<PAGE>
PAINEWEBBER GLOBAL INCOME FUND SEMIANNUAL REPORT
June 15, 1999
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, 1999.
MARKET OVERVIEW
- -------------------------------------------------------------------------------
[GRAPHIC]
Developed bond markets, as measured by the Salomon Brothers World Government
Bond Index (WGBI), gained 2.28% on a currency-hedged basis for the six months
ended April 30, 1999. Individual market performance diverged considerably
during the period: European bonds did well; the U.S. posted slight losses; and
Japanese bonds generated small positive returns. The differences in market
performance reflected differences in the countries' rates of economic growth
over the period.
World inflation remained under control, near 30-year lows. Currencies of
commodity-based economies such as Canada and Australia performed well,
benefiting from the stabilization of the emerging markets' crisis.
The WGBI lost 3.35% for the six-month period on an unhedged basis, reflecting
U.S. dollar appreciation against the yen and euro. In contrast, the U.S. market
as measured by the Lehman Brothers U.S. Government Bond Index lost 0.95% over
the same period. Emerging market debt recovered from the distressed pricing
environment of last October, and gained 15.87% for the period as measured by
the JP Morgan Emerging Markets Bond Index Plus.
PORTFOLIO REVIEW
- -------------------------------------------------------------------------------
[GRAPHIC]
PERFORMANCE
The Fund's total return consists of the change in net asset value with
dividends re-invested. For the six-month period ended April 30, 1999, without
deducting sales charges, Class A shares lost 1.07%, Class B shares lost 1.50%,
Class C shares lost 1.41% and Class Y shares lost 1.00%.
The Fund's total return may be lower for shareowners who purchased or redeemed
Fund shares during the period. After deducting the maximum applicable sales
charges, Class A shares lost 5.02%, Class B shares lost 6.31% and Class C
shares lost 2.14%. Class Y shares are not subject to sales charges.
HIGHLIGHTS
The Fund's primary market allocation strategy remained constant over the
period. Fund duration--a measure of exposure to interest rate risk--was short
in Europe and Japan (i.e., a lower level of risk than that of the WGBI) and
neutral in the United States. We shifted our yield curve strategy in the United
Kingdom, positioning the Fund to benefit if short-term rates there fall and
the curve returns to normal (that is, longer maturities yield more than shorter
maturities). In Germany we adopted a bias to a yield curve "flattening"
(meaning the yield difference between short and long maturities is
diminishing). We reduced the Fund's currency position in Europe from 29.1% at
October 31, 1998 to 24.7% at April 30, 1999, and increased its exposure to
Japan from zero to 5.3% over the same period. Both positions were below WGBI
weightings at period-end.*
* Portfolio weightings represent percentages of portfolio assets as of April
30, 1999. The Fund's portfolio is actively managed and its composition will
vary over time.
- -------------------------------------------------------------------------------
PaineWebber
Global Income Fund
FUND PROFILE
[ARROW] Goal:
High current income
consistent with prudent
investment risk;
secondarily capital
appreciation
[ARROW] Portfolio Managers:
Stuart Waugh and
William W. King,
Mitchell Hutchins Asset
Management Inc.
[ARROW] Total Net Assets:
$423.6 million as of
April 30, 1999
[ARROW] Dividend Payments:
Monthly
- -------------------------------------------------------------------------------
[GRAPHIC]
PaineWebber
Global Income
Fund
Credit Quality*
AAA 61.5%
AA 16.2%
A 9.4%
BBB 3.1%
BB 4.3%
B 2.0%
A1/P1 3.5%
- -------------------------------------------------------------------------------
1
<PAGE>
SEMIANNUAL REPORT
OUTLOOK
- -------------------------------------------------------------------------------
[ARROW]
GLOBAL ECONOMY
The prospects for global growth have brightened in recent months. The U.S.
economy has shown surprising strength, emerging economies have stabilized and
Europe is showing signs of moderate improvement. Most commodity prices have
stabilized and crude oil prices have rebounded strongly, which bodes well for
many resource-based developing countries. Many economies are benefiting from
easy monetary policy.
Although the Japanese economy shows some encouraging signs of cyclical
improvement, structural weaknesses remain. With short-term rates near zero and
large fiscal deficits, Japan has reached the limits of conventional stimulus
measures.
Despite signs of recovery overseas, worldwide excess manufacturing capacity is
likely to continue exerting downward pressure on inflation. Without such
pressure, risk premiums in the world's bond markets would be too low.
DURATION STRATEGY
Although yields in most markets have risen in recent months, we still believe
that a cautious approach to risk is appropriate going forward. Reflecting this
view, the Fund's overall duration is currently low, at about four years. We
believe the Fund is well structured for a global economy in which growth is
stabilizing and inflation could increase moderately. The Fund's largest
concentration is an 18% exposure to intermediate maturity U.S. corporate bonds.
