<PAGE>
As filed with the Securities and Exchange Commission on March 9, 1995
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.___ [ ] Post-Effective Amendment No.___
PAINEWEBBER INVESTMENT SERIES
(Exact Name of Registrant as Specified in Charter)
1285 Avenue of the Americas
New York, New York 10019
(Address of Principal Executive Offices)
(212) 713-2000
(Registrant's Area Code and Telephone Number)
DIANNE E. O'DONNELL, ESQ.
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
(Name and Address of Agent for Service)
Copies to:
ROBERT A. WITTIE, ESQ.
LINDA L. RITTENHOUSE, ESQ.
Kirkpatrick & Lockhart
South Lobby - 9th Floor
1800 M Street, N.W.
Washington, D.C. 20036-5891
Telephone: (202) 778-9000
Approximate Date of Proposed Public Offering: as soon as practicable after
this Registration Statement becomes effective.
The Registrant has filed a declaration registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. Accordingly, no filing fee is payable herewith. The Registrant filed
on December 22, 1994, the notice required by Rule 24f-2 for its fiscal year
ended October 31, 1994.
It is proposed that this filing will become effective on April 8, 1995
pursuant to Rule 488.
<PAGE>
PAINEWEBBER INVESTMENT SERIES
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheets
Letter to Shareholders
Notice of Annual Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
<PAGE>
PAINEWEBBER INVESTMENT SERIES
Form N-14 Cross Reference Sheet
<TABLE>
<CAPTION>
Part A Item No. Prospectus/Proxy
and Caption Statement Caption
--------------- -----------------
<S> <C> <C>
1. Beginning of Registration Cover Page
Statement and Outside Front
Cover Page of Prospectus
2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
3. Synopsis Information and Synopsis; Risks and Special
Risk Factors Considerations Regarding the Reorganization
4. Information About the Synopsis; The Reorganization
Transaction (Proposal 1); Appendix A
5. Information About the Synopsis; Risks and Special
Registrant Considerations Regarding the Reorganization;
Additional Information about Income Fund; See
also the Prospectus of PaineWebber Global
Income Fund, dated March 1, 1995, File No.
33-11025, filed March 1, 1995 (pursuant
to the Securities Act of 1933 and Rule 485(a)
of Regulation C thereunder) on Form N-1A
6. Information About the Synopsis; Risks and Special
Company Being Acquired Considerations Regarding the
Reorganization; See also the Prospectus of
Global Income Plus Fund, Inc., dated March 1,
1995, File No. 33-58946, filed March 8, 1995
(pursuant to Rule 497 of the Securities Act
of 1933)
7. Voting Information Voting Information
8. Interest of Certain Persons Not Applicable
and Experts
9. Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be
Underwriters
</TABLE>
<PAGE>
GLOBAL INCOME PLUS FUND, INC.
April , 1995
Dear Shareholder:
The attached proxy materials describe a proposal for consideration by the
shareholders under which Global Income Plus Fund, Inc. ("GLI") would convert
from a closed-end investment company to an open-end investment company by means
of a reorganization ("Reorganization") in which GLI would be merged into, and
become a part of, PaineWebber Global Income Fund ("Income Fund"), a series of
an existing, open-end management investment company. If the proposal is
approved and implemented, each shareholder of GLI would automatically become a
shareholder of Income Fund, and GLI thereafter would be liquidated.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE REORGANIZATION
PROPOSAL. Recently, shares of GLI have traded at a substantial discount from
their net asset value. Conversion of GLI to the open-end investment company
form of organization would eliminate that discount by enabling shareholders to
redeem shares at net asset value, rather than sell them in the secondary
market. The Board believes that the Reorganization would provide GLI
shareholders with the benefits of the open-end investment company (or "mutual
fund") form of organization, while also providing shareholders with the
economies of scale and other benefits of a combination with an existing fund
having substantially the same investment objectives and policies.
The attached proxy materials provide more information about the
Reorganization and the two Funds. In addition, the attached proxy materials
describe proposals for (1) the election of directors for GLI and (2) the
ratification of independent accountants for GLI. Those proposals are matters
ordinarily brought before the shareholders at GLI's annual meetings and are
necessary actions in the event that, for any reason, the Reorganization and the
subsequent liquidation of GLI are not approved or effected. If the
Reorganization is approved and effected, the current board of trustees of
Income Fund would serve as the board of the combined Fund.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your shares
early will permit GLI to avoid costly follow-up mail and telephone
solicitation. After reviewing the attached materials, please complete, date and
sign your proxy card and mail it in the enclosed return envelope today.
Very truly yours,
Paul B. Guenther
President
<PAGE>
GLOBAL INCOME PLUS FUND, INC.
----------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1995
----------------
To The Shareholders:
The annual meeting of shareholders of Global Income Plus Fund, Inc. ("GLI")
will be held on May 25, 1995 at 10:00 a.m., eastern time, at 1285 Avenue of the
Americas, 38th Floor, Room A, New York, New York 10019, for the following
purposes:
(1) To approve an Agreement and Plan of Reorganization and Liquidation
under which PaineWebber Global Income Fund ("Income Fund"), a series of
PaineWebber Investment Series, would acquire the assets of GLI in exchange
solely for Class A shares of beneficial interest in Income Fund and the
assumption by Income Fund of GLI's liabilities, followed by the
distribution of those shares to the shareholders of GLI (the
"Reorganization"), all as described in the accompanying prospectus/proxy
statement;
(2) To elect eight directors to serve until GLI is liquidated or, if the
Reorganization is not effected, until the annual meeting of stockholders in
1996 or until successors are elected and qualified;
(3) To ratify the selection of Price Waterhouse LLP as GLI's independent
accountants for the fiscal year ending October 31, 1995; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
You are entitled to vote at the meeting and any adjournments thereof if you
owned shares of GLI at the close of business on April 6, 1995. IF YOU ATTEND
THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON. IF YOU DO NOT EXPECT TO ATTEND
THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE PAID ENVELOPE.
By Order of the Board of Directors,
Dianne E. O'Donnell
Secretary
April , 1995
1285 Avenue of the Americas
New York, New York 10019
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD,
DATE AND SIGN THE CARD, AND RETURN IT IN THE ENVELOPE PROVIDED. IF YOU
SIGN, DATE AND RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR
SHARES WILL BE VOTED "FOR" THE REORGANIZATION, "FOR" THE NOMINEES FOR
DIRECTOR NAMED IN THE ATTACHED PROSPECTUS/PROXY STATEMENT AND "FOR" ALL
OTHER PROPOSALS NOTICED ABOVE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO
GLI OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR
PROXY CARD PROMPTLY. UNLESS PROXY CARDS SUBMITTED BY CORPORATIONS AND
PARTNERSHIPS ARE SIGNED BY THE APPROPRIATE PERSONS AS INDICATED IN THE
VOTING INSTRUCTIONS ON THE PROXY CARD, THEY WILL NOT BE VOTED.
- --------------------------------------------------------------------------------
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
(A SERIES OF PAINEWEBBER INVESTMENT SERIES)
GLOBAL INCOME PLUS FUND, INC.
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(TOLL FREE) 1-800-852-4750
----------------
PROSPECTUS/PROXY STATEMENT
APRIL , 1995
----------------
This prospectus/proxy statement is being furnished to shareholders of Global
Income Plus Fund, Inc. ("GLI") in connection with the solicitation of proxies
by the board of directors of GLI for use at the annual meeting of GLI
shareholders to be held on May 25, 1995, or any adjournment or adjournments
thereof.
At the annual meeting, GLI shareholders will be asked to vote on a proposed
reorganization ("Reorganization"), whereby PaineWebber Global Income Fund
("Income Fund"), a series of PaineWebber Investment Series ("Trust"), would
acquire the assets of GLI in exchange solely for Class A shares of beneficial
interest in Income Fund ("Class A Shares") and the assumption by Income Fund of
GLI's liabilities. Those Class A Shares would then be distributed to the
shareholders of GLI, so that each shareholder of GLI would receive a number of
full and fractional Class A Shares of Income Fund having an aggregate value
that, on the effective date of the Reorganization, is equal to the aggregate
net asset value of the shareholder's shares in GLI. Following that
distribution, GLI would have neither assets, liabilities nor shareholders, and
it would be liquidated as soon as practicable. The effect of the Reorganization
would be that GLI would have been converted from a closed-end to an open-end
investment company form of organization by means of its being merged into, and
becoming a part of, Income Fund.
GLI is a non-diversified, closed-end management investment company, while
Income Fund is a non-diversified series of the Trust, which is an open-end
management investment company. The investment objectives and policies of the
two Funds are substantially similar. GLI's primary investment objective is to
achieve a high level of current income, with capital appreciation as a
secondary objective. Income Fund's primary investment objective is high current
income consistent with prudent investment risk, with capital appreciation as a
secondary objective. Both Funds seek to achieve their investment objectives by
investing principally in high quality foreign and domestic debt securities.
GLI, however, is permitted to invest a portion of its assets in securities that
are rated as low as B- by a nationally recognized statistical rating
organization ("NRSRO") or in comparable, unrated securities, while Income Fund
may not invest in securities that are rated lower than BB by an NRSRO or in
comparable, unrated securities. In addition, GLI may invest up to 25% of its
total assets in illiquid securities, as compared to 10% of net assets for
Income Fund. GLI also may invest in preferred stocks and, under limited
circumstances, in other equity securities, while Income Fund is not permitted
to make such investments. If the Reorganization is approved, GLI will sell any
assets that are inconsistent with the investment policies of Income Fund prior
to the effective time of the Reorganization, and the proceeds thereof will be
held in temporary investments or
<PAGE>
reinvested in assets that qualify to be held by Income Fund. Mitchell Hutchins
Asset Management Inc. serves as the investment adviser and administrator to
both Funds.
At the annual meeting, GLI shareholders also will be asked to elect eight
directors, to ratify the selection of GLI's independent accountants for the
fiscal year ending October 31, 1995, and to transact such other business as may
properly come before the meeting. The election of directors and proposal to
ratify independent accountants are matters ordinarily brought before the
shareholders at GLI's annual meeting and are necessary actions in the event
that, for any reason, the Reorganization and the subsequent liquidation of GLI
are not approved or effected. If the Reorganization is approved and effected,
the current board of trustees of Income Fund would serve as the board of the
combined fund.
This prospectus/proxy statement, which should be retained for future
reference, sets forth concisely the information about the Reorganization and
about Income Fund that a shareholder should know before voting on the
Reorganization. A statement of additional information dated April , 1995
relating to the Reorganization, including historical financial statements, has
been filed with the Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. A prospectus and a statement of additional
information for GLI, both dated March 1, 1995, and a prospectus and a statement
of additional information for Income Fund, both dated March 1, 1995, have been
filed with the SEC and also are incorporated herein by reference. A copy of
Income Fund's prospectus accompanies this prospectus/proxy statement. GLI will
furnish to its shareholders, on request and without charge, a copy of GLI's
most recent Annual Report to Shareholders. Copies of the other GLI and Income
Fund documents that are incorporated herein and of GLI's Annual Report may be
obtained without charge and further inquiries may be made by contacting your
PaineWebber investment executive or PaineWebber's correspondent firms or by
calling toll-free 1-800-852-4750.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
VOTING INFORMATION.......................................................... 4
SYNOPSIS.................................................................... 5
RISKS AND SPECIAL CONSIDERATIONS REGARDING THE REORGANIZATION............... 13
THE REORGANIZATION (PROPOSAL 1)............................................. 16
ADDITIONAL INFORMATION ABOUT INCOME FUND.................................... 21
MISCELLANEOUS............................................................... 23
ELECTION OF DIRECTORS (PROPOSAL 2).......................................... 23
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS (PROPOSAL 3)........... 27
EXECUTIVE OFFICERS.......................................................... 28
SHAREHOLDER PROPOSALS....................................................... 29
OTHER BUSINESS.............................................................. 29
</TABLE>
3
<PAGE>
GLOBAL INCOME PLUS FUND, INC.
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
----------------
PROSPECTUS/PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
GLOBAL INCOME PLUS FUND, INC.
TO BE HELD ON
MAY 25, 1995
10:00 A.M.
----------------
VOTING INFORMATION
This prospectus/proxy statement is being furnished to shareholders of Global
Income Plus Fund, Inc. ("GLI") in connection with the board of directors'
solicitation of proxies to be used at the annual meeting of shareholders
("Meeting") to be held on May 25, 1995, or at any adjournment or adjournments
thereof. This prospectus/proxy statement will first be mailed to shareholders
on or about April , 1995.
A majority of the GLI shares outstanding on April 6, 1995, represented in
person or by proxy, must be present for the transaction of business at the
Meeting. In the event that a quorum is not present at the Meeting, or if a
quorum is present but sufficient votes to approve the proposal are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares represented at
the Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR any such proposal in favor of such
an adjournment and will vote those proxies required to be voted AGAINST any
such proposal against such adjournment. A shareholder vote may be taken on one
or more of the proposals in this proxy statement prior to any such adjournment
if sufficient votes have been received and it is otherwise appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners
or other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be
counted as shares present for purposes of determining whether a quorum is
present but will not be voted for or against any adjournment. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
or against any proposal where the required vote is a percentage of the shares
present. Abstentions and broker non-votes will not be counted, however, as
votes cast for purposes of determining whether sufficient votes have been
received to approve a proposal.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed by you or by your duly appointed agent or attorney-
in-fact. If you sign, date and return the proxy card, but give no voting
instructions, your shares will be voted in favor of approval of the Agreement
and Plan of Reorganization and Liquidation attached to this prospectus/proxy
statement as Appendix A ("Plan"). Under the Plan, PaineWebber Global Income
Fund ("Income Fund"), a series of PaineWebber Investment Series ("Trust"),
would acquire the assets of GLI in exchange solely for
4
<PAGE>
Class A shares of beneficial interest in Income Fund ("Class A Shares") and the
assumption by Income Fund of GLI's liabilities. (These transactions are
collectively referred to herein as the "Reorganization," and GLI and Income
Fund are collectively referred to herein as the "Funds.")
In addition, if you sign, date and return the proxy card, but give no voting
instructions, the duly appointed proxies will vote your shares in favor of the
eight nominees for directors named herein and in favor of ratifying the
selection of Price Waterhouse LLP as GLI's independent accountants, and they
may, in their discretion, vote upon such other matters as may come before the
Meeting or any adjournments thereof. The proxy card may be revoked by giving
another proxy or by letter or telegram revoking your proxy. To be effective,
such revocation must be received by GLI prior to the Meeting and must indicate
your name and account number. In addition, if you attend the Meeting in person
you may, if you wish, vote by ballot at the Meeting, thereby canceling any
proxy previously given.
As of the record date, April 6, 1995, GLI had [26,096,317] shares of common
stock outstanding. The solicitation of proxies, the cost of which will be borne
by GLI and Income Fund in proportion to their respective net assets, will be
made primarily by mail but also may include telephone or oral communications by
regular employees of Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"), who will not receive any compensation therefor from the Funds, or
by Shareholder Communications Corporation, professional proxy solicitors
retained by GLI, who will be paid fees and expenses of up to approximately
$19,250 for soliciting services. Management does not know of any person who
owns beneficially 5% or more of the shares of GLI. Directors and officers of
GLI own in the aggregate less than 1% of the shares of GLI. Each full share of
GLI outstanding is entitled to one vote, and each fractional share of GLI
outstanding is entitled to a proportionate share of one vote for such purposes.
Under Maryland law and GLI's Amended Articles of Incorporation, the
affirmative vote of a majority of the outstanding shares of GLI entitled to
vote at the meeting is required to approve the Reorganization. Directors will
be elected by an affirmative vote of the holders of a majority of the GLI
shares present in person or by proxy and entitled to vote thereon. An
affirmative vote of the holders of a majority of GLI shares cast at the meeting
is required to ratify the selection of the independent accountants.
SYNOPSIS
The following is a summary of certain information contained elsewhere in this
prospectus/proxy statement, the prospectuses for GLI and Income Fund, which are
incorporated herein by reference, and the Plan. Shareholders should read this
entire prospectus/proxy statement carefully.
The board of directors of GLI is recommending that shareholders approve the
Reorganization because it believes that the Reorganization will provide
shareholders with the benefits of the open-end investment company form of
organization, while also providing them with the economies of scale and other
benefits of a combination with an existing open-end fund having substantially
the same investment objectives and policies as GLI. As shareholders in an open-
end investment company, shareholders will be able to redeem their Class A
shares of Income Fund at net asset value. In contrast, shares of GLI are not
redeemable but may be traded on the New York Stock Exchange, Inc. ("NYSE") or
in the over-the-counter ("OTC") secondary markets. While such trading can
result in shares trading at a premium, shares of GLI frequently have traded at
a substantial
5
<PAGE>
discount to net asset value. During the sixteen weeks immediately preceding
November 1, 1994, that discount averaged in excess of 10%. On April , 1995,
the closing price per GLI share on the NYSE represented a discount from GLI's
net asset value of ( . %).
THE PROPOSED REORGANIZATION
The Plan provides for the acquisition of the assets of GLI by Income Fund, in
exchange solely for Class A Shares of Income Fund and the assumption by Income
Fund of the liabilities of GLI. The Class A Shares will then be distributed to
the shareholders of GLI so that each GLI shareholder will receive the number of
full and fractional Class A Shares of Income Fund that corresponds to the
aggregate net asset value of that shareholder's holdings in GLI as of the
Closing Date (defined below). Following the Reorganization, GLI will terminate
its registration as an investment company and be liquidated. The exchange of
GLI's assets for Class A Shares of Income Fund will occur at or as of 4:00
p.m., eastern time, on June 30, 1995 ("Closing Date"), or such later date as
the conditions to the closing are satisfied.
GLI's board of directors, including a majority of the directors who are not
"interested persons" of GLI as that term is defined in the Investment Company
Act of 1940 ("1940 Act") ("Independent Directors"), has concluded that the
Reorganization is in the best interests of GLI, that the terms of the
Reorganization are fair and reasonable and that the interests of GLI's
shareholders will not be diluted as a result of the proposed transaction.
Accordingly, GLI's board of directors recommends approval of the transaction.
In addition, the Trust's board of trustees, including a majority of the
trustees who are not "interested persons" of the Trust as that term is defined
in the 1940 Act ("Independent Trustees"), has concluded that the Reorganization
is in the best interests of Income Fund, that the terms of the Reorganization
are fair and reasonable and that the interests of Income Fund's shareholders
will not be diluted as a result of the proposed transaction.
The shareholders of GLI do not have appraisal rights, which may be accorded
to shareholders of corporations that propose similar types of reorganizations
under the laws of some states.
FORMS OF ORGANIZATION
GLI is a closed-end management investment company that is organized as a
Maryland corporation. It commenced operations on August 24, 1988. GLI's shares
of common stock are listed on the NYSE under the symbol "GLI" and are traded in
an OTC secondary market maintained by PaineWebber Incorporated ("PaineWebber").
The Trust is an open-end management investment company that was organized as
a Massachusetts business trust on December 22, 1986. Shareholders of a
Massachusetts business trust may, under certain circumstances, be held
personally liable for its obligations. However, the Trust's Declaration of
Trust expressly disclaims, and provides indemnification against, such
liability. Accordingly, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which Income
Fund itself would be unable to meet its obligations, a possibility that
Mitchell Hutchins believes is remote and, thus, does not pose a material risk.
Income Fund is a non-diversified series of the Trust that commenced
operations on March 20, 1987. Income Fund has four classes of shares (each a
"Class" and collectively, "Classes"), designated
6
<PAGE>
as Class A, Class B, Class C and Class D shares. The Trust is authorized to
issue an unlimited number of each Class of Income Fund shares. The primary
distinctions among the Classes of Income Fund's shares lie in their initial and
contingent sales charge structures and in their ongoing expenses, including
asset-based sales charges in the form of distribution fees. Each Class
represents interests in the same pool of assets. Only Class A Shares of Income
Fund will be issued to GLI shareholders in the Reorganization. Class A shares
of Income Fund normally are sold to investors subject to an initial sales
charge of up to 4% of the public offering price. However, Class A Shares
acquired by GLI shareholders as a result of the Reorganization will not be
subject to any initial sales charge. For further information relating to the
different Classes of Income Fund shares and their respective sales charge
structures and ongoing expenses, see "Flexible Pricing System" in Income Fund's
Prospectus.
Class A Shares of Income Fund may be exchanged for Class A shares of most
PaineWebber mutual funds, including those listed in the Income Fund prospectus.
No initial sales charge is imposed on the shares acquired in such an exchange.
However, a $5.00 exchange fee is charged for each exchange, and exchanges may
be subject to minimum investment requirements of the fund into which exchanges
are made. In contrast, no exchange privilege attaches to shares of GLI.
As an NYSE-listed company, GLI is required to hold annual shareholder
meetings. The Trust is not required to, and does not, hold annual shareholder
meetings.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of both Funds are substantially
similar. GLI's primary investment objective is to achieve a high level of
current income; capital appreciation is a secondary objective in the selection
of investments. The primary investment objective of Income Fund is high current
income consistent with prudent investment risk; capital appreciation is a
secondary objective. Normally, each Fund invests at least 65% of its total
assets in debt securities, denominated in foreign currencies or U.S. dollars,
of issuers located in at least three of the following countries: Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong,
Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, Thailand, the United Kingdom and the
United States. No more than 40% of either Fund's assets normally will be
invested in securities of issuers located in any one country.
In seeking to achieve its objective, GLI normally invests at least 65% of its
total assets in a combination of some or all of the following types of debt
securities, all of which at the time of purchase will be rated AAA or AA by
Standard & Poor's Ratings Group ("S&P"), Aaa or Aa by Moody's Investors
Service, Inc. ("Moody's"), comparably rated by another nationally recognized
statistical rating organization ("NRSRO") or, if not rated, judged by Mitchell
Hutchins to be of comparable quality: (1) debt securities issued or guaranteed
by foreign governments, their agencies, instrumentalities and political
subdivisions; (2) U.S. or foreign corporate debt securities, including
commercial paper; (3) debt obligations of banks and bank holding companies; (4)
debt securities issued or guaranteed by supranational organizations; (5)
securities issued or guaranteed by the U.S. government, its agencies and
instrumentalities; and (6) repurchase agreements relating to any of the
foregoing. Up to 35% of GLI's net assets may be invested in foreign and
domestic debt and convertible securities of U.S. and foreign issuers rated
below AA by S&P or Aa by Moody's, but rated
7
<PAGE>
B- or better by S&P, B (or b) or better by Moody's, comparably rated by another
NRSRO or, if not rated, judged by Mitchell Hutchins to be of comparable
quality. At least 65% of GLI's total assets normally are invested in income
producing securities.
GLI may invest up to 25% of its total assets in illiquid securities.
