<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND ANNUAL REPORT
PERFORMANCE AT A GLANCE
- -------------------------------------------------------------------------------
Comparison of the change of a $10,000 investment in PaineWebber Asia Pacific
Growth Fund and the MSCI All Country Asia Pacific Free (ex-Japan) Index.
[GRAPH]
Paine Webber Asia Pacific
MSCI Asia
Pacific Free
Fund
(Ex-Japan)
Class A Class B Class C Index
------- ------- ------- ------------
3/97 $ 9,549 $10,000 $10,000 $10,000
4/97 9,534 9,976 9,976 9,933
5/97 10,123 10,592 10,592 10,339
6/97 10,435 10,912 10,912 10,717
7/97 10,405 10,864 10,864 10,770
8/97 8,686 9,072 9,072 9,099
9/97 8,808 9,184 9,192 9,165
10/97 6,845 6,779 7,065 7,326
The graph depicts the performance of PaineWebber Asia Pacific Growth Fund versus
the MSCI All Country Asia Pacific Free (ex-Japan) Index. It is important to note
the PaineWebber Asia Pacific Growth Fund is a professionally managed mutual
fund, while the Index is not available for investment and is unmanaged. The
comparison is shown for illustrative purposes only.
Past performance is not predictive of future performance.
The performance of the classes vary based on the difference in sales charges and
fees paid by shareholders in different classes.
- -------------------------------------------------------------------------------
Total Return
Commencement of
Operations
Through 10/31/97+
-----------------
Class A* (28.32)%
% Return Without Deducting Class B** (28.64)%
Maximum Sales Charge Class C*** (28.64)%
Class A* (31.55)%
% Return After Deducting Class B** (32.21)%
Maximum Sales Charge Class C*** (29.35)%
* Maximum sales charge for Class A shares is 4.5% of the public offering
price. Class A shares bear ongoing 12b-1 services fees.
** Maximum contingent deferred sales charge for Class B shares is 5.0% and is
reduced to 0% after six years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charge for Class C is 1% and is reduced
to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution and
service fees.
+ Commencement of operations is March 25, 1997 for Class A, Class B and
Class C shares.
Note: Since the Fund has been in existence for less than one year, average
annual total returns are not provided. The Fund had no Class Y shares
outstanding during the fiscal period ended October 31, 1997.
The principal value of an investment in the Fund will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
- --------------------------------------------------------------------------------
1
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND ANNUAL REPORT
December 15, 1997
Dear Shareowner,
Enclosed is the annual report for PaineWebber Asia Pacific Growth Fund (the
"Fund") for the period from March 25, 1997, when the Fund commenced operations,
through October 31, 1997. We wrote you in June and discussed the first five-week
period of the Fund's inception. Much has transpired since then, and we want to
take this opportunity to summarize the major events contributing to the
volatility experienced by the Pacific Basin stock markets during the past seven
months. As a result, generally all Pacific Region funds have experienced poor
performance for the period. In this letter we address the Fund's performance,
its positioning and the outlook of Schroder Capital Management
International Inc., the Fund's subadviser.
GENERAL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Mainland Chinese liquidity flows and the positive momentum associated with the
U.K.-handover of Hong Kong to China provided support to the market during the
second quarter of 1997. Corporate earnings for Hong Kong companies were buoyed
by China's favorable economic prospects, particularly those involved in the
export growth businesses. However, the mood quickly turned gloomy in October, in
large part due to the market volatility triggered by the region's currency
turmoil. As a result, the Pacific Basin region experienced negative market
returns for the period ended October 31, 1997.
While the currency crisis was originally restricted to Thailand and its
neighboring countries- the Philippines, Indonesia and Malaysia-turmoil spread
through the region, finally reaching the North Asian markets of Korea, Taiwan
and Hong Kong in the closing weeks of October 1997. The outcome of the currency
turmoil has led Asian economies, with the exception of the Hong Kong dollar, to
abandon their fixed exchange rates and subsequently devalue its currencies
significantly. The Taiwanese government's decision to devalue its currency in
late-October led to speculative pressure on the Hong Kong dollar peg. And while
both the Hong Kong monetary authority and China have pledged to defend the peg,
local interest rates have moved up sharply, leading to significant downward
pressure on the real estate market and associated company share prices.
Interest rates in most economies in the region are now higher than previously
expected, largely diminishing the positive outlook that had existed for
corporate earnings growth. However, in our view, these high interest rate levels
should force governments and corporations to restructure the financial sector-a
strong, long-term positive for the region as a whole.
- --------------------------------------------------------------------------------
PAINEWEBBER
ASIA PACIFIC GROWTH FUND
FUND PROFILE
[Up Arrow] Goal:
Long-term capital appreciation
[Up Arrow] Portfolio Managers/ Subadviser:
Louise Croset and Heather Crighton, Schroder Capital Management
International Inc.
[Up Arrow] Total Net Assets:
$58.3 million as of October 31, 1997
[Up Arrow] Dividend Payments:
Annually, if any
- --------------------------------------------------------------------------------
2
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND ANNUAL REPORT
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
In terms of performance for the period from March 25, 1997 through October 31,
1997, the Fund's total return (the net asset value change with dividends
reinvested), without deducting sales charges, was (28.32)% for Class A shares,
(28.64)% for Class B shares and (28.64)% for Class C shares. In comparison, the
Morgan Stanley Capital International All Country Asia Pacific Free (ex-Japan)
Index and the Lipper Pacific (ex-Japan) Funds Average returned (26.74)% and
(28.68)%, respectively, during the same period.
For shareholders who purchased or redeemed Fund shares during the period, the
Fund's total return for the period may be higher or lower depending on when the
purchase or sale was made; for example, after deducting the maximum applicable
sales charges, the Fund's total return for the period was (31.55)% for Class A
shares, (32.21)% for Class B shares and (29.35)% for Class C shares.
