<PAGE>
PAINEWEBBER AND MITCHELL
HUTCHINS/KIDDER, PEABODY
MUTUAL FUNDS
PAINEWEBBER OFFERS A FAMILY OF 35 MUTUAL FUNDS WHICH ENCOMPASS A DIVERSIFIED
RANGE OF INVESTMENT GOALS. INVESTORS MAY EXCHANGE THEIR FUND SHARES WITH OTHER
FUNDS WITHIN THE FAMILY.
INCOME FUNDS
o MH/KP ADJUSTABLE RATE GOVERNMENT FUND
o MH/KP GLOBAL FIXED INCOME FUND
o MH/KP GOVERNMENT INCOME FUND
o MH/KP INTERMEDIATE FIXED INCOME FUND
o PW GLOBAL INCOME FUND
o PW HIGH INCOME FUND
o PW INVESTMENT GRADE INCOME FUND
o PW SHORT-TERM U.S. GOVERNMENT INCOME FUND
o PW SHORT-TERM U.S. GOVERNMENT INCOME FUND FOR CREDIT UNIONS
o PW STRATEGIC INCOME FUND
o PW U.S. GOVERNMENT INCOME FUND
TAX-FREE INCOME FUNDS
o MH/KP MUNICIPAL BOND FUND
o PW CALIFORNIA TAX-FREE INCOME FUND
o PW MUNICIPAL HIGH INCOME FUND
o PW NATIONAL TAX-FREE INCOME FUND
o PW NEW YORK TAX-FREE INCOME FUND
GROWTH FUNDS
o MH/KP EMERGING MARKETS EQUITY FUND
o MH/KP GLOBAL EQUITY FUND
o MH/KP SMALL CAP GROWTH FUND
o PW ATLAS GLOBAL GROWTH FUND
o PW BLUE CHIP GROWTH FUND
o PW CAPITAL APPRECIATION FUND
o PW COMMUNICATIONS & TECHNOLOGY GROWTH FUND
o PW EUROPE GROWTH FUND
o PW GROWTH FUND
o PW REGIONAL FINANCIAL GROWTH FUND
o PW SMALL CAP VALUE FUND
GROWTH AND INCOME FUNDS
o MH/KP ASSET ALLOCATION FUND
o MH/KP EQUITY INCOME FUND
o PW ASSET ALLOCATION FUND
o PW GROWTH AND INCOME FUND
o PW GLOBAL ENERGY FUND
o PW GLOBAL GROWTH AND INCOME FUND
o PW UTILITY INCOME FUND
PAINEWEBBER MONEY MARKET FUND
- ------------------
(COPYRIGHT)1995 PAINEWEBBER INCORPORATED
PRINTED ON
RECYCLED PAPER
MITCHELL HUTCHINS/
KIDDER, PEABODY
GLOBAL FIXED
INCOME FUND
SEMI-ANNUAL REPORT
February 28, 1995
<PAGE>
- --------------------------------------------------------------------------------
April 15, 1995
Dear Shareholder,
The world continues to enjoy a phase of economic recovery, although central
banks worldwide have recently effected credit tightening policies in order to
check prospective inflation, a side effect of vigorous economic expansion. In
the United States, the Federal Reserve raised interest rates six times in 1994
for a total increase of 2.5%. The Federal Reserve tightened another 0.5% on
February 1, 1995, increasing the Federal Funds rate to 6.0%.
In the last several months, Australia, New Zealand, the United Kingdom, Sweden
and Finland also raised their short-term interest rates. In many instances,
long-term yields have also risen and the differences in short- and long-term
interest rates have declined, causing yield curves to flatten. Central bankers
around the world appear to be acting diligently in their guard against
prospective inflation. Moreover, government budget deficits are falling
worldwide. Lower deficits translate into reduced pressure on bond yields as
governments reduce their borrowing demands.
Effective February 13, 1995, as a result of an asset purchase transaction by and
among Kidder, Peabody Group Inc., its parent, General Electric Company, and
Paine Webber Group Inc., the investment management for the Fund was transferred
to Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'). Mitchell
Hutchins' appointment as the Fund's investment adviser and administrator was
approved by shareholders on April 13, 1995. Mitchell Hutchins, a wholly owned
investment management subsidiary of PaineWebber Incorporated, provides
investment advisory and portfolio management services to individuals, pension
and endowment funds, trusts and institutions. As of February 28, 1995, Mitchell
Hutchins was adviser or sub-adviser to 42 investment companies with 77 separate
portfolios and aggregate assets of approximately $22 billion.
Although the Fund's name has been changed to Mitchell Hutchins/Kidder, Peabody
Global Fixed Income Fund, the investment objective remains the same: to seek
total return consisting of current income and capital appreciation by investing
in fixed-income securities primarily issued by U.S. and foreign governments and
authorities and supranational organizations. Strategic Fixed Income ('SFI')
remains as the Fund's sub-adviser. Ken Windheim of SFI remains the Fund's
portfolio manager and is responsible for the day-to-day management of the Fund.
PORTFOLIO REVIEW
During the six months ended February 28, 1995, an overweighted exposure to the
German mark against the U.S. dollar and high-yielding European currencies, as
well as a rally in the Japanese bond market resulted in the Fund's positive
performance. The Fund's total return for the period without deducting sales
charges was 5.28% for Class A shares, 5.04% for Class B shares and 5.40% for
Class C shares. The Fund's total return for the period after deducting the
maximum applicable sales charges was 2.72% for Class A shares, 5.04% for Class B
shares and 5.40% for Class C shares. In comparison, the Salomon Brothers World
Government Bond Index had a total return of 5.98% for the period.
The six-month period ended February 28, 1995 was remarkable for the turmoil in
global fixed-income markets caused by events such as the Mexican peso crisis and
the unraveling of Barings PLC, the British investment bank. These events
underscored the risks of investing in emerging markets, and redirected both
institutional and individual investors to traditional safe havens. This
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
shift in investor interest aided the appreciation of the already strong German
Deutschemark, and benefited the Fund, which had 13.1% of net assets invested in
Deutschemark-denominated bonds as of February 28, 1995. Relative to the U.S.
dollar, European currencies in general were strong during the period; this also
bolstered the Fund's return.
