<PAGE> 1
--------------------------------------------------------
GLOBAL PARTNERS
INCOME FUND INC.
INTERIM REPORT
--------------------------------------
NOVEMBER 30, 1995
<PAGE> 2
GLOBAL PARTNERS INCOME FUND INC.
January 29, 1996
Dear Shareholders:
During the quarter ended November 30, 1995, the net asset value for the Global
Partners Income Fund Inc. (the "Fund") increased from $11.11 per share at August
31, 1995 to $11.65 per share at November 30, 1995. Dividends of $0.35625 per
share were paid during the quarter. Assuming that these dividends were
reinvested in additional shares of the Fund, the total investment return, based
on net asset value per share, for the quarter ended November 30, 1995 was 8.19%,
compared to a 6.19% return for the Salomon Brothers Brady Bond Index and a 2.94%
return for the Salomon Brothers High-Yield Index. At November 30, 1995, the
Fund's stock traded at $11.625 per share, up $0.50 per share from August 31,
1995. This represented an approximate 0.2% discount to the underlying net asset
value per share of $11.65. 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 markets sovereign debt and U.S. high-yield corporate debt.
Investments in securities of emerging markets issues, including both obligations
of sovereign governments and companies, totaled 55% of total investments at the
end of the quarter, up from 53% at the beginning of the quarter. The remainder
of the Fund's portfolio assets was invested in U.S. high-yield corporate bonds.
As the market for emerging markets debt securities stabilized from the trough in
the market in early 1995, we decreased our allocation to U.S.-based corporate
issues and took advantage of the higher relative yields in emerging markets debt
securities. U.S. high-yield securities represented as much as 49% of the Fund's
total investments earlier in the year, which helped preserve net asset value for
the Fund during the emerging markets debt sell-off.
The U.S. high-yield market returned 17.83% in the first eleven months of 1995
(as measured by the Salomon Brothers High-Yield Index), slightly behind the
17.95% returned by the Salomon Brothers Brady Bond Index. More important to the
Fund, the U.S. high-yield market had a positive return in every month of 1995,
compared to the emerging debt markets' negative returns for three straight
months in the first quarter of 1995. Diversification by the Fund into the U.S.
high-yield market in 1995 had a stabilizing effect on the Fund's net asset value
and contributed to the Fund's 21.48% net asset value return for the first eleven
months of 1995.
MARKET OVERVIEW
The fiscal quarter ended November 30, 1995 saw continued recovery in emerging
markets debt after the dismal first calendar quarter of 1995. The important
developments for the market during the Fund's most recent quarter included:
declining U.S. interest rates, successful financings by Argentina and Mexico,
continued Mexican peso volatility and continued economic and structural reform
progress in Brazil. The market, after its 6.19% return in the quarter ended
November 30, 1995, returned 7.40% in December, as measured by the Salomon
Brothers Brady Bond Index.
<PAGE> 3
GLOBAL PARTNERS INCOME FUND INC.
Spreads above U.S. Treasuries for the Salomon Brothers Brady Bond Index narrowed
modestly from 1,076 basis points at the beginning of the quarter to 1,065 basis
points at November 30, 1995.
The U.S. high-yield market returned 2.94% in the quarter ended November 30,
1995. The U.S. high-yield bond market continued to be propelled by declining
U.S. interest rates and a relatively strong U.S. economy. Spreads over
Treasuries for the Salomon Brothers High-Yield Bond Index widened by 33 basis
points from 403 basis points to 436 basis points, reflecting concerns that the
U.S. economy would slow significantly in 1996.
PORTFOLIO REVIEW
U.S. dollar-denominated bonds of the Republic of Brazil remain the largest
holding of the portfolio, totaling 11.6% of total investments. During the
quarter, we increased the Fund's allocation to Brazil from 11.4% to capture any
expected spread tightening. Brazilian Brady Bonds were one of the top performing
components of the Salomon Brothers Brady Bond Index during the quarter, posting
a return of 7.9%.
