<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
September 23, 1999
Dear Shareholders:
We are pleased to provide you this annual report for the Global Partners Income
Fund Inc. ('Fund') as of August 31, 1999. Included in this report are an
analysis of the Fund's performance versus its benchmarks and its peer group, a
commentary on the emerging debt markets and U.S. high-yield market, a listing of
the Fund's investments as of August 31, 1999 and financial statements for the
year ended August 31, 1999.
During the year ended August 31, 1999, the net asset value of the Fund increased
from $9.76 per share at August 31, 1998 to $10.98 per share at August 31, 1999.
In addition, income dividends totaling $1.67 were paid during this period.
Assuming reinvestment of these dividends in additional shares of the Fund, the
total rate of return based on the net asset value for the twelve-month time
frame was 30.96%. During the same period, the JP Morgan Emerging Markets Bond
Index Plus ('EMBI+'), a standard measure of return for the emerging markets debt
markets, returned 30.47% and the Salomon Smith Barney High Yield Market Index
returned 5.59%. The Fund's performance was the result of several factors which
we will highlight below.
EMERGING MARKET DEBT
The Fund's fiscal year opened in the aftermath of the Russian debt crisis of
August 1998. For the balance of 1998, a rally occurred in emerging markets debt,
largely due to monetary easing by the U.S. Federal Reserve Board ('Fed') and
U.S. Congressional approval of funding for the International Monetary Fund
('IMF'). The agreement, as well as a lack of forced selling by non-dedicated
investors, caused the market to rise from September through the end of the year.
In January 1999, the market again traded down, due to concerns over the
Brazilian devaluation of its local currency, which led to investors demanding a
higher risk premium from emerging markets debt.
Despite the market's turmoil at the beginning of the Fund's fiscal year and
worries stemming from Brazil's currency devaluation, global contagion was not as
severe as might have been expected. This relative calm was due to a number of
positive world events, including the Fed's monetary easing, congressional
funding for the IMF and a reduction in leverage dedicated to credit risk
investments.
The Fed raised interest rates by 50 basis points so far in 1999 in response to
the ongoing strength of the U.S. economy. The process of anticipating these two
25 basis-point rate increases has influenced bond market investors worldwide and
has impacted emerging markets debt. The Fed has emphasized its commitment to
price stability and its governors have made a number of public speeches
outlining their concerns. This high-profile approach on the part of the Fed has
increased the bond market's focus on the U.S. economy and the outlook for
increases in rates.
The following is a brief description of developments in key countries over the
past twelve months:
Brazil. As mentioned previously, the most notable event to occur in Brazil
during the period was the devaluation of the country's local currency, the real,
in January. The devaluation caused spillover throughout Latin America, but the
deterioration in market sentiment was short lived.
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
Brazil's recovery from the effects of its January currency devaluation continues
to be impressive. Brazil has exceeded the fiscal targets outlined in its IMF
agreement for the first six months of 1999. In addition, unemployment and
inflation levels have exceeded projections and underscore the progress Brazil is
making in reforming its economy. The most compelling evidence of Brazil's
progress in 1999 is the change in the overnight borrowing rate set by the
Central Bank. In an effort to stabilize the currency and prevent an inflationary
spike, the Central Bank set the overnight rate at 45% after the devaluation in
January. That rate has been gradually reduced over the ensuing months. The
current overnight borrowing rate is 19.5%. Brazil continues to have an ambitious
structural reform agenda, which includes changes to the taxation and social
security schemes. Despite recent political noise, the working relationship
between the administration and congress remains intact and we expect further
positive developments on these important initiatives in the fourth quarter.
Brazil returned 27.58% in the twelve months ended August 31, 1999. We are
slightly underweight in Brazil, the second largest component of the EMBI+ after
Argentina.
Ecuador. In a development with potentially negative implications for all
emerging markets, Ecuador announced that it would delay a $96 million coupon
payment on its Brady bonds due on August 31, 1999. In addition, Ecuador also
announced plans to restructure its $6 billion of Brady debt outstanding. Any
restructuring is expected to take considerable time and involve a number of
important parties including the Ecuadorian government and congress, the IMF and
international investors. It is too early to make a definite determination of
value in Ecuador until a firm restructuring proposal is presented.
Mexico. Mexico remains a safe haven investment in the emerging markets universe.
It is the only major Latin American country that is not in recession in 1999.
Its political and economic leadership is very solid and its need for external
financing is quite low. We expect a smooth transition to new leadership in the
upcoming presidential election, the first such contest where the election of the
PRI party candidate is not a foregone conclusion.
Venezuela. Venezuela was the best performing emerging markets debt issuer in the
EMBI+ over the past twelve months, returning 69.03%. The presidential race in
November resulted in a decisive victory for Hugo Chavez, who won 56% of the
vote. This was the largest victory in 15 years, a clear mandate for change.
Although a controversial figure prior to the election, Chavez seems to be
softening his views with regard to a major shift in economic policy, indicating
that he is a proponent of continuing a dialogue with the IMF and the current
'shadow program.' The Constituent Assembly, a key element of President Chavez's
plan to reform the Venezuelan political system, was elected in July. In a
stunning development, 91% of the seats were won by allies of President Chavez.
