GLOBAL PARTNERS INCOME FUND INC, N-30D, 1998-11-17

GLOBAL PARTNERS INCOME FUND INC
N-30D, 1998-11-17

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<PAGE>
GLOBAL PARTNERS INCOME FUND INC.

October 8, 1998
Dear Shareholders:

We are pleased to provide this annual report for the Global Partners Income Fund
Inc. ('Fund') for the fiscal year ended August 31, 1998. Included are market
commentary, audited financial statements, the related report of independent
accountants and other information about the Fund.

During the twelve months ended August 31, 1998, the net asset value for the Fund
decreased from $16.18 per share to $9.76 at August 31, 1998. Dividends totaling
$2.44 per share were paid during this period. This total represents $1.62 and
$0.82 per share from net investment income and realized net long-term capital
gains, respectively. Assuming the reinvestment of these dividends in additional
shares of the Fund, the net asset value return for the fiscal year ended August
31, 1998 was -28.95%. During the same period, the JP Morgan Emerging Markets
Bond Index Plus ('JP Morgan EMBI+'), a standard measure of return for the
emerging debt market returned -29.87% and the Salomon Smith Barney High
Yield Market Index returned 3.00% during the same period.

At August 31, 1998, the Fund, as a percentage of total investments, was
approximately 51% invested in securities of emerging market issuers, including
obligations of sovereign governments and companies. The balance of the Fund's
assets was invested in U.S. high-yield securities and short-term investments.

EMERGING MARKETS DEBT SECURITIES

In the twelve-month period ended August 31, 1998, despite an initial period of
strength, the emerging debt market performed poorly. This sell-off was largely
due to a combination of continued Asian weakness as well as Russian economic and
political turmoil.

On August 31, 1998, top country allocations (as a percentage of total
investments) for the Fund were as follows:

<TABLE>
<S> <C>
United States........................................................ 49.4%
Brazil............................................................... 9.4%
Morocco.............................................................. 6.3%
Argentina............................................................ 6.0%
Costa Rica........................................................... 5.4%
Russia............................................................... 5.2%
Panama............................................................... 3.3%
Venezuela............................................................ 3.0%
South Korea.......................................................... 2.0%
Mexico............................................................... 2.0%
</TABLE>

For the twelve-month period ending August 31, 1998, outperformers in the
emerging debt market included Argentina, Brazil, Mexico, Morocco, Nigeria,
Panama, Peru, The Philippines, Poland and South Korea. Underperformers for the
period included Bulgaria, Ecuador, Russia and Venezuela.

Emerging debt markets continue to be negatively impacted by a global trend--
investors are reducing their appetite for risk. Beginning with Asian currency
problems in the fall of 1997 and compounded by the extended Japanese recession
and recent weakness in US equity prices, investors are demanding a higher risk
premium for investing in credit sensitive fixed income assets. This higher risk
premium leads to higher borrowing costs for countries that still have access to
the capital markets, and shuts other countries out of the capital markets
completely. Russia's problems, which we will detail below,

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GLOBAL PARTNERS INCOME FUND INC.

occurred in this risk-adverse investment environment. This investment
environment limited the range of Russia's policy response and compounded the
severity of the sell-off which spilled over to all other emerging market
credits. We expect this highly volatile period for emerging markets debt to
continue. The elements required for stability must come from a variety of
sources both inside and outside the emerging debt market. These elements include
an economic recovery in Japan, greater stability in US equity prices and an end
to political turmoil in Russia. When stability returns, emerging markets debt
will again trade on credit fundamentals. While we are optimistic that the worst
of the crisis has passed, market volatility will continue to be extremely high
and market sentiment will be cautious.

The following is a brief description of each sector's highlights over the past
twelve months.

LATIN AMERICA

Several times throughout the period, officials in the largest oil producing
regions met to discuss the oversupply of oil in world markets and the resulting
decline in oil prices. Latin American economies which rely on oil for much of
their commodity exports continue to suffer from these plunging prices. Since
August 31, 1997, West Texas Intermediate spot oil has fallen 32.3%, from
US$19.67 per barrel to US$13.32 per barrel.

Argentina. The International Monetary Fund ('IMF') mission completed its review
of Argentina, announcing that the country has met all of its fiscal targets for
the first half of 1998. Argentina has had an impressive record in meeting
financing needs during the year. For example, in March, the Argentine government
expanded its global 2017 bond (a series of debt offerings maturing in 2017) by
US$750 million. With the expansion, Argentina met US$1.35 billion of its US$2
billion financing requirement for the second quarter. While Argentina's capital
raising efforts are impressive, we remain concerned that they will not have the
ability to raise the nearly US$12 billion they will need in 1999.

Brazil. Brazil has made substantial progress on the privatization front during
the Fund's fiscal year. Sao Paulo state electricity distributor (formerly CESPE,
now Elektro) was sold to the US utility company Enron for BRL1.48 billion, a 99%
premium over the government's minimum requirement. In addition, Telebras was
sold for BRL22 billion, a 60% premium of the minimum asking price. Separately,
the TBC (the government's standard loan rate) was cut by 125 basis points to
19.75%. This move brings the rate below its pre-crisis level of 20.7%, from
which it was doubled last October in response to contagion effects from the
Asian crisis. In the political arena, President Cardoso was re-elected in the
first round of Brazil's presidential elections on October 4th. While Brazil is
continuing to exhibit sound monetary and political strength, we are concerned
that their level of short-term local currency debt (US$300 billion) is a
potential problem, and thus remain underweight.

Ecuador. Despite Ecuador's relative outperformance in November, the country's
inability to institute reform measures continues to be disappointing.
Specifically, the government has incurred continuous delays in the auction of a
35% stake in state-owned telephone company EMETEL. In addition, following the
failure by Congress to pass an increase in the value added tax, the sucre
devalued 7.5%. On a more positive note, in Ecuador's presidential elections,
Jamil Mahuad was the official first-round winner with 34.9% of the votes,
followed by Alvaro Noboa with 26.6%. Mahuad is an experienced politician with a
respected economic team and is believed to be the candidate with the ability to
stabilize the economy. We have established a marginally overweight position
because we believe we are being adequately compensated for the risk we are
taking. Further reforms will need to take place, however, for us to increase our
exposure.

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GLOBAL PARTNERS INCOME FUND INC.

Mexico. We remain confident in Mexico's potential and increased our exposure
during the period. The country's limited need for new capital in 1999 leads us
to believe that the region is a relative safe haven versus other more volatile
assets. We are, however, slightly underweight due to tight spread levels.

Panama. Panama retired US$600 million of outstanding Brady debt and
simultaneously issued a 30-year global bond during September, 1997. The exchange
allowed Panama to improve its debt structure and lower its cost of funding. We
remain overweight in Panama.

Peru. In March, Moody's raised Peru's sovereign debt ceiling to Ba3 from B2,
citing prudent fiscal and monetary policies and an outlook for strong growth.
Moody's stated that the move was based on the country's progress, which included
macroeconomic stabilization and high average rates of growth over the past
several years. Also noted was the completion of both Paris and London Club debt
restructurings, which have reduced external debt from US$33.5 billion to US$28.2
billion and have significantly lessened the near-term debt service by improving
the amortization profile. The rating increase complements Standard & Poor's
previously assigned BB rating. We maintained our overweight position during the
period, due to expected high growth as well as a limited debt obligation in the
region.

