| UNITED STATES |
| SECURITIES AND EXCHANGE COMMISSION |
| Washington, D.C. 20549 |
| |
| FORM N-Q |
| |
| QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED |
| MANAGEMENT INVESTMENT COMPANY |
| |
| Investment Company Act file number: 811-07540 |
| |
|
| |
| Global High Income Fund Inc. |
| |
|
| (Exact name of registrant as specified in charter) |
| |
| 51 West 52nd Street, New York, New York 10019-6114 |
| |
|
| (Address of principal executive offices) (Zip code) |
| |
| Mark F. Kemper, Esq. |
| UBS Global Asset Management |
| 51 West 52nd Street |
| New York, NY 10019-6114 |
| (Name and address of agent for service) |
| |
| Copy to: |
| Jack W. Murphy, Esq. |
| Dechert LLP |
| 1775 I Street, N.W. |
| Washington, DC 20006-2401 |
| |
| |
| Registrant’s telephone number, including area code: 212-882 5000 |
| |
| Date of fiscal year end: October 31 |
| |
| Date of reporting period: July 31, 2008 |
| |
Item 1. Schedule of Investments
| Global High Income Fund Inc. |
|
|
|
|
|
|
| Portfolio
of investments — July 31, 2008 (unaudited) |
|
|
|
|
|
|
| |
|
|
Face |
|
|
|
| |
|
|
Amount |
|
Value |
| |
|
|
|
|
|
| Bonds — 82.76% |
|
|
|
|
|
|
| International bonds — 82.76% |
|
|
|
|
|
|
| International
corporate bonds — 20.38% |
|
|
|
|
|
|
| Argentina
— 0.36% |
|
|
|
|
|
|
| Banco de Galicia y Buenos Aires, |
|
|
|
|
|
|
| 11.000%, due 01/01/19(1) |
|
$ |
874,204 |
|
$ |
716,847 |
| Province of Mendoza, |
|
|
|
|
|
|
| 5.500%, due
09/04/18 |
|
|
562,122 |
|
|
380,789 |
| |
|
|
|
|
|
| |
|
|
|
|
|
1,097,636 |
| |
|
|
|
|
|
| Brazil
— 1.62% |
|
|
|
|
|
|
| Union National
FIDC Trust 2006, |
|
|
|
|
|
|
| 19.620%, due
12/01/08(2),(3) |
|
BRL |
2,141,490 |
|
|
1,402,041 |
| 20.600%, due
07/01/10(2),(3) |
|
|
1,832,665 |
|
|
1,204,106 |
| 21.180%, due
05/01/11(2) |
|
|
3,560,082 |
|
|
2,342,234 |
| |
|
|
|
|
|
| |
|
|
|
|
|
4,948,381 |
| |
|
|
|
|
|
| Indonesia
— 1.95% |
|
|
|
|
|
|
| Majapahit
Holding BV, |
|
|
|
|
|
|
| 7.250%, due
06/28/17 |
|
$ |
3,700,000 |
|
|
3,293,000 |
| 7.250%, due
06/28/17(3) |
|
|
3,000,000 |
|
|
2,670,000 |
| |
|
|
|
|
|
| |
|
|
|
|
|
5,963,000 |
| |
|
|
|
|
|
| Ireland
— 0.95% |
|
|
|
|
|
|
| TransCapitalInvest
Ltd., |
|
|
|
|
|
|
| 7.700%, due
08/07/13(3) |
|
$ |
850,000 |
|
|
850,000 |
| 8.700%, due
08/07/18(3) |
|
|
2,050,000 |
|
|
2,052,500 |
| |
|
|
|
|
|
| |
|
|
|
|
|
2,902,500 |
| |
|
|
|
|
|
| Kazakhstan — 0.51% |
|
|
|
|
|
|
| CenterCredit International BV, |
|
|
|
|
|
|
| 8.250%, due 09/30/11 |
|
KZT |
220,000,000 |
|
|
1,555,999 |
| |
|
|
|
|
|
| Luxembourg
— 1.74% |
|
|
|
|
|
|
| Steel Capital
SA, |
|
|
|
|
|
|
| 9.750%, due
07/29/13(3) |
|
$ |
2,100,000 |
|
|
2,101,050 |
| VTB Capital
SA, |
|
|
|
|
|
|
| 6.609%, due
10/31/12 |
|
|
2,230,000 |
|
|
2,160,201 |
| 6.875%, due
05/29/18(3) |
|
|
1,100,000 |
|
|
1,053,250 |
| |
|
|
|
|
|
| |
|
|
|
|
|
5,314,501 |
| |
|
|
|
|
|
| Malaysia
— 5.66% |
|
|
|
|
|
|
| Johor Corp., |
|
|
|
|
|
|
| 1.000%, due
07/31/12(4) |
|
MYR |
46,970,000 |
|
|
17,310,811 |
| |
|
|
|
|
|
| Mexico
— 1.77% |
|
|
|
|
|
|
| Desarrolladora
Homex SAB de CV, |
|
|
|
|
|
|
| 7.500%, due
09/28/15 |
|
$ |
2,180,000 |
|
|
2,114,600 |
| Hipotecaria
Su Casita SA, |
|
|
|
|
|
|
| 8.500%, due
10/04/16 |
|
|
3,285,000 |
|
|
3,301,425 |
| |
|
|
|
|
|
| |
|
|
|
|
|
5,416,025 |
| |
|
|
|
|
|
| Philippines
— 1.48% |
|
|
|
|
|
|
| National Power
Corp., |
|
|
|
|
|
|
| 8.400%, due
12/15/16 |
|
$ |
3,100,000 |
|
|
3,208,500 |
| 9.625%, due
05/15/28 |
|
|
1,160,000 |
|
|
1,319,500 |
| |
|
|
|
|
|
| |
|
|
|
|
|
4,528,000 |
| |
|
|
|
|
|
| Russia
— 2.49% |
|
|
|
|
|
|
| Dali Capital
PLC for Bank of Moscow, |
|
|
|
|
|
|
| 7.250%, due
11/25/09 |
|
RUB |
75,800,000 |
|
|
3,210,138 |
| Gaz Capital
for Gazprom, |
|
|
|
|
|
|
| 7.288%, due
08/16/37(3) |
|
$ |
1,700,000 |
|
|
1,514,360 |
| RSHB Capital
SA for OJSC Russian Agricultural Bank, |
|
|
|
|
|
|
| 7.125%, due
01/14/14(3) |
|
|
400,000 |
|
|
394,360 |
| 7.175%, due
05/16/13 |
|
|
2,520,000 |
|
|
2,504,376 |
| |
|
|
|
|
|
| |
|
|
|
|
|
7,623,234 |
| |
|
|
|
|
|
| Global High Income Fund Inc. |
|
|
|
|
|
|
| Portfolio
