<PAGE>
GLOBAL INCOME
FUND
================================================================================
SEMI-ANNUAL REPORT
June 30, 2000
American Stock
Exchange Symbol:
GIF
11 Hanover Square,
New York, NY 10005
1-888-847-4200
www.globalincomefund.net
<PAGE>
Stock
GLOBAL INCOME FUND Exchange Symbol: GIF
================================================================================
11 Hanover Square, New York, NY 10005
www.globalincomefund.net
July 25, 2000
Fellow Shareholders:
We are pleased to submit this Semi-Annual Report for the six months ended
June 30, 2000 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 June 30,
2000, the Fund had approximately 72% of its total assets invested in fixed
income securities with an actual or deemed investment grade rating, and
approximately 28% of its total assets in fixed income securities with an actual
or deemed rating below investment grade. At mid-year, the Fund's two largest
investment allocations by country were the United States (50%) and Argentina
(14%), with the balance spread over 17 other countries, territories and
supranational organizations.
Review and Outlook
The first half of 2000 clearly demonstrated the potential benefits that
professional management and investment flexibility can offer investors. During
the first half of the year, many financial markets were characterized by high
levels of volatility, with many noteworthy price trends emerging and reversing
over the period. As usual, the key to successful investing during this period
seemed to be both what you owned and when you owned it. We are pleased to report
that during this difficult period Global Income Fund had a net asset value total
return of 5.53% and a market total return of 8.08%.
Interest rates were mixed during the first half of 2000. The Federal
Reserve raised its Federal Funds rate target by 1.00% to 6.50%, continuing a
trend that began in June 1998, when the rate was at 4.75%. Notably, after their
May 16 meeting, the target was increased by 0.50%, an aggressive departure from
the 0.25% increments that have characterized the tightening moves so far. In
contrast, three month Treasury bills rose only 0.52% over the same period, from
5.33% to 5.85%. Intermediate and long term government bond rates declined over
this period, predominantly due to concerns of reduced supply, and Treasury
buy-backs caused by the burgeoning Federal budget surplus. Five and ten year
Treasury note yields fell from 6.34% and 6.44%, to 6.18% and 6.03%,
respectively. This decline in rates was beneficial for prices and total return.
The Lehman Brothers Aggregate Bond Index had a six month total return of 3.99%.
Credit concerns, higher default rates, and negative cash flows out of high yield
funds led the Lehman Brothers High Yield Index to decline by 1.11% over the six
month period. The U.S. dollar rose by
<PAGE>
3.52% versus the Yen and 5.34% against the Euro, causing the Lehman Brothers
Global Bond Index to decline by .08%. The J.P. Morgan Emerging Markets Bond
Index ended the period up 8.15%, with high levels of volatility throughout the
six months.
The current domestic economic environment is characterized by strong
growth, low unemployment, low but rising inflation, a large and growing budget
surplus, and a record high trade deficit. Fed policy is driven by an attempt to
raise interest rates by enough to prevent excess demand to increase inflationary
pressures. Financial markets are highly volatile, reflecting the strong, but
conflicting influences affecting market sentiment. On the one hand, the Fed is
seeking to reduce demand by raising the Fed Funds rate; yet, this interest rate
has become a less meaningful tool for adjusting monetary conditions in recent
years - demand, reflecting the "wealth effect" of the strong stock market over
the past five years and from overseas recoveries is not directly affected by
monetary policy. Further, the budget surplus has caused a decline in longer term
yields. On the other hand, increases in productivity, new technology, U.S.
Government budget surpluses, and other factors keep inflation low, despite high
levels of growth. The possibility of a so-called "new economy," where growth can
persist at high levels without igniting inflation, has been recognized by some
market participants, but not embraced by the Fed.
As to the period ahead, it is tempting to conclude that the Fed's raising
of interest rates has begun to bear fruit. Recent data suggest the torrid pace
of economic growth has abated. The unemployment rate has increased from a low of
3.9% to 4.1%, weekly jobless claims have risen, retail sales have slowed, and
interest sensitive sectors, such as housing and auto sales, have softened.
Second quarter GDP growth should be around, or more than 5%, down from more than
6% over the past three quarters. It is not clear that this slowdown will
continue, or that it was due to the Fed's 1.75 percentage points tightening over
the past year. It is likely that some of the slowing is related to demand being
satiated in prior quarters, warm weather, and normal random variation. The
slowdown in retail sales this spring coincided with high income tax payments.
