<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
PORTFOLIO OF INVESTMENTS MAY 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000)* MATURITY DATES INTEREST RATES VALUE
--------- -------------------- -------------- ------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES - 82.29%
Argentina - 4.39%
US$ 8,250 Republic of Argentina,
Discount Bonds, FRN's.. 03/31/23 6.875+% $ 5,011,875
Republic of Argentina,
US$ 7,000 FRB's.................. 03/31/05 7.313+ 4,593,750
US$ 5,500 Republic of Argentina,
Par Bonds, Step-Up
Coupon................. 03/31/23 5.000+ 2,743,125
------------
12,348,750
------------
Australia - 6.24%
8,454 New South Wales Treasury
Corp. Exchangeable **.. 12/01/01 12.000 7,042,501
7,000 New South Wales Treasury
Corp. Exchangeable..... 12/01/01 12.000 5,831,265
Queensland Treasury
6,000 Corp. Global Issue..... 05/15/03 10.500 4,676,850
------------
17,550,616
------------
Brazil - 5.33%
US$ 33,060 Republic of Brazil...... 04/15/14 to 04/15/24 4.250 to 8.000 14,994,375
------------
Canada - 2.60%
Province of British
9,000 Columbia............... 08/29/01 10.150 7,293,710
------------
Denmark - 2.54%
38,549 Government of Denmark... 11/15/00 to 05/15/03 8.000 to 9.000 7,137,341
------------
Ecuador - 1.38%
US$ 7,500 Government of Ecuador... 02/28/25 7.250 3,881,250
------------
Finland - 0.87%
10,000 Republic of Finland..... 03/15/04 9.500 2,441,543
------------
France - 3.14%
41,400 Government of France.... 04/25/03 to 10/25/19 8.500 8,835,230
------------
Germany - 4.83%
Federal Republic of
18,015 Germany................ 07/22/02 to 01/04/24 6.250 to 8.000 12,389,959
Republic of Germany
1,500 Unity Fund............. 08/20/01 8.750 1,188,037
------------
13,577,996
------------
Indonesia - 0.75%
Perusahaan Listrik
5,000,000 Negara FRN's........... 10/29/00 15.500+ 2,110,936
------------
Ireland - 2.43%
4,000 Republic of Ireland..... 07/15/01 to 09/30/12 8.750 to 9.000 6,812,449
------------
Italy - 1.96%
9,515,000 Republic of Italy....... 12/01/97 9.500 5,524,918
------------
Mexico - 8.45%
US$ 1,580 Grupo Industrial
Durango, S.A. de C.V. . 07/15/01 12.000 1,185,000
US$ 390 Grupo Mexicano
Desarrollo**........... 02/17/01 8.250 163,800
US$ 3,000 Fifth Mexican Acceptance
Corp.**................ 12/15/98 8.000 1,308,600
US$ 1,505 MC-Cuernavaca Trust**... 07/25/01 9.250 1,090,858
US$ 15,000 Mexican Multi Year
Refinance Loan
Participation.......... 03/20/05 5.688+ 9,450,000
US$ 17,000 United Mexican States
Collateralized Fixed
Rate Notes(1).......... 12/31/19 6.250 9,562,500
US$ 1,500 United Mexico States
Collateralized FRN's... 12/31/19 7.250+ 999,375
------------
23,760,133
------------
</TABLE>
1
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) MAY 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000)* MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ---------------- ------------
<C> <S> <C> <C> <C>
Morocco - 2.18%
US$ 5,000 Kingdom of Morocco Loan
Participation, Tranche
A (JP Morgan)(2)...... 01/01/09 7.375+% $ 3,062,500
US$ 5,000 Kingdom of Morocco Loan
Participation, Tranche
A (Salomon
Brothers)(2).......... 01/01/09 7.375+ 3,062,500
------------
6,125,000
------------
