GLOBAL INCOME FUND 11 Hanover Square, New York, NY 10005 American Stock Exchange Symbol: BBZ August 12, 1998 Fellow Shareholders: We are pleased to submit this Annual Report for the fiscal year ended June 30, 1998. We are also pleased to note that annualizing the Fund's July 1998 dividend and based on the market price on payment date, the Fund's dividend distribution yield now stands at 11.18%. The Fund's current net asset value per share is $6.78. With a recent closing market price on the American Stock Exchange of $6.44 per share, we believe this represents an opportunity to purchase shares at an attractive discount from their underlying value. Dividend Distribution Policy Continued The adoption by the Fund's Board of Directors in June 1997 of a managed 10% dividend distribution policy has been well received. The policy is intended to provide shareholders with a stable cash flow and reduce or eliminate any market price discount to net asset value. The monthly dividend distributions of 0.83% of the Fund's net asset value (10% on an annual basis) will be paid primarily from ordinary income and any capital gains with the balance representing return of capital. We believe shares of the Fund are a sound value and an attractive investment for income oriented portfolios. Review and Outlook Bond prices have increased generally during the year, but we note that the increase was not uniform throughout the entire maturity spectrum of U.S. Treasury obligations. In our December report to shareholders, we identified several variables that could contribute to such a rise in prices as a result of declining interest rates. We felt that turmoil in Asia would create a global preference for the safety of U.S. Government securities, and have a deflationary impact on the prices of commodities and manufactured imports, offsetting domestic prices pressures caused by low levels of unemployment. In addition, we felt that the Federal budget surplus, which reduced the supply of U.S. Government securities, would also bring lower interest rates. Finally, we anticipated that a slowdown in the pace of domestic growth could prompt easier monetary policy and reduce inflationary pressures. Our outlook for stable or lower interest rates has been generally correct over the year and, at this writing, remains unchanged. While GDP grew at a high rate of 5.4% in the first quarter, we anticipate much slower growth for the balance of the year. We are pleased that monthly inflation reports continue to be low. We have always been skeptical of the argument that low levels of unemployment lead to inflation, and continue to expect price competition and gains in productivity to be prevalent. We also note that yields after inflation on government securities of the United States are very attractive compared to those of other developed nations, and expect continued demand for U.S. debt from both value and safety conscious global investors. Future declines in interest rates will continue to be constrained by the Federal Funds overnight rate. Historically, the Federal Funds rate is thought to be neutral when it is around 1.75 percentage points greater than the rate of inflation. Over the past year, core producer prices are up only .8%, and core consumer prices have risen only 2.2%, implying a neutral Fed Funds rate between 2.5% and 4%, much lower than the current 5.5% level. In his February Humphrey-Hawkins Testimony to the Congress, Federal Reserve Chairman Alan Greenspan acknowledged this passive increase in monetary restraint by the Federal Reserve as a deliberate and welcome tightening, intended to offset sources of stimulus in the economy, such as rising equity prices. We expect this rate to remain unchanged until the balance of forces in the economy tilt either toward a reemergence of inflation, which would prompt greater restraint, or clear signs that weakness in Asia has become excessively deflationary and threatens growth globally. While "inverted yield curves" where long term interest rates are lower than short term rates, are historically anomalous, they are not unprecedented, and we continue to believe that intermediate and long term interest rates can decline further. The markets for the debt of less developed countries were volatile during the first half of the year. In the first quarter, The J.P. Morgan Emerging Market Bond Index had a total return of approximately 5.2 %. Over the last twelve months, the Fund has generally invested between 15% and 30% of its total assets in these markets, and the returns from the lows of the quarter to the highs were almost 10.5%. During the second quarter, the index declined by almost 6%. One positive development during the first half of the yearwas the "decoupling" of these markets: there is less of a tendency than was the case last fall for bond prices to drop in all regionssimultaneously in response to an isolated, independent political or economic dislocation in a predominantly unrelated