<PAGE>
PAINEWEBBER GLOBAL INCOME FUND SEMIANNUAL REPORT
June 15, 2000
Dear Shareholder,
We are pleased to present you with the semiannual report for PaineWebber Global
Income Fund (the "Fund") for the six-month period ended April 30, 2000.
MARKET REVIEW
Developed bond markets, as measured by the Salomon Smith Barney World Government
Bond Index (WGBI) gained 3.37% on a U.S. dollar, currency-hedged basis over the
six-month period ending April 30, 2000. Because of the general strength of the
U.S. dollar over the period, developed bond markets lost 4.35% measured in U.S.
dollars on an unhedged basis. Over the period, growth prospects improved for
most of the world's developed economies. Unemployment rates trended down and
capacity utilization rates trended higher.
Growing resource constraints combined with higher input prices from higher
commodity prices, most notably oil, have caused modest acceleration of inflation
rates. In response, all developed countries except Japan have tightened monetary
policy in an attempt to prevent inflationary pressures from building further. In
Japan, although the economy is showing improvement, deflationary pressures have
remained evident, and the Bank of Japan has kept in place its 0% interest rate
policy initiated in February 1999.
In non-Japanese markets, yield curves have flattened considerably as
short-term interest rates have risen significantly more than long-term interest
rates. Another consequence of strong economic growth has been rapid improvement
in government fiscal balances at the same time that private credit demand has
been robust. In Europe and the United States this has caused supply/demand
dynamics to improve in favor of government securities. As a result, the yield
spread of corporate bonds compared to government bonds has widened.
PAINEWEBBER
GLOBAL INCOME FUND
Investment Goals:
Primarily,high current income consistent with prudent investment risk;
secondarily,capital appreciation
Portfolio Managers:
Stuart Waugh
William W.King
Mitchell Hutchins Asset Management Inc.
Commencement:
March 20, 1987 (Class B)
July 1, 1991 (Class A)
August 26, 1991 (Class Y)
July 2, 1992 (Class C)
Dividend Payments:
Monthly
1
<PAGE>
SEMIANNUAL REPORT PAINEWEBBER GLOBAL INCOME FUND
PORTFOLIO REVIEW
<TABLE>
<CAPTION>
Average Annual Total Returns, Periods Ended 4/30/00
<S> <C> <C> <C> <C> <C> <C>
6 Months 1 Year 5 Years 10 Years Inception0
---------------------------------------------------------------------------------------------
Before Deducting Class A* -1.94% -3.30% 4.65% N/A 5.69%
Maximum Sales Charge Class B** -2.63 -4.40 3.74 6.47% 7.67
Class C+ -2.18 -3.68 4.14 N/A 4.39
Class Y++ -1.76 -2.86 4.97 N/A 5.95
---------------------------------------------------------------------------------------------
After Deducting Class A* -5.89 -7.13 3.80 N/A 5.21
Maximum Sales Charge Class B** -7.39 -8.97 3.42 6.47 7.67
Class C+ -2.89 -4.37 4.14 N/A 4.39
---------------------------------------------------------------------------------------------
Salomon Smith Barney World
Gov't Bond Index (U.S. $, Unhedged) -4.35 -3.47 3.20 8.66 7.35
Lipper Global Income Funds Median -2.60 -4.83 4.05 6.40 7.20
---------------------------------------------------------------------------------------------
</TABLE>
Past performance is no guarantee of future performance. The investment return
and the principal value of an investment in the Fund will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Returns for periods of one year or less are cumulative. The performance
data quoted assume reinvestment of all dividends and capital gains. Lipper peer
group data calculated by Lipper Inc.; used with permission. The Lipper Median is
the return of the fund that places in the middle of the peer group.
0 Inception: since commencement of issuance on July 1, 1991 for Class A
shares, March 20, 1987 for Class B shares, July 2, 1992 for Class C shares
and August 26, 1991 for Class Y shares. Inception performance for the Index
and the Lipper median are shown as of the inception of the oldest share
class.
* 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% and is
reduced to 0% after six years. Class B shares bear ongoing 12b-1
distribution and service fees.
+ Maximum contingent deferred sales charge for Class C shares is 0.75% and is
reduced to 0% after one year. Class C shares bear ongoing 12b-1
distribution and service fees.
++ 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 that may invest in PaineWebber mutual funds, as well as the
trustee of the PaineWebber 401(k) Plus Plan. Class Y shares do not bear
initial or contingent deferred sales charges or ongoing distribution and
service fees.
2
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND SEMIANNUAL REPORT
PORTFOLIO HIGHLIGHTS
Over the semiannual period, the Fund's investment strategy consisted of the
following components. Global duration ranged between 3.8-4.3 years, primarily
reflecting the Fund's zero weighting in the Japanese government bond market,
which was not fully compensated by overweightings elsewhere. (Duration is a
measure of a bond portfolio's sensitivity to interest rate changes.) Duration in
the U.S. was longer than the benchmark, based on credible Federal Reserve
monetary policies, low inflation and attractive valuations, especially in
agency, corporate and Yankee bonds. The Fund's allocation to emerging-market
debt ranged between 8-14% of net assets, primarily in sovereign credits with
stable or improving credit profiles. The Fund held a roughly 27% weight (+/-5%)
in the euro, with opportunistic investments in the yen and commodity currencies.
OUTLOOK
GLOBAL ECONOMY
We believe the scenario most likely to develop over the next twelve months
is for the U.S. economy to slow modestly while overseas economies continue to
accelerate. This soft-landing scenario would stop deterioration in the U.S.
current account deficit--a major threat to the world's macroeconomic balance.
Inflation pressures remain controlled, although mild wage pressures are emerging
in the United States.
If inflation remains low then continued growth need not imply much higher
bond yields in the United States and Europe. In Japan, however, deflation must
end for growth to normalize. Japan's fiscal stimulus program is likely to
require continued massive bond issuance, which will exert upward pressure on
bond yields.
