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

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

Market review

After a sharp rally in October, the emerging markets debt asset class posted weak results later in the quarter. Investor sentiment for the asset class fluctuated given signs of moderating growth in China, sharply falling commodity prices and uncertainties regarding the direction of future global monetary policy. All told, the J.P. Morgan Emerging Markets Bond Index Global (EMBI Global) gained 1.55% during the quarter.1 Local currency emerging markets debt, as measured by the J.P. Morgan Government Bond Index–Emerging Markets Global Diversified (GBI–EM Global Diversified), declined 0.01% during the quarter.2

Performance review

For the fourth quarter of 2015, the Fund posted a net asset value total return of 0.35% and a market price total return of 12.71%. On a net asset value basis, the Fund underperformed its benchmark, the Global High Income Fund Index (the “Index”), which rose 0.77% for the quarter.3 The Fund’s trading discount narrowed significantly after the October 13, 2015 issuance of a press release announcing a proposal to liquidate the Fund in 2016. This contributed to the higher market price total return performance for the period.

During the quarter, the Fund's overweight to Mexican quasi-sovereign debt detracted from performance.4 The Fund's underweight to Mexican US dollar-denominated debt wasn't strong enough to outweigh negative security selection. Similarly, weak security selection in Colombia hindered relative performance. Elsewhere, an underweight to Argentina was not rewarded. Its spreads tightened as investor sentiment improved following elections in the country and hopes for meaningful political reforms. Finally, a small overweight to the Russian ruble was a headwind for performance; however, overall exposure to Russia was not as negative as noted further below.

On the upside, underweights to Brazilian quasi-sovereigns and local debt contributed to results. Tactical adjustments made to our security holdings in Brazil over the period were positive for results as well. An overweight to Russian US dollar-denominated debt was additive for performance as it held up better than many other commodity countries based on still-solid reserves and a prudent fiscal policy. Our tactical trading of Venezuelan US dollar-denominated debt was also positive for performance, as was our positioning in South African local debt.

Several changes were made to the portfolio during the quarter. In addition to the previously discussed tactical trading, we also adjusted the Fund's positioning in Turkey during the quarter. In particular, we pared our exposure leading up to the country's elections and then added to our position as the European Union supported the country with moderate aid to assist with the Syrian refugee crisis.

Lastly, we reduced the Fund's allocation to local currency denominated emerging markets debt in favor of US dollar-denominated debt.

Outlook

We believe 2016 will likely be a transition year for emerging markets (EM), as many countries will still be in the midst of adjusting their economies to the new reality of lower commodity prices, trade volumes and capital inflows. We continue to believe that the main adjustment mechanism in most EM countries will be the exchange rate. EM countries are facing headwinds from several directions, but many of them are starting to embark on adjustment programs that will likely help them improve their capacity to service debt and boost their real GDP growth potential in coming years.

Growth in developed markets continues to recover, led by stronger domestic demand in the US and solid consumption in the eurozone. Global monetary policies are likely to diverge further, with the US Federal Reserve (the "Fed") raising rates, while the European Central Bank and Bank of Japan continue to expand their balance sheets. In the US, uncertainties regarding the Fed's interest rate path could be a source of volatility in 2016.

Growth in emerging countries is likely to remain subdued in 2016. We expect a mild recovery from 2015 levels. This likely will be mainly due to base effects, as some of the larger countries, including Russia, may come out of a recession in 2016. One of the main reasons for persistent low growth rates in EM countries is the ongoing economic adjustment in China. The country is now on the edge of a new consumption-led growth paradigm, where success of policy reforms will depend on the government's ability to implement deep structural reforms while, at the same time, migrating to a market-based institutional framework. With China's growth rates slowing to mid-single digits from mid-double digits a decade ago, global trade volumes and commodity prices have declined significantly, reflecting China's increasing role in international trade. These adverse dynamics have had a detrimental impact on emerging market export values, with little evidence of improvement in the foreseeable future, in our view.

Important Note: As previously announced in a press release issued on October 13, 2015, based upon the recommendation of UBS Asset Management (Americas) Inc., the Fund’s investment advisor, the Fund's Board of Directors determined that liquidation and dissolution of the Fund is in the best interests of the Fund's shareholders. A proposed plan of liquidation is being submitted for the approval of the Fund’s shareholders at the Fund’s February 2016 annual meeting of shareholders. If the shareholders approve of the proposed plan, the liquidation and dissolution of the Fund will take place as soon as reasonably practicable, but in no event later than December 31, 2016 (absent unforeseen circumstances).

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 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 http://www.ubs.com/closedendfundsinfo. You may also request copies of the fund overview by calling the Closed-End Funds Desk at 888-793 8637.

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