<PAGE>
BULK RATE
American Stock Transfer & Trust Company U.S. POSTAGE
40 Wall Street PAID
New York, New York 10005 STATEN ISLAND, NY
PERMIT No.
169
Global Partners
Income Fund Inc.
Semi-Annual Report
February 29, 2000
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
March 15, 2000
Dear Shareholders:
We are pleased to provide you with this semi-annual report for the Global
Partners Income Fund Inc. ('Fund') as of February 29, 2000. 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 February 29, 2000, and
financial statements for the six-months ended February 29, 2000.
During the six months ended February 29, 2000, the net asset value of the Fund
increased from $10.98 per share at August 31, 1999 to $12.02 per share at
February 29, 2000. In addition, income dividends totaling $0.71 per share 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 six-month time frame was 16.45%. In comparison, the JP Morgan Emerging
Markets Bond Index Plus ('EMBI+')1, a standard measure of return for the
emerging markets debt markets, returned 21.56% and the Salomon Smith Barney High
Yield Market Index2 returned 0.36% for the same time period. The Fund's
performance was the result of several factors which we will highlight below.
EMERGING MARKET DEBT
Emerging market debt returned 21.56% for the six months ended February 29, 2000
as measured by the EMBI+. The market performed well in a relatively difficult
fixed income environment. During the same period, the Salomon Smith Barney Broad
Investment Grade Index3 returned 1.93%. Emerging market returns were dominated
by Russia, Bulgaria, Peru, Brazil and Venezuela, during the reporting period.
The U.S. Federal Reserve Board ('Fed') raised interest rates by 50 basis points
during the past six months of the Fund's fiscal year 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. The
Fed's aggressive approach has increased the bond market's focus on the U.S.
economy and the outlook for increases in rates.
When viewed in the context of this relatively difficult fixed income
environment, the performance of emerging markets debt has been particularly
strong. Investors have been attracted by the high yields available in the market
and reassured by the improving economic performance of a number of key
countries.
Russia was the best performing country in the Index over the past six months,
returning 67.06%. The country continues to work with the International Monetary
Fund ('IMF') on an expanded
- ---------
1 The EMBI+ is a total return index that tracks the traded market for U.S.
dollar-denominated Brady and other similar sovereign restructured bonds traded
in the emerging markets.
2 The Salomon Smith Barney High-Yield Market Index covers a significant portion
of the below-investment-grade U.S. corporate bond market.
3 The Salomon Smith Barney Broad Investment Grade (BIG) Bond Index includes
institutionally traded U.S. Treasury Bonds, government-sponsored bonds (U.S.
Agency and supranational), mortgage-backed securities and corporate
securities.
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
financing package. Spokesmen for the IMF indicated pleasant surprise at the
status of Russia's macroeconomic reforms. Russia reached agreement with the
London Club on restructuring defaulted Soviet-era debt. (The London Club is the
official group of creditors lending to emerging market governments.) The
agreement appears to be quite favorable to the Russians and broadens their
alternatives for financing sources in the future. On the political front,
President Yeltsin resigned and appointed Prime Minister Putin to the position of
acting President. President Putin, the prohibitive favorite, was elected
President on the first ballot of the March 26, 2000 election.
Bulgaria returned 26.32% during the past six months. The local economy continues
to recover from the impact of the Kosovo crisis, as regional trade has
rebounded. In addition, the country enjoys the support of multi-lateral agencies
and Western governments for its disciplined approach to dealing with its
economic problems. We continue to hold an overweighted position in Bulgaria.
Brazil's recovery from the effects of its January currency devaluation continues
to be impressive. Brazil has continued to exceed the fiscal targets outlined in
its IMF agreement. In addition, unemployment and inflation levels have been
lower than projected and underscore the progress Brazil is making in reforming
its economy. 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 2000. Brazil returned 25.81% in the six months ended
February 29, 2000.
Economic growth has rebounded in Peru leading to very strong performance over
the past six months. Peruvian debt has returned 26.21% over this period as
economic growth has combined with heightened interest in the political scene
leading up to this year's presidential election.