DURATION STRATEGY AND MARKET ALLOCATION
Presently, the Fund's global duration is roughly four years--shorter than
the World Government Bond Index (WGBI). As noted in the Highlights section, this
setting primarily reflects the Fund's lack of exposure in the Japanese
government bond market. Duration in the U.S. remains slightly longer than in the
WGBI, for the reasons noted in the Highlights section above. Fund duration in
the UK is short based on extreme valuations in longer maturity bonds and also in
Europe, based on our belief that the European Central Bank must continue to
raise rates at this stage in Europe's business cycle. The Fund has no exposure
to Japanese government bonds.
3
<PAGE>
SEMIANNUAL REPORT PAINEWEBBER GLOBAL INCOME FUND
CURRENCY STRATEGY
The Fund's exposure to the euro hurt absolute performance over the
semiannual period. Prospects for euro appreciation looked good to us last fall.
We believed the euro would appreciate based on an outlook for accelerating
cyclical growth in Europe, a deteriorating U.S. current-account deficit and
increasing volatility in the U.S. equity markets. Although each of these trends
did develop in the first quarter, the euro weakened nevertheless.
We expect pressures on the euro to abate. Cyclically, Europe is
recovering--its economy doesn't appear vulnerable to financial shocks nor does
it have a current-account deficit. Based on many traditional measures, the euro
is undervalued and should recover. The Fund's present exposure to the euro is
about 26%, roughly three-quarters of the euro exposure of the WGBI. We don't
want to hedge substantially more unless we're convinced the currency will
continue to fall, because we believe a reversal in the euro from present levels
could be substantial and quick.
CREDIT AND EMERGING MARKET STRATEGY
We have recently begun to increase allocations to corporate and agency
bonds in the U.S., where spreads are historically attractive.
We are making opportunistic allocations to emerging-market debt, primarily
in sovereign credits with stable or improving credit profiles. Several
emerging-market countries appear vulnerable to external shocks or over-reliance
on foreign financing. Nevertheless, we believe a number of BBB/BB-rated credits
have strong enough fundamentals that their credit ratings can withstand a
downturn of investor sentiment.
4
<PAGE>
PAINEWEBBER GLOBAL INCOME FUND SEMIANNUAL REPORT
PORTFOLIO STATISTICS
Characteristics* 4/30/00 10/31/99
--------------------------------------------------------------------------------
Net Assets ($mm) $292.4 $358.1
Weighted Average Duration 4.2 yrs 4.0 yrs
Weighted Average Maturity 9.2 yrs 7.4 yrs
--------------------------------------------------------------------------------
Asset Allocation* 4/30/00 10/31/99
--------------------------------------------------------------------------------
Europe 40.2% 34.9%
U.S. Treasurys and Corporates 38.5 41.9
Emerging Market Investment Grade 6.5 6.2
Australia, Canada & New Zealand 5.8 7.6
Emerging Market Noninvestment Grade 5.6 6.1
Cash & Equivalents 3.4 3.3
--------------------------------------------------------------------------------
Total 100.0 100.0
Currency Exposure* 4/30/00 10/31/99
--------------------------------------------------------------------------------
U.S. Dollar 53.9% 55.9%
Unhedged--Europe 26.9 35.6
Foreign Currency Hedged to U.S. Dollars 10.0 1.7
Unhedged--Australia, Canada, Japan, Korea & New Zealand 9.2 6.8
--------------------------------------------------------------------------------
Total 100.0 100.0
Credit Quality* 4/30/00 10/31/99
--------------------------------------------------------------------------------
A1/P1 6.7% 5.8%
AAA 59.5 59.4
AA 9.3 8.1
A 14.0 16.6
BBB 4.9 3.9
BB 3.4 4.7
B 2.2 1.5
--------------------------------------------------------------------------------
Total 100.0 100.0
* Weightings represent percentages of net assets as of the dates indicated.
The Fund's portfolio is actively managed and its composition will vary over
time.
5
<PAGE>
SEMIANNUAL REPORT PAINEWEBBER GLOBAL INCOME FUND
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 /s/ Brian M. Storms
MARGO ALEXANDER BRIAN M. STORMS
Chairman and Chief Executive Officer President and Chief Operating Officer
Mitchell Hutchins Asset Management Inc. Mitchell Hutchins Asset Management Inc.
/s/ Stuart Waugh /s/ William W. King
STUART WAUGH WILLIAM W. KING
Managing Director First Vice President
Mitchell Hutchins Asset Management Inc. Mitchell Hutchins Asset Management Inc.
Portfolio Manager, Global Income Fund 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, 2000, 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 risks, charges and expenses,
and should be read carefully before investing.
6
<PAGE>
PaineWebber Global Income Fund
Performance Results (unaudited)
<TABLE>
<CAPTION>
Net Asset Value Total Return/1/
---------------------------------- ---------------------------------------
12 Months 6 Months
04/30/00 10/31/99 04/30/99 Ended 04/30/00 Ended 04/30/00
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares $9.31 $9.76 $10.18 (3.30)% (1.94)%
------------------------------------------------------------------------------------------------------
Class B Shares 9.25 9.72 10.14 (4.40) (2.63)
------------------------------------------------------------------------------------------------------
Class C Shares 9.31 9.76 10.17 (3.68) (2.18)
------------------------------------------------------------------------------------------------------
Performance Summary Class A Shares
<CAPTION>
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
------------------------------------------------------------------------------------------------------
1999 10.58 9.61 -- 0.3892 0.1704 (3.93)
------------------------------------------------------------------------------------------------------
01/01/00 - 04/30/00 9.61 9.31 -- 0.1754 -- (1.32)
------------------------------------------------------------------------------------------------------
Totals: $0.3198 $5.3651 $0.6595
------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 04/30/00: 63.12%
------------------------------------------------------------------------------------------------------
</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. Total
investment return for periods of less than one year has not been annualized.
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.
