<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 (Class A) and the Morgan Stanley Capital International (MSCI)
World Index from November 30, 1991 through October 31, 1998.
[GRAPH]
<TABLE>
<CAPTION>
PaineWebber Global
Equity Fund (A) MSCI World Index
<S> <C> <C>
Nov-91 $9,551 $10,000
Jan-92 $10,224 $10,534
Apr-92 $10,465 $10,007
Jul-92 $10,532 $10,088
Oct-92 $10,382 $9,967
Jan-93 $10,549 $10,267
Apr-93 $11,565 $11,641
Jul-93 $11,683 $12,060
Oct-93 $13,047 $12,727
Jan-94 $14,470 $13,431
Apr-94 $13,889 $13,085
Jul-94 $14,075 $13,338
Oct-94 $14,504 $13,766
Jan-95 $13,082 $13,105
Apr-95 $14,388 $14,430
Jul-95 $15,609 $15,285
Oct-95 $14,751 $15,145
Jan-96 $15,557 $16,430
Apr-96 $16,581 $17,209
Jul-96 $15,837 $16,707
Oct-96 $16,842 $17,693
Jan-97 $17,637 $18,616
Apr-97 $17,518 $19,072
Jul-97 $20,452 $22,248
Oct-97 $18,336 $20,746
Jan-98 $18,847 $21,976
Apr-98 $22,151 $24,703
Jul-98 $21,735 $24,942
Oct-98 $18,800 $24,001
</TABLE>
The graph depicts the performance of PaineWebber Global Equity Fund Class A
shares versus the MSCI 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 no guarantee of future performance.
The performance of the other classes will vary from the performance of the class
shown because of differences in sales charges and fees paid by shareholders
investing in different classes.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS, PERIODS ENDED 10/31/98
One Year Five Years Life****
<S> <C> <C> <C> <C>
CLASS A* 2.53% 7.58% 9.53%
Before Deducting
Maximum Sales Charge CLASS B** 1.62% N/A 6.37%
CLASS C*** 1.74% 6.76% 8.23%
CLASS A* (2.10)% 6.59% 8.81%
After Deducting
Maximum Sales Charge CLASS B** (2.74)% N/A 5.57%
CLASS C*** 0.87% 6.76% 8.23%
</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% and is
reduced to 0% after six years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charge for Class C shares is 1% and is
reduced to 0% after one year. Class C shares bear ongoing 12b-1
distribution and service fees.
**** Life: since commencement of issuance on November 14, 1991 for Class A
shares, August 25, 1995 for Class B shares, and May 10, 1993 for Class C
shares.
The Fund offers Class Y shares to a limited group of eligible investors,
including participants in certain investment programs sponsored by PaineWebber
and that may invest in PaineWebber mutual funds as well as the trustee of the
PaineWebber 401(k) Plus Plan (formerly known as PaineWebber Savings Investment
Plan). For the year and five years ended October 31, 1998, and since inception
on May 10, 1993 through October 31, 1998, Class Y shares have produced average
annual total returns of 2.86%, 7.92% and 9.40%, respectively. Class Y shares do
not bear 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 PAINEWEBBER EMERGING MARKETS EQUITY FUND
PERFORMANCE AT A GLANCE
- --------------------------------------------------------------------------------
Comparison of the change of a $10,000 investment in PaineWebber Emerging
Markets Equity Fund (Class A, C and Y) and the Morgan Stanley Capital
International (MSCI) Emerging Markets Free Index from January 31, 1994
through October 31, 1998.
[GRAPH]
<TABLE>
<CAPTION>
PAINEWEBBER EMERGING PAINEWEBBER EMERGING PAINEWEBBER EMERGING
MARKETS EQUITY MARKETS EQUITY MARKETS EQUITY MSCI EMERGING
FUND CLASS A FUND CLASS C FUND CLASS Y MARKETS FREE INDEX
<S> <C> <C> <C> <C>
Jan-94 $9,549 $10,000 $10,000 $10,000
Apr-94 $8,694 $9,095 $9,113 $8,754
Jul-94 $8,895 $9,286 $9,326 $9,352
Oct-94 $9,485 $9,884 $9,950 $10,441
Jan-95 $7,316 $7,610 $7,678 $8,134
Apr-95 $7,375 $7,663 $7,754 $8,334
Jul-95 $8,116 $8,410 $8,539 $9,001
Oct-95 $7,630 $7,887 $8,029 $8,412
Jan-96 $7,797 $8,046 $8,205 $9,243
Apr-96 $8,172 $8,418 $8,606 $9,534
Jul-96 $7,550 $7,762 $7,962 $8,897
Oct-96 $7,534 $7,737 $7,946 $8,959
Jan-97 $8,100 $8,294 $8,547 $9,774
Apr-97 $8,331 $8,518 $8,798 $9,942
Jul-97 $9,589 $9,788 $10,135 $10,934
Oct-97 $7,479 $7,613 $7,904 $8,198
Jan-98 $6,913 $7,023 $7,311 $7,455
Apr-98 $7,718 $7,829 $8,163 $8,497
Jul-98 $6,228 $6,301 $6,584 $6,772
Oct-98 $5,193 $5,247 $5,498 $5,659
</TABLE>
The graph depicts the performance of PaineWebber Emerging Markets Equity Fund
shares versus the MSCI Emerging Markets Free Index. It is important to note
PaineWebber Emerging Markets 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 no guarantee of future performance.
The performance of the classes vary based on the difference in sales charges
and fees paid by shareholders in different classes.
Class B shares are not shown because they were first offered at a later date.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS, PERIODS ENDED 10/31/98
One Year Life****
<S> <C> <C> <C>
CLASS A* (30.56)% (11.86)%
Before Deducting
Maximum Sales Charge CLASS B** (30.69)% (11.64)%
CLASS C*** (31.08)% (12.53)%
CLASS A* (33.67)% (12.71)%
After Deducting
Maximum Sales Charge CLASS B** (34.15)% (12.56)%
CLASS C*** (31.77)% (12.53)%
</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% and is
reduced to 0% after six years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charge for Class C shares is 1% and is
reduced to 0% after one year. Class C shares bear ongoing 12b-1
distribution and service fees.
**** Life: since commencement of issuance on January 19, 1994 for Class A and
Class C shares, and December 5, 1995 for Class B shares.
The Fund offers Class Y shares to a limited group of eligible investors,
including participants in certain investment programs sponsored by PaineWebber
and that may invest in PaineWebber mutual funds. For the year ended October 31,
1998, and since inception on January 19, 1994 through October 31, 1998, Class Y
shares have produced average annual total returns of (30.44)% and (11.66)%,
respectively. Class Y shares do not bear 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.
2
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND ANNUAL REPORT
PERFORMANCE AT A GLANCE
- --------------------------------------------------------------------------------
Comparison of the change of a $10,000 investment in PaineWebber Asia
Pacific Growth Fund (Class A, B and C) and the Morgan Stanley Capital
International (MSCI) All Country Asia Pacific Free (ex-Japan) Index from
March 31, 1997 through October 31, 1998.
[GRAPH]
<TABLE>
<CAPTION>
MSCI ALL COUNTRY
PAINEWEBBER ASIA PACIFIC PAINEWEBBER ASIA PACIFIC PAINEWEBBER ASIA PACIFIC ASIA PACIFIC FREE
GROWTH FUND CLASS A GROWTH FUND CLASS B GROWTH FUND CLASS C (EX-JAPAN) INDEX
<S> <C> <C> <C> <C>
Mar-97 $9,549 $10,000 $10,000 $10,000
Apr-97 $9,534 $9,976 $9,976 $9,933
May-97 $10,122 $10,592 $10,592 $10,339
Jun-97 $10,345 $10,912 $10,912 $10,717
Jul-97 $10,405 $10,864 $10,864 $10,770
Aug-97 $8,686 $9,072 $9,072 $9,100
Sep-97 $8,808 $9,184 $9,192 $9,166
Oct-97 $6,845 $7,136 $7,136 $7,327
Nov-97 $6,417 $6,688 $6,688 $6,910
Dec-97 $6,310 $6,568 $6,568 $6,763
Jan-98 $5,959 $6,200 $6,200 $6,455
Feb-98 $6,746 $7,016 $7,016 $7,434
Mar-98 $6,623 $6,888 $6,888 $7,355
Apr-98 $6,218 $6,456 $6,456 $6,863
May-98 $5,424 $5,632 $5,632 $6,005
Jun-98 $4,905 $5,088 $5,088 $5,526
Jul-98 $4,796 $4,968 $4,976 $5,437
Aug-98 $4,179 $4,328 $4,328 $4,661
Sep-98 $4,645 $4,808 $4,816 $5,058
Oct-98 $5,210 $5,176 $5,392 $5,942
</TABLE>
The graph depicts the performance of PaineWebber Asia Pacific Growth Fund shares
versus the MSCI All Country Asia Pacific Free (ex-Japan) index. It is important
to note PaineWebber Asia Pacific Growth Fund is a professionally managed mutual
fund while the Index is not available for investment and is unmanaged. The
comparison is shown for illustrative purposes only.
Past Performance is no guarantee of future performance.
The performance of the classes vary based on the difference in sales charges and
fees paid by shareholders in different classes.
Class Y shares are not shown because they were first offered at a later date.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS, PERIODS ENDED 10/31/98
One Year Life****
<S> <C> <C> <C>
CLASS A* (23.88)% (31.48)%
Before Deducting
Maximum Sales Charge CLASS B** (24.44)% (31.98)%
CLASS C*** (24.44)% (31.94)%
CLASS A* (27.29)% (33.42)%
After Deducting
Maximum Sales Charge CLASS B** (28.22)% (33.69)%
CLASS C*** (25.20)% (31.94)%
</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% and is
reduced to 0% after six years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charge for Class C shares is 1% and is
reduced to 0% after one year. Class C shares bear ongoing 12b-1
distribution and service fees.
**** Life: since commencement of issuance on March 25, 1997 for Class A, Class
B and Class C shares.
The Fund offers Class Y shares to a limited group of eligible investors,
including the participants in certain investment programs sponsored by
PaineWebber and that may invest in PaineWebber mutual funds. The average annual
total return of Class Y shares from inception on March 13, 1998 through October
31, 1998 was (21.59)%. Class Y shares do not bear initial or contingent deferred
sales charges or ongoing distribution and service fees.
The investment return and the principal value of an investment in the Fund will
fluctuate, so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
3
<PAGE>
ANNUAL REPORT PAINEWEBBER GLOBAL EQUITY, EMERGING MARKETS EQUITY AND
ASIA PACIFIC GROWTH FUNDS
December 15, 1998
PAINEWEBBER GLOBAL EQUITY FUND
FUND PROFILE
- - GOAL:
Long-term growth of capital
- - PORTFOLIO MANAGERS:
Kirk Barneby and Mark Tincher, Mitchell Hutchins Asset Management Inc.;
Scott Opsal, Invista Capital Management, Inc.
- - TOTAL NET ASSETS:
$396.5 million as of October 31, 1998
- - DIVIDEND PAYMENTS:
Annually, if any
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
Top Five Countries
10/31/98 (1)
<S> <C>
United States 67.3%
United Kingdom 8.2%
Netherlands 5.0%
Sweden 4.3%
Finland 2.8%
</TABLE>
Dear Shareholder,
We are pleased to present you with the annual report for PaineWebber Global
Equity Fund, PaineWebber Emerging Markets Equity Fund and PaineWebber Asia
Pacific Growth Fund for the fiscal year ended October 31, 1998.
PAINEWEBBER GLOBAL EQUITY FUND
- --------------------------------------------------------------------------------
[GRAPHIC]
PERFORMANCE--
The Fund's total return consists of the change in net asset value with
dividends reinvested. For the fiscal year ended October 31, 1998, without
deducting sales charges, Class A shares gained 2.53%, Class B shares gained
1.62%, Class C shares gained 1.74% and Class Y shares gained 2.86%.
The Fund's total return may be lower for shareowners who purchased or redeemed
Fund shares during the period. After deducting the maximum applicable sales
charges, Class A shares lost 2.10%, Class B shares lost 2.74% and Class C shares
gained 0.87%. Class Y shares are not subject to sales charges.
MARKET OVERVIEW--
The global investment markets endured considerable volatility during the
Fund's fiscal year. During the first six months, the international equity
markets advanced due to strong economic growth and low interest rates throughout
the world. Optimism grew as Europe moved closer to monetary union. Then, toward
the end of the Fund's fiscal year, the international markets faltered as
investors became increasingly risk averse.
The markets had been highly valued during the year as a result of high
consumer confidence and an attractive investment outlook. As Asia's troubles
spread during the year, other markets encountered problems. Russia's currency
devaluation in August, in connection with short-term debt problems in Brazil,
led investors to demand higher risk premiums and place their funds in safer
investments.
MANAGEMENT CHANGE--
On September 24, 1998, shareholders of the PaineWebber Global Equity Fund
approved a change to the Fund's management. As a result, effective October 1,
1998, GE Investment Management no longer serves as the Fund's subadviser.
Mitchell Hutchins Asset Management Inc. is now responsible for the asset
allocation decision (U.S. versus international allocation) as well as management
of the U.S. portion of the Fund's portfolio.
Invista Capital Management, Inc. will serve as subadviser to the Fund's
international portion. Invista has an impressive record in managing comparable
international investments. As of August 31, 1998, Invista managed approximately
$26 billion in client assets.
NEW INVESTMENT PROCESS--
- - Asset allocation decision--Kirk Barneby, Chief Investment Officer of
Quantitative Investments, evaluates the
1 All weightings represent percentages of net assets as of October 31, 1998,
unless noted otherwise. The Funds are actively managed, and holdings are
subject to change.
4
<PAGE>
ANNUAL REPORT
Fund's U.S./international allocation each month using a proprietary model.
- - U.S. investment selection--Mark Tincher, Chief Investment Officer of
Equity Investments, uses the Mitchell Hutchins Factor Valuation Model and
equity research team to identify undervalued companies with relatively
strong earnings momentum.
- - International investment selection--Scott Opsal, Chief Investment Officer
of Invista, takes a bottom-up, value-oriented approach to investing in
international stocks that sell at below-average multiples relative to
similar companies around the world.
PORTFOLIO HIGHLIGHTS--
The Fund entered 1998 with low exposure in the Far Eastern markets, and
therefore was little affected by the region's poor performance later in the
year. The Fund's position in Latin American equities significantly hurt
performance, as that market lost 40% during the fiscal year. An overweighting in
continental Europe helped performance for much of the year. After the transition
to Invista as the Fund's sub-adviser, the international portion of the Fund was
positioned defensively to limit its downside risk.
OUTLOOK--
The Fund remains overweighted in Europe (30.41%),(1) which despite the
world's troubles still has the most robust economic outlook of the developed
markets. For example, the United Kingdom continues to provide investment
opportunities for U.K.-domiciled companies with worldwide operations.
We expect current economic conditions in the United States--slow growth,
low inflation and low interest rates--to continue into 1999. It is difficult to
predict what will happen to stock prices given their current volatility, but we
look for slower, steadier growth once the markets stabilize.
Japan seems to be on the right track to taking appropriate bank reform
measures; however, it still must concentrate on working out bad debts. We expect
lower prices for Japanese stocks as earnings estimates are lowered. We continue
to monitor the Asian markets in hope of identifying attractive investments when
the market turns.
Latin America continues to face economic weakness, although we now are
seeing prices that more fully reflect that outlook. We are researching
opportunities where we think the stock price has overly discounted the company's
prospects.
PAINEWEBBER EMERGING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
[GRAPHIC]
PERFORMANCE--
The Fund's total return consists of the change in net asset value with
dividends reinvested. For the fiscal year ended October 31, 1998, without
deducting sales charges, Class A shares lost 30.56%, Class B shares lost
30.69%, Class C shares lost 31.08% and Class Y shares lost 30.44%.
The Fund's total return may be lower for shareowners who purchased or
redeemed Fund shares during the period. After deducting the maximum applicable
sales charges, Class A shares lost 33.67%, Class B shares lost 34.15% and Class
C shares lost 31.77%. Class Y shares are not subject to sales charges.
MARKET OVERVIEW--
The crisis in emerging markets, which began with the devaluation of the
Thai currency in July 1997, spread
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
Top Five Sectors,
10/31/98 (1)
<S> <C>
Consumer Cyclical 21.1%
Financial Services 18.6%
Utilities 12.2%
Consumer Noncyclical 10.6%
HealthCare 8.6%
</TABLE>
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
Top Five Stocks,
10/31/98 (1)
<S> <C>
Merita PLC 1.5%
Citigroup, Inc. 1.2%
BellSouth Corp. 1.2%
Dell Computer Corp. 1.1%
</TABLE>
(1) All weightings represent percentages of net assets as of October 31,
1998, unless noted otherwise. The Funds are actively managed, and holdings are
subject to change.
5
<PAGE>
ANNUAL REPORT PAINEWEBBER GLOBAL EQUITY, EMERGING MARKETS EQUITY,
ASIA PACIFIC GROWTH FUNDS
PAINEWEBBER EMERGING
MARKETS EQUITY FUND
FUND PROFILE
- - GOAL:
Long-term capital appreciation
- - PORTFOLIO MANAGERS:
John Troiano, Schroder Capital Management International Inc.
- - TOTAL NET ASSETS:
$8.2 million as of October 31, 1998
- - DIVIDEND PAYMENTS:
Annually, if any
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
Top Five Countries
10/31/98 (1)
<S> <C>
Brazil 10.5%
South Africa 10.4%
Mexico 10.2%
Korea 9.4%
India 6.9%
</TABLE>
to Russia, Latin America and most recently Brazil. What began as a local
concern gradually became global, with investors becoming increasingly risk
averse. Capital was withdrawn, international lending and borrowing declined
and many economies in the region weakened or shrank.
In the past fiscal year, Greece and Portugal were least affected by the
turbulence as falling inflation and low interest rates supported their
economies. Both countries also benefited from their upcoming participation in
the European Monetary Union (EMU). Russian stocks suffered dramatically, losing
almost 90% of their value over the period. The crisis in Russia impacted other
countries in Eastern Europe, resulting in a decline in investor sentiment. Latin
America's current account balances came under pressure as a result of falling
commodity prices; these problems were exacerbated by a downturn in capital
flows.
PORTFOLIO HIGHLIGHTS--
In this environment, the Fund's strategy was defensive. The Fund benefited
from strong country selection including overweightings in Korea and continental
Europe, and underweightings in those markets most severely affected by the Asian
crisis, notably Russia and Latin America. Stock selection generally detracted
from performance as the Fund remained concentrated in high-quality companies
with solid long-term growth prospects. In many of these markets, liquidity
considerations drove performance over the year, ignoring stock fundamentals.
