MITCHELL HUTCHINS KIDDER PEABODY INVESTMENT TRUST, N-30D, 1995-11-06

MITCHELL HUTCHINS KIDDER PEABODY INVESTMENT TRUST
N-30D, 1995-11-06

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<PAGE>

PAINEWEBBER
GLOBAL EQUITY FUND

ANNUAL REPORT
August 31, 1995

PAINEWEBBER AND MITCHELL
HUTCHINS/KIDDER, PEABODY
MUTUAL FUNDS

PAINEWEBBER OFFERS A FAMILY OF 22 MUTUAL FUNDS WHICH ENCOMPASS A DIVERSIFIED
RANGE OF INVESTMENT GOALS. INVESTORS MAY EXCHANGE THEIR FUND SHARES WITH OTHER
FUNDS WITHIN THE FAMILY.

INCOME FUNDS
o PW GLOBAL INCOME FUND
o PW HIGH INCOME FUND
o PW INVESTMENT GRADE INCOME FUND
o PW LOW DURATION U.S. GOVERNMENT INCOME FUND
o PW STRATEGIC INCOME FUND
o PW U.S. GOVERNMENT INCOME FUND

TAX-FREE INCOME FUNDS
o PW CALIFORNIA TAX-FREE INCOME FUND
o PW MUNICIPAL HIGH INCOME FUND
o PW NATIONAL TAX-FREE INCOME FUND
o PW NEW YORK TAX-FREE INCOME FUND

GROWTH FUNDS
o MH/KP EMERGING MARKETS EQUITY FUND
o MH/KP SMALL CAP GROWTH FUND
o PW CAPITAL APPRECIATION FUND
o PW GLOBAL EQUITY FUND
o PW GROWTH FUND
o PW REGIONAL FINANCIAL GROWTH FUND
o PW SMALL CAP VALUE FUND

GROWTH AND INCOME FUNDS
o MH/KP ASSET ALLOCATION FUND
o PW BALANCED FUND
o PW GROWTH AND INCOME FUND
o PW UTILITY INCOME FUND

PAINEWEBBER MONEY MARKET FUND
- ---------------------------------

(COPYRIGHT)1995 PAINEWEBBER INCORPORATED

[LOGO] PRINTED ON

RECYCLED PAPER

<PAGE>
- --------------------------------------------------------------------------------

October 16, 1995

Dear Shareholder,

On August 25, 1995, PaineWebber Atlas Global Growth Fund, PaineWebber Europe
Growth Fund and PaineWebber Global Growth and Income Fund merged into Mitchell
Hutchins/Kidder, Peabody Global Equity Fund, which is now known as PaineWebber
Global Equity Fund (the 'Fund'). Because the pricing structure of Mitchell
Hutchins/Kidder, Peabody Global Equity Fund differed from the PaineWebber Funds'
pricing structure, PaineWebber Class B shareholders are now Class E shareholders
of the Fund, while PaineWebber Class D shareholders are now Class B shareholders
of the Fund. Only the names of the Classes are different; in all other respects,
the shares of the Fund issued in the reorganization are the same as the shares
held prior to the merger.

GE Investment Management Incorporated ('GEIM'), a subsidiary of GE Investments,
the sub-adviser of all the funds involved in the merger, will continue to be the
sub-adviser of the Fund. GE Investments, an affiliate of General Electric
Company, is one of the largest money managers in the United States with more
than $50 billion in diversified assets. Ralph Layman, executive vice president
and a senior investment manager at GE Investments, is the portfolio manager of
the Fund. Mr. Layman heads the International Equity Department at GE Investments
and is responsible for the management of the firm's global equity portfolios,
which represent approximately $6.6 billion in assets. In addition to the Fund,
he and his team manage GE Global Equity Fund, GE International Equity Fund and
Elfun Global Fund, as well as separate accounts, including General Electric
Pension. Mr. Layman is a member of GE Investments' Asset Allocation Committee
and is a Trustee of GE Pension Trust.

The Fund seeks to achieve long-term growth of capital by investing principally
in foreign equity securities. Mr. Layman's investment approach is a bottom-up
stock picking style that focuses on targeting undervalued stocks. He is a
long-term investor; he and his management team look at companies on a three- to
five-year time horizon. They look for globally competitive companies with a
secular growth story, such as new proprietary technology, management changes, or
restructuring. Asset allocation decisions are not made by country or industry.
Rather, the country and industry allocation develop from the stock selection
process. However, diversification across industries and countries is utilized as
a risk control measure.

PORTFOLIO REVIEW

The Fund's total return for the year ended August 31, 1995, without deducting
sales charges, was 3.24% for Class A shares and 2.46% for Class B shares. The
Fund's total return for this period, after deducting the maximum applicable
sales charges, was (1.40)% for Class A shares and 2.46% for Class B shares.
Class E share results are not material for this time period since they came into
existence on August 25, 1995. In comparison, the MSCI World Index was up 8.2%,
while the Standard & Poor's 500 Index was up 21.5%. Please keep in mind that the

indices are unmanaged

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<PAGE>
- --------------------------------------------------------------------------------
and do not reflect the deduction of management fees and fund costs. The primary
driver of the Fund's underperformance relative to the benchmark (the MSCI World
Index) was the Fund's significant underweighting in U.S. securities.
Additionally, the Fund's weighting in emerging markets, in particular our
investments in Mexico, were a negative contribution. Although we did add to the
Fund's U.S. holdings in the first quarter of 1995, it was not enough to increase
the Fund's U.S. weighting to the benchmark level. The Fund's performance was
enhanced, however, by the Fund's underweight position in the Japanese market,
which was down 8.6% for the period, as well as the Fund's exposure in
Switzerland, which was up 21.6% for the period.

The year ended August 31, 1995 was marked by a continuing slide in the value of
the dollar, particularly against the 'hard' European currencies. After weakening
throughout the first half of 1995, the dollar made a rapid reversal against the
yen in August, rising 10%, reversing most of the year's losses. The dollar rally
hurt the Fund's performance because we do not hedge our foreign currency
positions. However, the Fund is positioned in many companies that are global,
and we believe the Fund should benefit from any dollar rallies in the long-term
because of the likely positive impact on earnings. In fact, since the dollar
recovery began, many of the Fund's Japanese holdings, which are exporters,
actually showed positive performance, despite the fall in value of the yen.
Rohm, Canon and Murata Manufacturing are examples.(1) We believe that continuing
mild strength in the dollar might have a positive impact on the Fund in the
medium-term as well.

OUTLOOK

The U.S. economy seems to have muddled through a soft landing--a slowdown in
economic growth without a decline into recession--which has propelled the U.S.
stock market this year. Given that 1996 is an election year, we expect monetary
policy to remain in an easy mode as long as there are no signs of a serious
deterioration in inflation trends. Clearly this should be positive for equities.
On the other hand, we still believe that earnings momentum is slowing, and that
surprises are likely to be on the downside. Stock picking is becoming
increasingly important, as opportunities are more difficult to find. We have
used the strength in the U.S. market over the last several months to reduce some
of the Fund's holdings, particularly in the technology and financial areas, and
have redeployed those assets in situations that we believe are attractive in
Europe.

We continue to find value in Continental Europe, where restructuring
opportunities abound. Additionally, the large-capitalization, multi-national
companies in Europe, including many held by the Fund, appear to be inexpensive
relative to their potential growth rates. Deficit reduction in the region is
beginning to take shape, which should be positive for these companies in the
long-term. However, in the short-run, it may hurt consumer confidence in an
environment where restructuring and downsizing are gathering pace. We anticipate
a mild increase in economic activity leading into the new year, thanks to the

stimulatory effect of interest rates falling.