The rise in personal income and high levels of consumer confidence, however, are
not consistent with a slowdown. In any event, we do not believe the Fed has done
enough to cause a slowdown. Excluding the easing to prevent a systemic crisis in
the fall of 1998, the Fed has only tightened by 1 percentage point. The year
over year rate of inflation has increased by between 2% and 4% since then, so
"real" Fed Funds are actually easier now than when the tightening began.
Moreover, recognizing the reduced role of the Fed Funds rate in determining
monetary conditions, a more comprehensive analysis suggests that overall
monetary conditions are no tighter now than they were a year ago. Although the
Fed Funds rate recently has been left unchanged, the Fed will certainly resume
interest rate hikes should economic growth re-accelerate or the rate of
inflation increase later in the year.
Additionally, demographics and volatility in equity markets should increase
demand for fixed income securities. We are impressed with the building strength
of European economies and are optimistic about the new Euro currency. In
contrast, we view the Japanese market with some skepticism, due to the lack of
progress in structural reforms, the crisis level of the fiscal
2
<PAGE>
deficit, and the political deadlock - all suggestive of the lack of leadership
necessary to achieve enduring economic recovery. Although emerging markets
performed well during the first half of the year, we remain wary of their lower
liquidity levels and pricing excesses.
In view of these market conditions, the Fund's strategy has been to utilize
its global focus and flexibility to increase its dollar denominated investments
and benefit from U.S. dollar strength, as well as to extend its duration over
the first half of the year as the likelihood of near term, large magnitude rate
increases diminishes. In fact, the Fund's unhedged exposure to non-dollar assets
was negligible during this period. Going forward, we will continue to be looking
for investments with the greatest potential to provide stockholders with a high
level of income and, secondarily, capital appreciation.
10% 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 six months ended June 30, 2000, actual
distributions were 5.02% of average net assets with approximately 95.73% derived
from net investment income and the balance from return of capital. We believe
shares of the Fund are a sound value and an appealing investment for portfolios
seeking total return from capital appreciation and income.
Reinvestment Plan Attractive
The Fund's current net asset value per share is $5.71. With a recent
closing on the American Stock Exchange of $4.69 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 a very effective way to add to your holding because
quarterly 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. Please call 1-888-847-4200, and an Investor
Service Representative will be happy to assist you.
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,
Portfolio Manager
3
<PAGE>
GLOBAL INCOME FUND, INC.
Schedule of Portfolio Investments--June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Par Market
Value Value
------------ ------------
<C> <S> <C>
BONDS (99.66%)
Argentina (13.83%)
$ 945,212 BHN Mortgage Trust, 8.00% Notes, due 3/31/11 $ 900,221
689,000 Camuzzi Gas, 9.25% Bonds, due 12/15/01 692,445
500,000 Compagnie De Radiocomunicaciones Moviles S.A.,
9.25% Notes, due 5/08/08 443,750
1,000,000 CIA Transporte Energia, 8.625% Senior Notes, due 4/01/03 955,000
500,000 Mastellone Hermanos SA, 11.75% Bonds, due 4/01/08 376,250
500,000 Multicanal SA, Discount Notes, due 9/29/00 488,750
500,000 Perez Companc, 9.00% Notes, due 5/01/06 (2) 441,250
1,396,428 Province of Tucuman, 9.45% Notes, due 8/01/04 1,211,402
------------
5,509,068
------------
Brazil (2.16%)
450,000 CIA Petrolifera Marlim, 13.125% Notes, due 12/17/04 (2) 468,000
500,000 Espirito Santo-Escelsa, 10% Senior Notes, due 7/15/07 391,250
------------
859,250
------------
Bulgaria (1.99%)
