UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07540
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Global High Income Dollar Fund Inc.
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(Exact name of registrant as specified in charter)
51 West 52nd Street, New York, New York 10019-6114
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(Address of principal executive offices) (Zip code)
Mark F. Kemper, Esq.
UBS Global Asset Management (US) Inc.
51 West 52nd Street
New York, NY 10019-6114
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(Name and address of agent for service)
Copy to:
Jack W. Murphy, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, DC 20006-2401
Registrant's telephone number, including area code: 212-882 5000
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Date of fiscal year end: October 31
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Date of reporting period: October 31, 2004
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ITEM 1. REPORTS TO STOCKHOLDERS.
[UBS GLOBAL ASSET MANAGEMENT LOGO]
GLOBAL HIGH INCOME
DOLLAR FUND INC.
ANNUAL REPORT
OCTOBER 31, 2004
GLOBAL HIGH INCOME DOLLAR FUND INC.
December 15, 2004
DEAR SHAREHOLDER,
We present you with the annual report for Global High Income Dollar Fund for the
fiscal year ended October 31, 2004.
PERFORMANCE
Over the one-year period, Global High Income Dollar Fund's (the "Fund") net
asset value return was 15.12%, outperforming the 13.41% return of its peers, as
measured by the Lipper Emerging Markets Debt Funds median. On a market price
basis, the Fund returned 18.68% over the fiscal year, outperforming the median's
return of 12.47% over the same timeframe. (For more on the Fund's performance,
please refer to "Performance At A Glance" on page 5.)
The Fund's strong absolute and relative performance was largely the result of
strong country and security allocation. The Fund did not use leverage during the
reporting period as did some of its peers. Leverage tends to magnify a Fund's
upside and downside returns.
AN INTERVIEW WITH PORTFOLIO MANAGER UWE SCHILLHORN
Q. HOW DID THE EMERGING DEBT MARKETS PERFORM OVER THE PERIOD?
A. Emerging markets debt, as measured by the JP Morgan Emerging Markets Bond
Index--Global (EMBI--G), came in strong, returning 12.79% over the fiscal
year. In comparison, government bonds in developed markets returned 4.69%, as
measured by the Citigroup World Government Bond Index (WGBI), on a
currency-hedged basis in US dollars.
The emerging debt markets experienced periods of volatility during the fiscal
year, but ultimately generated strong results. As the reporting period began,
solid economic growth in the US and abroad, improving credit trends and
strong investor demand for higher yielding securities led to solid returns
for emerging markets debt. However, as 2004 began, strengthening global
economic growth quickly gave way to concerns over the increased likelihood of
rising interest rates. This caused investors to become more risk averse, and
demand for emerging markets debt fell sharply.
[SIDENOTE]
GLOBAL HIGH INCOME DOLLAR FUND INC.
INVESTMENT GOALS:
Primarily, high level of current income; secondarily, capital appreciation.
PORTFOLIO MANAGEMENT:
Portfolio Management Team, including Uwe Schillhorn
UBS Global Asset Management (US) Inc.
COMMENCEMENT:
October 8, 1993
NYSE SYMBOL:
GHI
DIVIDEND PAYMENTS:
Monthly
1
The markets' weakness persisted through the second quarter of 2004, before a
sharp rally took place during the final four months of the fiscal year.
Rising oil and commodity prices helped drive positive growth prospects in
developing countries. In addition, it appeared that interest rates would be
raised at a measured pace. This, combined with a number of positive
country-specific events and rising investor demand, caused emerging markets
debt spreads to decline sharply (a spread is the difference in yield between
debt obligations of different categories).
Q. WHAT WERE SOME OF THE PORTFOLIO POSITIONING STRATEGIES YOU EMPLOYED DURING
THE FISCAL YEAR?
A. Throughout the period, we proactively adjusted the portfolio's exposure in
Brazil. Early in the period we held an overweight position in the country, as
the Lula administration successfully met the country's fiscal deficit targets
and championed tax and social security reform. ("Overweight" or "underweight"
refers to the Fund's degree of investment in a category of investments versus
that of a benchmark index.) However, in January 2004, we shifted to an
underweight position. While economic growth in Brazil was expected to
continue, we felt this was already priced into the market, and that there was
limited upside potential for its debt. Our underweight position proved
beneficial as Brazil's bonds subsequently declined in price. We then moved to
a market weight in Brazil after spreads widened, and we felt they were more
in line with the country's economic fundamentals. This adjustment enhanced
performance as growth and fiscal performance in Brazil strengthened as the
year progressed. Spreads then declined even further in September 2004, at
which time Standard & Poor's raised the country's credit rating from B+ to
BB-.
Q. DID THE FUND'S DURATION POSITION AID PERFORMANCE OVER THE REPORTING PERIOD?
A. Overall, our US interest rate duration strategy enhanced results. During the
first half of the reporting period, the Fund was generally neutral versus the
benchmark. However, we were underweight the five-year portion of the yield
curve and overweight 30-year securities. This enhanced portfolio performance,
as shorter-term securities underperformed as yields rose (and prices fell)
and the longer end of the yield curve outperformed. In the second half of the
reporting period, the Fund moved to an underweight position in 30-year
securities versus the benchmark. This did not have any significant
consequences on relative performance.
2
Q. WERE THERE ANY STRATEGIES THAT DETRACTED FROM RESULTS?
A. While the Fund's overall country allocation position was a positive for
performance over the fiscal year, there were a few strategies that detracted
from results. For example, the Fund's underweight in Turkey was an overall
negative for relative performance. We initially had no exposure to the
country, as bond spreads were relatively low. However, spreads declined even
further based on expectations that the country would gain membership in the
European Economic Union (EEU). At that point, we believed spread levels were
well past their intrinsic, or true, values. Spreads subsequently widened, and
we took the opportunity to establish an approximate 5% allocation to the
country, which was nearly in line with the benchmark. However, we again moved
to a meaningful underweight in Turkey after a strong rally occurred in
conjunction with positive news about the country's potential membership in
the EEU.
Oil-exporting countries performed well due to high oil prices. As a result,
the Fund's underweight in Venezuela subsequently detracted from relative
performance, although this was compensated for by an overweight in Ecuador.
Q. HOW WERE YOU POSITIONED IN OTHER EMERGING MARKET COUNTRIES?
A. We continued to have overweights in countries with relatively high credit
quality that we believe were attractively valued given their underlying
economic fundamentals. Such countries included Russia, Serbia and Bulgaria.
Our overweight in performing Argentine local debt enhanced results, as
Argentine US dollar-denominated debt performed well on the back of strong
fiscal performance and expectations of further improvements in the country's
debt-restructuring plans.
We were mostly underweight in Mexico during the fiscal year. This did not
have a material impact on performance, as Mexico did not outperform other
emerging market countries in the same rating category.
Q. WHAT IS YOUR OUTLOOK FOR THE GLOBAL ECONOMY AND EMERGING MARKETS DEBT IN THE
COMING MONTHS?
A. It is widely expected that the Federal Reserve Board will have to continue to
raise interest rates at a measured pace. We don't expect spreads to tighten
significantly from their current levels, as we believe the improving
macroeconomic picture for many emerging markets has already been priced into
their bond prices. We expect growth in emerging markets to remain relatively
high, but somewhat lower than over the last 12 months. Based on this outlook,
the Fund currently is neutrally positioned in terms of credit exposure.
Presently, our interest rate duration remains shorter than that of the
benchmark.
3
We thank you for your continued support and welcome any comments or questions
you may have. For additional information on the UBS funds,* please contact your
financial advisor or visit us at www.ubs.com.
Sincerely,
/s/ Joseph A. Varnas /s/ Uwe Schillhorn
JOSEPH A. VARNAS UWE SCHILLHORN
PRESIDENT PORTFOLIO MANAGEMENT TEAM MEMBER
Global High Income Dollar Fund Inc. Global High Income Dollar Fund Inc.
MANAGING DIRECTOR DIRECTOR
UBS Global Asset Management (US) Inc. UBS Global Asset Management (US) Inc.
* Mutual funds are sold by prospectus only. The prospectus contains more
complete information regarding investment objectives, risks, charges and
expenses, and should be read carefully before investing.
This letter is intended to assist shareholders in understanding how the Fund
performed during the fiscal year ended October 31, 2004, and reflects our views
at the time of its writing. Of course, these views may change in response to
changing circumstances, and they do no guarantee the future performance of the
markets or the Fund. We encourage you to consult your financial advisor
regarding your personal investment program.
4
PERFORMANCE AT A GLANCE (UNAUDITED)
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/04
NET ASSET VALUE RETURNS* 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
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Global High Income Dollar Fund Inc. 13.05% 15.12% 15.70% 13.43%
Lipper Emerging Market Debt Funds median** 11.35 13.41 17.27 14.16
MARKET PRICE RETURNS*
Global High Income Dollar Fund Inc. 18.49% 18.68% 22.80% 16.98%
Lipper Emerging Market Debt Funds median** 16.27 12.47 20.09 14.90
* Past Performance does not predict future performance. The return and value
of an investment will fluctuate, so that an investor's shares, when sold,
may be worth more or less than their original cost. NAV return assumes, for
illustration only, that dividends were reinvested at the net asset value on
the distribution dates. Market returns assume that dividends are reinvested
at prices according to the dividend reinvestment plan. NAV and market price
returns for periods of one year or less have not been annualized. Returns do
not reflect taxes paid on dividends/distributions or brokerage commissions
and taxes paid on the sale of shares.
