<PAGE>
ANNUAL REPORT -- OCTOBER 15, 1996
- -------------------------------------------------------------
DEAR SHAREHOLDER,
We are pleased to present you with the Annual Report for PaineWebber Global
Equity Fund (the 'Fund') for the year ended August 31, 1996.
ECONOMIC OVERVIEW
The world's equity markets were quite volatile during the month of July, as
concerns over the pace of economic growth in the U.S. led to worries of rising
inflation and potential interest rate increases. Since the U.S. has been a
driver of global growth in the developed economies over the past year,
international markets reacted in tandem with U.S. bonds and equities. As the
summer ended, however, evidence of a rapidly growing U.S. economy gave way to
expectations for slower, sustainable moderate growth--a positive economic
condition for global financial markets.
Late summer also brought increasing enthusiasm for the probability of European
Monetary Union ('EMU')--that is, a single form of European currency. Although
many of the potential European partners to EMU are not technically meeting the
economic targets set forth in the convergence plan, it is clear that the
political will is strong and the governments will submit budgets that are at
least within the spirit of the agreement. It is now accepted that Germany,
France and other core members will proceed with their plans for EMU. What is
surprising is the efforts being made by the weaker members, Spain and Italy, as
they labor to cut inflation rates and fiscal deficits in an attempt to become
initial EMU members in 1999.
PORTFOLIO REVIEW
For the fiscal year ended August 31, 1996, the Fund's total return (the net
asset value change with dividends reinvested), without deducting sales charges,
was 8.06% for Class A shares, 7.18% for Class B shares, 7.18% for Class C shares
and 8.39% for Class Y shares. For new shareholders, if the effects of maximum
sales
<PAGE>
PORTFOLIO REVIEW
- -------------------------------------------------------------
charges are taken into account, the Fund's total return for the year was 3.20%
for Class A shares, 2.18% for Class B shares, 6.18% for Class C shares and 8.39%
for Class Y shares. In comparison, the Morgan Stanley Capital International
World Index (the 'Index') was up 12.75% for the same period.
The primary driver of the Fund's performance versus the Index was the
portfolio's underweighted position in the strong U.S. equity market (24.3% of
net assets as of August 31, 1996). This was particularly evident in the first
half of the fiscal year, when Class A shares rose 3.7%, while the Index rose
10.35%. The second half of the year was more favorable for the Fund, as our
international and U.S.-based holdings performed well. In Europe in particular,
the stock selection process employed by GE Investment Management's (GEIM, the
sub-advisor of the Fund) global research team--which entails searching the world
for companies that are priced inexpensively to their long-term growth
rates--identified several quality global companies based in Europe that should
benefit from trends occurring there. For example, many of these companies are
restructuring their operations with an increased focus on creating long-term
shareholder value. The combination of business restructuring and economic reform
should lead to lower long-term interest rates and higher equity valuations in
Europe.
Going forward, as we look at other markets around the world, it is becoming
increasingly difficult to find bargains in Japan (11.6% of net assets as of
August 31, 1996) and in the U.S. Although we are not negative on the competitive
position of U.S. companies, valuations are stretched and equities in Europe
(46.2%), Southeast Asia (8.9%) and Latin America (6.0%) are far more attractive.
We continue to position the Fund to take advantage of these compelling values
and expect to benefit as many foreign-based companies strive to attain U.S.
valuations through enhanced investor relations programs and U.S. listings.
2
<PAGE>
PORTFOLIO REVIEW
- -------------------------------------------------------------
Moreover, as mentioned previously, ongoing trends, including the benefits of
tightening fiscal budgets, an increasing focus on privatization of inefficient
government-run enterprises and the development of new savings programs to help
meet pension fund needs, should produce a positive long-term environment for
European financial markets. However, as governments and businesses rationalize
their budgets, consumer confidence and spending should remain sluggish. This
should moderate European economic growth over the next few years, but should
also keep inflation and interest rates low.
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/ Ralph Layman
MARGO N. ALEXANDER RALPH LAYMAN
President, Portfolio Manager,
Mitchell Hutchins Asset PaineWebber Global
Management Inc. Equity Fund
3
<PAGE>
PORTFOLIO REVIEW
- -------------------------------------------------------------
PAINEWEBBER GLOBAL EQUITY FUND
Comparison of the change of a $10,000 investment in PaineWebber Global Equity
Fund and the MSCI World Index.
The following graph depicts the performance of PaineWebber Global Equity Fund
versus the Morgan Stanley Capital International World Index. It is important to
note PaineWebber Global Equity 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.
<TABLE>
<CAPTION>
Nov-91 Aug-92 Aug-93 Aug-94 Aug-95 Aug-96
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PaineWebber Global Equity Fund; Class A 9,610 10,688 12,308 14,562 15,080 16,246
MSCI World Index 10,000 10,334 12,612 13,739 14,945 16,903
</TABLE>
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.
-----------------------------------------------------------------------------
AVERAGE ANNUAL RETURN
<TABLE>
<CAPTION>
% Return Without Deducting % Return After Deducting
Maximum Sales Charge Maximum Sales Charge
---------------------------- ---------------------------
Class A* B** C*** A* B** C***
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 08/31/96 8.06% 7.18% 7.18% 3.20% 2.18% 6.18%
Commencement of Operations
Through 08/31/96+ 10.71% 6.98% 9.61% 9.65% 2.08% 9.61%
</TABLE>
* Maximum sales charge for Class A shares is 4.5% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares is 5.0% and is
reduced to 0% after 6 years. Class B shares bear ongoing 12b-1 distribution
and service fees.
*** Maximum contingent deferred sales charge for Class C shares is 1.0% and is
reduced to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution
and service fees.