7
<PAGE>
PaineWebber Global Income Fund
Performance Results (unaudited) (continued)
Performance Summary Class B Shares
<TABLE>
<CAPTION>
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
-------------------------------------------------------------------------------------------------
1999 10.54 9.56 -- 0.3276 0.1440 (4.89)
-------------------------------------------------------------------------------------------------
01/01/00 - 04/30/00 9.56 9.25 -- 0.1442 -- (1.76)
-------------------------------------------------------------------------------------------------
Totals: $0.6487 $9.0719 $0.5753
-------------------------------------------------------------------------------------------------
Cumulative Total Return as of 04/30/00: 163.67%
-------------------------------------------------------------------------------------------------
Performance Summary Class C Shares
<CAPTION>
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
-------------------------------------------------------------------------------------------------
1999 10.58 9.61 -- 0.3545 0.1551 (4.41)
-------------------------------------------------------------------------------------------------
01/01/00 - 04/30/00 9.61 9.31 -- 0.1599 -- (1.48)
-------------------------------------------------------------------------------------------------
Totals: $0.3098 $4.3254 $0.6061
-------------------------------------------------------------------------------------------------
Cumulative Total Return as of 04/30/00: 40.01%
-------------------------------------------------------------------------------------------------
</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. Total
investment return for periods of less than one year has not been annualized.
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, 2000 and since inception, August 26, 1991 through April 30,
2000, Class Y shares had a total return of (1.76)% and 65.27%, 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.
8
<PAGE>
PaineWebber Global Income Fund
Performance Results (unaudited) (concluded)
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
% Return Without % Return After
Deducting Deducting
Maximum Sales Maximum Sales
Charge Charge
--------------------- ---------------------
Class A* B** C*** A* B** C***
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 03/31/00 (1.39)% (2.50)% (1.88)% (5.38)% (7.15)% (2.58)%
-----------------------------------------------------------------------------
Five Years Ended 03/31/00 5.26 4.34 4.74 4.40 4.03 4.74
-----------------------------------------------------------------------------
Ten Years Ended 03/31/00 N/A 6.71 N/A N/A 6.71 N/A
-----------------------------------------------------------------------------
Commencement of Operations
Through 03/31/00+ 5.97 7.87 4.69 5.48 7.87 4.69
-----------------------------------------------------------------------------
</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, 2000, for the five years ended March 31, 2000 and since
inception August 26, 1991 through March 31, 2000, Class Y shares have an
average annual total return of (1.05)%, 5.57 and 6.24%, 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.
9
<PAGE>
PaineWebber Global Income Fund
Portfolio of Investments April 30, 2000 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000)* Dates Rates Value
---------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
Long-Term Debt Securities -- 77.63%
Brazil -- 1.09%
US$ 2,326 Federal Republic of
Brazil, DCB............ 04/15/12 7.438%@ $ 1,674,720
US$ 1,970 Federal Republic of
Brazil................. 05/15/27 10.125 1,526,750
------------
3,201,470
------------
Canada -- 3.23%
13,850 Government of Canada.... 09/01/01 7.000 9,452,239
------------
France -- 1.53%
4,870 Government of France.... 10/25/07 5.500 4,487,489
------------
Germany -- 5.59%
19,345 Federal Republic of
Germany................ 02/17/04 to 07/04/09 3.250 to 4.000 16,357,521
------------
Hungary -- 0.65%
520,000 Government of Hungary... 06/12/01 13.500 1,892,080
------------
Italy -- 3.70%
10,647 Republic of Italy....... 04/01/04 8.500 10,823,809
------------
Korea -- 0.66%
US$ 1,860 Republic of Korea....... 04/15/08 8.875 1,918,032
------------
Malaysia -- 1.97%
US$ 3,025 Government of Malaysia.. 06/01/09 8.750 3,100,625
US$ 3,092 Petroliam Nasional
Berhad**............... 10/15/26 7.625 2,653,245
------------
5,753,870
------------
Mexico -- 3.83%
US$ 5,786 Pemex Finance Limited... 11/15/03 6.125 5,605,188
US$ 1,400 United Mexican States... 05/15/26 11.500 1,655,500
US$ 4,010 United Mexican States
Series B, DISC(1)...... 12/31/19 6.943@ 3,929,800
------------
11,190,488
------------
Netherlands -- 7.63%
24,179 Government of
Netherlands............ 09/15/01 to 01/15/28 5.500 to 8.750 22,301,330
------------
Panama -- 0.75%
US$ 2,330 Republic of Panama...... 04/01/29 9.375 2,190,200
------------
Philippines -- 0.73%
US$ 2,235 Republic of Philippines. 10/21/24 9.500 2,140,013
------------
Poland -- 1.94%
14,975 Republic of Poland...... 06/12/04 10.000 2,897,847
US$ 3,090 Republic of Poland, PDI. 10/27/14 6.000# 2,777,138
------------
5,674,985
------------
Trinidad & Tobago -- 1.34%
US$ 3,800 Republic of Trinidad &
Tobago**............... 10/01/09 9.875 3,914,000
------------
</TABLE>
10
<PAGE>
PaineWebber Global Income Fund
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000)* Dates Rates Value
---------- -------------------- --------------- ------------
<C> <S> <C> <C> <C>
Long-Term Debt Securities --
(concluded)
Turkey -- 1.13%
US$ 3,113 Republic of Turkey...... 11/05/04 to 01/15/30 11.875% $ 3,308,624
------------
United Kingdom -- 13.91%
23,915 United Kingdom Gilt..... 08/27/02 to 12/07/03 6.500 to 10.000 40,673,596
------------
United States -- 27.95%
2,921 Abbey National Capital
Trust.................. 06/30/30++ 8.963 2,828,933
3,070 Associates Corporation
of North America....... 11/01/03 5.750 2,887,970
3,560 CIT Group Incorporated.. 02/15/04 5.500 3,287,147
9,000 Clorox Corporation...... 07/15/01 8.800 9,153,171
4,145 FMR Corporation......... 06/15/29 7.570 3,918,173
9,000 Ford Motor Capital
Corporation BV......... 07/01/01 9.500 9,201,096
5,815 General Motors
Acceptance Corporation. 11/10/03 5.750 5,469,670
2,745 HSBC Capital Funding LP
**..................... 06/30/30++ 10.176 2,847,539
21,608 U.S. Treasury Inflation
Index Notes............ 01/15/08 to 04/15/28 3.625 20,846,969
18,880 U.S. Treasury Bonds(2).. 11/15/27 to 02/15/29 5.250 to 6.125 17,850,904
3,507 Wells Fargo Company..... 09/03/02 6.500 3,433,164
------------
81,724,736
------------
Total Long-Term Debt Securities
(cost -- $246,258,485).............. 227,004,482
------------
12,885 Australia Treasury
Bills.................. 05/18/00 5.750+ 7,505,351
------------
Short-Term Debt Securities -- 18.32%
Australia -- 2.57%
Germany -- 2.93%
9,459 Federal Republic of
Germany................ 09/15/00 3.250 8,579,202
------------
Netherlands -- 2.32%