Venezuela. After months of negotiations, the IMF and the government agreed on
the terms of a 'shadow' fiscal monitoring program during the period. Unlike the
previous stand-by agreement, the program will not entail any financial support
from the IMF, only technical assistance. In the final month of the period,
however, Venezuela's market sentiment was suffering, due to two main factors.
First, Moody's downgraded Venezuela's sovereign ceiling to B1 from Ba2, having
placed the rating on watch for possible downgrade on May 8th. Moody's pointed to
the government's inability to address the domestic implications of external
shocks. Second, the privatization of the state aluminum complex, CVG, was
canceled. Although the coalition formed by Kaiser Aluminum and Billiton would
have only paid US$1.55 billion, with only US$200 million going to the
government, psychologically, the sale would have had a strong impact, as it
would have displayed the government's conviction to the privatization process.
While we are discouraged by the downgrade and failed privatization, we remain
overweight in Venezuela, due to several factors: Venezuela's capital needs in
1999 are relatively limited; Venezuela retired a good deal of their external
debt with the proceeds of the 1997 oil boom; and Venezuelan spreads are at
historically wide levels versus other similarly rated countries.

EASTERN EUROPE

Bulgaria. In December, Moody's upgraded Bulgaria's foreign currency rating to B2
from B3, citing improved credit risk with the election of a reform-oriented
government and establishment of a currency board. For comparison, the upgrade
puts Bulgaria on par with Peru and one notch below Brazil and Ecuador.
Additionally, the IMF approved the fourth tranche of a US$510 million standby
loan. Bulgaria's strides in decreasing inflation and promoting growth during the
past year have been significant: inflation in February was near 1.5%, down from
100% a year ago, and was negative 0.1% in March, largely due to falling fuel
prices. We remain slightly overweight in Bulgaria, due to the country's limited
debt service, in addition to it's meeting all IMF fiscal targets for the year.

Russia. Russia's dramatic decline during the period was due to a number of
factors: 1) the government forced a restructuring of all domestic debt; 2) the
ruble was devalued; 3) Yeltsin dismissed his Cabinet, appointing Sergey
Kireyenko as the new Prime Minister, only to reverse his actions at the end of
the period, re-appointing Viktor Chernomyrdin; and 4) the Duma refused to
appoint Chernomyrdin, resulting in Yevgeny Primakov being appointed the new
Prime Minister. These developments

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GLOBAL PARTNERS INCOME FUND INC.

devastated Russian dollar denominated bond prices during the month of August,
with prices declining as much as 80%. The result was a tremendous shock to the
market and caused a wide-spread sell-off across all emerging markets. The timing
of these events was unfortunate, as the investment community needed to be
convinced of Russia's commitment to promoting political continuity, and
therefore effectively implementing fiscal reform.

While we are extremely concerned about Russia's ability to reform both
financially and politically, we have a slightly overweight US dollar denominated
position in the Fund. We believe the Fund is adequately compensated for the risk
at these prices. It is important to note that while the Fund suffered
significant mark-to-market losses in these positions, the Fund did not own ruble
denominated debt. The distinction is important because the debt the Fund owns
was not defaulted on and is still current on all interest payments. We believe
these bonds, trading at cents on the dollar, have much more upside than downside
in an unchanged environment. There is also significant return potential in these
investments if the country implements any meaningful reforms.

U.S. HIGH-YIELD SECURITIES

Although the economy was expected to slow as a result of the fourth quarter
Asian crisis, corporate earnings and credit quality were generally very good and
supported a positive tone in the market. The market dipped during late October
1997, as Asian markets tumbled. However, few bonds traded and the market
recovered almost completely in a few short weeks. The market's firmness appeared
to be due to several factors, including: 1) a high level of cash in the market,
2) a strong rally in the US Treasury market and 3) a belief that the economy
will slow, but no recession will materialize, keeping fundamental credit quality
fairly healthy. In addition, the high-yield market's increase was fueled by
strong demand from both retail and institutional buyers. High-yield mutual funds
were aggressive buyers, as they experienced record inflows during the period.
Collateralized Bond Obligations (CBOs), insurance companies, pension funds and
other institutional buyers have also been active participants.

During the early summer, however, the high-yield market reversed its positive
trend. Investors became increasingly concerned with the impact of fundamental
problems in Japan, Russia and Southeast Asia, and a 'flight-to-quality' ensued.
Technical conditions were also weak, due to heavy new issuance. However, new
issuance began to slow, bringing supply and demand closer to equilibrium. In
addition, continued merger and acquisition activity in the cable/media sector
helped provide a more positive tone to the market.

August was a difficult and tumultuous month for the world financial markets,
including the high-yield market. Led by the emerging markets, most domestic
financial markets traded significantly lower. The Russian 'meltdown' drove vast
amounts of capital from emerging markets debt, high-yield debt and stocks to the
safety of the Treasuries. The high-yield market suffered an outflow of over US$2
billion from mutual funds. New issue activities ground to a halt toward the end
of the month. Net new issue supply totaled only US$4.5 billion. For the final
month of the reporting period, the Salomon Smith Barney High Yield Index
returned a negative 6.70%, compared with a positive 10.40% for the first 11
months of the period. By comparison, however, the high-yield market fared much
better than the emerging debt and domestic equity markets during August, which
dropped 28.7% and 14.4%, respectively, as measured by the JP Morgan EMBI+ and
the S & P 500. This was the worst monthly performance for the high-yield market
since the Index's inception in 1989 and the worst environment the market has
experienced since August through October of 1990 when the Index declined 12.0%.

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GLOBAL PARTNERS INCOME FUND INC.

The top five outperforming sectors for the twelve months ended August 31, 1998
were airlines, banking, utilities, technology and services. Underperformers for
the period included energy, pharmaceuticals, auto manufacturing, paper & forest
products and retail food & drug.

The high-yield market has experienced a slight rebound during the first several
days of September. However, we believe this may be short-lived and are looking
to invest in higher credit quality companies in non-cyclical industries. We do
not believe the environment will be as grim as 1990, for the following reasons:
1) there is no broker/dealer that dominates the high-yield market, like Drexel,
which went bankrupt in 1990; 2) we foresee no major liquidation of high-yield
paper by a major ownership class, like the savings and loan industry was forced
to do in 1989 and 1990; 3) finally, companies are more conservatively
capitalized today going into a downturn compared with the highly leveraged
companies which faced a recession in 1990. That being stated, we probably have
not yet seen the full impact of this global economic contraction, and remain
cautious on the high-yield market.

Given the nature of today's market, we wish to remind you that, while the Fund
may offer higher reward potential, the risks of investments in high-yield
securities and securities in emerging markets may also be greater.

* * *

In a continuing effort to provide timely information concerning Global Partners
Income Fund Inc., shareholders may call 1-888-777-0102 (toll free), Monday
through Friday from 8:00 am to 6:00 pm EST for the Fund's current net asset
value, market price and other information regarding the Fund's portfolio
holdings and allocations. For information concerning your Global Partners Income
Fund Inc. stock account, please call American Stock Transfer & Trust Company at
1-800-937-5449 (1-718-921-8200 if you are calling from within New York City).

We appreciate the confidence you have demonstrated in the past and hope to
continue to serve you in the future years.

