<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND ANNUAL REPORT
PERFORMANCE AT A GLANCE
Comparison of the change of a $10,000 investment in PaineWebber
Global Equity Fund and the MSCI World Index.
[PERFORMANCE CHART]
MSCI World Index PaineWebber Global Equity Fund Class A
---------------- --------------------------------------
11/91 $10,000 $ 9,550
10/92 $ 9,966 $10,380
10/93 $12,724 $13,045
10/94 $13,763 $14,502
10/95 $15,144 $14,754
10/96 $17,693 $16,132
The 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.
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 TOTAL RETURN
Commencement of
Twelve Months Operations
Ended 10/31/96 Through 10/31/96+
Class A* 14.17% 11.14%
% Return Without Deducting
Maximum Sales Charge Class B** 13.28% 9.13%
Class C*** 13.28% 10.23%
Class A* 9.01% 10.11%
% Return After Deducting
Maximum Sales Charge Class B** 8.28% 5.80%
Class C*** 12.28% 10.23%
* 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 trustee of the PaineWebber Savings Investment Plan and INSIGHT Investment
Advisory Program participants. For the year ended October 31, 1996, and since
inception, May 10, 1993 through October 31, 1996, Class Y shares have had an
average annual total return of 14.54% and 11.38%, 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.
1
<PAGE>
ANNUAL REPORT
FUND PROFILE
(ARROW) Goals:
Long-term growth of capital
(ARROW) Portfolio Managers:
Ralph Layman with the assistance of Michael Solecki,
GE Investment Management
(ARROW) Total Net Assets:
$551.5 million (as of October 31, 1996)
(ARROW) Dividend Payment:
Annually
December 16, 1996
Dear Shareholder,
We are pleased to present you with the annual report for PaineWebber Global
Equity Fund (the "Fund") for the period ended October 31, 1996. This is the
first letter written since the Fund's fiscal year end was changed from August
31 to October 31.
ECONOMIC OVERVIEW
(GRAPHIC OMITTED)
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 by many
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
(GRAPHIC OMITTED)
For the 12 months ended October 31, 1996, the Fund's total return (the net
asset value change with dividends reinvested), without deducting sales charges,
was 14.17% for Class A shares, 13.28% for Class B shares, 13.28% for Class C
shares and 14.54% for Class Y shares. For shareholders who purchased or
redeemed Fund shares during the period, the Fund's total return for the period
may be lower; for example, after deducting the maximum applicable sales
charges, the Fund's total return for the 12 month period was 9.01% for Class A
shares, 8.28% for Class B shares, 12.28% for Class C shares and 14.54% for
Class Y shares. In comparison, the Morgan Stanley Capital International World
Index (the "Index") was up 16.30% for the same period.
In general, despite attractive returns, the Fund's underweighted position
in a strong U.S. equity market (24.8% of net assets as of October 31, 1996)
hampered Fund performance versus the
2
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND ANNUAL REPORT
Index during the fiscal year. However, the second half of the year proved
particularly favorable for the Fund, as both our international and U.S.-based
holdings performed well. In Europe in particular, the stock selection process
employed by GE Investment Management's (GEIM, subadviser of the Fund) global
research team --which entails searching the world for companies that are priced
inexpensively relative 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.
OUTLOOK
(GRAPHIC OMITTED)
Going forward, as we look at other markets around the world, it is becoming
increasingly difficult to find bargains in the U.S. and Japan (combined, 35.5%
of net assets as of October 31, 1996). Although we are not negative on the
competitive position of U.S. companies, valuations are stretched and equities
in Europe (46.7%), Southeast Asia (9.6%) and Latin America (5.5%) 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.
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 are
expected to 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 Management Inc. PaineWebber Global Equity Fund
GEOGRAPHICAL
BREAKDOWN
PaineWebber Global Equity Fund Top ten equity holdings by country
October 31, 1996.
United States 24.82%
Japan 10.71%
United Kingdom 9.55%
France 9.22%
Switzerland 7.93%
Hong Kong 5.15%
Germany 4.51%
Austria 3.80%
Italy 3.71%
Netherlands 2.80%
3
<PAGE>
PAINEWEBBER
GLOBAL EQUITY FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN1
---------------------------- -----------------------------
12 MONTHS 2 MONTHS
ENDED ENDED
10/31/96 08/31/96 10/31/95 10/31/96 10/31/96
<S> <C> <C> <C> <C> <C>
Class A Shares $17.43 $16.81 $15.82 14.17% 3.69%
Class B Shares 16.93 16.35 15.50 13.28 3.55
Class C Shares 16.93 16.35 15.50 13.28 3.55
</TABLE>
PERFORMANCE SUMMARY CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE CAPITAL
----------------- GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN1
<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 - 10/31/96 15.81 17.43 -- -- 10.25
Total: $ 2.1983 $ 0.0800
CUMULATIVE TOTAL RETURN AS OF 10/31/96: 68.98%
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE CAPITAL
----------------- GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN1
<S> <C> <C> <C> <C> <C>
08/25/95 - 12/31/95 $15.83 $15.46 $ 0.5743 -- 1.29%
01/01/96 - 10/31/96 15.46 16.93 -- -- 9.51
Total: $ 0.5743 $ 0.0000
CUMULATIVE TOTAL RETURN AS OF 10/31/96: 10.92%
PERFORMANCE SUMMARY CLASS C SHARES
<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 - 10/31/96 15.46 16.93 -- -- 9.51
Total: $ 2.0373 $ 0.0000
CUMULATIVE TOTAL RETURN AS OF 10/31/96: 40.34%
</TABLE>
<TABLE>
<S> <C>
1 Figures assume reinvestment of all dividends and distributions, if any, 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.
