N-CSR/A: Certified annual shareholder report of registered management investment companies filed on Form N-CSR
Published on March 10, 2004
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08025
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Global Income Fund, Inc.
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(Exact name of registrant as specified in charter)
11 Hanover Square, New York, NY 10005
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(Address of principal executive offices) (Zip code)
Thomas B. Winmill, President
11 Hanover Square
New York, NY 10005
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-212-344-6310
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Date of fiscal year end: 12/31/03
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Date of reporting period: 1/1/03 - 12/31/03
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Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policy making roles.
Item 1. Report to Shareholders
GLOBAL INCOME
FUND
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ANNUAL REPORT
December 31, 2003
Independent Public Accountant American Stock
Tait, Weller & Baker Exchange Symbol:
GIF
11 Hanover Square
New York, NY 10005
1-800-278-4353
www.globalincomefund.net
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This report, including the financial statements herein, is transmitted to the
shareholders of the Fund for their information. The financial information
included herein is taken from the records of the Fund. This is not a prospectus,
circular or representation intended for use in the purchase of shares of the
Fund or any securities mentioned in this report. Pursuant to Section 23 of the
Investment Company Act of 1940, notice is hereby given that the Fund may in the
future, purchase shares of its own common stock. These purchases may be made
from time to time, at such times, and in such amounts, as may be deemed
advantageous to the Fund, although nothing herein shall be considered a
commitment to purchase such shares.
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American Stock
GLOBAL INCOME FUND Exchange Symbol: GIF
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11 Hanover Square, New York, NY 10005
www.globalincomefund.net
January 29, 2004
Fellow Shareholders:
It is a pleasure to submit this 2003 Annual Report for Global Income Fund,
and to welcome our new shareholders who find attractive the Fund's quality
approach to global income investing.
2003 Market Total Return 17.25%
In 2003, the Fund had a market total return on the American Stock Exchange
of 17.25% on a net asset return of 10.22% - a gratifying result in view of its
primary objective of providing its shareholders a high level of current income,
with capital appreciation as a secondary objective. In contrast, the Lehman
Brothers Aggregate Bond Index returned 4.11% in the same period. Investing
primarily in investment grade fixed income securities issued by governments and
corporations throughout the world, the top three countries as of December 31,
2003 were United States, Germany and United Kingdom. At year end the Fund's
portfolio was invested approximately 93% in bonds, notes, debentures, and trust
certificates with an actual or deemed investment grade rating and 7% in actual
or deemed investment grade preferred stocks. Of these holdings, approximately
50% were denominated in Eurodollars, 47% in U.S. dollars, and 3% in Australian
dollars.
On June 25, 2003 the Federal Reserve Bank lowered the Federal Funds rate to
1% from 1.25% and the rate remained unchanged for the balance of 2003. Business
investment in the third quarter and fourth quarter was strong. Likewise,
consumer spending was strong in the third quarter. Yet, this spending weakened
at the end of that third quarter and further weakened in the fourth quarter.
Moreover, the economy recently passed the 40th straight month of manufacturing
sector job losses and no substantial increases are anticipated. Against this
mixed economic picture, the Fund's strategy was to improve the overall credit
quality of the portfolio and increase Eurodollar denominated investments.
Looking ahead at the fixed income markets in 2004, we remain cautiously
optimistic. In January 2004, the Federal Reserve bank left its short-term
interest rate target at a 45-year low of 1%. While the Fed has now dropped the
commitment it made five months previously to keep interest rates low for "a
considerable period," the Fed did note that it can be "patient" in raising rates
because inflation is low and the economy still has not fully recovered. Overall,
we would agree with the Fed's economic outlook when it commented that "output is
expanding briskly," and while "new hiring remains subdued, other indicators
suggest an improvement in the labor market." Fragile is a word that seems
appropriate for the economic recovery as well as the world we currently live in.
Dividend Distribution Policy
The Fund's revised managed distribution policy appears to be well received.
The policy is intended to provide shareholders with a relatively stable cash
flow and reduce or eliminate the Fund's market price discount to its net asset
value per share. Under the current policy, distributions of approximately 7%
(compared to 10% previously) of the Fund's net asset value per share on an
annual basis are intended to be paid primarily from ordinary income and any net
capital gains, with the balance representing return of capital. This policy is
subject to regular review at the Board's quarterly meetings and the amount of
the distribution may vary depending on the net asset value per share at the time
of declaration. Although the distribution rate may be further reduced reflecting
low current yields, we continue to believe shares of the Fund are a sound value
and attractive for portfolios seeking total return from capital appreciation and
income.
Purchase Shares at an Attractive Discount
The Fund's current net asset value per share is $5.21. With a recent closing on
the American Stock Exchange of $5.01, we believe this represents an important
opportunity to purchase additional shares at an attractive discount from their
underlying value. The Fund's Dividend Reinvestment Plan is an effective way to
also add to your holding because quarterly dividend distributions are reinvested
without charge, which can contribute importantly to growing your investment over
time. Please call 1-800-278-4353 and an Investor Service Representative will be
happy to assist you. We appreciate your support and look forward to serving your
investment needs in the months and years ahead.
Sincerely,
/s/ Thomas B. Winmill /s/ Marion E. Morris
Thomas B. Winmill Marion E. Morris
President Senior Vice President
Portfolio Manager
GLOBAL INCOME FUND, INC.
