<PAGE>
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AMERICAN STOCK
GLOBAL INCOME FUND EXCHANGE SYMBOL: GIF
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11 HANOVER SQUARE, NEW YORK, NY 10005
WWW.GLOBALINCOMEFUND.NET
January 28, 2000
Fellow Shareholder:
It is a pleasure to submit this Report for Global Income Fund and to
welcome our shareholders who have made their investment since our last Report.
The primary investment objective of the Fund is to provide for its shareholders
a high level of income and, secondarily, capital appreciation. The Fund pursues
its investment objectives by investing primarily in a global portfolio of
investment grade fixed income securities. At December 31, 1999, the Fund had
approximately 70% of its total assets invested in fixed income securities with
an actual or deemed investment grade rating, and approximately 30% of its total
assets in fixed income securities with an actual or deemed rating below
investment grade. At year end, the Fund's two largest investment allocations by
country were the United States (26.9%) and Argentina (10.6%), with the balance
spread over 17 other countries, territories and supranational organizations.
REVIEW AND OUTLOOK
Interest rates increased sharply during the second half of 1999 with
thirty year Treasury bond yields rising from 5.96% to 6.48%. For the full 1999
year, bond yields increased by 1.4 percentage points causing Treasury bond
prices to drop and to incur a negative total return for the year of --14.66%.
The Lehman Brothers Global Bond Index lost 5.24%, as the dollar lost 9.76% to
the Japanese Yen, but gained 13.75% to the new Euro. In the non-investment grade
bond sector, where the Fund's investments are limited to less than 35% of total
assets, high yield and most emerging market issues fared somewhat better. The
Lehman Brothers High Yield Index had a total return of 2.39% and the JP Morgan
Emerging Market Bond Index was up 25.97% after a punishing 1998. For 1999,
Global Income Fund's net asset value total return was a positive 5.11%.
The Fed Funds rate also rose decisively during the second half of the
year. The Federal Reserve Open Market Committee ("FOMC") raised this benchmark
level by 0.25% at both its August and November meetings, bringing the total
increase for 1999 to 0.75%, with Fed Funds ending the century at 5.50%. The FOMC
followed a familiar pattern of reverting to a neutral bias after meetings where
the Fed Funds rate was increased and reinstating a tightening bias after
meetings when interest rates were left unchanged, as was the case in October.
The exception to this pattern was the December FOMC meeting, which was expected
to result in no increase in interest rates due to Y2K worries. While the FOMC
left interest rates unchanged and maintained a neutral bias, the language of the
announcement was cautious: "Based on the available evidence . . . the Committee
remains concerned with the possibility that over time increases in demand will
continue to exceed the growth in potential supply, even after . . . the
remarkable rise in productivity growth." Further, the FOMC made it clear
that the neutral bias was intended "to indicate that the focus of policy in the
inter-meeting period must be ensuring a smooth transition into the year 2000."
Most Fed watchers concluded that a 0.25% tightening can be
<PAGE>
expected at the next FOMC meeting in February 2000, and Fed Funds futures
contracts corroborate this outlook. Our own opinions regarding the future course
of interest rates are discussed below.
During the second half of the year, the domestic economy performed
exceedingly well with real GDP growing at an annualized rate of 5.7% in the
third quarter and 5.8% in the fourth quarter. Inflation, however, seems to have
been kept in check. Producer and consumer prices rose 3.1% and 2.6%
year-over-year in November, while the "core" producer and consumer prices, which
excludes volatile food and energy prices, rose just 1.8% and 2.1%. Since our
last report to shareholders, the "core" inflation rates have increased only
slightly. We note, however, that commodity prices rose sharply in the third
quarter of 1999, and that manufacturers report higher prices in the monthly
purchasing managers survey. Import prices, which were important in reducing
inflationary pressures in 1999, have also risen sharply. Likewise, the U.S.
dollar may not benefit prices in 2000 as it did in 1999. Moreover, as Asian
economies recover, and the recession in Latin America subsides, the potential
for a synchronized global economic growth could create excessive and
inflationary demand.
