-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U4wJBELevO6Ma+CDrpSu+oLpakxcFGBzHu7D5YIT6wsyMp/khCGVcqthneZT3Cfh gl8ZuxdeljOWHuHpwvFIuw== 0000950117-02-001072.txt : 20020507 0000950117-02-001072.hdr.sgml : 20020507 ACCESSION NUMBER: 0000950117-02-001072 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020228 FILED AS OF DATE: 20020507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL PARTNERS INCOME FUND INC CENTRAL INDEX KEY: 0000911638 IRS NUMBER: 313731196 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07994 FILM NUMBER: 02635532 BUSINESS ADDRESS: STREET 1: SEVEN WORLD TRADE CENTER STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2127831301 MAIL ADDRESS: STREET 1: 7 WORLD TRADE CENTER STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 N-30D 1 a32341.txt GLOBAL PARTNERS INCOME FUND INC. N-30D GLOBAL PARTNERS INCOME FUND INC. March 20, 2002 Dear Shareholders: We are pleased to provide the semi-annual report for Global Partners Income Fund Inc. ('Fund') for the period ended February 28, 2002. Included in this report are the financial statements, an analysis of the Fund's performance versus its benchmarks, a commentary on the emerging-debt markets and the U.S. high-yield bond market, and a listing of the Fund's investments as of February 28, 2002. FUND PERFORMANCE During the six months ended February 28, 2002, the net asset value ('NAV')(1) of the Fund decreased from $10.77 per share at August 31, 2001 to $10.50 per share at February 28, 2002. In addition, income dividends totaling $0.71 were paid during this period. Assuming reinvestment of these dividends in additional shares of the Fund, the total rate of return based on the NAV for the period was 4.54%. U.S. HIGH-YIELD BONDS(2) MARKET AND FUND OVERVIEW For the six months ended February 28, 2002, the U.S. high-yield market returned negative 1.77%, as measured by the Salomon Smith Barney High Yield Market Index ('SSB High Yield Market Index'),(3) as the market struggled to recover from the impact of September 11th. Net mutual-fund inflows and lower interest rates battled to push the market higher, while negative economic data, equity-market declines, accounting questions and heightened focus on credit-rating downgrades pressured the market to the downside. The September 11th tragedy caused the U.S. high-yield market to record its worst month of performance (negative 7.20%) since the SSB High Yield Market Index began in January 1989. These events introduced heightened volatility into the U.S. high-yield market and had a particularly adverse impact on valuations of bonds from issuers in industries with more cyclical exposure or with exposure to the tourism and airline sectors. Despite continued economic weakness and the uncertain economic consequences of the events of September 11th, the high-yield market rebounded in the four months following the poor September - --------- (1) The NAV is calculated by subtracting total liabilities from the closing value of all securities held by the Fund (plus all other assets) and dividing the result (total net assets) by the total number of the Fund's shares outstanding. The NAV fluctuates with changes in the market price of the securities in which the Fund has invested. However, the price at which an investor may buy or sell shares of the Fund is at their market (NYSE) price as determined by supply of and demand for the Fund's shares. (2) High-yield bonds are subject to additional risks such as the increased risk of default because of the lower credit quality of the issues. (3) The SSB High Yield Market Index is a broad-based unmanaged index of high-yield securities. Please note that an investor cannot invest directly in an index. GLOBAL PARTNERS INCOME FUND INC. performance. Strong U.S. Treasury security gains, bargain hunters in search of oversold securities, and the reversal of mutual-fund flows to $4.7 billion of inflows(4) compared to almost $2 billion in redemptions in September(5) contributed in part to the market rally. The U.S. high-yield market declined to end the six-month period as volatility increased due to Enron's collapse and the related accounting concerns and increased downgrade activity by the rating agencies. For the period, the U.S. high-yield market's top-performing sectors included: containers, restaurants, housing-related, food/beverages, consumer products and healthcare. The containers sector rebounded from lower raw-material prices and depressed levels in 2000. Operational improvements and asset sales enabled the restaurants sector to return from what we considered to be oversold prices in the prior year. The housing-related sector benefited from better than expected new-home sales, whereas we think the food/beverages, consumer products and healthcare sectors benefited from a flight to quality to non-cyclicals. The worst performing sectors for the period included telecommunications, airlines, automotive, utilities, metals/mining and supermarkets/drugstores. The telecommunications sector suffered as declining asset values, excess capacity and weaker than expected revenue growth caused many telecommunications companies to enter into Chapter 11 bankruptcy. The airlines industry was negatively impacted by the terror attacks and the subsequent dramatic slowdown in air travel. The automotive sector suffered due to the falloff in production schedules and continued pricing pressure from