<PAGE> 1
--------------------------------------------------------
GLOBAL PARTNERS
INCOME FUND INC.
SEMI-ANNUAL REPORT
----------------------------------------
FEBRUARY 29, 1996
<PAGE> 2
GLOBAL PARTNERS INCOME FUND INC.
April 19, 1996
Dear Shareholder:
During the quarter ended February 29, 1996, the net asset value of the Global
Partners Income Fund (the "Fund") increased from $11.65 per share at November
30, 1995 to $12.60 per share at February 29, 1996. Assuming that dividends of
$0.4175 per share paid during the period were reinvested in additional shares of
the Fund, the total net asset value return was 11.81% for the quarter ended
February 29, 1996. For the same period, the Salomon Brothers Brady Bond Index,
which we use as a measure of the return of the overall market for emerging
market debt, gained 9.64%, and the Salomon Brothers High-Yield Bond Index gained
3.72%. The Fund's primary objective is to achieve high current income. As a
secondary objective, the Fund seeks capital appreciation. We seek to achieve
these objectives by combining two asset classes -- emerging market sovereign
debt and U.S. high-yield corporate debt.
Investments in securities of emerging market issuers, including both obligations
of sovereign governments and companies, totaled 56.55% of total investments at
the end of the quarter. The remainder of the Fund's portfolio assets was
invested in high-yield corporate bonds. The overweighting of the portfolio in
emerging market debt is based upon our view that although both assets represent
good value in today's market, emerging market debt has more potential for
capital appreciation in the near term. However, this is a balance that is
constantly changing and managed for relative value.
MARKET OVERVIEW
The recovery in the emerging debt market continued into January 1996 driven by
the continued improvement of fundamentals in the major Latin American countries
and the effect of additional funds flowing into the market. However, by February
1996, instability in the U.S. bond market caused by investor anticipation of an
increase in interest rates by the Federal Reserve, contributed to a sell-off in
the emerging debt market, as measured by a 6.18% decline in the Salomon Brothers
Brady Bond Index for the month. Despite the global impact of fluctuations in the
U.S. fixed-income markets, we believe the fundamental outlook for the Fund's
core country holdings in the emerging debt market continues to be positive.
In the United States, technical conditions in the high-yield market continued to
be strong through the end of 1995. As economic growth slowed, non-cyclical
issues outperformed cyclical corporate debt issues significantly. Top performing
sectors in 1995 included airlines, telecommunications, gaming and media, while
retailers, restaurants, transportation and textile companies underperformed the
market average, as represented by the Salomon Brothers High-Yield Bond Index.
The high-yield market gained 0.62% in February 1996, continuing a string of 16
consecutive months of positive performance for the sector, a string which was
broken in March. While
<PAGE> 3
GLOBAL PARTNERS INCOME FUND INC.
volatility in the U.S. fixed-income markets in March caused volatility in all
bond markets, high-yield quality spreads narrowed as the pick-up in U.S.
economic activity boded well for credit quality upgrades. As a result, this
market significantly outperformed the higher credit quality U.S. fixed-income
markets.
PORTFOLIO REVIEW
For the quarter ended February 29, 1996, Argentine Brady bonds gained 8.16%. Our
position in Argentine bonds represented 5.55% of total investments as of that
date. In February, market gains followed partial congressional approval of
Argentine President Menem's "super powers" legislation which would grant the
government special powers to cut and alter taxes without prior congressional
approval. These gains were erased by the wide Brady bond market sell-off.
Current market prices for Argentine Brady bonds reflect the view that the law is
likely to be ratified in the Senate in its original format.
Brazilian Brady bonds gained 10.18% for the quarter ended February 29, 1996. By
the end of February, legislative delays and a potential congressional
investigation of an accounting scandal surrounding Brazil's seventh-largest
financial institution, Banco Nacional, overshadowed prospects for a significant
economic recovery into the second quarter and a stabilizing political situation.