2
Schedule of Portfolio Investments - December 31, 2003
3
See accompanying notes to financial statements. GLOBAL INCOME FUND, INC.
Schedule of Portfolio Investments - December 31, 2003
(1) Par value stated in currency indicated; market value stated in U.S. dollars.
4
GLOBAL INCOME FUND, INC. See accompanying notes to financial statements.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
STATEMENT OF OPERATIONS
Year Ended December 31, 2003
5
See accompanying notes to financial statements. GLOBAL INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 2003 and 2002
6
GLOBAL INCOME FUND, INC. See accompanying notes to financial statements.
Notes to Financial Statements
(1) Global Income Fund, Inc., a Maryland corporation registered under the
Investment Company Act of 1940, as amended, is a non-diversified, closed-end
management investment company, whose shares are listed on the American Stock
Exchange. The primary objective of the Fund is a high level of income and
secondarily, capital appreciation. The Fund seeks to achieve its investment
objectives by investing primarily in foreign and domestic fixed income
securities. The Fund is subject to the risk of price fluctuations of the
securities held in its portfolio which is generally a function of the underlying
credit ratings of an issuer, currency denomination, duration, and yield of its
securities, and general economic and interest rate conditions. The following is
a summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements. With respect to security
valuation, securities traded on a national securities exchange or the Nasdaq
National Market System ("NMS") are valued at the last reported sales price on
the day the valuations are made. Such securities that are not traded on a
particular day and securities traded in the over-the-counter market that are not
on NMS are valued at the mean between the current bid and asked prices. Certain
of the securities in which the Fund invests are priced through pricing services
which may utilize a matrix pricing system which takes into consideration factors
such as yields, prices, maturities, call features and ratings on comparable
securities. Bonds may be valued according to prices quoted by a dealer in bonds
which offers pricing services. If market quotations are not available or deemed
reliable, then such securities are valued as determined in good faith under the
direction of or pursuant to procedures established by the Fund's Board of
Directors. Debt obligations with remaining maturities of 60 days or less are
valued at cost adjusted for amortization of premiums and accretion of discounts.
Securities denominated in foreign currencies are translated into U.S. dollars at
prevailing exchange rates. Forward contracts are marked to market and the change
in market value is recorded by the Fund as an unrealized gain or loss. When a
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if the
counterparties are unable to meet the terms of the contracts or if the value of
the currency changes unfavorably. Investment transactions are accounted for on
the trade date (the date the order to buy or sell is executed). Interest income
is recorded on the accrual basis. Discounts and premiums on securities purchased
are amortized over the life of the respective securities. Dividends and
distributions to shareholders are recorded on the ex-dividend date. In preparing
financial statements in conformity with accounting principles generally accepted
in the United States of America, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(2) The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable investment income and net capital gains, if
any, after utilization of any capital loss carryforward, to its shareholders and
therefore no Federal income tax provision is required. At December 31, 2003, the
Fund had an unused capital loss carryforward of approximately $8,130,200 of
which $1,189,000 expires in 2004, $214,000 in 2006, $3,977,000 in 2007,
$1,381,000 in 2008, and $1,369,200 in 2010. Based on Federal income tax cost of
$26,567,289, gross unrealized appreciation and gross unrealized depreciation
were $1,531,172 and $29,448, respectively, at December 31, 2003. Distributions
paid to shareholders during the year ended December 31, 2003 differ from net
investment income and net gains (losses) from security, foreign currency, and
futures transactions as determined for financial reporting purposes. These
distributions are shown under "Distributions to Shareholders" in the Statements
of Changes in Net Assets.
(3) The Fund retains CEF Advisers, Inc. as its Investment Manager. Under the
terms of the Investment Management Agreement, the Investment Manager receives a
management fee, payable monthly, based on the average weekly net assets of the
Fund at the annual rate of 7/10 of 1% of the first $250 million, 5/8 of 1% from
$250 million to $500 million, and 1/2 of 1% over $500 million. This fee is
calculated by determining the average of net assets on each Friday of a month
and applying the applicable rate to such aver-
7
GLOBAL INCOME FUND, INC.
age for the number of days in the month. Certain officers and directors of the
Fund are officers and directors of the Investment Manager. The Fund reimbursed
the Investment Manager $56,540 for providing certain administrative and
accounting services at cost for the year ended December 31, 2003.
(4) The Fund has an arrangement with its custodian and transfer agent whereby
interest earned on uninvested cash balances was used to offset a portion of the
Fund's expenses. Purchases and sales of securities other than short term notes
aggregated $37,972,669 and $38,403,109, respectively, for the year ended
December 31, 2003. A forward currency contract is an obligation to purchase or
sell a specific currency for an agreed-upon price at a future date. The Fund
could be exposed to risk if counterparties to the contracts are unable to meet
the terms of their contracts. The Fund had no forward currency contracts
outstanding at December 31, 2003.
(5) The Fund may borrow through a committed bank line of credit. At December 31,
2003, there was no balance outstanding and the interest rate was at the
borrower's option of (i) Overnight Federal Funds or (ii) LIBOR (30, 60, 90
days), each as in effect from time to time, plus 0.75% per annum, calculated on
the basis of actual days elapsed for a 360-day year. For the year ended December
31, 2003, the weighted average interest rate was 1.84% based on the balances
outstanding during the period and the weighted average amount outstanding was
$44,719.