Note: The Fund offers Class Y shares to a limited group of eligible investors, including the trustee of the
PaineWebber Savings Investment Plan and INSIGHT Investment Advisory Program participants. For the year ended
October 31, 1996, and since inception, May 10, 1993 through October 31, 1996, Class Y shares have a total return
of 14.54% and 45.52%, respectively. Class Y shares do not have initial or contingent deferred sales charges or
ongoing distribution and service fees.
</TABLE>
4
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - 96.64%
AUSTRALIA - 1.17%
Food - 1.17%
4,056,023 Burns Philip & Company, Limited............................. $ 6,429,967
------------
AUSTRIA - 3.18%
Engineering Services - 1.99%
78,586 VA Technologie AG........................................... 10,990,017
------------
Oil & Gas - 0.83%
46,445 OMV AG...................................................... 4,546,636
------------
Services - 0.36%
40,631 Flughafen Wein AG........................................... 2,002,853
------------
Total Austria Common Stocks............................................ 17,539,506
------------
FINLAND - 0.84%
Manufacturing - 0.84%
302,833 Valmet Corporation.......................................... 4,620,958
------------
FRANCE - 9.22%
Automotive - 1.68%
154,043 Valeo S.A................................................... 9,244,087
------------
Capital Goods - 0.91%
57,831 Technip S.A./Compagnie Francaise............................ 5,055,193
------------
Energy - 3.18%
224,056 Total S.A. (Class B)........................................ 17,525,671
------------
Food - 1.87%
18,587 Carrefour S.A. ............................................. 10,314,195
------------
Producers' Goods - 1.58%
386,883 Coflexip S.A. ADR*.......................................... 8,704,868
------------
Total France Common Stocks............................................. 50,844,014
------------
GERMANY - 3.78%
Energy - 2.27%
234,846 Veba AG..................................................... 12,525,430
------------
Pharmaceutical - 1.51%
123,225 Gehe AG..................................................... 8,299,624
------------
Total Germany Common Stocks............................................ 20,825,054
------------
</TABLE>
5
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONTINUED)
HONG KONG - 5.15%
Broadcasting - 1.20%
1,896,600 Television Broadcasting Limited............................. $ 6,647,249
------------
Financial Services - 1.20%
325,110 HSBC Holdings............................................... 6,622,284
------------
Retail - 1.46%
7,961,000 Giordano Holdings Limited................................... 8,030,806
------------
Utilities - 1.29%
3,059,500 Consolidated Electric Power Asia............................ 7,122,294
------------
Total Hong Kong Common Stocks.......................................... 28,422,633
------------
INDONESIA - 1.28%
Automotive - 1.28%
2,884,500 Astra International......................................... 6,006,021
1,075,067 Steady Safe................................................. 1,050,005
------------
7,056,026
------------
ITALY - 3.71%
Banking - 0.53%
364,896 IMI......................................................... 2,887,658
------------
Furniture/Home Appliances - 0.47%
57,465 Industrie Natuzzi SPA ADR................................... 2,607,474
------------
Miscellaneous - 0.65%
457,166 Edison...................................................... 2,719,791
35,128 Istituto Mobiliare Italiano ADR............................. 860,636
------------
3,580,427
------------
Telecommunications - 2.06%
5,509,203 Telecom Italia Mobilare..................................... 11,385,202
------------
Total Italy Common Stocks.............................................. 20,460,761
------------
JAPAN - 10.71%
Automotive - 1.08%
582,000 Suzuki Motor Corporation, Limited........................... 5,929,647
------------
Electronics - 2.88%
412,000 Canon Incorporated.......................................... 7,888,630
135,000 Murata Manufacturing Company, Limited....................... 4,339,730
206,000 Omron Corporation........................................... 3,672,917
------------
15,901,277
------------
Entertainment - 0.40%
54,000 Sega Enterprises (1)........................................ 2,181,722
------------
Equipment - 0.87%
81,000 Rohm Company................................................ 4,802,161
------------
Financial Services - 1.20%
287,600 Credit Saison Company (1)................................... 6,643,433
------------
</TABLE>
6
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONTINUED)
JAPAN - (CONCLUDED)
Retail - 0.81%
90,000 Ito-Yokado Company, Limited................................. $ 4,489,922
------------
Security Services - 1.36%
126,000 Secom Company, Limited...................................... 7,503,228
------------
Telecommunications - 2.11%
1,547 DDI Corporation............................................. 11,617,276
------------
Total Japan Common Stocks.............................................. 59,068,666
------------
MALAYSIA - 0.82%
Banking - 0.82%
670,300 AMMB Holdings Berhad........................................ 4,536,762
------------
MEXICO - 2.20%
Banking - 0.53%
335,768 Grupo Financiero Bancomer ADR* + (1)........................ 2,791,072
30,412 Grupo Financiero Inbursa S.A................................ 98,378
3,198 Grupo Financiero Inbursa S.A. ADR........................... 51,168
------------
2,940,618
------------
Media - 0.59%
123,654 Grupo Televisa S.A. de C.V. ADR (1)......................... 3,245,918
------------
Telecommunications - 1.08%
871,617 Grupo Carso S.A. de C.V.* (Series A)........................ 3,958,199
222,792 Grupo Carso S.A. de C.V. ADR*+.............................. 1,999,558
------------
5,957,757
------------
Total Mexico Common Stocks............................................. 12,144,293
------------
NETHERLANDS - 2.80%
Entertainment - 0.41%
47,644 Polygram.................................................... 2,238,007
------------
Financial Services - 1.61%
285,578 Internationale Nederlanden Groep N.V........................ 8,903,799
------------
Food Processing - 0.78%