of investments — July 31, 2008 (unaudited) |
|
|
|
|
|
|
| |
|
|
Face |
|
|
|
| |
|
|
Amount |
|
Value |
| |
|
|
|
|
|
| Ukraine — 0.18% |
|
|
|
|
|
|
| NJSC Naftogaz of Ukraine, |
|
|
|
|
|
|
| 8.125%, due
09/30/09 |
|
$ |
600,000 |
|
$ |
535,500 |
| |
|
|
|
|
|
| United
Arab Emirates — 1.13% |
|
|
|
|
|
|
| Abu Dhabi
National Energy Co., |
|
|
|
|
|
|
| 6.600%, due
08/01/13(3) |
|
$ |
2,200,000 |
|
|
2,222,000 |
| 7.250%, due
08/01/18(3) |
|
|
1,200,000 |
|
|
1,227,000 |
| |
|
|
|
|
|
| |
|
|
|
|
|
3,449,000 |
| |
|
|
|
|
|
| Venezuela — 0.54% |
|
|
|
|
|
|
| Petroleos
de Venezuela SA, |
|
|
|
|
|
|
| 5.250%, due 04/12/17 |
|
$ |
2,500,000 |
|
|
1,666,250 |
| |
|
|
|
|
|
| Total international
corporate bonds |
|
|
|
|
|
|
| (cost — $58,937,689) |
|
|
|
|
|
62,310,837 |
| |
|
|
|
|
|
| Foreign government bonds — 61.26% |
|
|
|
|
|
|
| Argentina — 7.87% |
|
|
|
|
|
|
| Argentina Prestamos Garantizadad, |
|
|
|
|
|
|
| 2.817%, due 05/15/09(5) |
|
ARS |
200,000 |
|
|
162,233 |
| 2.817%, due 04/15/10(5) |
|
|
500,000 |
|
|
142,857 |
| Republic of Argentina, |
|
|
|
|
|
|
| 3.127%, due 08/03/12(5) |
|
$ |
11,692,000 |
|
|
4,735,260 |
| 7.000%, due
03/28/11 |
|
|
13,725,000 |
|
|
12,146,625 |
| 7.000%, due
09/12/13 |
|
|
3,100,000 |
|
|
2,371,500 |
| 7.000%, due
10/03/15 |
|
|
2,065,000 |
|
|
1,404,200 |
| 11.000%, due 12/04/05(6) |
|
|
1,000,000 |
|
|
270,000 |
| 11.000%, due 10/09/06(6) |
|
|
4,500,000 |
|
|
1,260,000 |
| 11.375%, due 03/15/10(6) |
|
|
800,000 |
|
|
216,000 |
| 11.375%, due 01/30/17(6) |
|
|
1,800,000 |
|
|
540,000 |
| 12.250%, due 06/19/18(6) |
|
|
2,850,000 |
|
|
798,000 |
| |
|
|
|
|
|
| |
|
|
|
|
|
24,046,675 |
| |
|
|
|
|
|
| Brazil
— 10.78% |
|
|
|
|
|
|
| Federal Republic
of Brazil, |
|
|
|
|
|
|
| 6.000%, due
01/17/17 |
|
$ |
8,520,000 |
|
|
8,703,180 |
| Letras Tesouro
Nacional |
|
|
|
|
|
|
| 11.469%, due 01/01/09(7) |
|
BRL |
12,100,000 |
|
|
7,309,743 |
| 13.093%, due 01/01/10(7) |
|
|
5,300,000 |
|
|
2,776,644 |
| Notas do Tesouro
Nacional, |
|
|
|
|
|
|
| Series B,
6.000%, due 05/15/45 |
|
|
8,200,000 |
|
|
8,299,203 |
| Series F,
10.000%, due 01/01/12 |
|
|
3,440,000 |
|
|
1,981,179 |
| Series F,
10.000%, due 01/01/17 |
|
|
7,280,000 |
|
|
3,885,595 |
| |
|
|
|
|
|
| |
|
|
|
|
|
32,955,544 |
| |
|
|
|
|
|
| Colombia
— 0.22% |
|
|
|
|
|
|
| Republic of
Colombia, |
|
|
|
|
|
|
| 9.850%, due
06/28/27 |
|
COP |
1,070,000,000 |
|
|
504,280 |
| 12.000%, due
10/22/15 |
|
|
327,000,000 |
|
|
182,686 |
| |
|
|
|
|
|
| |
|
|
|
|
|
686,966 |
| |
|
|
|
|
|
| Dominican Republic — 2.39% |
|
|
|
|
|
|
| Republic of
Dominica, |
|
|
|
|
|
|
| 9.040%, due
01/23/18 |
|
$ |
617,532 |
|
|
615,988 |
| 9.500%, due
09/27/11 |
|
|
6,628,252 |
|
|
6,694,534 |
| |
|
|
|
|
|
| |
|
|
|
|
|
7,310,522 |
| |
|
|
|
|
|
| El Salvador
— 1.14% |
|
|
|
|
|
|
| Republic of
El Salvador, |
|
|
|
|
|
|
| 7.750%, due
01/24/23 |
|
$ |
3,000,000 |
|
|
3,130,500 |
| 8.250%, due
04/10/32 |
|
|
340,000 |
|
|
355,300 |
| |
|
|
|
|
|
| |
|
|
|
|
|
3,485,800 |
| |
|
|
|
|
|
| Gabon — 0.42% |
|
|
|
|
|
|
| Gabonese Republic, |
|
|
|
|
|
|
| 8.200%, due
12/12/17(3) |
|
$ |
1,270,000 |
|
|
1,292,225 |
| |
|
|
|
|
|
| Hungary
— 3.74% |
|
|
|
|
|
|
| Hungary Government
Bond, |
|
|
|
|
|
|
| 5.500%, due
02/12/14 |
|
HUF |
1,960,000,000 |
|
|
11,449,188 |
| |
|
|
|
|
|
| Global High Income Fund Inc. |
|
|
|
|
|
|
| Portfolio
of investments — July 31, 2008 (unaudited) |
|
|
|
|
|
|
| |
|
|
Face |
|
|
|
| |
|
|
Amount |
|
Value |
| |
|
|
|
|
|
| Indonesia — 2.89% |
|
|
|
|
|
|
| Indonesia
Government, Credit-Linked Note, |
|
|
|
|
|
|
| 11.000%, due
10/15/14 |
|
IDR |
4,000,000,000 |
|
$ |
427,927 |
| Indonesia
Treasury Bonds, |
|
|
|
|
|
|
| 9.750%, due
05/15/37 |
|
|
6,960,000,000 |
|
|
591,895 |
| 10.000%, due
02/15/28 |
|
|
10,200,000,000 |
|
|
909,626 |
| 10.250%, due
07/15/27 |
|
|
15,000,000,000 |
|
|
1,369,715 |
| 11.000%, due
09/15/25 |
|
|
8,000,000,000 |
|
|
797,801 |
| 12.000%, due
09/15/26 |
|
|
32,715,000,000 |
|
|
3,440,539 |
| Republic of
Indonesia, |
|
|
|
|
|
|
| 8.500%, due
10/12/35 |
|
$ |
1,200,000 |
|
|