- ------------------
(1) As of August 31, 1995, these securities represented 1.8%, 1.7% and 1.7% of
the portfolio, respectively. They are depicted for illustrative purposes
only. The portfolio is actively managed and its composition will vary over
time. Past performance is no guarantee of future results.

- --------------------------------------------------------------------------------

2
<PAGE>
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The Japanese economy continues to suffer through deflation. However, the yen
weakness seen in the last several months is the first sign of relief. We
continue to be underweighted versus the benchmark in Japan for two reasons.
First, we do not think that the financial sector (one-third of the Nikkei Index)
is one that poses a favorable risk/reward ratio. Although there have been hints
that the government is willing to acknowledge the asset problems in the sector,
little in the way of restructuring has been formally proposed. Second, we are
skeptical about the potential long-term growth rates of many
domestically-oriented companies, because the artificial trade barriers that have
protected them for years are falling slowly. We continue to find interesting
opportunities in the export arena. Many of these companies have managed to
maintain growth in a strong yen environment and should also likely benefit from
the weaker yen.

In Southeast Asia, growth is propelling inflation in many countries to levels we
believe are unsustainable. Wage pressures generated by a shortage of skilled
labor and higher import prices are primarily responsible. In addition, trade
balances have deteriorated--calling into question growth prospects. Malaysia, in
particular, announced 9.3% inflation in the year to June 1995, fueling concerns
that interest rates will have to rise to quell growth.

Given our investment style of looking for undervalued growth opportunities, we
are finding more attractive investments in non-U.S. markets. As always, we will
continue to focus on stocks that we believe can deliver consistent growth at a
reasonable price, regardless of the economic environment. We remain committed to
our stock picking discipline and ready to take advantage of investment
opportunities offered by volatile markets.

We value you as a shareholder and as a client, and thank you for your continued
support. We welcome any comments or questions you may have.

Sincerely,

/s/ Frank P.L. Minard /s/ Ralph R. Layman
- --------------------- --------------------
FRANK P.L. MINARD RALPH R. LAYMAN
Chairman, Portfolio Manager,
Mitchell Hutchins Asset Management Inc. PaineWebber Global Equity Fund

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<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

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Comparison of Change in Value of $10,000 Investment in the Fund and the Morgan
Stanley Capital International World Index
- --------------------------------------------------------------------------------

The following graph depicts the performance of the PaineWebber Global
Equity Fund versus the MSCI World Index. It is important to note that the 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.

[GRAPH]

11/14/91 2/92 8/92 2/93
-------- ---- ---- ----
PW Global Equity Fund,
Class A Shares ....... $ 9,547 $9,897 $10,239 $10,396
MSCI World Index ....... 10,000 9,820 9,672 9,711

8/93 2/94 8/94 2/95 8/95
---- ---- ---- ---- ----
PW Global Equity Fund,
Class A Shares ....... $11,799 $13,646 $13,950 $12,740 $14,402
MSCI World Index ....... 11,522 11,985 12,289 11,761 13,076

Past performance is not predictive of future performance.
The performance of the other classes will vary from the performance of the class
shown based on the difference in sales charges and fees paid by shareholders
investing in different classes.

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURN % RETURN WITHOUT SALES CHARGE % RETURN WITH SALES CHARGE
----------------------------- -----------------------------
CLASS CLASS
----------------------------- -----------------------------
A* B** C*** E**** A* B** C*** E****
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Twelve Months Ended
08/31/95 3.24% 2.46% 3.54% N/A (1.40)% 2.46% 3.54% N/A
Five Years Ended 08/31/95 N/A N/A N/A N/A N/A N/A N/A N/A
Commencement of Operations+
Through 08/31/95 11.44 10.69 11.82 N/A 10.08 10.69 11.82 N/A
</TABLE>

* Maximum sales charge for Class A shares is 4.50% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.

** Class B shares are sold without an initial or contingent deferred sales
charge, but bear ongoing 12b-1 distribution and service fees.

*** Class C shares are sold without an initial or contingent deferred sales
charge and are available exclusively to a limited group of eligible
persons, including PaineWebber employees and INSIGHT participants.

**** Maximum contingent deferred sales charge for Class E shares is 5.0% and is
reduced to 0% after 6 years. Class E shares bear ongoing 12b-1 distribution
and service fees.

+ Commencement of operations dates are November 14, 1991, May 10, 1993, May
10, 1993 and August 25, 1995 for Class A, Class B, Class C and Class E
shares, respectively.

The data above represent past performance of the Fund's shares, which is no
guarantee of future results. The investment return and 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.
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<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

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Recent Performance Results (unaudited)
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<TABLE>
<CAPTION>
TOTAL RETURN(1)
NET ASSET VALUE -------------------------------
------------------------------ 12 MONTHS 6 MONTHS
08/31/95 02/28/95 08/31/94 ENDED 08/31/95 ENDED 08/31/95
-------- -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Class A Shares $ 16.12 $ 14.26 $ 16.98 3.24% 13.04%
Class B Shares 15.82 14.05 16.81 2.46 12.60
Class C Shares 16.22 14.33 17.03 3.54 13.19
Class E Shares 15.82 N/A N/A N/A N/A
</TABLE>

PERFORMANCE SUMMARY CLASS A SHARES

NET ASSET VALUE
------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)

- -------------- --------- ------ ----------- ---- ---------
11/14/91-12/31/91 $ 12.00 $12.29 -- -- 2.42%
1992 12.29 12.45 $ 0.2410 -- 3.26
1993 12.45 16.07 0.2100 -- 30.77
1994 16.07 14.43 1.2530 -- (2.35)
01/01/95-08/31/95 14.43 16.12 -- -- 11.71
----------- -------
Total: $ 1.7040 $0.0000
---------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/95: 50.86%

PERFORMANCE SUMMARY CLASS B SHARES

NET ASSET VALUE
------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
- -------------- --------- ------ ----------- ---- ---------
05/10/93-12/31/93 $ 13.80 $15.99 $ 0.2100 -- 17.39%
1994 15.99 14.23 1.2530 -- (3.12)
01/01/95-08/31/95 14.23 15.82 -- -- 11.17
----------- -------
Total: $ 1.4630 $0.0000
---------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/95: 26.44%

PERFORMANCE SUMMARY CLASS C SHARES

NET ASSET VALUE
------------------ CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
- -------------- --------- ------ ----------- ---- ---------
05/10/93-12/31/93 $ 13.80 $16.10 $ 0.2100 -- 18.19%
1994 16.10 14.49 1.2530 -- (2.16)
01/01/95-08/31/95 14.49 16.22 -- -- 11.94
---------- -------
Total: $ 1.4630 $0.0000
------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/95: 29.45%

PERFORMANCE SUMMARY CLASS E SHARES

NET ASSET VALUE
------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
- -------------- --------- ------ ----------- ---- ---------
08/25/95-08/31/95 $ 15.83 $15.82 -- -- (0.06)%
--------- --------
Total: $ 0.0000 $ 0.0000
--------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 08/31/95: (0.06)%

(1) Figures assume reinvestment of all dividends and capital gains
distributions, if any, at net asset value on the payable date, and do not
include sales charges; results for Class A and Class E shares would be lower
if sales charges were included. The data above represent past performance of
the Fund's shares, which is no guarantee of future results. The investment
return and 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.