The agenda for the Assembly revolves around the drafting of a new constitution
for Venezuela. The initial draft of the constitution is expected to be available
in late October 1999. This document will have important implications for the
future of external capital investment in Venezuela. We believe the political
agenda will take precedence over any economic issues during the balance of 1999
as the new constitution is reviewed and ratified. Oil prices at current levels
are giving Venezuela the economic flexibility to address the constitutional
changes. We have been substantially overweight in Venezuela, a position which
contributed significantly to our performance.
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
Russia. Russia was the second best performing country in the EMBI+ over the past
twelve months, returning 61.06%. The country continues to work with the IMF on
an expanded financing package. Spokesmen for the IMF indicated pleasant surprise
at the status of Russia's macroeconomic reforms. On the political front, Kremlin
intrigue continues as the Duma elections in December and the presidential
election in June 2000 approach. Prime Minister Stepashin was fired by President
Yeltsin and replaced by Vladimir Putin, the fifth Russian prime minister in 17
months. Allegations of money laundering in the private sector have raised
questions concerning misuse of IMF aid money by the public sector. These
political issues will likely keep volatility in Russia high over the next few
months.
Morocco. King Hassan II died after 38 years on the throne. He has been replaced
by his eldest son, King Mohammed VI. We expect the policies that have made
Morocco a steadily improving credit will be continued by the new king. In
another important development in Morocco, a cellular telephone license has been
awarded to Telefonica for a price of $1.1 billion and a commitment to spend an
additional $700 million developing the network. The proceeds from this will be
used to fund a variety of government initiatives in Morocco.
OUTLOOK
Our outlook for emerging markets debt is positive based upon the current spread
level of 1,100 basis points over Treasuries. The economic rebound in Asia and
the apparent bottoming of the recession in many Latin American countries points
to an improving macroeconomic environment for emerging markets countries. We
expect the market to remain volatile but believe that we are being well
compensated for this price risk at current spread levels.
U.S. HIGH-YIELD SECURITIES
The U.S. high-yield market returned 5.59% for the Fund's fiscal year, as
reported by the Salomon Smith Barney High Yield Market Index. While benefiting
from a strong economy and a booming U.S. equity market, high-yield suffered from
the following:
1. a backup in U.S. Treasuries due to concern about rising inflation;
2. slowing mutual fund inflows;
3. a heavy new issue calendar;
4. a reduction in broker/dealer liquidity; and,
5. a rise in default rates, especially among marginal commodity producers.
The period began in the aftermath of the Russian debt crisis of August 1998.
Spreads in the high-yield market widened substantially to 665 basis points over
Treasuries as investors sold credit sensitive issues in a widespread flight to
quality. As the fiscal year progressed, concerns that a weak recovery in Asia
and recession in Latin America would trigger a slowdown in the U.S. economy
slowed the pace of spread tightening in the high-yield market.
Stronger-than-expected economic growth in the U.S., particularly in the second
calendar quarter, drove strong performance in the high-yield market. Later in
the fiscal year, the continued growth of the U.S. economy led to concerns about
rising inflation, which put pressure on the high-yield market.
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
These inflation fears caused the Fed to raise interest rates 50 basis points
over the course of the period. The high-yield market's top performers included
basic industries such as energy, metals/mining and paper & forest products, all
driven by a sustained recovery in commodity prices. Other top performers
included the less cyclical gaming and consumer product sectors and cable &
media. The worst performers included healthcare, due to the industry's troubles
with the recently imposed Medicare reimbursement system, textile/apparel, which
is suffering from cheaper imports, automotive, restaurants and services.
On August 31, 1999, the high-yield market was yielding 11.13%, up from 10.89% at
the beginning of the fiscal year. The excess yield over Treasuries was 5.21%,
down from 5.90% at the beginning of the year. Our outlook for the high-yield
market remains positive given current valuations. We continue to focus on good
quality and liquid credits in our highly diversified portfolio.
* * *
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 a.m. to 6:00 p.m. 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 GDF 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.
