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 (Americas) Inc.
51 West 52nd Street
New York, NY 10019-6114
(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
Date of fiscal year end: October 31
Date of reporting period: April 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
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[LOGO OF UBS] UBS Global Asset
Management
GLOBAL HIGH INCOME
DOLLAR FUND INC.
SEMIANNUAL REPORT
APRIL 30, 2006
GLOBAL HIGH INCOME DOLLAR FUND INC.
June 15, 2006
DEAR SHAREHOLDER,
We are pleased to present you with the semiannual report for Global High Income
Dollar Fund Inc. (the "Fund") for the six-month period ended April 30, 2006.
During the reporting period, the Fund completed a successful nontransferable
rights offering. This offering provided shareholders the opportunity to purchase
additional shares at a discount to the prevailing market price. In addition, the
new proceeds enabled the Fund to pursue investment opportunities without selling
holdings to generate capital for those purchases. This mitigated the need for
the Fund to record realized capital gains (through the sale of securities), and
generally improved the Fund's tax and trading efficiency.
PERFORMANCE
Over the six-month period ended April 30, 2006, the Fund's net asset value
return was 7.33%, compared with the 5.59% median net asset value return of its
Lipper peer group, the Lipper Emerging Markets Debt Funds, and the 4.85% return
of its benchmark, the J.P. Morgan Emerging Markets Bond Index--Global (the
"Index"). On a market price basis, the Fund declined 1.91% over the six-month
period, compared with its Lipper peer group's median market price return of
5.91% over the same timeframe. (For more on the Fund's performance, please refer
to "Performance at a Glance" on page 6.)
The Fund did not use leverage during the period. Leverage magnifies returns on
both the upside and on the downside, and creates a wider range of returns within
the Fund's peer group.
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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 (Americas) Inc.
COMMENCEMENT:
October 8, 1993
NYSE SYMBOL:
GHI
DIVIDEND PAYMENTS:
Monthly
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AN INTERVIEW WITH PORTFOLIO MANAGER UWE SCHILLHORN
Q. WHY WAS THE FUND'S MARKET PRICE RETURN SO DIFFERENT FROM ITS LIPPER PEER
GROUP'S?
A. Many factors can affect whether investors are willing to pay more or less for
a fund than the net asset value of the shares, and hence,
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1
GLOBAL HIGH INCOME DOLLAR FUND INC.
whether a fund trades at a premium or a discount. Throughout the reporting
period, the Fund continued to trade at a premium to its underlying net asset
value, although that price difference narrowed as the period progressed.
During the past six months, interest rates rose substantially, and emerging
markets debt performance was rather volatile, particularly during the second
half of the Fund's reporting period. After the period ended, that volatility
continued as many emerging markets debt indexes declined. While it is
difficult to predict how the market will react, any significant developments
or price changes within emerging markets could potentially impact the Fund's
market price.
Looking back, while both market volatility and rising interest rates may have
had an effect on the Fund's market price during the semiannual period, the
Fund's management team ultimately is unable to predict whether the Fund will
trade at a discount or a premium, as there are many external factors that
influence market trading.
Q. HOW DID EMERGING MARKETS DEBT PERFORM OVER THE PERIOD?
A. Emerging markets debt continued to post solid returns during what was a
relatively challenging period for fixed income investors. On a global level,
interest rates in the United States and in other developed nations continued
to rise, reflecting both the good health of worldwide economies and the
desire of central banks to temper that growth and keep inflation in check.
In general, as interest rates rose over the last six months, bond yields
rose with them, which was an issue of some concern to us. As yields on
developed markets bonds continued to rise, yields in emerging markets did
not keep pace. This was especially true during the first quarter of 2006,
when yield spreads between US Treasuries and similarly dated emerging
markets debt tightened by more than 40 basis points. (Yield spread is the
difference in yield between bonds. A basis point is one one-hundredth of one
percent.)
Although tightening spreads are generally a positive event for current bond
holders, they can potentially have a detrimental effect on the global demand
for emerging markets debt. When yields on developed markets bonds are high,
investors may have less incentive to take on the incremental risk associated
with investing in emerging markets. In this type of environment, we believe
that active management through disciplined country, sector and security
selection becomes particularly important. Although security selection
detracted slightly from our returns during the period, our country
allocation decisions more than made up for it, and added significantly to
Fund performance on a net asset value basis.
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2
GLOBAL HIGH INCOME DOLLAR FUND INC.
Q. WITH THAT IN MIND, WERE THERE ANY SIGNIFICANT THEMES AT THE REGIONAL LEVEL?
A. Emerging market economies in general appeared to be on solid footing
throughout the period, which was a positive for the Fund. For the most part,
the economies of Latin America continued to expand in concert, with certain
countries in the region exceeding growth expectations. We found this region
to be relatively attractive given its recent strength. Argentina represented
the Fund's largest overweight position versus the Index at period end, and
our position there benefited performance.
For years, inflation in Argentina spiraled out of control, devaluing the
country's currency to nearly worthless levels. Over the last several years,
however, the government has taken significant steps to restructure debts and
stabilize its currency. Similarly, Ecuador has also shown signs of
improvement, and although our position there is not as significant, it did
help Fund performance.
Q. WHAT OTHER EMERGING MARKETS HAD A SIGNIFICANT IMPACT ON PERFORMANCE?
A. Mexico, Brazil and Venezuela were all rather significant underweight
positions during the period, primarily because we believed other countries in
the region--such as Argentina and Ecuador--represented more attractive
opportunities. Although those three countries posted positive returns during
the period, our active allocation into other investment opportunities
benefited performance.
Our position in Turkey had a mixed effect on relative returns. For several
years, Turkey has sought membership in the European Union, and market demand
for the country's debt has fluctuated based in part on how likely investors
felt the nation's admittance was. Although we have at times held a larger
exposure to Turkey, at the end of the period, we believed the country's debt
was generally overvalued, and we were underweight as a result.
The Ivory Coast was another noteworthy country. Spreads there tightened
substantially over the period as political improvements indicated that a
more stable economy may be on the horizon. After three years of civil war,
there are some signs that the country's government is gaining support, which
we investors see as key in rebuilding the nation's impoverished economy. We
had a relatively small position in the Ivory Coast, but our exposure
contributed positively to total returns.
Q. IN TERMS OF YIELD CURVE POSITIONING, HOW DID YOU STRUCTURE THE PORTFOLIO
DURING THE PERIOD?
A. We had anticipated a global increase in interest rates during the past six
months and positioned the portfolio accordingly. The Fund's US
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3
GLOBAL HIGH INCOME DOLLAR FUND INC.
interest rate duration was below that of the Index, making the Fund less
sensitive to US rate increases, which helped performance. The US Federal
Reserve Board (the "Fed") continued its tightening campaign, raising
short-term rates four times during the period and once more after the period
ended, bringing the federal funds rate to 5.00%. (The federal funds rate is
the interest rate banks charge each other for overnight loans.) Our
short-duration positioning added to returns as yields rose during the period.
Q. WHAT IS YOUR GENERAL OUTLOOK FOR EMERGING MARKETS DEBT OVER THE COMING
MONTHS?
A. We believe that given the recent strong performance in emerging markets
debt, country weightings and security selection should be of heightened
importance. We also believe that our active allocation process should enable
the Fund's management team to identify those risks our analysis indicates
are most likely to be appropriately compensated, and to structure the
portfolio accordingly. We believe such a strategy is likely to help the Fund
prudently pursue its investment objectives over the coming months.
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4
GLOBAL HIGH INCOME DOLLAR FUND INC.
We thank you for your continued support, and welcome any comments or questions
you may have. For additional information on the UBS family of funds,* please
contact your financial advisor or visit us at www.ubs.com/globalam-us.
