N-CSR: Certified annual shareholder report of registered management investment companies filed on Form N-CSR
Published on March 7, 2007
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08025
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) (Zipcode)
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
Date of fiscal year end: 12/31
Date of reporting period: 1/1/06 - 12/31/06
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.
A registrant is required to disclose the information specified by Form
N-CSR and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a current valid Office of Management and Budget ("OMB")
control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under clearance requirements of 44 U.S.C. sec. 3507.
Item 1. Report to Shareholders.
GLOBAL INCOME FUND
[GRAPHIC APPEARS HERE]
ANNUAL REPORT
December 31, 2006
American Stock
Exchange Symbol:
GIF
11 Hanover Square
New York, NY 10005
www.globalincomefund.net
[CHART APPEARS HERE]
Korea 1.58%
Hungary 2.02%
Cyprus 2.07%
Mexico 3.10%
Supranational/Other 3.71%
Japan 4.08%
Sweden 4.16%
Austria 4.27%
United States 5.23%
Germany 6.01%
France 8.25%
Australia 10.46%
United Kingdom 11.49%
Canada 12.88%
Netherlands 18.46%
PORTFOLIO ANALYSIS*
Currency Allocation
Eurodollar 51.55%
U.S. Dollar 21.28%
Australian Dollar 12.33%
British Pound 6.01%
Canadian Dollar 6.60%
-----
97.77%
Ratings
AAA 34.71%
AA 17.43%
A 35.68%
BBB 6.44%
(less than)BBB 1.47%
NR 2.04%
-----
97.77%
- --------
* Country allocation and portfolio analysis use approximate percentages of
total net assets and may not add up to 100% due to leverage or other assets,
rounding, and other factors. Ratings are not a guarantee of credit quality
and may change. NR means "not rated."
GLOBAL INCOME
FUND American Stock
Exchange Symbol: GIF
11 Hanover Square, New York, NY 10005
www.globalincomefund.net
February 22, 2007
Fellow Shareholders:
It is a pleasure to submit this 2006 Annual Report for Global Income Fund
and to welcome our new shareholders who find the Fund's quality approach to
global income investing attractive. The primary investment objective of the
Fund, a closed end management investment company listed on the American Stock
Exchange, is to provide for its shareholders a high level of income. The Fund's
secondary investment objective is capital appreciation. The Fund has pursued
its investment objectives by investing primarily in a global portfolio of
investment grade fixed income securities.
Additional Investment Strategy
The Board of Directors recently approved an additional investment strategy
to achieve the Fund's objectives. The Fund may now invest in shares of closed
end management investment companies ("Portfolio Funds") selected by CEF
Advisers, Inc. (the "Investment Manager") that invest significantly in income
producing securities. This strategy will be limited by provisions of the
Investment Company Act of 1940, as amended (the "Act"), that limit the amount
the Fund can invest in any one Portfolio Fund to 3% of the Portfolio Fund's
total outstanding stock. As a result, the Fund may hold a smaller position in a
Portfolio Fund than if it were not subject to this restriction. To comply with
provisions of the Act, on any matter upon which Portfolio Fund stockholders are
solicited to vote, the Investment Manager will vote Portfolio Fund shares in
the same general proportion as shares held by other stockholders of the
Portfolio Fund. The Fund will not invest in any closed end funds managed by the
Investment Manager.
Under this new strategy, the Fund may own shares of open end management
investment companies ("open end funds") as a result of a Portfolio Fund's
conversion from a closed end fund or for short term liquidity. The Fund will
not own open end funds as a strategic investment over the long term, and the
Investment Manager will generally redeem its investment in open end funds
within a time period deemed reasonable by the Investment Manager taking into
account the circumstances surrounding each such fund (excepting investments in
short term liquidity funds).
Market Report
After increasing the Federal funds target rate by a quarter of one percent
at each of its four meetings in the first half of 2006, the Federal Open Market
Committee ("FOMC") left the target rate unchanged at 5.25% in the second half
of the year. Since the FOMC had signaled that future rate increases would
depend on current data regarding inflation and economic growth, the FOMC
appeared to view the economy as moderating in each of these respects, although
it indicated a continuing concern with inflation. The FOMC's restraint was well
received, causing equities to rise, and other interest rates to decline towards
the end of the year. As U.S. interest rates fell, the U.S. dollar weakened
versus the euro, yen, and British pound. The second half also saw bonds
rallying as oil prices dropped and overall corporate earnings remained strong.
More recently, the U.S. Department of Labor reported that U.S. non-farm
payrolls expanded by a seasonally adjusted 167,000 jobs, with solid gains in
the service sector and moderate declines in the manufacturing and construction
sectors. The report indicated that the United States showed a net increase of
1.8 million jobs in 2006, compared with 1.9 million in 2005 and 2.1 million in
2004. At the same time, the unemployment rate remains near a five year low.
Notwithstanding these positive signs for the U.S. economy, we remained
concerned by the U.S. current-account deficit - the combined balances for trade
in goods and services, income, and net unilateral current transfers - which
increased to $225.6 billion in the third quarter of 2006 from $217.1 billion in
the second quarter. With this trend, our foreign debt will be reaching
increasingly high levels. While a weaker U.S. dollar might contribute to
closing the deficit by making U.S. exports cheaper and more competitive for
sales abroad, the buying power of Americans for products from abroad would be
lessened.
Global Allocation
The Fund's strategy in 2006 was to invest its assets in primarily investment
grade fixed income securities denominated in major world currencies and issued
by organizations across many countries. On December 31, 2006, the Fund held
securities of sovereign nations, corporations, and other organizations based in
the United States, Netherlands, United Kingdom, Australia, France, Canada,
Germany, Austria, Sweden, Japan, Cyprus, Hungary, and Korea. Of these
securities approximately 52% were in Eurodollars, 21% in U.S. dollars, 12% in
Australian dollars, 6% in British pounds, and 7% in Canadian dollars. All but
approximately 1.5% of the Fund's portfolio investments are considered
investment grade by actual or deemed rating, or in cash or cash equivalents.
For 2006, the Fund had a market total return on the American Stock Exchange of
13.43% on a net asset value total return of 8.43%, gratifying results for our
global investment grade allocation process. We believe this approach provides a
sound, quality, fixed income strategy for investors over the long term. Our
current view of markets suggests that the Fund will benefit over the course of
2007 from a high quality portfolio selection strategy, investing globally in
investments in multiple currencies and in closed end income funds.
Distribution Policy
The Fund has a managed quarterly distribution policy, which 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
2006 policy, distributions of approximately 6% of the Fund's net asset value
per share on an annual basis were intended to be paid primarily from ordinary
income and any net capital gains, with the balance representing return of
capital. For the year ended December 31, 2006 actual distributions were about
6.4% of average net assets of which approximately 48% was derived from net
investment income and the balance from return of capital.
This managed quarterly distribution policy is subject to review by the Board
of Directors and the amount of the distribution may vary depending on the
Fund's net asset value per share at the time of declaration. Although the
dollar amount of the distributions cannot be predicted, we continue to believe
shares of the Fund are a sound long term value for investors seeking a high
level of income, with capital appreciation as a secondary objective.
Shares at a Discount
The Fund's current net asset value per share is $4.38. With a recent closing
price on the American Stock Exchange of $4.15, you can purchase additional
shares at a discount from their underlying value. Investment return and value
will vary, so shares of the Fund may subsequently be worth more or less than
their original cost. We believe that shares of the Fund are attractive, and
look forward to serving your investment needs over the years ahead.