Netherlands - 4.47%
Government of
17,550 Netherlands........... 10/16/00 to 09/15/01 8.750 to 9.250 12,563,930
------------
New Zealand - 4.89%
2,470 International Bank For
Reconstruction &
Development(3)........ 07/25/97 12.500 1,781,229
17,470 Government of New
Zealand............... 11/15/96 to 07/15/97 9.000 to 10.000 11,970,432
------------
13,751,661
------------
Poland - 3.22%
US$10,000 Republic of Poland..... 10/27/24 2.750+ 3,937,500
US$10,000 Republic of Poland PDI. 10/24/14 3.250+ 5,125,000
------------
9,062,500
------------
Spain - 7.24%
2,471,000 Government of Spain.... 06/15/97 to 03/25/00 11.000 to 12.250 20,370,235
------------
Sweden - 1.90%
39,100 Government of Sweden... 05/05/00 10.250 5,333,765
------------
Turkey - 2.34%
US$ 7,000 Republic of Turkey..... 06/15/99 9.000 6,580,000
------------
United Kingdom - 6.97%
10,500 United Kingdom Gilt.... 01/22/97 to 07/14/00 13.000 to 15.500 19,597,968
------------
Venezuela - 4.17%
US$ 7,500 Venezuela Sovereign
Trust Bonds........... 12/21/07 8.250 3,965,625
US$13,500 Republic of Venezuela
FLIRB's............... 03/31/07 7.000 to 7.313 6,648,750
US$ 2,250 Republic of Venezuela
Par Bonds(4).......... 03/31/20 6.750 1,116,563
------------
11,730,938
------------
Total Long-Term Debt Securities
(cost--$242,474,418).............. 231,385,244
------------
SHORT-TERM DEBT SECURITIES - 7.07%
United States - 7.07%
20,000 U.S. Treasury Bills.... 06/22/95 to 06/29/95 5.500 to 5.720@ 19,873,640
------------
Total Short-Term Debt Securities
(cost - $19,873,640).............. 19,873,640
------------
INDEXED SECURITY - 2.31%
Thailand - 2.31%
US$ 7,000 Morgan Guaranty Trust
Company Thailand Baht
Linked CD (cost -
$6,453,723).......... 02/05/96 12.600@ 6,482,700
------------
REPURCHASE AGREEMENT - 4.35%
12,245 Repurchase Agreement
dated 5/31/95 with
Salomon Brothers
collateralized by
$12,329,000 U.S.
Treasury Notes, 6.500%
due 5/15/97; proceeds:
$12,247,082 (cost -
$12,245,000)......... 06/01/95 6.120 12,245,000
------------
Total Investments (cost -
$281,046,781) - 96.02%........... 269,986,584
Other assets in excess of
liabilities - 3.98%.............. 11,202,997
------------
Net Assets - 100.00%.............. $281,189,581
============
</TABLE>
2
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
PORTFOLIO OF INVESTMENTS (CONCLUDED) MAY 31, 1995 (UNAUDITED)
- -------
Note: The Portfolio of Investments is listed by the issuer's country of origin.
* In local currency unless otherwise indicated.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
FLIRB - Front loaded interest reduction bond.
FRB - Floating rate bond.
FRN - Floating rate note.
+ Reflects rate at May 31, 1995 on variable or step coupon rate instruments.
PDI - Past due interest bond.
@ Yield to maturity for zero coupon bonds and discounted securities.
(1) With an additional 23,366,000 recoverable rights attached maturing on
06/30/03 with no market value.
(2) Participation interest was acquired through the financial institution
indicated parenthetically.
(3) "Supranational" security denominated in New Zealand Dollars.
(4) With 11,250 oil warrants attached expiring on 04/15/20 with no market
value.