Venezuela's Constituent Assembly completed the draft of a new Constitution. The
Constitution calls for national elections to be held on May 28, 2000. We expect
the new Constitution to be ratified by the voters and President Chavez to win
re-election. Oil price strength improved Venezuela's credit quality throughout
1999. Venezuela returned 23.10% during the past six months of the Fund's fiscal
year. We continue to overweight Venezuela for several reasons: Venezuela's
financing needs in 2000 are relatively limited; oil prices remain substantially
above budgeted levels; and Venezuelan spreads are at particularly wide levels
given its level of credit quality.
OUTLOOK
Our outlook for emerging markets debt is positive based upon the current spread
level of approximately 800 basis points over Treasuries. Economic growth in Asia
combined with a rebound in gross domestic product ('GDP') growth in many Latin
American countries points to an improving macroeconomic environment for emerging
countries. In addition, volatility has declined sharply in the emerging debt
markets. Volatility over the past six months has been approximately 8%,
substantially below the long-term historical level of 15%.
HIGH-YIELD DEBT SECURITIES
The high-yield market returned 0.36% over the six-month period ended
February 29, 2000, as reported by the Salomon Smith Barney High Yield Market
Index. Investors' reluctance to commit
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
significant amounts of cash to the market, combined with a large supply of new
issues, pushed up yields in both the new issue and secondary markets during the
period. Investors' primary concerns over the period included: (i) limited
broker-dealer liquidity; (ii) continued mutual fund outflows; (iii) volatility
in the equity market; (iv) inflation and interest rate worries; and
(v) increased credit concerns. These concerns led the high-yield market, and
credit markets in general, to heavily penalize underperformers.
The market's challenging conditions carried over to the new issue market, where
investors preferred larger issues from established, higher quality issuers and
shunned smaller transactions from less recognized borrowers. As a result, many
new issues were forced to price at a significant discount in order to attract
investor attention, while others were postponed.
Limited broker-dealer liquidity, mutual fund outflows and a highly selective
new-issue market combined to create a difficult technical situation in the
market. Credit problems in selected corporations put additional pressure on the
market and led the high-yield market to under-perform the Salomon Smith Barney
Broad Investment Grade Index, which returned
1.93% for the six-month period.
During the six-months ended February 29, 2000, the top performing sectors in the
high-yield market included telecommunications, cable, gaming and energy. The
most significant underperforming sectors were supermarkets/drugstores, textiles
and consumer products. Energy performance was driven by rising oil prices
throughout the period. Individual credit performance in the other sectors was
more responsible for relative returns than any other macro factor.
In terms of credit quality, BB issues outperformed B issues, which in turn
outperformed CCC issues. Investors continued to favor the greater liquidity and
higher credit quality offered by BB issues.
SALOMON SMITH BARNEY HIGH YIELD MARKET INDEX
TOTAL RATE OF RETURN
SIX MONTHS ENDED FEBRUARY 29, 2000
----------------------------------
<TABLE>
<S> <C>
BB Issues................................................... 1.29%
B Issues.................................................... 0.67%
CCC Issues.................................................. (5.87)%
Current Yield............................................... 11.85%
Spread between Index & 10-Year.............................. Spread of 537 basis points
(widening by 16 basis
points since August 31,
1999)
</TABLE>
OUTLOOK
The high-yield market represents good long-term value at current spread levels.
We expect the technical imbalances in the market will be corrected as investors
recognize the attractive returns offered in the market at current spread levels.
* * *
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
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>
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G L O B A L P A R T N E R S I N C O M E F U N D I N C.