1,284,000 |
| |
|
|
|
|
|
| |
|
|
|
|
|
8,821,503 |
| |
|
|
|
|
|
| Malaysia — 0.30% |
|
|
|
|
|
|
| Malaysia Government
Bond, |
|
|
|
|
|
|
| 3.869%, due
04/13/10 |
|
MYR |
3,000,000 |
|
|
921,818 |
| |
|
|
|
|
|
| Mexico
— 0.36% |
|
|
|
|
|
|
| Mexican Bonos, |
|
|
|
|
|
|
| 7.500%, due
06/03/27 |
|
MXN |
12,580,000 |
|
|
1,086,025 |
| |
|
|
|
|
|
| Pakistan — 1.74% |
|
|
|
|
|
|
| Islamic Republic
of Pakistan, |
|
|
|
|
|
|
| 6.750%, due 02/19/09 |
|
$ |
2,400,000 |
|
|
2,363,760 |
| 6.875%, due
06/01/17 |
|
|
1,000,000 |
|
|
705,000 |
| 6.875%, due
06/01/17(3) |
|
|
1,690,000 |
|
|
1,216,800 |
| 7.125%, due
03/31/16 |
|
|
1,400,000 |
|
|
1,042,264 |
| |
|
|
|
|
|
| |
|
|
|
|
|
5,327,824 |
| |
|
|
|
|
|
| Poland
— 3.88% |
|
|
|
|
|
|
| Government
of Poland, |
|
|
|
|
|
|
| 4.250%, due
05/24/11 |
|
PLN |
11,200,000 |
|
|
5,131,083 |
| 6.000%, due
11/24/10 |
|
|
14,000,000 |
|
|
6,733,572 |
| |
|
|
|
|
|
| |
|
|
|
|
|
11,864,655 |
| |
|
|
|
|
|
| Russia
— 3.10% |
|
|
|
|
|
|
| Russian Federation, |
|
|
|
|
|
|
| 7.500%, due
03/31/30(1) |
|
$ |
2,787,550 |
|
|
3,132,509 |
| 7.500%, due
03/31/30(1),(3) |
|
|
2,318,285 |
|
|
2,605,173 |
| 12.750%, due
06/24/28 |
|
|
2,100,000 |
|
|
3,727,920 |
| |
|
|
|
|
|
| |
|
|
|
|
|
9,465,602 |
| |
|
|
|
|
|
| Serbia
— 0.84% |
|
|
|
|
|
|
| Republic of
Serbia, |
|
|
|
|
|
|
| 3.750%, due
11/01/24(1) |
|
$ |
2,790,000 |
|
|
2,566,800 |
| |
|
|
|
|
|
| South Africa
— 0.62% |
|
|
|
|
|
|
| Republic of
South Africa, |
|
|
|
|
|
|
| 5.875%, due
05/30/22 |
|
$ |
300,000 |
|
|
282,000 |
| 6.500%, due
06/02/14 |
|
|
990,000 |
|
|
1,022,175 |
| 7.375%, due
04/25/12 |
|
|
560,000 |
|
|
595,000 |
| |
|
|
|
|
|
| |
|
|
|
|
|
1,899,175 |
| |
|
|
|
|
|
| Turkey
— 12.62% |
|
|
|
|
|
|
| Government
of Turkey, |
|
|
|
|
|
|
| 14.000%, due
01/19/11 |
|
TRY |
1,000,000 |
|
|
789,326 |
| 14.000%, due
09/26/12 |
|
|
2,450,000 |
|
|
1,866,365 |
| 16.000%, due
03/07/12 |
|
|
8,000,000 |
|
|
6,541,855 |
| Republic of
Turkey, |
|
|
|
|
|
|
| 7.000%, due
09/26/16 |
|
$ |
10,700,000 |
|
|
10,766,875 |
| 7.250%, due
03/15/15 |
|
|
250,000 |
|
|
259,375 |
| 11.000%, due
01/14/13 |
|
|
1,250,000 |
|
|
1,465,625 |
| 11.500%, due
01/23/12 |
|
|
620,000 |
|
|
726,950 |
| Republic of
Turkey, Credit-Linked Notes, |
|
|
|
|
|
|
| 14.000%, due
01/19/11 |
|
|
2,884,424 |
|
|
3,517,267 |
| 14.000%, due
01/20/11 |
|
|
5,000,000 |
|
|
6,971,200 |
| 15.000%, due
02/11/10 |
|
|
4,000,000 |
|
|
5,664,080 |
| |
|
|
|
|
|
| |
|
|
|
|
|
38,568,918 |
| |
|
|
|
|
|
| Ukraine
— 1.01% |
|
|
|
|
|
|
| Republic of
Ukraine, |
|
|
|
|
|
|
| 6.580%, due
11/21/16 |
|
$ |
1,300,000 |
|
|
1,147,250 |
| 7.650%, due
06/11/13 |
|
|
2,000,000 |
|
|
1,955,000 |
| |
|
|
|
|
|
| |
|
|
|
|
|
3,102,250 |
| |
|
|
|
|
|
| Global High Income Fund Inc. |
|
|
|
|
|
|
| Portfolio
of investments — July 31, 2008 (unaudited) |
|
|
|
|
|
|
| |
|
|
Face |
|
|
|
| |
|
|
Amount |
|
Value |
| |
|
|
|
|
|
| Venezuela — 6.74% |
|
|
|
|
|
|
| Republic of
Venezuela, |
|
|
|
|
|
|
| 5.375%, due
08/07/10 |
|
$ |
2,805,000 |
|
$ |
2,638,103 |
| 5.750%, due
02/26/16 |
|
|
13,945,000 |
|
|
10,493,612 |
| 7.000%, due
12/01/18 |
|
|
4,630,000 |
|
|
3,588,250 |
| 10.750%, due
09/19/13 |
|
|
3,800,000 |
|
|
3,895,000 |
| |
|
|
|
|
|
| |
|
|
|
|
|
20,614,965 |
| |
|
|
|
|
|
| Vietnam
— 0.60% |
|
|
|
|
|
|
| Socialist
Republic of Vietnam, |
|
|
|
|
|
|
| 6.875%, due
01/15/16 |
|
$ |
900,000 |
|
|
864,000 |
| 6.875%, due
01/15/16(3) |
|
|
1,000,000 |
|
|
960,000 |
| |
|
|
|
|
|
| |
|
|
|
|
|
1,824,000 |
| |
|
|
|
|
|
| Total foreign
government bonds |
|
|
|
|
|
|
| (cost — $181,993,324) |
|
|
|
|
|
187,290,455 |
| |
|
|
|
|
|
| Convertible bond — 1.12% |
|
|
|
|
|
|
| China — 1.12% |
|
|
|
|
|
|
China Petroleum & Chemical Corp.,
2.601%, due 04/24/14(7)
(cost $3,565,479) |
|
HKD |
24,500,000 |
|
|
3,430,468 |
| |
|
|
|
|
|
| Total international
bonds |
|
|
|
|
|
|
| (cost — $244,496,492) |
|
|
|
|
|
253,031,760 |
| |
|
|
|
|
|
| |
|
|
Number
of |
|
|
|
| |
|
|
warrants |
|
|
|
| |
|
|
|
|
|
|
| Warrants
— 1.01% |
|
|
|
|
|
|
| Argentina
— 1.01% |
|
|
|
|
|
|
Republic of