(6) The tax character of distributions paid to shareholders for the years ended
December 31, 2003 and 2002 was follows:
Year Ordinary income Return of capital Total
---- --------------- ----------------- -----
2003 $1,215,358 $ 767,761 $ 1,983,119
2002 1,538,797 1,158,289 2,697,086
As of December 31, 2003, the components of distributable earnings on a tax basis
were as follows:
Unrealized appreciation on investments and foreign securities $ 1,537,695
Capital loss carryforwards (8,130,270)
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$ (6,592,575)
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(7) Regarding concentration of credit risk, investing in securities of foreign
issuers involves special risks which include changes in foreign exchange rates
and the possibility of future adverse political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign issuers and in foreign markets may be less liquid and their prices
more volatile than those of U.S. issuers and markets.
(8) At December 31, 2003 there were 5,565,396 shares of $.01 par value common
stock outstanding (20,000,000 shares authorized). The shares issued and
resulting increase in paid-in capital in connection with reinvestment of
dividends from net investment income during the years ended December 31, 2003
and 2002 were as follows:
Shares issued Increase in paid-in capital
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2003 90,974 $439,788
2002 125,231 $614,055
On December 10, 2003, the Fund filed with the Securities and Exchange Commission
a registration statement relating to a non-transferable offering of rights
exercisable for shares of the Fund (the "Offer"). The Board of Directors of the
Fund authorized the filing of the registration statement, but has not, as of the
date hereof, yet unconditionally approved the Offer or its final terms.
8
GLOBAL INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
* Per share income and operating expenses and net realized and unrealized gain
(loss) on investments have been computed using the average number of shares
outstanding. These computations had no effect on net asset value per share.
** Annualized.
(a) Total return on market value basis is calculated assuming a purchase of
common stock on the opening of the first day and a sale on the closing of
the last day of each period reported. Dividends and distributions, if any,
are assumed for purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Generally, total
return on net asset value basis will be higher than total return on market
value basis in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total return on net asset
value basis will be lower than total return on market value basis in
periods where there is a decrease in the discount or an increase in the
premium of the market value to the net asset value from the beginning to
the end of such periods. Total return calculated for a period of less than
one year is not annualized. The calculation does not reflect brokerage
commissions, if any.
(b) Ratio after custodian credits was 1.72%, 2.66%, 2.24%**, and 2.43% for the
years ended December 31, 2001, and 2000, the six months ended December 31,
1999 and the year ended June 30, 1999, respectively. There were no
custodian credits for the years ended December 31, 2003 and 2002.
9
GLOBAL INCOME FUND, INC.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders of Global Income Fund, Inc.:
We have audited the accompanying statements of assets and liabilities of Global
Income Fund, Inc., including the schedule of portfolio investments as of
December 31, 2003 and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated thereon. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2003, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Global
Income Fund, Inc. as of December 31, 2003, 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 periods indicated
thereon, in conformity with accounting principles generally accepted in the
United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 22, 2004
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RESULTS OF THE ANNUAL MEETING
The Fund's Annual Meeting was held on September 4, 2003 at the American Stock
Exchange, 86 Trinity Place, New York, New York for the purpose of electing the
following director to serve as follows with the votes received as set forth
below:
Director Class Term Expiring Votes For Votes Withheld
- -------- ----- ---- -------- --------- --------------
Peter K. Werner 1 5 years 2008 5,257,043 117,070
Directors whose term of office continued after the meeting are George B. Langa,
David R. Stack, Bassett S. Winmill, and Thomas B. Winmill.
10
GLOBAL INCOME FUND, INC.
HISTORICAL DISTRIBUTION SUMMARY
Return
Investment of
Period Income Capital Total
- ------ ------ ------- -----
2003 $ 0.22 $ 0.14 $ 0.36
2002 $ 0.28 $ 0.22 $ 0.50
2001 $ 0.36 $ 0.20 $ 0.56
2000 $ 0.42 $ 0.16 $ 0.58
6 Months Ended 12/31/99 $ 0.23 $ 0.07 $ 0.30
12 Months Ended 6/30/99 $ 0.55 $ 0.13 $ 0.68
12 Months Ended 6/30/98 $ 0.52 $ 0.32 $ 0.84
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MANAGED DISTRIBUTION
The Board's current policy is to provide investors with a stable quarterly
distribution out of current income, supplemented by realized capital gains, and
to the extent necessary, paid-in capital. The Fund is subject to U.S. corporate,
tax, and securities laws. Under U.S. tax accounting rules, the amount of
distributable net income is determined on an annual basis and is dependent
during the fiscal period on the aggregate gains and losses realized by the Fund
and, to a lesser extent, the actual exchange rate between the U.S. dollar and
the currencies in which Fund assets are denominated. Therefore, the exact amount
of distributable income can only be determined as of the end of the Fund's
fiscal period. Under the U.S. Investment Company Act of 1940, however, the Fund
is required to indicate the source of each distribution to shareholders. The
Fund estimates that distributions for the fiscal period commencing January 1,
2004, including the distributions paid quarterly, are comprised approximately
half of net investment income and the balance from paid-in capital. This
estimated distribution composition may vary from quarter to quarter because it
may be materially impacted by future realized gains and losses on securities and
fluctuations in the value of currencies in which Fund assets are denominated. In
January after each fiscal period, a Form 1099 DIV will be sent to shareholders,
which will state the amount and composition of distributions and provide
information with respect to their appropriate tax treatment.