30,492 Nutricia Verenigde Bedrijven................................ 4,277,183
------------
Total Netherlands Common Stocks........................................ 15,418,989
------------
NORWAY - 1.67%
Commercial Services - 1.67%
270,526 Petroleum Geo-Service....................................... 9,200,123
------------
PAKISTAN - 0.01%
Banking - 0.01%
38,200 Bank Commerce Al Habib...................................... 27,544
115 Prime Commercial Bank....................................... 31
795 Soneri Bank................................................. 419
------------
27,994
------------
</TABLE>
7
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONTINUED)
PANAMA - 0.54%
Agriculture, Food & Beverages - 0.54%
68,222 Panamerican Beverages, Incorporated ADR .................... $ 2,976,185
------------
PERU - 0.94%
Telecommunications - 0.94%
250,330 Telefonica Del Peru S.A. ADR ............................... 5,163,056
------------
PHILIPPINES - 1.79%
Brewery - 1.48%
2,252,309 San Miguel Corporation...................................... 8,141,909
------------
Telecommunications - 0.31%
1,939,700 Philippino Telephone........................................ 1,716,059
------------
Total Philippines Common Stocks........................................ 9,857,968
------------
SOUTH AFRICA - 1.27%
Steel - 1.27%
9,791,283 South African Iron & Steel/Iscor............................ 6,990,048
------------
SPAIN - 0.96%
Oil & Gas - 0.96%
162,704 Repsol S.A.................................................. 5,311,040
------------
SWEDEN - 1.73%
Automotive Manufacturing - 1.73%
224,532 Autoliv Ab 'B' Free......................................... 9,526,655
------------
SWITZERLAND - 7.93%
Food - 1.50%
7,631 Nestle S.A. Registered...................................... 8,289,053
------------
Insurance - 0.98%
5,019 Schw Ruckversicher (1)...................................... 5,384,307
------------
Manufacturing - 1.55%
6,933 ABB AG...................................................... 8,567,521
------------
Pharmaceutical - 3.04%
9,635 Sandoz AG................................................... 11,136,658
743 Roche Holdings AG........................................... 5,619,525
------------
16,756,183
------------
Specialty Retail - 0.86%
29,259 Tag Heuer................................................... 4,745,328
------------
Total Switzerland Common Stocks........................................ 43,742,392
------------
THAILAND - 0.57%
Banking - 0.57%
412,330 Thai Farmers Bank plc....................................... 3,153,730
------------
</TABLE>
8
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONTINUED)
UNITED KINGDOM - 9.55%
Building Materials & Paper Packaging - 1.13%
1,055,332 BPB Industries.............................................. $ 6,235,116
------------
Capital Goods - 2.17%
761,007 Siebe....................................................... 11,940,279
------------
Drugs - 1.39%
1,785,513 Medeva plc.................................................. 7,672,126
------------
Entertainment - 2.86%
202,277 EMI Group................................................... 3,973,768
427,975 Granada Group............................................... 6,164,679
1,000,519 Thorn....................................................... 5,618,149
------------
15,756,596
------------
Publishing - 2.00%
592,637 Reed International.......................................... 11,034,778
------------
Total United Kingdom Common Stocks..................................... 52,638,895
------------
UNITED STATES - 24.82%
Banks - 2.31%
128,476 Citicorp.................................................... 12,719,124
------------
Chemicals - 4.42%
358,455 Airgas Incorporated......................................... 8,110,044
197,378 Allied-Signal Incorporated.................................. 12,928,259
50,998 Avery Dennison Corporation.................................. 3,359,493
------------
24,397,796
------------
Computer Hardware - 0.50%
94,917 Zebra Technologies Corporation (Class A).................... 2,740,728
------------
Electrical Equipment - 1.62%
228,156 UCAR International Incorporated*............................ 8,926,604
------------
Financial Services - 1.53%
155,641 The Travelers Group, Incorporated........................... 8,443,524
------------
Household Products - 2.50%
149,919 Colgate-Palmolive Company (1)............................... 13,792,548
------------
Industrial Services & Supplies - 2.14%
294,468 Ecolab Incorporated (1)..................................... 10,748,082
121,614 Medaphis Corporation........................................ 1,079,324
------------
11,827,406
------------
Information & Computer Services - 2.35%
163,022 First Data Corporation (1).................................. 13,001,005
------------
Manufacturing - General - 0.66%
73,183 Tyco International Limited.................................. 3,631,706
------------
Manufacturing - High Technology - 0.89%
301,356 Sensormatic Electronics Corporation (1)..................... 4,934,705
------------
</TABLE>
9
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ------------
<S> <C>
COMMON STOCKS - (CONCLUDED)
UNITED STATES - (CONCLUDED)
Medical Products - 0.17%
61,910 Sunrise Medical Incorporated*............................... $ 920,911
------------
Motor Vehicles - 0.75%
122,546 Chrysler Corporation........................................ 4,120,609
------------
Semi-Conductor - 1.18%
59,470 Intel Corporation........................................... 6,534,266
------------
Specialty Retail - 2.51%
92,496 General Nutrition Company Incorporated...................... 1,688,052
83,557 Sears Roebuck & Company..................................... 4,042,070
238,925 Toys 'R' Us, Incorporated*.................................. 8,093,584
------------
13,823,706
------------
Telecommunication Equipment - 1.29%
154,855 Motorola Incorporated....................................... 7,123,330
------------
Total United States Common Stocks...................................... 136,937,968
------------
Total Common Stocks (cost - $465,128,189).............................. 532,893,683
------------
PREFERRED STOCKS - 3.21%
AUSTRIA - 0.62%
Banking - 0.62%