Sincerely,
/s/ Thomas B. Winmill
------------------------------
Thomas B. Winmill
President
GLOBAL INCOME FUND, INC. 2
Schedule of Portfolio Investments - December 31, 2006
Principal Market
Amount (a) Value
---------- ----------
DEBT SECURITIES (94.01%)
Australia (10.46%)
A$1,500,000 Commonwealth Bank of Australia, 6.75% Senior
Government
Guaranteed Notes, due 12/01/07.................... $1,185,978
$1,000,000 National Australia Bank, 8.60% Subordinated
Notes, due 5/19/10................................ 1,103,505
$300,000 Principal Financial Group, 144A, 8.20% Senior
Notes, due 8/15/09 (b)............................ 321,311
A$500,000 Telstra Corp. Ltd., 6.25% Senior Notes, due
4/15/15........................................... 375,426
A$500,000 Telstra Corp. Ltd., 7.25% Senior Notes, due
11/15/12.......................................... 399,418
----------
3,385,638
----------
Austria (4.27%)
(Euro)1,000,000 Republic of Austria, 5.25% Euro Medium Term
Notes, due 1/04/11................................ 1,382,540
----------
Canada (12.88%)
C$1,000,000 Canada Housing Trust, 144A, 4.75% Guaranteed
Notes, due 3/15/07 (b)............................ 860,342
A$1,300,000 Government of Quebec, 6.00% Senior Unsubordinated
Notes, due 2/18/09................................ 1,012,372
C$1,000,000 HSBC Financial Corp. Ltd., 4.00% Medium Term
Notes, due 5/03/10................................ 850,761
C$500,000 Molson Coors Capital Finance, 5.00% Guaranteed
Notes, due 9/22/15................................ 424,646
A$1,350,000 Province of Ontario, 5.50% Euro Medium Term
Notes, due 7/13/12................................ 1,018,628
----------
4,166,749
----------
Cyprus (2.07%)
(Euro)500,000 Republic of Cyprus, 4.375% Euro Medium Term
Notes, due 7/15/14................................ 669,531
----------
France (8.25%)
(Euro)1,000,000 Elf Aquitaine, 4.50% Senior Unsubordinated Notes,
due 3/23/09....................................... 1,329,695
(Euro)1,000,000 Societe Nationale des Chemins de Fer Francais,
4.625% Euro Medium Term
Notes, due 10/25/09............................... 1,339,469
----------
2,669,164
----------
Germany (6.01%)
(Pounds)500,000 Dresdner Bank Aktiengesellschaft, 7.75%
Subordinated Bonds, due 12/07/07.................. 994,983
(Pounds)500,000 RWE Finance B.V., 4.625% Notes, due 8/17/10....... 948,655
----------
1,943,638
----------
Hungary (2.02%)
(Euro)500,000 Republic of Hungary, 4.00% Bonds, due 9/27/10..... 654,738
----------
Japan (4.08%)
(Euro)1,000,000 Toyota Motor Credit Corp., 4.125% Euro Medium
Term Notes, due 1/15/08........................... 1,320,149
----------
Korea (1.58%)
$500,000 Korea Development Bank, 5.75% Notes, due 9/10/13.. 512,646
----------
Mexico (3.10%)
$1,000,000 United Mexican States, 5.625% Notes, due 1/15/17.. 1,003,500
----------
Netherlands (18.46%)
(Euro)1,000,000 Aegon N.V., 4.625% Euro Medium Term Notes, due
4/16/08........................................... 1,327,915
(Euro)500,000 Heineken N.V., 4.375% Bonds, due 2/04/10.......... 661,104
(Euro)1,000,000 ING Bank N.V., 5.50% Euro Medium Term Notes, due
1/04/12........................................... 1,387,816
(Euro)1,000,000 Nederlandse Waterschapsbank, 4.00% Notes, due
2/11/09........................................... 1,317,518
(Euro)1,000,000 Rabobank Nederland, 3.125% Senior Notes, due
7/19/10........................................... 1,281,096
----------
5,975,449
----------
See notes to financial statements. 3 GLOBAL INCOME FUND, INC.
Schedule of Portfolio Investments - December 31, 2006
Principal
Amount (a) Market Value
---------- ------------
Sweden (4.16%)
(Euro)1,000,000 Kingdom of Sweden, 5.00% Eurobonds, due 1/28/09. $ 1,345,833
-----------
United Kingdom (11.49%)
$1,000,000 National Westminster Bank, 7.375% Subordinated
Notes, due 10/01/09............................. 1,053,724
(Euro)1,000,000 Tesco PLC, 4.75% Euro Medium Term Notes, due
4/13/10......................................... 1,338,205
(Euro)1,000,000 Vodafone Group Plc, 4.625% Euro Medium Term
Notes, due 1/31/08.............................. 1,325,501
-----------
3,717,430
-----------
United States (1.47%)
$500,000 CIT RV Trust 1998-A B 6.29% Subordinated Bonds,
due 1/15/17..................................... 475,466
-----------
Supranational/Other (3.71%)
$1,200,000 The International Bank for Reconstruction &
Development,
5.05% Notes, due 5/29/08........................ 1,200,120
-----------
Total Debt Securities (cost: $ 30,019,567)...... 30,422,591
-----------
Shares
------
PREFERRED STOCKS (2.68%)
United States (2.68%)
4,000 BAC Capital Trust II, 7.00%..................... 101,200
25,000 Corporate-Backed Trust Certificates, 8.20%
(Motorola)...................................... 647,500
5,000 SATURNS-Bellsouth SM, 5.875%.................... 119,000
-----------
Total Preferred Stocks (cost: $ 850,000)........ 867,700
-----------
Principal
Amount (a)
----------
REGISTERED INVESTMENT COMPANY (1.08%)
$349,054 SSgA Money Market Fund 4.94% (c) (cost: $
349,054)........................................ 349,054
-----------
Total Investments (cost: $ 31,218,621) (97.77%). 31,639,345
-----------
Receivables and other assets in excess of
liabilities (2.23%)............................. 722,828
-----------
Net Assets (100.00%)............................ $32,362,173
===========
- --------
(a) The principal amount is stated in U.S. dollars unless otherwise indicated.
(b) These securities are exempt from registration purusant to Rule 144A under
the Securities Act of 1933, as amended or otherwise restricted. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers. At December 31, 2006, these securities
are considered liquid and the market value amounted to $1,181,653 or 3.7%
of total net assets. Restricted securities held by the Fund are as follows:
- --------
(c) Rate represents the 7-day annualized yield at December 31, 2006.
GLOBAL INCOME FUND, INC. 4 See notes to financial statements.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006
ASSETS
Investments at market value (cost: $ 31,218,621)............... $31,639,345
Interest receivable............................................ 803,986
Other assets................................................... 11,317
-----------
Total assets............................................... 32,454,648
-----------
LIABILITIES
Accrued expenses............................................... 67,863
Investment management.......................................... 19,286
Administrative services........................................ 5,326
-----------
Total liabilities.......................................... 92,475
-----------
NET ASSETS........................................................ $32,362,173
===========
NET ASSET VALUE PER SHARE
(applicable to 7,393,572 shares outstanding: 20,000,000 shares
of $.01 par value authorized)................................ $ 4.38
===========
At December 31, 2006, net assets consisted of:
Paid-in capital................................................ $36,627,184
Accumulated net realized loss on investments and foreign
currencies................................................... (4,711,714)
Net unrealized appreciation on investments and foreign
currencies................................................... 446,703
-----------
$32,362,173
===========
STATEMENT OF OPERATIONS
Year Ended December 31, 2006
INVESTMENT INCOME
Interest (net of $7,632 of foreign tax expense)................. $1,384,855
Dividends....................................................... 95,777
----------
Total investment income..................................... 1,480,632
----------
EXPENSES
Investment management........................................... 225,289
Legal........................................................... 121,747
Administrative services......................................... 66,135
Printing and postage............................................ 49,393
Bookkeeping and pricing......................................... 43,540
Auditing........................................................ 22,875
Exchange listing................................................ 19,725
Custodian....................................................... 17,575
Insurance....................................................... 12,841
Directors....................................................... 10,440
Transfer agent.................................................. 9,581
Loan interest and fees.......................................... 5,902
Other........................................................... 3,919
Total expenses.............................................. 608,962
Expense reductions....................................... (2,081)
----------
Net expenses................................................ 606,881
----------
Net investment income........................................... 873,751
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES
Net realized gain (loss) on:
Sale of investments......................................... (252,390)
Foreign currencies transactions............................. 127,434
Net unrealized appreciation on:
Investments................................................. 1,621,291
Translation of assets and liabilities in foreign
currencies................................................ 50,389
----------
Net realized and unrealized gain on investments and foreign
currencies.................................................... 1,546,724
----------
Net change in net assets resulting from operations.............. $2,420,475
==========
See notes to financial statements. 5 GLOBAL INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 2006 and 2005
2006 2005
----------- -----------
OPERATIONS
Net investment income............................... $ 873,751 $ 835,053
Net realized gain (loss) on investments and foreign
currencies........................................ (124,956) 623,354
Unrealized appreciation (depreciation) on
investments and foreign currencies................ 1,671,680 (4,117,933)
----------- -----------
Net change in net assets resulting from
operations..................................... 2,420,475 (2,659,526)
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from ordinary income ($0.13 and $0.20
per share, respectively).......................... (995,603) (1,458,409)
Tax return of capital ($0.15 and $0.08 per share,
respectively)..................................... (1,072,996) (608,022)
CAPITAL SHARE TRANSACTIONS
Reinvestment of distributions to shareholders
(8,784 and 7,249 shares, respectively)............ 35,168 30,567
----------- -----------
Total change in net assets................... 387,044 (4,695,390)
NET ASSETS
Beginning of year................................... 31,975,129 36,670,519
----------- -----------
End of year (including accumulated undistributed
net investment loss of $ 5,582 in 2005)........... $32,362,173 $31,975,129
=========== ===========
GLOBAL INCOME FUND, INC. 6 See notes to financial statements.