Management believes that as some stability begins to return to markets,
long-term fundamentals will once again drive share prices.
OUTLOOK--
Management's outlook for emerging markets remains cautious. We believe that
emerging markets growth in general will remain weak next year due to high
interest rates and weak export markets.
Our current outlook for Asian and European Markets is positive. We prefer
Asia and Europe to Latin America. Within Asia, the Fund moved from an
underweight to a neutral position in recent months (29.5%), (1) with its largest
exposure in Korea (9.4%). Korea and Thailand were the first countries into the
crisis, and we believe they are taking the necessary steps to turn their
economies around. We also continue to favor Hungary and Poland due to their
attractive valuations and favorable economic outlooks.
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
Top Five Stocks,
10/31/98 (1)
<S> <C>
Telefonos de
Mexico S.A. 3.6%
Samsung Electronics
Corp. 2.7%
Telecomunicacoes de
Sao Paulo S.A. 2.5%
Centrars Electricas
Brasileiras S.A. 1.9%
YPF Sociedad Anonima
Seires D ADR 1.3%
</TABLE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
- --------------------------------------------------------------------------------
[GRAPHIC]
PERFORMANCE--
The Fund's total return consists of the change in net asset value with
dividends reinvested. For the fiscal year ended October 31, 1998, without
deducting sales charges, Class A shares lost 23.88%, Class H shares lost 24.44%
and Class C shares lost 24.44%. Since inception on March 13, 1998, Class Y
shares lost 21.59%.
The Fund's total return
6
<PAGE>
ANNUAL REPORT
may be lower for shareowners who purchased or redeemed Fund shares during the
period. After deducting the maximum applicable sales charges, Class A shares
lost 27.29%, Class B shares lost 28.22% and Class C shares lost 25.20%. Class Y
shares are not subject to sales charges.
MARKET OVERVIEW--
This fiscal year was marked by significant market volatility in the
Asia-Pacific region, beginning with currency devaluations in emerging countries
and spreading to developed markets. The end of fixed exchange rates and the
resulting rise in interest rates worsened the operating environment of two
significant industries in the region--real estate and banking. Government
intervention in Malaysia and Hong Kong added to concerns. In Malaysia, the
announcement of capital controls shocked investors and led to an effective
closure of the stock market.
In September and October 1998 the region's markets rallied as interest
rates were cut and as central banks and governments appeared more ready to
respond to evidence of slowing global growth.
PORTFOLIO HIGHLIGHTS--
During the fiscal year, the Fund favored companies in the consumer staples,
telecommunications, and utility sectors. Generally, we emphasize quality
companies with solid domestic franchises. In many of these markets, liquidity
considerations drove performance over the year, ignoring stock fundamentals.
Management believes that as some stability begins to return to markets,
long-term fundamentals once again will drive share prices.
At the end of the fiscal year, the Fund was overweighted in Australia
(28.8%)(1) and Singapore (9.1%)--Australia due to its steadiness and Singapore
because the government continues to focus on maintaining the nation's
competitive advantages. The Hong Kong position was reduced during the period as
the macroeconomic environment there deteriorated (26.5%). During the second half
of the fiscal year we began to favor Korea (7.8%) and Thailand (1.8%). These
two countries were the first into the crisis and we believe their governments'
proactive responses are likely to help turn their economies around.
OUTLOOK--
Management continues to take a long-term view of the region and expects to
continue a defensive focus. We believe a resumption of more positive investor
sentiment depends on continued currency stability and lower interest rates. The
shorter-term outlook for the markets is likely to be influenced by external
developments in the U.S. and Brazil. Economic data still indicate stress within
the region and management expects the Asian economies to remain weak into the
first half of 1999.
Hong Kong remains one of the more flexible economies within the region, and
probably will adapt to the changing environment. Malaysia's imposition of
capital controls is a negative factor for Singapore's growth outlook, but events
have underscored the strength of Singapore's government by comparison. In
response to the crisis, the government continues to focus on ways to maintain
Singapore's competitive advantages, for example, by cutting costs.
PAINEWEBBER ASIA PACIFIC GROWTH FUND
FUND PROFILE
- - GOAL:
Long-term capital appreciation
- - PORTFOLIO MANAGERS:
Louise Croset and Heather Crighton, Schroder Capital Management
International Inc.
- - TOTAL NET ASSETS:
$30.5 million as of October 31, 1998
- - DIVIDEND PAYMENTS:
Annually, if any
PAINEWEBBER ASIA PACIFIC GROWTH FUND
<TABLE>
Top Five Countries,
10/31/98 (1)
<S> <C>
Australia 28.8%
Hong Kong 26.5%
Singapore 9.1%
Korea 7.8%
Taiwan 7.3%
</TABLE>
7
<PAGE>
ANNUAL REPORT PAINEWEBBER GLOBAL EQUITY, EMERGING MARKETS EQUITY,
ASIA PACIFIC GROWTH FUNDS
PAINEWEBBER ASIA PACIFIC GROWTH FUND
<TABLE>
Top Five Stocks,
10/31/98 (1)
<S> <C>
Hutchison Whampoa
Ltd 3.8%
Cheung Kong Holdings
Ltd 3.4%
News Corp. Ltd 2.8%
Hong Kong Telecom
Co. Ltd 2.3%
Westpac Banking
Corp. 2.3%
</TABLE>
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.
For a quarterly FUND PROFILE on PaineWebber Asia Pacific Growth Fund,
PaineWebber Emerging Markets Equity Fund and PaineWebber Global Equity Fund
or another fund in the PaineWebber Family of Funds(2), please contact your
investment executive.
Sincerely,
<TABLE>
<S> <C> <C>
/s/ Margo Alexander /s/ T. Kirkham Barneby /s/ Mark A. Tincher
MARGO ALEXANDER T. KIRKHAM BARNEBY MARK A. TINCHER
President, Managing Director and Managing Director and
Mitchell Hutchins Chief Investment Officer-- Chief Investment
Asset Management Inc. Quantitative Investments Officer--Equities
Mitchell Hutchins Mitchell Hutchins
Asset Management Inc. Asset Management Inc.
Portfolio Manager, PaineWebber
Global Equity Fund
/s/ Louise Croset /s/ Heather Crighton /s/ John Troiano
LOUISE CROSET HEATHER CRIGHTON JOHN TROIANO
Portfolio Manager, PaineWebber Portfolio Manager, Portfolio Manager,
Asia Pacific Growth Fund PaineWebber Asia Pacific PaineWebber Emerging
Growth Fund Markets Equity Fund
/s/ Scott Opsal
SCOTT OPSAL
Portfolio Manager,
PaineWebber Global
Equities Fund
</TABLE>
This letter is intended to assist shareholders in understanding how the
Funds performed during the fiscal year ended October 31, 1998, and reflects our
views at the time of writing this report. Of course, these views may change in
response to changing circumstances. We encourage you to consult your investment
executive regarding your personal investment program.
(1) All weightings represent percentages of net assets as of October 31,
1998, unless noted otherwise. The Funds are actively managed, and holdings are
subject to change.
(2) Mutual funds are sold by prospectus only. The prospectus for the funds
contains more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
8
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
PERFORMANCE RESULTS(UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN(1)
---------------------------------------- -----------------------------------
12 MONTHS ENDED 6 MONTHS
10/31/98 04/30/98 10/31/97 10/31/98 ENDED 10/31/98
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Class A Shares $16.27 $19.17 $ 18.37 2.53% (15.13)%
- ---------------------------------------------------------------------------------------------------------------
Class B Shares 15.43 18.26 17.69 1.62 (15.50)
- ---------------------------------------------------------------------------------------------------------------
Class C Shares 15.45 18.28 17.69 1.74 (15.48)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE SUMMARY CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED 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 -- (2.38)
- ---------------------------------------------------------------------------------------------------------------
1995 14.43 15.81 0.5743 -- 13.54
- ---------------------------------------------------------------------------------------------------------------
1996 15.81 17.57 0.5784 -- 14.80
- ---------------------------------------------------------------------------------------------------------------
1997 17.57 16.14 2.4768 -- 6.34
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 16.14 16.27 -- -- 0.81
- ---------------------------------------------------------------------------------------------------------------
Total: $ 5.2535 $ 0.0800
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: 88.63%
- ---------------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
08/25/95-12/31/95 $15.83 $15.46 $ 0.5743 -- 1.29%
- ---------------------------------------------------------------------------------------------------------------
1996 15.46 17.03 0.5784 -- 13.91
- ---------------------------------------------------------------------------------------------------------------
1997 17.03 15.42 2.4768 -- 5.49
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 15.42 15.43 -- -- 0.06
- ---------------------------------------------------------------------------------------------------------------
Total: $ 3.6295 $ 0.0000
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: 21.78%
- ---------------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS C SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<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
- ---------------------------------------------------------------------------------------------------------------
1996 15.46 17.03 0.5784 -- 13.91
- ---------------------------------------------------------------------------------------------------------------
1997 17.03 15.43 2.4768 -- 5.55
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 15.43 15.45 -- -- 0.13
- ---------------------------------------------------------------------------------------------------------------
Total: $ 5.0925 $ 0.0000
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: 54.27%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain distributions,
if any, at net asset value on the payable dates and do not include sales
charges; results 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 participants in certain investment programs that are sponsored by
PaineWebber and may invest in PaineWebber mutual funds as well as the trustee of
the PaineWebber 401(k) Plus Plan (formerly known as PaineWebber Savings
Investment Plan). For the year ended October 31, 1998, the five years ended
October 31, 1998, and for the period from May 10, 1993, through October 31,
1998, Class Y shares had a total return of 2.86%, 46.42% and 63.61%,
respectively. Class Y shares do not have initial or contingent deferred sales
charges or ongoing distribution and service fees.
The data above represents past performance of the Fund's shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
9
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
PERFORMANCE RESULTS(UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN(1)
---------------------------------------- ------------------------------------
12 MONTHS ENDED 6 MONTHS
10/31/98 04/30/98 10/31/97 10/31/98 ENDED 10/31/98
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Class A Shares $ 6.52 $ 9.69 $ 9.39 (30.56)% (32.71)%
- ----------------------------------------------------------------------------------------------------------------
Class B Shares 6.37 9.45 9.19 (30.69) (32.59)
- ----------------------------------------------------------------------------------------------------------------
Class C Shares 6.32 9.43 9.17 (31.08) (32.98)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE SUMMARY CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
01/19/94-12/31/94 $12.00 $10.49 -- -- (12.58)%
- ---------------------------------------------------------------------------------------------------------------
1995 10.49 9.26 -- $ 0.0517 (11.20)
- ---------------------------------------------------------------------------------------------------------------
1996 9.26 9.71 -- -- 4.86
- ---------------------------------------------------------------------------------------------------------------
1997 9.71 9.27 -- -- (4.53)
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 9.27 6.52 -- -- (29.67)
- ---------------------------------------------------------------------------------------------------------------
Total: $ 0.0000 $ 0.0517
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: (45.35)
- ---------------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
12/05/95-12/31/95 $ 9.13 $ 9.18 -- -- 0.55%
- ---------------------------------------------------------------------------------------------------------------
1996 9.18 9.56 -- -- 4.14
- ---------------------------------------------------------------------------------------------------------------
1997 9.56 9.06 -- -- (5.23)
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 9.06 6.37 -- -- (29.69)
- ---------------------------------------------------------------------------------------------------------------
Total: $ 0.0000 $ 0.0000
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: (30.23)
- ---------------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS C SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
01/19/94-12/31/94 $12.00 $10.42 -- -- (13.17)%
- ---------------------------------------------------------------------------------------------------------------
1995 10.42 9.18 -- $ 0.0034 (11.87)
- ---------------------------------------------------------------------------------------------------------------
1996 9.18 9.55 -- -- 4.03
- ---------------------------------------------------------------------------------------------------------------
1997 9.55 9.04 -- -- (5.34)
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 9.04 6.32 -- -- (30.09)
- ---------------------------------------------------------------------------------------------------------------
Total: $ 0.0000 $ 0.0034
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: (47.31)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain distributions,
if any, at net asset value on the payable dates and do not include sales
charges; results 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 participants in certain investment programs that are sponsored by
PaineWebber and may invest in PaineWebber mutual funds. For the year ended
October 31, 1998 and since inception, January 19, 1994 through October 31, 1998,
Class Y shares had a total return of (30.44)% and (44.75)%, respectively. Class
Y shares do not have initial or contingent deferred sales charges or ongoing
distribution and service fees.
The data above represents past performance of the Fund's shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
10
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
PERFORMANCE RESULTS(UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN(1)
---------------------------------------- ----------------------------------
12 MONTHS SIX MONTHS
10/31/98 04/30/98 10/31/97 ENDED 10/31/98 ENDED 10/31/98
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Class A Shares $ 6.82 $ 8.14 $ 8.96 (23.88)% (16.22)%
- --------------------------------------------------------------------------------------------------------------
Class B Shares 6.74 8.07 8.92 (24.44) (16.48)
- --------------------------------------------------------------------------------------------------------------
Class C Shares 6.74 8.07 8.92 (24.44) (16.48)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE SUMMARY CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
03/25/97-12/31/97 $12.50 $ 8.26 -- -- (33.92)%
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 8.26 6.82 -- -- (17.43)
- ---------------------------------------------------------------------------------------------------------------
Total: $ 0.0000 $ 0.0000
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: (45.44)%
- ---------------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
03/25/97-12/31/97 $12.50 $ 8.21 -- -- (34.32)%
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 8.21 6.74 -- -- (17.90)
- ---------------------------------------------------------------------------------------------------------------
Total: $ 0.0000 $ 0.0000
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: (46.08)%
- ---------------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS C SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
03/25/97-12/31/97 $12.50 $ 8.21 -- -- (34.32)%
- ---------------------------------------------------------------------------------------------------------------
01/01/98-10/31/98 8.21 6.74 -- -- (17.90)
- ---------------------------------------------------------------------------------------------------------------
Total: $ 0.0000 $ 0.0000
- ---------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 10/31/98: (46.08)%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain distributions,
if any, at net asset value on the payable dates and do not include sales
charges; results would be lower if sales charges were included.
Note: The Fund offers Class Y shares to a limited group of eligible investors,
including participants in certain investment programs that are sponsored by
PaineWebber and may invest in PaineWebber mutual funds. Since inception, March
13, 1998 through October 31, 1998, Class Y shares had a total return of
(21.59)%. Class Y shares do not have initial or contingent deferred sales
charges or ongoing distribution and service fees.
The above data represents past performance of the Fund's shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
11
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--92.65%
ARGENTINA--0.78%
ENERGY SOURCES--0.78%
107,000 YPF Sociedad Anonima, ADR..... $ 3,096,312
-------------
AUSTRALIA--0.58%
BANKS--0.58%
174,000 National Australia Bank,
Ltd. ....................... 2,307,160
-------------
AUSTRIA--0.77%
ENERGY SOURCES--0.40%
17,000 OMV AG........................ 1,594,594
-------------
MATERIALS & COMMODITIES--0.37%
47,000 RHI AG........................ 1,472,216
-------------
Total Austria Common Stocks.................... 3,066,810
-------------
CANADA--1.48%
BANKS--0.63%
54,000 Royal Bank of Canada.......... 2,484,000
-------------
MULTI INDUSTRY--0.85%
179,000 Imasco Ltd.................... 3,364,226
-------------
Total Canada Common Stocks..................... 5,848,226
-------------
DENMARK--0.71%
FOOD & HOUSEHOLD PRODUCTS--0.71%
51,000 Danisco A/S................... 2,818,037
-------------
FINLAND--2.79%
BANKS--1.47%
1,084,889 Merita PLC.................... 5,814,213
-------------
CHEMICALS--0.32%
155,000 Kemira OY..................... 1,276,796
-------------
ELECTRICAL & ELECTRONICS--0.62%
26,966 Nokia OYJ "A" Shares.......... 2,454,131
-------------
FOREST PRODUCTS, PAPER--0.38%
63,000 UPM--Kymmene OY............... 1,506,848
-------------
Total Finland Common Stocks.................... 11,051,988
-------------
FRANCE--2.36%
BEVERAGES & TOBACCO--0.68%
45,400 Seita......................... 2,696,593
-------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
FRANCE--(CONCLUDED)
BUILDING MATERIALS & COMPONENTS--0.78%
30,300 Lafarge....................... $ 3,097,680
-------------
ENERGY SOURCES--0.48%
16,302 Elf Aquitaine................. 1,886,677
-------------
INSURANCE--0.42%
14,890 AXA UAP....................... 1,683,061
-------------
Total France Common Stocks..................... 9,364,011
-------------
GERMANY--0.66%
HEALTH & PERSONAL CARE--0.66%
63,000 Hoechst AG.................... 2,631,814
-------------
IRELAND--0.87%
BANKS--0.87%
189,000 Bank of Ireland............... 3,455,896
-------------
ISRAEL--1.07%
ELECTRICAL & ELECTRONICS--0.83%
99,295 ECI Telecommunications Ltd.... 3,289,147
-------------
ELECTRONIC COMPONENTS & INSTRUMENTS--0.24%
27,500 Orbotech Ltd.*................ 962,500
-------------
Total Israel Common Stocks..................... 4,251,647
-------------
ITALY--2.10%
BANKS--0.73%
189,000 San Paolo-IMI SPA............. 2,904,943
-------------
ENERGY SOURCES--0.38%
252,000 ENI SPA....................... 1,498,582
-------------
WIRELESS TELECOMMUNICATIONS--0.99%
779,000 Telecom Italia SPA............ 3,924,577
-------------
Total Italy Common Stocks...................... 8,328,102
-------------
JAPAN--0.31%
APPLIANCES & HOUSEHOLD DURABLES--0.31%
19,600 Sony Corp..................... 1,244,124
-------------
MEXICO--0.89%
BEVERAGES & TOBACCO--0.39%
77,453 Panamerican Beverages, Inc.