Sincerely,
/s/ W. Douglas Beck
W. Douglas Beck, CFA
President
Global High Income Dollar Fund Inc.
Executive Director
UBS Global Asset Management (Americas) Inc.
/s/ Uwe Schillhorn
Uwe Schillhorn, CFA
Portfolio Management Team Member
Global High Income Dollar Fund Inc.
Executive Director
UBS Global Asset Management (Americas) Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the six months ended April 30, 2006. The views and opinions in
the letter were current as of June 15, 2006. They are not guarantees of
performance or investment results, and should not be taken as investment advice.
Investment decisions reflect a variety of factors, and we reserve the right to
change our views about individual securities, sectors and markets at any time.
As a result, the views expressed should not be relied upon as a forecast of the
Fund's future investment intent.
We encourage you to consult your financial advisor regarding your personal
investment program.
* MUTUAL FUNDS ARE SOLD BY PROSPECTUS ONLY. YOU SHOULD READ IT CAREFULLY AND
CONSIDER A FUND'S INVESTMENT OBJECTIVES, RISKS, CHARGES, EXPENSES AND OTHER
IMPORTANT INFORMATION CONTAINED IN THE PROSPECTUS BEFORE INVESTING.
PROSPECTUSES FOR MOST OF OUR FUNDS CAN BE OBTAINED FROM YOUR FINANCIAL
ADVISOR, BY CALLING UBS FUNDS AT 800-647 1568 OR BY VISITING OUR WEB SITE AT
WWW.UBS.COM/GLOBALAM-US.
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5
GLOBAL HIGH INCOME DOLLAR FUND INC.
PERFORMANCE AT A GLANCE (UNAUDITED)
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 4/30/06
TOTAL RETURNS 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
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GLOBAL HIGH INCOME DOLLAR FUND INC.
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Net asset value* 7.33% 16.64% 15.39% 12.89%
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Market price* -1.91% 5.40% 17.45% 15.54%
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LIPPER EMERGING MARKETS DEBT FUNDS MEDIAN**
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Net asset value* 5.59% 15.41% 16.41% 13.25%
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Market price* 5.91% 6.26% 14.84% 13.12%
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J.P. MORGAN EMBI GLOBAL INDEX* 4.85% 11.97% 12.17% 12.10%
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* Past performance does not predict future performance. The return and value
of an investment will fluctuate, so that an investor's Fund shares, when
sold, may be worth more or less than their original cost. Fund net asset
value ("NAV") return assumes, for illustration only, that
dividends/distributions were reinvested at the NAV on the payable dates.
Fund market price returns assume that dividends/distributions were
reinvested under the Dividend Reinvestment Plan. NAV and market price
returns for periods of less than one year have not been annualized.
Returns do not reflect taxes that a shareholder would pay on Fund dividends/
distributions or brokerage commissions and taxes on the sale of Fund shares.
** Lipper peer group data calculated by Lipper Inc.; used with permission. The
Lipper median is the return of the fund that places in the middle of the
peer group.
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6
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO STATISTICS (UNAUDITED)
CHARACTERISTICS* 4/30/06 10/31/05 4/30/05
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Net Asset Value $14.91 $15.72 $15.15
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Market Price $15.50 $17.82 $17.31
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12-Month Dividends/Distributions $2.6258 $2.8920 $3.0134
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Dividend/Distribution at Period-End $0.1116 $0.1194 $0.1391
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Net Assets (mm) $322.0 $305.7 $294.5
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CURRENCY EXPOSURE** 4/30/06 10/31/05 4/30/05
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US Dollar Denominated 86.4% 78.4% 86.7%
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Non US Dollar Denominated 13.6 21.6 13.3
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TOTAL 100.0% 100.0% 100.0%
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TOP 10 COUNTRIES OTHER THAN US** 4/30/06 10/31/05 4/30/05
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Argentina 15.3% Brazil 17.6% Brazil 16.9%
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Brazil 13.1 Argentina 15.2 Russia 16.2
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Russia 9.8 Russia 11.2 Mexico 10.2
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Mexico 9.1 Mexico 7.0 Argentina 10.1
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Peru 5.3 Qatar 5.7 Qatar 4.6
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Philippines 4.6 Malaysia 5.5 Turkey 4.5
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Malaysia 4.1 Philippines 5.4 Germany 3.7
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Turkey 3.9 Venezuela 3.5 Philippines 3.5
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Uruguay 3.8 Turkey 3.4 Colombia 3.5
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Venezuela 3.4 Peru 3.2 Malaysia 2.9
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TOTAL 72.4% 77.7% 76.1%
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CREDIT QUALITY** 4/30/06 10/31/05 4/30/05
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A 3.0% 6.4% 8.5%
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BBB 17.6 18.0 27.8
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BB 33.6 29.4 32.8
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B 21.0 18.8 5.7
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CCC 2.8 1.9 3.6
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Selective Default - - 1.8
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Non-Rated 14.2 19.4 10.9
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Cash Equivalents 7.7 4.6 8.4
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Other assets, less liabilites 0.1 1.5 0.5
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TOTAL 100.0% 100.0% 100.0%
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* Prices and other characteristics will vary over time.
** Weightings represent percentages of net assets of the entire Fund 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. ("S&P"), to individual portfolio holdings. S&P is an
independent ratings agency.
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7
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2006 (UNAUDITED)
FACE
AMOUNT VALUE
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INTERNATIONAL BONDS -- 91.71%
ARGENTINA -- 14.85%
Banco de Galicia y Buenos Aires
5.000%, due 01/01/14+ ........................................... $ 8,810,000 $ 7,730,775
8.190%, due 01/01/10++ .......................................... 1,500,000 1,501,500
11.000%, due 01/01/19+ .......................................... 772,669 836,414
Republic of Argentina++
3.000%, due 04/30/13 ............................................ 2,820,000 2,067,060
Republic of Argentina++ (a)
4.889%, due 08/03/12 ............................................ 20,132,000 16,739,758
Republic of Argentina, DISC++
5.830%, due 12/31/33 ............................................ ARS 44,931,571 18,952,686
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47,828,193
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BRAZIL -- 12.35%
Brazil Real Credit-Linked Note, 144A @
12.337%, due 01/05/10 ........................................... $ 6,026,619 4,078,318
15.495%, due 01/03/07 ........................................... 3,192,333 2,908,498
Brazil Real Credit-Linked Note, 144A
18.870%, due 01/05/10 ........................................... BRL 19,570,000 5,623,201
Federal Republic of Brazil
7.875%, due 03/07/15 ............................................ $ 2,140,000 2,305,850
8.250%, due 01/20/34 ............................................ 2,470,000 2,691,065
8.750%, due 02/04/25 ............................................ 7,620,000 8,610,600
8.875%, due 10/14/19 ............................................ 2,080,000 2,397,200
11.000%, due 01/11/12 ........................................... 6,550,000 8,027,025
Federal Republic of Brazil, EXIT Bond
6.000%, due 09/15/13 ............................................ 3,124,983 3,123,420
------------
39,765,177
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COLOMBIA -- 1.01%
Republic of Colombia
10.500%, due 07/09/10 ........................................... $ 2,800,000 3,248,000
------------
DOMINICAN REPUBLIC -- 2.44%
Republic of Dominican
9.500%, due 09/27/11 ............................................ $ 7,313,619 7,862,140
------------
ECUADOR -- 2.82%
Republic of Ecuador+
9.000%, due 08/15/30 ............................................ $ 3,840,000 3,974,400
Republic of Ecuador, 144A+
9.000%, due 08/15/30 ............................................ 4,945,000 5,118,075
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9,092,475
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8
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2006 (UNAUDITED)
FACE
AMOUNT VALUE
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INTERNATIONAL BONDS -- (CONTINUED)
EL SALVADOR -- 1.73%
Republic of El Salvador
7.750%, due 01/24/23 ............................................ $ 1,290,000 $ 1,399,650
8.250%, due 04/10/32 ............................................ 3,870,000 4,179,600
------------
5,579,250
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INDONESIA -- 2.32%
Indonesia Government Credit-Linked Note, 144A
11.000%, due 10/15/14 ........................................... IDR 4,000,000,000 434,903
Republic of Indonesia
7.250%, due 04/20/15 ............................................ $ 581,000 596,978
Republic of Indonesia, 144A
6.750%, due 03/10/14 ............................................ 1,140,000 1,134,300
6.875%, due 03/09/17 ............................................ 1,165,000 1,153,350
7.250%, due 04/20/15 ............................................ 1,459,000 1,499,122
7.500%, due 01/15/16 ............................................ 1,270,000 1,317,625
8.500%, due 10/12/35 ............................................ 1,210,000 1,331,000
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7,467,278
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IRAQ -- 0.80%
Republic of Iraq, 144A
5.800%, due 01/15/28 ............................................ $ 3,790,000 2,586,675
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MALAYSIA -- 4.07%
Johor Corp.