We continue to view the momentum of developments in Brazil as positive and
sustainable for the foreseeable future. Brazil represented 13.76% of total
investments as of February 29, 1996.
Polish Brady bonds gained 15.85% during the quarter ended February 29, 1996,
reflecting the Moody's Investors Service upgrade of Polish Brady bonds to the
investment grade rating of Baa. Our investments in Poland represented 3.87% of
total investments at quarter-end. In February, the Cabinet of Prime Minister
Wlodzimierz Cimoszewicz was overwhelmingly approved by the government's powerful
lower chamber, the Sejm. The installation of Mr. Cimoszewicz as Prime Minister
is a very positive step for Poland as he is widely respected across the
political spectrum.
Ecuadorian Brady bonds gained 16.02% during the quarter ended February 29, 1996,
reflecting that country's continued economic development. The Ecuadorian
congress recently approved the sale of 39% of the shares of the newly-formed
electricity companies that will be reshaped from assets of the state-owned
electric company. Ecuadorian bonds represented 6.77% of total investments as of
February 29, 1996.
The Mexican economy is beginning to show significant signs of recovery as
confirmed by the strong economic performance in the third and fourth quarters of
1995. Mexican Brady bonds reflected that progress and gained 4.94% during the
quarter ended February 29, 1996. Mexico represented 3.32% of total investments
as of that date. It is likely that local interest rates in Mexico will remain
volatile in the short term as market participants remain unsure of the near-term
inflation trend.
<PAGE> 4
GLOBAL PARTNERS INCOME FUND INC.
During the quarter our major portfolio changes included additions to our
positions in Ecuador and Brazil based on our favorable outlook for these
countries. We sold a portion of our investments in Poland after the price
appreciation following announcement of Poland's investment grade credit rating.
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 market debt securities is available by calling (800)
421-4777. The update also includes specific information about the Fund, its
portfolio, country allocations and recent performance.
Cordially,
/s/ MICHAEL S. HYLAND /s/ ALAN H. RAPPAPORT
- --------------------- ---------------------
Michael S. Hyland Alan H. Rappaport
Chairman of the Board President
<PAGE> 5
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
February 29, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS -- 60.73% (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES -- 6.75%
$ 1,500 Asia Pulp & Paper International Finance, 11.75%, 10/01/05..................... $ 1,470,000
3,500 Berry Plastics, 12.25%, 4/15/04C.............................................. 3,832,500
1,000 Crown Paper Co., 11.00%, 9/01/05.............................................. 927,500
2,000 Indah Kiat International, 12.50%, 6/15/06..................................... 2,030,000
2,000 Renco Metals Inc., 12.00%, 7/15/00............................................ 2,180,000
2,000 Valcor, 9.625%, 11/01/03C..................................................... 1,900,000
------------
12,340,000
------------
CONSUMER CYCLICALS -- 3.67%
2,000 Cole National Group Inc., 11.25%, 10/01/01C................................... 2,010,000
3,000 Finlay Fine Jewelry, 10.625%, 5/01/03C........................................ 2,895,000
2,000 Flagstar, 10.75%, 9/15/01C.................................................... 1,800,000
------------
6,705,000
------------
CONSUMER NON-CYCLICALS -- 21.74%
1,500 American Safety Razor Co., Series B, 9.875%, 8/01/05C......................... 1,567,500
1,400 Bally's Grand Inc., 10.375%, 12/15/03......................................... 1,470,000
1,250 Big V Supermarkets, 11.00%, 2/15/04........................................... 1,125,000
2,000 Borg-Warner Security Corp., 9.125%, 5/01/03................................... 1,880,000
2,000 Carr-Gottstein Foods Co., 12.00%, 11/15/05W................................... 2,070,000
2,000 Dade International Inc., 13.00%, 2/01/05C..................................... 2,260,000
2,000 Empress River Casino Finance, 10.75%, 4/01/02C................................ 2,070,000
2,250 Hines Horticulture, 11.75%, 10/15/05C......................................... 2,340,000
1,000 Hollywood Casino Corp., 12.75%, 11/01/03C..................................... 950,000
4,000 International Semi-Tech, Zero Coupon until 8/15/00 (11.50% thereafter),
8/15/03..................................................................... 2,400,000
1,000 Norcal Waste Systems, 12.50%, 11/15/05*,W..................................... 1,045,000
2,000 Pathmark, 9.625%, 5/01/03C.................................................... 1,920,000