The Fund holds a 5% position in U.S. Treasury inflation protected securities as
a hedge against an increase of inflation.*
MARKET ALLOCATION
The Fund's primary market concentrations are in government and corporate bonds
in the United States (47.1%) and the United Kingdom (14.9%). The Fund is
underexposed to European bonds relative to the WGBI and has no exposure to
yen-denominated bonds. Yields in both Europe and Japan are near historical
lows.
CURRENCY STRATEGY
As noted above, the Fund is underweighted in European currencies and the yen.
While we intend to vary these exposures depending on economic developments and
technical analysis, our general bias is to increase allocations to foreign
currencies.
Cyclical factors have had the greatest impact on currency trends in recent
months. Strong economic growth in the United States has put upward pressure on
U.S. interest rates, strengthening the U.S. dollar versus the euro and the yen.
However, the U.S. current account balance has deteriorated sharply and over the
next few years is expected to reach record lows in relation to gross domestic
product. The dollar could be vulnerable if the current account deficit changed
investors' perceptions about the investment merits of the United States.
* Portfolio weightings represent percentages of portfolio assets as of april
30, 1999. The Fund's portfolio is actively managed and its composiiton
will vary over time.
- -------------------------------------------------------------------------------
PaineWebber
Global Income
Fund
Currency Exposure*
[Pie Chart]
Unhedged--Europe 24.7
Hedged 2.7
Unhedged--Australia 12.1
US $ 60.5
- -------------------------------------------------------------------------------
PaineWebber
Global Income
Fund
U.S. Treasury and
U.S. Corporates 47.1%
Europe 33.8%
Other 9.0%
Australia, Canada &
New Zealand 8.3%
Cash Equivalents 1.8%
- -------------------------------------------------------------------------------
2
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND SEMIANNUAL REPORT
CREDIT AND EMERGING MARKET STRATEGY
The Fund recently bought noninvestment grade emerging market debt--primarily
Brady bonds issued by Brazil, Mexico, Panama and the Philippines (11.6%).* The
latter three are solid BB-rated credits. We believe their creditworthiness will
improve if world growth recovers. We invested in Brazilian debt because we
think the government initially will succeed in meeting the fiscal targets
specified in its IMF agreement and will be able to lower interest rates over
the next several quarters. Lower rates increase the chances that Brazil can
remain in compliance with IMF targets--if it can, we believe Brazil's external
debt will continue to gain value.
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 Review on
PaineWebber Global Income Fund or another fund in the PaineWebber Family of
Funds,(1) please contact your Financial Advisor.
Sincerely,
/s/ Margo Alexander
- -------------------
Margo Alexander
Chairman and Chief Executive Officer
Mitchell Hutchins Asset Management Inc.
/s/ Stuart Waugh
- -------------------
Stuart Waugh
Managing Director
Mitchell Hutchins Asset Management Inc.
Portfolio Manager, Global Income Fund
/s/ Brian M. Storms
- -------------------
Brian M. Storms
President and Chief Operating Officer
Mitchell Hutchins Asset Management Inc.
/s/ William W. King
- -------------------
William W. King
First Vice President
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, 1999, and reflects our
views at the time of its writing. Of course, these views may change in response
to changing circumstances. We encourage you to consult your Financial Advisor
regarding your personal investment program.
(1) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risk, charges and expenses and
should be read carefully before investing.
* Portfolio weightings represent percentages of portfolio assets as of April
30, 1999. The Fund's portfolio is actively managed and its composition
will vary over time.
3
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
PERFORMANCE RESULTS (unaudited)
<TABLE>
<CAPTION>
Net Asset Value Total Return(1)
---------------------------------------- -----------------------------------
04/30/99 10/31/98 04/30/98 12 Months 6 Months
Ended 04/30/99 Ended 04/30/99
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $10.18 $10.58 $10.17 6.00% (1.07)%
Class B Shares 10.14 10.54 10.14 5.02 (1.50)
Class C Shares 10.17 10.58 10.16 5.45 (1.41)
<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
1998 10.14 10.58 -- 0.6125 0.0814 10.74
01/01/99-04/30/99 10.58 10.18 -- 0.1925 -- (1.97)
- ---------------------------------------------------------------------------------------------------------------------------
Totals: $0.3198 $4.9930 $0.4891
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return
as of 4/30/99: 68.68%
<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
1998 10.11 10.54 -- 0.5249 0.0699 9.73
01/01/99-04/30/99 10.54 10.14 -- 0.1629 -- (2.26)
- ---------------------------------------------------------------------------------------------------------------------------
Totals: $0.6487 $8.7630 $0.4313
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return
as of 4/30/99: 172.66%
<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
1998 10.13 10.58 -- 0.5540 0.0736 10.22
01/01/99-04/30/99 10.58 10.17 -- 0.1751 -- (2.23)
- ---------------------------------------------------------------------------------------------------------------------------
Totals: $0.3098 $3.9861 $0.4510
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return
as of 4/30/99: 45.36%
- ---------------------------------------------------------------------------------------------------------------------------
</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, 1999 and since inception,
August 26, 1991 through April 30, 1999, Class Y shares had a total
return of (1.00)% and 70.13%, 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
Performance Results (unaudited) (concluded)
Average Annual Total Return
<TABLE>
<CAPTION>
% Return Without Deducting % Return After Deducting
Maximum Sales Charge Maximum Sales Charge
------------------------------------ ---------------------------
Class A* B** C*** A* B** C***
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 03/31/99 6.88% 5.90% 6.43% 2.63% 0.90% 5.68%
- ---------------------------------------------------------------------------------------------------------------
Five Years Ended 03/31/99 6.38 5.54 5.86 5.52 5.23 5.86
- ---------------------------------------------------------------------------------------------------------------
Ten Years Ended 03/31/99 N/A 7.76 N/A N/A 7.76 N/A
- ---------------------------------------------------------------------------------------------------------------
Commencement of Operations
Through 03/31/99 6.96 8.68 5.71 6.41 8.68 5.71
- ---------------------------------------------------------------------------------------------------------------
</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, 1999, for the five years ended March 31, 1999 and
since inception August 26, 1991 through March 31, 1999, Class Y shares
have an average annual total return of 7.26%, 6.69% 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 Funds shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate, so that an investors shares, when redeemed, may be worth more
or less than their original cost.
