MUNICIPAL PARTNERS FUND INC.
January 22, 2000
Dear Shareholders:
We are pleased to provide this annual report for the Municipal Partners Fund
Inc. ("Fund") as of December 31, 1999. Included are market commentary, a
schedule of the Fund's investments as of December 31, 1999 and financial
statements for the year ended December 31, 1999. The Fund distributed income
dividends to common shareholders totaling $0.80 per share during the period. The
table below shows the annualized distribution rate and the 12-month total return
based on the Fund's December 31, 1999 net asset value ("NAV") per share and its
New York Stock Exchange ("NYSE") closing price.1
Price Annualized Twelve-Month
Per Share Distribution Rate2 Total Return
--------- ------------------ ------------
$13.12 (NAV) 6.08% (6.97)%
$10.9375 (NYSE) 7.30% (17.52)%
SPECIAL SHAREHOLDER NOTICE
We are proud to report that Municipal Partners Fund Inc. has recently received a
4-star (out of a possible 5 stars) rating from Morningstar Inc. as of December
31, 1999.3
MARKET REVIEW
The bond markets encountered a wild swing in investor sentiment during the past
year as healthy optimism drove confidence at the onset, yet monetary policy
tightening concerns overshadowed bonds as the year progressed. Despite posting
negative returns, municipal bonds performed better than U.S. Treasuries during
the period. In our view, decreased supply, generous yield ratios at the
beginning of the year and an improvement in fundamental credit quality provided
support for municipal bonds.
- ------------
1 The NAV is calculated by subtracting total liabilities and outstanding
preferred stock from the closing value of all securities held by the Fund plus
all other assets. This result (net assets of common shareholders) is divided
by the total number of common shares outstanding. The NAV fluctuates with
changes in the market prices of securities in which the Fund has invested.
However, the price at which an investor buys or sells shares of the Fund is
its market price as determined by supply and demand.
2 Total returns are based on changes in NAV or the market value and assume the
reinvestment of all dividends and/or capital gains distributions in additional
shares. The annualized distribution rate is the Fund's current monthly income
dividend rate, annualized, and then divided by the NAV or the market value
noted in the report. This annualized distribution rate assumes a current
monthly income dividend rate of $0.0665 for twelve months. This rate is as of
January 31, 2000 and is subject to change. The important difference between a
total return and an annualized distribution rate is that the total return
takes into consideration a number of factors including the fluctuation of the
NAV or the market value during the period reported. The NAV fluctuation
includes the effects of unrealized appreciation or depreciation in the Fund.
Accordingly, since an annualized distribution rate only reflects the current
monthly income dividend rate annualized, it should not be used as the sole
indicator to judge the return you receive from your fund investment. Past
performance is not indicative of future results.
3 Morningstar, Inc. proprietary ratings reflect historical risk adjusted
performance as of December 31, 1999. Ratings are loan-adjusted, updated
monthly and subject to change. Morningstar ratings are calculated from each
fund's three, five and ten-year average annual returns (if applicable) in
excess of 90-day Treasury bill returns with appropriate fee adjustment and a
risk factor that reflect fund performance below 90-day T-bill returns. The
highest Morningstar rating is five stars; the lowest is one star. The top 10%
of the funds in a broad asset class receive five stars; the next 22.5% receive
four stars, the next 35% receive three stars, the next 22.5% receive two stars
and the next 10% receive one star. For the three, five and ten-year periods,
there were 193, 193 and 37 funds, respectively in the municipal bond class.
<PAGE>
MUNICIPAL PARTNERS FUND INC.
State and local governments issued approximately $226 billion of debt during
1999 representing a 21% decline versus 1998's pace of $286 billion. The
reduction in the supply of municipal bonds was due to a precipitous drop in
refunding activity. Refunding issues eased almost 55% (year over year) while new
project funding remained virtually unchanged.
The amount of debt outstanding in the municipal market currently exceeds $1.5
trillion, according to data published by the Federal Reserve Board of Governors.
From 1997 through 1999, the 10 most populous U.S. states accounted for almost
60% of new municipal debt. Data from the U.S. Bureau of the Census indicated
that the top 10 states represent approximately 52% of the nation's population.
We think concentrated issuance of municipal securities is likely to continue in
the near term.
Demand for municipal bonds traditionally comes from three types of investors:
retail, mutual funds and property & casualty insurance companies. Strong demand
from retail investors absorbed most of last year's supply while property and
casualty insurance companies and mutual funds generally kept a low profile.
Generous municipal yield ratios at the beginning of the year did not attract
institutions but were enough to meet the needs of retail investors. During the
past year, municipal bond yields were more correlated with taxable spread yields
but less than U.S. Treasury yields. In our opinion, correlation between
municipal bonds and taxable spread products may develop into a long-term trend
if U.S. Treasury supply continues to decline.
A strong national economy improved the fundamental quality of many municipal
debt issuers. Credit upgrades outpaced weakening issues by a ratio of
approximately 4 to 1, according to Standard & Poor's, a major credit reporting
agency. Impressive participation by secondary insurance providers supported
relatively narrow municipal quality spreads. Insured securities represented
almost 50% of new municipal bond supply during the past few years.
INVESTMENT STRATEGY
Our philosophy of focusing on long-term fundamentals, rigorous credit analysis
and sector selection remains the foundation for how we manage the Fund. We have
remained short to neutral versus our benchmark in terms of our maturity
structure.