Class A ADR................. 1,568,423
-------------
</TABLE>
12
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
MEXICO--(CONCLUDED)
MULTI INDUSTRY--0.50%
78,893 Desc S.A. De C.V.............. $ 1,489,105
524,595 Desc S.A. de C.V. Series B.... 478,509
-------------
1,967,614
-------------
Total Mexico Common Stocks..................... 3,536,037
-------------
NETHERLANDS--5.03%
APPLIANCE & HOUSEHOLD DURABLES--0.95%
71,127 Philips Electronics N.V....... 3,783,898
-------------
BUSINESS & PUBLIC SERVICES--0.75%
116,000 Vedior N.V. CVA............... 2,955,177
-------------
FINANCIAL SERVICES--0.35%
28,336 Internationale Nederlander
Groep N.V................... 1,370,962
-------------
FOOD & HOUSEHOLD PRODUCTS--1.44%
43,000 Benckiser N.V................. 2,437,154
44,200 Unilever N.V.................. 3,278,717
-------------
5,715,871
-------------
FOREST PRODUCTS, PAPER--0.53%
117,000 Buhrmann N.V.................. 2,097,728
-------------
MACHINERY & ENGINEERING--0.31%
97,000 New Holland N.V. ............. 1,224,625
-------------
WIRELESS TELECOMMUNICATIONS--0.70%
71,500 Kon KPN N.V................... 2,778,185
-------------
Total Netherlands Common Stocks................ 19,926,446
-------------
NEW ZEALAND--0.65%
WIRELESS TELECOMMUNICATIONS--0.65%
630,000 Telecom Corp. of New Zealand
Ltd......................... 2,585,528
-------------
NORWAY--0.77%
BANKS--0.00%
1,966 Den Norske Bank............... 6,915
-------------
MULTI INDUSTRY--0.77%
179,000 Orkla ASA..................... 3,026,482
-------------
Total Norway Common Stocks..................... 3,033,397
-------------
NUMBER OF
SHARES VALUE
- ------------- -------------
SOUTH AFRICA--0.39%
ENERGY SOURCES--0.39%
312,000 Sasol Ltd..................... $ 1,530,040
-------------
SPAIN--0.87%
ENERGY SOURCES--0.87%
68,456 Repsol S.A.................... 3,435,922
-------------
SWEDEN--4.30%
BANKS--0.81%
76,000 Svenska Handelsbanken A
shares...................... 3,198,309
-------------
BEVERAGES & TOBACCO--0.71%
795,000 Swedish Match AB.............. 2,800,730
-------------
HEALTH & PERSONAL CARE--1.48%
147,000 Astra AB Series A............. 2,382,206
66,169 Pharmacia & Upjohn Inc. ADR... 3,502,821
-------------
5,885,027
-------------
INDUSTRIAL PARTS--0.39%
46,068 Autoliv, Inc.................. 1,534,420
-------------
MULTI INDUSTRY--0.52%
226,000 Trelleborg AB................. 2,070,074
-------------
WIRELESS TELECOMMUNICATIONS--0.39%
68,562 Ericsson LM B shares.......... 1,545,851
-------------
Total Sweden Common Stocks..................... 17,034,411
-------------
SWITZERLAND--2.69%
FOOD & HOUSEHOLD PRODUCTS--0.81%
1,500 Nestle S.A.................... 3,187,486
-------------
HEALTH & PERSONAL CARE--0.93%
2,054 Novartis AG................... 3,697,897
-------------
INSURANCE--0.26%
1,690 Zurich Allied AG.............. 1,026,245
-------------
WIRELESS TELECOMMUNICATIONS--0.69%
8,100 Swisscom AG................... 2,743,231
-------------
Total Switzerland Common Stocks................ 10,654,859
-------------
</TABLE>
13
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
UNITED KINGDOM--8.19%
BANKS--0.46%
85,000 Barclays PLC.................. $ 1,830,943
-------------
BEVERAGES & TOBACCO--1.48%
300,000 Diageo PLC.................... 3,238,608
258,000 Imperial Tobacco PLC.......... 2,629,749
-------------
5,868,357
-------------
BROADCASTING & PUBLISHING--0.44%
714,000 Mirror Group PLC.............. 1,741,743
-------------
BUSINESS & PUBLIC SERVICES--0.71%
568,000 WPP Group PLC................. 2,823,463
-------------
ELECTRICAL & ELECTRONICS--0.28%
529,408 FKI PLC....................... 1,116,448
-------------
FINANCIAL SERVICES--0.19%
100,000 Amvescap PLC.................. 766,554
-------------
FOOD & HOUSEHOLD PRODUCTS--0.74%
169,000 Reckitt & Colman PLC.......... 2,921,894
-------------
INDUSTRIAL PARTS--0.35%
636,000 Mayflower Corp. PLC........... 1,399,781
-------------
INSURANCE--0.81%
112,737 CGU PLC....................... 1,785,930
156,444 Royal Sun Alliance PLC........ 1,432,266
-------------
3,218,196
-------------
LEISURE & TOURISM--0.68%
373,000 Carlton Communications PLC.... 2,678,203
-------------
MACHINERY & ENGINEERING--0.42%
125,000 Smiths Industries PLC......... 1,673,699
-------------
MATERIALS & COMMODITIES--0.61%
523,000 Bunzl PLC..................... 2,415,951
-------------
MULTI INDUSTRY--1.02%
233,000 Charter PLC................... 1,162,116
1,366,000 Cookson Group PLC............. 2,857,841
-------------
4,019,957
-------------
RAILROADS--0.00%
456 Railtrack Group PLC........... 12,249
-------------
Total United Kingdom Common Stocks............. 32,487,438
-------------
NUMBER OF
SHARES VALUE
- ------------- -------------
UNITED STATES--54.39%
AIRLINES--0.95%
19,400 Alaska Air Group, Inc......... $ 697,188
27,700 AMR Corp.*.................... 1,855,900
21,700 US Airways Group, Inc.*....... 1,227,406
-------------
3,780,494
-------------
APPAREL, RETAIL--0.65%
136,400 TJX Companies, Inc............ 2,583,075
-------------
APPAREL, TEXTILES--0.25%
34,300 Westpoint Stevens Inc.*....... 975,406
-------------
BANKS--2.80%
57,900 Bank of New York Co. Inc...... 1,827,469
58,500 Bank One Corp................. 2,859,187
43,900 Mellon Bank Corp.............. 2,639,488
44,500 The Chase Manhattan Corp...... 2,528,156
34,100 Wells Fargo & Co.............. 1,268,094
-------------
11,122,394
-------------
COMPUTER HARDWARE--3.23%
43,900 Cisco Systems, Inc.*.......... 2,765,700
72,700 Compaq Computer Corp.......... 2,299,137
63,300 Dell Computer Corp.*.......... 4,146,150
14,700 International Business
Machines.................... 2,182,031
52,700 Unisys Corp.*................. 1,403,138
-------------
12,796,156
-------------
COMPUTER SOFTWARE--2.53%
77,900 Autodesk, Inc................. 2,429,506
29,200 BMC Software Inc.*............ 1,403,425
72,700 Cadence Design Systems,
Inc.*....................... 1,553,963
29,200 Compuware Corp.*.............. 1,582,275
41,200 Networks Associates Inc.*..... 1,751,000
50,700 Sterling Software Inc.*....... 1,327,706
-------------
10,047,875
-------------
CONSUMER DURABLES--1.45%
40,500 Furniture Brands International
Inc.*....................... 870,750
36,600 HON Industries, Inc........... 775,463
75,000 Interface, Inc................ 923,437
48,200 Maytag Corp................... 2,382,887
36,200 Herman Miller Inc............. 798,663
-------------
5,751,200
-------------
DEFENSE/ AEROSPACE--1.51%
59,700 Allied-Signal, Inc............ 2,324,569
</TABLE>
14
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
UNITED STATES--(CONTINUED)
DEFENSE/ AEROSPACE--(CONCLUDED)
25,300 Lockheed Martin Corp.......... $ 2,817,787
19,400 Precision Castparts Corp...... 853,600
-------------
5,995,956
-------------
DIVERSIFIED RETAIL--2.46%
77,800 Dayton Hudson Corp............ 3,296,775
80,300 Family Dollar Stores Inc...... 1,455,438
58,300 Federated Department Stores,
Inc.*....................... 2,240,906
34,900 Fred Meyer Inc.*.............. 1,860,606
39,000 Saks Inc.*.................... 887,250
-------------
9,740,975
-------------
DRUGS & MEDICINE--4.18%
58,500 American Home Products
Corp........................ 2,851,875
40,200 Amerisource Health Corp.*..... 2,107,988
23,100 Biogen, Inc.*................. 1,605,450
14,500 Bristol-Myers Squibb Co....... 1,603,156
23,000 Schering-Plough Corp.......... 2,366,125
48,700 Warner Lambert Co............. 3,816,862
39,800 Watson Pharmaceuticals,
Inc.*....................... 2,213,875
-------------
16,565,331
-------------
ELECTRIC UTILITIES--1.28%
39,000 AES Corp...................... 1,596,562
33,100 Consolidated Edison Co. of New
York, Inc................... 1,659,137
21,500 Energy East Corp.............. 1,050,813
21,700 Utilicorp United Inc.......... 779,844
-------------
5,086,356
-------------
ELECTRICAL EQUIPMENT--0.82%
82,800 SCI Systems Inc.*............. 3,270,600
-------------
ENERGY RESERVES & PRODUCTION--0.47%
33,100 Amoco Corp.................... 1,857,738
-------------
ENTERTAINMENT--0.62%
4,400 Viacom Inc., Class A.......... 261,250
36,600 Viacom, Inc., Class B*........ 2,191,425
-------------
2,452,675
-------------
ENVIRONMENTAL SERVICES--0.65%
31,100 Republic Services Inc.*....... 680,313
41,700 Waste Management Inc.......... 1,881,712
-------------
2,562,025
-------------
NUMBER OF
SHARES VALUE
- ------------- -------------
UNITED STATES--(CONTINUED)
FINANCIAL SERVICES--1.82%
20,000 Associates First Capital
Corp........................ $ 1,410,000
39,000 CIT Group, Inc................ 1,065,187
100,421 Citigroup, Inc................ 4,726,040
-------------
7,201,227
-------------
FOOD RETAIL--1.89%
57,500 Food Lion Inc................. 632,500
39,000 Kroger Co.*................... 2,164,500
38,200 Safeway Inc.*................. 1,826,438
48,700 Starbucks Corp.*.............. 2,112,362
19,100 Whole Foods Market Inc.*...... 765,194
-------------
7,500,994
-------------
FOREST PRODUCTS, PAPER--1.11%
68,200 Fort James Corp............... 2,749,312
62,800 United Stationers Inc.*....... 1,664,200
-------------
4,413,512
-------------
GAS UTILITY--0.77%
36,600 Columbia Gas System, Inc...... 2,118,225
19,100 K N Energy, Inc............... 949,031
-------------
3,067,256
-------------
HOUSEHOLD PRODUCTS--0.20%
28,600 Viad Corp..................... 784,713
-------------
INDUSTRIAL PARTS--2.90%
22,800 American Standard Companies,
Inc.*....................... 728,175
43,900 Crane Co...................... 1,264,869
59,500 Ingersoll Rand Co............. 3,004,750
69,900 Mettler Toledo International
Inc.*....................... 1,529,062
22,800 SPX Corp.*.................... 1,241,175
39,100 United Technologies Corp...... 3,724,275
-------------
11,492,306
-------------
INDUSTRIAL SERVICES/SUPPLIES--0.94%
60,000 Tyco International Ltd........ 3,716,250
-------------
INFORMATION & COMPUTER SERVICES--0.37%
13,600 Computer Sciences Corp.*...... 717,400
19,200 Valassis Communications
Inc.*....................... 765,600
-------------
1,483,000
-------------
LEISURE--0.78%
39,800 Eastman Kodak Co.............. 3,084,500
-------------
</TABLE>
15
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
UNITED STATES--(CONTINUED)
LIFE INSURANCE--2.07%
30,300 American General Corp......... $ 2,075,550
69,200 Conseco Inc................... 2,400,375
34,200 Protective Life Corp.......... 1,267,538
39,000 Reliastar Financial Corp...... 1,708,687
10,500 SunAmerica Inc................ 740,250
-------------
8,192,400
-------------
LONG DISTANCE & PHONE COMPANIES--4.59%
58,500 Bell Atlantic Corp............ 3,107,813
58,500 BellSouth Corp................ 4,669,031
17,200 Century Telephone Enterprises,
Inc......................... 977,175
51,600 GTE Corp...................... 3,028,275
42,600 MCI Worldcom Inc.*............ 2,353,650
87,590 SBC Communications, Inc....... 4,056,512
-------------
18,192,456
-------------
MANUFACTURING--HIGH TECHNOLOGY--0.15%
6,600 Sensormatic Electronics
Corp........................ 37,125
10,200 Tellabs, Inc.*................ 561,000
-------------
598,125
-------------
MEDICAL PROVIDERS--0.64%
39,400 Tenet Healthcare Corp.*....... 1,100,738
19,400 Wellpoint Health Networks
Inc.*....................... 1,428,325
-------------
2,529,063
-------------
MINING & METALS--0.29%
23,100 Martin Marietta Materials,
Inc......................... 1,133,344
-------------
MOTOR VEHICLES--1.39%
38,500 Borg Warner Automotive Inc.... 1,804,687
68,100 Ford Motor Co................. 3,694,425
-------------
5,499,112
-------------
OIL REFINING--0.35%
39,000 Coastal Corp.................. 1,374,750
-------------
OIL SERVICES--0.83%
48,700 Halliburton Co................ 1,750,156
29,200 Schlumberger Ltd.............. 1,533,000
-------------
3,283,156
-------------
OTHER INSURANCE--2.73%
78,400 Allstate Corp................. 3,376,100
24,900 Ambac Inc..................... 1,448,869
NUMBER OF
SHARES VALUE
- ------------- -------------
UNITED STATES--(CONCLUDED)
OTHER INSURANCE--(CONCLUDED)
25,000 American International Group
Inc......................... $ 2,131,250
10,800 CIGNA Corp.................... 787,725
21,700 Everest Reinsurance Holdings
Inc......................... 747,294
8,700 Loews Corp.................... 817,256
49,800 Travelers Property Casualty
Corp........................ 1,528,237
-------------
10,836,731
-------------
REAL PROPERTY--0.36%
11,100 Chelsea GCA Realty, Inc....... 381,563
31,400 Lafarge Corp.................. 1,057,787
-------------
1,439,350
-------------
RESTAURANTS--0.74%
34,800 CKE Restaurants, Inc.......... 915,675
58,500 Outback Steakhouse Inc.*...... 2,025,563
-------------
2,941,238
-------------
SECURITIES & ASSET MANAGEMENT--0.40%
24,400 Morgan Stanley Dean Witter &
Co.......................... 1,579,900
-------------
SEMICONDUCTOR--0.96%
68,200 Applied Materials, Inc.*...... 2,365,687
29,200 Uniphase Corp.*............... 1,445,400
-------------
3,811,087
-------------
SPECIALTY RETAIL--2.08%
31,400 99 Cents Only Stores*......... 1,452,250
43,900 Home Depot Inc................ 1,909,650
70,200 Office Depot Inc.*............ 1,755,000
33,500 Staples, Inc.*................ 1,092,938
48,100 Williams Sonoma Inc.*......... 1,310,725
31,100 Zale Corp.*................... 736,681
-------------
8,257,244
-------------
THRIFT--1.24%
39,500 Allegiance Corp............... 1,468,906
78,100 Dime Bancorp, Inc............. 1,859,756
48,700 Greenpoint Financial Corp..... 1,597,969
-------------
4,926,631
-------------
TOBACCO--0.94%
73,100 Phillip Morris Co. Inc........ 3,737,238
-------------
Total United States Common Stocks.............. 215,663,839
-------------
Total Common Stocks (cost--$327,058,521)....... 367,352,044
-------------
</TABLE>
16
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
SHORT-TERM U.S. GOVERNMENT AND AGENCY [email protected]%
$ 39,160 Federal Home Loan Mortgage
Discount Notes.............. 11/02/98 5.420% $ 39,154,104
4,000 United States Treasury
Bills++..................... 01/14/99 3.750 3,969,170
-------------
Total Short-Term U.S. Government and Agency
Obligations (cost--$43,123,274)................ 43,123,274
-------------
REPURCHASE AGREEMENTS--2.00%
7,019 Repurchase Agreement dated
10/30/98 with Deutsche Bank,
collateralized by $6,825,000
U.S. Treasury Notes, 7.125%
due 02/29/00
(value--$7,159,357);
proceeds: $7,022,144 (cost--
$7,019,000)................. 11/02/98 5.375 7,019,000
915 Repurchase Agreement dated
10/30/98 with State Street
Bank & Trust Company,
collateralized by $796,050
U.S. Treasury Notes, 7.000%
due 07/15/06
(value--$934,364); proceeds:
$915,324 (cost--$915,000)... 11/02/98 4.250 915,000
-------------
Total Repurchase Agreements (cost--$7,934,000).................................... 7,934,000
-------------
Total Investments (cost--$378,115,795)--105.52%................................... 418,409,318
Liabilities in excess of other assets--(5.52)%.................................... (21,892,429)
-------------
Net Assets--100.00%............................................................... $ 396,516,889
-------------
-------------
</TABLE>
- ---------------
* Non-income producing security.
++ Entire or partial amount pledged as collateral for futures transactions.
@ Interest rates shown are discount rates at date of purchase.
ADR American Depository Receipt
<TABLE>
<CAPTION>
FUTURES CONTRACTS
NUMBER OF IN EXPIRATION UNREALIZED
CONTRACTS LONG FUTURES CONTRACTS EXCHANGE FOR DATE APPRECIATION
- ----------- --------------------------------------------- ---------------- ---------- ------------
<C> <S> <C> <C> <C>
101 S&P 500...................................... $ 25,041,856 Dec 98 $2,864,384
------------
------------
</TABLE>
See accompanying notes to financial statements
17
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------- -------------
<C> <S> <C>
COMMON STOCKS--81.56%
ARGENTINA--3.13%
DIVERSIFIED INDUSTRIALS--0.55%
9,095 Perez Companc S.A. Class B.... $ 44,944
-------------
OIL EXPLORATION & PRODUCTION--1.34%
3,767 YPF Sociedad Anonima Series D
ADR......................... 109,008
-------------
PROPERTY--0.20%
1,200 Cresud S.A. C.I.F.Y.A. ADR*... 16,650
-------------
RETAILERS, FOOD--0.07%
400 Disco S. A. ADR............... 5,875
-------------
TELECOMMUNICATIONS--0.97%
4,400 Telecom Argentina S.A......... 28,389
1,530 Telefonica de Argentina S.A.
