-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Izz92ajs8w61VicAUKtb1H7EvgUEp8RKoWYh+cvbADDzOx6Y1SoM6LYTn7d/xfpk gl2srt0jepzmoAslRt1nxQ== 0001047469-04-038567.txt : 20041229 0001047469-04-038567.hdr.sgml : 20041229 20041229165054 ACCESSION NUMBER: 0001047469-04-038567 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041031 FILED AS OF DATE: 20041229 DATE AS OF CHANGE: 20041229 EFFECTIVENESS DATE: 20041229 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL HIGH INCOME DOLLAR FUND INC CENTRAL INDEX KEY: 0000897996 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07540 FILM NUMBER: 041231614 BUSINESS ADDRESS: STREET 1: C/O UBS GLOBAL ASSET MANAGEMENT (US) INC STREET 2: 51 WEST 52ND ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212 882 5575 MAIL ADDRESS: STREET 1: C/O UBS GLOBAL ASSET MANAGEMENT (US) INC STREET 2: 51 WEST 52ND ST CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL OPPORTUNITIES INCOME FUND INC /MD/ DATE OF NAME CHANGE: 19930624 N-CSR 1 a2148032zn-csr.txt N-CSR 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 --------------------------------------------- Global High Income Dollar Fund Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 51 West 52nd Street, New York, New York 10019-6114 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Mark F. Kemper, Esq. UBS Global Asset Management (US) Inc. 51 West 52nd Street New York, NY 10019-6114 - ------------------------------------------------------------------------------- (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: October 31, 2004 ------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. [UBS GLOBAL ASSET MANAGEMENT LOGO] GLOBAL HIGH INCOME DOLLAR FUND INC. ANNUAL REPORT OCTOBER 31, 2004 GLOBAL HIGH INCOME DOLLAR FUND INC. December 15, 2004 DEAR SHAREHOLDER, We present you with the annual report for Global High Income Dollar Fund for the fiscal year ended October 31, 2004. PERFORMANCE Over the one-year period, Global High Income Dollar Fund's (the "Fund") net asset value return was 15.12%, outperforming the 13.41% return of its peers, as measured by the Lipper Emerging Markets Debt Funds median. On a market price basis, the Fund returned 18.68% over the fiscal year, outperforming the median's return of 12.47% over the same timeframe. (For more on the Fund's performance, please refer to "Performance At A Glance" on page 5.) The Fund's strong absolute and relative performance was largely the result of strong country and security allocation. The Fund did not use leverage during the reporting period as did some of its peers. Leverage tends to magnify a Fund's upside and downside returns. AN INTERVIEW WITH PORTFOLIO MANAGER UWE SCHILLHORN Q. HOW DID THE EMERGING DEBT MARKETS PERFORM OVER THE PERIOD? A. Emerging markets debt, as measured by the JP Morgan Emerging Markets Bond Index--Global (EMBI--G), came in strong, returning 12.79% over the fiscal year. In comparison, government bonds in developed markets returned 4.69%, as measured by the Citigroup World Government Bond Index (WGBI), on a currency-hedged basis in US dollars. The emerging debt markets experienced periods of volatility during the fiscal year, but ultimately generated strong results. As the reporting period began, solid economic growth in the US and abroad, improving credit trends and strong investor demand for higher yielding securities led to solid returns for emerging markets debt. However, as 2004 began, strengthening global economic growth quickly gave way to concerns over the increased likelihood of rising interest rates. This caused investors to become more risk averse, and demand for emerging markets debt fell sharply. [SIDENOTE] GLOBAL HIGH INCOME DOLLAR FUND INC. INVESTMENT GOALS: Primarily, high level of current income; secondarily, capital appreciation. PORTFOLIO MANAGEMENT: Portfolio Management Team, including Uwe Schillhorn UBS Global Asset Management (US) Inc. COMMENCEMENT: October 8, 1993 NYSE SYMBOL: GHI DIVIDEND PAYMENTS: Monthly 1 The markets' weakness persisted through the second quarter of 2004, before a sharp rally took place during the final four months of the fiscal year. Rising oil and commodity prices helped drive positive growth prospects in developing countries. In addition, it appeared that interest rates would be raised at a measured pace. This, combined with a number of positive country-specific events and rising investor demand, caused emerging markets debt spreads to decline sharply (a spread is the difference in yield between debt obligations of different categories). Q. WHAT WERE SOME OF THE PORTFOLIO POSITIONING STRATEGIES YOU EMPLOYED DURING THE FISCAL YEAR? A. Throughout the period, we proactively adjusted the portfolio's exposure in Brazil. Early in the period we held an overweight position in the country, as the Lula administration successfully met the country's fiscal deficit targets and championed tax and social security reform. ("Overweight" or "underweight" refers to the Fund's degree of investment in a category of investments versus that of a benchmark index.) However, in January 2004, we shifted to an underweight position. While economic growth in Brazil was expected to continue, we felt this was already priced into the market, and that there was limited upside potential for its debt. Our underweight position proved beneficial as Brazil's bonds subsequently declined in price. We then moved to a market weight in Brazil after spreads widened, and we felt they were more in line with the country's economic fundamentals. This adjustment enhanced performance as growth and fiscal performance in Brazil strengthened as the year progressed. Spreads then declined even further in September 2004, at which time Standard & Poor's raised the country's credit rating from B+ to BB-. Q. DID THE FUND'S DURATION POSITION AID PERFORMANCE OVER THE REPORTING PERIOD? A. Overall, our US interest rate duration strategy enhanced results. During the first half of the reporting period, the Fund was generally neutral versus the benchmark. However, we were underweight the five-year portion of the yield curve and overweight 30-year securities. This enhanced portfolio performance, as shorter-term securities underperformed as yields rose (and prices fell) and the longer end of the yield curve outperformed. In the second half of the reporting period, the Fund moved to an underweight position in 30-year securities versus the benchmark. This did not have any significant consequences on relative performance. 2 Q. WERE THERE ANY STRATEGIES THAT DETRACTED FROM RESULTS? A. While the Fund's overall country allocation position was a positive for performance over the fiscal year, there were a few strategies that detracted from results. For example, the Fund's underweight in Turkey was an overall negative for relative performance. We initially had no exposure to the country, as bond spreads were relatively low. However, spreads declined even further based on expectations that the country would gain membership in the European Economic Union (EEU). At that point, we believed spread levels were well past their intrinsic, or true, values. Spreads subsequently widened, and we took the opportunity to establish an approximate 5% allocation to the country, which was nearly in line with the benchmark. However, we again moved to a meaningful underweight in Turkey after a strong rally occurred in conjunction with positive news about the country's potential membership in the EEU. Oil-exporting countries performed well due to high oil prices. As a result, the Fund's underweight in Venezuela subsequently detracted from relative performance, although this was compensated for by an overweight in Ecuador. Q. HOW WERE YOU POSITIONED IN OTHER EMERGING MARKET COUNTRIES? A. We continued to have overweights in countries with relatively high credit quality that we believe were attractively valued given their underlying economic fundamentals. Such countries included Russia, Serbia and Bulgaria. Our overweight in performing Argentine local debt enhanced results, as Argentine US dollar-denominated debt performed well on the back of strong fiscal performance and expectations of further improvements in the country's debt-restructuring plans. We were mostly underweight in Mexico during the fiscal year. This did not have a material impact on performance, as Mexico did not outperform other emerging market countries in the same rating category. Q. WHAT IS YOUR OUTLOOK FOR THE GLOBAL ECONOMY AND EMERGING MARKETS DEBT IN THE COMING MONTHS? A. It is widely expected that the Federal Reserve Board will have to continue to raise interest rates at a measured pace. We don't expect spreads to tighten significantly from their current levels, as we believe the improving macroeconomic picture for many emerging markets has already been priced into their bond prices. We expect growth in emerging markets to remain relatively high, but somewhat lower than over the last 12 months. Based on this outlook, the Fund currently is neutrally positioned in terms of credit exposure. Presently, our interest rate duration remains shorter than that of the benchmark. 3 We thank you for your continued support and welcome any comments or questions you may have. For additional information on the UBS funds,* please contact your financial advisor or visit us at www.ubs.com. Sincerely, /s/ Joseph A. Varnas /s/ Uwe Schillhorn JOSEPH A. VARNAS UWE SCHILLHORN PRESIDENT PORTFOLIO MANAGEMENT TEAM MEMBER Global High Income Dollar Fund Inc. Global High Income Dollar Fund Inc. MANAGING DIRECTOR DIRECTOR UBS Global Asset Management (US) Inc. UBS Global Asset Management (US) Inc. * Mutual funds are sold by prospectus only. The prospectus contains more complete information regarding investment objectives, risks, charges and expenses, and should be read carefully before investing. This letter is intended to assist shareholders in understanding how the Fund performed during the fiscal year ended October 31, 2004, and reflects our views at the time of its writing. Of course, these views may change in response to changing circumstances, and they do no guarantee the future performance of the markets or the Fund. We encourage you to consult your financial advisor regarding your personal investment program. 4 PERFORMANCE AT A GLANCE (UNAUDITED) AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/04
NET ASSET VALUE RETURNS* 6 MONTHS 1 YEAR 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------ Global High Income Dollar Fund Inc. 13.05% 15.12% 15.70% 13.43% Lipper Emerging Market Debt Funds median** 11.35 13.41 17.27 14.16 MARKET PRICE RETURNS* Global High Income Dollar Fund Inc. 18.49% 18.68% 22.80% 16.98% Lipper Emerging Market Debt Funds median** 16.27 12.47 20.09 14.90