Argentina, expires 12/15/35*(8)
(cost — $3,938,253) |
|
|
40,798,000 |
|
|
3,082,723 |
| |
|
|
|
|
|
| |
|
|
Face |
|
|
|
| |
|
|
Amount |
|
|
|
| |
|
|
|
|
|
|
| Short-term
investments — 5.34% |
|
|
|
|
|
|
| Foreign government bonds — 4.94% |
|
|
|
|
|
|
| Dominican Republic — 0.71% |
|
|
|
|
|
|
| Republic of Dominica Treasury Bill, Credit-Linked Note, |
|
|
|
|
|
|
| 11.255%, due 08/11/08(9) |
|
$ |
2,285,276 |
|
|
2,174,630 |
| |
|
|
|
|
|
| Egypt — 4.23% |
|
|
|
|
|
|
| Egypt Treasury
Bills, |
|
|
|
|
|
|
| 5.420%, due 09/23/08(9) |
|
EGP |
7,700,000 |
|
|
1,429,829 |
| 5.485%, due 10/07/08(9) |
|
|
10,200,000 |
|
|
1,886,565 |
| 6.295%, due 09/02/08(9) |
|
|
18,000,000 |
|
|
3,362,644 |
| 6.380%, due 09/16/08(9) |
|
|
8,700,000 |
|
|
1,618,635 |
| 6.407%, due 10/14/08(9) |
|
|
11,900,000 |
|
|
2,196,509 |
| 7.783%, due 08/05/08(9) |
|
|
12,200,000 |
|
|
2,295,552 |
| 8.216%, due 12/16/08(9) |
|
|
850,000 |
|
|
153,803 |
| |
|
|
|
|
|
| (cost — $14,723,538) |
|
|
|
|
|
12,943,537 |
| |
|
|
|
|
|
| |
|
|
Shares |
|
|
|
| |
|
|
|
|
|
|
| Other — 0.40% |
|
|
|
|
|
|
| UBS Supplementary
Trust — U.S. Cash Management Prime Fund, 2.530%(10),(11) |
|
|
|
|
|
|
| (cost — $1,209,445) |
|
|
1,209,445 |
|
|
1,209,445 |
| |
|
|
|
|
|
| Total short-term
investments |
|
|
|
|
|
|
| (cost — $15,932,983) |
|
|
|
|
|
16,327,612 |
| |
|
|
|
|
|
| Total investments(12) — 89.11% |
|
|
|
|
|
|
| (cost — $264,367,728) |
|
|
|
|
|
272,442,095 |
| Cash and other
assets, less liabilities — 10.89% |
|
|
|
|
|
33,301,084 |
| |
|
|
|
|
|
| Net assets
— 100.00% |
|
|
|
|
$ |
305,743,179 |
| |
|
|
|
|
|
Notes to portfolio of investments
Aggregate cost for federal income tax purposes, which was the same for book purposes,
was $264,367,728; and net unrealized appreciation consisted of:
| Gross unrealized appreciation |
|
$ |
19,006,800 |
|
| Gross unrealized
depreciation |
|
|
(10,932,433 |
) |
| |
|
|
|
| Net unrealized
appreciation |
|
$ |
8,074,367 |
|
| |
|
|
|
| * |
|
Non-income
producing security. |
| (1) |
|
Step bond — Coupon rate increases in increments to maturity. Rate disclosed is as of
July 31, 2008. Maturity date disclosed is the ultimate maturity date. |
| (2) |
|
Security linked to closed end fund. The rate shown is the annualized yield at July 31, 2008. |
| (3) |
|
Security exempt
from registration under Rule 144A of the Securities Act of 1933. These securities
are considered liquid, unless otherwise noted, and maybe resold in transactions
exempt from registration, normally to qualified institutional buyers. At July 31,
2008, the value of these securities amounted to $22,764,865 or 7.45% of net assets. |
| (4) |
|
Security is
illiquid. At July 31, 2008, the value of these securities amounted to $17,310,811
or 5.66% of net assets. |
| (5) |
|
Floating rate
security — The interest rate shown is the current rate as of July 31, 2008. |
| (6) |
|
Bond interest
is in default. |
| (7) |
|
Reflects annualized
yield at July 31, 2008 on zero coupon bonds. |
| (8) |
|
Security represents
an equity claim linked to Argentina’s gross domestic product. |
| (9) |
|
The rate shown
is the effective yield at the date of purchase. |
| (10) |
|
The rate shown
reflects the yield at July 31, 2008. |
| (11) |
|
The table
below details the Fund’s investment in a security issued by a fund that is
advised by the same advisor as the Fund. The advisor does not earn a management
fee from UBS Supplementary Trust. |
| |
|
|
|
|
|
|
|
|
|
|
Income earned |
| |
|
|
|
|
Purchases
|
|
Sales |
|
|
|
from affiliate
|
| |
|
|
|
|
during
the |
|
during
the |
|
|
|
for the
|
| |
|
|
|
|
nine months
|
|
nine months
|
|
|
|
nine months
|
| |
|
|
Value |
|
ended |
|
ended |
|
Value |
|
ended |
| |
Security
Description |
|
10/31/07
|
|
07/31/08
|
|
07/31/08
|
|
07/31/08
|
|
07/31/08
|
| |
|
| |
UBS Supplementary
Trust — U.S. Cash |
|
|
|
|
|
|
|
|
|
|
| |
Management Prime Fund |
|
$8,810,452 |
|
$152,529,321 |
|
($160,130,328) |
|
$1,209,445 |
|
$464,365 |
| |
|
| (12) |
|
The Fund calculates
its net asset value based on the current market value, where available, for its
