<PAGE>
PAINEWEBBER GLOBAL INCOME FUND SEMIANNUAL REPORT
June 15, 1998
Dear Shareholder,
We are pleased to present you with the semiannual report for the PaineWebber
Global Income Fund (the "Fund") for the six-month period ended April 30, 1998.
GENERAL MARKET OVERVIEW
- -------------------------------------------------------------------------------
[PICTURE]
The Asian crisis has produced both disinflationary influences (lower
commodity prices and cheaper imports) and expansionary impacts (lower interest
rates). These influences have produced growth with low inflation -- beneficial
conditions for bonds.
In Europe, the growth cycle is slowly shifting from an export-driven phase to
one driven by domestic demand. Unemployment is declining in France and Germany,
and demand is robust in many of the smaller European economies.
PORTFOLIO REVIEW
- -------------------------------------------------------------------------------
[PICTURE]
Performance--The Fund's total return (the net asset value change with
dividends reinvested) for the six-month period ended April 30, 1998, without
deducting sales charges, was 2.21% for Class A shares, 1.79% for Class B shares,
1.91% for Class C shares and 2.28% for Class Y shares.
For shareowners who purchased or redeemed Fund shares during the period the
Fund's total return may be lower; for example, after deducting the maximum
applicable sales charges, Class A shares lost 1.90%, Class B shares lost 3.16%
and Class C shares gained 1.17%. (Class Y shares are not subject to sales
charges.)
Portfolio Highlights--Although inflation remains low in Europe, expected
returns are low for the longer maturities of all European bond markets.
Therefore, we have shortened the duration of the European portion of our
portfolio. (Duration is a measure of a bond fund's sensitivity to interest rate
changes.) Over the six-month period we increased investments in Poland, Hungary
and Greece, which offered high single-digit yields on intermediate maturities.
In the United States we shifted some of the Fund's Treasury holdings to
higher-yielding investment grade corporate bonds and AA-rated mortgages.
- ------------------------------------------------------------------------------
PAINEWEBBER GLOBAL INCOME FUND
FUND PROFILE
Goal:
High current income consistent with prudent investment risk;
secondarily capital appreciation
Portfolio manager:
Stuart Waugh, Mitchell Hutchins Asset Management Inc.
Total Net Assets:
$524.8 million as of April 30, 1998
Dividend Payments:
Monthly
PAINEWEBBER GLOBAL INCOME FUND
Quarterly breakdown as percent of net assets, April 30, 1998*
AAA 66.7%
AA 9.4%
A 15%
BBB 1.6%
BB 2.1%
B 1%
A1/P1 4.2%
* Allocations subject to change
1
<PAGE>
SEMIANNUAL REPORT
PAINEWEBBER GLOBAL INCOME FUND
Currency exposure as percent of net assets, April 30, 1998*
U.S. Dollar 50.9%
Hedged 19.5%
Unhedged (Europe) 23.9%
Unhedged (Japan, Canada, New Zealand) 5.7%
OUTLOOK
- -------------------------------------------------------------------------------
[PICTURE]
The overall outlook for developed markets is positive. Growth and inflation
should remain moderate in the U.S. and Europe. Our main focus of investment is
on high-quality holdings in these markets.
We expect growth in Asia to remain anemic over the next 12 months;
manufacturing supply will most likely overwhelm demand and solvency issues will
likely predominate. International liquidity issues will continue to affect
spreads in dollar-denominated, emerging market debt. If the recession in Japan
stalls an Asian recovery, emerging markets will face financing problems.
In Latin America, we expect lower commodity prices and stiffer export
competition to worsen trade accounts. As a consequence, we have made only
limited use of the Fund's ability to invest in emerging market debt. The
exceptions are Poland and Mexico, where we believe sovereign creditworthiness
will continue to improve this year.
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have.
For a quarterly Fund Profile on the PaineWebber Global Income Fund or another
fund in the PaineWebber Family of Funds,(1) please contact your investment
executive.
Sincerely,
/s/ MARGO ALEXANDER /s/ STUART WAUGH
MARGO ALEXANDER STUART WAUGH
President Managing Director
Mitchell Hutchins Asset Management Inc. Mitchell Hutchins Asset Management Inc.
Portfolio Manager, Global Income Fund
This letter is intended to assist shareholders in understanding how the Fund
performed during the six-month period ended April 30, 1998, and reflects our
views at the time we are writing this report. Of course, these views may change
in response to changing circumstances. We encourage you to consult your
investment executive regarding your personal investment program.
(1) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses,
and should be read carefully before investing.