5
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS APRIL 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000)* Dates Rates Value
-------- -------- -------- -----
<S> <C> <C> <C>
Long-Term Debt Securities--94.28%
Brazil--1.94%
US$ 6,666 Federal Republic of Brazil, DCB ................... 04/15/12 5.938%@ $ 4,216,245
US$ 4,155 Federal Republic of Brazil ........................ 04/15/04 11.625 4,019,963
------------
8,236,208
------------
Canada--4.34%
25,650 Government of Canada .............................. 03/01/01 to 09/01/01 7.000 to 7.500 18,401,183
------------
France--1.20%
4,147 Government of France .............................. 10/25/25 6.000 5,085,980
------------
Germany--6.34%
23,515 Federal Republic of Germany ....................... 09/20/01 to 01/04/28 4.000 to 8.250 26,862,541
------------
Italy--3.27%
10,647 Republic of Italy ................................. 04/01/04 8.500 13,857,227
------------
Japan--1.08%
US$ 4,520 Sony Corporation .................................. 03/04/03 6.125 4,560,892
------------
Korea--0.48%
US$ 1,860 Republic of Korea ................................. 04/15/08 8.875 2,022,750
------------
Luxembourg--1.61%
US$ 7,000 Tyco International Group .......................... 01/15/09 6.125 6,822,851
------------
Mexico--3.27%
US$ 4,820 Pemex Finance Limited ............................. 11/15/03 6.125 4,814,312
US$ 4,300 United Mexican States ............................. 02/17/09 10.375 4,601,000
US$ 5,145 United Mexican States Series B, DISC .............. 12/31/19 6.039@ 4,431,131
------------
13,846,443
------------
Netherlands--5.42%
19,627 Government of Netherlands ......................... 05/15/00 to 09/15/01 8.750 to 9.000 22,940,421
------------
Panama--1.12%
US$ 6,074 Republic of Panama, PDI(2) ........................ 07/17/16 5.938@ 4,752,611
------------
Philippines--1.06%
US$ 4,425 Republic of Philippines ........................... 04/15/08 8.875 4,469,693
------------
Poland--0.99%
US$ 6,540 Republic of Poland, PAR ........................... 10/27/24 3.000# 4,201,950
------------
United Kingdom--14.81%
34,170 United Kingdom Gilt ............................... 07/14/00 to 12/07/03 6.500 to 13.000 62,756,776
------------
United States--47.35%
3,070 Associates Corporation of North America ........... 11/01/03 5.750 3,034,195
9,692 Banc One Corporation .............................. 09/01/00 6.250 9,762,713
6,060 CIT Group Incorporated ............................ 02/15/04 5.500 5,929,031
16,000 Clorox Corporation ................................ 07/15/01 8.800 17,045,648
NZD 21,525 Federal National Mortgage Association ............. 06/20/02 7.250 12,595,906
20,170 Federal National Mortgage Association ............. 04/15/03 to 05/15/08 5.750 to 6.000 20,299,542
14,000 Ford Motor Capital Corporation BV ................. 07/01/01 9.500 15,024,478
5,815 General Motors Acceptance Corporation ............. 11/10/03 5.750 5,744,313
1,935 Phillip Morris Companies .......................... 02/01/07 7.200 2,004,410
23,519 U.S. Treasury Inflation Index Bonds ............... 01/15/08 to 04/15/28 3.625 22,687,159
85,825 U.S. Treasury Notes(1) ............................ 08/31/00 to 02/15/29 4.625 to 6.500 86,449,021
------------
200,576,416
------------
Total Long-Term Debt Securities (cost--$405,631,338) 399,393,942
------------
</TABLE>
6
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000)* Dates Rates Value
-------- -------- -------- -----
<S> <C> <C> <C>
Short-Term Debt Securities--3.45%
Australia--0.97%
6,260 Australia Treasury Bills, DISC .................... 05/20/99 4.620%+ $4,133,008
------------
United States--2.48%
10,400 U.S. Treasury Notes (1) ........................... 08/15/99 8.000 10,497,500
------------
Total Short-Term Debt Securities (cost--$14,681,875) 14,630,508
------------
Repurchase Agreement--1.79%
7,581 Repurchase agreement dated 04/30/99
with Dresdner Securities (USA) Inc.,
collateralized $7,398,000 U.S. Treasury
Notes, 6.250%, due 08/31/02 (value--
$7,732,686); proceeds: $7,584,064
(cost--$7,581,000) ................................ 05/03/99 4.850 7,581,000
------------
Total Investments (cost--$427,894,213)--99.52% ........................................................ 421,605,450
Other assets in excess of liabilities--0.48% .......................................................... 2,016,366
------------
Net Assets--100.00% .................................................................................. $423,621,816
============
</TABLE>
- ---------
Note: The Portfolio of Investments is listed by the issuer's country of origin.