Sincerely,
<TABLE>
<S> <C>
Heath B. McLendon William D. Cvengros
Heath B. McLendon William D. Cvengros
Co-Chairman of the Board Co-Chairman of the Board
Peter J. Wilby Beth A. Semmel
Peter J. Wilby Beth A. Semmel
Executive Vice President Executive Vice President
</TABLE>
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SCHEDULE OF INVESTMENTS
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds -- 41.1%
Basic Industries -- 4.6%
$ 1,500,000 APP International Finance, 11.750% due 10/1/05 (a).......... $ 1,095,000
1,500,000 Berry Plastics Corp., 12.250% due 4/15/04 (a)............... 1,575,000
750,000 Envirosource Inc., 9.750% due 6/15/03 (a)................... 480,000
1,000,000 Equistar Chemicals L.P., 8.750% due 2/15/09 (a)(b).......... 995,000
1,000,000 Glencore Nickel Property Ltd., 9.000% due 12/1/14 (a)....... 880,000
1,500,000 Lyondell Chemical Co., Series B, 9.875% due 5/1/07 (a)...... 1,511,250
1,500,000 P&L Coal Holdings Corp., Series B, 8.875% due 5/15/08 (a)... 1,485,000
1,500,000 PCI Chemicals Canada Inc., 9.250% due 10/15/07 (a).......... 1,080,000
1,500,000 Radnor Holdings Corp., 10.000% due 12/1/03 (a).............. 1,515,000
------------
10,616,250
------------
Consumer Cyclicals -- 3.2%
2,000,000 Cole National Group, 8.625% due 8/15/07 (a)................. 1,600,000
1,000,000 Doman Industries Ltd., 12.000% due 7/1/04 (a)(b)............ 1,005,000
1,500,000 Federal Mogul Corp., 7.500% due 1/15/09 (a)(b).............. 1,380,000
1,500,000 Finlay Fine Jewelry Corp., 8.375% due 5/1/08 (a)............ 1,449,375
1,000,000 HMH Properties Inc., Series C, 8.450% due 12/1/08 (a)....... 937,500
1,000 Units Mattress Discounters Corp., 12.625% due 7/15/07 (a)(b)(c)... 965,000
------------
7,336,875
------------
Consumer Non-Cyclicals -- 7.4%
Ameriserve Food Distribution Inc.:
825,000 8.875% due 10/15/06 (a)..................................... 709,500
1,000,000 10.125% due 7/15/07 (a)..................................... 780,000
1,000,000 B&G Foods Inc., 9.625% due 8/1/07 (a)....................... 932,500
1,000,000 CFP Holdings Inc., 11.625% due 1/15/04 (a).................. 885,000
1,250,000 Harrahs Operating Co., Inc., 7.875% due 12/15/05 (a)........ 1,187,500
1,461,000 Hines Horticulture, Inc., 11.750% due 10/15/05 (a).......... 1,557,791
1,500,000 Horseshoe Gaming Holdings, Corp., Series B, 9.375% due
6/15/07 (a)............................................... 1,528,125
1,000,000 Imperial Holly Corp., 9.750% due 12/15/07 (a)............... 940,000
1,000,000 Isle of Capri Casinos, 8.750% due 4/15/09 (a)............... 930,000
1,000,000 Maxxim Medical, Inc., 10.500% due 8/1/06 (a)................ 1,055,000
1,900,000 North Atlantic Trading, 11.000% due 6/15/04 (a)............. 1,890,500
1,500,000 Park Place Entertainment Corp., 7.875% due 12/15/05 (a)..... 1,413,750
2,250,000 Revlon Worldwide Corp., Series B, zero coupon due 3/15/01
(a)....................................................... 1,338,750
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 5
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SCHEDULE OF INVESTMENTS (continued)
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Non-Cyclicals -- 7.4% (continued)
$ 1,125,000 Simmons Co., 10.250% due 3/15/09 (a)........................ $ 1,113,750
1,000,000 Sun International Hotels, 8.625% due 12/15/07 (a)........... 970,000
------------
17,232,166
------------
Energy -- 1.6%
1,000,000 Lomak Petroleum Inc., 8.750% due 1/15/07 (a)................ 930,000
1,000,000 PennzOil Co., 10.250% due 11/1/05 (a)....................... 1,027,500
TransAmerican Energy Corp.:
2,000,000 13.000% due 6/15/02 (a)(d).................................. 220,000
500,000 Series B, 11.500% due 6/15/02 (a)(d)(e)..................... 61,250
2,000,000 United Refining Co., Series B, 10.750% due 6/15/07 (a)...... 1,460,000
------------
3,698,750
------------
Financial -- 2.1%
1,000,000 Airplanes Pass Through Trust, 10.875% due 3/15/19 (a)....... 954,870
Contifinancial Corp.:
1,000,000 7.500% due 3/15/02 (a)...................................... 360,000
1,000,000 8.125% due 4/1/08 (a)....................................... 360,000
2,000,000 Morgan Stanley Aircraft Finance, Series 1A, Class D1, 8.700%
due 3/15/23 (a)(b)........................................ 1,740,000
1,500,000 Williams Scotsman, Inc., 9.875% due 6/1/07 (a).............. 1,470,000
------------
4,884,870
------------
Industrial - Manufacturing -- 6.0%
1,000,000 Alvey Systems Inc., 11.375% due 1/31/03 (a)................. 1,015,000
1,350,000 American Axle & Manufacturing Inc., 9.750% due 3/1/09 (a)... 1,363,500
1,500,000 Axiohm Transaction Solutions, Inc., 9.750% due 10/1/07
(a)....................................................... 750,000
1,625,000 Blount Inc., 13.000% due 8/1/09 (a)(b)...................... 1,665,625
1,750,000 BREED Technologies, Inc., 9.250% due 4/15/08 (a)(d)......... 87,500
1,250,000 Foamex L.P., 9.875% due 6/15/07 (a)......................... 1,100,000