<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

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Portfolio of Investments
August 31, 1995
- ------------------------------------------------------------------------------

COMMON STOCKS--92.82%

NUMBER OF
SHARES VALUE
- ------------- -------------
AUSTRALIA--1.59%
FOOD--1.59%
4,830,205 Burns Philip & Co., Ltd......................... $ 10,240,717
-------------
AUSTRIA--3.66%
BANKING--0.68%
84,894 Creditanstalt Bankverein........................ 4,374,411
-------------
CONSTRUCTION--0.40%
47,683 Flughafen Wein AG............................... 2,600,177
-------------
ELECTRONICS--0.18%
6,778 AMS Austria Mikros.............................. 1,188,915
-------------
OIL & GAS--0.66%
44,517 OMV AG.......................................... 4,242,794
-------------
TECHNOLOGY--1.74%
101,639 VA Technologie AG............................... 11,222,670
-------------
Total Austria Common Stocks.................................... 23,628,967
-------------
BELGIUM--0.20%
CHEMICALS--0.20%
2,397 Solvay et Cie................................... 1,258,361
-------------
DENMARK--1.68%
SERVICES--0.71%
167,934 ISS International Service System A/S 'B'........ 4,569,833

-------------
TELECOMMUNICATIONS--0.97%
118,672 Tele Danmark AS--(Series B)..................... 6,229,447
-------------
Total Denmark Common Stocks.................................... 10,799,280
-------------
FINLAND--0.06%
PRINTING/PUBLISHING--0.06%
20,252 Aamulehti Yhtymae Bearer Series 2............... 378,533
-------------
FRANCE--9.40%
AUTOMOTIVE--1.90%
256,062 Valeo SA........................................ 12,225,085
-------------
BANKING--0.89%
139,706 Banque Nationale de Paris....................... 5,731,329
-------------
CAPITAL GOODS--0.85%
11,212 Legris Industries............................... 552,623
5,952 Lyonnaise des Eaux.............................. 571,986
67,802 Technip SA/Compagnie Francaise.................. 4,345,627
-------------
5,470,236
-------------
ENERGY--2.34%
256,832 Total SA (Class B).............................. 15,086,806
-------------

<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

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COMMON STOCKS--(continued)

NUMBER OF
SHARES VALUE
- ------------- -------------
FRANCE--(concluded)
FOOD--1.73%
19,954 Carrefour SA.................................... $ 11,140,041
-------------
HEALTH & PERSONAL CARE--0.06%
4,288 Boiron.......................................... 416,410
-------------
INDUSTRIAL HOLDINGS--0.06%
16,747 Dynaction....................................... 366,085
-------------
PRODUCERS' GOODS--1.43%
525,148 Coflexip S.A., ADR.............................. 9,190,090

-------------
UTILITIES--0.14%
8,237 Eaux, Cie Generale.............................. 871,727
-------------
Total France Common Stocks..................................... 60,497,809
-------------
GERMANY--3.18%
AUTO--1.88%
316,545 Veba AG......................................... 12,109,599
-------------
PHARMACEUTICAL--1.00%
12,054 Gehe AG......................................... 5,437,648
2,224 Gehe (new) AG *................................. 983,561
-------------
6,421,209
-------------
TECHNOLOGY--0.30%
12,822 SAP AG.......................................... 1,952,788
-------------
Total Germany Common Stocks.................................... 20,483,596
-------------
HONG KONG--5.62%
BROADCAST--1.28%
2,229,600 Television Broadcasting Ltd..................... 8,237,509
-------------
CONGLOMERATE--1.18%
1,580,700 Hutchison Whampoa Ltd........................... 7,616,601
-------------
INSURANCE--0.58%
5,232,000 National Mutual Asia Ltd........................ 3,751,143
-------------
RETAIL--1.43%
11,251,000 Giordano Holdings Ltd........................... 9,229,279
-------------
UTILITIES--1.15%
3,587,900 Consolidated Electric Power Asia *.............. 7,392,715
-------------
Total Hong Kong Common Stocks.................................. 36,227,247
-------------
INDONESIA--0.71%
AUTOMOTIVE--0.71%
2,294,000 Astra International............................. 4,579,903
-------------

<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

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COMMON STOCKS--(continued)

NUMBER OF
SHARES VALUE
- ------------- -------------
ITALY--2.34%
BANKING--0.52%
408,228 IMI............................................. $ 2,595,234
40,047 Istituto Mobiliare Italiano SPA, ADR............ 760,893
-------------
3,356,127
-------------
MACHINERY & EQUIPMENT--0.08%
80,168 Danieli & Company............................... 502,746
-------------
TELECOMMUNICATIONS--1.74%
1,310,981 Stet Di Risp.................................... 4,017,900
2,859,360 Stet Di Risp Non-Convertible.................... 6,986,066
6,100 Societa Finanziaria Telefonica SPA, ADR......... 186,813
-------------
11,190,779
-------------
Total Italy Common Stocks...................................... 15,049,652
-------------
JAPAN--14.89%
AUTOMOTIVE--2.16%
1,195,000 Suzuki Motor Corp, Ltd.......................... 13,933,722
-------------
ELECTRONICS--6.46%
593,000 Canon Inc....................................... 10,735,502
270,000 Murata Manufacturing Co., Ltd................... 10,770,175
45,000 Nintendo Corp................................... 2,807,610
155,000 Omron Corporation............................... 3,408,510
211,000 Secom Co., Ltd.................................. 13,876,752
-------------
41,598,549
-------------
EQUIPMENT--1.80%
188,000 Rohm Co......................................... 11,594,968
-------------
FOOD--1.76%
213,000 Ito-Yokado...................................... 11,350,414
-------------
IRON/STEEL--0.67%
226,000 Tokyo Steel Manufacturing....................... 4,345,709
-------------
TELECOMMUNICATIONS--2.04%
1,556 DDI Corporation................................. 13,145,709
-------------
Total Japan Common Stocks...................................... 95,969,071
-------------
KOREA--1.01%
ELECTRIC UTILITY--1.01%
108,689 Korea Electric Power Corporation................ 3,823,514
116,076 Korea Electric Power Corporation, ADR........... 2,655,239

-------------
Total Korea Common Stocks...................................... 6,478,753
-------------
MALAYSIA--1.77%
BANKING--1.77%
839,000 AMMB Holdings Berhad............................ 11,433,267
-------------

<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

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COMMON STOCKS--(continued)

NUMBER OF
SHARES VALUE
- ------------- -------------
MEXICO--2.59%
BANKING--0.49%
394,014 Grupo Financiero Bancomer, ADR **............... $ 3,175,753
-------------
TELECOMMUNICATION--2.10%
971,831 Grupo Carso S.A. de C.V. *...................... 6,241,401
297,605 Grupo Carso S.A. de C.V., ADR *................. 3,812,320
145,099 Grupo Televisa S.A. de C.V., ADR................ 3,446,101
-------------
13,499,822
-------------
Total Mexico Common Stocks..................................... 16,675,575
-------------
NETHERLANDS--0.99%
FINANCIAL SERVICES--0.99%
114,623 Internationale Nederlanden Groep N.V............ 6,370,655
-------------
NORWAY--2.04%
COMMERCIAL SERVICES--1.69%
428,217 Petroleum Geo-Service *......................... 10,911,475
-------------
MACHINERY & EQUIPMENT--0.17%
28,725 Kvaermer 'B' Free............................... 1,065,464
-------------
OIL SERVICES--0.18%
89,001 Aker A/S 'B' Free............................... 1,137,393
-------------
Total Norway Common Stocks..................................... 13,114,332
-------------
PAKISTAN--0.01%
BANKING--0.01%
340 Bank of Punjab *................................ 386

38,200 Bank Commerce Al Hab............................ 47,615
100 Prime Commercial Bank........................... 89
795 Soneri Bank..................................... 889
1,350 Union Bank Ltd. ................................ 1,187
-------------
Total Pakistan Common Stocks................................... 50,166
-------------
SOUTH AFRICA--1.51%
MINING--1.51%
8,492,462 Iscor........................................... 9,755,310
-------------
SPAIN--0.50%
TOBACCO--0.02%
2,886 Tabacalera SA................................... 106,539
-------------
UTILITIES--0.48%
489,187 Sevillana De Elec............................... 3,100,811
-------------
Total Spain Common Stocks...................................... 3,207,350
-------------
SWEDEN--3.41%
APPLIANCES--0.63%
92,752 Electrolux Ab 'B' Free.......................... 4,048,668
-------------