1.000%, due 07/31/12 ............................................ MYR 43,970,000 13,100,028
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MEXICO -- 9.09%
Conproca S.A. de C.V.
12.000%, due 06/16/10 ........................................... $ 1,145,000 1,328,200
PEMEX Finance Ltd.
8.020%, due 05/15/07 ............................................ 341,667 345,411
PEMEX Project Funding Master Trust
8.625%, due 02/01/22 ............................................ 9,250,000 10,683,750
United Mexican States
5.875%, due 01/15/14 ............................................ 2,260,000 2,228,360
7.500%, due 04/08/33 ............................................ 8,582,000 9,397,290
8.300%, due 08/15/31 ............................................ 4,450,000 5,284,375
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29,267,386
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PAKISTAN -- 1.03%
Islamic Republic of Pakistan
6.750%, due 02/19/09 ............................................ $ 3,300,000 3,308,250
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9
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2006 (UNAUDITED)
FACE
AMOUNT VALUE
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INTERNATIONAL BONDS -- (CONTINUED)
PERU -- 5.32%
Republic of Peru
7.350%, due 07/21/25 ............................................ $ 1,450,000 $ 1,435,500
8.375%, due 05/03/16 ............................................ 1,340,000 1,459,260
8.750%, due 11/21/33 ............................................ 4,400,000 4,961,000
9.125%, due 02/21/12 ............................................ 1,755,000 1,949,805
9.875%, due 02/06/15 ............................................ 1,550,000 1,840,625
Republic of Peru, DISC++
5.875%, due 03/07/27 ............................................ 2,970,000 2,821,500
Republic of Peru, FLIRB++
5.000%, due 03/07/17 ............................................ 2,783,900 2,658,625
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17,126,315
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PHILIPPINES -- 4.63%
National Power Corp.
9.625%, due 05/15/28 ............................................ $ 6,280,000 7,017,900
9.875%, due 03/16/10 ............................................ 3,610,000 3,998,075
Republic of Philippines
7.750%, due 01/14/31 ............................................ 3,870,000 3,899,025
------------
14,915,000
------------
QATAR -- 2.89%
State of Qatar
9.750%, due 06/15/30 ............................................ $ 6,540,000 9,319,500
------------
RUSSIA -- 9.77%
Aries Vermogensverwaltungs, 144A
9.600%, due 10/25/14 ............................................ $ 3,500,000 4,357,500
Russian Federation+
5.000%, due 03/31/30 ............................................ 10,100,000 10,958,500
Russian Federation, 144A+
5.000%, due 03/31/30 ............................................ 9,153,589 9,931,644
Russian Federation
12.750%, due 06/24/28 ........................................... 1,420,000 2,481,450
Russian Gazprom Credit-Linked Note, 144A
8.110%, due 01/18/07 ............................................ RUB 34,500,000 1,281,186
Russian Ruble Credit-Linked Note, 144A
7.580%, due 10/09/07 ............................................ 66,000,000 2,450,966
------------
31,461,246
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SERBIA -- 2.63%
Republic of Serbia+
3.750%, due 11/01/24 ............................................ $ 9,500,000 8,478,750
------------
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10
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2006 (UNAUDITED)
FACE
AMOUNT VALUE
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INTERNATIONAL BONDS -- (CONCLUDED)
TURKEY -- 4.69%
Republic of Turkey
8.000%, due 02/14/34 ............................................ $ 7,240,000 $ 7,746,800
9.000%, due 06/30/11 ............................................ 3,610,000 4,034,175
Republic of Turkey Credit-Linked Note
15.000%, due 02/10/10 ........................................... TRY 1,000,000 826,843
Republic of Turkey Credit-Linked Note 144A @
0.000%, due 02/11/10 ............................................ $ 2,500,000 2,490,075
------------
15,097,893
------------
UKRAINE -- 0.72%
ING Bank NV Credit-Linked Note
11.890%, due 12/30/09 ........................................... UAH 8,270,000 1,736,453
NAK Naftogaz Ukrainy
8.125%, due 09/30/09 ............................................ $ 600,000 584,250
------------
2,320,703
------------
URUGUAY -- 3.81%
Republic of Uruguay
6.875%, due 01/19/16 ............................................ EUR 7,830,000 10,322,853
7.625%, due 03/21/36 ............................................ $ 1,980,000 1,950,300
------------
12,273,153
------------
VENEZUELA -- 3.43%
Republic of Venezuela
5.375%, due 08/07/10 ............................................ $ 1,260,000 1,222,200
9.375%, due 01/13/34 ............................................ 7,730,000 9,809,370
------------
11,031,570
------------
VIETNAM -- 1.31%
Socialist Republic of Vietnam, 144A
6.875%, due 01/15/16 ............................................ $ 4,100,000 4,223,000
------------
Total International Bonds (Cost $278,031,899) ...................... 295,351,982
------------
NUMBER OF
RIGHTS
---------
RIGHTS -- 0.02%
MEXICO -- 0.02%
United Mexican States Value Recovery Rights,
Series D, Expiration Date 06/30/06 (b) .......................... 1,885,000 12,252
United Mexican States Value Recovery Rights,
Series E, Expiration Date 06/30/07 (b) .......................... 1,885,000 49,010
------------
Total Rights (Cost $0) ............................................. 61,262
------------
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11
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2006 (UNAUDITED)
NUMBER OF
WARRANTS VALUE
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WARRANTS -- 0.47%
ARGENTINA -- 0.47%
Republic of Argentina, expires 12/15/35 (c) ........................ 51,648,103 $ 1,507,726
------------
Total Warrants (Cost $348,001) ..................................... 1,507,726
------------
FACE
AMOUNT
-----------------
SHORT-TERM INVESTMENTS -- 7.66%
US GOVERNMENT OBLIGATIONS -- 0.22%
US Treasury Bills,
4.285%, due 07/06/06 (d) ........................................ $ 705,000 699,101
------------
SHARES
----------
OTHER* -- 7.44%
UBS Supplementary Trust -- US Cash Management Prime Fund,
4.907%** ........................................................ 23,951,202 23,951,202
------------
Total Short-Term Investments (Cost $24,650,709) .................... 24,650,303
------------
Total Investments (Cost $303,030,609) -- 99.86% .................... 321,571,273
Cash and other assets, less liabilities -- 0.14% ................... 461,506
------------
Net Assets -- 100.00% .............................................. $322,032,779
============
NOTES TO SCHEDULE OF INVESTMENTS
Note: The Portfolio of Investments is listed by the issuer's country of
origin.
+ Reflects rate at April 30, 2006 on step coupon rate instruments.
++ Reflects rate at April 30, 2006 on floating rate instruments.