* Past Performance does not predict future performance. The return and value of an investment will fluctuate, so that an investor's shares, when sold, may be worth more or less than their original cost. NAV return assumes, for illustration only, that dividends were reinvested at the net asset value on the distribution dates. Market returns assume that dividends are reinvested at prices according to the dividend reinvestment plan. NAV and market price returns for periods of one year or less have not been annualized. Returns do not reflect taxes paid on dividends/distributions or brokerage commissions and taxes paid on the sale of shares. ** Lipper closed-end fund peer group data calculated by Lipper Inc.; used with permission. The Lipper median is the return of the fund that places in the middle of the Lipper Emerging Market Debt Funds peer group. 5 PORTFOLIO STATISTICS
CHARACTERISTICS* 10/31/04 4/30/04 10/31/03 - ----------------------------------------------------------------------------- Net Asset Value $ 16.43 $ 15.34 $ 15.92 Market Price $ 18.31 $ 16.26 $ 17.07 12-Month Dividends/ Distributions $ 1.7443 $ 1.7667 $ 1.6840 Dividend/Distribution at Period-End $ 0.1488 $ 0.1486 $ 0.1461 Net Assets (mm) $ 319.4 $ 298.2 $ 309.5 CURRENCY EXPOSURE** 10/31/04 4/30/04 10/31/03 - ------------------------------------------------------------------------------- U.S. Dollar Denominated 98.3% 95.8% 98.2% Foreign Denominated 1.7 4.2 1.8 TOTAL 100.0% 100.0% 100.0%
TOP 10 COUNTRIES (EXCLUDING U.S.)** 10/31/04 4/30/04 10/31/03 - ----------------------------------------------------------------------------------- Brazil 22.4% Brazil 21.4% Brazil 20.0% Russia 13.8 Russia 19.4 Russia 17.0 Mexico 10.1 Mexico 12.6 Mexico 14.4 Argentina 8.4 Argentina 4.9 Venezuela 5.0 Malaysia 4.4 Colombia 4.9 Trinidad & Tobago 3.2 Turkey 4.2 Venezuela 3.8 Panama 3.2 Philippines 3.6 Bulgaria 3.2 Malaysia 3.2 Colombia 3.5 Malaysia 3.2 Peru 2.7 Germany 3.1 Poland 2.4 Philippines 2.3 Ecuador 3.1 South Africa 2.3 Colombia 2.0 TOTAL 76.6% 78.1% 73.0% CREDIT QUALITY** 10/31/04 4/30/04 10/31/03 - ----------------------------------------------------------------------------------- A1/P1 -- -- 8.7% A 4.7% 13.4% 2.1 BBB 25.9 14.9 24.2 BB 41.3 34.9 28.2 B 8.6 26.7 22.4 CCC 9.3 7.0 8.9 Selective Default -- 0.9 1.9 Non-Rated 6.0 2.2 1.6 Cash Equivalents 3.2 -- -- Other assets less liabilities 1.0 -- -- Net Receivable -- -- 2.0 TOTAL 100.0% 100.0% 100.0%
* Prices and other characteristics will vary over time. ** Weightings represent percentages of net assets as of the dates indicated. The Fund's portfolio is actively managed and its composition will vary over time. Credit quality ratings shown are based on those assigned by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and/or Moody's Investors Services, Inc. to indvidual portfolio holdings. Both are independent ratings agencies. Past performance is no guarantee of future results. The value of an investment will fluctuate, so that an investor's shares, when sold, may be worth more or less than their original cost. 6 GLOBAL HIGH INCOME DOLLAR FUND INC. Portfolio of Investments -- October 31, 2004
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE - ---------------------------------------------------------------------------------------------------------------------------- FOREIGN DEBT SECURITIES--95.80% ARGENTINA--8.38% $ 5,270 Banco de Galicia y Buenos Aires 01/01/14 3.000%+ $ 3,566,209 21,940 Republic of Argentina (1) 08/03/12 1.980++ 16,871,860 ARS 4,270 Republic of Argentina 01/03/10 2.000 2,082,983 $ 3,950 Republic of Argentina 01/03/16 2.000 1,520,750 5,000 Republic of Argentina, PAR (1) 03/31/23 6.000 2,737,500 26,779,302 BAHAMAS--1.27% 3,760 Odebrecht Overseas Ltd., 144A 02/25/09 11.500 4,060,800 BRAZIL--22.35% 2,340 Braskem S.A., 144A 11/05/08 12.500 2,644,200 2,038 Federal Republic of Brazil 04/15/12 3.125++ 1,870,088 1,200 Federal Republic of Brazil 01/20/34 8.250 1,080,000 1,520 Federal Republic of Brazil 10/14/19 8.875 1,504,800 8,270 Federal Republic of Brazil 04/15/24 8.875 7,959,875 320 Federal Republic of Brazil 05/15/27 10.125 340,000 3,430 Federal Republic of Brazil 03/12/08 11.500 3,966,795 37,814 Federal Republic of Brazil, C 04/15/14 8.000 37,553,651 3,512 Federal Republic of Brazil, DCB 04/15/12 3.125++ 3,221,988 6,000 Federal Republic of Brazil, DISC 04/15/24 3.063++ 5,280,000 6,650 Federal Republic of Brazil, PAR 04/15/24 6.000++ 5,951,750 71,373,147 BULGARIA--0.96% 2,450 Republic of Bulgaria 01/15/15 8.250 3,059,438 COLOMBIA--3.48% 7,890 Republic of Colombia 04/09/11 9.750 9,113,097 1,840 Republic of Colombia 01/28/33 10.375 2,005,600 11,118,697 ECUADOR--3.12% 6,280 Republic of Ecuador 08/15/30 8.000+ 5,309,740 5,500 Republic of Ecuador, 144A 08/15/30 8.000+ 4,650,250 9,959,990 EL SALVADOR--1.43% 1,450 Republic of El Salvador 09/21/34 7.625 1,486,250 3,070 Republic of El Salvador 04/10/32 8.250 3,078,596 4,564,846
7
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE - ---------------------------------------------------------------------------------------------------------------------------- FOREIGN DEBT SECURITIES--(CONTINUED) GERMANY--3.11% $ 8,500 Aries Vermogensverwaltungs, 144A 10/25/14 9.600% $ 9,923,750 INDONESIA--0.72% 2,988 Republic of Indonesia Loan Participation (Deutsche Bank AG, Singapore Branch) (2)(3) 12/14/19 2.760++ 2,300,760 IVORY COAST--0.33% 5,700 Republic of Ivory Coast (3) 03/29/18 2.000++ 1,054,500 MALAYSIA--4.39% 3,000 Petroliam Nasional Berhad 10/15/26 7.625 3,601,653 4,784 Petroliam Nasional Berhad, 144A 10/15/26 7.625 5,743,435 3,800 Petronas Capital Ltd. 05/22/22 7.875 4,669,135 14,014,223 MEXICO--10.03% 3,170 Conproca S.A. de C.V. 06/16/10 12.000 4,010,050 752 PEMEX Finance Ltd. 05/15/07 8.020 792,896 5,500 PEMEX Project Funding Master Trust 02/01/22 8.625 6,352,500 3,000 PEMEX Project Funding Master Trust 10/13/10 9.125 3,606,000 1,250 Petroleos Mexicanos 03/30/18 9.250 1,512,500 3,317 United Mexican States 04/08/33 7.500 3,535,922 10,574 United Mexican States 08/15/31 8.300 12,212,970 32,022,838 NETHERLANDS--1.64% EUR 606 ING Bank NV (3) 05/31/09 7.540* 550,630 1,093 ING Bank NV (3) 05/31/10 7.730* 912,712 2,136 ING Bank NV (3) 05/31/11 7.910* 1,633,895 1,115 ING Bank NV (3) 05/31/13 8.040* 722,780 781 ING Bank NV (3) 05/31/14 8.070* 466,459 1,373 ING Bank NV (3) 05/31/12 8.080* 959,779 5,246,255 PANAMA--2.23% $ 3,920 Republic of Panama 09/30/27 8.875 4,096,400 2,790 Republic of Panama 01/16/23 9.375 3,020,175 7,116,575
8
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE - ---------------------------------------------------------------------------------------------------------------------------- FOREIGN DEBT SECURITIES--(CONTINUED) PERU--2.42% $ 1,610 Republic of Peru 05/03/16 8.375% $ 1,682,450 1,100 Republic of Peru 02/06/15 9.875 1,270,500 5,330 Republic of Peru, FLIRB 03/07/17 4.500++ 4,770,350 7,723,300 PHILIPPINES--3.55% 7,160 Republic of Philippines 01/18/17 9.375 7,383,392 3,935 Republic of Philippines 01/15/19 9.875 3,959,397 11,342,789 RUSSIA--13.77% 8,060 Russian Federation 05/14/11 3.000 6,669,650 13,180 Russian Federation 03/31/30 5.000+ 13,196,475 18,984 Russian Federation, 144A 03/31/30 5.000+ 19,007,318 4,624 Russian Federation, 144A 03/31/10 8.250 5,121,096 43,994,539 SOUTH AFRICA--1.81% 3,500 Republic of South Africa 04/25/12 7.375 3,990,000 1,500 Republic of South Africa 05/19/09 9.125 1,785,000 5,775,000 TURKEY--4.20% TRL 4,900,000,000 Republic of Turkey 10/05/05 0.000* 2,746,991 $ 2,000 Republic of Turkey 10/06/05 5.960 2,116,018 1,980 Republic of Turkey 03/15/15 7.250 1,984,950 1,060 Republic of Turkey 02/14/34 8.000 1,070,600 2,830 Republic of Turkey 06/30/11 9.000 3,151,913 2,030 Republic of Turkey 01/15/14 9.500 2,334,500 13,404,972 UKRAINE--2.87% 3,600 Republic of Ukraine 06/11/13 7.250 3,600,000 5,430 Republic of Ukraine 06/11/13 7.650 5,572,537 9,172,537 URUGUAY--1.05% 4,101 Republic of Uruguay 01/15/33 7.875 3,332,204 36 Republic of Uruguay, PIK 01/15/33 7.875 29,434 3,361,638 VENEZUELA--2.69% 1,520 Republic of Venezuela 10/08/14 8.500 1,541,280
9
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE - ---------------------------------------------------------------------------------------------------------------------------- FOREIGN DEBT SECURITIES--(CONCLUDED) VENEZUELA--(CONCLUDED) $ 3,980 Republic of Venezuela 09/15/27 9.250% $ 4,071,540 2,900 Republic of Venezuela 01/13/34 9.375 2,972,500 8,585,320 Total Foreign Debt Securities (cost--$279,492,557) 305,955,216 NUMBER OF RIGHTS (000) - ---------------------------------------------------------------------------------------------------------------------------- RIGHTS--0.04% MEXICO--0.04% 1,885 United Mexican States Value Recovery Rights, Series C, Expiration Date 06/30/05 (5) 37,889 1,885 United Mexican States Value Recovery Rights, Series D, Expiration Date 06/30/06 (5) 44,674 1,885 United Mexican States Value Recovery Rights, Series E, Expiration Date 06/30/07 (5) 40,905 123,468 VENEZUELA--0.00% 27 Venezuela Oil Indexed Payment Obligations, Expiration Date 4/15/20 (3)(4)(5) 0 Total Rights (cost--$0) 123,468 NUMBER OF SHARES (000) - ---------------------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENT**--3.17% UNITED STATES--3.17% 10,119 UBS Supplementary Trust U.S. Cash Management Prime Fund (cost--$10,118,548) 1.850@ 10,118,548 Total Investments (cost--$289,611,105)--99.01% 316,197,232 Other assets in excess of liabilities--0.99% 3,162,184 Net Assets--100.00% $ 319,359,416
10 Note: The Portfolio of Investments is listed by the issuer's country of origin. + Reflects rate at October 31, 2004 on step coupon rate instruments. ++ Reflects rate at October 31, 2004 on variable rate instruments. * Reflects annualized yield at October 31, 2004 on zero coupon bonds. ** Security is issued by a fund that is advised by a related entity of UBS Global Asset Management (US) Inc., Global High Income Dollar Fund Inc.'s advisor. @ Interest rate reflects yield at October 31, 2004. (1) Bond interest in default. (2) Participation interest was acquired through the financial institution indicated parenthetically. (3) Illiquid securities represent a value of $8,601,515 or 2.69% of net assets. (4) Security is being fair valued by a valuation committee under the direction of the Board of Directors. At October 31, 2004, the value of these securities amounted to $0 or 0.00% of net assets. (5) Rights do not currently accrue income. Quarterly income, if any, will vary based on several factors including oil exports, prices, and inflation. ARS Argentina Peso C Front-Loaded Interest Reduction with Capitalized Interest Bond DCB Debt Conversion Bond DISC Discount Bond EUR Euro FLIRB Front-Loaded Interest Reduction Bond PAR Par Bond PIK Payment in Kind TRL Turkish Lira 144A Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 2004, the value of these securities amounted to $51,150,849 or 16.02% of net assets. 11 FUTURES CONTRACTS
