<PAGE>
<PAGE>
GLOBAL PARTNERS
INCOME FUND INC.
SEMI-ANNUAL REPORT
FEBRUARY 28, 1997
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
--------------------------
BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT No.
169
--------------------------
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
April 25, 1997
Dear Shareholder:
We are pleased to provide this semi-annual report for the Global Partners Income
Fund Inc. (the 'Fund') as of February 28, 1997. Included are market commentary,
a statement of the Fund's investments as of February 28, 1997 and financial
statements for the six months ended February 28, 1997.
During the six months ended February 28, 1997, the net asset value of the Fund
increased from $13.88 per share at August 31, 1996 to $15.74 per share at
February 28, 1997. Assuming that dividends of $1.0025 per share paid during the
period were reinvested in additional shares of the Fund, the net asset value
return was 21.18% for the six months ended February 28, 1997. 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 19.59%, and the
Salomon Brothers High-Yield Market Index gained 8.96%.
Investments in securities of emerging market issuers totaled 57.9% of the Fund's
total long-term investments at February 28, 1997, while the remaining 42.1% was
invested in high-yield U.S. corporate securities. This overweighting in emerging
market debt is based upon our view that while both asset classes represent good
value in today's market, emerging market debt has more potential for capital
appreciation in the near term. This balance, however, is constantly changing and
managed for relative value.
MARKET OVERVIEW
EMERGING MARKETS DEBT
The continued strong performance of the emerging markets debt market has been
driven by positive economic and political developments in a number of key
countries. The combination of favorable market conditions and attractive yields
has encouraged institutional investors to increase their allocations to emerging
markets debt.
The outlook for economic growth in emerging markets is especially strong in
Latin America. The major economies of the region are experiencing the benefits
of reform measures that have been enacted over the past few years. GDP annual
growth rates are expected to accelerate into the 4% to 6% range over the next
two years. This level of economic growth should provide the opportunity for
these countries to make progress in reducing unemployment. In addition,
inflation rates in the major Latin American countries are trending lower.
The recent renewed commitment on the part of the Russian government to reform
has been well received by the market. This important emerging economy is
concluding a large debt restructuring and is addressing the tax collection
problem which has hampered economic growth over the past few years.
HIGH-YIELD DEBT
The U.S. high-yield debt market's strong performance has been driven by both
fundamental and technical factors over the last six months. A buoyant economy,
characterized by solid growth and low inflation, has provided support for
fundamental credit improvement among a broad group of existing issuers. In
addition, money flow into high-yield mutual funds has continued at a near record
pace and has created strong demand for new issues. As a result of this credit
improvement, well below average corporate default rates and demand created from
new money entering the market, the average market yield has declined by 80 basis
points and the spread to Treasuries has tightened by 40 basis points.
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Sectors of the high-yield market that have outperformed over the last six months
include single B rated (mid-quality) issues and bonds in the leisure/lodging,
banking, utilities and manufacturing sectors. Groups that underperformed the
market include CCC rated (lower quality) issues, publishing, restaurants,
containers and healthcare.
ANNUAL SHAREHOLDERS MEETING
The Fund held its annual shareholders meeting on December 12, 1996. At the
meeting, shareholders elected each of the nominees proposed for election to the
Fund's Board of Directors and ratified the selection of Price Waterhouse LLP as
the independent accountants of the Fund. The following table provides
information concerning the matters voted on at the meeting:
1. Election of Directors
<TABLE>
<CAPTION>
NOMINEES VOTES FOR VOTES WITHHELD
-------------------------------------------------------
<S> <C> <C>
Alan H. Rappaport 13,699,525 133,606
Leslie H. Gelb 13,684,096 149,036
</TABLE>
2. Ratification of Price Waterhouse LLP as the Independent Accountants of
the Fund
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINED
-------------------------------------------------------
<S> <C> <C>
13,609,877 40,091 183,163
</TABLE>
* * *
On February 14, 1997, Oppenheimer Group, Inc., the ultimate parent company of
Advantage Advisers, Inc., the Fund's investment manager, entered into an
agreement to sell the stock of the investment manager to PIMCO Advisors, L.P.