7,425 Government of
Netherlands............ 05/15/00 9.000 6,769,179
------------
United States -- 10.50%
9,500 Federal Home Loan Bank.. 08/09/00 5.710 9,488,353
21,400 U.S. Treasury Notes(2).. 08/31/00 to 11/30/00 4.625 to 5.125 21,211,000
------------
30,699,353
------------
Total Short-Term Debt Securities
(cost -- $56,472,885)............... 53,553,085
------------
Repurchase Agreement -- 1.44%
4,220 Repurchase agreement
dated 04/28/00 with
Warburg Dillion Read
LLC, collateralized by
$3,154,000
U.S. Treasury Bonds,
12.000%, due 08/15/13
(value -- $4,305,210);
proceeds: $4,222,005
(cost -- $4,220,000)... 05/01/00 5.700 4,220,000
------------
Total Investments (cost --
$306,951,370) -- 97.39%............ 284,777,567
Other assets in excess of
liabilities -- 2.61%................ 7,626,258
------------
Net Assets -- 100.00%............... $292,403,825
============
</TABLE>
11
<PAGE>
PaineWebber Global Income Fund
----------
Note: The Portfolio of Investments is listed by the issuer's country of origin.
<TABLE>
<C> <S>
* In local currency unless otherwise indicated.
** Security exempt from registration under 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified Institutional buyers.
# Reflects rate at April 30, 2000 on step coupon rate instrument.
@ Floating rate securities--the interest rates shown are the current rates
as of April 30, 2000.
+ Interest rate shown is discount rate at date of purchase.
++ Maturity date shown is the callable date for perpetual rewriting
securities.
(1) Issued with additional 6,169,000 recoverable rights attached maturing on
06/30/03 with no market value.
(2) Security, or portion thereof, was on loan at April 30, 2000.
DCB Debt Conversion Bond.
DISC Discount Bond.
PDI Past Due Interest Bond.
</TABLE>
Forward Foreign Currency Contracts
<TABLE>
<CAPTION>
Unrealized
Contract to Appreciation
Deliver In Exchange for Maturity Dates (Depreciation)
----------- ---------------- -------------------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...... 6,442,500 US$ 3,786,000 05/18/00 $ 23,108
Australian Dollars...... 6,442,500 US$ 3,785,355 05/18/00 22,463
British Pounds.......... 11,485,000 US$ 18,455,613 05/03/00 to 06/08/00 563,000
British Pounds.......... 8,432,000 US$ 13,298,950 05/30/00 162,162
British Pounds.......... 8,185,000 US$ 12,932,791 06/27/00 177,167
Euro.................... 16,583,000 US$ 15,892,443 05/03/00 to 06/14/00 771,049
Japanese Yen............ 289,779,120 US$ 2,724,000 05/08/00 37,655
U.S. Dollars............ 8,550,894 EUR 8,593,000 06/14/00 (708,600)
U.S. Dollars............ 2,614,258 EUR 2,638,000 05/22/00 (210,522)
U.S. Dollars............ 1,057,124 EUR 1,097,000 05/03/00 (58,902)
U.S. Dollars............ 8,846,794 GBP 5,560,000 05/03/00 (185,950)
U.S. Dollars............ 13,383,742 JPY1,390,458,815 05/08/00 to 05/19/00 (477,079)
U.S. Dollars............ 3,999,322 JPY 415,129,576 05/22/00 (141,242)
U.S. Dollars............ 3,617,381 KRW4,020,719,000 05/30/00 6,076
---------
$ (19,615)
=========
-----------------
</TABLE>
Currency Type Abbreviations:
EUR--Euro
GBP--British Pounds
JPY--Japanese Yen
KRW--Korean Wan
US$--United States Dollars
Investments by Type of Issuer
<TABLE>
<CAPTION>
Percent of Net
Assets
--------------------
Long-term Short-term
--------- ----------
<S> <C> <C>
Government and other public issuers........................ 62.01% 18.32%
Bank and other financial institutions...................... 11.58 --
Industrial................................................. 4.04 --
Repurchase agreement....................................... -- 1.44
----- -----
77.63% 19.76%
===== =====
</TABLE>
See accompanying notes to financial statements
12
<PAGE>
PaineWebber Global Income Fund
Statement of Assets and Liabilities April 30, 2000 (unaudited)
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost -- $306,951,370)....... $284,777,567
Investments of cash collateral received for securities loaned, at
value (cost -- $33,045,912)..................................... 33,045,912
Foreign currency (cost -- $433,414).............................. 411,717
Receivable for investments sold.................................. 8,154,663
Interest receivable.............................................. 6,010,952
Receivable for shares of beneficial interest sold................ 11,686
Unrealized appreciation on forward foreign currency contracts.... 1,762,680
Other assets..................................................... 113,879
------------
Total assets..................................................... 334,289,056
------------
Liabilities
Collateral for securities loaned................................. 33,045,912
Payable for investments purchased................................ 5,448,748
Payable for shares of beneficial interest repurchased............ 976,838
Unrealized depreciation on forward foreign currency contracts.... 1,782,295
Payable to affiliates............................................ 258,081
Accrued expenses and other liabilities........................... 373,357
------------
Total liabilities................................................ 41,885,231
------------
Net Assets
Beneficial interest -- $0.001 par value (unlimited amount
authorized)..................................................... 339,892,592
Distributions in excess of net investment income................. (92,978)
Accumulated net realized losses from investment transactions..... (24,893,301)
Net unrealized depreciation of investments, other assets,
liabilities and forward contracts denominated in foreign
currencies...................................................... (22,502,488)
------------
Net assets....................................................... $292,403,825
============
Class A:
Net assets....................................................... $261,255,897
------------
Shares outstanding............................................... 28,059,202
------------
Net asset value and redemption value per share................... $9.31
=====
Maximum offering price per share (net asset value plus sales
charge of 4.00% of offering price).............................. $9.70
=====
Class B:
Net assets....................................................... $ 6,270,457
------------
Shares outstanding............................................... 677,774
------------
Net asset value and offering price per share..................... $9.25
=====
Class C:
Net assets....................................................... $ 18,091,670
------------
Shares outstanding............................................... 1,943,577
------------
Net asset value and offering price per share..................... $9.31
=====
Class Y:
Net assets....................................................... $ 6,785,801
------------
Shares outstanding............................................... 729,047
------------
Net asset value, offering price and redemption value per share... $9.31
=====
</TABLE>