+ Commencement of issuance dates are November 14, 1991, August 25, 1995 and
May 10, 1993 for Class A, Class B and Class C shares, respectively.
Note: The Fund offers Class Y shares to certain eligible investors, including
the trustees of the PaineWebber Savings Investment Plan and INSIGHT Investment
Advisory Program participants. For the year ended August 31, 1996, and since
inception, May 10, 1993 through August 31, 1996, Class Y shares have an average
annual return of 8.39% and 10.77%, respectively. Class Y shares do not have
initial or contingent deferred sales charges or ongoing distribution and service
fees.
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.
4
<PAGE>
PAINEWEBBER
GLOBAL EQUITY FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
TOTAL RETURN(1)
-----------------------------
NET ASSET VALUE 12 MONTHS 6 MONTHS
---------------------------- ENDED ENDED
08/31/96 02/29/96 08/31/95 08/31/96 08/31/96
<S> <C> <C> <C> <C> <C>
Class A Shares $16.81 $16.24 $16.12 8.06% 3.51%
Class B Shares 16.35 15.86 15.82 7.18 3.09
Class C Shares 16.35 15.86 15.82 7.18 3.09
</TABLE>
PERFORMANCE SUMMARY CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE CAPITAL
----------------- GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
11/14/91-12/31/91 $12.00 $12.29 -- -- 2.42%
1992 12.29 12.45 $ 0.1610 $ 0.0800 3.26
1993 12.45 16.07 0.2100 -- 30.77
1994 16.07 14.43 1.2530 -- (2.35)
1995 14.43 15.81 0.5743 -- 13.54
01/01/96-08/31/96 15.81 16.81 -- -- 6.33
Total: $ 2.1983 $ 0.0800
CUMULATIVE TOTAL RETURN AS OF 08/31/96: 62.97%
PERFORMANCE SUMMARY CLASS B SHARES(2)
<CAPTION>
NET ASSET VALUE CAPITAL
----------------- GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
08/25/95-12/31/95 $15.83 $15.46 $ 0.5743 -- 1.29%
01/01/96-08/31/96 15.46 16.35 -- -- 5.76
Total: $ 0.5743 $ 0.0000
CUMULATIVE TOTAL RETURN AS OF 08/31/96: 7.12%
PERFORMANCE SUMMARY CLASS C SHARES(3)
<CAPTION>
NET ASSET VALUE CAPITAL
----------------- GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN1
<S> <C> <C> <C> <C> <C>
05/10/93-12/31/93 $13.80 $15.99 $ 0.2100 -- 17.39%
1994 15.99 14.23 1.2530 -- (3.12)
1995 14.23 15.46 0.5743 -- 12.67
01/01/96-08/31/96 15.46 16.35 -- -- 5.76
Total: $ 2.0373 $ 0.0000
CUMULATIVE TOTAL RETURN AS OF 08/31/96: 35.53%
</TABLE>
- ------------------
1 Figures assume reinvestment of all dividends and distributions at net
asset value on the payable dates and do not include sales charges; results for
each class would be lower if sales charges were included.
2 Formerly Class E shares.
3 Formerly Class B shares.
5
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
PORTFOLIO OF INVESTMENTS AUGUST 31, 1996
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - 95.42%
AUSTRALIA - 0.92%
Food - 0.92%
3,403,340 Burns Philip & Company, Limited (1)......................... $ 5,034,606
------------
AUSTRIA - 3.29%
Engineering Services - 1.89%
80,834 VA Technologie AG........................................... 10,338,556
------------
Oil & Gas - 0.87%
47,773 OMV AG...................................................... 4,770,649
------------
Services - 0.53%
41,793 Flughafen Wein AG........................................... 2,917,424
------------
Total Austria Common Stocks............................................ 18,026,629
------------
FINLAND - 0.98%
Manufacturing - 0.98%
311,497 Valmet Corporation.......................................... 5,343,014
------------
FRANCE - 9.30%
Automotive - 1.46%
158,443 Valeo S.A................................................... 7,981,148
------------
Banking - 0.54%
81,829 Banque Nationale de Paris................................... 2,948,385
------------
Capital Goods - 0.99%
59,431 Technip S.A./Compagnie Francaise............................ 5,388,624
------------
Energy - 3.10%
230,456 Total S.A. (Class B)........................................ 16,957,679
------------
Food - 1.76%
19,087 Carrefour S.A............................................... 9,648,506
------------
Producers' Goods - 1.45%
397,951 Coflexip S.A. ADR*.......................................... 7,909,276
------------
Total France Common Stocks............................................. 50,833,618
------------
GERMANY - 3.83%
Energy - 2.32%
241,564 Veba AG..................................................... 12,677,375
------------
Pharmaceutical - 1.51%
126,750 Gehe AG..................................................... 8,266,677
------------
Total Germany Common Stocks............................................ 20,944,052
------------
</TABLE>
6
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONTINUED)
HONG KONG - 4.61%
Broadcasting - 1.27%
1,950,600 Television Broadcasting Limited............................. $ 6,937,597
------------
Financial Services - 1.04%
329,600 HSBC Holdings............................................... 5,690,843
------------
Retail - 1.24%
8,187,000 Giordano Holdings Limited................................... 6,776,617
------------
Utilities - 1.06%
3,147,000 Consolidated Electric Power Asia............................ 5,799,890
------------
Total Hong Kong Common Stocks.......................................... 25,204,947
------------
INDONESIA - 0.87%
Automotive - 0.87%
2,967,000 Astra International......................................... 3,863,116
1,105,566 Steady Safe................................................. 920,322
------------
4,783,438
------------
ITALY - 3.38%
Banking - 0.70%
375,335 IMI......................................................... 2,956,078
36,133 IMI ADR..................................................... 844,609
------------
3,800,687
------------
Furniture/Home Appliances - 0.55%
59,109 Industrie Natuzzi SPA ADR................................... 2,985,004
------------
Telecommunications - 2.13%
5,666,822 Telecom Italia Mobilare..................................... 11,664,063
------------
Total Italy Common Stocks.............................................. 18,449,754
------------
JAPAN - 11.64%
Automotive - 1.25%
598,000 Suzuki Motor Corporation, Limited........................... 6,824,222
------------
Electronics - 3.04%
423,000 Canon Incorporated.......................................... 7,863,611
138,000 Murata Manufacturing Company, Limited....................... 4,902,264
211,000 Omron Corporation........................................... 3,864,256
------------
16,630,131
------------
Entertainment - 0.43%
55,000 Sega Enterprises (1)........................................ 2,353,672
------------
Equipment - 0.91%
83,000 Rohm Company................................................ 4,972,667
------------
Financial Services - 1.30%
295,800 Credit Saison Company (1)................................... 7,105,080
------------
Retail - 0.89%
92,000 Ito-Yokado Company, Limited................................. 4,851,463
------------
</TABLE>
7
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONTINUED)
JAPAN - (CONCLUDED)
Security Services - 1.51%
129,000 Secom Company, Limited...................................... $ 8,250,966
------------
Telecommunications - 2.31%
1,591 DDI Corporation............................................. 12,665,332
------------
Total Japan Common Stocks.............................................. 63,653,533