UNREALIZED NUMBER OF CONTRACTS TO IN EXPIRATION APPRECIATION/ CONTRACTS RECEIVE EXCHANGE FOR DATES (DEPRECIATION) 110 U.S. Treasury Note 5 Year Futures $ 12,143,000 December 2004 $ 108,250 CONTRACTS TO DELIVER 174 U.S. Long Bond 20 Year Futures (Chicago Board of Trade) 19,421,975 December 2004 (386,837) $ (278,587)
FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACTS TO IN MATURITY UNREALIZED DELIVER EXCHANGE FOR DATE DEPRECIATION Euro 3,900,000 USD 4,825,821 01/21/05 $ (145,835)
CURRENCY TYPE ABBREVIATIONS: USD United States Dollar
INDUSTRY DIVERSIFICATION AS A PERCENT OF NET ASSETS AS OF OCTOBER 31, 2004 Foreign Debt Securities International Corporate Bonds Oil/Gas 7.98% Financial Services 6.12 Industrials 2.53 Minerals 0.83 Total International Corporate Bonds 17.46 Foreign Government Bonds 78.34 Total Foreign Debt Securities 95.80 Rights 0.04 Short-Term Investment 3.17 Total Investments 99.01 Other assets in excess of liabilities 0.99 Net Assets 100.00%
See accompanying notes to financial statements 12 GLOBAL HIGH INCOME DOLLAR FUND INC. Statement of Assets and Liabilities -- October 31, 2004 ASSETS: Investments in securities of unaffiliated issuers, at value (cost--$279,492,557) $ 306,078,684 Investments in securities of a related entity, at value (cost--$10,118,548) 10,118,548 Foreign currency, at value (cost--$105) 106 Cash collateral for futures contracts 1,926,006 Interest receivable 3,087,550 Receivable for investments sold 2,561,121 Other assets 9,847 Total assets 323,781,862 LIABILITIES: Payable for investments purchased 3,598,234 Payable to investment advisor and administrator 338,313 Unrealized depreciation on forward foreign currency contracts 145,835 Variation margin payable 95,563 Directors fees payable 3,000 Accrued expenses and other liabilities 241,501 Total liabilities 4,422,446 NET ASSETS: Capital stock--$0.001 par value; 100,000,000 shares authorized; 19,439,667 shares issued and outstanding 268,246,555 Distributions in excess of net investment income (282,947) Accumulated net realized gain from investment transactions 25,234,103 Net unrealized appreciation of investments, futures, forward foreign currency contracts, and other assets and liabilities denominated in foreign currencies 26,161,705 Net assets $ 319,359,416 Net asset value per share $ 16.43
See accompanying notes to financial statements 13 Statement of Operations
FOR THE YEAR ENDED OCTOBER 31, 2004 - ------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest income net of foreign witholding taxes of $1,069 (includes $73,218 from a related entity) $ 23,435,979 Securities lending income--net 251 23,436,230 EXPENSES: Investment advisory and administration fees 3,869,604 Custody and accounting fees 247,656 Professional fees 69,240 Reports and notices to shareholders 67,355 Transfer agency fees 14,308 Directors' fees 13,602 Other expenses 38,609 4,320,374 Net investment income 19,115,856 REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT ACTIVITIES: NET REALIZED GAIN (LOSS) FROM: Investment transactions 39,638,312 Foreign currency transactions (357,752) Futures 1,174,404 NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION OF: Investments (15,591,446) Futures (222,228) Other assets, liabilities and forward foreign currency contracts (5,537) Net realized and unrealized gains from investment activities 24,635,753 Net increase in net assets resulting from operations $ 43,751,609
See accompanying notes to financial statements 14 Statement of Changes in Net Assets
FOR THE YEARS ENDED OCTOBER 31, ---------------------------------- 2004 2003 - ------------------------------------------------------------------------------------------------- FROM OPERATIONS: Net investment income $ 19,115,856 $ 19,877,411 Net realized gain from investment transactions 39,638,312 12,426,980 Net realized gain from futures and foreign currency transactions 816,652 2,143,359 Net change in unrealized appreciation/depreciation of: Investments (15,591,446) 33,037,627 Futures (222,228) (56,359) Other assets, liabilities and forward foreign currency contracts (5,537) (144,666) Net increase in net assets resulting from operations 43,751,609 67,284,352 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (18,957,163) (22,097,218) Net realized gains (14,951,448) (10,316,523) Return of capital -- (322,658) Total dividends and distributions to shareholders (33,908,611) (32,736,399) Net increase in net assets 9,842,998 34,547,953 NET ASSETS: Beginning of year 309,516,418 274,968,465 End of year $ 319,359,416 $ 309,516,418 Distributions in excess of net investment income $ (282,947) $ (711,053)
See accompanying notes to financial statements 15 GLOBAL HIGH INCOME DOLLAR FUND INC. Notes to Financial Statements ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Global High Income Dollar Fund Inc. (the "Fund") was incorporated in Maryland on February 23, 1993 and is registered with the Securities and Exchange Commission as a closed-end, non-diversified management investment company whose shares trade on the New York Stock Exchange ("NYSE"). The Fund's primary investment objective is to achieve a high level of current income. As a secondary objective the Fund seeks capital appreciation, to the extent consistent with it's primary objective. In the normal course of business the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires Fund management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies: VALUATION OF INVESTMENTS--The Fund calculates its net asset value based on the current market value, where available, for its portfolio securities. The Fund normally obtains market values for its securities from independent pricing sources and broker-dealers. Independent pricing sources may use reported last sale prices, current market quotations or valuations from computerized "matrix" systems that derive values based on comparable securities. A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities. Securities traded in the over-the-counter ("OTC") market and listed on The Nasdaq Stock Market, Inc. ("Nasdaq") normally are valued at the NASDAQ Official Closing Price. Other OTC securities are valued at the last bid price available on the valuation date prior to valuation. Securities which are listed on U.S. and foreign stock exchanges normally are valued at the last sale price on the day the securities are valued or, lacking any sales on such day, at the last available bid price. In cases where securities are traded on more than one exchange, the securities are valued on the exchange designated as the primary market by UBS Global Asset Management (US) Inc. ("UBS Global AM"), the investment advisor and administrator of the Fund. UBS Global AM is an indirect wholly owned asset management subsidiary of UBS AG, an internationally diversified organization with headquarters in Zurich, Switzerland and operations in many areas of the financial services industry. If a market value is not available from an independent pricing source for a particular security, that security is valued at fair value as determined in good faith by or under the direction of the Fund's board of directors (the "Board"). 16 All investments quoted in foreign currencies will be valued weekly in U.S. dollars on the basis of the foreign currency exchange rates. Foreign currency exchange rates are generally determined prior to the close of the NYSE. Occasionally, events affecting the value of foreign investments and such exchange rates occur between the time at which they are determined and the close of the NYSE, which will not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities or currency exchange rates occur during such time periods, the securities will be valued at their fair value as determined in good faith by or under the direction of the Board. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are recorded on the trade date. Realized gains and losses from investment and foreign exchange transactions are calculated using the identified cost method. Interest income is recorded on an accrual basis. Discounts are accreted and premiums are amortized as adjustments to interest income and the identified cost of investments. FOREIGN CURRENCY TRANSLATION--The books and records of the Fund are maintained in U.S. dollars using the WM/Reuters closing spot rates as of 4:00 pm London time. For purposes of calculating the U.S. dollar equivalent value of a non-U.S. dollar denominated obligation, foreign currency amounts are translated into U.S. dollars on the following basis: (1) market value of investment securities and other assets and liabilities - at the exchange rates prevailing at the end of the Fund's fiscal period; and (2) purchases and sales of investment securities and income and expenses - at the rates of exchange prevailing on the respective dates of such transactions. Although the net assets and the market value of the Fund's portfolio are presented at the foreign exchange rates at the end of the Fund's fiscal period, the Fund does not generally isolate the effect of fluctuations in foreign exchange rates from the effect of the changes in market prices of securities. However, the Fund does isolate the effect of fluctuations in foreign exchange rates when determining the gain or loss upon the sale or maturity of foreign currency-denominated securities pursuant to U.S. federal income tax regulations. Certain foreign exchange gains and losses included in realized and unrealized gains and losses are included in or are a reduction of ordinary income in accordance with U.S. federal income tax regulations. FORWARD FOREIGN CURRENCY CONTRACTS--The Fund may enter into forward foreign currency exchange contracts ("forward contracts") in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Fund may also use forward contracts to enhance income. The Fund has no specific limitation on the percentage of assets which may be committed to such contracts. The Fund may enter into forward contracts or 17 maintain a net exposure to forward contracts only if (1) the consummation of the contracts would not obligate the Fund to deliver an amount of foreign currency in excess of the value of the position being hedged by such contracts or (2) the Fund identifies cash or liquid securities in an amount not less than the value of