Notes to Financial Statements - December 31, 2006
1. Organization, Investment Objectives, and Summary of Significant Accounting
Policies
Organization and Investment Objectives - Global Income Fund, Inc., a Maryland
corporation registered under the Investment Company Act of 1940, as amended
(the "Act"), is a non-diversified, closed end management investment company,
whose shares are listed on the American Stock Exchange. The Fund's primary and
fundamental objective is to provide a high level of income. The Fund's
secondary, non-fundamental, investment objective is capital appreciation. The
Fund pursues its investment objectives by investing primarily in a global
portfolio of investment grade fixed income securities and closed end funds that
invest significantly in income producing 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 the Fund's significant accounting policies.
Security Valuation - Securities traded primarily on the NASDAQ Stock Market
("NASDAQ") are normally valued by the Fund at the NASDAQ Official Closing Price
("NOCP") provided by NASDAQ each business day. The NOCP is the most recently
reported price as of 4:00:02 p.m., Eastern time, unless that price is outside
the range of the "inside" bid and asked prices (i.e., the bid and asked prices
that dealers quote to each other when trading for their own accounts); in that
case, NASDAQ will adjust the price to equal the inside bid or asked price,
whichever is closer. Because of delays in reporting trades, the NOCP may not be
based on the price of the last trade to occur before the market closes. Such
securities that are not traded on a particular day, securities traded in the
over-the-counter market that are not on NASDAQ, and foreign securities 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 that
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
that 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 and 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.
Foreign Currency Translation - Securities denominated in foreign currencies are
translated into U.S. dollars at prevailing exchange rates. Realized gain or
loss on a sale of investments denominated in foreign currencies is reported
separately from gain or loss attributable to a change in foreign exchange rates
for those investments.
Foreign Currency Contracts - 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.
Repurchase Agreements - The Fund participates in repurchase agreements with the
Fund's custodian. The custodian takes possession of the underlying collateral
securities which are valued daily to ensure that the fair market value,
including accrued interest, is at least equal at all times to the repurchase
price. In the event of default on the obligation to repurchase, the Fund has
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation. Under certain circumstances, in the event of default or
bankruptcy by the other party to the agreement, realization and/or retention of
the collateral may be subject to legal proceedings.
Income Taxes- No provision has been made for U.S. income taxes because the
Fund's current intention is to continue to qualify as a regulated investment
company under the Internal Revenue Code and to distribute to its shareholders
substantially all of its taxable income and net realized gains. Foreign
securities held by the Fund may be subject to foreign taxation. Foreign taxes,
if any, are recorded based on the tax regulations and rates that exist in the
foreign markets in which the Fund invests.
7 GLOBAL INCOME FUND, INC.
Notes to Financial Statements - December 31, 2006 (continued)
Security Transactions - Investment transactions are accounted for on the trade
date (the date the order to buy or sell is executed). Net realized gains and
losses are determined on the identified cost basis, which is also used for
federal income tax purposes.
Investment Income - Interest income is recorded on the accrual basis. Discounts
and premiums on securities purchased are amortized over their remaining
maturity. Dividend income is recorded on the ex-dividend date. Withholding
taxes on foreign dividends have been provided for in accordance with the Fund's
understanding of the applicable country's tax rules and rates.
Expenses - Estimated expenses are accrued daily. Certain expenses are
applicable to multiple funds. Expenses directly attributable to the Fund are
charged to the Fund. Expenses borne by the complex of related investment
companies, which includes open end and closed end investment companies for
which the Investment Manager or its affiliates serves as investment manager,
that are not directly attributed to the Fund are allocated among the Fund and
the other investment companies in the complex on the basis of relative net
assets, except where a more appropriate allocation of expenses to each
investment company in the complex otherwise can be made fairly.
Expense Reduction Arrangement - Through arrangements with the Fund's custodian
and cash management bank, credits realized as a result of uninvested cash
balances were used to reduce custody and transfer agency expenses,
respectively. For financial reporting purposes, the Fund included these credits
as expense reductions in the Statement of Operations.
Distributions - Distributions to shareholders are recorded on the ex-dividend
date and are determined according to income tax regulations (tax basis).
Distributable earnings determined on a tax basis may differ from earnings
recorded in accordance with accounting principles generally accepted in the
United States of America. These differences may be permanent or temporary.
Permanent differences are reclassified among capital accounts to reflect their
tax character. These reclassifications have no impact on net assets or the
results of operations. Temporary differences are not reclassified, as they may
reverse in subsequent periods.
Use of Estimates - 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.
Indemnifications - The Fund indemnifies its officers and directors for certain
liabilities that might arise from their performance of their duties for the
Fund. Additionally, in the normal course of business the Fund enters into
contracts that contain a variety of representations and warranties and which
may provide general indemnifications. The Fund's maximum exposure under these
arrangements is unknown as it involves future claims that may be made against
the Fund under circumstances that have not occurred.
2. Fees and Transactions with Related Parties
The Fund retains CEF Advisers, Inc. as its Investment Manager pursuant to an
Investment Management Agreement ("IMA"). Under the terms of the IMA, the
Investment Manager receives a management fee, payable monthly, based on the
average weekly net assets of the Fund at an annual rate of 7/10 of 1% of the
first $50 million, 5/8 of 1% over $50 million to $150 million, 1/2 of 1% over
$150 million. Certain officers and directors of the Fund are officers and
directors of the Investment Manager. Pursuant to the IMA, the Fund reimburses
the Investment Manager for providing at cost certain administrative services
comprised of compliance and accounting services. For the year ended
December 31, 2006, the Fund incurred total administrative costs of $66,135,
comprised of $32,640 and $33,495 for compliance and accounting services,
respectively.
GLOBAL INCOME FUND, INC. 8
Notes to Financial Statements - December 31, 2006 (continued)
3. Distributions to Shareholders and Distributable Earnings
The tax character of distributions paid to shareholders for the year ended
December 31, 2006 and 2005 was as follows:
2006 2005
---------- ----------
Distributions paid from:
Ordinary income........................... $ 995,603 $1,458,409
Return of capital......................... 1,072,996 608,022
---------- ----------
$2,068,599 $2,066,431
========== ==========
As of December 31, 2006, the components of distributable earnings on a tax
basis were as follows:
Unrealized appreciation on investments and foreign
currencies........................................... $ 446,703
Capital loss carryovers................................ (4,711,714)
Post-October foreign currency losses................... -
-----------
$(4,265,011)
===========
Accounting principles generally accepted in the United States of America
require certain components of net assets to be reclassified between financial
and tax reporting. These reclassifications have no effect on net assets or net
asset value per share. For the year ended December 31, 2006, permanent
differences between book and tax accounting have been reclassified as follows:
Increase in Decrease in Accumulated
Accumulated Undistributed Net Realized Loss on Decrease in
Net Investment Loss Investments and Foreign Currencies Paid-in Capital
------------------------- ---------------------------------- ---------------
$1,200,430 $1,214,094 $(2,414,524)
As of December 31, 2006, the Fund had net capital loss carryovers of
$4,711,714, of which $1,708,533, $1,381,580, $1,369,211 and $252,390 expires in
2007, 2008, 2010, and 2014, respectively, that may be used to offset future
realized capital gains for federal income tax purposes.
4. Securities Transactions
Purchases and sales of securities, other than short term notes, aggregated
$5,265,509 and $6,624,054, respectively, for the year ended December 31, 2006.
At December 31, 2006, for federal income tax purposes the aggregate cost of
securities was $31,218,621 and net unrealized appreciation was $420,724,
comprised of gross unrealized appreciation of $764,749 and gross unrealized
depreciation of $344,025.
5. Bank Line of Credit
The Fund, Foxby Corp., Midas Fund, Inc., and Midas Special Fund, Inc. (the
"Borrowers") have entered into a committed secured line of credit facility with
State Street Bank & Trust Company ("Bank"), the Fund's custodian. Foxby Corp.
is a closed end investment company managed by the Investment Manager, and Midas
Fund, Inc. and Midas Special Fund, Inc. are open end investment companies
managed by an affiliate of the Investment Manager. The aggregate amount of the
line of credit is $25,000,000, which was renewed and increased from $9,000,000
effective June 15, 2006. The borrowing of each Borrower is collateralized by
the underlying investments of such Borrower. The Bank will make revolving loans
to a Borrower not to exceed in the aggregate outstanding at any time with
respect to any one Borrower, the least of $25,000,000, the maximum amount
permitted pursuant to each Borrower's investment policies, or as permitted
under the Act. The commitment fee on this facility is 0.10% per annum on the
unused portion of the commitment, based on a 360-day year. All loans under this
facility will be available 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, 2006, the weighted average
interest rate was
9 GLOBAL INCOME FUND, INC.
Notes to Financial Statements (concluded)
5.95% based on the balances outstanding during the period, and the average
daily amount outstanding during the period was $54,211. At December 31, 2006,
there were investment securities pledged as collateral with a market value of
approximately $1,900,000 and no outstanding loan balance.