As a matter of investment policy, Asia Pacific invests in the advanced,
developing and emerging markets of the Pacific Region. As of October 31, 1997,
more than two-thirds of the Fund's assets were invested in the advanced markets
of Australia, Hong Kong, New Zealand and Singapore, maintaining a
well-diversified portfolio invested across 11 countries. Hong Kong is the Fund's
largest country position, making up 27.9% of the Fund's net assets as of October
31, 1997; Australia is the second largest with 25.3% of net assets. Among the
developing markets, Malaysia led in size with 8.5% of net assets, and Thailand
held the smallest position at under 2% of net assets. In the emerging markets
portion of the Fund, India held the largest position with 3.8% of net assets.
Brighter Spots in the Advanced Markets-We have maintained the Fund's position in
Hong Kong during the past seven months. Although the current high-interest-rate
environment will hurt corporate earnings in the short run, we believe the reform
process currently at work in China will have an overriding positive impact on
the outlook for Hong Kong. Well-managed corporations that have increased their
activities in China, particularly in infrastructure and service-related
industries, should benefit.
We also have maintained our exposure to Singapore, whose reputation as a safe
haven, relatively speaking, remains intact with its highly capitalized local
banks. Singapore's government allowed the local currency to depreciate during
the recent crisis, which should help to ensure competitiveness of exports.
Currently, the southern hemisphere is the area we favor most, particularly
Australia and New Zealand. We have recently increased the Fund's exposure to
both countries, as their interest rate cycles should be favorable for equities.
Slowing Asian growth, however, may negatively impact demand for Australian
resources.
The Developing Markets-In contrast to the situation in Singapore, the fall in
Malaysia's market over the year reflected increasing investor concern over the
lack of government policy in dealing with economic conditions. Political
considerations are taking priority, and much slower economic growth is likely as
the domestic economy
- --------------------------------------------------------------------------------
PAINEWEBBER ASIA PACIFIC GROWTH FUND
Country Allocation (as a % of net assets as of October 31, 1997)*
[GRAPH]
[PLOT POINTS TO COME]
2.7% Cash & Cash Equivalents
8.5% Emerging Markets
19.2% Developing Markets
69.6% Advanced Markets
Advanced Markets:
Australia, Hong Kong, New Zealand & Singapore
Developing Markets:
Malaysia, Korea, Taiwan & Thailand
Emerging Markets:
India, Indonesia & the Philippines
* Allocations are subject to change.
- --------------------------------------------------------------------------------
3
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND ANNUAL REPORT
contracts next year. In light of these events, the Fund has reduced its
Malaysian position to 8.5% as of October 31, 1997, from 10.0% at the end of
August.
The Emerging Markets-We reduced the Fund's emerging market position; Indonesia
and the Philippines continue to represent a small part of the Fund (4.8% of net
assets as of October 31, 1997). Higher interest rates, as a by-product of the
currency devaluations, have negatively impacted the outlook for economic growth
and corporate earnings. Overcapacity in manufacturing plants and in commercial
and retail real estate in South Asia will require a period of adjustment, with
vacancy levels expected to remain high.
The banking sectors will face deteriorating operating environments as
non-performing loans rise; and, although eventual recapitalization of balance
sheets will occur, most banking sectors face rationalization. Disappointingly,
policy response generally has been slow to address individual country problems,
but the recent acceptance of International Monetary Fund help in Thailand,
Indonesia and Korea is positive-not solely for the individual countries, but for
the region as a whole. In the short run, the IMF bailout will likely be a
negative because the conditions of the bailout will mean that investments,
consumption and GDP growth will slow; however, we believe the sooner
restructuring occurs, the better, and we view it as a long-term positive for the
region.
Shifting Industry Focus-In light of the high-interest-rate environment, the Fund
has shifted its industry focus, away from interest-rate-sensitive sectors such
as real estate and banking-which comprised 32.1% of the Fund's net assets as of
October 31, 1997-and towards more defensive sectors such as utilities,
communications and consumer durables (16.1% of net assets).
What Looks Good in this Environment-Schroder Capital is capitalizing on its
local presence and experience to identify well-managed companies with attractive
earnings potential. Management favors companies:
o With large cash positions in their balance sheets to obtain resources at
now-available better prices.
o That hold, and will continue to hold, dominant market shares.
o In charge of their own pricing environments.
Three examples are Singapore International Airlines, Foster's Brewing Group
Ltd., the Australian brewing company, and New-Zealand-based Fletcher Challenge
Building. Singapore International Airlines (1.7% of net assets as of October 31,
1997) relies heavily on international traffic for its revenue stream-as opposed
to regional traffic-and should benefit from the region's currency devaluations
as travel to the region should pick up. Armed with a strong balance sheet, the
company receives a significant amount of its revenues in non-Singapore dollars
and is increasingly cutting operating costs.
Foster's Brewing Group Ltd. (1.3% of net assets) holds a dominant market share
in Australia and is pushing its brand strength overseas. Additionally, the
company is growing its wine subsidiary aggressively, making inroads into the
European and the U.S. markets. Its overseas earnings provide a positive
translation back into Australian dollars.
Fletcher Challenge Building (0.5% of net assets) is a building materials company
that is currently restructuring. A prime beneficiary of falling interest rates,
this company is a cash-generative business-a positive in this environment.
- --------------------------------------------------------------------------------
PAINEWEBBER ASIA PACIFIC GROWTH FUND
Top Five Industries (as a % of net assets as of October 31, 1997)*
Real Estate 20.5%
Banks 11.6%
Electricity & Gas 7.1%
Communications 6.5%
Diversified Industrials 4.3%
* Allocations are subject to change.
PAINEWEBBER ASIA PACIFIC GROWTH FUND
Top Five Holdings (as a % of net assets as of October 31, 1997)*
Citic Pacific Ltd. 3.3%
Hutchins Whampoa Ltd. 3.2%
Australia & New Zealand Banking Group Ltd. 3.1%
HSBC Holdings PLC 2.7%
Broker Hill Proprietary Co. Ltd. 2.6%
* Holdings are subject to change.