market. However, during times of extreme stress, this "contagion" is still in evidence. This makes investing in these markets challenging, but we continue to believe that the magnitude of potential rewards warrant a commitment to this arena, and are confident in our ability to manage these risks. In regard to currencies, although we have favored the U.S. dollar for the past three years, we began increasing our weightings in core European currencies this spring for several reasons. We are concerned that weakness in Asia will continue to have a negative impact on our balance of trade. We believe that the outperformance of European equity markets over the United States will increase investor confidence and enthusiasm for these markets and anticipate an eventual diminution of the flight to quality premium associated with dollar strength in the second quarter. Despite the fact that U.S. dollar denominated yields offer exceptional value relative to the yields in other developed countries, we have been successful in increasing our non-dollar allocation in assets which will contribute positively to the portfolios current yield and total return. Rights Offering Oversubscribed As announced previously, the Fund received subscriptions for approximately 2,320,000 shares of the Fund's common stock, well in excess of the 1,576,468 shares offered pursuant to its rights offering, which expired on June 10, 1998. In accordance with the terms of the rights offering, the subscription price was $6.15 per share. Since sufficient shares were not available to honor all requests for over-subscription, pursuant to the terms of the rights offering the Fund allocated available shares remaining after fulfilling exercises of rights pursuant to the primary subscription privilege on a pro rata basis, based on the number of rights owned by the persons requesting over-subscriptions. An Easy Way to Grow Your Account The Fund's Dividend Reinvestment Plan provides an attractive opportunity to add to your holdings, particularly since the Fund's monthly dividends are reinvested without charge at the net asset value per share or market price, whichever is lower. Sincerely, Thomas B. Winmill Steven A. Landis President Senior Vice President Portfolio Manager BULL & BEAR GLOBAL INCOME FUND, INC. Schedule of Portfolio Investments - June 30, 1998 ================================================================================ Par Value BONDS (94.9%) Market Value - -------------------------------------- ----------------------------------------- Argentina (16.4%) - -------------------------------------------------------------------------------- $1,000,000 Astra Compania Argentina de Petroleo S.A., 11.625%, due 12/02/99 $ 1,048,750 (2) - -------------------------------------------------------------------------------- 1,000,000 Bridas Corp., 12.50% Senior Notes, due 11/15/99 1,048,750 - -----------------------------------------0-------------------------------------- L2,725,000,000 Perez Companc Floating Rate Notes, due 4/01/02 1,504,593 - -------------------------------------------------------------------------------- 750,000 IMASAC S.A. 11%, due 5/02/05 696,563 - -------------------------------------------------------------------------------- 892,855 Province of Tucuman, 9.45%, due 8/01/04 830,355 - -------------------------------------------------------------------------------- 1,000,000 Republic of Argentina, 8.75%, due 7/10/02 862,500 - -------------------------------------------------------------------------------- 500,000 Supercanal Holdings S.A. 11.50% Senior Notes, due 5/15/05 482,500 - -------------------------------------------------------------------------------- 6,474,011 - ------------------------------------------------------------------------------- Brazil (3.4%) - -------------------------------------------------------------------------------- 500,000 Comtel Brasileira Ltda., 10.75% Notes, due 9/26/04 (2) 462,500 - -------------------------------------------------------------------------------- 500,000 Radio e Televisao Bandeirantes Ltda., 12.875% Notes, due 5/15/06 421,250 - -------------------------------------------------------------------------------- 500,000 Voto-Votorantim Overseas Trading Operations N.V. 8.50%, - -------------------------------------------------------------------------------- due 6/27/05 446,248 - -------------------------------------------------------------------------------- 1,329,998 - -------------------------------------------------------------------------------- Chile (2.5%) - -------------------------------------------------------------------------------- 1,000,000 Banco Santiago S.A. 7% Subordinated Notes, due 7/18/07 1,005,936 - -------------------------------------------------------------------------------- China (1.1%) - -------------------------------------------------------------------------------- 500,000 Guangdong Enterprises (Holdings) Ltd., 8.875% Senior