------------
MALAYSIA - 0.76%
Banking - 0.76%
344,400 AMMB Holdings Berhad........................................ 2,348,496
344,400 AMMB Holdings Berhad (Class A).............................. 1,795,909
------------
4,144,405
------------
MEXICO - 2.70%
Banking - 0.63%
345,374 Grupo Financiero Bancomer ADR* + (1)........................ 3,453,740
------------
Media - 0.71%
127,191 Grupo Televisa S.A. de C.V. ADR............................. 3,863,427
------------
Multi-line Insurance - 0.02%
896,554 Invercorporacion S.A. de C.V................................ 115,883
------------
Telecommunications - 1.34%
896,554 Grupo Carso S.A. de C.V. (Series A)......................... 4,115,020
229,166 Grupo Carso S.A. de C.V. ADR +.............................. 2,177,077
175,394 Grupo Carso Global Telecom S.A. de C.V. ADR*................ 1,035,921
------------
7,328,018
------------
Total Mexico Common Stocks............................................. 14,761,068
------------
NETHERLANDS - 2.95%
Entertainment - 0.53%
49,007 Polygram.................................................... 2,918,384
------------
Financial Services - 1.65%
289,173 Internationale Nederlanden Groep N.V........................ 9,011,057
------------
Food Processing - 0.77%
31,220 Nutricia Verenigde Bedrijven................................ 4,177,470
------------
Total Netherlands Common Stocks........................................ 16,106,911
------------
NORWAY - 1.41%
Commercial Services - 1.41%
278,265 Petroleum Geo-Service....................................... 7,685,439
------------
PAKISTAN - 0.01%
Banking - 0.01%
38,200 Bank Commerce Al Habib...................................... 30,058
115 Prime Commercial Bank....................................... 35
795 Soneri Bank................................................. 497
------------
30,590
------------
</TABLE>
8
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONTINUED)
PANAMA - 0.28%
Agriculture, Food & Beverages - 0.28%
36,176 Panamerican Beverages, Incorporated......................... $ 1,528,436
------------
PERU - 1.07%
Telecommunications - 1.07%
250,120 Telefonica Del Peru S.A. ADR (1)............................ 5,846,555
------------
PHILIPPINES - 1.82%
Brewery - 1.34%
2,252,310 San Miguel Corporation...................................... 7,351,499
------------
Telecommunications - 0.48%
1,995,200 Philippino Telephone........................................ 2,627,769
------------
Total Philippines Common Stocks........................................ 9,979,268
------------
SOUTH AFRICA - 1.06%
Steel - 1.06%
9,638,174 South African Iron & Steel/Iscor............................ 5,777,535
------------
SPAIN - 0.99%
Oil & Gas - 0.99%
167,359 Repsol S.A.................................................. 5,434,906
------------
SWEDEN - 1.39%
Automotive Manufacturing - 1.39%
230,955 Autoliv Ab 'B' Free......................................... 7,621,069
------------
SWITZERLAND - 7.53%
Food - 1.68%
7,849 Nestle S.A. Registered...................................... 9,187,574
------------
Insurance - 1.02%
5,162 Schw Ruckversicher.......................................... 5,577,867
------------
Manufacturing - 1.61%
7,131 ABB AG...................................................... 8,786,761
------------
Pharmaceutical - 3.22%
9,910 Sandoz AG................................................... 11,789,953
764 Roche Holdings AG........................................... 5,820,861
------------
17,610,814
------------
Total Switzerland Common Stocks........................................ 41,163,016
------------
THAILAND - 0.82%
Banking - 0.82%
424,130 Thai Farmers Bank plc....................................... 4,491,873
------------
</TABLE>
9
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONTINUED)
UNITED KINGDOM - 9.47%
Building Materials & Paper Packaging - 1.11%
1,085,525 BPB Industries.............................................. $ 6,085,313
------------
Capital Goods - 2.03%
774,888 Siebe....................................................... 11,101,807
------------
Drugs - 1.33%
1,836,596 Medeva plc.................................................. 7,284,438
------------
Entertainment - 3.00%
267,347 EMI Group................................................... 6,015,725
437,899 Granada Group............................................... 5,966,066
729,545 Thorn....................................................... 4,420,104
------------
16,401,895
------------
Publishing - 2.00%
609,592 Reed International.......................................... 10,899,170
------------
Total United Kingdom Common Stocks..................................... 51,772,623
------------
UNITED STATES - 24.34%
Banks - 2.01%
132,151 Citicorp.................................................... 11,001,571
------------
Chemicals - 4.88%
457,971 Airgas Incorporated......................................... 10,304,348
221,515 Allied-Signal Incorporated.................................. 13,678,551
52,457 Avery Dennison Corporation.................................. 2,681,864
------------
26,664,763
------------
Computer Hardware - 0.32%
81,929 Zebra Technologies Corporation (Class A).................... 1,730,750
------------
Electrical Equipment - 1.67%
234,683 UCAR International Incorporated*............................ 9,152,637
------------
Financial Services - 1.27%
160,093 The Travelers Group, Incorporated........................... 6,944,034
------------
Household Products - 2.29%
154,208 Colgate-Palmolive Company................................... 12,529,400
------------
Industrial Services & Supplies - 1.97%
302,892 Ecolab Incorporated......................................... 9,200,344
125,093 Medaphis Corporation (1).................................... 1,579,299
------------
10,779,643
------------
Information & Computer Services - 2.39%
167,686 First Data Corporation...................................... 13,079,508
------------
Manufacturing - General - 0.58%
75,276 Tyco International Limited.................................. 3,180,411
------------
Manufacturing - High Technology - 1.04%
309,977 Sensormatic Electronics Corporation......................... 5,695,827
------------
</TABLE>
10
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONCLUDED)
UNITED STATES - (CONCLUDED)
Medical Products - 0.47%
156,037 Sunrise Medical Incorporated*............................... $ 2,555,106
------------
Motor Vehicles - 1.42%
266,066 Chrysler Corporation........................................ 7,749,172
------------
Semi-Conductor - 0.89%
61,171 Intel Corporation........................................... 4,882,210
------------
Specialty Retail - 1.58%
95,142 General Nutrition Company Incorporated...................... 1,403,344
245,760 Toys 'R' Us, Incorporated*.................................. 7,249,920
------------
8,653,264
------------
Telecommunication Equipment - 1.56%
159,285 Motorola Incorporated....................................... 8,501,837
------------
Total United States Common Stocks...................................... 133,100,133
------------
Total Common Stocks (cost - $472,753,714).............................. 521,717,418
------------