- --------------------------------------------------------------------------------
4
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND ANNUAL REPORT
OUTLOOK
- --------------------------------------------------------------------------------
[UP ARROW]
Investors should not lose sight of the attractive reasons for being invested in
the Pacific region for the long term. The Pacific Basin economies are very
adaptable and have experienced previous periods of regeneration. We expect
volatility in the Pacific markets to continue for the next three to six months,
as uncertainty hovers over valuations and the extent to which the banking
industries have non-performing loans. However, by mid-1998, we expect that most
of the risks in the region will be apparent and that aggressive devaluations
will have translated into significant export potential for the region. This
should result in narrowing current account deficits which, in turn, tends to
cause interest rates to decline, providing stability to the foreign exchanges.
We expect that by 1999 the Pacific Basin region may begin to return to its
earlier growth rates. Regional governments generally continue to be focused on
removing tariffs and encouraging more liberal trade policies to increase
competitiveness in the region. Lastly, the financial sector restructuring,
combined with extreme currency devaluations, should also be a strong positive
for the region, particularly for exporters.
For a quarterly Fund Profile on PaineWebber Asia Pacific Growth Fund or another
fund in the PaineWebber Family of Funds, contact your Investment Executive.
Our ultimate objective in managing your investments is to help you successfully
meet your financial goals. We thank you for your continued support, and welcome
any comments or questions you may have.
Sincerely,
/s/ MARGO N. ALEXANDER /s/ LOUISE CROSET /s/ HEATHER CRIGHTON
- ---------------------- ------------------------ ------------------------
MARGO N. ALEXANDER LOUISE CROSET HEATHER CRIGHTON
President, Portfolio Manager, Portfolio Manager,
Mitchell Hutchins PaineWebber Asia Pacific PaineWebber Asia Pacific
Asset Management Inc. Growth Fund. Growth Fund
The views expressed in this report were those of the Fund's portfolio managers
as of the dates specified, and may not reflect the views of the portfolio
managers on the date this report is first published or anytime thereafter. These
views are intended to assist shareholders of the Fund in understanding their
investment in the Fund and do not constitute investment advice; investors should
consult their own investment executives as to their individual investment
programs.
- --------------------------------------------------------------------------------
5
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
PERFORMANCE RESULTS (unaudited)
<TABLE>
<CAPTION>
Total Return(1)
-------------------------------------------
Net Asset Value For the For the
------------------------- Period Ended Six Months Ended
10/31/97 04/30/97 10/31/97+ 10/31/97
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares $8.96 $12.48 (28.32)% (28.21)%
- ---------------------------------------------------------------------------------------------------------------------------
Class B Shares 8.92 12.47 (28.64) (28.47)
- ---------------------------------------------------------------------------------------------------------------------------
Class C Shares 8.92 12.47 (28.64) (28.47)
<CAPTION>
Performance Summary Class A Shares
Net Asset Value
----------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
03/25/97-10/31/97 $12.50 $8.96 -- -- (28.32)%
- ---------------------------------------------------------------------------------------------------------------------------
Total: $0.0000 $0.0000
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return as
of 10/31/97: (28.32)%
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Performance Summary Class B Shares
Net Asset Value
----------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
03/25/97-10/31/97 $12.50 $8.92 -- -- (28.64)%
- ---------------------------------------------------------------------------------------------------------------------------
Total: $0.0000 $0.0000
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return as
of 10/31/97: (28.64)%
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Performance Summary Class C Shares
Net Asset Value
----------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
03/25/97-10/31/97 $12.50 $8.92 -- -- (28.64)%
- ---------------------------------------------------------------------------------------------------------------------------
Total: $0.0000 $0.0000
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return as
of 10/31/97: (28.64)%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain
distributions, if any, at net asset value on the payable dates and do not
include sales charges; results would be lower if sales charges were
included. The Fund had no Class Y shares outstanding during the period.
+ Commencement of operations was March 25, 1997 for Class A, Class B and
Class C shares.
The above data represents past performance of the Fund's shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
- --------------------------------------------------------------------------------
6
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1997
Number of
Shares Value
--------- -----
COMMON STOCKS--97.35%
Australia--25.30%
Banks--3.13%
261,800 Australia & New Zealand
Banking Group Ltd. $1,826,380
-----------
Breweries, Pubs, & Restaurants--1.33%
409,300 Foster's Brewing Group Ltd. 777,169
-----------
Building Materials & Merchants--0.57%
125,500 Pioneer International Ltd. 331,850
-----------
Diversified Industrials--4.29%
150,500 Broken Hill Propriety Co.