During the period, the Fund's European bond holdings were heavily concentrated
in core markets. This had a positive influence on relative performance as yield
spreads between core and peripheral markets widened. The Fund was well
positioned for the strong rally in Japan, with moderately overweighted exposure
to the yen and the Japanese government bond market. These gains were partially
offset by our underweighted position in the U.S. Treasury market, however, where
yields fell in response to the slowdown in economic growth in the first months
of 1995.
Economic statistics for the first quarter of 1995 indicate that the U.S. economy
has slowed so far this year. A primary reason is weakness in consumer spending,
although consumer confidence remains near peak levels. We believe that the
retrenchment in consumer spending is temporary, and that it may accelerate in
the second quarter. Another harness on growth is a decrease in exports to
Mexico, caused by the depreciated peso, which has pushed U.S. goods beyond the
reach of the average Mexican consumer. The drain on Mexican exports may be
balanced by increased U.S. exports to Europe and Asia, where a weaker dollar may
heighten demand for U.S. products. Inflation, which was the impetus behind the
Federal Reserve's tightening policy, has begun to appear at the retail level,
with the Consumer Price Index (a measure of the prices of goods, including food
and energy) growing at an annual rate of 3.5% in 1995 versus a pace of 2.5% late
last year. We believe that the first quarter slowdown of the U.S. economy is
temporary, and that growth might speed up in the second quarter, raising the
possibility of further credit tightening by the Federal Reserve and a rise in
bond yields.
Global fixed income markets present many challenges going forward. The German
bond market has moved in lockstep with the U.S. market during the period ended
February 28, 1995, despite the sharp rise in the Deutschemark against the
dollar. In the next few months, however, we expect that U.S. Treasury yields may
rise relative to German Bund yields. Outside Germany, European markets have been
mixed, with Italy and Spain's markets declining while the Northern European
markets have risen in dollar terms. In Japan, the strength of the yen has driven
bond yields below 4%. The record high level of the yen is expected to further
slow an already sluggish Japanese recovery and intensify deflationary pressures.
As global cycles of economic growth evolve, we will continue to search for
opportunities to achieve our objectives of income and capital appreciation in
1995.
Thank you for your participation in the Mitchell Hutchins/Kidder, Peabody Global
Fixed Income Fund. We value you as a shareholder and as a client and welcome any
comments or questions you may have.
Sincerely,
/s/ FRANK P.L. MINARD /s/ KENNETH A. WINDHEIM
FRANK P.L. MINARD KENNETH A. WINDHEIM
Chairman, Portfolio Manager,
Mitchell Hutchins Asset Management Mitchell Hutchins/Kidder, Peabody
Inc. Global Fixed Income Fund
- --------------------------------------------------------------------------------
2
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Recent Performance Results (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURN(1)
--------------------------------
NET ASSET VALUE 12 MONTHS 6 MONTHS
--------------------------------- ------------- -------------
2/28/95 8/31/94 2/28/94 ENDED 2/28/95 ENDED 2/28/95
<S> <C> <C> <C> <C> <C>
Class A Shares $11.99 $11.93 $12.27 4.66% 5.28%
Class B Shares 11.99 11.93 12.27 4.15 5.04
Class C Shares 12.00 11.94 12.28 4.91 5.40
</TABLE>
PERFORMANCE SUMMARY CLASS A SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
----------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/24/92-12/31/92 $12.00 $11.99 -- $0.0069 1.83%
1993 11.99 12.48 0.517 0.6956 14.45
1994 12.48 11.59 -- 0.8144 -0.58
01/01/95-02/28/95 11.59 11.99 -- 0.0801 4.13
Total: $0.517 $1.5970
CUMULATIVE TOTAL RETURN AS OF 2/28/95: 18.22%
</TABLE>
PERFORMANCE SUMMARY CLASS B SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
----------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/10/93-12/31/93 $12.77 $12.48 $0.517 $0.3242 4.33%
1994 12.48 11.59 -- 0.7540 -1.08
01/01/95-02/28/95 11.59 11.99 -- 0.0727 4.06
Total: $0.517 $1.1509
CUMULATIVE TOTAL RETURN AS OF 2/28/95: 7.42%
</TABLE>
PERFORMANCE SUMMARY CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
----------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/10/93-12/31/93 $12.77 $12.49 $0.517 $0.3878 4.92%
1994 12.49 11.60 -- 0.8448 -0.33
01/01/95-02/28/95 11.60 12.00 -- 0.0838 4.16
Total: $0.517 $1.3164
CUMULATIVE TOTAL RETURN AS OF 2/28/95: 8.95%
</TABLE>
AVERAGE ANNUAL RETURN
<TABLE>
<CAPTION>
% RETURN WITHOUT DEDUCTING % RETURN AFTER DEDUCTING
MAXIMUM SALES CHARGES MAXIMUM SALES CHARGES
------------------------------------------- ------------------------------------------
CLASS CLASS
------------------------------------------- ------------------------------------------
A* B** C*** A* B** C***
<S> <C> <C> <C> <C> <C> <C>
Twelve Months
Ended 3/31/95 11.98% 11.69% 12.59% 9.45% 11.69% 12.59%
Five Years
Ended 3/31/95 N/A N/A N/A N/A N/A N/A
Commencement of
Operations Through
3/31/95 10.61 7.25 8.09 9.49 7.25 8.09
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not include
sales charges; results for Class A would be lower if sales charges were
included.
* Maximum sales charge for Class A shares is 2.25% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
** Class B shares are sold without initial or contingent deferred sales
charges, but bear ongoing 12b-1 distribution and service fees.
*** Class C shares are sold without initial or contingent deferred sales charges
and are available exclusively to PaineWebber employees.
+ Commencement of operations was December 24, 1992, May 10, 1993 and May 10,
1993 for Class A, Class B and Class C shares, respectively.
