GLOBAL HIGH INCOME DOLLAR FUND INC. ANNUAL REPORT
December 15, 1999
Dear Shareholder,
We are pleased to present you with the annual report for the Global High Income
Dollar Fund Inc. (the "Fund") for the fiscal year ended October 31, 1999.
- -------------------------------------------
GLOBAL HIGH INCOME DOLLAR
FUND INC.
INVESTMENT GOALS:
High level of current
income; secondarily
capital appreciation
PORTFOLIO MANAGER:
Stuart Waugh,
Mitchell Hutchins Asset
Management Inc.
COMMENCEMENT:
October 8, 1993
NYSE SYMBOL:
GHI
DIVIDEND PAYMENTS:
Monthly
- -------------------------------------------
MARKET REVIEW
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
The environment for emerging market debt changed positively over the year.
In strong contrast to the deflation fears and atmosphere of financial crisis
which characterized foreign debt markets in 1998, world recovery and strong
commodity prices have characterized the recent past. Financial stabilization
took hold in most of Asia as export growth engendered economic recovery. After
devaluing the REAL last winter, the Brazilian government successfully
implemented an International Monetary Fund program designed to stabilize its
debt-to-GDP level. Recovering growth and low inflation have characterized
Brazil's economic performance this year although its external deficits continue
to grow. Oil exporting countries such as Mexico, Venezuela and Russia have
enjoyed windfall surpluses because of the higher prevailing prices.
Recovery in world growth has exerted a powerful impact on emerging market
debt prices. The sector benchmark, the JP Morgan Emerging Markets Bond Index
Plus (EMBI+), gained 19.98% over the 12 months ended October 31, 1999. In
contrast, developed bond markets as measured by the Salomon Smith Barney World
Government Bond Index returned only 1.3% hedged into U.S. dollars over the 12
months.
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
AVERAGE ANNUAL % RETURNS, PERIODS ENDED 10/31/99*
Since Inception
1 Yr. 5 Yrs. 10/8/93
- --------------------------------------------------------------------------------
Net Asset Value Return1 16.55 11.19 8.19
Market Price Return2 13.23 11.44 6.48
JPMorgan EMBI+ 19.98 13.17 N/A
- --------------------------------------------------------------------------------
1 NAV return assumes, for illustration only, that dividends were reinvested at
the net asset value on the payable dates.
2 Market price return assumes dividends were reinvested under the Dividend
Reinvestment Plan.
- -----------------
* Returns do not reflect any commissions and are not representative of an
individual investment. The Fund's share prie and investment return will vary
so that an investor's shares may be worth more than their original cost Past
performance is no guarantee of future results.
1
<PAGE>
ANNUAL REPORT
SHARE PRICE, DIVIDEND AND YIELD, 10/31/99+
- ---------------------------------------------
Net Asset Value $13.66
Market Price $11.50
12-Mo. Dividend $1.4043
Market Yield3 10.43%
IPO Yield3 8.00%
Net Assets ($mm) $284.3
- ----------------------------------------------
+ Prices and yields will vary.
3 IPO yield is calculated by multiplying the October distribution ($0.1000)
by 12 and dividing by the initial public offering price of $15.00. Market
yield is calculated by multiplying the October distribution by 12 and
dividing by the Fund's closing price on October 31, 1999.
PERFORMANCE ATTRIBUTION
For the fiscal year ended October 31, 1999, the Fund returned 16.55% based
on net asset value and 13.23% based on market price, compared to the EMBI+
return of 19.98%. The primary reason for the difference between the Fund's
return and the return on the EMBI+ was the Fund's underweighting in Russian
eurobonds, which rebounded strongly from depressed levels of a year ago. These
bonds, most of which returned more than 200% over the 12 months ended October
31, 1999, have approximately a 5% weight in the EMBI+; however, the Fund had
only a small holding and did not benefit from their gains as much as the Index
benefited.