3,000 Penn Traffic Co., 9.625%, 4/15/05C............................................ 2,535,000
2,500 Plastic Specialty, 11.25%, 12/01/03........................................... 2,325,000
1,750 Remington Arms, 10.00%, 12/01/03C,W........................................... 1,487,500
2,250 Revlon Worldwide, Series B, Zero Coupon, 3/15/98C............................. 1,808,438
1,000 Samsonite Corp., 11.125%, 7/15/05C............................................ 990,000
1,000 SC International Services, 13.00%, 10/01/05................................... 1,055,000
2,000 Selmer Co. Inc., 11.00%, 5/15/05.............................................. 2,120,000
1,000 Showboat Inc., 9.25%, 5/01/08C................................................ 1,017,500
1,350 Telex Communications, Inc., 12.00%, 7/15/04C.................................. 1,424,250
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 1
<PAGE> 6
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
February 29, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS (CONTINUED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-CYCLICALS -- 21.74% (CONCLUDED)
$ 2,789 Trump Taj Mahal, 11.35%, 11/15/99(C,X).......................................... $ 2,759,649
1,000 William House Regency, 13.00%, 11/15/05(W)...................................... 1,102,500
------------
39,722,337
------------
ENERGY -- 1.14%
2,000 KCS Energy Inc., 11.00%, 1/15/03(W)............................................. 2,075,000
------------
INDUSTRIAL/MANUFACTURING -- 12.70%
2,000 Alvey Systems Inc., 11.375%, 1/31/03(W)......................................... 2,080,000
2,000 Foamex Capital L.P., 11.25%, 10/01/02(C)........................................ 1,860,000
1,250 Inter-City Products, 9.75%, 3/01/00............................................. 1,000,000
5,000 Jordan Industries, 10.375%, 8/01/03(C).......................................... 4,525,000
2,000 Motor Wheel, 11.50%, 3/01/00(C)................................................. 1,800,000
2,000 RBX Corp., 11.25%, 10/15/05(W).................................................. 1,970,000
3,000 Specialty Equipment, 11.375%, 12/01/03(C)....................................... 3,135,000
2,000 Talley Mfg. & Technology, 10.75%, 10/15/03...................................... 2,040,000
2,000 Units Terex Corp., 13.75%, 5/15/02 (including 8,000 rights)(W,Y)...................... 1,930,000
3,500 Venture Holdings Trust, 9.75%, 4/01/04(C)....................................... 2,870,000
------------
23,210,000
------------
MEDIA/TELECOMMUNICATIONS -- 13.68%
3,000 Adelphia Communications, 12.50%, 5/15/02(C)..................................... 3,142,500
1,500 American Media Operations, Inc., 11.625%, 11/15/04.............................. 1,556,250
2,000 Brooks Fiber Properties, Zero Coupon until 3/01/01 (10.875% thereafter),
3/01/06(W).................................................................... 1,180,000
2,050 Diamond Cable Co., Zero Coupon until 12/15/00 (11.75% thereafter), 12/15/05..... 1,250,500
2,000 Granite Broadcasting, 10.375%, 5/15/05(C)....................................... 2,070,000
6,000 Hollinger Inc., Convertible Bond, Zero Coupon, 10/05/13......................... 1,942,500
3,500 In Flight Phone, Zero Coupon until 5/15/98 (14.00% thereafter), 5/15/02......... 1,085,000
2,500 International Cabletel Inc., Zero Coupon until 2/01/01 (11.50% thereafter),
2/01/06(W).................................................................... 1,475,000
3,500 Marcus Cable Co., Zero Coupon until 6/15/00 (14.25% thereafter), 12/15/05....... 2,380,000
1,500 Outdoor Systems, 10.75%, 8/15/03................................................ 1,537,500
2,000 Units People's Choice TV Corp., Zero Coupon until 6/01/00 (13.135% thereafter),
6/01/04(Z).................................................................... 1,270,000
3,000 United International Holdings, Zero Coupon, 11/15/99............................ 1,935,000
2,000 USA Mobile Communications, 9.50%, 2/01/04(C).................................... 2,010,000
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 2
<PAGE> 7
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
February 29, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS (CONCLUDED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA/TELECOMMUNICATIONS -- 13.68% (CONCLUDED)
650 Units Winstar Communications, Zero Coupon until 10/15/00 (14.00% thereafter),
10/15/05(W,#)............................................................... $ 1,095,250
1,000 Units Wireless One Inc., 13.00%, 10/15/03(##)....................................... 1,080,000
------------
25,009,500
------------
TRANSPORTATION -- 1.05%