SCHEDULE OF INVESTMENTS (unaudited)
February 29, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS -- 33.3%
BASIC INDUSTRIES -- 4.4%
$ 1,500,000 APP International Finance, 11.750% due 10/1/05 (a).......... $ 1,278,750
1,500,000 Berry Plastics Corp., 12.250% due 4/15/04 (a)............... 1,522,500
1,000,000 Glencore Nickel Property Ltd., 9.000% due 12/1/14 (a)....... 870,000
850,000 LTV Corp., 11.750% due 11/15/09 (a)(b)...................... 864,875
1,500,000 Lyondell Chemical Co., Series B, 9.875% due 5/1/07 (a)...... 1,440,000
1,750,000 Moll Industries, 10.500% due 7/1/08 (a)..................... 708,750
750,000 Norampac Inc., 9.500% due 2/1/08 (a)........................ 746,250
1,500,000 P&L Coal Holdings Corp., Series B, 8.875% due
5/15/08 (a)................................................ 1,402,500
1,000,000 PCI Chemicals Canada Inc., 9.250% due 10/15/07 (a).......... 832,500
1,250,000 Radnor Holdings Corp., 10.000% due 12/1/03 (a).............. 1,168,750
------------
10,834,875
------------
CONSUMER CYCLICALS -- 3.2%
1,000,000 Advance Stores Co., Inc., 10.250% due 4/15/08 (a)........... 850,000
2,000,000 Cole National Group, 8.625% due 8/15/07 (a)................. 1,350,000
1,000,000 Doman Industries Limited, 12.000% due 7/1/04 (a)............ 1,040,000
1,500,000 Federal Mogul Corp., 7.500% due 1/15/09 (a)................. 1,308,750
1,500,000 Finlay Fine Jewelry Corp., 8.375% due 5/1/08 (a)............ 1,365,000
1,000,000 HMH Properties, Inc., Series C, 8.450% due 12/1/08 (a)...... 900,000
1,000 Units Mattress Discounters Corp., 12.625% due
7/15/07 (a)(b)(c).......................................... 950,000
625,000 Pillowtex Corp., 9.000% due 12/15/07 (a).................... 256,250
------------
8,020,000
------------
CONSUMER NON-CYCLICALS -- 4.8%
1,000,000 B&G Foods Inc., 9.625% due 8/1/07 (a)....................... 850,000
1,250,000 Harrahs Operating Co., Inc., 7.875% due 12/15/05 (a)........ 1,175,000
1,461,000 Hines Horticulture Inc., 11.750% due 10/15/05 (a)........... 1,493,873
1,500,000 Horseshoe Gaming Holdings, Corp., Series B, 9.375% due
6/15/07 (a)................................................ 1,462,500
1,000,000 Imperial Holly Corp., 9.750% due 12/15/07 (a)............... 460,000
500,000 Isle of Capri Casinos, 8.750% due 4/15/09 (a)............... 444,375
750,000 Mohegan Tribal Gaming, 8.750% due 1/1/09 (a)................ 721,875
1,900,000 North Atlantic Trading, 11.000% due 6/15/04 (a)............. 1,714,750
1,500,000 Park Place Entertainment Corp., 7.875% due 12/15/05 (a)..... 1,402,500
350,000 Revlon Consumer Products, 8.625% due 2/1/08 (a)............. 143,500
500,000 Simmons Co., 10.250% due 3/15/09 (a)........................ 455,000
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 5
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G L O B A L P A R T N E R S I N C O M E F U N D I N C.