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN APPRECIATION
DELIVER EXCHANGE FOR MATURITY DATES (DEPRECIATION)
------------- ----------------- -------------------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...... 12,858,000 US$ 9,397,914 08/22/95 to 10/13/95 $ 223,509
Australian Dollars...... 8,453,000 US$ 6,217,087 07/19/95 to 11/03/95 167,045
Belgium Francs.......... 382,800,000 US$ 12,622,239 08/21/95 (573,386)
British Pounds.......... 11,000,000 US$ 17,258,125 06/12/95 to 08/11/95 (187,634)
Danish Kroners.......... 37,500,000 US$ 6,924,423 07/26/95 143,070
German Deutchemarks..... 9,928,900 US$ 6,820,962 06/19/95 (203,938)
Greek Drachmas.......... 3,022,204,400 US$ 12,579,804 06/13/95 to 06/26/95 (677,028)
New Zealand Dollars..... 8,520,000 US$ 5,457,912 06/09/95 (200,910)
Spanish Pesetas......... 3,410,710,000 US$ 25,625,904 06/12/95 to 09/22/95 (2,135,209)
Spanish Pesetas......... 400,000,000 US$ 3,103,903 06/06/95 (159,601)
U.S. Dollars............ 2,598,918 BEF 74,965,800 08/21/95 (17,464)
U.S. Dollars............ 2,629,858 DEM 3,686,469 06/19/95 (21,637)
U.S. Dollars............ 3,926,300 ESP 499,666,160 06/12/95 to 07/10/95 152,006
U.S. Dollars............ 7,209,426 GBP 4,632,000 06/12/95 to 07/10/95 138,870
U.S. Dollars............ 5,021,220 GRD 1,137,152,275 06/26/95 (16,486)
-----------
$(3,368,793)
===========
</TABLE>
CURRENCY TYPE ABBREVIATIONS:
BEF - Belgium Francs
DEM - German Deutchemarks
ESP - Spanish Pesetas
GBP - British Pounds
GRD - Greek Drachmas
INVESTMENTS BY TYPE OF ISSUER
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
--------------------------
LONG-TERM SHORT-TERM
------------ ------------
<S> <C> <C>
Government and other
public issuers......... 80.33% 7.07%
Banks................... 0.63 2.31
Repurchase Agreement.... -- 4.35
Other................... 1.33 --
------------ ------------
82.29% 13.73%
============ ============
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost - $281,046,781)........ $269,986,584
Cash............................................................. 11,326,713
Cash denominated in foreign currencies (cost - $157,956)......... 108,608
Receivables for investments sold................................. 12,659,484
Interest receivable.............................................. 7,329,455
Unrealized appreciation on forward foreign currency contracts.... 643,307
Receivable for foreign taxes withheld............................ 691,430
Deferred organizational expenses................................. 41,518
Other assets..................................................... 66,661
------------
Total assets..................................................... 302,853,760
------------
Liabilities
Payable for investments purchased................................ 17,032,418
Unrealized depreciation on forward foreign currency contracts.... 4,012,100
Payable to affiliates............................................ 236,162
Accrued expenses and other liabilities........................... 383,499
------------
Total liabilities................................................ 21,664,179
------------
Net Assets
Capital stock, $0.001 par value; total authorized 100,000,000
shares; 21,407,128 shares issued and outstanding................ 21,407
Paid-in surplus.................................................. 296,071,850
Undistributed net investment income.............................. 1,095,145
Accumulated net realized losses from investments, forward
contracts and other assets and liabilities denominated in
foreign currencies.............................................. (1,383,834)
Net unrealized depreciation of investments, forward contracts and
other assets and liabilities
denominated in foreign currencies............................... (14,614,987)
------------
Net assets....................................................... $281,189,581
============
Net asset value per share........................................ $13.14
======
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest (net of foreign withholding taxes)....................... $14,227,959
-----------
Expenses:
Investment advisory and administration............................ 1,345,201
Custody and accounting............................................ 179,610
Reports and notices to shareholders............................... 63,433
Legal and audit................................................... 31,222
Amortization of organizational expenses........................... 30,469
Directors' fees and expenses...................................... 14,918
Transfer agency fees.............................................. 9,140
Other expenses.................................................... 7,472
-----------
1,681,465
-----------
Net investment income............................................. 12,546,494
-----------
Realized and unrealized gains (losses) from investment activities:
Net realized losses from investment transactions.................. (2,993,227)
Net realized gains from foreign currency transactions............. 2,354,351
Net change in unrealized appreciation/depreciation of investments. 5,989,652
Net change in unrealized appreciation/depreciation of other
assets, liabilities and forward contracts denominated in foreign
currencies....................................................... (5,990,940)
-----------
Net realized and unrealized losses from investment activities..... (640,164)
-----------
Net increase in net assets resulting from operations.............. $11,906,330
===========
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
MAY 31, 1995 ENDED