$ 2,000 Petro PSC Properties, 12.50%, 6/01/0(2C)...................................... 1,920,000
------------
TOTAL CORPORATE BONDS (cost $109,957,373)..................................... 110,981,837
------------
<CAPTION>
SOVEREIGN BONDS -- 63.24%
<C> <S> <C>
------------------------------------------------------------------------------------------------------------
ARGENTINA -- 7.62%
19,500 Republic of Argentina, FRB, 6.8125%, 3/31/05(*,C)............................. 13,918,125
------------
BRAZIL -- 18.89%
27,470 Federal Republic of Brazil, C Bond, 8.00%, 4/15/14(C,X)....................... 16,481,865
7,250 Federal Republic of Brazil, EIB, 6.8125%, 4/15/06(*).......................... 5,174,688
5,000 Federal Republic of Brazil, Exit Bond, 6.00%, 9/15/13......................... 2,950,000
6,510 Federal Republic of Brazil, IDU, 6.375%, 1/01/01(*,C)......................... 5,684,044
3,000 Federal Republic of Brazil, "New" New Money Bond, 6.875%, 4/15/09(*,C)........ 2,021,250
4,350 Federal Republic of Brazil, Par Z-L, 4.25%, 4/15/24(*,C)...................... 2,218,500
------------
34,530,347
------------
BULGARIA -- 4.52%
1,750 Republic of Bulgaria, Discount Bond, Tranche A, 6.25%, 7/28/24(*)............. 901,250
15,750 Republic of Bulgaria, IAB, 6.25%, 7/28/11(*).................................. 7,363,125
------------
8,264,375
------------
COSTA RICA -- 5.79%
7,000 Costa Rica, Principal Bond, Series A, 6.25%, 5/21/10(C)....................... 4,200,000
11,000 Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15(C)....................... 6,380,000
------------
10,580,000
------------
ECUADOR -- 9.29%
42,427 Republic of Ecuador, PDI Bond, 6.0625%, 2/28/15)(*,X).... .................... 16,970,732
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 3
<PAGE> 8
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
February 29, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS (CONCLUDED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEXICO -- 4.55%
$13,500 United Mexican States, Par Bond, Series A, 6.25%, 12/31/19 (including
13,500,000 rights)(C)....................................................... $ 8,319,375
------------
PANAMA -- 2.39%
5,000 Republic of Panama, FRN, 6.75%, 5/10/02(*).................................... 4,375,000
------------
POLAND -- 5.32%
13,000 Republic of Poland, PDI Bond, 3.75%, 10/27/14(*).............................. 9,717,500
------------
VENEZUELA -- 4.87%
7,000 Republic of Venezuela, FLIRB, Series B, 6.625%, 3/31/07(*)...................... 3,797,500
9,500 Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20 (including 22,500
warrants)(C)................................................................ 5,112,187
------------
8,909,687
------------
TOTAL SOVEREIGN BONDS (cost $113,746,399)..................................... 115,585,141
------------
<CAPTION>
LOAN PARTICIPATION -- 12.47%
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
29,176 Kingdom of Morocco, Tranche B, 6.75%, 1/01/04* (Morgan Guaranty Trust Company
of New York, Morgan Stanley Emerging Markets Inc.)(T)
(cost $26,048,891).......................................................... 22,794,117
------------
<CAPTION>
PREFERRED STOCK -- .70%
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
12,500 Shares Cablevision Systems Corp., 11.125%, 4/01/08 (cost $1,250,000)(W,X)............ 1,282,092
------------
<CAPTION>
WARRANTS(a) -- .13%
--------------------------------------------------------------------------------------------------------------
<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)..................... 60,000
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
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 4
<PAGE> 9
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (concluded)
February 29, 1996 (unaudited)
<TABLE>
<CAPTION>
VALUE
WARRANTS(a) -- (CONCLUDED) (NOTE 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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)........... $ 174,000
------------
TOTAL WARRANTS (cost $152,964)................................................ 234,000
------------
TOTAL INVESTMENTS -- 137.27% (cost $251,155,627).............................. 250,877,187
------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (37.27%)............................. (68,112,570)
------------
NET ASSETS -- 100.0%
(equivalent to $12.60 per share on 14,507,134 common shares outstanding).... $182,764,617
------------
- ------------------------------------------------------------------------------------------------------------
(*) 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 all or part of the income earned is capitalized as additional
principal or shares.
(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, each
exercisable for one share of common stock.