2
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
<TABLE>
<CAPTION>
PERFORMANCE RESULTS (unaudited)
Net Asset Value Total Return(1)
---------------------------------------- -----------------------------------
04/30/98 10/31/97 04/30/97 12 Months 6 months
Ended 04/30/98 Ended 04/30/98
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $10.17 $10.27 $10.09 7.58% 2.21%
- ---------------------------------------------------------------------------------------------------------------
Class B Shares 10.14 10.24 10.07 6.65 1.79
- ---------------------------------------------------------------------------------------------------------------
Class C Shares 10.16 10.26 10.09 6.91 1.91
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Performance Summary Class A Shares
Net Asset Value
----------------------- Capital Gains Dividends Paid from Total
Period Covered Beginning Ending Distributed Paid Capital Return(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
07/01/91-12/31/91 $10.40 $11.05 $0.0100 $0.4800 -- 11.11%
- ---------------------------------------------------------------------------------------------------------------
1992 11.05 10.42 0.1644 0.6029 -- 1.22
- ---------------------------------------------------------------------------------------------------------------
1993 10.42 10.97 0.1445 0.7486 -- 14.16
- ---------------------------------------------------------------------------------------------------------------
1994 10.97 9.90 0.0009 0.3213 $0.3178 (3.89)
- ---------------------------------------------------------------------------------------------------------------
1995 9.90 10.44 -- 0.7325 -- 13.20
- ---------------------------------------------------------------------------------------------------------------
1996 10.44 10.44 -- 0.7113 -- 7.13
- ---------------------------------------------------------------------------------------------------------------
1997 10.44 10.14 -- 0.5914 0.0899 3.84
- ---------------------------------------------------------------------------------------------------------------
01/01/98-04/30/98 10.14 10.17 -- 0.2126 -- 2.41
- ---------------------------------------------------------------------------------------------------------------
Totals: $0.3198 $4.4006 $0.4077
- ---------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 04/30/98: 59.13%
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Performance Summary Class B Shares
Net Asset Value
----------------------- Capital Gains Dividends Paid from Total
Period Covered Beginning Ending Distributed Paid Capital Return(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
03/20/87-12/31/87 $10.00 $10.86 $0.1800 $0.6647 -- 17.58%
- ---------------------------------------------------------------------------------------------------------------
1988 10.86 10.64 0.1489 1.3436 -- 12.15
- ---------------------------------------------------------------------------------------------------------------
1989 10.64 10.25 -- 0.9200 -- 5.44
- ---------------------------------------------------------------------------------------------------------------
1990 10.25 10.87 -- 1.1300 -- 17.72
- ---------------------------------------------------------------------------------------------------------------
1991 10.87 11.05 0.0100 0.7300 -- 10.75
- ---------------------------------------------------------------------------------------------------------------
1992 11.05 10.41 0.1644 0.5214 -- 0.38
- ---------------------------------------------------------------------------------------------------------------
1993 10.41 10.96 0.1445 0.6689 -- 13.36
- ---------------------------------------------------------------------------------------------------------------
1994 10.96 9.87 0.0009 0.2852 $0.2810 (4.77)
- ---------------------------------------------------------------------------------------------------------------
1995 9.87 10.41 -- 0.6538 -- 12.39
- ---------------------------------------------------------------------------------------------------------------
1996 10.41 10.41 -- 0.6336 -- 6.34
- ---------------------------------------------------------------------------------------------------------------
1997 10.41 10.11 -- 0.5240 0.0804 3.06
- ---------------------------------------------------------------------------------------------------------------
01/01/98-04/30/98 10.11 10.14 -- 0.1831 -- 2.12
- ---------------------------------------------------------------------------------------------------------------
Totals: $0.6487 $8.2583 $0.3614
- ---------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 04/30/98: 157.23%
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Performance Summary Class C Shares
Net Asset Value
----------------------- Capital Gains Dividends Paid from Total
Period Covered Beginning Ending Distributed Paid Capital Return(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
07/02/92-12/31/92 $10.94 $10.42 $0.1644 $0.3744 -- 0.10%
- ---------------------------------------------------------------------------------------------------------------
1993 10.42 10.97 0.1445 0.6973 -- 13.64
- ---------------------------------------------------------------------------------------------------------------
1994 10.97 9.89 0.0009 0.2978 $0.2938 (4.43)
- ---------------------------------------------------------------------------------------------------------------
1995 9.89 10.42 0.6801 -- 12.54
- ---------------------------------------------------------------------------------------------------------------
1996 10.42 10.43 0.6592 -- 6.70
- ---------------------------------------------------------------------------------------------------------------
1997 10.43 10.13 -- 0.5482 0.0836 3.33
- ---------------------------------------------------------------------------------------------------------------
01/01/98-04/30/98 10.13 10.16 -- 0.1906 -- 2.19
- ---------------------------------------------------------------------------------------------------------------
Totals: $0.3098 $3.4476 $0.3774
- ---------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 04/30/98: 37.84%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends, capital gains and other
distributions at net asset value on the payable dates and do not include
sales charges; results would be lower if sales charges were included.
Note: The Fund offers Class Y shares to a limited group of eligible investors,
including participants in certain investment programs that are sponsored
by PaineWebber and may invest in PaineWebber mutual funds. For the six
months ended April 30, 1998 and since inception, August 26, 1991 through
April 30, 1998, Class Y shares had a total return of 2.28% and 59.94%,
respectively. Class Y shares do not have initial or contingent deferred
sales charges or ongoing distribution and service fees.
The data above represents past performance of the Fund's shares, which is
no guarantee of future results. The principal value of an investment in the
Fund will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
3
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
PERFORMANCE RESULTS (unaudited) (concluded)
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
% Return Without Deducting % Return After Deducting
Maximum Sales Charge Maximum Sales Charge
-------------------------------- --------------------------------
Class A* B** C*** A* B** C***
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 03/31/98 7.11% 6.30% 6.56% 2.83% 1.30% 5.81%
- ---------------------------------------------------------------------------------------------------------------------------
Five Years Ended 03/31/98 5.92 5.10 5.37 5.05 4.80 5.37
- ---------------------------------------------------------------------------------------------------------------------------
Ten Years Ended 03/31/98 N/A 7.61 N/A N/A 7.61 N/A
- ---------------------------------------------------------------------------------------------------------------------------
Commencement of Operations
Through 03/31/98+ 6.97 8.84 5.58 6.33 8.84 5.58
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Maximum sales charge for Class A shares is 4% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares is 5.0% and
is reduced to 0% after 6 years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charge for Class C shares is 0.75% and
is reduced to 0% after 1 year. Class C shares bear ongoing 12b-1
distribution and service fees.
+ Commencement of operations dates are July 1, 1991, March 20, 1987 and
July 2, 1992 for Class A, Class B and Class C shares, respectively.
Note: The Fund offers Class Y shares to a limited group of eligible investors,
including participants in certain investment programs that are sponsored
by PaineWebber and may invest in PaineWebber mutual funds. For the twelve
months ended March 31, 1998, for the five years ended March 31, 1998 and
since inception August 26, 1991 through March 31, 1998, Class Y shares
have an average annual total return of 7.34%, 6.21% and 7.24%,
respectively. Class Y shares do not have initial or contingent deferred
sales charges or ongoing distribution and service fees.