"Illiquid securities" for this purpose means securities that cannot be disposed
of within seven days in the ordinary course of business at approximately the
amount at which GLI has valued the securities. GLI also may invest in preferred
stock and may purchase equity securities, including common stocks, warrants and
rights, when attached to fixed income securities or as a part of a unit
including fixed income securities, or in connection with a conversion or
exchange of fixed income securities. During unusual market conditions, GLI
temporarily may hold cash (U.S. dollars or foreign currencies) and temporarily
may invest any portion or all of its assets in money market instruments of U.S.
or foreign issuers.
In seeking to achieve its objective, Income Fund normally invests at least
65% of its total assets in the following types of debt securities rated AAA or
AA by S&P, Aaa or Aa by Moody's or another NRSRO or, if unrated, determined by
Mitchell Hutchins to be of comparable quality: (1) high quality debt securities
issued or guaranteed by U.S. or foreign governments or their agencies,
instrumentalities or political subdivisions, (2) high quality debt securities
issued or guaranteed by supranational organizations such as the International
Bank for Reconstruction and Development ("World Bank"), (3) high quality U.S.
or foreign corporate debt securities, including commercial paper, (4) high
quality debt obligations of banks and bank holding companies and (5) repurchase
agreements involving these securities. Income Fund may invest up to 35% of its
assets in debt securities rated below the two highest grades assigned by an
NRSRO but rated BBB or better by S&P, Baa or better by Moody's or comparably
rated by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. Income Fund may invest up to 20% of its total assets in
sovereign debt securities rated below BBB by S&P, Baa by Moody's or comparably
rated by another NRSRO, but no lower than BB by S&P, Ba by Moody's or
comparably rated by another NRSRO or, in the case of such securities assigned a
commercial paper rating, no lower than B by S&P or comparably rated by another
NRSRO or, if not so rated, determined by Mitchell Hutchins to be of comparable
quality.
Income Fund may invest up to 10% of its net assets in illiquid securities.
Income Fund may invest up to 5% of its total assets in debt securities
convertible into equity securities, but it is not otherwise authorized to
invest in preferred stock or other equity securities. Mitchell Hutchins expects
that normally more than 50% of Income Fund's assets will be invested in U.S.
and foreign government securities in order to minimize credit risk and to take
advantage of opportunities that historically have been presented by, and are
perceived to exist today with respect to, such instruments.
Both Funds may engage in certain options, futures contracts, forward currency
contracts and interest rate protection transactions to attempt to hedge against
the overall level of risk associated with their respective investments. In
addition, both Funds may use options (and, for Income Fund, futures contracts)
to attempt to enhance income. There can be no assurance that either Fund will
achieve its investment objectives.
8
<PAGE>
Each Fund's net asset value fluctuates based upon changes in the value of its
portfolio securities. Certain investment grade debt securities in which the
Funds invest have speculative characteristics. Debt securities rated below
investment grade are subject to greater risks of default and price fluctuation
than investment grade securities and are considered predominantly speculative.
In addition, the market for lower rated debt securities may be thinner and less
active than for higher quality securities. Investments in illiquid securities
and in foreign securities, including emerging market securities, in which the
Funds may invest, involve special risks. Each Fund's use of hedging and related
income strategies also may entail special risks. See "Risks and Special
Considerations Regarding the Reorganization."
OPERATIONS OF INCOME FUND FOLLOWING THE REORGANIZATION
As noted above, both Funds invest at least 65% of their assets in U.S. and
foreign debt securities that are rated at least AA by an NRSRO, or in
comparable securities. However, GLI may invest up to 35% of its net assets in
debt securities rated as low as B-, or in comparable securities. Income Fund
may not invest in securities rated as low as B-. Income Fund may invest up to
35% of its total assets in debt securities that are rated as low as BBB, or in
comparable securities, and it may invest up to 20% of its total assets in
sovereign debt securities rated as low as BB, or in comparably rated sovereign
debt securities.
In addition, GLI is permitted by its investment policies to invest up to 25%
of its total assets in illiquid securities, while Income Fund's investment in
such securities is limited to 10% of its net assets. Also, GLI may invest in
preferred stock and may purchase equity securities, including common stocks,
warrants and rights, when they are attached to fixed income securities or as a
part of a unit including fixed income securities, or in connection with a
conversion or exchange of fixed income securities. Income Fund may invest up to
5% of its assets in debt securities that are convertible into equity
securities, but it is not otherwise authorized to invest in preferred stock or
other equity securities.
Mitchell Hutchins does not expect Income Fund to revise its investment
policies to reflect those of GLI following the Reorganization. Since GLI is
permitted to invest in securities having ratings that are lower than is
permitted for Income Fund, certain of the securities currently held in GLI's
portfolio would need to be sold, rather than transferred to Income Fund. If the
Reorganization is approved, GLI will sell any assets that are inconsistent with
the investment policies of Income Fund prior to the effective time of the
Reorganization, and the proceeds thereof will be held in temporary investments
or reinvested in assets that qualify to be held by Income Fund. The necessity
for GLI to dispose of assets prior to the effective time of the Reorganization
may result in selling securities at a disadvantageous time and could result in
GLI realizing losses that would not otherwise have been realized.
All fees and expenses of Income Fund applicable to its operations and to
purchases of Income Fund shares would apply after the Reorganization. However,
the initial sales charge normally charged in connection with the sale of Income
Fund's Class A shares will not be charged in respect of the Class A Shares that
are distributed to GLI's shareholders as part of the Reorganization. After the
Reorganization, the trustees and officers of the Trust and Income Fund's
investment adviser, distributor, exclusive dealer and other outside agents will
continue to serve Income Fund in their current capacities.
Following the Reorganization, Stuart Waugh, who currently is the portfolio
manager for both Funds and who has been primarily responsible for the day-to-
day portfolio management of the
9
<PAGE>
Funds since their inception, would continue as the portfolio manager of Income
Fund. Mr. Waugh is a vice president of both the Trust and GLI and is a managing
director of global fixed income investments of Mitchell Hutchins. Mr. Waugh has
been employed by Mitchell Hutchins as a portfolio manager since 1988.
FEES AND EXPENSES
Mitchell Hutchins serves as each Fund's investment adviser and administrator.
Mitchell Hutchins is a wholly owned subsidiary of PaineWebber, which is a
wholly owned subsidiary of Paine Webber Group Inc. ("PW Group"), a publicly
held financial services holding company. The principal business address of each
of Mitchell Hutchins, PaineWebber and PW Group is 1285 Avenue of the Americas,
New York, New York 10019.
Mitchell Hutchins receives a monthly fee for services as investment adviser
and administrator, payable with respect to GLI at an annual rate of 0.85% of
GLI's average daily net assets and with respect to Income Fund in accordance
with the following schedule:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
<S> <C>
Up to $500 million.................................................. 0.750%
In excess of $500 million up to $1.0 billion........................ 0.725%
In excess of $1.0 billion up to $1.5 billion........................ 0.700%
In excess of $1.5 billion up to $2.0 billion........................ 0.675%
Over $2.0 billion................................................... 0.650%
</TABLE>
For the fiscal year ended October 31, 1994, Income Fund paid investment
advisory and administration fees to Mitchell Hutchins at an effective annual
rate of 0.717% of Income Fund's average daily net assets.
If the Reorganization is effected, the lower advisory and administration fee
schedule that currently is applicable to Income Fund will apply to the combined
entity and, thus, will apply to the Class A Shares of Income Fund held by the
former shareholders of GLI.
As a closed-end investment company, GLI pays no distribution or 12b-1 service
fees. As a series of an open-end investment company, however, Income Fund
continuously offers and redeems its shares and does pay such fees to its
distributor, Mitchell Hutchins. Under a distribution agreement with Mitchell
Hutchins relating to its Class A shares, Income Fund pays Mitchell Hutchins a
monthly 12b-1 service fee at the annual rate of 0.25% of the average daily net
assets attributable to the Class A shares. Under separate plans of distribution
pertaining to each of Income Fund's Class B and D shares, Income Fund pays
monthly 12b-1 service fees to Mitchell Hutchins at the rate of 0.25% of the
average daily net assets attributable to each of those Classes and, in
addition, pays Mitchell Hutchins monthly 12b-1 distribution fees at the annual
rates of 0.75% of the average daily net assets attributable to the Class B
shares and 0.50% of the average daily net assets of the Class D shares. Class C
shares pay no distribution or 12b-1 service fees. Annual 12b-1 distribution
fees are a form of asset-based sales charges.
Only the 0.25% 12b-1 service fee applicable to Income Fund's Class A shares
would apply to the Class A Shares distributed to GLI shareholders as part of
the Reorganization.
10
<PAGE>
Each Fund also pays certain other expenses in connection with its operations,
including accounting, custodian, legal, audit, transfer agency and registration
expenses. Combining the Funds will eliminate duplication of certain expenses.
For example, only one annual audit of the combined Fund will be required rather
than one audit of each Fund as currently is required. The combination is also
expected to result in reduced expenses due to economies of scale. However,
open-end funds such as Income Fund normally pay higher transfer agency fees
than closed-end funds due to the continuous sale and redemption of open-end
fund shares. Similarly, Income Fund and other open-end funds incur expenses
associated with maintaining continuous state and federal securities
registrations. Closed-end funds, such as GLI, do not incur such expenses.
Accordingly, some of Income Fund's expenses will be higher than those that have
been incurred by GLI.
For the fiscal year ended October 31, 1994, expenses stated as a percentage
of average net assets for Income Fund's Class A shares were 1.17%, as compared
to 1.10% for GLI shares. Following the Reorganization, it is estimated that the
expense ratio for the Class A shares of Income Fund will be 1.16%, although the
actual expense ratio may differ.
The following table shows the current fees for Income Fund's Class A shares
and GLI and pro forma fees for Income Fund's Class A shares after giving effect
to the Reorganization:
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
EXISTING FEES ESTIMATED
AND EXPENSES FEES
----------------- -------------
INCOME FUND COMBINED FUND
(CLASS A) GLI (CLASS A)
----------- ----- -------------
<S> <C> <C> <C>
Management Fee (effective rate)................ 0.717% 0.850% 0.712%
12b-1 Fees..................................... 0.250% None 0.250%
Other Expenses................................. 0.203% 0.250% 0.198%
----- ----- -----
Total Fund Operating Expenses................ 1.170% 1.100% 1.160%
===== ===== =====
</TABLE>
EXAMPLE
The following illustrates the expenses on a $1,000 investment under the
existing and proposed fees and the expenses stated above, assuming (1) a 5%
annual return and (2) redemption at the end of each time period shown. The fees
shown below do not reflect an initial sales charge of up to 4% of the public
offering price that normally is charged in connection with the sale of Income
Fund's Class A shares. No initial sales charge will be charged in connection
with Class A Shares distributed to GLI shareholders as part of the
Reorganization.
<TABLE>
<CAPTION>
EXISTING FEES:
--------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------- --------------- --------------- ----------------
INCOME FUND INCOME FUND INCOME FUND INCOME FUND
(CLASS A) GLI (CLASS A) GLI (CLASS A) GLI (CLASS A) GLI
----------- --- ----------- --- ----------- --- ----------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$12 $11 $37 $35 $64 $61 $142 $134
<CAPTION>
ESTIMATED FEES:
---------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$12 $37 $64 $141
</TABLE>
11
<PAGE>
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in Class A Shares of
Income Fund through the Reorganization. THE EXAMPLE ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF INCOME FUND. Actual
expenses may vary from year to year and may be higher or lower than those shown
above.
PURCHASES AND REDEMPTIONS
Shares of Income Fund are available through PaineWebber and its correspondent
firms or through PFPC Inc., the Fund's Transfer Agent. The minimum initial
investment in Income Fund is $1,000; each additional investment must be $100 or
more. Income Fund's Class A shares normally are sold with a maximum initial
sales charge of up to 4% of the public offering price. The Class A Shares that
would be distributed to shareholders of GLI as part of the Reorganization would
not be subject to an initial sales charge. However, following the
Reorganization, new purchases of Class A shares of Income Fund would be subject
to the 4% initial sales charge, and any Class B or Class D shares of Income
Fund that are purchased by former GLI shareholders would be subject to their
respective terms.
Income Fund's Class B shares are sold subject to a maximum contingent
deferred sales charge ("CDSC") of 5% of redemption proceeds, which declines to
zero after six years, when Class B shares automatically convert into Class A
shares. Class D shares of Income Fund are sold without an initial sales charge
or CDSC.
Shares of each Class of Income Fund may be redeemed at their particular net
asset value (subject to any applicable CDSC), and redemption proceeds will be
paid within seven days of the receipt of a redemption request. Clients of
PaineWebber or its correspondent firms may redeem shares held in non-
certificated form through PaineWebber or its correspondent firms; all other
shareholders must redeem through the Fund's Transfer Agent.
Shares of GLI are listed and traded on the NYSE under the symbol "GLI."
Shares of GLI may be offered from time to time in order to effect OTC secondary
market sales by PaineWebber in its capacity as a dealer and secondary market-
maker at negotiated prices related to prevailing market prices on the NYSE at
the time of sale.
EXCHANGES
Shares of Income Fund may be exchanged for shares of the corresponding Class
of other PaineWebber funds, and shares of Income Fund may be acquired through
an exchange of shares of the corresponding Class of other PaineWebber funds, as
provided in Income Fund's Prospectus. No initial sales charge is imposed on the
shares being acquired, and no CDSC is imposed on the shares being disposed of,
through an exchange. However, a CDSC may apply to redemptions of Class B shares
acquired through an exchange. Exchanges may be subject to minimum investment
and other requirements of the fund into which exchanges are made.
Shareholders of GLI currently do not have any exchange privilege. Upon
completion of the Reorganization, however, former GLI shareholders would hold
Class A Shares of Income Fund and would enjoy the same exchange privileges as
other Income Fund Class A shareholders.
12
<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund declares and pays quarterly dividends from its net investment
income. In addition, each Fund may distribute, with the dividends for the first
three quarters of each fiscal year, any net short-term capital gains and net
gains from foreign currency transactions. Each Fund also distributes
substantially all of its net capital gain (the excess of net long-term capital
gain over net short-term capital loss) and any undistributed net short-term
capital gain and net gains from foreign currency transactions, at least
annually. On or before the Closing Date, GLI will declare as a distribution
substantially all of its net investment income, net capital gain, net short-
term capital gain and realized net foreign currency gains in order to continue
to maintain its tax status as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"). Because the declared amount of
this distribution may have to be estimated well in advance of the date on which
the precise amount necessary to accomplish that purpose will be calculable,
such distribution could result in an overdistribution (and return of capital)
or underdistribution (with the result that GLI may incur a tax liability).
Income Fund also will declare and make a distribution to its shareholders of
substantially all of its net investment income, net capital gain, net short-
term capital gain and realized net foreign currency gains earned and realized
through the date of the Reorganization, so that the incoming GLI shareholders
will have no interest in the investment income and net realized gains earned by
Income Fund to that date. Both Funds may make additional distributions if
necessary to avoid a 4% excise tax on certain undistributed income and capital
gain. GLI will pay such distributions only in cash. Shareholders of all Classes
of Income Fund may have such distributions paid in additional shares of the
same Class at net asset value or receive them in cash.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
The Funds have received an opinion of Kirkpatrick & Lockhart, legal counsel
to the Trust and GLI, to the effect that the proposed Reorganization will
qualify as a tax-free reorganization under section 368(a)(1)(C) of the Code.
Accordingly, neither Fund will recognize gain or loss (except, possibly, with
respect to certain options, futures and forward contracts) in connection with
the Reorganization. In addition, shareholders of GLI who receive Class A Shares
pursuant to the Reorganization will recognize no gain or loss. See "The
Reorganization (Proposal 1)--Tax Considerations."
RISKS AND SPECIAL CONSIDERATIONS REGARDING THE REORGANIZATION
The fact that the investment objectives and policies of each Fund are very
similar and the fact that they are managed by the same investment adviser and
portfolio manager should minimize the risks that might otherwise be associated
with the Reorganization. In general, Income Fund's investment policies do not
present investment risks that are not also presented by the investment policies
of GLI. Moreover, the differences between the investment policies and
operations of the two Funds generally tend to reduce the investment risks
currently presented to GLI shareholders.
The three primary differences in the investment policies of Income Fund and
GLI are:
(1) GLI can invest in lower rated securities--GLI may invest up to 35% of
its net assets in securities with credit ratings as low as B- (or
comparable securities), while Income Fund may only invest up to 20% of its
assets in sovereign debt securities rated as low as BB and an additional
15% of its assets in securities rated as low as BBB (or comparable
securities). While
13
<PAGE>
credit ratings are general and are not absolute standards of quality, lower
rated debt securities generally involve higher risks.
(2) GLI can invest in a higher level of illiquid securities--GLI may
invest up to 25% of its total assets in illiquid securities, as compared to
10% of net assets for Income Fund. Illiquid securities present special
risks.
(3) GLI can invest to a greater extent in equity securities--GLI can
invest in preferred stocks and may purchase equity securities, including
common stocks, warrants and rights, when attached to fixed income
securities or as part of a unit including fixed income securities; Income
Fund may invest up to 5% of its total assets in debt securities that are
convertible into equity securities, but has no further authority to invest
in equity securities. Equity securities present risks not presented by debt
securities.
In addition, shares of GLI and other closed-end investment companies have in
the past frequently traded at a discount to their net asset values. During the
16 calendar weeks preceding November 1, 1994, shares of GLI traded on the NYSE
at an average discount from net asset value of more than 10%. See "The
Reorganization (Proposal 1)--Reasons for the Reorganization." Shares of open-
end investment companies, such as Income Fund, may be redeemed at net asset
value and, therefore, are not subject to market discounts from net asset value.
Although the risks presented by each Fund's policies are substantially the
same, the following risks and special considerations should be taken into
consideration by GLI shareholders in evaluating the proposed Reorganization.
The investment income of each Fund is based on the income earned on the
securities it holds, less expenses incurred. Thus, each Fund's investment
income may be expected to fluctuate in response to changes in such expenses or
income. Each Fund may invest its assets without limitation in debt securities
that will be subject to credit risk and the inverse relationship between market
prices and interest rates; that is, when interest rates rise, the prices of
such securities tend to decline, and conversely, when interest rates fall,
prices tend to rise.
Income Fund is permitted to invest up to 35% of its assets in securities
rated BBB by S&P, Baa by Moody's, comparably rated by another NRSRO or, if
unrated, determined by Mitchell Hutchins to be of comparable quality. Such
securities are investment grade, although Moody's considers securities rated
Baa to have speculative characteristics. Income Fund may invest up to 20% of
its total assets in sovereign debt securities rated below investment grade but
no lower than BB by S&P, Ba by Moody's or comparably rated by another NRSRO or,
in the case of such securities assigned a commercial paper rating, no lower
than B by S&P or comparably rated by another NRSRO.
Lower rated debt securities generally offer a higher current yield than that
available from higher grade issues, but they involve higher risks, in that they
are especially subject to adverse changes in general economic conditions and in
the industries in which the issuers are engaged, to changes in the financial
condition of the issuers and to price fluctuation in response to changes in
interest rates. During periods of economic downturn or rising interest rates,
highly leveraged issuers may experience financial stress which could adversely
affect their ability to make payments of interest and principal and increase
the possibility of default. In addition, such issuers may not have more
traditional methods of financing available to them and may be unable to repay
debt at
14
<PAGE>
maturity by refinancing. The risk of loss due to default by such issuers is
significantly greater because such securities are frequently unsecured and
subordinated to the prior payment of senior indebtedness.
The market for lower rated debt securities has expanded rapidly in recent
years, and its growth paralleled a long economic expansion. In the past, the
prices of many lower rated debt securities declined substantially, reflecting
an expectation that many issuers of such securities might experience financial
difficulties. As a result, the yields on such securities rose dramatically.
Such higher yields did not reflect the value of the income stream that holders
of such securities expected, but rather the risk that holders of such
securities could lose a substantial portion of their value as a result of the
issuer's financial restructuring or default. There can be no assurance that
such declines will not recur. The market for lower rated debt securities
generally is thinner and less active than that for higher quality securities,
which may limit a Fund's ability to sell such securities at their fair value in
response to changes in the economy or the financial markets. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may
also decrease the value and liquidity of lower rated securities, especially in
a thinly traded market.
Investments in both Funds involve the special risks of investing in foreign
securities, which include possible adverse political and economic developments
abroad and differing characteristics of foreign economies and markets, as well
as the fact that there is often less information publicly available about
foreign issuers of securities held by the Funds than is available concerning
U.S. companies. Also, the value of the Funds' investments can be adversely
affected by fluctuations in foreign currency values.
The foreign securities in which the Funds may invest include securities of
issuers located in emerging market countries. The risks of investing in foreign
securities may be greater with respect to securities of issuers in, or
denominated in the currencies of, emerging market countries. The securities
markets of emerging market countries are substantially smaller, less developed,
less liquid and more volatile than the securities markets of the U.S. and other
developed countries. Disclosure and regulatory standards in many respects are
less stringent in emerging market countries than in the U.S. and other major
markets. Investing in local markets, particularly in emerging market countries,
may require the Fund to adopt special procedures, seek local government
approvals or take other actions, each of which may involve additional costs to
the Fund. Certain emerging market countries may also restrict investment
opportunities in issuers in industries deemed important to national interests.
Each Fund may use options, futures contracts, forward currency contracts and
interest rate protection transactions. Hedging and related income strategies
utilizing these instruments involve certain special risks, including (1) the
fact that skills needed to use hedging instruments are different from those
needed to select the Funds' securities, (2) possible imperfect correlation, or
even no correlation, between price movements of hedging instruments and price
movements of the investments being hedged, (3) the fact that, while hedging
strategies can reduce the risk of loss, they can also reduce the opportunity
for gain, or even result in losses, by offsetting favorable price movements in
hedged investments and (4) the possible inability of a Fund to purchase or sell
a portfolio security at a time that otherwise would be favorable for it to do
so, or the possible need for a Fund to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to
15
<PAGE>
maintain "cover" or to segregate securities in connection with hedging
transactions and the possible inability of a Fund to close out or to liquidate
its hedged position.
THE REORGANIZATION (PROPOSAL 1)
GENERAL
The terms and conditions under which the proposed Reorganization may be
consummated are set forth in the Plan. Significant provisions of the Plan are
summarized below; however, this summary is qualified in its entirety by
reference to the Plan, a copy of which is attached as Appendix A to this
prospectus/proxy statement.
The Reorganization would be effected pursuant to the Plan. The Plan
contemplates (a) the acquisition by Income Fund on the Closing Date of the
assets of GLI in exchange solely for Class A Shares of Income Fund and the
assumption by Income Fund of GLI's liabilities and (b) the constructive
distribution of such Class A Shares to the shareholders of GLI as provided for
by the Plan.
The assets of GLI to be acquired by Income Fund shall include without
limitation all cash, cash equivalents, securities, receivables and other
property owned by GLI. Income Fund will assume from GLI all debts, liabilities,
obligations and duties of GLI of whatever kind or nature; provided, however,
that GLI will use its best efforts, to the extent practicable, to discharge all
of its known debts, liabilities, obligations and duties prior to the Closing
Date, except with respect to that Fund's positions in options and futures
contracts. Income Fund also will deliver the Class A Shares to GLI, which GLI
shall then distribute to its shareholders.