Class B ADR................. 50,586
-------------
78,975
-------------
Total Argentina Common Stocks.................... 255,452
-------------
BOTSWANA--0.76%
BREWERIES, PUBS, & RESTAURANTS--0.76%
48,200 Sechaba Breweries Ltd......... 61,839
-------------
BRAZIL--0.87%
ELECTRICITY--0.62%
600,000 Companhia Paulista de Forca e
Luz......................... 50,298
-------------
MEDIA--0.25%
2,500 Aracruz Celulose S.A. ADR..... 20,937
-------------
Total Brazil Common Stocks....................... 71,235
-------------
CHILE--2.95%
BANKS--0.25%
2,200 Banco Santander Chile Series A
ADR......................... 20,350
-------------
BREWERIES, PUBS, & RESTAURANTS--0.23%
1,600 Embotelladora Andina S.A.
ADR......................... 18,800
-------------
BREWERY--0.31%
1,400 Compania Cervecerias Unidas
S.A. ADR.................... 25,200
-------------
DIVERSIFIED INDUSTRIALS--0.23%
2,600 Quinenco SA ADR............... 18,850
-------------
ELECTRICITY--0.95%
2,950 Chilectra S.A. ADR+........... 53,837
1,447 Gener S.A. ADR................ 23,333
-------------
77,170
-------------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------- -------------
<C> <S> <C>
CHILE--(CONCLUDED)
EXTRACTIVE INDUSTRIES--0.33%
800 Sociedad Quimica Y Minera de
Chile S.A. Series B ADR..... $ 26,600
-------------
TELECOMMUNICATIONS--0.65%
2,425 Compania de Telecomunicaciones
de Chile S.A. ADR........... 53,199
-------------
Total Chile Common Stocks........................ 240,169
-------------
CHINA--0.49%
ELECTRICITY & GAS--0.35%
2,050 Huaneng Power International
Inc. ADR*................... 28,187
-------------
TRANSPORTATION--0.14%
64,000 Qingling Motors Co. Class H... 11,817
-------------
Total China Common Stocks........................ 40,004
-------------
CROATIA--0.35%
HEALTH/ PERSONAL CARE--0.35%
1,950 Pliva D.D. GDR................ 28,178
-------------
CZECH REPUBLIC--1.16%
UTILITIES--1.16%
6,250 SPT Telecom A.S.*............. 94,429
-------------
EGYPT--0.69%
BANKS--0.16%
1,653 Commercial International Bank
GDR*........................ 12,811
-------------
CONSTRUCTION--0.38%
4,285 Arab International
Construction................ 31,094
-------------
OTHER FINANCIAL--0.15%
1,100 EFG Hermes Holding S A E
GDS......................... 12,375
-------------
Total Egypt Common Stocks........................ 56,280
-------------
GREECE--2.85%
BANKS--1.42%
717 Alpha Credit Bank*............ 57,241
410 National Bank of Greece....... 58,204
-------------
115,445
-------------
BEVERAGE/ TOBACCO MANUFACTURING--0.70%
2,350 Hellenic Bottling Co. S.A..... 57,130
-------------
</TABLE>
18
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
GREECE--(CONCLUDED)
MEDIA--0.09%
570 Lambrakis Publishing.......... $ 7,080
-------------
TELECOMMUNICATIONS--0.64%
2,312 Greek Telecom................. 52,514
-------------
Total Greece Common Stocks....................... 232,169
-------------
HONG KONG--2.73%
COMMERCE/ INDUSTRIAL--0.42%
110,000 Beijing Datang Power
Generation Company Ltd.*.... 34,086
-------------
COMMUNICATIONS--0.71%
31,000 China Telecom*................ 58,238
-------------
CONSTRUCTION--0.50%
16,000 Cheung Kong Infrastucture
Holdings.................... 40,697
-------------
FOODS--0.18%
17,000 NG Fung Hong Ltd.............. 15,035
-------------
REAL ESTATE--0.50%
116,000 China Resources Beijing*...... 31,078
7,000 China Resources Developement
Enterprises Ltd............. 9,355
-------------
40,433
-------------
SHIPPING--0.27%
45,000 Cosco Pacific Ltd............. 22,079
-------------
TRANSPORTATION EQUIPMENT--0.09%
38,000 Zhejiang Expressway Co.
Ltd......................... 7,458
-------------
WHOLESALE--0.06%
16,000 Guangnan Holdings............. 4,906
-------------
Total Hong Kong Common Stocks.................... 222,932
-------------
HUNGARY--2.99%
BANKS--0.48%
1,080 OTP Bank National Savings &
Commerical Bank*............ 38,610
-------------
BUILDING MATERIALS/ CONSTRUCTION--0.30%
795 Pannonplast Muanya RT......... 24,545
-------------
HEALTH/ PERSONAL CARE--0.30%
750 Gedeon Richter RT GDR......... 24,750
-------------
OIL--0.89%
3,230 Moayar Olaj-Es Gazipare
Reszvnytaras AG GDR......... 72,675
-------------
NUMBER OF
SHARES VALUE
- --------------- -------------
HUNGARY--(CONCLUDED)
UTILITIES--1.02%
3,170 Matav RT* ADR................. $ 83,054
-------------
Total Hungary Common Stocks...................... 243,634
-------------
INDIA--6.87%
BANKS--0.40%
9,000 State Bank of India........... 33,048
-------------
ELECTRICAL EQUIPMENT--0.62%
9,000 Bharat Heavy Electricals
Ltd......................... 50,230
-------------
ELECTRICITY & GAS--0.36%
15,000 Tata Power Co................. 29,203
-------------
ENGINEERING VEHICLES--0.18%
1,100 Bajaj Auto Ltd................ 14,375
-------------
HOUSEHOLD GOODS & TEXTILES--1.41%
2,100 Hindustan Lever............... 79,441
12,800 Reliance Industry............. 35,190
-------------
114,631
-------------
OIL EXPLORATION & PRODUCTION--1.00%
8,700 Bharat Petroleum Corp. Ltd.... 52,375
4,600 Hindustan Petroleum Corp.
Ltd......................... 28,897
-------------
81,272
-------------
PHARMACEUTICALS--0.48%
3,300 Ranbaxy Laboratories Ltd...... 38,880
-------------
TELECOMMUNICATIONS--1.21%
18,200 Mahanagar Telephone Nigam
Ltd......................... 78,598
1,200 Videsh Sanchar Nigam Ltd...... 20,389
-------------
98,987
-------------
TOBACCO--1.21%
6,000 ITC Ltd....................... 99,080
-------------
Total India Common Stocks........................ 559,706
-------------
INDONESIA--0.67%
COMMUNICATIONS--0.25%
16,000 P.T. Indosat.................. 17,263
11,000 P.T. Telekomunikasi
Indonesia................... 2,714
-------------
19,977
-------------
MISCELLANEOUS MANUFACTURING--0.12%
11,000 P.T. Gudang Garam............. 9,914
-------------
OILS--0.30%
2,500 P.T. Gulf Indonesia Resources
Ltd......................... 24,688
-------------
Total Indonesia Common Stocks.................... 54,579
-------------
</TABLE>
19
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
ISRAEL--4.47%
BANKS--1.08%
22,430 Bank Hapoalim Ltd............. $ 40,568
37,460 Bank Leumi.................... 47,706
-------------
88,274
-------------
ELECTRONICS--0.20%
870 NICE-Systems Ltd. ADR*........ 16,530
-------------
PHARMACEUTICALS--0.94%
1,940 Teva Pharmaceutical Industries
Ltd., ADS................... 76,509
-------------
RETAIL TRADE--0.57%
17,850 Supersol Ltd.................. 45,965
-------------
TELECOMMUNICATIONS--1.34%
3,290 ECI Telecommunications
Ltd.*....................... 108,981
-------------
UTILITIES--0.34%
9,719 Bezek Israel
Telecommunications.......... 27,844
-------------
Total Israel Common Stocks....................... 364,103
-------------
KOREA--9.43%
BANKS--0.67%
7,501 Kookmin Bank.................. 27,059
8,000 Shinhan Bank.................. 27,405
-------------
54,464
-------------
COMMUNICATIONS--0.71%
85 Korea Mobile Telecom Corp.*... 58,192
-------------
ELECTRICAL APPLIANCES--4.80%
11,510 L.G. Electronics Inc.*........ 102,059
500 L.G. Information &
Communication Ltd........... 11,482
1,422 Samsung Display Devices Co.... 53,345
5,476 Samsung Electronics Corp...... 224,103
-------------
390,989
-------------
ELECTRICITY & GAS--1.16%
5,310 Korea Electric Power Corp..... 94,570
-------------
IRON & STEEL--0.98%
1,450 Pohang Iron & Steel Co.
Ltd......................... 80,308
-------------
MACHINERY/ ENGINE SERVICES--0.45%
9,700 Daewoo Heavy Industrial....... 36,462
-------------
SHIPPING--0.66%
9,529 Samsung Heavy Industries...... 53,440
-------------
Total Korea Common Stocks........................ 768,425
-------------
NUMBER OF
SHARES VALUE
- --------------- -------------
MALAYSIA--0.30%
ELECTRICITY & GAS--0.14%
14,000 Tenaga Nasional Berhad (1).... $ 11,089
-------------
SERVICES--0.16%
6,000 Resorts World Berhad (1)...... 3,581
14,000 Tanjong PLC (1)............... 9,387
-------------
12,968
-------------
Total Malaysia Common Stocks..................... 24,057
-------------
MEXICO--10.23%
BANKS--0.32%
25,000 Grupo Financiero Banamex*..... 26,217
-------------
BREWERIES, PUBS, & RESTAURANTS--0.98%
31,100 Fomento Economico Mexicano,
S.A. de C.V. Series B*...... 79,996
-------------
BUILDING MATERIALS & MERCHANTS--1.00%
34,095 Cemex, S.A. de C.V.*.......... 81,122
-------------
BUILDING & CONSTRUCTION--0.88%
13,100 Consorico Ara, S.A. de
C.V.*....................... 28,772
19,000 Grupo Industrial Saltillo,
S.A. de C.V.*............... 42,857
-------------
71,629
-------------
EXTRACTIVE INDUSTRIES--0.28%
7,400 Industrias Penoles............ 22,622
-------------
FOOD PRODUCERS--0.73%
35,000 Grupo Industrial Bimbo, S.A.
de C.V...................... 58,864
-------------
MEDIA--0.35%
2,100 Grupo Televisa, S.A. de
C.V.*....................... 28,463
-------------
METALS--0.30%
2,900 Tubos De Acero de Mexico, S.A.
de C.V. ADR*................ 24,650
-------------
PAPER, PACKAGING & PRINTING--0.52%
14,600 Kimberly Clark de Mexico S.A.
de C.V...................... 42,754
-------------
RETAIL--0.33%
43,000 Controladora Comercial
Mexicana.................... 27,226
-------------
RETAILERS, GENERAL--0.95%
60,000 Cifra, S.A. de C.V. Series
C*.......................... 77,760
-------------
TELECOMMUNICATIONS--3.59%
5,540 Telefonos de Mexico, S.A. de
C.V. ADR.................... 292,581
-------------
Total Mexico Common Stocks....................... 833,884
-------------
</TABLE>
20
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
PAKISTAN--0.28%
CHEMICALS--0.18%
9,899 Engro Chemicals Pakistan
Ltd.*....................... $ 9,121
9,000 Fauji Fertilizer Co. Ltd.*.... 5,545
-------------
14,666
-------------
ELECTRICITY--0.09%
39,000 Hub Power Co.................. 7,741
-------------
OIL EXPLORATION & PRODUCTION--0.01%
552 Pakistan State Oil Company
Ltd.*....................... 544
-------------
Total Pakistan Common Stocks..................... 22,951
-------------
PERU--1.00%
BANKS--0.26%
41,000 Banco Continental............. 21,379
-------------
BUILDING & CONSTRUCTION--0.00%
1 Cementos Norte Pacasmayo,
S.A......................... 1
-------------
TELECOMMUNICATIONS--0.74%
4,600 Telefonica Del Peru S.A. Class
B ADS....................... 59,800
-------------
Total Peru Common Stocks......................... 81,180
-------------
PHILIPPINES--2.00%
COMMERCE/ INDUSTRIAL--0.23%
75,000 Ayala Corp. .................. 19,052
-------------
COMMUNICATIONS--0.33%
128,000 Digital Telecommunications
Philiphines, Inc.
(Digitel)*.................. 2,728
1,031 Philippine Long Distance
Telephone Co. .............. 24,657
-------------
27,385
-------------
ELECTRICITY & GAS--0.70%
19,361 Manila Electric Co. Class B... 57,099
-------------
FOODS--0.36%
50,000 La Tondena Distilleries....... 29,120
-------------
REAL ESTATE--0.38%
101,104 Ayala Land Inc................ 30,695
-------------
Total Philippines Common Stocks.................. 163,351
-------------
POLAND--2.32%
BANKS--1.15%
790 Bank Przemyslowo-Handlowy
S.A. ....................... 51,131
6,560 Bank Wielkopolski............. 42,267
-------------
93,398
-------------
DIVERSIFIED HOLDINGS COMPANIES--0.91%
6,241 Elektrim Spolka Akcyjna
S.A. ....................... 74,265
-------------
NUMBER OF
SHARES VALUE
- --------------- -------------
POLAND--(CONCLUDED)
ELECTRICAL EQUIPMENT--0.26%
6,685 Bydgodsa Fabryka Kabli
S.A.*....................... $ 21,536
-------------
Total Poland Common Stocks....................... 189,199
-------------
PORTUGAL--3.91%
BANKS--0.58%
1,600 Banco Espirito Santo e
Comercial de Lisboa, S.A.... 47,270
-------------
FORESTRY/ PAPER PRODUCTS--0.19%
810 Semapa Sociedade de
Investimento e Gestao, SGPS,
S.A......................... 15,803
-------------
INSURANCE--0.59%
1,780 Companhia de Seguros Mundial
Confianca S.A.*............. 48,189
-------------
RETAIL--1.10%
2,061 Estabelecimentos Jeronimo
Martins & Filho, SGPS,
S.A.*....................... 89,274
-------------
TELECOMMUNICATIONS--1.45%
1,470 Portugal Telecom S.A.......... 69,644
265 Telecel Comunicacaoes Pessoais
S.A.*....................... 48,815
-------------
118,459
-------------
Total Portugal Common Stocks..................... 318,995
-------------
RUSSIA--0.79%
ELECTRICITY--0.15%
4,180 Unified Energy System GDR*.... 12,540
-------------
OILS--0.47%
1,490 Lukoil Holdings ADR........... 24,212
7,140 Surgutneftegaz ADR............ 14,280
-------------
38,492
-------------
OTHER ENERGY--0.17%
7,890 Ao Mosenergo ADR.............. 13,808
-------------
Total Russia Common Stocks....................... 64,840
-------------
SOUTH AFRICA--10.36%
BANKS--0.98%
14,600 Amalgamated Banks of South
Africa...................... 79,553
-------------
BREWERIES, PUBS, & RESTAURANTS--1.04%
4,360 South African Brewery Ltd..... 84,747
-------------
DIVERSIFIED INDUSTRIALS--2.50%
1,200 Anglo America Industrial Corp.
Ltd......................... 19,273
20,677 Barlow Ltd.................... 97,890
61,500 Malbak Ltd. .................. 26,918
</TABLE>
21
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
SOUTH AFRICA--(CONCLUDED)
DIVERSIFIED INDUSTRIALS--(CONCLUDED)
8,900 Rembrandt Group Ltd........... $ 59,307
-------------
203,388
-------------
EXTRACTIVE INDUSTRIES--0.92%
2,290 Anglo American Corporation of
South Africa Ltd. S.A....... 74,704
-------------
FINANCIAL SERVICES--0.66%
41,850 First Rand Ltd................ 54,280
-------------
OIL EXPLORATION & PRODUCTION--0.92%
15,315 Sasol Ltd..................... 75,104
-------------
OTHER FINANCIAL--0.77%
6,300 Fedsure Holdings Ltd.......... 62,466
-------------
PAPER, PACKAGING & PRINTING--1.17%
16,100 Nampak Ltd.................... 30,057
13,000 Sappi......................... 65,029
-------------
95,086
-------------
PHARMACEUTICALS--0.39%
7,000 South African Druggist Ltd.... 32,202
-------------
RETAILERS, GENERAL--1.01%
9,400 Ellerine Holdings Ltd......... 25,693
13,773 LA Retail Stores Ltd.......... 16,732
59,158 Metro Cash And Carry.......... 40,161
-------------
82,586
-------------
Total South Africa Common Stocks................. 844,116
-------------
TAIWAN--4.82%
BANKS--0.59%
113,000 Bank Sinopac.................. 48,267
-------------
CHEMICALS--0.30%
19,000 Nan Ya Plastic................ 24,025
-------------
ELECTRICAL APPLIANCES--3.21%
1,875 Acer Inc. GDR................. 9,750
13,000 D-Link........................ 28,666
15,000 Phoenixtec Power Co........... 31,689
44,000 Siliconware Precision
Industries Co.*............. 70,563
2,524 Siliconware Precision
Industries Co. GDR*+........ 26,123
47,000 Taiwan Semiconductor
Manufacturing Company
Ltd......................... 94,942
-------------
261,733
-------------
MISCELLANEOUS MANUFACTURING--0.12%
1,118 Teco Electric & Machinery Ltd.