(UNAUDITED) NOVEMBER 30, 1994
------------ -----------------
<S> <C> <C>
From operations:
Net investment income.......................... $ 12,546,494 $ 23,695,055
Net realized gains (losses) from investment
transactions.................................. (2,993,227) 4,387,962
Net realized gains (losses) from foreign
currency transactions......................... 2,354,351 (11,333,743)
Net change in unrealized
appreciation/depreciation of investments...... 5,989,652 (33,840,900)
Net change in unrealized
appreciation/depreciation of other assets,
liabilities and forward contracts denominated
in foreign currencies......................... (5,990,940) 1,625,132
------------ ------------
Net increase (decrease) in net assets resulting
from operations............................... 11,906,330 (15,466,494)
------------ ------------
Dividends and distributions to shareholders
from:
Net investment income.......................... (10,489,493) (17,346,720)
Net realized gains from investment
transactions.................................. -- (3,295,953)
Return of capital.............................. -- (3,613,743)
------------ ------------
(10,489,493) (24,256,416)
------------ ------------
Net increase (decrease) in net assets.......... 1,416,837 (39,722,910)
Net Assets:
Beginning of period............................ 279,772,744 319,495,654
------------ ------------
End of period (including undistributed net
investment income of $1,095,145 at May 31,
1995)......................................... $281,189,581 $279,772,744
============ ============
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Strategic Global Income Fund, Inc. (the "Fund") was incorporated in Maryland on
November 15, 1991 as a closed-end, non-diversified management investment
company. Prior to commencing its operations on February 3, 1992, the Fund had
no operations other than the sale to Mitchell Hutchins Asset Management Inc.
("Mitchell Hutchins"), which is a wholly owned subsidiary of PaineWebber
Incorporated ("PaineWebber") and investment adviser, administrator and
distributor of the Funds, of 7,128 shares of common stock for $100,006. Costs
incurred in connection with the organization of approximately $155,000 have
been deferred and are being amortized using the straight-line method over a
period not to exceed 60 months from the date the Fund commenced investment
operations. Offering costs estimated at $635,000 were charged to capital upon
receipt of the proceeds from the public offering of the Fund's shares.
Valuation of Investments - Securities which are listed on U.S. and foreign
stock exchanges are valued at the last sale price on the day the securities are
being valued or, lacking any sales on such day, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange designated by Mitchell Hutchins as the
primary market. Securities traded in the over-the-counter ("OTC") market and
listed on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") are valued at the last trade price on NASDAQ prior to the
time of valuation; other OTC securities are valued at the last bid price
available in the OTC market prior to the time of valuation. The amortized cost
method of valuation, which approximates market, is used to value short-term
debt instruments with sixty days or less remaining to maturity unless the
Fund's board of directors determines this does not represent fair value.
Securities and assets for which market quotations are not readily available
(including restricted securities subject to limitations as to their sale) are
valued at fair value as determined in good faith by or under the direction of
the Fund's board of directors. All investments quoted in foreign currencies
will be valued weekly in U.S. dollars on the basis of the foreign currency
exchange rates prevailing at the time such valuation is determined by the
Fund's custodian.
The ability of the issuers of the debt securities held by the Fund to meet
their obligations may be affected by economic and political developments,
including those particular to a specific industry, country or region.
Foreign currency exchange rates are generally determined prior to the close of
the New York Stock Exchange, Inc. ("NYSE"). Occasionally, events affecting the
value of foreign investments and such exchange rates occur between the time at
which they are determined and the close of the NYSE, which would not be
reflected in the computation of the Fund's net asset value. If events
materially affecting the
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
value of such securities or currency exchange rates occurred 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 Fund's board of directors.
Investment Transactions and Investment Income - Investment transactions are
recorded on the trade date. Realized gains and losses on sales of investments
and foreign exchange transactions are calculated using the identified cost
method. Interest income is recorded on an accrual basis. Discounts are accreted
as adjustments to interest income and the identified cost of investments.
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 values of the Fund's portfolio are
presented at the foreign exchange rates at the close of the period, the Fund
does not generally isolate the effect of fluctuations in foreign exchange rates
from the effect of the changes in market prices of securities. However, the
Fund does isolate the effect of fluctuations in foreign exchange rates when
determining the gain or loss upon the sale or maturity of foreign currency
denominated debt obligations pursuant to federal income tax regulations.