portfolio securities. The Fund normally obtains market values for its securities
from independent pricing sources and broker-dealers. Independent pricing sources
may use reported last sale prices, current market quotations or valuations from
computerized “matrix” systems that derive values based on comparable securities. A matrix system
incorporates parameters such as security quality, maturity and coupon, and/or research
and evaluations by its staff, including review of broker-dealer market price quotations,
if available, in determining the valuation of the portfolio securities. Securities
traded in the over-the-counter (“OTC”) market and listed on The NASDAQ
Stock Market, Inc. (“NASDAQ”) normally are valued at the NASDAQ Official
Closing Price. Other OTC securities are valued at the last bid price on the valuation
date available prior to valuation. Securities which are listed on US and foreign
stock exchanges normally are valued at the last sale price on the day the securities
are valued or, lacking any sales on such day, at the last available bid price. In
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market by UBS Global Asset Management
(Americas) Inc., the investment advisor of the Fund. If a market value is not available
from an independent pricing source for a particular security, that security is valued
at fair value as determined in good faith by or under the direction of the Fund’s Board of Directors (the “Board”). Various factors
may be reviewed in order to make a good faith determination of a security’s
fair value. These factors include, but are not limited to, the type and cost of
the security; contractual or legal restrictions on resale of the security; relevant
financial or business developments of the issuer; actively traded similar or related
securities; conversion or exchange rights on the security; related corporate actions;
and changes in overall market conditions. Foreign currency exchange rates are generally
determined as of the close of the NYSE. Occasionally, events affecting the value
of foreign investments occur between the time at which they are determined and the
close of the NYSE, which will not be reflected in the computation of the Fund’s
net asset value. If events materially affecting the value of such securities occur
during such time periods, the securities will be valued at their fair value as determined
in good faith by or under the direction of the Board. The amortized cost method
of valuation, which approximates market value, generally is used to value short-term
debt instruments with sixty 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 US dollars on the basis of the foreign currency
exchange rates prevailing at the time such valuation is determined by the Fund’s
custodian. |
| Currency type abbreviations: |
| ARS |
|
Argentine Peso |
| BRL |
|
Brazilian
Real |
| COP |
|
Colombian
Peso |
| EGP |
|
Egyptian Pound |
| HKD |
|
Hong Kong
Dollar |
| HUF |
|
Hungarian
Forint |
| IDR |
|
Indonesian
Rupiah |
| KZT |
|
Kazakhstan
Tenge |
| MXN |
|
Mexican Peso |
| MYR |
|
Malaysian
Ringgit |
| PLN |
|
Polish Zloty |
| RUB |
|
Russian Ruble |
| TRY |
|
New Turkish
Lira |
Forward foreign currency contracts
Global High Income Fund Inc. had the following open forward foreign currency
contracts as of July 31, 2008:
| |
|
|
|
|
|
|
|
|
|
Unrealized |
| |
|
Contracts |
|
In |
|
Maturity |
|
appreciation/ |
| |
|
to deliver |
|
exchange for |
|
dates |
|
(depreciation) |
| |
|
|
|
|
|
|
|
|
| Argentine Peso |
|
31,000,000 |
|
USD |
|
10,047,521 |
|
08/27/08 |
|
$ (59,470 |
) |
| Brazilian
Real |
|
28,972,233 |
|
USD |
|
17,751,337 |
|
08/27/08 |
|
(628,284 |
) |
| Columbian
Peso |
|
1,875,000,000 |
|
USD |
|
1,056,041 |
|
08/27/08 |
|
16,109 |
|
| Czech Koruna |
|
94,400,000 |
|
EUR |
|
3,932,676 |
|
08/27/08 |
|
(15,397 |
) |
| Czech Koruna |
|
94,400,000 |
|
USD |
|
6,110,032 |
|
08/27/08 |
|
(32,211 |
) |
| Hungarian
Forint |
|
900,000,000 |
|
USD |
|
5,815,584 |
|
08/27/08 |
|
(162,202 |
) |
| Indonesian
Rupiah |
|
41,605,250,000 |
|
USD |