(T) Participation interests were acquired through the financial institutions indicated parenthetically.
(a) Non-income producing security.
EIB -- Eligible Interest Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
FRN -- Floating Rate Note.
IAB -- Interest in Arrears Bond.
IDU -- Interest Due and Unpaid.
PDI -- Past Due Interest.
</TABLE>
See accompanying notes to financial statements.
PAGE 5
<PAGE> 10
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $251,155,627)................................................. $250,877,187
Cash......................................................................................... 606,628
Interest receivable.......................................................................... 7,231,947
Receivable for investments sold.............................................................. 2,966,250
Unamortized organization expenses (Note 2)................................................... 59,251
Prepaid expenses............................................................................. 22,794
------------
Total assets......................................................................... 261,764,057
------------
LIABILITIES
Loans payable (Note 5)....................................................................... 75,000,000
Accrued interest expense on loan (Note 5).................................................... 2,220,438
Payable for investments purchased............................................................ 1,500,000
Accrued management fee (Note 3).............................................................. 167,955
Accrued printing and mailing fees............................................................ 39,127
Accrued legal fee............................................................................ 35,040
Accrued audit and tax return preparation fees................................................ 16,632
Accrued custodian expense.................................................................... 11,919
Other accrued expenses....................................................................... 8,329
------------
Total liabilities.................................................................... 78,999,440
------------
NET ASSETS
Common Stock ($.001 par value, 100,000,000 shares authorized; 14,507,134 shares
outstanding)............................................................................... 14,507
Additional paid-in capital................................................................... 202,591,603
Undistributed net investment income.......................................................... 2,257,418
Accumulated realized loss on investments..................................................... (21,820,471)
Net unrealized depreciation on investments................................................... (278,440)
------------
Net assets........................................................................... $182,764,617
------------
Net Asset Value Per Share ($182,764,617 / 14,507,134 shares)................................. $ 12.60
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 6
<PAGE> 11
GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
INCOME
Interest (includes discount accretion of $3,582,317)....................... $15,922,666
EXPENSES
Interest expense (Note 5).................................................. $2,736,063
Management fee (Note 3).................................................... 950,840
Custodian.................................................................. 35,461
Transfer agent............................................................. 32,808
Legal...................................................................... 31,964
Audit and tax services..................................................... 28,592
Printing................................................................... 26,037
Directors' fees and expenses (Note 3)...................................... 16,658
Shareholder annual meeting................................................. 16,358
Listing fee................................................................ 11,959
Amortization of deferred organization expenses (Note 2).................... 11,106
Other...................................................................... 5,851 3,903,697
---------- -----------
Net investment income.......................................................... 12,018,969
-----------
NET REALIZED AND UNREALIZED GAIN
Net Realized Gain on Investments............................................... 3,604,423
Change in Net Unrealized Depreciation on Investments........................... 17,187,933
-----------
Net realized gain and change in net unrealized depreciation on investments..... 20,792,356
