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Global High Income Fund Inc. – Fund Commentary and Portfolio Statistics

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Global High Income Fund Inc. (the “Fund”) (NYSE:GHI) is a non-diversified, closed-end management investment company seeking high current income and, secondarily, capital appreciation through investments primarily in securities of emerging markets debt issuers.

Fund Commentary for the first quarter of 2015 from UBS Global Asset Management (Americas) Inc. (“UBS Global AM”), the Fund’s investment advisor

Market review

After performing poorly at the end of 2014, the emerging markets debt asset class generated a positive return during the first quarter of 2015. The year began on a weak note, as investor risk aversion remained elevated. The asset class then rallied in February. This was driven by a number of factors, including stabilizing oil prices and a cease fire accord between Russia and Ukraine. Investor sentiment for the asset class remained positive in early March before weakening, and the asset class was largely flat for the month as a whole. All told, the J.P. Morgan Emerging Markets Bond Index Global (EMBI Global) rose 2.06% during the quarter.1 However, given the strong US dollar, local currency emerging markets debt, as measured by the J.P. Morgan Government Bond Index-Emerging Markets Global Diversified (GBI-EM Global Diversified), declined 3.96% during the quarter.2

Performance review

For the first quarter of 2015, the Fund posted a net asset value total return of -1.52% and a market price total return of 0.98%. On a net asset value basis, the Fund underperformed its benchmark, the Global High Income Fund Index (the “Index”), which returned -0.97% for the quarter.3

The Fund’s overweight to Venezuela was the largest detractor from performance during the quarter. Venezuela performed poorly, as the country’s financial situation remained unsettled and necessary reforms have yet to be enacted. Elsewhere, the Fund’s shorter duration relative to the Index was not rewarded, as interest rates declined across the yield curve during the first quarter.

On the other hand, a number of the Fund’s positions that performed poorly in late 2014 rallied over the first three months of 2015. In particular, an overweight to Russia was additive for results as the country outperformed the Index, although some of our holdings modestly lagged the benchmark.

Elsewhere, an underweight to Ukraine was beneficial given its deteriorating economic backdrop and the increasing likelihood of a debt restructuring. The Fund’s exposure to long duration local Brazilian debt added value given the declining interest rate environment. Finally, an allocation to short-dated debt from Belarus contributed to performance as it rallied in February and March after poor performance in January.

Several changes were made to the portfolio during the quarter. We further reduced the Fund’s local currency and local debt positions and increased its risk allocation to US dollar-denominated debt. We also pared the Fund’s underweight positions in a number of countries and moved closer to neutral weightings versus the Index.


While we remain cautious on the short-term outlook for the emerging markets debt asset class, our outlook has improved somewhat since the end of 2014. We anticipate modestly strengthening growth in the US, which should be supportive for emerging markets exporters. Growth in Europe continues to be weak, but we are seeing some signs of progress following the introduction of the European Central Bank’s quantitative easing program. However, we recognize that some emerging markets countries still show a lower level of economic activity, and further downward revisions to growth cannot be ruled out. Finally, inflation is relatively benign overall and, as such, we do not expect to see policy tightening from emerging markets central banks in the near-term.

Portfolio statistics as of March 31, 20154

Top ten countries (bond holdings only)5

Percentage of net assets

Brazil 10.3%
Indonesia 8.7
Turkey 7.0
Mexico 6.8
Russia 5.5
Malaysia 5.3
South Africa 4.6
Poland 4.3
India 4.1
Thailand 3.3



Top ten currency exposures (includes all securities
and other instruments)6

Percentage of net assets

United States Dollar 53.8%
Brazilian Real 6.3
Indonesian Rupiah 4.6
Polish Zloty 4.2
Malaysian Ringgit 4.2
Thai Baht 3.3
South African Rand 3.3
Mexican Peso 3.0
Turkish Lira 3.0
Colombian Peso 2.2