* In local currency unless otherwise indicated.
# Reflects rate at April 30, 1999 on step coupon rate instruments.
@ Floating rate securities -- the interest rates shown are the current rates
as of April 30, 1999.
+ Interest rate shown is discount rate at date of purchase.
(1) Security, or portion thereof, was on loan at April 30, 1999.
(2) Interest may be capitalized.
DCB Debt Conversion Bond.
DISC Discount Bond.
PAR Par Bond.
PDI Past Due Interest Bond.
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
Forward Foreign Currency Contracts
<TABLE>
<CAPTION>
Unrealized
Contract to Appreciation
Deliver In Exchange for Maturity Dates (Depreciation)
------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
British Pounds ............ 22,530,000 US$ 36,278,055 05/26/99 to 06/08/99 $ 47,072
British Pounds ............ 7,960,000 US$ 12,791,720 07/13/99 (4,617)
Canadian Dollars .......... 9,415,000 US$ 6,257,893 05/05/99 (199,577)
Euro ...................... 9,600,000 US$ 10,393,920 05/17/99 243,392
Euro ...................... 5,946,600 US$ 6,422,744 05/24/99 132,205
Greek Drachma ............. 2,592,759,000 US$ 8,636,197 06/28/99 276,705
New Zealand Dollars ....... 14,000,000 US$ 7,053,700 07/06/99 (793,374)
U.S. Dollars .............. 39,295,617 EUR 36,146,600 05/14/99 to 05/24/99 (1,071,595)
U.S. Dollars .............. 22,561,505 JPY 2,683,083,125 05/19/99 to 05/24/99 (41,120)
U.S. Dollars .............. 8,480,551 GRD 2,592,759,000 06/28/99 (121,060)
U.S. Dollars .............. 6,874,000 NZD 14,000,000 07/06/99 973,074
-----------
$ (558,895)
===========
</TABLE>
- ---------
Currency Type Abbreviations:
EUR - Euro
GRD - Greek Drachma
JPY - Japanese Yen
NZD - New Zealand Dollars
US$ - United States Dollars
<TABLE>
<CAPTION>
Investments by Type of Issuer
Percent of Net Assets
------------------------
Long-term Short-term
--------- ----------
<S> <C> <C>
Government and other public issuers ......................................... 77.77% 3.45%
Bank and other financial institutions ....................................... 9.32 --
Industrial .................................................................. 7.19 --
Repurchase agreement -- 1.79
----- ----
94.28% 5.24%
===== ====
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments in securities, at value (cost--$427,894,213) ......................................... $421,605,450
Investments of collateral received for securities loaned ......................................... 86,842,360
Receivable for investments sold .................................................................. 13,693,785
Interest receivable .............................................................................. 8,121,599
Unrealized appreciation on forward foreign currency contracts .................................... 1,672,448
Receivable for shares of beneficial interest sold ................................................ 33,027
Other assets ..................................................................................... 108,645
------------
Total assets ..................................................................................... 532,077,314
------------
Liabilities
Collateral for securities loaned ................................................................. 86,842,360
Payable for investments purchased ................................................................ 17,476,500
Unrealized depreciation on forward foreign currency contracts .................................... 2,231,343
Payable for shares of beneficial interest repurchased ............................................ 1,194,140
Payable to affiliates ............................................................................ 375,567
Accrued expenses and other liabilities ........................................................... 335,588
------------
Total liabilities ................................................................................ 108,455,498
------------
Net Assets
Beneficial interest--$0.001 par value (unlimited amount authorized) .............................. 449,030,183
Distributions in excess of net investment income ................................................. (4,671,414)
Accumulated net realized losses from investment and foreign currency transactions ................ (13,740,093)
Net unrealized depreciation of investments, other assets, liabilities and
forward contracts denominated in foreign currencies .......................................... (6,996,860)
------------
Net assets ....................................................................................... $423,621,816
============
Class A:
Net assets ....................................................................................... $366,604,616
------------
Shares outstanding ............................................................................... 36,029,902
------------
Net asset value and redemption value per share ................................................... $10.18
======
Maximum offering price per share (net asset value plus sales charge of 4.00% of offering price) .. $10.60
======
Class B:
Net assets ....................................................................................... $ 22,189,273
------------
Shares outstanding ............................................................................... 2,189,350
------------
Net asset value and offering price per share ..................................................... $10.14
======
Class C:
Net assets ....................................................................................... $ 24,622,211
------------
Shares outstanding ............................................................................... 2,420,452
------------
Net asset value and offering price per share ..................................................... $10.17
======
Class Y:
Net assets ....................................................................................... $ 10,205,716
------------
Shares outstanding ............................................................................... 1,003,364