- --------------------------------------------------------------------------------
3
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1995
- --------------------------------------------------------------------------------
LONG-TERM DEBT SECURITIES--79.55%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT MATURITY INTEREST
(000)* DATES RATES VALUE
- ---------- ----------------- -------------- ------------
AUSTRIA--0.43%
<S> <C> <C> <C> <C>
JPY 60,000 Republic of Austria Government Bonds................ 09/28/05 4.50% $ 614,748
------------
<CAPTION>
AUSTRALIA--0.24%
<S> <C> <C> <C> <C>
470 Australian Government Bonds......................... 01/15/01 8.75 333,254
------------
<CAPTION>
BELGIUM--1.33%
<S> <C> <C> <C> <C>
60,000 Belgium Kingdom Government Bonds.................... 04/29/04 7.25 1,879,458
------------
<CAPTION>
CANADA--1.70%
<S> <C> <C> <C> <C>
3,645 Canadian Government Bonds........................... 12/01/03-06/01/25 6.50 to 9.25 2,399,282
------------
<CAPTION>
DENMARK--2.53%
<S> <C> <C> <C> <C>
21,600 Denmark Bullets..................................... 11/15/01-05/15/03 8.00 3,570,669
------------
<CAPTION>
FRANCE--3.46%
<S> <C> <C> <C> <C>
25,800 French Government Bonds O.A.T.'s.................... 01/25/01-04/25/23 5.50 to 9.50 4,896,583
------------
<CAPTION>
GERMANY--13.13%
<S> <C> <C> <C> <C>
2,090 Bundesrepublik Deutschland Bonds Floating Rate
Note................................................ 09/20/04 5.28 1,413,310
11,900 Bundesrepublik Deutschland Bonds.................... 10/20/00-01/04/24 6.25 to 9.00 8,366,890
6,990 Bundesschatzanweisungen Bonds....................... 02/24/99 6.875 4,784,218
5,800 Treuhandanstalt Bonds............................... 01/29/03-09/09/04 7.125 to 7.50 4,000,321
------------
Total Germany Long-Term Debt Securities............. 18,564,739
------------
<CAPTION>
ITALY--2.99%
<S> <C> <C> <C> <C>
8,010,000 Italian Buoni Poliennali del Tesoro Bonds........... 04/01/99-08/01/99 8.50 4,231,869
------------
<CAPTION>
JAPAN--17.06%
<S> <C> <C> <C> <C>
170,000 Export-Import Bank of Japan Bonds................... 10/01/03 4.375 1,746,184
2,056,915 Japanese Government Bonds........................... 06/21/99-09/20/04 4.10 to 6.70 22,380,281
------------
Total Japan Long-Term Debt Securities............... 24,126,465
------------
<CAPTION>
NETHERLANDS--3.57%
<S> <C> <C> <C> <C>
8,280 Netherlands Government Bonds........................ 06/15/99-10/01/04 7.25 to 8.50 5,044,751
------------
<CAPTION>
NEW ZEALAND--5.97%
<S> <C> <C> <C> <C>
13,410 New Zealand Government Bonds........................ 11/15/96-04/15/04 6.50 to 9.00 8,445,567
------------
<CAPTION>
NORWAY--0.60%
<S> <C> <C> <C> <C>
5,000 Norwegian Government Bonds.......................... 10/31/02 9.50 842,734
------------
<CAPTION>
SPAIN--0.75%
<S> <C> <C> <C> <C>
154,000 Spanish Government Bonds............................ 06/15/02-05/30/04 8.00 to 10.30 1,060,123
------------
<CAPTION>
SUPRANATIONAL--0.29%
<S> <C> <C> <C> <C>
40,000 International Organizations Bank for Reconstruction
& Development World Bank Japan Global Bonds......... 03/20/03 4.50 416,818
------------
<CAPTION>
SWEDEN--0.65%
<S> <C> <C> <C> <C>
6,600 Sweden Government Bonds............................. 01/21/99 11.00 924,111
------------
<CAPTION>
UNITED KINGDOM--5.19%
<S> <C> <C> <C> <C>
4,770 United Kingdom Treasury Bonds....................... 02/26/01-12/07/05 6.75 to 10.00 7,333,670
------------
</TABLE>
4
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LONG-TERM DEBT SECURITIES--79.55%--(CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT MATURITY INTEREST
(000)* DATES RATES VALUE
- ---------- ----------------- -------------- ------------
UNITED STATES--19.66%
<S> <C> <C> <C> <C>
14,489 United States Treasury Bonds........................ 11/15/12-11/15/24 7.50 to 10.375% $ 15,387,777
12,841 United States Treasury Notes........................ 11/30/98-02/15/04 5.125 to 7.75 12,417,878
------------
Total United States Long-Term Debt Securities....... 27,805,655
------------
<CAPTION>
TOTAL LONG-TERM DEBT SECURITIES
<S> <C>
(cost--$110,090,402)............................................. 112,490,496
------------
</TABLE>
- --------------------------------------------------------------------------------
SHORT-TERM DEBT SECURITIES--27.61%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
AUSTRALIA--5.52%
<S> <C> <C> <C>
10,800 Australia Treasury Bills............................ 06/01/95 7,810,346
------------
<CAPTION>
CANADA--1.62%
<S> <C> <C> <C>
3,200 Canadian Treasury Bills............................. 03/23/95 2,290,490
------------
<CAPTION>
DENMARK--5.46%
<S> <C> <C> <C>
45,000 Denmark Treasury Bills.............................. 04/03/95 7,703,333
------------
<CAPTION>
FRANCE--6.70%
<S> <C> <C> <C>
49,000 French Treasury Bills............................... 04/20/95 9,479,670
------------
<CAPTION>
JAPAN--7.69%
<S> <C> <C> <C> <C>
1,051,000 Japan Time Deposit.................................. 03/20/95-03/23/95 2.15625 10,877,102
------------
<CAPTION>
NEW ZEALAND--0.62%
<S> <C> <C> <C>
1,400 New Zealand Treasury Bills.......................... 04/05/95 880,130
------------
<CAPTION>
TOTAL SHORT-TERM DEBT SECURITIES
<S> <C>
(cost--$38,467,402).............................................. 39,041,071
------------
</TABLE>
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--2.57%
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3,637 Repurchase Agreement dated 02/28/95, with Citicorp
Securities Inc. Collateralized by $3,080,000 U.S.