@ Reflects annualized yield at April 30, 2006 on zero coupon bonds.
* Security is issued by a fund that is advised by the same advisor as
the Fund.
** Interest rate reflects yield at April 30, 2006.
(a) Bond interest in default.
(b) Rights do not currently accrue income. Quarterly income, if any, will
vary based on several factors including oil exports, prices and
inflation.
(c) Security represents an equity claim linked to Argentina's Gross
Domestic Product.
(d) All or a portion of this security was pledged to cover margin
requirements for futures contracts.
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 April 30, 2006 the value of these securities
amounted to $51,919,438 or 16.12% of net assets.
ARS Argentina Peso
BRL Brazilian Real
DISC Discount Bond
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12
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2006 (UNAUDITED)
EUR Euro
EXIT Bond A long-term bond with a low interest rate, often issued by a less
developed country, that gives the buyer the right of exemption from
taking part in any subsequent rescheduling.
FLIRB Front Loaded Interest Reduction Bond
IDR Indonesian Rupiah
MYR Malaysian Ringgit
RUB Russian Ruble
TRY New Turkish Lira
UAH Ukraine Hryvnia
FORWARD FOREIGN CURRENCY CONTRACTS
Global High Income Dollar Fund Inc. had the following open forward foreign
currency contracts as of April 30, 2006:
UNREALIZED
CONTRACTS TO IN MATURITY APPRECIATION/
DELIVER EXCHANGE FOR DATES (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------
Brazilian Real 18,500,000 USD 8,632,758 05/25/06 $ (165,854)
- --------------------------------------------------------------------------------------------------------
Euro 18,770,000 USD 22,890,578 07/20/06 (908,281)
- --------------------------------------------------------------------------------------------------------
New Turkish Lira 5,418,347 USD 3,241,026 04/27/07 (589,277)
- --------------------------------------------------------------------------------------------------------
United States Dollar 3,528,719 TRY 5,688,347 04/27/07 301,585
- --------------------------------------------------------------------------------------------------------
Total net unrealized depreciation on forward foreign currency contracts $(1,361,827)
========================================================================================================
CURRENCY TYPE ABBREVIATIONS:
TRY New Turkish Lira
USD United States Dollar
FUTURES CONTRACTS
Global High Income Dollar Fund Inc. had the following open futures contracts as
of April 30, 2006:
UNREALIZED
EXPIRATION CURRENT APPRECIATION/
DATE PROCEEDS VALUE (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------
INDEX FUTURES PURCHASE CONTRACTS:
10 Year US Treasury Note, 350 contracts June 2006 $37,013,900 $36,952,344 $ (61,556)
- --------------------------------------------------------------------------------------------------------------
INDEX FUTURES SALE CONTRACTS:
5 Year US Treasury Note, 30 contracts June 2006 3,152,693 3,124,688 28,005
- --------------------------------------------------------------------------------------------------------------
30 Year US Treasury Bond, 355 contracts June 2006 40,123,305 37,929,531 2,193,774
- --------------------------------------------------------------------------------------------------------------
Total net unrealized appreciation on futures contracts $2,160,223
==============================================================================================================
The segregated aggregate market value of investments to cover margin
requirements for open futures positions at April 30, 2006 was $699,101.
- --------------------------------------------------------------------------------
13
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2006
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF APRIL 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
International Bonds:
International Corporate Bonds:
Capital Markets ................................................ 0.11%
Commercial Banks ............................................... 4.43
Construction & Engineering ..................................... 0.41
Diversified Financial Services ................................. 4.29
Electric Utilities ............................................. 3.42
Oil & Gas ...................................................... 3.50
------
Total International Corporate Bonds .................................. 16.16
Foreign Government Bonds .......................................... 75.55
------
Total International Bonds ............................................ 91.71
Rights ............................................................... 0.02
Warrants ............................................................. 0.47
Short-Term Investments ............................................... 7.66
------
Total Investments .................................................... 99.86
Cash and other assets, less liabilities .............................. 0.14
------
Net Assets ........................................................... 100.00%
------
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
14
GLOBAL HIGH INCOME DOLLAR FUND INC.
STATEMENT OF ASSETS AND LIABILITIES -- APRIL 30, 2006 (UNAUDITED)
- ------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities of unaffiliated issuers, at value
(cost - $279,079,407) $297,620,071
- ------------------------------------------------------------------------------------------------
Investments in securities of a related entity, at value
(cost - $23,951,202) 23,951,202
- ------------------------------------------------------------------------------------------------
Total investments 321,571,273
- ------------------------------------------------------------------------------------------------
Cash 408,938
- ------------------------------------------------------------------------------------------------
Foreign currency, at value (cost - $154,335) 157,164
- ------------------------------------------------------------------------------------------------
Interest receivable 4,254,255
- ------------------------------------------------------------------------------------------------
Due from broker 1,023,309
- ------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency contracts 301,585
- ------------------------------------------------------------------------------------------------
Unrealized appreciation on swap agreements 846,362
- ------------------------------------------------------------------------------------------------
Other assets 16,071
- ------------------------------------------------------------------------------------------------
Total assets 328,578,957
- ------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 3,829,850
- ------------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency contracts 1,663,412
- ------------------------------------------------------------------------------------------------
Payable to investment advisor and administrator 305,869
- ------------------------------------------------------------------------------------------------
Other payable 548,243
- ------------------------------------------------------------------------------------------------
Director's fees payable 3,010
- ------------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 195,794
- ------------------------------------------------------------------------------------------------
Total liabilities 6,546,178
- ------------------------------------------------------------------------------------------------
NET ASSETS:
Capital stock - $0.001 par value; 100,000,000 shares authorized;
21,591,836 shares issued and outstanding 299,244,249
- ------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (6,553,082)
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain from investment transactions 9,403,018
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, futures, swaps,
forward foreign currency transactions and other assets
and liabilities denominated in foreign currencies 19,938,594
- ------------------------------------------------------------------------------------------------
Net assets $322,032,779
- ------------------------------------------------------------------------------------------------
Net asset value per share $14.91
================================================================================================
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
15
GLOBAL HIGH INCOME DOLLAR FUND INC.