and its affiliates. On April 1, 1997, the Board of Directors of the Fund
approved, subject to the vote of the Fund's shareholders, new investment
management and investment advisory agreements for the Fund with the investment
manager and with Salomon Brothers Asset Management, the Fund's investment
adviser. The agreements are substantially identical to the existing agreements
and would take effect upon shareholder approval and the closing of the proposed
acquisition of the investment manager. The closing of the acquisition is also
subject to certain additional closing conditions.
We thank you for your continued interest and confidence in the Fund. In our
ongoing effort to provide timely and relevant information to our shareholders, a
recorded Fund update is available 24 hours a day by calling 1-800-421-4777. This
line provides current information relating to the Fund, including portfolio
manager outlook and market commentary, as well as price information.
Should you require specific information regarding your Global Partners Income
Fund stock account, or for information regarding the Fund's Dividend
Reinvestment Plan, please call American Stock Transfer & Trust Company at
1-800-937-5449. If you are calling from within New York City, please call
718-921-8200.
Cordially,
/s/ Michael S. Hyland /s/ Alan H. Rappaport
- ----------------------- ----------------------
Michael S. Hyland Alan H. Rappaport
Chairman of the Board President
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Investments
February 28, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Corporate Bonds -- 55.8% (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Basic Industries -- 6.6%
$ 2,000 Algoma Steel Inc., 12.375%, 7/15/05............................................ $ 2,240,000
1,500 Asia Pulp & Paper International Finance, 11.75%, 10/01/05...................... 1,653,750
2,000 Berry Plastics, 12.25%, 4/15/04................................................ 2,220,000
1,500 Florida Coast Paper LLC, 12.75%, 6/01/03(C).................................... 1,620,000
2,500 NL Industries, Zero Coupon until 10/15/98 (13.00% thereafter), 10/15/05(C)..... 2,287,500
1,000 Printpack Inc., 10.625%, 8/15/06............................................... 1,052,500
2,000 Radnor Holdings, 10.00%, 12/01/03(W)........................................... 2,060,000
2,000 Valcor, 9.625%, 11/01/03....................................................... 1,960,000
------------
15,093,750
------------
Consumer Cyclicals -- 4.8%
1,000 Cole National Group, 9.875%, 12/31/06(W)....................................... 1,052,500
1,000 Collins & Aikman, 10.00%, 1/15/07(W)........................................... 1,030,000
2,000 CSK Auto Inc., 11.00%, 11/01/06(W)............................................. 2,080,000
2,000 Finlay Fine Jewelry, 10.625%, 5/01/03(C)....................................... 2,110,000
2,000 Hills Stores, 12.50%, 7/01/03.................................................. 1,580,000
1,000 Synthetic Industries, 9.25%, 2/15/07(W)........................................ 1,020,000
2,000 Wyndham Hotel Corp., 10.50%, 5/15/06(C)........................................ 2,140,000
------------
11,012,500
------------
Consumer Non-Cyclicals -- 15.8%
2,000 Americold Corp., 12.875%, 5/01/08.............................................. 2,120,000
2,000 Big V Supermarkets, 11.00%, 2/15/04(C)......................................... 1,970,000
2,000 Carr-Gottstein Foods Co., 12.00%, 11/15/05(C).................................. 2,200,000
1,000 CFP Holdings Inc., 11.625%, 1/15/04(W)......................................... 1,061,250
1,000 Dade International Inc., 11.125%, 5/01/06...................................... 1,095,000
1,000 Doane Products Company, 10.625%, 3/01/06....................................... 1,070,000
2,250 Hines Horticulture, 11.75%, 10/15/05(C)........................................ 2,486,250
1,000 Hollywood Casino Corp., 12.75%, 11/01/03(C).................................... 1,010,000
1,000 Majestic Star Casino LLC, 12.75%, 5/15/03(C)................................... 1,085,000
1,000 Pen-Tab Industries Inc., 10.875%, 2/01/07(W)................................... 1,037,500
1,500 Plastic Specialty, 11.25%, 12/01/03............................................ 1,620,000