------------
Net asset value, offering price and redemption value per share ................................... $10.17
======
======
</TABLE>
See accompanying notes to financial statements
9
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six
Months Ended
April 30, 1999
(unaudited)
-----------
<S> <C>
Investment income:
Interest (net of foreign withholding taxes) ..................................................... $15,346,385
-----------
Expenses:
Investment advisory and administration fees ..................................................... 1,599,063
Service fees--Class A ........................................................................... 406,446
Service and distribution fees--Class B .......................................................... 138,248
Service and distribution fees--Class C .......................................................... 87,306
Transfer agency and related services fees ....................................................... 215,954
Custody and accounting .......................................................................... 128,078
Reports and notices to shareholders ............................................................. 75,145
Legal and audit ................................................................................. 56,725
State registration fees ......................................................................... 26,513
Trustees' fees .................................................................................. 5,250
Other expenses .................................................................................. 11,253
------------
2,749,981
------------
Net investment income ........................................................................... 12,596,404
------------
Realized and unrealized gains (losses) from investment activities:
Net realized gains (losses) from:
Investment transactions ....................................................................... 7,173,077
Foreign currency transactions ................................................................. (794,523)
Net change in unrealized appreciation (depreciation) of :
Investments ................................................................................... (22,424,053)
Other assets, liabilities and forward contracts denominated in foreign currencies ............. (1,412,675)
------------
Net realized and unrealized losses from investment activities ................................... (17,458,174)
------------
Net decrease in net assets from operations ...................................................... $(4,861,770)
===========
</TABLE>
See accompanying notes to financial statements
10
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the
April 30, 1999 Year Ended
(unaudited) October 31, 1998
-------------- ----------------
<S> <C> <C>
From operations:
Net investment income ........................................................... $ 12,596,404 $ 32,039,065
Net realized gains (losses) from investments and foreign currency transactions .. 6,378,554
(3,166,160)
Net change in unrealized appreciation/depreciation of investments, other assets,
liabilities and forward contracts denominated in foreign currencies ........... (23,836,728) 16,750,259
------------- -------------
Net increase (decrease) in net assets resulting from operations ................. (4,861,770) 45,623,164
------------- -------------
Dividends and distributions to shareholders:
From net investment income--Class A ............................................. (10,723,389) (21,497,232)
From net investment income--Class B ............................................. (649,585) (2,563,608)
From net investment income--Class C ............................................. (671,437) (1,401,794)
From net investment income--Class Y ............................................. (302,829) (488,585)
In excess of net investment income--Class A ..................................... -- (1,981,230)
In excess of net investment income--Class B ..................................... -- (207,140)
In excess of net investment income--Class C ..................................... -- (126,752)
In excess of net investment income--Class Y ..................................... -- (46,367)
From paid in capital--Class A ................................................... -- (3,423,822)
From paid in capital--Class B ................................................... -- (357,965)
From paid in capital--Class C ................................................... -- (219,044)
From paid in capital--Class Y ................................................... -- (80,128)
------------- -------------
Total dividends and distributions to shareholders ............................... (12,347,240) (32,393,667)
------------- -------------
From beneficial interest transactions:
Net proceeds from the sale of shares ............................................ 120,586,427 199,708,865
Cost of shares repurchased ...................................................... (167,626,624) (390,939,942)
Proceeds from dividends reinvested .............................................. 8,023,294 20,788,759
------------- -------------
Net decrease in net assets from beneficial interest transactions ................ (39,016,903) (170,442,318)
------------- -------------
Net decrease in net assets ...................................................... (56,225,913) (157,212,821)
Net assets:
Beginning of period ............................................................. 479,847,729 637,060,550
------------- -------------
End of period ................................................................... $ 423,621,816 $ 479,847,729
============= =============
</TABLE>
See accompanying notes to financial statements
11
<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"). The Fund seeks high current income and, secondarily, capital
appreciation by investing primarily in high-quality debt securities of foreign
and U.S. issuers.