See accompanying notes to financial statements
13
<PAGE>
PaineWebber Global Income Fund
Statement of Operations
<TABLE>
<CAPTION>
For the Six
Months Ended
April 30, 2000
(unaudited)
--------------
<S> <C>
Investment income:
Interest (net of foreign withholding taxes -- $1,626)........... $ 11,142,246
------------
Expenses:
Investment advisory and administration fees..................... 1,216,108
Service fees -- Class A......................................... 360,309
Service and distribution fees -- Class B........................ 42,855
Service and distribution fees -- Class C........................ 74,120
Transfer agency and related services fees....................... 180,786
Custody and accounting.......................................... 132,532
Reports and notices to shareholders............................. 73,980
Legal and audit................................................. 54,420
State registration fees......................................... 20,686
Trustees' fees.................................................. 5,250
Other expenses.................................................. 8,270
------------
2,169,316
Less: Fee waiver from adviser................................... (4,081)
------------
Net expenses.................................................... 2,165,235
------------
Net investment income........................................... 8,977,011
------------
Realized and unrealized gains (losses) from investment
transactions:
Net realized losses from:
Investment transactions........................................ (2,487,911)
Foreign currency transactions.................................. (5,128,605)
Net change in unrealized appreciation (depreciation) of:
Investments.................................................... (7,925,085)
Other assets, liabilities and forward contracts denominated in
foreign currencies............................................ 229,134
------------
Net realized and unrealized losses from investment transactions. (15,312,467)
------------
Net decrease in net assets from operations...................... $ (6,335,456)
============
</TABLE>
See accompanying notes to financial statements
14
<PAGE>
PaineWebber Global Income Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six
Months Ended
April 30, For the
2000 Year Ended
(unaudited) October 31, 1999
------------ ----------------
<S> <C> <C>
From operations:
Net investment income........................... $ 8,977,011 $ 23,096,844
Net realized losses from investments and foreign
currency transactions.......................... (7,616,516) (2,087,692)
Net change in unrealized
appreciation/depreciation of investments, other
assets,
liabilities and forward contracts denominated
in foreign currencies.......................... (7,695,951) (31,646,405)
------------ -------------
Net decrease in net assets resulting from
operations..................................... (6,335,456) (10,637,253)
------------ -------------
Dividends and distributions to shareholders:
From net investment income -- Class A........... (7,976,443) (11,711,650)
From net investment income -- Class B........... (195,495) (631,462)
From net investment income -- Class C........... (499,389) (732,369)
From net investment income -- Class Y........... (227,242) (342,651)
In excess of net investment income -- Class A... -- (2,470,298)
In excess of net investment income -- Class B... -- (119,488)
In excess of net investment income -- Class C... -- (153,577)
In excess of net investment income -- Class Y... -- (75,412)
From paid in capital -- Class A................. -- (5,969,172)
From paid in capital -- Class B................. -- (288,728)
From paid in capital -- Class C................. -- (371,100)
From paid in capital -- Class Y................. -- (182,224)
------------ -------------
Total dividends and distributions to
shareholders................................... (8,898,569) (23,048,131)
------------ -------------
From beneficial interest transactions:
Net proceeds from the sale of shares............ 51,997,956 151,934,535
Cost of shares repurchased...................... (108,364,520) (255,256,106)
Proceeds from dividends reinvested.............. 5,924,869 15,238,771
------------ -------------
Net decrease in net assets from beneficial
interest transactions.......................... (50,441,695) (88,082,800)
------------ -------------
Net decrease in net assets...................... (65,675,720) (121,768,184)
Net assets:
Beginning of period............................. 358,079,545 479,847,729
------------ -------------
End of period................................... $292,403,825 $ 358,079,545
============ =============
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
Notes to Financial Statements (unaudited)
Organization and Significant Accounting Policies
PaineWebber Investment Series ("Trust") was organized under Massachusetts 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's primary investment objective is high current income consistent with pru-
dent investment risk; capital appreciation is a secondary objective.
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 serv-
ice and/or distribution charges, if any, and certain transfer agency and re-
lated 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 assump-
tions 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--The Fund calculates its net asset value based on the
current market value for its portfolio securities. The Fund normally obtains
market values for its securities from independent pricing sources. Independent
pricing sources may use last sale prices, current market quotations or valua-
tions from computerized "matrix" systems that derive values based on comparable
securities. Securities traded in the over-the-counter ("OTC") market and listed
on The Nasdaq Stock Market, Inc. ("Nasdaq") normally are valued at the last
sale price on Nasdaq prior to valuation. Other OTC securities are valued at the
last bid price available prior to valuation. Securities which are listed on
U.S. and foreign stock exchanges normally are valued at the last sale price on
the day the securities are 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 valued on the exchange designated as the primary
market by Michell Hutchins Asset Management, Inc. ("Mitchell Hutchins"), a
wholly owned asset management subsidiary of PaineWebber Incorporated
("PaineWebber") and investment adviser and administrator of the Fund. If a mar-
ket value is not available from an independent pricing source for a particular
security, that security is valued at fair value as determined in good faith by
or under the direction of the Trust's board of trustees (the "board"). The am-
ortized cost method of valuation, which approximates market value, generally is
used to value short-term debt instruments with sixty days or less remaining to
maturity, unless the board determines that this does not represent fair value.