its total assets committed to the consummation of the forward contracts and not covered as provided in (1) above, as marked-to-market daily. Risks may arise upon entering into forward contracts from the potential inability of counterparties to meet the terms of their forward contracts and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. Fluctuations in the value of forward contracts are recorded for book purposes as unrealized gains or losses by the Fund. Realized gains and losses include net gains and losses recognized by the Fund on contracts which have been sold or matured. FUTURES CONTRACTS--The Fund may use financial futures contracts for hedging purposes and to adjust exposure to U.S. and foreign fixed income markets in connection with a reallocation of the Fund's assets or to manage the average duration of the Fund. However, imperfect correlations between futures contracts and the related securities or markets, or market disruptions, do not normally permit full control of these risks at all times. Using financial futures contracts involves various market risks. The maximum amount at risk from the purchase of a futures contract is the contract value. Upon entering into a financial futures contract, the Fund is required to pledge to a broker an amount of cash and/or liquid securities equal to a certain percentage of the contract amount. This amount is known as the "initial margin". Subsequent payments, known as "variation margin," are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying financial futures contracts. Such variation margin is recorded for financial statement purposes on a daily basis as an unrealized gain or loss on futures until the financial futures contract is closed, at which time the net gain or loss is reclassified to realized gain or loss on futures. DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends from net investment income and distributions from net realized capital gains and/or return of capital is determined in accordance with U.S. federal income tax regulations, which may differ from accounting principles generally accepted in the United States. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. 18 CONCENTRATION OF RISK Investing in securities of foreign issuers and currency transactions may involve certain considerations and risks not typically associated with investments in the United States. These risks include revaluation of currencies, adverse fluctuations in foreign currency values and possible adverse political, social and economic developments, including those particular to a specific industry, country or region, which could cause the securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. government securities. These risks are greater with respect to securities of issuers located in emerging market countries in which the Fund invests. The ability of the issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments particular to a specific industry, country or region. INVESTMENT ADVISOR AND ADMINISTRATOR AND OTHER TRANSACTIONS WITH RELATED ENTITIES The Board has approved an investment advisory and administration contract ("Advisory Contract") with UBS Global AM, under which UBS Global AM serves as investment advisor and administrator of the Fund. In accordance with the Advisory Contract, the Fund pays UBS Global AM an investment advisory and administration fee, which is accrued weekly and paid monthly, at the annual rate of 1.25% of the Fund's average weekly net assets. The Fund invests in shares of the UBS Supplementary Trust U.S. Cash Management Prime Fund ("Supplementary Trust"). Supplementary Trust is a business trust managed by UBS Global Asset Management (Americas) Inc., a related entity of UBS Global AM. The Fund pays no management fees to Supplementary Trust. Distributions from the Supplementary Trust are reflected as interest income on the statement of operations. Amounts relating to those investments for the year ended October 31, 2004 are summarized as follows:
SALES INTEREST % OF FUND PURCHASES PROCEEDS INCOME VALUE NET ASSETS - --------------------------------------------------------------------------------------------------------- UBS Supplementary Trust U.S. Cash Management Prime Fund $ 168,413,127 $ 158,294,579 $ 73,218 $ 10,118,548 3.17%
19 SECURITIES LENDING The Fund may lend securities up to 33 1/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, cash equivalents or U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. The Fund will regain ownership of loaned securities to exercise certain beneficial rights; however, the Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially. The Fund receives compensation for lending its securities from interest or dividends earned on the cash, cash equivalents or U.S. government securities held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees. UBS Securities LLC, an indirect wholly owned subsidiary of UBS AG, and other affiliated broker-dealers have been approved as borrowers under the Fund's securities lending program. At October 31, 2004, the Fund did not have any securities on loan. For the year ended October 31, 2004, the Fund earned $251 for lending its securities and UBS Securities LLC earned $84 in compensation as the Fund's lending agent. At October 31, 2004, the Fund did not owe UBS Securities LLC compensation as the Fund's lending agent. CAPITAL STOCK There are 100,000,000 shares of $0.001 par value common stock authorized and 19,439,667 shares outstanding at October 31, 2004. For the year ended October 31, 2004 and for the year ended October 31, 2003, the Fund did not repurchase any shares of common stock. For the period September 17, 1998 (commencement of repurchase program) through February 28, 2001, the Fund repurchased 3,297,000 shares of common stock at an average market price per share of $11.68 and a weighted average discount from net asset value of 14.88%. As of October 31, 2004, paid-in-capital has been reduced by the cost of $38,698,693 of capital stock repurchased. PURCHASES AND SALES OF SECURITIES For the year ended October 31, 2004, aggregate purchases and sales of portfolio securities, excluding short-term securities, were $416,335,661 and $414,967,773, respectively. FEDERAL TAX STATUS The Fund intends to distribute substantially all of its taxable income and to comply with the other requirements of the Internal Revenue Code applicable to regulated investment companies. Accordingly, no provision for federal income taxes is required. In addition, by distributing during each calendar year, substantially all of its net investment income, realized capital gains and certain other amounts, if any, the Fund intends not to be subject to a federal excise tax. 20 The tax character of distributions paid during the fiscal year ended October 31, 2004 and October 31, 2003, respectively were as follows:
DISTRIBUTIONS PAID FROM: 2004 2003 - ------------------------------------------------------------------------------------------------- Net investment income $ 30,792,351 $ 24,240,920 Net realized gains 3,116,260 8,172,821 Return of capital -- 322,658 $ 33,908,611 $ 32,736,399
At October 31, 2004, the components of accumulated earnings on a tax basis were as follows: Undistributed long-term capital gains $ 24,993,049 Unrealized appreciation 26,119,812 Total accumulated earnings $ 51,112,861
The difference between book-basis and tax-basis net unrealized appreciation of investments is attributable to premium amortization adjustments and wash sales. During the current fiscal year, the Fund had no capital loss carry-forwards to offset current year gains. For federal income tax purposes, the tax cost of investments and components of net unrealized appreciation of investments at October 31, 2004 were as follows: Tax cost of investments $ 290,077,420 Gross appreciation (investments having an excess of value over cost) $ 27,520,375 Gross depreciation (investments having an excess of cost over value) (1,400,563) Net unrealized appreciation of investments $ 26,119,812
To reflect reclassifications arising from permanent "book/tax" differences for the year ended October 31, 2004, distributions in excess of net investment income was decreased by $15,220,861 and accumulated net realized gain from investment activities was decreased by $15,220,861. These differences are primarily due to tax treatment of foreign currency transactions, paydown gains and losses, distribution reclasses and premium adjustments for certain debt obligations. 21 GLOBAL HIGH INCOME DOLLAR FUND INC. Financial Highlights Selected data for a share of common stock outstanding thoughout each year is presented below:
FOR THE YEARS ENDED OCTOBER 31, ----------------------------------------------------------------------------- 2004 2003 2002+ 2001 2000 - --------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF YEAR $ 15.92 $ 14.14 $ 14.16 $ 14.42 $ 13.66 Net investment income 0.98 1.02 1.04 1.24 1.48 Net realized and unrealized gains from investment activities 1.27 2.44 0.52 0.10 0.71 Net increase from investment operations 2.25 3.46 1.56 1.34 2.19 Dividends from net investment income (0.97) (1.13) (1.31) (1.15) (1.48) Distributions from net realized gains from investment transactions (0.77) (0.53) -- -- -- Distributions from paid-in-capital -- (0.02) (0.27) (0.46) -- Distributions in excess of net investment income -- -- -- -- (0.09) Total dividends and distributions to shareholders (1.74) (1.68) (1.58) (1.61) (1.57) Net increase in net asset value resulting from repurchase of common stock -- -- -- 0.01 0.14 NET ASSET VALUE, END OF YEAR $ 16.43 $ 15.92 $ 14.14 $ 14.16 $ 14.42 MARKET VALUE, END OF YEAR $ 18.31 $ 17.07 $ 13.87 $ 12.98 $ 12.63 TOTAL INVESTMENT RETURN(1) 18.68% 36.52% 19.38% 15.80% 24.55% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000's) $ 319,359 $ 309,516 $ 274,968 $ 275,205 $ 281,955 Expenses to average net assets 1.40% 1.43% 1.43% 1.41% 1.39% Net investment income to average net assets 6.18% 6.66% 7.23% 8.46% 10.12% Portfolio turnover rate 140% 53% 57% 51% 43%