Cordially,

WILLIAM D. CVENGROS HEATH B. MCLENDON
William D. Cvengros Heath B. McLendon
Co-Chairman of the Board Co-Chairman of the Board

PETER J. WILBY
Peter J. Wilby
Executive Vice President

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GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------------
Schedule of Investments
August 31, 1998

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT Corporate Bonds--49.8% VALUE
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>

Basic Industries--5.7%

$ 1,500,000 APP International Finance, 11.750% due 10/1/05(a)............................ $ 795,000

2,000,000 Berry Plastics, 12.250% due 4/15/04(a)....................................... 2,102,500

1,000,000 Envirosource Inc., 9.750% due 6/15/03(a)..................................... 945,000

500,000 Envirosource Inc., 9.750% due 6/15/03(a)(b).................................. 496,875

1,000,000 Glencore Nickel, 9.000% due 12/1/14.......................................... 750,000

2,000,000 PCI Chemicals Canada Inc., 9.250% due 10/15/07(a)............................ 1,862,500

2,000,000 Radnor Holdings, 10.000% due 12/1/03(a)...................................... 2,010,000

2,000,000 Units Stone Container Corp., 12.250% due 4/1/02(a)(c).............................. 2,020,000

1,000,000 Tekni-Plex Inc., 11.250% due 4/1/07(a)....................................... 1,052,500
------------

12,034,375
------------
Consumer Cyclicals--0.9%

2,000,000 Cole National Group, 8.625% due 8/15/07(a)................................... 1,960,000
------------
Consumer Non-Cyclicals--9.5%

2,000,000 B&G Foods Inc., 9.625% due 8/1/07(a)......................................... 1,860,000

2,000,000 Carr-Gottstein Foods Co., 12.000% due 11/15/05(a)............................ 2,290,000

2,000,000 CFP Holdings Inc., 11.625% due 1/15/04(a).................................... 1,110,000

1,000,000 Dade International Inc., 11.125% due 5/1/06(a)............................... 1,110,000

1,000,000 Doane Products Company, 10.625% due 3/1/06(a)................................ 1,130,000

1,461,000 Hines Horticulture, 11.750% due 10/15/05(a).................................. 1,534,050

1,500,000 Horseshoe Gaming, 9.375% due 6/15/07(a)...................................... 1,500,000

1,000,000 Imperial Holly Corp., 9.750% due 12/15/07(a)................................. 976,250

1,900,000 North Atlantic Trading, 11.000% due 6/15/04(a)............................... 1,800,250

3,000,000 Revlon Worldwide, zero coupon due 3/15/01(a)................................. 2,175,000

1,000,000 Riddell Sports Inc., 10.500% due 7/15/07..................................... 955,000

900,000 SC International Services, 9.250% due 9/1/07(a).............................. 911,250

1,000,000 Shop Vac Corp., 10.625% due 9/1/03(a)........................................ 1,060,000

1,550,000 Stroh Brewery, 11.100% due 7/1/06(a)......................................... 771,125

946,000 Waterford Gaming LLC, 12.750% due 11/15/03(a)................................ 1,029,958
------------

20,212,883
------------
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 6

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GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------------
Schedule of Investments (continued)
August 31, 1998

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT Corporate Bonds--49.8% (continued) VALUE
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Energy--5.3%

$ 2,000,000 Cliffs Drilling, 10.250% due 5/15/03(a)...................................... $ 2,100,000

1,000,000 Dailey International Inc., 9.500% due 2/15/08................................ 878,750

1,000,000 Magnum Hunter, 10.000% due 6/1/07............................................ 915,000

2,000,000 National Energy Group, 10.750% due 11/1/06................................... 1,270,000

2,000,000 Parker Drilling Corp., 9.750% due 11/15/06(a)................................ 1,950,000

1,000,000 Pool Energy Services Co., 8.625% due 4/1/08(a)............................... 877,500

500,000 TransAmerican Energy, 11.500% due 6/15/02.................................... 320,000

2,000,000 TransAmerican Energy, zero coupon until 6/15/99 (13.000% thereafter) due
6/15/02(a)................................................................. 980,000

2,000,000 United Refining, 10.750% due 6/15/07(a)...................................... 1,830,000
------------

11,121,250
------------
Financial--2.1%

1,000,000 Airplanes Pass Through Trust, 10.875% due 3/15/19(a)......................... 1,104,090

2,000,000 Morgan Stanley Aircraft Finance, Series 1A, Class D1, 8.700% due
3/15/23(a)(b).............................................................. 1,840,000

1,500,000 Williams Scotsman Inc., 9.875% due 6/1/07.................................... 1,485,000
------------

4,429,090
------------
Housing Related--0.9%

2,000,000 Nortek Inc., 9.125% due 9/1/07(a)............................................ 1,995,000
------------
Industrial/Manufacturing--5.8%

1,000,000 Alvey Systems Inc., 11.375% due 1/31/03(a)................................... 1,050,000

1,500,000 Axiohm Transaction Solution, 9.750% due 10/1/07(a)........................... 1,432,500

1,250,000 Burke Industries Inc., 10.000% due 8/15/07(a)................................ 1,235,938

1,250,000 Foamex L.P., 9.875% due 6/15/07(a)........................................... 1,318,750

1,900,000 High Voltage Engineering, 10.500% due 8/15/04(a)............................. 1,805,000

1,000,000 Insilco Corp., 10.250% due 8/15/07(a)........................................ 1,010,000

1,000,000 Jordan Industries, 10.375% due 8/1/07(a)..................................... 980,000

1,000,000 Jordan Telecom Products, zero coupon until 8/1/00 (11.750% thereafter) due
8/1/07..................................................................... 775,000

2,000,000 L-3 Comms Corp., 10.375% due 5/1/07.......................................... 2,145,000

500,000 Venture Holdings Trust, 9.500% due 7/1/05.................................... 491,250
------------

12,243,438
------------
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 7

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GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------------
Schedule of Investments (continued)
August 31, 1998

$ 1,250,000 Adelphia Communications, 9.875% due 3/1/07(a)................................ $ 1,325,000

1,500,000 American Media Operations, Inc., 11.625% due 11/15/04(a)..................... 1,560,000

750,000 Big Flower Press, 8.875% due 7/1/07(a)....................................... 750,000

4,000,000 Century Communications, zero coupon due 1/15/08.............................. 1,760,000

2,000,000 CSC Holdings Inc., 10.500% due 5/15/16(a).................................... 2,280,000

1,050,000 Diamond Cable Co., zero coupon until 12/15/00 (11.750% thereafter) due
12/15/05(a)................................................................ 861,000

2,000,000 Granite Broadcasting, 10.375% due 5/15/05(a)................................. 2,000,000

3,750,000 Hollinger Inc., Convertible Bond, zero coupon due 10/5/13.................... 1,500,000

1,750,000 ICG Holding Inc., zero coupon until 9/15/00 (13.500% thereafter) due
9/15/05(a)................................................................. 1,347,500

2,000,000 Intermedia Communication, 8.600% due 6/1/08.................................. 1,895,000

2,000,000 Lin Television Corp., 8.375% due 3/1/08(a)(b)................................ 1,940,000

1,500,000 Nextel Communications, zero coupon until 2/15/99 (9.750% thereafter) due
8/15/04(a).................................................................. 1,456,875

750,000 Nextel Communications, zero coupon until 2/15/03 (9.950% thereafter) due
2/15/08.................................................................... 426,563

2,500,000 NTL Inc., zero coupon until 2/1/01 (11.500% thereafter) due 2/1/06(a)........ 1,937,500

2,000,000 Rogers Communications, 8.875% due 7/15/07(a)................................. 1,950,000

987,000 SFX Broadcasting, 10.750% due 5/15/06(a)..................................... 1,051,155

2,500,000 United International Holdings, zero coupon until 2/15/03 (10.750% thereafter)
due 2/15/08................................................................ 1,175,000

2,250 Units Viatel Inc., zero coupon until 4/15/03 (12.500% thereafter) due
4/15/08(b)(d).............................................................. 1,350,000
------------

26,565,593
------------
Services/Other--3.5%

2,200,000 Allied Waste Industries, zero coupon until 6/1/02 (11.300% thereafter) due
6/1/07(a).................................................................. 1,608,750

750,000 APCOA Inc., 9.250% due 3/15/08(b)............................................ 729,375

1,000,000 Dyncorp Inc., 9.500% due 3/1/07(a)........................................... 1,005,000

1,000,000 Intertek Finance PLC, 10.250% due 11/1/06(a)................................. 1,007,500