As of December 31, 1999, the Fund's long-term holdings consisted of 47 issues
throughout 26 different states. Moreover, the credit quality of the portfolio
remains high with an average credit quality of AA according to either Standard &
Poor's Ratings Group or Moody's Investors Services Inc. (Standard & Poor's
Corporation and Moody's Investor Service Inc. are two major credit reporting and
bond rating agencies.) The Fund had an average effective maturity of 14.4 years
and on average duration of 8.2 years. The portfolio is well-diversified with the
greatest industry sector weightings in industrial development, housing and
transportation.
In response to the relatively tight risk premium levels of lower quality bonds,
we plan to continue investing in higher quality municipal bonds. One sector that
did not improve fundamentally during the period was the not-for-profit health
care sector. Health care providers continued to struggle with the Balanced
Budget Act of 1997. Accordingly, yield spreads for this sector widened
appreciably during 1999.
MARKET OUTLOOK
Looking ahead, the demands of a growing economy will call for a steady supply of
municipal debt. We expect new issuance of municipal bonds to range between $200
and $250 billion during 2000.
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Some municipalities are concerned about a possible reduction in sales tax
receipts due to the explosive growth of e-commerce. Most state and local
governments rely on sales tax revenue to help pay for essential services
including public safety, fire, health, education, roads and bridges. Consumers
are supposed to pay sales taxes voluntarily on items purchased from out-of-state
merchants via the Internet, but few do. Early estimates of sales tax shortfalls
from e-commerce are wide ranging. As a comparison, state officials believe that
$5 billion in taxes goes uncollected annually from mail order catalogue sales.
We do not think that growing Internet commerce poses an immediate threat to
either state or local revenue bases. In the near term, surging income tax
receipts generated by a vibrant U.S. economy should take the edge off any sales
tax shortfalls. Moreover, some municipal authorities used recent surplus tax
receipts to fund reserve (i.e., "rainy day") accounts. Capital deposited into
these accounts can help mitigate future revenue shortfalls. In April 2000, a
19-member Advisory Commission on Electronic Commerce will report to the U.S.
Congress about Internet tax issues, with the taxing of Internet commerce as the
main topic of their report. Other state and local organizations have also
recently been proactive in identifying other taxation alternatives.
The U.S. economy should remain stable this year as low unemployment and strong
consumer confidence will likely support demand for goods. Additionally, we think
that the Federal Reserve Board has engineered a good balance between strong
economic growth and an "acceptable" rate of inflation.
All of us at Salomon Brothers Asset Management Inc appreciate the confidence you
have demonstrated in the past and hope to continue to serve you in the new
century.
Cordially,
/s/ William D. Cvengros /s/ Heath B. McLendon
WILLIAM D. CVENGROS HEATH B. MCLENDON
Co-Chairman of the Board Co-Chairman of the Board
/s/ Robert E. Amodeo
ROBERT E. AMODEO
Executive Vice President
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Schedule of Investments
December 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long-Term Investments -- 99.0%
ALABAMA -- 1.1%
$1,225,000 BBB Courtland, AL IDB Solid Waste Disposal Revenue
(Champion International Corp. Project), Series A,
7.000% due 11/1/22............................................ $ 1,263,196
-----------
CALIFORNIA -- 1.9%
2,000,000 A2* West Covina, CA COP (Queen of the Valley Hospital),
6.500% due 8/15/14, Pre-Refunded 8/15/04...................... 2,191,540
-----------
CONNECTICUT -- 0.8%
1,000,000 BBB- Connecticut State Health & Educational Facilities Authority Revenue
(Windham Community Memorial Hospital),
Series C, 6.000% due 7/1/20................................... 882,140
-----------
GEORGIA -- 2.2%
315,000 AAA Fulton County, GA Housing Authority Single-Family Mortgage,
6.600% due 3/1/28............................................. 325,660
2,250,000 AAA Georgia Municipal Electric Authority Power Revenue, Series Z,
FGIC-Insured, 5.500% due 1/1/20............................... 2,145,128
-----------
2,470,788
-----------
ILLINOIS -- 9.9%
3,750,000 AAA Chicago, IL Board of Education School Reform, AMBAC-Insured,
5.750% due 12/1/27............................................ 3,546,075
2,000,000 AAA Chicago, IL Midway Airport Revenue, Series A, MBIA-Insured,
5.500% due 1/1/29............................................. 1,807,680
Illinois Health Facilities Authority Revenue:
1,165,000 AAA Highland Park Hospital Project, Series A, MBIA-Insured,
5.500% due 10/1/08.......................................... 1,183,080
1,500,000 A+ Refunding, Lutheran General Health System, Series C,
7.000% due 4/1/14........................................... 1,672,515
3,000,000 AAA Illinois State Sales Tax Revenue, Series V, 6.375% due 6/15/20.. 3,055,890
-----------
11,265,240
-----------
KANSAS -- 0.9%
1,000,000 AAA Wyandotte County, Kansas City, KS Government