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 are valued by an outside pricing
service approved by a management committee under the direction of the Board of
trustees. 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.
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.
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.
12
<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.
13
<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 and administrator 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, 1999, the Fund owed Mitchell Hutchins $263,767 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, 1999, the Fund owed Mitchell Hutchins $110,160 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, 1999, it earned $34,384 in sales charges.
14
<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 is compensated for the lending of its
securities, which is included in interest income, 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, 1999, the Fund earned $50,837 as compensation for
lending its securities and PaineWebber earned $16,915 in compensation as the
Fund's lending agent. At April 30, 1999, the Fund owed PaineWebber $1,640 in
compensation.
At April 30, 1999, the Fund's custodian held cash having an aggregate value
of $86,842,360 as collateral for portfolio securities loaned having a market
value of $83,334,387.
As of April 30, 1999 the Fund invested the cash collateral in the following
money market funds and time deposits:
Number of Shares/
Principal Amount Value
---------------- -----------
45,750,000 Deutsche Bank Time Deposits, 4.906 to
4.938%, due 05/03/99 ..................... $45,750,000
1,280,157 Janus Money Market Fund .................... 1,280,157
833,420 Liquid Assets Portfolio .................... 833,420
38,978,742 Mitchell Hutchins Money Market Fund LLC .... 38,978,742
41 Temp Fund Portfolio ........................ 41
-----------
$86,842,360
===========
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, 1999, the Fund did not borrow
under the Facility.
TRANSFER AGENCY RELATED 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, 1999, PaineWebber received from PFPC, Inc., not the Fund,
approximately 57% of the total transfer agency and related service fees
collected by PFPC, Inc. from the Fund.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at April 30,
1999 was substantially the same as the cost of securities for financial
statement purposes.
At April 30, 1999, the components of the net unrealized depreciation of
investments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having an excess of value over cost) ......... $ 4,715,575
------------
Gross depreciation (investments having an excess of cost over value) ......... (11,004,338)
------------
Net unrealized depreciation of investments ................................... $ (6,288,763)
============
</TABLE>
For the six months ended April 30, 1999, total aggregate purchases and sales
of portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<S> <C>
Purchases .................................................................... $195,692,587
Sales ........................................................................ $226,056,199
</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, 1998, the Fund had a capital loss carryforward of $20,067,409
available as a reduction, to the extent provided in the regulations, of any
future net realized capital gains which expires as follows: $4,313,594 in 2002
and $15,753,815 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.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
SHARES OF BENEFICIAL INTEREST
There are an unlimited number of $0.001 par value shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Class A Class B
---------------------------- --------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Six Months Ended
April 30, 1999:
Shares sold .............. 11,183,900 $ 115,867,737 22,808 $ 237,073
Shares repurchased ....... (15,119,167) (157,018,216) (332,104) (3,451,239)
Dividends reinvested ..... 666,476 6,916,160 38,023 393,505
Shares converted from
Class B to Class A ..... 712,479 7,416,835 (715,228) (7,416,835)
----------- ------------- ---------- ------------
Net increase (decrease) (2,556,312) $ (26,817,484) (986,501) $(10,237,496)
=========== ============= ========== ============
Year Ended
October 31, 1998:
Shares sold .............. 18,902,084 $ 192,414,767 95,631 $ 972,655
Shares repurchased ....... (34,229,342) (348,903,208) (2,351,256) (23,943,212)
Dividends reinvested ..... 1,667,329 17,033,158 187,992 1,912,285
Shares converted from
Class B to Class A ..... 4,833,973 49,246,777 (4,847,839) (49,246,777)
----------- ------------- ---------- ------------
Net decrease ............. (8,825,956) $ (90,208,506) (6,915,472) $(70,305,049)
=========== ============= ========== ============
<CAPTION>
Class C Class Y
-------------------------- --------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Six Months Ended
April 30, 1999:
Shares sold .............. 55,711 $ 588,112 375,190 $ 3,893,505
Shares repurchased ....... (383,094) (4,007,555) (302,880) (3,149,614)
Dividends reinvested ..... 40,535 419,537 28,361 294,092