9
<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

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COMMON STOCKS--(continued)

NUMBER OF
SHARES VALUE
- ------------- -------------
SWEDEN--(concluded)
AUTOMOTIVE MANUFACTURING--1.18%
106,364 Autoliv Ab...................................... $ 6,428,545
58,896 Volvo Ab 'B' Free............................... 1,170,397
-------------
7,598,942
-------------
PHARMACEUTICAL--1.60%
317,601 Astra Ab 'B' Free............................... 10,315,960
-------------
Total Sweden Common Stocks..................................... 21,963,570
-------------
SWITZERLAND--7.09%
EQUIPMENT--2.05%
12,504 BBC Brown Boveri Ltd. .......................... 13,188,866
-------------

FOOD--2.03%
12,950 Nestle SA....................................... 13,100,456
-------------
INSURANCE--0.74%
5,891 Schw Ruckversicher.............................. 4,771,466
-------------
PHARMACEUTICAL--2.27%
2,184 Roche Holdings AG............................... 14,626,456
-------------
Total Switzerland Common Stocks................................ 45,687,244
-------------
THAILAND--0.73%
BANKING--0.73%
483,430 Thai Farmers Bank Ltd. ......................... 4,706,980
-------------
TURKEY--0.10%
BANKING--0.07%
1,770,213 Akbank.......................................... 451,068
-------------
MEDIA--0.03%
9,858,880 Medya Holdings.................................. 176,366
-------------
Total Turkey Common Stocks..................................... 627,434
-------------
UNITED KINGDOM--7.78%
BROADCASTING--1.64%
695,466 Reed International.............................. 10,556,359
-------------
BUILDING MATERIALS & PAPER PACKAGING--1.45%
1,842,461 BPB Industries.................................. 9,322,401
-------------
CAPITAL GOODS--0.12%
200,000 Weir Group...................................... 769,828
-------------
DRUGS--2.19%
3,467,437 Medeva plc...................................... 14,153,902
-------------
ENTERTAINMENT--1.07%
300,472 Thorn EMI plc................................... 6,890,383
-------------
HEALTHCARE--0.44%
873,477 Takare plc...................................... 2,833,411
-------------

10
<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

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- ------------------------------------------------------------------------------

COMMON STOCKS--(continued)

NUMBER OF
SHARES VALUE
- ------------- -------------
UNITED KINGDOM--(concluded)
MINING--0.87%
1,145,000 Antofagasta Holdings............................ $ 5,597,936
-------------
Total United Kingdom Common Stocks............................. 50,124,220
-------------
UNITED STATES--19.96%
AUTOMOTIVE--0.75%
90,088 Chrysler Corporation............................ 4,853,491
-------------
BANKS--0.90%
79,806 J.P. Morgan & Co................................ 5,815,862
-------------
BUSINESS MACHINES--0.65%
40,338 International Business Machines Corporation..... 4,169,941
-------------
CHEMICALS--1.97%
286,421 Allied Signal, Inc.............................. 12,709,932
-------------
ELECTRONIC EQUIPMENT--0.51%
118,421 UCAR International Inc.......................... 3,256,578
-------------
ELECTRONICS--2.32%
69,789 Intel Corporation............................... 4,283,300
142,869 Motorola Inc.................................... 10,679,458
-------------
14,962,758
-------------
HEALTH (NON-DRUG)--1.51%
376,056 Sunrise Medical Inc. *.......................... 9,730,449
-------------
MISCELLANEOUS FINANCE--1.11%
149,508 The Travelers Group Inc......................... 7,176,384
-------------

MORTGAGE FINANCING--2.32%
264,665 Countrywide Credit Industries, Inc.............. 5,822,630
100,961 First Financial Management Corporation.......... 9,099,110
-------------
14,921,740
-------------
PAPER--1.33%
104,723 International Paper Co.......................... 8,574,196
-------------
POLLUTION CONTROL--1.70%
699,192 Wheelabrator Technologies, Inc.................. 10,924,875
-------------
PRODUCERS' GOODS--0.89%
185,000 Giddings & Lewis Inc............................ 3,029,375
46,734 Zebra Technologies Corporation (Class A) *...... 2,722,256
-------------

5,751,631
-------------
RETAIL (ALL OTHER)--1.23%
305,516 Toys 'R' Us, Inc. *............................. 7,943,416
-------------
SERVICES--1.39%
326,831 Ecolab Inc...................................... 8,946,999
-------------

11
<PAGE>

PAINEWEBBER GLOBAL EQUITY FUND

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

COMMON STOCKS--(concluded)

NUMBER OF
SHARES VALUE
- ------------- -------------
UNITED STATES--(concluded)
SOAPS, HARDWARES--1.38%
130,361 Colgate-Palmolive Co............................ $ 8,864,548
-------------
Total United States Common Stocks.............................. 128,602,800
-------------
TOTAL COMMON STOCKS (cost--$558,546,868)....................... 597,910,792
-------------
PREFERRED STOCKS--2.74%
BRAZIL--1.15%
FOOD--0.62%
272,900,000 Ceval Alimentos SA.............................. 3,965,066
-------------
MACHINERY--0.53%
13,410,000 Brasmotor....................................... 3,444,978
-------------
Total Brazil Preferred Stocks.................................. 7,410,044
-------------
GERMANY--1.59%
AUTOMOTIVE--0.22%
1,633 Porsche AG Non-Voting........................... 734,433
1,420 Porsche AG...................................... 665,731
-------------
1,400,164
-------------
TECHNOLOGY--1.37%
59,622 SAP AG.......................................... 8,824,462
-------------
Total Germany Preferred Stocks................................. 10,224,626
-------------
TOTAL PREFERRED STOCKS (cost--$13,627,992)..................... 17,634,670
-------------

PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- --------- -------- --------
FEDERAL HOME LOAN MORTGAGE
CORPORATION--0.31%
$ 1,990 FHLMC (cost--$1,996,547)......... 09/12/95 5.650% 1,996,547
-------------
U.S. GOVERNMENT OBLIGATIONS--1.81% 09/07/95 5.420
11,700 U.S.Treasury Bills to to
(cost--$11,670,859).............. 10/19/95 5.913 11,670,859
-------------
REPURCHASE AGREEMENT--0.27%
1,740 Repurchase Agreement dated
08/31/95 with State Street Bank
& Trust Co., collateralized by
$1,905,000 U.S. Treasury Bonds,
6.250% due 08/15/23; proceeds:
$1,740,278 (cost--$1,740,000).... 09/01/95 5.750 1,740,000
-------------
TOTAL INVESTMENTS
(cost--$587,582,266)--97.95%.............. 630,952,868
Other assets in excess of
liabilities--2.05%...................... 13,213,652
-------------
NET ASSETS--100.00%....................... $644,166,520
=============

- ------------
* Non-income producing security.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
ADR--American Depository Receipts
See accompanying notes to financial statements

<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
August 31, 1995
- --------------------------------------------------------------------------------

ASSETS
Investments, at value (cost--$587,582,266).............. $630,952,868
Cash denominated in foreign currencies, at value
(cost--$6,639,551)..................................... 6,607,483
Cash.................................................... 3,995,514
Receivable for investments sold......................... 12,167,017
Dividends and interest receivable....................... 1,941,970

