<PAGE> 1
-----------------------------------------------------------
GLOBAL PARTNERS
INCOME FUND INC.
ANNUAL REPORT
-----------------------------------------
AUGUST 31, 1995
----------------------------------
SALOMON BROTHERS ASSET MANAGEMENT
-------------------------------
<PAGE> 2
GLOBAL PARTNERS INCOME FUND INC.
October 27, 1995
To Our Shareholders:
The net asset value for the Global Partners Income Fund Inc. rose to $11.11 per
share as of August 31, 1995. Dividends of $0.11875 per share were paid during
each month of the quarter. The total investment return, based on net asset value
per share for the quarter, assuming reinvestment of dividends in additional
shares of the Fund, was 4.4% compared with an increase of 4.4% in the Salomon
Brothers Brady Bond Index and an increase of 2.55% for the Salomon Brothers
High-Yield Index. As its investment objective, the Fund seeks to achieve high
current income and, as a secondary objective, capital appreciation. We have
sought to meet these objectives by combining two dissimilar asset
classes -- emerging market sovereign debt and U.S. high-yield corporate debt.
U.S. HIGH-YIELD CORPORATE BOND MARKET
The U.S. high-yield market continued to perform well in the current quarter and
outperformed the Treasury sector in this period. The higher level of current
income in the high-yield sector was slightly offset by a small widening in the
yield spread to comparable maturity Treasuries. Spreads widened from 3.98% to
4.03% during the quarter. The high-yield market experienced near record cash
flows into mutual funds and a large volume of new issues in the quarter. Over
the course of the past year, we have increased our exposure to the media sector,
which has been one of the strongest performing sectors in the market.
EMERGING MARKETS
Emerging markets regained stability in the three-month period ended in August
following the extreme volatility of the first five months of the year. For the
three months ended in August, the Salomon Brothers Brady Bond Index appreciated
4.4% as investors focused on the fundamentals in individual countries and looked
beyond the short-term effects of Mexico's peso devaluation at the end of 1994.
The important developments for the market during the Fund's most recent quarter
included successful financings by Argentina and a continuation of the recession
in Mexico. Investors continue to move back into the market based on the
encouraging level of stability over the past three months.
COUNTRY ANALYSIS
The largest holdings of foreign government debt securities in the Fund, as a
percentage of total assets on August 31, were in Brazil (11.1%), Morocco (9.1%),
Argentina (8.3%) and Poland (6.8%).
BRAZIL: President Cardoso continued to successfully guide his package of
constitutional reforms through the Brazilian Congress. In July, Standard &
Poor's raised its foreign currency rating on Brazil to single B-plus from single
B, reflecting the success of the Cardoso administration in its anti-inflation
efforts.
<PAGE> 3
GLOBAL PARTNERS INCOME FUND INC.
MOROCCO: The Moroccan economy continued to struggle with the effects of a severe
drought. The World Bank approved a $100 million emergency agricultural loan to
aid this stricken sector of the economy. Moroccan GDP is expected to contract in
1995 due to the effects of the drought. Current estimates from the Ministry of
Finance call for a contraction of approximately 5% in the Moroccan economy in
1995.
ARGENTINA: The country successfully returned to the capital markets with major
debt underwritings denominated in deutschmarks and yen during the Fund's most
recent quarter. These financings will be used, in part, to finance repurchases
of Argentine public debt.
POLAND: The market continues to upgrade its assessment of Poland's prospects in
light of its investment grade credit rating. Inflation continued to fall during
the recent quarter reflecting the decline in food prices and the strength of the
zloty.
ANNUAL SHAREHOLDERS MEETING
The Fund held its annual shareholders meeting on December 7, 1994. At the
meeting, shareholders elected each of the nominees proposed for election to the
Fund's Board of Directors and ratified the selection of Price Waterhouse LLP as
the independent accountants of the Fund. The following table provides
information concerning the matters voted on at the meeting:
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
NOMINEES VOTES FOR VOTES AGAINST
- ----------------------------------------------------
<S> <C> <C>
Charles F. Barber 13,194,468 228,612
Leslie H. Gelb 13,193,415 229,665
Michael S. Hyland 13,193,618 229,462
Alan H. Rappaport 13,188,556 234,523
Jeswald W. Salacuse 13,192,806 230,274
</TABLE>
2. RATIFICATION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS OF
THE FUND
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINED UNVOTED
- -----------------------------------------------------------
<S> <C> <C> <C>
3,812,026 13,633 37,707 0
</TABLE>
We encourage you to read the financial statements that follow for further
details about the Fund's investments. A recorded update of developments
affecting emerging markets debt securities is available by calling (800)
421-4777.