6.Foreign Securities 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.
7.Capital Stock
At December 31, 2006, there were 7,393,572 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
distributions during the years ended December 31, 2006 and 2005 were as follows:
Shares issued Increase in paid-in capital
------------- ---------------------------
2006.......................... 8,784 $35,168
2005.......................... 7,249 $30,567
In October 2005, the Fund filed with the Securities and Exchange Commission
("SEC") 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. Legal costs incurred in connection with the Offer of $64,077 were
expensed in 2006.
8.Recently Issued Accounting Standards
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes -
an Interpretation of FASB Statement No. 109, Accounting for Income Taxes." FIN
48 establishes a minimum threshold for financial statement recognition of the
benefit of positions taken in filing tax returns (including whether an entity
is taxable in a particular jurisdiction), and requires certain expanded tax
disclosures. FIN 48 is to be implemented no later than June 29, 2007, and is to
be applied to all open tax years as of the date of effectiveness. The FASB
issued Statement of Financial Accounting Standards No. 157, "Fair Value
Measurements" ("FAS 157"), in September 2006, which is effective for fiscal
years beginning after November 15, 2007. FAS 157 defines fair value,
establishes a framework for measuring fair value, and expands the required
financial statement disclosures about fair value measurements. Management is
currently evaluating the impact of adopting FIN 48 and FAS 157.
GLOBAL INCOME FUND, INC. 10
FINANCIAL HIGHLIGHTS
- --------
(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.
11 GLOBAL INCOME FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Global Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of Global
Income Fund, Inc. including the schedule of portfolio investments as of
December 31, 2006 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 years 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
audit.
We conducted our audits in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). 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. The Fund is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Fund's
internal control over financial reporting. Accordingly, we express no such
opinion. 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, 2006 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, 2006, 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
years indicated thereon, in conformity with accounting principles generally
accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
February 23, 2007
GLOBAL INCOME FUND, INC. 12
PRIVACY POLICY
The Fund 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; and (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 non-affiliated third party except as permitted by
law. We take steps to safeguard shareholder information. We restrict access to
non-public personal information about you to those employees and service
providers who need to know such information to provide products or services to
you. Together with our service providers, we maintain physical, electronic, and
procedural safeguards to guard your non-public 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.
PROXY VOTING
The Fund's Proxy Voting Guidelines (the "Guidelines") as well as its voting
record for the most recent 12 months ended June 30, are available without
charge by calling the Fund collect at 1-212-344-6310 and on the SEC's website
at www.sec.gov. The Guidelines are also posted on the Fund's website at
www.globalincomefund.net.
QUARTERLY HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov. The Fund's Forms N-Q
may be reviewed and copied at the SEC's Public Reference Room in Washington,
DC, and information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The Fund makes the Forms N-Q available to
shareholders on its website at www.globalincomefund.net.
Additional Information (Unaudited) 13 GLOBAL INCOME FUND, INC.
MANAGED DISTRIBUTIONS
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 year 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 year. Under the Investment Company Act of 1940, as amended,
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, 2007, including the distributions paid quarterly, will be
comprised approximately one-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 year, a Form 1099-DIV will
be sent to shareholders stating the amount and composition of distributions and
providing information about their appropriate tax treatment.
DIVIDEND REINVESTMENT PLAN
Terms and Conditions of
the 2006 Restated Dividend Reinvestment Plan
1. Each shareholder (the "Shareholder") holding shares of common stock (the
"Shares") of Global Income Fund, Inc. (the "Fund") will automatically be a
participant in the Dividend Reinvestment Plan (the "Plan"), unless the
Shareholder specifically elects to receive all dividends and capital gains in
cash paid by check mailed directly to the Shareholder by American Stock
Transfer & Trust Company, 59 Maiden Lane, New York, New York 10038,
1-800-278-4353, as agent under the Plan (the "Agent"). The Agent will open an
account for each Shareholder under the Plan in the same name in which such
Shareholder's shares of Common Stock are registered.
2. Whenever the Fund declares a capital gain distribution or an income dividend
payable in Shares or cash, participating Shareholders will take the
distribution or dividend entirely in Shares and the Agent will automatically
receive the Shares, including fractions, for the Shareholder's account in
accordance with the following:
Whenever the Market Price (as defined in Section 3 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 the Fund's net asset value per Share or 95% of the
Fund's Market Price per Share. Whenever 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. If the Fund should declare a dividend or capital gain
distribution payable only in cash, the Agent will, as purchasing agent for
the participating Shareholders, buy Shares in the open market, on the
American Stock Exchange (the "Exchange") or elsewhere, for such
Shareholders' accounts after the payment date, except that the Agent will
endeavor to terminate purchases in the open market and cause the Fund to
issue the remaining Shares if, following the commencement of the purchases,
the market value of the Shares exceeds the net asset value. These remaining
Shares will be issued by the Fund at a price equal to the Market Price.
In a case where the Agent has terminated open market purchases and caused
the issuance of remaining Shares by the Fund, the number of Shares received
by the participant in respect of the cash dividend or distribution will be
based on the weighted average of prices paid for Shares purchased in the
open market and the price at which the Fund issues remaining Shares. To the
extent that the Agent is unable to terminate purchases in the open market
before the Agent has completed its purchases, or remaining Shares cannot be
issued by the Fund because the Fund declared a dividend or distribution
GLOBAL INCOME FUND, INC. 14 Additional Information (Unaudited)
payable only in cash, and the market price exceeds the net asset value of
the Shares, the average Share purchase price paid by the Agent may exceed
the net asset value of the Shares, resulting in the acquisition of fewer
Shares than if the dividend or capital gain distribution had been paid in
Shares issued by the Fund.
The Agent will apply all cash received as a dividend or capital gain
distribution to purchase shares of common stock on the open market as soon
as practicable after the payment date of the dividend or capital gain
distribution, but in no event later than 45 days after that date, except
when necessary to comply with applicable provisions of the federal
securities laws.
3. For all purposes of the Plan: (a) the Market Price of the Shares on a
particular date shall be the average of the volume weighted average sale prices
or, if no sale occurred then the mean between the closing bid and asked
quotations, for the Shares on the Exchange on each of the five trading days the
Shares traded ex-dividend on the Exchange immediately prior to such date, and
(b) net asset value per share on a particular date shall be as determined by or
on behalf of the Fund.
4. The open-market purchases provided for herein may be made on any securities
exchange on which the Shares are traded, in the over-the-counter market or in
negotiated transactions, and may be on such terms as to price, delivery and
otherwise as the Agent shall determine. Funds held by the Agent uninvested will
not bear interest, and it is understood that, in any event, the Agent shall
have no liability in connection with any inability to purchase Shares within 45
days after the initial date of such purchase as herein provided, or with the
timing of any purchases effected. The Agent shall have no responsibility as to
the value of the Shares acquired for the Shareholder's account.
5. The Agent will hold Shares acquired pursuant to the Plan in noncertificated
form in the Agent's name or that of its nominee. At no additional cost, a
Shareholder participating in the Plan may send to the Agent for deposit into
its Plan account those certificate shares of the Fund in its possession. These
Shares will be combined with those unissued full and fractional Shares acquired
under the Plan and held by the Agent. Shortly thereafter, such Shareholder will
receive a statement showing its combined holdings. The Agent will forward to
the Shareholder any proxy solicitation material and will vote any Shares so
held for the Shareholder only in accordance with the proxy returned by him or
her to the Fund. Upon the Shareholder's written request, the Agent will deliver
to him or her, without charge, a certificate or certificates for the full
Shares.
6. The Agent will confirm to the Shareholder each acquisition for his or her
account as soon as practicable but not later than 60 days after the date
thereof. Although the Shareholder may from time to time have an individual
fractional interest (computed to three decimal places) in a Share, no
certificates for fractional Shares will be issued. However, dividends and
distributions on fractional Shares will be credited to Shareholders' accounts.
In the event of a termination of a Shareholder's account under the Plan, the
Agent will adjust for any such undivided fractional interest in cash at the
opening market value of the Shares at the time of termination.
7. Any stock dividends or split Shares distributed by the Fund on Shares held
by the Agent for the Shareholder will be credited to the Shareholder's account.
In the event that the Fund makes available to the Shareholder the right to
purchase additional Shares or other securities, the Shares held for a
Shareholder under the Plan will be added to other Shares held by the
Shareholder in calculating the number of rights to be issued by such
Shareholder. Transaction processing may either be curtailed or suspended until
the completion of any stock dividend, stock split, or corporate action.
8. The Agent's service fee for handling capital gain distributions or income
dividends will be paid by the Fund. The Shareholder will be charged a pro rata
share of brokerage commissions on all open market purchases.
9. The Shareholder may terminate his or her account under the Plan by notifying
the Agent. A termination will be effective immediately if notice is received by
the Agent two days prior to any dividend or distribution payment date. If the
request is received less than two days prior to the payment date, then that
dividend will be invested, and all subsequent dividends will be paid in cash.