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................................... $32,811,325
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 7
<PAGE> 12
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31,
(UNAUDITED) 1995
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
OPERATIONS
Net investment income................................................... $ 12,018,969 $ 22,405,751
Net realized gain (loss) on investments................................. 3,604,423 (25,424,894)
Change in net unrealized depreciation on investments.................... 17,187,933 10,617,570
------------ ------------
Net increase in net assets from operations.............................. 32,811,325 7,598,427
DIVIDENDS
From net investment income.............................................. (11,224,906) (20,672,691)
------------ ------------
Total increase (decrease) in net assets................................. 21,586,419 (13,074,264)
NET ASSETS
Beginning of period..................................................... 161,178,198 174,252,462
------------ ------------
End of period (includes undistributed net investment income of
$2,257,418 and $1,463,355, respectively).............................. $ 182,764,617 $161,178,198
------------ ------------
</TABLE>
STATEMENT OF CASH FLOWS
For the Six Months Ended February 29, 1996 (unaudited)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Purchases of portfolio securities....................................................... $(100,167,088)
Proceeds from sales of portfolio investments and principal paydowns..................... 99,429,899
Net sales of short-term investments..................................................... 7,030,000
-------------
6,292,811
Net investment income................................................................... 12,018,969
Accretion of discount on investments.................................................... (3,582,317)
Amortization of organization expenses................................................... 11,106
Net change in receivables/payables related to operations................................ (3,022,504)
-------------
Net cash provided by operating activities........................................... 11,718,065
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Common stock dividends paid............................................................. (11,224,906)
-------------
Net cash used by financing activities............................................... (11,224,906)
-------------
Net increase in cash........................................................................ 493,159
Cash at beginning of period................................................................. 113,469
-------------
CASH AT END OF PERIOD....................................................................... $ 606,628
-------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 8
<PAGE> 13
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. The Fund seeks to maintain a high
level of current income by investing primarily in a portfolio of high-yield U.S.
and non-U.S. corporate debt securities and high-yield foreign sovereign debt
securities. As a secondary objective, the Fund seeks capital appreciation.
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. The
policies are in conformity with generally accepted accounting principles
("GAAP"). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual amounts could differ
from those estimates.
SECURITIES VALUATION. 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 accrued on a daily 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.
PAGE 9
<PAGE> 14
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 (See Note 4) are 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 GAAP. 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 six months
ended February 29, 1996, 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 & Co., Inc. ("Oppenheimer"),
pursuant
PAGE 10
<PAGE> 15
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 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 February 29, 1996, Oppenheimer and the Investment Adviser owned 3,567 and
4,587 shares of the Fund, respectively.
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, $700 for attendance at each board
meeting, $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 six months ended February 29, 1996, aggregated $100,924,900 and
$99,390,494, respectively. The federal income tax cost basis of the Fund's
investments at February 29, 1996 was substantially the same as the cost basis
for financial reporting. Gross unrealized appreciation and depreciation amounted
to $14,517,677 and $14,796,117, respectively, resulting in net unrealized
depreciation for federal income tax purposes of $278,440.