PREFERRED STOCKS - 3.94%
AUSTRIA - 0.61%
Banking - 0.61%
74,411 Creditanstalt Bankverein.................................... 3,360,266
------------
BRAZIL - 1.73%
Food - 0.36%
249,578,218 Ceval Alimentos S.A......................................... 1,964,216
------------
Machinery - 1.37%
22,571,253 Brasmotor................................................... 7,465,278
------------
Total Brazil Preferred Stocks.......................................... 9,429,494
------------
GERMANY - 1.12%
Technology - 1.12%
37,402 SAP AG...................................................... 6,132,553
------------
PANAMA - 0.48%
Banking - 0.48%
48,741 Banco Latinomericano........................................ 2,601,551
------------
Total Preferred Stocks (cost - $22,370,365)............................ 21,523,864
------------
MONEY MARKET FUNDS - 3.67%
20,077,269 Provident Institutional Investment Fund
(cost - $20,077,269).............................................. 20,077,269
------------
</TABLE>
11
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------- -------- ------------
<S> <C> <C> <C>
AGENCY BACKED OBLIGATIONS - 1.83%
$10,000 Federal Home Loan Mortgage Discount Notes (cost -
$9,995,642)....................................... 09/04/96 3.92% $ 9,995,642
------------
Total Investments (cost - $525,196,990) - 104.86%............ 573,314,193
Liabilities in excess of other assets - (4.86)%.............. (26,540,598)
------------
Net Assets--100.00%.......................................... $546,773,595
------------
------------
</TABLE>
* Non-income producing security
(1) Security, or a portion thereof, was loaned at August 31, 1996.
+ 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 Depositary Receipt
See accompanying notes to financial statements
12
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
<S> <C>
Assets
Investments, at value (cost - $525,196,990).................................................... $573,314,193
Cash denominated in foreign currencies, at value (cost - $202,048)............................. 201,260
Receivable for investments sold................................................................ 15,065
Dividends and interest receivable.............................................................. 1,374,249
Receivable for shares of beneficial interest sold.............................................. 220,069
Deferred organizational expenses............................................................... 17,080
Other assets................................................................................... 205,543
------------
Total assets................................................................................... 575,347,459
------------
Liabilities
Payable for shares of beneficial interest repurchased.......................................... 4,436,365
Payable for investments purchased.............................................................. 3,359,372
Collateral for securities loaned............................................................... 19,626,098
Payable to affiliate........................................................................... 620,227
Accrued expenses and other liabilities......................................................... 531,802
------------
Total liabilities.............................................................................. 28,573,864
------------
Net Assets
Beneficial interest shares of $0.001 par value outstanding (unlimited amount authorized)....... 502,525,074
Accumulated net investment loss................................................................ (1,331,590)
Accumulated net realized losses from investments............................................... (2,299,580)
Net unrealized appreciation of investments and other assets and liabilities denominated in
foreign currencies........................................................................... 47,879,691
------------
Net assets..................................................................................... $546,773,595
------------
------------
Class A:
Net assets..................................................................................... $305,217,556
------------
Shares outstanding............................................................................. 18,159,504
------------
Net asset and redemption value per share....................................................... $16.81
------------
------------
Maximum offering price per share (net asset value plus sales charge of 4.50% of offering
price)......................................................................................... $17.60
------------
------------
Class B:
Net assets..................................................................................... $113,235,257
------------
Shares outstanding............................................................................. 6,925,002
------------
Net asset value and offering price per share................................................... $16.35
------------
------------
Class C:
Net assets..................................................................................... $66,584,798
------------
Shares outstanding............................................................................. 4,073,046
------------
Net asset value and offering price per share................................................... $16.35
------------
------------
Class Y:
Net assets..................................................................................... $61,735,984
------------
Shares outstanding............................................................................. 3,638,139
------------
Net asset value, offering price and redemption value per share................................. $16.97
------------
------------
</TABLE>
See accompanying notes to financial statements
13
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 1996
<S> <C>
Investment income:
Dividends (net of foreign withholding taxes of $670,848)........................................ $ 8,721,327
Interest........................................................................................ 601,274
-----------
9,322,601
-----------
Expenses:
Investment advisory and administration fees..................................................... 4,990,588
Service fees - Class A.......................................................................... 828,741
Service and distribution fees - Class B......................................................... 1,252,635
Service and distribution fees - Class C......................................................... 732,335
Transfer agency fees and expenses............................................................... 790,172
Custody and accounting.......................................................................... 644,727
Reports and notices to shareholders............................................................. 394,328
Legal and audit................................................................................. 134,475
Amortization of organizational expenses......................................................... 64,936
State registration fees......................................................................... 58,722