In the United States, economic growth caused the unemployment rate to
decline to 4.1%, and new job growth accelerated to an average rate of 274,000
per month in the fourth quarter. We would not be surprised to see the
unemployment rate decline below 4.0% in 2000. Yet despite the low level of
unemployment, average wage growth - a prime catalyst for inflation - remains
contained at moderate 3.7%. With more employment, personal income grew about
5.9% last year. Further, personal consumption rose by around 6.8%, as consumer
credit grew by over 6.5% and the savings rate declined. If these trends
continue, their inflationary potential may cause interest rates to rise in 2000.
Over the past year, monetary aggregates, such as bank lending and
corporate and consumer debt, have all grown at a rapid pace. In addition, the
enormous equity market gains in the United States, Asia, and Europe, represent a
huge source of liquidity. Even a large increase in U.S. home prices have
contributed to the wealth effect, increasing consumer demand.
We do not doubt that the ingredients for higher inflation are in place,
and expect that interest rates will continue to rise. Although the Federal
Reserve increased the Fed Funds Rate by 0.75% in 1999, enough measures of
inflation have increased by more than that to suggest that the Fed is the most
accommodative it has been in at least the past two years. We remain concerned
that the Fed is already "behind the curve" in not having been sufficiently
aggressive in raising rates. The rate of inflation can increase at a pace that
can appear glacially slow, but unless countered, still results in a
glacier-sized problem. This slowness will probably keep the Fed operating in a
familiar 0.25% increment, wait-and-see mode in 2000. Additionally the FOMC
undoubtedly harbors concerns that a speculative bubble may exist in equity
markets and fears that an aggressive tightening could have dramatic
consequences. Policy makers may still hope that the rate increases of the past
year might have some impact, or simply that the longevity of the expansion may
lead to its demise. We also believe that a policy of raising interest rates will
inevitably lead to decreased demand, lower corporate earnings, and an economic
slowdown. As the business cycle reverses, it is realistic to expect that
interest rates will again decline.
During periods of rising interest rates, Global Income Fund adopts a
more defensive posture by buying shorter duration securities and hedging
interest rate exposure with futures contracts.
2
<PAGE>
Domestically, we are concerned about rising interest rates and the recent
increase in default rates seen in the U.S. high yield markets. Overseas, we
believe that European and Japanese interest rates will continue to rise. In
Europe, the business expansion continues as its financial markets evolve towards
the more free wheeling U.S. model. Japan's nascent economic recovery seems to
persist, reflecting a turnaround throughout Asia last year. In emerging markets,
despite last year's sharp recovery in debt prices, further improvement towards
historical averages can be expected as their market economies continue to
improve. World economic growth will probably boost Latin America as well. In any
event, the Fund will continue to invest in global markets opportunistically in
an attempt to generate a high level of income and capital appreciation for
shareholders.
DIVIDEND DISTRIBUTION POLICY CONTINUED
The managed 10% dividend distribution policy adopted by the Fund's Board
of Directors in 1997 continues to be well received. The objective is to provide
shareholders with a relatively stable cash flow and reduce or eliminate any
market price discount to the Fund's net asset value per share. Payments are made
primarily from ordinary income and any capital gains, with the balance
representing return of capital. For the year ended December 31, 1999, actual
distributions were 10.36% of average net assets with approximately 78.15%
derived from net investment income and the balance from return of capital. We
believe shares of the Fund are a sound value and an attractive investment for
income oriented portfolios.
REINVESTMENT PLAN ATTRACTIVE
The Fund's current net asset value is $5.77. With a recent closing
market price of $4.31 per share, we believe this represents an important
opportunity to purchase additional shares at an attractive discount from their
underlying value. The Fund's Dividend Reinvestment Plan is particularly
attractive because monthly dividend distributions are reinvested without charge
at the lower of net asset value per share or market price, which can contribute
importantly to growing your investment over time.
We appreciate your support and look forward to continuing to serve your
investment needs.