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 revaluation of currencies and future
adverse political and economic developments, which could cause securities and
their markets to be less liquid and prices more volatile than those of
comparable U.S. companies and U.S. government securities.
Forward Foreign Currency Contracts - The Fund may enter into forward foreign
currency 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 has no specific limitation on the percentage of assets which may be
committed to such contracts. The Fund may enter into forward contracts or
maintain a net exposure to forward contracts only if (1) the consummation of
the contracts would not obligate the Fund to deliver an amount of foreign
currency in excess of the value of the position being hedged by such contracts
or (2) the Fund maintains cash, U.S. government securities or liquid, high-
grade debt securities in a segregated account in an amount not less than the
value of its total assets committed to the consummation of the forward
contracts and not covered as provided in (1) above, as marked to market daily.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
Risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their forward contracts and
from unanticipated movements in the value of foreign currencies relative to the
U.S. dollar.
Fluctuations in the value of forward contracts are recorded 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.
Repurchase Agreements - The Fund's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings. The Fund occasionally participates in joint repurchase
agreement transactions with other funds managed by Mitchell Hutchins.
Reverse Repurchase Agreements - The Fund may enter into reverse repurchase
agreements with banks and broker-dealers up to an aggregate value of not more
than 33.3% of its total assets. At May 31, 1995, the Fund had no reverse
repurchase agreements outstanding.
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 TO SHAREHOLDERS
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 considered either
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.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS-(CONCLUDED)
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's board of directors has approved an investment advisory and
administration contract ("Advisory Contract") with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment adviser and administrator of the
Fund. In accordance with the Advisory Contract, Mitchell Hutchins receives
compensation from the Fund, computed weekly and paid monthly, at an annual rate
of 1.00% of the Fund's average weekly net assets. At May 31, 1995, the Fund
owed Mitchell Hutchins $236,162 in investment advisory and administration fees.
Under a separate contract with Mitchell Hutchins, BEA Associates serves as the
Fund's Latin American debt adviser ("BEA Associates Contract"). Under the BEA
Associates Contract, Mitchell Hutchins (not the Fund) pays BEA Associates a
fee, computed weekly and paid monthly, at the annual rate of 0.25% of the
Fund's average weekly net assets.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at May 31, 1995,
was substantially the same as the cost of securities for financial statement
purposes.
At May 31, 1995, the components of net unrealized depreciation of investments
were as follows:
Gross depreciation (investments having an excess of
cost over value)................................................ $(19,595,803)
Gross appreciation (investments having an excess of
value over cost)................................................ 8,535,606
------------
Net unrealized depreciation of investments....................... $(11,060,197)
============
For the six months ended May 31, 1995, total aggregate purchases and sales of
portfolio securities, excluding short-term securities, were $116,922,764 and
$122,133,650, respectively.
CAPITAL STOCK
There are 100,000,000 shares of $0.001 par value capital stock authorized. Of
the 21,407,128 shares outstanding at May 31, 1995, Mitchell Hutchins owned
7,128 shares.
SUBSEQUENT EVENT
On June 16, 1995, the Board of Directors of the Fund announced that it had
voted to terminate BEA Associates as the Fund's Latin American Debt Adviser, to
be effective in 60 days. Mitchell Hutchins will assume full responsibility for
managing the Fund's investments in Latin American debt securities.