Notes, - -------------------------------------------------------------------------------- due 5/22/07 432,242 - -------------------------------------------------------------------------------- Colombia (2.4%) - -------------------------------------------------------------------------------- 1,000,000 Termoemcali Funding Corp., 10.125%, due 12/15/14 (2) 952,500 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Dominican Republic (1.2%) - ------------------------------------------------------------------------------- 500,000 Tricom S.A. 11.375% Senior Notes, due 9/01/04 (2) 478,750 - ------------------------------------------------------------------------------- Germany (1.4%) - ------------------------------------------------------------------------------- 2,000,000 Metro Finance BV 18.50%, due 5/22/00 566,389 - ------------------------------------------------------------------------------- Lithuania (6.5%) - -------------------------------------------------------------------------------- 2,560,000 Lietuvos Energija Amortising, Floating Rate Note, due 4/06/00 2,560,000 - -------------------------------------------------------------------------------- Mexico (3.6%) - -------------------------------------------------------------------------------- 500,000 Bepensa S.A. de C.V. 9.75% Senior Notes, due 9/30/04 487,500 - -------------------------------------------------------------------------------- 1,000,000 Grupo Minero Mexico S.A.de C.V. 8.25%, due 4/01/08 950,000 - -------------------------------------------------------------------------------- 1,437,500 - -------------------------------------------------------------------------------- Panama (1.9%) - -------------------------------------------------------------------------------- 1,000,000 Panama-Interest Reduction Bonds, 3.75% Debentures, due 7/17/14 745,382 - -------------------------------------------------------------------------------- Poland (2.3%) - -------------------------------------------------------------------------------- Zl1,000,000 Poland Past due Interest Notes, due 10/27/14 899,275 - -------------------------------------------------------------------------------- Qatar (1.3%) - -------------------------------------------------------------------------------- 500,000 Ras Laffan Liquified Natural Gas Company Ltd., 8.294%, - -------------------------------------------------------------------------------- due 3/15/14 (2) 500,509 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------- Russia (2.1%) - --------------------------------------------------------------------- 500,000 City of St. Petersburg 9.50% Bonds, due 6/18/02 $ 398,750 - -------------------------------------------------------------------------------- 1,000,000 Russian Ministry of Finance 9.375% Bonds, due 3/31/05 445,934 - -------------------------------------------------------------------------------- 844,684 - -------------------------------------------------------------------------------- Turkey (1.1%) - -------------------------------------------------------------------------------- 500,000 Pera Financial Services Company, 9.375%, due 10/15/02 444,375 - -------------------------------------------------------------------------------- United Kingdom (8.7%) - -------------------------------------------------------------------------------- £750,000 Sutton Bridge Financing Ltd., 8.625%, due 6/30/22 (2) 1,479,324 - -------------------------------------------------------------------------------- 3,000,000 Rothschild Continuation Finance B.V. Primary Capital Floating - -------------------------------------------------------------------------------- Rate Notes 1,980,000 - -------------------------------------------------------------------------------- 3,459,324 - -------------------------------------------------------------------------------- United States (38.7%) - -------------------------------------------------------------------------------- $500,000 Conseco Finance Trust II, 8.70%, Capital Trust Pass through - -------------------------------------------------------------------------------- Securities,due 11/15/26 570,655 - -------------------------------------------------------------------------------- 250,000 Equifax Inc., 6.30%, due 7/01/05 248,306 - -------------------------------------------------------------------------------- 1,000,000 First Hawaiian Capital I, 8.343%, due 7/01/27 1,079,053 - -------------------------------------------------------------------------------- 500,000 MacSaver Financial Services, 7.60% Notes, due 8/01/07 469,537 - ------------------------------------------------------------------------------- 500,000 Socgen Real Estate LLC, 7.64% Bonds, due 12/29/49 497,628 - -------------------------------------------------------------------------------- 500,000 Staples Inc., 7.125% Senior Notes, due 8/15/07 519,928 - -------------------------------------------------------------------------------- 1,000,000 U.S. Treasury Note, 5.50%, due 2/28/03 999,688 - -------------------------------------------------------------------------------- 1,500,000 U.S. Treasury Note, 5.75%, due 4/30/03 1,515,002 - -------------------------------------------------------------------------------- 1,000,000 U.S. Treasury Note, 5.375%, due 6/30/03 996,251 - -------------------------------------------------------------------------------- 2,300,000 U.S. Treasury Note, 6.125%, due 8/15/07 2,394,878 - -------------------------------------------------------------------------------- 1,000,000 U.S. Treasury Note, 5.50%, due 2/15/08 1,000,001 - -------------------------------------------------------------------------------- 3,000,000 U.S. Treasury Note, 5.625%, due 5/15/08 3,042,189 - -------------------------------------------------------------------------------- 13,333,116 - -------------------------------------------------------------------------------- Supernational/Other (5.4%) - -------------------------------------------------------------------------------- 1,000,000 Corporacion Andina De Fomento 5.375% Bonds, due 1/29/03 558,109 - -------------------------------------------------------------------------------- 3,500,000 European Bank for Reconstruction & Development 19.25% Notes, - -------------------------------------------------------------------------------- due 4/02/00 1,002,122 - -------------------------------------------------------------------------------- 1,950,000 International Bank for Reconstruction & Development 18% Notes, - -------------------------------------------------------------------------------- due 2/27/03 584,385 - -------------------------------------------------------------------------------- 2,144,616 - ------------------------------------------------------------------------------- Total Bonds (cost: $38,136,612) 37,608,607 - -------------------------------------------------------------------------------- SHORT TERM HOLDINGS (5.1%) ) - ------------------------------------------------------------------------------- 2,000,000 Goldman Sachs Group, Commercial Paper, due 7/01/98 - ----------------------------------------------------------------------------- (cost $2,000,000) 2,000,000 - ----------------------------------------------------------------------------- Shares WARRANTS (0.0%) - ----------------------------------------------------------------------------- 2,526 CHI Energy, Inc., series B (3) 707 - ----------------------------------------------------------------------------- 1,640 CHI Energy, Inc., series C (3) 459 - ----------------------------------------------------------------------------- Total Warrants (cost: $513,320) 1,166 - --------------------------------------------------------------- Total Investments (cost: $40,649,932) (100.0%) $39,609,773 ================================================================================ (1) Pa value stated in currency indicated; market value stated in U.S. dollars. See accompanying notes to financial statements. (2) Purchased pursuant to Rule 144A exemption from Federal registration requirements. (3) Non-income producing security. STATEMENT OF ASSETS AND LIABILITIES June 30, 1998 ASSETS: .Investments at market value (cost: $40,649,932) (note 1) $39,609,773 .Cash.1,910,911 .Interest receivable 834,203 .Other assets 5,322 .......Total assets 42,360,209 LIABILITIES: Payables: ...Reverse repurchase agreement 8,095,694 ...Investment securities purchased 918,244 ...Interest 7,154 .Accrued management fees 25,353 .Accrued expenses 73,147 .Other liabilities 216,356 .......Total liabilities 9,335,948 NET ASSETS: (applicable to 4,762,553 outstanding shares: 20,000,000 shares of $.01 par value authorized) $33,024,261 NET ASSET VALUE PER SHARE .($33,024,261 a 4,762,553) $6.93 At June 30, 1998, net assets consisted of: .Paid-in capital $50,984,809 Accumulated net realized loss on investments, ...foreign currencies and futures (16,920,439) Net unrealized depreciation on investments and foreign currencies ...and futures (1,040,109) ....... $33,024,261 STATEMENT OF OPERATIONS Year Ended June 30, 1998 INVESTMENT INCOME: .Interest (net of $27,253 of foreign tax) $2,755,168 .Dividends 37,245 ...Total investment income 2,792,413 EXPENSES: .Interest (note 5) 488,780 .Investment management (note 3) 176,297 .Professional (note 3) 77,636 .Custodian 65,173 .Directors 24,285 .Printing 23,349 .Transfer agent 17,685 .Registration 11,186 .Other. 3,806 ...Total expenses 888,197 ...Fee reductions (note 4) (25,872) ...Net expenses 862,325 .......Net investment income 1,930,088 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCIES AND FUTURES: Net realized loss from security ...transactions (537,932) .Net realized loss from foreign currency and futures transactions (267,625) Unrealized depreciation of investments, ...foreign currencies and futures during the period (1,211,629) .Net realized and unrealized loss on investments, foreign currencies ...and futures (2,017,186) .Net decrease in net assets resulting from operations $ (87,098)