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PROXY VOTING
The Fund's Proxy Voting Guidelines (the "Guidelines") are available without
charge, by calling the Fund collect at 1-212-635-0671. The Guidelines are also
posted on http://www.globalincomefund.net, the Fund's website, and are available
on the SEC's website at http://sec.gov.
11
GLOBAL INCOME FUND, INC.
DIVIDEND REINVESTMENT PLAN
The Fund has adopted a Dividend Reinvestment Plan (the "Plan"). Under the Plan,
each dividend and capital gain distribution, if any, declared by the Fund on
outstanding shares will, unless elected otherwise by each shareholder by
notifying the Fund in writing at any time prior to the record date for a
particular dividend or distribution, be paid on the payment date fixed by the
Board of Directors or a committee thereof in additional shares. If the Market
Price (as defined below) per share is equal to or exceeds the net asset value
per share at the time shares are valued for the purpose of determining the
number of shares equivalent to the cash dividend or capital gain distribution
(the "Valuation Date"), participants will be issued additional shares equal to
the amount of such dividend divided by the greater of that NAV per share or 95%
of that Market Price per share. If the Market Price per share is less than such
net asset value on the Valuation Date, participants will be issued additional
shares equal to the amount of such dividend divided by the Market Price. The
Valuation Date is the day before the dividend or distribution payment date or,
if that day is not an American Stock Exchange trading day, the next trading day.
For all purposes of the Plan: (a) the Market Price of the shares on a particular
date shall be the average closing market price on the five trading days the
shares traded ex-dividend on the Exchange prior to such date or, if no sale
occurred on any of these days, then the mean between the closing bid and asked
quotations for the shares on the Exchange on such day, and (b) net asset value
per share on a particular date shall be as determined by or on behalf of the
Fund.
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PRIVACY POLICY
Global Income Fund, Inc. recognizes the importance of protecting the personal
and financial information of its shareholders. We consider each shareholder's
personal information to be private and confidential. This describes the
practices followed by us to protect our shareholders' privacy. We may obtain
information about you from the following sources: (1) information we receive
from you on forms and other information you provide to us whether in writing, by
telephone, electronically or by any other means; (2) information regarding your
transactions with us, our corporate affiliates, or others. We do not sell
shareholder personal information to third parties. We will collect and use
shareholder personal information only to service shareholder accounts. This
information may be used by us in connection with providing services or financial
products requested by shareholders. We will not disclose shareholder personal
information to any nonaffiliated third party except as permitted by law. We take
steps to safeguard shareholder information. We restrict access to nonpublic
personal information about you to those employees and service providers who need
to know that information to provide products or services to you. With our
service providers we maintain physical, electronic, and procedural safeguards to
guard your nonpublic personal information. Even if you are no longer a
shareholder, our Privacy Policy will continue to apply to you. We reserve the
right to modify, remove or add portions of this Privacy Policy at any time.
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Visit us on the Internet at www.globalincomefund.net. The site provides
information about the Fund including market performance, net asset value (NAV),
dividends, press releases, and shareholder reports. For further information, you
can email us at info@globalincomefund.net. The Fund is a member of the
Closed-End Fund Association (CEFA). Its website address iswww.cefa.com. CEFA is
solely responsible for the content of its website.
12
GLOBAL INCOME FUND, INC.
DIRECTORS AND OFFICERS
DIRECTORS OFFICERS
BASSETT S. WINMILL THOMAS B. WINMILL, Esq,
Chairman President
GEORGE B. LANGA* MARION E. MORRIS
DAVID R. STACK* Senior Vice President
PETER K. WERNER*
THOMAS B. WINMILL, Esq. WILLIAM G. VOHRER
Treasurer
* Member, Audit Committee
MONICA PELAEZ, Esq.
Vice President, Secretary
HEIDI KEATING
Vice President
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Internet Custodian
www.globalincomefund.net State Street Bank & Trust Co.
email: info@globalincomefund.net 801 Pennsylvania Avenue
Kansas City, MO 64105
Investment Manager Stock Transfer Agent and Registrar
CEF Advisers, Inc. American Stock Transfer & Trust Co.
11 Hanover Square 59 Maiden Lane
New York, NY 10005 New York, NY 10038
1-800-278-4353
Independent Accountants www.amstock.com
Tait, Weller & Baker
1818 Market St., Suite 2400
Philadelphia, PA 19103
13
GLOBAL INCOME FUND, INC.
GLOBAL INCOME FUND
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11 Hanover Square
New York, NY 10005
Printed on recycled paper [GRAPHIC]
GIF-AR-12/03
Item 2. Code of Ethics
(a) The registrant has adopted a code of ethics (the "Code") that
applies to its principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these individuals
are employed by the Fund or a third party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) (1) The Code is attached hereto as Exhibit 99.CODE ETH.
(2) The text of the Code can be on the registrant's website,
www.globalincomefund.net.
(3) A copy of the Code may be obtained free of charge by calling collect
1-212-344-6310.