2,000,000 Les Inc., 9.250% due 6/1/08(a)(b)............................................ 2,007,500

1,000,000 Norcal Waste Systems, 13.500% due 11/15/05................................... 1,155,000
------------

7,513,125
------------
Technology/Electronics--1.7%

1,500,000 Amphenol Corp., 9.875% due 5/15/07(a)........................................ 1,554,375

900 Units DecisionOne Corp., zero coupon until 8/1/02 (11.500% thereafter) due
8/1/08(e).................................................................. 486,000

1,500,000 Unisys Corp., 7.875% due 4/1/08(a)........................................... 1,500,000
------------

3,540,375
------------
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 8

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GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------------
Schedule of Investments (continued)
August 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT Corporate Bonds--49.8% (continued) VALUE
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Transportation--1.7%

$ 1,000,000 Atlantic Express, 10.750% due 2/1/04(a)...................................... $ 1,045,000

1,000,000 Holt Group, 9.750% due 1/15/06(a)(b)......................................... 965,000

750,000 TFM Sa De Cv, 10.250% due 6/15/07............................................ 611,250

2,000,000 TFM Sa De Cv, zero coupon until 6/15/02 (11.750% thereafter) due 6/15/09..... 1,020,000
------------

3,641,250
------------
Utilities--0.2%

500,000 Companhia Energetica De Sao Paulo, 9.125% until 6/26/02 (9.625% thereafter)
due 6/26/07(b)............................................................. 337,500
------------

Total Corporate Bonds (Cost--$111,485,363)................................... 105,593,879
------------
Sovereign Bonds--40.9%

- ----------------------------------------------------------------------------------------------------------
Argentina--6.0%

18,928,750 Republic of Argentina, FRB, Series L, 6.625% due 3/31/05(a)(f)............... 12,788,737
------------
Brazil--9.2%

Federal Republic of Brazil:

17,023,752 C Bond, 8.000% due 4/15/14(a)(g)........................................... 9,086,427

11,700,000 Global Bonds, 9.375% due 4/7/08(a)......................................... 7,034,625

8,250,000 NMB, Series L, 6.6875% due 4/15/09(a)(f)................................... 3,465,000
------------

19,586,052
------------
Bulgaria--0.8%

Republic of Bulgaria:

500,000 FLIRB, Series A, 2.500% due 7/28/12(f)..................................... 187,500

3,500,000 IAB, 6.6875% due 7/28/11(a)(f)............................................. 1,529,063
------------

1,716,563
------------
Colombia--0.4%

1,000,000 Republic of Colombia, 7.270% due 6/15/03(b).................................. 797,500
------------
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 9

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GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------------
Schedule of Investments (continued)
August 31, 1998

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT Sovereign Bonds--40.9% (continued) VALUE
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Costa Rica--5.4%

Costa Rica, Principal Bond:

$ 6,000,000 Series A, 6.250% due 5/21/10............................................... $ 4,635,000

8,500,000 Series B, 6.250% due 5/21/15............................................... 6,800,000
------------

11,435,000
------------
Ecuador--1.4%

Republic of Ecuador:

1,000,000 Par Bond, 3.500% due 2/28/25(f)............................................ 410,000

8,135,459 Bearer PDI Bond, 6.625% due 2/27/15(a)(f)(g)............................... 2,542,331
------------

2,952,331
------------
Ivory Coast--0.1%

2,000,000 Ivory Coast, FLIRB, 2.000% due 3/29/18(f).................................... 230,000
------------
Mexico--1.2%

3,000,000 United Mexican States, Global Bond, 11.500% due 5/15/26(a)................... 2,602,500
------------
Panama--3.3%

Republic of Panama:

2,705,000 Global Bond, 8.875% due 9/30/27(a)......................................... 2,053,771

4,400,000 IRB, 4.000% due 7/17/14(a)(f).............................................. 2,728,000

3,438,647 PDI Bond, 6.6875% due 7/17/16(a)(f)(g)..................................... 2,119,068
------------

6,900,839
------------
Peru--1.9%

9,500,000 Republic of Peru, FLIRB, 3.250% due 3/7/17(a)(f)............................. 4,037,500
------------
Philippines--1.5%

4,250,000 Republic of Philippines, 8.875% due 4/15/08.................................. 3,091,875
------------
Poland--0.8%

2,250,000 Republic of Poland, PDI Bond, 4.000% due 10/27/14(a)(f)...................... 1,767,656
------------
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 10

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------------
Schedule of Investments (continued)
August 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT Sovereign Bonds--40.9% (continued) VALUE
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
Russia--3.9%

Russia, Global Bond:

$16,775,000 11.750% due 6/10/03(b)..................................................... $ 4,026,000

750,000 8.750% due 7/24/05......................................................... 165,000

9,000,000 11.000% due 7/24/18........................................................ 2,025,000

7,975,000 12.750% due 6/24/28........................................................ 1,914,000

620,807 Russia, IAN, 6.625% due 12/15/15(b)(f)....................................... 90,017
------------

8,220,017
------------
South Korea--2.0%

Export-Import Bank of Korea, Global Bond:

1,500,000 7.250% due 6/25/01......................................................... 1,216,125

350,000 6.500% due 2/10/02......................................................... 286,164

Korea Development Bank, Global Bond:

1,550,000 7.900% due 2/1/02(b)....................................................... 1,262,506

1,500,000 6.625% due 11/21/23........................................................ 1,028,775

500,000 Republic of Korea, 8.875% due 4/15/08........................................ 356,250
------------

4,149,820
------------

Venezuela--3.0%

Republic of Venezuela:

2,714,299 DCB Trust Series DL, 6.625% due 12/18/07(a)(f)............................. 1,109,470

5,000,000 Global Bond, 13.625% due 8/15/18(a)........................................ 2,925,000

5,750,000 Global Bond, 9.250% due 9/15/27(a)......................................... 2,364,688
------------

6,399,158
------------

Total Sovereign Bonds (Cost --$120,631,908)............................... 86,675,548
------------

Loan Participations--8.2%
- ----------------------------------------------------------------------------------------------------------

20,058,820 Kingdom of Morocco, Tranche B, 6.4375% due 1/1/04(f) (Morgan Guaranty Trust
Company of New York, Morgan Stanley Emerging Markets Inc.)(h).............. 13,339,115

25,375,000 Russia, Principal Loan, 6.625% due 12/15/20(f) (Chase Manhattan, Bank of
America, ING Securities, J.P. Morgan, Union Bank of Switzerland)(h)(i)..... 2,697,003

1,254,545 The People's Democratic Republic of Algeria, Tranche 1, 6.625% due 9/4/06(f)
(Chase Manhattan)(h)....................................................... 752,726

836,363 The People's Democratic Republic of Algeria, Tranche A, 7.3125% due 3/4/00(f)
(Chase Manhattan)(h)....................................................... 694,182
------------

Total Loan Participations (Cost--$34,844,078)................................ 17,483,026
------------
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 11

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------------
Schedule of Investments (continued)
August 31, 1998
<TABLE>
<CAPTION>
Preferred Stock--0.2% VALUE
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>

1,000,000 APP Finance (II) Mauritius Limited, Series A, 12.000%(f) (Cost--
Shares $1,000,000)................................................................ $ 425,000
------------

Warrants & Rights(j)--0.1%
<C> <S> <C>
- ------------------------------------------------------------------------------------------------------------------
1,000 Warrants Glasstech Inc. (Exercise Price of $0.01 per share expiring on 6/30/04. Each
warrant exercisable for 0.125 shares of common stock.)..................... 1,500
5,000 Warrants In Flight Phone (Exercise price of $0.01 per share expiring on 8/31/02. Each
warrant exercisable for one share of common stock.)........................ 0
8,000 Rights Terex Corporation Stock Appreciation Rights (Expiring on 5/15/02)............ 136,000
6,000 Warrants United International Holdings (Exercise price of $15 per share expiring on
11/15/99. Each warrant exercisable for 4.535 shares of common stock.)...... 30,000
3,000 Warrants Wireless One Inc. (Exercise price of $11.55 per share. Each warrant
exercisable for one share of common stock.)................................ 750
------------

Total Warrants & Rights (Cost--$152,964).................................. 168,250
------------

PRINCIPAL
AMOUNT Repurchase Agreement--0.8%
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 1,625,000 Merrill Lynch, 5.750% due 9/1/98; Proceeds at maturity--$1,625,260;
(Fully collateralized by U.S. Treasury Bond, 7.625% due 2/15/07;
Market value--$1,659,350) (Cost--$1,625,000)............................ 1,625,000
------------

Total Investments--100% (Cost--$269,739,313*)................................ $211,970,703
------------
------------
</TABLE>

- --------------------------------------------------------------------------------

(a) All or a portion of the security is segregated as collateral pursuant to a
loan agreement.