SCHEDULE OF INVESTMENTS (unaudited) (continued)
February 29, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-CYCLICALS -- 4.8% (continued)
$ 500,000 Sun International Hotels, 9.000% due 3/15/07 (a)............ $ 465,000
1,000,000 Sun International Hotels, 8.625% due 12/15/07 (a)........... 937,500
250,000 Vlasic Foods International Inc., 10.250% due
7/1/09 (a)(b).............................................. 175,000
------------
11,900,873
------------
ENERGY -- 1.8%
1,500,000 Belco Oil & Gas Corp., Series B, 8.875% due 9/15/07 (a)..... 1,410,000
1,000,000 Lomak Petroleum Inc., 8.750% due 1/15/07 (a)................ 900,000
1,000,000 PennzEnergy Co., 10.250% due 11/1/05 (a).................... 1,078,750
2,000,000 United Refining Co., Series B, 10.750% due 6/15/07 (a)...... 1,200,000
------------
4,588,750
------------
FINANCIAL -- 1.7%
990,200 Airplanes Pass Through Trust, 10.875% due 3/15/19 (a)....... 901,112
Contifinancial Corp.:
1,000,000 7.500% due 3/15/02 (a)..................................... 95,000
1,000,000 8.125% due 4/1/08 (a)...................................... 95,000
2,000,000 Morgan Stanley Aircraft Finance, Series 1A, Class D1, 8.700%
due 3/15/23 (a)(b)......................................... 1,700,000
750,000 Sovereign Bancorp, 10.500% due 11/15/06 (a)................. 755,625
750,000 Williams Scotsman Inc., 9.875% due 6/1/07 (a)............... 710,625
------------
4,257,362
------------
INDUSTRIAL - MANUFACTURING -- 3.7%
1,350,000 American Axle & Manufacturing Inc., 9.750% due
3/1/09 (a)................................................. 1,336,500
1,500,000 Axiohm Transaction Solutions Inc., 9.750% due
10/1/07 (a)(d)............................................. 315,000
1,625,000 Blount Inc., 13.000% due 8/1/09 (a)......................... 1,722,500
1,750,000 BREED Technologies Inc., 9.250% due 4/15/08 (a)(d).......... 35,000
1,250,000 Foamex L.P., 9.875% due 6/15/07 (a)......................... 1,056,250
1,000,000 Gentek Inc., 11.000% due 8/1/09 (a)......................... 1,030,000
750,000 Hexcel Corp., 9.750% due 1/15/09 (a)........................ 641,250
1,500,000 High Voltage Engineering Corp., 10.500% due 8/15/04 (a)..... 1,233,750
750,000 JL French Automotive Casting, 11.500% due 6/1/09 (a)........ 761,250
1,000,000 Tenneco Automotive Inc., 11.625% due 10/15/09 (a)(b)........ 1,018,750
------------
9,150,250
------------
MEDIA - TELECOMMUNICATIONS -- 8.1%
1,250,000 Adelphia Communications Corp., Series B, 9.875% due
3/1/07 (a)................................................. 1,240,625
1,000,000 Century Communications Corp., zero coupon due
1/15/08 (a)................................................ 422,500
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 6
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
SCHEDULE OF INVESTMENTS (unaudited) (continued)
February 29, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA - TELECOMMUNICATIONS -- 8.1% (continued)
$ 1,625,000 Charter Communications Holdings LLC, zero coupon until
4/1/04 (9.920% thereafter) due 4/1/11 (a).................. $ 942,500
1,000,000 Covad Comm Group, 12.000% due 2/15/10 (a)(b)................ 1,000,000
1,000,000 CSC Holdings Inc., 10.500% due 5/15/16 (a).................. 1,105,000
1,050,000 Diamond Cable Co., zero coupon until 12/15/00
(11.750% thereafter) due 12/15/05 (a)...................... 1,001,438
1,250,000 Hollinger International Publishing, 9.250% due
2/1/06 (a)................................................. 1,184,375
1,750,000 ICG Holding Inc., zero coupon until 9/15/00
(13.500% thereafter) due 9/15/05 (a)....................... 1,610,000
1,000,000 Intermedia Communications, Inc., Series B, 8.600% due
6/1/08 (a)................................................. 920,000