Trustees' fees and expenses..................................................................... 15,750
Other expenses.................................................................................. 160,105
-----------
10,067,514
-----------
Net investment loss............................................................................. (744,913)
-----------
Realized and unrealized gains (losses) from investment transactions:
Net realized gains (losses) from:
Investment transactions.................................................................... 41,488,308
Foreign currency transactions.............................................................. (510,978)
Net change in unrealized appreciation/depreciation of:
Investments................................................................................ 4,746,601
Other assets and liabilities denominated in foreign currencies............................. (320,015)
-----------
Net realized and unrealized gains from investment transactions.................................. 45,403,916
-----------
Net increase in net assets resulting from operations............................................ $44,659,003
-----------
-----------
</TABLE>
See accompanying notes to financial statements
14
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
AUGUST 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
From operations:
Net investment income (loss).................................................. $ (744,913) $ 15,770
Net realized gains from investment transactions............................... 41,488,308 16,774,940
Net realized losses from foreign currency transactions........................ (510,978) (521,164)
Net changes in unrealized appreciation/depreciation of:
Investments................................................................. 4,746,601 (12,104,719)
Other assets and liabilities denominated in foreign currencies.............. (320,015) (766,274)
------------ ------------
Net increase in net assets resulting from operations.......................... 44,659,003 3,398,553
------------ ------------
Distributions to shareholders from:
Net realized gains from investment transactions - Class A..................... (11,751,371) (12,882,410)
Net realized gains from investment transactions - Class B..................... (4,530,984) --
Net realized gains from investment transactions - Class C..................... (2,643,433) (2,404,670)
Net realized gains from investment transactions - Class Y..................... (1,956,458) (2,465,467)
------------ ------------
(20,882,246) (17,752,547)
------------ ------------
From beneficial interest transactions:
Net proceeds from the sale of shares.......................................... 130,337,737 33,293,582
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.................................................... (271,376,430) (83,619,851)
Proceeds from dividends reinvested............................................ 19,869,011 17,479,893
------------ ------------
Net increase (decrease) in net assets from beneficial interest transactions... (121,169,682) 412,800,647
------------ ------------
Net increase (decrease) in net assets......................................... (97,392,925) 398,446,653
Net assets:
Beginning of period........................................................... 644,166,520 245,719,867
------------ ------------
End of period................................................................. $546,773,595 $644,166,520
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
PAINEWEBBER
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Global Equity Fund (the 'Fund') is a diversified
series of PaineWebber Investment 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.
Currently, the Fund offers Class A, Class B (formerly Class E),
Class C (formerly Class B) and Class Y (formerly Class C)
shares. Effective November 10, 1995, the Fund began using
industry standardized nomenclatures and Class B, Class C and
Class E shares were renamed Class C, Class Y and Class B
shares, respectively. 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 distribution charges and certain transfer agency
expenses. In addition, Class B shares and all corresponding
dividend reinvested 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.
At the meeting held on December 13, 1995, the Trust's board of
trustees elected to change the Fund's fiscal year from August
31st to October 31st effective October 31, 1996.
The preparation of financial statements in accordance with
generally accepted accounting principles requires the Trust'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.
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 by
Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'),
a wholly owned subsidiary of PaineWebber Incorporated
('PaineWebber') and investment adviser and administrator of the
Fund, 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
Nasdaq Stock Market, Inc. ('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 prior to
the time of valuation. The amortized cost method of valuation,
which approximates market value, is used to value short-term
debt instruments with sixty 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.
16
<PAGE>
PAINEWEBBER
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. Foreign currency exchange rates are
generally determined prior to the close of 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 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 are 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 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 (except in the case of certain
foreign dividends which are recorded as soon after the
ex-dividend date as the Fund becomes aware of such dividend).
Interest income is recorded on an accrual basis. Discounts are
accreted 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 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 exchange rates prevailing on the
respective dates of such transactions.
17
<PAGE>
PAINEWEBBER
Although the net assets and the market values of the Fund 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
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.
Realized currency gain/loss on investment transactions includes
realized foreign exchange gains/losses from the sale of
portfolio securities, sales of foreign currencies, currency
gains/losses realized between the trade and settlement dates on
securities transactions, and 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/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-dividend 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 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 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.
ACQUISITIONS
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
18
<PAGE>
PAINEWEBBER
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
7,902,877 Class A, 2,541,127 Class C, 1,725,341 Class Y and
6,112,274 Class B 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 C and 1,513,866 Class B 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 C and
1,443,399 Class B 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.