<TABLE>
<S> <C>
Cordially,
/s/ MICHAEL S. HYLAND /s/ ALAN H. RAPPAPORT
- --------------------- -------------------
Michael S. Hyland Alan H. Rappaport
Chairman of the Board President
</TABLE>
<PAGE> 4
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
August 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS -- 64.56% (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES -- 9.23%
$ 4,000 Berry Plastics, 12.25%, 4/15/04(C)............................................ $ 4,160,000
2,000 Harris Chemical, Zero Coupon until 1/15/96 (10.25% thereafter), 7/15/01(C).... 1,780,000
2,000 Indah Kiat International, 12.50%, 6/15/06..................................... 2,050,000
2,000 Renco Metals Inc., 12.00%, 7/15/00............................................ 2,120,000
2,000 Stone Container, 9.875%, 2/1/01(C)............................................ 1,982,500
3,000 Valcor, 9.625%, 11/01/03(C)................................................... 2,790,000
------------
14,882,500
------------
CONSUMER CYCLICALS -- 8.76%
2,000 Carrols, 11.50%, 8/15/03(C)................................................... 1,975,000
2,000 Cole National Group Inc., 11.25%, 10/1/01(C).................................. 1,980,000
2,000 Family Restaurants, 9.75%, 2/1/02(C).......................................... 940,000
4,000 Finlay Fine Jewelry, 10.625%, 5/1/03(C)....................................... 3,880,000
4,000 Flagstar, 10.75%, 9/15/01(C).................................................. 3,700,000
2,000 Parisian, 9.875%, 7/15/03(C).................................................. 1,640,000
------------
14,115,000
------------
CONSUMER NON-CYCLICALS -- 20.59%
2,000 Bally Park Place Funding, Inc., 9.25%, 3/15/04................................ 1,885,000
2,000 Borg-Warner Security Corp., 9.125%, 5/1/03.................................... 1,760,000
2,000 Dade International Inc., 13.00%, 2/1/05(C).................................... 2,140,000
4,000 International Semi-Tech, Zero Coupon until 8/15/00 (11.50% thereafter),
8/15/03..................................................................... 2,060,000
4,000 Pathmark, 9.625%, 5/1/03(C)................................................... 3,980,000
3,000 Penn Traffic Co., 9.625%, 4/15/05(C).......................................... 2,467,500
3,000 Plastic Specialty, 11.25%, 12/1/03............................................ 2,745,000
1,750 Ralph's Grocery, 11.00%, 6/15/05.............................................. 1,645,000
1,750 Remington Arms, 10.00%, 12/1/03*,(W,C)........................................ 1,592,500
1,000 Samsonite Corp., 11.125%, 7/15/05(W).......................................... 1,017,500
2,000 Selmer Co. Inc., 11.00%, 5/15/05(W)........................................... 1,920,000
1,000 Showboat Inc., 9.25%, 5/1/08(C)............................................... 925,000
1,350 Telex Communications, Inc., 12.00%, 7/15/04................................... 1,393,875
4,589 Trump Taj Mahal, 11.35%, 11/15/99(X).......................................... 3,689,825
4,000 William House Regency, 11.50%, 6/15/05(C)..................................... 3,960,000
------------
33,181,200
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 1
<PAGE> 5
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
August 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS (CONCLUDED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY -- 1.95%
$ 5,000 Clark R & M Holdings, Zero Coupon, 2/15/00(C)................................. $ 3,137,500
------------
FINANCIAL -- .98%
1,500 Olympic Financial Ltd., 13.00%, 5/01/00....................................... 1,575,000
------------
INDUSTRIAL/MANUFACTURING -- 12.24%
3,000 Foamex Capital L.P., 9.50%, 6/1/00(C)......................................... 2,925,000
2,000 Foamex Capital L.P., 11.25%, 10/1/02(C)....................................... 2,010,000
5,000 Jordan Industries, 10.375%, 8/1/03(C)......................................... 4,637,500
2,000 Motor Wheel, 11.50%, 3/01/00(C)............................................... 1,780,000