2,000,000 Lin Television Corp., 8.375% due 3/1/08 (a)................. 1,780,000
3,500,000 Nextel Communications, zero coupon until 2/15/03
(9.950% thereafter) due 2/15/08 (a)........................ 2,485,000
2,500,000 NTL Inc., zero coupon until 2/1/01 (11.500% thereafter) due
2/1/06 (a)................................................. 2,343,750
1,000,000 Orange PLC, 8.750% due 6/1/06 (a)........................... 1,025,000
2,500,000 United International Holdings, zero coupon until 2/15/03
(10.750% thereafter) due 2/15/08 (a)....................... 1,768,750
2,250,000 Viatel Inc., zero coupon until 4/15/03 (12.500% thereafter)
due 4/15/08 (a)............................................ 1,350,000
------------
20,178,938
------------
SERVICES - OTHER -- 2.7%
1,500,000 Allied Waste North America, Series B, 7.875% due
1/1/09 (a)................................................. 1,267,500
1,000,000 Dyncorp Inc., 9.500% due 3/1/07 (a)......................... 893,750
1,000,000 Intertek Finance PLC, 10.250% due 11/1/06 (a)............... 880,000
1,000,000 Iron Mountain Inc., 8.250% due 7/1/11 (a)................... 860,000
1,000,000 Primark Corp., 9.250% due 12/15/08 (a)...................... 935,000
2,000,000 Safety-Kleen Services, 9.250% due 6/1/08 (a)................ 1,840,000
------------
6,676,250
------------
TRANSPORTATION -- 2.3%
1,000,000 Atlantic Express, 10.750% due 2/1/04 (a).................... 970,000
1,250,000 Holt Group, 9.750% due 1/15/06 (a).......................... 790,625
400,000 Laidlaw Inc., 6.650% due 10/1/04 (a)........................ 322,000
1,500,000 Northwest Airlines Inc., 7.625% due 3/15/05 (a)............. 1,335,000
TFM Sa De Cv:
2,000,000 Zero coupon until 6/15/02 (11.750% thereafter) due
6/15/09 (a)................................................ 1,445,000
750,000 10.250% due 6/15/07 (a).................................... 736,875
------------
5,599,500
------------
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
SCHEDULE OF INVESTMENTS (unaudited) (continued)
February 29, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES -- 0.6%
$ 1,000,000 Azurix Corp., 10.750% due 2/15/10 (a)(b).................... $ 1,005,000
500,000 Companhia Energetica De Sao Paulo, 9.125% until 6/26/02
(9.625% thereafter) due 6/26/07 (a)........................ 482,500
------------
1,487,500
------------
TOTAL CORPORATE BONDS (Cost -- $93,955,910)................ 82,694,298
------------
SOVEREIGN BONDS -- 57.4%
ARGENTINA -- 7.9%
Republic of Argentina:
3,850,000 Structured Note, 11.786% due 4/10/05 (a)(e)(f)............. 3,619,000
350,000 Zero coupon, Series E, due 10/15/03 (a).................... 241,500
1,200,000 Zero coupon, Series F, due 10/15/04 (a).................... 732,000
15,260,000 11.000% due 12/4/05 (a).................................... 15,012,025
------------
19,604,525
------------
BRAZIL -- 12.7%
Federal Republic of Brazil:
6,870,585 C Bond, 8.000% due 4/14/14 (a)(g).......................... 5,077,796
1,500,000 DCB, Series L Bearer, 7.000% due 4/15/12 (a)(e)............ 1,117,500
5,590,000 DCB, Series L Registered, 7.000% due 4/15/12 (a)(e)........ 4,164,550
1,000,000 FLIRB, Series L Registered, 5.000% due 4/15/09 (a)(e)...... 766,250
2,845,444 MYDFA, 6.813% due 9/15/07 (a)(e)........................... 2,365,275
1,420,000 NMB, Series L Bearer, 7.000% due 4/15/09 (a)(e)............ 1,171,500
1,400,000 NMB, Series L Registered, 7.000% due 4/15/09 (a)(e)........ 1,155,000
11,165,000 14.500% due 10/15/09 (a)................................... 12,069,365
1,600,000 12.750% due 1/15/20 (a).................................... 1,570,000
2,120,000 12.250% due 3/6/30 (a)..................................... 2,013,470
------------
31,470,706
------------
BULGARIA -- 1.3%
Republic of Bulgaria:
150,000 Discount Bond, Series A, 7.063% due 7/28/24 (a)(e)......... 123,938
4,000,000 FLIRB, Series A, 2.750% due 7/28/12 (a)(e)................. 3,000,000
------------
3,123,938
------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 8
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
SCHEDULE OF INVESTMENTS (unaudited) (continued)
February 29, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
COLOMBIA -- 3.3%
Republic of Colombia:
$ 525,000 7.250% due 2/15/03 (a)..................................... $ 492,188
1,000,000 7.270% due 6/15/03 (a)(b).................................. 915,000
2,005,000 10.875% due 3/9/04 (a)..................................... 2,005,000
3,900,000 11.218% due 8/13/05 (a)(e)................................. 3,802,500
1,350,000 7.625% due 2/15/07 (a)..................................... 1,076,625
------------
8,291,313
------------
COSTA RICA -- 1.7%
Costa Rica Principal Bond:
1,200,000 Series A, 6.250% due 5/21/10 (a)........................... 1,158,000
3,400,000 Series B, 6.250% due 5/21/15 (a)........................... 3,026,000
------------
4,184,000
------------
CROATIA -- 2.1%
Croatia:
2,911,364 Series A, 7.063% due 7/31/10 (a)(e)........................ 2,718,486
2,537,315 Series B, 7.063% due 7/31/06 (a)(e)........................ 2,419,965
------------
5,138,451
------------
ECUADOR -- 0.9%
Republic of Ecuador:
1,900,000 Discount Bond, due 2/28/25 (a)(d).......................... 773,063
3,950,000 Par Bond, due 2/28/25 (a)(d)............................... 1,461,500
------------
2,234,563
------------
IVORY COAST -- 0.1%
2,000,000 Ivory Coast, FLIRB, 2.000% due 3/29/18 (a)(e)............... 380,000
------------
MEXICO -- 9.8%
United Mexican States:
2,500,000 Par Bond, Series W-B, 6.250% due 12/31/19 (a)(h)........... 2,035,938
18,771,000 11.375% due 9/15/16 (a).................................... 22,149,780
110,000 11.500% due 5/15/26 (a).................................... 136,730
------------
24,322,448
------------
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 9
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
SCHEDULE OF INVESTMENTS (unaudited) (continued)
February 29, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
PANAMA -- 1.7%
Republic of Panama:
$ 2,900,000 IRB, 4.250% due 7/17/14 (a)(e)............................. $ 2,303,688
800,000 8.875% due 9/30/27 (a)..................................... 690,000
1,350,000 9.375% due 4/1/29 (a)...................................... 1,297,688
------------
4,291,376
------------
PERU -- 1.9%
Republic of Peru:
1,000,000 FLIRB, 3.750% due 3/7/17 (a)(e)............................ 641,550
6,000,000 PDI, 4.500% due 3/7/17 (a)(e).............................. 4,203,750
------------
4,845,300
------------
PHILIPPINES -- 1.1%
2,815,000 Republic of Philippines, 9.875% due 1/15/19 (a)............. 2,709,438
------------
POLAND -- 1.0%
Republic of Poland:
650,000 PAR Bond, 3.500% due 10/27/24 (a)(e)....................... 407,266
2,250,000 PDI, 6.000% due 10/27/14 (a)(e)............................ 1,999,688
------------
2,406,954
------------
RUSSIA -- 5.9%
Russia:
18,835,228 IAN, due 12/15/15 (a)(d)................................... 4,496,911
11,850,000 11.750% due 6/10/03 (a).................................... 10,191,000
------------
14,687,911
------------
VENEZUELA -- 6.0%
Republic of Venezuela:
2,500,000 Discount Bond, Series W-A, 7.000% due 3/31/20 (a)(e)....... 1,943,750
535,710 FLIRB, Series A, 6.875% due 3/31/07 (a)(e)................. 449,160
882,375 NMB, 7.125% due 12/18/05 (a)(e)............................ 745,607
200,000 9.125% due 6/18/07 (a)..................................... 147,000
8,800,000 13.625% due 8/15/18 (a).................................... 8,228,000