Ltd. (1) 1,492,332
134,200 Pacific Dunlop Ltd. 286,621
204,000 WMC Ltd. 724,488
-----------
2,503,441
-----------
Engineering--2.62%
154,000 Henry Walker Group Ltd 232,846
262,000 Pacific BBA Ltd. 828,948
83,000 Simsmetal Ltd. 466,958
1,528,752
-----------
Extractive Industries--3.24%
53,000 Brambles Industries Ltd. (1) 1,019,024
63,000 Rio Tinto Ltd. (1) 766,472
216,459 Savage Resources 103,853
-----------
1,889,349
-----------
Leisure & Hotels--0.99%
126,300 TABCORP Holdings Ltd. 579,110
-----------
Media--1.18%
153,500 West Australia News Holding 685,475
-----------
Oil Exploration & Production--2.15%
148,000 Woodside Petroleum Ltd. 1,250,013
-----------
Paper, Packaging & Printing--1.03%
60,800 Amcor Ltd. 286,818
150,000 Pacific Magazine & Printing
Communications Ltd. 311,188
-----------
598,006
-----------
Property--2.00%
57,000 Lend Lease Corp. Ltd. (1) 1,167,283
-----------
Retailers, General--1.28%
231,000 Woolworths Ltd. 745,649
-----------
Transportation--1.49%
485,500 Qantas Airways 870,641
-----------
Total Australia Common Stocks 14,753,118
-----------
Hong Kong--27.86%
Banks--2.66%
68,400 HSBC Holdings PLC $ 1,548,212
-----------
Commerce/Industrial--3.26%
397,000 Citic Pacific Ltd. 1,899,890
-----------
Construction--1.21%
273,000 Cheung Kong Infrastucture
Holdings 706,202
Electricity & Gas--3.66%
508,000 Hong Kong & China Gas Ltd. 959,296
347,000 Hong Kong Electric Holdings 1,175,891
-----------
2,135,187
-----------
Miscellaneous Financial--0.64%
148,600 Dah Sing Financial 372,870
-----------
Real Estate--15.24%
154,000 Cheung Kong Holdings Ltd. 1,070,620
498,000 China Resources Development
Enterprises Ltd. 1,365,531
93,000 Henderson Land Development
Co. Ltd. 514,829
131,000 Hong Kong Land Holdings 298,680
271,000 Hutchison Whampoa Ltd. 1,875,251
343,000 Kerry Properties Ltd. (1) 709,823
164,000 New World Development Ltd. 576,964
338,000 New World Infrastructure
Ltd. (1)* 668,874
170,000 Sun Hung Kai Properties Ltd. 1,253,314
270,000 Wharf (Holdings) Ltd. 551,769
-----------
8,885,655
-----------
Retail Sales--0.40%
630,000 Giordano International
Holdings Ltd. 232,232
-----------
Shipping--0.52%
262,000 Cosco Pacific Ltd. (1) 304,986
-----------
Wholesale--0.27%
172,000 Guangnan Holdings 157,951
-----------
Total Hong Kong Common Stocks 16,243,185
-----------
India--3.76%
Banks--0.84%
26,700 State Bank of India (1) GDR 491,280
-----------
Electricity & Gas--0.91%
16,000 BSES Ltd. GDR * 258,400
1,000 Tata Electric Companies GDR 275,000
-----------
533,400
-----------
- --------------------------------------------------------------------------------
7
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
Number of
Shares Value
--------- -----
COMMON STOCKS--(continued)
India--(concluded)
Engineering--0.32%
17,500 Mahindra & Mahindra (1) $ 183,750
-----------
Telecommunications--0.81%
34,000 Videsh Sanchar Nigam Ltd. GDR* 469,200
-----------
Textiles & Apparel--0.88%
24,500 Reliance Industries Ltd. (1) 514,500
-----------
Total India Common Stocks 2,192,130
-----------
Indonesia--2.68%
Communications--1.57%
92,000 P.T. Indosat 207,351
764,000 P.T. Telekomunikasi Indonesia 709,958
-----------
917,309
-----------
Miscellaneous Manufacturing--0.83%
170,000 P.T. Gudang Garam 480,999
-----------
Transportation Equipment--0.28%
219,000 P.T. Astra International 162,503
-----------
Total Indonesia Common Stocks 1,560,811
-----------
Korea--3.87%
Banks--0.34%
26,000 Shinhan Bank 199,378
-----------
Communications--0.30%
570 SK Telecom Co. Ltd. 176,021
-----------
Electrical Appliances--1.29%
26,000 L.G. Electronics Inc. 350,259
10,185 Samsung Electronics Corp. 400,012
-----------
750,271
-----------
Electricity & Gas--0.43%
17,700 Korea Electric Power Corp. 251,285
-----------
Iron & Steel--0.63%
8,400 Pohang Iron & Steel Co. Ltd. 368,207
-----------
Oils--0.41%
17,630 Yukong Ltd. 237,503
-----------
Securities--0.47%
22,000 Daewoo Securities * 271,295
-----------
Total Korea Common Stocks 2,253,960
-----------
Malaysia--8.48%
Banks--1.15%
130,000 Malayan Banking Berhad (1)* $ 503,075
193,000 RHB Capital Berhad (1) 162,112
12,200 RHB Sakura Merchant Bankers * 7,685
-----------
672,872
-----------
Chemicals--0.33%
388 CCM Bioscience Berhad 115
158,000 Chem Co. Malaysia 190,539
-----------
190,654
-----------
Commerce/Industrial--0.54%
217,000 Sime Darby Berhad 312,464
-----------
Communications--0.79%
176,500 Telekom Malaysia Berhad (1) 457,995
-----------
Construction--1.32%
268,000 Gamuda Berhad (1) 410,019
153,000 United Engineers (Malaysia)
Ltd. Berhad (1) 362,592
-----------
772,611
-----------
Electricity & Gas--1.19%
25,000 Petronas Gas Berhad 68,881
288,000 Tenaga Nasional Berhad (1) 622,049
-----------
690,930
-----------
Foods--1.83%
552,000 IOI Corp. 470,281
296,000 KFC Holdings (Malaysia) Berhad 594,930
-----------
1,065,211
-----------
Miscellaneous Manufacturing--0.10%
113,000 MBM Resources Berhad 60,678
-----------
Services--1.23%
677,000 Magnum Corp. Berhad 530,064
101,000 Star Publications 187,851
-----------
717,915
-----------
Total Malaysia Common Stocks 4,941,330
-----------
New Zealand--4.15%
Breweries, Pubs, & Restaurants--0.78%
351,500 Restaurant Brands * 455,232
-----------
Building & Construction--0.53%
103,000 Fletcher Challenge Building 311,045
-----------
- --------------------------------------------------------------------------------
8
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
COMMON STOCKS--(concluded)
New Zealand--(concluded)
Communications--1.08%
130,000 Telecom Corp. of New
Zealand Ltd. $ 629,748
-----------
Pharmaceuticals--1.27%
232,800 Fisher & Paykel 739,260
-----------
Transportation--0.49%
135,000 Air New Zealand 285,796
-----------
Total New Zealand Common Stocks 2,421,081
-----------
Philippines--2.10%
Communications--1.29%
30,400 Philippine Long Distance
Telephone Co. (1) 750,353
-----------
Electricity & Gas--0.42%
81,500 Manila Electric Co.