CURRENCY EXPOSURE*
As of 10/31/99 % As of 4/30/99 %
- --------------------------------------------------------------------------------
U.S. Dollar Denominated 94.1 U.S. Dollar Denominated 96.1
Total Foreign Currency 5.9 Total Foreign Currency 3.9
- --------------------------------------------------------------------------------
Total 100.0 Total 100.0
TRANSACTIONS
At the beginning of the year the Fund held substantial cash positions
(roughly 18-20% of net assets) as a defensive strategy, in large measure because
of concerns over the balance of payments risks in Brazil. We began to reinvest
the Fund's cash after the devaluation of the Brazilian REAL in January and
Brazil's subsequent agreement with the IMF on terms of a support program. We
increased the Fund's risk exposure across the emerging markets sector in the
belief that stabilization of Brazil's financial circumstances would stabilize
debt valuations for other countries as well. By the end of the first half of the
Fund's fiscal year we had reduced cash balances to a level that facilitated the
Fund's share buyback program.
- -----------------
* Weightings represent percentages of portfolio assets as of October 31, 1999,
unless noted otherwise. The Fund's portfolio is actively managed and its
composition will vary over time.
2
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC. ANNUAL REPORT
TOP TEN COUNTRIES*
10/31/99 % 4/30/99 %
- --------------------------------------------------------------------------------
Mexico 23.5 Mexico 22.9
Brazil 14.1 Brazil 13.8
Poland 8.5 Poland 9.0
Argentina 5.1 Morocco 5.6
Bulgaria 5.0 Argentina 5.0
Venezuela 4.8 Korea 4.8
Morocco 4.7 Bulgaria 4.8
Korea 4.6 Venezuela 4.8
Panama 4.0 Philippines 4.5
Philippines 3.7 Panama 4.3
- --------------------------------------------------------------------------------
Total 78.0 Total 79.5
OUTLOOK
- --------------------------------------------------------------------------------
The strong performance of the sector in the last 12 months has brought
valuations and yields of emerging-market credits more into line with similarly
rated domestic credits. Cyclical recovery in Asia, Latin America and Eastern
Europe is clearly encouraging confidence in creditworthiness of emerging market
issuers. Risks for the sector seem less apparent now than a year ago but risks
remain--chiefly the risk of higher interest rates in the developed world.
Short-term rates remain low in the developed world because modest wage gains and
ample worldwide manufacturing capacity have kept inflation low. Accelerating and
simultaneous growth in all of the world's major economic regions may force
developed countries to pursue tighter monetary policies (and higher interest
rates) than they have had to in the last several years.
Higher interest rates could cause problems for sovereign issuers seeking to
refinance maturing debt. Argentina seems the most likely to encounter problems,
as it continues to face large debt maturities and public sector borrowing
requirements in the coming years. Argentina's high debt service ratio is
especially problematic in view of its lack of export competitiveness, since
exports ultimately provide the resources to service external debt.
Brazil remains subject to economic instability despite achieving its IMF
targets for the year--its budget deficit remains large and its government
interest burden high. The Brazilian government has yet to rein in the
accelerating cost of one of the world's most generous pension systems.
Although Russia recently has benefited from an improved export environment,
political risks have increased with the Russian government's increasing
isolation from the West over the war in Chechnya.
- -----------------
* Weightings represent percentages of portfolio assets as of October 31, 1999,
unless noted otherwise. The Fund's portfolio is actively managed and its
composition will vary over time.
3
<PAGE>
ANNUAL REPORT
Such risks should not obscure positive developments in the emerging market
debt sector. The universe of debt issues available to the Fund expanded this
year, as countries with no previous traded debt issued bonds. This is positive
for the Fund as a broader market allows the Fund to hold a more diversified
portfolio and affords more choices when investment in one country or region is
not desirable.
CREDIT QUALITY* 10/31/99
- ----------------------------------------
A1/P1 3.3%
A 3.9
BBB 18.2
BB 45.3
B 24.7
Non-Rated 2.0
Below B 0.6
Selective Default** 2.0
- ----------------------------------------
Total 100.0
Mexico has benefited from its economic integration with the United States,
and has experienced strong foreign direct investment and healthy economic
growth; its fiscal and external deficits appear manageable. Mexico may be able
to improve its credit rating over the next year if it can advance its reform
agenda. It must resolve credit problems in its banking sector--the legacy of its
1994 peso crisis. Bankruptcy legislation is needed to allow banks to collect on
or foreclose on defaulted loans. Additionally, the government and Congress
elected next summer need to legislate tax reform lowering the budget's
dependence on favorable oil prices and to reduce government involvement in the
private sector. We believe such reforms would allow Mexico to move beyond
economic stabilization and would be extremely positive for its creditworthiness.
Finally, along with both upside and downside risks, the emerging-market
sector continues to afford substantial excess yields over higher rated credits
and diversification away from strictly domestic high-yield bonds.