3,000 Specialty Equipment, 11.375%, 12/1/03(C)...................................... 3,150,000
2,000 UCAR Global Enterprises, 12.00%, 1/15/05...................................... 2,240,000
3,500 Venture Holdings Trust, 9.75%, 4/1/04(C)...................................... 2,992,500
------------
19,735,000
------------
MEDIA/TELECOMMUNICATIONS -- 8.63%
3,000 Adelphia Communications, 12.50%, 5/15/02(C)................................... 3,045,000
2,000 Granite Broadcasting, 10.375%, 5/15/05(W)..................................... 2,040,000
2,500 Units In Flight Phone, Zero Coupon until 5/15/98 (14.00% thereafter), 5/15/02(W,Y).. 875,000
3,500 Marcus Cable Co., Zero Coupon until 6/15/00 (14.25% thereafter), 12/15/05(W).. 1,933,750
1,500 Outdoor Systems, 10.75%, 8/15/03.............................................. 1,447,500
2,000 Units People's Choice TV Corp., Zero Coupon until 6/1/00 (13.135% thereafter),
6/1/04Z .................................................................... 915,000
3,000 United International Holdings, Zero Coupon, 11/15/99.......................... 1,815,000
2,000 USA Mobile Communications, 9.50%, 2/1/04...................................... 1,840,000
------------
13,911,250
------------
TRANSPORTATION -- 2.18%
2,000 Petro PSC Properties, 12.50%, 6/1/02.......................................... 1,995,000
2,500 Transtar Holdings, Zero Coupon until 12/15/99 (13.375% thereafter),
12/15/03.................................................................... 1,525,000
------------
3,520,000
------------
TOTAL CORPORATE BONDS (cost $108,078,561)..................................... 104,057,450
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 2
<PAGE> 6
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
August 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS -- 61.95% (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA -- 12.31%
$19,500 Republic of Argentina, FRB, 7.3125%, 3/31/05*,(C)............................. $ 11,943,750
12,109 Republic of Argentina, BOCON Pre II, 5.9063%, 4/1/01*,(C,P)................... 7,892,693
------------
19,836,443
------------
BRAZIL -- 16.48%
11,400 Federal Republic of Brazil, IDU Series A, 6.6875%, 1/1/01*,(C)................ 9,426,375
4,350 Federal Republic of Brazil, Par YL4, 4.25%, 4/15/24*,(C)...................... 1,976,531
27,195 Federal Republic of Brazil, C Bond, 8.00%, 4/15/14C,(X)....................... 13,529,578
3,000 Federal Republic of Brazil, "New" New Money Bonds, 7.3125%, 4/15/09*,(C)...... 1,638,750
------------
26,571,234
------------
BULGARIA -- 2.16%
1,750 Republic of Bulgaria, Discount Bond, Series A, 6.75%, 7/28/24*................ 879,375
10,000 Republic of Bulgaria, FLIRB, Series A, 2.00%, 7/28/12*........................ 2,600,000
------------
3,479,375
------------
COSTA RICA -- 5.50%
7,000 Costa Rica Series A, Principal Bond, 6.25%, 5/21/10(C)........................ 3,640,000
11,000 Costa Rica Series B, Principal Bond, 6.25%, 5/21/15(C)........................ 5,225,000
------------
8,865,000
------------
ECUADOR -- 4.54%
531 Republic of Ecuador, IE Bond, 6.75%, 12/21/04*................................ 312,515
11,000 Republic of Ecuador, Par Bond, 3.00%, 2/28/25*................................ 3,657,500
10,461 Republic of Ecuador, PDI Bond, 6.8125%, 2/28/15*,(X).......................... 3,347,601
------------
7,317,616
------------
MEXICO -- 5.46%
14,500 United Mexican States, Par Bond, Series A, 6.25%, 12/31/19 (including
14,500,000 rights).......................................................... 8,799,688
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 3
<PAGE> 7
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
August 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS (CONCLUDED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PANAMA -- 2.47%
$ 5,000 Republic of Panama, FRN, 7.25%, 5/10/02*...................................... $ 3,975,000
------------
POLAND -- 10.06%
26,500 Republic of Poland, PDI Bonds, 3.25%, 10/27/14*............................... 16,214,687
------------