The key to Brazil's economic and credit quality improvement in 1995 has been the
credibility of its new currency, the Real, and the ability of Brazil's monetary
policy to drastically reduce inflation. Inflation is expected to total about 15%
in 1995, down from 1,094% in 1994. After initiating a strong burst of
consumption upon the introduction of the new currency in July 1994, the central
bank has used high interest rates to bring economic growth rates down in the
later part of 1995, reducing inflationary pressures.
Going forward, Brazil's future performance is largely dependent upon fiscal
policy. Successful fiscal policy will include substantial reductions in
government expenditures and privatization to pay down government debt. With high
real interest rates, domestic debt levels are increasing substantially, although
external debt remains at reasonable levels. The risk in Brazil is that the
political will to downsize the government and sell off state owned companies
will diminish. We view the momentum of developments in Brazil as positive and
sustainable, and feel that Brazilian external debt represents an acceptable
level of risk.
Moroccan government loans continue to be a core holding in the portfolio,
accounting for 10.1% of total investments. Moroccan debt has lagged the market
for much of the year but rebounded 6.9% during the quarter. Morocco's economic
output and governmental finances were hurt by a drought in 1995, which caused a
sharp rise in imports as well as a decline in agricultural exports. We view this
as a short-term concern and expect Morocco to remain a core holding in the
portfolio.
Obligations of the Republic of Argentina constitute 9.0% of total investments,
up from 8.5% at the beginning of the quarter. During the quarter, Argentine
Brady Bonds were the top performing component of the Salomon Brothers Brady Bond
Index, registering a gain of 11.1%. Argentina's outperformance is primarily due
to the success of the government's tax moratorium through which $3.5 billion in
receipts has been pledged as of quarter end. This increase in revenues has aided
both President Menem and Finance Minister Cavallo and has
<PAGE> 4
GLOBAL PARTNERS INCOME FUND INC.
helped solidify the economic reforms the country has undertaken under their
leadership. We expect to continue to maintain a large exposure to Argentina.
The Fund's fourth largest holding is in bonds of the Republic of Poland, which
represent 7.1% of total investments. During the quarter, Polish Brady Bonds were
up 4.8%. On November 19, 1995, Aleksander Kwasniewski was elected President of
the Republic in the second round of voting. The election of the former communist
was largely anticipated by the market, but caused some market nervousness and
contributed to Poland's underperformance versus the overall market during the
quarter.
Poland has shown remarkable economic advancements during 1995 and we expect
Poland to develop into a major European economic force. Poland was the first
Brady Bond issuing country to receive an investment grade rating, Baa3 by
Moody's Investors Service, Inc. We expect that large investment grade bond
buyers will focus increasingly on Poland which should cause spreads to tighten.
The Fund's allocation to debt from Russia was eliminated during the quarter. We
believe at some point Russian debt will be a meaningful component of the Fund,
as Russia should have an impressive fiscal profile after their Brady
restructuring. At this point, however, we believe the debt has some downside
risk heading into an election year.
Within the U.S. high-yield bond section of the portfolio, we continued the
rebalancing of the portfolio away from cyclical companies to non-cyclical
companies. Non-cyclical, defensive companies grew to almost 60% of the
high-yield bond portfolio from roughly 50% at quarter end August 31, 1995.
Within the non-cyclical allocation, we have focused on companies with stable
cash flows in diverse economic environments, such as consumer product companies,
and companies experiencing fairly strong revenue growth, as we have seen in the
media and gaming industries. In the cyclical sectors, we have concentrated on
manufacturing companies where we feel the business prospects of the individual
companies are positive. We are currently staying away from commodity oriented
companies where we see declining pricing power as the world economy slows.
ANNUAL SHAREHOLDERS MEETING
The Fund held its annual shareholders meeting on December 13, 1995. 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
<PAGE> 5
GLOBAL PARTNERS INCOME FUND INC.
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 12,696,820 240,522
Riordan Roett 12,693,137 244,205
</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>
- ------------------------------------------------------------
12,705,198 95,148 136,992 4
</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. This number also includes specific information about the Fund, its
portfolio and its recent performance.