1,000,000 Republic of Bulgaria Discounts, Floating Rate Notes,
due 7/28/24 792,500
------------
Chile (1.12%)
500,000 Banco Sud Americano S.A., 7.60% Subordinated Notes,
due 3/15/07 (2). 444,354
------------
Colombia (4.37%)
864,594 Oil Purchase Co. II, 10.73% Senior Notes,
due 1/31/04 (2) 839,359
993,700 Termoemcali Funding Corp., 10.125% Notes,
due 12/15/14 (2) 549,019
485,300 Transgas De Occidente S.A., 9.79% Senior Notes,
due 11/01/10 (2) 351,843
------------
1,740,221
------------
Dominican Republic (1.18%)
500,000 Tricom S.A., 11.375% Senior Notes, due 9/01/04 (2) 468,750
------------
El Salvador (1.32%)
500,000 Republic of El Salvador, 10.00% Notes, due 1/15/07 (2) 526,250
------------
France (1.14%)
500,000 Socgen Real Estate LLC, 7.64% Bonds, due 12/29/49 (2) 455,886
------------
India (1.07%)
500,000 Sterlite Industries Ltd., Floating Rate Notes,
due 6/05/07 426,250
------------
Mexico (2.25%)
500,000 Grupo Elektra SA de Cv, 12.00% Senior Notes,
due 4/01/08 (2) 453,750
500,000 Maxcom Telecomunicaciones, 13.75% Senior Notes,
due 4/01/07 (2) 442,500
------------
896,250
------------
Panama (1.72%)
692,342 Republic of Panama, Floating Rate Notes, due 5/14/02 686,284
------------
Philippines (1.99%)
500,000 Bayan Telecommunications, 13.50% Senior Notes,
due 7/15/06 (2) 328,125
500,000 CE Casecnan, 11.45% Senior Notes, due 11/15/05 466,250
------------
794,375
------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Par Market
Value Value
------------ -------------
<C> <S> <C>
Qatar (2.58%)
$1,000,000 State of Qatar, 9.50% Bonds, due 5/21/09 (2).................... $ 1,027,500
------------
Russia (.97%)
$ 500,000 Russian Federation, 10.00% Unsubordinated Notes, due 6/26/07.... 385,000
------------
United Kingdom (6.55%)
2,000,000 Rothschild Continuation Finance B.V., Floating Rate Notes,
due 1/23/15..................................................... 1,587,442
1,500,000 Rothschild Continuation Finance B.V., Perpetual Primary
Capital Floating Rate Notes..................................... 1,021,134
------------
2,608,576
------------
United States (49.57%)
500,000 AT&T Corp.-Liberty Media, 8.25% Debentures, due 2/01/30 (2)..... 460,325
1,500,000 Bunge Trade Ltd., 9.25% Notes, due 5/01/02 (2).................. 1,494,627
806,000 Dicatphone Corp., 11.75% Senior Subordinated Notes,
due 8/01/05..................................................... 822,120
1,000,000 General Electric Capital Corp., 7.375% Notes, due 1/19/10....... 1,011,930
7,500,000 U.S. Treasury Note, 6.75%, due 5/15/05.......................... 7,678,125
8,000,000 U.S. Treasury Note, 6.50%, due 2/15/10.......................... 8,275,000
------------
19,742,127
------------
Uruguay (3.14%)
L552,631 Banco Central Del Uruguay DCB, Floating Rate Notes,
due 2/19/07 (1)................................................. 783,462
500,000 Banco Comercial S.A., 8.875% Bonds, due 5/15/09................. 467,500
------------
1,250,962
------------
Venezuela (.88%)
455,000 Petrozuata Finance, Inc., 8.22% Notes, due 4/01/17 (2).......... 351,488
------------
Supranational/Other (1.83%)
MXN2,400,000 International Bank Reconstruction & Development,
15.875% Notes, due 2/28/03 (1).................................. 242,189
500,000 OUB Soverign Emerging Market, 11.50% CBO-II Notes,
due 5/12/18..................................................... 484,620
------------
726,809
------------
Total Bonds (cost: $40,299,508)............................. 39,691,900
------------
Shares COMMON STOCKS (.34%)
------ Services-Specialty Outpatient Facilities (.34%)
20,000 Caremark Rx, Inc.(3)............................................ 136,250
------------
Total Common Stocks (cost: $121,463)........................ 136,250
------------
Total Investments (cost: $40,420,971)(100.0%)............ $ 39,828,150
============
</TABLE>
(1) Par value stated in currency indicated; market value stated in U.S.
dollars.
(2) Purchased pursuant to Rule 144Aexemption from Federal registration
requirements.
(3) Non-income producing security.