VENEZUELA -- 2.97%
9,500 Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20 (including 47,500
warrants)(C)................................................................ 4,797,500
------------
TOTAL SOVEREIGN BONDS (cost $107,673,786)..................................... 99,856,543
------------
LOAN PARTICIPATIONS -- 13.98%
------------------------------------------------------------------------------------------------------------
20,000 Kingdom of Morocco, Tranche B, 6.6875%, 1/1/04*
(Morgan Guaranty Trust Company of New York)(T).............................. 14,025,000
11,000 Kingdom of Morocco, Tranche B, 6.6875%, 1/1/04*
(Morgan Stanley Emerging Markets Inc.)(T)................................... 7,713,750
2,500 Russia, Bank for Foreign Economic Affairs, Vnesheconombank, Floating rate(a),
(b) (J.P. Morgan and Chase Manhattan Bank, N.A.)(T)......................... 787,500
------------
TOTAL LOAN PARTICIPATIONS (cost $28,273,305).................................. 22,526,250
------------
</TABLE>
<TABLE>
<CAPTION>
WARRANTS(A) -- .17%
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
4,000 Warrants Berry Plastics (Exercise price of $18.797 per share expiring on 4/15/04. Each
warrant exercisable for 1.13237 shares of common stock)..................... 50,000
6,000 Warrants United International Holdings (Exercise price of $15 per share expiring on
11/15/99. Each warrant exercisable for one share of common stock)........... 222,000
------------
TOTAL WARRANTS (cost $152,964)................................................ 272,000
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 4
<PAGE> 8
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (concluded)
August 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) REPURCHASE AGREEMENTS -- 4.36% (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2,968 J.P. Morgan, 5.75%, cost $2,968,000, dated 8/31/95, $2,968,474 due 9/1/95,
(collateralized by $3,388,000, Zero Coupon U.S. Treasury Strip due 8/15/97,
valued at $3,028,025)....................................................... 2,968,000
4,062 State Street Bank and Trust Company, 5.55%, cost $4,062,000, dated 8/31/95,
$4,062,626 due 9/1/95, (collateralized by $3,895,000, 7.125% U.S. Treasury
Note due 9/30/99, valued at $4,148,175)..................................... 4,062,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $7,030,000)................................. 7,030,000
------------
TOTAL INVESTMENTS -- 145.02% (cost $251,208,616).............................. 233,742,243
------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (45.02%)............................. (72,564,045)
------------
NET ASSETS -- 100.0% (equivalent to $11.11 per share on 14,507,134 common
shares outstanding)......................................................... $161,178,198
------------
</TABLE>
- --------------------------------------------------------------------------------
* Rate shown reflects current rate on instrument with variable rate or step
coupon rates.
C All or a portion of the security is segregated as collateral pursuant to
a loan agreement.
W Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.
X Payment-in-kind security for which part of the interest earned is
capitalized as additional principal.
Y Each unit is comprised of a $1,000 par Senior Discount Note due 5/15/02
and a warrant to purchase one share of common stock.
Z Each unit is comprised of a $1,000 par Senior Discount Note due 6/01/04
and a warrant to purchase 1.427 shares of common stock.
P Payment-in-kind. Interest is paid by the issuance of additional bonds
until May 1, 1997. Thereafter, interest will be paid in cash.
T Participation interests were acquired through the financial institutions
indicated parenthetically.
(a) Non-income producing security.
(b) Security is currently in default.
FLIRB -- Front-Loaded Interest Reduction Bonds.
FRB -- Floating Rate Bonds.
FRN -- Floating Rate Notes.
IDU -- Interest Due and Unpaid.
IE -- Interest Equalization.
PDI -- Past Due Interest.
See accompanying notes to financial statements.