Shares converted from
Class B to Class A ..... -- -- -- --
----------- ----------- -------- ------------
Net increase (decrease) (286,848) $(2,999,906) 100,671 $ 1,037,983
=========== =========== ======== ============
Year Ended
October 31, 1998:
Shares sold .............. 294,545 $ 3,016,400 322,167 $ 3,305,043
Shares repurchased ....... (1,309,976) (13,377,478) (460,229) (4,716,044)
Dividends reinvested ..... 122,674 1,249,744 58,095 593,572
Shares converted from
Class B to Class A ..... -- -- -- --
----------- ----------- -------- ------------
Net decrease ............. $ (892,757) $(9,111,334) (79,967) $ (817,429)
=========== =========== ======== ============
</TABLE>
17
<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, 1999 -----------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
----------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 10.58 $ 10.27 $ 10.46 $ 10.35 $ 9.99 $ 10.97
-------- ------- -------- -------- -------- -------
Net investment income ........................... 0.29@ 0.62@ 0.69@ 0.72@ 0.77@ 0.72
Net realized and unrealized gains (losses)
from investments and foreign currency ......... (0.40)@ 0.32@ (0.19)@ 0.13@ 0.31@ (1.05)
-------- ------- -------- -------- -------- -------
Net increase (decrease) from
investment transactions ....................... (0.11) 0.94 0.50 0.85 1.08 (0.33)
-------- ------- -------- -------- -------- -------
Dividends from net investment income ............ (0.29) (0.50) (0.54) (0.74) (0.72) (0.33)
Distributions in excess of net
investment income ............................. -- (0.05) (0.06) -- -- --
Distributions from paid in capital .............. -- (0.08) (0.09) -- -- (0.32)
-------- ------- -------- -------- -------- -------
Total dividends and distributions
to shareholders ............................... (0.29) (0.63) (0.69) (0.74) (0.72) (0.65)
-------- ------- -------- -------- -------- -------
Net asset value, end of period .................. $ 10.18 $ 10.58 $ 10.27 $ 10.46 $ 10.35 $ 9.99
-------- ------- -------- -------- -------- -------
-------- ------- -------- -------- -------- -------
Total investment return(1) ...................... (1.07)% 9.51% 4.99% 8.60% 11.09% (3.10)%
-------- ------- -------- -------- -------- -------
-------- ------- -------- -------- -------- -------
Ratios/supplemental data:
Net assets, end of period (000's) ............... $366,605 $408,190 $486,718 $549,932 $663,022 $611,855
Expenses to average net assets .................. 1.15%* 1.24% 1.21% 1.27% 1.24%(2) 1.17%
Net investment income to average net assets ..... 5.68%* 6.07% 6.66% 6.88% 7.47%(2) 6.94%
Portfolio turnover rate ......................... 47% 93% 172% 126% 113% 108%
</TABLE>
- ----------
* Annualized
@ Calculated using the average monthly shares outstanding for the period
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
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%.
18
<PAGE>
PaineWebber Global Income Fund
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------------------------
For the
Six Months
Ended For the Years Ended October 31,
April 30, 1999 ----------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
-------- ------- ------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 10.54 $ 10.24 $ 10.44 $ 10.31 $ 9.96 $ 10.95
-------- ------- ------- --------- -------- ---------
Net investment income ........................... 0.24@ 0.51@ 0.58@ 0.64@ 0.69@ 0.86
Net realized and unrealized gains (losses)
from investments and foreign currency ......... (0.40)@ 0.33@ (0.17)@ 0.15@ 0.30@ (1.28)
-------- ------- ------- --------- -------- ---------
Net increase (decrease) from
investment transactions ....................... (0.16) 0.84 0.41 0.79 0.99 (0.42)
-------- ------- ------- --------- -------- ---------
Dividends from net investment income ............ (0.24) (0.43) (0.48) (0.66) (0.64) (0.29)
Distributions in excess of net
investment income ............................. -- (0.04) (0.05) -- -- --
Distributions from paid in capital .............. -- (0.07) (0.08) -- -- (0.28)
-------- ------- ------- --------- -------- ---------
Total dividends and distributions
to shareholders ............................... (0.24) (0.54) (0.61) (0.66) (0.64) (0.57)
-------- ------- ------- --------- -------- ---------
Net asset value, end of period .................. $ 10.14 $ 10.54 $ 10.24 $ 10.44 $ 10.31 $ 9.96
-------- ------- ------- --------- -------- ---------
-------- ------- ------- --------- -------- ---------
Total investment return(1) ...................... (1.50)% 8.53% 4.11% 7.95% 10.24% (3.90)%
-------- ------- ------- --------- -------- ---------
-------- ------- ------- --------- -------- ---------
Ratios/supplemental data:
Net assets, end of period (000's) ............... $ 22,189 $33,478 $103,312 $ 307,577 $484,534 $725,553
Expenses to average net assets .................. 2.04%* 2.13% 1.99% 1.99% 2.00%(2) 1.94%
Net investment income to average net assets ..... 4.76%* 5.16% 5.83% 6.14% 6.71%(2) 6.05%
Portfolio turnover rate ......................... 47% 93% 172% 126% 113% 108%
<CAPTION>
Class C
------------------------------------------------------------------------
For the
Six Months