INVESTMENT ADVISER 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 adviser 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 0.85% of the Fund's average daily net assets
up to and including $500 million, 0.83% of its average 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.
Under a separate contract with Mitchell Hutchins ('Sub-Advisory
Contract'), GEIM serves as the Fund's sub-adviser. Under the
Sub-Advisory Contract, Mitchell Hutchins (not the Fund) pays
GEIM a fee, computed daily and paid monthly, at an 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.
19
<PAGE>
PAINEWEBBER
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 distribution
pertaining to Class A, Class B (formerly Class E) and Class C
(formerly Class B) shares, the Fund pays Mitchell Hutchins
monthly service fees at the annual rate 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.
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 the
shareholders upon certain redemptions of Class B and Class C
shares. Mitchell Hutchins has informed the Fund that for the
year ended August 31, 1996, it had earned approximately
$229,590 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 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.
As of August 31, 1996, the Fund's custodian held cash and cash
equivalents having an aggregate value of $20,077,269 as
collateral for portfolio securities loaned having a market
value of $19,626,098.
20
<PAGE>
PAINEWEBBER
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned
at August 31, 1996 was substantially the same as the cost of
securities for financial statement purposes.
At August 31, 1996, the components of the net unrealized
appreciation of investments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having
an excess of value over cost)...... $ 75,563,336
Gross depreciation (investments having
an excess of cost over value)...... (27,446,133)
------------
Net unrealized appreciation of
investments........................ $ 48,117,203
------------
------------
</TABLE>
For the year ended August 31, 1996, aggregate purchases and
sales of portfolio securities, excluding short-term securities,
were $191,440,428 and $309,979,517, 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 August 31, 1996, the Fund has a net capital loss
carryforward of approximately $18,909,000. 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 August 31, 2002.
In accordance with U.S. Treasury regulations, the Fund has
elected to defer $528,906 of net realized foreign currency
losses arising after October 31, 1995. Such losses have been
treated for tax purposes as arising on September 1, 1996.
To reflect reclassifications arising from permanent
'book / tax' differences for the year ended August 31, 1996,
the Fund's accumulated net investment loss and beneficial
interest were both reduced by $747,909.
21
<PAGE>
PAINEWEBBER
SHARES OF BENEFICIAL INTEREST
AT AUGUST 31, 1996, THERE WAS 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 CLASS Y
------------------------- ------------------------- ------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED AUGUST 31, 1996:
Shares sold........... 3,773,378 $ 63,129,065 996,490 $ 15,875,329 2,665,239 $ 42,738,539 518,809 $ 8,594,804
Shares repurchased.... (8,829,630) (146,403,118) (3,235,769) (51,584,942) (4,033,170) (64,638,426) (525,977) (8,749,944)
Shares converted from
Class B to Class
A................... 136,369 2,251,844 (138,655) (2,251,844) -- -- -- --
Dividends
reinvested.......... 707,938 11,206,643 270,717 4,190,705 163,102 2,524,812 122,137 1,946,851
---------- ------------ ---------- ------------ ---------- ------------ --------- -----------
Net increase
(decrease)............ (4,211,945) $(69,815,566) (2,107,217) $(33,770,752) (1,204,829) $(19,375,075) 114,969 $ 1,791,711
---------- ------------ ---------- ------------ ---------- ------------ --------- -----------
---------- ------------ ---------- ------------ ---------- ------------ --------- -----------
YEAR ENDED AUGUST 31, 1995:
Shares sold........... 940,218 $ 15,179,015 9,954 $ 157,526 559,864 $ 8,885,221 553,290 $ 9,071,820
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 9,069,539 143,575,469 3,493,020 55,291,061 1,725,341 28,010,075
Shares repurchased.... (3,939,313) (60,869,557) (47,274) (747,123) (837,535) (12,930,296) (591,713) (9,072,875)
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 9,032,219 $142,985,872 3,383,599 $ 53,623,364 1,856,401 $30,445,537
---------- ------------ ---------- ------------ ---------- ------------ --------- -----------
---------- ------------ ---------- ------------ ---------- ------------ --------- -----------
</TABLE>
22
<PAGE>
[This page intentionally left blank]
23
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------
FOR THE
PERIOD
NOVEMBER
14,
FOR THE YEARS ENDED 1991+ TO
AUGUST 31, AUGUST
----------------------------------------- 31,
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 16.12 $ 16.98 $ 14.55 $ 12.87 $12.00
-------- -------- -------- -------- --------
Net investment income
(loss)...................... 0.02 0.02 0.01 0.03 0.09
Net realized and unrealized
gains (losses) from
investment and foreign
currency transactions....... 1.24 0.37 2.63 1.89 0.78
-------- -------- -------- -------- --------
Net increase (decrease) from
investment operations....... 1.26 0.39 2.64 1.92 0.87
-------- -------- -------- -------- --------
Dividends from net investment
income...................... -- -- -- (0.08) --
Distributions from net
realized gains.............. (0.57) (1.25) (0.21) (0.16) --
-------- -------- -------- -------- --------
Total dividends and
distributions............... (0.57) (1.25) (0.21) (0.24) --
-------- -------- -------- -------- --------
Net asset value, end of
period...................... $ 16.81 $ 16.12 $ 16.98 $ 14.55 $12.87
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (1)... 8.06% 3.24% 18.23% 15.24% 7.25%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental Data:
Net assets, end of period
(000's)..................... $305,218 $360,652 $185,493 $156,451 $113,070
Expenses to average net
assets...................... 1.48% 1.71%(2) 1.58% 1.53% 1.68%*
Net investment income (loss)
to average net assets....... 0.10% 0.09%(2) 0.07% 0.22% 0.93%*
Portfolio turnover............ 33% 40% 51% 56% 30%
Average commission rate paid
per share of common stock
investments purchased/sold
(3)......................... $ 0.0120 -- -- -- --
</TABLE>
- ------------------
<TABLE>
<S> <C>
* Annualized
** Formerly Class E
*** Formerly Class B
**** Formerly Class C
+ Commencement of operations
++ 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 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 (except Class Y) 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%, 0.00%, 0.06% and 0.06% for Class A,
Class B, Class C and Class Y shares, respectively.