Treasury Bonds, 10.75% due 02/15/03; proceeds
$3,637,614 (cost--$3,637,000)....................... 03/01/95 6.08 3,637,000
</TABLE>
- --------------------------------------------------------------------------------
CURRENCY CALL OPTIONS PURCHASED--0.12%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT
- ----------
<S> <C> <C>
7,904,017 German Deutsche Marks, expiring 06/23/1995 at FRF
3.000(a)............................................ 168,128
5,039,920 German Deutsche Marks, expiring 04/17/1995 at Bfr
2.000(b)............................................ 2,016
------------
TOTAL CALL OPTIONS (cost $109,712)............................... 170,144
------------
TOTAL INVESTMENTS (cost--$152,304,516)--109.85%.................. 155,338,711
Liabilities in excess of other assets--(9.85%)................... (13,926,579)
------------
NET ASSETS--100.00%.............................................. $141,412,132
------------
------------
</TABLE>
- ------------
* In Local Currency unless otherwise indicated.
(a) Contract face amount denominated in U.S. dollars representing DEM
11,385,897.43 against French Francs.
(b) Contract face amount denominated in U.S. dollars representing DEM
7,574,999.76 against Belgian Francs.
See accompanying notes to financial statements.
5
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO MATURITY APPRECIATION
DELIVER IN EXCHANGE FOR DATES (DEPRECIATION)
-------------- -------------------- -------------------- --------------
<S> <C> <C> <C> <C> <C>
Australian Dollars...................... 25,446,787 US$ 19,393,855 03/24/95 to 05/24/95 $ 626,987
Belgian Francs.......................... 379,889,600 US$ 11,790,870 03/24/95 (844,950)
Canadian Dollars........................ 36,962,200 US$ 26,222,195 03/24/95 to 05/24/95 (275,418)
Swiss Francs............................ 76,246,447 US$ 59,711,705 04/24/95 to 06/22/95 (2,342,864)
German Deutsche Marks................... 127,071,929 US$ 83,395,191 03/24/95 to 06/22/95 (3,741,054)
Danish Kronas........................... 107,164,915 US$ 17,899,549 03/24/95 to 06/22/95 (546,835)
European Currency Units................. 1,842,173 US$ 2,277,478 05/24/95 (69,849)
Spanish Pesetas......................... 3,244,851,526 US$ 24,274,868 03/24/95 to 06/22/95 (930,930)
French Francs........................... 281,889,003 US$ 52,768,806 03/24/95 to 05/24/95 (2,174,463)
British Pounds.......................... 40,567,281 US$ 63,386,145 03/24/95 to 06/22/95 (843,526)
Italian Liras........................... 48,522,580,898 US$ 29,554,692 03/02/95 to 06/22/95 479,723
Japanese Yen............................ 7,810,119,425 US$ 79,641,078 03/24/95 to 06/22/95 (1,830,140)
Dutch Guilders.......................... 5,989,200 US$ 3,545,447 03/24/95 to 05/24/95 (119,181)
Norwegian Kronas........................ 5,471,808 US$ 814,378 03/24/95 (32,450)
New Zealand Dollars..................... 28,634,373 US$ 18,133,367 03/24/95 to 06/22/95 35,668
Swedish Kronas.......................... 158,894,173 US$ 21,101,652 03/24/95 to 06/22/95 (486,695)
U.S. Dollars............................ 11,522,029 AUD 15,117,535 03/24/95 to 06/22/95 (378,860)
U.S. Dollars............................ 9,714,333 Bfr 309,243,695 03/24/95 to 05/24/95 577,337
U.S. Dollars............................ 23,787,505 CAD 33,492,889 03/24/95 to 06/22/95 216,769
U.S. Dollars............................ 57,533,996 CHF 75,560,661 03/24/95 to 06/22/95 3,756,562
U.S. Dollars............................ 96,575,926 DEM 147,379,064 03/24/95 to 06/22/95 4,491,556
U.S. Dollars............................ 8,899,163 DKK 53,952,012 03/01/95 to 05/24/95 387,289
U.S. Dollars............................ 6,141,520 ECU 5,065,939 03/24/95 314,209
U.S. Dollars............................ 22,846,393 ESP 3,042,058,015 03/24/95 to 06/22/95 787,933
U.S. Dollars............................ 39,250,163 FRF 210,282,937 03/24/95 to 06/22/95 1,739,274
U.S. Dollars............................ 62,539,589 GBP 39,830,810 03/02/95 to 06/22/95 514,833
U.S. Dollars............................ 27,854,754 ITL 45,597,715,823 03/24/95 to 05/24/95 (583,017)
U.S. Dollars............................ 87,637,892 JPY 8,657,439,531 03/02/95 to 06/22/95 2,364,326
U.S. Dollars............................ 11,957,836 NLG 20,845,806 03/24/95 to 05/24/95 787,736
U.S. Dollars............................ 2,362,101 NOK 15,337,125 06/22/95 16,385
U.S. Dollars............................ 11,679,747 NZD 18,424,330 03/02/95 to 06/22/95 (74,060)
U.S. Dollars............................ 20,237,922 SEK 152,142,419 03/24/95 to 05/24/95 403,801
--------------
$ 2,226,096
--------------
--------------
</TABLE>
- ------------
CURRENCY TYPE ABBREVIATIONS:
AUD--Australian Dollars
Bfr--Belgian Francs
CAD--Canadian Dollars
CHF--Swiss Francs
DEM--German Deutsche Marks
DKK--Danish Kronas
ECU--European Currency Units
ESP--Spanish Pesetas
FRF--French Francs
GBP--British Pounds
ITL--Italian Liras
JPY--Japanese Yen
NLG--Dutch Guilders
NOK--Norweigan Kronas
NZD--New Zealand Dollars
SEK--Swedish Kronas
6
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost--$152,194,804)....................................... $155,168,567
Options, at value (cost--$109,712)............................................................. 170,144
Cash........................................................................................... 357
Cash denominated in foreign currencies, at value (cost--$7,106,284)............................ 7,139,734
Receivable for investments sold................................................................ 21,814,288
Receivable for shares of beneficial interest sold.............................................. 88,178
Unrealized appreciation on forward foreign currency contracts.................................. 15,322,074
Dividends and interest receivable (cost--$2,364,334)........................................... 2,433,881
Deferred organization expenses................................................................. 138,071
Other assets................................................................................... 1,606
------------
Total assets............................................................................... 202,276,900
------------
LIABILITIES:
Payable for investments purchased.............................................................. 40,266,843
Payable for shares of beneficial interest repurchased.......................................... 6,959,739
Unrealized depreciation on forward foreign currency contracts.................................. 13,095,978
Foreign deferred interest...................................................................... 3,938
Income distribution payable.................................................................... 294,951
Payable to affiliates.......................................................................... 114,539
Accrued expenses and other liabilities......................................................... 128,780
------------
Total liabilities.......................................................................... 60,864,768
------------
NET ASSETS:
Beneficial interest shares of $0.001 par value outstanding (unlimited amount authorized)....... 149,014,008
Overdistributed net investment income.......................................................... (6,508,981)
Accumulated net realized losses from investments............................................... (6,007,678)
Net unrealized appreciation of investments and other assets, liabilities and forward contracts
denominated in foreign currencies............................................................. 4,914,783
------------