PAGE 5
<PAGE> 9
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $251,208,616)................................................. $233,742,243
Cash......................................................................................... 113,469
Interest receivable.......................................................................... 5,725,232
Unamortized organization expenses (Note 2)................................................... 70,356
Prepaid expenses............................................................................. 11,072
------------
Total assets......................................................................... 239,662,372
------------
LIABILITIES
Loans payable (Note 5)....................................................................... 75,000,000
Accrued interest expense on loan (Note 5).................................................... 2,458,854
Payable for investments purchased............................................................ 742,188
Accrued management fee (Note 3).............................................................. 150,526
Accrued audit and tax return preparation fees................................................ 57,500
Accrued legal fee............................................................................ 30,241
Other accrued expenses....................................................................... 44,865
------------
Total liabilities.................................................................... 78,484,174
------------
NET ASSETS
Common Stock ($.001 par value, authorized 100,000,000; 14,507,134 shares outstanding)........ 14,507
Additional paid-in capital................................................................... 202,591,603
Undistributed net investment income.......................................................... 1,463,355
Accumulated realized loss on investments..................................................... (25,424,894)
Net unrealized depreciation on investments................................................... (17,466,373)
------------
Net assets........................................................................... $161,178,198
------------
Net Asset Value Per Share ($161,178,198 / 14,507,134 shares)................................. $ 11.11
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 6
<PAGE> 10
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
INCOME
Interest (includes discount accretion of $5,727,341)..................... $ 30,110,391
EXPENSES
Interest expense (Note 5)................................................ $5,501,758
Management fee (Note 3).................................................. 1,732,025
Legal.................................................................... 69,542
Printing................................................................. 65,073
Custodian................................................................ 63,379
Audit and tax services................................................... 61,000
Transfer agent........................................................... 48,591
Shareholder annual meeting............................................... 32,896
Directors' fees and expenses............................................. 24,484
Listing fee.............................................................. 24,330
Amortization of deferred organization expenses (Note 2).................. 22,272
Other.................................................................... 59,290 7,704,640
---------- ------------
Net investment income........................................................ 22,405,751
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net Realized Loss on Investments............................................. (25,424,894)
Change in Net Unrealized Depreciation on Investments......................... 10,617,570
------------
Net realized loss and change in net unrealized depreciation on investments... (14,807,324)
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS................................... $ 7,598,427
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 7
<PAGE> 11
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
AUGUST 31, AUGUST 31,
1995 1994(a)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income..................................................... $ 22,405,751 $14,169,263
Net realized gain (loss) on investments................................... (25,424,894) 1,065,549
Change in net unrealized appreciation (depreciation) on investments....... 10,617,570 (28,083,943)
------------ ------------
Net increase (decrease) in net assets from operations..................... 7,598,427 (12,849,131)
DIVIDENDS AND DISTRIBUTIONS
From net investment income................................................ (20,672,691) (14,169,263)
From net realized short-term gains........................................ -- (1,065,549)
In excess of net investment income (Note 2)............................... -- (269,705)
------------ ------------
Total dividends and distributions......................................... (20,672,691) (15,504,517)
CAPITAL SHARE TRANSACTIONS
Net proceeds from issuance of 14,500,000 shares........................... -- 202,506,091
------------ ------------
Total increase (decrease) in net assets................................... (13,074,264) 174,152,443
NET ASSETS
Beginning of period....................................................... 174,252,462 100,019
------------ ------------
End of period (includes undistributed net investment income of $1,463,355
for 1995)............................................................... $161,178,198 $174,252,462
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
(a) For the period from commencement of investment operations on October 29,
1993 through August 31, 1994.
See accompanying notes to financial statements.
PAGE 8
<PAGE> 12
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Year Ended August 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Purchases of portfolio securities....................................................... $(195,382,343)
Proceeds from sales of portfolio investments and principal paydowns..................... 204,585,400
Net purchases of short-term investments................................................. (7,030,000)
-------------
2,173,057
Net investment income................................................................... 22,405,751
Accretion of discount on investments.................................................... (5,727,341)
Amortization of organization expenses................................................... 22,272
Net change in receivables/payables related to operations................................ 1,861,977
-------------
Net cash provided by operating activities........................................... 20,735,716
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Common Stock dividends paid............................................................. (22,395,415)
-------------
Net cash used by financing activities............................................... (22,395,415)
-------------
Net decrease in cash........................................................................ (1,659,699)
Cash at beginning of year................................................................... 1,773,168
-------------
CASH AT END OF YEAR......................................................................... $ 113,469
-------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 9
<PAGE> 13
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
Global Partners Income Fund Inc. (the "Fund") was incorporated in Maryland on
September 3, 1993 and is registered as a non-diversified, closed-end, management
investment company under the Investment Company Act of 1940, as amended. The
Fund commenced operations on October 29, 1993.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
SECURITIES VALUATION. In valuing the Fund's assets, all securities for which
market quotations are readily available are valued (i) at the last sale price
prior to the time of determination if there were a sale on the date of
determination, (ii) at the mean between the last current bid and asked prices if
there were no sales on such date and bid and asked quotations are available, and
(iii) at the bid price if there were no sales price on such date and only bid
quotations are available. Publicly traded foreign government debt securities are
typically traded internationally in the over-the-counter market, and are valued
at the mean between the last current bid and asked price as of the close of
business of that market. However, when the spread between bid and asked price
exceeds five percent of the par value of the security, the security is valued at
the bid price. Securities may also be 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. Investment transactions are
recorded on the trade date. Interest income is recorded on the accrual basis.
Market discount on securities purchased is accreted on an effective yield basis
over the life of the security. The Fund uses the specific identification method
for determining realized gain or loss on investments sold.