Utility System Revenue, AMBAC-Insured, 5.750% due 9/1/24...... 962,960
-----------
- ---------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 4
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (continued)
December 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MAINE -- 2.0%
Maine State Housing Authority Mortgage Purchase:
$1,755,000 AA Series A-2, 6.650% due 11/15/25............................... $ 1,774,147
525,000 AA Series A-4, 6.375% due 11/15/12............................... 529,882
-----------
2,304,029
-----------
MARYLAND -- 3.4%
3,750,000 AAA Northeast Maryland Waste Disposal Authority, Solid Waste Revenue
(Montgomery County Resource Recovery, Ogden Martin Systems
Project A), MBIA-Insured, 6.300% due 7/1/16................... 3,809,737
-----------
MASSACHUSETTS -- 2.7%
3,170,000 AA Massachusetts State Water Pollution Abatement, Series A,
5.750% due 8/1/29............................................. 3,018,664
-----------
MICHIGAN -- 0.8%
1,000,000 AAA Detroit, MI City School District Refunding, Series C, FGIC-Insured,
5.250% due 5/1/16............................................. 941,350
-----------
MINNESOTA -- 2.8%
3,185,000 AA+ Minnesota State Housing Finance Agency Single-Family Mortgage,
Series H, 6.500% due 1/1/26................................... 3,201,148
-----------
MONTANA -- 1.7%
2,000,000 AA+ Montana State Board Housing Single-Family Program, Series A-2,
6.050% due 12/1/12............................................ 1,994,560
-----------
NEVADA -- 6.0%
1,350,000 AAA Clark County, NV Passenger Facility Revenue (McCarran International
Airport), MBIA-Insured, 5.750% due 7/1/23..................... 1,261,143
Nevada Housing Division, Single-Family Program, Series B-2:
4,355,000 Aa2* 6.400% due 10/1/25............................................ 4,374,467
1,135,000 Aa 6.950% due 10/1/26............................................ 1,164,249
-----------
6,799,859
-----------
NEW HAMPSHIRE -- 0.5%
535,000 Aa3* New Hampshire State HFA, Single-Family Residential, Series A,
6.800% due 7/1/15............................................. 545,374
-----------
- ---------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 5
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (continued)
December 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NEW JERSEY -- 8.7%
New Jersey EDA:
$5,150,000 AAA PCR (Public Service Electric and Gas Co. Project), MBIA-Insured,
6.400% due 5/1/32........................................... $ 5,217,517
4,450,000 AAA Water Facilities Revenue (New Jersey American Water Co.,
Inc. Project), Series A, FGIC-Insured, 6.875% due 11/1/34... 4,716,155
-----------
9,933,672
-----------
NEW YORK -- 8.1%
1,175,000 A1* New York City, NY Municipal Water Finance Authority
Water & Sewer System Revenue, Series B, 5.750% due 6/15/29.... 1,106,815
4,000,000 A New York State Dorm Authority Revenue, Student University Educational
Facilities, 5.500% due 5/15/26................................ 3,609,640
950,000 AAA Port Authority of New York and New Jersey Construction,
Ninety-Sixth Series, FGIC-Insured, 6.600% due 10/1/23......... 1,000,968
3,650,000 Aa3* Triborough Bridge & Tunnel Authority, NY General Purpose Revenue,
Series Y, 5.500% due 1/1/17................................... 3,547,983
-----------
9,265,406
-----------
OHIO -- 7.9%
2,000,000 BBB Miami County, OH Hospital Facilities Revenue Refunding
& Improvement (Upper Valley Medical Center),
6.250% due 5/15/13............................................ 1,885,120
7,200,000 A+ Ohio State Water Development Authority Solid Waste
Disposal Revenue (Cargill Inc.), 6.300% due 9/1/20............ 7,128,720
-----------
9,013,840
-----------
PENNSYLVANIA -- 2.4%
3,000,000 AAA Delaware Valley, PA Regional Finance Authority Local
Government Revenue, Series A, AMBAC-Insured,
5.500% due 8/1/28............................................. 2,785,170
-----------
RHODE ISLAND -- 2.8%
3,115,000 AA+ Rhode Island Housing & Mortgage Finance Corp.,
Homeownership Opportunity, Series 7B,
6.800% due 10/1/25............................................ 3,191,130
-----------
- ---------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 6
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (continued)
December 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOUTH CAROLINA -- 1.6%
$2,000,000 AAA Charleston County, SC Revenue (Care Alliance Health Services),
Series A, FSA-Insured, 5.125% due 8/15/15..................... $ 1,857,540
-----------
SOUTH DAKOTA -- 3.2%
3,595,000 AAA South Dakota Housing Development Authority, Homeowner Mortgage,
Series D, 6.850% due 5/1/26................................... 3,660,070
-----------
TENNESSEE -- 6.1%
3,400,000 AA- The IDB of Humphreys County, TN Solid Waste Disposal Revenue
(E.I. du Pont de Nemours and Co. Project), 6.700% due 5/1/24.. 3,490,576
3,500,000 AAA Memphis-Shelby County, TN Airport Authority Airport Revenue,
Series D, AMBAC-Insured, 6.000% due 3/1/24.................... 3,408,300
-----------
6,898,876
-----------
TEXAS -- 12.1%
1,750,000 AAA Lower Colorado River Authority, TX Revenue Refunding, Series B,
FSA-Insured, 6.000% due 5/15/13............................... 1,804,373
6,000,000 AAA Lower Neches Valley Authority, TX Industrial Development Corp.