** Lipper closed-end fund peer group data calculated by Lipper Inc.; used with
permission. The Lipper median is the return of the fund that places in the
middle of the Lipper Emerging Market Debt Funds peer group.
5
PORTFOLIO STATISTICS
CHARACTERISTICS* 10/31/04 4/30/04 10/31/03
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Net Asset Value $ 16.43 $ 15.34 $ 15.92
Market Price $ 18.31 $ 16.26 $ 17.07
12-Month Dividends/
Distributions $ 1.7443 $ 1.7667 $ 1.6840
Dividend/Distribution
at Period-End $ 0.1488 $ 0.1486 $ 0.1461
Net Assets (mm) $ 319.4 $ 298.2 $ 309.5
CURRENCY EXPOSURE** 10/31/04 4/30/04 10/31/03
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U.S. Dollar Denominated 98.3% 95.8% 98.2%
Foreign Denominated 1.7 4.2 1.8
TOTAL 100.0% 100.0% 100.0%
TOP 10 COUNTRIES
(EXCLUDING U.S.)** 10/31/04 4/30/04 10/31/03
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Brazil 22.4% Brazil 21.4% Brazil 20.0%
Russia 13.8 Russia 19.4 Russia 17.0
Mexico 10.1 Mexico 12.6 Mexico 14.4
Argentina 8.4 Argentina 4.9 Venezuela 5.0
Malaysia 4.4 Colombia 4.9 Trinidad & Tobago 3.2
Turkey 4.2 Venezuela 3.8 Panama 3.2
Philippines 3.6 Bulgaria 3.2 Malaysia 3.2
Colombia 3.5 Malaysia 3.2 Peru 2.7
Germany 3.1 Poland 2.4 Philippines 2.3
Ecuador 3.1 South Africa 2.3 Colombia 2.0
TOTAL 76.6% 78.1% 73.0%
CREDIT QUALITY** 10/31/04 4/30/04 10/31/03
-----------------------------------------------------------------------------------
A1/P1 -- -- 8.7%
A 4.7% 13.4% 2.1
BBB 25.9 14.9 24.2
BB 41.3 34.9 28.2
B 8.6 26.7 22.4
CCC 9.3 7.0 8.9
Selective Default -- 0.9 1.9
Non-Rated 6.0 2.2 1.6
Cash Equivalents 3.2 -- --
Other assets
less liabilities 1.0 -- --
Net Receivable -- -- 2.0
TOTAL 100.0% 100.0% 100.0%
* Prices and other characteristics will vary over time.
** Weightings represent percentages of net assets as of the dates indicated.
The Fund's portfolio is actively managed and its composition will vary over
time. Credit quality ratings shown are based on those assigned by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc., and/or Moody's
Investors Services, Inc. to indvidual portfolio holdings. Both are
independent ratings agencies.
Past performance is no guarantee of future results. The value of an investment
will fluctuate, so that an investor's shares, when sold, may be worth more or
less than their original cost.
6
GLOBAL HIGH INCOME DOLLAR FUND INC.
Portfolio of Investments -- October 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
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FOREIGN DEBT SECURITIES--95.80%
ARGENTINA--8.38%
$ 5,270 Banco de Galicia y Buenos Aires 01/01/14 3.000%+ $ 3,566,209
21,940 Republic of Argentina (1) 08/03/12 1.980++ 16,871,860
ARS 4,270 Republic of Argentina 01/03/10 2.000 2,082,983
$ 3,950 Republic of Argentina 01/03/16 2.000 1,520,750
5,000 Republic of Argentina, PAR (1) 03/31/23 6.000 2,737,500
26,779,302
BAHAMAS--1.27%
3,760 Odebrecht Overseas Ltd., 144A 02/25/09 11.500 4,060,800
BRAZIL--22.35%
2,340 Braskem S.A., 144A 11/05/08 12.500 2,644,200
2,038 Federal Republic of Brazil 04/15/12 3.125++ 1,870,088
1,200 Federal Republic of Brazil 01/20/34 8.250 1,080,000
1,520 Federal Republic of Brazil 10/14/19 8.875 1,504,800
8,270 Federal Republic of Brazil 04/15/24 8.875 7,959,875
320 Federal Republic of Brazil 05/15/27 10.125 340,000
3,430 Federal Republic of Brazil 03/12/08 11.500 3,966,795
37,814 Federal Republic of Brazil, C 04/15/14 8.000 37,553,651
3,512 Federal Republic of Brazil, DCB 04/15/12 3.125++ 3,221,988
6,000 Federal Republic of Brazil, DISC 04/15/24 3.063++ 5,280,000
6,650 Federal Republic of Brazil, PAR 04/15/24 6.000++ 5,951,750
71,373,147
BULGARIA--0.96%
2,450 Republic of Bulgaria 01/15/15 8.250 3,059,438
COLOMBIA--3.48%
7,890 Republic of Colombia 04/09/11 9.750 9,113,097
1,840 Republic of Colombia 01/28/33 10.375 2,005,600
11,118,697
ECUADOR--3.12%
6,280 Republic of Ecuador 08/15/30 8.000+ 5,309,740
5,500 Republic of Ecuador, 144A 08/15/30 8.000+ 4,650,250
9,959,990
EL SALVADOR--1.43%
1,450 Republic of El Salvador 09/21/34 7.625 1,486,250
3,070 Republic of El Salvador 04/10/32 8.250 3,078,596
4,564,846
7
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
----------------------------------------------------------------------------------------------------------------------------
FOREIGN DEBT SECURITIES--(CONTINUED)
GERMANY--3.11%
$ 8,500 Aries Vermogensverwaltungs, 144A 10/25/14 9.600% $ 9,923,750
INDONESIA--0.72%
2,988 Republic of Indonesia Loan Participation
(Deutsche Bank AG, Singapore
Branch) (2)(3) 12/14/19 2.760++ 2,300,760
IVORY COAST--0.33%
5,700 Republic of Ivory Coast (3) 03/29/18 2.000++ 1,054,500
MALAYSIA--4.39%
3,000 Petroliam Nasional Berhad 10/15/26 7.625 3,601,653
4,784 Petroliam Nasional Berhad, 144A 10/15/26 7.625 5,743,435
3,800 Petronas Capital Ltd. 05/22/22 7.875 4,669,135
14,014,223
MEXICO--10.03%
3,170 Conproca S.A. de C.V. 06/16/10 12.000 4,010,050
752 PEMEX Finance Ltd. 05/15/07 8.020 792,896
5,500 PEMEX Project Funding Master Trust 02/01/22 8.625 6,352,500
3,000 PEMEX Project Funding Master Trust 10/13/10 9.125 3,606,000
1,250 Petroleos Mexicanos 03/30/18 9.250 1,512,500
3,317 United Mexican States 04/08/33 7.500 3,535,922
10,574 United Mexican States 08/15/31 8.300 12,212,970
32,022,838
NETHERLANDS--1.64%
EUR 606 ING Bank NV (3) 05/31/09 7.540* 550,630
1,093 ING Bank NV (3) 05/31/10 7.730* 912,712
2,136 ING Bank NV (3) 05/31/11 7.910* 1,633,895
1,115 ING Bank NV (3) 05/31/13 8.040* 722,780
781 ING Bank NV (3) 05/31/14 8.070* 466,459
1,373 ING Bank NV (3) 05/31/12 8.080* 959,779
5,246,255
PANAMA--2.23%
$ 3,920 Republic of Panama 09/30/27 8.875 4,096,400
2,790 Republic of Panama 01/16/23 9.375 3,020,175
7,116,575
8
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
----------------------------------------------------------------------------------------------------------------------------
FOREIGN DEBT SECURITIES--(CONTINUED)
PERU--2.42%
$ 1,610 Republic of Peru 05/03/16 8.375% $ 1,682,450
1,100 Republic of Peru 02/06/15 9.875 1,270,500
5,330 Republic of Peru, FLIRB 03/07/17 4.500++ 4,770,350
7,723,300
PHILIPPINES--3.55%
7,160 Republic of Philippines 01/18/17 9.375 7,383,392
3,935 Republic of Philippines 01/15/19 9.875 3,959,397
11,342,789
RUSSIA--13.77%
8,060 Russian Federation 05/14/11 3.000 6,669,650
13,180 Russian Federation 03/31/30 5.000+ 13,196,475
18,984 Russian Federation, 144A 03/31/30 5.000+ 19,007,318
4,624 Russian Federation, 144A 03/31/10 8.250 5,121,096
43,994,539
SOUTH AFRICA--1.81%
3,500 Republic of South Africa 04/25/12 7.375 3,990,000
1,500 Republic of South Africa 05/19/09 9.125 1,785,000
5,775,000
TURKEY--4.20%
TRL 4,900,000,000 Republic of Turkey 10/05/05 0.000* 2,746,991
$ 2,000 Republic of Turkey 10/06/05 5.960 2,116,018
1,980 Republic of Turkey 03/15/15 7.250 1,984,950
1,060 Republic of Turkey 02/14/34 8.000 1,070,600
2,830 Republic of Turkey 06/30/11 9.000 3,151,913
2,030 Republic of Turkey 01/15/14 9.500 2,334,500
13,404,972
UKRAINE--2.87%
3,600 Republic of Ukraine 06/11/13 7.250 3,600,000
5,430 Republic of Ukraine 06/11/13 7.650 5,572,537
9,172,537
URUGUAY--1.05%
4,101 Republic of Uruguay 01/15/33 7.875 3,332,204
36 Republic of Uruguay, PIK 01/15/33 7.875 29,434
3,361,638
VENEZUELA--2.69%
1,520 Republic of Venezuela 10/08/14 8.500 1,541,280
9
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
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FOREIGN DEBT SECURITIES--(CONCLUDED)
VENEZUELA--(CONCLUDED)
$ 3,980 Republic of Venezuela 09/15/27 9.250% $ 4,071,540
2,900 Republic of Venezuela 01/13/34 9.375 2,972,500
8,585,320
Total Foreign Debt Securities (cost--$279,492,557) 305,955,216
NUMBER OF
RIGHTS
(000)
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RIGHTS--0.04%
MEXICO--0.04%
1,885 United Mexican States Value Recovery Rights,
Series C, Expiration Date 06/30/05 (5) 37,889
1,885 United Mexican States Value Recovery Rights,
Series D, Expiration Date 06/30/06 (5) 44,674
1,885 United Mexican States Value Recovery Rights,
Series E, Expiration Date 06/30/07 (5) 40,905
123,468
VENEZUELA--0.00%
27 Venezuela Oil Indexed Payment Obligations,
Expiration Date 4/15/20 (3)(4)(5) 0
Total Rights (cost--$0) 123,468
NUMBER OF
SHARES
(000)
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SHORT-TERM INVESTMENT**--3.17%
UNITED STATES--3.17%
10,119 UBS Supplementary Trust U.S. Cash
Management Prime Fund
(cost--$10,118,548) 1.850@ 10,118,548
Total Investments (cost--$289,611,105)--99.01% 316,197,232
Other assets in excess of liabilities--0.99% 3,162,184
Net Assets--100.00% $ 319,359,416
10
Note: The Portfolio of Investments is listed by the issuer's country of origin.