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 to
shareholders monthly from net investment income. Net realized gains, if any, in
excess of loss carryovers are expected to be distributed annually. Dividends and
distributions to shareholders are recorded
PAGE 10
<PAGE> 14
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
on the ex-dividend date. 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 generally accepted
accounting principles. These differences are due primarily to deferral of wash
sale and post-October losses. Dividends which exceed net investment income for
financial reporting purposes but not for tax purposes are reported as dividends
in excess of net investment income.
UNAMORTIZED ORGANIZATION EXPENSES. Organization expenses amounting to $113,655
were incurred in connection with the organization of the Fund. These costs have
been deferred and are being amortized ratably over a five-year period from
commencement of operations.
REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is the
Fund's policy to take possession, through its custodian, of the underlying
collateral and to monitor its value at the time the arrangement is entered into
and at all times during the term of the repurchase agreement to ensure that it
always equals or exceeds the repurchase price. In the event of default of the
obligation to repurchase, the Fund has the right to liquidate the collateral and
apply the proceeds in satisfaction of the obligation. Under certain
circumstances, in the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral may be subject to
legal proceedings.
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. For the year ended
August 31, 1995, the Fund paid interest expense of $4,277,735.
NOTE 3. MANAGEMENT AND ADVISORY FEES AND OTHER TRANSACTIONS
The Fund entered into a management agreement with Advantage Advisers, Inc. (the
"Investment Manager"), a subsidiary of Oppenheimer, 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 Investment Manager and the Fund entered into an investment advisory and
administration agreement with Salomon Brothers Asset Management Inc (the
"Investment Adviser"), an affiliate of Salomon Brothers Inc ("SBI"), pursuant to
which the Investment Adviser provides investment advisory and administrative
services to the Fund. The Investment Adviser is responsible for the management
of the Fund's portfolio in accordance with the Fund's
PAGE 11
<PAGE> 15
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 Fund pays the Investment Manager a monthly fee at an annual rate of 1.10% of
the Fund's average weekly net assets for its services, out of which the
Investment Manager pays the Investment Adviser a monthly fee at an annual rate
of .65% of the Fund's average weekly net assets for its services.
At August 31, 1995, Oppenheimer and the Investment Adviser each owned 3,567
shares of the Fund.
Certain officers and/or directors of the Fund are also officers and/or directors
of the Investment Manager or the Investment Adviser.
The Fund pays each Director not affiliated with the Investment Manager or the
Investment Adviser a fee of $5,000 per year, a fee of $700 for attendance at
each in-person meeting, a fee of $100 for participation in each telephonic
meeting and reimbursement for travel and out-of-pocket expenses for each board
and committee meeting attended.
NOTE 4. PORTFOLIO ACTIVITY
Purchases and sales of investment securities, other than short-term investments,
for the year ended August 31, 1995, aggregated $196,124,531 and $204,585,400,
respectively. The federal income tax cost basis of the Fund's investments at
August 31, 1995 was substantially the same as the cost basis for financial
reporting. Gross unrealized appreciation and depreciation amounted to $8,027,222
and $25,493,595, respectively, resulting in net unrealized depreciation for
federal income tax purposes of $17,466,373.
Pursuant to federal income tax regulations, the Fund elected to treat capital
losses of $20,857,951, incurred in the period November 1, 1994 through August
31, 1995, as having occurred on September 1, 1995. In addition, the Fund has a
capital loss carryforward as of August 31, 1995 of $4,566,945 which expires in
2003. To the extent future capital gains are offset by such capital losses, the
Fund does not anticipate distributing such gains to shareholders.
In connection with Statement of Position 93-2, "Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies", distributions to shareholders have been
restated to reflect the tax characterization of such amounts. As of September 1,
1994, the Fund reclassified $1,065,549 from Accumulated Realized Loss on
Investments to Undistributed Net Investment Income. This reclassification did
not affect net investment income, net realized loss or net assets for the year
ended August 31, 1995.
PAGE 12
<PAGE> 16
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5. BANK LOANS
The Fund borrowed $37,500,000 pursuant to a secured loan agreement with
Internationale Nederlanden Ireland Capital Limited. The interest rate on the
loan is equal to six-month LIBOR plus 1.125% and the maturity date is November
6, 1995. The collateral for the loan was valued at $56,405,638 on August 31,
1995 and is being held in a segregated account by the Fund's custodian. In
accordance with the terms of the loan agreement, the Fund must maintain a level
of collateral to debt of at least 133%.