(b) Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.

(c) Each unit is comprised of a $1 par 10.75% Senior Debenture Note due 4/1/02
and a 1.50% Supplemental Interest Certificate.

(d) Each unit is comprised of a $1,000 par Senior Note due 4/15/08 and 0.49
shares of Series A Preferred Stock.

(e) Each unit is comprised of a $1,000 par Senior Note due 8/1/08 and a warrant
to purchase 1.9 shares of common stock at $23 per share expiring 8/1/07.

(f) Rate shown reflects current rate on instrument with variable rate or step
coupon rates.

(g) Payment-in-kind security for which part of the income earned is capitalized
as additional principal.

(h) Participation interests were acquired through the financial institutions
indicated parenthetically.

(i) Portion of income earned is capitalized as Russia Interest in Arrears Notes.

(j) Non-income producing securities.

* Aggregate cost for Federal income tax purposes is substantially the same.

<TABLE>
<S> <C>
DCB --Debt Conversion Bond. IAN --Interest in Arrears Notes.
FLIRB --Front Loaded Interest Reduction Bond. IRB --Interest in Reduction Bond.
FRB --Floating Rate Bond. NMB --New Money Bond.
IAB --Interest in Arrears Bond. PDI --Past Due Interest.
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 12

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------------
Statement of Assets and Liabilities
August 31, 1998

<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost--$269,739,313)................................................ $211,970,703
Cash...................................................................................... 928
Interest receivable....................................................................... 6,829,668
Receivable for investments sold........................................................... 614,083
Unamortized deferred organization expenses (Note 1)....................................... 3,479
Prepaid expenses.......................................................................... 9,578
------------
Total Assets.............................................................................. 219,428,439
------------
LIABILITIES
Loan payable (Note 4)..................................................................... 75,000,000
Loan interest payable (Note 4)............................................................ 1,972,265
Management fee payable (Note 2)........................................................... 170,050
Accrued expenses.......................................................................... 156,702
------------
Total Liabilities......................................................................... 77,299,017
------------
Total Net Assets.......................................................................... $142,129,422
------------
------------
NET ASSETS
Common stock ($0.001 par value, 100,000,000 shares authorized; 14,569,154 shares
outstanding)............................................................................. $ 14,569
Additional paid-in capital................................................................ 203,399,330
Undistributed net investment income....................................................... 1,300,435
Distributions in excess of net realized capital gain on investments....................... (4,816,302)
Net unrealized depreciation on investments................................................ (57,768,610)
------------
Total Net Assets.......................................................................... $142,129,422
------------
------------
NET ASSET VALUE PER SHARE OF COMMON STOCK ($142,129,422 [div] 14,569,154 shares).............. $9.76
-----
-----

</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 13

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------------
Statement of Operations
For the Year Ended August 31, 1998

<TABLE>
<S> <C> <C>
INCOME
Interest (includes discount accretion of $5,730,053)........................... $ 30,069,993
OPERATING EXPENSES
Interest expense (Note 4)...................................................... $4,752,344
Management fee (Note 2)........................................................ 2,384,015
Legal.......................................................................... 84,838
Custodian...................................................................... 73,259
Audit and tax services......................................................... 70,000
Transfer agent................................................................. 44,433
Directors' fees and expenses (Note 2).......................................... 33,408
Shareholder annual meeting..................................................... 25,740
Printing....................................................................... 24,425
Listing fee.................................................................... 24,236
Amortization of deferred organization expenses (Note 1)........................ 22,272
Other.......................................................................... 18,044
----------
Total Operating Expenses....................................................... 7,557,014
------------
Net Investment Income.............................................................. 22,512,979
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments............................................... 1,510,650
Change in net unrealized depreciation on investments........................... (81,994,340)
------------
Net Realized Gain and Change in Net Unrealized Depreciation on Investments......... (80,483,690)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS......................................... $(57,970,711)
------------
------------
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 14

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- -----------------------------------------------------------------
Statements of Changes in Net Assets
For the Years Ended August 31,

<TABLE>
<CAPTION>
1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income....................................................... $ 22,512,979 $ 22,562,401
Net realized gain........................................................... 1,510,650 18,834,581
Change in net unrealized appreciation (depreciation) on investments......... (81,994,340) 16,819,689
------------ ------------
Net Increase (Decrease) in Net Assets From Operations....................... (57,970,711) 58,216,671
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income....................................................... (23,476,177) (24,879,757)
Net realized gains.......................................................... (7,150,029) --
In excess of net realized capital gains..................................... (4,816,302) --
------------ ------------
Decrease in Net Assets From Distributions to Shareholders................... (35,442,508) (24,879,757)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares issued in reinvestment of dividends (62,020 and 0
shares issued)............................................................ 807,789 --
------------ ------------
Increase (Decrease) in Net Assets............................................... (92,605,430) 33,336,914
------------ ------------
NET ASSETS
Beginning of year........................................................... 234,734,852 201,397,938
------------ ------------
END OF YEAR (includes undistributed net investment income of $1,300,435 and
$2,263,633, respectively)................................................. $142,129,422 $234,734,852
------------ ------------
------------ ------------
</TABLE>

- ------------------------------------------------
Statement of Cash Flows
For the Year Ended August 31, 1998

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Purchases of portfolio securities......................................................... $(414,248,690)
Proceeds from sales of portfolio securities and principal paydowns........................ 432,670,172
Net sales of short-term investments....................................................... 1,117,000
-------------
19,538,482
Net investment income..................................................................... 22,512,979
Accretion of discount on investments...................................................... (5,730,053)
Capitalized income on payment-in-kind securities.......................................... (1,300,225)
Amortization of organization expenses..................................................... 22,272
Net change in receivables/payables related to operations.................................. (408,253)
-------------
Net Cash Provided by Operating Activities............................................. 34,635,202
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Proceeds from shares issued in reinvestment of dividends.................................. 807,789
Dividends and distributions paid.......................................................... (35,442,508)
-------------
Net Cash Used by Financing Activities................................................. (34,634,719)
-------------
Net Increase in Cash.......................................................................... 483
Cash at Beginning of Year..................................................................... 445
-------------
CASH AT END OF YEAR........................................................................... $ 928
-------------
-------------
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.

PAGE 15

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------
Notes to Financial Statements

Note 1. Organization and Significant Accounting Policies

Global Partners Income Fund Inc. ('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.

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 16

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------
Notes to Financial Statements (continued)

FEDERAL INCOME TAXES. The Fund has complied and intends to continue to comply
with the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute all of its
income and capital gains, if any, to its shareholders. Therefore, no federal
income tax or excise tax provision is required.