The data above represents past performance of the Fund's shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
4
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS APRIL 30, 1998 (unaudited)
Principal
Amount Maturity Interest
(000)* Dates Rates Value
-------- --------- --------- ------------
<S> <C> <C> <C>
Long-Term Debt Securities--94.15%
Brazil--0.55%
US$ 3,481 Federal Republic of Brazil........................... 04/15/14 8.000% $2,882,415
----------
Canada--1.92%
10,675 Government of Canada................................. 06/01/08 10.000 10,093,039
----------
Germany--7.46%
61,740 Federal Republic of Germany..........................09/20/01 to 11/11/04 7.500 to 8.250 39,152,755
----------
Greece--1.62%
2,675,800 Republic of Hellenic.................................03/21/00 to 03/21/02 9.200 to 9.800 8,523,341
----------
Hungary--1.10%
1,196,860 Government of Hungary................................01/12/00 to 08/24/00 16.000 to 18.500 5,753,400
----------
Italy--2.61%
20,615,000 Republic of Italy(1)................................. 04/01/04 8.500 13,682,379
----------
Japan--2.86%
US$10,200 Nomura Asset Securities Corporation.................. 03/15/30 6.590 10,416,750
US$ 4,520 Sony Corporation..................................... 03/04/03 6.125 4,513,966
----------
14,930,716
----------
Mexico--2.10%
US$10,165 United Mexican States(1).............................01/15/07 to 09/15/16 8.625 to 11.375 10,995,736
----------
Netherlands--4.51%
43,230 Government of Netherlands............................09/15/01 to 01/15/06 6.000 to 8.750 23,687,338
----------
New Zealand--0.57%
5,000 Government of New Zealand(1)......................... 03/15/02 10.000 3,016,504
----------
Poland--3.56%
42,030 Republic of Poland(2)................................02/12/00 to 06/12/02 12.000 to 14.000 10,466,769
US$ 2,700 Republic of Poland, PAR.............................. 10/27/24 3.000# 1,728,000
US$ 7,120 Republic of Poland, PDI.............................. 10/27/14 4.000# 6,497,000
----------
18,691,769
----------
Spain--1.71%
1,200,000 Government of Spain.................................. 03/25/00 12.250 8,969,107
----------
Sweden--2.98%
99,100 Kingdom of Sweden....................................06/15/01 to 05/05/03 10.250 to 13.000 15,663,500
----------
United Kingdom--15.81%
43,270 United Kingdom Gilt..................................07/14/00 to 12/07/15 8.00 to 13.000 82,973,391
----------
United States--44.79%
9,692 Banc One Corporation................................. 09/01/00 6.250 9,712,218
16,000 Clorox Corporation................................... 07/15/01 8.800 17,247,904
22,000 Ford Motor Credit Corporation........................ 07/01/01 to 09/10/02 6.550 to 9.500 23,443,840
NZD21,525 Federal National Mortgage Association................ 06/20/02 7.250 11,677,221
5,815 General Motor Acceptance Corporation................. 01/22/03 5.875 5,735,649
2,900 Phillip Morris Companies............................. 07/15/05 7.000 2,971,627
16,100 U.S. Treasury Inflation Index Bonds.................. 04/15/28 3.625 15,979,250
143,166 U.S. Treasury Notes(1)............................... 08/15/99 to 02/15/08 5.500 to 8.000 148,346,020
-----------
235,113,729
-----------
Total Long-Term Debt Securities (cost--$494,677,513)............ 494,129,119
-----------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PAINEWEBBER GLOBAL INCOME FUND
Principal
Amount Maturity Interest
(000)* Dates Rates Value
- ---------- ---------- -------- -----------
<S> <C> <C> <C>
Short-Term Debt Securities--3.53%
Grand Cayman--2.36%
JPY 1,640,646 State Street Bank Time Deposit........................ 05/28/98 0.450% $12,387,844
-----------
Norway--1.17%
44,380 Kingdom of Norway........................................ 01/31/99 9.000 6,141,358
-----------
Total Short-Term Debt Securities (cost--$18,626,709) 18,529,202
-----------
Repurchase Agreement--0.80%
4,187 Repurchase agreement dated 04/30/98 with First Chicago
National Bank Inc., collateralized by $4,195,000 U.S.
Treasury Notes, 5.625%, due 12/31/99 (value--$4,270,930);
proceeds: $4,187,640 (cost--$4,187,000).................... 05/01/98 5.500 4,187,000
-----------
Total Investments (cost--$517,491,221)--98.48%......................................................... 516,845,321
Other assets in excess of liabilities--1.52%........................................................... 7,972,703
-----------
Net Assets--100.00%.................................................................................... $524,818,024
===========
</TABLE>
- -------------------
Note: The Portfolio of Investments is listed by the issuer's country of origin
* In local currency unless otherwise indicated
(1) Security, or portion thereof, was on loan at April 30, 1998
(2) Illiquid Securities represent 2.00% of Net Assets
# Reflects rate at April 30, 1998 on step coupon rate instruments
PAR Par Bond
PDI Past Due Interest Bond
<TABLE>
<CAPTION>
Forward Foreign Currency Contracts
Unrealized
Contract to Appreciation
Deliver In Exchange for Maturity Dates (Depreciation)
----------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
British Pounds........................ 11,570,000 US$ 18,893,810 05/12/98 $ (446,447)
British Pounds........................ 20,893,000 US$ 34,493,411 07/01/98 to 07/27/98 (322,997)
German Deutschemarks.................. 11,503,000 US$ 6,331,113 06/25/98 (86,653)
German Deutschemarks.................. 26,883,858 US$ 15,083,145 06/22/98 to 10/02/98 66,520
German Deutschemarks.................. 50,895,000 US$ 27,691,931 06/02/98 (672,891)
Italian Lira.......................... 7,130,000,000 US$ 3,982,217 05/27/98 (42,491)
Korean Won............................ 4,420,000,000 US$ 2,932,979 05/11/98 (374,166)
New Zealand Dollars................... 13,097,441 US$ 7,544,848 05/29/98 to 06/22/98 296,701
Netherland Guilder.................... 17,850,000 US$ 8,750,000 09/28/98 (159,556)
Polish Zloties........................ 33,350,184 US$ 9,660,000 05/26/98 (31,851)
Swedish Kronas........................ 113,000,000 US$ 14,561,856 07/17/98 (68,059)
U.S. Dollars.......................... 32,267,279 DEM 58,388,847 06/02/98 to 06/25/98 274,017
U.S. Dollars.......................... 9,049,029 DEM 16,500,000 06/22/98 146,757
U.S. Dollars.......................... 3,965,429 ITL 7,130,000,000 05/27/98 59,278
U.S. Dollars.......................... 2,905,983 KRW 4,420,000,000 05/11/98 401,163
--------------
$ (960,675)
==============
- -----------------------
Currency Type Abbreviations:
DEM - German Deutschemarks
ITL - Italian Lira
KRW - Korean Won
<CAPTION>
Investments by Type of Issuer
Percent of Net Assets
------------------------
Long-term Short-term
--------- -----------
<S> <C> <C>
Government and other public issuers................................................ 77.95% 1.17%
Bank and other financial institutions.............................................. 9.40 2.36
Industrial......................................................................... 6.80 --
Repurchase agreements.............................................................. -- 0.80
--------- ----------
94.15% 4.33%
========= ==========
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments in securities, at value (cost--$517,491,221)......................................... $516,845,321
Investments of collateral received for securities loaned......................................... 42,112,763
Receivable for investments and foreign currency sold............................................. 39,648,855
Interest receivable.............................................................................. 12,407,679
Unrealized appreciation on forward foreign currency conracts..................................... 1,244,436
Receivable for shares of beneficial interest sold................................................ 121,111
Other assets..................................................................................... 144,729
------------
Total assets..................................................................................... 612,524,894
------------
Liabilities
Collateral for securities loaned................................................................. 42,112,763
Payable for investments and foreign currency contracts purchased................................. 37,394,006
Payable for shares of beneficial interest repurchased............................................ 2,397,672
Unrealized depreciation on forward foreign currency contracts.................................... 2,205,111
Due to custodian................................................................................. 2,237,074
Payable to affiliates............................................................................ 490,845