(3) Disclosure effective for fiscal years beginning on or after September 1, 1995.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
CLASS C***
CLASS B** ------------------------------------------------------
------------------------------ FOR THE
FOR THE PERIOD
YEAR FOR THE PERIOD MAY 10,
ENDED AUGUST 25, FOR THE YEARS ENDED 1993++
AUGUST 1995++ AUGUST 31, TO AUGUST
31, TO AUGUST 31, ----------------------------------------- 31,
1996 1995 1996 1995 1994 1993
-------- ---------------- -------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 15.82 $ 15.83 $ 15.82 $ 16.81 $ 14.52 $ 13.80
-------- -------- -------- ------------- ---------- --------
Net investment income
(loss)...................... (0.12) 0.00 (0.13) (0.11) (0.07) (0.02)
Net realized and unrealized
gains (losses) from
investment and foreign
currency transactions....... 1.22 (0.01) 1.23 0.37 2.57 0.74
-------- -------- -------- ------------- ---------- --------
Net increase (decrease) from
investment operations....... 1.10 (0.01) 1.10 0.26 2.50 0.72
-------- -------- -------- ------------- ---------- --------
Dividends from net investment
income...................... -- -- -- -- -- --
Distributions from net
realized gains.............. (0.57) -- (0.57) (1.25) (0.21) --
-------- -------- -------- ------------- ---------- --------
Total dividends and
distributions............... (0.57) -- (0.57) (1.25) (0.21) --
-------- -------- -------- ------------- ---------- --------
Net asset value, end of
period...................... $ 16.35 $ 15.82 $ 16.35 $ 15.82 $ 16.81 $ 14.52
-------- -------- -------- ------------- ---------- --------
-------- -------- -------- ------------- ---------- --------
Total investment return (1)... 7.18 % (0.06)% 7.18% 2.46% 17.29% 5.22%
-------- -------- -------- ------------- ---------- --------
-------- -------- -------- ------------- ---------- --------
Ratios/Supplemental Data:
Net assets, end of period
(000's)..................... $113,235 $ 142,880 $ 66,585 $ 83,485 $ 31,837 $ 10,807
Expenses to average net
assets...................... 2.25% 2.17%*(2) 2.27% 2.48%(2) 2.33% 2.28%*
Net investment income (loss)
to average net assets....... (0.68)% (1.92)%*(2) (0.70)% (0.68)%(2) (0.68)% (0.53)%*
Portfolio turnover............ 33% 40% 33% 40% 51% 56%
Average commission rate paid
per share of common stock
investments purchased/sold
(3)......................... $0.0120 -- $ 0.0120 -- -- --
<CAPTION>
CLASS
Y****
--------
FOR THE FOR THE
YEARS PERIOD
ENDED MAY 10,
AUGUST 1993++
31, TO AUGUST
-------- 31,
1996 1995 1994 1993
-------- ------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 16.22 $ 17.03 $ 14.56 $ 13.80
-------- ------- ---------- --------
Net investment income
(loss)...................... 0.07 0.07 0.05 0.02
Net realized and unrealized
gains (losses) from
investment and foreign
currency transactions....... 1.25 0.37 2.63 0.74
-------- ------- ---------- --------
Net increase (decrease) from
investment operations....... 1.32 0.44 2.68 0.76
-------- ------- ---------- --------
Dividends from net investment
income...................... -- -- -- --
Distributions from net
realized gains.............. (0.57) (1.25) (0.21) --
-------- ------- ---------- --------
Total dividends and
distributions............... (0.57) (1.25) (0.21) --
-------- ------- ---------- --------
Net asset value, end of
period...................... $ 16.97 $ 16.22 $ 17.03 $ 14.56
-------- ------- ---------- -----------
Total investment return (1)... 8.39% 3.54% 18.49% 5.51%
-------- ------- ---------- -----------
-------- ------- ---------- -----------
Ratios/Supplemental Data:
Net assets, end of period
(000's)..................... $ 61,736 $57,150 $ 28,390 $ 19,098
Expenses to average net
assets...................... 1.17% 1.46%(2) 1.33% 1.28%*
Net investment income (loss)
to average net assets....... 0.46% 0.36%(2) 0.32% 0.47%*
Portfolio turnover............ 33% 40% 51% 56%
Average commission rate paid
per share of common stock
investments purchased/sold
(3)......................... $ 0.0120 -- -- --
</TABLE>
25
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
PaineWebber Global Equity Fund:
We have audited the accompanying statement of assets and
liabilities of PaineWebber Global Equity Fund, including the
portfolio of investments, as of August 31, 1996, and the
related statement of operations for the year then ended, the
statement of changes in net assets and financial highlights for
each of the two years in the period then ended. These financial
statements and the 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 audits. The financial highlights for each of the
three years in the period ended August 31, 1994 were audited by
other auditors whose report dated October 14, 1994 expressed an
unqualified opinion on the financial highlights.
We conducted our audits 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 at August 31, 1996, by correspondence with
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 audits provide 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 PaineWebber Global Equity
Fund at August 31, 1996, the results of its operations for the
year then ended, the changes in its net assets and the
financial highlights for each of the two years in the period
then ended, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
New York, New York
October 24, 1996
26
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
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 (August 31, 1996) as to the federal tax status
of distributions received by shareholders during such fiscal
year. Accordingly, we are advising you that the distributions
for Class A, Class B, Class C and Class Y shares made during
the fiscal year were made from long-term capital gains in the
amount of $0.5743 per share.