10
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Net Realized and Net Increase
Unrealized Gains (Decrease) in
(Losses) from Net Assets
Investments and Resulting
Net Investment Foreign Currency from
Income Transactions Operations
--------------- ------------------ ----------------
Total Per Total Per Total Per
Quarter Ended (000's) Share (000's) Share (000's) Share
- ------------- -------- ------ --------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
May 31, 1995.............. $ 6,490 $ 0.30 $ 14,104 $ 0.66 $ 20,594 $ 0.96
February 28, 1995......... 6,056 0.29 (14,744) (0.69) (8,688) (0.40)
-------- ------ --------- ------- -------- ------
Total..................... $ 12,546 $ 0.59 $ (640) $ (0.03) $ 11,906 $ 0.56
======== ====== ========= ======= ======== ======
November 30, 1994......... $ 6,233 $ 0.26 $ (5,485) $ (0.23) $ 748 $ 0.03
August 31, 1994........... 5,790 0.27 (6,310) (0.29) (520) (0.02)
May 31, 1994.............. 6,262 0.29 (22,922) (1.07) (16,660) (0.78)
February 28, 1994......... 5,410 0.26 (4,445) (0.21) 965 0.05
-------- ------ --------- ------- -------- ------
Total..................... $ 23,695 $ 1.08 $ (39,162) $ (1.80) $(15,467) $(0.72)
======== ====== ========= ======= ======== ======
November 30, 1993......... $ 5,123 $ 0.24 $ 2,294 $ 0.11 $ 7,417 $ 0.35
August 31, 1993........... 6,141 0.29 10,795 0.50 16,936 0.79
May 31, 1993.............. 6,251 0.29 8,388 0.39 14,639 0.68
February 28, 1993......... 6,493 0.30 11,020 0.51 17,513 0.81
-------- ------ --------- ------- -------- ------
Total..................... $ 24,008 $ 1.12 $ 32,497 $ 1.51 $ 56,505 $ 2.63
======== ====== ========= ======= ======== ======
</TABLE>
11
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding
throughout each of theperiods is presented below:
<TABLE>
<CAPTION>
For the
Six Months For the Years Ended For the Period
Ended November 30, February 3, 1992+
May 31, 1995 --------------------- to
(unaudited) 1994 1993 November 30, 1992
------------ -------- --------- -----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $13.07 $14.92 $13.47 $14.03
-------- --------- --------- --------
Net increase (decrease)
from investment
operations:
Net investment income... 0.59 1.08 1.12 1.02
Net realized and
unrealized gains
(losses) from
investment and foreign
currency transactions.. (0.03) (1.80) 1.51 (0.82)
-------- --------- --------- --------
TOTAL INCREASE
(DECREASE) FROM
INVESTMENT OPERATIONS... 0.56 (0.72) 2.63 0.20
-------- --------- --------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income.................. (0.49) (0.82) (1.12) (0.70)
From net realized gains
from investment and
foreign currency
transactions........... -- (0.15) (0.06) (0.03)
Return of capital....... -- (0.16) -- --
-------- --------- --------- --------
TOTAL DIVIDENDS AND
DISTRIBUTIONS........... (0.49) (1.13) (1.18) (0.73)
-------- --------- --------- --------
Offering costs charged
to capital.............. -- -- -- (0.03)
-------- --------- --------- --------
NET ASSET VALUE, END OF
PERIOD.................. $13.14 $13.07 $14.92 $13.47
======== ========= ========= ========
Market value, end of
period.................. $11.00 $11.13 $14.25 $12.88
======== ========= ========= ========
Total return(1)......... 3.55% (14.53)% 19.92% (9.67)%
======== ========= ========= ========
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's).......... $281,190 $279,773 $319,496 $288,251
Ratio of expenses to
average net assets...... 1.25%* 1.27% 1.58%** 1.34%*
Ratio of net investment
income to average net
assets.................. 9.33%* 8.01% 7.81%** 8.79%*
Portfolio turnover rate. 51.38%* 82.12% 111.29% 94.08%
</TABLE>
- -------
* Annualized.
** Includes 0.31% of interest expense relating to reverse repurchase agreement
transactions entered into during the fiscal year.
+ Commencement of operations.
(1) Total return on market value is calculated assuming a purchase of one share
at market value on the first day of each period reported, reinvestment of
all dividends and capital gain distributions in accordance with the
Dividend Reinvestment Plan and a sale at market value on the last day of
each period reported. Total returns does not reflect broker commissions and
has not been annualized for periods of less than one year.
12
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
GENERAL INFORMATION
THE FUND
Strategic Global Income Fund, Inc. (the "Fund") is a non-
diversified, closed-end management investment company whose shares
trade on the New York Stock Exchange, Inc. ("NYSE"). The Fund's
primary investment objective is to achieve a high level of current
income; capital appreciation is a secondary objective in the
selection of investments. The Fund's investment adviser and
administrator is Mitchell Hutchins Asset Management Inc., a wholly
owned subsidiary of PaineWebber Incorporated, which has over $35.2
billion in assets under management. Mitchell Hutchins may allocate
up to 35% of the Fund's total assets for investment by the Fund's
Latin American debt adviser, BEA Associates, in fixed income
securities of issuers in Latin America.