(Class B) (1) 248,293
-----------
Real Estate--0.39%
585,250 Ayala Land Inc. (Class B) (1) 227,001
-----------
Total Philippines Common Stocks 1,225,647
-----------
Singapore--12.27%
Banks--3.45%
91,000 Development Bank of
Singapore Ltd.* 849,334
210,000 United Overseas Bank Ltd. 1,160,000
-----------
2,009,334
-----------
Miscellaneous Manufacturing--1.51%
256,000 Venture Manufacturing
(Singapore) Ltd. 877,714
-----------
Real Estate--2.85%
99,000 City Development Ltd.* 414,857
216,000 DBS Land Ltd. 367,543
167,000 Keppel Land Ltd. 233,270
117,000 Parkway Holdings Ltd. 295,657
275,000 Wing Tai Holdings Ltd. 349,206
-----------
1,660,533
-----------
Services--2.50%
106,000 Singapore Press Holding Ltd.* 1,460,445
-----------
Textiles--0.30%
451,500 Courts Singapore 177,733
-----------
Transportation--1.66%
129,000 Singapore International
Airlines 966,476
-----------
Total Singapore Common Stocks 7,152,235
-----------
Taiwan--5.15%
Commerce/Industrial--0.43%
20,700 Asustek Computer Inc. * $ 253,058
-----------
Construction--0.74%
39,587 Asia Cement Corp. GDR 434,467
-----------
Electrical Appliances--2.25%
57,500 Acer Inc. (1) 378,063
25,000 Siliconware Precision
Industries Co. GDR * + 240,625
35,000 Taiwan Semiconductor
Manufacturing Co. Ltd. (1) 693,437
-----------
1,312,125
-----------
Iron & Steel--0.34%
13,100 China Steel Corp. GDS (1) 195,845
-----------
Miscellaneous Financial--0.45%
30,000 R.O.C. Taiwan Fund * 260,625
-----------
Miscellaneous Manufacturing--0.66%
29,201 Teco Electric & Machinery
Ltd. GDR 383,993
-----------
Transportation Equipment--0.28%
16,050 Evergreen Marine Corp. GDR + 165,315
-----------
Total Taiwan Common Stocks 3,005,428
-----------
Thailand--1.73%
Communications--0.69%
369,000 TelecomAsia Corp. PLC * 161,901
125,000 Total Access Communication
Public Co. Ltd. 238,750
-----------
400,651
-----------
Electricity & Gas--0.51%
182,000 Electricity Generating
Public Co. Ltd. 297,234
-----------
Mining--0.53%
30,800 PTT Exploration &
Production PLC 307,812
-----------
Total Thailand Common Stocks 1,005,697
-----------
Total Common Stocks (cost--$78,857,247) 56,754,622
-----------
MONEY MARKET FUNDS--0.05%
25,762 Liquid Assets Portfolio
(cost--$25,762) 25,762
-----------
- --------------------------------------------------------------------------------
10
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
Principal
Amount
(000) Maturity Dates Interest Rates Value
--------- -------------- -------------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENT--1.73%
$ 1,010 Repurchase Agreement dated 10/31/97 with State
Street Bank & Trust Company, collateralized
by $1,031,494 U.S. Treasury Bills, 5.250%
due 12/31/97; proceeds: $1,010,421
(cost--$1,010,000) 11/03/97 5.000% $1,010,000
-----------
INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED--16.83%
Repurchase Agreements--9.40%
2,740 Repurchase Agreement dated 10/31/97 with Dresner
Bank AG, collateralized by $2,795,534 U.S.
Treasury Notes, 6.375% due 01/15/99;
proceeds: $2,741,297 11/03/97 5.680 2,740,000
2,740 Repurchase Agreement dated 10/31/97 with Union
Bank of Switzerland, collateralized by $2,795,213
U.S. Treasury Bonds, 6.000% due 02/15/26;
proceeds: $2,741,297 11/03/97 5.680 2,740,000
-----------
5,480,000
-----------
<CAPTION>
Number of
Shares
---------
<S> <C>
Money Market Funds--7.43%
2,449,404 Liquid Assets Portfolio 2,449,404
1,860,735 TempCash Portfolio 1,860,735
23,336 TempFund Portfolio 23,336
-----------
4,333,475
-----------
Total Investment of Cash Collateral for Securities Loaned (cost--$9,813,475) 9,813,475
-----------
Total Investments (cost--$89,706,484)--115.96% 67,603,859
Liabilities in excess of other assets--(15.96)% (9,302,240)
-----------
Net Assets--100.00% $58,301,619
===========
</TABLE>
- -----------
* Non-income producing security
+ Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration; normally to qualified institutional buyers.
GDR Global Depositary Receipt
GDS Global Depositary Shares
(1) Security, or a portion thereof, was on loan at October 31, 1997.