STATEMENT OF OPERATIONS
For the Six
Months Ended
April 30, 2006
(unaudited)
- ------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income net of foreign witholding taxes of $32,630 $9,695,775
- ------------------------------------------------------------------------------------
Affiliated interest 341,129
- ------------------------------------------------------------------------------------
Total income 10,036,904
- ------------------------------------------------------------------------------------
EXPENSES:
Investment advisory and administration fees 1,963,364
- ------------------------------------------------------------------------------------
Custody and accounting fees 127,072
- ------------------------------------------------------------------------------------
Reports and notices to shareholders 42,566
- ------------------------------------------------------------------------------------
Professional fees 42,494
- ------------------------------------------------------------------------------------
Transfer agency fees 12,397
- ------------------------------------------------------------------------------------
Listing fees 11,745
- ------------------------------------------------------------------------------------
Directors' fees 6,722
- ------------------------------------------------------------------------------------
Other expenses 16,384
- ------------------------------------------------------------------------------------
Total expenses 2,222,744
- ------------------------------------------------------------------------------------
Less: Fee waivers by investment advisor and administrator (144,325)
- ------------------------------------------------------------------------------------
Net expenses 2,078,419
- ------------------------------------------------------------------------------------
Net investment income 7,958,485
- ------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT ACTIVITIES:
Net realized gain (loss) from:
Investment transactions 9,320,813
- ------------------------------------------------------------------------------------
Futures 1,089,696
- ------------------------------------------------------------------------------------
Foreign currency transactions (177,332)
- ------------------------------------------------------------------------------------
Swap agreements (113,840)
- ------------------------------------------------------------------------------------
Net change in unrealized appreciation/(depreciation) of:
Investments 4,251,554
- ------------------------------------------------------------------------------------
Futures 967,630
- ------------------------------------------------------------------------------------
Swap agreements 773,899
- ------------------------------------------------------------------------------------
Other assets, liabilities and forward foreign currency transactions (942,061)
- ------------------------------------------------------------------------------------
Net realized and unrealized gains from investment activities 15,170,359
- ------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $23,128,844
====================================================================================
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
16
GLOBAL HIGH INCOME DOLLAR FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six
Months Ended For the
April 30, 2006 Year Ended
(unaudited) October 31, 2005
- ---------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $7,958,485 $19,853,788
- ---------------------------------------------------------------------------------------------
Net realized gain from investment transactions 9,320,813 34,163,837
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) from futures and
foreign currency transactions 912,364 (251,180)
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) from swap agreements (113,840) 56,487
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation of:
- ---------------------------------------------------------------------------------------------
Investments 4,251,554 (12,780,742)
- ---------------------------------------------------------------------------------------------
Futures 967,630 1,471,180
- ---------------------------------------------------------------------------------------------
Swap Agreements 773,899 72,463
- ---------------------------------------------------------------------------------------------
Other assets, liabilities and forward foreign
currency transactions (942,061) (37,034)
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 23,128,844 42,548,799
- ---------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (14,326,555) (31,225,937)
- ---------------------------------------------------------------------------------------------
Net realized gains (23,455,902) (24,993,580)
- ---------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (37,782,457) (56,219,517)
- ---------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from shares issued through rights
offering (net of offering costs of $389,000) 30,997,694 --
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from
capital shares transactions 30,997,694 --
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 16,344,081 (13,670,718)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 305,688,698 319,359,416
- ---------------------------------------------------------------------------------------------
End of period 322,032,779 305,688,698
- ---------------------------------------------------------------------------------------------
Distributions in excess of net investment income ($6,553,082) ($185,012)
- ---------------------------------------------------------------------------------------------
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
17
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
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. 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 for certain
liabilities. 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 US 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 on
the valuation date available prior to valuation. Securities which are listed on
US 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 (Americas) Inc., the investment advisor of
the Fund. 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
- --------------------------------------------------------------------------------
18
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
Board of Directors (the "Board"). All investments quoted in foreign currencies
will be valued weekly in US dollars on the basis of the foreign currency
exchange rates. Foreign currency exchange rates are generally determined as of
the close of the New York Stock Exchange ("NYSE"). Occasionally, events
affecting the value of foreign investments 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 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. The amortized cost method of valuation, which approximates market
value, generally is used to value short-term debt instruments with sixty day or
less remaining to maturity, unless the Board determines that this does not
represent fair value.
Prior to November 1, 2005, foreign currency exchange rates were generally
determined prior to the close of the NYSE. Occasionally, events affecting the
value of foreign investments and such exchange rates occurred between the time
at which they were determined and the close of the NYSE, which would not have
been reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities or currency exchange rates
occurred during such time periods, the securities were valued at their fair
value as determined in good faith by or under the direction of the Board.
Effective November 1, 2005, the Fund began using the foreign currency exchange
rates determined as of the close of regular trading on the NYSE.
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--Prior to November 1, 2005, the books and records
of the Fund were maintained in US dollars using the WM/Reuters closing spot
rates as of 4:00 pm London time. Effective November 1, 2005, the Fund began
using the foreign currency exchange rates determined as of the close of regular
trading on the NYSE. For purposes of calculating the US dollar equivalent value
of a non-US dollar denominated obligation, foreign currency amounts are
translated into US 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.
- --------------------------------------------------------------------------------
19
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
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 US 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 US 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 US 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
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
US 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 US 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.
- --------------------------------------------------------------------------------
20
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
Upon entering into a financial futures contract, the Fund is required to deliver
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.
SWAP AGREEMENTS--Total return swap agreements involve commitments to pay
interest in exchange for a market-linked return based on a notional amount. To
the extent the total return of the security or index underlying the transaction
exceeds or falls short of the offsetting interest rate obligation, the Fund will
receive a payment from or make a payment to the counterparty, respectively.
Total return swaps are marked-to-market daily, and the change, if any, is
recorded as unrealized appreciation or depreciation in the Statement of
Operations. Periodic payments received or made at the end of each measurement
period, but prior to termination, are recorded as realized gains or losses in
the Statement of Operations.
At April 30, 2006, the Fund had outstanding total return swap contracts with the
following terms:
PAYMENTS PAYMENTS
TERMINATION MADE BY RECEIVED BY UNREALIZED
NOTIONAL AMOUNT DATE THE FUND THE FUND APPRECIATION
- -----------------------------------------------------------------------------------------
USD 4,480,000 07/27/07 3.56708%* 11.75%+ $ 64,616
- -----------------------------------------------------------------------------------------
EUR 4,110,000 07/27/07 2.35975** 11.00++ 749,791
- -----------------------------------------------------------------------------------------
RUB 34,500,000 10/09/07 $1,396,580^ 7.58# 31,955
=========================================================================================
CURRENCY TYPE ABBREVIATIONS:
EUR Euro
RUB Russian Ruble
USD United States Dollar
* Rate based on 6 month LIBOR (USD - BBA)
** Rate based on 12 month LIBOR (EUR - BBA) plus 29 basis points.
+ Rate is equal to the interest amounts, if any, paid to holders of record of
Government of Jamaica bond, due 05/15/2011.
++ Rate is equal to the interest amounts, if any, paid to holders of record of
Government of Jamaica bond, due 07/27/2012.
^ Payment made on 09/27/05 to fully fund the swap.
# Rate is equal to the total return on the OAO Gazprom 7.58% bond, due
10/09/07.
BBA British Banking Association
- --------------------------------------------------------------------------------
21
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
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 US 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.
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 US companies and US
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
UBS Global Asset Management (US) Inc., ("UBS Global AM--US") served as the
Fund's Investment Advisor and Administrator until April 1, 2006. On April 1,
2006, the Fund's Investment Advisory and Administration Contract ("Advisory
Contract") was transferred from UBS Global AM--US to UBS Global Asset Management
(Americas) Inc. (UBS Global AM--Americas").
The transfer of the Advisory Contracts between sister companies occurred in
connection with an internal reorganization involving UBS Global AM--US and UBS
Global AM--Americas. The Fund's Board of Directors approved the transfer of the
Advisory Contract effective April 1, 2006. All of the personnel of UBS Global
AM--US who previously provided investment advisory services to the Fund continue
to provide investment advisory services to the Fund as employees of UBS Global
AM--Americas. UBS Global AM--Americas has the same contractual rights and
responsibilities under the Advisory and Administration Contract as those
previously held by
- --------------------------------------------------------------------------------
22
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
UBS Global AM--US. UBS Global AM--US and UBS Global AM--Americas are both
indirect wholly owned subsidiaries of UBS AG.
In accordance with the Advisory Contract, the Fund pays UBS Global AM--Americas
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.
Beginning August 1, 2005, UBS Global AM--US (and UBS Global AM--Americas as
successor advisor/administrator) has agreed to waive compensation otherwise
payable to it to reduce the fee it receives under the Advisory Contract so that
it is paid at the following rates:
AVERAGE WEEKLY NET ASSETS ADVISORY FEE
- --------------------------------------------------------------
Up to $200 million 1.25%
- --------------------------------------------------------------
Above $200 million 1.00%
==============================================================
The waiver will continue indefinitely unless the Board agrees to any change. At
April 30, 2006, the Fund owed UBS Global AM--Americas $305,869, which is
composed of $330,143 of investment advisory and administration fees less fees
waived of $24,274. For the six months ended April 30, 2006, UBS Global
AM--Americas waived $144,325 of investment advisory and administration fees from
the Fund.