The value of GLI's assets to be acquired, and the amount of GLI's liabilities
to be assumed, by Income Fund and the net asset value of a Class A Share of
Income Fund will be determined as of the Closing Date by or under the direction
of the Trust's board of trustees and GLI's board of directors. Where market
quotations are readily available, portfolio securities will be valued based
upon such market quotations, provided such quotations adequately reflect, in
Mitchell Hutchins' judgment, fair value of the security. Where such market
quotations are not readily available, such securities will be valued based upon
appraisals received from a pricing service using a computerized matrix system,
or based upon appraisals derived from information concerning the security or
similar securities received from recognized dealers in those securities. The
amortized cost method of valuation generally will be used to value debt
instruments with 60 days or less remaining to maturity, unless GLI's board of
directors (with respect to GLI) or the Trust's board of trustees (with respect
to Income Fund) determines that this does not represent fair value. All other
securities and assets will be valued at fair value as determined in good faith
by or under the direction of GLI's board of directors or the Trust's board of
trustees, as applicable. All investments quoted in foreign currencies will be
valued 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.
As soon as practicable after the Closing Date, GLI will distribute the Class
A Shares of Income Fund received by GLI to its shareholders of record so that
each shareholder of GLI will receive a number of full and fractional shares of
the Class A Shares of Income Fund equal in value to the shareholder's holdings
in GLI; GLI will be liquidated as soon as practicable thereafter. Such
16
<PAGE>
distribution will be accomplished by opening accounts on the books of Income
Fund in the names of GLI shareholders and by transferring thereto the Class A
Shares previously credited to the account of GLI on those books. Each
shareholder account will represent the respective corresponding value of Class
A Shares of Income Fund due to such GLI shareholder. Fractional Class A Shares
of Income Fund will be rounded to the third decimal place.
Accordingly, as a result of the Reorganization, each former shareholder of
GLI will own full and fractional Class A Shares of Income Fund that, except for
rounding, will be equal to the value of that shareholder's shares of the common
stock of GLI immediately prior to the Reorganization. Moreover, because Class A
Shares of Income Fund will be issued at net asset value in exchange for the net
assets of GLI, except for rounding, the aggregate value of the Class A Shares
of Income Fund so issued will equal the aggregate value of shares of the common
stock of GLI. The net asset value of each Class A Share of Income Fund will not
be changed by the transaction. Thus, the Reorganization will not result in a
dilution of any shareholder interest.
Any transfer taxes payable upon issuance of Class A Shares of Income Fund in
a name other than that of the registered holder of the shares on the books of
GLI as of that time shall be paid by the person to whom such Class A Shares are
to be issued as a condition of such transfer. Any reporting responsibility of
GLI will continue to be the responsibility of GLI up to and including the
Closing Date and such later date on which GLI is terminated.
The cost of the Reorganization, including professional fees and the cost of
soliciting proxies for the meeting, consisting principally of printing and
mailing expenses, together with the cost of any supplementary solicitation,
will be borne by both Funds in proportion to their respective net assets.
Mitchell Hutchins recommended this method of expense allocation to the
directors/trustees. Mitchell Hutchins based its recommendations on its belief
that the method is fair because, for the reasons discussed under "Reasons for
the Proposed Transaction," the transaction has the potential to benefit both
Funds. The directors of GLI and the trustees of the Trust considered the
expense allocation method in approving the Reorganization and finding that the
Reorganization is in the best interests of each Fund.
The consummation of the Reorganization is subject to a number of conditions
set forth in the Plan, some of which may be waived by GLI or the Trust. In
addition, the Plan may be amended in any mutually agreeable manner, except that
no amendment may be made subsequent to the meeting of shareholders of GLI that
would detrimentally affect the value of the Class A Shares of Income Fund to be
distributed.
REASONS FOR THE REORGANIZATION
GLI's board of directors, including a majority of the Independent Directors,
has determined that the Reorganization is in the best interests of GLI, that
the terms of the Reorganization are fair and reasonable and that the interests
of GLI's shareholders will not be diluted as a result of the Reorganization.
The Trust's board of trustees, including a majority of the Independent
Trustees, has determined that the Reorganization is in the best interests of
Income Fund, that the terms of the Reorganization are fair and reasonable and
that the interests of Income Fund's shareholders will not be diluted as a
result of the Reorganization.
17
<PAGE>
In considering the Reorganization, the boards of directors/trustees made an
extensive inquiry into a number of factors, including the following:
(1) the compatibility of the investment objectives, policies and
restrictions of the Funds;
(2) the effect of the Reorganization on expected investment performance;
(3) the effect of the Reorganization on the expense ratio of Income Fund
relative to its current expense ratio;
(4) the effect of the Reorganization on the expense ratio of Income Fund
relative to the current expense ratio of GLI;
(5) the costs to be incurred by each Fund as a result of the
Reorganization;
(6) the tax consequences of the Reorganization;
(7) possible alternatives to the Reorganization, including, in the case
of GLI, the possibility of converting to an open-end investment company
without being reorganized into any pre-existing fund; and
(8) the potential benefits of the Reorganization to other persons,
especially Mitchell Hutchins and PaineWebber.
During the 16 calendar weeks preceding November 1, 1994, shares of GLI traded
on the NYSE at an average discount from net asset value of more than 10%. Under
those circumstances, the policies of GLI, as set forth in its Prospectus,
require that GLI submit to its shareholders, at its next succeeding annual
meeting, a proposal, to the extent consistent with the 1940 Act, to amend GLI's
Articles of Incorporation to convert from a closed-end to an open-end
investment company. At its meeting on November 9, 1994, the board of directors
of GLI, acting upon the recommendation of Mitchell Hutchins, determined to
recommend to GLI's shareholders that they approve such a conversion, but
determined to defer, until a later date, specific recommendations as to the
manner in which such a conversion should be implemented.
At a meeting of GLI's board of directors on February 15, 1995, Mitchell
Hutchins recommended, and the board approved, that the conversion of GLI to an
open-end investment company be implemented through the Reorganization. On the
same date, the Reorganization was recommended to, and approved, by the board of
trustees of the Trust. Mitchell Hutchins advised the directors/trustees that
the reorganization of GLI into Income Fund provided a sound alternative
investment option, given the Funds' similar investment objectives and policies.
Mitchell Hutchins and the GLI board of directors believe that the
Reorganization offers GLI shareholders the benefits of investing in a larger,
existing open-end fund with investment objectives and policies substantially
similar to those of GLI.
In recommending the Reorganization, Mitchell Hutchins indicated to the boards
that the investment advisory and administration fee schedule applicable to
Income Fund would be lower than that currently in effect for GLI. The boards
also were advised that the expense ratio for Income Fund's Class A shares would
likely decrease as a result of the Reorganization due to the increased size of
the combined fund. That expense ratio, however, would be higher than the
expense ratio of GLI. In approving the Reorganization, the directors/trustees
noted that the overall investment objectives of high current income consistent
with prudent investment risk and, secondarily, capital appreciation remain
appropriate ones to offer investors as part of an overall investment strategy.
18
<PAGE>
DESCRIPTION OF SECURITIES TO BE ISSUED
The Trust is registered with the SEC as an open-end management investment
company. The trustees are authorized to issue an unlimited number of shares of
beneficial interest of separate series (par value $.001 per share). The
trustees have established Income Fund as one of the Trust's four series and
have authorized the public offering of four Classes of shares of Income Fund.
Each share in a Class represents an equal proportionate interest in Income Fund
with each other share in that Class. Shares of Income Fund entitle their
holders to one vote per full share and fractional votes for fractional shares
held, except that each Class of shares has exclusive voting rights on matters
pertaining to its plan of distribution.
On the Closing Date, Income Fund will have outstanding four Classes of
shares, designated Class A, Class B, Class C and Class D shares. Only Class A
Shares will be issued as part of the Reorganization. Each Class represents
interests in the same assets of the Fund. The Classes differ as follows: (1)
each Class has exclusive voting rights on matters pertaining to its plan of
distribution; (2) Class A shares are subject to an initial sales charge; (3)
Class B shares bear ongoing distribution fees, are subject to a CDSC upon
certain redemptions and will automatically convert to Class A shares
approximately six years after issuance; (4) Class D shares are subject to
neither an initial sales charge nor a CDSC, bear ongoing distribution fees and
do not convert into another Class; and (5) each Class may bear differing
amounts of certain Class-specific expenses. Each share of each Class of Income
Fund is entitled to participate equally in dividends and other distributions
and the proceeds of any liquidation, except that because of the higher expenses
resulting from the distribution fees borne by the Class B and Class D shares,
dividends on Class B and Class D shares are expected to be lower than those for
Class A Shares of Income Fund. For the same reason, dividends on Class B shares
of Income Fund are expected to be lower than those for its Class D shares.
Dividends on each Class also might be affected differently by the allocation of
other Class-specific expenses. Class C shares, which may be offered only to a
limited class of institutional investors, are subject to neither an initial or
contingent deferred sales charge nor ongoing service or distribution fees.
The Trust does not hold annual meetings of shareholders. There normally will
be no meetings of shareholders for the purpose of electing trustees unless
fewer than a majority of the trustees holding office has been elected by
shareholders, at which time the trustees then in office will call a
shareholders' meeting for the election of trustees. Under the 1940 Act,
shareholders of record of at least two-thirds of the outstanding shares of an
investment company may remove a trustee by votes cast in person or by proxy at
a meeting called for that purpose. The trustees are required to call a meeting
of shareholders for the purpose of voting upon the question of removal of any
trustee when requested in writing to do so by the shareholders of record
holding at least 10% of the Trust's outstanding shares.
19
<PAGE>
TAX CONSIDERATIONS
The Funds have received an opinion from Kirkpatrick & Lockhart, counsel to
GLI and the Trust, to the effect that (1) the Reorganization described above
will constitute a "reorganization" within the meaning of section 368(a)(1)(C)
of the Code; (2) GLI shareholders will recognize no gain or loss on the
constructive exchange of all their GLI shares solely for Class A Shares; (3) no
gain or loss will be recognized to GLI on the transfer to Income Fund of its
assets (except, possibly, with respect to certain options, futures and forward
contracts included in those assets (collectively "Contracts")) in exchange
solely for Class A Shares and the assumption by Income Fund of GLI's
liabilities or on the subsequent distribution of Class A Shares to GLI
shareholders in constructive exchange for their GLI shares; (4) no gain or loss
will be recognized to Income Fund on its receipt of those assets in exchange
solely for Class A Shares and its assumption of GLI's liabilities; (5) Income
Fund's basis for those assets (with the possible exception of the Contracts)
will be the same as the basis thereof in GLI's hands immediately before the
Reorganization; (6) Income Fund's holding period for those assets (with the
possible exception of the Contracts) will include GLI's holding period
therefor; (7) each GLI shareholder's basis for the Class A Shares to be
received by him or her in the Reorganization will be the same as his or her
basis for his or her GLI shares to be constructively surrendered in exchange
for those Class A Shares, and each GLI shareholder's holding period for those
Class A Shares will include his or her holding period for those GLI shares,
provided they are held as capital assets by the shareholder on the date of the
Reorganization.
PRO FORMA CAPITALIZATION AND RATIOS
The following table shows the capitalization of each Fund as of October 31,
1994 and on a pro forma combined basis (unaudited) as of that date giving
effect to the Reorganization:
<TABLE>
<CAPTION>
INCOME PRO FORMA
FUND GLI COMBINED
------ --- ---------
<S> <C> <C> <C>
Net Assets.......................... $1,442,863,756 $228,666,225 $1,671,529,981
Net Asset Value Per Share
Class A........................... $9.99 $8.76* $9.99
Class B........................... $9.96 -- $9.96
Class C........................... $9.99 -- $9.99
Class D........................... $9.98 -- $9.98
Shares Outstanding
Class A........................... 61,273,875 26,096,317* 84,163,387
Class B........................... 72,827,577 -- 72,827,577
Class C........................... 1,298,635 -- 1,298,635
Class D........................... 9,267,815 -- 9,267,815
</TABLE>
- --------
* Refers to all outstanding GLI shares; GLI does not have separate classes of
shares.
20
<PAGE>
The following table shows the ratio of expenses to average net assets and the
ratio of net investment income to average net assets of each Fund for the
fiscal year ended October 31, 1994. The ratios are also shown on a pro forma
basis (unaudited) for that period giving effect to the Reorganization (although
certain adjustments deemed immaterial are not reflected):
<TABLE>
<CAPTION>
INCOME PRO FORMA
FUND GLI COMBINED
------ ---- ---------
<S> <C> <C> <C>
Ratio of expenses to average net assets
Class A.............................................. 1.17% 1.10%* 1.16%
Class B.............................................. 1.94% -- 1.92%
Class C.............................................. 0.88% -- 0.87%
Class D.............................................. 1.68% -- 1.67%
Ratio of net investment income to average net assets
Class A.............................................. 6.94% 7.39%* 6.94%
Class B.............................................. 6.05% -- 6.17%
Class C.............................................. 7.23% -- 7.19%
Class D.............................................. 6.34% -- 6.43%
</TABLE>
- --------
* Refers to all outstanding GLI shares; GLI does not have separate classes of
shares.
ADDITIONAL INFORMATION ABOUT INCOME FUND
A copy of Income Fund's prospectus, dated March 1, 1995, which is
incorporated by reference herein, accompanies this prospectus/proxy statement.
21
<PAGE>
MISCELLANEOUS
AVAILABLE INFORMATION
GLI and the Trust are subject to the information requirements of the
Securities Exchange Act of 1934 and the 1940 Act, and in accordance therewith
file reports, proxy material and other information with the SEC. Such reports,
proxy material and other information can be inspected and copied at the Public
Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such material can also be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20459 at prescribed rates.
The securities of GLI are listed on the NYSE, at which reports, proxy
statements and other information concerning GLI can be inspected.
LEGAL MATTERS
Certain legal matters in connection with the issuance of Class A Shares of
Income Fund will be passed upon by Kirkpatrick & Lockhart, counsel to the
Trust.
EXPERTS
The audited financial statements and financial highlights of Income Fund and
GLI, incorporated by reference herein and included or incorporated by reference
in their respective Statements of Additional Information, have been audited by
Price Waterhouse LLP, independent accountants, whose reports thereon are
included in the Funds' Annual Reports to Shareholders for the fiscal year ended
October 31, 1994. The financial statements audited by Price Waterhouse LLP have
been incorporated herein by reference in reliance on the reports given on its
authority as an expert in auditing and accounting.
ELECTION OF DIRECTORS (PROPOSAL 2)
Proposal 2 relates to the election of directors of GLI. Management proposes
the election of the eight nominees named in the table below as directors of
GLI. Each nominee, including those who are not Independent Directors, has
indicated his or her willingness to serve if elected. If elected, each nominee
will hold office until GLI is liquidated or, if the Reorganization is not
approved and effected, until the next annual meeting of shareholders or until
his or her successor is elected and qualified. Unless you give contrary
instructions on the enclosed proxy card, your shares will be voted in favor of
the election of the eight nominees. If any of the nominees should withdraw or
otherwise become unavailable for election, your shares will be voted in favor
of such other nominee or nominees as management may recommend.
Messrs. Gowen, Malek and Murray and Mrs. Moyers have served as directors of
GLI since its inception in 1988. Mr. Feldberg has served as a director since
October 24, 1990. Mr. Bewkes served as a director from October 24, 1990 until
his resignation from the board on November 17, 1993; he was subsequently
reappointed to the board on December 27, 1993. Mr. Minard has served as a
22
<PAGE>
director since September 29, 1993. Directors shall be elected by the vote of
the holders of a majority of shares of GLI present in person or by proxy and
entitled to vote thereon. If each of the eight nominees is elected, they will
fill eight of the nine positions on the board, leaving one vacancy. Proxies
cannot be voted for more than eight persons. The vacant position on the board
had been held by Joseph J. Grano, Jr., who resigned from the board in December
1994, in connection with his being named president of PaineWebber. The board
has not yet selected a replacement for Mr. Grano, but it may do so in the
future. All directors and executive officers as a group (19 persons)
beneficially owned shares of GLI, including shares shown in the table below,
on , 1995, representing less than 1% of shares outstanding of GLI on that
date.
<TABLE>
<CAPTION>
PRESENT POSITION WITH SHARES OWNED
GLI; BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS , 1995**
------------ ------------------------------------ -----------------
<S> <C> <C>
E. Garrett Bewkes Jr.*; 68 Director and Chairman of the Board of
Directors. Mr. Bewkes is a director of PW
Group (holding company of PaineWebber and
Mitchell Hutchins) and a consultant to PW
Group. Prior to 1988, he was chairman of
the board, president and chief executive
officer of American Bakeries Company. Mr.
Bewkes is also a director of Interstate
Bakeries Corporation and a director or
trustee of 26 other investment companies
for which Mitchell Hutchins or PaineWebber
serves as investment adviser.
Paul B. Guenther*; 54 Director and President. Mr. Guenther is
president and a director of PW Group and
Mitchell Hutchins and a director of
PaineWebber. Mr. Guenther is also president
of 26 and a director or trustee of 17 other
investment companies for which Mitchell
Hutchins or PaineWebber serves as
investment adviser.
Meyer Feldberg; 52 Director. Mr. Feldberg is Dean and
Columbia University Professor of Management of the Graduate
101 Uris Hall School of Business, Columbia University.
New York, NY 10027 Prior to 1989, he was president of the
Illinois Institute of Technology. Dean
Feldberg is also a director of AMSCO
International Inc., Federated Department
Stores. Inc., Inco Homes Corporation and
New World Communications Group Incorporated
and a director or trustee of 18 other
investment companies for which Mitchell
Hutchins or PaineWebber serves as
investment adviser.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
PRESENT POSITION WITH SHARES OWNED
GLI; BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS , 1995**
------------ ------------------------------------ ---------------
<S> <C> <C>
George W. Gowen; 65 Director. Mr. Gowen is a partner in the law
666 Third Avenue firm of Dunnington, Bartholow & Miller.
New York, NY 10017 Prior to May 1994, he was a partner in the
law firm of Fryer, Ross & Gowen. Mr. Gowen
is also a director of Columbia Real Estate
Investments, Inc. and a director or trustee
of 16 other investment companies for which
Mitchell Hutchins or PaineWebber serves as
investment adviser.
Frederic V. Malek; 58 Director. Mr. Malek is chairman of Thayer
901 15th St., N.W. Capital Partners (investment bank) and a
Suite 300 co-chairman and director of CB Commercial
Washington, DC 20005 Group Inc. (real estate). From January 1992
to November 1992, he was campaign manager
of Bush-Quayle '92. From 1990 to 1992, he
was vice chairman, and from 1989 to 1990,
he was president, of Northwest Airlines
Inc., NWA Inc. (holding company of
Northwest Airlines Inc.) and Wings Holdings
Inc. (holding company of NWA Inc.). Prior
to 1989, he was employed by the Marriott
Corporation (hotels, restaurants, airline
catering and contract feeding), where he
most recently was an executive vice
president and president of Marriott Hotels
and Resorts. Mr. Malek is also a director
of American Management Systems, Inc.,
Automatic Data Processing, Inc., Avis,
Inc., FPL Group, Inc., ICF International,
Manor Care, Inc. and National Education
Corporation and a director or trustee of 16
other investment companies for which
Mitchell Hutchins or PaineWebber serves as
investment adviser.
Frank P.L. Minard*; 49 Director. Mr. Minard is chairman and a
director of Mitchell Hutchins, chairman of
the board of Mitchell Hutchins
Institutional Investors Inc. and a director
of PaineWebber. Prior to 1993, Mr. Minard
was managing director of Oppenheimer
Capital in New York and director of
Oppenheimer Capital Ltd. in London. Mr.
Minard is also a director or trustee of 16
other investment companies for which
Mitchell Hutchins or PaineWebber serves as
investment adviser.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
PRESENT POSITION WITH GLI SHARES OWNED
BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS , 1995**
------------ ------------------------------------ -----------------
<S> <C> <C>
Judith Davidson Moyers; 59 Director. Mrs. Moyers is president of
Public Affairs Public Affairs Television, Inc., an
Television educational consultant and a home
356 W. 58th Street economist. Mrs. Moyers is also a director
New York, NY 10019 of Ogden Corporation and a director or
trustee of 16 other investment companies
for which Mitchell Hutchins or PaineWebber
serves as investment adviser.
Thomas F. Murray; 84 Director. Mr. Murray is a real estate and
400 Park Avenue financial consultant. Mr. Murray is also a
New York, NY 10022 director and chairman of American
Continental Properties, Inc., a trustee of
Prudential Realty Trust and a director or
trustee of 16 other investment companies
for which Mitchell Hutchins or PaineWebber
serves as investment adviser.
</TABLE>
- --------
* Messrs. Bewkes, Guenther and Minard are "interested persons" of GLI as
defined in the 1940 Act by virtue of their positions with PW Group,
PaineWebber and/or Mitchell Hutchins.
** Unless otherwise stated, as of the date indicated, each director had sole
voting and investment power of shares owned.
The board of directors of GLI met five times during GLI's latest fiscal year
ended October 31, 1994. The Audit Committee of the board currently consists of
Messrs. Feldberg, Gowen, Malek and Murray and Mrs. Moyers. The duties of the
Audit Committee are (a) to review the financial and accounting policies of GLI,
including internal accounting control procedures, and to review reports
prepared by GLI's independent accountants, including reports on GLI's financial
statements; (b) to review and recommend approval or disapproval of audit and
non-audit services and the fees charged for such services; (c) to evaluate the
independence of the independent accountants and to recommend whether to retain
such independent accountants for the next fiscal year; and (d) to report to the
board and make such recommendations as it deems necessary. The Audit Committee
met once during GLI's fiscal year ended October 31, 1994, and all of the
members of the committee attended except Mr. Gowen. Each director attended at
least 75% of the meetings of the board of directors and Audit Committee except
Mr. Gowen. The board does not have a standing nominating or compensation
committee.
GLI pays each director who is not affiliated with or an interested person of
Mitchell Hutchins $3,000 annually and $500 per meeting of the board of
directors and its committees; directors of GLI who are "interested persons" as
defined in the 1940 Act receive no compensation from GLI. GLI also reimburses
directors for any expenses incurred in attending meetings. Because Mitchell
Hutchins performs substantially all of the services necessary for the operation
of GLI, GLI requires no employees. No officer, director of employee of
PaineWebber or Mitchell Hutchins presently receives any compensation from GLI
for acting as a director or officer. The table below includes certain
information relating to the compensation of GLI's directors for the fiscal year
ended October 31, 1994.