<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> 6
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
November 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS -- 65.87% (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES -- 9.14%
$ 1,500 Asia Pulp & Paper International Finance, 11.75%, 10/1/05...................... $ 1,455,000
4,000 Berry Plastics, 12.25%, 4/15/04(C)............................................ 4,250,000
2,000 Crown Paper Co., 11.00%, 9/1/05............................................... 1,870,000
2,000 Harris Chemical, Zero Coupon until 1/15/96 (10.25% thereafter), 7/15/01(C).... 1,860,000
2,000 Indah Kiat International, 12.50%, 6/15/06..................................... 2,020,000
2,000 Renco Metals Inc., 12.00%, 7/15/00............................................ 2,155,000
2,000 Valcor, 9.625%, 11/01/03(C)................................................... 1,850,000
------------
15,460,000
------------
CONSUMER CYCLICALS -- 5.20%
2,000 Cole National Group Inc., 11.25%, 10/1/01(C).................................. 1,990,000
2,000 Family Restaurants, 9.75%, 2/1/02(C).......................................... 1,080,000
3,000 Finlay Fine Jewelry, 10.625%, 5/1/03(C)....................................... 2,962,500
3,000 Flagstar, 10.75%, 9/15/01(C).................................................. 2,767,500
------------
8,800,000
------------
CONSUMER NON-CYCLICALS -- 25.58%
2,000 American Safety Razor Co., Series B, 9.875%, 8/1/05........................... 2,005,000
2,000 Bally Park Place Funding, Inc., 9.25%, 3/15/04(C)............................. 1,995,000
2,000 Borg-Warner Security Corp., 9.125%, 5/1/03.................................... 1,750,000
2,000 Carr-Gottstein Foods Co., 12.00%, 11/15/05(W)................................. 2,000,000
2,000 Dade International Inc., 13.00%, 2/1/05(C).................................... 2,210,000
2,000 Empress River Casino Finance, 10.75%, 4/1/02.................................. 2,055,000
1,000 Grand Casinos Inc., 10.125%, 12/1/03.......................................... 1,021,250
2,250 Hines Horticulture, 11.75%, 10/15/05(W)....................................... 2,300,625
2,000 Hollywood Casino Corp., 12.75%, 11/1/03....................................... 1,830,000
1,000 Norcal Waste Systems, 12.50%, 11/15/05(*,W)................................... 987,500
3,000 Pathmark, 9.625%, 5/1/03(C)................................................... 2,797,500
3,000 Penn Traffic Co., 9.625%, 4/15/05(C).......................................... 2,242,500
3,000 Plastic Specialty, 11.25%, 12/1/03............................................ 2,715,000
1,750 Remington Arms, 10.00%, 12/1/03(*,C,W)........................................ 1,540,000
2,250 Revlon Worldwide, Series B, Zero Coupon, 3/15/98.............................. 1,665,000
1,000 Samsonite Corp., 11.125%, 7/15/05............................................. 940,000
1,000 SC International Services, 13.00%, 10/1/05.................................... 1,030,000
2,000 Selmer Co. Inc., 11.00%, 5/15/05.............................................. 1,970,000
1,000 Showboat Inc., 9.25%, 5/1/08(C)............................................... 995,000
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 1
<PAGE> 7
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
November 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS (CONTINUED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-CYCLICALS -- 25.58% (CONTINUED)
$ 1,350 Telex Communications, Inc., 12.00%, 7/15/04(C)................................ $ 1,380,375
2,789 Trump Taj Mahal, 11.35%, 11/15/99(C,X)........................................ 2,412,253
4,000 William House Regency, 11.50%, 6/15/05(C)..................................... 4,360,000
1,000 William House Regency, 13.00%, 11/15/05(W).................................... 1,027,500
------------
43,229,503
------------
ENERGY -- 1.94%
5,000 Clark R & M Holdings, Zero Coupon, 2/15/00(C)................................. 3,275,000