MANAGEMENT OF THE FUND
Stuart Waugh, a managing director and portfolio manager of
Mitchell Hutchins responsible for global fixed income and currency
trading, is responsible for the day-to-day management of the
Fund's portfolio. He is also a vice president of the Fund and of
other investment companies for which Mitchell Hutchins serves as
investment adviser. Mr. Waugh has been employed by Mitchell
Hutchins as a portfolio manager for the last eight years. He is a
portfolio manager of Global High Income Dollar Fund Inc., Global
Income Plus Fund, Inc., PaineWebber Global Growth and Income Fund,
PaineWebber Global Income Fund, PaineWebber Series Trust--Global
Income Portfolio and a manager of the Foreign and Emerging Market
Securities sector of PaineWebber Strategic Income Fund with
aggregate assets as of May 31, 1995 of approximately $2 billion.
Other members of the Mitchell Hutchins' global investing group
provide input on market outlook, interest rate forecasts,
investment research and other considerations pertaining to the
Fund's investments.
SHAREHOLDER INFORMATION
The Fund's NYSE trading symbol is "SGL". Comparative net asset
value and market price information about the Fund is published
weekly in The Wall Street Journal, The New York Times and
Barron's, as well as numerous other newspapers.
An annual meeting of shareholders of the Fund was held on March
16, 1995. At the meeting, E. Garrett Bewkes, Jr., Meyer Feldberg,
George W. Gowen, Frederic V. Malek, Frank P.L. Minard, Judith
Davidson Moyers, and Thomas F. Murray were elected as directors to
serve until the annual meeting of shareholders in 1996, or
13
<PAGE>
STRATEGIC GLOBAL INCOME FUND, INC.
until their successors are elected and qualified, and the
selection of Ernst & Young LLP as the Fund's independent auditors
for the fiscal year ending November 30, 1995 was ratified. The
votes were as follows:
<TABLE>
<CAPTION>
SHARES SHARES
VOTED WITHHOLD
FOR AUTHORITY
---------- ----------
<S> <C> <C>
E. Garrett Bewkes, Jr. .......................... 19,764,215 477,255
Meyer Feldberg................................... 19,814,464 427,005
George W. Gowen.................................. 19,798,353 443,116
Frederic V. Malek................................ 19,787,645 453,824
Frank P.L. Minard................................ 19,813,434 428,035
Judith Davidson Moyers........................... 20,018,124 223,345
Thomas F. Murray................................. 19,776,464 465,005
</TABLE>
<TABLE>
<CAPTION>
SHARES SHARES SHARES
VOTED VOTED WITHHOLD
FOR AGAINST AUTHORITY
---------- -------- ----------
<S> <C> <C> <C>
Ratification of the selection of Ernst
& Young LLP........................... 19,860,135 244,582 136,753
</TABLE>
Broker non-votes and abstentions are included with the "Shares
Withhold Authority" totals.
DISTRIBUTION POLICY
Under current policies of the Fund's board of directors,
shareholders may affirmatively elect to receive all dividends and
other distributions in cash paid by check mailed directly to the
shareholders by PNC Bank, National Association ("Transfer Agent"),
as dividend disbursing agent. Under the Fund's Dividend
Reinvestment Plan (the "Plan"), shareholders not making such
election and whose shares are registered in their own names will
receive all such distributions in additional Fund shares.
Shareholders whose shares are held in the name of a broker or
nominee should contact such broker or nominee to determine
whether, or how, they may participate in the Plan.
The Transfer Agent will serve as agent for the shareholders in
administering the Plan. After the Fund declares a dividend or
determines to make a capital gain distribution, the Transfer Agent
will, as agent for the participants, receive the cash payment and
use it to buy Fund shares in the open market, on the NYSE or
elsewhere, for the participants' accounts. The Fund will not issue
any new shares in connection with the Plan.
14