25
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM GLI
AGGREGATE BENEFITS ACCRUED ESTIMATED AND THE FUND
COMPENSATION AS PART OF ANNUAL BENEFITS COMPLEX PAID TO
NAME OF PERSON, POSITION FROM GLI* GLI'S EXPENSES UPON RETIREMENT DIRECTORS+
- ------------------------ ------------ ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
E. Garrett Bewkes, Jr.,
Director and Chairman
of the Board of
Directors.............. -- -- -- --
Meyer Feldberg,
Director............... $8,250 -- -- $86,050
George W. Gowen,
Director............... $7,250 -- -- $71,425
Paul B. Guenther,
Director and President. -- -- -- --
Frederic V. Malek,
Director............... $8,250 -- -- $77,875
Frank P.L. Minard,
Director............... -- -- -- --
Judith Davidson Moyers,
Director............... $7,250 -- -- $71,125
Thomas F. Murray,
Director............... $7,750 -- -- $71,925
</TABLE>
- --------
* Represents fees paid to each director during the fiscal year ended October
31, 1994.
+ Represents total compensation paid to each director during the calendar year
ended December 31, 1994.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS (PROPOSAL 3)
GLI's financial statements for the fiscal year ended October 31, 1994 were
audited by Price Waterhouse LLP ("Price Waterhouse"), independent accountants.
In addition, Price Waterhouse prepares GLI's federal and state annual income
tax returns.
The board of directors of GLI has selected Price Waterhouse as the
independent accountants for GLI for the fiscal year ending October 31, 1995,
subject to ratification by GLI's shareholders at the Meeting. Price Waterhouse
has been GLI's independent accountants since GLI's inception in 1988. The
ratification of Price Waterhouse as independent accountants is to be voted upon
at the Meeting, and it is intended that the persons named in the accompanying
proxy will vote for such ratification unless contrary instructions are given.
Price Waterhouse has informed GLI that it has no material direct or indirect
financial interest in GLI. The affirmative vote of the holders of a majority of
the shares of GLI cast at the Meeting is required for ratification.
Representatives of Price Waterhouse are not expected to be present at the
Meeting, but they have been given the opportunity to make a statement if they
so desire and will be available should any matter arise requiring their
presence.
26
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 3.
EXECUTIVE OFFICERS
Officers of GLI are appointed by the directors and serve at the pleasure of
the board. None of the GLI officers currently receives any compensation from
GLI. The executive officers of GLI are:
TERESA M. BOYLE, age 36, vice president. Ms. Boyle is a first vice
president and manager--advisory administration of Mitchell Hutchins. Prior
to November 1993, she was compliance manager of Hyperion Capital
Management, Inc., an investment advisory firm. Prior to April 1993, Ms.
Boyle was a vice president and manager--legal administration of Mitchell
Hutchins. Ms. Boyle is also a vice president of 26 other investment
companies for which Mitchell Hutchins or PaineWebber serves as investment
adviser.
JOAN L. COHEN, age 30, vice president and assistant secretary. Ms. Cohen
is a vice president and attorney of Mitchell Hutchins. Prior to December
1993, she was an associate at the law firm of Seward & Kissel. Ms. Cohen is
also a vice president and assistant secretary of 26 other investment
companies for which Mitchell Hutchins or PaineWebber serves as investment
adviser.
ELLEN R. HARRIS, age 48, vice president. Ms. Harris is chief domestic
equity strategist and a managing director of Mitchell Hutchins. Ms. Harris
is also a vice president of 19 other investment companies for which
Mitchell Hutchins or PaineWebber serves as investment adviser.
ANN E. MORAN, age 37, vice president and assistant treasurer. Ms. Moran
is a vice president of Mitchell Hutchins. Ms. Moran is also a vice
president and assistant treasurer of 39 other investment companies for
which Mitchell Hutchins or PaineWebber serves as investment adviser.
DIANNE E. O'DONNELL, age 42, vice president and secretary. Ms. O'Donnell
is a senior vice president and senior associate general counsel of Mitchell
Hutchins. Ms. O'Donnell is also a vice president and secretary of 39 other
investment companies for which Mitchell Hutchins or PaineWebber serves as
investment adviser.
VICTORIA E. SCHONFELD, age 44, vice president. Ms. Schonfeld is a
managing director and general counsel of Mitchell Hutchins. From April 1990
to May 1994, she was a partner in the law firm of Arnold & Porter. Prior to
April 1990, she was a partner in the law firm of Shereff, Friedman, Hoffman
& Goodman. Ms. Schonfeld is also a vice president of 39 other investment
companies for which Mitchell Hutchins or PaineWebber serves as investment
adviser.
PAUL H. SCHUBERT, age 32, vice president and assistant treasurer. Mr.
Schubert is a vice president of Mitchell Hutchins. From August 1992 to
August 1994, he was a vice president at BlackRock Financial Management L.P.
Prior to August 1992, he was an audit manager with Ernst & Young LLP. Mr.
Schubert is also a vice president and assistant treasurer of 39 other
investment companies for which Mitchell Hutchins or PaineWebber serves as
investment adviser.
MARTHA J. SLEZAK, age 32, vice president and assistant treasurer. Ms.
Slezak is a vice president of Mitchell Hutchins. From September 1991 to
April 1992, she was fund-raising director for a U.S. Senate campaign. Prior
to September 1991, she was a tax manager with
27
<PAGE>
Arthur Andersen & Co. Ms. Slezak is also a vice president and assistant
treasurer of 39 other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
JULIAN F. SLUYTERS, age 34, vice president and treasurer. Mr. Sluyters is
a senior vice president and the director of the mutual fund finance
division of Mitchell Hutchins. Prior to 1991, he was an audit senior
manager with Ernst & Young LLP. Mr. Sluyters is also a vice president and
treasurer of 39 other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
GREGORY K. TODD, age 38, vice president and assistant secretary. Mr. Todd
is a first vice president and associate general counsel of Mitchell
Hutchins. Prior to 1993, he was a partner in the law firm of Shereff,
Friedman, Hoffman & Goodman. Mr. Todd is also a vice president and
assistant secretary of 39 other investment companies for which Mitchell
Hutchins or PaineWebber serves as investment adviser.
STUART WAUGH, age 39, vice president. Mr. Waugh is a managing director
and a portfolio manager of Mitchell Hutchins responsible for global fixed
income investments and currency trading. Mr. Waugh is also a vice president
of 5 other investment companies for which Mitchell Hutchins or PaineWebber
serves as investment adviser.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit proposals to be considered at GLI's 1996
annual meeting of shareholders (which will not be held if the Reorganization is
approved and GLI is liquidated) should send such proposals to GLI at 1285
Avenue of the Americas, New York, New York 10019, so as to be received by GLI
no later than January 26, 1996. Shareholder proposals that are submitted in a
timely manner will not necessarily be included in GLI's proxy materials.
Inclusion of such proposals is subject to limitations under the federal
securities laws.
OTHER BUSINESS
Management knows of no business to be presented to the meeting other than the
matters set forth in this proxy statement, but should any other matter
requiring a vote of shareholders arise, the proxies will vote thereon according
to their best judgment in the interest of GLI.
By Order of the Board of Directors,
Dianne E. O'Donnell
Secretary
April , 1995
----------------------------------------------------------------
IT IS IMPORTANT THAT YOU EXECUTE AND RETURN YOUR PROXY PROMPTLY.
----------------------------------------------------------------
28
<PAGE>
Exhibit 4
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION ("Agreement") is
made as of , 1995, between PaineWebber Investment Series, a Massachusetts
business trust ("Trust"), on behalf of its PaineWebber Global Income Fund
series ("Acquiring Fund"), and Global Income Plus Fund, Inc., a Maryland
corporation ("Target"). (Acquiring Fund and Target are sometimes referred to
herein individually as a "Fund" and collectively as the "Funds," and the Trust
and Target are sometimes referred to herein collectively as the "Investment
Companies.")
This Agreement is intended to be, and is adopted as, a plan of a
reorganization described in section 368(a)(1)(C) of the Internal Revenue Code
of 1986, as amended ("Code"). The reorganization will involve the transfer to
Acquiring Fund of Target's assets solely in exchange for voting shares of
beneficial interest, Class A, in Acquiring Fund ("Acquiring Fund Shares") and
the assumption by Acquiring Fund of Target's liabilities, followed by the
constructive distribution of the Acquiring Fund Shares to the holders of shares
of stock of Target ("Target Shares") in exchange therefor, all upon the terms
and conditions set forth herein. The foregoing transactions are referred to
herein as the "Reorganization." All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by Acquiring
Fund are made and shall be taken or undertaken by the Trust on its behalf.
Acquiring Fund's shares are divided into four classes, designated Class A,
Class B, Class C, and Class D shares; only the Class A shares are involved in
the Reorganization. Target has only a single class of outstanding shares.
In consideration of the mutual promises herein, the parties covenant and
agree as follows:
1. PLAN OF REORGANIZATION AND LIQUIDATION OF TARGET
1.1. Target agrees to assign, sell, convey, transfer, and deliver all of its
assets described in paragraph 1.2 ("Assets") to Acquiring Fund. Acquiring Fund
agrees in exchange therefor--
(a) to issue and deliver to Target the number of full and fractional
Acquiring Fund Shares determined by dividing the net value of Target
(computed as set forth in paragraph 2.1) by the net asset value (computed
as set forth in paragraph 2.2) ("NAV") of one Acquiring Fund Share; and
(b) to assume all of Target's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph
3.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Target's books, and other property owned by Target at the
Effective Time (as defined in paragraph 3.1).
A-1
<PAGE>
1.3. The Liabilities shall include (except as otherwise provided herein) all
of Target's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this Agreement.
Notwithstanding the foregoing, Target agrees to use its best efforts to
discharge all of its known Liabilities prior to the Effective Time.
1.4. At or before the Effective Time, Target shall declare and pay to its
stockholders a dividend and/or other distribution in an amount intended to be
large enough so that it will have distributed substantially all (and in any
event not less than 98%) of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall constructively distribute the Acquiring Fund Shares
received by it pursuant to paragraph 1.1 to Target's stockholders of record,
determined as of the Effective Time (collectively "Stockholders" and
individually a "Stockholder"), in exchange for their Target Shares. Such
distribution shall be accomplished by the Fund's transfer agent ("Transfer
Agent") opening accounts on Acquiring Fund's share transfer books in the
Stockholders' names and transferring such Acquiring Fund Shares thereto. Each
Stockholder's account shall be credited with the respective pro rata number of
full and fractional Acquiring Fund Shares due that Stockholder. All outstanding
Target Shares, including any represented by certificates, shall simultaneously
be canceled on Target's stock transfer records. Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares in connection with the
Reorganization.
1.6. As soon as reasonably practicable after distribution of the Acquiring
Fund Shares pursuant to paragraph 1.5, Target shall be liquidated and any
further actions shall be taken in connection therewith as required by
applicable law.
1.7. Any reporting responsibility of Target to a public authority is and
shall remain its responsibility up to and including the date on which it is
liquidated.
1.8. Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than that of the registered holder on Target's books of the Target
Shares constructively exchanged therefor shall be paid by the person to whom
such Acquiring Fund Shares are to be issued, as a condition of such transfer.
2. VALUATION
2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a) the
value of the Assets computed as of the close of regular trading on the New York
Stock Exchange, Inc. ("NYSE") on the date of the Closing ("Valuation Time"),
using the valuation procedures set forth in Target's then-current prospectus
and statement of additional information less (b) the amount of the Liabilities
as of the Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of an Acquiring Fund Share
shall be computed as of the Valuation Time, using the valuation procedures set
forth in Acquiring Fund's then-current prospectus and statement of additional
information.
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2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by or
under the direction of Mitchell Hutchins Asset Management Inc. in accordance
with its regular practice as administrator for the Funds.
3. CLOSING AND EFFECTIVE TIME
3.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the Funds' principal office on June 30,
1995, or at such other place and/or on such other date as the parties may
agree. All acts taking place at the Closing shall be deemed to take place
simultaneously as of the close of business on the date thereof or at such other
time as the parties may agree ("Effective Time"). If, immediately before the
Valuation Time, (a) the NYSE is closed to trading or trading thereon is
restricted or (b) trading or the reporting of trading on the NYSE or elsewhere
is disrupted, so that accurate appraisal of the net value of Target and the NAV
per Acquiring Fund Share is impracticable, the Effective Time shall be
postponed until the first business day after the day when such trading shall
have been fully resumed and such reporting shall have been restored.
3.2. Target shall deliver to the Trust at the Closing a schedule of the
Assets as of the Effective Time, which shall set forth for all portfolio
securities included therein their adjusted tax basis and holding period by lot.
The Investment Companies' custodian shall deliver at the Closing a certificate
of an authorized officer stating that (a) title to the Assets held by the
custodian will be transferred on its books from Target to Acquiring Fund at the
Effective Time and (b) all necessary taxes in conjunction with the delivery of
the Assets, including all applicable federal and state stock transfer stamps,
if any, have been paid or provision for payment has been made.
3.3. Target shall deliver to the Trust at the Closing a list of the names and
addresses of the Stockholders and the number of outstanding Target Shares owned
by each Stockholder, all as of the Effective Time, certified by the Secretary
or Assistant Secretary of Target. The Transfer Agent shall deliver at the
Closing a certificate as to the opening on Acquiring Fund's share transfer
books of accounts in the Stockholders' names. The Trust shall issue and deliver
a confirmation to Target evidencing the Acquiring Fund Shares to be credited to
Target at the Effective Time or provide evidence satisfactory to Target that
such Acquiring Fund Shares have been credited to Target's account on Acquiring
Fund's books. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, stock certificates, receipts, or other documents
as the other party or its counsel may reasonably request.
3.4. Target and the Trust each shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated as of the Effective Time,
to the effect that the representations and warranties it made in this Agreement
are true and correct at the Effective Time except as they may be affected by
the transactions contemplated by this Agreement and as to such other matters as
the recipient shall reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. Target represents and warrants as follows:
4.1.1. Target is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Maryland, and a copy of its
Articles of Incorporation is on file with the Department of Assessments and
Taxation of the State of Maryland;
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4.1.2. Target is duly registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"),
and such registration will be in full force and effect at the Effective
Time;
4.1.3. At the Closing, Target will have good and marketable title to the
Assets and full right, power, and authority to sell, assign, transfer, and
deliver the Assets free of any liens or other encumbrances; and upon
delivery and payment for the Assets, Acquiring Fund will acquire good and
marketable title thereto;
4.1.4. The Liabilities were incurred by Target in the ordinary course of
its business;
4.1.5. Target qualified for treatment as a regulated investment company
("RIC") under Subchapter M of the Code for each past taxable year since it
commenced operations and will continue to meet all the requirements for
such qualification for its current taxable year; and it has no earnings or
profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it. The Assets shall be invested at all times
through the Effective Time in a manner that ensures compliance with the
foregoing;
4.1.6. Target is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the meaning
of section 368(a)(3)(A) of the Code;
4.1.7. Not more than 25% of the value of Target's total assets (excluding
cash, cash items, and U.S. government securities) is invested in the stock
or securities of any one issuer, and not more than 50% of the value of such
assets is invested in the stock or securities of five or fewer issuers; and
4.1.8. Target will be liquidated as soon as reasonably practicable after
the Reorganization.
4.2. Acquiring Fund represents and warrants as follows:
4.2.1. The Trust is an unincorporated voluntary association organized as
a business trust; it is duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Massachusetts; and a copy of
its Declaration of Trust is on file with the Secretary of the Commonwealth
of Massachusetts;
4.2.2. The Trust is duly registered as an open-end management investment
company under the 1940 Act, and such registration will be in full force and
effect at the Effective Time;
4.2.3. Acquiring Fund is a duly established and designated series of the
Trust, established and designated by resolution of its trustees;
4.2.4. No consideration other than Acquiring Fund Shares (and Acquiring
Fund's assumption of the Liabilities) will be issued in exchange for the
Assets in the Reorganization;
4.2.5. The Acquiring Fund Shares to be issued and delivered to Target
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of Acquiring Fund, fully paid and non-assessable,
except to the extent that under Massachusetts law shareholders of an
unincorporated voluntary association organized as a business trust may,
under certain circumstances, be held personally liable for the
association's obligations. Except as contemplated by this Agreement,
Acquiring Fund does not have outstanding any options, warrants, or other
rights to subscribe for or purchase any of its shares, nor is there
outstanding any security convertible into any of its shares;
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4.2.6. Acquiring Fund is a "fund" as defined in section 851(h)(2) of the
Code; it qualified for treatment as a RIC under Subchapter M of the Code
for each past taxable year since it commenced operations and will continue
to meet all the requirements for such qualification for its current taxable
year; and it has no earnings or profits accumulated in any taxable year in
which the provisions of Subchapter M did not apply to it;
4.2.7. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares issued
in the ordinary course of its business as a series of an open-end
investment company; nor does Acquiring Fund have any plan or intention to
redeem or otherwise reacquire any Acquiring Fund Shares issued to the
Stockholders pursuant to the Reorganization, other than through redemptions
arising in the ordinary course of that business;
4.2.8. Acquiring Fund (a) will actively continue Target's business in
substantially the same manner that Target conducted that business
immediately before the Reorganization, (b) has no plan or intention to sell
or otherwise dispose of any of the Assets, except for dispositions made in
the ordinary course of that business and dispositions necessary to maintain
its status as a RIC under Subchapter M of the Code, and (c) expects to
retain substantially all the Assets in the same form as it receives them in
the Reorganization, unless and until subsequent investment circumstances
suggest the desirability of change or it becomes necessary to make
dispositions thereof to maintain such status;
4.2.9. There is no plan or intention for Acquiring Fund to be dissolved
or merged with another corporation or business trust or any "fund" thereof
(within the meaning of section 851(h)(2) of the Code) following the
Reorganization; and
4.2.10. Immediately after the Reorganization, (a) not more than 25% of
the value of Acquiring Fund's total assets (excluding cash, cash items, and
U.S. government securities) will be invested in the stock or securities of
any one issuer and (b) not more than 50% of the value of such assets will
be invested in the stock or securities of five or fewer issuers.
4.3. Each Fund represents and warrants as follows:
4.3.1. The fair market value of the Acquiring Fund Shares, when received
by the Stockholders, will be approximately equal to the fair market value
of their Target Shares constructively surrendered in exchange therefor;
4.3.2. Its management (a) is unaware of any plan or intention of
Stockholders to redeem or otherwise dispose of any portion of the Acquiring
Fund Shares to be received by them in the Reorganization and (b) does not
anticipate dispositions of those Acquiring Fund Shares at the time of or
soon after the Reorganization to exceed the usual rate and frequency of
dispositions of shares of Acquiring Fund as a series of an open-end
investment company. Consequently, its management expects that the
percentage of Stockholder interests, if any, that will be disposed of as a
result of or at the time of the Reorganization will be de minimis. Nor does
its management anticipate that there will be extraordinary redemptions of
Acquiring Fund Shares immediately following the Reorganization;
4.3.3. The Stockholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
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4.3.4. Immediately following consummation of the Reorganization,
Acquiring Fund will hold substantially the same assets and be subject to
substantially the same liabilities that Target held or was subject to
immediately prior thereto, plus any liabilities and expenses of the parties
incurred in connection with the Reorganization;
4.3.5. The fair market value on a going concern basis of the Assets will
equal or exceed the Liabilities to be assumed by Acquiring Fund and those
to which the Assets are subject;
4.3.6. There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount; and
4.3.7. Pursuant to the Reorganization, Target will transfer to Acquiring
Fund, and Acquiring Fund will acquire, at least 90% of the fair market
value of the net assets, and at least 70% of the fair market value of the
gross assets, held by Target immediately before the Reorganization. For the
purposes of this representation, any amounts used by Target to pay its
Reorganization expenses and redemptions and distributions made by it
immediately before the Reorganization (except those occurring in the
ordinary course of its business) will be included as assets thereof held
immediately before the Reorganization.
5. COVENANTS
5.1. Each Fund covenants to operate its respective business in the ordinary
course between the date hereof and the Effective Time, it being understood that
such ordinary course will include declaring and paying customary dividends and
other distributions and such changes in operations as are contemplated by each
Fund's normal operations.
5.2. Target covenants to call a stockholders' meeting to consider and act
upon this Agreement and to take all other action necessary to obtain approval
of the transactions contemplated hereby.
5.3. Target covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
5.4. Target covenants that it will assist the Trust in obtaining such
information as the Trust reasonably requests concerning the beneficial
ownership of Target Shares.
5.5. Target covenants that its books and records, including all books and
records required to be maintained under the 1940 Act and the rules and
regulations thereunder, shall be available to the Trust from and after the
Effective Time and shall be turned over to the Trust at or prior thereto.
5.6. Each Fund covenants to prepare the joint Prospectus/Proxy Statement--to
be included in the registration statement to be filed with the Securities and
Exchange Commission ("SEC") by the Trust on Form N-14 relating to the Acquiring
Fund Shares issuable hereunder, and any supplement or amendment thereto
("Registration Statement")--in compliance with applicable federal securities
laws.
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other Fund, execute and deliver or cause to be executed and
delivered all such assignments and other instruments, and will take or cause to
be taken such further action, as the other Fund may deem
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necessary or desirable in order to vest in, and confirm to, (a) Acquiring Fund,
title to and possession of all the Assets, and (b) Target, title to and
possession of the Acquiring Fund Shares to be delivered hereunder, and
otherwise to carry out the intent and purpose hereof.
5.8. The Trust covenants to use all reasonable efforts to obtain the
approvals and authorizations required by the Securities Act of 1933 ("1933
Act"), the 1940 Act, and such state securities laws it may deem appropriate in
order to continue its operations after the Effective Time.
5.9. Subject to this Agreement, each Fund covenants to take or cause to be
taken all actions, and to do or cause to be done all things, reasonably
necessary, proper, or advisable to consummate and effectuate the transactions
contemplated hereby.
6. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance by the
other Fund of all the obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made at
and as of the Effective Time, and (c) the following further conditions that, at
or before the Effective Time:
6.1. This Agreement and the transactions contemplated hereby shall have been
duly adopted and approved by Target's board of directors and shall have been
approved by its stockholders in accordance with applicable law.
6.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. The Registration Statement shall have become
effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued, and the SEC shall not have issued an
unfavorable report with respect to the Reorganization under section 25(b) of
the 1940 Act nor instituted any proceedings seeking to enjoin consummation of
the transactions contemplated hereby under section 25(c) of the 1940 Act. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Fund to permit consummation, in all material respects, of
the transactions contemplated hereby shall have been obtained, except where
failure to obtain same would not involve a risk of a material adverse effect on
the assets or properties of either Fund, provided that either Fund may for
itself waive any of such conditions.
6.3. At the Effective Time, no action, suit, or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or to obtain damages or other relief in connection with,
the transactions contemplated hereby.