Sincerely,
/s/ Thomas B. Winmill /s/ Steven A. Landis
Thomas B. Winmill Steven A. Landis
President Senior Vice President
3
<PAGE>
GLOBAL INCOME FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS--DECEMBER 31, 1999
<TABLE>
<CAPTION>
PAR
VALUE MARKET VALUE
----- ------------
BONDS (99.42%)
ARGENTINA (10.59%)
<S> <C> <C>
$ 500,000 Buenos Aires Embottellad, 12% Bonds, due 9/01/05................ $ 485,000
500,000 Compagnie De Radiocomunicaciones Moviles S.A.,
9.25% Notes, due 5/08/08........................................ 433,750
500,000 Imasac S.A., 11% Notes, due 5/02/05............................. 292,500
500,000 Mastellone Hermanos SA, 11.75% Bonds, due 4/01/08............... 406,250
500,000 Multicanal SA, due 9/29/00...................................... 461,950
1,560,713 Province of Tucuman, 9.45%, due 8/01/04......................... 1,260,276
500,000 Republic of Argentina, Floating Rate Notes, due 4/07/09......... 498,750
----------
3,838,476
----------
BRAZIL (4.65%)
500,000 CIA Petrolifera Marlim, 13.125%, due 12/17/04................... 514,375
500,000 Espirito Santo-Escelsa, 10% Senior Notes, due 7/15/07........... 421,250
500,000 Radio e Televisao Bandeirantes Ltda., 12.875% Notes, due 5/15/06 248,750
500,000 Republic of Brazil, 11.625% Bonds, due 4/15/04.................. 501,250
----------
1,685,625
----------
CAYMAN ISLANDS (11.84%)
1,500,000 Bunge Trade Ltd., 9.25% Notes, due 5/01/02...................... 1,462,161
956,054 Oil Purchase Co. II, 10.73% Senior Notes, due 1/31/04........... 939,695
1,000,000 PDVSA Finance Ltd., 9.375% Bonds, due11/15/07................... 947,153
1,000,000 PDVSA Finance Ltd., 9.75% Bonds, due 2/15/10.................... 940,773
----------
4,289,782
----------
CHILE (1.23%)
500,000 Banco Sud Americano S.A., 7.60% Subordinated Notes, due 3/15/07. 444,748
COLOMBIA (2.98%)
1,000,000 Termoemcali Funding Corp., 10.125%, due 12/15/14 (2)............ 657,500
487,200 Transgas De Occidente S.A., 9.79% Senior Notes, due 11/01/10.... 423,864
----------
1,081,364
----------
DOMINICAN REPUBLIC (2.19%)
500,000 Dominican Republic, 6%, due 8/30/24............................. 327,500
500,000 Tricom S.A., 11.375% Senior Notes, due 9/01/04 (2).............. 467,500
----------
795,000
----------
GERMANY (5.42%)
1,000,000 Daimlerchrysler, 7.20%, due 9/01/09............................. 983,487
2,000,000 Helaba Finance B.V., 10.50%, due 5/04/01........................ 457,025
2,000,000 KFW International Finance, 16.30%, due 6/24/03.................. 524,788
----------
1,965,300
----------
KOREA (1.56%)
550,000 Korea Development Bank, 9.40% Notes, due 8/01/01................ 565,088
----------
LITHUANIA (4.37%)
1,086,000 Lietuvos Energija Amortising, Floating Rate Note, due 4/06/00... 1,075,140
500,000 Republic of Lithuania, 8% Notes, due 3/29/04.................... 508,535
----------
1,583,675
----------
MALAYSIA (0.98%)
400,000 Petroliam Nasi, 7.625%, due 10/15/26............................ 353,311
----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
PAR
VALUE MARKET VALUE
----- ------------
<S> <C> <C>
MEXICO (4.12%)
$ 500,000 Pemex Finance Ltd., 8.02%, due 5/15/07..........................$ 482,243
500,000 Pemex Finance Ltd., 10.61%, due 8/15/17......................... 549,483
500,000 Vicap SA, 11.375%, due 5/15/07.................................. 462,500
----------
1,494,226
----------
PANAMA (1.20%)
500,000 Panama Republic, 8.25%, due 4/22/08............................. 436,250
----------
PHILIPPINES (3.90%)
500,000 Bayan Telecommunications, 13.50% Senior Notes, due 7/15/06...... 437,500
500,000 CE Casecnan, 11.45%, due 11/15/05............................... 478,462
500,000 Philippine Long Distance Telephone, 10.50% Notes, due 4/15/09... 498,668
----------
1,414,630
----------
QATAR (2.92%)
1,000,000 State of Qatar, 9.50% Bonds, due 5/21/09........................ 1,058,933
----------
UNITED KINGDOM (10.07%)
1,000,000 Diageo Capital, 7.25%, 11/01/09................................. 985,191
4,000,000 Rothschild Continuation Finance B.V. Primary Capital Floating
Rate Notes...................................................... 2,664,612
----------
3,649,803
----------
UNITED STATES (26.90%)
500,000 Electronic Data, 7.125%, 10/15/09............................... 488,224
500,000 Goldman Sachs, 7.35%, 10/01/09.................................. 489,241
500,000 United Technologies, 6.625%, 11/15/04........................... 489,805
500,000 Socgen Real Estate LLC, 7.64% Bonds, due 12/29/49............... 459,083
6,000,000 U.S. Treasury Note, 5.875%, due 11/15/04........................ 5,885,628