All investments quoted in foreign currencies will be valued daily in U.S. dol-
lars 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 be-
tween 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. If
events 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 board.
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 ac-
crued
16
<PAGE>
Notes to Financial Statements (unaudited)
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 collat-
eral 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 le-
gal proceedings. The Fund occasionally participates in joint repurchase agree-
ment transactions with other funds managed by Mitchell Hutchins.
Investment Transactions and Investment Income--Investment transactions are re-
corded on the trade date. Realized gains and losses from investments and for-
eign exchange transactions are calculated using the identified cost method. In-
terest income is recorded on an accrual basis. Discounts are accreted as ad-
justments 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 (af-
ter 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) purchases 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 deter-
mining the gain or loss upon the sale or maturity of foreign currency denomi-
nated debt obligations pursuant to federal income tax regulations. Certain for-
eign 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 ex-
change 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 main-
tain 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 consumma-
tion 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 po-
tential inability of counterparties to meet the terms of their forward con-
tracts and from unanticipated movements in the value of foreign currencies rel-
ative to the U.S. dollar.
17
<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 differ-
ences 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 in-
volve certain considerations and risks not typically associated with invest-
ments in the United States. These risks include revaluation of currencies, ad-
verse fluctuations in foreign currency values and possible adverse political,
social and economic developments, including those particular to a specific in-
dustry, 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. compa-
nies 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 devel-
opments particular to a specific industry, country or region.
Investment Adviser and Administrator
The Trust's board has approved an Investment Advisory and Administration Con-
tract ("Advisory Contract") with Mitchell Hutchins, under which Mitchell
Hutchins serves as investment adviser and administrator of the Fund. In accor-
dance 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:
<TABLE>
<CAPTION>
Average Daily Net Assets Annual Rate
------------------------ -----------
<S> <C>
Up to $500 million................................................ 0.750%
In excess of $500 million up to $1.0 billion...................... 0.725
In excess of $1.0 billion up to $1.5 billion...................... 0.700
In excess of $1.5 billion up to $2.0 billion...................... 0.675
Over $2.0 billion................................................. 0.650
</TABLE>
At April 30, 2000, the Fund owed Mitchell Hutchins $184,999 in investment ad-
visory and administration fees. Mitchell Hutchins waived a portion of its in-
vestment advisory and administration fees in connection with the Fund's invest-
ment of cash collateral from security lending in the Mitchell Hutchins Private
Money Market Fund LLC. For the six months ended April 30, 2000, Mitchell
Hutchins waived $4,081.
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 sepa-
rate 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
18
<PAGE>
Notes to Financial Statements (unaudited)
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, 2000, the Fund owed Mitchell Hutchins
$72,164 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, 2000, it earned $11,191 in sales charges.
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 se-
curities in an amount at least equal to the market value of the securities
loaned, plus accrued interest, determined on a daily basis and adjusted accord-
ingly. The Fund will retain record ownership of loaned securities to exercise
certain beneficial rights; however, the Fund may bear the risk of delay in re-
covery 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 bor-
rower plus reasonable administrative and custody fees. For the six months ended
April 30, 2000, the Fund earned $20,977 as compensation for lending its securi-
ties, and PaineWebber earned $6,995 in compensation as the Fund's lending
agent. At April 30, 2000, the Fund owed PaineWebber $918 in compensation.
At April 30, 2000, the Fund's custodian held cash having an aggregate value of
$33,045,912 as collateral for portfolio securities loaned having a market value
of $31,608,881.
As of April 30, 2000 the Fund invested the cash collateral in the following
money market funds:
<TABLE>
<CAPTION>
Number of Shares Value
---------------- -----------
<C> <S> <C>
4,716,911 AIM Liquid Assets Portfolio.................. $ 4,716,911
Mitchell Hutchins Private Money Market Fund
22,160,824 LLC.......................................... 22,160,824
27,528 Provident Temp Fund Portfolio................ 27,528
6,140,649 Scudder Institutional Fund Incorporated...... 6,140,649
-----------
Total investments of cash collateral received for securities
loaned (cost -- $33,045,912).................................. $33,045,912
===========
</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 tempo-
rary financing until the settlement of sale or purchase of portfolio securi-
ties, the repurchase or redemption of shares of the Fund at the request of the
shareholders and other temporary or emergency purposes. In connection there-
with, the Fund has agreed to pay a commitment fee, pro rata, based on the rela-
tive 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, 2000, the Fund did not borrow under the Fa-
cility.
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
19
<PAGE>
Notes to Financial Statements (unaudited)
April 30, 2000, PaineWebber received from PFPC, Inc., not the Fund, approxi-
mately 53% of the total transfer agency and related service fees collected by
PFPC, Inc. from the Fund.
Investments in Securities
For federal income tax purposes, the cost of securities owned at April 30,
2000 was substantially the same as the cost of securities for financial state-
ment purposes.
At April 30, 2000, the components of the net unrealized depreciation of in-
vestments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having an excess of value
over cost).................................................. $ 2,376,271
Gross depreciation (investments having an excess of cost over
value)...................................................... (24,550,074)
------------
Net unrealized depreciation of investments................... $(22,173,803)
============
For the six months ended April 30, 2000, total aggregate purchases and sales
of portfolio securities, excluding short-term securities, were as follows:
Purchases.................................................... $48,430,826
Sales........................................................ $86,642,425
</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 sub-
stantially 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, 1999, the Fund had a capital loss carryforward of $17,248,634
available as a reduction, to the extent provided in the regulations, of any fu-
ture net realized capital gains which expires as follows: $1,494,819 in 2002
and $15,753,815 in 2003. To the extent that such losses are used to offset fu-
ture capital gains, it is probable that the gains so offset will not be
distributed.