1,000,000 Gentek Inc., 11.000% due 8/1/09 (a)(b)...................... 1,020,000
750,000 Hexcel Corp., 9.750% due 1/15/09 (a)........................ 705,000
1,500,000 High Voltage Engineering Corp., 10.500% due 8/15/04 (a)..... 1,402,500
750,000 JL French Automotive Casting, 11.500% due 6/1/09 (a)(b)..... 764,063
500,000 Jordan Industries, 10.375% due 8/1/07 (a)................... 492,500
1,750,000 Jordan Telecommunications Products, zero coupon until 8/1/00
(11.750% thereafter) due 8/1/07 (a)....................... 1,485,312
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 6
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SCHEDULE OF INVESTMENTS (continued)
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial - Manufacturing -- 6.0% (continued)
$ 2,000,000 L-3 Communications Corp., Series B, 10.375% due 5/1/07
(a)....................................................... $ 2,112,500
------------
13,963,500
------------
Media - Telecommunications -- 11.2%
1,250,000 Adelphia Communications Corp., Series B, 9.875% due 3/1/07
(a)....................................................... 1,275,000
Big Flower Press Holdings Inc.:
750,000 8.875% due 7/1/07 (a)....................................... 712,500
1,250,000 8.625% due 12/1/08 (a)...................................... 1,168,750
1,000,000 Century Communications Corp., zero coupon due 1/15/08 (a)... 415,000
2,000,000 Charter Communications Holdings LLC, zero coupon until
4/1/04 (9.920% thereafter) due 4/1/11 (a)(b).............. 1,200,000
2,000,000 CSC Holdings Inc., 10.500% due 5/15/16 (a).................. 2,200,000
1,050,000 Diamond Cable Co., zero coupon until 12/15/00
(11.750% thereafter) due 12/15/05 (a)....................... 939,750
2,000,000 Granite Broadcasting Corp., 10.375% due 5/15/05 (a)......... 2,025,000
1,250,000 Hollinger International Publishing, 9.250% due 2/1/06 (a)... 1,253,125
1,750,000 ICG Holding Inc., zero coupon until 9/15/00 (13.500%
thereafter) due 9/15/05 (a)............................... 1,540,000
1,000,000 Intermedia Communications, Inc., Series B, 8.600% due 6/1/08
(a)....................................................... 895,000
2,000,000 Lin Television Corp., 8.375% due 3/1/08 (a)................. 1,895,000
Nextel Communications Inc.:
1,500,000 9.750% due 8/15/04 (a)...................................... 1,500,000
750,000 Zero coupon until 2/15/03 (9.950% thereafter) due 2/15/08
(a)....................................................... 519,375
2,500,000 NTL Inc., zero coupon until 2/1/01 (11.500% thereafter) due
2/1/06 (a)................................................ 2,162,500
1,000,000 Orange PLC, 8.750% due 6/1/06 (a)(b)........................ 992,500
1,500,000 Rogers Communications, Inc., 8.875% due 7/15/07 (a)......... 1,526,250
987,000 SFX Broadcasting, Inc., Series B, 10.750% due 5/15/06 (a)... 1,078,298
2,500,000 United International Holdings, zero coupon until 2/15/03
(10.750% thereafter) due 2/15/08 (a)...................... 1,450,000
2,250,000 Viatel Inc., zero coupon until 4/15/03 (12.500% thereafter)
due 4/15/08 (a)........................................... 1,395,000
------------
26,143,048
------------
Services - Other -- 3.3%
1,500,000 Allied Waste North America, Series B, 7.875% due 1/1/09
(a)....................................................... 1,365,000
1,000,000 Dyncorp Inc., 9.500% due 3/1/07 (a)......................... 996,250
1,000,000 Intertek Finance PLC, 10.250% due 11/1/06 (a)............... 925,000
1,000,000 Iron Mountain Inc., 8.250% due 7/1/11 (a)(b)................ 935,000
2,000,000 Protection One Alarm Co., 8.125% due 1/15/09 (a)(b)......... 1,440,000
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SCHEDULE OF INVESTMENTS (continued)
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Services - Other -- 3.3% (continued)
$ 2,000,000 Safety-Kleen Services, 9.250% due 6/1/08 (a)................ $ 1,985,000
------------
7,646,250
------------
Technology - Electronics -- 0.0%
900 Units DecisionOne Corp., zero coupon until 8/1/02
(11.500% thereafter) due 8/1/08 (a)(d)(f)................. 6,750
------------
Transportation -- 1.5%
1,000,000 Atlantic Express, 10.750% due 2/1/04 (a).................... 980,000
1,250,000 Holt Group, 9.750% due 1/15/06 (a).......................... 843,750
TFM Sa De Cv:
750,000 10.250% due 6/15/07 (a)..................................... 639,375
2,000,000 Zero coupon until 6/15/02 (11.750% thereafter) due 6/15/09
(a)....................................................... 1,085,000
------------
3,548,125
------------
Utilities -- 0.2%
500,000 Companhia Energetica De Sao Paulo, 9.125% until 6/26/02
(9.625% thereafter) due 6/26/07 (a)....................... 422,500
------------
Total Corporate Bonds (Cost -- $107,587,811)............... 95,499,084
------------
Sovereign Bonds -- 46.1%
Argentina -- 8.7%
Republic of Argentina:
2,673,750 FRB, 5.938% due 3/31/05 (a)(g).............................. 2,282,714