2,000,000 U.S. Treasury Note, 6.00%, due 8/15/09.......................... 1,938,126
----------
9,750,107
----------
URUGUAY (2.44%)
592,105 Banco Central Del Uruguay, 6.25%, due 2/19/07................... 881,439
----------
VENEZUELA (0.88%)
455,000 Petrozuata Finance, Inc., 8.22%, due 4/01/17.................... 317,363
----------
SUPRANATIONAL/OTHER (1.18%)
500,000 OUB Soverign Emerging Market, 11.50% CBO-II Notes, due 5/12/18.. 426,650
----------
Total Bonds (cost: $37,277,184)................................. 36,031,770
----------
SHORT TERM INVESTMENTS (0.58%)
100,000 U.S. Treasury Bill, due 1/13/00................................. 99,827
110,875 State Street Bank & Trust Repurchase Agreement, 2.5%, December
31, 1999, due January 3, 2000 (collateralized by $115,000 U.S.
Treasury Notes, 6.75%, due 4/30/00, market value: $116,581,
proceeds at maturity $110,833).................................. 110,875
----------
Total Short Term Investments (cost: $210,702)................... 210,702
----------
TOTAL INVESTMENTS (COST: $37,487,886) (100.0%)............ $36,242,472
----------
</TABLE>
(1) Par value stated in currency indicated; market value stated in U.S.
dollars.
(2) Purchased pursuant to Rule 144A exemption from Federal registration
requirements.
(3) Non-income producing security.
See accompanying notes to financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value
(cost: $37,487,886) (note 1)................... $36,242,472
Cash............................................... 11,993
Collateral for securities loaned,
at market value (note 5)....................... 1,090,000
Interest receivable................................ 782,529
Other assets....................................... 5,321
-----------
Total assets............................... 38,132,315
-----------
LIABILITIES:
Payables:
Reverse repurchase agreement................... 7,890,000
Interest....................................... 3,876
Collateral for securities loaned (note 5).......... 1,090,000
Accrued expenses................................... 70,732
Accrued management fees............................ 17,584
-----------
Total liabilities.......................... 9,072,192
-----------
NET ASSETS: (applicable to 5,036,944
outstanding shares: 20,000,000 shares
of $.01 par value authorized)...................... $29,060,123
===========
NET ASSET VALUE PER SHARE
($29,060,123 / 5,036,944).......................... $5.77
=====
At December 31, 1999, net assets consisted of:
Paid-in capital.................................... $42,742,459
Accumulated net realized loss on
investments and foreign currencies............. (12,448,406)
Accumulated deficit in net investment
income......................................... (36,638)
Net unrealized depreciation on
investments and foreign currencies............. (1,197,292)
-----------
$29,060,123
===========
</TABLE>
STATEMENTS OF OPERATIONS
Six Months Ended December 31, 1999 and
Year Ended June 30, 1999
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
December 31, June 30,
1999 1999
------------ -----------
<S> <C> <C>
INVESTMENT INCOME:
Interest............................ $ 1,685,667 $ 3,343,913
Dividends........................... -- 5,382
----------- -----------
Total investment income 1,685,667 3,349,295
----------- -----------
EXPENSES:
Interest (note 5)................... 114,457 297,682
Investment management (note 3)...... 102,942 211,729
Custodian........................... 42,295 80,335
Professional (note 3)............... 21,590 44,200
Printing............................ 7,262 32,683
Directors........................... 14,146 29,288
Transfer agent...................... 7,540 15,341
Registration........................ 13,669 14,718
Other............................... 8,864 15,439
----------- -----------
Total expenses.............. 332,765 741,415
Fee reductions (note 4) (2,471) (4,989)
----------- -----------
Net expenses................ 330,294 736,426
----------- -----------
Net investment income... 1,355,373 2,612,869
----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS, FOREIGN
CURRENCIES AND FUTURES:
Net realized loss from security
transactions................ (1,102,507) (3,024,859)
Net realized loss from foreign
currency transactions....... (229,340) (78,867)
Unrealized appreciation
(depreciation) of investments
and foreign currencies
during the period............ 459,528 (616,711)
----------- -----------
Net realized and unrealized loss
on investments and foreign
currencies (872,319) (3,720,437)
----------- -----------
Net increase (decrease) in net
assets resulting from
operations................... $483,054 $(1,107,568)