- -----------------
* Weightings represent percentages of portfolio assets as of October 31, 1999,
unless noted otherwise. The Fund's portfolio is actively managed and its
composition will vary over time.
** Relates to the Fund's Soviet Union debt
position.
4
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC. ANNUAL REPORT
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have. For a QUARTERLY REVIEW on
Global High Income Dollar Fund Inc. or a fund in the PaineWebber Family of
Funds,4 please contact your Financial Advisor.
Sincerely,
/s/ Margo Alexander /s/ Brian M. Storms
- ------------------- -------------------
MARGO ALEXANDER BRIAN M. STORMS
Chairman and Chief Executive Officer President and Chief Operating Officer
Mitchell Hutchins Asset Management Inc. Mitchell Hutchins Asset Management Inc.
/s/ Stuart Waugh
- ----------------
STUART WAUGH
Managing Director,
Mitchell Hutchins Asset Management Inc.
Portfolio Manager, Global High Income
Dollar Fund Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the fiscal year ended October 31, 1999, and reflects our views
at the time of its writing. Of course, these views may change in response to
changing circumstances. We encourage you to consult your Financial Advisor
regarding your personal investment program.
- -----------------
4 Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
5
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
-------- --------- --------- ---------
LONG-TERM DEBT SECURITIES--96.99%
ARGENTINA--5.00%
<S> <C> <C> <C> <C> <C>
ARS 6,050 Republic of Argentina ...................... 02/12/07 11.750% $ 5,265,975
$ 6,000 Republic of Argentina ...................... 04/07/09 11.750 5,892,000
4,033 Republic of Argentina, DISC ................ 03/31/23 6.000+ 3,060,039
-----------
14,218,014
-----------
BRAZIL--13.81%
4,430 Federal Republic of Brazil ................. 10/15/09 14.500 4,591,695
15,306 Federal Republic of Brazil, DCB ............ 04/15/12 7.000+ 9,987,165
21,300 Federal Republic of Brazil, DISC. .......... 04/15/24 6.938+ 14,803,500
2,800 Federal Republic of Brazil, EXIT ........... 09/15/13 6.000 1,764,005
5,000 Federal Republic of Brazil, NMB ............ 04/15/09 7.000+ 3,637,500
7,500 Federal Republic of Brazil, PAR ............ 04/15/24 5.750++ 4,481,250
-----------
39,265,115
-----------
BULGARIA--4.96%
3,500 Republic of Bulgaria, DISC ................. 07/28/24 6.500+ 2,594,375
11,000 Republic of Bulgaria, FLIRB ................ 07/28/12 2.750++ 7,383,750
5,400 Republic of Bulgaria, IAB .................. 07/28/11 6.500+ 4,117,500
-----------
14,095,625
-----------
CHILE--1.04%
3,000 CIA de Telecom de Chile, S.A. .............. 01/01/06 8.375 2,964,900
-----------
COSTA RICA--1.24%
3,500 Republic of Costa Rica ..................... 05/15/09 9.335 3,535,000
-----------
ECUADOR--0.35%
3,000 Republic of Ecuador, PAR ................... 02/28/25 4.000++ 982,500
-----------
EL SALVADOR--1.46%
4,170 Republic of El Salvador(1) ................. 08/15/06 9.500 4,149,150
-----------
HUNGARY--2.03%
HUF1,406,000 Republic of Hungary ........................ 01/12/01 to 06/12/01 13.500 5,763,394
-----------
KOREA--4.48%
$ 12,270 Republic of Korea .......................... 04/15/03 to 04/15/08 8.750 to 8.875 12,721,100
-----------
MEXICO--23.09%
3,464 Coca-Cola Femsa, S.A. de C.V. .............. 11/01/06 8.950 3,377,400
3,000 Grupo Industrial Durango, S.A. de C.V. .... 07/15/01 12.000 2,970,000
5,700 Grupo Televisa, S.A. de C.V. ............... 05/15/08 0/13.250@ 4,916,250
6,875 Mexican Multi Year Refinance Loan
Participation (Salomon Brothers)(1)(2) ... 03/20/05 6.063+ 5,680,469
3,000 Pemex Finance LTD(1) ....................... 11/15/18 9.150 2,801,490
15,068 United Mexican States ...................... 04/06/05 to 05/15/26 9.750 to 11.500 16,532,138