Item 3. Audit Committee Financial Expert
The Fund's Board of Directors has determined that it has three "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Directors: George B. Langa, David R. Stack and Peter K. Werner.
Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the audit committee and Board
of Directors in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
2003 2002
Audit Fees $ 18,750 $ 18,750
Audit-Related Fees 0 0
Tax Fees 3,250 3,750
All Other Fees 0 0
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, specifically the issuance of a report on internal
controls. Tax fees include amounts related to tax compliance, tax planning, and
tax advice. Other fees include the registrant's pro-rata share of amounts for
agreed-upon procedures in conjunction with service contract approvals by the
registrant's Board of Directors.
(e) (1) The registrant's audit committee has adopted a policy to consider for
pre-approval any non-audit services proposed to be provided by the
auditors to the Fund, and any non-audit services proposed to be
provided by such auditors to the Fund's investment manager, if any,
which have a direct impact on Fund operations or financial reporting.
Such pre-approval of non-audit services proposed to be provided by the
auditors to the Fund is not necessary, however, under the following
circumstances: (1) all such services do not aggregate to more than 5%
of total revenues paid by the Fund to the auditor in the fiscal year
in which services are provided, (2) such services were not recognized
as non-audit services at the time of the engagement, and (3) such
services are brought to the attention of the Audit Committee, and
approved by the Audit Committee, prior to the completion of the audit.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity
controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant were $21,500 and
$22,750, respectively.
(h) All non-audit services rendered in (g) above were pre-approved by the
registrant's audit committee. Accordingly, these services were considered
by the registrant's audit committee in maintaining the principal
accountant's independence.
Item 5. Audit Committee of Listed Registrants
The registrant has a standing audit committee. The members of the audit
committee are George B. Langa, David R. Stack and Peter K. Werner.
Item 6. Reserved
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Amended Proxy Voting Policies and Procedures
Foxby Corp.
Global Income Fund, Inc.
Midas Fund, Inc.
Midas Special Equities Fund, Inc.
Tuxis Corporation
Foxby Corp., Global Income Fund, Inc., Midas Fund, Inc., Midas Special Equities
Fund, Inc. and Tuxis Corporation (the "Funds") delegate the responsibility for
voting proxies of portfolio companies held in each Fund's portfolio to
Institutional Shareholder Services, Inc. ("ISS"). The Proxy Voting Guidelines of
ISS are incorporated by reference herein as each Fund's proxy voting policies
and procedures, as supplemented by the terms hereof. Each Fund retains the right
to override the delegation to ISS on a case-by-case basis, in which case the
ADDENDUM -- NON-DELEGATED PROXY VOTING POLICIES AND PROCEDURES supercede the
Proxy Voting Guidelines of ISS in their entirety. In all cases, a Fund's proxies
will be voted in the best interests of the Fund.
With respect to a vote upon which a Fund overrides the delegation to ISS,
to the extent that such vote presents a material conflict of interest between
the Fund and its investment adviser, distributor, or any affiliated person of
the Fund's investment adviser or distributor, the Fund will disclose such
conflict to, and obtain consent from, its Independent Directors, or a committee
thereof, prior to voting the proxy.
January 1, 2004
- --------
1 For the open-end investment companies, Midas Fund, Inc. and Midas Special
Equities Fund, Inc., the investment adviser is Midas Management Corporation and
the distributor is Investor Service Center, Inc. For Foxby Corp. and Global
Income Fund, Inc., the investment adviser is CEF Advisers, Inc. Tuxis
Corporation is internally managed. The closed-end funds, Foxby Corp., Global
Income Fund, Inc. and Tuxis Corporation, do not have a distributor.
2 Each Fund's Independent Directors are those directors who are not interested
persons of the Fund, its investment adviser and distributor.
ADDENDUM --
NON-DELEGATED PROXY VOTING POLICIES AND PROCEDURES
These proxy voting policies and procedures are intended to provide general
guidelines regarding the issues they address. As such, they cannot be
"violated." In each case the vote will be based on maximizing shareholder value
over the long term, as consistent with overall investment objectives and
policies.
BOARD AND GOVERNANCE ISSUES
o Board of Director Composition
Typically, we will not object to slates with at least a majority of independent
directors.
We generally will not object to shareholder proposals that request that the
board audit, compensation and/or nominating committees include independent
directors exclusively.
o Approval of Independent Auditors
We will evaluate on a case-by-case basis instances in which the audit firm has a
significant audit relationship with the company to determine whether we believe
independence has been compromised.
We will review and evaluate the resolutions seeking ratification of the auditor
when fees for financial systems design and implementation substantially exceed
audit and all other fees, as this can compromise the independence of the
auditor.
We will carefully review and evaluate the election of the audit committee chair
if the audit committee recommends an auditor whose fees for financial systems
design and implementation substantially exceed audit and all other fees, as this
can compromise the independence of the auditor.
o Increase Authorized Common Stock
We will generally support the authorization of additional common stock necessary
to facilitate a stock split.