16,010,000 Global Bond, 11.000% due 12/4/05 (a)........................ 14,649,150
3,850,000 Structured Note, 11.447% due 4/10/05 (a)(g)(h).............. 3,311,000
------------
20,242,864
------------
Brazil -- 8.6%
Federal Republic of Brazil:
14,929,007 C Bond, 8.000% due 4/14/14 (a)(i)........................... 8,971,408
1,000,000 DCB, Series L Bearer, 5.938% due 4/15/12 (a)(g)............. 570,000
5,590,000 DCB, Series L Registered, 5.938% due 4/15/12 (a)(g)......... 3,186,300
8,250,000 NMB, Series L Bearer, 5.938% due 4/15/09 (a)(g)............. 5,424,375
2,750,000 NMB, Series L Registered, 5.938% due 4/15/09 (a)(g)......... 1,808,125
------------
19,960,208
------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 8
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SCHEDULE OF INVESTMENTS (continued)
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Bulgaria -- 1.1%
Republic of Bulgaria:
$ 150,000 Discount Bond, Series A, 6.500% due 7/28/24 (a)(g).......... $ 101,250
4,000,000 FLIRB, Series A, 2.750% due 7/28/12 (a)(g).................. 2,430,000
------------
2,531,250
------------
Colombia -- 2.9%
Republic of Colombia:
525,000 7.250% due 2/15/03 (a)...................................... 456,750
1,000,000 7.270% due 6/15/03 (a)(b)................................... 848,500
2,005,000 10.875% due 3/9/04 (a)...................................... 1,914,775
3,900,000 12.471% due 8/13/05 (a)(g).................................. 3,412,500
200,000 7.625% due 2/15/07 (a)...................................... 148,000
------------
6,780,525
------------
Costa Rica -- 2.4%
Costa Rica Principal Bond:
3,000,000 Series A, 6.250% due 5/21/10 (a)............................ 2,707,500
3,500,000 Series B, 6.250% due 5/21/15 (a)............................ 2,940,000
------------
5,647,500
------------
Croatia -- 1.0%
Croatia:
300,000 Series A, 6.456% due 7/31/10 (a)(g)......................... 235,500
2,596,323 Series B, 6.456% due 7/31/06 (a)(g)......................... 2,116,003
------------
2,351,503
------------
Ecuador -- 0.8%
Republic of Ecuador:
1,900,000 Discount Bond, 6.000% due 2/28/25 (a)(d)(g)................. 674,500
4,000,000 Par Bond, 4.000% due 2/28/25 (a)(d)(g)...................... 1,270,000
------------
1,944,500
------------
Ivory Coast -- 0.2%
2,000,000 Ivory Coast FLIRB, 2.000% due 3/29/18 (a)(g)................ 485,000
------------
Mexico -- 6.9%
United Mexican States:
5,325,000 Global Bond, 10.375% due 2/17/09 (a)........................ 5,380,913
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 9
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SCHEDULE OF INVESTMENTS (continued)
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Mexico -- 6.9% (continued)
$ 2,750,000 Par Bond, Series W-A, 6.250% due 12/31/19 (a)(j)............ $ 1,973,125
12,100,000 Par Bond, Series W-B, 6.250% due 12/31/19 (a)(j)............ 8,681,750
------------
16,035,788
------------
Panama -- 1.4%
Republic of Panama:
1,350,000 Global Bond, 9.375% due 4/1/29 (a).......................... 1,253,813
2,900,000 IRB, 4.250% due 7/17/14 (a)(g).............................. 2,075,312
------------
3,329,125
------------
Peru -- 1.7%
Republic of Peru:
1,000,000 FLIRB, 3.750% due 3/7/17 (a)(g)............................. 507,500
6,000,000 PDI, 4.500% due 3/7/17 (a)(g)............................... 3,491,250
------------
3,998,750
------------
Philippines -- 1.8%
4,515,000 Republic of Philippines, 9.875% due 1/15/19 (a)............. 4,272,319
------------
Poland -- 1.0%
Republic of Poland:
650,000 PAR Bond, 3.000% due 10/27/24 (a)(g)........................ 381,875
2,250,000 PDI Bond, 5.000% due 10/27/14 (a)(g)........................ 1,965,937
------------
2,347,812
------------
Russia -- 1.6%
5,750,000 Russia Global Bond, 11.750% due 6/10/03 (a)................. 3,536,250
335,228 Russia IAN, 6.0625% due 12/15/15 (a)(d)(e).................. 49,132
------------
3,585,382
------------
South Korea -- 0.3%
550,000 Korea Development Bank, Global Bond, 7.900% due 2/1/02
(a)....................................................... 552,008
------------
Venezuela -- 5.7%
Republic of Venezuela:
2,500,000 Discount Bond, Series W-A, 5.875% due 3/31/20 (a)(g)........ 1,575,000
571,425 FLIRB, Series A, 6.000% due 3/31/07 (a)(g).................. 399,140
200,000 Global Bond, 9.125% due 6/18/07 (a)......................... 147,000
11,100,000 Global Bond, 13.625% due 8/15/18 (a)........................ 9,324,000
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 10
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SCHEDULE OF INVESTMENTS (continued)
August 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Venezuela -- 5.7% (continued)
$ 2,000,000 Global Bond, 9.250% due 9/15/27 (a)......................... $ 1,210,000
750,000 Par Bonds, Series W-A, 6.750% due 3/31/20 (a)............... 457,500
------------
13,112,640
------------
Total Sovereign Bonds (Cost -- $107,799,451)............... 107,177,174