+ Reflects rate at October 31, 2004 on step coupon rate instruments.
++ Reflects rate at October 31, 2004 on variable rate instruments.
* Reflects annualized yield at October 31, 2004 on zero coupon bonds.
** Security is issued by a fund that is advised by a related entity of UBS
Global Asset Management (US) Inc., Global High Income Dollar Fund Inc.'s
advisor.
@ Interest rate reflects yield at October 31, 2004.
(1) Bond interest in default.
(2) Participation interest was acquired through the financial institution
indicated parenthetically.
(3) Illiquid securities represent a value of $8,601,515 or 2.69% of net
assets.
(4) Security is being fair valued by a valuation committee under the direction
of the Board of Directors. At October 31, 2004, the value of these
securities amounted to $0 or 0.00% of net assets.
(5) Rights do not currently accrue income. Quarterly income, if any, will vary
based on several factors including oil exports, prices, and inflation.
ARS Argentina Peso
C Front-Loaded Interest Reduction with Capitalized Interest Bond
DCB Debt Conversion Bond
DISC Discount Bond
EUR Euro
FLIRB Front-Loaded Interest Reduction Bond
PAR Par Bond
PIK Payment in Kind
TRL Turkish Lira
144A Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At October 31, 2004, the value of these securities amounted to
$51,150,849 or 16.02% of net assets.
11
FUTURES CONTRACTS
UNREALIZED
NUMBER OF CONTRACTS TO IN EXPIRATION APPRECIATION/
CONTRACTS RECEIVE EXCHANGE FOR DATES (DEPRECIATION)
110 U.S. Treasury Note 5 Year Futures $ 12,143,000 December 2004 $ 108,250
CONTRACTS TO
DELIVER
174 U.S. Long Bond 20 Year Futures
(Chicago Board of Trade) 19,421,975 December 2004 (386,837)
$ (278,587)
FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACTS TO IN MATURITY UNREALIZED
DELIVER EXCHANGE FOR DATE DEPRECIATION
Euro 3,900,000 USD 4,825,821 01/21/05 $ (145,835)
CURRENCY TYPE ABBREVIATIONS:
USD United States Dollar
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF OCTOBER 31, 2004
Foreign Debt Securities
International Corporate Bonds
Oil/Gas 7.98%
Financial Services 6.12
Industrials 2.53
Minerals 0.83
Total International Corporate Bonds 17.46
Foreign Government Bonds 78.34
Total Foreign Debt Securities 95.80
Rights 0.04
Short-Term Investment 3.17
Total Investments 99.01
Other assets in excess of liabilities 0.99
Net Assets 100.00%
See accompanying notes to financial statements
12
GLOBAL HIGH INCOME DOLLAR FUND INC.
Statement of Assets and Liabilities -- October 31, 2004
ASSETS:
Investments in securities of unaffiliated issuers, at value (cost--$279,492,557) $ 306,078,684
Investments in securities of a related entity, at value (cost--$10,118,548) 10,118,548
Foreign currency, at value (cost--$105) 106
Cash collateral for futures contracts 1,926,006
Interest receivable 3,087,550
Receivable for investments sold 2,561,121
Other assets 9,847
Total assets 323,781,862
LIABILITIES:
Payable for investments purchased 3,598,234
Payable to investment advisor and administrator 338,313
Unrealized depreciation on forward foreign currency contracts 145,835
Variation margin payable 95,563
Directors fees payable 3,000
Accrued expenses and other liabilities 241,501
Total liabilities 4,422,446
NET ASSETS:
Capital stock--$0.001 par value; 100,000,000 shares authorized;
19,439,667 shares issued and outstanding 268,246,555
Distributions in excess of net investment income (282,947)
Accumulated net realized gain from investment transactions 25,234,103
Net unrealized appreciation of investments, futures, forward foreign currency
contracts, and other assets and liabilities denominated in foreign currencies 26,161,705
Net assets $ 319,359,416
Net asset value per share $ 16.43
See accompanying notes to financial statements
13
Statement of Operations
FOR THE YEAR
ENDED
OCTOBER 31, 2004
-------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income net of foreign witholding taxes of $1,069
(includes $73,218 from a related entity) $ 23,435,979
Securities lending income--net 251
23,436,230
EXPENSES:
Investment advisory and administration fees 3,869,604
Custody and accounting fees 247,656
Professional fees 69,240
Reports and notices to shareholders 67,355
Transfer agency fees 14,308
Directors' fees 13,602
Other expenses 38,609
4,320,374
Net investment income 19,115,856
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT ACTIVITIES:
NET REALIZED GAIN (LOSS) FROM:
Investment transactions 39,638,312
Foreign currency transactions (357,752)
Futures 1,174,404
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION OF:
Investments (15,591,446)
Futures (222,228)
Other assets, liabilities and forward foreign currency contracts (5,537)
Net realized and unrealized gains from investment activities 24,635,753
Net increase in net assets resulting from operations $ 43,751,609
See accompanying notes to financial statements
14
Statement of Changes in Net Assets
FOR THE YEARS ENDED OCTOBER 31,
----------------------------------
2004 2003
-------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 19,115,856 $ 19,877,411
Net realized gain from investment transactions 39,638,312 12,426,980
Net realized gain from futures and foreign
currency transactions 816,652 2,143,359
Net change in unrealized appreciation/depreciation of:
Investments (15,591,446) 33,037,627
Futures (222,228) (56,359)
Other assets, liabilities and forward foreign
currency contracts (5,537) (144,666)
Net increase in net assets resulting from operations 43,751,609 67,284,352
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (18,957,163) (22,097,218)
Net realized gains (14,951,448) (10,316,523)
Return of capital -- (322,658)
Total dividends and distributions to shareholders (33,908,611) (32,736,399)
Net increase in net assets 9,842,998 34,547,953
NET ASSETS:
Beginning of year 309,516,418 274,968,465
End of year $ 319,359,416 $ 309,516,418
Distributions in excess of net investment income $ (282,947) $ (711,053)
See accompanying notes to financial statements
15
GLOBAL HIGH INCOME DOLLAR FUND INC.
Notes to Financial Statements
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Global High Income Dollar Fund Inc. (the "Fund") was incorporated in Maryland on
February 23, 1993 and is registered with the Securities and Exchange Commission
as a closed-end, non-diversified management investment company whose shares
trade on the New York Stock Exchange ("NYSE"). The Fund's primary investment
objective is to achieve a high level of current income. As a secondary objective
the Fund seeks capital appreciation, to the extent consistent with it's primary
objective.
In the normal course of business the Fund enters into contracts that contain a
variety of representations that provide general indemnification. The Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Fund that have not yet occurred.
However, the Fund has not had prior claims or losses pursuant to these contracts
and expects the risk of loss to be remote.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires Fund management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies:
VALUATION OF INVESTMENTS--The Fund calculates its net asset value based on the
current market value, where available, for its portfolio securities. The Fund
normally obtains market values for its securities from independent pricing
sources and broker-dealers. Independent pricing sources may use reported last
sale prices, current market quotations or valuations from computerized "matrix"
systems that derive values based on comparable securities. A matrix system
incorporates parameters such as security quality, maturity and coupon, and/or
research and evaluations by its staff, including review of broker-dealer market
price quotations, if available, in determining the valuation of the portfolio
securities. Securities traded in the over-the-counter ("OTC") market and listed
on The Nasdaq Stock Market, Inc. ("Nasdaq") normally are valued at the NASDAQ
Official Closing Price. Other OTC securities are valued at the last bid price
available on the valuation date prior to valuation. Securities which are listed
on U.S. and foreign stock exchanges normally are valued at the last sale price
on the day the securities are valued or, lacking any sales on such day, at the
last available bid price. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by UBS Global Asset Management (US) Inc. ("UBS Global AM"), the
investment advisor and administrator of the Fund. UBS Global AM is an indirect
wholly owned asset management subsidiary of UBS AG, an internationally
diversified organization with headquarters in Zurich, Switzerland and operations
in many areas of the financial services industry. If a market value is not
available from an independent pricing source for a particular security, that
security is valued at fair value as determined in good faith by or under the
direction of the Fund's board of directors (the "Board").