original-equipment manufacturers. The utilities sector declined due to accounting and balance-sheet concerns sparked by Enron's collapse and the metals/mining sector suffered from the continued concerns over the depth and duration of the economic downturn. Disappointing results from Rite Aid caused the supermarkets/drugstores sector to underperform. In terms of credit quality, BB, B and CCC issues generated returns of 0.0%, negative 2.05% and negative 8.45%, respectively, as measured by the SSB High Yield Market Index, as investors sought safety in the higher quality credit tiers, such as BB issues, while avoiding CCC and lower quality single-B issues due to heightened credit concerns. The Fund's performance was helped by an overweighting in the consumer products sector and by underweightings in the telecommunications, automotive, utilities, metals/mining and supermarkets/drugstores sectors. The Fund's performance was adversely affected, however, by underweightings in the containers, restaurants, housing-related and food/beverages sectors. On February 28, 2002, the U.S. high-yield market, as measured by the SSB High Yield Market Index, yielded 11.63%, roughly in line with 11.75% on August 31, 2001. The excess yield over U.S. Treasury securities was 7.36%, roughly in line with 7.28% on August 31, 2001. Salomon Brothers Asset Management Inc ('SBAM'), the Fund's investment adviser, believes that these levels represent attractive long-term value. - --------- (4) October 1, 2001 through January 31, 2002. Source: AMG Data Services. (5) September 1 through September 30, 2001. Source: AMG Data Services. GLOBAL PARTNERS INCOME FUND INC. OUTLOOK Going forward, SBAM believes valuations in the market continue to appear attractive at yields in excess of 11.5%. Nevertheless, SBAM remains somewhat cautious, believing that the longer term positive effects of any U.S. Federal Reserve Board ('Fed') interest-rate cuts and lower long-term interest rates are partially offset by several factors in the short run, including (i) disappointing corporate profitability, (ii) the magnitude and timing of a global economic rally, (iii) reduced secondary-market liquidity and (iv) continued equity-market volatility. In light of these conditions, SBAM is increasing its focus on selected opportunities in the single-B credit tier, which it believes presents a more compelling risk/reward profile. EMERGING MARKET DEBT(6) MARKET OVERVIEW Developments in Argentina set the tone for emerging markets during the Fund's semi-annual period. Argentina, the worst performer in the J.P. Morgan Emerging Markets Bond Index Plus ('EMBI+'),(7) returned negative 55.61%. Most notable was the reduction of the country's weighting in the Index. In January 2001, Argentina's weighting stood at 22%, the largest in the EMBI+. At the end of February 2002, it stood at 2.54%. Nonetheless, in what can only be described as a difficult period for the global financial markets, 15 out of the EMBI+'s 18 countries outperformed the Index's return for the period. During the Fund's semi-annual period, the Fed continued easing (i.e., reducing) short-term interest rates from 3.00% to 1.75%, where they remained at the end of February 2002. The combination of a weak economy, uncertainty about downside risks, and low and falling inflation drove the Fed's rate cuts. At their meeting on January 30, 2002, the federal policymakers left the benchmark U.S. interest rate unchanged for the first time in a year, citing signs that the economy was beginning to recover from recession. The overnight target rate remains at 1.75%, a 40-year low. Oil prices, an important driver of value in several emerging markets, experienced considerable price volatility during the period. A number of factors contributed to this volatility, including a global oversupply of oil, a slump in the aviation industry and a slowing U.S. economy. Oil prices traded in a wide range during the period, from $27.20 to $19.44 per barrel as investors focused on the declining - --------- (6) Investing in foreign securities is subject to certain risks not associated with domestic investing, such as currency fluctuations and changes in political and economic conditions. These risks are magnified in emerging or developing markets. (7) 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. Please note that an investor cannot invest directly in an index. GLOBAL PARTNERS INCOME FUND INC. demand for oil. Prices closed the period at $21.74 per barrel. In December, the Organization of the Petroleum Exporting Countries' ('OPEC')(8) 11-member cartel decided to cut production by 1.5 million barrels per day for six months starting January 1, 2002. The move follows an unprecedented agreement by five non-OPEC members, including Russia, Mexico and Norway, who participated in the cut. Return volatility(9) for emerging market debt remained below historical levels. The volatility for the 12 months ended February 28, 2002 was 14.19%. This level gradually increased throughout 2001 as the Turkish banking crisis, the September 11th terrorist attacks and the demise of the Argentine economy all added to the uncertainty in emerging markets. SBAM believes the market's ability to view problems on a country-by-country basis and not extrapolate isolated problems into broader market risks is a positive development illustrating a maturity of the asset class. LATIN AMERICA Latin American debt