Upon any termination the Agent will cause a certificate or certificates for the
full Shares held for the Shareholder under the Plan and cash adjustment for any
fraction to be delivered to him or her.
Additional Information (Unaudited) 15 GLOBAL INCOME FUND, INC.
10.These terms and conditions may be amended or supplemented by the Fund at any
time or times but, except when necessary or appropriate to comply with
applicable law or the rules or policies of the Securities and Exchange
Commission or any other regulatory authority, only by mailing to the
Shareholder appropriate written notice at least 30 days prior to the effective
date thereof. The amendment or supplement shall be deemed to be accepted by the
Shareholder unless, prior to the effective date thereof, the Agent receives
written notice of the termination of such Shareholder's account under the Plan.
Any such amendment may include an appointment by the Fund of a successor agent
in its place and stead under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent. Upon
any such appointment of an Agent for the purpose of receiving dividends and
distributions, the Fund will be authorized to pay to such successor Agent all
dividends and distributions payable on Shares held in the Shareholder's name or
under the Plan for retention or application by such successor Agent as provided
in these terms and conditions.
11. In the case of Shareholders, such as banks, brokers or nominees, which hold
Shares for others who are the beneficial owners, the Agent will administer the
Plan on the basis of the number of Shares certified from time to time by the
Shareholders as representing the total amount registered in the Shareholder's
name and held for the account of beneficial owners who are to participate in
the Plan.
12. The Agent shall at all times act in good faith and agree to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this agreement and to comply with applicable law, but assumes
no responsibility and shall not be liable for loss or damage due to errors
unless the errors are caused by its negligence, bad faith or willful misconduct
or that of its employees.
13. Neither the Fund or the Agent will be liable for any act performed in good
faith or for any good faith omission to act, including without limitation, any
claim of liability arising out of (i) failure to terminate a Shareholder's
account, sell shares or purchase shares, (ii) the prices which shares are
purchased or sold for the Shareholder's account, and (iii) the time such
purchases or sales are made, including price fluctuation in market value after
such purchases or sales.
HISTORICAL DISTRIBUTION SUMMARY
Investment Return of
Period Income Capital Total
------ ---------- --------- ------
2006.............................................. $0.130 $0.150 $0.280
2005.............................................. $0.200 $0.080 $0.280
2004.............................................. $0.245 $0.090 $0.335
2003.............................................. $0.220 $0.140 $0.360
2002.............................................. $0.280 $0.220 $0.500
2001.............................................. $0.360 $0.200 $0.560
2000.............................................. $0.420 $0.160 $0.580
6 Months Ended 12/31/99........................... $0.230 $0.070 $0.300
12 Months Ended 6/30/99........................... $0.550 $0.130 $0.680
12 Months Ended 6/30/98........................... $0.520 $0.320 $0.840
WWW.GLOBALINCOMEFUND.NET
Visit us on the web 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,
please email us at info@globalincomefund.net. The Fund is a member of the
Closed-End Fund Association ("CEFA"). Its website address is www.cefa.com. CEFA
is solely responsible for the content of its website.
GLOBAL INCOME FUND, INC. 16 Additional Information (Unaudited)
STOCK DATA
Price (12/31/06) . . . . . . . . . . . .................. $4.18
Net Asset Value (12/31/06) . . . ........................ $4.38
Discount . . . . . . . . . . . . . . . . . .............. 4.6%
American Stock Exchange Symbol: GIF Newspaper exchange listings appear under an
abbreviation, such as: Glinc
2007 DISTRIBUTION PAYMENT DATES
Declaration Record Payment
----------- ------------------------ ------------------------
March 2 March 15 March 30
June 1 June 15 June 29
September 6 September 18 September 28
December 3 December 18 December 31
FUND INFORMATION
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
1-212-344-6310 www.amstock.com
1-800-278-4353
Internet Custodian
www.globalincomefund.net State Street Bank & Trust Co.
email: info@globalincomefund.net 801 Pennsylvania Avenue
Kansas City, MO 64105
RESULTS OF THE ANNUAL MEETING
The Fund's Annual Meeting was held on September 20, 2006 and adjourned to
October 11, 2006, October 31, 2006, and December 4, 2006 at the offices of the
Fund at 11 Hanover Square, 12th Floor, New York, New York for the following
purposes:
1. To elect to the Board of Directors the nominee, Thomas B. Winmill, as a
Class IV Director, and until his successor is duly elected and qualifies.
Votes For Votes Withheld
--------- --------------
6,568,780 302,983
2. To approve amendments to the Fund's Charter.
Votes For Against Abstain
--------- ------- -------
2,739,270 251,394 118,063
Directors whose term of office continued after the meeting are Bassett S.
Winmill (Class V), Peter K. Werner (Class I), James E. Hunt (Class II), and
Bruce B. Huber (Class III).
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 in the open
market. 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.
Additional Information (Unaudited) 17 GLOBAL INCOME FUND, INC.
DIRECTORS AND OFFICERS
The following table sets forth certain information concerning the other
Directors currently serving on the Board of the Fund. Unless otherwise noted,
the address of record for the directors and officers is 11 Hanover Square, New
York, New York 10005. Each Director who is deemed to be an "interested person"
because he is an "affiliated person" as defined in the Investment Company Act
of 1940, as amended (the "Act"), is indicated by an asterisk.
GLOBAL INCOME FUND, INC. 18 Additional Information (Unaudited)
- --------
* He is an "interested person" of the Fund as defined in the Act due to his
affiliation with the Investment Manager.
** Refers to directorships held by a director in any company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act
of 1934 or any company registered as an investment company under the Act.
Messrs. Huber, Hunt, and Werner also serve on the Audit and Nominating
Committees of the Board. Mr. Thomas B. Winmill also serves on the Executive
Committee of the Board.
The executive officers, other than those who serve as Directors, and their
relevant biographical information are set forth below.
- --------
(1) Officers hold their positions with the Fund until a successor has been duly
elected and qualifies. Officers are generally elected annually at the
December meeting of the Board of Directors. The officers were last elected
on December 13, 2006.
Additional Information (Unaudited) 19 GLOBAL INCOME FUND, INC.
GLOBAL INCOME FUND
11 Hanover Square
New York, NY 10005
Printed on recycled paper
GIF-AR-12/06
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 registrant 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 registrant'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: Bruce B. Huber, James E. Hunt, 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. The
designation or identification of a person as an audit committee financial expert
pursuant to this Item does not affect the duties, obligations, or liability of
any other member of the audit committee or board of directors.
Item 4. Principal Accountant Fees and Services.
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit of
the registrant's annual financial statements or services that are normally
provided by the accountant in connection with statutory and regulatory
filings or engagements for those fiscal years are as follows:
AUDIT FEES
2005 - $18,000
2006 - $18,500
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this Item
are as follows:
AUDIT RELATED FEES
2005 - $1,000
2006 - $1,000
Audit-related fees include amounts reasonably related to the performance of
the audit of the registrant's financial statements, including the issuance
of a report on internal controls and review of periodic reporting.
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning. Registrants shall describe the
nature of the services comprising the fees disclosed under this category
are as follows:
TAX FEES
2005 - $3,000
2006 - $3,500
Tax fees include amounts related to tax compliance, tax planning, and tax
advice.
(d) The aggregate fees billed in each of the last two fiscal years for products
and services provided by the principal accountant, other than the services
reported in paragraphs (a) through (c) of this Item. Registrants shall
describe the nature of the services comprising the fees disclosed under
this category are as follows:
ALL OTHER FEES
2005 - N/A
2006 - N/A
(e) (1) Pursuant to the registrant's Audit Committee Charter, the Audit
Committee shall consider for pre-approval any audit and non-audit services
proposed to be provided by the auditors to the registrant and any non-audit
services proposed to be provided by such auditors to the registrant's
Investment Manager, if the engagement relates directly to the registrant's
operations or financial reporting. In those situations when it is not
convenient to obtain full Audit Committee approval, the Chairman of the
Audit Committee is delegated the authority to grant pre-approvals of audit,
audit-related, tax, and all other services so long as all such pre-approved
decisions are reviewed with the full Audit Committee at its next scheduled
meeting.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 non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the
registrant for each of the last two fiscal years of the registrant were
$65,500 and $73,750, respectively.
(h) The registrant's audit committee has determined that the provision of
non-audit services that were rendered by accountant to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with 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 Bruce B. Huber, James E. Hunt and Peter K. Werner.
Item 6. Schedule of Investments.