2,000 Rayovac Corp., 10.25%, 11/01/06(C),(W)......................................... 2,100,000
2,000 Remington Product Co. LLC, 11.00%, 5/15/06(C).................................. 1,875,000
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 1
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Investments (continued)
February 28, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Corporate Bonds (continued) (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Consumer Non-Cyclicals -- 15.8% (concluded)
$ 1,500 Revlon Worldwide, Zero Coupon, 3/15/01(W)...................................... $ 983,850
1,000 SC International Services, 13.00%, 10/01/05(C)................................. 1,120,000
2,000 Selmer Co. Inc., 11.00%, 5/15/05............................................... 2,185,000
1,000 Shop Vac Corp., 10.625%, 9/01/03(W)............................................ 1,072,500
2,000 Smiths Food & Drug, 11.25%, 5/15/07(C)......................................... 2,270,000
1,550 Stroh Brewery, 11.10%, 7/01/06................................................. 1,643,000
1,350 Telex Communications, Inc., 12.00%, 7/15/04.................................... 1,473,188
2,000 Trump Atlantic City Associates, 11.25%, 5/01/06(C)............................. 1,930,000
1,500 Twin Laboratories Inc., 10.25%, 5/15/06(C)..................................... 1,567,500
1,000 Waterford Gaming LLC, 12.75%, 11/15/03(W)...................................... 1,070,000
------------
36,045,038
------------
Energy -- 4.7%
2,000 Benton Oil & Gas, 11.625%, 5/01/03............................................. 2,240,000
2,000 Cliffs Drilling, 10.25%, 5/15/03............................................... 2,147,500
1,000 Costilla Energy Inc., 10.25%, 10/01/06......................................... 1,060,000
1,000 KCS Energy Inc., 11.00%, 1/15/03............................................... 1,097,500
2,000 National Energy Group, 10.75%, 11/01/06........................................ 2,120,000
2,000 Parker Drilling Corp., 9.75%, 11/15/06(W)...................................... 2,130,000
------------
10,795,000
------------
Financial -- 1.8%
1,000 Airplanes Pass Through Trust, 10.875%, 3/15/19(C).............................. 1,138,750
2,000 Central Transport Rental, 9.50%, 4/30/03....................................... 1,895,000
1,000 First Nationwide, 10.625%, 10/01/03(W)......................................... 1,105,000
------------
4,138,750
------------
Housing Related -- .4%
1,000 Waxman Industries Inc., Zero Coupon until 6/01/99 (12.75% thereafter),
6/01/04...................................................................... 830,000
------------
Industrial/Manufacturing -- 6.3%
2,000 Alvey Systems Inc., 11.375%, 1/31/03(C)........................................ 2,110,000
1,500 Clark-Schwebel Inc., 10.50%, 4/15/06#.......................................... 1,605,000
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 2
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Investments (continued)
February 28, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Corporate Bonds (continued) (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Industrial/Manufacturing -- 6.3% (concluded)
$ 2,000 Jordan Industries, 10.375%, 8/01/03(C)......................................... $ 2,000,000
2,000 Specialty Equipment, 11.375%, 12/01/03......................................... 2,180,000
2,000 Talley Mfg. & Technology, 10.75%, 10/15/03..................................... 2,090,000
2,000 Terex Corp., 13.25%, 5/15/02(C)................................................ 2,220,000
2,233 Venture Holdings Trust, 9.75%, 4/01/04......................................... 2,121,350
------------
14,326,350
------------
Media/Telecommunications -- 10.4%
1,750 Adelphia Communications, 12.50%, 5/15/02(C).................................... 1,859,375
1,500 American Media Operations, Inc., 11.625%, 11/15/04............................. 1,650,000
2,000 Cablevision Systems Corp., 10.50%, 5/15/16(C).................................. 2,100,000
2,050 Diamond Cable Co., Zero Coupon until 12/15/00 (11.75% thereafter), 12/15/05(C). 1,414,500
2,000 Granite Broadcasting, 10.375%, 5/15/05(C)...................................... 2,070,000
6,000 Hollinger Inc., Convertible Bond, Zero Coupon, 10/05/13#....................... 2,175,000