------------
INDUSTRIAL/MANUFACTURING -- 10.47%
2,000 Foamex Capital L.P., 11.25%, 10/1/02(C)....................................... 2,000,000
5,000 Jordan Industries, 10.375%, 8/1/03(C)......................................... 4,250,000
2,000 Motor Wheel, 11.50%, 3/01/00(C)............................................... 1,740,000
2,000 RBX Corp., 11.25%, 10/15/05(W)................................................ 1,980,000
3,000 Specialty Equipment, 11.375%, 12/1/03(C)...................................... 3,037,500
2,000 Units Terex Corp., 13.75%, 5/15/02 (including 8,000 rights)(W,Y).................... 1,710,000
3,500 Venture Holdings Trust, 9.75%, 4/1/04(C)...................................... 2,975,000
------------
17,692,500
------------
MEDIA/TELECOMMUNICATIONS -- 12.36%
3,000 Adelphia Communications, 12.50%, 5/15/02(C)................................... 2,970,000
2,500 Comcast UK Cable, Zero Coupon until 11/15/00 (11.20% thereafter), 11/15/07.... 1,425,000
2,000 Granite Broadcasting, 10.375%, 5/15/05........................................ 2,050,000
5,000 In Flight Phone, Zero Coupon until 5/15/98 (14.00% thereafter), 5/15/02(W).... 1,750,000
3,500 Marcus Cable Co., Zero Coupon until 6/15/00 (14.25% thereafter), 12/15/05..... 2,205,000
1,500 Outdoor Systems, 10.75%, 8/15/03.............................................. 1,440,000
2,000 Units People's Choice TV Corp., Zero Coupon until 6/1/00 (13.135% thereafter),
6/1/04(Z)................................................................... 1,115,000
2,000 Rogers Cable Systems, 10.00%, 12/1/07......................................... 2,085,000
3,000 United International Holdings, Zero Coupon, 11/15/99.......................... 1,860,000
2,000 USA Mobile Communications, 9.50%, 2/1/04(C)................................... 1,960,000
650 Units Winstar Communications, Zero Coupon until 10/15/00 (14.00% thereafter),
10/15/05(W,#)............................................................... 1,001,000
1,000 Units Wireless One Inc., 13.00%, 10/15/03(##)....................................... 1,032,500
------------
20,893,500
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 2
<PAGE> 8
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
November 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS (CONCLUDED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TRANSPORTATION -- 1.18%
$ 2,000 Petro PSC Properties, 12.50%, 6/1/02.......................................... $ 1,995,000
------------
TOTAL CORPORATE BONDS (cost $114,564,970)..................................... 111,345,503
------------
SOVEREIGN BONDS -- 61.85%
------------------------------------------------------------------------------------------------------------
ARGENTINA -- 12.79%
12,285 Republic of Argentina, BOCON Pre II, 5.625%, 4/1/01(*,C,P).................... 8,883,755
19,500 Republic of Argentina, FRB, 6.8125%, 3/31/05(*,C)............................. 12,735,937
------------
21,619,692
------------
BRAZIL -- 16.50%
25,333 Federal Republic of Brazil, C Bond, 8.00%, 4/15/14(C,X)....................... 13,489,712
7,250 Federal Republic of Brazil, EIB, 6.8125%, 4/15/06(*).......................... 4,798,594
6,650 Federal Republic of Brazil, IDU, 6.6875%, 1/1/01(*,C)......................... 5,669,125
3,000 Federal Republic of Brazil, "New" New Money Bonds, 6.875%, 4/15/09(*,C)....... 1,762,500
4,350 Federal Republic of Brazil, Par Z-L, 4.25%, 4/15/24(*,C)...................... 2,177,719
------------
27,897,650
------------
BULGARIA -- 2.17%
1,750 Republic of Bulgaria, Discount Bond, Tranche A, 6.75%, 7/28/24(*)............. 891,405
10,000 Republic of Bulgaria, FLIRB, Series A, 2.00%, 7/28/12(*)...................... 2,775,000
------------
3,666,405
------------
COSTA RICA -- 5.57%
7,000 Costa Rica Series A, Principal Bond, 6.25%, 5/21/10(C)........................ 3,920,000
11,000 Costa Rica Series B, Principal Bond, 6.25%, 5/21/15(C)........................ 5,500,000