------------
Loan Participations -- 9.9%
16,411,760 Kingdom of Morocco, Tranche B, 5.906% due 1/1/04 (Morgan
Guaranty Trust Co. of New York, Morgan Stanley Emerging
Markets Inc.) (a)(g)(k)................................... 14,032,055
1,638,636 The People's Democratic Republic of Algeria, Tranche 1,
6.000% due 9/4/06
(Chase Manhattan) (a)(g)(k)............................... 1,097,886
2,500,000 The People's Democratic Republic of Algeria, Tranche 3,
6.000% due 3/4/10
(Chase Manhattan) (a)(g)(k)............................... 1,600,000
1,918,181 The People's Democratic Republic of Algeria, Tranche A,
6.750% due 3/4/00
(Chase Manhattan, Merrill Lynch) (a)(g)(k)................ 1,851,045
40,500,000 Russia Principal Loan, due 12/15/20 (Chase Manhattan, Bank
of America, First Boston, ING Securities, J.P. Morgan,
Union Bank of Switzerland) (a)(d)(e)(k)................... 4,556,250
------------
Total Loan Participations (Cost -- $31,913,643)............ 23,137,236
------------
<CAPTION>
SHARES SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock -- 0.2%
9,227 Viatel, Inc. (a)(e) (Cost -- $84,077)...................... 356,970
------------
Preferred Stock -- 0.2%
1,000,000 APP Finance (II) Mauritius Ltd., Series A, 12.000% (a)(f)... 580,000
TCR Holding Corp.:
4,091 Class B (a)(e).............................................. 245
2,250 Class C (a)(e).............................................. 126
5,932 Class D (a)(e).............................................. 314
12,271 Class E (a)(e).............................................. 773
------------
Total Preferred Stock (Cost -- $1,001,458)................. 581,458
------------
Warrants & Rights -- 1.2%
1,000 Glasstech Inc. (Exercise Price of $0.01 per share expiring on 6/30/04. Each warrant
exercisable for 0.125 shares of common stock.) (a)(e)................ 500
5,000 In Flight Phone (Exercise price of $0.01 per share expiring on 8/31/02. Each
warrant exercisable for one share of common stock.) (a)(e)........... 0
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 11
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SCHEDULE OF INVESTMENTS (continued)
August 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Warrants & Rights -- 1.2% (continued)
18,975 Republic of Argentina (Exercise price of 93.30% plus accrued interest per 1,000
bonds, expiring on 12/3/99.) (a)(e).................................. $ 80,644
8,000 Terex Corp. Stock Appreciation Rights (Expiring 5/15/02.) (a)(e)....... 192,000
6,000 United International Holdings (Exercise price of $15 per share expiring on
11/15/99. Each warrant exercisable for 4.535 shares of common stock.) (a)(e)... 343,500
28,401 United Mexican States (Exchangeable into Mexican Global Bonds, expiring on
2/18/00.) (a)(e)..................................................... 2,101,674
3,750 Venezuela Par Rights (a)(e)............................................ 0
3,000 Wireless One Inc. (Exercise price of $11.55 per share. Each warrant exercisable for
one share of common stock.) (a)(e)................................... 750
------------
Total Warrants & Rights (Cost -- $2,118,189).......................... 2,719,068
------------
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement -- 1.3%
$ 3,131,000 State Street Bank & Trust Co., 5.380% due 9/1/99; Proceeds at maturity --
$3,131,468; (Fully collateralized by U.S. Treasury Bonds, 7.500% due 11/15/16;
Market value -- $3,197,900) (Cost -- $3,131,000)..................... 3,131,000
------------
Total Investments -- 100% (Cost -- $253,635,629*).................... $232,601,990
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
(a) Security is segregated as collateral pursuant to a loan agreement.
(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(c) Each unit is comprised of a $1,000 par Sr. Note due 7/15/07 and a warrant to
purchase 4.85 Class A shares and 0.539 Class L shares at $0.01 per share.
(d) Security in default as of or subsequent to August 31, 1999.
(e) Non-income producing securities.
(f) Each unit is comprised of a $1,000 par Sr. Note due 8/1/08 and a warrant to
purchase 1.9 shares of common stock at $23 per share expiring 8/1/07.
(g) Rate shown reflects current rate on instrument with variable rate or step
coupon rates.
(h) Coupon rate is derived from a formula based on the yields of other Argentine
global bonds.
(i) Payment-in-kind security for which part of the income earned is capitalized
as additional principal.
(j) Including recovery rights.
(k) Participation interests were acquired through the financial institutions
indicated parenthetically.
* Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviations used in this schedule:
<TABLE>
<S> <C> <C> <C>
C Bond -- Capitalization Bond. IAN -- Interest in Arrears Note.
DCB -- Debt Conversion Bond. IRB -- Interest Reduction Bond.
FLIRB -- Front Loaded Interest Reduction Bond. NMB -- New Money Bond.
FRB -- Floating Rate Bond. PDI -- Past Due Interest.