1,750 ICG Holding Inc., Zero Coupon until 9/15/00 (13.50% thereafter), 9/15/05(C).... 1,299,375
Intermedia Communications of Florida, Zero Coupon until 5/15/01 (12.50%
2,000 thereafter), 5/15/06......................................................... 1,380,000
2,500 International Cabletel Inc., Zero Coupon until 2/01/01 (11.50% thereafter),
2/01/06(C)................................................................... 1,675,000
3,500 Marcus Cable Co., Zero Coupon until 6/15/00 (14.25% thereafter), 12/15/05(C)... 2,572,500
1,500 SFX Broadcasting, 10.75%, 5/15/06(C)........................................... 1,620,000
3,000 United International Holdings, Zero Coupon, 11/15/99........................... 2,205,000
800 Winstar Communications, Zero Coupon until 10/15/00 (14.00% thereafter),
10/15/05..................................................................... 488,000
Winstar Communications, Convertible Bond, Zero Coupon until 10/15/00
(14.00% thereafter), 10/15/05(W)............................................. 396,500
650
1,000 Wireless One Inc., 13.00%, 10/15/03(C)......................................... 930,000
------------
23,835,250
------------
Services/Other -- 2.5%
2,000 Borg-Warner Security Corp., 9.125%, 5/01/03.................................... 2,020,000
1,300 Intertek Finance PLC, 10.25%, 11/01/06(W)...................................... 1,365,000
1,000 Norcal Waste Systems, 13.00%, 11/15/05*........................................ 1,127,500
1,000 Speedy Muffler King Inc., 10.875%, 10/01/06.................................... 1,065,000
------------
5,577,500
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 3
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Investments (continued)
February 28, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Corporate Bonds (concluded) (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Technology/Electronics -- .9%
$ 2,000 Exide Electronics Group, 11.50%, 3/15/06(C).................................... $ 2,150,000
------------
Transportation -- .5%
1,000 Atlantic Express, 10.75%, 2/01/04(W)........................................... 1,035,000
------------
Utilities -- 1.1%
1,000 AES China Generating Co., 10.125%, 12/15/06.................................... 1,060,000
1,250 AES Corp., 10.25%, 7/15/06(C).................................................. 1,357,813
------------
2,417,813
------------
Total Corporate Bonds (cost $120,766,059)...................................... 127,256,951
------------
Sovereign Bonds -- 60.4%
- ----------------------------------------------------------------------------------------------------------
Argentina -- 9.4%
12,005 Republic of Argentina, FRB, Series L, 6.625%, 3/31/05*,(C)..................... 10,849,519
16,000 Republic of Argentina, Par Bond, Series L, 5.25%, 3/31/23*,(C)................. 10,600,000
------------
21,449,519
------------
Brazil -- 12.9%
30,270 Federal Republic of Brazil, C Bond, 8.00%, 4/15/14(C),(X)...................... 24,007,778
5,000 Federal Republic of Brazil, Investment (Exit) Bond, 6.00%, 9/15/13(C).......... 3,787,500
2,000 Federal Republic of Brazil, NMB, Series L, 6.5625%, 4/15/09*,(C)............... 1,740,000
------------
29,535,278
------------
Bulgaria -- .7%
2,500 Republic of Bulgaria, IAB, 6.5625%, 7/28/11*,(C)............................... 1,507,813
------------
Costa Rica -- 5.5%
7,000 Costa Rica, Principal Bond, Series A, 6.25%, 5/21/10#.......................... 5,810,000
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 4
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Investments (continued)
February 28, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Sovereign Bonds (concluded) (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Costa Rica -- 5.5% (concluded)
$ 8,500 Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15#.......................... $ 6,661,875
------------
12,471,875
------------
Ecuador -- 8.4%
30,934 Republic of Ecuador, PDI Bond, 6.4375%, 2/27/15*,(C),(X)....................... 19,198,472
------------
Mexico -- 7.9%
United Mexican States, Discount Bond, Series A, 6.45313%, 12/31/19*,(C)
1,500 (including 2,307,000 rights)................................................. 1,366,875
United Mexican States, Par Bond, Series A, 6.25%, 12/31/19(C) (including
13,250 13,250,000 rights)........................................................... 10,070,000