Accrued expenses and other liabilities........................................................... 869,399
------------
Total liabilities................................................................................ 87,706,870
------------
Net Assets
Capital Stock--$0.001 par value (unlimited amount authorized).................................... 558,625,982
Distributions in excess of net investment income................................................. (6,416,031)
Accumulated net realized losses from investment transactions and foreign currency................ (25,868,534)
Net unrealized depreciation of investments, other assets, liabilities and
forward contracts denominated in foreign currencies.............................................. (1,523,393)
------------
Net assets....................................................................................... $524,818,024
============
Class A:
Net assets....................................................................................... $428,389,361
------------
Shares outstanding............................................................................... 42,136,863
------------
Net asset value and redemption value per share................................................... $10.17
============
Maximum offering price per share (net asset value plus sales charge of 4.00% of offering price).. $10.59
============
Class B:
Net assets....................................................................................... $56,288,935
------------
Shares outstanding............................................................................... 5,553,176
------------
Net asset value and offering price per share..................................................... $10.14
------------
Class C:
Net assets....................................................................................... $30,633,979
------------
Shares outstanding............................................................................... 3,014,390
------------
Net asset value and offering price per share..................................................... $10.16
============
Class Y:
Net assets....................................................................................... $9,505,749
------------
Shares outstanding............................................................................... 935,241
------------
Net asset value and offering price per share..................................................... $10.16
============
</TABLE>
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six
Months Ended
April 30, 1998
(unaudited)
-----------------
Investment income:
<S> <C>
Interest (net of foreign withholding taxes)...................................................... $21,181,887
-----------------
Expenses:
Investment advisory and administration fees...................................................... 2,153,595
Service fees--Class A............................................................................ 574,608
Service and distribution fees--Class B........................................................... 371,808
Service and distribution fees--Class C........................................................... 125,857
Transfer agency and service fees................................................................. 330,188
Custody and accounting........................................................................... 183,490
Reports and notices to shareholders.............................................................. 161,696
Legal and audit.................................................................................. 112,738
State registration fees.......................................................................... 45,417
Trustees' fees................................................................................... 5,250
Other expenses................................................................................... 24,092
-----------------
4,088,739
-----------------
Net investment income............................................................................ 17,093,148
-----------------
Realized and unrealized gains (losses) from investment activities:
Net realized gains (losses) from:
Investment transactions........................................................................ 1,090,457
Foreign currency transactions.................................................................. (4,530,092)
Net change in unrealized appreciation/depreciation of:
Investments.................................................................................... (91,926)
Other assets, liabilities and forward contracts denominated in foreign currencies.............. (1,521,076)
-----------------
Net realized and unrealized losses from investment activities.................................... (5,052,637)
-----------------
Net increase in net assets resulting from operations............................................. $12,040,511
=================
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the
April 30, 1998 Year Ended
(unaudited) October 31, 1997
---------------- -------------------
<S> <C> <C>
From operations:
Net investment income........................................................... $ 17,093,148 $ 49,357,423
Net realized gains from investment transactions................................. 1,090,457 4,199,590
Net realized losses from foreign currency transactions.......................... (4,530,092) (10,338,511)
Net change in unrealized appreciation/depreciation of:
Investments................................................................... (91,926) (14,031,758)
Other assets, liabilities and forward contracts in foreign currencies......... (1,521,076) 2,416,586
---------------- -------------------
Net increase in net assets resulting from operations............................ 12,040,511 31,603,330
---------------- -------------------
Dividends and distributions to shareholders:
From net investment income--Class A............................................. (14,642,946) (27,840,969)
From net investment income--Class B............................................. (2,054,847) (8,831,997)
From net investment income--Class C............................................. (967,296) (2,128,744)
From net investment income--Class Y............................................. (312,078) (630,033)
In excess of net investment income--Class A..................................... -- (3,060,693)
In excess of net investment income--Class B..................................... -- (844,584)
In excess of net investment income--Class C..................................... -- (226,669)
In excess of net investment income--Class Y..................................... -- (67,644)
From paid in capital--Class A................................................... -- (4,640,523)
From paid in capital--Class B................................................... -- (1,280,531)
From paid in capital--Class C................................................... -- (343,669)
From paid in capital--Class Y................................................... -- (102,560)
---------------- -----------------
Total dividends and distributions to shareholders............................... (17,977,167) (49,998,616)
---------------- -----------------
From beneficial interest transactions:
Net proceeds from the sale of shares............................................ 77,822,219 24,327,034
Cost of shares repurchased...................................................... (195,734,119) (322,360,553)
Proceeds from dividends reinvested.............................................. 11,606,030 31,974,549
---------------- -----------------
Net decrease in net assets from beneficial interest transactions................ (106,305,870) (266,058,970)
---------------- -----------------
Net decrease in net assets...................................................... (112,242,526) (284,454,256)
Net assets:
Beginning of period............................................................. 637,060,550 921,514,806
---------------- ----------------
End of period................................................................... $ 524,818,024 $ 637,060,550
================ ================
</TABLE>
See accompanying notes to financial statements
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
Organization and Significant Accounting Policies
PaineWebber Investment Series ("Trust") was organized under Massachussetts
law by a Declaration of Trust dated December 22, 1986 and is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, as a non-diversified open-end management investment company. The Trust
currently has one series, PaineWebber Global Income Fund (the "Fund").