=========== ===========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended December 31, 1999 and Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
JUNE 30,
DECEMBER 31, ----------------------------
1999 1999 1998
------------ --------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income................................................... $ 1,355,373 $ 2,612,869 $ 1,930,088
Net realized loss from security and foreign currency transactions....... (1,331,847) (3,103,726) (805,557)
Unrealized appreciation (depreciation) of investments and foreign
currencies during the period.................................... 459,528 (616,711) (1,211,629)
------------ ------------ ------------
Net change in net assets resulting from operations...................... 483,054 (1,107,568) (87,098)
Additions to (subtractions from) paid-in capital (note 6)............... -- 15,703 (349,978)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.23, $0.55 and $0.52 per
share, respectively)............................................ (1,126,033) (2,656,469) (1,660,618)
Distributions from paid-in capital ($0.07, $0.13 and $0.32 per share,
respectively)................................................... (367,674) (631,413) (933,121)
CAPITAL SHARE TRANSACTIONS:
Change in net assets resulting from capital share transactions
(a) (note 6).................................................... 470,582 955,680 10,694,156
------------ ------------ ------------
Total change in net assets...................................... (540,071) (3,424,067) 7,663,341
NET ASSETS:
Beginning of period..................................................... 29,600,194 33,024,261 25,360,920
------------ ------------ ------------
End of period (including accumulated deficit net investment income of
$36,638 and $122,467 as of December 31, 1999 and June 30,
1999, respectively)............................................. $29,060,123 $29,600,194 $33,024,261
============ ============ ============
</TABLE>
- -------------------------------------------
(a) Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
JUNE 30,
DECEMBER 31, ----------------------------------------------
1999 1999 1998
-------------------- -------------------- ------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
-------- --------- -------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares issued in reinvestment of distributions........... 98,103 $470,582 176,288 $955,680 178,392 $1,386,689
Shares issued in rights offering (note 6)................ -- -- -- -- 1,576,468 9,307,467
Net increase..................................... 98,103 $470,582 176,28 $955,680 1,754,860 $10,694,156
======== ========= ======== ========= ========== ===========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Global Income Fund, Inc. is a Maryland corporation registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company, whose shares are listed on the American Stock
Exchange. The primary objective of the Fund is a high level of income and
secondarily, capital appreciation. The Fund seeks to achieve its investment
objectives by investing primarily in foreign and domestic fixed income
securities, depending on the Investment Manager's evaluation of current and
anticipated market conditions, as set forth in its prospectus. The Fund is
subject to the risk of price fluctuations of the securities held in its
portfolio which is generally a function of the underlying credit ratings of an
issuer, the duration and yield of its securities, and general economic and
interest rate conditions. On September 8, 1999, the Board of Directors of the
Fund approved a change in the fiscal year end to December 31. Previously, the
fiscal year end was June 30. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements. With respect to security valuation, securities traded on a
national securities exchange or the Nasdaq National Market System ("NMS") are
valued at the last reported sales price on the day the valuations are made. Such
securities that are not traded on a particular day and securities traded in the
over-the-counter market that are not on NMS are valued at the mean between the
current bid and asked prices. Certain of the securities in which the Fund
invests are priced through pricing services which may utilize a matrix pricing
system which takes into consideration factors such as yields, prices,
maturities, call features and ratings on comparable securities. Bonds may be
valued according to prices quoted by a dealer in bonds which offers pricing
services. Debt obligations with remaining maturities of 60 days or less are
valued at cost adjusted for amortization of premiums and accretion of discounts.