Receivable for shares of beneficial interest sold....... 315,510
Other assets............................................ 270,909
------------
Total assets........................................ 656,251,271
------------
LIABILITIES
Payable for investments purchased....................... 5,557,069
Payable for shares of beneficial interest repurchased... 4,643,152
Payable to affiliates................................... 823,148
Accrued expenses and other liabilities.................. 1,061,382
------------
Total liabilities................................... 12,084,751
------------
NET ASSETS
Beneficial interest shares of $0.001 par value
outstanding (unlimited amount authorized).............. 624,442,665
Accumulated net investment loss......................... (443,323)
Accumulated net realized losses from investment
transactions........................................... (23,285,928)
Net unrealized appreciation of investments and other
assets and liabilities denominated in foreign
currencies............................................. 43,453,106
------------
Net assets.......................................... $644,166,520
------------
------------
CLASS A:
Net assets.............................................. $360,651,755
------------
Shares outstanding...................................... 22,371,449
------------
Net asset value and redemption value per share.......... $16.12
------------
------------
Maximum offering price per share (net asset value plus
sales charge of 4.50% of offering price)............... $16.88
------------
------------

CLASS B:
Net assets.............................................. $ 83,485,037
------------
Shares outstanding...................................... 5,277,875
------------
Net asset value, offering price and redemption value per
share.................................................. $15.82
------------
------------

CLASS C:
Net assets.............................................. $ 57,149,865
------------
Shares outstanding...................................... 3,523,170
------------

Net asset value, offering price and redemption value per
share................................................... $16.22
------------
------------

CLASS E:
Net assets.............................................. $142,879,863
------------
Shares outstanding...................................... 9,032,219
------------
Net asset value and offering price per share............ $15.82
============

See accompanying notes to financial statements

<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended August 31, 1995
- --------------------------------------------------------------------------------

INVESTMENT INCOME:
Dividends (net of foreign withholding taxes)............. $3,518,996
Interest................................................. 385,652
----------
3,904,648
----------

EXPENSES:
Investment advisory and administration fees.............. 2,109,091
Service fees--Class A.................................... 402,728
Service and distribution fees--Class B................... 306,775
Service and distribution fees--Class E................... 15,712
Custody and accounting................................... 350,615
Transfer agency.......................................... 183,443
Reports and notices to shareholders...................... 121,809
Legal and audit.......................................... 86,046
Federal and state registration fees...................... 78,561
Amortization of organizational expenses.................. 63,219
Trustees' fees and expenses.............................. 10,000
Reorganization expenses.................................. 126,737
Other expenses........................................... 34,142
----------
3,888,878
----------
NET INVESTMENT INCOME....................................... 15,770
----------

REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gains (losses) from:

Investment transactions............................... 16,774,940
Foreign currency transactions......................... (521,164)
Net change in unrealized appreciation/depreciation of:
Investments........................................... (12,104,719)
Other assets, liabilities and forward contracts
denominated in
foreign currencies.................................. (766,274)
----------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS............................. 3,382,783
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $3,398,553
==========

See accompanying notes to financial statements

14
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------

For the Year Ended
August 31,
--------------------------
1995 1994
------------ ------------

FROM OPERATIONS:
Net investment income.......................... $ 15,770 $ 33,457
Net realized gains from investment
transactions................................. 16,774,940 19,733,100
Net realized losses from foreign currency
transactions................................. (521,164) (22,678)
Net changes in unrealized
appreciation/depreciation of investments and
other assets, liabilities and forward
contracts denominated in foreign
currencies................................... (12,870,993) 17,509,713
------------ ------------
Net increase in net assets resulting from
operations................................... 3,398,553 37,253,592
------------ ------------
Net investment income included in prices of
shares sold and redeemed..................... -- 1,018
------------ ------------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains from investment
transactions--Class A........................ (12,882,410) (2,439,391)
Net realized gains from investment
transactions--Class B........................ (2,404,670) (302,023)

Net realized gains from investment
transactions--Class C........................ (2,465,467) (342,063)
------------ ------------
(17,752,547) (3,083,477)
------------ ------------

FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares........... 33,293,582 78,480,740
Proceeds from the acquisition of PaineWebber
Atlas Global Growth Fund, PaineWebber Europe
Growth Fund and PaineWebber Global Growth and
Income Fund
(net of reorganization costs)................ 445,647,023 --
Cost of shares repurchased..................... (83,619,851) (56,319,218)
Proceeds from dividends and distributions
reinvested................................... 17,479,893 3,031,120
------------ ------------
Net increase in net assets derived from
beneficial interest transactions............. 412,800,647 25,192,642
------------ ------------
Net increase in net assets..................... 398,446,653 59,363,775

NET ASSETS:
Beginning of period............................ 245,719,867 186,356,092
------------ ------------
End of period.................................. $644,166,520 $245,719,867
============ ============

See accompanying notes to financial statements

<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------

ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

PaineWebber Global Equity Fund (formerly Mitchell Hutchins/Kidder, Peabody
Global Equity Fund) (the 'Fund') is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company.

Organizational Matters--On May 10, 1993, the Fund adopted the Choice
Pricing System (Service Mark). The Fund offers Class A, Class B, Class C and
Class E shares. Each class represents interests in the same assets of the Fund
and the classes are identical except for differences in their sales charge
structure and ongoing service and distribution charges. In addition, Class E
shares, along with their pro-rata reinvested dividend shares, automatically
convert to Class A shares approximately six years after initial issuance. All
classes of shares have equal rights as to voting privileges, except that each
class has exclusive voting rights with respect to its distribution plan.

Costs incurred by the Fund in connection with the organization and
registration of its shares, have been deferred and are being amortized, using
the straight-line method over the period of benefit, not to exceed five years,
beginning with the commencement of operations.

Acquisition of PaineWebber Atlas Global Growth Fund, PaineWebber Europe
Growth Fund and PaineWebber Global Growth and Income Fund--Effective as of the
close of business on August 25, 1995 (the 'Merger Date'), the Fund acquired all
of the assets and assumed all of the liabilities of PaineWebber Atlas Global
Growth Fund ('Atlas Global Growth Fund'), PaineWebber Europe Growth Fund
('Europe Growth Fund') and PaineWebber Global Growth and Income Fund ('Global
Growth and Income Fund') in separate tax-free exchanges for shares of the Fund.
The acquisitions were accomplished by tax-free exchanges of 7,902,876 Class A,
2,541,127 Class B, 1,725,341 Class C and 6,112,274 Class E shares of the Fund
for 9,177,350 Class A, 2,959,973 Class D, 1,998,736 Class C and 7,167,207 Class
B shares of Atlas Global Growth Fund; 3,216,438 Class A, 524,746 Class B and
1,513,865 Class E shares of the Fund for 5,956,503 Class A, 968,150 Class D and
2,809,436 Class B shares of Europe Growth Fund; and 2,441,269 Class A, 427,147
Class B and 1,443,398 Class E shares of the Fund for 3,949,615 Class A, 687,169
Class D and 2,326,782 Class B shares of Global Growth and Income Fund
outstanding on the Merger Date. Atlas Global Growth Fund's net assets at that
date, valued at $292,492,539, including accumulated net realized losses of
$36,390,411 and net unrealized appreciation of investments of $7,998,273, Europe
Growth Fund's net assets at that date, valued at $84,167,218, including net
unrealized appreciation of investments of $4,572,497, and Global Growth and
Income Fund's net assets at that date, valued at $68,987,395 including
accumulated net realized losses of $3,541,154 and net unrealized appreciation of
investments of $1,671,268, were combined with those of the Fund. All shares were
exchanged at net asset value. Accordingly, no shareholder had any gain or loss
as a result of the exchange. The Fund's statement of operations and financial

highlights do not include the operations of Atlas Global Growth Fund, Europe
Growth Fund and Global Growth and Income Fund prior to the Merger Date.