72,342 Creditanstalt Bankverein.................................... 3,394,904
------------
BRAZIL - 1.40%
Food - 0.41%
242,636,363 Ceval Alimentos S.A. ....................................... 2,278,996
------------
Machinery - 0.99%
16,089,449 Brasmotor................................................... 5,465,464
------------
Total Brazil Preferred Stocks.......................................... 7,744,460
------------
GERMANY - 0.73%
Technology - 0.73%
30,111 SAP AG...................................................... 4,052,180
------------
PANAMA - 0.46%
Banking - 0.46%
48,741 Banco Latinamericano........................................ 2,546,717
------------
Total Preferred Stocks (cost - $19,302,827)............................ 17,738,261
------------
</TABLE>
10
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- --------- ---------- -------- ------------
<S> <C> <C> <C>
AGENCY BACKED OBLIGATIONS - 0.46%
$2,555 Federal Home Loan Mortgage Discount Notes
(cost - $2,553,165)............................... 11/06/96 4.32%# $ 2,553,165
------------
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED - 5.69%
<CAPTION>
NUMBER OF
SHARES
- ---------
<S> <C> <C> <C>
MONEY MARKET FUNDS - 5.69%
8,329,375 AIM Institutional Fund............................ 8,329,375
23,063,250 Provident Institutional Investment Fund........... 23,063,250
------------
Total Money Market Funds (cost - $31,392,625)................ 31,392,625
------------
Total Investments (cost - $518,376,806) - 106.00%............ 584,577,734
Liabilities in excess of other assets - (6.00)%.............. (33,109,888)
------------
Net Assets--100.00%.......................................... $551,467,846
------------
------------
</TABLE>
- ------------
<TABLE>
<S> <C>
* 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.
# Yield to maturity at October 31, 1996.
ADR American Depositary Receipts
(1) Security, or a portion thereof, was loaned at October 31, 1996.
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
<TABLE>
<S> <C>
Assets
Investments, at value (cost - $518,376,806).................................................... $584,577,734
Cash denominated in foreign currencies, at value (cost - $201,118)............................. 199,557
Receivable for investments sold................................................................ 857,398
Dividends and interest receivable.............................................................. 534,452
Receivable for shares of beneficial interest sold.............................................. 856,673
Deferred organizational expenses............................................................... 6,257
Other assets................................................................................... 218,494
------------
Total assets................................................................................... 587,250,565
------------
Liabilities
Payable for shares of beneficial interest repurchased.......................................... 3,353,909
Collateral for securities loaned............................................................... 31,392,625
Payable to affiliate........................................................................... 628,905
Accrued expenses and other liabilities......................................................... 407,280
------------
Total liabilities.............................................................................. 35,782,719
------------
Net Assets
Beneficial interest shares of $0.001 par value outstanding (unlimited amount authorized)....... 485,539,773
Accumulated net investment loss................................................................ (845,425)
Accumulated net realized gains from investments................................................ 694,086
Net unrealized appreciation of investments and other assets and liabilities denominated in
foreign currencies........................................................................... 66,079,412
------------
Net assets..................................................................................... $551,467,846
------------
------------
Class A:
Net assets..................................................................................... $307,267,488
------------
Shares outstanding............................................................................. 17,631,317
------------
Net asset and redemption value per share....................................................... $17.43
------------
------------
Maximum offering price per share (net asset value plus sales charge of 4.50% of offering
price)......................................................................................... $18.25
------------
------------
Class B:
Net assets..................................................................................... $113,444,796
------------
Shares outstanding............................................................................. 6,700,149
------------
Net asset value and offering price per share................................................... $16.93
------------
------------
Class C:
Net assets..................................................................................... $67,530,353
------------
Shares outstanding............................................................................. 3,989,099
------------
Net asset value and offering price per share................................................... $16.93
------------
------------
Class Y:
Net assets..................................................................................... $63,225,209
------------
Shares outstanding............................................................................. 3,591,346
------------
Net asset value, offering price and redemption value per share................................. $17.60
------------
------------
</TABLE>
See accompanying notes to financial statements
12
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE TWO FOR THE YEAR
MONTHS ENDED ENDED
OCTOBER 31, 1996 AUGUST 31, 1996
---------------- ---------------
<S> <C> <C>
Investment income:
Dividends (net of foreign withholding taxes of $40,459 and $670,848,