GDR......................... 9,894
-------------
NUMBER OF
SHARES VALUE
- --------------- -------------
TAIWAN--(CONCLUDED)
REAL ESTATE--0.27%
21,000 Delpha Construction........... $ 22,279
-------------
TEXTILES--0.33%
13,000 Nien Hsing Textile Company
Ltd......................... 26,661
-------------
Total Taiwan Common Stocks....................... 392,859
-------------
THAILAND--2.14%
COMMUNICATIONS--0.54%
6,000 Advanced Information Service
PLC......................... 44,088
-------------
CONSTRUCTION--0.40%
2,600 Siam Cement Co................ 32,549
-------------
ELECTRICITY & GAS--0.45%
14,000 Electricity Generating Public
Company Ltd................. 36,957
-------------
MINING--0.75%
6,300 PTT Exploration & Production
Public Company Ltd.......... 60,694
-------------
Total Thailand Common Stocks..................... 174,288
-------------
TURKEY--2.39%
BANKS--0.68%
1,569,525 Akbank........................ 23,161
2,842,260 Yapi ve Kredi Bankasi A.S..... 32,074
-------------
55,235
-------------
ELECTRICAL EQUIPMENT--0.20%
205,150 Vestel Electronic Sanayi ve
Ticaret..................... 16,739
-------------
FINANCIAL INSTITUTIONS/ SERVICES--0.27%
1,467,650 Haci Omer Sabanci............. 22,167
-------------
MEDIA--0.17%
2,243,480 Dogan Yayin Holdings.......... 14,022
-------------
RETAIL--0.64%
61,000 Migros Turk T.A.S............. 51,891
-------------
UTILITIES--0.43%
1,276,044 Northern Electric
Telekomunikasyon A.S........ 28,356
303,820 Northern Electric
Telekomunikasyon A.S.*...... 6,752
-------------
35,108
-------------
Total Turkey Common Stocks....................... 195,162
-------------
VENEZUELA--0.49%
ELECTRICITY--0.26%
74,543 Electricidad de Caracas....... 21,176
-------------
</TABLE>
22
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
VENEZUELA--(CONCLUDED)
TELECOMMUNICATIONS--0.23%
1,200 Compania Anonima National
Telecom de Venezuela (CANTV)
ADR......................... $ 18,600
-------------
Total Venezuela Common Stocks.................... 39,776
-------------
ZIMBABWE--0.12%
OTHER FINANCIAL--0.12%
39,000 NMBZ Holdings................. 9,750
-------------
Total Common Stocks (cost--$8,609,140)........... 6,647,542
-------------
PREFERRED STOCKS--9.58%
BRAZIL--9.58%
BANKS/ RETAIL--1.00%
5,400 Companhia Vale Do Rio Doce.... 81,482
-------------
BREWERIES, PUBS, & RESTAURANTS--0.54%
93,000 Cia Cervejaria Brahma......... 43,658
-------------
BUILDING MATERIALS & MERCHANTS--0.21%
130,000 Companhia Cimento Portland
Itau (CIA).................. 17,436
-------------
ELECTRICITY--2.59%
6,668,000 Centrais Electricas
Brasileiras S.A.
(Electrobras)............... 154,277
7,300 Companhia Paranaense De ADR... 56,575
-------------
210,852
-------------
ENGINEERING--0.37%
9,700 Usinas Siderurgicas de Minas
Gerais S.A. (Usiminas)*..... 30,574
-------------
OIL EXPLORATION & PRODUCTION--0.66%
426,000 Petroleo Brasileiros S.A.
(Petrobras)*................ 53,567
-------------
NUMBER OF
SHARES VALUE
- --------------- -------------
BRAZIL--(CONCLUDED)
RETAILERS, GENERAL--0.00%
280,000 Empresa Nacional de Comercio
Redito e Participacoes
S.A. ....................... $ 376
-------------
SUPPORT SERVICES--0.35%
1,468,524 Companhia Energetica de Minas
Gerias (CEMIG).............. 28,560
-------------
TELECOMMUNICATIONS--3.86%
4,480,000 Tele Centro Sul Part.......... 43,189
1,217,864 Telecomunicacoes de Sao Paulo
S.A. (Electrobras).......... 204,185
259,472 Telecomunicacoes do Parana
S.A. (Telepar).............. 43,503
472,864 Telesp Celular S.A............ 23,388
-------------
314,265
-------------
Total Preferred Stocks (cost--$1,264,633)........ 780,770
-------------
NUMBER OF
RIGHTS
- ---------------
RIGHTS--0.00%
BRAZIL--0.00%
ELECTRICITY--0.00%
1,467 Companhia Paulista de Forca e
Luz, rights expiring
11/06/98.................... 17
-------------
KOREA--0.00%
BANKS--0.00%
1,484 Shinhan Bank, rights expiring
11/12/98.................... 0
-------------
Total Rights (cost--$0).......................... 17
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE
- --------------- ------------- -------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--2.08%
$ 170 United States Treasury Bills
(cost--$169,291)............ 12/03/98 4.800%@ 169,291
-------------
</TABLE>
23
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- --------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT--4.14%
$ 338 Repurchase Agreement dated
10/30/98 with State Street
Bank & Trust Company,
collateralized by $320,000
U.S. Treasury Notes, 6.375%
due 08/15/02 (value--
$346,963); proceeds:
$338,118 (cost--$330,000)... 11/02/98 4.250% $ 338,000
-------------
Total Investments (cost--$10,381,064)--97.36%..................................... 7,935,620
Other assets in excess of liabilities--2.64%...................................... 214,938
-------------
Net Assets--100.00%............................................................... $ 8,150,558
-------------
-------------
</TABLE>
- ---------------
* Non-income producing securities
+ Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration;
normally to qualified institutional buyers.
@ Interest rate shown is discount rate at date of purchase.
ADR American Depositary Receipts
ADS American Depositary Shares
GDR Global Depositary Receipts
GDS Global Depositary Shares
(1) Illiquid securities represent 0.30% of net assets.
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT TO IN MATURITY UNREALIZED
DELIVER EXCHANGE FOR DATES DEPRECIATION
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Brazilian Real................ 300,000 USD 237,708 11/30/98 $ 10,226
Brazilian Real................ 70,000 USD 71,692 01/19/99 1,692
Hong Kong Dollars............. 1,200,000 USD 149,626 02/22/99 4,521
Polish Zloty.................. 151,400 USD 40,000 12/15/98 3,315
------------
$ 19,754
------------
------------
</TABLE>
- ---------------
USD United States Dollars
See accompanying notes to financial statements
24
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--96.04%
AUSTRALIA--28.83%
BANKS--4.18%
99,900 Australia & New Zealand
Banking Group Ltd........... $ 571,714
115,800 Westpac Bank Corp. ........... 704,716
-------------
1,276,430
-------------
BREWERIES, PUBS, & RESTAURANTS--2.14%
265,600 Foster's Brewing Group
Ltd. ....................... 652,850
-------------
DIVERSIFIED INDUSTRIALS--3.92%
79,839 Broken Hill Propriety Co.
Ltd......................... 679,120
153,000 WMC Ltd....................... 519,522
-------------
1,198,642
-------------
ENGINEERING--1.43%
166,200 Pacific BBA Ltd............... 437,629
-------------
EXTRACTIVE INDUSTRIES--3.91%
29,500 Brambles Industries Ltd....... 647,437
43,700 Rio Tinto Ltd. ............... 547,108
-------------
1,194,545
-------------
INSURANCE--0.90%
13,400 AMP Ltd....................... 159,516
29,300 QBE Insurance Group........... 115,818
-------------
275,334
-------------
LEISURE & HOTELS--1.75%
80,200 TABCORP Holdings Ltd.......... 533,915
-------------
MEDIA--2.78%
124,400 News Corp. Ltd. .............. 850,419
-------------
METALS--0.34%
26,900 Comalco Ltd................... 103,471
-------------
OIL EXPLORATION & PRODUCTION--1.83%
105,400 Woodside Petroleum Ltd. ...... 557,374
-------------
PROPERTY--2.12%
29,300 Lend Lease Corp. Ltd.......... 646,842
-------------
RETAILERS, GENERAL--1.86%
161,000 Woolworths Ltd................ 566,927
-------------
TELECOMMUNICATIONS--1.67%
165,000 Telstra Corp. ................ 510,836
-------------
Total Australia Common Stocks.................. 8,805,214
-------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
HONG KONG--26.45%
COMMUNICATIONS--4.12%
292,000 China Telecom*................ $ 548,560
355,000 Hong Kong Telecom Co. Ltd. ... 710,459
-------------
1,259,019
-------------
CONSTRUCTION--2.03%
244,000 Cheung Kong Infrastucture
Holdings.................... 620,632
-------------
ELECTRICITY & GAS--5.88%
120,000 CLP Holdings.................. 673,983
346,300 Hong Kong & China Gas Ltd. ... 491,840
171,700 Hong Kong Electric Holdings... 629,604
-------------
1,795,427
-------------
LAND TRANSPORTATION--0.59%
736,000 Jiangsu Expressway............ 180,555
-------------
REAL ESTATE--11.99%
152,000 Cheung Kong Holdings Ltd...... 1,040,155
229,000 China Resources Development
Enterprises Ltd. ........... 306,023
109,000 Henderson Land Development Co.
Ltd......................... 536,204
152,000 Hutchison Whampoa Ltd. ....... 1,089,219
99,000 Sun Hung Kai Properties
Ltd......................... 690,252
-------------
3,661,853
-------------
SERVICES--0.62%
351,000 South China Morning Post...... 188,076
-------------
SHIPPING--1.22%
760,000 Cosco Pacific Ltd............. 372,886
-------------
Total Hong Kong Common Stocks.................. 8,078,448
-------------
INDIA--5.72%
BANKS/ RETAIL--0.72%
60,000 State Bank of India........... 220,319
-------------
BUILDING MATERIALS & MERCHANTS--0.23%
3,300 Associated Cement Co. ........ 71,568
-------------
ELECTRONIC & ELECTRICAL EQUIPMENT--0.53%
29,000 Bharat Heavy Electricals
Ltd. ....................... 161,852
-------------
ENGINEERING VEHICLES--0.28%
6,600 Bajaj Auto Ltd................ 86,248
-------------
HOUSEHOLD GOODS & TEXTILES--1.01%
6,000 Hindustan Lever............... 226,973
</TABLE>
25
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
INDIA--(CONCLUDED)
HOUSEHOLD GOODS & TEXTILES--(CONCLUDED)
30,000 Reliance Industries Ltd....... $ 82,478
-------------
309,451
-------------
OIL EXPLORATION & PRODUCTION--0.52%
25,000 Hindustan Petroleum Corp. .... 157,050
-------------
PHARMACEUTICALS--0.43%
11,000 Ranbaxy Laboratories Ltd. .... 129,599
-------------
TELECOMMUNICATIONS--1.24%
54,400 Mahanagar Telephone Nigam
Ltd. ....................... 234,931
8,500 Videsh Sanchar Nigam Ltd...... 144,425
-------------
379,356
-------------
TOBACCO--0.76%
14,000 ITC Ltd....................... 231,186
-------------
Total India Common Stocks...................... 1,746,629
-------------
KOREA--7.81%
BANKS--0.35%
29,840 Kookmin Bank.................. 107,646
-------------
COMMUNICATIONS--1.81%
807 SK Telecom Co. Ltd............ 552,484
-------------
ELECTRICAL APPLIANCES--3.27%
40,400 L.G. Electronics Inc. ........ 358,226
5,490 Samsung Display Devices....... 205,953
10,627 Samsung Electronics Corp. .... 434,906
-------------
999,085
-------------
ELECTRICITY & GAS--1.82%
31,200 Korea Electric Power Corp. ... 555,665
-------------
IRON & STEEL--0.34%
1,890 Pohang Iron & Steel Co.
Ltd. ....................... 104,677
-------------
MACHINERY--0.22%
18,000 Daewoo Heavy Industries....... 67,662
-------------
Total Korea Common Stocks...................... 2,387,219
-------------
MALAYSIA--3.89%
CHEMICALS--0.33%
128,000 Chemical Co. Malaysia Berhad
(1)......................... 99,975
-------------
COMMUNICATIONS--0.58%
143,500 Telekom Malaysia Berhad (1)... 178,431
-------------
NUMBER OF
SHARES VALUE
- ------------- -------------
MALAYSIA--(CONCLUDED)
CONSTRUCTION--0.52%
268,000 Gamuda Berhad (1)............. $ 156,992
-------------
ELECTRICITY & GAS--0.92%
51,000 Petronas Gas Berhad (1)....... 64,354
274,000 Tenaga Nasional Berhad (1).... 217,037
-------------
281,391
-------------
FOODS--0.75%
484,000 IOI Corp. Berhad (1).......... 133,736
241,000 KFC Holdings (Malaysia) Berhad
(1)......................... 96,337
-------------
230,073
-------------
INSURANCE--0.02%
12,000 Malaysian Assurance Berhad
(1)......................... 6,189
-------------
METALS--0.27%
105,000 Kian Joo Can Factory Berhad
(1)......................... 82,397
-------------
SERVICES--0.17%
77,000 Tanjong Berhad (1)............ 51,631
-------------
SHIPPING--0.33%
130,000 Malaysia International
Shipping Berhad (1)......... 99,621
-------------
Total Malaysia Common Stocks................... 1,186,700
-------------
NEW ZEALAND--3.72%
BUILDING & CONSTRUCTION--0.80%
184,400 Fletcher Challenge Building... 244,122
-------------
COMMUNICATIONS--1.74%
130,000 Telecom Corp. of New Zealand
Ltd. ....................... 533,522
-------------
PHARMACEUTICALS--1.18%
121,300 Fisher & Paykel............... 359,713
-------------
Total New Zealand Common Stocks................ 1,137,357
-------------
PHILIPPINES--1.46%
COMMUNICATIONS--0.31%
4,000 Philippine Long Distance
Telephone Co. .............. 95,663
-------------
ELECTRICITY & GAS--0.50%
51,300 Manila Electric Co. Class B... 151,293
-------------
REAL ESTATE--0.65%
652,200 Ayala Land Inc. .............. 198,004
-------------
Total Philippines Common Stocks................ 444,960
-------------
</TABLE>
26
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
SINGAPORE--9.05%
BANKS--2.28%
40,500 Development Bank of Singapore
Ltd......................... $ 253,825
94,000 United Overseas Bank Ltd...... 441,843
-------------
695,668
-------------
COMMUNICATIONS--1.22%
216,700 Singapore Telecom............. 374,149
-------------
MISCELLANEOUS MANUFACTURING--0.83%
139,000 Singapore Tech Engineering.... 136,651
35,000 Venture Manufacturing
(Singapore) Ltd............. 116,129
-------------
252,780
-------------
REAL ESTATE--1.33%
112,000 City Development Ltd. ........ 406,022
-------------
SERVICES--2.18%
77,380 Singapore Press Holdings
Ltd......................... 665,634
-------------
TRANSPORTATION--1.21%
60,000 Singapore International
Airlines.................... 368,664
-------------
Total Singapore Common Stocks.................. 2,762,917
-------------
TAIWAN--7.31%
CHEMICALS--0.27%
66,000 Nan Ya Plastics............... 83,454
-------------
COMMERCE/INDUSTRIAL--1.26%
51,750 Asustek Computer Inc. GDR*.... 382,950
-------------
ELECTRICAL APPLIANCES--2.60%
39,000 D-Link........................ 85,999
41,000 Phoenixtec Power.............. 86,615
131,000 Siliconware Precision
Industries Co.*............. 210,085
9,000 Siliconware Precision
Industries Co. GDR*+........ 93,150
158,000 Taiwan Semiconductor
Manufacturing Co. Ltd.*..... 319,167
-------------
795,016
-------------
NUMBER OF
SHARES VALUE
- ------------- -------------
TAIWAN--(CONCLUDED)
INSURANCE--0.51%
44,000 Cathay Life Insurance......... $ 155,374
-------------
IRON & STEEL--1.40%
630,000 China Steel Corp.............. 427,448
-------------
MISCELLANEOUS FINANCIAL--0.98%
45,100 R.O.C. Taiwan Fund............ 298,788
-------------
TEXTILES--0.29%
43,000 Nien Hsing Textile Company
Ltd. ....................... 88,188
-------------
Total Taiwan Common Stocks..................... 2,231,218
-------------
THAILAND--1.80%
COMMUNICATIONS--0.12%
5,000 Advanced Information
Services.................... 35,869
-------------
ELECTRICITY & GAS--0.71%
82,000 Electricity Generating Public
Co. Ltd. ................... 216,465
-------------
MINING--0.97%
30,800 PTT Exploration & Production
PLC......................... 296,726
-------------
Total Thailand Common Stocks................... 549,060
-------------
Total Common Stocks (cost--$37,365,177)........ 29,329,722
-------------
NUMBER OF
WARRANTS
- -------------
WARRANTS--0.01%
HONG KONG--0.01%
ELECTRICITY & GAS--0.01%
18,650 Hong Kong & China Gas Ltd.,
warrants expiring 09/30/99;
exercise price HKD 12.27
(cost--$0).................. 1,926
-------------
</TABLE>
27
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- --------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT--4.13%
$ 1,261 Repurchase Agreement dated
10/30/98 with State Street
Bank & Trust Company,
collateralized by $1,190,000
U.S. Treasury Notes, 6.375%
due 08/15/02 (value--
$1,290,269); proceeds:
$1,261,447
(cost--$1,261,000).......... 11/02/98 4.250% $ 1,261,000
-------------
Total Investments (cost--$38,626,177)--100.18%.................................... 30,592,648
Liabilities in excess of other assets--(0.18)%.................................... (53,502)
-------------
Net Assets--100.00%............................................................... $ 30,539,146
-------------
-------------
</TABLE>
- -----------------
* Non-income producing securities
+ Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration;
normally to qualified institutional buyers.
GDR Global Depositary Receipts
HKD Hong Kong Dollars
(1) Illiquid securities represent 3.89% of net assets.