16
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

Valuation of Investments--Securities which are listed on U.S. and foreign
stock exchanges are valued at the last sales 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 by Mitchell Hutchins Asset
Management Inc. ('Mitchell Hutchins'), an affiliate and wholly owned subsidiary
of PaineWebber Incorporated ('PaineWebber') and investment adviser,
administrator and distributor of the Funds, and GE Investment Management
Incorporated ('GEIM') the Sub-Adviser to the Fund, as the primary market.
Securities traded in the over-the-counter ('OTC') market and listed on the
National Association of Securities Dealers Quotation System ('NASDAQ') are
valued at the last trade price on NASDAQ prior to the time of valuation; other
OTC securities are valued at the last bid price available in the OTC market
prior to the time of valuation. The amortized cost method of valuation is used
to value short-term debt instruments with sixty days or less remaining to
maturity. 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 each Trust's Board of Trustees. All investments quoted in foreign
currencies will be valued daily in U.S. dollars on the basis of the foreign
currency exchange rates prevailing at the time such valuation is determined by
each Fund's custodian.

Foreign currency exchange rates are generally determined prior to the close
of the New York Stock Exchange, Inc. ('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 the NYSE which would not be reflected
in a computation of the Fund's net asset value. If events materially affecting
the value of such securities or currency exchange rates occurred during such
time period, the securities will be valued at their fair value as determined in
good faith by or under the direction of the Trust's Board of Trustees.

CONCENTRATION OF RISK

Investing in securities of foreign issuers and currency transactions may
involve certain considerations 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
industry, country or region, which could cause the securities and their markets
to be less liquid and prices more volatile that those of comparable U.S.
companies and U.S. government securities. These risks are greater with respect
to securities of issuers located in emerging market countries in which each 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.

17
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

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 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 on sales of investments
and foreign exchange transactions are calculated using the identified cost
method. Dividend income is recorded on the ex-dividend date. 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 and
unrealized gains and 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) market value of investment securities, other assets and
liabilities--at the exchange rates prevailing at the end of the
period.

(2) purchases and sales of investment securities, income and
expenses--at the rate of exchange prevailing on the respective
dates of such transactions.

Although the net assets and the market values of the Fund are presented at
the foreign exchange rates at the close of the period, the Fund does not
generally isolate the effect of fluctuations in foreign exchange rates from the

effect of the changes in market prices of securities. However, the Fund does
isolate the effect of fluctuations in foreign exchange rates when determining
the gain or loss upon the sale or maturity of foreign currency-denominated debt
obligations pursuant to U.S. federal income tax regulations. Pursuant to U.S.
federal income tax regulations, certain foreign exchange gains/losses included
in realized and unrealized gain/loss are included in or are a reduction of
ordinary income for federal income tax purposes.

Realized currency gain/loss on investment transactions includes realized
foreign exchange gains and losses from the sale of portfolio securities, sales
of foreign currencies, currency gains or

18
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
losses realized between the trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts received or paid. Gains and losses from translating
foreign currency-denominated assets and liabilities at year-end exchange rates
are included in change in unrealized appreciation of other assets, liabilities
and forward contracts denominated in foreign currencies.

Forward Foreign Currency Contracts--The Fund may enter into forward foreign
currency exchange contracts ('forward contracts') in connection with planned
purchases or sales of securities or to hedge the U.S. dollar value of portfolio
securities denominated in a particular currency.

The Fund has no specific limitation on the percentage of assets which may
be committed to such contracts. The Fund may enter into forward contracts or
maintain a net exposure to forward contracts only if (1) the consummation of the
contracts would not obligate the Fund to deliver an amount of foreign currency
in excess of the value of the position being hedged by such contracts or (2) the
Fund maintains cash, U.S. government securities or liquid, high-grade debt
securities in a segregated account in an amount not less than the value of its
total assets committed to the consummation of the forward contracts and not
covered as provided in (1) above, as marked-to-market daily.

Risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their forward contracts and
from unanticipated movements in the value of foreign currencies relative to the
U.S. dollar.

Fluctuations in the value of forward contracts are recorded for book
purposes as an unrealized gain or loss by the Fund. Realized gains and losses
include net gains and losses recognized by the Fund on contracts which have
matured or the Fund has terminated by entering into offsetting commitments.

Federal 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.

The Fund has a net capital loss carryforward of approximately $39,653,000
as of August 31, 1995, pursuant to its reorganization with PaineWebber Atlas
Global Growth Fund, and PaineWebber Europe Growth Fund. In the year of merger,
utilization of the capital loss carryforward is limited by the Internal Revenue
Code; therefore, the entire amount was not available as of August 31, 1995. In
subsequent years, these carryforward losses are available as a

19
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
reduction, to the extent provided in the regulations, of future net capital
gains realized, and will expire by August 31, 2002.

In accordance with U.S. Treasury regulations, the Fund has elected to defer
approximately $421,756 of realized foreign currency losses arising after October
31, 1994. Such losses are treated for tax purposes as arising on September 1,
1995.

Dividends and Distributions--Dividends and distributions to shareholders
are recorded on the ex-dividend date. Dividends from net investment income and
distributions from net realized capital gains 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. As of August 31, 1995, the effect of such differences totalled
$3,173,555. Dividends and distributions which exceed net investment income and
net realized capital gains for financial reporting purposes, but not for tax
purposes, are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they exceed
net investment income and net realized capital gains for tax purposes, they are
reported as distributions of additional paid-in-capital.

INVESTMENT ADVISER AND ADMINISTRATOR

Investment advisory functions for the Fund were transferred from Kidder
Peabody Asset Management, Inc. ('KPAM') to Mitchell Hutchins on an interim basis
as a result of an asset purchase transaction by and among Kidder, Peabody Group,
Inc., its parent General Electric Company ('GE') and PaineWebber Group Inc. That
interim period began on February 13, 1995 and ended on April 13, 1995.

At a special meeting of shareholders that took place on April 13, 1995,
Mitchell Hutchins was appointed as investment adviser and administrator of the

Fund and GEIM, a wholly owned subsidiary of GE, was appointed as the Fund's
sub-adviser. For its services, Mitchell Hutchins received a monthly fee at the
annual rate of 1.00% of the Fund's average daily net assets, the same fee
previously paid to KPAM for investment advisory and administration services, as
described in the Fund's prospectus. Mitchell Hutchins (not the Fund) paid GEIM a
monthly fee of 0.70% of the Fund's average daily net assets. Mitchell Hutchins
and GEIM continue to manage the Fund in accordance with its investment
objective, policies and restrictions as stated in the Fund's prospectus.

Effective after the Merger Date, Mitchell Hutchins receives a monthly fee
at the annual rate of 0.85% of the Fund's average daily net assets up to and
including $500 million, 0.83% of its average

20
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
daily net assets over $500 million and up to and including $1 billion and 0.805%
of its average daily net assets over $1 billion. Mitchell Hutchins (not the
Fund) pays GEIM a monthly fee at the annual rate of 0.31% of the Fund's average
daily net assets up to and including $500 million, 0.29% of the Fund's average
daily net assets over $500 million and up to and including $1 billion and 0.265%
of the Fund's average daily net assets over $1 billion. At August 31, 1995, the
Fund owed Mitchell Hutchins $544,556 in investment advisory and administration
fees.

In compliance with applicable state securities laws, Mitchell Hutchins will
reimburse the Fund if and to the extent that the aggregate operating expenses in
any fiscal year, exclusive of taxes, interest, brokerage fees, distribution fees
and extraordinary expenses, exceed limitations imposed by various state
regulations. Currently, the most restrictive limitations applicable to the Fund
is 2.5% of the first $30 million of average daily net assets, 2.0% of the next
$70 million and 1.5% of any excess over $100 million. No expense reimbursement
was required for the year ended August 31, 1995 pursuant to the above
limitation.