The Fund invests in shares of the UBS Supplementary Trust -- US Cash Management
Prime Fund ("Supplementary Trust"). Supplementary Trust is a business trust
managed by UBS Global AM--Americas.
The Fund pays no management fees to Supplementary Trust. Distributions from
Supplementary Trust are reflected as interest income on the statement of
operations.
Amounts relating to those investments at April 30, 2006 and for the period ended
are summarized as follows:
% OF
SALES INTEREST NET
FUND PURCHASES PROCEEDS INCOME VALUE ASSETS
- --------------------------------------------------------------------------------------------
UBS Supplementary Trust --
US Cash Management
Prime Fund $122,530,833 $112,225,314 $341,129 $23,951,202 7.44%
============================================================================================
- --------------------------------------------------------------------------------
23
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
ADDITIONAL INFORMATION REGARDING COMPENSATION TO AFFILIATE OF A BOARD MEMBER
Effective March 1, 2005, Professor Meyer Feldberg accepted the position of
senior advisor to Morgan Stanley, resulting in his becoming an interested
director of the Fund. The Fund has been informed that Professor Feldberg's role
at Morgan Stanley does not involve matters directly affecting any UBS funds. UBS
Global AM--Americas may execute Fund portfolio transactions through Morgan
Stanley based on that firm's ability to provide best execution of the
transactions. For the six months ended April 30, 2006, the Fund purchased and
sold certain securities (e.g., fixed income securities) in principal trades with
Morgan Stanley having an aggregate value of $2,522,299. Morgan Stanley received
compensation in connection with these trades, which may have been in the form of
a "mark-up" or "mark-down" of the price of the securities, a fee from the issuer
for maintaining a commercial paper program, or some other form of compensation.
Although the precise amount of this compensation is not generally known by UBS
Global AM--Americas, UBS Global AM--Americas believes that under normal
circumstances it represents a small portion of the total value of the
transactions.
SECURITIES LENDING
The Fund may lend securities up to 331/3% of its total assets to qualified
broker-dealers or institutional investors. The loans are secured at all times by
cash, cash equivalents or US 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 US government securities held as
collateral, net of fee rebates paid to the borrower plus reasonable
administrative and custody fees. UBS Financial Services Inc., and other
affiliated broker-dealers have been approved as borrowers under the Fund's
securities lending program. UBS Securities LLC is the lending agent for each
Fund. For the period ended April 30, 2006, the Fund did not have any securities
on loan and the Fund did not owe UBS Securities LLC compensation as the Fund's
lending agent.
RIGHTS OFFERING
During the six months ended April 30, 2006, the Fund issued 2,152,169 shares in
connection with a rights offering of the Fund's common stock. Shareholders of
record on November 10, 2005, were issued one
- --------------------------------------------------------------------------------
24
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
non-transferable right for each share of common stock owned, entitling
shareholders the opportunity to acquire one newly issued share of common stock
for every three rights held. The rights offering commenced on November 10, 2005
and expired on December 20, 2005. The subscription price per share was the
greater of (i) the net asset value ("NAV") per share on December 20, 2005 (the
"expiration date") or (ii) 95% of the volume weighted average share price on the
New York Stock Exchange on the expiration date and four preceding business days.
The subscription price of the offer was $14.58. Offering costs attributed to the
rights offering in the amount of $389,000 were charged against additional
paid-in-capital.
CAPITAL STOCK
There are 100,000,000 shares of $0.001 par value common stock authorized and
21,591,836 shares outstanding at April 30, 2006. For the year ended October 31,
2005 and for the six months ended April 30, 2006, the Fund did not repurchase
any shares of common stock. Transactions in shares of common stock were as
follows:
SHARES AMOUNT
- --------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED APRIL 30, 2006:
Shares issued through rights offering 2,152,169 $30,997,694
==========================================================================
PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 2006, aggregate purchases and sales of
portfolio securities, excluding short-term securities, were $154,475,680 and
$160,035,132 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.
The tax character of distributions paid during the fiscal year ended October 31,
2005 were as follows:
DISTRIBUTIONS PAID FROM:
- -------------------------------------------------------------------------------
Ordinary income $31,225,937
- -------------------------------------------------------------------------------
Net realized long-term capital gains 24,993,580
- -------------------------------------------------------------------------------
$56,219,517
===============================================================================
- --------------------------------------------------------------------------------
25
GLOBAL HIGH INCOME DOLLAR FUND INC.
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED)
At October 31, 2005, the components of accumulated earnings on a tax basis were
as follows:
Undistributed ordinary income $6,575,976
- --------------------------------------------------------------------------
Undistributed long-term capital gains 17,879,944
- --------------------------------------------------------------------------
Net unrealized appreciation 12,838,324
- --------------------------------------------------------------------------
Total accumulated earnings $37,294,244
==========================================================================
The tax character of distributions paid and components of accumulated earnings
(deficit) on a tax basis for the current fiscal year will be calculated after
the Fund's fiscal year ended October 31, 2006.
The difference between book-basis and tax-basis net unrealized appreciation of
investments is attributable to premium amortization adjustments and wash sales.
During the fiscal year ended October 31, 2005, the Fund had no capital loss
carry-forwards to offset current year gains.
For federal income tax purposes, which was substantially the same as book
purposes, the tax cost of investments and the components of net unrealized
appreciation of investments at April 30, 2006 were as follows:
Tax cost of investments $303,030,609
=====================================================================================
Gross appreciation (investments having an excess of value over cost) $19,828,332
- -------------------------------------------------------------------------------------
Gross depreciation (investments having an excess of cost over value) (1,287,668)
- -------------------------------------------------------------------------------------
Net unrealized appreciation of investments $18,540,664
=====================================================================================
To reflect reclassifications arising from permanent "book/tax" differences for
the year ended October 31, 2005, accumulated undistributed net investment income
was increased by $11,470,084, and accumulated net realized gain from investment
activities was decreased by $11,470,084.
The difference is primarily due to tax treatment of paydown gains and losses,
distributions in excess of net investment income and adjustments for certain
debt obligations.
- --------------------------------------------------------------------------------
26
GLOBAL HIGH INCOME DOLLAR FUND INC.
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each period is
presented below:
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED OCTOBER 31,
APRIL 30, 2006 ---------------------------------------------
(UNAUDITED) 2005 2004 2003 2002+
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $15.72 $16.43 $15.92 $14.14 $14.16
- --------------------------------------------------------------------------------------------------------
Net investment income 0.38 1.02 0.98 1.02 1.04
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized
gains from investment activities 0.71* 1.17 1.27 2.44 0.52
- --------------------------------------------------------------------------------------------------------
Net increase from investment operations 1.09* 2.19 2.25 3.46 1.56
- --------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.69)(2) (1.61) (0.97) (1.13) (1.31)
- --------------------------------------------------------------------------------------------------------
Distributions from net realized
gains from investment transactions (1.21)(2) (1.29) (0.77) (0.53) --
- --------------------------------------------------------------------------------------------------------
Distributions from paid-in-capital -- -- -- (0.02) (0.27)
- --------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.90) (2.90) (1.74) (1.68) (1.58)
- --------------------------------------------------------------------------------------------------------
Net increase in net asset value
resulting from repurchase of
common stock -- -- -- -- --
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $14.91 $15.72 $16.43 $15.92 $14.14
- --------------------------------------------------------------------------------------------------------
MARKET VALUE, END OF PERIOD $15.50 $17.82 $18.31 $17.07 $13.87
- --------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN(1) (1.91)% 13.25% 18.68% 36.52% 19.38%
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (000's) $322,033 $305,689 $319,359 $309,516 $274,968
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets:
- --------------------------------------------------------------------------------------------------------
Before fee waivers by advisor 1.42%** 1.43% 1.40% 1.43% 1.43%
- --------------------------------------------------------------------------------------------------------
After fee waivers by advisor 1.32%** 1.41% 1.40% 1.43% 1.43%
- --------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets:
- --------------------------------------------------------------------------------------------------------
Before fee waivers by advisor 4.97%** 6.47% 6.18% 6.66% 7.23%
- --------------------------------------------------------------------------------------------------------
After fee waivers by advisor 5.07%** 6.49% 6.18% 6.66% 7.23%
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 52% 160% 140% 53% 57%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
27
GLOBAL HIGH INCOME DOLLAR FUND INC.