Included as part of the report to shareholders filed under Item 1 of this
Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
CONCISE SUMMARY OF ISS 2007 PROXY VOTING GUIDELINES
EFFECTIVE FOR MEETINGS FEB. 1, 2007
UPDATED DEC. 15, 2006
1. AUDITORS
AUDITOR RATIFICATION
Vote FOR proposals to ratify auditors, unless any of the following apply:
o An auditor has a financial interest in or association with the company,
and is therefore not independent,
o There is reason to believe that the independent auditor has rendered an
opinion which is neither accurate nor indicative of the company's
financial position; or
o Fees for non-audit services ("Other" fees) are excessive.
2. BOARD OF DIRECTORS
VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS
Vote CASE-BY-CASE on director nominees, examining, but not limited to, the
following factors:
o Composition of the board and key board committees;
o Attendance at board and committee meetings;
o Corporate governance provisions and takeover activity;
o Disclosures under Section 404 of Sarbanes-Oxley Act;
o Long-term company performance relative to a market and peer index;
o Extent of the director's investment in the company;
o Existence of related party transactions;
o Whether the chairman is also serving as CEO;
o Whether a retired CEO sits on the board;
o Number of outside boards at which a director serves;
o Majority vote standard for director elections without a provision to
allow for plurality voting when there are more nominees than seats.
WITHHOLD from individual directors who:
o Attend less than 75 percent of the board and committee meetings without
a valid excuse (such as illness, service to the nation, work on behalf
of the company);
o Sit on more than six public company boards;
o Are CEOs of public companies who sit on the boards of more than two
public companies besides their own-- withhold only at their outside
boards.
WITHHOLD from the entire board of directors, (except from new nominees, who
should be considered on a CASE-BY-CASE basis) if:
o The company's proxy indicates that not all directors attended 75% of
the aggregate of their board and committee meetings, but fails to
provide the required disclosure of the names of the directors involved.
If this information cannot be obtained, withhold from all incumbent
directors;
o The company's poison pill has a dead-hand or modified dead-hand feature.
Withhold every year until this feature is removed;
o The board adopts or renews a poison pill without shareholder approval
since the beginning of 2005, does not commit to putting it to
shareholder vote within 12 months of adoption, or reneges on a
commitment to put the pill to a vote, and has not yet received a
withhold recommendation for this issue;
o The board failed to act on a shareholder proposal that received
approval by a majority of the shares outstanding the previous year;
o The board failed to act on a shareholder proposal that received
approval of the majority of shares cast for the previous two
consecutive years;
o The board failed to act on takeover offers where the majority of the
shareholders tendered their shares;
o At the previous board election, any director received more than 50
percent withhold votes of the shares cast and the company has failed to
address the issue(s) that caused the high withhold rate;
o The company is a Russell 3000 company that underperformed its industry
group (GICS group) under the criteria discussed in the section
"Performance Test for Directors".
WITHHOLD from Inside Directors and Affiliated Outside Directors (per the
Classification of Directors below) when:
o The inside or affiliated outside director serves on any of the three key
committees: audit, compensation, or nominating;
o The company lacks an audit, compensation, or nominating committee so that
the full board functions as that committee;
o The company lacks a formal nominating committee, even if board attests
that the independent directors fulfill the functions of such a
committee;
o The full board is less than majority independent.
WITHHOLD from the members of the Audit Committee if:
o The non - audit fees paid to the auditor are excessive (see discussion
under Auditor Ratification);
o A material weakness identified in the Section 404 Sarbanes-Oxley Act
disclosures rises to a level of serious concern; there are chronic
internal control issues and an absence of established effective control
mechanisms;
o There is persuasive evidence that the audit committee entered into an
inappropriate indemnification agreement with its auditor that limits
the ability of the company, or its shareholders, to pursue legitimate
legal recourse against the audit firm.
WITHHOLD from the members of the Compensation Committee if:
o There is a negative correlation between the chief executive's pay and
company performance (see discussion under Equity Compensation Plans);
o The company reprices underwater options for stock, cash or other
consideration without prior shareholder approval, even if allowed in
their equity plan;
o The company fails to submit one-time transfers of stock options to a
shareholder vote;
o The company fails to fulfill the terms of a burn rate commitment they
made to shareholders;
o The company has backdated options (see "Options Backdating" policy);
o The company has poor compensation practices (see "Poor Pay Practices"
policy). Poor pay practices may warrant withholding votes from the CEO
and potentially the entire board as well.
WITHHOLD from directors, individually or the entire board, for egregious actions
or failure to replace management as appropriate.
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 CHAIR (SEPARATE CHAIR/CEO)
Generally vote FOR shareholder proposals requiring an independent director fill
the position of chair, unless there are compelling reasons to recommend against
the proposal, such as a counterbalancing governance structure. This should
include all of the following:
o Has a designated lead director, elected by and from the independent
board members with clearly delineated and comprehensive duties. (The
role may alternatively reside with a presiding director, vice chairman,
or rotating lead director; however the director must serve a minimum of
one year in order to qualify as a lead director.) At a minimum these
should include:
- Presiding at all meetings of the board at which the chairman is
not present, including executive sessions of the independent
directors,
- Serving as liaison between the chairman and the independent
directors,
- Approving information sent to the board,
- Approving meeting agendas for the board,
- Approves meetings schedules to assure that there is sufficient time
for discussion of all agenda items,
- Having the authority to call meetings of the independent directors,
- If requested by major shareholders, ensuring that he is available for
consultation and direct communication;
o Two-thirds independent board;
o All-independent key committees;
o Established governance guidelines;
o The company does not under-perform its peers*.
*Starting in 2007, the industry peer group used for this evaluation will change
from the 4-digit GICS group to the average of the 12 companies in the same
6-digit GICS group that are closest in revenue to the company, and identified on
the executive compensation page of proxy analyses. To fail, the company must
under-perform its index and industry group on all 4 measures (1 and 3 year
performance, industry peers, and index).
MAJORITY VOTE SHAREHOLDER PROPOSALS
Generally vote FOR precatory and binding resolutions requesting that the board
change the company's bylaws to stipulate that directors need to be elected with
an affirmative majority of votes cast, provided it does not conflict with the
state law where the company is incorporated. Binding resolutions need to allow
for a carve-out for a plurality vote standard when there are more nominees than
board seats. Companies are strongly encouraged to also adopt a post-election
policy (also know as a director resignation policy) that will provide guidelines
so that the company will promptly address the situation of a holdover director.
3. PROXY CONTESTS
VOTING FOR DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Vote CASE-BY-CASE on the election of directors in contested elections,
considering the following factors:
o Long-term financial performance of the target company relative to its
industry;
o Management's track record;
o Background to the proxy contest;
o Qualifications of director nominees (both slates);
o Strategic plan of dissident slate and quality of critique against
management;
o Likelihood that the proposed goals and objectives can be achieved (both
slates);
o Stock ownership positions.
REIMBURSING PROXY SOLICITATION EXPENSES
Vote CASE-BY-CASE on proposals to reimburse proxy solicitation expenses. When
voting in conjunction with support of a dissident slate, vote FOR the
reimbursement of all appropriate proxy solicitation expenses associated with the
election.
4. TAKEOVER DEFENSES
POISON PILLS
Vote FOR shareholder proposals requesting that the company submit its poison
pill to a shareholder vote or redeem it UNLESS the company has: (1) A
shareholder approved poison pill in place; or (2) The company has adopted a
policy concerning the adoption of a pill in the future specifying that the board
will only adopt a shareholder rights plan if either:
o Shareholders have approved the adoption of the plan; or
o The board, in its exercise of its fiduciary responsibilities, determines
that it is in the best interest of shareholders under the circumstances
to adopt a pill without the delay in adoption that would result from
seeking stockholder approval (i.e. the "fiduciary out" provision). A
poison pill adopted under this fiduciary out will be put to a
shareholder ratification vote within twelve months of adoption or
expire. If the pill is not approved by a majority of the votes cast on
this issue, the plan will immediately terminate.
Vote FOR shareholder proposals calling for poison pills to be put to a vote
within a time period of less than one year after adoption. If the company has no
non-shareholder approved poison pill in place and has adopted a policy with the
provisions outlined above, vote AGAINST the proposal. If these conditions are
not met, vote FOR the proposal, but with the caveat that a vote within twelve
months would be considered sufficient.
Vote CASE-by-CASE on management proposals on poison pill ratification, focusing
on the features of the shareholder rights plan. Rights plans should contain the
following attributes:
o No lower than a 20% trigger, flip-in or flip-over;
o A term of no more than three years;
o No dead-hand, slow-hand, no-hand or similar feature that limits the
ability of a future board to redeem the pill;
o Shareholder redemption feature (qualifying offer clause); if the board
refuses to redeem the pill 90 days after a qualifying offer is
announced, ten percent of the shares may call a special meeting or seek
a written consent to vote on rescinding the pill.
SUPERMAJORITY VOTE REQUIREMENTS
Vote AGAINST proposals to require a supermajority shareholder vote.
Vote FOR proposals to lower supermajority vote requirements.