Sewerage Facilities Revenue (Mobil Oil Refining Corp. Project),
6.400% due 3/1/30............................................. 6,023,220
Richardson, TX Hospital Authority Hospital Revenue Refunding
& Improvement (Richardson Medical Center):
1,840,000 BBB+ 6.750% due 12/1/23.......................................... 1,811,553
1,160,000 BBB+ 6.750% due 12/1/23, Pre-Refunded 12/1/03.................... 1,251,744
255,000 AA Texas State Veterans Housing Assistance, 6.800% due 12/1/23..... 263,481
2,750,000 BBB West Side Calhoun County, TX Navigation District Solid Waste
Disposal Revenue (Union Carbide Chemicals),
6.400% due 5/1/23............................................. 2,592,837
-----------
13,747,208
-----------
VIRGINIA -- 2.4%
2,000,000 BBB Giles County, VA IDA Revenue (Hoechst Celanese Project),
5.950% due 12/1/25............................................ 1,794,720
955,000 AA+ Virginia State Housing Development Authority, Commonwealth
Mortgage, Sub-Series B-5, 6.300% due 1/1/27................... 955,334
-----------
2,750,054
-----------
- ---------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 7
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (continued)
December 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WASHINGTON -- 4.7%
$4,250,000 AAA Seattle, WAGO, Series B, FSA-Insured, 5.750% due 12/1/28........ $ 4,032,272
1,280,000 AAA Washington State Housing Finance Commission, Single-Family
Mortgage Revenue Refunding, Series D-1, 6.150% due 1/1/26..... 1,275,059
------------
5,307,331
------------
WEST VIRGINIA -- 2.3%
2,445,000 A- West Virginia State Water Development Authority,
Loan Program II, Series A, 7.000% due 11/1/31,
Pre-Refunded 11/1/01.......................................... 2,593,167
------------
Total Long-Term Investments (Cost -- $113,672,728).............. 112,654,049
------------
Short-Term Investments -- 1.0%
INDIANA -- 0.6%
700,000 A-1 Jasper County, INPCR (Northern Indiana Public Service), Series B,
VRDD, 4.800% due 6/1/13....................................... 700,000
------------
NEW YORK -- 0.4%
400,000 A-1+ New York City, NYGO, Series B2, MBIA-Insured, VRDD,
4.750% due 8/15/11............................................ 400,000
------------
Total Short-Term Investments (Cost -- $1,100,000)............... 1,100,000
------------
Total Investments -- 100% (Cost -- $114,772,728**).............. $113,754,049
============
<FN>
- ------------
(a) All ratings are by Standard & Poor's Ratings Service, except those
identified by an asterisk (*) which are rated by Moody's Investors Service,
Inc.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 9 and 10 for definition of ratings and certain security descriptions.
- ---------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 8
</FN>
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Long-Term Securities Ratings (unaudited)
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA - Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA - Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issue only in a small degree.
A - Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
BBB - Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
BB - Bonds rated "BB" have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments.
Moody's Investors Service, Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3
may be applied to each generic rating from "Aa" to "Baa," where 1 is the highest
and 3 the lowest ranking within its generic category.
Aaa - Bonds rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger
than in "Aaa" securities.
A - Bonds rated "A" possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment some time in the
future.
Baa - Bonds rated "Baa" are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
NR - Indicates that the bond is not rated by Moody's or Standard & Poor's as
indicated.
Page 9
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Short-Term Securities Ratings (unaudited)
SP-1 - Standard &Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
sign.
A-1 - Standard &Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety regarding
timely payment is either overwhelming or very strong; those issues
determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign.
VMIG 1 - Moody's highest rating for issues having a demand feature - VRDO.
P-1 - Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
Security Descriptions (unaudited)
<TABLE>
<S> <C> <C> <C>
ABAG - Association of Bay Area Governors GO - General Obligation Bonds
AIG - American International Guaranty HDC - Housing Development Corporation
AMBAC - American Municipal Bond Assurance HFA - Housing Finance Authority
Corporation IDA - Industrial Development Authority
BAN - Bond Anticipation Notes IDB - Industrial Development Board
BIG - Bond Investors Guaranty IDR - Industrial Development Revenue
CGIC - Capital Guaranty Insurance Company INFLOS - Inverse Floaters
CHFCLI - California Health Facility ISD - Independent School District
Construction Loan Insurance LEVRRS - Leveraged Reverse Rate Securities
CONNIE LOC - Letter of Credit
LEE - College Construction Loan Association MBIA - Municipal Bond Investors Assurance
COP - Certificate of Participation Corporation
EDA - Economic Development Authority MVRICS - Municipal Variable Rate Inverse
EDR - Economic Development Revenue Coupon Security
FGIC - Financial Guaranty Insurance Company PCR - Pollution Control Revenue
FHA - Federal Housing Administration PSFG - Permanent School Fund Guaranty
FHLMC - Federal Home Loan Mortgage RAN - Revenue Anticipation Notes
Corporation RIBS - Residual Interest Bonds
FLAIRS - Floating Adjustable Interest Rate RITES - Residual Interest Tax-Exempt Securities
Securities SYCC - Structured Yield Curve Certificate
FNMA - Federal National Mortgage Association TAN - Tax Anticipation Notes
FRTC - Floating Rate Trust Certificates TECP - Tax Exempt Commercial Paper
FSA - Financial Security Assurance TOB - Tender Option Bonds
GIC - Guaranteed Investment Contract TRAN - Tax and Revenue Anticipation Notes
GNMA - Government National Mortgage VA - Veterans Administration
Association VRDD - Variable Rate Daily Demand
VRWE - Variable Rate Wednesday Demand
</TABLE>
Page 10
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Statement of Assets and Liabilities
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $114,772,728)........................................ $113,754,049
Cash................................................................................ 34,217
Interest receivable................................................................. 1,819,847
Receivable for securities sold...................................................... 65,038
Prepaid expenses.................................................................... 17,308
------------
TOTAL ASSETS........................................................................ 115,690,459
------------
LIABILITIES:
Management fee payable (Note 2)..................................................... 59,236
Accrued expenses.................................................................... 117,991
------------
TOTAL LIABILITIES................................................................... 177,227
------------
TOTAL NET ASSETS......................................................................... $115,513,232
============
NET ASSETS:
Preferred Stock (Note 5)............................................................ $ 40,000,000
------------
Common Stock ($0.001 par value, 100,000,000 shares authorized; 5,757,094
shares outstanding)............................................................... 5,757
Additional paid-in capital.......................................................... 79,673,514
Undistributed net investment income................................................. 98,525
Accumulated net realized loss on security transactions.............................. (3,245,885)
Net unrealized depreciation on investments.......................................... (1,018,679)
------------
Net Assets Applicable to Common Stock............................................... 75,513,232
------------
TOTAL NET ASSET.......................................................................... $115,513,232
============
NET ASSET VALUE PER SHARE OF COMMON STOCK ($75,513,232 / 5,757,094 shares outstanding)... $13.12
======
- --------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 11
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Statement of Operations