|
4,373,975 |
|
08/27/08 |
|
(181,550 |
) |
| Indian Rupee |
|
265,000,000 |
|
USD |
|
6,103,978 |
|
08/27/08 |
|
(92,896 |
) |
| Kazakhstan
Tenge |
|
208,000,000 |
|
USD |
|
1,616,162 |
|
11/03/08 |
|
(99,494 |
) |
| Mexican Peso |
|
162,634,760 |
|
USD |
|
15,546,869 |
|
08/27/08 |
|
(596,807 |
) |
| New Turkish
Lira |
|
18,012,745 |
|
USD |
|
13,851,900 |
|
08/27/08 |
|
(1,500,417 |
) |
| Polish Zloty |
|
3,530,000 |
|
USD |
|
1,672,589 |
|
08/27/08 |
|
(33,694 |
) |
| South African
Rand |
|
23,200,000 |
|
USD |
|
2,831,513 |
|
08/27/08 |
|
(311,263 |
) |
| Thai Baht |
|
125,000,000 |
|
USD |
|
3,753,754 |
|
08/27/08 |
|
23,729 |
|
| Ukrainian Hryvnia |
|
8,270,000 |
|
USD |
|
1,463,717 |
|
05/18/09 |
|
(166,881 |
) |
| United States |
|
3,502,052 |
|
ARS |
|
12,800,000 |
|
11/16/09 |
|
106,289 |
|
| United States |
|
1,602,075 |
|
ARS |
|
5,250,000 |
|
12/11/08 |
|
58,947 |
|
| United States |
|
4,698,972 |
|
BRL |
|
8,000,000 |
|
08/27/08 |
|
376,127 |
|
| United States |
|
1,259,007 |
|
COP |
|
2,275,000,000 |
|
08/27/08 |
|
2,777 |
|
| United States |
|
13,450,349 |
|
CZK |
|
215,837,750 |
|
08/27/08 |
|
593,380 |
|
| United States |
|
9,329,441 |
|
HUF |
|
1,526,110,000 |
|
08/27/08 |
|
806,957 |
|
| United States |
|
6,125,751 |
|
INR |
|
265,000,000 |
|
12/04/08 |
|
(11,235 |
) |
| United States |
|
30,769,288 |
|
MXN |
|
317,634,760 |
|
08/27/08 |
|
760,212 |
|
| United States |
|
393,838 |
|
MYR |
|
1,268,000 |
|
08/27/08 |
|
(4,458 |
) |
| United States |
|
2,696,078 |
|
MYR |
|
8,800,000 |
|
08/27/08 |
|
6,243 |
|
| United States |
|
2,283,781 |
|
PEN |
|
6,402,580 |
|
08/27/08 |
|
(6,404 |
) |
| United States |
|
5,056,603 |
|
PLN |
|
11,043,620 |
|
08/27/08 |
|
281,514 |
|
| United States |
|
4,552,159 |
|
RUB |
|
108,000,000 |
|
08/27/08 |
|
52,495 |
|
| United States |
|
11,549,664 |
|
SKK |
|
230,000,000 |
|
08/27/08 |
|
247,913 |
|
| United States |
|
15,249,453 |
|
THB |
|
490,000,000 |
|
08/27/08 |
|
(627,757 |
) |
| United States |
|
8,674,835 |
|
TRY |
|
10,600,000 |
|
08/27/08 |
|
359,577 |
|
| United States |
|
1,490,090 |
|
UAH |
|
8,270,000 |
|
05/18/09 |
|
140,508 |
|
| United States |
|
15,104,248 |
|
ZAR |
|
118,700,000 |
|
08/27/08 |
|
975,384 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized appreciation on forward foreign currency contracts |
|
|
|
$ 277,741 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Currency type abbreviations: |
| ARS |
|
Argentine
Peso |
| BRL |
|
Brazilian
Real |
| COP |
|
Columbian
Peso |
| CZK |
|
Czech Koruna |
| EUR |
|
Euro |
| HUF |
|
Hungarian
Forint |
| INR |
|
Indian Rupee |
| MXN |
|
Mexican Peso |
| MYR |
|
Malaysian
Ringgit |
| PEN |
|
Peruvian Nuevo
Sol |
| PLN |
|
Polish Zloty |
| RUB |
|
Russian Ruble |
| SKK |
|
Slovak Koruna |
| THB |
|
Thai Baht |
| TRY |
|
New Turkish
Lira |
| UAH |
|
Ukrainian Hryvnia |
| USD |
|
United States
Dollar |
| ZAR |
|
South African
Rand |
Futures contracts
Global High
Income Fund Inc. had the following open futures contracts as of July 31, 2008:
| |
|
|
|
|
|
|
|
|
|
Unrealized |
| |
|
Expiration
|
|
Cost/ |
|
|
|
|
appreciation/ |
| |
|
dates |
|
(proceeds) |
|
Value |
|
(depreciation) |
| |
|
|
|
|
|
|
|
|
| US treasury futures buy contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
| US Long Bond, 210 contracts |
|
September 2008 |
|
$ |
23,759,858 |
|
$ |
24,255,000 |
|
$ |
495,142 |
|
10 Year US Treasury Notes, 10 contracts |
|
September
2008 |
|
|
1,118,921 |
|
|
1,148,281 |
|
|
29,360 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| US treasury
futures sell contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
| 5 Year US Treasury Notes, 118 contracts |
|
September
2008 |
|
|
(12,957,492 |
) |
|
(13,137,641 |
) |
|
(180,149 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net unrealized
appreciation on futures contracts |
|
|
|
|
|
|
|
|
|
$ |
344,353 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
The segregated aggregate cash collateral delivered to broker to cover margin requirements for the open
futures positions at July 31, 2008 was $238,326.