5. MERGERS AND CORPORATE RESTRUCTURINGS
For mergers and acquisitions, review and evaluate the merits and drawbacks of
the proposed transaction, balancing various and sometimes countervailing factors
including:
o VALUATION - Is the value to be received by the target shareholders (or
paid by the acquirer) reasonable? While the fairness opinion may
provide an initial starting point for assessing valuation
reasonableness, emphasis is placed on the offer premium, market
reaction and strategic rationale.
o MARKET REACTION - How has the market responded to the proposed deal? A
negative market reaction should cause closer scrutiny of a deal.
o STRATEGIC RATIONALE - Does the deal make sense strategically? From
where is the value derived? Cost and revenue synergies should not be
overly aggressive or optimistic, but reasonably achievable. Management
should also have a favorable track record of successful integration of
historical acquisitions.
o NEGOTIATIONS AND PROCESS - Were the terms of the transaction negotiated
at arm's-length? Was the process fair and equitable? A fair process
helps to ensure the best price for shareholders. Significant
negotiation "wins" can also signify the deal makers' competency. The
comprehensiveness of the sales process (e.g., full auction, partial
auction, no auction) can also affect shareholder value.
o CONFLICTS OF INTEREST - Are insiders benefiting from the transaction
disproportionately and inappropriately as compared to non-insider
shareholders? As the result of potential conflicts, the directors and
officers of the company may be more likely to vote to approve a merger
than if they did not hold these interests. Consider whether these
interests may have influenced these directors and officers to support
or recommend the merger. The CIC figure presented in the "ISS
Transaction Summary" section of this report is an aggregate figure that
can in certain cases be a misleading indicator of the true value
transfer from shareholders to insiders. Where such figure appears to be
excessive, analyze the underlying assumptions to determine whether a
potential conflict exists.
o GOVERNANCE - Will the combined company have a better or worse
governance profile than the current governance profiles of the
respective parties to the transaction? If the governance profile is to
change for the worse, the burden is on the company to prove that other
issues (such as valuation) outweigh any deterioration in governance.
6. STATE OF INCORPORATION
REINCORPORATION PROPOSALS
Vote CASE-BY-CASE on proposals to change a company's state of incorporation,
taking into consideration both financial and corporate governance concerns,
including the reasons for reincorporating, a comparison of the governance
provisions, comparative economic benefits, and a comparison of the
jurisdictional laws. Vote FOR re-incorporation when the economic factors
outweigh any neutral or negative governance changes.
7. CAPITAL STRUCTURE
COMMON STOCK AUTHORIZATION
Vote CASE-BY-CASE on proposals to increase the number of shares of common stock
authorized for issuance using a model developed by ISS. Vote FOR proposals to
approve increases beyond the allowable increase when a company's shares are in
danger of being de-listed or if a company's ability to continue to operate as a
going concern is uncertain.
In addition, for capital requests that are less than or equal to 300 percent of
the current authorized shares and marginally fail the calculated allowable cap
(i.e., exceed the allowable cap by no more than 5 percent) vote on a
CASE-BY-CASE basis, In this situation, vote FOR the increase based on the
company's performance, and whether the company's ongoing use of shares has shown
prudence.
ISSUE STOCK FOR USE WITH RIGHTS PLAN
Vote AGAINST proposals that increase authorized common stock for the explicit
purpose of implementing a non-shareholder approved shareholder rights plan
(poison pill).
PREFERRED STOCK
Vote AGAINST proposals authorizing the creation of new classes of preferred
stock with unspecified voting, conversion, dividend distribution, and other
rights ("blank check" preferred stock). Vote FOR proposals to create "de-clawed"
blank check preferred stock (stock that cannot be used as a takeover defense).
Vote FOR proposals to authorize preferred stock in cases where the company
specifies the voting, dividend, conversion, and other rights of such stock and
the terms of the preferred stock appear reasonable. Vote AGAINST proposals to
increase the number of blank check preferred stock authorized for issuance when
no shares have been issued or reserved for a specific purpose. Vote CASE-BY-CASE
on proposals to increase the number of blank check preferred shares after
analyzing the number of preferred shares available for issue given a company's
industry and performance in terms of shareholder returns.
8. EXECUTIVE AND DIRECTOR COMPENSATION
POOR PAY PRACTICES
WITHHOLD from compensation committee members, CEO, and potentially the entire
board, if the company has poor compensation practices, such as:
o Egregious employment contracts (e.g., those containing multi-year guarantees
for bonuses and grants);
o Excessive perks that dominate compensation (e.g., tax gross-ups for personal
use of corporate aircraft);
o Huge bonus payouts without justifiable performance linkage or proper
disclosure;
o Performance metrics that are changed (e.g., canceled or replaced during the
performance period without adequate explanation of the action and the link
to performance);
o Egregious pension/SERP (supplemental executive retirement plan) payouts
(e.g., the inclusion of additional years of service not worked or inclusion
of performance-based equity awards in the pension calculation);
o New CEO awarded an overly generous new hire package (e.g., including
excessive "make whole" provisions or any of the poor pay practices listed
in this policy);
o Excessive severance provisions (e.g., including excessive change in control
payments);
o Change in control payouts without loss of job or substantial diminution of job
duties;
o Internal pay disparity;
o Options backdating (covered in a separate policy); and
EQUITY COMPENSATION PLANS
Vote CASE-BY-CASE on equity-based compensation plans. Vote AGAINST the equity
plan if any of the following factors apply:
o The total cost of the company's equity plans is unreasonable;
o The plan expressly permits the repricing of stock options without prior
shareholder approval;
o There is a disconnect between CEO pay and the company's performance;
o The company's three year burn rate exceeds the greater of 2% and the mean
plus 1 standard deviation of its industry group; or
o The plan is a vehicle for poor pay practices.
DIRECTOR COMPENSATION
Vote CASE-BY-CASE on compensation plans for non-employee directors, based on the
cost of the plans against the company's allowable cap.
On occasion, director stock plans that set aside a relatively small number of
shares when combined with employee or executive stock compensation plans exceed
the allowable cap. Vote for the plan if ALL of the following qualitative factors
in the board's compensation are met and disclosed in the proxy statement:
o Director stock ownership guidelines with a minimum of three times the
annual cash retainer.
o Vesting schedule or mandatory holding/deferral period:
- A minimum vesting of three years for stock options or restricted
stock; or
- Deferred stock payable at the end of a three-year deferral period.
o Mix between cash and equity:
- A balanced mix of cash and equity, for example 40% cash/60% equity or
50% cash/50% equity; or
- If the mix is heavier on the equity component, the vesting schedule
or deferral period should be more stringent, with the lesser of
five years or the term of directorship.
o No retirement/benefits and perquisites provided to non-employee
directors; and
o Detailed disclosure provided on cash and equity compensation delivered
to each non-employee director for the most recent fiscal year in a
table. The column headers for the table may include the following: name
of each non-employee director, annual retainer, board meeting fees,
committee retainer, committee-meeting fees, and equity grants.
EMPLOYEE STOCK PURCHASE PLANS--QUALIFIED PLANS
Vote CASE-BY-CASE on qualified employee stock purchase plans. Vote FOR employee
stock purchase plans where all of the following apply:
o Purchase price is at least 85% of fair market value;
o Offering period is 27 months or less; and
o The number of shares allocated to the plan is ten percent or less of the
outstanding shares.
EMPLOYEE STOCK PURCHASE PLANS--NON-QUALIFIED PLANS
Vote CASE-by-CASE on nonqualified employee stock purchase plans. Vote FOR
nonqualified employee stock purchase plans with all the following features:
o Broad-based participation (i.e., all employees of the company with the
exclusion of individuals with 5% or more of beneficial ownership of the
company);
o Limits on employee contribution, which may be a fixed dollar amount or
expressed as a percent of base salary;
o Company matching contribution up to 25% of employee's contribution, which
is effectively a discount of 20% from market value;
o No discount on the stock price on the date of purchase, since there is a
company matching contribution.
OPTIONS BACKDATING
In cases where a company has practiced options backdating, WITHHOLD on a
CASE-BY-CASE basis from the members of the compensation committee, depending on
the severity of the practices and the subsequent corrective actions on the part
of the board. WITHHOLD from the compensation committee members who oversaw the
questionable options grant practices or from current compensation committee
members who fail to respond to the issue proactively, depending on several
factors, including, but not limited to:
o Reason and motive for the options backdating issue, such as inadvertent
vs. deliberate grant date changes;
o Length of time of options backdating;
o Size of restatement due to options backdating;
o Corrective actions taken by the board or compensation committee, such
as canceling or repricing backdated options, or recouping option gains
on backdated grants;
o Adoption of a grant policy that prohibits backdating, and creation of a
fixed grant schedule or window period for equity grants going forward.