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.
PAGE 11
<PAGE> 16
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 $53,280,517 on February 29, 1996
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 loan was not renewed on April 1, 1996.
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 $57,911,892 on February 29,
1996 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 March 1, 1996
with an interest rate equal to LIBOR plus 1.50% and a maturity date of April 1,
1996. The loan was not renewed on April 1, 1996.
On April 1, 1996, the Fund borrowed $75,000,000 pursuant to a secured loan
agreement with Bankers Trust Company. The interest rate on the loan is equal to
six-month LIBOR plus 1.00% and the maturity date is October 1, 1996. The
collateral for the loan 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 160%.
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 participation at February 29, 1996 was $22,794,117.
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.
PAGE 12
<PAGE> 17
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
(unaudited)
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.
NOTE 8. DIVIDENDS SUBSEQUENT TO FEBRUARY 29, 1996
On March 1 and April 1, 1996, the Board of Directors of the Fund declared a
dividend from net investment income, each in the amount of $.11875 per share,
payable on March 29 and April 30, 1996, to shareholders of record on March 12
and April 16, 1996, respectively.
PAGE 13
<PAGE> 18
GLOBAL PARTNERS INCOME FUND INC.
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE FOR THE
ENDED YEAR ENDED PERIOD ENDED
FEBRUARY 29, 1996 AUGUST 31, AUGUST 31,
(UNAUDITED) 1995 1994(a)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 11.11 $ 12.01 $ 14.02
-------- ---------- ------------
Net investment income....................................... 0.83 1.54 0.97
Net realized gain (loss) and change in net unrealized
appreciation (depreciation) on investments................ 1.43 (1.02) (1.86)
-------- ---------- ------------
Total from investment operations............................ 2.26 0.52 (0.89)
-------- ---------- ------------
Less distributions
Dividends from net investment income...................... (0.77) (1.42) (0.98)
Dividends from short-term gains........................... -- -- (0.07)
Dividends in excess of net investment income.............. -- -- (0.02)
-------- ---------- ------------
Total distributions......................................... (0.77) (1.42) (1.07)
-------- ---------- ------------
Offering costs on issuance of common stock.................. -- -- (0.05)
-------- ---------- ------------
Net asset value, end of period.............................. $ 12.60 $ 11.11 $ 12.01
-------- ---------- ------------
Per share market value, end of period....................... $ 12.25 $ 11.125 $ 11.75
Total investment return based on market price per
share(c).................................................. 17.40% 8.01% (9.02%)(b)
Ratios to average net assets:
Operating expenses...................................... 1.35%(d) 1.39% 1.38%(d)
Interest expense........................................ 3.17%(d) 3.46% 1.39%(d)
Total expenses.......................................... 4.52%(d) 4.85% 2.77%(d)
Net investment income................................... 13.90%(d) 14.10% 9.05%(d)
Portfolio turnover rate................................. 40.92% 85.15% 11.71%
Net assets, end of period (000)......................... $ 182,765 $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............ 7.32%(d) 7.34% 5.44%(d)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
(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) For purposes of this calculation, dividends on common shares are assumed to be reinvested at prices
obtained under the Fund's dividend reinvestment plan and the broker commission paid to purchase or sell
a share is excluded. This calculation is not annualized.
(d) Annualized.
See accompanying notes to financial statements.
PAGE 14
<PAGE> 19
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited)
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS:
</TABLE>
<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>
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
February 29, 1996................................................. 6,198 .43 13.594 .93
</TABLE>
- --------------------------------------------------------------------------------
* Totals expressed in thousands of dollars except per share amounts.
See accompanying notes to financial statements.
PAGE 15
<PAGE> 20
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;
Managing Director, Salomon Brothers Inc 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.
7 World Trade Center
New York, New York 10048
Telephone 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> 21
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
---------------------