Currently, the Fund offers Class A, Class B, Class C and Class Y shares. Each
class represents interests in the same assets of the Fund, and the classes are
identical except for differences in their sales charge structure, ongoing
service and/or distribution charges, if any, and certain transfer agency and
related expenses. In addition, Class B shares and all corresponding reinvested
dividend shares automatically convert to Class A shares approximately six years
after initial issuance. All classes of shares have equal rights as to voting
privileges except that Class A, Class B and Class C shares each have exclusive
voting rights with respect to their service and/or distribution plan. Class Y
shares have no service or distribution plan.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies:
Valuation of Investments--Securities which are listed on stock exchanges are
valued at the last sale price on the day the securities are being valued or,
lacking any sales on such day, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities are generally
valued on the exchange designated as the primary market by Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins"), an asset management subsidiary of
PaineWebber Incorporated ("PaineWebber") and investment advisor, administrator
and distributor of the Fund. Securities traded in the over-the-counter ("OTC")
market and listed on The Nasdaq Stock Market, Inc. ("Nasdaq") are valued at the
last available sales price, or last bid price available if no sales occur on
Nasdaq prior to the time of valuation; other OTC securities are valued at the
last bid price available in the OTC market prior to the time of valuation (other
than short-term investments that mature in sixty days or less). The amortized
cost method of valuation generally is used to value short-term debt instruments
with sixty days or less remaining to maturity. Securities and assets for which
market quotations are not readily available (including restricted and/or
illiquid securities subject to limitations as to their sale) are valued at fair
value as determined in good faith by or under the direction of the Trust's board
of trustees. All investments quoted in foreign currencies will be valued daily
in U.S. dollars on the basis of the foreign currency exchange rates prevailing
at the time such valuation is determined by the Fund's custodian.
Foreign currency exchange rates are generally determined prior to the close
of regular trading on the New York Stock Exchange ("NYSE"). Occasionally events
affecting the value of foreign investments and such exchange rates occur between
the time at which they are determined and the close of the NYSE, which will not
be reflected in the computation of the Fund's net asset value on that day. If
events occur materially affecting the value of such securities or currency
exchange rates during such time period, the securities will be valued at their
fair value as determined in good faith by or under the direction of the Trust's
board of trustees.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
Repurchase Agreements--The Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. The Fund occasionally
participates in joint repurchase agreement transactions with other funds managed
by Mitchell Hutchins.
Investment Transactions and Investment Income--Investment transactions are
recorded on the trade date. Realized gains and losses from investments and
foreign exchange transactions are calculated using the identified cost method.
Interest income is recorded on an accrual basis. Discounts are accreted as
adjustments to interest income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of
dividend-eligible shares, as appropriate) of each class at the beginning of the
day (after adjusting for current capital share activity of the respective
classes). Class specific expenses are charged directly to the applicable class
of shares.
Foreign Currency Translation--The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis: (1) market value of investment securities, other
assets and liabilities--at the exchange rates prevailing at the end of the
period; and (2) purchase and sales of investment securities, income and
expenses--at the rates of exchange prevailing on the respective dates of such
transactions.
Although the net assets and the market values of the Fund's securities are
presented at the foreign exchange rates at the end of the period, the Fund does
not generally isolate the effect of fluctuations in foreign exchange rates from
the effect of the changes in market prices of securities. However, the Fund does
isolate the effect of fluctuations in foreign exchange rates when determining
the gain or loss upon the sale or maturity of foreign currency denominated debt
obligations pursuant to federal income tax regulations. Certain foreign exchange
gains and losses included in realized and unrealized gains and losses are
included in or are a reduction of ordinary income in accordance with federal
income tax regulations. Net realized foreign currency gain (loss) is treated as
ordinary income for income tax reporting purposes. Gains/losses from translating
foreign currency denominated assets and liabilities at year-end exchange rates
are included in change in unrealized appreciation/depreciation of other assets
and liabilities denominated in foreign currencies.
Forward Foreign Currency Contracts--The Fund may enter into forward foreign
currency exchange contracts ("forward contracts") in connection with planned
purchases or sales of securities or to hedge the U.S. dollar value of portfolio
securities denominated in a particular currency. The Fund may also use forward
currency contracts to enhance income.
The Fund has no specific limitation on the percentage of assets which may be
committed to such contracts. The Fund may enter into forward contracts or
maintain a net exposure to forward contracts only if (1) the consummation of the
contracts would not obligate the Fund to deliver an amount of foreign currency
in excess of the value of the position being hedged by such contracts or (2) the
Fund maintains cash or liquid securities in a segregated account in an amount
not less than the value of its total assets committed to the consummation of the
forward contracts and not covered as provided in (1) above, as marked-to-market
daily.
Risks may arise with respect to entering into forward contracts from the
potential inability of counterparties to meet the terms of their forward
contracts and from unanticipated movements in the value of foreign currencies
relative to the U.S. dollar.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
Fluctuations in the value of forward contracts are recorded for book purposes
as unrealized gains or losses by the Fund. Realized gains and losses include net
gains and losses recognized by the Fund on contracts which have matured.