8,650 United Mexican States, Par Bond, Series B, 6.25%, 12/31/19(C) (including
8,650,000 rights)............................................................ 6,574,000
------------
18,010,875
------------
Panama -- 3.5%
5,000 Republic of Panama, IRB, 3.50%, 7/17/14*,(C)................................... 3,712,500
5,086 Republic of Panama, PDI Bond, 6.5625%, 7/17/16*,(C),(X).......................... 4,392,876
------------
8,105,376
------------
Peru -- 2.3%
9,250 Republic of Peru, FLIRB, 3.25%, 3/07/17*,##.................................... 5,347,656
------------
Poland -- 1.1%
3,000 Republic of Poland, PDI Bond, 4.00%, 10/27/14*,(C)............................. 2,531,250
------------
Russia -- 1.9%
6,000 Russia, IAN, 12/31/15*,(R)..................................................... 4,286,250
------------
Venezuela -- 6.8%
20,000 Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20(C) (including 100,000
rights)...................................................................... 15,400,000
------------
Total Sovereign Bonds (cost $115,767,827)...................................... 137,844,364
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 5
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Investments (continued)
February 28, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) Loan Participations -- 13.3% (NOTE 2)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 6,000 Bank of Foreign Economic Affairs, Vnesheconombank(a),(b) (Merrill Lynch)(T).... $ 5,010,000
Kingdom of Morocco, Tranche B, 6.375%, 1/01/04* (Morgan Guaranty Trust Company
25,529 of New York, Morgan Stanley Emerging Markets Inc.)(T)........................ 25,401,761
------------
Total Loan Participations (cost $26,892,080)................................... 30,411,761
------------
Preferred Stock -- 1.3%
- ----------------------------------------------------------------------------------------------------------
1,000 Asia Pulp & Paper Finance (II) Mauritius Limited, Series A, 12.00%*,(W)........ 1,001,667
Shares
20,000 Chancellor Radio Broadcasting, 12.00%, 1/15/09(W).............................. 2,034,667
Shares ------------
Total Preferred Stock (cost $3,000,000)........................................ 3,036,334
------------
Warrants & Rights(a) -- .1%
- ----------------------------------------------------------------------------------------------------------
Exide Electronics Group (Exercise price of $13.475 per share expiring on
2,000 3/15/06. Each warrant exercisable for 5.15 shares of common stock.).......... 84,000
Warrants
In Flight Phone (Exercise price of $.01 per share expiring on 8/31/02. Each
5,000 warrant exercisable for one share of common stock.).......................... 0
Warrants
8,000 Terex Corporation Stock Appreciation Rights.................................... 22,000
Rights
United International Holdings (Exercise price of $15 per share expiring on
6,000 11/15/99. Each warrant exercisable for 4.535 shares of common stock.)........ 30,000
Warrants
Wireless One Inc. (Exercise price of $11.55 per share. Each warrant exercisable
3,000 for one share of common stock.).............................................. 3,000
Warrants
------------
Total Warrants & Rights (cost $152,964)........................................ 139,000
------------
Repurchase Agreement -- 4.1%
- ----------------------------------------------------------------------------------------------------------
Union Bank of Switzerland, 5.36%, cost $9,389,000, dated 2/28/97, $9,393,194
due 3/03/97, (collateralized by $9,424,000 U.S. Treasury Note, 5.875%, due
9,389 10/31/98, valued at $9,577,140).............................................. 9,389,000
------------
Total Investments -- 135.0% (cost $275,967,930)............................... 308,077,410
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 6
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Investments (concluded)
February 28, 1997 (unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Liabilities in Excess of Other Assets -- (35.0%).............................. $(79,763,762)
------------
Net Assets -- 100.0%
(equivalent to $15.74 per share on 14,507,134 common shares outstanding)..... $228,313,648
------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Rate shown reflects current rate on instrument with variable rate or step
coupon rates.
