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Global High Income Fund Inc. Announces Election of New Director by Board, Change to Waivers Further Reducing Advisory Fees and

^{Published on 2010-07-30 14:16:03 - Market Wire}
 

NEW YORK--([ BUSINESS WIRE ])--Global High Income Fund Inc. (the "Fund") (NYSE: GHI) is a non-diversified, closed-end management investment company seeking high current income and secondarily, capital appreciation through investments primarily in securities of emerging market debt issuers.

Election of new director by Board

The Fund announced that the Funda™s Board of Directors (aBoarda) elected Barry M. Mandinach to serve as a Class II director. Mr. Mandinach is currently a managing director of UBS Global Asset Management (US) Inc. and UBS Global Asset Management (Americas) Inc. (collectively, aUBS Global AMa"Americas regiona). He is the Head of Institutional & Wholesale Business (US) and Chief Marketing Officer (US) for UBS Global AMa"Americas region. Mr. Mandinach has been with UBS Global AM a" Americas region or its predecessors since 2001.

Change to waivers further reducing advisory fees

The Fund also announced a change to its fee waiver arrangements with UBS Global Asset Management (Americas) Inc. (aUBS Global AMa), the Funda™s investment advisor and administrator. Pursuant to its advisory contract with UBS Global AM (the "Advisory Contract"), the Fund pays UBS Global AM an investment advisory and administration fee, accrued weekly and paid monthly, at the annual rate of 1.25% of the Fund's average weekly net assets. Since August 1, 2005, UBS Global AM has contractually agreed to waive compensation otherwise payable to it to reduce the fee it receives under the Advisory Contract so that it is paid at the annual rate of 1.25% of the Funda™s average weekly net assets on assets up to $200 million, and at the annual rate of 1.00% of the Fund's average weekly net assets on assets above $200 million. This fee reduction abreakpointa continues indefinitely unless the Funda™s board agrees to any change. Effective August 1, 2010, UBS Global AM has agreed to further voluntarily waive compensation otherwise payable to it under the Advisory Contract so that it is paid at the annual rate of 1.20% of the Fund's average weekly net assets on assets up to $200 million, and at the annual rate of 1.00% of the Fund's average weekly net assets on assets above $200 million. This further voluntary waiver (i.e., the 0.05% reduction of the fee at the first abreakpointa level) will be for the period from August 1, 2010, through July 31, 2011.

Fund Commentary for the month of June 2010

Market Review

The Funda™s benchmark, the Global High Income Fund Index,¹ returned 1.45% in June 2010. US dollar (USD) denominated debt advanced 2.01%, while local market investments returned 0.89% when measured as components of the benchmark.

Spreads of USD-denominated emerging markets (EM) bonds widened slightly in June. (aSpreadsa refer to differences between the yields paid on US Treasury bonds and other types of debt, such as emerging market bonds.) At the same time, the US Treasury market reacted to economic doubts and yields declined: 10-year US Treasury yields finished the month at 2.93%, down from 3.28% at the end of May. From a regional USD-debt perspective, Latin America contributed the most, as higher beta countries were the focus among investors again this month. Higher beta countries such as the Dominican Republic, Uruguay and Venezuela were among the outperformers. Conversely, lower beta regions such as Asia and the Middle East underperformed in June.²

In June, local markets recovered with contribution from local yield returns.³ Average local yields, as measured by the index, were slightly lower and reached 6.84% at the end of the month. Currency returns were flat relative to the USD overall. However, currencies in Latin America appreciated and generated positive returns (the Brazilian real, Colombian peso and the Peruvian nuevos sol). Eastern European currencies again faced pressure in June as talks regarding a potential increased default risk in Hungary hit the markets.

Performance Review

For the month of June, the Fund posted a net asset value total return of 1.36% and a market price total return of 1.64%. The Fund slightly underperformed its benchmark, the Global High Income Fund Index, on a net asset value return basis, for the month. In general, returns from investments in high beta USD debt (that is USD-denominated debt issued by high beta countries such as Venezuela, Argentina and Pakistan), as well as an overweight to local currencies added to the overall performance. An overweight position in Venezuela contributed positively, while positions in Russia and Ecuador detracted from performance. Local yield exposure was more supportive than last month, particularly investments in Brazil and Mexico. Local currency exposure in the Mexican peso and the South Korean won contributed as well, while the Funda™s overweight to the Egyptian pound detracted. Approximately 65% of the portfolio was invested in local currencies, representing an approximately 15% overweight when compared to the benchmark.

Outlook

For emerging economies, we expect stronger growth rates and thus an increase in growth differentials between EM countries and developed markets. The share of global growth coming from emerging economies has already reached pre-crisis levels, and we expect it to increase further. With these two factors in mind, we believe EM economies should become much more important in a global context and could take the lead in economic terms in the future.

Volatility and increasing risk aversion were triggered in large part by deteriorating fundamentals in developed countries. After the recent spread widening, USD-denominated sovereign debt has started to look attractive again, given the robust economic and fiscal environment in emerging market countries.

Over the long term, as investors become less risk averse, we believe that USD spreads over US Treasuries may be supported by renewed investment interest and higher liquidity. EM currencies may again face appreciation pressure due to strong economic developments in EM countries. We currently expect to maintain an overweight position in EM currencies versus the USD given the current environment.

Disclaimers Regarding Fund Commentary - The Fund Commentary is intended to assist shareholders in understanding how the Fund performed during the month noted.Views and opinions were current as of the date of this press release.They are not guarantees of performance or investment results and should not be taken as investment advice.Investment decisions reflect a variety of factors, and the Fund and UBS Global AM reserve the right to change views about individual securities, sectors and markets at any time.As a result, the views expressed should not be relied upon as a forecast of the Funda™s future investment intent.

Past performance does not predict future performance. The return and value of an investment will fluctuate so that an investora™s shares, when sold, may be worth more or less than their original cost. The Funda™s net asset value (aNAVa) returns assume, for illustration only, that dividends and other distributions, if any, were reinvested at the NAV on the payable dates. The Funda™s market price returns assume that all dividends and other distributions, if any, were reinvested at prices obtained under the Funda™s Dividend Reinvestment Plan. Returns for periods of less than one year have not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and other distributions, if any, or the sale of Fund shares.