Industry diversification
As a
percentage of net assets
As of July 31, 2008 (unaudited)
| International bonds |
|
|
|
| International
corporate bonds |
|
|
|
| Commercial
banks |
|
2.23 |
% |
| Diversified
financial services |
|
5.33 |
|
| Electric utilities |
|
3.43 |
|
| Household
durables |
|
0.69 |
|
| Metals &
mining |
|
0.69 |
|
| Multi-utilities |
|
1.13 |
|
| Oil, gas
& consumable fuels |
|
1.22 |
|
| Real estate
investment trusts (REITs) |
|
5.66 |
|
| |
|
|
|
| Total international
corporate bonds |
|
20.38 |
|
| Foreign government
bonds |
|
61.26 |
|
| Convertible bond |
|
1.12 |
|
| |
|
|
|
| Total international
bonds |
|
82.76 |
|
| Warrants |
|
1.01 |
|
| Short-term investments |
|
5.34 |
|
| |
|
|
|
| Total investments |
|
89.11 |
|
| Cash and other
assets, less liabilities |
|
10.89 |
|
| |
|
|
|
| Net assets |
|
100.00 |
% |
| |
|
|
|
1) Swap agreements
The Fund may engage in
swap agreements, including but not limited to interest rate, currency, total return, and credit
default swap agreements. The Fund expects to enter into these transactions to preserve a return or
spread on a particular investment or portion of the portfolio's duration, to protect against any
increase in the price of securities the Fund anticipates purchasing at a later date, or to gain
exposure to certain markets in the most economical way possible.
The Fund may enter into interest rate swap agreements with another
party to receive or pay interest (e.g., an exchange of fixed rate payments for floating rate payments) to protect iteself from interest rate fluctuations.
This type of swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference
to a specified interest rate(s) for a specified amount. The payment flows are usually netted against each other, with the difference
being paid by one party to the other.
Credit default swap
agreements involve commitments to make or receive payments in the event of a default or a credit
event of a referenced security. As a buyer, the Fund would make periodic payments to the
counterparty, and the Fund would receive payments only upon the occurrence of a credit event. If no
credit event occurs, the Fund will lose its periodic stream of payments over the term of the
contract. However, if a credit event does occur, the Fund typically would receive full notional
value for a reference obligation that may have little or no value. As a seller, the Fund would
receive periodic payments from the counterparty, and the Fund would make payments only upon the
occurrence of a credit event. If no credit event occurs, the Fund will gain the periodic stream of
payments it received over the term of the contract. However, if a credit event occurs, the Fund
will pay full notional value for a reference obligation that may have little or no value. Credit
default swaps may involve greater risks than if the Fund had invested in the reference obligation
directly and are subject to general market risk, liquidity risk, counterparty risk and credit
risk.
Total return swap agreements involve commitments to pay or receive interest in
exchange for a market-linked return based on a notional amount. To the extent the total return of
the security or index underlying the transaction exceeds or falls short of the offsetting interest
rate obligation, the Fund will receive a payment from or make a payment to the counterparty,
respectively. Total return swaps are marked-to-market daily, and the change, if any, is recorded as
unrealized appreciation or depreciation.
The use of swaps involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. If UBS Global Asset Management (Americas)
Inc. is incorrect in its forecast of market values, interest rates and other applicable factors,
the investment performance of the Fund will be less favorable than it would have been if this
investment technique was never used. Swaps do not involve the delivery of securities and are
subject to counterparty risk. If the other party to a swap defaults and fails to consummate the
transaction, the Fund's risk of loss will consist of the net amount of interest or other payments
that the Fund is contractually entitled to receive. Therefore, the Fund would consider the
creditworthiness of the counterparty to a swap agreement in evaluating potential credit risk.
The Fund accrues for interim payments on swap agreements on a daily basis, with the net amount
recorded within unrealized appreciation/depreciation of swap agreements on the Statement of assets
and liabilities. Once interim payments are settled in cash, the net amount is recorded as realized
gain/loss on swap agreements, in addition to realized gain/loss recorded upon the termination of
swap agreements on the Statement of operations. Fluctuations in the value of swap agreements are
recorded for financial statement purposes as unrealized appreciation or depreciation of swap
agreements.