Net assets................................................................................. $141,412,132
------------
------------
CLASS A:
Net assets..................................................................................... $108,994,863
------------
Shares outstanding............................................................................. 9,087,405
------------
Net asset value and redemption value per share................................................. $11.99
------------
------------
Maximum offering price per share (net asset value plus sales charge of 2.25% of offering
price)........................................................................................ $12.27
------------
------------
CLASS B:
Net assets..................................................................................... $ 19,660,680
------------
Shares outstanding............................................................................. 1,639,377
------------
Net asset value, offering price and redemption value per share................................. $11.99
------------
------------
CLASS C:
Net assets..................................................................................... $ 12,756,589
------------
Shares outstanding............................................................................. 1,062,685
------------
Net asset value, offering price and redemption value per share................................. $12.00
------------
------------
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest and discounts earned (net of foreign withholding
taxes)................................................. $5,449,450
----------
EXPENSES:
Investment advisory fees................................. 598,119
Service fees--Class A.................................... 165,436
Service fees--Class B.................................... 29,371
Distribution fees--Class B............................... 58,742
Custody and accounting fees.............................. 105,059
Transfer agency fees..................................... 54,207
Amortization of organization expenses.................... 23,622
Legal and audit fees..................................... 17,668
Federal and state registration fees...................... 16,005
Reports and notices to shareholders...................... 10,674
Trustees' fees and expenses.............................. 4,901
Other expenses........................................... 6,907
----------
1,090,711
----------
NET INVESTMENT INCOME....................................... 4,358,739
----------
REALIZED AND UNREALIZED GAINS FROM INVESTMENT AND FOREIGN
CURRENCY ACTIVITIES:
Net realized gains (losses) from:
Investment activities and options..................... (4,656,010)
Foreign currency activities........................... 3,310,424
Net change in unrealized appreciation of:
Investments and options............................... 4,451,180
Other assets, liabilities and forward contracts
denominated in
foreign currencies.................................. 1,050,764
----------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENT
ACTIVITIES................................................ 4,156,358
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $8,515,097
----------
----------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
February 28, August 31,
1995 1994
------------ ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.......................... $ 4,358,739 $ 9,536,271
Net realized losses from investment activities
and options.................................. (4,656,010) (6,602,287)
Net realized gains from foreign currency
activities................................... 3,310,424 1,612,276
Net change in unrealized
appreciation/depreciation of investments and
options...................................... 4,451,180 (7,737,719)
Net change in unrealized
appreciation/depreciation of other assets,
liabilities and forward contracts denominated
in foreign currencies........................ 1,050,764 315,301
------------ ------------
8,515,097 (2,876,158)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class A................. (3,380,995) (7,680,804)
Net investment income--Class B................. (542,232) (892,910)
Net investment income--Class C................. (435,512) (962,557)
Excess of net investment income--Class A....... (2,774,180) (1,560,400)
Excess of net investment income--Class B....... (516,943) (176,688)
Excess of net investment income--Class C....... (308,417) (157,785)
Net realized short-term gains from investment
transactions--Class A........................ -- (6,122,714)
Net realized short-term gains from investment
transactions--Class B........................ -- (693,291)
Net realized short-term gains from investment
transactions--Class C........................ -- (619,117)
------------ ------------
(7,958,279) (18,866,266)
------------ ------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares........... 10,508,717 72,966,458
Cost of shares repurchased..................... (79,422,763) (79,138,601)
Proceeds from dividends reinvested............. 6,851,903 17,364,168
------------ ------------
Net increase (decrease) in net assets derived
from beneficial interest transactions........ (62,062,143) 11,192,025
------------ ------------
Net increase (decrease) in net assets.......... (61,505,325) (10,550,399)
NET ASSETS:
Beginning of period............................ 202,917,457 213,467,856
------------ ------------
End of period (including distribution in excess
of net investment income of $6,508,981 and
$2,909,441, respectively).................... $141,412,132 $202,917,457
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Mitchell Hutchins/Kidder, Peabody Global Fixed Income Fund (formerly
Kidder, Peabody Global Fixed Income Fund) (the 'Fund') is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, as a diversified, open-end investment company.
Organizational Matters--On May 10, 1993, the Fund adopted the Choice
Pricing SystemSM. Prior to May 10, 1993, the Fund issued only Class A shares;
subsequent to that date the Fund issued Class A, Class B and Class C shares.
Each class represents interests in the same assets of the Fund and the classes
are identical except for differences in their sales structure and ongoing
service and distribution charges. All classes of shares have equal rights as to
voting privileges, except that each class has exclusive voting rights with
respect to its distribution plan.
Organization costs are being amortized evenly over a sixty month period.
Prepaid registration fees are charged to income as the related shares are
issued.
Valuation of Investments--The Fund's investments are valued at market value
or, in the absence of a market value, at fair value as determined by or under
the direction of the Trustees. Investments in government securities and other
securities traded over-the-counter, other than short-term investments that
mature in 60 days or less, are valued at the average of the quoted bid and asked
prices in the over-the-counter market. Short-term investments that mature in 60
days or less are valued on the basis of amortized cost which the Trustees have
determined to represent fair value.
Securities that are primarily traded on foreign exchanges are generally
valued at the preceding closing values of the securities on their respective
exchanges. When an occurrence, subsequent to the time value was so established,
is likely to have changed that value, the fair market value of those securities
will be determined by consideration of other factors by or under the direction
of the Trustees.