* Calculated using the average monthly shares outstanding for the period.
** Annualized.
1 Total investment return is calculated assuming a purchase of $10,000 of
common stock at the current market price on the first day of each period
reported and a sale at the current market price on the last day of each
period 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 would pay on Fund
dividends/distributions or a sale of Fund shares.
2 The actual sources of the Fund's fiscal year 2006 dividends/distributions
may be net investment income, net realized capital gains, return of
capital or a combination or the foregoing and may be subject to
retroactive recharacterization at the end of the Fund's fiscal year based
on tax regulations. Shareholders will be informed on the tax
characteristics of dividends/distributions after the close of the 2006
fiscal year.
+ 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.
- --------------------------------------------------------------------------------
28
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 2006. 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 2007. Shareholders are advised to consult their own tax advisors with
respect to the tax consequences of their investment in the Fund.
- --------------------------------------------------------------------------------
29
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 (Americas)
Inc. ("UBS Global AM"), an indirect wholly owned asset management subsidiary of
UBS AG.
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 various publications.
SHAREHOLDER MEETING INFORMATION
An annual meeting of shareholders of the Fund was held on February 3, 2006. At
the meeting, Richard Q. Armstrong, David J. Beaubien, Alan S. Bernikow, Richard
R. Burt, Meyer Feldberg, Bernard H. Garil and Heather R. Higgins were elected to
serve as board members until the next annual meeting of shareholders, or until
their successors are duly elected and qualified or until they retire, resign or
are earlier removed. The shares were voted as indicated below:
SHARES
SHARES WITHHOLD
TO VOTE FOR OR WITHHOLD AUTHORITY IN THE ELECTION OF: VOTED FOR AUTHORITY
- -----------------------------------------------------------------------------------------
Richard Q. Armstrong 16,655,644.631 391,675.643
- -----------------------------------------------------------------------------------------
David J. Beaubien 16,650,153.631 397,166.643
- -----------------------------------------------------------------------------------------
Alan S. Bernikow 16,663,834.672 383,485.602
- -----------------------------------------------------------------------------------------
Richard R. Burt 16,659,094.631 388,225.643
- -----------------------------------------------------------------------------------------
Meyer Feldberg 16,664,925.631 382,394.643
- -----------------------------------------------------------------------------------------
Bernard H. Garil 16,696,346.631 350,973.643
- -----------------------------------------------------------------------------------------
Heather R. Higgins 16,644,979.672 402,340.602
- -----------------------------------------------------------------------------------------
The Fund is not aware of any broker non-votes. (Broker non-votes are shares held
in street name for which the broker indicates that instructions have not been
received from the beneficial owners or other persons entitled to vote and for
which the broker does not have discretionary voting authority.)
- --------------------------------------------------------------------------------
30
GLOBAL HIGH INCOME DOLLAR FUND INC.
GENERAL INFORMATION (UNAUDITED)
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
Web site 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 AND RECORD
You may obtain a description of the Fund's (1) proxy voting policies, (2) proxy
voting procedures, and (3) information regarding how the Fund voted any proxies
related to portfolio securities during the 12-month period ended June 30, 2005,
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 Web site (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 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
- --------------------------------------------------------------------------------
31
GLOBAL HIGH INCOME DOLLAR FUND INC.
GENERAL INFORMATION (UNAUDITED)
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.
Pursuant to the policy as in effect from December 1999 through early May 2005,
the Fund made 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
- --------------------------------------------------------------------------------
32
GLOBAL HIGH INCOME DOLLAR FUND INC.
GENERAL INFORMATION (UNAUDITED)
unless the NYSE is closed that Friday). The Board approved reducing the
annualized rate for distribution pursuant to the policy from 11% to 9% effective
beginning with the June 2005 monthly distribution. 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 change or terminate the
managed distribution policy at any time; any such change or 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 percentage of its net assets) 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 reassess the annualized percentage of net assets at which the Fund's
monthly distributions will be made no less frequently than annually.
- --------------------------------------------------------------------------------
33
GLOBAL HIGH INCOME DOLLAR FUND INC.
BOARD APPROVAL OF INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT (UNAUDITED)
BACKGROUND--At a meeting of the board of Global High Income Dollar Fund Inc.
(the "Fund") on February 8, 2006, the members of the board, including the board
members who are not "interested persons" of the Fund ("Independent Directors"),
as defined in the Investment Company Act of 1940, as amended, considered and
approved the transfer of the current Investment Advisory and Administration
Agreement between the Fund and UBS Global Asset Management (US) Inc. ("UBS
Global AM") to UBS Global Asset Management (Americas) Inc. ("UBS Global
Americas"), an affiliate of UBS Global AM. The board received information and
materials about the proposed transfer both at its November 2005 meeting and at
its February 2006 meeting. In considering the approval of the transfer of the
Investment Advisory and Administration Agreement (such transfer referred to as
the "New Investment Advisory and Administration Agreement"), the board reviewed
a memorandum from UBS Global AM explaining the reasons for the proposed
transfer, including that the transfer would result in management efficiencies
and eliminate the duplication of functions that had resulted from having two
registered investment advisors, UBS Global AM and UBS Global Americas, providing
investment advisory services to the UBS funds. The board also reviewed material
provided by UBS Global AM on UBS Global Americas, including that the current
portfolio managers for the Fund would not change as a result of the transfer
from UBS Global AM to UBS Global Americas. The board also noted management's
explanation that any expenses resulting from the transfer would be borne by UBS
Global AM, and not the Fund. The board also received and reviewed a draft of an
opinion to be provided by Dechert LLP, counsel to the Fund, that the proposed
transfer would not be considered an "assignment" of the existing investment
advisory contract under the Investment Company Act of 1940, as amended, because
(1) there would be no change of actual control of the investment advisor to the
Fund; (2) there would be no change of management of the investment advisor to
the Fund; (3) the nature, quality and extent of the investment advisory services
provided by UBS Global AM under the current Investment Advisory and
Administration Agreement would not change as a result of the transfer; (4) the
transfer would not result in any change in the fundamental investment processes,
investment strategies or investment techniques currently employed by UBS Global
AM portfolio managers or other investment professionals in providing services to
the Fund; and (5) there would be no change to any of the material terms of the
Investment Advisory and Administration Agreements as a result of the transfer.
The board took note of its knowledge of UBS Global AM and
- --------------------------------------------------------------------------------
34
GLOBAL HIGH INCOME DOLLAR FUND INC.
BOARD APPROVAL OF INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT (UNAUDITED)
its affiliates, including UBS Global Americas, and the current Investment
Advisory and Administration Agreement for the Fund, including the extensive
materials it had reviewed at its annual contract renewal meeting in the summer
of 2005 for the Fund, and noted that it had at that time received a memorandum
from its independent legal counsel discussing, among other things, the duties of
board members in considering approval of advisory and administration agreements.