16
All investments quoted in foreign currencies will be valued weekly in U.S.
dollars on the basis of the foreign currency exchange rates.
Foreign currency exchange rates are generally determined prior to the close of
the NYSE. Occasionally, events affecting the value of foreign investments and
such exchange rates occur between the time at which they are determined and the
close of the NYSE, which will not be reflected in the computation of the Fund's
net asset value. If events materially affecting the value of such securities or
currency exchange rates occur during such time periods, the securities will be
valued at their fair value as determined in good faith by or under the direction
of the Board.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date. Realized gains and losses from investment and
foreign exchange transactions are calculated using the identified cost method.
Interest income is recorded on an accrual basis. Discounts are accreted and
premiums are amortized 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 using the WM/Reuters closing spot rates as of 4:00 pm London
time. For purposes of calculating the U.S. dollar equivalent value of a non-U.S.
dollar denominated obligation, foreign currency amounts are translated into U.S.
dollars on the following basis: (1) market value of investment securities and
other assets and liabilities - at the exchange rates prevailing at the end of
the Fund's fiscal period; and (2) purchases and sales of investment securities
and 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's portfolio are
presented at the foreign exchange rates at the end of the Fund's fiscal 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 securities pursuant to U.S. federal income tax regulations.
Certain foreign exchange gains and losses included in realized and unrealized
gains and losses are included in or are a reduction of ordinary income in
accordance with U.S. federal income tax regulations.
FORWARD FOREIGN CURRENCY CONTRACTS--The Fund may enter into forward foreign
currency exchange contracts ("forward contracts") in connection with planned
purchases or sales of securities or to hedge the U.S. dollar value of portfolio
securities denominated in a particular currency. The Fund may also use forward
contracts to enhance income.
The Fund has no specific limitation on the percentage of assets which may be
committed to such contracts. The Fund may enter into forward contracts or
17
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 identifies cash or liquid securities in an amount not less than the value
of its total assets committed to the consummation of the forward contracts and
not covered as provided in (1) above, as marked-to-market daily.
Risks may arise 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 for book purposes as
unrealized gains or losses by the Fund. Realized gains and losses include net
gains and losses recognized by the Fund on contracts which have been sold or
matured.
FUTURES CONTRACTS--The Fund may use financial futures contracts for hedging
purposes and to adjust exposure to U.S. and foreign fixed income markets in
connection with a reallocation of the Fund's assets or to manage the average
duration of the Fund. However, imperfect correlations between futures contracts
and the related securities or markets, or market disruptions, do not normally
permit full control of these risks at all times. Using financial futures
contracts involves various market risks. The maximum amount at risk from the
purchase of a futures contract is the contract value.
Upon entering into a financial futures contract, the Fund is required to pledge
to a broker an amount of cash and/or liquid securities equal to a certain
percentage of the contract amount. This amount is known as the "initial margin".
Subsequent payments, known as "variation margin," are made or received by the
Fund each day, depending on the daily fluctuations in the value of the
underlying financial futures contracts. Such variation margin is recorded for
financial statement purposes on a daily basis as an unrealized gain or loss on
futures until the financial futures contract is closed, at which time the net
gain or loss is reclassified to realized gain or loss on futures.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends from net investment
income and distributions from net realized capital gains and/or return of
capital is determined in accordance with U.S. federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States. 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.
18
CONCENTRATION OF RISK
Investing in securities of foreign issuers and currency transactions may involve
certain considerations and risks not typically associated with investments in
the United States. These risks include revaluation of currencies, adverse
fluctuations in foreign currency values and possible adverse political, social
and economic developments, including those particular to a specific industry,
country or region, which could cause the securities and their markets to be less
liquid and prices more volatile than those of comparable U.S. companies and U.S.
government securities. These risks are greater with respect to securities of
issuers located in emerging market countries in which the Fund invests. The
ability of the issuers of debt securities held by the Fund to meet their
obligations may be affected by economic and political developments particular to
a specific industry, country or region.
INVESTMENT ADVISOR AND ADMINISTRATOR AND OTHER TRANSACTIONS WITH RELATED
ENTITIES
The Board has approved an investment advisory and administration contract
("Advisory Contract") with UBS Global AM, under which UBS Global AM serves as
investment advisor and administrator of the Fund. In accordance with the
Advisory Contract, the Fund pays UBS Global AM an investment advisory and
administration fee, which is accrued weekly and paid monthly, at the annual rate
of 1.25% of the Fund's average weekly net assets.
The Fund invests in shares of the UBS Supplementary Trust U.S. Cash Management
Prime Fund ("Supplementary Trust"). Supplementary Trust is a business trust
managed by UBS Global Asset Management (Americas) Inc., a related entity of UBS
Global AM.
The Fund pays no management fees to Supplementary Trust. Distributions from the
Supplementary Trust are reflected as interest income on the statement of
operations.
Amounts relating to those investments for the year ended October 31, 2004 are
summarized as follows:
SALES INTEREST % OF
FUND PURCHASES PROCEEDS INCOME VALUE NET ASSETS
---------------------------------------------------------------------------------------------------------
UBS Supplementary
Trust U.S. Cash
Management Prime
Fund $ 168,413,127 $ 158,294,579 $ 73,218 $ 10,118,548 3.17%
19
SECURITIES LENDING
The Fund may lend securities up to 33 1/3% of its total assets to qualified
broker-dealers or institutional investors. The loans are secured at all times by
cash, cash equivalents or U.S. government securities in an amount at least equal
to the market value of the securities loaned, plus accrued interest and
dividends, determined on a daily basis and adjusted accordingly. The Fund will
regain ownership of loaned securities to exercise certain beneficial rights;
however, the Fund may bear the risk of delay in recovery of, or even loss of
rights in, the securities loaned should the borrower fail financially. The Fund
receives compensation for lending its securities from interest or dividends
earned on the cash, cash equivalents or U.S. government securities held as
collateral, net of fee rebates paid to the borrower plus reasonable
administrative and custody fees. UBS Securities LLC, an indirect wholly owned
subsidiary of UBS AG, and other affiliated broker-dealers have been approved as
borrowers under the Fund's securities lending program. At October 31, 2004, the
Fund did not have any securities on loan. For the year ended October 31, 2004,
the Fund earned $251 for lending its securities and UBS Securities LLC earned
$84 in compensation as the Fund's lending agent. At October 31, 2004, the Fund
did not owe UBS Securities LLC compensation as the Fund's lending agent.
CAPITAL STOCK
There are 100,000,000 shares of $0.001 par value common stock authorized and
19,439,667 shares outstanding at October 31, 2004. For the year ended October
31, 2004 and for the year ended October 31, 2003, the Fund did not repurchase
any shares of common stock.
For the period September 17, 1998 (commencement of repurchase program) through
February 28, 2001, the Fund repurchased 3,297,000 shares of common stock at an
average market price per share of $11.68 and a weighted average discount from
net asset value of 14.88%. As of October 31, 2004, paid-in-capital has been
reduced by the cost of $38,698,693 of capital stock repurchased.
PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 2004, aggregate purchases and sales of portfolio
securities, excluding short-term securities, were $416,335,661 and $414,967,773,
respectively.
FEDERAL TAX STATUS
The Fund intends to distribute substantially all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year,
substantially all of its net investment income, realized capital gains and
certain other amounts, if any, the Fund intends not to be subject to a federal
excise tax.
20
The tax character of distributions paid during the fiscal year ended October 31,
2004 and October 31, 2003, respectively were as follows:
DISTRIBUTIONS PAID FROM: 2004 2003
-------------------------------------------------------------------------------------------------
Net investment income $ 30,792,351 $ 24,240,920
Net realized gains 3,116,260 8,172,821
Return of capital -- 322,658
$ 33,908,611 $ 32,736,399
At October 31, 2004, the components of accumulated earnings on a tax basis were
as follows:
Undistributed long-term capital gains $ 24,993,049
Unrealized appreciation 26,119,812
Total accumulated earnings $ 51,112,861
The difference between book-basis and tax-basis net unrealized appreciation of
investments is attributable to premium amortization adjustments and wash sales.
During the current fiscal year, the Fund had no capital loss carry-forwards to
offset current year gains.
For federal income tax purposes, the tax cost of investments and components of
net unrealized appreciation of investments at October 31, 2004 were as follows:
Tax cost of investments $ 290,077,420
Gross appreciation (investments having an excess of value over cost) $ 27,520,375
Gross depreciation (investments having an excess of cost over value) (1,400,563)
Net unrealized appreciation of investments $ 26,119,812
To reflect reclassifications arising from permanent "book/tax" differences for
the year ended October 31, 2004, distributions in excess of net investment
income was decreased by $15,220,861 and accumulated net realized gain from
investment activities was decreased by $15,220,861. These differences are
primarily due to tax treatment of foreign currency transactions, paydown gains
and losses, distribution reclasses and premium adjustments for certain debt
obligations.
21
GLOBAL HIGH INCOME DOLLAR FUND INC.