(C) All or a portion of the security is segregated as collateral pursuant to a
loan agreement.
(W) Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.
(X) Payment-in-kind security for which part of the income earned is capitalized
as additional principal.
# Securities valued at $16,251,875 as of February 28, 1997 were segregated to
be available for the purchase of delayed delivery securities with a cost of
$13,110,938.
## 'When and if issued' security.
(R) 'When and if issued' security issued pursuant to Russia's Brady Plan debt
restructuring. The Investment Adviser believes that this restructuring will
be completed and finalized and that the related Brady Bonds will be issued.
Accordingly, the Fund has marked-to-market its investment in this security
at February 28, 1997.
(T) Participation interests were acquired through the financial institutions
indicated parenthetically.
(a) Non-income producing security.
(b) Security is currently in default.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
IAB -- Interest in Arrears Bond.
IAN -- Interest in Arrears Note.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 7
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Assets and Liabilities
February 28, 1997 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $275,967,930)................................................. $308,077,410
Cash.......................................................................................... 349
Interest receivable........................................................................... 6,928,186
Receivable for investments sold............................................................... 4,731,250
Unamortized organization expenses (Note 2).................................................... 36,978
Prepaid expenses.............................................................................. 32,504
------------
Total assets.......................................................................... 319,806,677
------------
LIABILITIES
Loan payable (Note 5)......................................................................... 75,000,000
Payable for investments purchased............................................................. 14,094,788
Accrued interest expense on loan (Note 5)..................................................... 2,113,449
Accrued management fee (Note 3)............................................................... 193,305
Accrued audit and tax return preparation fees................................................. 35,495
Accrued legal fee............................................................................. 26,278
Accrued custodian expense..................................................................... 13,916
Accrued printing and mailing fees............................................................. 12,000
Other accrued expenses........................................................................ 3,798
------------
Total liabilities..................................................................... 91,493,029
------------
NET ASSETS
Common Stock ($.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........................................................... 1,733,977
Accumulated net realized loss on investments.................................................. (8,135,919)
Net unrealized appreciation on investments.................................................... 32,109,480
------------
Net assets............................................................................ $228,313,648
------------
NET ASSET VALUE PER SHARE ($228,313,648[div]14,507,134 shares)................................ $ 15.74
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 8
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Operations
For the Six Months Ended February 28, 1997 (unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
INCOME
Interest (includes discount accretion of $3,062,621)....................... $15,629,020
EXPENSES
Interest expense (Note 5).................................................. $2,519,699
Management fee (Note 3).................................................... 1,188,311
Legal...................................................................... 45,759
Custodian.................................................................. 41,600
Audit and tax services..................................................... 34,712
Transfer agent............................................................. 26,536
Printing................................................................... 18,470
Directors' fees and expenses (Note 3)...................................... 16,567
Listing fee................................................................ 13,518
Amortization of deferred organization expenses (Note 2).................... 11,045
Shareholder annual meeting................................................. 8,571
Other...................................................................... 7,832 3,932,620
---------- -----------
Net investment income.......................................................... 11,696,400
-----------
NET REALIZED AND UNREALIZED GAIN
Net Realized Gain on Investments............................................... 5,059,283
Change in Net Unrealized Appreciation on Investments........................... 24,703,439
-----------
Net realized gain and change in net unrealized appreciation on investments..... 29,762,722
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................................... $41,459,122
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 9
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE
FEBRUARY 28, YEAR ENDED
1997 AUGUST 31,
(UNAUDITED) 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income....................................................... $11,696,400 $ 24,678,884
Net realized gain on investments............................................ 5,059,283 12,229,692
Change in net unrealized appreciation (depreciation) on investments......... 24,703,439 24,872,414