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
10
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1997
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost - $89,706,484) $67,603,859
Cash denominated in foreign currencies, at value (cost - $330,012) 331,325
Receivable for shares of beneficial interest sold 1,855,641
Receivable for investments sold 118,589
Dividends and interest receivable 147,927
Deferred organizational expenses 132,907
Other assets 94,239
-----------
Total assets 70,284,487
-----------
Liabilities
Collateral for securities loaned 9,813,475
Payable for shares of beneficial interest repurchased 1,095,679
Payable for investments purchased 831,250
Payable to affiliates 116,940
Accrued expenses and other liabilities 125,524
-----------
Total liabilities 11,982,868
-----------
Net assets
Beneficial interest shares of $0.001 par value outstanding (unlimited amount authorized) 82,546,404
Accumulated net investment income 1,932
Accumulated net realized losses from investments (2,142,366)
Net unrealized depreciation of investments and other assets and liabilities
denominated in foreign currencies (22,104,351)
-----------
Net assets $58,301,619
===========
Class A:
Net assets $21,466,419
-----------
Shares outstanding 2,396,652
-----------
Net asset and redemption value per share $8.96
=====
Maximum offering price per share (net asset value plus sales charge of 4.50% of offering price) $9.38
=====
Class B:
Net assets $22,948,675
-----------
Shares outstanding 2,573,776
-----------
Net asset value and offering price per share $8.92
=====
Class C:
Net assets $13,886,525
-----------
Shares outstanding 1,557,293
-----------
Net asset value and offering price per share $8.92
=====
</TABLE>
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
11
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the
Period Ended
October 31, 1997+
------------------
<S> <C>
Investment income:
Dividends (net of foreign withholding taxes of $70,151) $ 889,152
Interest 307,012
------------
1,196,164
------------
Expenses:
Investment advisory and administration fees 533,412
Service fees--Class A 43,850
Service and distribution fees--Class B 167,837
Service and distribution fees--Class C 101,270
Custody and accounting 138,347
Reports and notices to shareholders 90,718
Legal and audit fees 54,154
Transfer agency and related services fees 43,723
State registration fees 40,740
Amortization of organizational expenses 18,218
Trustees' fees 12,850
Other expenses 676
------------
1,245,795
------------
Net investment loss (49,631)
------------
Realized and unrealized losses from investment transactions:
Net realized losses from:
Investments (2,142,366)
Foreign currency transactions (86,558)
Net unrealized appreciation/depreciation of:
Investments (22,102,625)
Other assets and liabilities denominated in foreign currencies (1,726)
------------
Net realized and unrealized losses from investment transactions (24,333,275)
------------
Net decrease in net assets resulting from operations $(24,382,906)
------------
</TABLE>
- -----------
+ For the period March 25, 1997 (commencement of operations) through
October 31, 1997
See accompanying notes to financial statements
12
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
Period Ended
October 31, 1997+
-----------------
<S> <C>
From operations:
Net investment loss $ (49,631)
Net realized losses from investments (2,142,366)
Net realized losses from foreign currency transactions (86,558)
Net unrealized appreciation/depreciation of:
Investments (22,102,625)
Other assets and liabilities denominated in foreign currencies (1,726)
------------
Net decrease in net assets resulting from operations (24,382,906)
------------
From beneficial interest transactions:
Net proceeds from the sale of shares 104,360,162
Cost of shares repurchased (21,675,637)
------------
Net increase in net assets from beneficial interest transactions 82,684,525
------------
Net increase in net assets 58,301,619
Net Assets:
Beginning of period 0
------------
End of period (including undistributed net investment income of $1,932 at October 31, 1997) $ 58,301,619
=============
</TABLE>
- -----------
+ For the period March 25, 1997 (commencement of operations) through
October 31, 1997
- --------------------------------------------------------------------------------
13
See accompanying notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Asia Pacific Growth Fund (the "Fund") is a diversified series of
PaineWebber Managed Investments Trust (the "Trust") which is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, as an open-end management investment company. Organizational costs have
been deferred and are being amortized using the straight-line method over a
period not to exceed 60 months from the date the Fund commenced operations.
The Fund offers Class A, Class B, Class C and Class Y shares. The Fund had no
Class Y shares outstanding during the period. Each class represents interests in
the same assets of the Fund, and the classes are identical except for
differences in their sales charge structures, ongoing service and/or
distribution charges and certain transfer agency expenses. In addition, Class B
shares and all corresponding reinvested dividend shares automatically convert to
Class A shares approximately six years after initial issuance. All classes of
shares have equal voting privileges, except that each class has exclusive voting
rights with respect to its service and/or distribution plan.
The preparation of financial statements in accordance with generally accepted
accounting principles requires the Fund's management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies:
Valuation of Investments--Securities which are listed on U.S. and foreign
stock exchanges are valued at the last sale price on the day the securities are
being valued or, lacking any sales on such day, at the last available bid price.
In cases where securities are traded on more than one exchange, the securities
are generally valued on the exchange designated as the primary market by
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly-owned
asset management subsidiary of PaineWebber Incorporated ("PaineWebber") and
investment adviser and administrator of the Fund, or Schroder Capital Management
International Inc. ("Schroder"), the sub-adviser for the Fund ("Sub-Adviser").
Securities traded in the over-the-counter ("OTC") market and listed on the
Nasdaq Stock Market, Inc. ("Nasdaq") are valued at the last trade price on
Nasdaq prior to the time of valuation. When market quotations are not readily
available, securities are valued based upon appraisals derived from information
concerning those securities or similar securities received from a recognized
dealer in those securities. The amortized cost method of valuation, which
approximates market value, is used to value short-term debt instruments with 60
days or less remaining to maturity unless the Trust's board of trustees
determines that this does not represent fair value. Securities and assets for
which market quotations are not readily available (including restricted
securities subject to limitations as to their sale) are valued at fair value as
determined in good faith by or under the direction of the Trust's board of
trustees.
All investments quoted in foreign currencies are valued daily in U.S. dollars
on the basis of the foreign currency exchange rates prevailing at the time such
valuation is determined by the Fund's custodian, unless the board of trustees
determines that this does not represent fair value. Foreign currency exchange
rates are generally determined prior to the close of trading on the New York
Stock Exchange ("NYSE"). Occasionally, events affecting the value of foreign
investments and such exchange rates occur between the time at which they are
determined and the close of trading on the NYSE, which will not be reflected in
a computation of the Fund's net asset value. If events materially affecting the
value of such investments or currency exchange rates occur during such time
period, the investments will be valued at their fair value as determined in good
faith by or under the direction of the Trust's board of trustees.
Repurchase Agreements--The Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
interest, is at least equal to the repurchase price. In the event of default of
the obligation to repurchase, the Fund has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation. Under certain
circumstances, in the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral may be subject to
legal proceedings. The Fund occasionally participates in joint repurchase
agreement transactions with other funds managed by Mitchell Hutchins.
Investment Transactions and Investment Income--Investment transactions are
recorded on the trade date. Realized gains and losses from investment and
foreign exchange transactions are calculated using the identified cost method.
Dividend income is recorded on the ex-dividend date ("ex-date") (except in the
case of certain foreign dividends which are recorded as soon after the ex-date
as the Fund using reasonable diligence becomes aware of such dividends).
Interest income is recorded on an accrual basis. Discounts are accreted and
premiums are amortized as adjustments to interest income and the identified cost
of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of
dividend-eligible shares, as appropriate) of each class at the beginning of the
day (after adjusting for current capital share activity of the respective
classes). Class-specific expenses are charged directly to the applicable class
of shares.
Foreign Currency Translation--The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis: (1) the foreign currency market value of
investment securities and other assets and liabilities stated in foreign
currencies are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the rate
of exchange prevailing on the respective dates of such transactions.