At July 31, 2008, the Fund had outstanding interest rate swap contracts with the following terms:
| |
|
|
|
|
Termination |
|
Payments made by |
|
|
Payments received |
|
|
|
|
| Counterparty
|
|
Notional amount |
|
date |
|
the Fund |
|
|
by the Fund |
|
|
Value |
|
| JPMorgan Chase Bank |
|
THB |
170,000,000 |
|
07/22/13 |
|
—(1) |
|
|
|
5.9500%(2) |
|
|
$ |
146,603 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
Rate based
on 6 month BIBOR. This is a forward starting trade and, as such, a floating rate
has not yet been assigned as of July 31, 2008. |
| (2) |
|
Payments received
are based on the notional amount. |
| BIBOR |
|
Bangkok Interbank Offered Rate |
Currency type abbreviation:
At July 31, 2008, the Fund had outstanding credit default swap contracts with the following terms:
| |
|
|
|
|
|
Termination
|
|
|
Payments made by |
|
Payments received |
|
|
|
|
| Counterparty
|
|
Notional amount |
|
dates |
|
|
the Fund |
|
by the Fund |
|
Value |
|
| Citigroup Global Markets Limited |
|
USD |
|
8,100,000 |
|
01/20/13 |
|
|
— |
(1) |
|
1.1500 |
%(2) |
|
$ |
(80,585 |
) |
| Credit Suisse
International |
|
USD |
|
1,500,000 |
|
12/20/11 |
|
|
$1,500,000 |
(3),(4) |
|
5.0000 |
(2) |
|
|
1,272,960 |
|
| Credit Suisse
International |
|
USD |
|
4,500,000 |
|
05/20/12 |
|
|
— |
(5) |
|
3.3000 |
(2) |
|
|
19,156 |
|
| Merrill Lynch
International |
|
USD |
|
3,000,000 |
|
03/20/09 |
|
|
— |
(6) |
|
4.5500 |
(2) |
|
|
67,913 |
|
| Merrill Lynch
International |
|
USD |
|
3,050,000 |
|
05/20/13 |
|
|
0.9600 |
%(2) |
|
— |
(7) |
|
|
(35,565 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Upfront payments made by the Fund of $1,500,000) |
|
|
|
$ |
1,243,879 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
Payment to
the counterparty will be made upon the occurrence of bankruptcy and/or restructuring
event with respect to the Republic of Bulgaria 8.250% bond, due 01/15/15. |
| (2) |
|
Payments made
or received are based on the notional amount. |
| (3) |
|
Payment made
on 01/30/07 to fully fund swap, which reflects the cost basis of the contract. |
| (4) |
|
Payment to
the counterparty will be made upon the occurrence of bankruptcy and/or restructuring
event with respect to the NJSC Naftogaz of Ukraine 8.125% bond, due 09/30/09. |
| (5) |
|
Payment to
the counterparty will be made upon the occurrence of bankruptcy and/or restructuring
event with respect to the Deutsche Bank Kazakhstan 7.375% bond, due 11/12/13. |
| (6) |
|
Payment to
the counterparty will be made upon the occurrence of bankruptcy and/or restructuring
event with respect to the Republic of Venezuela 9.250% bond, due 09/15/27. |
| (7) |
|
Payment from
the counterparty will be received upon the occurrence of bankruptcy and/or restructuring
event with respect to the Republic of Croatia 5.000% bond, due 04/15/14. |
Currency type abbreviation:
At July 31, 2008, the Fund had outstanding total return swap contracts with the following terms:
| |
|
|
|
|
Termination |
|
Payments made by |
|
|
Payments received |
|
|
|
| Counterparty |
|
Notional amount |
|
date |
|
the Fund |
|
|
by the Fund |
|
Value |
|
| Credit Suisse International |
|
ARS |
12,225,000 |
|
12/19/11 |
|
$ |
10,815,082(1) |
|
|
— |
(2) |
|
$ |
9,916,502 |
| (Upfront payments made by the Fund of $10,815,082) |
|
|
|
|
|
| (1) |
|
Payment made
on 04/13/07 to fully fund swap, which reflects the cost basis of the contract. |
| (2) |
|
Payment is
equal to the total return on the Republic of Argentina 4.000% bond, due 12/17/11. |
Currency type abbreviation:
2) Securities lending
The Fund may lend securities up to 331/3% of its total assets to qualified broker-dealers or institutional investors. The loans are
secured at all times by cash, cash equivalents or US government securities in an amount at least
equal to the market value of the securities loaned, plus accrued interest and dividends, determined
on a daily basis and adjusted accordingly. The Fund will regain ownership of loaned securities to
exercise certain beneficial rights; however, the Fund may bear the risk of delay in recovery of, or
even loss of rights in, the securities loaned should the borrower fail financially. The Fund
receives compensation for lending its securities from interest or dividends earned on the cash,
cash equivalents or US government securities held as collateral, net of fee rebates paid to the
borrower plus reasonable administrative and custody fees. UBS Financial Services Inc. and other
affiliated broker-dealers have been approved as borrowers under the Fund's securities lending
program. UBS Securities LLC is the lending agent. For the three months ended July 31, 2008, UBS
Securities LLC did not earn any compensation as the Fund's lending agent. At July 31, 2008, the
Fund did not owe UBS Securities LLC any compensation as the Fund's lending agent. At July 31, 2008,
there were no securities on loan and no related collateral outstanding.
For more information regarding the Fund’s
other significant accounting policies, please refer to the Fund’s semi-annual report to shareholders dated April 30, 2008.
| Item 2. Controls and Procedures. |
| |
|
|
| (a) |
|
The registrant’s principal executive officer and principal financial officer have concluded that the
registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940, as amended (“Investment Company Act”)) are effective based on their
evaluation of these controls and procedures as of a date within 90 days of the filing date of this
document. |
| |
|
|
| (b) |
|
The registrant’s principal executive officer and principal financial officer are aware of no
changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act) that occurred during the registrant’s last fiscal quarter that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting. |
| |
|
|
| |
|
|
| Item 3. Exhibits. |
| |
|
|
| (a) |
|
Certifications of principal executive officer and principal financial officer of registrant pursuant
to Rule 30a-2(a) under the Investment Company Act is attached hereto as Exhibit EX-99.CERT. |
|
SIGNATURES |
| |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of
1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized. |
| |
|
|
| Global High Income Fund Inc. |
| |
|
|
| By: |
|
/s/ Kai R. Sotorp |
| |
|
Kai R. Sotorp |
| |
|
President |
| |
|
|
| Date: |
|
September 29, 2008 |
| |
|
|
| |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of
1940, this report has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated. |
| |
|
|
| |
|
|
| By: |
|
/s/ Kai R. Sotorp |
| |
|
Kai R. Sotorp |
| |
|
President |
| |
|
|
| Date: |
|
September 29, 2008 |
| |
|
|
| By: |
|
/s/ Thomas Disbrow |
| |
|
Thomas Disbrow |
| |
|
Vice President and Treasurer |
| |
|
|
| Date: |
|
September 29, 2008 |