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 12
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $253,635,629)........... $232,601,990
Cash.................................................... 467
Interest receivable..................................... 5,399,136
Receivable for securities sold.......................... 893,000
Prepaid expenses........................................ 9,569
------------
TOTAL ASSETS............................................ 238,904,162
------------
LIABILITIES:
Loan payable (Note 4)................................... 75,000,000
Payable for securities purchased........................ 1,265,885
Loan interest payable (Note 4).......................... 338,951
Management fee payable (Note 2)......................... 152,219
Accrued expenses........................................ 143,588
------------
TOTAL LIABILITIES....................................... 76,900,643
------------
TOTAL NET ASSETS............................................ $162,003,519
------------
------------
NET ASSETS:
Common stock ($0.001 par value, 100,000,000 shares
authorized; 14,748,540 shares outstanding)............. $ 14,749
Additional paid-in capital.............................. 205,371,639
Undistributed net investment income..................... 19,470
Accumulated net realized loss on investments............ (22,368,700)
Net unrealized depreciation on investments.............. (21,033,639)
------------
TOTAL NET ASSETS............................................ $162,003,519
------------
------------
NET ASSET VALUE, PER SHARE ($162,003,519 [div] 14,748,540
shares outstanding)....................................... $10.98
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 13
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................................ $ 30,115,226
------------
EXPENSES:
Interest expense (Note 4)............................... 4,812,307
Management fee (Note 2)................................. 1,789,926
Transfer agent fees..................................... 43,950
Audit and tax services.................................. 41,682
Custody................................................. 36,275
Shareholder communications.............................. 33,947
Directors' fees......................................... 33,408
Legal fees.............................................. 26,216
Listing fees............................................ 24,236
Shareholder annual meeting.............................. 18,547
Amortization of deferred organization costs (Note 1).... 3,479
Other................................................... 17,823
------------
TOTAL EXPENSES.......................................... 6,881,796
------------
NET INVESTMENT INCOME....................................... 23,233,430
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Net Realized Loss From Security Transactions (excluding
short-term securities):
Proceeds from sales................................. 236,881,723
Cost of securities sold............................. 254,434,121
------------
NET REALIZED LOSS....................................... (17,552,398)
------------
Change in Net Unrealized Depreciation on Investments:
Beginning of year................................... (57,768,610)
End of year......................................... (21,033,639)
------------
DECREASE IN NET UNREALIZED DEPRECIATION................. 36,734,971
------------
NET GAIN ON INVESTMENTS..................................... 19,182,573
------------
INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 42,416,003
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 14
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended August 31,
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income................................... $ 23,233,430 $ 22,512,979
Net realized gain (loss)................................ (17,552,398) 1,510,650
(Increase) decrease in net unrealized depreciation...... 36,734,971 (81,994,340)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....... 42,416,003 (57,970,711)
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income................................... (24,514,395) (23,476,177)
Net realized gains...................................... -- (7,150,029)
In excess of net realized capital gains................. -- (4,816,302)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS.......................................... (24,514,395) (35,442,508)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued in reinvestment of
distributions (179,386 and 62,020 shares
issued, respectively)................................. 1,972,489 807,789
------------ ------------
INCREASE (DECREASE) IN NET ASSETS........................... 19,874,097 (92,605,430)
NET ASSETS:
Beginning of Year....................................... 142,129,422 234,734,852
------------ ------------
END OF YEAR*............................................ $162,003,519 $142,129,422
------------ ------------
------------ ------------
*Includes undistributed net investment income of............ $19,470 $1,300,435
</TABLE>
STATEMENT OF CASH FLOWS
For the Year Ended August 31, 1999
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Proceeds from sales of portfolio securities and
principal paydowns..................................... $ 241,604,130
Purchases of portfolio securities....................... (233,513,027)
Net purchases of short-term securities.................. (1,506,000)
-------------
6,585,103
Net investment income................................... 23,233,430
Adjustments to reconcile net investment income to net
cash provided by operating activities:
Accretion of discount on securities................. (6,057,402)
Capitalized income on payment-in-kind securities.... (989,445)
Amortization of deferred organization costs
(Note 1)............................................ 3,479
Net change in receivables/payables related to
operations.......................................... (233,720)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES............... 22,541,445
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Proceeds from shares issued in reinvestment of
distributions.......................................... 1,972,489
Distributions paid...................................... (24,514,395)
-------------
NET CASH USED BY FINANCING ACTIVITIES................... (22,541,906)
-------------
Net Decrease in Cash........................................ (461)
Cash, Beginning of Year..................................... 928
-------------
CASH, END OF YEAR........................................... $ 467
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 15
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. 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>
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 COSTS. Organization costs amounting to $113,655 were
incurred in connection with the organization of the Fund. These costs have been
deferred and amortized ratably over a five-year period from commencement of
operations. As of August 31, 1999, the amortization of the deferred organization
costs had been completed.
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
accreting discount on debt obligations. For the year ended August 31, 1999, the
Fund paid interest expense of $6,445,621.
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 GAAP.
PAGE 17
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (continued)
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 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 Brothers Holding Co. Inc., which
in turn is wholly owned by 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 Investment Adviser has delegated certain administrative services
to SSB Citi Fund Management LLC ('SSBC'), formerly known as SSBC Fund Management
Inc., an affiliate of the Investment Adviser, pursuant to a Sub-Administration
Agreement between the Investment Adviser and SSBC.
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, 1999, 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.
NOTE 3. PORTFOLIO ACTIVITY
During the year ended August 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<S> <C>
Purchases................................................... $234,778,912
------------
------------
Sales....................................................... $236,881,723
------------
------------
</TABLE>
PAGE 18
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (continued)
At August 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation............................... $ 8,371,673
Gross unrealized depreciation............................... (29,405,312)
------------
Net unrealized depreciation................................. $(21,033,639)
------------
------------
</TABLE>
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 2.00% and the maturity date is
November 8, 1999. The collateral for the loan was valued at $229,370,447 on
August 31, 1999 and is being held in a segregated account by the Fund's
custodian.
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. At August 31, 1999, the Fund held
loan participations with a total cost of $31,913,643.
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>
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 involves 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. CAPITAL LOSS CARRYFORWARD
At August 31, 1999, the Fund had, for Federal income tax purposes, a capital
loss carryforward of approximately $17,939,400, available to offset future
capital gains through August 31, 2007. To the extent that these carryforward
losses are used to offset capital gains, it is probable that any gains so offset
will not be distributed.
NOTE 9. DIVIDENDS SUBSEQUENT TO AUGUST 31, 1999
On September 1 and October 1, 1999, 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 24 and October 29, 1999, to shareholders of record on
September 14 and October 13, 1999, respectively.