For the Year Ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................................ $ 6,924,558
------------
EXPENSES:
Management fees (Note 2)............................................................ 730,031
Auction agent fees.................................................................. 110,325
Audit and tax services.............................................................. 69,547
Shareholder communications.......................................................... 45,385
Directors' fees and expenses........................................................ 25,000
Legal............................................................................... 21,231
Listing fees........................................................................ 16,170
Transfer agent...................................................................... 15,002
Custodian........................................................................... 5,581
Other............................................................................... 24,801
------------
TOTAL EXPENSES...................................................................... 1,063,073
------------
NET INVESTMENT INCOME.................................................................... 5,861,485
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales.............................................................. 63,603,464
Cost of securities sold.......................................................... 65,043,228
------------
NET REALIZED LOSS................................................................... (1,439,764)
------------
Change in Net Unrealized Appreciation (Depreciation) on Investments:
Beginning of year................................................................ 7,762,903
End of year...................................................................... (1,018,679)
------------
INCREASE IN NET UNREALIZED DEPRECIATION............................................. (8,781,582)
------------
NET LOSS ON INVESTMENTS.................................................................. (10,221,346)
------------
DECREASE IN NET ASSETS FROM OPERATIONS................................................... $ (4,359,861)
============
- --------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
Page 12
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Statements of Changes in Net Assets
For the Years Ended December 31,
<TABLE>
<CAPTION>
1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income................................................ $ 5,861,485 $ 5,982,095
Net realized gain (loss)............................................. (1,439,764) 494,761
(Increase) decrease in net unrealized depreciation................... (8,781,582) 49,447
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.................... (4,359,861) 6,526,303
------------ ------------
DIVIDENDS PAID FROM NET INVESTMENT INCOME TO:
Common shareholders.................................................. (4,594,162) (4,594,162)
Preferred shareholders............................................... (1,437,790) 1,512,967)
------------ ------------
DECREASE IN NET ASSETS FROM DIVIDENDS (6,031,952) (6,107,129)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS......................................... (10,391,813) 419,174
NET ASSETS:
Beginning of Year.................................................... 125,905,045 125,485,871
------------- ------------
END OF YEAR*......................................................... $115,513,232 $125,905,045
============ ============
* Includes undistributed net investment income of: $98,525 $268,992
======= ========
Statement of Cash Flows
For the Year Ended December 31, 1999
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Proceeds from sales of portfolio securities......................................... $ 63,588,444
Purchases of portfolio securities................................................... (65,382,850)
Net sales of short-term securities.................................................. 1,700,000
------------
(94,406)
Net investment income............................................................... 5,861,485
Amortization of net premium on investments.......................................... 81,571
Net change in receivables/payables related to operations............................ 129,736
------------
NET CASH PROVIDED BY OPERATING ACTIVITIES........................................... 5,978,386
------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Common stock dividends paid......................................................... (4,594,162)
Preferred stock dividends paid...................................................... (1,437,790)
------------
NET CASH USED BY FINANCING ACTIVITIES............................................... (6,031,952)
------------
NET DECREASE IN CASH..................................................................... (53,566)
Cash, Beginning of Year.................................................................. 87,783
-------------
CASH, END OF YEAR........................................................................ $ 34,217
============
- --------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 13
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements
Note 1. Organization and Significant Accounting Policies
Municipal Partners Fund Inc. ("Fund") was incorporated in Maryland on November
24, 1992 and is registered as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended. The Board of
Directors authorized 100 million shares of $0.001 par value common stock. The
Fund's primary investment objective is to seek a high level of current income
which is exempt from regular federal income taxes, consistent with the
preservation of capital. As a secondary investment objective, the Fund intends
to enhance portfolio value by purchasing tax exempt securities that, in the
opinion of Salomon Brothers Asset Management Inc ("Investment Adviser"), may
appreciate in value relative to other similar obligations in the marketplace.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with Generally Accepted
Accounting Principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual amounts could differ from those estimates.
SECURITIES VALUATION. Tax-exempt securities are valued by independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics. Short-term investments having a maturity of 60 days or
less are valued at amortized cost which approximates market value. Securities
for which reliable quotations are not readily available are valued at fair value
as determined in good faith by, or under procedures established by, the Board of
Directors.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
recorded on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis. Interest income is accrued on a daily
basis. The Fund amortizes premiums and accretes discounts on securities
purchased using the effective interest method.
FEDERAL INCOME TAXES. The Fund has complied and intends to continue to comply
with the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute all of its
income and capital gains, if any, to its shareholders. Therefore, no federal
income tax or excise tax provision is required.
DIVIDENDS AND DISTRIBUTIONS. The Fund declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Long-term
capital gains, if any, in excess of loss carryovers (See Note 4) are expected to
be distributed annually. Dividends and distributions to common shareholders are
recorded on the ex-dividend date. Dividends and distributions to preferred
shareholders are accrued on a weekly basis and are determined as described in 5.
The amount of dividends and distributions from net investment income and net
realized gains are determined in accordance with federal income tax regulations,
which may differ from GAAP.
Page 14
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements (continued)
CASH FLOW INFORMATION. The Fund invests in securities and distributes dividends
from net investment income and net realized gains from investment transactions.
These activities are reported in the Statement of Changes in Net Assets.
Additional information on cash receipts and cash payments is presented in the
Statement of Cash Flows. Accounting practices that do not affect reporting
activities on a cash basis include carrying investments at value and amortizing
premium or accreting discount on debt obligations.