4,965,000 9.250% due 9/15/27 (a)..................................... 3,363,788
------------
14,877,305
------------
TOTAL SOVEREIGN BONDS (Cost -- $128,833,921)............... 142,568,228
------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 10
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
SCHEDULE OF INVESTMENTS (unaudited) (continued)
February 29, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
LOAN PARTICIPATIONS -- 8.2%
$14,588,230 Kingdom of Morocco, Tranche B, 6.844% due 1/1/04
(Morgan Guaranty Trust Company of New York, Morgan Stanley
Emerging Markets Inc.) (a)(e)(i)............................. $ 13,913,520
1,638,636 The People's Democratic Republic of Algeria, Tranche 1,
6.813% due 9/4/06 (Chase Manhattan) (a)(e)(i)................ 1,286,329
959,090 The People's Democratic Republic of Algeria, Tranche A,
7.500% due 3/4/00 (Chase Manhattan, Merrill Lynch) (a)(e)(i). 959,091
3,725,000 The People's Democratic Republic of Algeria, Tranche 3,
6.813% due 3/4/10 (Chase Manhattan, First Boston) (a)(e)(i).. 2,756,500
6,500,000 Russia, Principal Loan, due 12/15/20 (Goldman Sachs) (a)(d)(i) 1,543,750
------------
TOTAL LOAN PARTICIPATIONS (Cost -- $19,344,824)............ 20,459,190
------------
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCK -- 0.2%
1,000,000 APP Finance (II) Mauritius Limited, Series A,
12.000% (a)(e)............................................. 600,000
TCR Holding Corp. (a)(j):
4,091 Class B..................................................... 40
2,250 Class C..................................................... 22
5,932 Class D..................................................... 59
12,271 Class E..................................................... 123
------------
TOTAL PREFERRED STOCK (Cost -- $1,001,455)................. 600,244
------------
WARRANTS AND RIGHTS (j) -- 0.1%
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)................................................ 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)................................................ 0
8,000 Terex Corp. Stock Appreciation Rights
(Expiring 5/15/02) (a)..................................... 144,000
3,000 Wireless One Inc. (Exercise price of $11.55 per share.
Each warrant exercisable for one share of common
stock.) (a)................................................ 750
------------
TOTAL WARRANTS AND RIGHTS (Cost -- $0)..................... 145,250
------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 11
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
SCHEDULE OF INVESTMENTS (unaudited) (continued)
February 29, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.8%
<S> <C> <C>
$ 1,975,000 State Street Bank & Trust Co., 5.720% due 3/1/00; Proceeds
at maturity -- $1,975,314; (Fully collateralized by U.S.
Treasury Bonds, 11.750% due 2/15/01; Market value --
$2,017,931) (Cost -- $1,975,000)............................ $ 1,975,000
------------
TOTAL INVESTMENTS -- 100% (Cost -- $245,111,110*)........... $248,442,210
------------
------------
</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 Senior 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 is currently in default.
(e) Rate shown reflects current rate on instrument with variable rate or step
coupon rates.
(f) Coupon rate is derived from a formula based on the yields of other Argentine
bonds.
(g) Payment-in-kind security for which part of the income earned is capitalized
as additional principal.
(h) Including recovery rights.
(i) Participation interests were acquired through the financial institutions
indicated parenthetically.
(j) Non-income producing security.
*Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviations used in this schedule:
-----------------------------------
<TABLE>
<S> <C>
C Bond -- Capitalization Bond.