See accompanying notes to financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
ASSETS:
Investments at market value
(cost: $40,420,971) (note 1) .......................... $ 39,828,150
Cash .................................................... 519,585
Investment securities sold receivable ................... 1,006,009
Interest receivable ..................................... 870,476
Other assets ............................................ 5,321
------------
Total assets ........................................ 42,229,541
------------
LIABILITIES:
Payables:
Reverse repurchase agreement .......................... 11,412,500
Interest .............................................. 7,171
Investment securities purchased ....................... 498,583
Demand notes payable to bank (note 5) ................... 993,503
Accrued management fees ................................. 16,667
Accrued expenses ........................................ 15,827
------------
Total liabilities ................................... 12,944,251
------------
NET ASSETS: (applicable to 5,128,545
outstanding shares: 20,000,000 shares
of $.01 par value authorized) ........................... $ 29,285,290
============
NET ASSET VALUE PER SHARE
($29,285,290 / 5,128,545) ............................... $5.71
=====
At June 30, 2000, net assets consisted of:
Paid-in capital ......................................... $ 43,150,300
Accumulated net realized loss on
investments and foreign currencies .................... (12,958,160)
Accumulated deficit in net investment
income ................................................ (305,648)
Net unrealized depreciation on
investments and foreign currencies .................... (601,202)
------------
$ 29,285,290
============
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
INVESTMENT INCOME:
Interest ................................................ $ 1,838,253
------------
EXPENSES:
Interest (note 5) ....................................... 249,974
Management (note 3) ..................................... 101,335
Custodian ............................................... 41,048
Professional (note 3) ................................... 15,457
Directors ............................................... 13,164
Registration ............................................ 7,630
Transfer agent .......................................... 6,582
Printing ................................................ 4,987
Other ................................................... 2,394
------------
Total expenses ........................................ 442,571
Fee reductions (note 4) ............................... (3,900)
------------
Net expenses .......................................... 438,671
------------
Net investment income ............................... 1,399,582
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS, FOREIGN
CURRENCIES AND FUTURES:
Net realized loss from security transactions ............ (509,754)
Net realized loss from foreign currency transactions .... (206,527)
Unrealized appreciation of investments and foreign
currencies during the year............................. 596,090
------------
Net realized and unrealized loss on investments and
foreign currencies..................................... (120,191)
------------
Net increase in net assets resulting from operations..... $1,279,391
============
See accompanying notes to financial statements.
6
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 2000 (Unaudited) and December 31, 1999 and
<TABLE>
<CAPTION>
Year Ended June 30, 1999 June 30, December 31, June 30,
2000 1999 1999
----------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income................................................ $ 1,399,582 $ 1,355,373 $ 2,612,869
Net realized loss from security and foreign currency transactions.... (716,281) (1,331,847) (3,103,726)
Unrealized appreciation (depreciation) of investments and
foreign currencies during the period............................... 596,090 459,528 (616,711)
----------- ----------- -----------
Net change in net assets resulting from operations................. 1,279,391 483,054 (1,107,568)
Additions to paid-in capital (note 6)................................ - - 15,703
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.28, $0.23 and
$0.52 per share, respectively)..................................... (1,399,582) (1,126,033) (2,656,469)
Distributions from paid-in capital ($0.01, $0.07 and
$0.13 per share, respectively)..................................... (62,483) (367,674) (631,413)
CAPITAL SHARE TRANSACTIONS:
Change in net assets resulting from reinvestment of distributions
(91,601, 98,103 and 176,288 shares, respectively) (note 6)......... 407,841 470,582 955,680
----------- ----------- -----------
Total change in net assets......................................... 225,167 (540,071) (3,424,067)
NET ASSETS:
Beginning of period.................................................. 29,060,123 29,600,194 33,024,261
----------- ----------- -----------
End of period (including accumulated deficit in net
investment income of $305,648, $36,638 and $122,467 as of
June 30, 2000, December 31, 1999 and June 30, 1999,
respectively)...................................................... $29,285,290 $29,060,123 $29,600,194
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Notes to Financial Statements
(Unaudited)
(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
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 $40,420,971, gross unrealized appreciation and gross
unrealized depreciation were $552,773 and $1,145,594, respectively, at June 30,
2000. Distributions paid to shareholders during the six months ended
December 31, 1999 differ from net investment income and net gains (losses) from
security, foreign currency and futures transactions as determined for financial
reporting purposes principally as a result of the characterization of realized
foreign currency gains (losses) for tax/book purposes, the taxability of
unrealized appreciation (depreciation) on certain forward currency contracts and
the utilization of capital loss carryforwards. These distributions are
classified as "distributions from paid-in capital" in the Statements of Changes
in Net Assets.