The Fund borrowed an additional $37,500,000 pursuant to a secured loan agreement
with Internationale Nederlanden (U.S.) Capital Corporation. The interest rate on
the loan is equal to six-month LIBOR plus 1.50% and the maturity date is
September 1, 1995. The collateral for the loan was valued at $61,734,020 on
August 31, 1995 and is being held in a segregated account by the Fund's
custodian. In accordance with the terms of the loan agreement, the Fund must
maintain a level of collateral to debt of at least 115%. The loan was renewed on
September 1, 1995 with an interest rate equal to LIBOR plus 1.50% and a maturity
date of March 1, 1996.
NOTE 6. LOAN PARTICIPATIONS
The Fund invests in fixed and floating rate loans arranged through private
negotiations between a foreign sovereign entity and one or more financial
institutions. The Fund's investment in any such loan may be in the form of a
participation in or an assignment of the loan. The market value of the Fund's
loan participations at August 31, 1995 was $22,526,250.
In connection with purchasing loan participations, the Fund generally will have
no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any rights of set-off against the borrower,
and the Fund may not benefit directly from any collateral supporting the loan in
which it has purchased the participation. As a result, the Fund will assume the
credit risk of both the borrower and the lender that is selling the
participation. In the event of the insolvency of the lender selling the
participation, the Fund may be treated as a general creditor of the lender and
may not benefit from any set-off between the lender and the borrower.
NOTE 7. CREDIT RISK
The yields of emerging market debt obligations and high yield corporate debt
obligations reflect, among other things, perceived credit risk. The Fund's
investment in securities rated below investment grade typically involve risks
not associated with higher rated securities including, among others, overall
greater risk of timely and ultimate payment of interest and principal, greater
market price volatility and less liquid secondary market trading. The
PAGE 13
<PAGE> 17
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
consequences of political, social, economic or diplomatic changes may have
disruptive effects on the market prices of sovereign bonds and loan
participations held by the Fund.
NOTE 8. EVENTS SUBSEQUENT TO AUGUST 31, 1995
On September 1 and October 2, 1995, the Board of Directors of the Fund declared
a dividend from net investment income, each in the amount of $.11875 per share,
payable on September 29 and October 31, 1995, to shareholders of record on
September 11 and October 12, 1995, respectively.
PAGE 14
<PAGE> 18
GLOBAL PARTNERS INCOME FUND INC.
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
FOR THE
FOR THE PERIOD ENDED
YEAR ENDED AUGUST 31,
AUGUST 31, 1995 1994(a)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income...................................................... $ 1.54 $ 0.97
Net realized gain (loss) and change in net unrealized appreciation
(depreciation) on investments............................................ (1.02) (1.86)
--------------- ------------------
Total from investment operations....................................... 0.52 (0.89)
--------------- ------------------
Dividends from net investment income....................................... (1.42) (0.98)
Dividends from short-term gains............................................ -- (0.07)
Dividends in excess of net investment income............................... -- (0.02)
Offering costs on issuance of common stock................................. -- (0.05)
--------------- ------------------
Net decrease in net asset value........................................ (0.90) (2.01)
Net asset value, beginning of period....................................... 12.01 14.02
--------------- ------------------
Net asset value, end of period............................................. $ 11.11 $12.01
--------------- ------------------
Per share market value, end of period...................................... $11.125 $11.75
Total investment return based on market price per share(c)................. 8.01% (9.02%)(b)
Ratios to average net assets:
Operating expenses..................................................... 1.39% 1.38%(d)
Interest expense....................................................... 3.46% 1.39%(d)
Total expenses......................................................... 4.85% 2.77%(d)
Net investment income.................................................. 14.10% 9.05%(d)
Portfolio turnover rate................................................ 85.15% 11.71%
Net assets, end of period.............................................. $ 161,178,198 $174,252,462
Bank loans outstanding, end of period.................................. $ 75,000,000 $ 75,000,000
Weighted average bank loans............................................ $ 75,000,000 $ 47,271,987
Weighted average interest rate on bank loans........................... 7.34% 5.44%(d)
</TABLE>
- --------------------------------------------------------------------------------
(a) For the period October 29, 1993 (commencement of investment operations)
through August 31, 1994.
(b) Return calculated based on beginning of period price of $14.02 (initial
offering price of $15.00 less sales load of $0.98) and end of period
market value of $11.75 per share. This calculation is not annualized.