DISTRIBUTION PLANS

Effective February 13, 1995, Mitchell Hutchins serves as the exclusive
distributor of the Fund's shares. Under separate plans of distribution, Class A
shares are sold subject to a front-end sales load and bear a service fee of
0.25% per annum of average class net assets. Class B and Class E shares are sold
at net asset value without a sales load and bear a distribution fee of 0.75% per
annum and a service fee of 0.25% per annum of average class net assets. The Fund
pays Mitchell Hutchins the service and distribution fees monthly. For these
services for the period ended February 13, 1995, Kidder, Peabody & Co.
Incorporated, the Fund's predecessor distributor, earned $330,637 in fees. For
the period February 13, 1995 to August 31, 1995, Mitchell Hutchins earned
$402,435 in such fees. At August 31, 1995, the Fund owed Mitchell Hutchins
$270,736 in service and distribution fees. Mitchell Hutchins also receives the
proceeds of any front-end sales loads with respect to the purchase of Class A

shares.

INVESTMENTS IN SECURITIES

For federal income tax purposes, the cost of securities owned at August 31,
1995 was substantially the same as the cost of securities for financial
statement purposes.

21
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

At August 31, 1995, the components of the net unrealized appreciation of
investments were as follows:

Gross appreciation (investments having an excess of value
over cost)................................................ $ 62,522,522

Gross depreciation (investments having an excess of cost
over value)............................................... (19,151,920)
------------

Net unrealized appreciation of investments.................. $ 43,370,602
============

For the year ended August 31, 1995, aggregate purchases and sales of
portfolio securities, excluding short-term securities, were $95,073,285 and
$154,584,119, respectively.

22
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Notes to Financial Statements -- (concluded)
- --------------------------------------------------------------------------------

BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number
of shares of beneficial interest, par value $0.001 per share. Transactions in
shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS E
------------------------- ----------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- ----------- --------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Year ended August 31,
1995:
Shares sold.............. 940,218 $ 15,179,015 559,864 $ 8,885,221 553,290 $ 9,071,820 9,954 $ 157,526
Shares issued in
connection with the
acquisition of
PaineWebber Atlas
Global Growth Fund,
PaineWebber Europe
Growth Fund and
PaineWebber Global
Growth and Income
Fund................... 13,560,584 218,770,418 3,493,020 55,291,061 1,725,341 28,010,075 9,069,539 143,575,469
Shares repurchased....... (3,939,313) (60,869,557) (837,535) (12,930,296) (591,713) (9,072,875) (47,274) (747,123)
Dividends reinvested..... 884,497 12,665,998 168,250 2,377,378 169,483 2,436,517 -- --
---------- ------------ --------- ----------- --------- ----------- --------- ------------
Net increase.............. 11,445,986 $185,745,874 3,383,599 $53,623,364 1,856,401 $30,445,537 9,032,219 $142,985,872
========== ============ ========= =========== ========= =========== ========= ============

Year ended August 31,
1994:
Shares sold.............. 2,764,374 $ 43,492,060 1,520,043 $23,745,336 707,025 $11,244,362 -- --
Shares repurchased....... (2,738,250) (44,032,678) (388,843) (6,218,957) (372,775) (6,067,583) -- --
Dividends reinvested..... 149,182 2,394,380 18,552 296,272 21,173 340,468 -- --
---------- ------------ --------- ----------- --------- ----------- --------- ------------
Net increase.............. 175,306 $ 1,853,762 1,149,752 $17,822,651 355,423 $ 5,517,247 -- --
========== ============ ========= =========== ========= =========== ========= ============
</TABLE>

<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------

Selected data for a share of beneficial interest outstanding throughout each
period is presented below:

<TABLE>
<CAPTION>
Class A
--------------------------------------------------------
For the Years Ended For the Period
August 31, November 14, 1991+
----------------------------------- to August 31,
1995 1994 1993 1992
-------- -------- -------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 16.98 $ 14.55 $ 12.87 $ 12.00
-------- -------- -------- ----------
Net investment income
(loss)...................... 0.02 0.01 0.03 0.09
Net realized and unrealized
gains (losses) from
investment
and foreign currency
transactions................ 0.37 2.63 1.89 0.78
-------- -------- -------- ----------
Net increase (decrease) from
investment operations....... 0.39 2.64 1.92 0.87
-------- -------- -------- ----------
Dividends from net investment
income...................... -- -- (0.08) --
Distributions from net
realized gains.............. (1.25) (0.21) (0.16) --
-------- -------- -------- ----------
Total dividends and
distributions............... (1.25) (0.21) (0.24) --
-------- -------- -------- ----------
Net asset value, end of
period...................... $ 16.12 $ 16.98 $ 14.55 $ 12.87
-------- -------- -------- ----------
-------- -------- -------- ----------
Total investment return (1)... 3.24% 18.23% 15.24% 7.25%
-------- -------- -------- ----------
-------- -------- -------- ----------
Ratios/Supplemental data:
Net assets, end of period
(000's)..................... $360,652 $185,493 $156,451 $113,070
Ratio of expenses to average
net assets.................. 1.71%(2) 1.58% 1.53% 1.68%*

Ratio of net investment income
to average
net assets.................. 0.09%(2) 0.07% 0.22% 0.93%*
Portfolio turnover rate....... 40% 51% 56% 30%
</TABLE>

- ------------------
* Annualized
+ Commencement of offering of shares.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and capital
gain 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 Class A shares would be lower if
sales charges were included. Total investment returns for periods of less
than one year have not been annualized.
(2) These ratios include non-recurring reorganization expenses of 0.06%, 0.06%,
0.06%, and 0.00% for Class A, Class B, Class C and Class E shares,
respectively.

24
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Class B Class C
------------------------------------ ---------------------------------------
For the For the Class E
Period Period --------------
May 10, May 10, For the Period
For the Years Ended 1993+ For the Years Ended 1993+ August 25,
August 31, to August August 31, to August 1995+
----------------------- 31, ------------------------ 31, to August 31,
1995 1994 1993 1995 1994 1993 1995
--------- -------- --------- ------------ -------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>

Net asset value, beginning of
period...................... $ 16.81 $ 14.52 $ 13.80 $ 17.03 $ 14.56 $ 13.80 $ 15.83
--------- -------- --------- ------------ -------- ------- ---------
Net investment income
(loss)...................... (0.11) (0.07) (0.02) 0.07 0.05 0.02 0.00
Net realized and unrealized
gains (losses) from
investment and foreign
currency transactions....... 0.37 2.57 0.74 0.37 2.63 0.74 (0.01)
--------- -------- --------- ------------ -------- ------- ---------
Net increase (decrease) from
investment operations....... 0.26 2.50 0.72 0.44 2.68 0.76 (0.01)

--------- -------- --------- ------------ -------- ------- ---------
Dividends from net investment
income...................... -- -- -- -- -- -- --

Distributions from net
realized gains.............. (1.25) (0.21) -- (1.25) (0.21) -- --
--------- -------- --------- ------------ -------- ------- ---------
Total dividends and
distributions............... (1.25) (0.21) -- (1.25) (0.21) -- --
--------- -------- --------- ------------ -------- ------- ---------
Net asset value, end of
period...................... $ 15.82 $ 16.81 $ 14.52 $ 16.22 $ 17.03 $ 14.56 $ 15.82
--------- -------- --------- ------------ -------- ------- ---------
--------- -------- --------- ------------ -------- ------- ---------
Total investment return (1)... 2.46% 17.29% 5.22% 3.54% 18.49% 5.51% (0.06)%
--------- -------- --------- ------------ -------- ------- ---------
--------- -------- --------- ------------ -------- ------- ---------
Ratios/Supplemental data:
Net assets, end of period
(000's)..................... $ 83,485 $ 31,837 $ 10,807 $ 57,150 $ 28,390 $19,098 $ 142,880
Ratio of expenses to average
net assets.................. 2.48(2) 2.33% 2.28%* 1.46(2) 1.33% 1.28%* 2.17%*(2)
Ratio of net investment income
to average net assets....... (0.68)%(2) (0.68)% (0.53)%* 0.36(2) 0.32% 0.47%* (1.92)%*(2)
Portfolio turnover rate....... 40% 51% 56% 40% 51% 56% 40%
</TABLE>