Note 2. Management and Advisory Fees and Other Transactions
The Fund has entered into a management agreement with PIMCO Advisors L.P.
("Investment Manager"), pursuant to which the Investment Manager, among other
things, supervises the Fund's investment program and monitors the performance of
the Fund's service providers. The management agreement was assigned to the
Investment Manager from its subsidiary, Value Advisors LLC on November 2, 1999.
The Investment Manager and the Fund entered into an investment advisory and
administration agreement with the Investment Adviser, a wholly owned subsidiary
of Salomon Brothers Holding Co. Inc., which in turn is wholly owned by Salomon
Smith Barney Holdings Inc. ("SSBH"), pursuant to which the Investment Adviser
provides investment advisory and administrative services to the Fund. The
Investment Adviser is responsible on a day-to-day basis for the management of
the Fund's portfolio in accordance with the Fund's investment objectives and
policies and for making decisions to buy, sell, or hold particular securities
and is responsible for day-to-day administration of the Fund. The Investment
Adviser has delegated certain administrative services to SSB Citi Fund
Management LLC ("SSBC"), formerly known as SSBC Fund Management Inc., an
affiliate of the Investment Adviser, pursuant to a Sub-Administration Agreement
between the Investment Adviser and SSBC.
The Fund pays the Investment Manager a monthly fee at an annual rate of 0.60% of
the Fund's average weekly net assets for its services, and the Investment
Manager pays the Investment Adviser a monthly fee at an annual rate of 0.36% of
the Fund's average weekly net assets for its services. For purposes of
calculating the fees, the liquidation value of any outstanding preferred stock
of the Fund is not deducted in determining the Fund's average weekly net assets.
Certain officers and/or directors of the Fund are also officers and/or directors
of the Investment Manager or the Investment Adviser.
At December 31, 1999, the Investment Adviser owned 4,275 shares of the Fund.
Page 15
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements (continued)
Note 3. Investments
During the year ended December 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
Purchases....................................................... $65,382,850
===========
Sales........................................................... $63,603,464
===========
At December 31, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
Gross unrealized appreciation................................... $ 1,299,176
Gross unrealized depreciation................................... 2,317,855)
-----------
Net unrealized depreciation..................................... $(1,018,679)
===========
Note 4. Capital Loss Carryforwards
At December 31, 1999, the Fund had a net capital loss carryover of approximately
$2,425,000 of which $1,049,000 will be available through December 31, 2002,
$704,000 will be available through December 31, 2003, $52,000 will be available
through December 31, 2004 and $620,000 will be available through December 31,
2007 to offset future capital gains to the extent provided by Federal income tax
regulations.
Note 5. Preferred Stock
On April 2, 1993, the Fund closed its public offering of 800 shares of $0.001
par value Auction Rate Preferred Stock ("Preferred Shares") at an offering price
of $50,000 per share. The Preferred Shares have a liquidation preference of
$50,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) and, subject to certain restrictions, are
redeemable in whole or in part.
Dividend rates generally reset every 28 days and are determined by auction
procedures. The dividend rates on the Preferred Shares during the year ended
December 31, 1999 ranged from 3.30% to 4.10%. The weighted average dividend rate
for the year ended December 31, 1999 was 3.545%. The Board of Directors
designated the dividend period commencing October 19, 1999 as a Special Rate
Period. Pursuant to this Special Rate Period, the dividend rate set by the
auction held on October 18, 1999 remained in effect through January 17, 2000.
The dividend rate for this Special Rate Period was 4.10%.
Page 16
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements (continued)
The Fund is subject to certain restrictions relating to the Preferred Shares.
The Fund may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
Preferred Shares would be less than 200%. The Preferred Shares are also subject
to mandatory redemption at $50,000 per share plus any accumulated or unpaid
dividends, whether or not declared, if certain requirements relating to the
composition of the assets and liabilities of the Fund as set forth in its
Articles Supplementary are not satisfied.
The Preferred Shares, which are entitled to one vote per share, generally vote
with the common shares but vote separately as a class to elect two directors and
on certain matters affecting the rights of the Preferred Shares.
Note 6. Concentration of Credit Risk
Since the Fund invests a portion of its assets in issuers located in a single
state, it may be affected by economic and political developments in a specific
state or region. Certain debt obligations held by the Fund are entitled to the
benefit of insurance, standby letters of credit or other guarantees of banks or
other financial institutions.
Note 7. Events Subsequent to December 31, 1999
COMMON STOCK DIVIDENDS. On January 3 and February 1, 2000, the Board of
Directors of the Fund declared a common share dividend from net investment
income, each in the amount of $0.0665 per share, payable on January 28 and
February 25, 2000 to shareholders of record on January 19 and February 15, 2000,
respectively.
PREFERRED STOCK DIVIDENDS. The Board of Directors designated the dividend period
commencing January 18, 2000 as a Special Rate Period. Pursuant to this Special
Rate Period, the dividend rate set by the auction held on January 14, 2000
remains in effect through April 17, 2000 when the regular auction procedure
resumes, subject to the Fund's ability to designate any subsequent dividend
period as a Special Rate Period. The dividend rate for this Special Rate Period
is 3.975%.