respectively).............................................................. $ 576,308 $ 8,721,327
Interest..................................................................... 109,969 601,274
---------------- ---------------
686,277 9,322,601
---------------- ---------------
Expenses:
Investment advisory and administration fees.................................. 794,518 4,990,588
Service fees - Class A....................................................... 131,568 828,741
Service and distribution fees - Class B...................................... 191,642 1,252,635
Service and distribution fees - Class C...................................... 113,306 732,335
Transfer agency fees and expenses............................................ 113,100 790,172
Custody and accounting....................................................... 121,058 644,727
Reports and notices to shareholders.......................................... 82,000 394,328
Legal and audit.............................................................. 47,000 134,475
Amortization of organizational expenses...................................... 10,823 64,936
State registration fees...................................................... 12,828 58,722
Trustees' fees and expenses.................................................. 4,025 15,750
Other expenses............................................................... 19,290 160,105
---------------- ---------------
1,641,158 10,067,514
---------------- ---------------
Net investment loss.......................................................... (954,881) (744,913)
---------------- ---------------
Realized and unrealized gains (losses) from investment transactions:
Net realized gains (losses) from:
Investment transactions................................................. 3,004,088 41,488,308
Foreign currency transactions........................................... 1,722 (510,978)
Net change in unrealized appreciation/depreciation of:
Investments............................................................. 18,083,725 4,746,601
Other assets and liabilities denominated in foreign currencies.......... 115,996 (320,015)
---------------- ---------------
Net realized and unrealized gains from investment transactions............... 21,205,531 45,403,916
---------------- ---------------
Net increase in net assets resulting from operations......................... $ 20,250,650 $44,659,003
---------------- ---------------
---------------- ---------------
</TABLE>
See accompanying notes to financial statements
13
<PAGE>
GLOBAL EQUITY FUND
PAINEWEBBER
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
FOR THE TWO AUGUST 31,
MONTHS ENDED ------------------------------------------
OCTOBER 31, 1996 1996 1995
------------------ ------------------- -------------------
<S> <C> <C> <C>
From operations:
Net investment income (loss).......................... $ (954,881) $ (744,913) $ 15,770
Net realized gains from investment transactions....... 3,004,088 41,488,308 16,774,940
Net realized gains (losses) from foreign currency
transactions........................................ 1,722 (510,978) (521,164)
Net changes in unrealized appreciation/depreciation
of:
Investments......................................... 18,083,725 4,746,601 (12,104,719)
Other assets and liabilities denominated in foreign
currencies....................................... 115,996 (320,015) (766,274)
------------------ ------------------- -------------------
Net increase in net assets resulting from operations.. 20,250,650 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.................. 34,520,774 130,337,737 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............................ (50,077,173) (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............................... (15,556,399) (121,169,682) 412,800,647
------------------ ------------------- -------------------
Net increase (decrease) in net assets................. 4,694,251 (97,392,925) 398,446,653
Net Assets:
Beginning of period................................... 546,773,595 644,166,520 245,719,867
------------------ ------------------- -------------------
End of period......................................... $551,467,846 $ 546,773,595 $ 644,166,520
------------------ ------------------- -------------------
------------------ ------------------- -------------------
</TABLE>
See accompanying notes to financial statements
14
<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, Class C and Class
Y shares. 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 Class A, Class
B and Class C shares have exclusive voting rights with respect
to their 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.
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 7,902,877 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
15
<PAGE>
PAINEWEBBER
include the operations of Atlas Global Growth Fund, Europe
Growth Fund and Global Growth and Income Fund prior to the
Merger Date.
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. The following
is a summary of significant accounting policies:
Valuation of Investments--Securities which are listed on U.S.
and foreign stock exchanges are valued at the last sale price
on the day the securities are being valued or, lacking any
sales on such day, at the last available bid price. In cases
where securities are traded on more than one exchange, the
securities are generally valued on the exchange designated by
Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'),
a wholly owned subsidiary of PaineWebber Incorporated
('PaineWebber') and investment adviser and administrator of the
Fund, or 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 (other than short-term debt securities
described below). The amortized cost method of valuation, which
approximates market value, is used to value short-term debt
instruments with 60 days or less remaining to maturity unless
the Trust's board of trustees determines that this does not
represent fair value. Securities and assets for which market
quotations are not readily available (including restricted
securities subject to limitations as to their sale) are valued
at fair value as determined in good faith by or under the
direction of the Trust's board of trustees.