DCB -- Debt Conversion Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
IAN -- Interest in Arrears Note.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 12
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
February 29, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $245,111,110)............ $248,442,210
Cash..................................................... 715
Interest receivable...................................... 6,390,533
Prepaid expenses......................................... 812
------------
TOTAL ASSETS............................................. 254,834,270
------------
LIABILITIES:
Loan payable (Note 4).................................... 75,000,000
Payable for securities purchased......................... 1,977,939
Loan interest payable (Note 4)........................... 370,161
Management fees payable (Note 2)......................... 152,293
Accrued expenses......................................... 113,878
------------
TOTAL LIABILITIES........................................ 77,614,271
------------
TOTAL NET ASSETS............................................ $177,219,999
------------
------------
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
Overdistributed net investment income.................... (590,868)
Accumulated net realized loss from security
transactions............................................ (30,906,621)
Net unrealized appreciation of investments............... 3,331,100
------------
TOTAL NET ASSETS............................................ $177,219,999
------------
------------
NET ASSET VALUE, PER SHARE ($177,219,999 [div] 14,748,540
shares outstanding)........................................ $12.02
------
------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 13
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
STATEMENT OF OPERATIONS (unaudited)
For the Six Months Ended February 29, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................................. $ 13,927,609
------------
EXPENSES:
Interest expense (Note 4)................................ 2,920,222
Management fees (Note 2)................................. 925,713
Legal fees............................................... 52,763
Audit and tax services................................... 29,917
Shareholder communications............................... 24,432
Transfer agent fees...................................... 21,915
Custody.................................................. 18,851
Directors' fees.......................................... 16,658
Listing fees............................................. 12,085
Other.................................................... 7,052
------------
TOTAL EXPENSES........................................... 4,029,608
------------
NET INVESTMENT INCOME....................................... 9,898,001
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Realized Loss From Security Transactions (excluding
short-term securities):
Proceeds from sales................................... 107,243,235
Cost of securities sold............................... 115,781,156
------------
NET REALIZED LOSS........................................ (8,537,921)
------------
Change in Net Unrealized Appreciation (Depreciation):
Beginning of period................................... (21,033,639)
End of period......................................... 3,331,100
------------
INCREASE IN NET UNREALIZED APPRECIATION.................. 24,364,739
------------
NET GAIN ON INVESTMENTS..................................... 15,826,818
------------
INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 25,724,819
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 14
<PAGE>
G L O B A L P A R T N E R S I N C O M E F U N D I N C.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended February 29, 2000 (unaudited)
and the Year Ended August 31, 1999
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income.................................... $ 9,898,001 $ 23,233,430
Net realized loss........................................ (8,537,921) (17,552,398)
Increase in net unrealized appreciation.................. 24,364,739 36,734,971
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS................... 25,724,819 42,416,003
------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................................... (10,508,339) (24,514,395)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS............................................ (10,508,339) (24,514,395)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued in reinvestment of
distributions
(0 and 179,386 shares issued, respectively)............. -- 1,972,489
------------ ------------
INCREASE IN NET ASSETS...................................... 15,216,480 19,874,097
NET ASSETS:
Beginning of period...................................... 162,003,519 142,129,422
------------ ------------
END OF PERIOD*........................................... $177,219,999 $162,003,519
------------ ------------
------------ ------------
*Includes undistributed (overdistributed) net investment
income of................................................. $(590,868) $19,470
--------- -------
--------- -------
</TABLE>
STATEMENT OF CASH FLOWS (unaudited)
For the Six Months Ended February 29, 2000
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Proceeds from sales of portfolio securities and principal
paydowns................................................ $ 111,329,574
Purchases of portfolio securities........................ (107,888,643)
Net sales of short-term securities....................... 1,156,000
-------------
4,596,931
Net investment income.................................... 9,898,001
Adjustments to reconcile net investment income to net
cash provided by operating activities:
Accretion of discount on securities................... (2,773,385)
Capitalized income on payment-in-kind securities...... (231,895)
Net change in receivables/payables related to
operations.......................................... (981,065)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................ 10,508,587
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Distributions paid....................................... (10,508,339)
-------------
NET CASH USED BY FINANCING ACTIVITIES.................... (10,508,339)
-------------
Net Increase in Cash........................................ 248
Cash, Beginning of period................................... 467
-------------
CASH, END OF PERIOD......................................... $ 715
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 15
STATEMENT OF DIFFERENCES
The division sign shall be expressed as................................... [div]