Securities of foreign issuers denominated in foreign currencies are translated
into U.S. dollars at prevailing exchange rates. Forward currency contracts are
undertaken to hedge certain assets denominated in foreign currencies. Forward
and futures contracts are marked to market daily and the change in market value
is recorded by the Fund as an unrealized gain or loss. When a contract is
closed, the Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at the time it
was closed. The Fund could be exposed to risk if the counterparties are unable
to meet the terms of the contracts or if the value of the currency changes
unfavorably. Investment transactions are accounted for on the trade date (the
date the order to buy or sell is executed). Interest income is recorded on the
accrual basis. Discounts and premiums on securities purchased are amortized over
the life of the respective securities. Dividends and distributions to
shareholders are recorded on the ex-dividend date. In preparing financial
statements in conformity with generally accepted accounting principles,
management makes estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(2) The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable investment income and net capital gains, if
any, after utilization of any capital loss carryforward, to its shareholders and
therefore no Federal income tax provision is required. At December 31, 1999, the
Fund had an unused capital loss carryforward of approximately $11,960,000 of
which $1,656,000 expires in 2000, $4,111,000 in 2001, $173,000 in 2003,
$1,880,000 in 2004, $214,000 in 2006 and $3,926,000 in 2007. Based on Federal
income tax cost of $37,487,886, gross unrealized appreciation and gross
unrealized depreciation were $231,178 and $1,476,592, respectively, at December
31, 1999. Distributions paid to shareholders during the six months ended
December 31, 1999 differ from net investment income as determined for financial
reporting purposes principally as a result of the characterization of realized
foreign currency gains (losses) for tax/book purposes.
(3) The Fund retains CEF Advisers, Inc. as its Investment Manager. Under the
terms of the Investment Management Agreement, the Investment Manager receives a
management fee, payable monthly, based on the average weekly net assets of the
Fund, at the annual rate of 7/10 of 1% of the first $250 million, 5/8 of 1% from
$250 million to $500 million, and 1/2 of 1% over $500 million. This fee is
calculated by determining the average of net assets on each Friday of a month
and applying the applicable rate to such average for the number of days in the
month. Certain officers and directors of the Fund are officers and directors of
8
<PAGE>
the Investment Manager. The Fund reimbursed the Investment Manager $7,518 for
providing certain administrative and accounting services at cost for the six
months ended December 31, 1999. At the Annual Meeting of Shareholders of the
Fund held on December 21, 1999, shareholders were asked to elect two directors
and to ratify the selection of independent auditors. Shareholders elected:
George B. Langa as a director of the Fund with 4,619,127 shares voted in favor
and 114,177 shares voted to withhold; and Robert D. Anderson as a director of
the Fund with 4,605,615 shares voted in favor, and 127,689 shares voted to
withhold. The names of each other director whose term in office continued after
the meeting are Peter K. Werner, Bassett S. Winmill and Thomas B. Winmill.
Regarding the independent auditors, 4,652,318 shares voted in favor, 46,563
shares voted against, and 34,423 shares voted to abstain. Pursuant to rule
14a-5(e)(2) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
September 18, 2000 is the date after which notice of a shareholder proposal
submitted outside the processes of Rule 14a-8 under the 1934 Act is considered
untimely, as established by the Fund's By-laws, as amended December 8, 1999.