Page 17
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Financial Highlights
Data for a share of common stock outstanding throughout each year ended December
31:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR...................... $ 14.92 $ 14.85 $ 13.99 $14.19 $11.55
--------- -------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income................................ 1.02 1.04 1.06 1.08 1.10
Net realized and unrealized gain (loss).............. (1.77) 0.09 0.86 (0.24) 2.63
--------- -------- -------- -------- --------
Total Income (Loss) From Operations..................... (0.75) 1.13 1.92 0.84 3.73
--------- -------- -------- -------- --------
LESS DIVIDENDS PAID FROM
NET INVESTMENT INCOME TO:
Common shareholders................................... (0.80) (0.80) (0.80) (0.79) (0.80)
Preferred shareholders................................ (0.25) (0.26) (0.26) (0.25) (0.29)
--------- -------- -------- -------- --------
Total Dividends From Net Investment Income.............. (1.05) (1.06) (1.06) (1.04) (1.09)
--------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR............................ $ 13.12 $ 14.92 $ 14.85 $13.99 $14.19
========= ======== ======== ======== ========
MARKET VALUE, END OF YEAR............................... $10.9375 $14.125 $ 13.50 $ 11.75 $11.625
========= ======== ======== ======== ========
TOTAL RETURN, BASED ON MARKET PRICE(1).................. (17.52)% 10.89% 22.31% 7.99% 26.18%
RATIOS TO AVERAGE NET ASSETS OF
COMMON SHAREHOLDERS(2):
Operating expenses.................................... 1.30% 1.28% 1.34% 1.40% 1.43%
Net investment income................................. 7.18% 6.99% 7.47% 7.84% 8.41%
NET ASSETS OF COMMON SHAREHOLDERS,
END OF YEAR (000S).................................... $75,513 $85,905 $85,486 $80,553 $81,698
PREFERRED STOCK OUTSTANDING,
END OF YEAR (000S).................................... $40,000 $40,000 $40,000 $40,000 $40,000
PORTFOLIO TURNOVER RATE................................. 54% 32% 27% 27% 35%
</TABLE>
- --------------------------------------------------------------------------------
(1) For purposes of this calculation, dividends on common shares are assumed to
be reinvested at prices obtained under the Fund's dividend reinvestment
plan and the broker commission paid to purchase or sell a share is
excluded.
(2) Ratios calculated on the basis of income and expenses relative to the
average net assets of common shares and excludes the effect of dividend
payments to preferred shareholders.
Page 18
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Report of Independent Accountants
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF MUNICIPAL PARTNERS FUND INC.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of Municipal Partners
Fund Inc. ("Fund") at December 31, 1999, the results of its operations and its
cash flows 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 five years in the period then ended, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 11, 2000
Page 19
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Selected Quarterly Financial Information (unaudited)
Summary of quarterly results of operations:
<TABLE>
<CAPTION>
NET REALIZED &
NET INVESTMENT UNREALIZED
INCOME GAIN (LOSS)
----------------- -------------------
QUARTER ENDED* TOTAL PER SHARE TOTAL PER SHARE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31, 1998............................................... $1,515 $0.26 $ (198) $(0.03)
June 30, 1998................................................ 1,463 0.26 302 0.05
September 30, 1998........................................... 1,513 0.26 1,494 0.26
December 31, 1998............................................ 1,491 0.26 (1,054) (0.19)
March 31, 1999............................................... 1,449 0.25 (793) (0.14)
June 30, 1999................................................ 1,455 0.26 (3,463) (0.60)
September 30, 1999........................................... 1,462 0.25 (2,750) (0.48)
December 31, 1999............................................ 1,495 0.26 (3,215) (0.55)
- --------------------------------------------------------------------------------------------------------
* Totals expressed in thousands of dollars except per share amounts.
Page 20
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Additional Shareholder Information (unaudited)
On April 15, 1999, the Annual Meeting of the Fund's Stockholders was held for
the purpose of voting on the following matters:
1. The election of Heath B. McLendon and Charles F. Barber as Directors of
the Fund; and
2. The ratification of the selection of PricewaterhouseCoopers LLP as the
Fund's independent accountants for the fiscal year ending December 31,
1999.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
PREFERRED
PREFERRED % OF SHARES VOTES % OF SHARES
NAME OF DIRECTORS VOTES FOR VOTED AGAINST VOTED
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Heath B. McLendon 708 100.0% 0 0.0%
Charles F. Barber 708 100.0% 0 0.0%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The results of the vote on Proposal 2 were as follows:
<TABLE>
<CAPTION>
% OF SHARES % OF SHARES VOTES % OF SHARES
VOTES FOR VOTED VOTES AGAINST VOTED ABSTAINED ABSTAINED
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4,906,402 98.9% 13,261 0.3% 40,939 0.8%
- ---------------------------------------------------------------------------------------------------------
Page 21
</TABLE>
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Other Information (unaudited)
Year 2000 Issue. As the year 2000 began, there were few problems caused by the
inability of certain computer systems to tell the difference between the year
2000 and the year 1900 (commonly known as the "Year 2000" issue). It is still
possible that some computer systems could malfunction in the future because of
the Year 2000 issue or as a result of actions taken to address the Year 2000
issue. The Investment Adviser does not anticipate that its services or those of
the Fund's other service providers will be adversely affected, but the
Investment Adviser will continue to monitor the situation. If malfunctions
related to the Year 2000 issue do arise, the Fund and its investments could be
negatively affected.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
Page 22
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Tax Information (unaudited)
For Federal tax purposes, the Fund hereby designates for the fiscal year ended
December 31, 1999:
* 100.00% of the dividends paid by the fund from net investment income as
tax exempt for regular Federal income tax purposes.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
Page 23
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Dividend Reinvestment Plan (unaudited)
Pursuant to certain rules of the Securities and Exchange Commission, the
following additional disclosure is provided.