------------
9,420,000
------------
ECUADOR -- 4.46%
531 Republic of Ecuador, IE Bond, 6.75%, 12/21/04(*).............................. 308,198
21,910 Republic of Ecuador, PDI Bond, 6.8125%, 2/28/15(*,X).......................... 7,230,372
------------
7,538,570
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 3
<PAGE> 9
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
November 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS (CONCLUDED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MEXICO -- 4.92%
$13,500 United Mexican States, Par Bond, Series A, 6.25%, 12/31/19 (including
13,500,000 rights).......................................................... $ 8,319,374
------------
PANAMA -- 2.45%
5,000 Republic of Panama, FRN, 6.75%, 5/10/02(*).................................... 4,137,500
------------
POLAND -- 10.12%
26,500 Republic of Poland, PDI Bonds, 3.75%, 10/27/14(*)............................. 17,109,063
------------
VENEZUELA -- 2.87%
9,500 Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20 (including 22,500
warrants)(C)................................................................ 4,839,063
------------
TOTAL SOVEREIGN BONDS (cost $108,896,153)..................................... 104,547,317
------------
LOAN PARTICIPATIONS -- 14.43%
------------------------------------------------------------------------------------------------------------
<C> <S> <C>
20,000 Kingdom of Morocco, Tranche B, 6.75%, 1/1/04(*)
(Morgan Guaranty Trust Company of New York)(T).............................. 15,737,500
11,000 Kingdom of Morocco, Tranche B, 6.75%, 1/1/04(*)
(Morgan Stanley Emerging Markets Inc.)(T)................................... 8,655,625
------------
TOTAL LOAN PARTICIPATIONS (cost $27,685,061).................................. 24,393,125
------------
WARRANTS(a) -- .12%
------------------------------------------------------------------------------------------------------------
<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)..................... 40,000
5,000 Warrants In Flight Phone (Exercise price of $.01 per share expiring on 8/31/02. Each
warrant exercisable for one share of common stock).......................... 0
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)........... 168,000
------------
TOTAL WARRANTS (cost $152,964)................................................ 208,000
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 4
<PAGE> 10
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (concluded)
November 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) REPURCHASE AGREEMENT -- .38% (NOTE 2)
------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 630 Chase Manhattan Bank, N.A., 5.875%, cost $630,000, dated 11/30/95, $630,103
due 12/1/95, (collateralized by $460,000, 11.625% U.S. Treasury Note
due 11/15/04, valued at $644,000)........................................... $ 630,000
------------
TOTAL INVESTMENTS -- 142.65% (cost $251,929,148).............................. 241,123,945
------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (42.65%)............................. (72,094,431)
------------
NET ASSETS -- 100.0% (equivalent to $11.65 per share on 14,507,134 common
shares outstanding)......................................................... $169,029,514
------------
- ------------------------------------------------------------------------------------------------------------
(*) 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.
(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.
(#) Each unit is comprised of two $1,000 par Senior Discount Notes and one $1,000 par Convertible Senior
Subordinated Discount Note, all due 10/15/05.
(##) Each unit is comprised of a $1,000 par Senior Discount Note due 10/15/03 and three warrants to purchase
one share 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.
EIB -- Eligible Interest Bonds.
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.
</TABLE>
See accompanying notes to financial statements.