------------ ------------
Net increase in net assets from operations.................................. 41,459,122 61,780,990
DIVIDENDS
From net investment income.................................................. (14,543,412) (21,561,250)
------------ ------------
Total increase in net assets................................................ 26,915,710 40,219,740
NET ASSETS
Beginning of period......................................................... 201,397,938 161,178,198
------------ ------------
End of period (includes undistributed net investment income of $1,733,977
and $4,580,989, respectively)............................................. $228,313,648 $201,397,938
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 10
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Statement of Cash Flows
For the Six Months Ended February 28, 1997 (unaudited)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Purchases of portfolio securities......................................................... $(126,467,166)
Proceeds from sales of portfolio securities and principal paydowns........................ 134,565,612
Net purchases of short-term investments................................................... (477,000)
-------------
7,621,446
Net investment income..................................................................... 11,696,400
Accretion of discount on investments...................................................... (3,062,621)
Interest on payment-in-kind bonds......................................................... (1,237,928)
Amortization of organization expenses..................................................... 11,045
Net change in receivables/payables related to operations.................................. (485,081)
-------------
Net cash provided by operating activities............................................. 14,543,261
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Common stock dividends paid............................................................... (14,543,412)
-------------
Net cash used by financing activities................................................. (14,543,412)
-------------
Net decrease in cash.......................................................................... (151)
Cash at beginning of period................................................................... 500
-------------
CASH AT END OF PERIOD......................................................................... $ 349
-------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 11
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
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 results 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 12
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
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 during the term of the repurchase agreement to ensure that it 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 28, 1997, the Fund paid interest expense of $2,478,125.
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 to which the Investment Manager, among other things, supervises the
Fund's investment program and monitors the performance of the Fund's service
providers.
PAGE 13
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Notes to Financial Statements (continued)
(unaudited)
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 28, 1997, 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 28, 1997, aggregated $135,649,454 and
$137,199,477, respectively. The federal income tax cost basis of the Fund's
investments at February 28, 1997 was substantially the same as the cost basis
for financial reporting. Gross unrealized appreciation and depreciation amounted
to $33,380,106 and $1,270,626, respectively, resulting in net unrealized
appreciation for federal income tax purposes of $32,109,480.
The Fund had a capital loss carryforward as of August 31, 1996 of $12,899,400 of
which $4,566,943 expires in 2003 and $8,332,457 expires in 2004. To the extent
future capital gains are offset by such capital losses, the Fund does not
anticipate distributing such gains to shareholders.
PAGE 14
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Notes to Financial Statements (continued)
(unaudited)
Note 5. Bank Loan
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 April 1, 1997. The collateral for the loan was
valued at $155,940,279 on February 28, 1997 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
160%. The loan was not renewed on April 1, 1997.
On April 1, 1997, the Fund borrowed $75,000,000 pursuant to a secured loan
agreement with ING Baring (U.S.) Capital Corporation. The interest rate on the
loan is equal to six-month LIBOR plus 0.4375% and the maturity date is April 1,
1998. 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 150%.
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 February 28, 1997 was $30,411,761.
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 15
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Notes to Financial Statements (concluded)
(unaudited)
Note 8. Events Subsequent to February 28, 1997
On March 3 and April 1, 1997, 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 31 and April 30, 1997, to shareholders of record on March 18
and April 15, 1997, respectively.
On February 14, 1997, Oppenheimer Group, Inc., the ultimate parent company of
the Investment Manager, entered into an agreement to sell the stock of the
Investment Manager to PIMCO Advisors, L.P. and its affiliates. On April 1, 1997,
the Board of Directors of the Fund approved, subject to the vote of the Fund's
shareholders, a new investment management and investment advisory and
administration agreement for the Fund with the Investment Manager and the
Investment Adviser. The agreements are substantially identical to the existing
agreements and would take effect upon shareholder approval and the closing of
the proposed acquisition of the Investment Manager. The closing of the
acquisition is also subject to certain additional closing conditions.