All investments quoted in foreign currencies are valued daily
in U.S. dollars on the basis of the foreign currency exchange
rates prevailing at the time such valuation is determined by
the Fund's custodian, unless the board of trustees determines
that this does not represent fair value. Foreign currency
exchange rates are generally determined prior to the close of
trading on the New York Stock Exchange ('NYSE'). Occasionally,
events affecting the value of foreign investments and such
exchange rates occur between the time at which they are
determined and the close of trading on the NYSE, which will not
be reflected in a computation of the Fund's net asset value. If
events materially affecting the value of such investments or
currency exchange rates occur during such time period, the
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.
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
16
<PAGE>
PAINEWEBBER
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 using reasonable diligence becomes
aware of such dividends). 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 (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 as follows: (1) the foreign
currency market value of investment securities and other assets
and liabilities stated in foreign currencies are translated at
the exchange rates prevailing at the end of the period; and
(2) purchases, sales, income and expenses are translated at the
rate of exchange prevailing on the respective dates of such
transactions. The resulting exchange gains and losses are
included in the Statement of Operations.
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.
17
<PAGE>
PAINEWEBBER
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. Dividends and
distributions that 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
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
paid-in-capital.
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.
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. At
October 31, 1996, the Fund owed Mitchell Hutchins $405,999 in
investment advisory and administration fees.
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.
18
<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 and Class C 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. At October 31, 1996 the Fund owed Mitchell Hutchins
$222,906 in service and distribution fees.
Mitchell Hutchins also receives the proceeds of the initial
sales charges paid by shareholders upon the purchase of Class A
shares and the contingent deferred sales charges paid by the
shareholders upon certain redemptions of Class B and Class C
shares. Mitchell Hutchins has informed the Fund that for the
two months ended October 31, 1996 and the year ended August 31,
1996, it had earned approximately $76,222 and $836,558,
respectively, 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. The Fund's lending agent is PaineWebber Global Security
Lending, a wholly owned subsidiary of PaineWebber, who receives
no compensation from the Fund.
As of October 31, 1996, the Fund's custodian held cash and cash
equivalents having an aggregate value of $31,392,625 as
collateral for portfolio securities loaned having a market
value of $30,211,433.
19
<PAGE>
PAINEWEBBER
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned
at October 31, 1996 was substantially the same as the cost of
securities for financial statement purposes.
At October 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)...... $ 93,166,428
Gross depreciation (investments having
an excess of cost over value)...... (26,965,500)
------------
Net unrealized appreciation of
investments........................ $ 66,200,928
------------
------------
</TABLE>
For the two months ended October 31, 1996, aggregate purchases
and sales of portfolio securities, excluding short-term
securities, were $17,801,727 and $31,498,879, respectively.
FEDERAL INCOME TAX STATUS
The Fund intends to distribute substantially all of its taxable
income and to comply with the other requirements of the
Internal Revenue Code applicable to regulated investment
companies. Accordingly, no provision for federal income taxes
is required. In addition, by distributing during each calendar
year, substantially all of its net investment income, capital
gains and certain other amounts, if any, the Fund intends not
to be subject to a federal excise tax.
At October 31, 1996, the Fund has a net capital loss
carryforward of approximately $16,035,000. In subsequent years,
this carryforward loss is available as a reduction, to the
extent provided in the regulations, of future net realized
capital gains and will expire by October 31, 2001.
To reflect reclassifications arising from permanent
'book / tax' differences for the year ended October 31, 1996,
the Fund's accumulated net realized gains were reduced by
$10,422; accumulated net investment loss was reduced by
$1,439,324 and beneficial interest was reduced by $1,428,902.