Although the net assets and the market values of the Fund's securities are
presented at the foreign exchange rates at the end of the period, the Fund does
not generally isolate the effect of fluctuations in foreign exchange rates from
the effect of the unrealized changes in market prices of securities. However,
the Fund does isolate the effect of fluctuations in foreign exchange rates when
determining the realized gain or loss upon the sale or maturity of foreign
currency denominated debt obligations pursuant to federal income tax
regulations. Certain foreign exchange gains and losses included in realized and
unrealized gains and losses are included in or are a reduction of ordinary
income in accordance with federal income tax regulations. Net realized foreign
currency gain (loss) is treated as ordinary income for income tax reporting
purpose. Gains/losses from translating foreign currency denominated assets and
liabilities at year-end exchange rates are included in change in unrealized
appreciation/depreciation of other assets and liabilities denominated in foreign
currencies.
Dividends and Distributions--Dividends and distributions to shareholders are
recorded on the ex-date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
Concentration of Risk
Investing in securities of foreign issuers and currency transactions may
involve certain consideration and risks not typically associated with
investments in the United States. These risks include revaluation of currencies,
adverse fluctuations in foreign currency values and possible adverse political,
social and economic developments, including those particular to a specific
<PAGE>
industry, country or region, which could cause the securities and their markets
to be less liquid and prices more volatile than those of comparable, U.S.
companies. These risks are greater with respect to securities of issuers located
in emerging market countries in which the Fund is authorized to invest. The
ability of the issuers of debt securities held by the Fund to meet their
obligations may be affected by economic and political developments in a specific
industry, country or region.
Investment Advisor and Administrator
The Trust's board of trustees has approved an investment advisory and
administration contract ("Advisory Contract") with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment advisor and administrator of the
Fund. In accordance with the Advisory Contract, Mitchell Hutchins receives
compensation from the Fund, computed daily and paid monthly, at an annual rate
of 1.20% of the Fund's average daily net assets up to and including $100 million
and 1.10% of its average daily net assets over $100 million. At October 31,
1997, the Fund owed Mitchell Hutchins $71,093 in investment advisory and
administration fees.
Under a separate contract with Mitchell Hutchins ("Sub-Advisory Contract"),
Schroder serves as the Fund's sub-adviser. Under the Sub-Advisory Contract,
Mitchell Hutchins (not the Fund) pays Schroder a fee, computed daily and paid
monthly, at an annual rate of 0.65% of the Fund's average daily net assets up to
and including $100 million and 0.55% of the Fund's average daily net assets over
$100 million.
For the period ended October 31, 1997, the Fund paid no brokerage commissions
to PaineWebber for transactions executed on behalf of the Fund.
Distribution Plan
Mitchell Hutchins is the distributor of the Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under separate
plans of service and/or distribution pertaining to Class A, Class B and Class C
shares, each Class of shares of the Fund pays Mitchell Hutchins monthly service
fees at the annual rate of 0.25% of the average daily net assets of Class A,
Class B and Class C shares and monthly distribution fees at the annual rate of
0.75% of the average daily net assets of Class B and Class C shares. Class Y
shares have no service or distribution plan. At October 31, 1997 the Fund owed
Mitchell Hutchins $42,816 in service and distribution fees.
Mitchell Hutchins also receives the proceeds of the initial sales charges
paid by shareholders upon the purchase of Class A shares and the contingent
deferred sales charges paid by shareholders upon certain redemptions of Class A,
Class B and Class C shares. Mitchell Hutchins has informed the Fund that for the
period ended October 31, 1997 it had earned $1,160,496 in sales charges.
Security Lending
The Fund may lend up to 33 1/3% of its total assets to qualified
institutions. The loans are secured at all times by cash or U.S. government
securities in an amount at least equal to the market value of the securities
loaned, plus accrued interest and dividends, determined on a daily basis and
adjusted accordingly. The Fund will regain record ownership of loaned securities
to exercise certain beneficial rights; however, the Fund may bear the risk of
delay in recovery of, or even loss of rights in, the securities loaned should
the borrower fail financially. The Fund receives compensation, which is included
in interest income, for lending its securities from interest earned on the cash
or U.S. government securities held as collateral, net of fee rebates paid to the
borrower plus reasonable administrative and custody fees. The Fund's lending
agent is PaineWebber, who received $14,324 as compensation from the Fund for the
period ended October 31, 1997. At October 31, 1997, the Fund owed PaineWebber
$3,031 in security lending fees.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
As of October 31, 1997, the Fund's custodian held cash and cash equivalents
having an aggregate value of $9,813,475 as collateral for portfolio securities
loaned having a market value of $9,337,934.
Bank Line of Credit
The Fund may participate with other funds managed by Mitchell Hutchins in a
$200 million committed credit facility ("Facility") to be utilized for temporary
financing until the settlement of sales or purchases of portfolio securities,
the repurchase or redemption of shares of the Fund at the request of the
shareholders and other temporary or emergency purposes. In connection therewith,
the Fund has agreed to pay commitment fees, pro rata, based on the relative
asset size of the funds in the Facility. Interest is charged to the Fund at
rates based on prevailing market rates in effect at the time of borrowings. For
the period ended October 31, 1997, the Fund did not borrow under the Facility.
Transfer Agency and Related Services Fees
Prior to August 1, 1997, the Fund paid PaineWebber an annual fee of $4.00 per
active shareholder account for certain services not provided by the Fund's
transfer agent. For these services for the period ended July 31, 1997,
PaineWebber earned $9,958 from the Fund. Subsequent to August 1, 1997,
PaineWebber provides transfer agency related services to the Fund pursuant to a
delegation of authority from PFPC, Inc., the Fund's transfer agent, and is
compensated for these services by PFPC, Inc., not the Fund.
Investments in Securities
For federal income tax purposes, the cost of securities owned at October 31,
1997 was substantially the same as the cost of securities for financial
statement purposes.