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT TO IN MATURITY UNREALIZED
DELIVER EXCHANGE FOR DATE DEPRECIATION
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Hong Kong Dollars............. 10,000,000 USD 1,253,290 03/03/99 $ 30,409
------------
------------
</TABLE>
- ---------------
USD United States Dollars
See accompanying notes to financial statements
28
<PAGE>
PAINEWEBBER
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 1998
<TABLE>
<CAPTION>
EMERGING
GLOBAL EQUITY MARKETS ASIA PACIFIC
FUND EQUITY FUND GROWTH FUND
------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Investments, at value (cost--$378,115,795,
$10,381,064 and $38,626,177, respectively).... $ 418,409,318 $ 7,935,620 $ 30,592,648
Cash............................................ 6,322 6,532 540
Cash denominated in foreign currencies, at value
(cost--$2,015,605, $209,339 and $319,265,
respectively)................................. 2,016,622 212,420 321,279
Receivable for investments sold................. 2,969,029 147,290 --
Receivable for shares of beneficial interest
sold.......................................... 246,683 793 50,603
Dividends and interest receivable............... 2,200,838 34,838 114,492
Futures variation margin receivable............. 219,675 -- --
Deferred organizational expenses................ -- 8,801 102,681
Other assets.................................... 193,162 29,221 34,950
------------- --------------- ---------------
Total assets.................................... 426,261,649 8,375,515 31,217,193
------------- --------------- ---------------
LIABILITIES
Payable for investments purchased............... 25,962,893 95,604 297,893
Payable for shares of beneficial interest
repurchased................................... 2,923,021 20,360 161,873
Unrealized depreciation of forward foreign
currency contracts............................ -- 19,754 30,409
Payable to affiliates........................... 387,173 139 47,375
Accrued expenses and other liabilities.......... 471,673 89,100 140,497
------------- --------------- ---------------
Total liabilities............................... 29,744,760 224,957 678,047
------------- --------------- ---------------
NET ASSETS
Beneficial interest--$0.001 par value (unlimited
amount authorized)............................ 337,333,352 29,011,709 67,232,845
Accumulated net investment income (loss)........ 399,997 4,920 (136,030)
Accumulated net realized gains (losses) from
investments and foreign currency
transactions.................................. 15,516,006 (18,405,320) (28,475,429)
Net unrealized appreciation/depreciation of
investments and other assets and liabilities
denominated in foreign currencies............. 43,267,534 (2,460,751) (8,082,240)
------------- --------------- ---------------
Net assets...................................... $ 396,516,889 $ 8,150,558 $ 30,539,146
------------- --------------- ---------------
------------- --------------- ---------------
CLASS A:
Net assets...................................... $ 251,680,020 $ 4,236,845 $ 11,525,747
------------- --------------- ---------------
Shares outstanding.............................. 15,464,690 649,553 1,689,601
------------- --------------- ---------------
Net asset and redemption value per share........ $16.27 $6.52 $6.82
------------- --------------- ---------------
------------- --------------- ---------------
Maximum offering price per share (net asset
value plus sales charge of 4.50% of offering
price)........................................ $17.04 $6.83 $7.14
------------- --------------- ---------------
------------- --------------- ---------------
CLASS B:
Net assets...................................... $ 52,709,040 $ 461,479 $ 12,746,176
------------- --------------- ---------------
Shares outstanding.............................. 3,414,989 72,409 1,891,243
------------- --------------- ---------------
Net asset value and offering price per share.... $15.43 $6.37 $6.74
------------- --------------- ---------------
------------- --------------- ---------------
CLASS C:
Net assets...................................... $ 41,103,029 $ 2,575,457 $ 6,220,307
------------- --------------- ---------------
Shares outstanding.............................. 2,660,215 407,749 922,470
------------- --------------- ---------------
Net asset value and offering price per share.... $15.45 $6.32 $6.74
------------- --------------- ---------------
------------- --------------- ---------------
CLASS Y:
Net assets...................................... $ 51,024,800 $ 876,777 $ 46,916
------------- --------------- ---------------
Shares outstanding.............................. 3,075,567 133,242 6,911
------------- --------------- ---------------
Net asset value, offering price and redemption $16.59 $6.58 $6.79
value per share............................... ------------- --------------- ---------------
------------- --------------- ---------------
</TABLE>
See accompanying notes to financial statements
29
<PAGE>
PAINEWEBBER
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1998
<TABLE>
<CAPTION>
GLOBAL EMERGING MARKETS ASIA PACIFIC
EQUITY FUND EQUITY FUND GROWTH FUND
------------ ---------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $776,567, $23,928 and $70,119,
respectively).................................................................... $7,015,246 $ 278,727 $ 1,010,136
Interest........................................................................... 815,187 21,677 123,696
------------ ---------------- ------------
7,830,433 300,404 1,133,832
------------ ---------------- ------------
EXPENSES:
Investment advisory and administration............................................. 3,918,629 161,312 477,960
Service fees--Class A.............................................................. 705,814 16,792 37,060
Service and distribution fees--Class B............................................. 699,953 8,265 165,647
Service and distribution fees--Class C............................................. 504,588 38,656 84,301
Custody and accounting............................................................. 1,157,741 49,322 153,979
Transfer agency and related service fees........................................... 414,620 21,578 76,879
Reports and notices to shareholders................................................ 221,256 23,428 47,552
Legal and audit.................................................................... 217,949 93,242 96,571
State registration fees............................................................ 53,622 36,825 149,755
Trustees' fees..................................................................... 12,142 12,142 11,562
Interest expense................................................................... -- 4,525 --
Amortization of organizational expenses............................................ -- 57,017 30,226
Other expenses..................................................................... 5,191 5,635 1,722
------------ ---------------- ------------
7,911,505 528,739 1,333,214
Less: Fee waivers.................................................................. -- (170,652) --
------------ ---------------- ------------
Net expenses....................................................................... 7,911,505 358,087 1,333,214
------------ ---------------- ------------
NET INVESTMENT LOSS................................................................ (81,072) (57,683) (199,382)
------------ ---------------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from:
Investments.................................................................... 14,395,205 (2,824,156) (26,226,085)
Foreign currency transactions.................................................. 481,069 (136,681) (76,554)
Futures transactions........................................................... 4,092,682 -- --
Net change in unrealized appreciation/depreciation of:
Investments.................................................................... 934,114 (1,564,207) 14,069,096
Futures........................................................................ 2,864,384 -- --
Other assets and liabilities denominated in foreign currencies................. 69,896 (24,657) (46,985)
------------ ---------------- ------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS........................ 22,837,350 (4,549,701) (12,280,528)
------------ ---------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................... $22,756,278 $ (4,607,384) $(12,479,910)
------------ ---------------- ------------
------------ ---------------- ------------
</TABLE>
See accompanying notes to financial statements
30
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED OCTOBER 31,
-----------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss............................. $ (81,072) $ (1,080,165)
Net realized gains (losses) from:
Investments................................... 14,395,205 80,862,560
Foreign currency transactions................. 481,069 (1,597,745)
Futures transactions.......................... 4,092,682 --
Net changes in unrealized
appreciation/depreciation of:
Investments................................... 934,114 (26,841,519)
Futures....................................... 2,864,384 --
Other assets and liabilities denominated in
foreign currencies............................ 69,896 161,247
---------------- ----------------
Net increase in net assets resulting from
operations.................................... 22,756,278 51,504,378
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains from investment
transactions--Class A......................... (37,180,745) (10,195,197)
Net realized gains from investment
transactions--Class B......................... (11,285,760) (3,786,480)
Net realized gains from investment
transactions--Class C......................... (7,351,661) (2,275,485)
Net realized gains from investment
transactions--Class Y......................... (7,350,899) (2,076,082)
---------------- ----------------
(63,169,065) (18,333,244)
---------------- ----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 714,822,072 354,354,793
Cost of shares repurchased...................... (831,906,775) (462,072,864)
Proceeds from dividends reinvested.............. 59,838,962 17,254,508
---------------- ----------------
Net decrease in net assets from beneficial
interest transactions......................... (57,245,741) (90,463,563)
---------------- ----------------
Net decrease in net assets...................... (97,658,528) (57,292,429)
NET ASSETS:
Beginning of year............................... 494,175,417 551,467,846
---------------- ----------------
End of year (including undistributed net
investment income of $399,997 at October 31,
1998)......................................... $ 396,516,889 $ 494,175,417
---------------- ----------------
---------------- ----------------
</TABLE>
See accompanying notes to financial statements
31
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED OCTOBER 31,
-----------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss............................. $ (57,683) $ (166,398)
Net realized gains (losses) from:
Investments................................... (2,824,156) 515,472
Foreign currency transactions................. (136,681) (78,052)
Net change in unrealized
appreciation/depreciation of:
Investments................................... (1,564,207) 47,391
Other assets and liabilities denominated in
foreign currencies............................ (24,657) 22,836
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations............................... (4,607,384) 341,249
---------------- ----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 9,078,922 19,732,492
Cost of shares repurchased...................... (22,538,713) (28,983,261)
---------------- ----------------
Net decrease in net assets from beneficial
interest transactions......................... (13,459,791) (9,250,769)
---------------- ----------------
Net decrease in net assets...................... (18,067,175) (8,909,520)
NET ASSETS:
Beginning of year............................... 26,217,733 35,127,253
---------------- ----------------
End of year (including undistributed net
investment income of $4,920 at October 31,
1998)......................................... $ 8,150,558 $ 26,217,733
---------------- ----------------
---------------- ----------------
</TABLE>
See accompanying notes to financial statements
32
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED
ENDED OCTOBER 31,
OCTOBER 31, 1998 1997+
---------------- ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss............................. $ (199,382) $ (49,631)
Net realized losses from:
Investments................................... (26,226,085) (2,142,366)
Foreign currency transactions................. (76,554) (86,558)
Net unrealized appreciation/depreciation of:
Investments................................... 14,069,096 (22,102,625)
Other assets and liabilities denominated in
foreign currencies............................ (46,985) (1,726)
---------------- ----------------
Net decrease in net assets resulting from
operations.................................... (12,479,910) (24,382,906)
---------------- ----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares............ 23,242,085 104,360,162
Cost of shares repurchased...................... (38,524,648) (21,675,637)
---------------- ----------------
Net increase (decrease) in net assets from
beneficial interest transactions.............. (15,282,563) 82,684,525
---------------- ----------------
Net increase (decrease) in net assets........... (27,762,473) 58,301,619
NET ASSETS:
Beginning of period............................. 58,301,619 0
---------------- ----------------
End of period (including undistributed net
investment income of $1,932 at October 31,
1997)......................................... $ 30,539,146 $ 58,301,619
---------------- ----------------
---------------- ----------------
</TABLE>
- ---------------
+ For the period March 25, 1997 (commencement of operations) through October 31,
1997
See accompanying notes to financial statements
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The PaineWebber Global Equity Fund ("Global Equity Fund"), a diversified
series of PaineWebber Investment Trust ("Investment Trust"), the PaineWebber
Emerging Markets Equity Fund ("Emerging Markets Equity Fund"), a diversified
series of PaineWebber Investment Trust II ("Investment Trust II") and the
PaineWebber Asia Pacific Growth Fund ("Asia Pacific Growth Fund"), a diversified
series of PaineWebber Managed Investments Trust ("Managed Trust"), (each a
"Fund") are registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, as open-end management investment
companies. Global Equity Fund seeks long-term growth of capital by investing
primarily in U.S. and foreign equity securities. Emerging Markets Equity Fund
seeks long-term capital appreciation by investing primarily in equity securities
of companies in newly industrializing countries. Asia Pacific Growth Fund seeks
long-term capital appreciation by investing primarily in equity securities of
companies in the Asia Pacific region, excluding Japan. (Investment Trust,
Investment Trust II and Managed Trust are each sometimes referred to herein as a
"Trust.") Organizational costs have been deferred and are being (or, in the case
of Global Equity Fund, have been) amortized using the straight-line method over
a period not to exceed 60 months from the date the Funds commenced operations.
Currently, each 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 and related
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.
The preparation of financial statements in accordance with generally accepted
accounting principles requires the Funds' 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"), an asset management subsidiary of
PaineWebber Incorporated ("PaineWebber") and investment adviser, administrator
and distributor of each Fund, or a Fund's sub-adviser, Invista Capital
Management, Inc. ("Invista") (for foreign investments only), for Global Equity
Fund, or Schroder Capital Management International Inc. ("Schroder"), for
Emerging Markets Equity Fund and the Asia Pacific Growth 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. When market quotations are not readily
available, securities are valued based upon appraisals derived from information
concerning those securities or similar securities received from a recognized
dealer in those securities. The amortized cost method of valuation, which
approximates market value, is used to value short-term debt instruments with 60
days or less remaining to maturity unless a Trusts' Board 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 each Trusts' Board.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 each Fund's custodian, unless each Trusts' Board
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 each Fund's net asset value. If events materially affecting the
value of such investments or currency exchange rates occur during such time
period, the investments will be valued at their fair value as determined in good
faith by or under the direction of a Trust's Board.
REPURCHASE AGREEMENTS--Each 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 Funds have 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 Funds occasionally
participate in joint repurchase agreement transactions with other funds managed
by Mitchell Hutchins.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date. Realized gains and losses from investment and
foreign exchange transactions are calculated using the identified cost method.
Dividend income is recorded on the ex-dividend date ("ex-date") (except in the
case of certain foreign dividends which are recorded as soon after the
ex-dividend date as each Fund using reasonable diligence becomes aware of such
dividends). Interest income is recorded on an accrual basis. Discounts are
accreted and premiums are amortized as adjustments to interest income and the
identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of dividend-
eligible shares, as appropriate) of each class at the beginning of the day
(after adjusting for current capital share activity of the respective classes).
Class-specific expenses are charged directly to the applicable class of shares.
FOREIGN CURRENCY TRANSLATION--The books and records of each Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into 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 each Fund's securities are
presented at the foreign exchange rates at the end of the period, the Funds do
not generally isolate the effect of fluctuations in foreign exchange rates from
the effect of the changes in market prices of securities. However, the Funds do
isolate the effect of fluctuations in foreign exchange rates when determining
the realized gain or loss upon the sale or maturity of foreign currency
denominated debt obligations pursuant to federal income tax regulations. Certain
foreign exchange gains and losses included in realized and unrealized gains and
losses are included in or are a reduction of ordinary income in accordance with
federal income tax regulations. Net realized foreign currency gain (loss) is
treated as ordinary income for income tax
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
reporting purposes. Gains/losses from translating foreign currency denominated
assets and liabilities at year-end exchange rates are included in the change in
unrealized appreciation/depreciation of other assets and liabilities denominated
in foreign currencies.
FUTURES CONTRACTS--Using financial futures contracts involves various market
risks. The maximum amount at risk from the purchase of a futures contract is the
contract value. The Funds use financial futures contracts for hedging purposes,
and in the case of Global Equity Fund, to adjust Global Equity's exposure to
U.S. and foreign equity markets in connection with a reallocation of that Fund's
assets. However, imperfect correlations between futures contracts and the
related portfolio securities or markets, or market disruptions, do not normally
permit full control of these risks at all times.
Upon entering into a financial futures contract, a Fund is required to pledge
to a broker an amount equal to a certain percentage of the contract amount. This
amount is known as the "initial margin." Subsequent payments, known as
"variation margin," are made or received by the Fund each day, depending on the
daily fluctuations in the value of the underlying financial futures contracts.
Such variation margin is recorded for financial statement purposes on a daily
basis as an unrealized gain or loss until the financial futures contract is
closed, at which time the net gain or loss is reclassified to realized.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
CONCENTRATION OF RISK
Investing in securities of foreign issuers and currency transactions may
involve certain 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 each of the Funds invest. The ability of
the issuers of debt securities held by a Fund to meet their obligations may be
affected by economic and political developments in a specific industry, country
or region.
INVESTMENT ADVISER AND ADMINISTRATOR
Each Fund has 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 for the Global Equity Fund, 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.
In accordance with the Advisory Contract for the Emerging Markets Equity Fund,
Mitchell Hutchins receives compensation from the Fund, computed daily and paid
monthly, at a rate of 1.20% of its average daily
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS
net assets. In accordance with the Advisory Contract for the Asia Pacific Growth
Fund, Mitchell Hutchins receives compensation from the Fund, computed daily and
paid monthly, at an annual rate of 1.20% of the Fund's average daily net assets
up to and including $100 million and 1.10% of its average daily net assets over
$100 million.
Mitchell Hutchins has entered into a contract with Invista dated October 1,
1998 ("Invista Contract"), pursuant to which Invista serves as investment
sub-adviser for the international investments of Global Equity Fund. Mitchell
Hutchins allocates the Fund's investments between domestic and international and
is responsible for the day-to-day management of the Fund's domestic investments.
Under the Invista Contract, Mitchell Hutchins (not the Fund) is obligated to pay
Invista at the annual rate of 0.40% of the proportion of the Fund's average
daily net assets allocated to international investments up to and including $100
million and 0.29% of the Fund's average daily net assets allocated to
international investments in excess of $100 million up to and including $300
million and to 0.26% of such assets in excess of $300 million. Prior to October
1, 1998, GE Investment Management Incorporated ("GEIM") served as investment
sub-adviser for all the Fund's assets pursuant to sub-advisory contracts with
Mitchell Hutchins or Kidder, Peabody Asset Management Inc ("KPAM"). GEIM
received $1,332,538 in sub-advisory fees from Mitchell Hutchins for the period
November 1, 1997 through September 30, 1998.
Under a contract with Mitchell Hutchins ("Sub-Advisory Contract"), Schroder
serves as the sub-adviser to the Emerging Markets Equity Fund. Under a
Sub-Advisory Contract, Mitchell Hutchins (not the Fund) pays Schroder a fee,
computed daily and paid monthly, at an annual rate of 0.70% of the Fund's
average daily net assets.
Under a contract with Mitchell Hutchins ("Sub-Advisory Contract"), Schroder
serves as the sub-adviser to the Asia Pacific Growth Fund. Under the
Sub-Advisory Contract, Mitchell Hutchins (not the Fund) pays Schroder a fee,
computed daily and paid monthly, at an annual rate of 0.65% of the Fund's
average daily net assets up to and including $100 million and 0.55% of the
Fund's average daily net assets over $100 million.
At October 31, 1998 the Global Equity Fund, the Emerging Markets Equity Fund,
and the Asia Pacific Growth Fund owed Mitchell Hutchins $262,953, $0 and
$29,713, respectively, in investment advisory and administrative fees. Mitchell
Hutchins voluntarily waived $154,704 of its management fee for the Emerging
Markets Equity Fund for the year ended October 31, 1998. Mitchell Hutchins may
discontinue this waiver at any time.
For the year ended October 31, 1998, the Funds paid no brokerage commissions
to PaineWebber for transactions executed on behalf of the Funds.
DISTRIBUTION PLAN
Mitchell Hutchins is the distributor of each Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under separate
plans of service and/or distribution pertaining to Class A, Class B and Class C
shares, each Fund pays Mitchell Hutchins monthly service fees at the annual rate
of 0.25% of the average daily net assets of Class A, Class B and Class C shares
and monthly distribution fees at the annual rate of 0.75% of the average daily
net assets of Class B and Class C shares. At October 31, 1998 the Global Equity
Fund, the Emerging Markets Equity Fund and the Asia Pacific Growth Fund owed
Mitchell Hutchins $123,342, $139 and $17,630, respectively, in service and
distribution fees. Mitchell Hutchins voluntarily waived $15,948 of its service
and distribution fees for the Emerging Markets Equity Fund for the year ended
October 31, 1998.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 A,
Class B and Class C shares. Mitchell Hutchins has informed the Global Equity
Fund, the Emerging Markets Equity Fund and the Asia Pacific Growth Fund that for
the year ended October 31, 1998 it earned $207,273, $11,156 and $188,449,
respectively, in sales charges.
SECURITY LENDING
Each Fund may lend securities 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. Each Fund will regain record ownership of loaned
securities to exercise certain beneficial rights; however, each Fund may bear
the risk of delay in recovery of, or even loss of rights in, the securities
loaned should the borrower fail financially. Each Fund receives compensation,
which is included in interest income, for lending its securities from interest
earned on the cash or U.S. government securities held as collateral, net of fee
rebates paid to the borrower plus reasonable administrative and custody fees.