(4) The Fund has entered into an arrangement with its custodian whereby interest
earned on uninvested cash balances was used to offset a portion of the Fund's
expenses. During the period, the Fund's custodian fees were reduced by $2,471
under such arrangements. Purchases and sales of securities other than short term
notes aggregated $39,501,113 and $38,543,614, respectively, for the six months
ended December 31, 1999. A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future date.
When the Fund purchases or sells foreign securities it customarily enters into a
forward currency contract to minimize foreign exchange risk between the trade
date and the settlement date of such transactions. The Fund could be exposed to
risk if counterparties to the contracts are unable to meet the terms of their
contracts. The Fund had no forward currency contracts outstanding at December
31, 1999.
As of December 31, 1999, the Fund bought 40 financial futures contracts on ten
year U.S. Treasury notes. The contracts expire in March 2000 and the Fund had
recorded an unrealized gain of $50,781 as of December 31, 1999.
(5) The Fund may borrow through a committed bank line of credit and reverse
repurchase agreements. At December 31, 1999, there was no balance outstanding on
the line of credit and the interest rate was equal to the Federal Reserve Funds
Rate plus 1.00 percentage point. For the six months ended December 31, 1999, the
weighted average interest rate was 3.79% based on the balances outstanding from
the line of credit and reverse repurchase agreements and the weighted average
amount outstanding was $5,990,237. As of December 31, 1999, the Fund loaned
fixed income securities having a value of $1,058,933 and received cash
collateral of $1,090,000 for the loan. The Fund loaned securities to certain
brokers who paid the Fund lenders' fees. These fees, less costs to administer
the program, are included in interest income on the Statement of Operations for
the year ended December 31, 1999. The loans are secured at all times by cash or
U.S. Government obligations in an amount at least equal to the market value of
the securities loaned, plus accrued interest, determined on a daily basis and
adjusted accordingly. Although the Fund may regain record ownership of loaned
securities to exercise certain beneficial rights, 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 participates in repurchase agreements
with the Fund's custodian. The custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
(6) Under the Dividend Reinvestment Plan (the "Plan"), each dividend and capital
gain distribution, if any, declared by the Fund on outstanding shares will,
unless elected otherwise by each shareholder by notifying the Fund in writing at
any time prior to the record date for a particular dividend or distribution, be
paid on the payment date fixed by the Board of Directors or a committee thereof
in additional shares in accordance with the following: whenever the Market Price
(as defined below) per share is equal to or exceeds the net asset
9
<PAGE>
value per share at the time shares are valued for the purpose of determining the
number of shares equivalent tot he cash dividend or capital gain distribution
(the "Valuation Date"), participants will be issued additional shares equal to
the amount of such dividend divided by the Fund's net asset value per share.