(c) Dividends are assumed, for purposes of this calculation, to be
reinvested at prices obtained under the Fund's dividend reinvestment plan.
This calculation is not annualized.
(d) Annualized.
PAGE 15
<PAGE> 19
- --------------------------------------------------------------------------------
GLOBAL PARTNERS INCOME FUND INC.
To the Board of Directors and Shareholders of
Global Partners Income Fund Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement 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 Global Partners
Income Fund Inc. (the "Fund") at August 31, 1995, the results of its operations
and cash flows for the year then ended, and the changes in its net assets and
the financial highlights for the year then ended and for the period October 29,
1993 (commencement of investment operations) through August 31, 1994, in
conformity with generally accepted accounting principles. 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 generally
accepted auditing standards 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 our audits,
which included confirmation of securities at August 31, 1995 by correspondence
with the custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, N.Y.
October 17, 1995
PAGE 16
<PAGE> 20
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited)
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS:
<TABLE>
<CAPTION>
NET REALIZED GAIN
(LOSS) & CHANGE IN
NET UNREALIZED
NET INVESTMENT APPRECIATION
INCOME (DEPRECIATION)
---------------- --------------------
PER PER
QUARTERS ENDED* TOTAL SHARE TOTAL SHARE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
November 30, 1993**........................................ $ 638 $.04 $ 1,069 $ .07
February 28, 1994.......................................... 4,028 .28 (3,184) (.21)
May 31, 1994............................................... 4,433 .31 (18,748) (1.30)
August 31, 1994............................................ 5,070 .34 (6,155) (.42)
November 30, 1994.......................................... 5,162 .36 (9,558) (.66)
February 28, 1995.......................................... 5,685 .39 (19,835) (1.37)
May 31, 1995............................................... 5,922 .41 13,324 .92
August 31, 1995............................................ 5,637 .38 1,262 .09
</TABLE>
- --------------------------------------------------------------------------------
* Totals expressed in thousands of dollars except per share amounts.
** For the period October 29, 1993 (commencement of investment operations)
through November 30, 1993.
See accompanying notes to financial statements.
PAGE 17
<PAGE> 21
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------------------------
OTHER INFORMATION
Pursuant to certain rules of the Securities and Exchange Commission the
following additional disclosure is provided.
Pursuant to the Fund's Dividend Reinvestment Plan (the "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
American Stock Transfer & Trust Company (the "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 paid by check in dollars mailed directly to the holder
by American Stock Transfer & Trust Company 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 that 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 does not intend to 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 18
<PAGE> 22
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------------------------
OTHER INFORMATION (continued)
In the case of holders of Common Stock, such as banks, broker-dealers or other
nominees, that 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.
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 the Plan Agent at 40 Wall Street, 46th floor, New
York, New York 10005.
PAGE 19
<PAGE> 23
GLOBAL PARTNERS INCOME FUND INC.
- -----------
DIRECTORS
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
LESLIE H. GELB
President, The Council on Foreign Relations
MICHAEL S. HYLAND
Chairman of the Board;
President, Salomon Brothers
Asset Management Inc
ALAN H. RAPPAPORT
President;
Executive Vice President,
Oppenheimer & Co., Inc.
RIORDEN ROETT
Professor and Director, Latin American
Studies Program, Paul H. Nitze
School of Advanced International Studies,
Johns Hopkins University
JESWALD W. SALACUSE
Henry J. Braker Professor of Commercial Law, and formerly Dean, The
Fletcher School of Law & Diplomacy Tufts University
- ---------
OFFICERS
MICHAEL S. HYLAND
Chairman of the Board
ALAN H. RAPPAPORT
President
PETER J. WILBY
Executive Vice President
LAWRENCE H. KAPLAN
Executive Vice President
ALAN M. MANDEL
Treasurer
LAURIE A. PITTI
Assistant Treasurer
TANA E. TSELEPIS
Secretary
- --------------------
GLOBAL PARTNERS
INCOME FUND INC.
Seven World Trade Center
New York, New York 10048
For information call (toll free)
1-800-SALOMON
INVESTMENT MANAGER
Advantage Advisers, Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281
INVESTMENT ADVISER
Salomon Brothers Asset Management Inc
Seven World Trade Center
New York, New York 10048
CUSTODIAN
The Chase Manhattan Bank, N.A.
Four Metrotech Center
Brooklyn, New York 11245
DIVIDEND DISBURSING AND TRANSFER AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
GDF
- --------------------------------------------------------------------------------
<PAGE> 24
---------------------
BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
---------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005