SEVERANCE AGREEMENTS FOR EXECUTIVES/GOLDEN PARACHUTES
Vote FOR shareholder proposals to require golden parachutes or executive
severance agreements to be submitted for shareholder ratification, unless the
proposal requires shareholder approval prior to entering into employment
contracts. Vote on a CASE-BY-CASE basis on proposals to ratify or cancel golden
parachutes. An acceptable parachute should include, but is not limited to, the
following:
o The triggering mechanism should be beyond the control of management;
o The amount should not exceed three times base amount (defined as the
average annual taxable W-2 compensation) during the five years prior to
the year in which the change of control occurs;
o Change-in-control payments should be double-triggered, i.e., (1) after
a change in control has taken place, and (2) termination of the
executive as a result of the change in control. Change in control is
defined as a change in the company ownership structure.
9. CORPORATE RESPONSIBILITY
ANIMAL RIGHTS
Generally vote AGAINST proposals to phase out the use of animals in product
testing unless:
o The company is conducting animal testing programs that are unnecessary or
not required by regulation;
o The company is conducting animal testing when suitable alternatives are
accepted and used at peer firms;
o The company has been the subject of recent, significant controversy
related to its testing programs.
DRUG PRICING AND RE-IMPORTATION
Generally vote AGAINST proposals requesting that companies implement specific
price restraints on pharmaceutical products, unless the company fails to adhere
to legislative guidelines or industry norms in its product pricing. Vote
CASE-BY-CASE on proposals requesting that the company evaluate their product
pricing considering:
o The existing level of disclosure on pricing policies;
o Deviation from established industry pricing norms;
o The company's existing initiatives to provide its products to needy
consumers;
o Whether the proposal focuses on specific products or geographic regions.
Generally vote FOR proposals requesting that companies report on the financial
and legal impact of their policies regarding prescription drug re-importation
unless such information is already publicly disclosed. Generally vote AGAINST
proposals requesting that companies adopt specific policies to encourage or
constrain prescription drug re-importation.
GENETICALLY MODIFIED FOODS
Vote AGAINST proposals asking companies to voluntarily label genetically
engineered (GE) ingredients in their products, or alternatively to provide
interim labeling and eventually eliminate GE ingredients due to the costs and
feasibility of labeling and/or phasing out the use of GE ingredients.
GENETICALLY MODIFIED FOODS
Vote AGAINST proposals asking companies to voluntarily label genetically
engineered (GE) ingredients in their products or alternatively to provide
interim labeling and eventually eliminate GE ingredients due to the costs and
feasibility of labeling and/or phasing out the use of GE ingredients.
TOBACCO
Most tobacco-related proposals (such as on second-hand smoke, advertising to
youth, and spin-offs of tobacco-related business) should be evaluated on a
CASE-BY-CASE basis.
TOXIC CHEMICALS
Generally vote FOR resolutions requesting that a company discloses its policies
related to toxic chemicals. Vote CASE-BY-CASE on resolutions requesting that
companies evaluate and disclose the potential financial and legal risks
associated with utilizing certain chemicals. Generally vote AGAINST resolutions
requiring that a company reformulate its products within a certain timeframe,
unless such actions are required by law in specific markets.
ARCTIC NATIONAL WILDLIFE REFUGE
Generally vote AGAINST request for reports outlining potential environmental
damage from drilling in the Arctic National Wildlife Refuge (ANWR) unless:
o New legislation is adopted allowing development and drilling in the ANWR
region;
o The company intends to pursue operations in the ANWR; and
o The company has not disclosed an environmental risk report for its ANWR
operations.
CONCENTRATED AREA FEEDING OPERATIONS (CAFOS)
Vote FOR resolutions requesting that companies report to shareholders on the
risks and liabilities associated with CAFOs, unless:
o The company has publicly disclosed guidelines for its corporate and
contract farming operations, including compliance monitoring; or
o The company does not directly source from CAFOs.
GLOBAL WARMING AND KYOTO PROTOCOL COMPLIANCE
Generally vote FOR proposals requesting a report on greenhouse gas emissions
from company operations and/or products unless this information is already
publicly disclosed or such factors are not integral to the company's line of
business. Generally vote AGAINST proposals that call for reduction in greenhouse
gas emissions by specified amounts or within a restrictive time frame unless the
company lags industry standards and has been the subject of recent, significant
fines or litigation resulting from greenhouse gas emissions.
Generally vote FOR resolutions requesting that companies outline their
preparations to comply with standards established by Kyoto Protocol signatory
markets unless:
o The company does not maintain operations in Kyoto signatory markets;
o The company already evaluates and substantially discloses such
information; or,
o Greenhouse gas emissions do not significantly impact the company's core
businesses.
POLITICAL CONTRIBUTIONS
Vote CASE-BY-CASE on proposals to improve the disclosure of a company's
political contributions considering: recent significant controversy or
litigation related to the company's political contributions or governmental
affairs; and the public availability of a policy on political contributions.
Vote AGAINST proposals barring the company from making political contributions.
LINK EXECUTIVE COMPENSATION TO SOCIAL PERFORMANCE
Vote CASE-BY-CASE on proposals to review ways of linking executive compensation
to social factors, such as corporate downsizings, customer or employee
satisfaction, community involvement, human rights, environmental performance,
predatory lending, and executive/employee pay disparities.
OUTSOURCING/OFF-SHORING
Vote CASE-BY-CASE on proposals calling for companies to report on the risks
associated with outsourcing, considering: the risks associated with certain
international markets; the utility of such a report to shareholders; the
existence of a publicly available code of corporate conduct that applies to
international operations.
COUNTRY-SPECIFIC HUMAN RIGHTS REPORTS
Vote CASE-BY-CASE on requests for reports detailing the company's operations in
a particular country and on proposals to implement certain human rights
standards at company facilities or those of its suppliers and to commit to
outside, independent monitoring.
10. MUTUAL FUND PROXIES
ELECTION OF DIRECTORS
Vote CASE-BY-CASE on the election of directors and trustees, following the same
guidelines for uncontested directors for public company shareholder meetings.
However, mutual fund boards do not usually have compensation committees, so do
not withhold for the lack of this committee.
CONVERTING CLOSED-END FUND TO OPEN-END FUND
Vote CASE-BY-CASE on conversion proposals, considering the following factors:
o Past performance as a closed-end fund;
o Market in which the fund invests;
o Measures taken by the board to address the discount; and
o Past shareholder activism, board activity, and votes on related
proposals.
ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT
Generally vote AGAINST shareholder proposals that mandate a specific minimum
amount of stock that directors must own in order to qualify as a director or to
remain on the board.
REIMBURSE SHAREHOLDER FOR EXPENSES INCURRED
Vote CASE-BY-CASE on shareholder proposals to reimburse proxy solicitation
expenses. When supporting the dissidents, vote FOR the reimbursement of the
proxy solicitation expenses.
Item 8. Portfolio Managers of Closed End Management Investment Companies.
The registrant's portfolio is managed by the Investment Policy Committee.
The following table provides information relating to each member and their role
within the commitee.
Name Title
-------------------- -------------------------------------
Thomas B. Winmill Chairman
Bassett S. Winmill Chief Investment Strategist
John F. Ramirez Director of Fixed Income
Heidi Keating Money Market Fund Portfolio Manager
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The Nominating Committee may consider candidates as Directors submitted by
current Directors, the Investment Manager, registrant stockholders, and other
appropriate sources. The Nominating Committee will consider candidates submitted
by a stockholder or group of stockholders who have owned at least 5% of the
registrant's outstanding common stock for at least two years at the time of
submission and who timely provide specified information about the candidates and
the nominating stockholder or group. To be timely for consideration by the
Nominating Committee, the submission, including all required information, must
be submitted in writing to the attention of the Secretary at the principal
executive offices of the registrant not less than 120 days before the date of
the proxy statement for the previous year's annual meeting of stockholders. The
Nominating Committee will consider only one candidate submitted by such a
stockholder or group for nomination for election at an annual meeting of
stockholders. The Nominating Committee will not consider self-nominated
candidates.
Item 11. 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 (the "1940 Act")) are effective as of a date within 90
days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the disclosure
controls and procedures required by Rule 30a-3(b) under the 1940 Act and
15d-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred
during the registrant's second fiscal quarter of the period covered by the
report that have materially affected, or are likely to materially affect
the registrant's internal control over financial reporting.
Item 12. 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(a) under the Investment Company
Act of 1940(17 CFR 270.360a-2) attached hereto as Exhibits EX-31 and
certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit EX-32.
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
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Thomas B. Winmill, President
Date: March 7, 2007
By: /s/ Thomas O'Malley
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Thomas O'Malley, Chief Financial Officer
Date: March 7, 2007
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 below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/ Thomas B. Winmill
---------------------------------------------
Thomas B. Winmill, President
Date: March 7, 2007
By: /s/ Thomas O'Malley
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Thomas O'Malley, Chief Financial Officer
Date: March 7, 2007