PAGE 5
<PAGE> 11
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $251,929,148)................................................. $241,123,945
Cash......................................................................................... 265,212
Interest receivable.......................................................................... 3,926,308
Receivable for investments sold.............................................................. 792,688
Unamortized organization expenses (Note 2)................................................... 64,803
Prepaid expenses............................................................................. 4,246
------------
Total assets......................................................................... 246,177,202
------------
LIABILITIES
Loans payable (Note 5)....................................................................... 75,000,000
Payable for investments purchased............................................................ 1,000,000
Accrued interest expense on loan (Note 5).................................................... 878,188
Accrued management fee (Note 3).............................................................. 148,080
Accrued legal fee............................................................................ 35,809
Accrued printing and mailing fees............................................................ 26,109
Accrued audit and tax return preparation fees................................................ 20,336
Other accrued expenses....................................................................... 39,166
------------
Total liabilities.................................................................... 77,147,688
------------
NET ASSETS
Common Stock ($.001 par value, authorized 100,000,000 shares; 14,507,134 shares
outstanding)............................................................................... 14,507
Additional paid-in capital................................................................... 202,591,603
Undistributed net investment income.......................................................... 2,116,524
Accumulated realized loss on investments..................................................... (24,887,917)
Net unrealized depreciation on investments................................................... (10,805,203)
------------
Net assets........................................................................... $169,029,514
------------
Net Asset Value Per Share ($169,029,514 / 14,507,134 shares)................................. $ 11.65
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 6
<PAGE> 12
GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------
STATEMENT OF OPERATIONS
For the Three Months Ended November 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
INCOME
Interest (includes discount accretion of $1,705,774)....................... $ 7,778,940
EXPENSES
Interest expense (Note 5).................................................. $1,393,813
Management fee (Note 3).................................................... 452,270
Legal...................................................................... 18,717
Custodian.................................................................. 15,336
Audit and tax services..................................................... 14,296
Printing................................................................... 13,018
Transfer agent............................................................. 12,081
Directors' fees and expenses (Note 3)...................................... 8,329
Shareholder annual meeting................................................. 8,179
Listing fee................................................................ 5,980
Amortization of deferred organization expenses (Note 2).................... 5,553
Other...................................................................... 10,027 1,957,599
---------- -----------
Net investment income.......................................................... 5,821,341
-----------
NET REALIZED AND UNREALIZED GAIN
Net Realized Gain on Investments............................................... 536,977
Change in Net Unrealized Depreciation on Investments........................... 6,661,170
-----------
Net realized gain and change in net unrealized depreciation on investments..... 7,198,147
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................................... $13,019,488
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 7
<PAGE> 13
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE
ENDED YEAR ENDED
NOVEMBER 30, 1995 AUGUST 31,
(UNAUDITED) 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income.................................................. $ 5,821,341 $ 22,405,751
Net realized gain (loss) on investments................................ 536,977 (25,424,894)
Change in net unrealized depreciation on investments................... 6,661,170 10,617,570
------------ ------------
Net increase in net assets from operations............................. 13,019,488 7,598,427
DIVIDENDS
From net investment income............................................. (5,168,172) (20,672,691)
------------ ------------
Total increase (decrease) in net assets................................ 7,851,316 (13,074,264)
NET ASSETS
Beginning of period.................................................... 161,178,198 174,252,462
------------ ------------
End of period (includes undistributed net investment income of
$2,116,524 and $1,463,355, respectively)............................. $ 169,029,514 $161,178,198
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 8
<PAGE> 14
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Three Months Ended November 30, 1995 (unaudited)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Purchases of portfolio securities........................................................ $(41,111,757)
Proceeds from sales of portfolio investments............................................. 35,699,100
Net sales of short-term investments...................................................... 6,400,000
------------
987,343
Net investment income.................................................................... 5,821,341
Accretion of discount on investments..................................................... (1,705,774)
Amortization of organization expenses.................................................... 5,553
Net change in receivables/payables related to operations................................. 211,452
------------
Net cash provided by operating activities............................................ 5,319,915
------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Common stock dividends paid.............................................................. (5,168,172)
------------
Net cash used by financing activities................................................ (5,168,172)
------------
Net increase in cash......................................................................... 151,743
Cash at beginning of period.................................................................. 113,469
------------
CASH AT END OF PERIOD........................................................................ $ 265,212
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 9
<PAGE> 15
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(unaudited)
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
PAGE 10
<PAGE> 16
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
expected to be distributed annually. Dividends and distributions to shareholders
are recorded 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 three
months ended November 30, 1995, the Fund paid interest expense of $2,974,479.