22 (1) Total investment return is calculated assuming a purchase of common stock at the current market price on the first day of each year reported and a sale at the current market price on the last day of each year reported, and assuming reinvestment of dividends and other distributions at prices obtained under the Fund's Dividend Reinvestment Plan. Total investment return does not reflect brokerage commissions or the deduction of taxes that a shareholder could pay on Fund distributions. + As required, effective as of November 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing premium on debt securities for financial statement reporting purposes only. The effect of this change for the year ended October 31, 2002 was to decrease net investment income per share by $0.02, increase net realized and unrealized gains from investment activities per share by $0.02, and decrease the ratio of net investment income to average net assets from 7.35% to 7.23%. Per share ratios and supplemental data for years prior to November 1, 2001 have not been restated to reflect this change in presentation. 23 GLOBAL HIGH INCOME DOLLAR FUND INC. Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Global High Income Dollar Fund Inc. We have audited the accompanying statement of assets and liabilities of Global High Income Dollar Fund Inc. (the "Fund"), including the portfolio of investments, as of October 31, 2004, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended October 31, 2000 was audited by other auditors whose report dated December 27, 2000 expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned at October 31, 2004 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above and audited by us, present fairly, in all material respects, the financial position of Global High Income Dollar Fund Inc. at October 31, 2004, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S generally accepted accounting principles. /s/ Ernst & young LLP New York, New York December 15, 2004 24 GLOBAL HIGH INCOME DOLLAR FUND INC. Tax Information (unaudited) Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not be reported as taxable income. Some retirement trusts (e.g., corporate, Keogh and 403(b)(7) plans) may need this information for their annual reporting. Since the Fund's fiscal year is not the calendar year, another notification will be sent in respect of calendar year 2004. The second notification, which will reflect the amount to be used by calendar year taxpayers on their federal income tax returns, will be made in conjunction with Form 1099 DIV and will be mailed in January 2005. Shareholders are advised to consult their own tax advisors with respect to the tax consequences of their investment in the Fund. 25 GLOBAL HIGH INCOME DOLLAR FUND INC. General Information (unaudited) THE FUND Global High Income Dollar Fund Inc. (the "Fund") is a non-diversified, closed-end management investment company whose shares trade on the New York Stock Exchange ("NYSE"). The Fund's primary investment objective is to achieve a high level of current income. As a secondary objective, the Fund seeks capital appreciation to the extent consistent with its primary objective. The Fund's investment advisor and administrator is UBS Global Asset Management (US) Inc. ("UBS Global AM"), an indirect wholly owned asset management subsidiary of UBS AG, which had over $55.6 billion in assets under management as of October 31, 2004. SHAREHOLDER INFORMATION The Fund's NYSE trading symbol is "GHI." Comparative net asset value and market price information about the fund is published weekly in THE WALL STREET JOURNAL, THE NEW YORK TIMES and BARRON'S, as well as in numerous other publications. QUARTERLY FORM N-Q PORTFOLIO SCHEDULE The Fund will file its complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. Additionally, you may obtain copies of Forms N-Q from the Fund upon request by calling 1-800-647-1568. PROXY VOTING POLICIES AND PROCEDURES You may obtain a description of the Fund's proxy voting policies and procedures, and its proxy voting record without charge, upon request by contacting the Fund directly at 1-800-647-1568, online on the Fund's Web site:www.ubs.com/ubsglobalam-proxy, or on the EDGAR Database on the SEC's website (http://www.sec.gov). DIVIDEND REINVESTMENT PLAN The Fund's Board has established a Dividend Reinvestment Plan (the "Plan") under which all shareholders whose shares are registered in their own names, or in the name of UBS Financial Services Inc. or its nominee, will have all dividends and other distributions on their shares of common stock automatically reinvested in additional shares, unless such shareholders elect to receive cash. Shareholders who elect to hold their shares in the name of another broker or nominee should contact such broker or nominee to determine whether, or how, they may participate in the Plan. The ability of such shareholders to participate in the Plan may change if their shares are transferred into the name of another broker or nominee. A shareholder may elect not to participate in the Plan or may terminate participation in the Plan at any time without penalty, and shareholders who have previously 26 terminated participation in the Plan may rejoin it at any time. Changes in elections must be made in writing to the Fund's transfer agent and should include the shareholder's name and address as they appear on that share certificate or in the transfer agent's records. An election to terminate participation in the Plan, until such election is changed, will be deemed an election by a shareholder to take all subsequent distributions in cash. An election will be effective only for distributions declared and having a record date at least ten days after the date on which the election is received. Additional shares of common stock acquired under the Plan will be purchased in the open market, on the NYSE or otherwise, at prices that may be higher or lower than the net asset value per share at the time of the purchase. Investors should consider whether continued participation in the dividend reinvestment plan is appropriate for them when the Fund's market price exceeds its net asset value; a portion of a dividend may represent a return of capital, which would be reinvested in the Fund at a premium to net asset value. The number of shares of common stock purchased with each dividend will be equal to the result obtained by dividing the amount of the dividend payable to a particular shareholder by the average price per share (including applicable brokerage commissions) that the transfer agent was able to obtain in the open market. The Fund will not issue any new shares in connection with the Plan. There currently is no charge to participants for reinvesting dividends or other distributions. The transfer agent's fees for handling the reinvestment of distributions are paid by the Fund. However, each participant pays a pro rata share of brokerage commissions incurred with respect to the transfer agent's open market purchases of common stock in connection with the reinvestment of distributions. The automatic reinvestment of dividends and other distributions in shares of common stock does not relieve participants of any income tax that may be payable on such distributions. Experience under the Plan may indicate that changes are desirable. Accordingly, the Fund reserves the right to amend or terminate the Plan with respect to any dividend or other distribution if notice of the change is sent to Plan participants at least 30 days before the record date for such distribution. The Plan also may be amended or terminated by the transfer agent by at least 30 days' written notice to all Plan participants. Additional information regarding the Plan may be obtained from, and all correspondence concerning the Plan should be directed to, the transfer agent at PFPC Inc., P.O. Box 43027 Providence, Rhode Island 02940-3027. For further information regarding the Plan, you may also contact the transfer agent directly at 1-800-331-1710. DISTRIBUTION POLICY The Fund's Board adopted a managed distribution policy in December 1999, which means that the Fund will make regular monthly distributions at an annualized rate equal to 11% of the Fund's net asset value, as determined as of the last trading day during the first week of that month (usually a Friday unless the NYSE is closed 27 that Friday). Prior to December 20, 1999, the Fund's distributions varied based on the Fund's net investment income and realized capital gains or losses. The Fund's Board may terminate the managed distribution policy at any time; any such termination may have an adverse effect on the market price for the Fund's shares. To the extent that the Fund's taxable income in any fiscal year exceeds the aggregate amount distributed based on a fixed percentage of its net asset value, the Fund would make an additional distribution in the amount of that excess near the end of the fiscal year. To the extent that the aggregate amount distributed by the Fund (based on a fixed percentage of its net asset value) exceeds its current and accumulated earnings and profits, the amount of that excess would constitute a return of capital or net realized capital gains for tax purposes. Monthly distributions based on a fixed percentage of the Fund's net asset value may require the Fund to make multiple distributions of long-term capital gains during a single fiscal year. The Fund has received exemptive relief from the Securities and Exchange Commission that enables it to do so. The Fund's Board will annually reassess the annualized percentage of net assets at which the Fund's monthly distributions will be made. 28 (This page intentionally left blank). 29 GLOBAL HIGH INCOME DOLLAR FUND INC. Supplemental Information (unaudited) BOARD OF DIRECTORS & OFFICERS The Fund is governed by a Board of Directors which oversees the Fund's operations. Each director serves until the next annual meeting of shareholders or until his or her successor is elected and qualified, or until he or she resigns or is otherwise removed. Officers are appointed by the directors and serve at the pleasure of the Board. The table below shows, for each director and officer, his or her name, address and age, the position held with the Fund, the length of time served as a director and officer of the Fund, the director's or officer's principal occupations during the last five years, the number of funds in the UBS fund complex overseen by the director or for which a person served as an officer, and other directorships held by the director. INTERESTED DIRECTORS
TERM OF OFFICE+ AND POSITION(S) LENGTH OF NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) AND AGE FUND SERVED DURING PAST 5 YEARS - ------------------------------------------------------------------------------------------------- Margo N. Alexander*++;57 Director Since 1996 Mrs. Alexander is retired. She was an executive vice president of UBS Financial Services Inc. (March 1984 to December 2002). She was chief executive officer (from January 1995 to October 2000), a director (from January 1995 to September 2001) and chairman (from March 1999 to September 2001) of UBS Global AM (formerly known as Mitchell Hutchins Asset Management Inc.)