20
<PAGE>
PAINEWEBBER
SHARES OF BENEFICIAL INTEREST
AT OCTOBER 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
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
TWO MONTHS
ENDED OCTOBER 31,
1996:
Shares sold........... 1,301,820 $ 22,362,041 63,198 $ 1,073,212
Shares repurchased.... (1,854,866) (32,308,134) (262,491) (4,423,837)
Shares converted from
Class B to Class
A................... 24,859 427,610 (25,560) (427,610)
Dividends
reinvested.......... -- -- -- --
---------- ------------ ---------- ------------
Net decrease............ (528,187) $ (9,518,483) (224,853) $ (3,778,235)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED AUGUST 31, 1996:
Shares sold........... 3,773,378 $ 63,129,065 996,490 $ 15,875,329
Shares repurchased.... (8,829,630) (146,403,118) (3,235,769) (51,584,942)
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
---------- ------------ ---------- ------------
Net increase
(decrease)............ (4,211,945) $(69,815,566) (2,107,217) $(33,770,752)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED AUGUST 31,
1995:
Shares sold........... 940,218 $ 15,179,015 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 9,069,539 143,575,469
Shares repurchased.... (3,939,313) (60,869,557) (47,274) (747,123)
Dividends
reinvested.......... 884,497 12,665,998 -- --
---------- ------------ ---------- ------------
Net increase............ 11,445,986 $185,745,874 9,032,219 $142,985,872
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
<CAPTION>
CLASS C CLASS Y
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
TWO MONTHS
ENDED OCTOBER 31,
1996:
Shares sold........... 508,932 $ 8,584,402 142,315 $ 2,501,119
Shares repurchased.... (592,879) (10,027,798) (189,108) (3,317,404)
Shares converted from
Class B to Class
A................... -- -- -- --
Dividends
reinvested.......... -- -- -- --
---------- ------------ --------- -----------
Net decrease............ (83,947) $ (1,443,396) (46,793) $ (816,285)
---------- ------------ --------- -----------
---------- ------------ --------- -----------
YEAR ENDED AUGUST 31,
1996:
Shares sold........... 2,665,239 $ 42,738,539 518,809 $ 8,594,804
Shares repurchased.... (4,033,170) (64,638,426) (525,977) (8,749,944)
Shares converted from
Class B to Class
A................... -- -- -- --
Dividends
reinvested.......... 163,102 2,524,812 122,137 1,946,851
---------- ------------ --------- -----------
Net increase
(decrease)............ (1,204,829) $(19,375,075) 114,969 $ 1,791,711
---------- ------------ --------- -----------
---------- ------------ --------- -----------
YEAR ENDED AUGUST 31,
1995:
Shares sold........... 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................ 3,493,020 55,291,061 1,725,341 28,010,075
Shares repurchased.... (837,535) (12,930,296) (591,713) (9,072,875)
Dividends
reinvested.......... 168,250 2,377,378 169,483 2,436,517
---------- ------------ --------- -----------
Net increase............ 3,383,599 $ 53,623,364 1,856,401 $30,445,537
---------- ------------ --------- -----------
---------- ------------ --------- -----------
</TABLE>
21
<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 For the Period
Two Months For the Years Ended November 14,
Ended August 31, 1991+ to
October 31, ------------------------------------------- August 31,
1996 1996 1995 1994 1993 1992
----------- --------- --------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period..................... $ 16.81 $ 16.12 $ 16.98 $ 14.55 $ 12.87 $ 12.00
----------- --------- --------- -------- -------- -------
Net investment income
(loss)..................... (0.02) 0.02 0.02 0.01 0.03 0.09
Net realized and unrealized
gains (losses) from
investment and
foreign currency
transactions............... 0.64 1.24 0.37 2.63 1.89 0.78
----------- --------- --------- -------- -------- -------
Net increase (decrease) from
investment operations...... 0.62 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.............. 0.00 (0.57) (1.25) (0.21) (0.24) 0.00
----------- --------- --------- -------- -------- -------
Net asset value, end of
period..................... $ 17.43 $ 16.81 $ 16.12 $ 16.98 $ 14.55 $ 12.87
----------- --------- --------- -------- -------- -------
----------- --------- --------- -------- -------- -------
Total investment return
(1)........................ 3.69% 8.06% 3.24% 18.23% 15.24% 7.25%
----------- --------- --------- -------- -------- -------
----------- --------- --------- -------- -------- -------
Ratios/Supplemental Data:
Net assets, end of period
(000's).................... $ 307,267 $ 305,218 $ 360,652 $185,493 $156,451 $113,070
Expenses to average net
assets..................... 1.53%* 1.48% 1.71%(2) 1.58% 1.53% 1.68%*
Net investment income (loss)
to average net assets...... (0.80)%* 0.10% 0.09%(2) 0.07% 0.22% 0.93%*
Portfolio turnover........... 3% 33% 40% 51% 56% 30%
Average commission rate paid
per share of common stock
investments purchased/sold
(3)........................ $ 0.0069 $ 0.0120 -- -- -- --
<CAPTION>
Class B
---------------------------------------
For the
Two
Months For the For the Period
Ended Year August 25,
October Ended 1995++
31, August 31, to August 31,
1996 1996 1995
-------- ---------- --------------
<S> <C> <C> <C>
Net asset value, beginning of
period..................... $ 16.35 $ 15.82 $ 15.83
-------- ---------- -------
Net investment income
(loss)..................... (0.05 ) (0.12) 0.00
Net realized and unrealized
gains (losses) from
investment and
foreign currency
transactions............... 0.63 1.22 (0.01)
-------- ---------- -------
Net increase (decrease) from
investment operations...... 0.58 1.10 (0.01)
-------- ---------- -------
Dividends from net investment