At October 31, 1997, the components of the net unrealized depreciation of
investments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having an excess of value over cost)..... $ 1,276,387
Gross depreciation (investments having an excess of cost over value)..... (23,379,012)
------------
Net unrealized depreciation of investments............................... $(22,102,625)
============
</TABLE>
For the period ended October 31, 1997, aggregate purchases and sales of
portfolio securities, excluding short-term securities, were $89,681,773 and
$8,682,160, respectively.
Federal Income Tax Status
The Fund intends to distribute substantially all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year,
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
At October 31, 1997, the Fund has a net capital loss carryforward of
approximately $2,125,000. In subsequent years, this carryforward loss is
available as a reduction, to the extent provided in the regulations, of future
net realized capital gains and will expire by October 31, 2005. To the extent
that such losses are used to offset future capital gains, it is probable that
gains to offset will not be distributed to shareholders.
To reflect reclassifications arising from permanent "book/tax" differences
for the period ended October 31, 1997, the Fund's accumulated net investment
income (loss) was increased by $51,563; accumulated net realized losses from
investments were reduced by $86,558 and beneficial interest shares were reduced
by $138,121.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SHARES OF BENEFICIAL INTEREST
There is an unlimited amount of $0.001 par value shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Class A Class B Class C
------------------ ------------------ ------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Period ended October 31, 1997+:
Shares sold........................ 3,053,522 $37,770,138 3,354,769 $41,970,877 2,006,187 $24,619,147
Shares repurchased................. (656,870) (7,384,924) (780,993) (9,358,215) (448,894) (4,932,498)
--------- ----------- ----------- ----------- --------- -----------
Net increase....................... 2,396,652 $30,385,214 2,573,776 $32,612,662 1,557,293 $19,686,649
========= =========== ========== =========== ========= ===========
</TABLE>
- -----------
+ For the period March 25, 1997 (commencement of operations) through
October 31, 1997
18
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding in each Class
throughout the period is presented below:
<TABLE>
<CAPTION>
Class A Class B Class C
----------------- ----------------- -----------------
For the Period For the Period For the Period
Ended Ended Ended
October 31, 1997+ October 31, 1997+ October 31, 1997+
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...... $ 12.50 $ 12.50 $ 12.50
-------- ------- --------
Net investment income (loss).............. 0.03 (0.03) (0.03)
Net realized and unrealized losses from
investments and foreign currency....... (3.57) (3.55) (3.55)
-------- ------- --------
Net decrease from investment operations... (3.54) (3.58) (3.58)
-------- ------- --------
Net asset value, end of period............ $ 8.96 $ 8.92 $ 8.92
======== ======= ========
Total investment return (1)............... (28.32)% (28.64)% (28.64)%
======== ======= ========
Ratios/Supplemental Data:
Net assets, end of period (000's)......... $ 21,466 $22,949 $ 13,887
Expenses to average net assets............ 2.33%* 3.12%* 3.10%*
Net investment income (loss) to average
net assets.............................. 0.37%* (0.43)%* (0.42)%*
Portfolio turnover rate................... 13% 13% 13%
Average commission rate paid.............. $ 0.0156 $0.0156 $ 0.0156
</TABLE>
- ----------
* Annualized
+ For the period March 25, 1997 (commencement of operations) through October
31, 1997. There were no Class Y shares outstanding as of October 31, 1997.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the payable dates, and a sale
at net asset value on the last day of each period reported. The figures do
not include sales charges; results for each class would be lower if sales
charges were included. Total investment returns for periods less than a
year have not been annualized.
19
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Trustees and Shareholders of
PaineWebber Asia Pacific Growth Fund
We have audited the accompanying statement of assets and liabilities of the
PaineWebber Asia Pacific Growth Fund (the "Fund"), including the portfolio of
investments as of October 31, 1997, and the related statements of operations,
changes in net assets, and the financial highlights for the period from March
25, 1997 (commencement of operations) to October 31, 1997. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned at October 31, 1997 by correspondence with the custodians and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund at October 31, 1997, the results of its operations, the changes in its net
assets, and the financial highlights for the period from March 25, 1997 to
October 31, 1997, in conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
New York, New York
December 19, 1997
20
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
TAX INFORMATION (unaudited)
We are required by subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (October 31,
1997) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that no distributions
were paid by the Fund during the period.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar year 1997. The second notification, which
will reflect the amount to be used by calendar year taxpayers on their federal
income tax returns, will be made in conjunction with Form 1099 DIV and will be
mailed in January 1998. Shareholders are advised to consult their own tax
advisers with respect to the tax consequences of their investment in the Fund.
21
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES
E. Garrett Bewkes, Jr.
Chairman
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
PRINCIPAL OFFICERS
Margo N. Alexander
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Paul H. Schubert
Vice President and Treasurer
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
INVESTMENT SUBADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
This report is not to be used in conjunction with the offering of shares of the
Fund unless accompanied or preceded by an effective prospectus.
A prospectus containing more complete information for any of the Funds listed on
the back cover can be obtained from a PaineWebber investment executive or
corresponding firm. Read the prospectus carefully before investing.
<PAGE>
PaineWebber offers a family of 22 funds which encompass a diversified range of
investment goals.
BOND FUNDS
o High Income Fund
o Investment Grade Income Fund
o Low Duration U.S. Government Income Fund
o Strategic Income Fund
o U.S. Government Income Fund
TAX-FREE BOND FUNDS
o California Tax-Free Income Fund
o Municipal High Income Fund
o National Tax-Free Income Fund
o New York Tax-Free Income Fund
STOCK FUNDS
o Capital Appreciation Fund
o Financial Services Growth Fund
o Growth Fund
o Growth and Income Fund
o Small Cap Fund
o Utility Income Fund
ASSET ALLOCATION FUNDS
o Balanced Fund
o Tactical Allocation Fund
GLOBAL FUNDS
o Asia Pacific Growth Fund
o Emerging Markets Equity Fund
o Global Equity Fund
o Global Income Fund
PAINEWEBBER MONEY MARKET FUND
PAINEWEBBER
(Copyright)1997 PaineWebber Incorporated
Member SIPC
PAINEWEBBER
- ----------------------------------
ASIA PACIFIC
GROWTH FUND
ANNUAL REPORT
OCTOBER 31, 1997