Financial Highlights
Selected data for a share of common stock outstanding thoughout each year is
presented below:
FOR THE YEARS ENDED OCTOBER 31,
-----------------------------------------------------------------------------
2004 2003 2002+ 2001 2000
---------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 15.92 $ 14.14 $ 14.16 $ 14.42 $ 13.66
Net investment income 0.98 1.02 1.04 1.24 1.48
Net realized and
unrealized gains from
investment activities 1.27 2.44 0.52 0.10 0.71
Net increase from
investment operations 2.25 3.46 1.56 1.34 2.19
Dividends from net
investment income (0.97) (1.13) (1.31) (1.15) (1.48)
Distributions from net
realized gains from
investment transactions (0.77) (0.53) -- -- --
Distributions from
paid-in-capital -- (0.02) (0.27) (0.46) --
Distributions in excess of
net investment income -- -- -- -- (0.09)
Total dividends and
distributions to
shareholders (1.74) (1.68) (1.58) (1.61) (1.57)
Net increase in net asset
value resulting from
repurchase of common
stock -- -- -- 0.01 0.14
NET ASSET VALUE,
END OF YEAR $ 16.43 $ 15.92 $ 14.14 $ 14.16 $ 14.42
MARKET VALUE,
END OF YEAR $ 18.31 $ 17.07 $ 13.87 $ 12.98 $ 12.63
TOTAL INVESTMENT
RETURN(1) 18.68% 36.52% 19.38% 15.80% 24.55%
RATIOS/SUPPLEMENTAL
DATA:
Net assets,
end of year (000's) $ 319,359 $ 309,516 $ 274,968 $ 275,205 $ 281,955
Expenses to average
net assets 1.40% 1.43% 1.43% 1.41% 1.39%
Net investment income
to average net assets 6.18% 6.66% 7.23% 8.46% 10.12%
Portfolio turnover rate 140% 53% 57% 51% 43%
22
(1) Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day of each year reported and a sale
at the current market price on the last day of each year reported, and
assuming reinvestment of dividends and other distributions at prices
obtained under the Fund's Dividend Reinvestment Plan. Total investment
return does not reflect brokerage commissions or the deduction of taxes that
a shareholder could pay on Fund distributions.
+ As required, effective as of November 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide, Audits of Investment
Companies, and began amortizing premium on debt securities for financial
statement reporting purposes only. The effect of this change for the year
ended October 31, 2002 was to decrease net investment income per share by
$0.02, increase net realized and unrealized gains from investment activities
per share by $0.02, and decrease the ratio of net investment income to
average net assets from 7.35% to 7.23%. Per share ratios and supplemental
data for years prior to November 1, 2001 have not been restated to reflect
this change in presentation.
23
GLOBAL HIGH INCOME DOLLAR FUND INC.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Global High Income Dollar Fund
Inc.
We have audited the accompanying statement of assets and liabilities of Global
High Income Dollar Fund Inc. (the "Fund"), including the portfolio of
investments, as of October 31, 2004, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the four
years in the period then ended. 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. The financial highlights for the year ended October 31,
2000 was audited by other auditors whose report dated December 27, 2000
expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 and financial highlights. Our procedures
included confirmation of securities owned at October 31, 2004 by correspondence
with the custodian and brokers. 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, the financial statements and financial highlights referred to
above and audited by us, present fairly, in all material respects, the financial
position of Global High Income Dollar Fund Inc. at October 31, 2004, and the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the four years in the period then ended, in conformity with U.S
generally accepted accounting principles.
/s/ Ernst & young LLP
New York, New York
December 15, 2004
24
GLOBAL HIGH INCOME DOLLAR FUND INC.
Tax Information (unaudited)
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not be
reported as taxable income. Some retirement trusts (e.g., corporate, Keogh and
403(b)(7) plans) may need this information for their annual reporting.
Since the Fund's fiscal year is not the calendar year, another notification will
be sent in respect of calendar year 2004. The second notification, which will
reflect the amount to be used by calendar year taxpayers on their federal income
tax returns, will be made in conjunction with Form 1099 DIV and will be mailed
in January 2005. Shareholders are advised to consult their own tax advisors with
respect to the tax consequences of their investment in the Fund.
25
GLOBAL HIGH INCOME DOLLAR FUND INC.
General Information (unaudited)
THE FUND
Global High Income Dollar Fund Inc. (the "Fund") is a non-diversified,
closed-end management investment company whose shares trade on the New York
Stock Exchange ("NYSE"). The Fund's primary investment objective is to achieve a
high level of current income. As a secondary objective, the Fund seeks capital
appreciation to the extent consistent with its primary objective. The Fund's
investment advisor and administrator is UBS Global Asset Management (US) Inc.
("UBS Global AM"), an indirect wholly owned asset management subsidiary of UBS
AG, which had over $55.6 billion in assets under management as of October 31,
2004.
SHAREHOLDER INFORMATION
The Fund's NYSE trading symbol is "GHI." 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 in numerous other publications.
QUARTERLY FORM N-Q PORTFOLIO SCHEDULE
The Fund will file its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the SEC's
website at http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied
at the SEC's Public Reference Room in Washington, D.C. Information on the
operation of the SEC's Public Reference Room may be obtained by calling
1-800-SEC-0330. Additionally, you may obtain copies of Forms N-Q from the Fund
upon request by calling 1-800-647-1568.
PROXY VOTING POLICIES AND PROCEDURES
You may obtain a description of the Fund's proxy voting policies and
procedures, and its proxy voting record without charge, upon request by
contacting the Fund directly at 1-800-647-1568, online on the Fund's Web
site:www.ubs.com/ubsglobalam-proxy, or on the EDGAR Database on the SEC's
website (http://www.sec.gov).
DIVIDEND REINVESTMENT PLAN
The Fund's Board has established a Dividend Reinvestment Plan (the "Plan") under
which all shareholders whose shares are registered in their own names, or in the
name of UBS Financial Services Inc. or its nominee, will have all dividends and
other distributions on their shares of common stock automatically reinvested in
additional shares, unless such shareholders elect to receive cash. Shareholders
who elect to hold their shares in the name of another broker or nominee should
contact such broker or nominee to determine whether, or how, they may
participate in the Plan. The ability of such shareholders to participate in the
Plan may change if their shares are transferred into the name of another broker
or nominee.
A shareholder may elect not to participate in the Plan or may terminate
participation in the Plan at any time without penalty, and shareholders who have
previously
26
terminated participation in the Plan may rejoin it at any time. Changes in
elections must be made in writing to the Fund's transfer agent and should
include the shareholder's name and address as they appear on that share
certificate or in the transfer agent's records. An election to terminate
participation in the Plan, until such election is changed, will be deemed an
election by a shareholder to take all subsequent distributions in cash. An
election will be effective only for distributions declared and having a record
date at least ten days after the date on which the election is received.
Additional shares of common stock acquired under the Plan will be purchased in
the open market, on the NYSE or otherwise, at prices that may be higher or lower
than the net asset value per share at the time of the purchase. Investors should
consider whether continued participation in the dividend reinvestment plan is
appropriate for them when the Fund's market price exceeds its net asset value; a
portion of a dividend may represent a return of capital, which would be
reinvested in the Fund at a premium to net asset value. The number of shares of
common stock purchased with each dividend will be equal to the result obtained
by dividing the amount of the dividend payable to a particular shareholder by
the average price per share (including applicable brokerage commissions) that
the transfer agent was able to obtain in the open market. The Fund will not
issue any new shares in connection with the Plan. There currently is no charge
to participants for reinvesting dividends or other distributions. The transfer
agent's fees for handling the reinvestment of distributions are paid by the
Fund. However, each participant pays a pro rata share of brokerage commissions
incurred with respect to the transfer agent's open market purchases of common
stock in connection with the reinvestment of distributions. The automatic
reinvestment of dividends and other distributions in shares of common stock does
not relieve participants of any income tax that may be payable on such
distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan with respect to any
dividend or other distribution if notice of the change is sent to Plan
participants at least 30 days before the record date for such distribution. The
Plan also may be amended or terminated by the transfer agent by at least 30
days' written notice to all Plan participants. Additional information regarding
the Plan may be obtained from, and all correspondence concerning the Plan should
be directed to, the transfer agent at PFPC Inc., P.O. Box 43027 Providence,
Rhode Island 02940-3027. For further information regarding the Plan, you may
also contact the transfer agent directly at 1-800-331-1710.
DISTRIBUTION POLICY
The Fund's Board adopted a managed distribution policy in December 1999, which
means that the Fund will make regular monthly distributions at an annualized
rate equal to 11% of the Fund's net asset value, as determined as of the last
trading day during the first week of that month (usually a Friday unless the
NYSE is closed
27
that Friday). Prior to December 20, 1999, the Fund's distributions varied based
on the Fund's net investment income and realized capital gains or losses. The
Fund's Board may terminate the managed distribution policy at any time; any such
termination may have an adverse effect on the market price for the Fund's
shares.
To the extent that the Fund's taxable income in any fiscal year exceeds the
aggregate amount distributed based on a fixed percentage of its net asset value,
the Fund would make an additional distribution in the amount of that excess near
the end of the fiscal year. To the extent that the aggregate amount distributed
by the Fund (based on a fixed percentage of its net asset value) exceeds its
current and accumulated earnings and profits, the amount of that excess would
constitute a return of capital or net realized capital gains for tax purposes.
Monthly distributions based on a fixed percentage of the Fund's net asset value
may require the Fund to make multiple distributions of long-term capital gains
during a single fiscal year. The Fund has received exemptive relief from the
Securities and Exchange Commission that enables it to do so. The Fund's Board
will annually reassess the annualized percentage of net assets at which the
Fund's monthly distributions will be made.