6.4. Target shall have received at or before the Effective Time an opinion of
Kirkpatrick & Lockhart, counsel to the Trust, substantially to the effect that:
6.4.1. Acquiring Fund is a series of the Trust, an unincorporated
voluntary association duly organized and validly existing under the laws of
the Commonwealth of Massachusetts with power under its Declaration of Trust
to own all of its properties and assets and, to the knowledge of such
counsel, to carry on its business as presently conducted;
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6.4.2. This Agreement has been duly authorized, executed, and delivered
by Acquiring Fund and, assuming due authorization, execution, and delivery
of this Agreement by Target, is a valid and binding obligation of Acquiring
Fund;
6.4.3. The Acquiring Fund Shares to be distributed to the Stockholders
under this Agreement, assuming their due authorization and delivery as
contemplated by this Agreement, will be validly issued and outstanding and
fully paid and non-assessable, except as set forth in paragraph 4.2.5, and
no shareholder of Acquiring Fund has any preemptive right to subscribe
thereto or purchase such shares;
6.4.4. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, conflict
with the Trust's Declaration of Trust or By-Laws or any provision of any
agreement (known to such counsel) to which Acquiring Fund is a party or by
which it is bound or, to the knowledge of such counsel, result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, judgment, or decree to which Acquiring Fund is a party or by
which it is bound;
6.4.5. To the knowledge of such counsel, no consent, approval,
authorization, or order of any court or governmental authority is required
for the consummation by Acquiring Fund of the transactions contemplated
herein, except such as have been obtained under the 1933 Act, the
Securities Exchange Act of 1934, as amended ("1934 Act"), and the 1940 Act
and such as may be required under state securities laws;
6.4.6. The Trust has been registered with the SEC as an investment
company, and to the knowledge of such counsel no order has been issued or
proceeding instituted to suspend such registration; and
6.4.7. To the knowledge of such counsel, (a) no litigation,
administrative proceeding, or investigation of or before any court or
governmental body is pending or threatened as to Acquiring Fund or any of
its properties or assets and (b) Acquiring Fund is not a party to or
subject to the provisions of any order, decree, or judgment of any court or
governmental body that materially and adversely affects its business,
except as otherwise disclosed.
6.5. The Trust shall have received at or before the Effective Time an opinion
of Kirkpatrick & Lockhart, counsel to Target, substantially to the effect that:
6.5.1. Target is a corporation duly organized and validly existing under
the laws of the State of Maryland with power under its Articles of
Incorporation to own all of its properties and assets and, to the knowledge
of such counsel, to carry on its business as presently conducted;
6.5.2. This Agreement has been duly authorized, executed, and delivered
by Target and, assuming due authorization, execution, and delivery of this
Agreement by Acquiring Fund, is a valid and binding obligation of Target;
6.5.3. The execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, conflict
with Target's Articles of Incorporation or By-Laws or any provision of any
agreement (known to such counsel) to which Target is a party or by which it
is bound or, to the knowledge of such counsel, result in the acceleration
of any obligation, or the imposition of any penalty, under any agreement,
judgment, or decree to which Target is a party or by which it is bound;
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6.5.4. To the knowledge of such counsel, no consent, approval,
authorization, or order of any court or governmental authority is required
for the consummation by Target of the transactions contemplated herein,
except such as have been obtained under the 1933 Act, the 1934 Act, and the
1940 Act and such as may be required under state securities laws;
6.5.5. Target has been registered with the SEC as an investment company,
and, to the knowledge of such counsel, no order has been issued or
proceeding instituted to suspend such registration; and
6.5.6. To the knowledge of such counsel, (a) no litigation,
administrative proceeding, or investigation of or before any court or
governmental body is pending or threatened as to Target or any of its
properties or assets, and (b) Target is not a party to or subject to the
provisions of any order, decree, or judgment of any court or governmental
body that materially and adversely affects its business, except as
otherwise disclosed.
6.6. Each Fund shall have received at or before the Effective Time an
opinion of Kirkpatrick & Lockhart, counsel to each Fund, substantially to the
effect that for federal income tax purposes:
6.6.1. Acquiring Fund's acquisition of the Assets in exchange solely for
Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities,
followed by Target's distribution of those shares to the Stockholders
constructively in exchange for the Stockholders' Target Shares, will
constitute a reorganization within the meaning of section 368(a)(1)(C) of
the Code, and each Fund will be "a party to a reorganization" within the
meaning of section 368(b) of the Code;
6.6.2. No gain or loss will be recognized to Target on the transfer to
Acquiring Fund of the Assets (except, possibly, with respect to certain
options, futures, and forward contracts included in the Assets
(collectively "Contracts")) in exchange solely for Acquiring Fund Shares
and Acquiring Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Stockholders in constructive exchange
for their Target Shares;
6.6.3. No gain or loss will be recognized to Acquiring Fund on its
receipt of the Assets in exchange solely for Acquiring Fund Shares and its
assumption of the Liabilities;
6.6.4. Acquiring Fund's basis for the Assets (with the possible exception
of the Contracts) will be the same as the basis thereof in Target's hands
immediately before the Reorganization, and Acquiring Fund's holding period
for the Assets (with the possible exception of the Contracts) will include
Target's holding period therefor;
6.6.5. A Stockholder will recognize no gain or loss on the constructive
exchange of all its Target Shares solely for Acquiring Fund Shares pursuant
to the Reorganization; and
6.6.6. A Stockholder's basis for the Acquiring Fund Shares to be received
by it in the Reorganization will be the same as the basis for its Target
Shares to be constructively surrendered in exchange for those Acquiring
Fund Shares, and its holding period for those Acquiring Fund Shares will
include its holding period for those Target Shares, provided they are held
as capital assets by the Stockholder at the Effective Time.
At any time before the Closing, (a) Acquiring Fund may waive any of the
foregoing conditions if, in the judgment of the Trust's board of trustees,
such waiver will not have a material adverse effect on its shareholders'
interests, and (b) Target may waive any of the foregoing conditions if, in the
judgment of its board of directors, such waiver will not have a material
adverse effect on the Stockholder's interests.
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7. ENTIRE AGREEMENT; SURVIVAL
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall survive
the Closing.
8. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Target's stockholders:
8.1. By either Fund (a) in the event of the other Fund's material breach of
any representation, warranty, or covenant contained herein to be performed at
or prior to the Effective Time, (b) if a condition to its obligations has not
been met and it reasonably appears that such condition will not or cannot be
met, or (c) if the Closing has not occurred on or before December 31, 1995; or
8.2. By the parties' mutual agreement.
In the event of termination under paragraphs 8.1.(c) or 8.2, there shall be
no liability for damages on the part of either Fund, its officers, or the
members of Target's board of directors or the Trust's board of trustees, to the
other Fund.
9. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target's stockholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Stockholders' interests.
10. MISCELLANEOUS
10.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
10.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies
under or by reason of this Agreement.
10.3. The parties recognize that the Trust is a business trust. Notice is
hereby given that this instrument is executed on behalf of the Trust's trustees
solely in their capacity as trustees, and not individually, and that the
Trust's obligations under this instrument are not binding on or enforceable
against any of its trustees, officers, or shareholders, but are only binding on
and enforceable against Acquiring Fund's assets and property. Target agrees
that, in asserting any rights or claims under this Agreement, it shall look
only to Acquiring Fund's assets and property in settlement of such rights or
claims and not to such trustees or shareholders.
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed by
its duly authorized officer.
ATTEST: PAINEWEBBER INVESTMENT SERIES, on
behalf of its series, PAINEWEBBER
GLOBAL INCOME FUND
By: _________________________________ ______________________________________
Secretary Vice President
ATTEST: GLOBAL INCOME PLUS FUND, INC.
By: _________________________________ ______________________________________
Secretary Vice President
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- --------------------------
GLOBAL INCOME
PLUS FUND, INC.
- --------------------------
PROXY STATEMENT ----------------------------------
GLOBAL INCOME
PLUS FUND, INC.
----------------------------------
---------------------
NOTICE OF
ANNUAL MEETING
TO BE HELD ON
MAY 25, 1995
AND
PROXY STATEMENT
---------------------
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
(a series of PaineWebber Investment Series)
PAINEWEBBER GLOBAL INCOME PLUS FUND, INC.
1285 Avenue of the Americas
New York, New York 10019
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information relates specifically to the
proposed Reorganization whereby PaineWebber Global Income Fund ("Income Fund")
would acquire the assets of PaineWebber Global Income Plus Fund, Inc. ("GLI") in
exchange solely for Class A shares of common stock in Income Fund and the
assumption by Income Fund of GLI's liabilities. This Statement of Additional
Information consists of this cover page and the following described documents,
each of which is incorporated by reference herein:
(1) The Statement of Additional Information of PaineWebber Global Income
Fund dated March 1, 1995, incorporated by reference from File No. 33-
11025, filed March 1, 1995 (pursuant to the Securities Act of 1933
and Rule 485(a) of Regulation C thereunder) on Form N1-A.
(2) The Statement of Additional Information of Global Income Plus Fund,
Inc., dated March 1, 1995, incorporated by reference from File No. 33-
58946 filed March 8, 1995 (pursuant to Rule 497 of the Securities Act
of 1933).
(3) The Financial Statements of PaineWebber Global Income Fund for the
fiscal year ended October 31, 1994, incorporated by reference from
File No. 33-11025, filed February 28, 1995 pursuant to the Securities
Act of 1933 and Rule 485(a) of Regulation C thereunder) on Form N1-A.
(4) Pro forma financial statements.
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the prospectus/proxy statement dated April __,
1995 relating to the above-referenced matter. A copy of the prospectus/proxy
statement may be obtained by calling any PaineWebber investment executive or
correspondent firm or by calling toll-free 1-800-852-4750. This Statement of
Additional Information is dated April __, 1995.
<PAGE>
Pro Forma Combined
Statement of Assets and Liabilities
October 31, 1994
<TABLE>
<CAPTION>
Global Global Income Pro Forma
Income Fund Plus Fund, Inc. Combined
-------------- --------------- --------------
<S> <C> <C> <C>
Investments in securities, at value (cost-$1,367,376,407
$211,307,063 and $1,578,683,470, respectively) $1,332,558,781 $206,927,209 $1,539,485,990
Other assets 229,001,072 41,036,713 270,037,785
-------------- ------------ --------------
Total assets 1,561,559,853 247,963,922 1,809,523,775
-------------- ------------ --------------
Total liabilities 118,696,097 19,297,697 137,993,794
-------------- ------------ --------------
Beneficial interest shares of $0.001 par value, 144,667,902 shares outstanding
(unlimited amount authorized); Capital stock, $0.001 par value
(total authorized 100,000,000 shares), 26,096,317 shares issued and
outstanding; Beneficial interest shares of $0.001 par value, 167,557,414
shares outstanding (unlimited amount authorized). 144,668 26,096 167,557
Paid-in surplus 1,512,336,722 236,197,803 1,748,537,732
Distributions in excess of net investment income (10,012,056) (1,500,681) (11,512,737)
Accumulated net realized losses from investments,
other assets, liabilities and forward contracts denominated in foreign
currencies (15,074,431) (64,708) (15,139,139)
Net unrealized appreciation/depreciation of investments , other
assets, liabilities and forward contracts denominated in foreign currencies (44,531,147) (5,992,285) (50,523,432)
-------------- ------------ --------------
Net assets $1,442,863,756 $228,666,225 $1,671,529,981
============== ============ ==============
Class A:
Net assets $611,855,127 $228,666,225 $840,521,352
-------------- ------------ --------------
Shares outstanding 61,273,875 26,096,317 84,163,387
-------------- ------------ --------------
Net asset and redemption value per share $9.99 $8.76 $9.99
============== ============ ==============
Maximum offering price per share (net asset value plus sales
charge of 4.00% , 0% and 4.00% respectively, of offering price) $10.41 N/A $10.41
============== ============ ==============
Class B:
Net assets $725,553,075 $725,553,075
-------------- --------------
Shares outstanding 72,827,577 72,827,577
-------------- --------------
Net asset value and offering price per share $9.96 $9.96
============== ==============
Class C:
Net assets $12,975,182 $12,975,182
-------------- --------------
Shares outstanding 1,298,635 1,298,635
-------------- --------------
Net asset value, offering price and redemption value per share $9.99 $9.99
============== ==============
Class D:
Net assets $92,480,372 $92,480,372
-------------- --------------
Shares outstanding 9,267,815 9,267,815
-------------- --------------
Net asset value, offering price and redemption value per share $9.98 $9.98
============== ==============
</TABLE>
See Notes to Pro Forma Combined Financial Statements
<PAGE>
Pro Forma Combined
Statement of Operations
For the Year Ended October 31, 1994
<TABLE>
<CAPTION>
Global Global Income Pro Forma
Income Fund Plus Fund, Inc. Adjustments Combined
------------ --------------- ----------- ------------
<S> <C> <C> <C> <C>
Investment Income
Interest $142,626,149 $20,550,291 $0 $163,176,440
------------ ----------- --------- ------------
Expenses
Investment advisory and administration fees 12,723,592 2,056,155 (426,715) 14,353,032
Distribution fees - Class A 1,664,223 0 604,751 2,268,974
Distribution fees - Class B 9,741,334 0 0 9,741,334
Distribution fees - Class D 905,849 0 0 905,849
Transfer agency and service fees 1,328,234 59,201 10,313 1,397,748
Legal and audit fees 167,681 91,228 (71,909) 187,000
Other 2,308,592 465,418 (234,482) 2,539,528
------------ ----------- --------- ------------
28,839,505 2,672,002 (118,042) 31,393,465
------------ ----------- --------- ------------
Net investment income 113,786,644 17,878,289 118,042 131,782,975
------------ ----------- --------- ------------
Realized and unrealized gains(losses) from
investment activities:
Net realized gains(losses) from:
Investment transactions (17,079,241) 953,493 0 (16,125,748)
Foreign currency transactions (59,719,415) (8,562,455) 0 (68,281,870)
Net change in unrealized appreciation/depreciation of:
Investments (90,644,293) (14,651,040) 0 (105,295,333)
Other assets , liabilities and forward contracts denominated
in foreign currencies (15,050,480) (1,693,860) 0 (16,744,340)
------------ ----------- --------- ------------
Net realized and unrealized losses from investment
activities (182,493,429) (23,953,862) 0 (206,447,291)
------------ ----------- --------- ------------
Net decrease in net assets resulting from operations ($68,706,785) ($6,075,573) $118,042 ($74,664,316)
============ =========== ========= ============
</TABLE>
See Notes to Pro Forma Combined Financial Statements
<PAGE>
Pro Forma Capitalization
as of October 31, 1994
<TABLE>
<CAPTION>
Income Income
Fund GLI Fund -
(Actual) (Actual) (As Adjusted) (1)
-------------- ------------ -----------------
<S> <C> <C> <C>
Shareholders' Equity:
Beneficial interest shares of $0.001 par value outstanding
(unlimited amount authorized); Capital stock, $0.001 par value
(total authorized 100,000,000 shares); Beneficial interest shares
of $0.001 par value outstanding (unlimited amount authorized).
144,667,902 shares outstanding for Income Fund (Actual)
26,096,317 shares outstanding for GLI (Actual)
167,557,414 shares outstanding for Income Fund (As Adjusted) 144,668 26,096 167,557 (2)
Paid-in surplus........................................................... 1,512,336,722 236,197,803 1,748,537,732 (3)
Distributions in excess of net investment income.......................... (10,012,056) (1,500,681) (11,512,737)
Net realized losses from investment transactions.......................... (15,074,431) (64,708) (15,139,139)(4)
Net unrealized appreciation/depreciation of investments................... (44,531,147) (5,992,285) (50,523,432)
-------------- ------------ --------------
Net Assets $1,442,863,756 $228,666,225 $1,671,529,981
============== ============ ==============
</TABLE>
(1) The adjusted balances are presented as if the Reorganization involving both
Funds was effective as of October 31, 1994, for information purposes only.
The actual effective time of the Reorganization is expected to be June 30,
1995, at which time results would be reflective of the actual composition of
shareholders' equity at that date.
(2) Assumes the issuance of 22,889,512 Income Fund Class A shares in exchange
for the net assets applicable to common stockholders of GLI, which is based
on the net asset value per Class A share of Income Fund, and the net
assets applicable to common stockholders of GLI as of October 31, 1994,
after adjustment for the distributions referred to in (4) below. The
issuance of such number of Income Fund common shares would result in the
distribution of 0.877 shares for each common share of GLI upon liquidation
of GLI.
(3) Does not include the impact of estimated Reorganization costs of $250,000.
(4) Assumes GLI's net realized losses from investment transactions carry forward
into Income Fund.
<PAGE>
GLI & Income Fund
- --------------------------------------------------------------------------------
Portfolio of Investments
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Principal
Amount Amount
(000)* (000)* Maturity Interest
GLI Income Fund Dates Rates
- ---------------------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
LONG-TERM DEBT SECURITIES-
Australia-
12,278 66,951 New South Wales Treasury Corp. Exchange 07/01/99 to 12/01/01 11.500 to 12.000 %
7,200 60,670 Queensland Treasury Corp. Global Issue 08/15/01 to 05/15/03 10.500 to 12.000
Canada-
- 10,000 Bell Canada 05/21/96 9.875
3,356 36,320 Government of Canada 06/01/08 to 06/01/21 9.750 to 10.000
2,500 10,000 Hydro Quebec 05/15/03 10.250
11,671 72,013 Ontario Hydro Global Bonds 04/11/07 to 04/11/11 10.502 to 10.551 @
6,155 34,445 Ontario Hydro Global Bonds 02/06/02 8.625
5,111 31,914 Province of British Columbia Residual Bonds 01/09/12 9.061 to 9.115 @
- 10,100 Province of Ontario 05/01/96 10.750
Colombia-
- US$ 6,500 Republic of Colombia 05/11/98 7.125
Denmark-
85,930 564,690 Government of Denmark 11/15/96 to 11/15/00 9.000
Finland-
33,000 89,000 Republic of Finland Housing Bond 03/15/02 10.750
France-
37,050 311,500 Government of France 04/25/03 to 10/25/19 8.500
Germany-
26,370 156,180 Federal Republic of Germany 01/22/96 to 01/04/24 6.250 to 8.875
- 15,000 Republic of Germany Unity Bond 01/21/02 8.000
Greece-
- GBP 10,000 Bank of Greece 06/30/03 9.750
</TABLE>
<TABLE>
<CAPTION>
GLI Income Fund Combined
Value Value Value
------------------------------------------------
<S> <C> <C> <C>
84.23% 74.34% 75.69%
Australia- 6.67% 6.93% 6.90%
$9,657,128 $52,784,657 $62,441,785
5,595,082 47,228,559 52,823,641
------------------------------------------------
15,252,210 100,013,216 115,265,426
------------------------------------------------
Canada- 5.18% 6.52% 6.33%
- 7,593,065 7,593,065
2,615,676 28,224,344 30,840,020
1,875,162 7,500,647 9,375,809
2,230,834 13,764,689 15,995,523
4,403,677 24,644,136 29,047,813
723,638 4,518,525 5,242,163
- 7,782,500 7,782,500
------------------------------------------------
11,848,987 94,027,906 105,876,893
------------------------------------------------
Colombia- 0.00% 0.43% 0.37%
- 6,158,750 6,158,750
------------------------------------------------
Denmark- 6.44% 6.70% 6.67%
14,717,661 96,725,781 111,443,442
------------------------------------------------
Finland- 3.25% 1.39% 1.65%
7,442,398 20,071,921 27,514,319
------------------------------------------------
France- 3.14% 4.20% 4.05%
7,176,878 60,579,208 67,756,086
------------------------------------------------
Germany- 7.63% 7.79% 7.77%
17,436,371 102,267,704 119,704,075
- 10,182,507 10,182,507
------------------------------------------------
17,436,371 112,450,211 129,886,582
------------------------------------------------
Greece- 0.00% 1.02% 0.88%
- 14,684,339 14,684,339
------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Principal
Amount Amount
(000)* (000)* Maturity Interest
GLI Income Fund Dates Rates
- ---------------------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Hungary-
- US$ 38,000 National Bank of Hungary 11/01/03 to 11/01/13 7.950 to 8.375 %
Ireland-
5,300 23,960 Republic of Ireland 11/15/97 to 07/15/01 9.000 to 11.500
Mexico-
US$ 1,000 - Grupo Embotellador de Mexico, S.A. de C.V. 11/19/97 10.750
US$ 6,000 - Petroleos Mexicanos 12/01/23 8.625
New Zealand-
6,020 39,230 Government of New Zealand 07/15/97 10.000
2,020 14,230 International Bank for Reconstruction
& Development (1) 07/25/97 12.500
Philippines-
US$ 5,000 US$ 10,000 Republic of Philippines 02/23/96 to 12/01/17 5.250 + to 7.875
Spain-
3,023,860 19,186,330 Government of Spain 04/15/96 to 08/30/03 10.900 to 13.450
Sweden-
41,200 279,900 Government of Sweden 06/15/01 13.000
Turkey-
US$ 9,000 US$ 17,000 Republic of Turkey 08/06/97 to 06/15/99 8.125 to 9.000
United Kingdom-
- 27,500 Government of United Kingdom Exchequer 05/15/96 13.250
9,508 25,268 United Kingdom Gilt 01/22/97 to 06/10/03 8.000 to 13.250
United States-
2,000 - American Life Holdings 09/15/04 11.250
2,000 - Chancellor Broadcasting 10/01/04 12.500
- 18,000 Chase Manhattan 12/01/97 7.500 %
</TABLE>
<TABLE>
<CAPTION>
GLI Income Fund Combined
Value Value Value
------------------------------------------------
<S> <C> <C> <C>
Hungary- 0.00% 2.08% 1.79%
- 29,994,000 29,994,000
------------------------------------------------
Ireland- 3.76% 2.75% 2.89%
8,604,021 39,746,058 48,350,079
------------------------------------------------
Mexico- 2.53% 0.00% 0.35%
1,036,250 - 1,036,250
4,740,000 - 4,740,000
------------------------------------------------
5,776,250 0 5,776,250
------------------------------------------------
New Zealand- 2.25% 2.38% 2.37%
3,802,575 24,779,905 28,582,480
1,345,884 9,481,149 10,827,033
------------------------------------------------
5,148,459 34,261,054 39,409,513
------------------------------------------------
Philippines- 1.35% 0.70% 0.79%
3,081,250 10,075,000 13,156,250
------------------------------------------------
Spain- 10.89% 10.87% 10.87%
24,905,207 156,769,995 181,675,202
------------------------------------------------
Sweden- 2.77% 2.99% 2.96%
6,345,178 43,107,167 49,452,345
------------------------------------------------
Turkey- 3.44% 1.11% 1.43%
7,875,000 16,022,500 23,897,500
------------------------------------------------
United Kingdom- 7.07% 6.75% 6.80%
- 48,685,941 48,685,941
16,160,696 48,749,536 64,910,232
------------------------------------------------
16,160,696 97,435,477 113,596,173
------------------------------------------------
United States- 16.07% 9.73% 10.60%
2,000,000 - 2,000,000
2,000,000 - 2,000,000
- 17,946,054 17,946,054
</TABLE>
<PAGE>
GLI & Income Fund
- --------------------------------------------------------------------------------
Portfolio of Investments
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Principal
Amount Amount
(000)* (000)* Maturity Interest
GLI Income Fund Dates Rates
- ---------------------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
- 16,000 Clorox Corporation 07/15/01 8.800
2,000 - Color Tile Inc. 12/15/01 10.750
2,000 - Continental Cablevision 09/15/05 8.875
2,000 - County Seat Holdings 10/01/01 12.000
- 15,000 Ford Motor Credit Corp. 07/01/01 9.500
- 50,000 General Motors Acceptance Corp. MTN 07/15/96 to 04/30/97 7.950 to 8.625
2,500 - K-III Communications 05/01/02 10.625
2,000 - Kloster Cruise LTD 05/01/03 13.000
2,000 - Owens Illionois 04/01/99 10.250
2,000 - Pamida Inc. 03/15/03 11.750
3,000 - Penn Traffic 04/15/05 9.625
2,500 - Petroleos PSC Properties, L.P. (3) 06/01/02 12.500
2,000 - Plitt Theaters Inc. 06/15/04 10.875
2,500 - Reeves Industries 07/15/02 11.000
2,000 - Reliance Group Holdings 11/15/00 9.000
1,450 - Rohr Inc. 05/15/03 11.625
- 5,000 San Diego Gas & Electric Co. 04/15/20 9.625
2,000 - Specialty Equipment Inc. 12/01/03 11.375
2,000 - Stone Contianer Corp. First Management 10/01/02 10.750
2,000 - Transtexas Gas Corp. 09/01/00 10.500
- 34,000 U.S. Treasury Notes 01/31/96 to 11/30/96 6.500 to 7.500
Venezuela-
US$ 4,800 - Bariven Petroleos de Venezuela, S. A. 03/17/02 10.625
Total Long-Term Debt Securities (cost-$1,304,872,414)
SHORT-TERM DEBT SECURITIES-
Australia-
1,500 13,200 New South Wales Treasury Corp. 04/01/95 12.100
Finland-
- 90,000 Republic of Finland 06/15/95 11.000
United States-
</TABLE>
<TABLE>
<CAPTION>
GLI Income Fund Combined
Value Value Value
------------------------------------------------
<S> <C> <C> <C>
- 16,580,192 16,580,192
1,795,000 - 1,795,000
1,790,000 - 1,790,000
1,965,000 - 1,965,000
- 15,920,430 15,920,430
- 50,860,655 50,860,655
2,500,000 - 2,500,000
1,930,000 - 1,930,000
2,020,000 - 2,020,000
1,970,000 - 1,970,000
2,685,000 - 2,685,000
2,450,000 - 2,450,000
1,960,000 - 1,960,000
2,500,000 - 2,500,000
1,840,000 - 1,840,000
1,464,500 - 1,464,500
- 5,230,885 5,230,885
1,970,800 - 1,970,800
1,975,000 - 1,975,000
1,927,500 - 1,927,500
- 33,905,156 33,905,156
------------------------------------------------
36,742,800 140,443,372 177,186,172
------------------------------------------------
Venezuela- 1.79% 0.00% 0.24%
4,086,000 - 4,086,000
------------------------------------------------
Total Long-Term Debt Securities
(cost-$1,304,872,414) 192,599,366 1,072,565,955 1,265,165,321
------------------------------------------------
SHORT-TERM DEBT SECURITIES- 3.55% 5.71% 5.42%
Australia- 0.50% 0.69% 0.67%
1,135,053 9,988,466 11,123,519
------------------------------------------------
Finland- 0.00% 1.39% 1.20%
- 20,020,310 20,020,310
------------------------------------------------
United States- 3.05% 3.46% 3.41%
</TABLE>
<PAGE>
GLI & Income Fund
- --------------------------------------------------------------------------------
Portfolio of Investments
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Principal
Amount Amount
(000)* (000)* Maturity Interest
GLI Income Fund Dates Rates
- ---------------------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
7,000 50,000 U.S. Treasury Bills 11/10/94 to 11/17/94 4.500 to 4.675 %@
Uruguay-
- US$ 2,500 Republic of Uruguay 06/08/95 8.250
Total Short-Term Debt Securities (cost-$89,775,056)
INDEXED SECURITY-
Japan-
- US$ 19,000 Rabobank Nederland Japanese Yen Linked CD
(cost-$19,000,000) 02/02/95 15.400 (2)
REPURCHASE AGREEMENTS-
- 40,000 Repurchase Agreement dated 10/31/94, with
Citicorp Securities Inc, collateralized by
$41,590,000 U.S. Treasury Notes, 6.375%
due 01/15/99; proceeds: $40,005,300 11/01/94 4.770
6,207 28,829 Repurchase Agreement dated 10/31/94, with Daiwa
Securities (America), Inc., collateralized by
$37,670,000 U.S. Treasury Bonds, 9.125% and
7.250% due 05/15/09 and 08/15/22 respectively;
proceeds: $35,040,623 11/01/94 4.750
- 45,000 Repurchase Agreement dated 10/31/94, with First
Chicago Capital Markets, Inc., collateralized
by $46,580,000 U.S. Treasury Notes, 5.125% due
03/31/96; proceeds: $45,005,963 11/01/94 4.770
- 45,000 Repurchase Agreement dated 10/31/94, with
Yamaichi, International (America) Inc.