Dividends and Distributions--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
Concentration of Risk
Investing in securities of foreign issuers and currency transactions may
involve certain considerations and risks not typically associated with
investments in the United States. These risks include revaluation of currencies,
adverse fluctuations in foreign currency values and possible adverse political,
social and economic developments, including those particular to a specific
industry, country or region, which could cause the securities and their markets
to be less liquid and prices more volatile than those of comparable U.S.
companies and U.S. government securities. These risks are greater with respect
to securities of issuers located in emerging market countries in which the Fund
is authorized to invest. The ability of the issuers of debt securities held by
the Fund to meet their obligations may be affected by economic and political
developments particular to a specific industry, country or region.
Investment Adviser and Administrator
The Trust's board of trustees has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment adviser, administrator and
distributor of the Fund. In accordance with the Advisory Contract, the Fund pays
Mitchell Hutchins an investment advisory and administration fee, which is
accrued daily and paid monthly, in accordance with the following schedule:
Average Daily Net Assets Annual Rate
------------------ ----------
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
At April 30, 1998, the Fund owed Mitchell Hutchins $330,351 in investment
advisory and administration fees.
Distribution Plans
Mitchell Hutchins is the distributor of the Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under separate
plans of service and/or distribution pertaining to the Class A, Class B and
Class C shares, the Fund pays Mitchell Hutchins monthly service fees at the
annual rate of 0.25% of the average daily net assets of Class A, Class B and
Class C shares and monthly distribution fees at the annual rates of 0.75% and
0.50% of the average daily net assets of Class B and Class C shares,
respectively. At April 30, 1998, the Fund owed Mitchell Hutchins $156,646 in
service and distribution fees.
Mitchell Hutchins also receives the proceeds of the initial sales charges
paid by shareholders upon the purchase of Class A shares and the contingent
deferred sales charge paid by shareholders upon certain redemptions of Class A,
Class B and Class C shares. Mitchell Hutchins has informed the Fund that for the
six months ended April 30, 1998, it earned $88,282 in sales charges.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
Security Lending
The Fund may lend securities up to 33 1/3% of its total assets to qualified
institutions. The loans are secured at all times by cash or U.S. government
securities in an amount at least equal to the market value of the securities
loaned, plus accrued interest, determined on a daily basis and adjusted
accordingly. The Fund will regain record ownership of loaned securities to
exercise certain beneficial rights; however, the Fund may bear the risk of delay
in recovery of, or even loss of rights in, the securities loaned should the
borrower fail financially. The Fund receives compensation, which is included
in interest income, for lending its securities from interest earned on the cash
or U.S. government securities held as collateral, net of fee rebates paid to the
borrower plus reasonable administrative and custody fees. For the six months
ended April 30, 1998, PaineWebber earned $22,877 in compensation as the Fund's
lending agent. At April 30, 1998, the Fund owed PaineWebber $3,848 in
compensation.
At April 30, 1998, the Fund's custodian held cash having an aggregate value
of $42,112,763 as collateral for portfolio securities loaned having a market
value of $40,091,653.
As of April 30, 1998 the Fund invested the cash collateral in the following
Money Market Funds and Repurchase Agreements:
<TABLE>
<CAPTION>
<S> <C>
Liquid Assets Portfolio.................................................... $ 9,295,243
Temp Fund Portfolio........................................................ 26,520
Societe Generale Repurchase Agreement, 5.520%, due 05/01/98................ 16,791,000
Union Bank of Switzerland Repurchase Agreement, 5.510%, due 05/01/98....... 16,000,000
------------
$ 42,112,763
============
</TABLE>
Bank Line of Credit
The Fund may participate with other funds managed by Mitchell Hutchins in a
$200 million committed credit facility ("Facility") to be utilized for temporary
financing until the settlement of sale or purchase of portfolio securities, the
repurchase or redemption of shares of the Fund at the request of the
shareholders and other temporary or emergency purposes. In connection therewith,
the Fund has agreed to pay a commitment fee, pro rata, based on the relative
asset size of the funds in the Facility. Interest is charged to the Fund at
rates based on prevailing market rates in effect at the time of borrowings. For
the six months ended April 30, 1998, the Fund did not borrow under the Facility.
Transfer Agency Service Fees
PaineWebber provides transfer agency related services to the Fund pursuant to
a delegation of authority from PFPC, Inc., the Fund's transfer agent, and is
compensated for the services by PFPC, Inc., not the Fund. For the six months
ended April 30, 1998, PaineWebber received from PFPC, Inc., not the Fund,
approximately 53% of the total transfer agency and related service fees
collected by PFPC, Inc. from the Fund.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
Investments in Securities
For federal income tax purposes, the cost of securities owned at April 30,
1998 was substantially the same as the cost of securities for financial
statement purposes.