A security that is primarily traded on a domestic or foreign stock exchange
is valued at the last sale price on that exchange or, if no sales occurred
during the day, at current quoted bid price.
An option that is written by the Fund is valued at the last sale price or,
in the absence of the last sales price, the last bid price. In carrying out the
Trustees' valuation policies, the Fund may consult with an independent pricing
service.
The value of a futures contract is equal to the unrealized gain or loss on
the contract that is determined by marking the contract to the current
settlement price for a like contract on the valuation date of the futures
contract. A settlement price may not be used if the market makes a limit move
with respect to a particular futures contract or if the securities underlying
the futures contract experience significant price fluctuations after the
determination of the settlement price. When a settlement price cannot be used
futures contracts will be valued at their fair market value as determined by or
under the direction of the Trustees.
10
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
Investment Transactions and Investment Income--Investment transactions are
recorded on trade date. Realized gains and losses from investment are calculated
using the identified cost method. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on an accrual basis. Discounts are accreted
and premiums are amortized on straight line basis 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.
(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 value of the Fund are presented at
the foreign exchange rates at the end of the period, the Fund does not generally
isolate the effect of unrealized fluctuations in foreign exchange rates from the
effect of the changes in market prices of securities. However, the Fund does
isolate the effect of realized fluctuations in foreign exchange rates when
determining the realized gain or loss upon the sale or maturity of foreign
currency-denominated debt obligations pursuant to federal income tax
regulations. Foreign security and currency transactions may involve certain
considerations and risks not typically associated with investing in U.S.
companies and U.S. government securities. These risks include re-evaluation of
currencies and future adverse political and economic developments, which could
cause securities to be less liquid and their prices more volatile than those of
comparable U.S. companies and the U.S. government.
Forward Foreign Currency Contracts--The Fund is authorized to enter into
forward foreign currency exchange 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.
A forward currency contract is a commitment to purchase or sell foreign
currency at a future date at a negotiated exchange rate. Generally, the Fund
will enter into such forward contracts on the transaction's trade date with a
contracted date coinciding with the settlement date of the underlying security.
Certain risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar. During the period between the forward currency contract's trade date and
settlement date movements in the value of foreign currencies relative to
11
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
the U.S. dollar are recognized as unrealized gains or losses. On a daily basis
the Fund records an unrealized gain or loss to recognize the U.S. dollar value
of the foreign currency contract at the end of each day's trading. Should the
underlying security fail to settle within the contracted period the forward
currency contract is renegotiated at a new exchange rate. The gain or loss
resulting from the difference between the original and renegotiated settlement
values is recognized and included in realized transaction gain/loss.
Option Writing/Purchasing--The Fund may write options to increase its
income or to hedge a portion of its portfolio. When the Fund writes a call or
put option, an amount equal to the premium received is included in the Fund's
statement of assets and liabilities as an asset and an equivalent liability. The
amount of the liability is subsequently 'marked to market' to reflect the
current market value of the option written. If an option which the Fund has
written expires on its stipulated date, the Fund realizes a gain in the amount
of the premium originally received, and the liability related to such option is
extinguished. If the Fund enters into a closing purchase transaction, it
realizes a gain or loss determined by the difference between the premium
received and the cost of the closing transaction. If a call option which the
Fund has written is exercised, the Fund realizes a gain or loss from the sale of
the underlying security and the proceeds from such sale are increased by the
premium originally received. If a put option which the Fund has written is
exercised, the amount of the premium originally received reduces the cost of the
security that the Fund purchases upon exercise of the option. As the writer of
an option, the Fund may have no control over whether the underlying securities
are sold (called) or purchased (put) and as a result bears the market risk of an
unfavorable change in price of the security underlying the written option.
The Fund may purchase a call or put option to hedge against adverse market
shifts. The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's statement of assets and liabilities as an investment and
subsequently 'marked to market' to reflect the current market value of the
option purchased. If a call or put option which the Fund has purchased expires
on the stipulated expiration date, the Fund realizes a loss in the amount of the
cost of the option. If the Fund enters into a closing sale transaction, it
realizes a gain or loss, depending on whether the proceeds from the sale are
greater or less than the cost of the option. If the Fund exercises a put option,
it realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are decreased by the premium originally paid. If the
Fund exercises a call option, the cost of the security that the Fund purchases
upon exercise is increased by the premium originally paid. Certain risks may
arise upon writing or purchasing options from the potential inability of
counterparties to meet the terms of the options.
Repurchase Agreements--The Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The value of the
collateral must be a minimum of 102% of the market value of the securities being
loaned, allowing for minor variations arising from marking to market of such
collateral. If the issuer defaults or if bankruptcy or regulatory proceedings
are commenced with respect to the issuer, the realization of the proceeds may be
delayed or limited.
12
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
Federal Tax Status--The Fund intends to distribute 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.
Dividends and Distributions--Dividends and distributions to shareholders
are recorded on ex-dividend date. The Fund declares dividends from net
investment income daily and pays monthly. Net capital gains, if any, will be
distributed at least annually, but the Fund may make more frequent distributions
of such gains, if necessary, to avoid income or excise taxes.
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. Dividends and distributions which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they exceed
net investment income and net realized capital gains for tax purposes, they are
reported as distributions of paid-in-capital.
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund has entered into an Investment Advisory and Administration
Contract with Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'), a
wholly owned subsidiary of PaineWebber Incorporated, pursuant to which Mitchell
Hutchins serves as the Fund's investment adviser and administrator and receives
a fee, accrued daily and paid monthly, at the annual rate of 0.70% of the Fund's
average daily net assets. Mitchell Hutchins in turn employs Strategic Fixed
Income, L.P. ('SFI') as the Fund's sub-adviser, in which capacity SFI receives
from Mitchell Hutchins a fee, paid monthly, calculated and accrued daily, at the
annual rate of .35% of the Fund's average daily net assets. At February 28,
1995, the Fund owed Kidder Peabody Asset Management, Inc. ('KPAM'), the Fund's
predecessor investment adviser and administrator, $33,651 in investment advisory
and administration fees.
At a special meeting of shareholders that took place on April 13, 1995,
Mitchell Hutchins was appointed as investment adviser and administrator of the
Fund. The Fund pays the same fee for investment advisory and administration
services to Mitchell Hutchins as previously paid to KPAM, as described in the
Fund's prospectus. Mitchell Hutchins and SFI continue to manage the Fund in
accordance with the Fund's investment objective, policies and restrictions as
stated in the prospectus.