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, 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> 17
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 November 30, 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 board 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 three months ended November 30, 1995, aggregated $41,369,569 and
$36,491,788, respectively. The federal income tax cost basis of the Fund's
investments at November 30, 1995 was substantially the same as the cost basis
for financial reporting. Gross unrealized appreciation and depreciation amounted
to $10,011,311 and $20,816,514, respectively, resulting in net unrealized
depreciation for federal income tax purposes of $10,805,203.
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.
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 1.00% and the maturity date is April 1,
1996. The collateral for the loan was valued at $57,256,834 on November 30, 1995
and is being held in a segregated account by the
PAGE 12
<PAGE> 18
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 March
1, 1996. The collateral for the loan was valued at $58,823,255 on November 30,
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%.
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 November 30, 1995 was $24,393,125.
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
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.
PAGE 13
<PAGE> 19
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE 8. EVENTS SUBSEQUENT TO NOVEMBER 30, 1995
On December 13, 1995 and January 2, 1996, the Board of Directors of the Fund
declared a dividend from net investment income, in the amount of $.18 and
$.11875 per share, respectively, payable on December 29, 1995 and January 31,
1996, to shareholders of record on December 26, 1995 and January 12, 1996,
respectively.
PAGE 14
<PAGE> 20
GLOBAL PARTNERS INCOME FUND INC.
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE
ENDED FOR THE PERIOD ENDED
NOVEMBER 30, 1995 YEAR ENDED AUGUST 31,
(UNAUDITED) AUGUST 31, 1995 1994(a)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net investment income.................................... $ 0.40 $ 1.54 $ 0.97
Net realized gain (loss) and change in net unrealized
appreciation (depreciation) on investments............. 0.50 (1.02) (1.86)
-------- --------------- --------
Total from investment operations..................... 0.90 0.52 (0.89)
-------- --------------- --------
Dividends from net investment income..................... (.36) (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 increase (decrease) in net asset value........... 0.54 (0.90) (2.01)
Net asset value, beginning of period..................... 11.11 12.01 14.02
-------- --------------- --------
Net asset value, end of period........................... $ 11.65 $ 11.11 $12.01
-------- --------------- --------
Per share market value, end of period.................... $11.625 $11.125 $11.75
Total investment return based on market price per
share(c)............................................... 7.78% 8.01% (9.02%)(b)
Ratios to average net assets:
Operating expenses................................... 1.37%(d) 1.39% 1.38%(d)
Interest expense..................................... 3.38%(d) 3.46% 1.39%(d)
Total expenses....................................... 4.75%(d) 4.85% 2.77%(d)
Net investment income................................ 14.11%(d) 14.10% 9.05%(d)
Portfolio turnover rate.............................. 15.54% 85.15% 11.71%
Net assets, end of period (000)...................... $169,030 $ 161,178 $174,252
Bank loans outstanding, end of period (000).......... $ 75,000 $ 75,000 $ 75,000
Weighted average bank loans (000).................... $ 75,000 $ 75,000 $ 47,272
Weighted average interest rate on bank loans......... 7.45%(d) 7.34% 5.44%(d)
</TABLE>
- --------------------------------------------------------------------------------
(a) For the period October 29, 1993 (commencement of investment operations)
(t)hrough 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) (A)nnualized.
PAGE 15
<PAGE> 21
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)
------------------- ----------------------
QUARTERS ENDED(*) TOTAL PER SHARE TOTAL PER 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
November 30, 1995................................................. 5,821 .40 7,198 .50
</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 16
<PAGE> 22
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.
RIORDAN 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
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
GDF
- --------------------------------------------------------------------------------
<PAGE> 23
AMERICAN STOCK TRANSFER & TRUST COMPANY ---------------------
40 WALL STREET BULK RATE
NEW YORK, NEW YORK 10005 U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
---------------------