DIVIDENDS AND DISTRIBUTIONS. The Fund declares and pays dividends to
shareholders monthly from net investment income. Net realized gains, if any, in
excess of loss carryovers are expected to be distributed annually. Dividends and
distributions to shareholders are recorded 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 and distributions which exceed net investment
income and net realized capital gains for financial reporting purposes but not
for tax purposes are reported as distributions in excess of net investment
income or distributions in excess of net realized capital gains. To the extent
they exceed net investment income and net realized capital gains for tax
purposes, they are reported as tax return of capital.

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 year ended
August 31, 1998, the Fund paid interest expense of $4,812,110.

YEAR END TAX RECLASSIFICATIONS. The character of income and gains to be
distributed are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. At August 31, 1998,
reclassifications were made to the capital accounts of

PAGE 17

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------
Notes to Financial Statements (continued)

the Fund to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations. Net investment income,
net realized gains and net assets were not affected by this change.

Note 2. Management and Advisory Fees and Other Transactions

The Fund has entered into a management agreement with Value Advisors LLC
('Investment Manager'), a subsidiary of PIMCO Advisors L.P. ('PIMCO'), pursuant
to which the Investment Manager, among other things, supervises the Fund's
investment program and monitors the performance of the Fund's service providers.
The agreement with the Investment Manager was approved by shareholders at a
special meeting held on October 14, 1997, and has been in effect since the
closing of the sale of the Investment Manager by Oppenheimer Group Inc. to
PIMCO, which occurred on November 4, 1997. The Investment Manager was the
transferee of the investment management responsibilities for the Fund which were
previously provided by Advantage Advisers, Inc.

The Investment Manager and the Fund have entered into an investment advisory and
administration agreement with Salomon Brothers Asset Management Inc ('Investment
Adviser'), a wholly-owned subsidiary of Salomon Smith Barney Holdings Inc.
('SSBH'), pursuant to which the Investment Adviser provides investment advisory
and administrative services to the Fund. The Investment Adviser is responsible
on a day-to-day basis for the management of the Fund's portfolio in accordance
with the Fund's investment objectives and policies and for making decisions to
buy, sell, or hold particular securities and is responsible for day-to-day
administration of the Fund. The agreement with the Investment Adviser was most
recently approved by shareholders at an annual meeting held on January 15, 1998.
Approval of the agreement was necessary due to the merger of Salomon Inc., which
had been the ultimate parent company of the Investment Adviser, with and into
SSBH, which occurred on November 28, 1997.

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 0.65% of the Fund's average weekly net assets for its services.

At August 31, 1998, the Investment Adviser owned 4,587 shares of the Fund.

Certain officers and/or directors of the Fund are also officers and/or directors
of the Investment Manager or the Investment Adviser.

The Fund pays each Director not affiliated with the Investment Manager or the
Investment Adviser a fee of $5,000 per year, $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.

PAGE 18

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------
Notes to Financial Statements (continued)

Note 3. Portfolio Activity

Purchases and sales of investment securities, other than short-term investments,
for the year ended August 31, 1998, aggregated $406,491,940 and $421,706,405,
respectively. The federal income tax cost basis of the Fund's investments at
August 31, 1998 was substantially the same as the cost basis for financial
reporting. Gross unrealized appreciation and depreciation amounted to $3,323,970
and $61,092,580, respectively, resulting in net unrealized depreciation of
$57,768,610.

Note 4. Bank Loan

The Fund has outstanding a $75,000,000 loan pursuant to a secured loan agreement
with ING Baring (U.S.) Capital Corporation. The current interest rate on the
loan is equal to six-month LIBOR plus 0.4375% and the maturity date is April 1,
1999. The collateral for the loan was valued at $138,606,055 on August 31, 1998
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 150%.

Note 5. Loan Participations

The Fund invests in fixed and floating rate loans arranged through private
negotiations between a foreign sovereign entity and one or more financial
institutions. The Fund's investment in any such loan may be in the form of a
participation in or an assignment of the loan. The market value of the Fund's
loan participations at August 31, 1998 was $17,483,026.

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 6. 'When and If' Issued Bonds

'When and if' issued bonds are recorded as investments in the Fund's portfolio
and marked-to-market to reflect the current value of the bonds. When the Fund
sells a 'when and if' issued bond, an unrealized gain or loss is recorded equal
to the difference between the selling price and purchase cost of the bond.
Settlement of trades (i.e., receipt and delivery) of the 'when and if' issued
bond is contingent upon the successful issuance of such bond. In the event its
sponsor is unable to successfully issue the security, all trades in 'when and
if' issued bonds become null and void, and, accordingly, the Fund will reverse
any gain or loss recorded on such transactions.

PAGE 19

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------
Notes to Financial Statements (continued)

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.

The net asset value of the Fund could be negatively affected if the Fund were
required to liquidate assets in other than an orderly manner and/or in adverse
market conditions to repay any bank loans outstanding.

Note 8. Dividends Subsequent to August 31, 1998

On September 1 and October 1, 1998, the Board of Directors of the Fund declared
a dividend from net investment income, each in the amount of $0.11875 per share,
payable on September 25 and October 30, 1998, to shareholders of record on
September 15 and October 14, 1998, respectively.

Note 9. Bylaw Amendment

The Board of Directors of the Fund recently reviewed and approved on July 14,
1998, various amendments to the Fund's bylaws. For example, the bylaws
provisions relating to timely notice for proposals to be brought before an
annual meeting of stockholders (other than a proposal under Rule 14a-8 of the
Securities Exchange Act of 1934 to be included in the Fund's proxy statement)
have been amended. As amended, a stockholder's notice must be delivered to the
Fund not less than 60 days not more than 90 days prior to the first anniversary
of the preceding year's annual meeting. An exception applies in the event the
date of the annual meeting is substantially advanced or delayed from the
anniversary date. The Board believes that the amended timely notice provisions
will provide greater certainty to stockholders because previously, timely notice
keyed off the date of the current year's meeting or the date public disclosure
of the current year's meeting is made. In addition, the provisions provide that
any business to be brought before a special meeting of stockholders must be
specified in the notice of meeting or otherwise properly brought before the
meeting by or at the direction of the Board of Directors. Finally, upon
recommendation of the Fund's Maryland counsel, other changes to certain bylaw
provisions were made to conform to the bylaw provisions of more recently
organized Maryland companies.

PAGE 20

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ------------------------------------------
Financial Highlights
Data for a share of common stock outstanding throughout each year:

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994(1)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------

Net asset value,
beginning of year............. $ 16.18 $ 13.88 $ 11.11 $ 12.01 $ 14.02
-------- -------- --------- -------- --------
Net investment income........... 1.55 1.55 1.70 1.54 0.97
Net realized gain (loss) and
change in net unrealized
appreciation (depreciation) on
investments................... (5.53) 2.46 2.56 (1.02) (1.86)
-------- -------- --------- -------- --------
Total from investment
operations.................... (3.98) 4.01 4.26 0.52 (0.89)
-------- -------- --------- -------- --------
Less dividends and
distributions:
From net investment income.... (1.62) (1.71) (1.49) (1.42) (0.98)
In excess of net investment
income...................... -- -- -- -- (0.02)
From net realized gains....... (0.49) -- -- -- (0.07)
In excess of net realized
capital gains............... (0.33) -- -- -- --
-------- -------- --------- -------- --------
Total dividends and
distributions................. (2.44) (1.71) (1.49) (1.42) (1.07)
-------- -------- --------- -------- --------
Offering costs on issuance of
common stock ................. -- -- -- -- (0.05)
-------- -------- --------- -------- --------
Net asset value, end of year.... $ 9.76 $ 16.18 $ 13.88 $ 11.11 $ 12.01
-------- -------- --------- -------- --------
-------- -------- --------- -------- --------
Per share market value,
end of year................... $ 8.5625 $15.4375 $ 13.25 $ 11.125 $ 11.75
Total investment return based on
market price per share(2)..... (34.35)% 31.28% 34.22% 8.01% (9.02)%'DD'
Ratios to average net assets:
Total expenses, including
interest expense............ 3.54% 3.55% 4.19% 4.85% 2.77%'D'
Total expenses, excluding
interest expense (operating
expenses)................... 1.31% 1.31% 1.32% 1.39% 1.38%'D'
Net investment income......... 10.56% 10.14% 13.51% 14.10% 9.05%'D'
Portfolio turnover rate......... 144% 107% 92% 85% 12%
Net assets, end of year (000)... $142,129 $234,735 $ 201,398 $161,178 $174,252
Bank loans outstanding, end of
year (000).................... $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000
Weighted average bank loans
(000)......................... $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 47,272
Weighted average interest rate
on bank loans................. 6.34% 6.65% 6.99% 7.34% 5.44%'D'
- --------------------------------------------------------------------------------------------------------------
</TABLE>