13
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
Investment advisory functions for the Fund were previously transferred from
KPAM to Mitchell Hutchins on an interim basis as a result of an asset purchase
transaction by and among Kidder, Peabody Group Inc., its parent, General
Electric Company, and Paine Webber Group Inc. That period began on February 13,
1995 and ended on April 13, 1995. At February 28, 1995, the Fund owed Mitchell
Hutchins $44,947 in investment advisory and administration fees.
In compliance with applicable state securities laws, Mitchell Hutchins will
reimburse the Fund if and to the extent that the aggregate operating expenses in
any fiscal year, exclusive of taxes, interest, brokerage fees, distribution fees
and extraordinary expenses, exceed limitations imposed by various state
regulations. Currently, the most restrictive limitations applicable to the Fund
is 2.5% of the first $30 million of average daily net assets, 2.0% of the next
$70 million and 1.5% of any excess over $100 million. No expense reimbursement
was required for the six months ended February 28, 1995.
DISTRIBUTION PLANS
Effective February 13, 1995, Mitchell Hutchins serves as the exclusive
distributor of the Fund's shares. Under separate plans of distribution, Class A
shares are sold subject to a front-end sales load and bear a service fee of
0.25% per annum of average class net assets. Class B shares are sold at net
asset value without a sales load and bear a distribution fee of 0.50% per annum
and a service fee of 0.25% per annum of average class net assets. The Fund pays
Mitchell Hutchins the service and distribution fees monthly. For these services
for the period ended Feburary 13, 1995, Kidder, Peabody & Co. Incorporated, the
Fund's predecessor distributor, earned $234,406 in fees. At February 28, 1995,
$19,143 was payable to Mitchell Hutchins for the period from February 13 to
February 28, 1995. Mitchell Hutchins also receives the proceeds of any front-end
sales loads with respect to the purchase of Class A shares.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at February
28, 1995 was substantially the same as the cost of securities for financial
statement purposes.
14
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements--(concluded)
- --------------------------------------------------------------------------------
At February 28, 1995, the components of the net unrealized appreciation of
investments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having an excess of value over cost)....... $4,185,029
Gross depreciation (investments having an excess of cost over value)....... (1,117,384)
----------
Net unrealized appreciation of investments................................. $3,067,645
----------
----------
</TABLE>
For the six months ended February 28, 1995, total aggregate purchases and
sales of portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<S> <C>
Purchases............................................................... $240,782,187
Sales................................................................... $527,796,173
</TABLE>
Transactions in call options purchased for the six months ended February
28, 1995 were as follows:
<TABLE>
<CAPTION>
PAR VALUE
COVERED BY PREMIUMS
OPTIONS PAID
------------ ---------
<S> <C> <C>
Outstanding call options at beginning of year............................ $(13,294,017) $(135,080)
Options purchased........................................................ 22,524,017 237,019
Options closed........................................................... (22,173,937) (211,651)
------------ ---------
Outstanding call options at end of year.................................. $(12,943,937) $(109,712)
------------ ---------
------------ ---------
</TABLE>
BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of shares of beneficial interest, par value $.001 per share. Transactions in
shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------- ----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Six months ended February 28, 1995:
Shares sold......................... 666,493 $ 7,934,569 98,611 $ 1,174,503 117,220 $ 1,399,645
Dividends reinvested in additional
Fund shares....................... 445,387 5,221,284 82,621 967,489 56,449 663,130
Shares repurchased.................. (5,062,978) (60,211,233) (794,142) (9,394,788) (826,380) (9,816,742)
---------- ------------ --------- ----------- -------- -----------
Net decrease.......................... (3,951,098) $(47,055,380) (612,910) $(7,252,796) (652,711) $(7,753,967)
---------- ------------ --------- ----------- -------- -----------
---------- ------------ --------- ----------- -------- -----------
Year ended August 31, 1994:
Shares sold......................... 3,108,216 $ 39,707,546 1,832,752 $23,303,224 793,248 $ 9,955,688
Dividends reinvested in additional
Fund shares....................... 1,124,982 14,067,862 135,828 1,695,816 127,228 1,600,490
Shares repurchased.................. (4,991,354) (61,405,906) (598,936) (7,372,563) (825,212) (10,360,132)
---------- ------------ --------- ----------- -------- -----------
Net increase (decrease)............... (758,156) $ (7,630,498) 1,369,644 $17,626,477 95,264 $ 1,196,046
---------- ------------ --------- ----------- -------- -----------
---------- ------------ --------- ----------- -------- -----------
</TABLE>
15
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout the
periods presented below:
<TABLE>
<CAPTION>
Class A
--------------------------------------------------
For the Six For the Year For the Period
Months Ended Ended December 24, 1992+
February 28, August 31, to August 31,
1995 1994 1993
------------ ------------ ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............................... $ 11.93 $ 13.10 $ 12.00
------------ ------------ ----------
Income (loss) from investment operations:
Net investment income............................................ 0.18 0.43 0.45
Net realized and unrealized gains (losses) from investment and
foreign currency activities.................................... 0.45 (0.56) 1.18
------------ ------------ ----------
Total income (loss) from investment operations..................... 0.63 (0.13) 1.63
------------ ------------ ----------
Dividends and distributions:
Dividends from net investment income............................. (0.57) (0.63) (0.53)
Distributions from net realized gains............................ -- (0.41) --
------------ ------------ ----------
Total dividends and distributions................................ (0.57) (1.04) (0.53)
------------ ------------ ----------
Net asset value, end of period..................................... $ 11.99 $ 11.93 $ 13.10
------------ ------------ ----------
------------ ------------ ----------
Total return (1)................................................... 5.28% (1.10)% 13.79%
------------ ------------ ----------
------------ ------------ ----------
Ratios/Supplemental data:
Net assets, end of period (000's).................................. $108,995 $155,575 $180,686
Ratio of expenses, net of reimbursement, to average net assets..... 1.23%* 1.19% 1.14%*
Ratio of expenses, before reimbursement from manager,
to average net assets............................................ 1.23%* 1.19% 1.22%*
Ratio of net investment income to average net assets............... 5.16%* 4.22% 4.44%*
Portfolio turnover................................................. 150.86% 534.84% 130.43%
</TABLE>
- ------------------
* Annualized
+ Commencement of offering of shares.