Dividends received by tax-exempt recipients need not be
reported as taxable income. Some retirement trusts (e.g.,
corporate Keogh and 403(b)(7) plans) may need this information
for their annual reporting.
Because the Fund's fiscal year is not the calendar year,
another notification will be sent in respect of calendar year
1996. 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 1997. Shareholders are advised to
consult their own tax advisers with respect to the tax
consequences of their investment in the Fund.
27
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
SHAREHOLDER INFORMATION (UNAUDITED)
A special meeting of shareholders of the Fund was held on April 15, 1996. At the
meeting the following proposals were approved. (Shareholders of the Trust,
comprised of the Fund and another series, voted together as a single class with
respect to the election of board members; other matters noted below were
approved by shareholders of the Fund.)
PROPOSAL 1
To elect ten members of its Board of Trustees:
<TABLE>
<CAPTION>
SHARES VOTED SHARES WITHHOLD
FOR AUTHORITY
------------ ------------------------
<S> <C> <C>
Margo N. Alexander....................................................... 20,303,283 1,049,607
Richard Q. Armstrong..................................................... 20,308,731 1,044,159
E. Garrett Bewkes, Jr.................................................... 20,297,813 1,055,077
Richard R. Burt.......................................................... 20,300,802 1,052,088
Mary C. Farrell.......................................................... 20,307,545 1,045,345
Meyer Feldberg........................................................... 20,295,721 1,057,169
George W. Gowen.......................................................... 20,301,148 1,051,742
Frederic V. Malek........................................................ 20,288,858 1,064,032
Carl W. Schafer.......................................................... 20,298,881 1,054,009
John R. Torell III....................................................... 20,302,924 1,049,966
</TABLE>
PROPOSAL 2
Ratification of the selection of Ernst & Young LLP as the independent auditors
for its current fiscal year:
<TABLE>
<CAPTION>
SHARES VOTED SHARES VOTED SHARES
FOR AGAINST ABSTAIN
------------ ------------ -------
<S> <C> <C> <C>
18,043,249 75,337 966,692
</TABLE>
PROPOSAL 3
Approval of the proposed changes to the Fund's fundamental investment
restrictions and policies:
<TABLE>
<CAPTION>
SHARES VOTED SHARES VOTED SHARES
FOR AGAINST ABSTAIN
------------ ------------ ---------
<S> <C> <C> <C>
Modification of Fundamental Restriction on Portfolio Diversification for
Diversified Funds.......................................................... 17,673,371 249,336 1,162,571
Modification of Fundamental Restriction on Concentration..................... 17,673,371 249,336 1,162,571
Modification of Fundamental Restriction on Senior Securities and Borrowing... 17,673,371 249,336 1,162,571
Modification of Fundamental Restriction on Making Loans...................... 17,673,371 249,336 1,162,571
Modification of Fundamental Restriction on Underwriting Securities........... 17,673,371 249,336 1,162,571
Modification of Fundamental Restriction on Real Estate Investments........... 17,673,371 249,336 1,162,571
Modification of Fundamental Restriction on Investing in Commodities.......... 17,673,371 249,336 1,162,571
Elimination of Fundamental Restriction on Margin Transactions................ 17,673,371 249,336 1,162,571
Elimination of Fundamental Restriction on Short Sales........................ 17,673,371 249,336 1,162,571
Elimination of Fundamental Restriction on Investments in Oil, Gas and Mineral
Leases and Programs........................................................ 17,673,371 249,336 1,162,571
Elimination of Fundamental Restriction on Investments in Other Investment
Companies.................................................................. 17,673,371 249,336 1,162,571
Elimination of Fundamental Restriction on Investing for the Purpose of
Control.................................................................... 17,673,371 249,336 1,162,571
Elimination of Fundamental Restriction on Joint Participation in Securities
Trading Accounts........................................................... 17,673,371 249,336 1,162,571
</TABLE>
- ---------------
(Broker non-votes and abstentions are included within the 'Shares Withhold
Authority' and 'Shares Abstain' totals.)
28
<PAGE>
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<PAGE>
[This page intentionally left blank]
<PAGE>
BOARD OF TRUSTEES
- -------------------------------------------------------------
TRUSTEES
Margo N. Alexander
Richard Q. Armstrong
E. Garrett Bewkes, Jr.
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
John R. Torell III
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
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.
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.
<PAGE>
- ---
PaineWebber offers a family of 21 funds which encompass a diversified range of
investment goals.
BOND FUNDS
/ / High Income Fund
/ / Investment Grade Income Fund
/ / Low Duration U.S. Government Income Fund
/ / Strategic Income Fund
/ / U.S. Government Income Fund
TAX-FREE BOND FUNDS
/ / California Tax-Free Income Fund
/ / Municipal High Income Fund
/ / National Tax-Free Income Fund
/ / New York Tax-Free Income Fund
STOCK FUNDS
/ / Capital Appreciation Fund
/ / Financial Services Growth Fund
/ / Growth Fund
/ / Growth and Income Fund
EQUITY FUND
/ / Small Cap Fund
/ / Utility Income Fund
ASSET ALLOCATION FUNDS
/ / Balanced Fund
/ / Tactical Allocation Fund
GLOBAL FUNDS
/ / Emerging Markets Equity Fund
/ / Global Equity Fund
/ / Global Income Fund
PAINEWEBBER MONEY MARKET FUND
(Copyright) 1996 PaineWebber Incorporated
Member SIPC
- ---------------------------------------------------------
PAINEWEBBER
ANNUAL REPORT
- -------------------------------
GLOBAL
EQUITY FUND
AUGUST 31, 1996