(1) For the period October 29, 1993 (commencement of investment operations)
through August 31, 1994.

'DD' 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.

(2) 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.

'D' Annualized.

PAGE 21

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- ---------------------------------------------------------------
Report of Independent Accountants

To the Board of Directors and Shareholders of
Global Partners Income Fund Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of Global Partners
Income Fund Inc. ('Fund') at August 31, 1998, the results of its operations and
its cash flows for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the four years in the period then ended and for the period October 29, 1993
(commencement of investment operations) through August 31, 1994, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as 'financial statements') are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.

PricewaterhouseCoopers LLP
New York, N.Y.
October 21, 1998

PAGE 22

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.

- -----------------------------------------------------------------------
Selected Quarterly Financial Information (unaudited)
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS:

<TABLE>
<CAPTION>
NET REALIZED GAIN
(LOSS) & CHANGE
IN NET UNREALIZED
NET INVESTMENT APPRECIATION
INCOME (DEPRECIATION)
---------------------- ---------------------
QUARTERS ENDED* TOTAL PER SHARE TOTAL PER SHARE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------

November 30, 1996............................................. $6,038 $ 0.42 $ 18,781 $ 1.29
February 28, 1997............................................. 5,658 0.39 10,982 0.76
May 31, 1997.................................................. 5,426 0.37 (1,100) (0.07)
August 31, 1997............................................... 5,440 0.37 6,991 0.48
November 30, 1997............................................. 5,502 0.38 (8,712) (0.60)
February 27, 1998............................................. 5,521 0.38 5,620 0.39
May 29, 1998.................................................. 5,518 0.38 (5,824) (0.40)
August 31, 1998............................................... 5,972 0.41 (71,568) (4.92)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

* Totals expressed in thousands of dollars except per share amounts.

- ------------------------------------
Tax Information (unaudited)
For Federal tax purposes, the Fund hereby designates for the fiscal year ended
August 31, 1998:

The Taxpayer Relief Act of 1997 enacted differing rates of tax on various
long-term capital gain transactions. As a result, the Fund designates:

Total long-term capital gain distributions paid of $11,966,331.

$2,253,204 are considered '28 percent rate gains'.

$9,713,127 are considered '20 percent rate gains'.

PAGE 23

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.

- ----------------------------------------
Other Information (unaudited)

Year 2000. The investment management services provided to the Fund by the
Investment Adviser depend in large part on the smooth functioning of its
computer systems. Many computer software systems in use today cannot recognize
the year 2000, but revert to 1900 or some other date, due to the manner in which
the dates were encoded or calculated. The capability of these systems to
recognize the year 2000 could have a negative impact on the Investment Adviser's
provision of investment advisory services, including handling of securities
trades, pricing and account services. The Investment Adviser has advised the
Fund that it has been reviewing all of their computer systems and actively
working on necessary changes to its systems to prepare for the year 2000 and
expects that given the extensive testing which it is undertaking, its systems
will be year 2000 compliant before such date. In addition, the Investment
Adviser has been advised by certain of the Fund's service providers that they
are also in the process of modifying their systems with the same goal. There
can, however, be no assurance that the Investment Adviser or any other service
provider will be successful in achieving year 2000 compliance, or that
interaction with other non-complying computer systems will not impair services
to the Fund at that time.

PAGE 24

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------

PURSUANT TO CERTAIN RULES OF THE SECURITIES AND EXCHANGE COMMISSION, THE
FOLLOWING ADDITIONAL DISCLOSURE IS PROVIDED.

Form of Terms and Conditions of Amended and Restated Dividend
Reinvestment and Cash Purchase Plan

1. Each shareholder initially purchasing shares of common stock ('Shares') of
Global Partners Income Fund Inc. ('Fund') on or after September 6, 1996 will be
deemed to have elected to be a participant in the Amended and Restated Dividend
Reinvestment and Cash Purchase Plan ('Plan'), unless the shareholder
specifically elects in writing (addressed to the Agent at the address below or
to any nominee who holds Shares for the shareholder in its name) to receive all
income dividends and distributions of capital gains in cash, paid by check,
mailed directly to the record holder by or under the direction of American Stock
Transfer & Trust Company as the Fund's dividend-paying agent ('Agent'). A
shareholder whose Shares are held in the name of a broker or nominee who does
not provide an automatic reinvestment service may be required to take such
Shares out of 'street name' and register such Shares in the shareholder's name
in order to participate, otherwise dividends and distributions will be paid in
cash to such shareholder by the broker or nominee. Each participant in the Plan
is referred to herein as a 'Participant.' The Agent will act as Agent for each
Participant, and will open accounts for each Participant under the Plan in the
same name as their Shares are registered.

2. Unless the Fund declares a dividend or distribution payable only in the form
of cash, the Agent will apply all dividends and distributions in the manner set
forth below.

3. If, on the determination date, the market price per Share equals or exceeds
the net asset value per Share on that date (such condition, a 'market premium'),
the Agent will receive the dividend or distribution in newly issued Shares of
the Fund on behalf of Participants. If, on the determination date, the net asset
value per Share exceeds the market price per Share (such condition, a 'market
discount'), the Agent will purchase Shares in the open-market. The determination
date will be the fourth New York Stock Exchange trading day (a New York Stock
Exchange trading day being referred to herein as a 'Trading Day') preceding the
payment date for the dividend or distribution. For purposes herein, 'market
price' will mean the average of the highest and lowest prices at which the
Shares sell on the New York Stock Exchange on the particular date, or if there
is no sale on that date, the average of the closing bid and asked quotations.

4. Purchases made by the Agent will be made as soon as practicable commencing on
the Trading Day following the determination date and terminating no later than
30 days after the dividend or distribution payment date except where temporary
curtailment or suspension of purchase is necessary to comply with applicable
provisions of federal securities law; provided, however, that

PAGE 25

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
- --------------------------------------------------------------------------------
Form of Terms and Conditions of Amended and Restated Dividend
Reinvestment and Cash Purchase Plan (continued)

such purchases will, in any event, terminate on the Trading Day prior to the
'ex-dividend' date next succeeding the dividend or distribution payment date.

5. If (i) the Agent has not invested the full dividend amount in open-market
purchases by the date specified in paragraph 4 above as the date on which such
purchases must terminate or (ii) a market discount shifts to a market premium
during the purchase period, then the Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued Shares (x) in the case of (i) above, at the close of business on
the date the Agent is required to terminate making open-market purchases as
specified in paragraph 4 above or (y) in the case of (ii) above, at the close of
business on the date such shift occurs; but in no event prior to the payment
date for the dividend or distribution.