PAGE 20
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
FINANCIAL HIGHLIGHTS
Data for a share of common stock outstanding throughout each fiscal year ended
August 31:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR............... $9.76 $16.18 $13.88 $11.11 $12.01
-------- -------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income........... 1.59 1.55 1.55 1.70 1.54
Net realized and unrealized
gain (loss)................... 1.30 (5.53) 2.46 2.56 (1.02)
-------- -------- -------- -------- --------
Total Income (Loss) From
Operations...................... 2.89 (3.98) 4.01 4.26 0.52
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS FROM:
Net investment income........... (1.67) (1.62) (1.71) (1.49) (1.42)
Net realized gains.............. -- (0.49) -- -- --
Excess of net realized capital
gains......................... -- (0.33) -- -- --
-------- -------- -------- -------- --------
Total Distributions............... (1.67) (2.44) (1.71) (1.49) (1.42)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR...... $10.98 $9.76 $16.18 $13.88 $11.11
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
MARKET VALUE, END OF YEAR......... $11.3125 $8.5625 $15.4375 $13.25 $11.125
TOTAL RETURN,
BASED ON MARKET VALUE(1)........ 53.57% (34.35)% 31.28% 34.22% 8.01%
RATIOS TO AVERAGE NET ASSETS:
Total expenses, including
interest expense.............. 4.22% 3.54% 3.55% 4.19% 4.85%
Total expenses, excluding
interest expense (operating
expenses)..................... 1.27% 1.31% 1.31% 1.32% 1.39%
Net investment income........... 14.26% 10.56% 10.14% 13.51% 14.10%
PORTFOLIO TURNOVER RATE........... 102% 144% 107% 92% 85%
NET ASSETS, END OF YEAR (000S).... $162,004 $142,129 $234,735 $201,398 $161,178
Bank Loans Outstanding,
End of Year (000s).............. $75,000 $75,000 $75,000 $75,000 $75,000
Weighted Average Bank Loans
(000s).......................... $75,000 $75,000 $75,000 $75,000 $75,000
Weighted Average Interest Rate
on Bank Loans................... 6.42% 6.34% 6.65% 6.99% 7.34%
- ----------------------------------------------------------------------------------------
</TABLE>
(1)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.
PAGE 21
<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. (the 'Fund') at August 31, 1999, 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 five years in the period then ended, 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, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, N.Y.
October 19, 1999
PAGE 22
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited)
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS:
<TABLE>
<CAPTION>
NET REALIZED
NET INVESTMENT & UNREALIZED
INCOME GAIN (LOSS)
--------------------- --------------------
QUARTERS ENDED* TOTAL PER SHARE TOTAL PER SHARE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
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)
November 30, 1998........................................... 6,790 0.46 26,849 1.84
February 26, 1999........................................... 5,897 0.41 (9,536) (0.66)
May 28, 1999................................................ 5,334 0.36 8,273 0.56
August 31, 1999............................................. 5,212 0.36 (6,403) (0.44)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Totals expressed in thousands of dollars except per share amounts.
PAGE 23
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
ADDITIONAL SHAREHOLDER INFORMATION (unaudited)
On December 10, 1998, the Annual Meeting of the Fund's Stockholders was held for
the purpose of voting on the following matters:
1. The election of Heath B. McLendon, Dr. Riordan Roett and Charles F.
Barber as directors of the Fund; and
2. The ratification of the selection of PricewaterhouseCoopers LLP as the
Fund's independent accountants for the fiscal year ended August 31,
1999.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
% OF SHARES VOTES % OF SHARES
NAME OF DIRECTORS VOTES FOR VOTED AGAINST VOTED
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Heath B. McLendon 13,173,807 99.3% 96,959 0.7%
Dr. Riordan Roett 13,172,830 99.3 97,936 0.7
Charles F. Barber 13,174,211 99.3 96,555 0.7
- -----------------------------------------------------------------------------------------------------
</TABLE>
The results of the vote on Proposal 2 were as follows:
<TABLE>
<CAPTION>
% OF SHARES VOTES % OF SHARES VOTES % OF SHARES
VOTES FOR VOTED AGAINST VOTED ABSTAINED ABSTAINED
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------
13,134,327 99.0% 40,505 0.3% 95,934 0.7%
- -------------------------------------------------------------------------
</TABLE>
PAGE 24
<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 25
<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 (UNAUDITED)
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 26
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
FORM OF TERMS AND CONDITIONS OF AMENDED AND RESTATED DIVIDEND
REINVESTMENT AND CASH PURCHASE PLAN (unaudited) (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 27
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
FORM OF TERMS AND CONDITIONS OF AMENDED AND RESTATED DIVIDEND
REINVESTMENT AND CASH PURCHASE PLAN (unaudited) (continued)
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 28
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
FORM OF TERMS AND CONDITIONS OF AMENDED AND RESTATED DIVIDEND
REINVESTMENT AND CASH PURCHASE PLAN (unaudited) (continued)
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 29
<PAGE>
GLOBAL PARTNERS INCOME FUND INC.
Directors
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Inc.
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, SSB Citi Fund Management LLC and Travelers
Investment Advisers, 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
Controller
CHRISTINA T. SYDOR
Secretary
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>
GLOBAL PARTNERS
INCOME FUND INC.
ANNUAL REPORT
AUGUST 31, 1999
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
- -----------------------
GDFANN 8/99
STATEMENT OF DIFFERENCES
------------------------
The division sign shall be expressed as .............................. [div]