Credit quality7 Percentage of net assets
AA 1.3%
A 12.4
BBB 24.4
BB 13.8
B 11.5
CCC and below 2.7
Non-rated 31.5
Cash and other assets, less liabilities 2.4
Total 100.0
Net asset value per share8 $10.04
Market price per share8 $8.75
Duration9 6.20 yrs
Weighted average maturity 8.98 yrs

1 The J.P. Morgan Emerging Markets Bond Index Global (EMBI Global) is an unmanaged index which is designed to track total returns for US dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans and Eurobonds. Investors should note that indices do not reflect the deduction of fees and expenses.

2 The J.P. Morgan Government Bond Index-Emerging Markets Global Diversified (GBI-EM) is an unmanaged index which is designed to track the total returns for local currency debt instruments issued by emerging market governments. Investors should note that indices do not reflect the deduction of fees and expenses.

3 Global High Income Fund Index is an unmanaged index compiled by the advisor, currently constructed as follows: 50% JP Morgan Emerging Markets Bond Index (EMBI Global) and 50% JP Morgan Government Bond Index-Emerging Markets Global Diversified (GBI-EM Global Diversified). Investors should note that indices do not reflect the deduction of fees and expenses.

4 The Fund’s portfolio is actively managed, and its portfolio composition will vary over time.

5 Excludes exposures obtained via derivatives (e.g., swaps).

6 Forward foreign currency contracts are reflected at unrealized appreciation/depreciation; this may not align with the risk exposure described in the portfolio commentary section which reflects forward foreign currency contracts based on contract notional amount. As of the most recent period end, March 31, 2015, the Fund maintained a risk exposure to non-US dollar currencies equal to approximately 48% of the Fund.

7 Credit quality ratings shown in the table are based on those assigned by Standard & Poor’s Financial Services LLC, a part of McGraw-Hill Financial, (“S&P”), to individual portfolio holdings. S&P is an independent ratings agency. Rating reflected represents S&P individual debt issue credit rating. While S&P may provide a credit rating for a bond issuer (e.g., a specific company or country); certain issues, such as some sovereign debt, may not be covered or rated and therefore are reflected as non-rated for the purposes of this table. Credit ratings range from AAA, being the highest, to D, being the lowest, based on S&P’s measures; ratings of BBB or higher are considered to be investment grade quality. Unrated securities do not necessarily indicate low quality. Further information regarding S&P’s rating methodology may be found on its website at Please note that any references to credit quality made in the commentary preceding the table may reflect ratings based on multiple providers (not just S&P) and thus may not align with the data represented in this table.

8 Net asset value (NAV) and market price will fluctuate.

9 Duration is a measure of price sensitivity of a fixed income investment or portfolio (expressed as % change in price) to a one percentage point (i.e., 100 basis points) change in interest rates, accounting for optionality in bonds such as prepayment risk and call/put features.

Any performance information reflects the deduction of the Fund’s fees and expenses, as indicated in its shareholder reports, such as investment advisory and administration fees, custody fees, exchange listing fees, etc. It does not reflect any transaction charges that a shareholder may incur when (s)he buys or sells shares (e.g., a shareholder’s brokerage commissions).

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

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

Investing in the Fund entails specific risks, such as interest rate risk and the risks associated with investing in the securities of issuers in emerging market countries. The value of the Fund’s investments in foreign securities may fall due to adverse political, social and economic developments abroad and due to decreases in foreign currency values relative to the US dollar. Investments in emerging market issuers may decline in value because of unfavorable government actions, greater risks of political instability or the absence of accurate information about emerging market issuers. Further detailed information regarding the Fund, including a discussion of principal objectives, principal investment strategies and principal risks, may be found in the fund overview located at You may also request copies of the fund overview by calling the Closed-End Funds Desk at 888-793 8637.

(c)UBS 2015. All rights reserved.

The key symbol and UBS are among the registered and unregistered trademarks of UBS.

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