28
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29
GLOBAL HIGH INCOME DOLLAR FUND INC.
Supplemental Information (unaudited)
BOARD OF DIRECTORS & OFFICERS
The Fund is governed by a Board of Directors which oversees the Fund's
operations. Each director serves until the next annual meeting of shareholders
or until his or her successor is elected and qualified, or until he or she
resigns or is otherwise removed. Officers are appointed by the directors and
serve at the pleasure of the Board. The table below shows, for each director and
officer, his or her name, address and age, the position held with the Fund, the
length of time served as a director and officer of the Fund, the director's or
officer's principal occupations during the last five years, the number of funds
in the UBS fund complex overseen by the director or for which a person served as
an officer, and other directorships held by the director.
INTERESTED DIRECTORS
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
-------------------------------------------------------------------------------------------------
Margo N. Alexander*++;57 Director Since 1996 Mrs. Alexander is retired. She was an
executive vice president of UBS
Financial Services Inc. (March 1984 to
December 2002). She was chief executive
officer (from January 1995 to October
2000), a director (from January 1995 to
September 2001) and chairman (from March
1999 to September 2001) of UBS Global AM
(formerly known as Mitchell Hutchins
Asset Management Inc.)
30
NUMBER OF
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS
AND AGE OVERSEEN BY DIRECTOR HELD BY DIRECTOR
-------------------------------------------------------------------------------------------------
Margo N. Alexander*++; 57 Mrs. Alexander is a director or trustee None
of 16 investment companies (consisting
of 33 portfolios) for which UBS Global
AM or one of its affiliates serves as
investment advisor, sub-advisor or
manager.
31
INDEPENDENT DIRECTORS
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
-------------------------------------------------------------------------------------------------
Richard Q. Armstrong; 69 Director Since 1995 Mr. Armstrong is chairman and
c/o Willkie Farr & and principal of R.Q.A. Enterprises
Gallagher LLP Chairman (management consulting firm)
787 Seventh Avenue of the (since April 1991 and principal
New York, NY 10019-6099 Board of occupation since March 1995).
Directors
David J. Beaubien; 70 Director Since 2001 Mr. Beaubien is retired (since 2003).
84 Doane Road He was chairman of
Ware, MA 01082 Yankee Environmental Systems,
Inc., a manufacturer of
meteorological measuring systems
(since 1991).
Richard R. Burt; 57 Director Since 1995 Mr. Burt is chairman of Diligence
1275 Pennsylvania Ave., N.W. LLC (international information and
Washington, D.C. 20004 security firm) and IEP Advisors
(international investments and
consulting firm).
Meyer Feldberg; 62 Director Since 1996 Professor Feldberg is Dean Emeritus
Columbia Business School and Sanford Bernstein Professor of
33 West 60th Street Leadership and Ethics at Columbia
7th Floor Business School. Prior to July 2004,
New York, New York he was Dean and Professor of
10023-7905 Management of the Graduate School
of Business at Columbia University
(since 1989).
32
NUMBER OF
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS
AND AGE OVERSEEN BY DIRECTOR HELD BY DIRECTOR
---------------------------------------------------------------------------------------------------------------
Richard Q. Armstrong; 69 Mr. Armstrong is a director or trustee None
c/o Willkie Farr & of 16 investment companies (consisting
Gallagher LLP of 33 portfolios) for which UBS
787 Seventh Avenue Global AM or one of its affiliates
New York, NY 10019-6099 serves as investment advisor,
sub-advisor or manager.
David J. Beaubien; 70 Mr. Beaubien is a director or trustee of Mr. Beaubien is also a director of IEC
84 Doane Road 16 investment companies (consisting of Electronics, Inc., a manufacturer of
Ware, MA 01082 33 portfolios) for which UBS Global AM electronic assemblies.
or one of its affiliates serves as
investment advisor, sub-advisor or
manager.
Richard R. Burt; 57 Mr. Burt is a director or trustee of 16 Mr. Burt is also a director of Hollinger
1275 Pennsylvania Ave., N.W. investment companies (consisting of 33 International, Inc. (publishing), HCL
Washington, D.C. 20004 portfolios) for which UBS Global AM or Technologies, Ltd., (software and
one of its affiliates serves as information technologies), The Central
investment advisor, sub-advisor or European Fund, Inc., The Germany Fund,
manager. Inc., IGT, Inc. (provides technology to
gaming and wagering industry) and
chairman of Weirton Steel Corp. (makes
and finishes steel products). He is also
a director or trustee of funds in the
Scudder Mutual Funds Family (consisting
of 47 portfolios).
Meyer Feldberg; 62 Professor Feldberg is a director or Professor Feldberg is also a director of
Columbia Business School trustee of 30 investment companies Primedia Inc. (publishing), Federated
33 West 60th Street (consisting of 47 portfolios) for which Department Stores, Inc. (operator of
7th Floor UBS Global AM or one of its affiliates department stores), Revlon, Inc.
New York, New York serves as investment advisor, (cosmetics), Select Medical Inc.
10023-7905 sub-advisor or manager. (healthcare services) and SAPPI, Ltd.
(producer of paper).
33
TERM OF
OFFICE+ AND
POSITION(S) LENGTH OF
NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE FUND SERVED DURING PAST 5 YEARS
-----------------------------------------------------------------------------------------------
Carl W. Schafer; 68 Director Since 1996 Mr. Schafer is president of the
66 Witherspoon Street Atlantic Foundation (charitable
#1100 foundation) (since 1990).
Princeton, NJ 08542
William D. White; 70 Director Since 2001 Mr. White is retired (since 1994).
P.O. Box 199
Upper Black Eddy, PA 18972
34
NUMBER OF
NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS
AND AGE OVERSEEN BY DIRECTOR HELD BY DIRECTOR
-----------------------------------------------------------------------------------------------------------------
Carl W. Schafer; 68 Mr. Schafer is a director or trustee of Mr. Schafer is also a director of Labor
66 Witherspoon Street 16 investment companies (consisting of Ready, Inc. (temporary employment),
#1100 33 portfolios) for which UBS Global AM Guardian Life Insurance Company Mutual
Princeton, NJ 08542 or one of its affiliates serves as Funds (consisting of 25 portfolios), the
investment advisor, sub-advisor or Harding, Loevner Funds (consisting of 3
manager. portfolios), E.I.I. Realty Securities
Trust (investment company consisting of
2 portfolios) and Frontier Oil
Corporation.
William D. White; 70 Mr. White is a director or trustee of 16 None
P.O. Box 199 investment companies (consisting of
Upper Black Eddy, PA 18972 33 portfolios) for which UBS Global AM
or one of its affiliates serves as
investment advisor, sub-advisor or
manager.
35
OFFICERS
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE THE FUND SERVED SERVES AS OFFICER
--------------------------------------------------------------------------------------------------------------------------------
W. Douglas Beck*; Vice President Since 2003 Mr. Beck is an executive director and head of
37 product management of UBS Global AM (since
2002). From March 1998 to November 2002, he held
various positions at Merrill Lynch, the most
recent being first vice president and co-
manager of the managed solutions group. Mr. Beck
is vice president of 20 investment companies
(consisting of 75 portfolios) for which UBS
Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
James Capezzuto*; Vice President and Since 2004 Mr. Capezzuto is director and associate general
41 Assistant Secretary counsel at UBS Global AM (since 2004). Prior to
joining UBS Global AM he was senior vice
president, senior compliance manager at Bank of
America (from 2003-2004) prior to that he was
general counsel at Steinberg Priest & Sloane
and prior to that he was director and senior
counsel at Deutsche Asset Management (from
1996-2002.) Mr. Capezzuto is a vice president
and assistant secretary of 20 investment
companies (consisting of 75 portfolios) for
which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.
Thomas Disbrow*; Vice President and Since 2000 (Vice Mr. Disbrow is a director and co-head of the
38 Treasurer President) Since mutual fund finance department of UBS Global AM.
2004 (Treasurer) Prior to November 1999, he was a vice president
of Zweig/Glaser Advisers. Mr. Disbrow is a vice
president and treasurer of 16 investment
companies (consisting of 33 portfolios) and vice
president and assistant treasurer of four
investment companies (consisting of 42
portfolios) for which UBS Global AM or one of
its affiliates serves as investment advisor,
sub-advisor or manager.
36
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE TRUST SERVED SERVES AS OFFICER
--------------------------------------------------------------------------------------------------------------------------------
Mark F. Kemper+++; Vice President and Since 2004 Mr. Kemper is general counsel of UBS Global
46 Secretary Asset Management--Americas region (since July
2004). Mr. Kemper also is an executive director
of UBS Global AM Americas and was its deputy
general counsel from July 2001 to July 2004. He
has been secretary of UBS Global AM (Americas)
since 1999 and assistant secretary of UBS Global
Asset Management Trust Company since 1993.
Mr. Kemper is secretary of UBS Global AM (since
2004). Mr. Kemper is vice president and
secretary of 20 investment companies (consisting
of 75 portfolios) for which UBS Global AM
(Americas) or one of its affiliates serves as
investment advisor, sub-advisor or manager.
Joanne M. Kilkeary*; Vice President and Since 2004 Ms. Kilkeary is an associate director and a
36 Assistant Treasurer senior manager of the mutual fund finance
department of UBS Global AM. Ms. Kilkeary is a
vice president and assistant treasurer of 16
investment companies (consisting of 33
portfolios) for which UBS Global AM or one of
its affiliates serves as investment advisor,
sub-advisor or manager.