30,621 United Mexican States, DISC(3) ............. 12/31/19 5.874 to 6.933+ 26,755,098
3,500 United Mexican States, PAR(4) .............. 12/31/19 6.250 2,616,250
-----------
65,649,095
-----------
MALAYSIA--2.40%
3,000 Republic of Malaysia ....................... 06/01/09 8.750 3,082,500
4,000 Petroliam Nasional Berhad .................. 10/18/06 7.125 3,736,800
-----------
6,819,300
-----------
6
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
-------- --------- --------- ---------
MOROCCO--4.74%
$ 2,324 Kingdom of Morocco Loan Participation,
Tranche A (Chase Manhattan Bank)(1)(2) ... 01/01/09 5.906%+ $ 2,015,905
13,224 Kingdom of Morocco Loan Participation,
Tranche A (Morgan Guaranty Trust)(1)(2) .. 01/01/09 5.906+ 11,471,861
-----------
13,487,766
-----------
NETHERLANDS--0.99%
3,000 TPSA Finance BV ............................ 12/10/08 7.750 2,820,000
-----------
PANAMA--3.91%
3,104 Republic of Panama ......................... 04/01/29 9.375 2,933,280
10,894 Republic of Panama, PDI .................... 07/17/16 6.500+ 8,170,781
-----------
11,104,061
-----------
PERU--2.71%
5,000 Republic of Peru, FLIRB .................... 03/07/17 3.750++ 2,750,000
8,000 Republic of Peru, PDI ...................... 03/07/17 4.500++ 4,960,000
-----------
7,710,000
-----------
PHILIPPINES--3.59%
10,179 Republic of Philippines .................... 01/15/19 to 10/21/24 9.500 to 9.875 10,196,685
-----------
POLAND--8.35%
PLN 23,780 Republic of Poland ......................... 06/12/02 to 02/12/03 12.000 5,337,563
$ 30,300 Republic of Poland, PAR .................... 10/27/24 3.000++ 18,407,250
-----------
23,744,813
-----------
RUSSIA--2.62%
14,308 Russian IAN ................................ 12/15/15 6.063+ 1,573,836
3,000 Russia Federation .......................... 06/24/28 12.750 1,638,600
22,080 Russian Principal Loan
(Chase Manhattan Bank)(1)(2) ............ 12/15/20 6.063+ 2,014,800
24,300 Russian Principal Loan
(Morgan Guaranty Trust)(1)(2) ........... 12/15/20 6.063+ 2,217,375
-----------
7,444,611
-----------
TRINIDAD & TOBAGO--2.71%
7,500 Republic of Trinidad and Tobago(1) ......... 10/03/04 to 10/01/09 9.875 to 11.750 7,696,015
-----------
TUNISIA--1.87%
6,500 Banque Centrale de Tunisie ................. 09/19/27 8.250 5,330,000
-----------
TURKEY--0.88%
2,490 Republic of Turkey ......................... 11/05/04 11.875 2,499,337
-----------
VENEZUELA--4.76%
11,710 Republic of Venezuela ...................... 09/15/27 9.250 7,880,830
8,175 Republic of Venezuela, PAR(5) .............. 03/31/20 6.750 5,640,750
-----------
13,521,580
-----------
Total Long-Term Debt Securities (cost-$289,309,110).......... 275,718,061
-----------
7
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
-------- --------- --------- ---------
REPURCHASE AGREEMENT--1.22%
$ 3,454 Repurchase agreement dated 10/29/99 with
Zions Bancorp, collateralized by $3,445,000
U.S. Treasury Notes, 6.375% due 08/15/02
(value-$3,527,680); proceeds: $3,455,497
(cost--$3,454,000) ............................... 11/01/99 5.200% $ 3,454,000
-------------
Total Investments (cost--$292,763,110)--98.21% ..................... 279,172,061
Other assets in excess of liabilities--1.79% ....................... 5,094,321
-------------
Net Assets--100.00% ................................................ $284,266,382
=============
</TABLE>
- -----------------
Note: The Portfolio of Investments is listed by the issuer's country of origin
+ Reflects rate at October 31, 1999 on variable rate instruments
++ Reflects rate at October 31, 1999 on step coupon rate instruments
@ Current coupon rate is 0% on step up rate. Subsequent to 05/15/01 rate
will change to 13.250%.
(1) Illiquid securities represent 13.38% of net assets.