At April 30, 1998, the components of the net unrealized depreciation of
investments were as follows:
<TABLE>
<CAPTION>
<S> <C>
Gross appreciation (investments having an excess of value over cost)......... $ 7,619,292
Gross depreciation (investments having an excess of cost over value)......... (8,265,192)
-------------
Net unrealized depreciation of investments $ (645,900)
=============
For the six months ended April 30, 1998, total aggregate purchases and sales
of portfolio securities, excluding short-term securities, were as follows:
Purchases.................................................................... $ 329,547,564
Sales........................................................................ $ 378,306,489
</TABLE>
Federal Tax Status
The Fund intends to distribute substantially all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
At October 31, 1997, the Fund had a capital loss carry forward of $22,428,898
available as a reduction, to the extent provided in the regulations, of any
future net realized capital gains which expires as follows: $6,675,082 in 2002
and $15,753,816 in 2003. To the extent that such losses are used to offset
future capital gains, it is probable that the gains so offset will not be
distributed.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
Shares of Beneficial Interest
There are an unlimited amount of $0.001 par value shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------------------- -------------------- --------------------- -----------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- -------- -------- -------- -------- -------- -------- -----------
Six Months Ended
April 30, 1998:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold........... 7,220,135 $ 73,572,664 41,787 $ 424,207 200,285 $ 2,042,332 172,585 $ 1,783,016
Shares repurchased.... (16,555,152) (168,698,654) (1,548,592) (15,737,388) (859,315) (8,757,267) (249,476) (2,540,810)
Dividends reinvested.. 913,282 9,300,975 123,850 1,258,094 73,363 746,815 29,472 300,146
Shares converted from
Class B to Class A.. 3,146,428 32,040,267 (3,155,192) (32,040,267) -- -- -- --
---------- ------------ ---------- ------------- ---------- ------------ -------- -----------
Net decrease.......... (5,275,307) $(53,784,748) (4,538,147) $ (46,095,354) (585,667) $ (5,968,120) (47,419) $ (457,648)
========== ============ ========== ============= ========== ============ ======== ===========
Year Ended
October 31, 1997:
Shares sold........... 1,400,652 $ 14,315,313 266,230 $ 2,723,757 528,903 $ 5,416,951 208,671 $ 1,871,013
Shares repurchased.... (21,782,669) (222,541,051) (7,236,905) (74,001,286) (2,003,842) (20,474,051) (548,721) (5,344,165)
Dividends reinvested.. 2,177,592 22,246,482 671,598 6,868,908 203,733 2,081,999 75,931 777,160
Shares converted from
Class B to Class A.. 13,047,410 134,125,097 (13,082,351) (134,125,097) -- -- -- --
---------- ------------ ---------- ------------- ---------- ------------ -------- -----------
Net decrease (5,157,015) $(51,854,159) (19,381,428) $(198,533,718) (1,271,206) $(12,975,101) (264,119) $(2,695,992)
========== ============ ========== ============= ========== ============ ======== ===========
</TABLE>
15
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------
For the
Six Months
Ended For the Years Ended October 31,
April 30, 1998 -----------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 10.27 $ 10.46 $ 10.35 $ 9.99 $ 10.97 $ 10.64
----- ----- ----- ---- ----- -----
Net investment income................................... 0.31@ 0.69@ 0.72@ 0.77@ 0.72 0.59
Net realized and unrealized gains (losses) from
investments and foreign currency...................... (0.09)@ (0.19)@ 0.13@ 0.31 (1.05) 0.68
------ ----- ---- ---- ---- ----
Net increase (decrease) from investment transactions.... 0.22 0.50 0.85 1.08 (0.33) 1.27
------ ----- ---- ---- ---- ----
Dividends from net investment income.................... (0.32) (0.54) (0.74) (0.72) (0.33) (0.80)
Distributions from net realized gains from investments
and foreign currency transactions.................... -- -- -- -- -- (0.14)
Distributions in excess of net investment income........ -- (0.06) -- -- -- --
Distributions from paid in capital...................... -- (0.09) -- -- (0.32) --
------ ---- ---- ---- ---- ----
Total dividends and distributions to shareholders....... (0.32) (0.69) (0.74) (0.72) (0.65) (0.94)
------ ---- ---- ---- ---- ----
Net asset value, end of period.......................... $ 10.17 $ 10.27 $ 10.46 $ 10.35 $ 9.99 $ 10.97
======= ===== ===== ==== ==== ====
Total investment return(1).............................. 2.21% 4.99% 8.60% 11.09% (3.10) % 12.41%
======= ===== ===== ==== ==== =====
Ratios/supplemental data:
Net assets, end of period (000's)....................... $ 428,389 $486,718 $549,932 $663,022 $611,855 $648,853
Expenses to average net assets.......................... 1.28%* 1.21% 1.27% 1.24%(2) 1.17% 1.32%**
Net investment income to average net assets............. 6.07%* 6.66% 6.88% 7.47%(2) 6.94% 6.82%**
Portfolio turnover rate................................. 62% 172% 126% 113% 108% 90%
</TABLE>
- ----------------
* Annualized
** Includes 0.15% of interest expense related to the reverse repurchase
agreement transactions entered into during the fiscal year
@ Calculated using the average shares outstanding for the period
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net asset
value on the last day of each period reported. The figures do not include sales
charges; results would be lower if sales charges were included. Total investment
return for periods of less than one year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
16
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------
For the
Six Months
Ended For the Years Ended October 31,
April 30, 1998 -----------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 10.24 $ 10.44 $ 10.31 $ 9.96 $ 10.95 $ 10.62
------- -------- -------- -------- -------- ----------
Net investment income................................... 0.25@ 0.58@ 0.64@ 0.69@ 0.86 0.78
Net realized and unrealized gains (losses) from
investments and foreign currency...................... (0.07)@ (0.17)@ 0.15@ 0.30@ (1.28) 0.40
------- -------- -------- -------- -------- ----------
Net increase (decrease) from investment transactions.... 0.18 0.41 0.79 0.99 (0.42) 1.18
------- -------- -------- -------- -------- ----------
Dividends from net investment income.................... (0.28) (0.48) (0.66) (0.64) (0.29) (0.71)
Distributions from net realized gains from investments
and foreign currency transactions.................... -- -- -- -- -- (0.14)
Distributions in excess of net investment income........ -- (0.05) -- -- -- --
Distributions from paid in capital...................... -- (0.08) -- -- (0.28) --
------- -------- -------- -------- -------- ----------
Total dividends and distributions to shareholders....... (0.28) (0.61) (0.66) (0.64) (0.57) (0.85)
------- -------- ------- -------- -------- ----------
Net asset value, end of period.......................... $ 10.14 $ 10.24 $ 10.44 $ 10.31 $ 9.96 $ 10.95