Joseph T. Malone*; Vice President and Since 2004 Mr. Malone is a director and co-head of the
37 Assistant Treasurer mutual fund finance department of UBS Global AM.
From August 2000 through June 2001, he was the
controller at AEA Investors Inc. From March 1998
to August 2000, Mr. Malone was a manager within
the investment management services practice of
PricewaterhouseCoopers LLC. Mr.Malone is vice
president and assistant treasurer of 16 investment
companies (consisting of 33 portfolios) and vice
president, treasurer and principal accounting
officer of four investment companies (consisting
of 42 portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
37
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE TRUST SERVED SERVES AS OFFICER
----------------------------------------------------------------------------------------------------------------------------------
Joseph McGill*; Vice President and Since 2004 Mr. McGill is an executive director and chief
42 Chief Compliance compliance officer at UBS Global AM (since
Officer 2003). Prior to joining UBS Global AM he was
Assistant General Counsel, J.P. Morgan
Investment Management (from 1999-2003).
Mr. McGill is a vice president and chief compliance
officer of 20 investment companies (consisting
of 75 portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
John Penicook+++; Vice President Since 2002 Mr. Penicook is a managing director and global
46 head of fixed income of UBS Global AM (Americas)
Inc. and UBS Global AM. Mr. Penicook is a vice
president of three investment companies
(consisting of three portfolios) for which UBS
Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
Uwe Schillhorn+++; Vice President Since 2004 Mr. Schillhorn is a director (since 1995), and
40 head of emerging markets debt (since 2004) of
UBS Global AM. Mr. Schillhorn is a vice
president of two investment companies
(consisting of two portfolios) for which UBS
Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
38
TERM OF PRINCIPAL OCCUPATION(S)
OFFICE+ AND DURING PAST 5 YEARS;
POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN
NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON
AND AGE THE FUND SERVED SERVES AS OFFICER
--------------------------------------------------------------------------------------------------------------------------------
Joseph A. Varnas*; President Since 2003 Mr. Varnas is a managing director (since March
37 2003), global head of information technology and
operations (since March 2004) and head of product
management--Americas (since November 2002 of UBS
Global AM. He was head of technology of UBS Global
AM from November 2002 to March 2004. From 2000 to
2001, he was manager of product development in
Investment Consulting Services at UBS Financial
Services Inc. Mr.Varnas was a senior analyst in
the Global Securities Research and Economics Group
at Merrill Lynch from 1995 to 1999. Mr.Varnas is
president of 20 investment companies (consisting of
75 portfolios) for which UBS Global AM or one of
its affiliates serves as investment advisor,
sub-advisor or manager.
Keith A. Weller*; Vice President and Since 1995 Mr. Weller is a director and associate general
43 Assistant Secretary counsel of UBS Global AM. Mr.Weller is a vice
president and assistant secretary of 20 investment
companies (consisting of 75 portfolios) for which
UBS Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
----------
* This person's business address is 51 West 52nd Street, New York, New York
10019-6114.
+ Each Director serves until the next annual meeting of shareholders or until
his or her successor is elected and qualified, or until he or she resigns
or is otherwise removed. Each Director who has attained the age of
seventy-two (72) years will be subject to retirement on the last day of the
month in which he or she attains such age. Officers of the Fund are
appointed by the Directors and serve at the pleasure of the Board.
++ Mrs.Alexander is an "interested person" of the Fund as defined in the 1940
Act by virtue of her former positions with UBS Global AM and/or its
affiliates.
+++ This person's business address is One North Wacker Drive, Chicago, IL 60606.
39
GLOBAL HIGH INCOME DOLLAR FUND INC.
New York Stock Exchange Certifications (unaudited)
Global High Income Dollar Fund Inc. (the "Fund") is listed on the New York Stock
Exchange ("NYSE"). As a result, it is subject to certain corporate governance
rules and related interpretations issued by the exchange. Pursuant to those
requirements, the Fund must include information in this report regarding certain
certifications. The Fund's president and treasurer have filed certifications
with the SEC regarding the quality of the Fund's public disclosure. Those
certifications were made pursuant to Section 302 of the Sarbanes-Oxley Act
("Section 302 Certifications"). The Section 302 Certifications were filed as
exhibits to the Fund's annual report on Form N-CSR, which included a copy of
this annual report along with other information about the Fund. After the Fund's
2004 annual meeting of shareholders, it filed a certification with the NYSE
stating that its president was unaware of any violation of the NYSE's Corporate
Governance listing standards.
40
DIRECTORS
Richard Q. Armstrong
CHAIRMAN
Margo N. Alexander
David J. Beaubien
Richard R. Burt
Meyer Feldberg
Carl W. Schafer
William D. White
PRINCIPAL OFFICERS
Joseph A. Varnas
PRESIDENT
Mark F. Kemper
VICE PRESIDENT AND SECRETARY
Thomas Disbrow
VICE PRESIDENT AND TREASURER
W. Douglas Beck
VICE PRESIDENT
John Penicook
VICE PRESIDENT
INVESTMENT ADVISOR AND ADMINISTRATOR
UBS Global Asset Management (US) Inc.
51 West 52nd Street
New York, New York 10019-6114
NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(c) OF THE INVESTMENT
COMPANY ACT OF 1940 THAT FROM TIME TO TIME THE FUND MAY PURCHASE SHARES OF ITS
COMMON STOCK IN THE OPEN MARKET AT MARKET PRICES.
THIS REPORT IS SENT TO THE SHAREHOLDERS OF THE FUND FOR THEIR INFORMATION. IT IS
NOT A PROSPECTUS, CIRCULAR OR REPRESENTATION INTENDED FOR THE USE IN THE
PURCHASE OR SALE OF SHARES OF THE FUND OR OF ANY SECURITIES MENTIONED IN THIS
REPORT.
(C)2004 UBS Global Asset Management (US) Inc. All rights reserved.
[UBS LOGO] Presorted
Standard
UBS GLOBAL ASSET MANAGEMENT (US) INC. US Postage
51 West 52nd Street PAID
New York, New York 10019 Smithtown, NY
Permit 700
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions pursuant to Section 406 of
the Sarbanes-Oxley Act of 2002. (The registrant has designated the code of
ethics adopted pursuant to Sarbanes-Oxley as a "Code of Conduct" to lessen the
risk of confusion with its separate code of ethics adopted pursuant to Rule
17j-1 under the Investment Company Act of 1940, as amended.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board has determined that the following person serving on the
registrant's Audit Committee is an "audit committee financial expert" as defined
in item 3 of Form N-CSR: Richard Q. Armstrong. Mr. Armstrong is independent as
defined in item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES:
For the fiscal years ended October 31, 2004 and October 31, 2003,
the aggregate Ernst & Young LLP (E&Y) audit fees for professional
services rendered to the registrant were approximately $46,100
and $41,900, respectively.
Fees included in the audit fees category are those associated
with the annual audits of financial statements and services that
are normally provided in connection with statutory and regulatory
filings.
(b) AUDIT-RELATED FEES:
In each of the fiscal years ended October 31, 2004 and October
31, 2003, the aggregate audit-related fees billed by E&Y for
services rendered to the registrant that are reasonably related
to the performance of the audits of the financial statements, but
not reported as audit fees, were approximately $3,500 and $4,617,
respectively, which includes amounts related to non-audit
services prior to May 6, 2003 that would have been subject to
pre-approval if the SEC rules relating to the pre-approval of
non-audit services had been in effect at that time.
Fees included in the audit-related category are those associated
with (1) the reading and providing of comments on the 2004 and
2003 semiannual financial statements, (2) review of portions of
the registrant's semiannual 2003 Form N-SAR filing and (3) review
of the consolidated 2003 and 2002 report on UBS Funds'
profitability of UBS Global Asset Management (US) Inc. ("UBS
Global AM") to assist the board members in their annual
advisory/administration contract reviews.
There were no audit-related fees required to be approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the
fiscal years indicated above.
(c) TAX FEES:
In each of the fiscal years ended October 31, 2004 and October
31, 2003, the aggregate tax fees billed by E&Y for professional
services rendered to the registrant were approximately $9,200 and
$10,200, respectively, which includes amounts related to tax
services prior to May 6, 2003 that would have been subject to
pre-approval if the SEC rules relating to the pre-approval of
non-audit services had been in effect at that time.
Fees included in the tax fees category comprise all services
performed by professional staff in the independent accountant's
tax division except those services related to the audits. This
category comprises fees for tax return preparation and review of
excise tax calculations.
There were no tax fees required to be approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the
fiscal years indicated above.
(d) ALL OTHER FEES:
In each of the fiscal years ended October 31, 2004 and October
31, 2003, there were no fees billed by E&Y for products and
services, other than the services reported in Item 4(a)-(c)
above, rendered to the registrant.
Fees included in the all other fees category would consist of
services related to internal control reviews, strategy and other
consulting, financial information systems design and
implementation, consulting on other information systems, and
other tax services unrelated to the registrant.
There were no "all other fees" required to be approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the
fiscal years indicated above.
(e) (1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES:
The registrant's Audit Committee ("audit committee") has
adopted an "Audit Committee Charter (Amended and Restated as
of May 12, 2004)" (the "charter"). The charter contains the
audit committee's pre-approval policies and procedures.
Reproduced below is an excerpt from the charter regarding
pre-approval policies and procedures:
The [audit ]Committee shall:
...