income..................... -- -- --
Distributions from net
realized gains............. -- (0.57) --
-------- ---------- -------
Total dividends and
distributions.............. 0.00 (0.57) 0.00
-------- ---------- -------
Net asset value, end of
period..................... $ 16.93 $ 16.35 $ 15.82
-------- ---------- -------
-------- ---------- -------
Total investment return
(1)........................ 3.55 % 7.18% (0.06)%
-------- ---------- -------
-------- ---------- -------
Ratios/Supplemental Data:
Net assets, end of period
(000's).................... $113,445 $113,235 $142,880
Expenses to average net
assets..................... 2.34%* 2.25% 2.17%*(2)
Net investment income (loss)
to average net assets...... (1.61)%* (0.68)% (1.92)%*(2)
Portfolio turnover........... 3% 33% 40%
Average commission rate paid
per share of common stock
investments purchased/sold
(3)........................ $0.0069 $ 0.0120 --
</TABLE>
- ------------------
<TABLE>
<C> <S>
* Annualized
+ 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>
22
<PAGE>
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------------------
For the For the
Two Months For the Years Ended Period
Ended August 31, May 10, 1993++
October 31, ------------------------------ to August 31,
1996 1996 1995 1994 1993
----------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C>
$ 16.35 $ 15.82 $ 16.81 $ 14.52 $ 13.80
----------- ------- ------- ------- -------
(0.05) (0.13) (0.11) (0.07) (0.02)
0.63 1.23 0.37 2.57 0.74
----------- ------- ------- ------- -------
0.58 1.10 0.26 2.50 0.72
----------- ------- ------- ------- -------
-- -- -- -- --
-- (0.57) (1.25) (0.21) --
----------- ------- ------- ------- -------
0.00 (0.57) (1.25) (0.21) 0.00
----------- ------- ------- ------- -------
$ 16.93 $ 16.35 $ 15.82 $ 16.81 $ 14.52
----------- ------- ------- ------- -------
----------- ------- ------- ------- -------
3.55% 7.18% 2.46% 17.29% 5.22%
----------- ------- ------- ------- -------
----------- ------- ------- ------- -------
$67,530 $66,585 $83,485 $31,837 $ 10,807
2.30%* 2.27% 2.48%(2) 2.33% 2.28%*
(1.57)%* (0.70)% (0.68)%(2) (0.68)% (0.53)%*
3% 33% 40% 51% 56%
$0.0069 $0.0120 -- -- --
<CAPTION>
Class Y
----------------------------------------------------------------
For the
Two
Months For the
Ended For the Years Ended Period
October August 31, May 10, 1993++
31, ------------------------------ to August 31,
1996 1996 1995 1994 1993
------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C>
$ 16.97 $ 16.22 $ 17.03 $ 14.56 $ 13.80
------- ------- ------- ------- -------
(0.01) 0.07 0.07 0.05 0.02
0.64 1.25 0.37 2.63 0.74
------- ------- ------- ------- -------
0.63 1.32 0.44 2.68 0.76
------- ------- ------- ------- -------
-- -- -- -- --
-- (0.57) (1.25) (0.21) --
------- ------- ------- ------- -------
0.00 (0.57) (1.25) (0.21) 0.00
------- ------- ------- ------- -------
$ 17.60 $ 16.97 $ 16.22 $ 17.03 $ 14.56
------- ------- ------- ------- -------
------- ------- ------- ------- -------
3.71% 8.39% 3.54% 18.49% 5.51%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
$63,225 $61,736 $57,150 $28,390 $ 19,098
1.18%* 1.17% 1.46%(2) 1.33% 1.28%*
(0.45)%* 0.46% 0.36%(2) 0.32% 0.47%*
3% 33% 40% 51% 56%
$0.0069 $0.0120 -- -- --
</TABLE>
23
<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 October 31, 1996, and the
related statement of operations for the two months then ended
and for the year ended August 31, 1996, the statement of changes
in net assets and financial highlights for the two months then
ended and for the years ended August 31, 1996 and August 31,
1995. 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 October 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 and audited by us present fairly,
in all material respects, the financial position of PaineWebber
Global Equity Fund at October 31, 1996, the results of its
operations for the two months then ended and for the year ended
August 31, 1996, the changes in its net assets and the financial
highlights for the two months then ended and 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
December 13, 1996
24
<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 (October 31, 1996) as to the federal tax status
of distributions received by shareholders during such fiscal
year. Accordingly, we are advising you that no distributions
were paid by the Fund during the period.
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.
25
<PAGE>
[This page intentionally left blank]
<PAGE>
BOARD OF TRUSTEES
Margo N. Alexander Meyer Feldberg
Richard Q. Armstrong George W. Gowen
E. Garrett Bewkes, Jr. Frederic V. Malek
Richard R. Burt Carl W. Schafer
Mary C. Farrell John R. Torell III
PRINCIPAL OFFICERS
Margo N. Alexander Dianne E. O'Donnell
President Vice President and Secretary
Victoria E. Schonfeld Julian F. Sluyters
Vice President 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
o High Income Fund
o Investment Grade Income Fund
o Low Duration U.S. Government Income Fund
o Strategic Income Fund
o U.S. Government Income Fund
TAX-FREE BOND FUNDS
o California Tax-Free Income Fund
o Municipal High Income Fund
o National Tax-Free Income Fund
o New York Tax-Free Income Fund
STOCK FUNDS
o Capital Appreciation Fund
o Financial Services Growth Fund
o Growth Fund
o Growth and Income Fund
o Small Cap Fund
o Utility Income Fund
ASSET ALLOCATION FUNDS
(bullet) Balanced Fund
(bullet) Tactical Allocation Fund
GLOBAL FUNDS
o Emerging Markets Equity Fund
o Global Equity Fund
o Global Income Fund
PAINEWEBBER MONEY MARKET FUND
PaineWebber
(Copyright) 1996 PaineWebber Incorporated
Member SIPC
PaineWebber
GLOBAL EQUITY
FUND
OCTOBER 31, 1996
ANNUAL REPORT
[ARTWORK]