======= ======== ======== ======== ======== ==========
Total investment return(1).............................. 1.79% 4.11% 7.95% 10.24% (3.90)% 11.45%
======= ======== ======== ======== ======== ==========
Ratios/supplemental data:
Net assets, end of period (000's)....................... $56,289 $103,312 $307,577 $484,534 $725,553 $1,188,890
Expenses to average net assets.......................... 2.13%* 1.99% 1.99% 2.00%(2) 1.94% 2.11%**
Net investment income to average net assets............. 5.18%* 5.83% 6.14% 6.71%(2) 6.05% 5.97%**
Portfolio turnover rate................................. 62% 172% 126% 113% 108% 90%
</TABLE>
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------------------
For the
Six Months
Ended
April 30, 1998 For the Years Ended October 31,
(unaudited) 1997 1996 1995 1994 1993
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 10.26 $ 10.45 $ 10.33 $ 9.98 $ 10.96 $ 10.64
------- ------- ------- ------- ------- -------
Net investment income................................... 0.28@ 0.63@ 0.67@ 0.71@ 0.70 0.68
Net realized and unrealized gains (losses) from
investments and foreign currency...................... (0.09)@ (0.18)@ 0.14@ 0.31@ (1.09) 0.52
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment transactions.... 0.19 0.45 0.81 1.02 (0.39) 1.20
------- ------- ------- ------- ------- -------
Dividends from net investment income.................... (0.29) (0.50) (0.69) (0.67) (0.30) (0.74)
Distributions from net realized gains from investments
and foreign currency transactions.................... -- -- -- -- -- (0.14)
Distributions in excess of net investment income........ -- (0.06) -- -- -- --
Distributions from paid in capital...................... -- (0.08) -- -- (0.29) --
------- ------- ------- ------- ------- -------
Total dividends and distributions to shareholders....... (0.29) (0.64) (0.69) (0.67) (0.59) (0.88)
------- ------- ------- ------- ------- -------
Net asset value, end of period.......................... $ 10.16 $ 10.26 $ 10.45 $ 10.33 $ 9.98 $ 10.96
======= ======= ======= ======= ======= ========
Total investment return(1).............................. 1.91% 4.48% 8.12% 10.49% (3.56)% 11.64%
======= ======= ======= ======= ======= ========
Ratios/supplemental data:
Net assets, end of period (000's)....................... $30,634 $36,935 $50,928 $71,329 $92,480 $135,847
Expenses to average net assets.......................... 1.83%* 1.69% 1.73% 1.75%(2) 1.68% 1.83%**
Net investment income to average net assets............. 5.51%* 6.17% 6.40% 6.96%(2) 6.34% 6.17%**
Portfolio turnover rate................................. 62% 172% 126% 113% 108% 90%
</TABLE>
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
Class Y
---------------------------------------------------------------------
For the
Six Months
Ended
April 30, 1998 For the Years Ended October 31,
(unaudited) 1997 1996 1995 1994 1993
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.27 $ 10.49 $ 10.35 $ 9.99 $ 10.97 $ 10.64
------ ------- ------- ------- ------- -------
Net investment income ..................................... 0.31@ 0.71@ 0.75@ 0.78@ 0.75 0.71
Net realized and unrealized gains (losses) from investments
and foreign currency ...................................... (0.08)@ (0.21)@ 0.17@ 0.32@ (1.06) 0.58
------ ------- ------- ------- ------- -------
Net increase (decrease) from investment transactions ...... 0.23 0.50 0.92 1.10 (0.31) 1.29
------ ------- ------- ------- ------- -------
Dividends from net investment income ...................... (0.34) (0.56) (0.78) (0.74) (0.34) (0.82)
Distributions from net realized gains from investments and
foreign currency transactions ............................. -- -- -- -- -- (0.14)
Distributions in excess of net investment income .......... -- (0.06) -- -- -- --
Distributions from paid in capital ........................ -- (0.10) -- -- (0.33) --
------ ------- ------- ------- ------- -------
Total dividends and distributions to shareholders ......... (0.34) (0.72) (0.78) (0.74) (0.67) (0.96)
------ ------- ------- ------- ------- -------
Net asset value, end of period ............................ $10.16 $ 10.27 $ 10.49 $ 10.35 $ 9.99 $ 10.97
====== ======= ======= ======= ======= =======
Total investment return(1) ................................ 2.28% 5.20% 9.25% 11.39% (2.86)% 12.60%
====== ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000's) ......................... $9,506 $10,096 $13,077 $16,613 $12,975 $12,043
Expenses to average net assets ............................ 1.08%* 0.94% 0.96% 0.95%(2) 0.88% 1.06%**
Net investment income to average net assets ............... 6.29%* 6.93% 7.19% 7.77%(2) 7.23% 7.00%**
Portfolio turnover rate ................................... 62% 172% 126% 113% 108% 90%
</TABLE>
- ---------
* Annualized
** Includes 0.15% of interest expense related to the reverse repurchase
agreement transactions entered into during the fiscal year
@ Calculated using the average shares outstanding for the period
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. Total investment
return for periods of less than one year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
<PAGE>
BOARD OF TRUSTEES
E. Garrett Bewkes, Jr.
Chairman
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
PRINCIPAL OFFICERS
Margo N. Alexander
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Paul H. Schubert
Vice President and Treasurer
Dennis L. McCauley
Vice President
Stuart Waugh
Vice President
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
This report is not to be used in conjunction with the offering of shares of
the Fund unless accompanied or preceded by an effective prospectus.
The financial information included herein is taken from the records of the
Fund without examination by independent auditors who do not express an opinion
thereof.
A prospectus containing more complete information for any of the Funds listed
on the back cover can be obtained from a PaineWebber investment executive or
corresponding firm. Read the prospectus carefully before investing.
<PAGE>
PaineWebber offers a family of 26 funds which encompass a diversified range of
investment goals.
BOND FUNDS
o High Income Fund
o Investment Grade Income Fund
o Low Duration U.S. Government Income Fund
o Strategic Income Fund
o U.S. Government Income Fund
TAX-FREE BOND FUNDS
o California Tax-Free Income Fund
o Municipal High Income Fund
o National Tax-Free Income Fund
o New York Tax-Free Income Fund
STOCK FUNDS
o Financial Services Growth Fund
o Growth Fund
o Growth and Income Fund
o Mid Cap Fund
o Small Cap Fund
o S&P 500 Index Fund
o Utility Income Fund
ASSET ALLOCATION FUNDS
o Balanced Fund
o Tactical Allocation Fund
GLOBAL FUNDS
o Asia Pacific Growth Fund
o Emerging Markets Equity Fund
o Global Equity Fund
o Global Income Fund
MITCHELL HUTCHINS PORTFOLIOS
o Aggressive Portfolio
o Moderate Portfolio
o Conservative Portfolio
PAINEWEBBER MONEY MARKET FUND
PAINEWEBBER
(Copyright)1998 PaineWeber Incorporated
Member SIPC
[PaineWebber logo]
GLOBAL INCOME
FUND
SEMIANNUAL REPORT
APRIL 30, 1998