collateralized by $47,135,000 U.S. Treasury
Bonds 7.500% due 11/15/16;
proceeds: $45,005,963 11/01/94 4.770
Total Repurchase Agreements (cost-$165,036,000)
Total Investments (cost-$-1,578,683,470) 92.10%
Other assets in excess of liabilities- 7.90%
Net Assets - 100.00%
</TABLE>
<TABLE>
<CAPTION>
GLI Income Fund Combined
Value Value Value
------------------------------------------------
<S> <C> <C> <C>
6,985,790 49,939,500 56,925,290
------------------------------------------------
Uruguay- 0.00% 0.17% 0.15%
- 2,506,250 2,506,250
------------------------------------------------
Total Short-Term Debt Securities
(cost-$89,775,056) 8,120,843 82,454,526 90,575,369
------------------------------------------------
INDEXED SECURITY- 0.00% 1.30% 1.12%
Japan- 0.00% 1.30% 1.12%
- 18,709,300 18,709,300
------------------------------------------------
REPURCHASE AGREEMENTS- 2.71% 11.01% 9.87%
- 40,000,000 40,000,000
6,207,000 28,829,000 35,036,000
- 45,000,000 45,000,000
- 45,000,000 45,000,000
------------------------------------------------
Total Repurchase Agreements
(cost-$165,036,000) 6,207,000 158,829,000 165,036,000
------------------------------------------------
Total Investments
(cost-$-1,578,683,470) 206,927,209 1,332,558,781 1,539,485,990
Other assets in excess of
liabilities- 21,739,016 110,304,975 132,043,991
------------------------------------------------
Net Assets - $228,666,225 $1,442,863,756 $1,671,529,981
================================================
</TABLE>
____________________
Note: The Portfolio of Investments is listed by the issuer's country of origin.
<PAGE>
Note: The Portfolio of Investments is listed by the issuer's country of origin.
* In local currency unless otherwise indicated.
@ Yield to maturity for zero coupon bonds.
MTN - Medium term note.
(1) This security is not a New Zealand issue. It is a "Supernational" security
issued in New Zealand Currency by World Bank which is comprised of membership
from many countries.
(2) The yield is not guaranteed. Only if certain economic conditions exist on
the maturity date will the Fund receive the yield as stated.
(3) With an additional 2,500,000 warrants attached expiring 06/01/97.
+ Reflects rate at October 31, 1994 on step coupon rate instrument.
FORWARD FOREIGN CURRENCY CONTRACTS - (GLI and Income Fund Combined)
<TABLE>
<CAPTION>
Unrealized
Contract to In Exchange Maturity Appreciation
Deliver for Dates (Depreciation)
-------------- --------------------------------------------- ---------------
<S> <C> <C> <C> <C>
Australian Dollars 38,933,223 US$ 28,709,359 02/03/95 ($151,572)
Belgian Francs 985,000,000 US$ 30,251,843 11/08/94 (1,597,321)
Belgian Francs 1,656,800,000 US$ 50,496,800 11/18/94 (3,030,770)
Belgian Francs 853,000,000 US$ 27,815,148 01/27/95 213,731
British Pounds 32,510,000 US$ 53,225,372 01/30/95 113,143
British Pounds 31,400,000 US$ 51,367,260 01/31/95 62,130
Danish Kronas 168,167,120 US$ 28,541,602 01/23/95 37,263
Finnish Markkas 131,163,975 US$ 25,946,283 11/07/94 (2,495,347)
Finnish Markkas 102,214,120 US$ 18,326,153 03/27/95 (3,809,723)
Greek Drachmas 27,790,983,091 US$ 114,843,650 01/26/95 to 02/24/95 (801,859)
Irish Punts 13,201,024 US$ 20,461,587 11/17/94 (748,770)
Spanish Pesetas 21,238,983,014 US$ 168,174,064 11/17/94 to 01/27/95 (1,058,924)
Spanish Pesetas 4,805,700,000 US$ 36,781,741 11/17/94 (1,549,670)
Spanish Pesetas 2,757,521,125 US$ 21,925,110 01/26/95 19,679
U.S. Dollars 30,220,861 Bfr 985,000,000 11/08/94 1,628,304
U.S. Dollars 2,214,379 FIM 10,875,038 11/07/94 143,906
--------------
($13,025,800)
==============
</TABLE>
Currency Type Abbreviations:
Bfr - Belgian Franc
FIM - Finnish Markka
<PAGE>
INVESTMENTS BY TYPE OF ISSUER
<TABLE>
<CAPTION>
Percent of
Net Assets
-----------
<S> <C>
Government and other public issuers 68.17%
Repurchase Agreements 9.53%
Banks 5.44%
Financial institutions 4.67%
Retail 0.64%
Petroleum/Energy 0.63%
Media/Entertainment 0.60%
Industrial 0.27%
Other 2.15%
-----------
92.10%
=====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Notes to Pro Forma Combined Financial Statements
(unaudited)
Basis of Presentation:
Subject to approval of the Plan of Reorganization by the shareholders of Global
Income Plus Fund, Inc. ("GLI"), PaineWebber Global Income Fund ("Income Fund"),
a series of PaineWebber Investment Series, would acquire the assets of GLI, in
exchange solely for Class A shares of Income Fund that correspond to the
outstanding shares of GLI and the assumption by Income Fund, of GLI's
liabilities. The number of common shares to be received would be based on the
relative net asset value of the Funds' common shares on the effective date of
the Reorganization and, GLI will be terminated as soon as practicable
thereafter.
The pro forma combined financial statements reflect the financial position of
Income Fund and GLI at October 31, 1994 and the combined results of operations
of Income Fund and GLI for the year ended October 31, 1994 as though the
reorganization had occurred on October 31, 1994.
As a result of the Reorganization, the distribution and transfer agency service
fees will increase due to the applicable Plan of Distribution pertaining to
Class A of Income Fund. The investment advisory and administration fee will
decrease due to the lower fee schedule applicable to Income Fund. Other fixed
expenses will be reduced due to duplication of expenses. The pro forma combined
statement of assets and liabilities has not been adjusted as a result of the
proposed transaction because such adjustments would not be material. It is
estimated that costs of approximately $250,000 associated with the merger will
be charged to the combined fund.
The pro forma combined financial statements are presented for the information of
the reader and may not necessarily be representative of what the actual pro
forma combined financial statements would have been had the Reorganization
occurred on October 31, 1994. The pro forma combined financial statements
should be read in conjunction with the historical financial statements of the
constituent Funds included in the statement of additional information.
<PAGE>
PAINEWEBBER INVESTMENT SERIES
PART C
OTHER INFORMATION
Item 15. Indemnification
---------------
Section 2 of "Indemnification" in Article X of the Declaration of Trust
provides that the appropriate series of the Registrant will indemnify the
trustees and officers of the Registrant to the fullest extent permitted by law
against claims and expenses asserted against or incurred by them by virtue of
being or having been a trustee or officer; provided that no such person shall be
indemnified where there has been an adjudication or other determination, as
described in Article X, that such person is liable to the Registrant or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office or
did not act in good faith in the reasonable belief that his action was in the
best interest of the Registrant. Section 2 of "Indemnification" in Article X
also provides that the Registrant may maintain insurance policies covering such
rights of indemnification.
Additionally, "Limitation of Liability" in Article X of the Declaration of
Trust provides that the trustees or officers of the Registrant shall not be
personally liable to any person extending credit to, contracting with or having
a claim against the Registrant or a particular series; and that, provided they
have exercised reasonable care and have acted under the reasonable belief that
their actions are in the best interest of the Registrant, the trustees and
officers shall not be liable for neglect or wrongdoing by them or any officer,
agent, employee or investment adviser of the Registrant.
Section 2 of Article XI of the Declaration of Trust additionally provides
that, subject to the provisions of Section 1 of Article XI and to Article X,
trustees shall not be liable for errors of judgement or mistakes of fact or law,
for any act or omission in accordance with advice of counsel or other experts,
or for failing to follow such advice, with respect to the meaning and operation
of the Declaration of Trust.
Article IX of the By-Laws provides that the Registrant may purchase and
maintain insurance on behalf of any person who is or was a trustee, officer or
employee of the Registrant, or is or was serving at the request of the
Registrant as a trustee, officer or employee of a corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity or arising out of his status as
such, whether or not the Registrant would have the power to indemnify him
against such liability to the Registrant or its shareholders, provided that the
Registrant may not purchase or maintain insurance that protects any such person
against any liability to which he would otherwise be subject by
<PAGE>
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Section 9 of the Investment Advisory and Administration Contract
("Contract") provides that Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins") shall not be liable for any error of judgement or mistake of law or
for any loss suffered by any series of the Registrant in connection with the
matters to which the Contract relates, except for a loss resulting from the
willful misfeasance, bad faith, or gross negligence of Mitchell Hutchins in the
performance of its duties or from its reckless disregard of its obligations and
duties under the Contract. Section 10 of the Contract provides that the
trustees shall not be liable for any obligations of any series or the Registrant
under the Contract and that Mitchell Hutchins shall look only to the assets and
property of the Registrant or appropriate series in settlement of such right or
claim and not to the assets and property of the trustees.
Section 9 of each Distribution Contract provides that the Registrant will
indemnify Mitchell Hutchins and its officers, directors and controlling persons
against all liabilities arising from any alleged untrue statement of material
fact in the Registration Statement or from any alleged omission to state in the
Registration Statement a material fact required to be stated in it or necessary
to make the statements in it, in light of the circumstances under which they
were made, not misleading, except insofar as liability arises from untrue
statements or omissions made in reliance upon and in conformity with information
furnished by Mitchell Hutchins to the Registrant for use in the Registration
Statement; and provided that this indemnity agreement shall not protect any such
persons against liabilities arising by reason of their bad faith, gross
negligence or willful misfeasance; and shall not inure to the benefit of any
such persons unless a court of competent jurisdiction or controlling precedent
determines that such result is not against public policy as expressed in the
Securities Act of 1933. Section 9 of each Distribution Contract also provides
that Mitchell Hutchins agrees to indemnify, defend and hold the Registrant, its
officers and trustees free and harmless of any claims arising out of any alleged
untrue statement or any alleged omission of material fact contained in
information furnished by Mitchell Hutchins for use in the Registration Statement
or arising out of an agreement between Mitchell Hutchins and any retail dealer,
or arising out of supplementary literature or advertising used by Mitchell
Hutchins in connection with each Distribution Contract.
Section 9 of each Exclusive Dealer Agreement contains provisions similar to
Section 9 of the relevant Distribution Contract, with respect to PaineWebber
Incorporated ("PaineWebber").
<PAGE>
Section 6 of the Service Contract provides that PaineWebber shall be
indemnified and held harmless by the Registrant against all liabilities, except
those arising out of bad faith, gross negligence, willful misfeasance or
reckless disregard of its duties under the Service Contract.
Section 10 of each Distribution Contract and Section 7 of the Service
Contract contain provisions similar to Section 10 of the Investment Advisory and
Administration Contract, applicable to Mitchell Hutchins and PaineWebber,
respectively.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be provided to trustees, officers and controlling
persons of the Registrant, pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding or payment pursuant to any insurance policy) is
asserted against the Registrant by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 16. Exhibits:
--------
(1)(a) Declaration of Trust 1/
-
(b) Amendment effective January 28, 1988 to
Declaration of Trust 3/
-
(c) Amendment effective March 15, 1989 to
Declaration of Trust 4/
-
(d) Amendment effective November 27, 1989 to
Declaration of Trust 5/
-
(e) Amendment effective October 15, 1990 to
Declaration of Trust 6/
-
(f) Amendment effective October 24, 1990 to
Declaration of Trust 6/
-
(g) Amendment effective April 25, 1991 to
Declaration of Trust 8/
-
(h) Amendment effective May 1, 1991 to
Declaration of Trust 8/
-
(i) Amendment effective July 1, 1991 to
Declaration of Trust 8/
-
(j) Amendment effective September 24, 1991 to
Declaration of Trust 9/
-
<PAGE>
(k) Amendment effective October 30, 1991 to
Declaration of Trust 10/
--
(l) Amendment effective November 18, 1991 to
Declaration of Trust 10/
--
(m) Amendment effective June 30, 1992 to
Declaration of Trust 11/
--
(n) Amendment effective July 30, 1993 to
Declaration of Trust 12/
--
(o) Amendment effective November 17, 1993 to
Declaration of Trust 12/
--
(2)(a) By-Laws 1/
-
(b) Amendment dated March 19, 1991 to By-Laws 7/
-
(c) Amendment dated September 28, 1994 to
By-Laws 13/
--
(3) Voting trust agreement - none
(4) Agreement and Plan of Reorganization and Liquidation
(filed herewith as Appendix A)
(5) All instruments defining the rights of holders -- none
(6)(a) Investment Advisory and Administration
Contract 3/
-
(i) Investment Advisory Fee Agreement with respect to
PaineWebber Global Growth and Income Fund 4/
-
(ii) Investment Advisory Fee Agreement with respect to
PaineWebber Europe Growth Fund 5/
-
(7)(a) Distribution Contract with respect to
Class A shares 12/
--
(b) Distribution Contract with respect to
Class B shares 13/
--
(c) Distribution Contract with respect to
Class C shares 10/
--
(d) Distribution Contract with respect to
Class D shares 12/
--
(e) Exclusive Dealer Agreement with respect to
Class A shares 12/
--
(f) Exclusive Dealer Agreement with respect to
Class B shares 12/
--
(g) Exclusive Dealer Agreement with respect to
Class C shares 10/
--
(h) Exclusive Dealer Agreement with respect to
Class D shares 12/
--
(8) Bonus, profit sharing or pension plans - none
(9)(a) Custodian Agreement with respect to
PaineWebber Global Income Fund 2/
-
(b) Custodian Agreement with respect to PaineWebber
Global Energy Fund 3/
-
(c) Custodian Agreement with respect to
PaineWebber Global Growth and Income Fund 4/
-
(d) Custodian Agreement with respect to
PaineWebber Europe Growth Fund 5/
-
(10)(a) Plan of Distribution pursuant to Rule
12b-1 with respect to Class A shares 10/
--
(b) Plan of Distribution pursuant to Rule
12b-1 with respect to Class B shares 10/
--
<PAGE>
(c) Plan of Distribution pursuant to Rule
12b-1 with respect to Class D shares 11/
--
(11)(a) Opinion and consent of Kirkpatrick & Lockhart regarding the
legality of securities being registered (filed herewith)
(12) Opinion and consent of Kirkpatrick & Lockhart regarding certain tax
matters (filed herewith)
(13)(a) Transfer Agency Agreement with respect to Painewebber Investment
Series 6/
-
(b) Service Contract 4/
-
(14) Consent of Price Waterhouse LLP (filed herewith)
(15) Financial statements omitted from Part B - none
(16) Power of Attorney - none
(17) Form of Proxy (filed herewith)
- ----------------------
1/ Incorporated by Reference from Registration Statement on Form N-1A, File
- -
No. 33-11025, filed December 22, 1986.
2/ Incorporated by Reference from Post-Effective Amendment No. 1, File No. 33-
- -
11025, filed July 20, 1987.
3/ Incorporated by Reference from Post-Effective Amendment No. 3, File No. 33-
- -
11025, filed April 29, 1988.
4/ Incorporated by Reference from Post-Effective Amendment No. 6, File No. 33-
- -
11025, filed November 30, 1989.
5/ Incorporated by Reference from Post-Effective Amendment No. 8, File No. 33-
- -
11025, filed February 28, 1990.
6/ Incorporated by Reference from Post-Effective Amendment No. 11, File
- -
No. 33-11025, filed October 24, 1990.
7/ Incorporated by Reference from Post-Effective Amendment No. 15, File
- -
No. 33-11025, filed May 2, 1991.
8/ Incorporated by Reference from Post-Effective Amendment No.16, File No. 33-
- -
11025, filed July 31, 1991.
9/ Incorporated by Reference from Post-Effective Amendment No.
- -
18, File No. 33-11025, filed September 24, 1991.
10/ Incorporated by Reference from Post-Effective Amendment No.
- --
19, File No. 33-11025, filed February 14, 1992.
11/ Incorporated by Reference from Post-Effective Amendment No. 23, File No.
- --
33-11025, filed December 31, 1992.
12/ Incorporated by Reference from Post-Effective Amendment No. 25, File No.
- --
33-11025, filed March 1, 1994.
13/ Incorporated by Reference from Post-Effective Amendment No. 27, File No.
- --
33-11025, filed December 30, 1994.
<PAGE>
Item 17. Undertakings
------------
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of the prospectus which
is a part of this Registration Statement by any person of party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933, the reoffering prospectus will contain the
information called for by the applicable registration form for
reoffering by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
Registration Statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of New York
and the State of New York, on this 8th day of March, 1995.
----
PAINEWEBBER INVESTMENT SERIES
By: /s/ Dianne E. O'Donnell
-----------------------
Dianne E. O'Donnell
Vice President, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Paul B. Guenther Trustee and President March 8, 1995
- -------------------------- (Chief Executive Officer)
Paul B. Guenther
Trustee and Chairman March 8, 1995
- -------------------------- of the Board of Trustees
E. Garrett Bewkes, Jr.
/s/Meyer Feldberg Trustee March 8, 1995
- --------------------------
Meyer Feldberg
/s/George W. Gowen Trustee March 8, 1995
- --------------------------
George W. Gowen
Trustee March 8, 1995
- --------------------------
Frederick V. Malek
/s/Judith Davidson Moyers Trustee March 8, 1995
- --------------------------
Judith Davidson Moyers
/s/Thomas F. Murray Trustee March 8, 1995
- --------------------------
Thomas F. Murray
/s/Frank P. L. Minard Trustee March 8, 1995
- --------------------------
Frank P. L. Minard
/s/Julian F. Sluyters Vice President and March 8, 1995
- -------------------------- Treasurer (Principal
Julian F. Sluyters Financial and Accounting
Officer)
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS FILED WITH
N-14
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. ______
POST-EFFECTIVE AMENDMENT NO. _____
PaineWebber Investment Series
File No. 33-
<PAGE>
Exhibit 11
March 8, 1995
PaineWebber Investment Series
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
You have requested our opinion as to certain matters regarding the issuance
by PaineWebber Investment Series ("Trust") of Class A shares of beneficial
interest (the "Class A Shares") of PaineWebber Global Income Fund ("Income
Fund"), a series of the Trust, pursuant to an Agreement and Plan of
Reorganization and Liquidation ("Plan") between the Trust, on behalf of Income
Fund, and Global Income Plus Fund, Inc. ("GLI"). Under the Plan, Income Fund
would acquire the assets of GLI in exchange solely for the Class A Shares and
the assumption by Income Fund of GLI's liabilities. In connection with the
Plan, the Trust is about to file a Registration Statement on Form N-14 (the "N-
14") for the purpose of registering the Class A Shares under the Securities Act
of 1933, as amended ("1933 Act") to be issued pursuant to the Plan.