20
<PAGE>
Notes to Financial Statements (unaudited)
Shares of Beneficial Interest
There are an unlimited number of $0.001 par value shares of beneficial inter-
est 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
----------- ------------- ---------- ------------ -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended
April 30, 2000:
Shares sold......... 5,288,961 $ 50,317,982 44,166 $ 419,824 6,073 $ 58,192 125,680 $ 1,201,958
Shares repurchased.. (10,457,729) (99,811,408) (153,064) (1,454,711) (322,316) (3,090,241) (417,230) (4,008,160)
Dividends
reinvested......... 545,107 5,208,357 12,949 123,131 38,797 370,628 23,314 222,753
Shares converted
from
Class B to Class A. 477,687 4,585,589 (480,424) (4,585,589) -- -- -- --
----------- ------------- ---------- ------------ -------- ----------- -------- -----------
Net decrease........ (4,145,974) $ (39,699,480) (576,373) $ (5,497,345) (277,446) $(2,661,421) (268,236) $(2,583,449)
=========== ============= ========== ============ ======== =========== ======== ===========
Year Ended
October 31, 1999:
Shares sold......... 14,109,640 $ 145,289,001 60,221 $ 611,036 71,317 $ 736,205 514,266 $ 5,298,293
Shares repurchased.. (23,208,621) (237,511,862) (612,534) (6,215,142) (650,756) (6,650,592) (477,606) (4,878,510)
Dividends
reinvested......... 1,292,664 13,082,832 61,875 627,737 93,162 943,121 57,930 585,081
Shares converted
from
Class B to Class A. 1,425,279 14,470,718 (1,431,266) (14,470,718) -- -- -- --
----------- ------------- ---------- ------------ -------- ----------- -------- -----------
Net increase
(decrease)......... (6,381,038) $ (64,669,311) (1,921,704) $(19,447,087) (486,277) $(4,971,266) 94,590 $ 1,004,864
=========== ============= ========== ============ ======== =========== ======== ===========
</TABLE>
21
<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, 2000 -------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 9.76 $ 10.58 $ 10.27 $ 10.46 $ 10.35 $ 9.99
-------- -------- -------- -------- -------- --------
Net investment income@.. 0.27 0.57 0.62 0.69 0.72 0.77
Net realized and
unrealized gains
(losses) from
investments
and foreign currency@.. (0.46) (0.82) 0.32 (0.19) 0.13 0.31
-------- -------- -------- -------- -------- --------
Net increase (decrease)
from investment
transactions........... (0.19) (0.25) 0.94 0.50 0.85 1.08
-------- -------- -------- -------- -------- --------
Dividends from net
investment income...... (0.26) (0.33) (0.50) (0.54) (0.74) (0.72)
Distributions in excess
of net investment
income................. -- (0.07) (0.05) (0.06) -- --
Distributions from paid
in capital............. -- (0.17) (0.08) (0.09) -- --
-------- -------- -------- -------- -------- --------
Total dividends and
distributions to
shareholders........... (0.26) (0.57) (0.63) (0.69) (0.74) (0.72)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 9.31 $ 9.76 $ 10.58 $ 10.27 $ 10.46 $ 10.35
======== ======== ======== ======== ======== ========
Total investment
return(1).............. (1.94)% (2.44)% 9.51% 4.99% 8.60% 11.09%
======== ======== ======== ======== ======== ========
Ratios/Supplemental
data:
Net assets, end of
period (000's)......... $261,256 $314,475 $408,190 $486,718 $549,932 $663,022
Expenses to average net
assets, net of waivers
from adviser(3)........ 1.28%* 1.19% 1.24% 1.21% 1.27% 1.24%(2)
Net investment income to
average net assets, net
of waivers from
adviser(3)............. 5.59%* 5.58% 6.07% 6.66% 6.88% 7.47%(2)
Portfolio turnover rate. 19% 63% 93% 172% 126% 113%
</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 any applicable sales charges or program fees; results would be
lower if they 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%.
(3) During the six months ended April 30, 2000 and the year ended October 31,
1999, Mitchell Hutchins waived a portion of its advisory and administration
fees. The ratios excluding the waiver would be the same since the fee
waiver represents less than 0.005%.