(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 mil-
8
<PAGE>
lion, and 1/2 of 1% over $500 million. Certain officers and directors of the
Fund are officers and directors of the Investment Manager. The Fund reimbursed
the Investment Manager $8,008 for providing certain administrative and
accounting services at cost for the six months ended June 30, 2000.
(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 $3,900
under such arrangements. Purchases and sales of securities other than short term
notes aggregated $47,635,914 and $43,465,538, respectively, for the six months
ended June 30, 2000. 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 June 30, 2000.
(5) The Fund may borrow through a committed bank line of credit and reverse
repurchase agreements. At June 30, 2000, 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 June 30, 2000, the weighted
average interest rate was 5.08% based on the balances outstanding from the line
of credit and reverse repurchase agreements and the weighted average amount
outstanding was $9,876,408. 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 value per
share at the time shares are valued for the purpose of determining the number of
shares equivalent to the 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 $15,703 was
credited to paid-in capital during the year ended June 30, 1999.
9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended Years Ended June 30,
June 30, 2000 December ----------------------------------------------------
(Unaudited) 31, 1999 1999 1998 1997 1996 1995
----------- --------- -------- -------- -------- -------- --------
PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ........... $5.77 $5.99 $6.93 $8.43 $7.92 $8.00 $8.25
------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income .......................... .28 .23 .55 .52 .51 .26 .17
Net realized and unrealized gain (loss) on
investments .................................. (.05) (.15) (.81) (1.18) .59 .23 .18
------- ------- ------- ------- ------- ------- -------
Total from investment operations ............. .23 .08 (.26) (.66) 1.10 .49 .35
Less distributions:
Distributions from net investment income ....... (.28) (.23) (.55) (.52) (.59) (.26) (.17)
Distributions from paid in capital ............. (.01) (.07) (.13) (.32) - (.31) (.43)
------- ------- ------- ------- ------- ------- -------
Total distributions .......................... (.29) (.30) (.68) (.84) (.59) (.57) (.60)
------- ------- ------- ------- ------- ------- -------
Net asset value at end of period ................. $5.71 $5.77 $5.99 $6.93 $8.43 $7.92 $8.00
======= ======= ======= ======= ======= ======= =======
Per share market value at end of period .......... $4.50 $4.44 $5.19 $6.44 $8.50
======= ======= ======= ======= =======
TOTAL RETURN ON NET ASSET VALUE
BASIS ............................................ 5.53% 2.52% (2.23)% (8.44)% 14.71% 6.26% 4.52%
======= ======= ======= ======= ======= ======= =======
TOTAL RETURN ON MARKET VALUE
BASIS (a) ........................................ 8.08% (8.96)% (8.85)% (15.65)% 15.71%
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) ...... $29,285 $ 29,060 $29,600 $33,024 $25,361 $30,865 $39,180
======= ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets (b) (c) .. 3.05%** 2.26%** 2.45% 3.52% 2.71% 2.18% 2.21%
======= ======= ======= ======= ======= ======= =======
Ratio of net investment income to average net
assets ........................................... 9.66%** 9.21%** 8.95% 8.53% 7.35% 6.55% 6.20%
======= ======= ======= ======= ======= ======= =======
Portfolio turnover rate .......................... 119% 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 1.30%**, 1.48%**, 1.46%, 1.58% and
2.00% for the six months ended June 30, 2000 and December 31, 1999 and the
years ended June 30, 1999, 1998 and 1997, respectively.
(c) Ratio after custodian credits was 3.03%**, 2.24%**, 2.43% and 3.42% for the
six months ended June 30, 2000 and December 31, 1999 and the years ended
June 30, 1999 and 1998, respectively.
10
<PAGE>
GLOBAL INCOME FUND
======================
11 Hanover Square
New York, NY 10005
Printed on recycled paper [LOGO OF RECYCLING]
GIF-SAR-6/00