In its consideration of the approval of the New Investment Advisory and
Administration Agreement, the board considered the following factors:
NATURE, EXTENT AND QUALITY OF THE SERVICES UNDER THE NEW INVESTMENT ADVISORY AND
ADMINISTRATION AGREEMENT--The board took note that at its last annual contract
renewal meeting for the Fund, in connection with its review of the Fund's
advisory and distribution agreements, it had received and considered extensive
information regarding the nature, extent and quality of management services
generally provided to the Fund by UBS Global AM under the Investment Advisory
and Administration Agreement, and a description of the administrative and other
services rendered to the Fund and its shareholders by UBS Global AM and UBS
Global AM's role in coordinating providers of other services to the Fund,
including custody, accounting and transfer agency services. The board considered
management's explanation that UBS Global Americas would provide identical
services under the New Investment Advisory and Administration Agreement as were
provided by UBS Global AM under the current Investment Advisory and
Administration Agreement. The board's evaluation of the services to be provided
by UBS Global Americas to the Fund took into account the board's knowledge and
familiarity gained as board members of funds in the UBS New York fund complex,
including the scope and quality of investment management and other capabilities
and the quality of administrative and other services, and considered that based
on the materials presented to them these services would remain the same. The
board also considered, based on its knowledge of UBS Global AM and UBS Global
Americas, the financial resources available to UBS Global Americas and its
parent organization, UBS AG, one of the leading financial services companies in
the world.
The board concluded that, overall, it was satisfied with the nature, extent and
quality of services expected to be provided to the Fund under the New Investment
Advisory and Administration Agreement.
- --------------------------------------------------------------------------------
35
GLOBAL HIGH INCOME DOLLAR FUND INC.
BOARD APPROVAL OF INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT (UNAUDITED)
MANAGEMENT FEES--The board noted that the current contractual management fee for
the Fund under the current Investment Advisory and Administration Agreement was
not proposed to be changed under the New Investment Advisory and Administration
Agreement. The board also considered that at its most recent annual contract
renewal meeting during the summer of 2005 it had received and reviewed
information on the contractual management fee payable by the Fund to UBS Global
AM, including information on management fees paid by comparable funds. The board
recognized that the current fee arrangements would not change as a result of the
transfer.
Taking all of the above into consideration, the board determined that the
proposed contractual management fee was reasonable in light of the nature,
extent and quality of the services proposed to be provided to the Fund under the
New Investment Advisory and Administration Agreement.
FUND PERFORMANCE--The board took into consideration the reports on Fund
performance received by the board at each meeting and the more extensive review
and discussion of Fund performance at its most recent annual contract renewal
meeting. The board also noted that the transfer would not result in any change
in the fundamental investment processes, investment strategies or investment
techniques of the Fund and that no changes in the current Fund personnel
overseeing Fund management were proposed or anticipated as a result of the
transfer.
Based on its prior review and the more updated performance information provided,
the board concluded that the Fund's investment performance was satisfactory.
ADVISOR PROFITABILITY--As UBS Global Americas would be a new advisor to the
Fund, profitability of UBS Global Americas in providing services to the Fund was
not a primary factor considered by the board. The board did note that at its
most recent annual contract renewal meeting it received and considered a
profitability analysis of UBS Global AM and its affiliates in providing services
to the Fund and had determined at that time that UBS Global AM's profitability
was considered not excessive in light of the nature, extent and quality of the
services provided to the Fund. The board also recognized that the management fee
would not change as a result of the transfer and the services provided to the
Fund by UBS Global Americas would be identical to those currently provided by
UBS Global AM, making the profitability data received at its last contract
renewal meeting still of
- --------------------------------------------------------------------------------
36
GLOBAL HIGH INCOME DOLLAR FUND INC.
BOARD APPROVAL OF INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT (UNAUDITED)
some relevance. UBS Global AM also noted management's explanation that a
significant benefit of the transfer of the Investment Advisory and
Administration Agreement to UBS Global Americas was to reduce a regulatory
capital requirement imposed on UBS Global AM, which was expected to permit the
eventual transfer of certain financial assets owned by UBS Global AM to satisfy
regulatory requirements to other parts of UBS AG for other corporate purposes.
ECONOMIES OF SCALE--The board noted that it had previously considered whether
economies of scale in the provision of services to the Fund would be passed
along to the shareholders during its most recent consideration of the annual
renewal of the Investment Advisory and Administration Agreement and did not see
the need to reconsider this factor again in the context of the transfer of the
agreement to a sister investment advisor.
OTHER BENEFITS TO UBS GLOBAL AMERICAS--The board considered other benefits
received by UBS Global Americas and its affiliates as a result of its proposed
relationship with the Fund, including the potential opportunity to offer
additional products and services to Fund shareholders. The board also considered
the benefits to be realized when certain assets of UBS Global AM were freed from
certain regulatory requirements and were available to be paid as a dividend from
one part of UBS AG to another part of UBS AG for such purposes as UBS AG deemed
appropriate.
In light of the costs of providing investment management, administrative and
other services to the Fund and UBS Global America's expected ongoing commitment
to the Fund, the profits and other ancillary benefits that UBS Global Americas
and its affiliates received or would receive were considered reasonable.
In light of all of the foregoing, the board approved the New Investment Advisory
and Administration Agreement for the Fund.
No single factor reviewed by the board was identified by the board as the
principal factor in determining whether to approve the New Investment Advisory
and Administration Agreement. The Independent Directors were advised by separate
independent legal counsel throughout the process. The board discussed the
proposed approval of the New Investment Advisory and Administration Agreement in
a private session with their independent legal counsel at which no
representatives of UBS Global AM or UBS Global Americas were present.
- --------------------------------------------------------------------------------
37
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- --------------------------------------------------------------------------------
38
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- --------------------------------------------------------------------------------
39
(This page has been left blank intentionally)
- --------------------------------------------------------------------------------
40
DIRECTORS
Richard Q. Armstrong Meyer Feldberg
Chairman
Bernard H. Garil
David J. Beaubien
Heather R. Higgins
Alan S. Bernikow
Richard R. Burt
PRINCIPAL OFFICERS
W. Douglas Beck John Penicook
President Vice President
Mark F. Kemper Uwe Schillhorn
Vice President and Secretary Vice President
Thomas Disbrow
Vice President and Treasurer
INVESTMENT ADVISOR AND ADMINISTRATOR
UBS Global Asset Management (Americas) 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.
The financial information included herein is taken from the records of the Fund
without examination by independent registered accountants who do not express an
opinion thereon.
(C) 2006 UBS Global Asset Management (Americas) Inc. All rights reserved.
[LOGO OF UBS] UBS
-------------
PRESORTED
STANDARD
U.S. POSTAGE
PAID
COMPUTERSHARE
-------------
UBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC.
51 West 52nd Street
New York, New York 10019-6114
ITEM 2. CODE OF ETHICS.
- -----------------------
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual
report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
- -----------------------------------------
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual
report.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
- -----------------------------------------------
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual
report.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
- ----------------------------------------------
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual
report.
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.
- -------------------------------------------------------------------------
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual
report.
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, Mr.
Richard Burt, care of the Secretary of the registrant at UBS Global Asset
Management (Americas) 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 (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940, as amended) that occurred during the registrant's
last fiscal quarter 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 - Form N-CSR disclosure requirement not applicable to
this filing of a semi-annual report.
(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.
(a) (3) Written solicitation to purchase securities under Rule 23c-1 under
the Investment Company Act of 1940 sent or given during the period
covered by the report by or on behalf of the registrant to 10 or more
persons - The registrant has not engaged in such a solicitation during
the period covered by this report.
(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/ W. Douglas Beck
-------------------
W. Douglas Beck
President
Date: July 7, 2006
------------
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/ W. Douglas Beck
-------------------
W. Douglas Beck
President
Date: July 7, 2006
------------
By: /s/ Thomas Disbrow
------------------
Thomas Disbrow
Vice President and Treasurer
Date: July 7, 2006
------------