We have examined originals or copies believed by us to be genuine of the
Trust's Declaration of Trust and By-Laws, minutes of meetings of the Trust's
board of trustees, the form of the Plan, and such other documents relating to
the authorization and issuance of the Class A Shares as we have deemed relevant.
Based upon that examination, we are of the opinion that:
(1) The Class A Shares being registered by the N-14 may be issued in
accordance with the Plan and the Trust's Declaration of Trust and By-Laws,
subject to compliance with the 1933 Act, the Investment Company Act of 1940, as
amended, and applicable state laws regulating the distribution of securities,
and when so issued, those Class A Shares will be legally issued, fully paid and
non-assessable.
<PAGE>
PaineWebber Investment Series
Marach 8, 1995
Page 2
(2) The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, Trust shareholders could, under
certain circumstances, be held personally liable for the obligations of the
Trust or a series of the Trust, including Income Fund (each, a "Series"). The
Declaration of Trust states that the creditors of, contractors with, and
claimants against, the Trust or a Series shall look only to the assets of the
Trust or such Series for payment. It also requires that notice of such
disclaimer be given in each note, bond, contract, certificate, undertaking or
instrument made or issued by the officers or the trustees of the Trust on behalf
of the Trust or a Series. The Declaration of Trust further provides: (i) for
indemnification from Trust or Series assets, as appropriate, for all losses and
expenses of any shareholder held personally liable for the obligations of the
Trust or Series solely by virtue of ownership of Shares of a Series; and (ii)
for a Series to assume the defense of any claim against the shareholder for any
act or obligation of the Series. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust or a Series would be unable to meet its obligations.
We hereby consent to this opinion accompanying the Form N-14 that the Trust
plans to file with the Securities and Exchange Commission and to the reference
to our firm under the caption "Miscellaneous -- Legal Matters" in the
Prospectus/Proxy Statement filed as part of the Form N-14.
Sincerely yours,
KIRKPATRICK & LOCKHART
By: /s/ Robert A. Wittie
---------------------------
Robert A. Wittie
<PAGE>
Exhibit 12
[LETTERHEAD OF KIRKPATRICK & LOCKHART APPEARS HERE]
March 8, 1995
Global Income Plus Fund, Inc.
PaineWebber Investment Series
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Global Income Plus Fund, Inc. ("Target") and PaineWebber Investment Series
("Trust"), on behalf of PaineWebber Global Income Fund ("Acquiring Fund")/1/,
have requested our opinion as to certain federal income tax consequences of the
proposed acquisition of Target by Acquiring Fund, pursuant to a form of
Agreement and Plan of Reorganization and Liquidation ("Plan") attached as an
exhibit to the prospectus/proxy statement to be furnished in connection with the
solicitation of proxies by Target's board of directors for use at an annual
meeting of Target stockholders to be held on May 25, 1995 ("Proxy"), included in
the registration statement on Form N-14 to be filed with the Securities and
Exchange Commission ("SEC") ("Registration Statement"). Specifically, each
Investment Company has requested our opinion:
(1) that the acquisition by Acquiring Fund of Target's assets in
exchange solely for shares of beneficial interest in Acquiring Fund and the
assumption by Acquiring Fund of Target's liabilities, followed by the
distribution of those shares by Target pro rata to its stockholders of
record as of the close of business on the Closing Date (as hereinafter
defined) ("Target Stockholders") constructively in exchange for their
shares of common stock in Target ("Target Shares") (such transaction
sometimes being referred to herein as the "Reorganization"), will
constitute a "reorganization" within the
- --------------
/1/ Target and Acquiring are referred to herein individually either by such
names or as a "Fund" and collectively as the "Funds." Target and the Trust are
referred to herein individually either by such names or as an "Investment
Company" and collectively as the "Investment Companies."
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 2
meaning of section 368(a)(1)(C)/2/ and that each Fund will be a "party to a
reorganization" within the meaning of section 368(b),
(2) that Target, the Target Stockholders, and Acquiring Fund will
recognize no gain or loss upon the Reorganization, and
(3) regarding the basis and holding period after the Reorganization of
the transferred assets and the shares in Acquiring Fund issued pursuant
thereto.
In rendering this opinion, we have examined (1) the currently effective
prospectus and statement of additional information ("SAI") of Target, and the
currently effective prospectus and SAI of Acquiring Fund, all dated March 1,
1995, (2) the Proxy, (3) the Plan, and (4) such other documents as we have
deemed necessary or appropriate for the purposes hereof. As to various matters
of fact material to this opinion, we have relied on statements of responsible
officers of each Investment Company and on the Representations described below.
FACTS
-----
Target was incorporated under the laws of the State of Maryland on July 13,
1988, and is registered with the SEC as a non-diversified closed-end management
investment company under the Investment Company Act of 1940 ("1940 Act"). The
Trust was organized as an unincorporated voluntary association formed as a
business trust under the laws of the Commonwealth of Massachusetts (commonly
referred to as a "Massachusetts business trust") pursuant to a Declaration of
Trust dated December 22, 1986, and is registered with the SEC as an open-end
management investment company under the 1940 Act; Acquiring Fund commenced
operations as a non-diversified series thereof on March 20, 1987. Mitchell
Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly owned subsidiary
of PaineWebber Incorporated ("PaineWebber"), is the investment adviser and
administrator of each Fund and is the distributor of Acquiring Fund's shares.
- --------------
/2/ All section references are to the Internal Revenue Code of 1986, as amended
("Code"), and all "Treas. Reg. (S)" references are to the regulations under
the Code ("Regulations").
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 3
The shares of beneficial interest in Acquiring Fund are divided into four
classes, designated Class A, Class B, Class C, and Class D shares, which differ
from one another only with respect to (1) the sales charges imposed on the
purchase and/or redemption thereof (a front-end sales charge on Class A shares,
a contingent deferred sales charge on Class B shares, and no sales charge on
Class C or Class D shares), (2) the fees payable by each class pursuant to a
plan, if any, adopted under Rule 12b-1 promulgated under the 1940 Act, and (3)
the allocation of certain other class-specific expenses. Only Class A shares of
beneficial interest in Acquiring Fund will be issued in the Reorganization
("Acquiring Fund Shares").
The investment objectives and policies of the two Funds are substantially
similar. Target's primary investment objective is to achieve a high level of
current income; capital appreciation is a secondary objective in the selection
of investments. Acquiring Fund's investment objective is high current income
consistent with prudent investment risk; capital appreciation is a secondary
objective. Both Funds seek to achieve their investment objectives by investing
principally in high quality foreign and domestic debt securities. Normally,
each Fund invests at least 65% of its total assets in debt securities,
denominated in foreign currencies or U.S. dollars, of issuers located in at
least three of the following countries: Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, Thailand, the United Kingdom, and the United States. No more than
40% of either Fund's assets normally will be invested in securities of issuers
located in any one country.
In seeking to achieve its objective, Target normally invests at least 65%
of its total assets in a combination of some or all of the following types of
debt securities, all of which at the time of purchase will be rated AAA or AA by
Standard & Poor's Ratings Group ("S&P"), Aaa or Aa by Moody's Investors Service,
Inc. ("Moody's"), comparably rated by another nationally recognized statistical
rating organization ("NRSRO") or, if not rated, judged by Mitchell Hutchins to
be of comparable quality: (1) debt securities issued or guaranteed by foreign
governments, their agencies, instrumentalities and political subdivisions; (2)
U.S. or foreign corporate debt securities, including commercial paper; (3) debt
obligations of banks and bank holding companies; (4) debt securities issued or
guaranteed by supranational organizations; (5) securities issued or guaranteed
by the U.S. government, its agencies and instrumentalities; and (6) repurchase
agreements relating to any of the foregoing. Up to 35% of Target's net assets
may be invested in foreign
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 4
and domestic debt and convertible securities of U.S. and foreign issuers rated
below AA by S&P or Aa by Moody's but rated B- or better by S&P, B (or b) or
better by Moody's, comparably rated by another NRSRO, or, if not rated, judged
by Mitchell Hutchins to be of comparable quality. At least 65% of Target's
total assets normally are invested in income producing securities.
In seeking to achieve its objective, Acquiring Fund normally invests at
least 65% of its total assets in the following types of debt securities rated
AAA or AA by S&P, Aaa or Aa by Moody's or another NRSRO or, if unrated,
determined by Mitchell Hutchins to be of comparable quality: (1) high quality
debt securities issued or guaranteed by U.S. or foreign governments or their
agencies, instrumentalities or political subdivisions, (2) high quality debt
securities issued or guaranteed by supranational organizations such as the
International Bank for Reconstruction and Development, (3) high quality U.S. or
foreign corporate debt securities, including commercial paper, (4) high quality
debt obligations of banks and bank holding companies and (5) repurchase
agreements involving these securities. Acquiring Fund may invest up to 35% of
its assets in debt securities rated below the two highest grades assigned by an
NRSRO but rated BBB or better by S&P, Baa or better by Moody's, or comparably
rated by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. Acquiring Fund may invest up to 20% of its total assets in
sovereign debt securities rated below BBB by S&P, Baa by Moody's, or comparably
rated by another NRSRO but no lower than BB by S&P, Ba by Moody's, or comparably
rated by another NRSRO or, in the case of such securities assigned a commercial
paper rating, no lower than B by S&P or comparably rated by another NRSRO or, if
not so rated, determined by Mitchell Hutchins to be of comparable quality.
Target may invest up to 25% of its total assets in illiquid securities, as
compared to 10% of net assets that may be so invested by Acquiring Fund. Target
also may invest in preferred stocks and, under limited circumstances, in other
equity securities, while Acquiring Fund is not permitted to make such
investments (except that it may invest up to 5% of its total assets in debt
securities convertible into equity securities). If the Reorganization is
approved, Target will sell any assets that are inconsistent with Acquiring
Fund's investment policies prior to the Closing Date, and the proceeds thereof
will be held in temporary investments or reinvested in assets that qualify to be
held by Acquiring Fund.
Both Funds may engage in certain options, futures contracts, forward
currency contracts and interest rate protection transac-
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 5
tions to attempt to hedge against the overall level of risk associated with
their respective investments. In addition, both Funds may use options (and, for
Acquiring Fund, futures contracts) to attempt to enhance income.
On or before the closing date of the Reorganization, currently scheduled
for June 30, 1995 (or such other date on which the parties may agree) ("Closing
Date"), Target will declare and pay to Target Stockholders a dividend and/or
other distribution in an amount intended to be large enough so that it will have
distributed substantially all (and in any event not less than 98%) of its
investment company taxable income (computed without regard to any deduction for
dividends paid) and realized net capital gain, if any, for the current taxable
year through the Closing Date.
The Reorganization was considered by the Investment Companies' respective
governing boards (i.e., Target's board of directors and the Trust's board of
trustees) ("Boards") at meetings thereof held on February 15, 1995 ("Board
Meetings"). Each Board, including the members thereof who are not "interested
persons" (as that term is defined in the 1940 Act), determined that the
interests of their respective Fund's shareholders will not be diluted as a
result of the Reorganization, that the terms of the Reorganization are fair and
reasonable, and that the Reorganization is in the best interests of their
respective Fund.
In considering the Reorganization, the Boards made an extensive inquiry
into numerous factors, including the following:
(1) the compatibility of the Funds' investment objectives, policies, and
restrictions;
(2) the effect of the Reorganization on expected investment performance;
(3) the effect of the Reorganization on Acquiring Fund's expense ratio
relative to its current expense ratio and Target's current expense
ratio;
(4) the costs to be incurred by each Fund as a result of the
Reorganization;
(5) the tax consequences of the Reorganization;
(6) other alternatives to the Reorganization, including, in the case
of Target, the possibility of converting to an
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 6
open-end investment company without being reorganized into any pre-
existing fund; and
(7) the potential benefits of the transaction to other persons, especially
Mitchell Hutchins and PaineWebber.
At each Board Meeting, Mitchell Hutchins recommended, and the Board
approved, the Reorganization. Mitchell Hutchins advised each Board that the
Reorganization provided a sound alternative investment option for Target, given
the Funds' similar investment objectives and policies. Mitchell Hutchins and
Target's Board believe that the Reorganization offers Target's stockholders the
benefits of investing in a larger, existing open-end fund with investment
objectives and policies substantially similar to Target's.
In recommending the Reorganization, Mitchell Hutchins indicated to the
Boards that the investment advisory and administration fee schedule applicable
to Acquiring Fund would be lower than that currently in effect for Target. The
Boards also were advised that the expense ratio for Acquiring Fund's Class A
shares would likely decrease as a result of the Reorganization due to the
increased size of the combined Fund. In approving the "proposed transaction"
Reorganization, each Board noted that the overall investment objectives of high
current income consistent with prudent investment risk and, secondarily, capital
appreciation remain appropriate ones to offer investors as part of an overall
investment strategy.
Mitchell Hutchins noted that it did not expect to receive any immediate
direct benefits from the Reorganization, because the compensation that would be
received by it as investment adviser to the combined Fund would be lower than
the aggregate compensation it received from the two Funds prior to the
Reorganization, assuming no change in aggregate net assets. However, Mitchell
Hutchins noted that it could benefit in the future if the combined Fund's assets
grow faster than would have been the case for the two separate Funds in the
absence of the Reorganization.
Pursuant to all the foregoing, the Boards approved the Plan, subject to the
Target Stockholders' approval. The Plan, which specifies that it is intended to
be, and is adopted as, a plan of a reorganization described in section
368(a)(1)(C), provides in relevant part for the following:
(1) The acquisition by Acquiring Fund of the Assets (as defined below)
in exchange solely for Acquiring Fund's assumption of the Liabilities (as
defined below) and the number of full and fractional Acquiring Fund Shares
determined by dividing the net value of Target by the net asset value
("NAV") of an Acquiring Fund Share;
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Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 7
(2) The constructive distribution of the Acquiring Fund Shares to the
Target Stockholders; and
(3) The subsequent liquidation of Target.
The distribution described in (2) will be accomplished by the Trust's
transfer agent opening accounts on Acquiring Fund's share transfer books in the
Target Stockholders' names and transferring the Acquiring Fund Shares thereto,
whereupon all outstanding Target Shares will be canceled. Each Target
Stockholder's account will be credited with the respective pro rata number of
Acquiring Fund Shares due that stockholder. Acquiring Fund will not issue
certificates representing Acquiring Fund Shares in connection with the
Reorganization.
Target's assets to be acquired by Acquiring Fund (collectively "Assets")
include, without limitation, all cash, cash equivalents, securities, receivables
(including interest and dividends receivable), claims and rights of action,
rights to register shares under applicable securities laws, books and records,
deferred and prepaid expenses shown as assets on Target's books, and other
property owned by Target at the time of the closing of the Reorganization
("Closing").
Target's liabilities to be assumed by Acquiring Fund (collectively
"Liabilities") include (except as otherwise provided in the Plan) all of
Target's liabilities, debts, obligations, and duties of whatever kind or nature,
whether absolute, accrued, contingent, or otherwise, whether or not arising in
the ordinary course of business, whether or not determinable at the Closing
Date, and whether or not specifically referred to in the Plan. Notwithstanding
the foregoing, Target agreed to use its best efforts to discharge all of its
known Liabilities prior to the Closing Date.
REPRESENTATIONS
---------------
The representations enumerated below ("Representations") have been made to
us by appropriate officers of the Funds. Each Fund has represented and
warranted as follows:
1. The fair market value of the Acquiring Fund Shares, when received
by the Target Stockholders, will be approximately equal to the fair market
value of their Target Shares constructively surrendered in exchange
therefor;
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Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 8
2. Its management (a) is unaware of any plan or intention of Target
Stockholders to redeem or otherwise dispose of any portion of the Acquiring
Fund Shares to be received by them in the Reorganization and (b) does not
anticipate dispositions of those Acquiring Fund Shares at the time of or
soon after the Reorganization to exceed the usual rate and frequency of
dispositions of shares of Acquiring Fund as a series of an open-end
investment company. Consequently, its management expects that the
percentage of Target Stockholder interests, if any, that will be disposed
of as a result of or at the time of the Reorganization will be de minimis.
Nor does its management anticipate that there will be extraordinary
redemptions of Acquiring Fund Shares immediately following the
Reorganization;
3. The Target Stockholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
4. Immediately following consummation of the Reorganization,
Acquiring Fund will hold substantially the same assets and be subject to
substantially the same liabilities that Target held or was subject to
immediately prior thereto, plus any liabilities and expenses of the Funds
incurred in connection with the Reorganization;
5. The fair market value on a going concern basis of the Assets will
equal or exceed the Liabilities to be assumed by Acquiring Fund and those
to which the Assets are subject;
6. There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount; and
7. Pursuant to the Reorganization, Target will transfer to Acquiring
Fund, and Acquiring Fund will acquire, at least 90% of the fair market
value of the net assets, and at least 70% of the fair market value of the
gross assets, held by Target immediately before the Reorganization. For
the purposes of this representation, any amounts used by Target to pay its
Reorganization expenses and redemptions and distributions made by it
immediately before the Reorganization (except those occurring in the
ordinary course of its business) will be included as assets thereof held
immediately before the Reorganization.
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 9
Target also has represented and warranted as follows:
1. The Liabilities were incurred by Target in the ordinary course of
its business;
2. Target qualified for treatment as a regulated investment company
("RIC") under Subchapter M of the Code for each past taxable year since it
commenced operations and will continue to meet all the requirements for
such qualification for its current taxable year; and it has no earnings or
profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it;
3. Target is not under the jurisdiction of a court in a proceeding
under Title 11 of the United States Code or similar case within the meaning
of section 368(a)(3)(A);
4. Not more than 25% of the value of Target's total assets (excluding
cash, cash items, and U.S. government securities) is invested in the stock
or securities of any one issuer, and not more than 50% of the value of such
assets is invested in the stock or securities of five or fewer issuers; and
5. Target will be liquidated as soon as reasonably practicable after
the Reorganization.
Acquiring Fund also has represented and warranted as follows:
1. Acquiring Fund is a "fund" as defined in section 851(h)(2) of the
Code; it qualified for treatment as a RIC under Subchapter M of the Code
for each past taxable year since it commenced operations and will continue
to meet all the requirements for such qualification for its current taxable
year; and it has no earnings or profits accumulated in any taxable year in
which the provisions of Subchapter M did not apply to it;
2. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund shares following the Reorganization except for shares issued
in the ordinary course of its business as a series of an open-end
investment company; nor does Acquiring Fund have any plan or intention to
redeem or otherwise reacquire any Acquiring Fund Shares issued to the
Target Stockholders pursuant to the Reorganization, other than through
redemptions arising in the ordinary course of that business;
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 10
3. Acquiring Fund (a) will actively continue Target's business in
substantially the same manner that Target conducted that business
immediately before the Reorganization, (b) has no plan or intention to sell
or otherwise dispose of any of the Assets, except for dispositions made in
the ordinary course of that business and dispositions necessary to maintain
its status as a RIC under Subchapter M of the Code, and (c) expects to
retain substantially all the Assets in the same form as it receives them in
the Reorganization, unless and until subsequent investment circumstances
suggest the desirability of change or it becomes necessary to make
dispositions thereof to maintain such status;
4. There is no plan or intention for Acquiring Fund to be dissolved
or merged with another corporation or business trust or any "fund" thereof
(within the meaning of section 851(h)(2)) following the Reorganization; and
5. Immediately after the Reorganization, (a) not more than 25% of the
value of Acquiring Fund's total assets (excluding cash, cash items, and
U.S. government securities) will be invested in the stock or securities of
any one issuer and (b) not more than 50% of the value of such assets will
be invested in the stock or securities of five or fewer issuers.
OPINION
-------
Based solely on the facts set forth above, and conditioned on (1) the
Representations being true at the time of Closing and (2) the Reorganization
being consummated in accordance with the Plan, our opinion (as explained more
fully in the next section of this letter) is as follows:
1. Acquiring Fund's acquisition of the Assets in exchange solely for
the Acquiring Fund Shares and Acquiring Fund's assumption of the
Liabilities, followed by Target's distribution of those shares pro rata to
the Target Stockholders constructively in exchange for their Target Shares,
will constitute a reorganization within the meaning of section
368(a)(1)(C), and each Fund will be "a party to a reorganization" within
the meaning of section 368(b);
2. No gain or loss will be recognized to Target on the transfer to
Acquiring Fund of the Assets (except, possibly, with respect to certain
options, futures, and forward contracts included in the Assets
(collectively "Contracts")) in
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 11
exchange solely for the Acquiring Fund Shares and Acquiring Fund's
assumption of the Liabilities or on the subsequent distribution of those
shares to the Target Stockholders in constructive exchange for their Target
Shares (section 361);
3. No gain or loss will be recognized to Acquiring Fund on its
receipt of the Assets in exchange solely for the Acquiring Fund Shares and
its assumption of the Liabilities (section 1032(a));
4. Acquiring Fund's basis for the Assets (with the possible exception
of the Contracts) will be the same as the basis thereof in Target's hands
immediately before the Reorganization (section 362(b)), and Acquiring
Fund's holding period for the Assets (with the possible exception of the
Contracts) will include Target's holding period therefor (section 1223(2));
5. A Target Stockholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for Acquiring Fund
Shares pursuant to the Reorganization; and
6. A Target Stockholder's basis for the Acquiring FundShares to be
received by it in the Reorganization will be the same as the basis for its
Target Shares to be constructively surrendered in exchange for those
Acquiring Fund Shares (section 358(a)), and its holding period for those
Acquiring Fund Shares will include its holding period for those Target
Shares, provided they are held as capital assets by the Target Stockholder
on the Closing Date (section 1223(1)).
The foregoing opinion (1) is based on, and is conditioned on the continued
applicability of, the provisions of the Code and the Regulations, judicial
decisions, and rulings and other pronouncements of the Internal Revenue Service
("Service") in existence on the date hereof and (2) is applicable only to the
extent each Fund is solvent. We express no opinion about the tax treatment of
the transactions described herein if either Fund is insolvent.
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 12
ANALYSIS
--------
I. The Reorganization Will Be a Reorganization under Section 368(a)(1)(C),
and Each Fund Will Be a Party to a Reorganization.