(1) Total return is calculated assuming a $1,000 investment in Fund shares on
the first day of each period reported, reinvestment of all dividends and
capital gain distributions at net asset value on the payable date, and a
sale at net asset value on the last day of each period reported. The figures
do not include sales charges; results of Class A shares would be lower if
sales charges were included. Total returns for periods of less than one year
have not been annualized.
16
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
---------------------------------------------
For the
For the Six For the Year Period
Months Ended Ended May 10, 1993+
February 28, August 31, to August 31,
1995 1994 1993
------------ ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period................................... $ 11.93 $ 13.09 $ 12.77
------------ ------------ -------------
Income (loss) from investment operations:
Net investment income................................................ 0.20 0.49 0.17
Net realized and unrealized gains (losses) from investment and
foreign currency activities........................................ 0.40 (0.67) 0.32
------------ ------------ -------------
Total income (loss) from investment operations......................... 0.60 (0.18) 0.49
------------ ------------ -------------
Dividends and distributions:
Dividends from net investment income................................. (0.54) (0.57) (0.17)
Distributions from net realized gains................................ -- (0.41) --
------------ ------------ -------------
Total dividends and distributions.................................... (0.54) (0.98) (0.17)
------------ ------------ -------------
Net asset value, end of period......................................... $ 11.99 $ 11.93 $ 13.09
------------ ------------ -------------
------------ ------------ -------------
Total return (1)....................................................... 5.04% (1.51)% 3.84%
------------ ------------ -------------
------------ ------------ -------------
Ratios/Supplemental data:
Net assets, end of period (000's)...................................... $ 19,661 $ 26,866 $11,555
Ratio of expenses, net of reimbursement, to average net assets......... 1.74%* 1.68% 1.58%*
Ratio of expenses, before reimbursement from manager,
to average net assets................................................ 1.74%* 1.68% 1.66%*
Ratio of net investment income to average net assets................... 4.66%* 3.73% 4.00%*
Portfolio turnover..................................................... 150.86% 534.84% 130.43%
</TABLE>
- ------------------
* Annualized
+ Commencement of offering of shares.
(1) Total return is calculated assuming a $1,000 investment in Fund shares on
the first day of each period reported, reinvestment of all dividends and
capital gain distributions at net asset value on the payable date, and a
sale at net asset value on the last day of each period reported. Total
returns for periods of less than one year have not been annualized.
17
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Financial Highlights--(concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
---------------------------------------------
For the
For the Six For the Year Period
Months Ended Ended May 10, 1993+
February 28, August 31, to August 31,
1995 1994 1993
------------ ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period................................... $ 11.94 $ 13.10 $ 12.77
------------ ------------ -------------
Income (loss) from investment operations:
Net investment income................................................ 0.24 0.57 0.20
Net realized and unrealized gains (losses) from investment and
foreign currency activities........................................ 0.41 (0.66) 0.33
------------ ------------ -------------
Total income (loss) from investment operations......................... 0.65 (0.09) 0.53
------------ ------------ -------------
Dividends and distributions:
Dividends from net investment income................................. (0.59) (0.66) (0.20)
Distributions from net realized gains................................ -- (0.41) --
------------ ------------ -------------
Total dividends and distributions.................................... (0.59) (1.07) (0.20)
------------ ------------ -------------
Net asset value, end of period......................................... $ 12.00 $ 11.94 $ 13.10
------------ ------------ -------------
------------ ------------ -------------
Total return (1)....................................................... 5.40% (0.71)% 4.17%
------------ ------------ -------------
------------ ------------ -------------
Ratios/Supplemental data:
Net assets, end of period (000's)...................................... $ 12,757 $ 20,474 $21,226
Ratio of expenses, net of reimbursement, to average net assets......... 0.98%* 0.94% 0.89%*
Ratio of expenses, before reimbursement from manager,
to average net assets................................................ 0.98%* 0.94% 0.97%*
Ratio of net investment income to average net assets................... 5.41%* 4.50% 4.69%*
Portfolio turnover..................................................... 150.86% 534.84% 130.43%
</TABLE>
- ------------------
* Annualized
+ Commencement of offering of shares.
(1) Total return is calculated assuming a $1,000 investment in Fund shares on
the first day of each period reported, reinvestment of all dividends and
capital gain distributions at net asset value on the payable date, and a
sale at net asset value on the last day of each period reported. Total
returns for periods of less than one year have not been annualized.
18
<PAGE>
MITCHELL HUTCHINS/KIDDER, PEABODY GLOBAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders,
Mitchell Hutchins/Kidder, Peabody Global Fixed Income Fund
(one of the portfolios constituting the Mitchell Hutchins/Kidder, Peabody
Investment Trust):
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Mitchell Hutchins/Kidder, Peabody
Global Fixed Income Fund, as of February 28, 1995, and the related statements of
operations and of changes in net assets and the financial highlights for each of
the periods presented. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1995 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Mitchell
Hutchins/Kidder, Peabody Global Fixed Income Fund as of February 28, 1995, the
results of its operations, the changes in its net assets and financial
highlights for the periods presented in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
New York, New York
April 21, 1995
19
<PAGE>
- --------------------------------------
TRUSTEES
David J. Beaubien
William W. Hewitt, Jr.
Thomas R. Jordan
Frank P.L. Minard
Carl W. Schafer
- --------------------------------------
OFFICERS
Frank P. L. Minard
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Julian F. Sluyters
Vice President and Treasurer
- --------------------------------------
INVESTMENT ADVISER, ADMINISTRATOR
AND DISTRIBUTOR
Mitchell Hutchins Asset Management
Inc.
1285 Avenue of the Americas
New York, New York 10019
- --------------------------------------
INVESTMENT SUB-ADVISER
Strategic Fixed Income, L.P.
1001 19th Street North
Arlington, Virginia 22209
- --------------------------------------
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.
A Prospectus containing more complete
information for any of the funds
listed on the back cover can be
obtained from a PaineWebber investment
executive or correspondent firm. Read
the prospectus carefully before
investing.