(2) Participation interest was acquired through the financial institution
indicated parenthetically.
(3) With an additional 47,108,000 recoverable rights attached maturing on
06/30/03 with no market value.
(4) With an additional 3,500,000 warrants attached maturing on 06/30/03 with
no market value.
(5) With an additional 40,875 warrants attached maturing on 04/15/20 with no
market value.
ARS Argentine Peso
DCB Debt Conversion Bond
DISC Discount Bond
EXIT Investment Bond
FLIRB Front-loaded Interest Reduction Bond
HUF Hungary Forint
IAB Interest Arrears Bond
IAN Interest Arrears Note
NMB New Money Bond PAR Par Bond
PDI Past Due Interest Bond
PLN Polish Zloty
INVESTMENTS BY TYPE OF ISSUER PERCENTAGE OF NET ASSETS
-----------------------
LONG-TERM SHORT-TERM
--------- ---------
Government and other public issuers .................. 88.69% --
Oil/Gas .............................................. 2.30 --
Telecom .............................................. 2.04 --
Broadcasting ......................................... 1.73 --
Repurchase agreement ................................. -- 1.22%
Beverage/Bottling .................................... 1.19 --
Industrial ........................................... 1.04 --
----- ----
96.99% 1.22%
===== ====
See accompanying notes to financial statements
8
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1999
ASSETS
Investments in securities, at value (cost--$292,763,110) ..... $ 279,172,061
Cash ......................................................... 273
Receivable for investments sold .............................. 3,175,438
Interest receivable .......................................... 5,218,103
Other assets ................................................. 3,259
-------------
Total assets ................................................. 287,569,134
LIABILITIES
Payable for investments purchased ............................ 2,480,737
Payable for shares of capital stock repurchased .............. 289,574
Payable to investment adviser and administrator .............. 298,065
Accrued expenses and other liabilities ....................... 234,376
-------------
Total liabilities ............................................ 3,302,752
-------------
NET ASSETS
Capital stock - $0.001 par value; total authorized shares -
100,000,000; 20,810,267 shares issued and outstanding ...... 307,197,581
Undistributed net investment income .......................... 675,114
Accumulated net realized loss from investment transactions ... (9,978,003)
Net unrealized depreciation of investments, other assets,
liabilities and forward contracts denominated in
foreign currencies ......................................... (13,628,310)
-------------
Net assets ................................................... $ 284,266,382
=============
Net asset value per share .................................... $ 13.66
=============
See accompanying notes to financial statements
9
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
STATEMENT OF OPERATIONS
FOR THE
YEAR
ENDED
OCTOBER 31,
1999
-----------
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $48,467) .......... $28,042,276
-----------
EXPENSES:
Investment advisory and administration .......................... 3,619,271
Custody and accounting .......................................... 202,152
Reports and notices to shareholders ............................. 80,702
Legal and audit ................................................. 79,035
Transfer agency fees ............................................ 66,721
Directors' fees ................................................. 10,500
Other expenses .................................................. 59,138
-----------
.............................................................. 4,117,519
-----------
Net investment income ........................................... 23,924,757
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT ACTIVITIES
Net realized gains (losses) from:
Investment transactions .................................... (9,435,714)
Foreign currency transactions .............................. 604,250
Net change in unrealized appreciation/depreciation of:
Investments ................................................ 25,641,980
Other assets, liabilities and forward contracts
denominated in foreign currencies ........................ 257,086
-----------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENT ACTIVITIES ..... 17,067,602
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $40,992,359
===========
See accompanying notes to financial statements
10
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
----------------------------
1999 1998
------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ........................................................................ $ 23,924,757 $ 29,166,536
Net realized gain (loss) on investment transactions .......................................... (9,435,714) 13,429,681
Net realized gain (loss) from foreign currency transactions .................................. 604,250 (4,298,228)
Net change in unrealized appreciation/depreciation of:
Investments ................................................................................ 25,641,962 (57,425,201)
Other assets, liabilities and forward contracts denominated in foreign currencies .......... 257,104 (43,287)
------------ -----------
Net increase (decrease) in net assets resulting from operations .............................. 40,992,359 (19,170,499)
------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO STOCKHOLDERS:
From net investment income ................................................................... (23,852,464) (24,868,308)
From net realized gains from investment transactions ......................................... (6,829,547) (2,487,041)
In excess of net investment income ........................................................... -- (2,369,284)
------------ -----------
Total dividends and distributions to stockholders ............................................ (30,682,011) (29,724,633)
------------ -----------
CAPITAL STOCK TRANSACTIONS:
Cost of shares repurchased ................................................................... (20,111,126) (1,649,484)
------------ -----------
Net decrease in net assets ................................................................... (9,800,778) (50,544,616)
NET ASSETS:
Beginning of year ............................................................................ 294,067,160 344,611,776
------------ -----------
End of year (including undistributed net investment income of $675,114 at October 31, 1999) .. $284,266,382 $294,067,160
============ ============
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Global High Income Dollar Fund Inc. (the "Fund") was incorporated in the
State of Maryland on February 23, 1993 and is registered with the Securities and
Exchange Commission as a closed-end, non-diversified management investment
company. The Fund's primary investment objective is to achieve a high level of
current income. As a secondary objective the Fund seeks capital appreciation, to
the extent consistent with its primary objective.