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NUMBER OF NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS AND AGE OVERSEEN BY DIRECTOR HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------- Margo N. Alexander*++; 57 Mrs. Alexander is a director or trustee None of 16 investment companies (consisting of 33 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager.
31 INDEPENDENT DIRECTORS
TERM OF OFFICE+ AND POSITION(S) LENGTH OF NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) AND AGE FUND SERVED DURING PAST 5 YEARS - ------------------------------------------------------------------------------------------------- Richard Q. Armstrong; 69 Director Since 1995 Mr. Armstrong is chairman and c/o Willkie Farr & and principal of R.Q.A. Enterprises Gallagher LLP Chairman (management consulting firm) 787 Seventh Avenue of the (since April 1991 and principal New York, NY 10019-6099 Board of occupation since March 1995). Directors David J. Beaubien; 70 Director Since 2001 Mr. Beaubien is retired (since 2003). 84 Doane Road He was chairman of Ware, MA 01082 Yankee Environmental Systems, Inc., a manufacturer of meteorological measuring systems (since 1991). Richard R. Burt; 57 Director Since 1995 Mr. Burt is chairman of Diligence 1275 Pennsylvania Ave., N.W. LLC (international information and Washington, D.C. 20004 security firm) and IEP Advisors (international investments and consulting firm). Meyer Feldberg; 62 Director Since 1996 Professor Feldberg is Dean Emeritus Columbia Business School and Sanford Bernstein Professor of 33 West 60th Street Leadership and Ethics at Columbia 7th Floor Business School. Prior to July 2004, New York, New York he was Dean and Professor of 10023-7905 Management of the Graduate School of Business at Columbia University (since 1989).
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NUMBER OF NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS AND AGE OVERSEEN BY DIRECTOR HELD BY DIRECTOR - --------------------------------------------------------------------------------------------------------------- Richard Q. Armstrong; 69 Mr. Armstrong is a director or trustee None c/o Willkie Farr & of 16 investment companies (consisting Gallagher LLP of 33 portfolios) for which UBS 787 Seventh Avenue Global AM or one of its affiliates New York, NY 10019-6099 serves as investment advisor, sub-advisor or manager. David J. Beaubien; 70 Mr. Beaubien is a director or trustee of Mr. Beaubien is also a director of IEC 84 Doane Road 16 investment companies (consisting of Electronics, Inc., a manufacturer of Ware, MA 01082 33 portfolios) for which UBS Global AM electronic assemblies. or one of its affiliates serves as investment advisor, sub-advisor or manager. Richard R. Burt; 57 Mr. Burt is a director or trustee of 16 Mr. Burt is also a director of Hollinger 1275 Pennsylvania Ave., N.W. investment companies (consisting of 33 International, Inc. (publishing), HCL Washington, D.C. 20004 portfolios) for which UBS Global AM or Technologies, Ltd., (software and one of its affiliates serves as information technologies), The Central investment advisor, sub-advisor or European Fund, Inc., The Germany Fund, manager. Inc., IGT, Inc. (provides technology to gaming and wagering industry) and chairman of Weirton Steel Corp. (makes and finishes steel products). He is also a director or trustee of funds in the Scudder Mutual Funds Family (consisting of 47 portfolios). Meyer Feldberg; 62 Professor Feldberg is a director or Professor Feldberg is also a director of Columbia Business School trustee of 30 investment companies Primedia Inc. (publishing), Federated 33 West 60th Street (consisting of 47 portfolios) for which Department Stores, Inc. (operator of 7th Floor UBS Global AM or one of its affiliates department stores), Revlon, Inc. New York, New York serves as investment advisor, (cosmetics), Select Medical Inc. 10023-7905 sub-advisor or manager. (healthcare services) and SAPPI, Ltd. (producer of paper).
33
TERM OF OFFICE+ AND POSITION(S) LENGTH OF NAME, ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) AND AGE FUND SERVED DURING PAST 5 YEARS - ----------------------------------------------------------------------------------------------- Carl W. Schafer; 68 Director Since 1996 Mr. Schafer is president of the 66 Witherspoon Street Atlantic Foundation (charitable #1100 foundation) (since 1990). Princeton, NJ 08542 William D. White; 70 Director Since 2001 Mr. White is retired (since 1994). P.O. Box 199 Upper Black Eddy, PA 18972
34
NUMBER OF NAME, ADDRESS, PORTFOLIOS IN FUND COMPLEX OTHER DIRECTORSHIPS AND AGE OVERSEEN BY DIRECTOR HELD BY DIRECTOR - ----------------------------------------------------------------------------------------------------------------- Carl W. Schafer; 68 Mr. Schafer is a director or trustee of Mr. Schafer is also a director of Labor 66 Witherspoon Street 16 investment companies (consisting of Ready, Inc. (temporary employment), #1100 33 portfolios) for which UBS Global AM Guardian Life Insurance Company Mutual Princeton, NJ 08542 or one of its affiliates serves as Funds (consisting of 25 portfolios), the investment advisor, sub-advisor or Harding, Loevner Funds (consisting of 3 manager. portfolios), E.I.I. Realty Securities Trust (investment company consisting of 2 portfolios) and Frontier Oil Corporation. William D. White; 70 Mr. White is a director or trustee of 16 None P.O. Box 199 investment companies (consisting of Upper Black Eddy, PA 18972 33 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager.
35 OFFICERS
TERM OF PRINCIPAL OCCUPATION(S) OFFICE+ AND DURING PAST 5 YEARS; POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON AND AGE THE FUND SERVED SERVES AS OFFICER - -------------------------------------------------------------------------------------------------------------------------------- W. Douglas Beck*; Vice President Since 2003 Mr. Beck is an executive director and head of 37 product management of UBS Global AM (since 2002). From March 1998 to November 2002, he held various positions at Merrill Lynch, the most recent being first vice president and co- manager of the managed solutions group. Mr. Beck is vice president of 20 investment companies (consisting of 75 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager. James Capezzuto*; Vice President and Since 2004 Mr. Capezzuto is director and associate general 41 Assistant Secretary counsel at UBS Global AM (since 2004). Prior to joining UBS Global AM he was senior vice president, senior compliance manager at Bank of America (from 2003-2004) prior to that he was general counsel at Steinberg Priest & Sloane and prior to that he was director and senior counsel at Deutsche Asset Management (from 1996-2002.) Mr. Capezzuto is a vice president and assistant secretary of 20 investment companies (consisting of 75 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager. Thomas Disbrow*; Vice President and Since 2000 (Vice Mr. Disbrow is a director and co-head of the 38 Treasurer President) Since mutual fund finance department of UBS Global AM. 2004 (Treasurer) Prior to November 1999, he was a vice president of Zweig/Glaser Advisers. Mr. Disbrow is a vice president and treasurer of 16 investment companies (consisting of 33 portfolios) and vice president and assistant treasurer of four investment companies (consisting of 42 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager.