2. Pre-approve (a) all audit and permissible
non-audit services(1) to be provided to the Fund
and (b) all permissible non-audit services to be
provided by the Fund's independent auditors to UBS
Global [AM] and any Covered Service Providers, if
the engagement relates directly to the operations
and financial reporting of the Fund. In carrying
out this responsibility, the Committee shall seek
periodically from UBS Global [AM] and from the
independent auditors a list of such audit and
permissible non-audit services that can be
expected to be rendered to the Fund, UBS Global
[AM] or any Covered Service Providers by the
Fund's independent auditors, and an estimate of
the fees sought to be paid in connection with such
services. The Committee may delegate its
responsibility to pre-approve any such audit and
permissible non-audit services to a sub-committee
consisting of the Chairperson of the
Committee and two other members of the Committee
as the Chairperson, from time to time, may
determine and appoint, and such sub-committee
shall report to the Committee, at its next
regularly scheduled meeting after the
sub-committee's meeting, its decision(s). From
year to year, the Committee shall report to the
Board whether this system of pre-approval has been
effective and efficient or whether this Charter
should be amended to allow for pre-approval
pursuant to such policies and procedures as the
Committee shall approve, including the delegation
of some or all of the Committee's pre-approval
responsibilities to other persons (other than UBS
Global [AM] or the Fund's officers).
----------
(1) The Committee will not approve non-audit
services that the Committee believes may
taint the independence of the auditors.
Currently, permissible non-audit services
include any professional services (including
tax services) that are not prohibited
services as described below, provided to the
Fund by the independent auditors, other than
those provided to the Fund in connection with
an audit or a review of the financial
statements of the Fund. Permissible non-audit
services may NOT include: (i) bookkeeping or
other services related to the accounting
records or financial statements of the Fund;
(ii) financial information systems design and
implementation; (iii) appraisal or valuation
services, fairness opinions or
contribution-in-kind reports; (iv) actuarial
services; (v) internal audit outsourcing
services; (vi) management functions or human
resources; (vii) broker or dealer, investment
adviser or investment banking services;
(viii) legal services and expert services
unrelated to the audit; and (ix) any other
service the Public Company Accounting
Oversight Board determines, by regulation, is
impermissible.
Pre-approval by the Committee of any
permissible non-audit services is not
required so long as: (i) the aggregate amount
of all such permissible non-audit services
provided to the Fund, UBS Global [AM] and any
service providers controlling, controlled by
or under common control with UBS Global [AM]
that provide ongoing services to the Fund
("Covered Service Providers") constitutes not
more than 5% of the total amount of revenues
paid to the independent auditors (during the
fiscal year in which the permissible
non-audit services are provided) by (a) the
Fund, (b) its investment adviser and (c) any
entity controlling, controlled by, or under
common control with the investment adviser
that provides ongoing services to the Fund
during the fiscal year in which the services
are provided that would have to be approved
by the Committee; (ii) the permissible
non-audit services were not recognized by the
Fund at the time of the engagement to be
non-audit services; and (iii) such services
are promptly brought to the attention of the
Committee and approved by the Committee (or
its delegate(s)) prior to the completion of
the audit.
(e) (2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X:
AUDIT-RELATED FEES: There were no amounts that were
approved by the audit committee pursuant to the de
minimis exception for the fiscal years ended October
31, 2004 and October 31, 2003 on behalf of the
registrant.
There were no amounts that were required to be approved
by the audit committee pursuant to the de minimis
exception for the fiscal years ended October 31, 2004
and October 31, 2003 on behalf of the registrant's
service providers that relate directly to the
operations and financial reporting of the registrant.
TAX FEES: There were no amounts that were approved by
the audit committee pursuant to the de minimis
exception for the fiscal years ended October 31, 2004
and October 31, 2003 on behalf of the registrant.
There were no amounts that were required to be approved
by the audit committee pursuant to the de minimis
exception for the fiscal years ended October 31, 2004
and October 31, 2003 on behalf of the registrant's
service providers that relate directly to the
operations and financial reporting of the registrant.
ALL OTHER FEES: There were no amounts that were
approved by the audit committee pursuant to the de
minimis exception for the fiscal years ended October
31, 2004 and October 31, 2003 on behalf of the
registrant.
There were no amounts that were required to be approved
by the audit committee pursuant to the de minimis
exception for the fiscal years ended October 31, 2004
and October 31, 2003 on behalf of the registrant's
service providers that relate directly to the
operations and financial reporting of the registrant.
(f) According to E&Y, for the fiscal year ended October 31, 2004, the
percentage of hours spent on the audit of the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons who are not full-time,
permanent employees of E&Y was 0%.
(g) For the fiscal years ended October 31, 2004 and October 31, 2003,
the aggregate fees billed by E&Y of $3,468,898 and $3,391,944,
respectively, for non-audit services rendered on behalf of the
registrant ("covered"), its investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and
any entity controlling, controlled by, or under common control
with the adviser ("non-covered") that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant is shown in the table below:
2004 2003
---------- ----------
Covered Services $ 12,700 $ 14,817
Non-Covered Services 3,456,198 3,377,127
(h) The registrant's audit committee was not required to consider
whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing
services to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated standing audit committee (the "Audit
Committee") established in accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as amended. The Audit Committee is comprised of the
following board members: Mr. Armstrong, Mr. Beaubien, Mr. Burt, Mr. Feldberg and
Mr. White.
ITEM 6. SCHEDULE OF INVESTMENTS
Included as part of the report to shareholders filed under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant's Board of Directors believes that the voting of proxies on
securities held by the registrant is an important element of the overall
investment process. As such, the Board has delegated the responsibility to vote
such proxies to the registrant's advisor. Following is a summary of the proxy
voting policy of the advisor.
CORPORATE GOVERNANCE PHILOSOPHY, VOTING GUIDELINES AND POLICY SUMMARY
The proxy voting policy of UBS Global AM is based on its belief that voting
rights have economic value and must be treated accordingly. Generally, UBS
Global AM expects the boards of directors of companies issuing securities held
by its clients to act as stewards of the financial assets of the company, to
exercise good judgment and practice diligent oversight with the management of
the company. While there is no absolute set of rules that determines appropriate
corporate governance under all circumstances and no set of rules will guarantee
ethical behavior, there are certain benchmarks, which, if substantial progress
is made toward, give evidence of good corporate governance. UBS Global AM may
delegate to an independent proxy voting and research service the authority to
exercise the voting rights associated with certain client holdings. Any such
delegation shall be made with the direction that the votes be exercised in
accordance with UBS Global AM's proxy voting policy.
When UBS Global AM's view of a company's management is favorable, UBS Global AM
generally supports current management initiatives. When UBS Global AM's view is
that changes to the management structure would probably increase shareholder
value, UBS Global AM may not support existing management proposals. In general,
UBS Global AM (1) opposes proposals which act to entrench management; (2)
believes that boards should be independent of company management and composed of
persons with requisite skills, knowledge and experience; (3) opposes structures
which impose financial constraints on changes in control; (4) believes
remuneration should be commensurate with responsibilities and performance; and
(5) believes that appropriate steps should be taken to ensure the independence
of auditors.
UBS Global AM has implemented procedures designed to identify whether it has a
conflict of interest in voting a particular proxy proposal, which may arise as a
result of its or its affiliates' client relationships, marketing efforts or
banking and broker/dealer activities. To address such conflicts, UBS Global AM
has imposed information barriers between it and its affiliates who conduct
banking, investment banking and broker/dealer activities and has implemented
procedures to prevent business, sales and marketing issues from influencing our
proxy votes. Whenever UBS Global AM is aware of a conflict with respect to a
particular proxy, its appropriate local corporate governance committee is
required to review and agree to the manner in which such proxy is voted.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
There were no purchases made by or on behalf of the registrant or any
"affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Securities
Exchange Act of 1934, as amended, of shares of the registrant's equity
securities made in the period covered by this report.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant's Board has established a Nominating and Corporate Governance
Committee. The Nominating and Corporate Governance Committee will consider
nominees recommended by shareholders if a vacancy occurs among those board
members who are not "interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended. In order to recommend a nominee, a
shareholder should send a letter to the chairperson of the Nominating and
Corporate Governance Committee, Professor Meyer Feldberg, care of the Secretary
of the registrant at UBS Global Asset Management (US) Inc., 51 West 52nd Street,
New York, New York 10019-6114, and indicate on the envelope "Nominating and
Corporate Governance Committee." The shareholder's letter should state the
nominee's name and should include the nominee's resume or curriculum vitae, and
must be accompanied by a written consent of the individual to stand for election
if nominated for the Board and to serve if elected by shareholders.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940, as amended) are effective based on their evaluation of
these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) The registrant's principal executive officer and principal financial
officer are aware of no changes in the registrant's internal control
over financial reporting that occurred during the registrant's most
recent fiscal half-year that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Code of Ethics as required pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 (and designated by registrant as a "Code of
Conduct") is incorporated by reference herein from Exhibit EX-99 CODE
ETH to the registrant's Report on Form N-CSR filed December 30, 2003
(Accession Number: 0001206774-03-000909) (SEC File No. 811-07540).
(a) (2) Certifications of principal executive officer and principal
financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 is attached hereto as Exhibit EX-99.CERT.
(b) Certifications of principal executive officer and principal financial
officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
attached hereto as Exhibit EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Global High Income Dollar Fund Inc.
By: /s/ Joseph A. Varnas
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Joseph A. Varnas
President
Date: December 29, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Joseph A. Varnas
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Joseph A. Varnas
President
Date: December 29, 2004
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By: /s/ Thomas Disbrow
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Thomas Disbrow
Treasurer
Date: December 29, 2004
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