Ended For the Years Ended October 31,
April 30, 1999 ----------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
---------- ------- ------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 10.58 $ 10.26 $ 10.45 $ 10.33 $ 9.98 $ 10.96
------- ------- ------- -------- ------- ---------
Net investment income ........................... 0.27@ 0.56@ 0.63@ 0.67@ 0.71@ 0.70
Net realized and unrealized gains (losses)
from investments and foreign currency ......... (0.42)@ 0.33@ (0.18)@ 0.14@ 0.31@ (1.09)
------- ------- ------- -------- ------- ---------
Net increase (decrease) from investment
transactions .................................. (0.15) 0.89 0.45 0.81 1.02 (0.39)
------- ------- ------- -------- ------- ---------
Dividends from net investment income ............ (0.26) (0.46) (0.50) (0.69) (0.67) (0.30)
Distributions in excess of net
investment income ............................. -- (0.04) (0.06) -- -- --
Distributions from paid in capital .............. -- (0.07) (0.08) -- -- (0.29)
------- ------- ------- -------- ------- ---------
Total dividends and distributions
to shareholders ............................... (0.26) (0.57) (0.64) (0.69) (0.67) (0.59)
------- ------- ------- -------- ------- ---------
Net asset value, end of period .................. $ 10.17 $ 10.58 $ 10.26 $ 10.45 $ 10.33 $ 9.98
------- ------- ------- -------- ------- ---------
------- ------- ------- -------- ------- ---------
Total investment return(1) ...................... (1.41)% 9.01% 4.48% 8.12% 10.49% (3.56)%
------- ------- ------- -------- ------- ---------
------- ------- ------- -------- ------- ---------
Ratios/supplemental data:
Net assets, end of period (000's) ............... $24,622 $28,633 $36,935 $ 50,928 $71,329 $ 92,480
Expenses to average net assets .................. 1.65%* 1.77% 1.69% 1.73% 1.75%(2) 1.68%
Net investment income to average net assets ..... 5.17%* 5.54% 6.17% 6.40% 6.96%(2) 6.34%
Portfolio turnover rate ......................... 47% 93% 172% 126% 113% 108%
</TABLE>
19
<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 For the Years Ended October 31,
April 30, 1999 ------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
--------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $ 10.58 $10.27 $ 10.49 $ 10.35 $ 9.99 $ 10.97
------- ------ ------- ------- ------- -------
Net investment income ................................. 0.31@ 0.65@ 0.71@ 0.75@ 0.78@ 0.75
Net realized and unrealized gains (losses) from
investments and foreign currency .................... (0.41)@ 0.32@ (0.21)@ 0.17@ 0.32@ (1.06)
------- ------ ------- ------- ------- -------
Net increase (decrease) from investment transactions .. (0.10)@ 0.97 0.50 0.92 1.10 (0.31)
------- ------ ------- ------- ------- -------
Dividends from net investment income .................. (0.31) (0.52) (0.56) (0.78) (0.74) (0.34)
Distributions in excess of net investment income ...... -- (0.05) (0.06) -- -- --
Distributions from paid in capital .................... -- (0.09) (0.10) -- -- (0.33)
------- ------ ------- ------- ------- -------
Total dividends and distributions to shareholders ..... (0.31) (0.66) (0.72) (0.78) (0.74) (0.67)
------- ------ ------- ------- ------- -------
Net asset value, end of period ........................ $ 10.17 $10.58 $ 10.27 $ 10.49 $ 10.35 $ 9.99
======= ====== ======= ======= ======= =======
Total investment return(1) ............................ (1.00)% 9.89% 5.20% 9.25% 11.39% (2.86)%
======= ====== ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000's) .................. $10,206 $9,547 $10,096 $13,077 $16,613 $12,975
Expenses to average net assets ..................... 0.82%* 0.96% 0.94% 0.96% 0.95%(2) 0.88
Net investment income to average net assets ........ 6.01%* 6.35% 6.93% 7.19% 7.77%(2) 7.23
Portfolio turnover rate ............................ 47% 93% 172% 126% 113% 108
</TABLE>
- ---------------
* Annualized
@ Calculated using the average monthly shares outstanding for the period
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
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 program fees; results would be lower if program fees 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%.
20
<PAGE>
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<PAGE>
[This Page Intentionally Blank.]
<PAGE>
===============================================================================
BOARD OF TRUSTEES
E. Garrett Bewkes, Jr.
Chairman Meyer Feldberg
Margo N. Alexander George W. Gowen
Richard Q. Armstrong Frederic V. Malek
Richard R. Burt Carl W. Schafer
Mary C. Farrell Brian M. Storms
PRINCIPAL OFFICERS
Margo N. Alexander Paul H. Schubert
President Vice President and Treasurer
Victoria E. Schonfeld Dennis L. McCauley
Vice President Vice President
Dianne E. O'Donnell Stuart Waugh
Vice President and Secretary 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 27 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 Tax-Managed Equity 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 LOGO]
(Copyright) 1999 PaineWebber Incorporated
Member SIPC
PaineWebber
- -------------------------------------------------------------------------------
GLOBAL INCOME
FUND
APRIL 30, 1999
SEMIANNUAL REPORT