We will generally support the authorization of additional common stock.
o Blank Check Preferred Stock
Blank check preferred is stock with a fixed dividend and a preferential claim on
company assets relative to common shares. The terms of the stock (voting,
dividend and conversion rights) are determined at the discretion of the Board
when the stock is issued. Although such an issue can in theory be used for
financing purposes, often it has been used in connection with a takeover
defense. Accordingly, we will generally evaluate the creation of blank check
preferred stock.
o Classified or "Staggered" Board
On a classified (or staggered) board, directors are divided into separate
classes (usually three) with directors in each class elected to overlapping
three-year terms. Companies argue that such Boards offer continuity in direction
which promotes long-term planning. However, in some instances they may serve to
deter unwanted takeovers since a potential buyer would have to wait at least two
years to gain a majority of Board seats.
We will vote on a case-by-case basis on issues involving classified boards.
o Supermajority Vote Requirements
Supermajority vote requirements in a company's charter or bylaws require a level
of voting approval in excess of simple majority. Generally, supermajority
provisions require at least 2/3 affirmative vote for passage of issues.
We will vote on a case-by-case basis regarding issues involving supermajority
voting.
o Restrictions on Shareholders to Act by Written Consent
Written consent allows shareholders to initiate and carry out a shareholder
action without waiting until the annual meeting or by calling a special meeting.
It permits action to be taken by the written consent of the same percentage or
outstanding shares that would be required to effect the proposed action at a
shareholder meeting.
We will generally not object to proposals seeking to preserve the right of
shareholders to act by written consent.
o Restrictions on Shareholders to Call Meetings
We will generally not object to proposals seeking to preserve the right of the
shareholders to call meetings.
o Limitations, Director Liability and Indemnification
Because of increased litigation brought against directors of corporations and
the increase costs of director's liability insurance, many states have passed
laws limiting director liability for those acting in good faith. Shareholders,
however, often must opt into such statutes. In addition, many companies are
seeking to add indemnification of directors to corporate bylaws.
We will generally support director liability and indemnification resolutions
because it is important for companies to be able to attract the most qualified
individuals to their Boards.
o Reincorporation
Corporations are in general bound by the laws of the state in which they are
incorporated. Companies reincorporate for a variety of reasons including
shifting incorporation to a state where the company has its most active
operations or corporate headquarters, or shifting incorporation to take
advantage of state corporate takeovers laws.
We typically will not object to reincorporation proposals.
o Cumulative Voting
Cumulative voting allows shareholders to cumulate their votes behind one or a
few directors running for the board - that is, cast more than one vote for a
director thereby helping a minority of shareholders to win board representation.
Cumulative voting generally gives minority shareholders an opportunity to effect
change in corporate affairs.
We typically will not object to proposals to adopt cumulative voting in the
election of directors.
o Dual Classes of Stock
In order to maintain corporate control in the hands of a certain group of
shareholders, companies may seek to create multiple classes of stock with
differing rights pertaining to voting and dividends.
We will vote on a case-by-case basis dual classes of stock. However, we will
typically not object to dual classes of stock.
o Limit Directors' Tenure
In general, corporate directors may stand for re-election indefinitely.
Opponents of this practice suggest that limited tenure would inject new
perspectives into the boardroom as well as possibly creating room for directors
from diverse backgrounds; however, continuity is important to corporate
leadership and in some instances alternative means may be explored for injecting
new ideas or members from diverse backgrounds into corporate boardrooms.
Accordingly, we will vote on a case-by-case basis regarding attempts to limit
director tenure.
o Minimum Director Stock Ownership
The director share ownership proposal requires that all corporate directors own
a minimum number of shares in the corporation. The purpose of this resolution is
to encourage directors to have the same interest as other shareholders.
We normally will not object to resolutions that require corporate directors to
own shares in the company.
EXECUTIVE COMPENSATION
o Disclosure of CEO, Executive, Board and Management Compensation
On a case-by-case basis, we will support shareholder resolutions requesting
companies to disclose the salaries of top management and the Board of Directors.
o Compensation for CEO, Executive, Board and Management
We typically will not object to proposals regarding executive compensation if we
believe the compensation clearly does not reflect the current and future
circumstances of the company.
o Formation and Independence of Compensation Review Committee
We normally will not object to shareholder resolutions requesting the formation
of a committee of independent directors to review and examine executive
compensation.
o Stock Options for Board and Executives
We will generally review the overall impact of stock option plans that in total
offer greater than 25% of shares outstanding because of voting and earnings
dilution.
We will vote on a case-by-case basis option programs that allow the repricing of
underwater options.
In most cases, we will oppose stock option plans that have option exercise
prices below the marketplace on the day of the grant.
Generally, we will support options programs for outside directors subject to the
same constraints previously described.
o Employee Stock Ownership Plan (ESOPs)
We will generally not object to ESOPs created to promote active employee
ownership. However, we will generally oppose any ESOP whose purpose is to
prevent a corporate takeover.
o Changes to Charter or By-Laws
We will conduct a case-by-case review of the proposed changes with the voting
decision resting on whether the proposed changes are in shareholder's best
interests.
o Confidential Voting
Typically, proxy voting differs from voting in political elections in that the
company is made aware of shareholder votes as they are cast. This enables
management to contact dissenting shareholders in an attempt to get them to
change their votes.
We generally will not object to confidential voting.
o Equal Access to Proxy
Equal access proposals ask companies to give shareholders access to proxy
materials to state their views on contested issues, including director
nominations. In some cases they would actually allow shareholders to nominate
directors. Companies suggest that such proposals would make an increasingly
complex process even more burdensome.