36
TERM OF PRINCIPAL OCCUPATION(S) OFFICE+ AND DURING PAST 5 YEARS; POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON AND AGE TRUST SERVED SERVES AS OFFICER - -------------------------------------------------------------------------------------------------------------------------------- Mark F. Kemper+++; Vice President and Since 2004 Mr. Kemper is general counsel of UBS Global 46 Secretary Asset Management--Americas region (since July 2004). Mr. Kemper also is an executive director of UBS Global AM Americas and was its deputy general counsel from July 2001 to July 2004. He has been secretary of UBS Global AM (Americas) since 1999 and assistant secretary of UBS Global Asset Management Trust Company since 1993. Mr. Kemper is secretary of UBS Global AM (since 2004). Mr. Kemper is vice president and secretary of 20 investment companies (consisting of 75 portfolios) for which UBS Global AM (Americas) or one of its affiliates serves as investment advisor, sub-advisor or manager. Joanne M. Kilkeary*; Vice President and Since 2004 Ms. Kilkeary is an associate director and a 36 Assistant Treasurer senior manager of the mutual fund finance department of UBS Global AM. Ms. Kilkeary is a vice president and assistant treasurer of 16 investment companies (consisting of 33 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager. Joseph T. Malone*; Vice President and Since 2004 Mr. Malone is a director and co-head of the 37 Assistant Treasurer mutual fund finance department of UBS Global AM. From August 2000 through June 2001, he was the controller at AEA Investors Inc. From March 1998 to August 2000, Mr. Malone was a manager within the investment management services practice of PricewaterhouseCoopers LLC. Mr.Malone is vice president and assistant treasurer of 16 investment companies (consisting of 33 portfolios) and vice president, treasurer and principal accounting officer of four investment companies (consisting of 42 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager.
37
TERM OF PRINCIPAL OCCUPATION(S) OFFICE+ AND DURING PAST 5 YEARS; POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON AND AGE TRUST SERVED SERVES AS OFFICER - ---------------------------------------------------------------------------------------------------------------------------------- Joseph McGill*; Vice President and Since 2004 Mr. McGill is an executive director and chief 42 Chief Compliance compliance officer at UBS Global AM (since Officer 2003). Prior to joining UBS Global AM he was Assistant General Counsel, J.P. Morgan Investment Management (from 1999-2003). Mr. McGill is a vice president and chief compliance officer of 20 investment companies (consisting of 75 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager. John Penicook+++; Vice President Since 2002 Mr. Penicook is a managing director and global 46 head of fixed income of UBS Global AM (Americas) Inc. and UBS Global AM. Mr. Penicook is a vice president of three investment companies (consisting of three portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager. Uwe Schillhorn+++; Vice President Since 2004 Mr. Schillhorn is a director (since 1995), and 40 head of emerging markets debt (since 2004) of UBS Global AM. Mr. Schillhorn is a vice president of two investment companies (consisting of two portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager.
38
TERM OF PRINCIPAL OCCUPATION(S) OFFICE+ AND DURING PAST 5 YEARS; POSITION(S) LENGTH OF NUMBER OF PORTFOLIOS IN NAME, ADDRESS, HELD WITH TIME FUND COMPLEX FOR WHICH PERSON AND AGE THE FUND SERVED SERVES AS OFFICER - -------------------------------------------------------------------------------------------------------------------------------- Joseph A. Varnas*; President Since 2003 Mr. Varnas is a managing director (since March 37 2003), global head of information technology and operations (since March 2004) and head of product management--Americas (since November 2002 of UBS Global AM. He was head of technology of UBS Global AM from November 2002 to March 2004. From 2000 to 2001, he was manager of product development in Investment Consulting Services at UBS Financial Services Inc. Mr.Varnas was a senior analyst in the Global Securities Research and Economics Group at Merrill Lynch from 1995 to 1999. Mr.Varnas is president of 20 investment companies (consisting of 75 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager. Keith A. Weller*; Vice President and Since 1995 Mr. Weller is a director and associate general 43 Assistant Secretary counsel of UBS Global AM. Mr.Weller is a vice president and assistant secretary of 20 investment companies (consisting of 75 portfolios) for which UBS Global AM or one of its affiliates serves as investment advisor, sub-advisor or manager.
- ---------- * This person's business address is 51 West 52nd Street, New York, New York 10019-6114. + Each Director serves until the next annual meeting of shareholders or until his or her successor is elected and qualified, or until he or she resigns or is otherwise removed. Each Director who has attained the age of seventy-two (72) years will be subject to retirement on the last day of the month in which he or she attains such age. Officers of the Fund are appointed by the Directors and serve at the pleasure of the Board. ++ Mrs.Alexander is an "interested person" of the Fund as defined in the 1940 Act by virtue of her former positions with UBS Global AM and/or its affiliates. +++ This person's business address is One North Wacker Drive, Chicago, IL 60606. 39 GLOBAL HIGH INCOME DOLLAR FUND INC. New York Stock Exchange Certifications (unaudited) Global High Income Dollar Fund Inc. (the "Fund") is listed on the New York Stock Exchange ("NYSE"). As a result, it is subject to certain corporate governance rules and related interpretations issued by the exchange. Pursuant to those requirements, the Fund must include information in this report regarding certain certifications. The Fund's president and treasurer have filed certifications with the SEC regarding the quality of the Fund's public disclosure. Those certifications were made pursuant to Section 302 of the Sarbanes-Oxley Act ("Section 302 Certifications"). The Section 302 Certifications were filed as exhibits to the Fund's annual report on Form N-CSR, which included a copy of this annual report along with other information about the Fund. After the Fund's 2004 annual meeting of shareholders, it filed a certification with the NYSE stating that its president was unaware of any violation of the NYSE's Corporate Governance listing standards. 40 DIRECTORS Richard Q. Armstrong CHAIRMAN Margo N. Alexander David J. Beaubien Richard R. Burt Meyer Feldberg Carl W. Schafer William D. White PRINCIPAL OFFICERS Joseph A. Varnas PRESIDENT Mark F. Kemper VICE PRESIDENT AND SECRETARY Thomas Disbrow VICE PRESIDENT AND TREASURER W. Douglas Beck VICE PRESIDENT John Penicook VICE PRESIDENT INVESTMENT ADVISOR AND ADMINISTRATOR UBS Global Asset Management (US) Inc. 51 West 52nd Street New York, New York 10019-6114 NOTICE IS HEREBY GIVEN IN ACCORDANCE WITH SECTION 23(c) OF THE INVESTMENT COMPANY ACT OF 1940 THAT FROM TIME TO TIME THE FUND MAY PURCHASE SHARES OF ITS COMMON STOCK IN THE OPEN MARKET AT MARKET PRICES. THIS REPORT IS SENT TO THE SHAREHOLDERS OF THE FUND FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR OR REPRESENTATION INTENDED FOR THE USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND OR OF ANY SECURITIES MENTIONED IN THIS REPORT. (C)2004 UBS Global Asset Management (US) Inc. All rights reserved. [UBS LOGO] Presorted Standard UBS GLOBAL ASSET MANAGEMENT (US) INC. US Postage 51 West 52nd Street PAID New York, New York 10019 Smithtown, NY Permit 700 ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions pursuant to Section 406 of the Sarbanes-Oxley Act of 2002. (The registrant has designated the code of ethics adopted pursuant to Sarbanes-Oxley as a "Code of Conduct" to lessen the risk of confusion with its separate code of ethics adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended.) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board has determined that the following person serving on the registrant's Audit Committee is an "audit committee financial expert" as defined in item 3 of Form N-CSR: Richard Q. Armstrong. Mr. Armstrong is independent as defined in item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) AUDIT FEES: For the fiscal years ended October 31, 2004 and October 31, 2003, the aggregate Ernst & Young LLP (E&Y) audit fees for professional services rendered to the registrant were approximately $46,100 and $41,900, respectively. Fees included in the audit fees category are those associated with the annual audits of financial statements and services that are normally provided in connection with statutory and regulatory filings. (b) AUDIT-RELATED FEES: In each of the fiscal years ended October 31, 2004 and October 31, 2003, the aggregate audit-related fees billed by E&Y for services rendered to the registrant that are reasonably related to the performance of the audits of the financial statements, but not reported as audit fees, were approximately $3,500 and $4,617, respectively, which includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. Fees included in the audit-related category are those associated with (1) the reading and providing of comments on the 2004 and 2003 semiannual financial statements, (2) review of portions of the registrant's semiannual 2003 Form N-SAR filing and (3) review of the consolidated 2003 and 2002 report on UBS Funds' profitability of UBS Global Asset Management (US) Inc. ("UBS Global AM") to assist the board members in their annual advisory/administration contract reviews. There were no audit-related fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years indicated above. (c) TAX FEES: In each of the fiscal years ended October 31, 2004 and October 31, 2003, the aggregate tax fees billed by E&Y for professional services rendered to the registrant were approximately $9,200 and $10,200, respectively, which includes amounts related to tax services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time. Fees included in the tax fees category comprise all services performed by professional staff in the independent accountant's tax division except those services related to the audits. This category comprises fees for tax return preparation and review of excise tax calculations. There were no tax fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years indicated above. (d) ALL OTHER FEES: In each of the fiscal years ended October 31, 2004 and October 31, 2003, there were no fees billed by E&Y for products and services, other than the services reported in Item 4(a)-(c) above, rendered to the registrant. Fees included in the all other fees category would consist of services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the registrant. There were no "all other fees" required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years indicated above. (e) (1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES: The registrant's Audit Committee ("audit committee") has adopted an "Audit Committee Charter (Amended and Restated as of May 12, 2004)" (the "charter"). The charter contains the audit committee's pre-approval policies and procedures. Reproduced below is an excerpt from the charter regarding pre-approval policies and procedures: The [audit ]Committee shall: ... 