Whenever the Market Price per share is less than such net dividend divided by
the Market Price. The Valuation Date is the dividend or distribution payment
date or, if that date is not an American Stock Exchange trading day, the next
trading day. For all purposes of the Plan: (a) the Market Price of the shares on
a particular date shall be the average closing market price on the five trading
days the shares traded ex-dividend on the Exchange prior to such date or, if no
sale occurred on the Exchange prior to such date, then the mean between the
closing bid and asked quotations for the shares on the Exchange on such date,
and (b) net asset value per share on a particular date shall be as determined by
or on behalf of the Fund. On May 20, 1998, the Fund issued to its shareholders
of record on that date, non-transferable rights entitling the holders thereof to
subscribe for an aggregate of 1,576,468 shares of the Fund's common stock. In
connection with the rights offering estimated costs of $300,000 were charged
against paid-in capital. At the conclusion of the offering period, 1,576,468
shares were issued at a subscription price of $6.15, resulting in $9,307,467
(net of sales load) credited to paid-in capital. Actual costs of the rights
offering were less than estimated and as a result approximately $15,700 was
credited to paid-in capital during the year ended June 30, 1999.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED JUNE 30,
DECEMBER 31, ---------------------------------------------------
1999 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA*
Net asset value at beginning of period............... $5.99 $6.93 $8.43 $7.92 $8.00 $8.25
------- ------- ------- ------- ------- ------
Income from investment operations:
Net investment income........................ .23 .55 .52 .51 .26 .17
Net realized and unrealized gain (loss) on
investments.......................... (.15) (.81) (1.18) .59 .23 .18
------- ------ ------- ------- ------- -------
Total from investment operations..... .08 (.26) (.66) 1.10 .49 .35
------- ------ ------- ------- ------- -------
Less distributions:
Distributions from net investment income..... (.23) (.55) (.52) (.59) (.26) (.17)
Distributions from paid-in capital........... (.07) (.13) (.32) -- (.31) (.43)
------- ------ ------- ------- ------- -------
Total distributions.................. (.30) (.68) (.84) (.59) (.57) (.60)
------- ------ ------- ------- ------- -------
Net asset value at end of period..................... $5.77 $5.99 $6.93 $8.43 $7.92 $8.00
======= ====== ======= ======= ======= =======
Per share market value at end of period.............. $4.44 $5.19 $6.44 $8.50
======= ====== ======= =======
TOTAL RETURN ON NET ASSET VALUE BASIS................ 2.52% (2.23)% (8.44)% 14.71% 6.26% 4.52%
======= ====== ======= ======= ======== =======
TOTAL RETURN ON MARKET VALUE BASIS (a)............... (8.96)% (8.85)% (15.65)% 15.71%
======= ====== ======= =======
RATIOS/SUPPLEMENTAL DATAs
Net assets at end of period (000's omitted)..........$29,060 $29,600 $33,024 $25,361 $30,865 $39,180
======= ======= ======= ======= ======= =======
Ratio of expense to average net assets(b)(c)......... 2.26% 2.45% 3.52% 2.71% 2.18% 2.21%
======= ====== ======= ======= ======== =======
Ratio of net investment income to average net assets. 9.21% 8.95% 8.53% 7.35% 6.55% 6.20%
======= ====== ======= ======= ======== =======
Portfolio turnover rate.............................. 115% 183% 328% 475% 585% 385%
======= ====== ======= ======= ======== =======
</TABLE>
* Per share income and operating expenses and net realized and unrealized
gain (loss) on investments have been computed using the average number of
shares outstanding. These computations had no effect on net asset value
per share.
** Annualized.
(a) Effective February 7, 1997, the Fund converted from an open-end management
investment company to a closed-end management investment company. The Fund
has calculated total return on market value basis based upon purchases and
sales of the Fund at current market values and reinvestment of dividends
and distributions at lower of the per share net asset value on the payment
date or the average of closing market price for the five days preceding
the payment date.
(b) Ratio excluding interest expense was 1.48%**, 1.46%, 1.58% and 2.00% for
the six months ended December 31, 1999 and the years ended June 30, 1999,
1998 and 1997, respectively.
(c) Ratio after custodian credits was 2.24%**, 2.43% and 3.42% for the six
months ended December 31, 1999 and the years ended June 30, 1999 and 1998,
respectively.
10
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders of
Global Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Global Income Fund, Inc. including the schedule of portfolio investments as of
December 31, 1999, and the related statements of operations, the statements of
changes in net assets and the financial highlights for each of the periods
indicated thereon. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian. 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 present fairly, in all material respects, the financial
position of Global Income Fund, Inc. as of December 31, 1999, the results of its
operations for the period then ended, the changes in its net assets and the
financial highlights for each of the periods indicated thereon, in conformity
with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 14, 2000
11
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL GLOBAL
INCOME INCOME
FUND FUND
- --------------------------------- ------------------------------
11 HANOVER SQUARE AMERICAN STOCK
NEW YORK, NY 10005 EXCHANGE SYMBOL:
1-888-847-4200
GIF
- --------------------------------- ------------------------------
INDEPENDENT ACCOUNTANTS ANNUAL REPORT
TAIT, WELLER & BAKER DECEMBER 31, 1999
Printed on recycled paper
GIF-121-12/9