In general, we will not oppose resolutions for equal access proposals.
o Golden Parachutes
Golden parachutes are severance payments to top executives who are terminated or
demoted pursuant to a takeover. Companies argue that such provisions are
necessary to keep executives from "jumping ship" during potential takeover
attempts.
We will not object to the right of shareholders to vote on golden parachutes
because they go above and beyond ordinary compensation practices. In evaluating
a particular golden parachute, we will examine if considered material total
management compensation, the employees covered by the plan, and the quality of
management and all other factors deemed pertinent.
MERGERS AND ACQUISITIONS
o Mergers, Restructuring and Spin-offs
A merger, restructuring, or spin-off in some way affects a change in control of
the company's assets. In evaluating the merit of each issue, we will consider
the terms of each proposal. This will include an analysis of the potential
long-term value of the investment.
On a case by case basis, we will review management proposals for merger or
restructuring to determine the extent to which the transaction appears to offer
fair value and other proxy voting policies stated are not violated.
o Poison Pills
Poison pills (or shareholder rights plans) are triggered by an unwanted takeover
attempt and cause a variety of events to occur which may make the company
financially less attractive to the suitor. Typically, directors have enacted
these plans without shareholder approval. Most poison pill resolutions deal with
putting poison pills up for a vote or repealing them altogether.
We typically will not object to most proposals to put rights plans up for a
shareholder vote. In general, poison pills will be reviewed for the additional
value provided to shareholders, if any.
o Anti-Greenmail Proposals
Greenmail is the payment a corporate raider receives in exchange for his/her
shares. This payment is usually at a premium to the market price, so while
greenmail can ensure the continued independence of the company, it discriminates
against other shareholders.
We generally will support anti-greenmail provisions.
o Opt-Out of State Anti-takeover Law
A strategy for dealing with anti-takeover issues has been a shareholder
resolution asking a company to opt-out of a particular state's anti-takeover
laws.
We generally will not object to bylaws changes requiring a company to opt out of
state anti-takeover laws. Resolutions requiring companies to opt into state
anti-takeover statutes generally will be subject to further review for
appropriateness.
o Other Situations
In the event an issue is not addressed in the above guidelines, we will
determine on a case-by-case basis any proposals that may arise from management
or shareholders. To the extent that a proposal from management does not infringe
on shareholder rights, we will generally support management's position. We may
also elect to abstain or not vote on any given matter.
January 1, 2004
ISS Proxy Voting Guidelines Summary
Following is a concise summary of ISS's proxy voting policy guidelines.
1. Auditors
Vote CASE-BY-CASE on shareholder proposals on auditor rotation, taking into
account these factors:
o Tenure of the audit firm
o Establishment and disclosure of a renewal process whereby the auditor is
regularly evaluated for both audit quality and competitive price
o Length of the rotation period advocated in the proposal
o Significant audit-related issues
2. Board of Directors
Voting on Director Nominees in Uncontested Elections
Generally, vote CASE-BY-CASE. But WITHHOLD votes from:
o Insiders and affiliated outsiders on boards that are not at least majority
independent
o Directors who sit on more than six boards
o Compensation Committee members if there is a disconnect between the CEO's pay
and performance
Classification/Declassification of the Board
Vote AGAINST proposals to classify the board.
Vote FOR proposals to repeal classified boards and to elect all directors
annually.
Independent Chairman (Separate Chairman/CEO)
Vote FOR shareholder proposals asking that the chairman and CEO positions be
separated (independent chairman), unless the company has a strong countervailing
governance structure, including a lead director, two-thirds independent board,
all independent key committees, and established governance guidelines.
Majority of Independent Directors/Establishment of Committees
Vote FOR shareholder proposals asking that a majority or more of directors be
independent unless the board composition already meets the proposed threshold by
ISS's definition of independence.
Open Access (shareholder resolution)
Vote CASE-BY-CASE basis, taking into account the ownership threshold proposed in
the resolution and the proponent's rationale.
3. Shareholder Rights
Shareholder Ability to Act by Written Consent
Vote against proposals to restrict or prohibit shareholder ability to take
action by written consent. Vote for proposals to allow or make easier
shareholder action by written consent.
Shareholder Ability to Call Special Meetings
Vote against proposals to restrict or prohibit shareholder ability to call
special meetings. Vote for proposals that remove restrictions on the right of
shareholders to act independently of management.
Supermajority Vote Requirements
Vote AGAINST proposals to require a supermajority shareholder vote.
Vote FOR proposals to lower supermajority vote requirements.
Cumulative Voting
Vote against proposals to eliminate cumulative voting. Vote proposals to restore
or permit cumulative voting on a case-by-case basis relative to the company's
other governance provisions.
Confidential Voting
Vote FOR shareholder proposals requesting that corporations adopt confidential
voting, use independent vote tabulators and use independent inspectors of
election. In proxy contests, support confidential voting proposals only if
dissidents agree to the same policy that applies to management.
4. Proxy Contests
Voting for Director Nominees in Contested Elections
Votes in a contested election of directors must be evaluated on a CASE-BY-CASE
basis, considering the factors that include the long-term financial performance,
management's track record, qualifications of director nominees (both slates),
and an evaluation of what each side is offering shareholders.