The preparation of financial statements in accordance with 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 quotations for its securities from independent
pricing services and broker-dealers. Independent pricing services use last
reported 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 last sale price on Nasdaq prior to valuation. Other OTC securities are
valued at the last bid price available 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 Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"),
a wholly owned asset management subsidiary of PaineWebber Incorporated
("PaineWebber") and investment adviser and administrator of the Fund. If a
market value is not available from an independent pricing source for a
particular security, that security is valued at fair value as determined in good
faith by or under the direction of the Trust's board of trustees (the "board").
The amortized cost method of valuation, which approximates market value,
generally is used to value short-term debt instruments with sixty days or less
remaining to maturity, unless the board determines that this does not represent
fair value. All investments quoted in foreign currencies will be valued daily in
U.S. dollars on the basis of the foreign currency exchange rates prevailing at
the time such valuation is determined by the Fund's custodian.
Foreign currency exchange rates are generally determined prior to the close
of regular trading on the New York Stock Exchange ("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 on that day. If
events occur materially affecting the value of such securities or currency
exchange rates during such time period, the securities will be valued at their
fair value as determined in good faith by or under the direction of the Trust's
board.
REPURCHASE AGREEMENTS--The Fund's 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. The Fund occasionally
participates in joint repurchase agreement transactions with other funds managed
by Mitchell Hutchins.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date. Realized gains and losses from investments and
foreign exchange transactions are calculated on the identified cost method.
Interest income is recorded on an accrual basis. Discounts are accreted 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. Foreign currency amounts are translated into U.S.
dollars on the following basis: (1) market value of investment securities, other
assets and liabilities--at the exchange rates prevailing at the end of the
period; and (2) purchases and sales of investment securities, 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 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 debt
obligations pursuant to 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 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
currency contracts to enhance income.
The Fund has no specific limitation on the percentage of assets which may be
committed to such contracts. The Fund may enter into forward contracts or
maintain a net exposure to forward contracts only if (1) the consummation of the
contracts would not obligate the Fund to deliver an amount of foreign currency
in excess of the value of the position being hedged by such contracts or (2) the
Fund maintains cash or liquid securities in a segregated account 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 with respect to 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 matured.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to stockholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
CONCENTRATION OF RISK
Investing in securities of foreign issuers and currency transactions may
involve certain considerations and risks not typically associated with
investments in the United States. These risks include revaluation of currencies,
adverse fluctuations in foreign currency values and possible adverse political,
social and economic developments, including those particular to a specific
industry, country or region, which could cause the securities and their markets
to be less liquid and prices more volatile than those of comparable U.S.
companies and U.S. government securities. These risks are greater with respect
to
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 ADVISER AND ADMINISTRATOR
The Fund's board of directors has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment adviser and administrator of the
Fund. In accordance with the Advisory Contract, the Fund pays Mitchell Hutchins
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. At
October 31, 1999, the Fund owed Mitchell Hutchins $298,065 in investment
advisory and administration fees.
SECURITY LENDING
The Fund may lend securities up to 331/3% of its total assets to qualified
institutions. The loans are secured at all times by cash or U.S. government
securities 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. The Fund will regain record 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, which is included in
interest income, for lending its securities from interest earned on the cash or
U.S. government securities held as collateral, net of fee rebates paid to the
borrower plus reasonable administrative and custody fees. During the year ended
October 31, 1999, the Fund had no securities on loan.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at October 31,
1999, was substantially the same as the cost of securities for financial
statement purposes.