-------------------------------------------------------------------------
A. Acquiring Fund Is a Separate Corporation.
----------------------------------------
A reorganization under section 368(a)(1)(C) (a "C reorganization") involves
the acquisition by one corporation, in exchange solely for all or a part of its
voting stock, of substantially all of the properties of another corporation.
For the transaction to qualify under that section, therefore, the entities
involved therein both must be corporations (or associations taxable as
corporations). The Trust, however, is a Massachusetts business trust, not a
corporation, and Acquiring Fund is a separate series thereof.
Treasury Regulation (S) 301.7701-4(b) provides that certain arrangements
known as trusts (because legal title is conveyed to trustees for the benefit of
beneficiaries) will not be classified as trusts for purposes of the Code because
they are not simply arrangements to protect or conserve the property for the
beneficiaries. These "business or commercial trusts" are created simply as
devices to carry on profit-making businesses that normally would have been
carried on through corporations or partnerships. Treasury Regulation (S)
301.7701-4(c) further provides that an "`investment' trust will not be
classified as a trust if there is a power under the trust agreement to vary the
investment of the certificate holders." See Commissioner v. North American Bond
--- -----------------------------------
Trust, 122 F.2d 545 (2d Cir. 1941), cert. denied, 314 U.S. 701 (1942).
- ----- ------------
Based on these criteria, the Trust does not qualify as a trust for federal
income tax purposes. While the Trust is an "investment trust," it does not have
a fixed pool of assets -- Acquiring Fund has been, and will continue to be, a
managed portfolio of securities, and Mitchell Hutchins, as its investment
adviser, has had and will have the authority to buy and sell securities for it.
The Trust is not simply an arrangement to protect or conserve property for the
beneficiaries, but is designed to carry on a profit-making business. In
addition, the word "association" has long been held to include "Massachusetts
business trusts," such as the Trust. See Hecht v. Malley, 265 U.S. 144 (1924).
--- ---------------
Accordingly, we believe that the Trust will be treated as a corporation for
federal income tax purposes.
The Trust as such, however, is not participating in the Reorganization, but
rather a series thereof is the participant. Ordi-
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 13
narily, a transaction involving a segregated pool of assets (such as Acquiring
Fund) could not qualify as a reorganization, because the pool would not be a
corporation. Under section 851(h), however, Acquiring Fund is treated as a
separate corporation for all purposes of the Code save the definitional
requirement of section 851(a) (which is satisfied by the Trust). Thus, we
believe that Acquiring Fund will be a separate corporation, and the Acquiring
Fund Shares will be treated as shares of corporate stock, for purposes of
section 368(a)(1)(C).
B. Non-applicability of Section 368(a)(2)(F).
-----------------------------------------
Under section 368(a)(2)(F), if two or more parties to a transaction are
"investment companies," the transaction will not be considered a C
reorganization with respect to any such investment company or its stockholders
unless, among other things, the investment company is a RIC or --
(1) not more than 25% of the value of its total assets is invested
in the stock or securities of any one issuer and
(2) not more than 50% of the value of its total assets is invested
in the stock or securities of five or fewer issuers.
Each Fund will meet all the requirements for qualification and treatment as a
RIC for its respective current taxable year, and the foregoing percentage tests
will be satisfied by each Fund. Accordingly, we believe that section
368(a)(2)(F) will not cause the Reorganization to fail to qualify as a C
reorganization with respect to either Fund.
B. Transfer of "Substantially All" of the Properties.
-------------------------------------------------
For an acquisition to qualify as a C reorganization, the acquiring
corporation must acquire "substantially all of the properties" of the transferor
corporation solely in exchange for all or part of the acquiring corporation's
stock. For purposes of issuing private letter rulings, the Service considers
the transfer of at least 70% of the transferor's gross assets, and at least 90%
of its net assets, held immediately before the reorganization to satisfy the
"substantially all" requirement. Rev. Proc. 77-37, 1977-2 C.B. 568. The
Reorganization will involve such a transfer. Accordingly, we believe that the
Reorganization will involve the transfer to Acquiring Fund of substantially all
of Target's properties.
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 14
C. Qualifying Consideration.
------------------------
For an acquisition to qualify as a C reorganization, the acquiring
corporation must acquire at least 80% (by fair market value) of the transferor's
property solely in exchange for voting stock. Section 368(a)(2)(B)(iii). The
assumption of liabilities by the acquiring corporation or its acquisition of
property subject to liabilities normally are disregarded (section 368(a)(1)(C)),
but the amount of any such liabilities will be treated as money paid for the
transferor's property if the acquiring corporation exchanges any money or
property (other than its voting stock) therefor. Section 368(a)(2)(B). Because
Acquiring Fund will exchange only the Acquiring Fund Shares, and no money or
other property, for the Assets, we believe that the Reorganization will satisfy
the solely-for-voting-stock requirement to qualify as a C reorganization.
D. Requirements of Continuity.
--------------------------
Treasury Regulation (S) 1.368-1(b) sets forth two prerequisites to a valid
reorganization: (1) a continuity of the business enterprise under the modified
corporate form ("continuity of business") and (2) a continuity of interest
therein on the part of those persons who, directly or indirectly, were the
owners of the enterprise prior to the reorganization ("continuity of interest").
1. Continuity of Business.
----------------------
The continuity of business enterprise test as set forth in Treas. Reg. (S)
1.368-1(d)(2) requires that the acquiring corporation must either (i) continue
the acquired corporation's historic business ("business continuity") or (ii) use
a significant portion of the acquired corporation's historic business assets in
a business ("asset continuity").
While there is no authority that deals directly with the requirement of
continuity of business in the context of a transaction such as the
Reorganization, Rev. Rul. 87-76, 1987-2 C.B. 84, deals with a somewhat similar
situation. In that ruling, P was a RIC that invested exclusively in municipal
securities. P acquired the assets of T in exchange for P common stock in a
transaction that was intended to qualify as a C reorganization. Prior to the
exchange, T sold its entire portfolio of corporate securities and purchased a
portfolio of municipal bonds. The Service held that this transaction did not
qualify as a reorganization for the following reasons: (1) because T had sold
its historic assets before the exchange, there was no asset continuity; and (2)
---
the failure of
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 15
P to engage in the business of investing in corporate securities after the
exchange caused the transaction to lack business continuity as well.
Unlike the situation in Rev. Rul. 87-76, the Funds' investment objectives
are substantially the same and Acquiring Fund will actively continue Target's
business in substantially the same manner that Target conducted that business
immediately before the Reorganization. Accordingly, there will be business
continuity. For the foregoing reason, we believe that the Reorganization will
meet the continuity of business requirement.
Acquiring Fund not only will continue Target's historic business, but
Acquiring Fund also (1) has no plan or intention to sell or otherwise dispose of
any of the Assets, except for dispositions made in the ordinary course of its
business and dispositions necessary to maintain its status as a RIC, and (2)
expects to retain substantially all the Assets in the same form as it receives
them in the Reorganization, unless and until subsequent investment circumstances
suggest the desirability of change or it becomes necessary to make dispositions
thereof to maintain such status. Accordingly, there will be asset continuity as
well.
For all the foregoing reasons, we believe that the Reorganization will meet
the continuity of business requirement.
2. Continuity of Interest.
----------------------
For purposes of issuing private letter rulings, the Service considers the
continuity of interest requirement of Treas. Reg. (S) 1.368-1(b) satisfied if
ownership in an acquiring corporation on the part of a transferor corporation's
former stockholders is equal in value to at least 50% of the value of all the
formerly outstanding shares of the transferor corporation. Rev. Proc. 77-37,
supra; but see Rev. Rul. 56-345, 1956-2 C.B. 206 (continuity of interest was
- ----- --- ---
held to exist in a reorganization of two RICs where immediately after the
reorganization 26% of the shares were redeemed in order to allow investment in a
third RIC); also see Reef Corp. v. Commissioner, 368 F.2d 125 (5th Cir. 1966),
---- --- --------------------------
cert. denied, 386 U.S. 1018 (1967) (a redemption of 48% of a transferor
- ------------
corporation's stock was not a sufficient shift in proprietary interest to
disqualify a transaction as a reorganization under section 368(a)(2)(F) ("F
Reorganization"), even though only 52% of the transferor's stockholders would
hold all the transferee's stock); Aetna Casualty and Surety Co. v. U.S., 568
-------------------------------------
F.2d 811, 822-23 (2d Cir. 1976) (redemption of a 38.39% minority interest did
not prevent a transaction from qualifying as an F Reorganization); Rev. Rul. 61-
156, 1961-2 C.B.
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 16
62 (a transaction qualified as an F Reorganization even though the transferor's
stockholders acquired only 45% of the transferee's stock, while the remaining
55% of that stock was issued to new stockholders in a public underwriting
immediately after the transfer).
No minimum holding period for shares of an acquiring corporation is imposed
under the Code on the acquired corporation's stockholders. Rev. Rul. 66-23,
1966-1 C.B. 67, provides generally that "unrestricted rights of ownership for a
period of time sufficient to warrant the conclusion that such ownership is
definite and substantial" will suffice and that "ordinarily, the Service will
treat five years of unrestricted . . . ownership as a sufficient period" for
continuity of interest purposes.
A preconceived plan or arrangement by or among an acquired corporation's
stockholders to dispose of more than 50% of an acquiring corporation's shares
could be problematic. Stockholders with no such preconceived plan or
arrangement, however, are basically free to sell any part of the shares received
by them in the reorganization without fear of breaking continuity of interest,
because the subsequent sale will be treated as an independent transaction from
the reorganization.
Neither Fund (1) is aware of any plan or intention of Target Stockholders
to dispose of any portion of the Acquiring Fund Shares to be received by them in
the Reorganization or (2) anticipates dispositions at the time of or soon after
the Reorganization to exceed the usual rate and frequency of dispositions of
shares of Acquiring Fund as a series of an open-end investment company.
Consequently, each Fund expects that the percentage of Target Stockholder
interests, if any, that will be disposed of as a result of or at the time of the
Reorganization will be de minimis. Accordingly, we believe that the
Reorganization will meet the continuity of interest requirement of Treas. Reg.
(S) 1.368-1(b).
E. Distribution by Target.
----------------------
Section 368(a)(2)(G)(i) provides that a transaction will not qualify as a C
reorganization unless the corporation whose properties are acquired distributes
the stock it receives and its other property in pursuance of the plan of
reorganization. Under the Plan -- which we believe constitutes a "plan of
reorganization" within the meaning of Treas. Reg. (S) 1.368-2(g) -- Target will
distribute all the Acquiring Fund Shares to its stockholders in constructive
exchange for their Target Shares; as soon as is reasonably practicable
thereafter, Target will be liquidated.
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 17
Accordingly, we believe that the requirements of section 368(a)(2)(G)(i) will be
satisfied.
F. Business Purpose.
----------------
All reorganizations must meet the judicially imposed requirements of the
"business purpose doctrine," which was established in Gregory v. Helvering, 293
--------------------
U.S. 465 (1935), and is now set forth in Treas. Reg. (S)(S) 1.368-1(b), -1(c),
and -2(g) (the last of which provides that, to qualify as a reorganization, a
transaction must be "undertaken for reasons germane to the continuance of the
business of a corporation a party to the reorganization"). Under that doctrine,
a transaction must have a bona fide business purpose (and not a purpose to avoid
federal income tax) to constitute a valid reorganization. The purposes of the
Reorganization are to offer Target's stockholders the benefits of investing in a
larger, existing open-end fund with investment objectives and policies
substantially similar to Target's and a lower overall expense ratio than Target,
while likely reducing the expense ratio for Acquiring Fund's Class A shares due
to the increased size of the combined Fund. Each Board also determined that the
interests of their respective Fund's shareholders will not be diluted as a
result of the Reorganization, that the terms of the Reorganization are fair and
reasonable, and that the Reorganization is in the best interests of their
respective Fund. Accordingly, we believe that the Reorganization is being
undertaken for bona fide business purposes (and not a purpose to avoid federal
income tax) and therefore meets the requirements of the business purpose
doctrine.
For all the foregoing reasons, we believe that the Reorganization will
constitute a reorganization within the meaning of section 368(a)(1)(C).
G. Both Funds are Parties to the Reorganization.
--------------------------------------------
Section 368(b)(2) and Treas. Reg. (S) 1.368-1(f) provide that if one
corporation transfers substantially all of its properties to a second
corporation in exchange for all or a part of the voting stock of the second
corporation, then both corporations are parties to a reorganization. Target is
transferring substantially all of its properties to Acquiring Fund in exchange
for Acquiring Fund Shares. Accordingly, we believe that each Fund will be "a
party to a reorganization."
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 18
II. No Gain or Loss Will Be Recognized to Target.
--------------------------------------------
Under sections 361(a) and (c), no gain or loss will be recognized to a
corporation that is a party to a reorganization (1) on the exchange of property,
pursuant to the plan of reorganization, solely for stock or securities in
another corporate party to the reorganization or (2) on the distribution to its
stockholders, pursuant to that plan, of stock in such other corporation that was
received by the distributing corporation in the exchange. (Such a distribution
is required by section 368(a)(2)(G)(i) for a reorganization to qualify as a C
reorganization.) Section 361(c)(4) provides that specified provisions requiring
recognition of gain on certain distributions shall not apply to a distribution
described in (2) above.
Section 357(a) provides in pertinent part that, except as provided in
section 357(b), if a taxpayer receives property that would be permitted to be
received under section 361 without recognition of gain if it were the sole
consideration and, as part of the consideration, another party to the exchange
assumes a liability of the taxpayer or acquires from the taxpayer property
subject to a liability, then that assumption or acquisition shall not be treated
as money or other property and shall not prevent the exchange from being within
section 361. Section 357(b) applies where the principal purpose of the
assumption or acquisition was a tax avoidance purpose or not a bona fide
business purpose.
As noted above, the Reorganization will constitute a C reorganization, each
Fund will be a party to a reorganization, and the Plan constitutes a plan of
reorganization. Target will exchange the Assets solely for the Acquiring Fund
Shares and Acquiring Fund's assumption of the Liabilities and then will
liquidate pursuant to the Plan, distributing those shares to its stockholders in
constructive exchange for their Target Shares. As also noted above, we believe
that the Reorganization is being undertaken for bona fide business purposes (and
not a purpose to avoid federal income tax); we also do not believe that the
principal purpose of Acquiring Fund's assumption of the Liabilities is avoidance
of federal income tax on the proposed transaction. Accordingly, we believe that
no gain or loss will be recognized to Target on the Reorganization./3/
- ---------------
/3/ We express no opinion as to whether Target will recognize gain or loss
under section 1256 on the transfer of the Contracts to Acquiring Fund in the
Reorganization or as to Acquiring Fund's basis or holding period for the
Contracts.
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KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 19
III. No Gain or Loss Will Be Recognized to Acquiring Fund.
----------------------------------------------------
Section 1032(a) provides that no gain or loss will be recognized to a
corporation on the receipt by it of money or other property in exchange for its
shares. Acquiring Fund will issue the Acquiring Fund Shares to Target in
exchange for the Assets, which consist of money and securities. Accordingly, we
believe that no gain or loss will be recognized to Acquiring Fund on the
Reorganization.
IV. Acquiring Fund's Basis for the Assets Will Be a Carryover Basis, and Its
Holding Period Will Include Target's Holding Period.
------------------------------------------------------------------------
Section 362(b) provides that property acquired by a corporation in
connection with a reorganization will have the same basis in that corporation's
hands as the basis of the property in the transferor corporation's hands
immediately before the exchange, increased by any gain recognized to the
transferor on the transfer. As noted above, the Reorganization will constitute
a C reorganization and Target will recognize no gain on the Reorganization under
section 361(a) (except, possibly, with respect to the Contracts). Accordingly,
we believe that Acquiring Fund's basis for the Assets (except, possibly, the
Contracts) will be the same as the basis thereof in Target's hands immediately
before the Reorganization.
Section 1223(2) provides that where property acquired in an exchange has a
carryover basis, the property will have a holding period in the hands of the
acquiror that includes the holding period of the property in the transferor's
hands. As stated above, Acquiring Fund's basis for the Assets (except,
possibly, the Contracts) will be a carryover basis. Accordingly, we believe
that Acquiring Fund's holding period for the Assets (except, possibly, the
Contracts) will include Target's holding period therefor.
V. No Gain or Loss Will Be Recognized to a Target Stockholder.
----------------------------------------------------------------------
Under section 354(a), no gain or loss is recognized to a stockholder who
exchanges shares for other shares pursuant to a plan of reorganization, where
the shares exchanged, as well as the shares received, are those of a corporation
that is a party to the reorganization. As stated above, the Reorganization will
constitute a C reorganization, the Plan constitutes a plan of reorganiza-
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 20
tion, and each Fund will be a party to a reorganization. Accordingly, we
believe that under section 354 a Target Stockholder will recognize no gain or
loss on the constructive exchange of all its Target Shares solely for Acquiring
Fund Shares pursuant to the Reorganization.
VI. A Target Stockholder's Basis for Acquiring Fund Shares Will Be a
Substituted Basis, and its Holding Period therefor Will Include its Holding
Period for its Target Shares.
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Section 358(a)(1) provides, in part, that in the case of an exchange to
which section 354 applies, the basis of any shares received in the transaction
without the recognition of gain is the same as the basis of the property
transferred in exchange therefor, decreased by, among other things, the fair
market value of any other property and the amount of any money received in the
transaction and increased by the amount of any gain recognized on the exchange
by the stockholder.
As noted above, the Reorganization will constitute a C reorganization and
under section 354 no gain or loss will be recognized to a Target Stockholder on
the constructive exchange of its Target Shares for Acquiring Fund Shares in the
Reorganization. No property will be distributed to the Target Stockholders
other than the Acquiring Fund Shares, and no money will be distributed to them
pursuant to the Reorganization. Accordingly, we believe that a Target
Stockholder's basis for the Acquiring Fund Shares to be received by it in the
Reorganization will be the same as the basis for its Target Shares to be
constructively surrendered in exchange for those Acquiring Fund Shares.
Under section 1223(1), the holding period of property received in an
exchange includes the holding period of the property exchanged therefor if the
acquired property has, for the purpose of determining gain or loss, the same
basis in the holder's hands as the property exchanged therefor ("substituted
basis") and such property was a capital asset. As noted above, a Target
Stockholder will have a substituted basis for the Acquiring Fund Shares it
receives in the Reorganization; accordingly, provided that the Target
Stockholder held its Target Shares as capital assets on the Closing Date, we
believe its holding period for those Acquiring Fund Shares will include its
holding period for those TargetShares.
<PAGE>
KIRKPATRICK & LOCKHART
Global Income Plus Fund, Inc.
PaineWebber Investment Series
March 8, 1995
Page 21
We hereby consent to this opinion accompanying the Registration Statement
and to the references to our firm under the captions "Synopsis -- Federal Income
Tax Consequences of the Reorganization" and "The Reorganization (Proposal 1) --
Tax Considerations" in the Proxy.
Very truly yours,
KIRKPATRICK & LOCKHART
By: /s/ Theodore L. Press
-------------------------
Theodore L. Press
<PAGE>
Exhibit 14
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus/Proxy
Statement constituting part of this registration statement on Form N-14
(the "N-14 Registration Statement") of our report dated December 13, 1994,
relating to the financial statements and financial highlights of PaineWebber
Global Income Fund appearing in the October 31, 1994 Annual Report to
Shareholders, which is incorporated by reference in the Statement of Additional
Information constituting part of Post-Effective Amendment No. 29 to the
Registration Statement on Form N-1A of such Fund, which is incorporated by
reference in such Prospectus/Proxy Statement. We also consent to the
incorporation by reference in the Prospectus/Proxy Statement on the N-14
Registration Statement of our report dated December 13, 1994 relating to the
financial statements and financial highlights of PaineWebber Global Income Plus
Fund, Inc. appearing in the October 31, 1994 Annual Report to Shareholders,
which is included in the Statement of Additional Information constituting part
of Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 of
such Fund, which is incorporated by reference in such Prospectus/Proxy
Statement. We also consent to the references to us under the headings
"Additional Information About Income Fund-Financial Highlights" and
"Miscellaneous-Experts" in such Prospectus/Proxy Statement on the N-14
Registration Statement.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
March 8, 1995
<PAGE>
Exhibit 17
COMMON
GLOBAL INCOME PLUS FUND, INC. STOCK
ANNUAL MEETING OF SHAREHOLDERS -- MAY 25, 1995 PROXY
-----
The undersigned hereby appoints as proxies DIANNE E. O'DONNELL and JENNIFER A.
FARRELL and each of them (with power of substitution) to vote for the
undersigned all shares of stock held of record of the undersigned on April 6,
1995 at the aforesaid meeting and any adjournment thereof with all the power
the undersigned would have if personally present. The shares represented by
this proxy will be voted as instructed. Unless indicated to the contrary, this
proxy shall be deemed to grant authority to vote "FOR" all proposals. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GLOBAL INCOME PLUS
FUND, INC. ("Fund").
PLEASE INDICATE YOUR VOTE BY AN "X" IN THE APPROPRIATE BOX BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
FOR AGAINST ABSTAIN
1. Approval of an Agreement and Plan of
Reorganization and Liquidation between
PaineWebber Global Income Fund and the Fund. [_] [_] [_]
FOR
FOR OR ALL OR WITH-
2. ELECTION OF DIRECTORS ALL EXCEPT HOLD
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE STRIKE A [_] [_] [_]
LINE THROUGH THE NOMINEE'S NAME
IN THE LIST BELOW AND MARK CENTER
BOX TO RIGHT.)
E. GARRETT BEWKES, JR., PAUL B. GUENTHER, MEYER
FELDBERG, GEORGE W. GOWEN, FREDERIC V. MALEK,
FRANK P. L. MINARD, JUDITH DAVIDSON MOYERS AND
THOMAS F. MURRAY
FOR AGAINST ABSTAIN
3. Ratification of the selection of Price
Waterhouse LLP as the Fund's independent [_] [_] [_]
accountants for the fiscal year ending October
31, 1995.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
YOUR VOTE IS IMPORTANT
Many shareholders think that their vote is not important. On the contrary, it
is vital. To help the Fund avoid the expense and inconvenience of an addi-
tional solicitation, please date and sign this proxy and return it immediately
in the enclosed envelope to: PFPC Inc., P.O. Box 9426, Wilmington, DE 19809-
9938. PFPC Inc. has been engaged to forward the enclosed proxy material and to
tabulate proxies returned by mail.
YOUR PROMPT ATTENTION
BENEFITS ALL SHAREHOLDERS.
This proxy will not be voted unless it is dated and signed exactly as
instructed below.
If shares are held jointly, each shareholder named should sign. If only one
signs, his or her signature will be binding. If the shareholder is a corpora-
tion, the President or a Vice President should sign in his or her own name,
indicating title. If the shareholder is a partnership, a partner should sign
in his or her own name, indicating that he or she is a "Partner."
Sign exactly as name
appears hereon.
_____________________ (L.S.)
_____________________ (L.S.)
Date ____________, 19_______