Each Fund's lending agent is PaineWebber, who received compensation from the
Funds for the year ended October 31, 1998 as follows:
<TABLE>
<S> <C>
Global Equity Fund..................................................................... $ 42,839
Emerging Markets Equity Fund........................................................... $ 2,235
Asia Pacific Growth Fund............................................................... $ 25,777
</TABLE>
At October 31, 1998, the Global Equity Fund, Emerging Markets Equity Fund and
Asia Pacific Growth Fund owed PaineWebber $878, $0 and $32, respectively, in
compensation. For the year ended October 31, 1998, the Global Equity Fund, the
Emerging Markets Equity Fund, and the Asia Pacific Growth Fund earned
compensation of $119,352, $4,858 and $71,663 net of fees, rebates and expenses,
from securities lending transactions. At October 31, 1998 there were no
securities on loan from the Funds.
BANK LINE OF CREDIT
Each Fund may participate with other funds managed by Mitchell Hutchins in a
$200 million committed credit facility ("Facility") to be utilized for temporary
financing until settlement of sales or purchases of portfolio securities, the
repurchase or redemption of shares of each fund at the request of the
shareholders and other temporary or emergency purposes. In connection therewith,
each Fund has agreed to pay a commitment fee, pro rata, based on the relative
asset size of the funds in the Facility. Interest is charged to a fund at rates
based on prevailing market rates in effect at the time of borrowings. For the
year ended October 31, 1998 the Emerging Markets Equity Fund borrowed under the
Facility and had an average daily amount of borrowings of $5,500,000, over five
days, with a weighted average annualized interest rate of 5.94%.
TRANSFER AGENCY AND RELATED SERVICES FEES
PaineWebber provides transfer agency related services to the Funds pursuant to
a delegation of authority from PFPC Inc., the Funds' transfer agent, and is
compensated for these services by PFPC Inc., not the Funds. For the year ended
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1998, PaineWebber received from PFPC, Inc., not the Funds,
approximately 56%, 55% and 55% of the total transfer agency and related services
fees collected by PFPC from the Global Equity Fund, Emerging Markets Equity Fund
and Asia Pacific Growth Fund, respectively.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at October 31,
1998 was substantially the same as the cost of securities for financial
statement purposes.
At October 31, 1998, the components of net unrealized
appreciation/depreciation on investments were as follows:
<TABLE>
<CAPTION>
EMERGING
GLOBAL MARKETS ASIA PACIFIC
EQUITY FUND EQUITY FUND GROWTH FUND
----------- ----------- ------------
<S> <C> <C> <C>
Gross appreciation (investments having an excess of value over
cost)............................................................. $46,575,623 $ 561,956 $ 1,786,359
Gross depreciation (investments having an excess of cost over
value)............................................................ (6,282,100) (3,007,400) (9,819,888)
----------- ----------- ------------
Net appreciation (depreciation) of investments..................... $40,293,523 $(2,445,444) $ (8,033,529)
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
For the year ended October 31, 1998, total aggregate purchases and sales of
portfolio securities, excluding short term securities were as follows:
<TABLE>
<CAPTION>
EMERGING
GLOBAL EQUITY MARKETS ASIA PACIFIC
FUND EQUITY FUND GROWTH FUND
------------- ----------- ------------
<S> <C> <C> <C>
Purchases........................................................ $ 674,308,983 $ 8,279,329 $22,670,886
Sales............................................................ $ 797,876,601 $21,623,123 $37,885,931
</TABLE>
FEDERAL INCOME TAX STATUS
The Funds intend to distribute substantially all of their 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 their net investment income, capital gains and certain
other amounts, if any, the Funds intend not to be subject to a federal excise
tax.
At October 31, 1998 the Funds (with the exception of the Global Equity Fund)
had the following net capital loss carryforwards available as reductions, to the
extent provided in the regulations, of future net realized capital gains which
expire as follows:
<TABLE>
<CAPTION>
EMERGING
MARKETS ASIA PACIFIC
FISCAL YEAR ENDING EQUITY FUND GROWTH FUND
- ---------------------------------------------------- ------------ ------------
<S> <C> <C>
2002................................................ $ 7,735,682 --
2003................................................ 7,723,267 --
2005................................................ -- $ 5,254,850
2006................................................ 2,795,275 22,379,279
------------ ------------
$ 18,254,224 $27,634,129
------------ ------------
------------ ------------
</TABLE>
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At October 31, 1998, the effect of permanent "book/tax" reclassification
resulted in increases (decreases) to the components of net assets as follows:
<TABLE>
<CAPTION>
ACCUMULATED
ACCUMULATED NET REALIZED
NET INVESTMENT GAINS BENEFICIAL
FUND INCOME (LOSS) (LOSSES) INTEREST
- ----------------------------------------------------------------- -------------- ------------- ---------
<S> <C> <C> <C>
Global Equity Fund............................................... $ 1,801,564 $(1,806,634) $ 5,070
Emerging Markets Fund............................................ 75,778 136,681 (212,459)
Asia Pacific Growth Fund......................................... 61,420 (30,424) (30,996)
</TABLE>
SHARES OF BENEFICIAL INTEREST
There is an unlimited amount of $0.001 par value shares of benefical interest
authorized. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
-------------------------- ------------------------- ------------------------- -------------------------
GLOBAL EQUITY FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1998
Shares sold........... 36,060,226 $ 628,537,391 171,632 $ 2,956,175 2,845,323 $ 47,554,292 1,974,996 $ 35,774,214
Shares repurchased.... (39,766,228) (701,469,147) (1,441,098) (23,820,379) (3,737,235) (62,542,179) (2,453,452) (44,075,070)
Shares converted from
Class B to Class A... 887,156 15,790,653 (929,606) (15,790,653) -- -- -- --
Dividend reinvested... 2,234,439 35,103,031 688,904 10,340,457 471,391 7,080,291 458,058 7,315,183
----------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
Net decrease.......... (584,407) $ (22,038,072) (1,510,168) $ (26,314,400) (420,521) $ (7,907,596) (20,398) $ (985,673)
----------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
----------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
YEAR ENDED OCTOBER 31,
1997
Shares sold........... 13,610,390 $ 254,167,405 380,593 $ 6,769,009 3,594,429 $ 64,660,880 1,515,789 $ 28,757,499
Shares repurchased.... (16,445,507) (308,922,271) (1,626,421) (29,189,105) (4,630,809) (83,404,229) (2,127,743) (40,557,259)
Shares converted from
Class B to Class A... 709,755 13,463,891 (734,659) (13,463,891) -- -- -- --
Dividend reinvested... 543,143 9,521,294 205,495 3,491,361 128,017 2,175,015 116,573 2,066,838
----------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
Net decrease.......... (1,582,219) $ (31,769,681) (1,774,992) $ (32,392,626) (908,363) $ (16,568,334) (495,381) $ (9,732,922)
----------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
----------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
EMERGING MARKETS EQUITY -------------------------- --------------------- -------------------------- ------------------------
FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- -------- ----------- ----------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1998
Shares sold............... 65,135 $ 601,062 26,773 $ 232,787 1,042,209 $ 7,954,963 37,276 $ 290,110
Shares repurchased........ (416,028) (3,554,345) (109,930) (944,387) (1,217,647) (9,505,610) (967,273) (8,534,371)
Shares converted from
Class B
to Class A.............. 17,862 162,330 (18,300) (162,330) -- -- -- --
----------- ------------- -------- ----------- ----------- ------------- --------- -------------
Net decrease.............. (333,031) $ (2,790,953) (101,457) $ (873,930) (175,438) $ (1,550,647) (929,997) $ (8,244,261)
----------- ------------- -------- ----------- ----------- ------------- --------- -------------
----------- ------------- -------- ----------- ----------- ------------- --------- -------------
YEAR ENDED OCTOBER 31,
1997
Shares sold............... 142,149 $ 1,529,954 100,932 $ 1,104,923 1,555,080 $ 16,653,992 41,839 $ 443,623
Shares repurchased........ (744,379) (7,731,787) (21,351) (225,000) (1,817,955) (19,222,120) (174,464) (1,804,354)
----------- ------------- -------- ----------- ----------- ------------- --------- -------------
Net increase (decrease)... (602,230) $ (6,201,833) 79,581 $ 879,923 (262,875) $ (2,568,128) (132,625) $ (1,360,731)
----------- ------------- -------- ----------- ----------- ------------- --------- -------------
----------- ------------- -------- ----------- ----------- ------------- --------- -------------
</TABLE>
40
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SHARES OF BENEFICIAL INTEREST (CONCLUDED)
There is an unlimited amount of $0.001 par value shares of benefical interest
authorized. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y*
ASIA PACIFIC GROWTH -------------------------- ------------------------- ------------------------- -------------------------
FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1998
Shares sold........... 833,285 $ 6,176,465 643,643 $ 4,984,246 1,740,391 $ 12,038,987 6,911 $ 42,387
Shares repurchased.... (1,558,123) (11,548,589) (1,308,266) (9,734,562) (2,375,214) (17,241,497) -- --
Shares converted from
Class B to Class A... 17,787 152,282 (17,910) (152,282) -- -- -- --
----------- ------------- ---------- ------------- ---------- ------------- ----- -------------
Net increase
(decrease)........... (707,051) $ (5,219,842) (682,533) $ (4,902,598) (634,823) $ (5,202,510) 6,911 $ 42,387
----------- ------------- ---------- ------------- ---------- ------------- ----- -------------
----------- ------------- ---------- ------------- ---------- ------------- ----- -------------
PERIOD ENDED OCTOBER
31, 1997+
Shares sold........... 3,053,522 $ 37,770,138 3,354,769 $ 41,970,877 2,006,187 $ 24,619,147 -- $ --
Shares repurchased.... (656,870) (7,384,924) (780,993) (9,358,215) (448,894) (4,932,498) -- --
----------- ------------- ---------- ------------- ---------- ------------- ----- -------------
Net increase.......... 2,396,652 $ 30,385,214 2,573,776 $ 32,612,662 1,557,293 $ 19,686,649 -- $ --
----------- ------------- ---------- ------------- ---------- ------------- ----- -------------
----------- ------------- ---------- ------------- ---------- ------------- ----- -------------
</TABLE>
- ---------------
+ For the period March 25, 1997 (commencement of operations) through October
31, 1997.
* For the period March 13, 1998 (commencement of offering) through October 31,
1998.
41
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding in each class
throughout each period is presented below:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
FOR THE
FOR THE YEARS ENDED TWO MONTHS FOR THE YEARS ENDED
OCTOBER 31, ENDED AUGUST 31,
--------------------- OCTOBER 31, -----------------------------------------
1998# 1997 1996 1996 1995** 1994
--------- -------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 18.37 $ 17.43 $ 16.81 $ 16.12 $ 16.98 $ 14.55
--------- -------- ------------ --------- --------- ---------
Net investment income (loss)............ 0.03+ 0.00 (0.02) 0.02 0.02 0.01
Net realized and unrealized gains
(losses) from investments, futures and
foreign currency....................... 0.35+ 1.52 0.64 1.24 0.37 2.63
--------- -------- ------------ --------- --------- ---------
Net increase (decrease) from investment
operations............................. 0.38 1.52 0.62 1.26 0.39 2.64
--------- -------- ------------ --------- --------- ---------
Distributions from net realized gains... (2.48) (0.58) -- (0.57) (1.25) (0.21)
--------- -------- ------------ --------- --------- ---------
Net asset value, end of period.......... $ 16.27 $ 18.37 $ 17.43 $ 16.81 $ 16.12 $ 16.98
--------- -------- ------------ --------- --------- ---------
--------- -------- ------------ --------- --------- ---------
Total investment return (1)............. 2.53% 8.87% 3.69% 8.06% 3.24% 18.23%
--------- -------- ------------ --------- --------- ---------
--------- -------- ------------ --------- --------- ---------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $251,680 $294,878 $307,267 $ 305,218 $ 360,652 $ 185,493
Expenses to average net assets.......... 1.55% 1.44% 1.53%* 1.48% 1.71%(2) 1.58%
Net investment income (loss) to average
net assets............................. 0.17% 0.01% (0.80)%* 0.10% 0.09%(2) 0.07%
Portfolio turnover rate................. 151% 86% 3% 33% 40% 51%
</TABLE>
- -----------------
* Annualized
** Investment Advisory functions for the Fund were transferred from Kidder
Peabody Asset Management Inc. to Mitchell Hutchins on February 13, 1995.
# Effective October 1, 1998, Invista Capital Management, Inc. began overseeing
the day-to-day management of the international portion of the Fund's assets
and Mitchell Hutchins allocates the portfolio between domestic and
international investments and manages the domestic portion of the Fund's
assets.
+ Calculated using the average monthly shares outstanding for the year.
++ 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 other
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of each period reported. The figures do not
include sales charges; results for each class would be lower if sales charges
were included. Total investment returns for periods of less than a year have
not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.06%, 0.00% and
0.06% for Class A, Class B and Class C shares, respectively.
42
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------
FOR THE
PERIOD
FOR THE FOR THE AUGUST 25,
FOR THE YEARS ENDED TWO MONTHS YEAR 1995++
OCTOBER 31, ENDED ENDED TO AUGUST
------------------------- OCTOBER 31, AUGUST 31, 31,
1998# 1997 1996 1996 1995**
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 17.69 $ 16.93 $ 16.35 $ 15.82 $ 15.83
----------- ----------- ------------ ----------- -----------
Net investment income
(loss)....................... (0.12)+ (0.21) (0.05) (0.12) 0.00
Net realized and unrealized
gains (losses) from
investments, futures and
foreign currency............. 0.34+ 1.55 0.63 1.22 (0.01)
----------- ----------- ------------ ----------- -----------
Net increase (decrease) from
investment operations........ 0.22 1.34 0.58 1.10 (0.01)
----------- ----------- ------------ ----------- -----------
Distributions from net
realized gains............... (2.48) (0.58) -- (0.57) --
----------- ----------- ------------ ----------- -----------
Net asset value, end of
period....................... $ 15.43 $ 17.69 $ 16.93 $ 16.35 $ 15.82
----------- ----------- ------------ ----------- -----------
----------- ----------- ------------ ----------- -----------
Total investment return (1)... 1.62% 8.05% 3.55% 7.18% (0.06)%
----------- ----------- ------------ ----------- -----------
----------- ----------- ------------ ----------- -----------
Ratios/Supplemental Data:
Net assets, end of period
(000's)...................... $ 52,709 $ 87,104 $113,445 $113,235 $142,880
Expenses to average net
assets....................... 2.38% 2.26% 2.34%* 2.25% 2.17%*(2)
Net investment income (loss)
to average net assets........ (0.74)% (0.80)% (1.61)%* (0.68)% (1.92)%*(2)
Portfolio turnover rate....... 151% 86% 3% 33% 40%
<CAPTION>
CLASS C
-----------------------------------------------------------------------------
FOR THE
FOR THE YEARS ENDED TWO MONTHS FOR THE YEARS ENDED
OCTOBER 31, ENDED AUGUST 31,
--------------------- OCTOBER 31, --------------------------------------
1998# 1997 1996 1996 1995** 1994
--------- --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 17.69 $ 16.93 $ 16.35 $ 15.82 $ 16.81 $ 14.52
--------- --------- ------------ --------- --------- ---------
Net investment income
(loss)....................... (0.11)+ (0.23) (0.05) (0.13) (0.11) (0.07)
Net realized and unrealized
gains (losses) from
investments, futures and
foreign currency............. 0.35+ 1.57 0.63 1.23 0.37 2.57
--------- --------- ------------ --------- --------- ---------
Net increase (decrease) from
investment operations........ 0.24 1.34 0.58 1.10 0.26 2.50
--------- --------- ------------ --------- --------- ---------
Distributions from net
realized gains............... (2.48) (0.58) -- (0.57) (1.25) (0.21)
--------- --------- ------------ --------- --------- ---------
Net asset value, end of
period....................... $ 15.45 $ 17.69 $ 16.93 $ 16.35 $ 15.82 $ 16.81
--------- --------- ------------ --------- --------- ---------
--------- --------- ------------ --------- --------- ---------
Total investment return (1)... 1.74% 8.05% 3.55% 7.18% 2.46% 17.29%
--------- --------- ------------ --------- --------- ---------
--------- --------- ------------ --------- --------- ---------
Ratios/Supplemental Data:
Net assets, end of period
(000's)...................... $ 141,103 $ 54,510 $ 67,530 $ 66,585 $ 83,485 $ 31,837
Expenses to average net
assets....................... 2.32% 2.20% 2.30%* 2.27% 2.48%(2) 2.33%
Net investment income (loss)
to average net assets........ (0.65)% (0.75)% (1.57)%* (0.70)% (0.68)%(2) (0.68)%
Portfolio turnover rate....... 151% 86% 3% 33% 40% 51%
</TABLE>
43
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS(CONCLUDED)
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
<TABLE>
<CAPTION>
CLASS Y
--------------------------------------------------------------------------------
FOR THE
FOR THE YEARS ENDED TWO MONTHS FOR THE YEARS ENDED
OCTOBER 31, ENDED AUGUST 31,
--------------------- OCTOBER 31, -----------------------------------------
1998# 1997 1996 1996 1995** 1994
--------- -------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 18.63 $ 17.60 $ 16.97 $ 16.22 $ 17.03 $ 14.56
--------- -------- ------------ --------- --------- ---------
Net investment income (loss)............ 0.09+ 0.10 (0.01) 0.07 0.07 0.05
Net realized and unrealized gains from
investments,
futures and foreign currency........... 0.35+ 1.51 0.64 1.25 0.37 2.63
--------- -------- ------------ --------- --------- ---------
Net increase from investment
operations............................. 0.44 1.61 0.63 1.32 0.44 2.68
--------- -------- ------------ --------- --------- ---------
Distributions from net realized gains... (2.48) (0.58) -- (0.57) (1.25) (0.21)
--------- -------- ------------ --------- --------- ---------
Net asset value, end of period.......... $ 16.59 $ 18.63 $ 17.60 $ 16.97 $ 16.22 $ 17.03
--------- -------- ------------ --------- --------- ---------
--------- -------- ------------ --------- --------- ---------
Total investment return (1)............. 2.86% 9.31% 3.71% 8.39% 3.54% 18.49%
--------- -------- ------------ --------- --------- ---------
--------- -------- ------------ --------- --------- ---------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 51,025 $ 57,683 $63,225 $ 61,736 $ 57,150 $ 28,390
Expenses to average net assets.......... 1.21% 1.10% 1.18%* 1.17% 1.46%(2) 1.33%
Net investment income (loss) to average
net assets............................. 0.50% 0.36% (0.45)%* 0.46% 0.36%(2) 0.32%
Portfolio turnover rate................. 151% 86% 3% 33% 40% 51%
</TABLE>
- -----------------
* Annualized
** Investment Advisory functions for the Fund were transferred from Kidder
Peabody Asset Management Inc. to Mitchell Hutchins on February 13, 1995.