At October 31, 1999, the components of net unrealized depreciation of
investments were as follows:
Gross depreciation (investments having an
excess of cost over value) ..................... $(28,050,106)
Gross appreciation (investments
having an excess of value over cost) ........... 14,459,057
------------
Net unrealized depreciation of investments ..... $(13,591,049)
============
For the year ended October 31, 1999, total aggregate purchases and sales of
portfolio securities, excluding short-term securities, were $113,970,906 and
$84,241,713, respectively.
CAPITAL STOCK
There are 100,000,000 shares of $0.001 par value capital stock authorized. Of
the 20,810,267 shares outstanding at October 31, 1999 Mitchell Hutchins owned
10,162 shares.
For the year ended October 31, 1999, the fund repurchased 1,777,000 shares of
common stock at an average market price per share of $11.26 and a weighted
average discount from net asset value of 14.84% per share.
For the period September 17, 1998 (commencement of repurchase program)
through October 31, 1999, the Fund repurchased 1,926,400 shares of common stock
at an average market price per share of $11.24 and a weighted average discount
from net asset value of 14.65% per share. At October 31, 1999, paid-in-capital
was reduced by the cost of $21,760,610 of capital stock repurchased.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME 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 calender year
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
To reflect reclassifications arising from permanent "book/tax" differences
for the year ended October 31, 1999, undistributed net investment income was
increased by $602,821 and accumulated net realized loss from investment
transactions were increased by $602,821. Permanent book/tax differences are
primarily attributable to foreign currency gains/losses.
At October 31, 1999, the Fund had a net capital loss carryforward of
$9,435,714. The loss carryforward is available as a reduction, to the extent
provided in the regulations, of future net realized capital gains, and will
expire by October 31, 2007. To the extent that such losses are used to offset
future net realized capital gains as provided in the regulations, it is possible
that these gains will not be distributed.
15
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each year is
presented below:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ...................... $ 13.02 $ 15.16 $ 14.99 $ 13.07 $ 12.83
-------- -------- -------- -------- --------
Net investment income ................................... 1.10 1.28 1.31 1.30 1.34
Net realized and unrealized gains (losses)
from investments and foreign currency ................. 0.78 (2.12) 0.13 1.89 0.21
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations ...... 1.88 (0.84) 1.44 3.19 1.55
-------- -------- -------- -------- --------
Dividends from net investment income .................... (1.10) (1.10) (1.08) (1.27) (1.16)
Distributions from net realized gains from
investment transactions ............................... (0.30) (0.11) -- -- --
Distributions in excess of net investment income ........ -- (0.10) (0.19) -- --
Distributions from paid-in-capital ...................... -- -- -- -- (0.15)
-------- -------- -------- -------- --------
Total dividends and distributions to stockholders ....... (1.40) (1.31) (1.27) (1.27) (1.31)
-------- -------- -------- -------- --------
Net increase in net asset value resulting from
repurchases of common stock ........................... 0.16 0.01 -- -- --
-------- -------- -------- -------- --------
Net asset value, end of year ............................ $ 13.66 $ 13.02 $ 15.16 $ 14.99 $ 13.07
Market value, end of year ............................... $ 11.50 $ 11.50 $ 12.81 $ 12.63 $ 11.63
======== ======== ======== ======== ========
Total investment return(1) .............................. 13.23% (0.70)% 11.47% 20.26% 13.65%
======== ======== ======== ======== ========
Ratios/Supplemental data:
Net assets, end of year (000's) ......................... $284,266 $294,067 $344,612 $340,910 $297,087
Expenses to average net assets .......................... 1.42% 1.44% 1.42% 1.43% 1.46%
Net investment income to average net assets ............. 8.27% 8.55% 8.24% 9.18% 10.76%
Portfolio turnover rate ................................. 33% 89% 56% 80% 71%
</TABLE>
- ----------
(1) Total investment return is calculated assuming a purchase at market value
on the first day of each period reported, reinvestment of all dividends and
distributions in accordance with the Dividend Reinvestment Plan, and a sale
at market value on the last day of each period reported. Total investment
return does not reflect brokerage commissions.
16
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Global High Income Dollar Fund Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Global High Income Dollar Fund Inc.