25
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
- --------------------------------------------------------------------------------

The Board of Trustees and Shareholders,
PaineWebber Global Equity Fund
(One of the portfolios constituting Mitchell Hutchins/Kidder, Peabody Investment
Trust):

We have audited the accompanying statement of assets and liabilities of
PaineWebber Global Equity Fund as of August 31, 1995, and the related statements
of operations and changes in net assets, and financial highlights for the year
then ended. 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. The statement of changes in net assets for the year ended August 31, 1994
and the financial highlights for each of the three years in the period then
ended were audited by other auditors whose report dated October 14, 1994
expressed an unqualified opinion on that statement and financial highlights.

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. Our procedures included confirmation of securities owned as of
August 31, 1995, by correspondence with the custodian 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 1995 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of PaineWebber Global Equity Fund as of August 31, 1995, and the
results of its operations, the changes in its net assets and the financial
highlights for the year then ended in conformity with generally accepted
accounting principles.

/s/ ERNST & YOUNG LLP
New York, New York
October 30, 1995

26
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Tax Information
- --------------------------------------------------------------------------------

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 (August 31,
1995) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that the following
distributions paid during the fiscal year are taxable and are derived from the
following sources:

Per Share Data Class A Class B Class C
- ---------------------------------------- ------- ------- -------
Short-Term Capital Gains*............... $0.233 $ 0.233 $ 0.233
Long-Term Capital Gains................. 1.020 1.020 1.020
Percentage of ordinary income dividends
qualifying for the dividends received
deductions available to corporate
shareholders.......................... 100 % 100% 100%

- ------------------

* Taxable as ordinary income

In general, dividends received by tax-exempt recipients (e.g., IRAs and
Keoghs) need not be reported as taxable income for U.S. federal income tax
purposes.However, some retirement trusts (e.g., corporate, Keogh and 403(b)(7)
plans) may need this information for their annual information reporting.

Because the Fund's fiscal year is not the calendar year, another

notification will be sent in respect of calendar 1995. 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 1996. Shareholders are advised to consult their own
tax advisers with respect to the tax consequences of their investment in the
Fund.

<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Shareholder Information
- --------------------------------------------------------------------------------

A special meeting of shareholders of PaineWebber Global Equity Fund (the
'Fund') a series of Mitchell Hutchins/Kidder, Peabody Investment Trust (the
'Trust'), was held on April 13, 1995. At the meeting, David J. Beaubien, William
W. Hewitt, Jr., Thomas R. Jordan, Frank P.L. Minard and Carl W. Schafer were
elected as trustees to serve without limit in time, subject to resignation,
retirement or removal. The selection of Deloitte & Touche LLP as the Fund's
independent accountants was ratified. Each series of the Trust voted separately
on all matters being considered by the series, except for the election of
trustees and ratification or rejection of the Trust's independent accountants,
as to which the shares of all series of the Trust voted together as a single
class.

The votes were as follows:

ALL SHARES OF THE TRUST VOTING AS A SINGLE CLASS
(VOTES OF THE FUND'S SHAREHOLDERS NOTED
IN PARENTHESIS)
-------------------------------------------------
SHARES VOTED SHARES WITHHOLD AUTHORITY
---------------------- -------------------------
David J. Beaubien.......... 20,990,961 (8,285,612) 773,340 (315,045)
William W. Hewitt, Jr...... 20,990,961 (8,285,612) 773,340 (315,045)
Thomas R. Jordan........... 20,990,961 (8,285,612) 773,340 (315,045)
Frank P.L. Minard.......... 20,990,961 (8,285,612) 773,340 (315,045)
Carl W. Schafer............ 20,990,961 (8,285,612) 773,340 (315,045)

<TABLE>
<CAPTION>
ALL SHARES OF THE TRUST VOTING AS A SINGLE CLASS
(VOTES OF THE FUND'S SHAREHOLDERS NOTED IN PARENTHESIS)
------------------------------------------------------------
SHARES SHARES SHARES
VOTED FOR VOTED AGAINST WITHHOLD AUTHORITY
--------------------- --------------- ------------------
<S> <C> <C> <C>
Ratification of the selection
of

Deloitte & Touche LLP....... 20,423,671 (8,275,257) 544,111 (32,511) 796,520 (292,887)
</TABLE>

On July 20, 1995 the Board of Directors appointed Ernst & Young LLP the
Fund's independent accountants.

In addition, the following agreements were approved for the Fund:

1) An interim management agreement with Mitchell Hutchins containing
substantially the same terms, conditions and fees as the previous management
agreement with KPAM.

The votes were as follows:

ALL SHARES OF THE FUND VOTING AS A SINGLE CLASS
------------------------------------------------
SHARES SHARES SHARES
VOTED FOR VOTED AGAINST WITHHOLD AUTHORITY
--------- ------------- ------------------
8,260,011 43,472 297,173

<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Shareholder Information--(continued)
- --------------------------------------------------------------------------------

2) A new investment advisory and administration agreement with Mitchell
Hutchins containing the same fees and substantially similar material terms and
conditions as its previous management agreement with KPAM to commence in the
termination of the interim agreement.

The votes were as follows:

3) An interim investment advisory agreement with the Fund's current
investment sub-adviser containing substantially the same terms, conditions and
fees as its previous investment advisory agreement with that investment adviser.

The votes were as follows:

ALL SHARES OF THE FUND VOTING AS A SINGLE CLASS
------------------------------------------------
SHARES SHARES SHARES

VOTED FOR VOTED AGAINST WITHHOLD AUTHORITY
--------- ------------- ------------------
8,245,446 41,953 313,617

4) A new investment sub-advisory agreement with the Fund's current
investment sub-adviser containing substantially the same terms, conditions and
fees as its previous investment advisory agreement with that investment adviser
to commence on the termination of the interim agreement.

The votes were as follows:

Another special meeting of the Fund was held on August 21, 1995. At the
meeting the following agreements were approved for the Fund:

1) A new investment advisory and administration agreement between the Trust
in respect to the Fund and Mitchell Hutchins.

The votes were as follows:

29
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND

- --------------------------------------------------------------------------------
Shareholder Information--(concluded)
- --------------------------------------------------------------------------------

2) A new investment sub-advisory agreement among the Trust with respect of
the Fund, Mitchell Hutchins and the Fund's current investment sub-adviser.

The votes were as follows:

Broker non votes and abstentions are included within the 'Shares Withhold
Authority' totals.

<PAGE>

[This page intentionally left blank]

<PAGE>

[This page intentionally left blank]

<PAGE>
- ---------------------------------------------------------

TRUSTEES

David J. Beaubien

William W. Hewitt, Jr.

Thomas R. Jordan

Frank P.L. Minard

Carl W. Schafer
- ---------------------------------------------------------

OFFICERS

Margo N. Alexander
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Julian F. Sluyters
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 SUB-ADVISER

GE Investment Management Incorporated
3003 Summer Street
Stamford, Connecticut 06904
- ---------------------------------------------------------

This report is not to be used in connection 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
correspondent firm. Read the prospectus carefully before investing.