22
<PAGE>
PaineWebber Global Income Fund
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------
For the
Six Months
Ended For the Years Ended October 31,
April 30, 2000 -----------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 9.72 $ 10.54 $ 10.24 $ 10.44 $ 10.31 $ 9.96
------ ------- ------- -------- -------- --------
0.20 0.48 0.51 0.58 0.64 0.69
(0.45) (0.82) 0.33 (0.17) 0.15 0.30
------ ------- ------- -------- -------- --------
(0.25) (0.34) 0.84 0.41 0.79 0.99
------ ------- ------- -------- -------- --------
(0.22) (0.28) (0.43) (0.48) (0.66) (0.64)
-- (0.06) (0.04) (0.05) -- --
-- (0.14) (0.07) (0.08) -- --
------ ------- ------- -------- -------- --------
(0.22) (0.48) (0.54) (0.61) (0.66) (0.64)
------ ------- ------- -------- -------- --------
$ 9.25 $ 9.72 $ 10.54 $ 10.24 $ 10.44 $ 10.31
====== ======= ======= ======== ======== ========
(2.63)% (3.29)% 8.53% 4.11% 7.95% 10.24%
====== ======= ======= ======== ======== ========
$6,270 $12,187 $33,478 $103,312 $307,577 $484,534
2.06%* 2.11% 2.13% 1.99% 1.99% 2.00%(2)
4.77%* 4.64% 5.16% 5.83% 6.14% 6.71%(2)
19% 63% 93% 172% 126% 113%
<CAPTION>
Class B Class C
-------------------------------------------------------------------------------
For the For the
Six Months Six Months
Ended Ended For the Years Ended October 31,
April 30, 2000 April 30, 2000 ------------------------------------------------
(unaudited) (unaudited) 1999 1998 1997 1996 1995
--------------- -------------- --------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 9.72 $ 9.76 $ 10.58 $ 10.26 $ 10.45 $ 10.33 $ 9.98
--------------- -------------- --------- -------- -------- -------- -----------
0.20 0.24 0.52 0.56 0.63 0.67 0.71
(0.45) (0.45) (0.82) 0.33 (0.18) 0.14 0.31
--------------- -------------- --------- -------- -------- -------- -----------
(0.25) (0.21) (0.30) 0.89 0.45 0.81 1.02
--------------- -------------- --------- -------- -------- -------- -----------
(0.22) (0.24) (0.30) (0.46) (0.50) (0.69) (0.67)
-- -- (0.06) (0.04) (0.06) -- --
-- -- (0.16) (0.07) (0.08) -- --
--------------- -------------- --------- -------- -------- -------- -----------
(0.22) (0.24) (0.52) (0.57) (0.64) (0.69) (0.67)
--------------- -------------- --------- -------- -------- -------- -----------
$ 9.25 $ 9.31 $ 9.76 $ 10.58 $ 10.26 $ 10.45 $ 10.33
=============== ============== ========= ======== ======== ======== ===========
(2.63)% (2.18)% (2.93)% 9.01% 4.48% 8.12% 10.49%
=============== ============== ========= ======== ======== ======== ===========
$6,270 $18,092 $21,682 $28,633 $36,935 $50,928 $71,329
2.06%* 1.80%* 1.69% 1.77% 1.69% 1.73% 1.75%(2)
4.77%* 5.08%* 5.08% 5.54% 6.17% 6.40% 6.96%(2)
19% 19% 63% 93% 172% 126% 113%
</TABLE>
23
<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, 2000 ------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------- ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $ 9.76 $10.58 $10.27 $ 10.49 $ 10.35 $ 9.99
------ ------ ------ ------- ------- -------
Net investment income@..................... 0.28 0.60 0.65 0.71 0.75 0.78
Net realized and unrealized gains (losses)
from investments
and foreign currency@..................... (0.45) (0.82) 0.32 (0.21) 0.17 0.32
------ ------ ------ ------- ------- -------
Net increase (decrease) from investment
transactions.............................. (0.17) (0.22) 0.97 0.50 0.92 1.10
------ ------ ------ ------- ------- -------
Dividends from net investment income....... (0.28) (0.35) (0.52) (0.56) (0.78) (0.74)
Distributions in excess of net investment
income.................................... -- (0.07) (0.05) (0.06) -- --
Distributions from paid in capital......... -- (0.18) (0.09) (0.10) -- --
------ ------ ------ ------- ------- -------
Total dividends and distributions to
shareholders.............................. (0.28) (0.60) (0.66) (0.72) (0.78) (0.74)
------ ------ ------ ------- ------- -------
Net asset value, end of period............. $9.31 $ 9.76 $10.58 $ 10.27 $ 10.49 $ 10.35
====== ====== ====== ======= ======= =======
Total investment return(1)................. (1.76)% (2.10)% 9.89% 5.20% 9.25% 11.39%
====== ====== ====== ======= ======= =======
Ratios/Supplemental data:
Net assets, end of period (000's).......... $6,786 $9,735 $9,547 $10,096 $13,077 $16,613
Expenses to average net assets, net of
waivers from adviser(3)................... 1.02%* 0.85% 0.96% 0.94% 0.96% 0.95%(2)
Net investment income to average net
assets, net of waivers from adviser(3).... 5.84%* 5.86% 6.35% 6.93% 7.19% 7.77%(2)
Portfolio turnover rate.................... 19% 63% 93% 172% 126% 113%
</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 any applicable sales charges or program fees; results would be
lower if they 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%.
(3) During the six months ended April 30, 2000 and the year ended October 31,
1999, Mitchell Hutchins waived a portion of its advisory and administration
fees. The ratios excluding the waiver would be the same since the fee
waiver represents less than 0.005%.
24
<PAGE>
BOARD OF TRUSTEES
E. Garrett Bewkes, Jr. Meyer Feldberg
Chairman George W. Gowen
Margo N. Alexander Frederic V. Malek
Richard Q. Armstrong Carl W. Schafer
Richard R. Burt Brian M. Storms
Mary C. Farrell
PRINCIPAL OFFICERS
Margo N. Alexander Dennis L. McCauley
President Vice President
Dianne E. O'Donnell Stuart Waugh
Vice President and Secretary Vice President
Paul H. Schubert
Vice President and Treasurer
INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019
This report is not to be used in connection with the offering of shares of the
Fund unless accompanied or preceded by an effective prospectus.
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 Financial Advisor or
correspondent 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
. High Income Fund
. Investment Grade Income Fund
. Low Duration U.S. Government Income Fund
. Strategic Income Fund
. U.S. Government Income Fund
TAX - FREE BOND FUNDS
. California Tax-Free Income Fund
. Municipal High Income Fund
. National Tax-Free Income Fund
. New York Tax-Free Income Fund
STOCK FUNDS
. Enhanced S&P 500 Fund
. Enhanced Nasdaq-100 Fund
. Financial Services Growth Fund
. Growth Fund
. Growth and Income Fund
. Mid Cap Fund
. Small Cap Fund
. S&P 500 Index Fund
. Strategy Fund
. Tax-Managed Equity Fund
. Utility Income Fund
ASSET ALLOCATION FUNDS
. Balanced Fund
. Tactical Allocation Fund
GLOBAL FUNDS
. Asia Pacific Growth Fund
. Emerging Markets Equity Fund
. Global Equity Fund
. Global Income Fund
PAINEWEBBER MONEY MARKET FUND
PaineWebber
------------------------------
GLOBAL INCOME FUND
SEMIANNUAL REPORT
APRIL 30, 2000
PaineWebber
(C)2000 PaineWebber Incorporated
All Rights Reserved.
Member SIPC