(the "Fund") at October 31, 1999, 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 five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York 10036
December 22, 1999
17
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
TAX INFORMATION (UNAUDITED)
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (October 31,
1999) as to the federal tax status of distributions received by stockholders
during such fiscal year. Accordingly, we are advising you that distributions of
$1.40 per share were paid during the fiscal year by the Fund of which $1.10 are
taxable as ordinary income, and $0.30 per share are taxable as long-term capital
gains.
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 information
reporting.
Since the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar 1999. 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 DIVand will be mailed in
January 2000. Stockholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Fund.
18
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
GENERAL INFORMATION
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 adviser and administrator is Mitchell Hutchins Asset Management Inc.,
a wholly owned asset management subsidiary of PaineWebber Incorporated, which
has over $61 billion in assets under management as of November 30, 1999.
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, NEW YORK TIMES and BARRON'S, as well as numerous other publications.
At a meeting held on December 17, 1999, the Fund's board of directors adopted
several amendments to the Fund's bylaws. The bylaws were amended to specify
that, under normal circumstances, a director or officer of the Fund will serve
as Chairman of stockholder meetings. The Chairman has the power to decide the
order of business at stockholder meetings and is able to adopt and enforce
procedures that govern action by meeting participants. The amendments clarify
that the Chairman has the power to adjourn stockholder meetings. The amendments
also increase the percentage of outstanding shares necessary for stockholders to
call a special stockholders meeting from 25% to a majority of the shares that
would be entitled to vote at the meeting.
YEAR 2000 RISKS
Like other funds and financial and business organizations around the world,
the Fund could be adversely affected if the computer systems used by its
investment adviser, other service providers and entities with computer systems
that are linked to Fund records do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Issue."
Mitchell Hutchins is taking steps that it believes are reasonably designed to
address the Year 2000 Issue with respect to the computer systems that it uses,
and to obtain satisfactory assurances that each of the Fund's other major
service providers is taking comparable steps. However, there can be no assurance
that these steps will be sufficient to avoid any adverse impact on the Fund.
DIVIDEND REINVESTMENT PLAN
The Fund has established a Dividend Reinvestment Plan under which all
stockholders whose shares are registered in their own names, or in the name of
PaineWebber or its nominee, will have all dividends and other distributions on
their shares automatically reinvested in additional shares, unless such
stockholders elect to receive cash. Stockholders 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 Dividend Reinvestment
Plan. The ability of such stockholders to participate in the Plan may change if
their shares are transferred into the name of another broker or nominee.
A stockholder may elect not to participate in the Plan or may terminate
participation in the Plan at any time without penalty, and stockholders who have
previously terminated participation in the Plan may rejoin it at any time.
Changes in elections must be made in writing to the Fund's transfer agent and
should include the stockholder'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,
19
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
GENERAL INFORMATION (CONCLUDED)
until such election is changed, will be deemed an election by a stockholder 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 Dividend Reinvestment
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. 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 stockholder 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 its
Dividend Reinvestment 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. See "Tax Information."
Additional information regarding the Plan may be obtained from, and all
correspondence concerning the Plan should be directed to, the transfer agent at
PNC Bank, National Association, c/o PFPC Inc., P.O. Box 8950, Wilmington,
Delaware 19899.
20
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21
<PAGE>
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22
<PAGE>
GLOBAL HIGH INCOME DOLLAR FUND INC.
- --------------------------------------------------------------------------------
DIRECTORS
E. Garrett Bewkes, Jr. Meyer Feldberg
CHAIRMAN George W. Gowen
Margo N. Alexander Frederic V. Malek
Richard Q. Armstrong Carl W. Schafer
Richard R. Burt Brian M. Storms
Mary C. Farrell
PRINCIPAL OFFICERS
Margo N. Alexander Dennis L. McCauley
PRESIDENT VICE PRESIDENT
Victoria E. Schonfeld Paul H. Schubert
VICE PRESIDENT VICE PRESIDENT AND TREASURER
Dianne E. O'Donnell Stuart Waugh
VICE PRESIDENT AND SECRETARY VICE PRESIDENT
INVESTMENT ADVISER
AND ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019
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.
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.
23
<PAGE>
--------------------------
GLOBAL HIGH
INCOME DOLLAR
FUND INC.
ANNUAL REPORT
[LOGO]
(C)1999 PaineWebber IncorporateD
Member SIPC
All Rights Reserved.
OCTOBER 31, 1999