Reimbursing Proxy Solicitation Expenses
Vote CASE-BY-CASE. Where ISS recommends in favor of the dissidents, we also
recommend voting for reimbursing proxy solicitation expenses.
5. Poison Pills
Vote for shareholder proposals that ask a company to submit its poison
pill for shareholder ratification. Review on a case-by-case basis shareholder
proposals to redeem a company's poison pill and management proposals to ratify a
poison pill.
6. Mergers and Corporate Restructurings
Vote CASE-BY-CASE on mergers and corporate restructurings based on such features
as the fairness opinion, pricing, strategic rationale, and the negotiating
process.
7. Reincorporation Proposals
Proposals to change a company's state of incorporation should be evaluated on a
CASE-BY-CASE basis, giving consideration to both financial and corporate
governance concerns, including the reasons for reincorporating, a comparison of
the governance provisions, and a comparison of the jurisdictional laws.
Vote FOR reincorporation when the economic factors outweigh any neutral or
negative governance changes.
8. Capital Structure
Common Stock Authorization
Votes on proposals to increase the number of shares of common stock authorized
for issuance are determined on a CASE-BY-CASE basis using a model developed by
ISS.
Vote AGAINST proposals at companies with dual-class capital structures to
increase the number of authorized shares of the class of stock that has superior
voting rights.
Vote FOR proposals to approve increases beyond the allowable increase when a
company's shares are in danger of being delisted or if a company's ability to
continue to operate as a going concern is uncertain.
Dual-class Stock
Vote AGAINST proposals to create a new class of common stock with superior
voting rights.
Vote FOR proposals to create a new class of nonvoting or
subvoting common stock if:
o It is intended for financing purposes with minimal or no dilution to current
shareholders
o It is not designed to preserve the voting power of an insider or significant
shareholder
9. Executive and Director Compensation
ISS applies a quantitative methodology, but for Russell 3000 companies will also
apply a pay-for-performance overlay in assessing equity-based compensation
plans.
Vote AGAINST a plan if the cost exceeds the allowable cap.
Vote FOR a plan if the cost is reasonable (below the cap) unless either of the
following conditions apply:
o The plan expressly permits repricing without shareholder approval for listed
companies; or
o There is a disconnect between the CEO's pay and performance (an increase in
pay and a decrease in performance), the main source for the pay increase is
equity-based, and the CEO participates in the plan being voted on.
Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice options are evaluated
on a CASE-BY-CASE basis giving consideration to the following:
o Historic trading patterns
o Rationale for the repricing
o Value-for-value exchange
o Option vesting
o Term of the option
o Exercise price
o Participation
Employee Stock Purchase Plans
Votes on employee stock purchase plans should be determined on a CASE-BY-CASE
basis.
Vote FOR employee stock purchase plans where all of the following apply:
o Purchase price is at least 85 percent of fair market value
o Offering period is 27 months or less, and
o Potential voting power dilution (VPD) is 10 percent
or less.
Vote AGAINST employee stock purchase plans where any of the opposite
conditions obtain.
Shareholder Proposals on Compensation
Generally vote CASE-BY-CASE, taking into account company performance, pay level
versus peers, pay level versus industry, and long term corporate outlook. But
generally vote FOR shareholder proposals that:
o Advocate performance-based equity awards (indexed options, premium-priced
options, performance-vested awards), unless the proposal is overly restrictive
or the company already substantially uses such awards
o Call for a shareholder vote on extraordinary benefits contained in
Supplemental Executive Retirement Plans (SERPs).
10. Social and Environmental Issues
These issues cover a wide range of topics, including consumer and public safety,
environment and energy, general corporate issues, labor standards and human
rights, military business, and workplace diversity.
In general, vote CASE-BY-CASE. While a wide variety of factors goes into each
analysis, the overall principal guiding all vote recommendations focuses on how
the proposal will enhance the economic value of the company.
Vote:
o FOR proposals for the company to amend its Equal Employment Opportunity (EEO)
Statement to include reference to sexual orientation, unless the change would
result in excessive costs for the company.
o AGAINST resolutions asking for the adopting of voluntary labeling of
ingredients or asking for companies to label until a phase out of such
ingredients has been completed.
Item 8. Reserved
Item 9. Controls and Procedures
(a)(i) The Principal Executive Officer and Principal Financial Officer have
concluded that Global Income Fund, Inc.'s disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Investment Company Act) provide
reasonable assurances that material information relating to Global Income
Fund, Inc. is made known to them by the appropriate persons, based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this report.
(a)(ii) There were no significant changes in Global Income Fund, Inc. internal
controls or in other factors that could significantly affect these controls
subsequent to the date of the evaluation referenced in (a)(i) above.
Item 10. Exhibits
(a) Code of Ethics for Principal Executive and Senior Financial Officers
attached hereto as Exhibit 99.CODE ETH.
(b) Certifications pursuant to Rule 30a-2 under the Investment Company Act of
1940(17 CFR 270.30a-2) attached hereto as Exhibit 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 Income Fund, Inc.
By: /s/ Thomas B. Winmill
---------------------------------------------
Thomas B. Winmill, President
Date: March 10, 2004
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 Income Fund, Inc.
By: /s/ William G. Vohrer
---------------------------------------------
William G. Vohrer, Treasurer
Date: March 10, 2004