6. In the event that all or part of a dividend or distribution amount is to be
paid in newly issued Shares, such Shares will be issued to Participants in
accordance with the following formula: (i) if, on the valuation date, the net
asset value per Share is less than or equal to the market price per Share, then
the newly issued Shares will be valued at net asset value per Share on the
valuation date; provided, however, that if the net asset value is less than 95%
of the market price on the valuation date, then such Shares will be issued at
95% of the market price and (ii) if, on the valuation date, the net asset value
per Share is greater than the market price per Share, then the newly issued
Shares will be issued at the market price on the valuation date. The valuation
date will be the dividend or distribution payment date, except that with respect
to Shares issued pursuant to paragraph 5 above, the valuation date will be the
date such Shares are issued. If a date that would otherwise be a valuation date
is not a Trading Day, the valuation date will be the next preceding Trading Day.

7. Participants have the option of making additional cash payments to the Agent,
monthly, in a minimum amount of $250, for investment in Shares. The Agent will
use all such funds received from Participants to purchase Shares in the open
market on or about the first business day of each month. To avoid unnecessary
cash accumulations, and also to allow ample time for receipt and processing by
the Agent, Participants should send in voluntary cash payments to be received by
the Agent approximately 10 days before an applicable purchase date specified
above. A Participant may withdraw a voluntary cash payment by written notice, if
the notice is received by the Agent not less than 48 hours before such payment
is to be invested.

8. Purchases by the Agent pursuant to paragraphs 4 and 7 above may be made on
any securities exchange on which the Shares of the Fund are traded, in the
over-the-counter market or in negotiated transactions, and may be on such terms
as to price, delivery and otherwise as the Agent shall determine. Funds held by
the Agent uninvested will not bear interest, and it is understood that, in any
event, the Agent shall have no liability in connection with any inability to

PAGE 26

purchase Shares within the time periods herein provided, or with the timing of
any purchases effected. The Agent shall have no responsibility as to the value
of the Shares acquired for the Participant's account. The Agent may commingle
amounts of all Participants to be used for open-market purchases of Shares and
the price per Share allocable to each Participant in connection with such
purchases shall be the average price (including brokerage commissions) of all
Shares purchased by the Agent.

9. The Agent will maintain all Participants' accounts in the Plan and will
furnish written confirmations of all transactions in each account, including
information needed by Participants for personal and tax records. The Agent will
hold Shares acquired pursuant to the Plan in noncertificated form in the
Participant's name or that of its nominee, and each Participant's proxy will
include those Shares purchased pursuant to the Plan. The Agent will forward to
Participants any proxy solicitation material and will vote any Shares so held
for Participants only in accordance with the proxy returned by Participants to
the Fund. Upon written request, the Agent will deliver to Participants, without
charge, a certificate or certificates for the full Shares.

10. The Agent will confirm to Participants each acquisition made for their
respective accounts as soon as practicable but not later than 60 days after the
date thereof. Although Participants may from time to time have an undivided
fractional interest (computed to three decimal places) in a Share of the Fund,
no certificates for fractional shares will be issued. Dividends and
distributions on fractional shares will be credited to each Participant's
account. In the event of termination of a Participant's account under the Plan,
the Agent will adjust for any such undivided fractional interest in cash at the
market value of the Fund's Shares at the time of termination less the pro rata
expense of any sale required to make such an adjustment.

11. Any share dividends or split shares distributed by the Fund on Shares held
by the Agent for Participants will be credited to their respective accounts. In
the event that the Fund makes available to Participants rights to purchase
additional Shares or other securities, the Shares held for Participants under
the Plan will be added to other Shares held by the Participants in calculating
the number of rights to be issued to Participants.

12. The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. Participants will be charged a pro rata
share of brokerage commissions on all open-market purchases.

13. Participants may terminate their accounts under the Plan by notifying the
Agent in writing. Such termination will be effective immediately if notice is
received by the Agent not less than 10 days prior to any dividend or
distribution record date; otherwise such termination will be effective on the
first Trading Day after the payment date for such dividend or distribution with
respect to any subsequent dividend or distribution. The Plan may be amended or
terminated by the Fund as

PAGE 27

applied to any voluntary cash payments made and any income dividend or capital
gains distribution paid subsequent to written notice of the change or
termination sent to Participants at least 30 days prior to the record date for
the income dividend or capital gains distribution. The Plan may be amended or
terminated by the Agent, with the Fund's prior written consent, on at least 30
days' written notice to Participants. Notwithstanding the preceding two
sentences, the Agent or the Fund may amend or supplement the Plan at any time or
times when necessary or appropriate to comply with applicable law or rules or
policies of the Securities and Exchange Commission or any other regulatory
authority. Upon any termination, the Agent will cause a certificate or
certificates for the full Shares held by each Participant under the Plan and
cash adjustment for any fraction to be delivered to each Participant without
charge.

14. Any amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Agent receives
written notice of the termination of the Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its place and
stead of a successor Agent under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent under
these terms and conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will be authorized to
pay to such successor Agent, for each Participant's account, all dividends and
distributions payable on Shares of the Fund held in each Participant's name or
under the Plan for retention or application by such successor Agent as provided
in these terms and conditions.

15. In the case of Participants, such as banks, broker-dealers or other
nominees, which hold Shares for others who are beneficial owners ('Nominee
Holders'), the Agent will administer the Plan on the basis of the number of
Shares certified from time to time by each Nominee Holder as representing the
total amount registered in the Nominee Holder's name and held for the account of
beneficial owners who are to participate in the Plan.

16. The Agent shall at all times act in good faith and use its best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement and to comply with applicable law, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by its negligence, bad faith, or willful misconduct or that of its
employees.

17. All correspondence concerning the Plan should be directed to the Agent at 40
Wall Street, 46th Floor, New York, New York 10005.

PAGE 28

<PAGE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.

- ------------
Directors

CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated

WILLIAM D. CVENGROS
Co-Chairman of the Board;
Chief Executive Officer and
President of Value Advisors LLC and
Chief Executive Officer and
President of PIMCO Advisors L.P.

LESLIE H. GELB
President, The Council on Foreign Relations

HEATH B. MCLENDON
Co-Chairman of the Board;
Managing Director, Salomon Smith Barney Inc.
President and Director, Mutual Management
Corp. and Travelers Investment Advisers, Inc.;
Chairman, Smith Barney Strategy Advisors 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

WILLIAM D. CVENGROS
Co-Chairman of the Board

HEATH B. MCLENDON
Co-Chairman of the Board

STEPHEN J. TREADWAY
President

LEWIS E. DAIDONE
Executive Vice President and Treasurer

THOMAS K. FLANAGAN
Executive Vice President

NEWTON B. SCHOTT
Executive Vice President

BETH A. SEMMEL
Executive Vice President

PETER J. WILBY
Executive Vice President

ANTHONY PACE
Assistant Controller

- ----------------------
Global Partners
Income Fund Inc.
7 World Trade Center
New York, New York 10048

Telephone
1-888-777-0102

INVESTMENT MANAGER
Value Advisors LLC
800 Newport Center Drive
Suite 100
Newport Beach, California 92660

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

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036

LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017

NEW YORK STOCK EXCHANGE SYMBOL
GDF

- --------------------------------------------------------------------------------

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005

GLOBAL PARTNERS
INCOME FUND INC.

ANNUAL REPORT
AUGUST 31, 1998

BULK RATE
U.S. POSTAGE
STATEN ISLAND, NY
PERMIT NO.
169

STATEMENT OF DIFFERENCES
------------------------

The division sign shall be expressed as...................................[div]
The dagger symbol shall be expressed as...................................'D'
The double dagger symbol shall be expressed as.............................'DD'