# Effective October 1, 1998, Invista Capital Management, Inc. took over the
day-to-day management of the international portion of the Fund's assets and
Mitchell Hutchins allocates the portfolio between domestic and international
investments and manages the domestic portion of the Fund's assets.
+ Calculated using the average monthly shares outstanding for the year.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of each period reported. The figures do not
include program fees; results would be lower if program fees were included.
Total investment returns for periods of less than a year have not been
annualized.
(2) These ratios include non-recurring acquisition expenses of 0.06% for Class Y
shares.
44
<PAGE>
(This page has been left blank intentionally.)
45
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding in each class
throughout each period is presented below:
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------------
FOR THE FOR THE YEARS
FOR THE YEARS ENDED OCTOBER FOUR MONTHS ENDED FOR THE
31, ENDED JUNE 30, PERIOD ENDED
--------------------------- OCTOBER 31, --------------------------- JUNE 30,
1998 1997*** 1996 1996 1995** 1994+
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 9.39 $ 9.46 $ 10.06 $ 9.73 $ 10.79 $ 12.00
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss)............ (0.01)@ (0.06) (0.13) (0.14) (0.04) 0.04
Net realized and unrealized gains
(losses) from investments and foreign
currency............................... (2.86)@ (0.01) (0.47) 0.47 (0.97) (1.25)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) from investment
operations............................. (2.87) (0.07) (0.60) 0.33 (1.01) (1.21)
------------ ------------ ------------ ------------ ------------ ------------
Dividends from net investment income.... -- -- -- -- (0.05) --
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of period.......... $ 6.52 $ 9.39 $ 9.46 $ 10.06 $ 9.73 $ 10.79
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Total investment return (1)............. (30.56)% (0.74)% (5.96)% 3.39% (9.29)% (10.08)%
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 4,237 $ 9,222 $ 14,992 $ 20,680 $ 33,043 $ 46,758
Expenses, net of fee waivers, to average
net assets............................. 2.44% 2.44% 2.44%* 2.44% 2.44% 2.47%*
Expenses, before fee waivers, to average
net assets............................. 3.71% 3.01% 3.48%* 3.42% 2.54% 2.47%*
Net investment income (loss), net of fee
waivers, to average net assets......... (0.16)% (0.40)% (1.42)%* (0.52)% (0.76)% 0.72%*
Net investment income (loss), before fee
waivers, to average net assets......... (1.43)% (0.97)% (2.46)%* (1.50)% (0.86)% 0.72%*
Portfolio turnover rate................. 64% 87% 22% 69% 76% 8%
</TABLE>
- ---------------
+ For the period January 19, 1994 (commencement of operations) to June 30,
1994.
++ For the period December 5, 1995 (commencement of offering of shares) to
June 30, 1996.
@ Calculated using the average monthly shares outstanding for the year.
* Annualized
** Investment Advisory functions for the Fund were transferred from Kidder
Peabody Asset Management Inc. to Mitchell Hutchins on February 13, 1995.
*** Investment Sub-Advisory functions for the Fund were transferred from
Emerging Markets Management to Schroder Capital Management International
Inc. effective February 25, 1997.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends at net
asset value on the payable dates and a sale at net asset value on the last
day of each period reported. The figures do not include sales charges;
results for each class would be lower if sales charges were included. Total
investment returns for periods of less than one year have not been
annualized.
46
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
FOR THE YEARS ENDED FOR THE FOR THE
OCTOBER 31, FOUR MONTHS PERIOD ENDED
----------------------------- ENDED OCTOBER JUNE 30,
1998 1997*** 31, 1996 1996++
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 9.19 $ 9.32 $ 9.94 $ 9.13
------------- ------------- ------------- -----
Net investment income (loss)............ (0.08)@ (0.10) (0.07) (0.01)
Net realized and unrealized gains
(losses) from investments and foreign
currency............................... (2.74)@ (0.03) (0.55) 0.82
------------- ------------- ------------- -----
Net increase (decrease) from investment
operations............................. (2.82) (0.13) (0.62) 0.81
------------- ------------- ------------- -----
Dividends from net investment income.... -- -- -- --
------------- ------------- ------------- -----
Net asset value, end of period.......... $ 6.37 $ 9.19 $ 9.32 $ 9.94
------------- ------------- ------------- -----
------------- ------------- ------------- -----
Total investment return (1)............. (30.69)% (1.39)% (6.24)% 8.87%
------------- ------------- ------------- -----
------------- ------------- ------------- -----
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 461 $ 1,598 $ 879 $ 936
Expenses, net of fee waivers, to average
net assets............................. 3.19% 3.19% 3.19%* 3.19%*
Expenses, before fee waivers, to average
net assets............................. 4.92% 3.82% 4.23%* 4.97%*
Net investment income (loss), net of fee
waivers, to average net assets......... (0.99)% (1.25)% (2.12)%* (0.21)%*
Net investment income (loss), before fee
waivers, to average net assets......... (2.72)% (1.88)% (3.16)%* (1.99)%*
Portfolio turnover rate................. 64% 87% 22% 69%
<CAPTION>
CLASS C
------------------------------------------------------------------------
FOR THE FOR THE YEARS FOR THE
FOR THE YEARS ENDED FOUR MONTHS ENDED PERIOD
OCTOBER 31, ENDED JUNE 30, ENDED
--------------------- OCTOBER 31, --------------------- JUNE 30,
1998 1997*** 1996 1996 1995** 1994+
--------- --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 9.17 $ 9.32 $ 9.94 $ 9.67 $ 10.75 $ 12.00
--------- --------- ------------ --------- --------- ---------
Net investment income (loss)............ (0.08)@ (0.14) (0.22) (0.24) (0.17) --
Net realized and unrealized gains
(losses) from investments and foreign
currency............................... (2.77)@ (0.01) (0.40) 0.51 (0.90) (1.25)
--------- --------- ------------ --------- --------- ---------
Net increase (decrease) from investment
operations............................. (2.85) (0.15) (0.62) 0.27 (1.07) (1.25)
--------- --------- ------------ --------- --------- ---------
Dividends from net investment income.... -- -- -- -- (0.01) --
--------- --------- ------------ --------- --------- ---------
Net asset value, end of period.......... $ 6.32 $ 9.17 $ 9.32 $ 9.94 $ 9.67 $ 10.75
--------- --------- ------------ --------- --------- ---------
--------- --------- ------------ --------- --------- ---------
Total investment return (1)............. (31.08)% (1.61)% (6.24)% 2.79% (10.01)% (10.42)%
--------- --------- ------------ --------- --------- ---------
--------- --------- ------------ --------- --------- ---------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 2,575 $ 5,345 $ 7,882 $ 11,561 $ 18,551 $26,721
Expenses, net of fee waivers, to average
net assets............................. 3.19% 3.19% 3.19%* 3.19% 3.19% 3.22%*
Expenses, before fee waivers, to average
net assets............................. 4.42% 3.78% 4.23%* 4.17% 3.29% 3.22%*
Net investment income (loss), net of fee
waivers, to average net assets......... (0.96)% (1.18)% (2.16)%* (1.28)% (1.50)% (0.03)%*
Net investment income (loss), before fee
waivers, to average net assets......... (2.19)% (1.77)% (3.20)%* (2.26)% (1.60)% (0.03)%*
Portfolio turnover rate................. 64% 87% 22% 69% 76% 8%
</TABLE>
47
<PAGE>
PAINEWEBBER EMERGING MARKETS EQUITY FUND
FINANCIAL HIGHLIGHTS(CONCLUDED)
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
CLASS Y
---------------------------------------------------------------------------------------
FOR THE FOR THE YEARS
FOR THE YEARS FOUR MONTHS ENDED FOR THE
ENDED OCTOBER 31, ENDED JUNE 30, PERIOD ENDED
--------------------------- OCTOBER 31, --------------------------- JUNE 30,
1998 1997*** 1996 1996 1995** 1994+
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 9.46 $ 9.51 $ 10.11 $ 9.75 $ 10.80 $ 12.00
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss)............ (0.01)@ (0.02) (0.05) (0.01) 0.01 0.05
Net realized and unrealized gains
(losses) from investments and foreign
currency............................... (2.87)@ (0.03) (0.55) 0.37 (0.99) (1.25)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) from investment
operations............................. (2.88) (0.05) (0.60) 0.36 (0.98) (1.20)
------------ ------------ ------------ ------------ ------------ ------------
Dividends from net investment income.... -- -- -- -- (0.07) --
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of period.......... $ 6.58 $ 9.46 $ 9.51 $ 10.11 $ 9.75 $ 10.80
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Total investment return (1)............. (30.44)% (0.53)% (5.93)% 3.69% (9.03)% (10.00)%
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 877 $ 10,053 $ 11,375 $ 12,979 $ 12,332 $ 15,435
Expenses, net of fee waivers, to average
net assets............................. 2.19% 2.19% 2.19%* 2.19% 2.19% 2.22%*
Expenses, before fee waivers, to average
net assets............................. 3.36% 2.69% 3.23%* 3.29% 2.29% 2.22%*
Net investment income (loss), net of fee
waivers, to average net assets......... (0.08)% (0.15)% (1.13)%* (0.15)% (0.51)% 0.97%*
Net investment income (loss), before fee
waivers, to average net assets......... (1.25)% (0.65)% (2.17)%* (1.25)% (0.61)% 0.97%*
Portfolio turnover rate................. 64% 87% 22% 69% 76% 8%
</TABLE>
- ---------------
+ For the period January 19, 1994 (commencement of operations) to June 30,
1994.
@ Calculated using the average monthly shares outstanding for the year.
* Annualized
** Investment Advisory functions for the Fund were transferred from Kidder
Peabody Asset Management Inc. to Mitchell Hutchins on February 13, 1995.
*** Investment Sub-Advisory functions for the Fund were transferred from
Emerging Markets Management to Schroder Capital Management International
Inc. effective February 25, 1997.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends 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 program fees;
results would be lower if program fees were included. Total investment
returns for periods of less than one year have not been annualized.
48
<PAGE>
PAINEWEBBER ASIA PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding in each class
throughout the period is presented below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
-------------------------- -------------------------- -------------------------- -----------
FOR THE FOR THE FOR THE FOR THE
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997+ 1998 1997+ 1998 1997+ 1998++
----------- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 8.96 $ 12.50 $ 8.92 $ 12.50 $ 8.92 $ 12.50 $ 8.66
----------- ------------ ----------- ------------ ----------- ------------ -----------
Net investment income
(loss)....................... 0.00@ 0.03 (0.06)@ (0.03) (0.06)@ (0.03) 0.06@
Net realized and unrealized
losses from investments and
foreign currency............. (2.14)@ (3.57) (2.12)@ (3.55) (2.12)@ (3.55) (1.93)@
----------- ------------ ----------- ------------ ----------- ------------ -----------
Net decrease from investment
operations................... (2.14) (3.54) (2.18) (3.58) (2.18) (3.58) (1.87)
----------- ------------ ----------- ------------ ----------- ------------ -----------
Net asset value, end of
period....................... $ 6.82 $ 8.96 $ 6.74 $ 8.92 $ 6.74 $ 8.92 $ 6.79
----------- ------------ ----------- ------------ ----------- ------------ -----------
----------- ------------ ----------- ------------ ----------- ------------ -----------
Total investment return (1)... (23.88)% (28.32)% (24.44)% (28.64)% (24.44)% (28.64)% (21.59)%
----------- ------------ ----------- ------------ ----------- ------------ -----------
----------- ------------ ----------- ------------ ----------- ------------ -----------
Ratios/Supplemental Data:
Net assets, end of period
(000's)...................... $11,526 $21,466 $12,746 $22,949 $ 6,220 $13,887 $ 47
Expenses to average net
assets....................... 2.88% 2.33%* 3.63% 3.12%* 3.60% 3.10%* 2.66%*
Net investment income (loss)
to average net assets........ (0.02)% 0.37%* (0.78)% (0.43)%* (0.79)% (0.42)%* 1.46%*
Portfolio turnover rate....... 59% 13% 59% 13% 59% 13% 59%
</TABLE>
- -----------------
* Annualized
+ For the period March 25, 1997 (commencement of operations) through October
31, 1997.
++ For the period March 13, 1998 (commencement of offering) through October
31, 1998.
@ Calculated using the average monthly shares outstanding for the period.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the payable dates and a sale
at net asset value on the last day of each period reported. The figures do
not include sales charges or program fees; results for each class (except
Class Y) would be lower if sales charges or program fees were included.
Total investment returns for periods less than a year have not been
annualized.
49
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
PAINEWEBBER EMERGING MARKETS EQUITY FUND
PAINEWEBBER ASIA PACIFIC GROWTH FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Boards of Trustees and Shareholders
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of PaineWebber Global Equity Fund,
PaineWebber Emerging Markets Equity Fund and PaineWebber Asia Pacific Growth
Fund as of October 31, 1998, and the related statement of operations for the
year then ended and the statements of changes in net assets and the financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned at October 31, 1998, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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, PaineWebber Emerging Markets Equity Fund and
PaineWebber Asia Pacific Growth Fund at October 31, 1998, the results of their
operations for the year then ended and the changes in their net assets and the
financial highlights for each of the indicated periods, in conformity with
generally accepted accounting principles.
[ERNST & YOUNG SIGNATURE]
New York, New York
December 21, 1998
50
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
TAX INFORMATION (UNAUDITED)
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of each Fund's fiscal year end (October
31, 1998) as to the federal tax status of distributions received by shareholders
during such fiscal year from each Fund. Accordingly, we are advising you that
all of the distributions paid by the PaineWebber Global Equity Fund were made
from long-term capital gains in the amount of $2.4768 per share for each class
and that no distributions were paid by the PaineWebber Emerging Markets Equity
Fund or the PaineWebber Asia Pacific Growth Fund.
Dividends received by tax-exempt recipients (e.g. IRAs and Keoghs) 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 each Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar year 1998. The second notification, which
will reflect the amounts to be used by calendar year taxpayers on their federal
income tax returns, will be made in conjunction with Form 1099 DIV and is mailed
in January 1999. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in each Fund.
51
<PAGE>
PAINEWEBBER GLOBAL EQUITY FUND
SHAREHOLDER INFORMATION (UNAUDITED)
A Special Meeting of Shareholders of PaineWebber Investment Trust--PaineWebber
Global Equity Fund, was held on September 24, 1998, at which the following
proposals were approved by shareholders by the vote indicated beneath each item:
PROPOSAL 1(A)
To approval or disapprove an amended Investment Advisory and Administration
Agreement between PaineWebber Investment Trust and Mitchell Hutchins Asset
Management Inc. applicable to PaineWebber Global Equity Fund.
<TABLE>
<CAPTION>
SHARES FOR
SHARES AS A % OF TOTAL SHARES SHARES
VOTED FOR SHARES VOTED AGAINST ABSTAIN
- ----------- --------------- --------- ---------
<S> <C> <C> <C>
12,971,830 93.54% 551,272 344,138
</TABLE>
PROPOSAL 1(B)
To approve or disapprove a new Sub-Advisory Contract between Mitchell Hutchins
Asset Management Inc. and Invista Capital Management, Inc.
<TABLE>
<CAPTION>
SHARES FOR
SHARES AS A % OF TOTAL SHARES SHARES
VOTED FOR SHARES VOTED AGAINST ABSTAIN
- ----------- --------------- --------- ---------
<S> <C> <C> <C>
12,955,103 93.42% 352,459 559,678
</TABLE>
PROPOSAL 2
To approve or disapprove a policy to permit the Board of Trustees to appoint
and terminate sub-advisers, to enter into Sub-Advisory Contracts and to approve
amendments to Sub-Advisory Contracts, on behalf of Global Equity Fund without
further shareholder approval.
<TABLE>
<CAPTION>
SHARES FOR
SHARES AS A % OF TOTAL SHARES SHARES
VOTED FOR SHARES VOTED AGAINST ABSTAIN
- ----------- --------------- --------- ---------
<S> <C> <C> <C>
12,700,943 91.59% 543,696 622,600
</TABLE>
52
<PAGE>
TRUSTEES
E. Garrett Bewkes, Jr. Mary C. Farrell
CHAIRMAN
Meyer Feldberg
Margo N. Alexander
George W. Gowen
Richard Q. Armstrong
Frederic V. Malek
Richard R. Burt
Carl W. Schafer
PRINCIPAL OFFICERS
Margo N. Alexander T. Kirkham Barneby
PRESIDENT VICE PRESIDENT,
PAINEWEBBER INVESTMENT TRUST
Victoria E. Schonfeld
VICE PRESIDENT Mark A. Tincher
VICE PRESIDENT
Dianne E. O'Donnell
VICE PRESIDENT AND SECRETARY
Paul H. Schubert
VICE PRESIDENT AND TREASURER
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
INVESTMENT SUBADVISERS
Invista Capital Management Inc.
1800 Hub Tower
699 Walnut
Des Moines, Iowa 50309
Schroder Capital Management International Inc.
1301 Avenue of the Americas
New York, New York 10019
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
FUNDS UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
PaineWebber offers a family of 27 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
- - Financial Services Growth Fund
- - Growth Fund
- - Growth and Income Fund
- - Mid Cap Fund
- - Small Cap Fund
- - S&P 500 Index Fund
- - Tax-Managed Equity Fund
- - Utility Income Fund
ASSET ALLOCATION FUNDS
- - Balanced Fund
- - Tactical Allocation Fund
GLOBAL FUNDS
- - Asia Pacific Growth Fund
- - Emerging Markets Equity Fund
- - Global Equity Fund
- - Global Income Fund
MITCHELL HUTCHINS PORTFOLIOS
- - Aggressive Portfolio
- - Moderate Portfolio
- - Conservative Portfolio
PAINEWEBBER MONEY MARKET FUND
PAINEWEBBER
- -C-1998 PaineWebber Incorporated
Member SIPC
PAINEWEBBER
- -------------------------------------------------------------------------------
ANNUAL REPORT
GLOBAL EQUITY
FUND
EMERGING
MARKETS
EQUITY FUND
ASIA PACIFIC
GROWTH FUND
OCTOBER 31, 1998