PAGE 16
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
Financial Highlights
DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE FOR THE FOR THE
FEBRUARY 28, YEAR ENDED YEAR ENDED PERIOD ENDED
1997 AUGUST 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 1996 1995 1994(a)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 13.88 $ 11.11 $ 12.01 $ 14.02
-------- --------- -------- --------
Net investment income................... 0.81 1.70 1.54 0.97
Net realized gain (loss) and change in
net unrealized appreciation
(depreciation) on investments......... 2.05 2.56 (1.02) (1.86)
-------- --------- -------- --------
Total from investment operations........ 2.86 4.26 0.52 (0.89)
-------- --------- -------- --------
Less distributions
Dividends from net investment
income.............................. (1.00) (1.49) (1.42) (0.98)
Dividends from short-term gains....... -- -- -- (0.07)
Dividends in excess of net investment
income.............................. -- -- -- (0.02)
-------- --------- -------- --------
Total distributions..................... (1.00) (1.49) (1.42) (1.07)
-------- --------- -------- --------
Offering costs on issuance of common
stock................................. -- -- -- (0.05)
-------- --------- -------- --------
Net asset value, end of period.......... $ 15.74 $ 13.88 $ 11.11 $ 12.01
-------- --------- -------- --------
Per share market value, end of period... $ 14.25 $ 13.25 $ 11.125 $ 11.75
Total investment return based on market
price per share(c).................... 15.49% 34.22% 8.01% (9.02%)(b)
Ratios to average net assets:
Operating expenses.................. 1.31%(d) 1.32% 1.39% 1.38%(d)
Interest expense.................... 2.33%(d) 2.87% 3.46% 1.39%(d)
Total expenses...................... 3.64%(d) 4.19% 4.85% 2.77%(d)
Net investment income............... 10.83%(d) 13.51% 14.10% 9.05%(d)
Portfolio turnover rate............. 47.44% 91.80% 85.15% 11.71%
Net assets, end of period (000)..... $228,314 $ 201,398 $161,178 $174,252
Bank loans outstanding, end of
period (000)...................... $ 75,000 $ 75,000 $ 75,000 $ 75,000
Weighted average bank loans (000)... $ 75,000 $ 75,000 $ 75,000 $ 47,272
Weighted average interest rate on
bank loans........................ 6.77%(d) 6.99% 7.34% 5.44%(d)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period October 29, 1993 (commencement of investment operations)
through August 31, 1994.
(b) Return calculated based on beginning of period price of $14.02 (initial
offering price of $15.00 less sales load of $0.98) and end of period market
value of $11.75 per share. This calculation is not annualized.
(c) 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 17
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
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>
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
May 31, 1996................................................... 6,347 .44 9,993 .69
August 31, 1996................................................ 6,313 .43 6,317 .44
November 30, 1996.............................................. 6,038 .42 18,781 1.29
February 28, 1997.............................................. 5,658 .39 10,982 .76
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Totals expressed in thousands of dollars except per share amounts.
See accompanying notes to financial statements.
PAGE 18
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<PAGE>
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
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 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 RAPPAPORT
President
PETER J. WILBY
Executive Vice President
BETH SEMMEL
Executive Vice President
THOMAS K. FLANAGAN
Executive Vice President
LAWRENCE H. KAPLAN
Executive Vice President
and General Counsel
ALAN M. MANDEL
Treasurer
LAURIE A. PITTI
Assistant Treasurer
JENNIFER G. MUZZEY
Secretary
NOEL B. DAUGHERTY
Assistant 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
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
- --------------------------------------------------------------------------------
STATEMENT OF DIFFERENCES
------------------------
The division symbol shall be expressed as .............. [div]