2. Pre-approve (a) all audit and permissible non-audit services(1) to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund's independent auditors to UBS Global [AM] and any Covered Service Providers, if the engagement relates directly to the operations and financial reporting of the Fund. In carrying out this responsibility, the Committee shall seek periodically from UBS Global [AM] and from the independent auditors a list of such audit and permissible non-audit services that can be expected to be rendered to the Fund, UBS Global [AM] or any Covered Service Providers by the Fund's independent auditors, and an estimate of the fees sought to be paid in connection with such services. The Committee may delegate its responsibility to pre-approve any such audit and permissible non-audit services to a sub-committee consisting of the Chairperson of the Committee and two other members of the Committee as the Chairperson, from time to time, may determine and appoint, and such sub-committee shall report to the Committee, at its next regularly scheduled meeting after the sub-committee's meeting, its decision(s). From year to year, the Committee shall report to the Board whether this system of pre-approval has been effective and efficient or whether this Charter should be amended to allow for pre-approval pursuant to such policies and procedures as the Committee shall approve, including the delegation of some or all of the Committee's pre-approval responsibilities to other persons (other than UBS Global [AM] or the Fund's officers). ---------- (1) The Committee will not approve non-audit services that the Committee believes may taint the independence of the auditors. Currently, permissible non-audit services include any professional services (including tax services) that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may NOT include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible. Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, UBS Global [AM] and any service providers controlling, controlled by or under common control with UBS Global [AM] that provide ongoing services to the Fund ("Covered Service Providers") constitutes not more than 5% of the total amount of revenues paid to the independent auditors (during the fiscal year in which the permissible non-audit services are provided) by (a) the Fund, (b) its investment adviser and (c) any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit. (e) (2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X: AUDIT-RELATED FEES: There were no amounts that were approved by the audit committee pursuant to the de minimis exception for the fiscal years ended October 31, 2004 and October 31, 2003 on behalf of the registrant. There were no amounts that were required to be approved by the audit committee pursuant to the de minimis exception for the fiscal years ended October 31, 2004 and October 31, 2003 on behalf of the registrant's service providers that relate directly to the operations and financial reporting of the registrant. TAX FEES: There were no amounts that were approved by the audit committee pursuant to the de minimis exception for the fiscal years ended October 31, 2004 and October 31, 2003 on behalf of the registrant. There were no amounts that were required to be approved by the audit committee pursuant to the de minimis exception for the fiscal years ended October 31, 2004 and October 31, 2003 on behalf of the registrant's service providers that relate directly to the operations and financial reporting of the registrant. ALL OTHER FEES: There were no amounts that were approved by the audit committee pursuant to the de minimis exception for the fiscal years ended October 31, 2004 and October 31, 2003 on behalf of the registrant. There were no amounts that were required to be approved by the audit committee pursuant to the de minimis exception for the fiscal years ended October 31, 2004 and October 31, 2003 on behalf of the registrant's service providers that relate directly to the operations and financial reporting of the registrant. (f) According to E&Y, for the fiscal year ended October 31, 2004, the percentage of hours spent on the audit of the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons who are not full-time, permanent employees of E&Y was 0%. (g) For the fiscal years ended October 31, 2004 and October 31, 2003, the aggregate fees billed by E&Y of $3,468,898 and $3,391,944, respectively, for non-audit services rendered on behalf of the registrant ("covered"), its investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser ("non-covered") that provides ongoing services to the registrant for each of the last two fiscal years of the registrant is shown in the table below: 2004 2003 ---------- ---------- Covered Services $ 12,700 $ 14,817 Non-Covered Services 3,456,198 3,377,127 (h) The registrant's audit committee was not required to consider whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. The registrant has a separately designated standing audit committee (the "Audit Committee") established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The Audit Committee is comprised of the following board members: Mr. Armstrong, Mr. Beaubien, Mr. Burt, Mr. Feldberg and Mr. White. ITEM 6. SCHEDULE OF INVESTMENTS Included as part of the report to shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The registrant's Board of Directors believes that the voting of proxies on securities held by the registrant is an important element of the overall investment process. As such, the Board has delegated the responsibility to vote such proxies to the registrant's advisor. Following is a summary of the proxy voting policy of the advisor. CORPORATE GOVERNANCE PHILOSOPHY, VOTING GUIDELINES AND POLICY SUMMARY The proxy voting policy of UBS Global AM is based on its belief that voting rights have economic value and must be treated accordingly. Generally, UBS Global AM expects the boards of directors of companies issuing securities held by its clients to act as stewards of the financial assets of the company, to exercise good judgment and practice diligent oversight with the management of the company. While there is no absolute set of rules that determines appropriate corporate governance under all circumstances and no set of rules will guarantee ethical behavior, there are certain benchmarks, which, if substantial progress is made toward, give evidence of good corporate governance. UBS Global AM may delegate to an independent proxy voting and research service the authority to exercise the voting rights associated with certain client holdings. Any such delegation shall be made with the direction that the votes be exercised in accordance with UBS Global AM's proxy voting policy. When UBS Global AM's view of a company's management is favorable, UBS Global AM generally supports current management initiatives. When UBS Global AM's view is that changes to the management structure would probably increase shareholder value, UBS Global AM may not support existing management proposals. In general, UBS Global AM (1) opposes proposals which act to entrench management; (2) believes that boards should be independent of company management and composed of persons with requisite skills, knowledge and experience; (3) opposes structures which impose financial constraints on changes in control; (4) believes remuneration should be commensurate with responsibilities and performance; and (5) believes that appropriate steps should be taken to ensure the independence of auditors. UBS Global AM has implemented procedures designed to identify whether it has a conflict of interest in voting a particular proxy proposal, which may arise as a result of its or its affiliates' client relationships, marketing efforts or banking and broker/dealer activities. To address such conflicts, UBS Global AM has imposed information barriers between it and its affiliates who conduct banking, investment banking and broker/dealer activities and has implemented procedures to prevent business, sales and marketing issues from influencing our proxy votes. Whenever UBS Global AM is aware of a conflict with respect to a particular proxy, its appropriate local corporate governance committee is required to review and agree to the manner in which such proxy is voted. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Form N-CSR disclosure requirement not yet effective with respect to the registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. There were no purchases made by or on behalf of the registrant or any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended, of shares of the registrant's equity securities made in the period covered by this report. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The registrant's Board has established a Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will consider nominees recommended by shareholders if a vacancy occurs among those board members who are not "interested persons" as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended. In order to recommend a nominee, a shareholder should send a letter to the chairperson of the Nominating and Corporate Governance Committee, Professor Meyer Feldberg, care of the Secretary of the registrant at UBS Global Asset Management (US) Inc., 51 West 52nd Street, New York, New York 10019-6114, and indicate on the envelope "Nominating and Corporate Governance Committee." The shareholder's letter should state the nominee's name and should include the nominee's resume or curriculum vitae, and must be accompanied by a written consent of the individual to stand for election if nominated for the Board and to serve if elected by shareholders. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) Code of Ethics as required pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 (and designated by registrant as a "Code of Conduct") is incorporated by reference herein from Exhibit EX-99 CODE ETH to the registrant's Report on Form N-CSR filed December 30, 2003 (Accession Number: 0001206774-03-000909) (SEC File No. 811-07540). (a) (2) Certifications of principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit EX-99.CERT. (b) Certifications of principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit EX-99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Global High Income Dollar Fund Inc. By: /s/ Joseph A. Varnas --------------------- Joseph A. Varnas President Date: December 29, 2004 ----------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Joseph A. Varnas --------------------- Joseph A. Varnas President Date: December 29, 2004 ----------------- By: /s/ Thomas Disbrow ------------------ Thomas Disbrow Treasurer Date: December 29, 2004 ----------------- EX-99.CERT 2 a2148032zex-99_cert.txt EX 99.CERT Exhibit EX-99.CERT CERTIFICATIONS I, Joseph A. Varnas, President of Global High Income Dollar Fund Inc. certify that: 1. I have reviewed this report on Form N-CSR of Global High Income Dollar Fund Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/Joseph A. Varnas ------------------- Joseph A. Varnas President Date: December 29, 2004 ----------------- I, Thomas Disbrow, Treasurer of Global High Income Dollar Fund Inc., certify that: 1. I have reviewed this report on Form N-CSR of Global High Income Dollar Fund Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Thomas Disbrow ------------------ Thomas Disbrow Treasurer Date: December 29, 2004 ----------------- EX-99.906CERT 3 a2148032zex-99_906cert.txt EX 99.906CERT Exhibit EX-99.906CERT Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) In connection with the attached report of Global High Income Dollar Fund Inc. (the "Registrant") on Form N-CSR (the "Report"), each of the undersigned officers of the Registrant does hereby certify that, to the best of such officer's knowledge: 1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; 2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of, and for, the periods presented in the Report. Dated: December 29, 2004 ----------------- By: /s/ Joseph A. Varnas -------------------- Joseph A. Varnas President Dated: December 29, 2004 ----------------- By: /s/ Thomas Disbrow ------------------ Thomas Disbrow Treasurer This certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document. -----END PRIVACY-ENHANCED MESSAGE-----