Pursuant to the Fund's Dividend Reinvestment Plan ("Plan"), holders of Common
Stock whose shares of Common Stock are registered in their own names will be
deemed to have elected to have all distributions automatically reinvested by
State Street Bank and Trust Company ("Plan Agent") in Fund shares pursuant to
the Plan, unless they elect to receive distributions in cash. Holders of Common
Stock who elect to receive distributions in cash will receive all distributions
in cash by check in dollars mailed directly to the holder by the Plan Agent as
dividend-paying agent. Holders of Common Stock who do not wish to have
distributions automatically reinvested should notify the Plan Agent at the
address below. Distributions with respect to Common Stock registered in the name
of a bank, broker-dealer or other nominee (i.e., in "street name") will be
reinvested under the Plan unless the service is not provided by the bank,
broker-dealer or other nominee or the holder elects to receive dividends and
distributions in cash. Investors who own shares registered in the name of a
bank, broker-dealer or other nominee should consult with such nominee as to
participation in the Plan through such nominee, and may be required to have
their shares registered in their own names in order to participate in the Plan.
The Plan Agent serves as agent for the holders of Common Stock in administering
the Plan. After the Fund declares a dividend on the Common Stock or determines
to make a capital gain distribution, the Plan Agent will, as agent for the
participants, receive the cash payment and use it to buy the Fund's Common Stock
in the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts. The Fund will not issue any new shares of Common Stock
in connection with the Plan.
Participants have the option of making additional cash payments to the Plan
Agent, monthly, in a minimum amount of $250, for investment in the Fund's Common
Stock. The Plan Agent will use all such funds received from participants to
purchase shares of Common Stock in the open market on or about the first
business day of each month. To avoid unnecessary cash accumulations, and also to
allow ample time for receipt and processing by the Plan Agent, it is suggested
that participants send in voluntary cash payments to be received by the Plan
Agent approximately ten days before an applicable purchase date specified above.
A participant may withdraw a voluntary cash payment by written notice, if the
notice is received by the Plan Agent not less than 48 hours before such payment
is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares of Common Stock in
the account of each Plan participant will be held by the Plan Agent in the name
of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan.
Page 24
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Dividend Reinvestment Plan (unaudited) (continued)
In the case of holders of Common Stock, such as banks, broker-dealers or other
nominees, who hold shares for others who are beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of shares of Common Stock
certified from time to time by the holders as representing the total amount
registered in such holders' names and held for the account of beneficial owners
that have not elected to receive distributions in cash.
There is no charge to participants for reinvesting dividends or capital gains
distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. However, each participant will pay a pro rata
share of brokerage commissions incurred with respect to the Plan Agent's open
market purchases in connection with the reinvestment of dividends and
distributions and voluntary cash payments made by the participant. The receipt
of dividends and distributions under the Plan will not relieve participants of
any income tax which may be payable on such dividends or distributions.
Participants may terminate their accounts under the Plan by notifying the Plan
Agent in writing. Such termination will be effective immediately if notice in
writing is received by the Plan Agent not less than ten days prior to any
dividend or distribution record date. Upon termination, the Plan Agent will send
the participant a certificate for the full shares held in the account and a cash
adjustment for any fractional shares or, upon written instruction from the
participant, the Plan Agent will sell part or all of the participant's shares
and remit the proceeds to the participant, less a $2.50 fee plus brokerage
commission for the transaction.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to all participants in the
Plan at least 30 days before the record date for the dividend or distribution.
The Plan also may be amended by the Fund or the Plan Agent upon at least 30
days' written notice to participants in the Plan.
All correspondence concerning the Plan should be directed to State Street Bank
and Trust Company, P.O. Box 8209, Boston, Massachusetts 02266-8209.
Page 25
<PAGE>
MUNICIPAL PARTNERS FUND INC.
Directors
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
WILLIAM D. CVENGROS
Co-Chairman of the Board;
Chief Executive Officer and
President of Value Advisors LLC and
Chief Executive Officer and
President of PIMCO Advisors L.P.
HEATH B. MCLENDON
Co-Chairman of the Board;
Managing Director, Smith Barney Inc.
President and Director, SSBC Fund
Management Inc. and Travelers
Investment Adviser, Inc.
RIORDAN ROETT
Professor and Director, Latin American
Studies Program, Paul H. Nitze
School of Advanced International Studies,
Johns Hopkins University
ROBERT L. ROSEN
Chief Executive Officer,
R.L.R. Partners,
Chairman, National Financial Partners
Officers
WILLIAM D. CVENGROS
Co-Chairman of the Board
HEATH B. MCLENDON
Co-Chairman of the Board
STEPHEN J. TREADWAY
President
LEWIS E. DAIDONE
Executive Vice President and Treasurer
ROBERT E. AMODEO
Executive Vice President
NEWTON B. SCHOTT
Executive Vice President
ANTHONY PACE
Controller
CHRISTINA T. SYDOR
Secretary
Municipal Partners Fund Inc.
7 World Trade Center
New York, New York 10048
Telephone 1-888-777-0102
INVESTMENT ADVISER
Salomon Brothers Asset Management Inc
7 World Trade Center
New York, New York 10048
INVESTMENT MANAGER
PIMCO Advisors L.P.
800 Newport Center Drive
Suite 100
Newport Beach, California 92660
AUCTION AGENT
Bankers Trust Company
4 Albany Street
New York, New York 10006
CUSTODIAN
PNC Bank N.A.
200 Stevens Drive
Lester, PA 19113
DIVIDEND DISBURSING AND TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
NEW YORK STOCK EXCHANGE SYMBOL
MNP
<PAGE>
Municipal Partners
Fund Inc.
Annual Report
DECEMBER 31, 1999
State Street Bank and Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
BULK RATE
U.S. POSTAGE
PAID
S. HACKENSACK, NJ
PERMIT No. 750
MNPANN 12/99