returned negative 6.63% for the period as measured by the EMBI+, and was unquestionably affected by the deteriorating situation in Argentina. Most notable in this region was the divergence of Brazil from Argentina, as Brazilian debt returned an impressive 15.72% (as measured by the EMBI+) for the period despite Argentina's financial woes. BRAZILIAN DEBT returned 15.72% for the period as measured by the EMBI+. The breakaway from Argentine contagion and return to positive performance was, in our opinion, the most convincing change in the Latin sector over the past six months. The events in November and December showed that the historically close relationship between Brazilian and Argentine securities may have changed. This year is an election year in Brazil and SBAM believes that will cause some near-term volatility in its markets. However, SBAM believes that Brazil is well-positioned to withstand this volatility. The Fund maintained its slight overweight in Brazilian securities relative to the benchmark for the period. MEXICAN DEBT returned 9.34% for the period as measured by the EMBI+. Mexican debt benefited as some investors sought to reduce risk in their portfolios by selling volatile Argentine debt in exchange for more stable Mexican debt. Subdued economic activity combined with currency strength may put a cap on inflation pressures, suggesting market interest rates could decline further from current levels in 2002. More recently, in February, the market reacted favorably to the anticipated Standard & Poor's Ratings Service investment-grade upgrade and Mexican bonds rallied as sovereign spreads contracted. The Fund has maintained its exposure to Mexican debt because SBAM believes Mexico is one of the most economically stable countries in the emerging markets. - --------- (8) OPEC is an international organization of 11 developing countries, each of which is heavily reliant on oil revenues as its main source of income. Membership is open to any country that is a substantial net exporter of oil and which shares the ideals of the organization. The current members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. (9) Return volatility is the standard deviation of monthly returns over the period being measured. GLOBAL PARTNERS INCOME FUND INC. ARGENTINE DEBT returned negative 55.61% for the period as measured by the EMBI+. This was the worst performance in the Index and was the driving contributor of poor performance in the Latin American region for the period. The country continues to be mired in a four-year recession made worse by recent political turmoil. Argentina announced a debt moratorium (default) on all external debt obligations in December. President De la Rua resigned after last-minute attempts to form a coalition government with the opposition Peronist Party failed. De la Rua was in the second year of his four-year term. Recently, the Argentine government announced a series of measures to strengthen its embattled economy and move closer to an agreement with the International Monetary Fund ('IMF').(10) However, much uncertainty remains over how the situation in Argentina will play out in 2002. The country's ability to reach political consensus on a fiscal program will likely shape the near-term direction of the economy. The Fund remains underweight Argentine debt relative to the EMBI+ and SBAM continues to monitor developments in Argentina very closely. EASTERN EUROPE/MIDDLE EAST/AFRICA Non-Latin American debt, which represents approximately 40% of the EMBI+'s market capitalization, largely outperformed the Latin American debt for the period, returning 20.55%. RUSSIAN DEBT, the best performer for the period, returned 30.23% as measured by the EMBI+. The Russian economy continues to benefit from high domestic consumption, abundant foreign reserves and limited external financing requirements. These improving credit fundamentals have not gone unnoticed, as Moody's Investors Service, Inc. recently revised upward its foreign-currency bond rating two notches from B2 to Ba3, citing an improved capacity on the part of Russia to service its debt. Positive comments by the government on debt reduction and the elimination of the 2003 debt hump added momentum to a supportive technical picture. SBAM remained overweight in Russian debt for the period, as it positively contributed to portfolio performance. TURKISH DEBT returned 23.01% for the period as measured by the EMBI+. Following the September terrorist attacks on the U.S., market sentiment improved toward Turkey due to the country's strategic importance combined with its improved relations with the IMF. During the period, the IMF affirmed its commitment, granting Turkey an $11.4 billion injection to restore confidence in the banking sector. The Fund had a slight overweight position in Turkish sovereign debt, which positively contributed to the Fund's performance. - --------- (10) The IMF is an international organization of 183 member countries established to promote international monetary cooperation, exchange stability and orderly exchange arrangements. GLOBAL PARTNERS INCOME FUND INC. OUTLOOK Emerging market debt returned 1.68% for the period, as measured by the EMBI+. At the beginning of the Fund's semi-annual period, emerging debt markets generally came under pressure from the developed world's economic slowdown, poor equity market performance, the terrorist attacks on the U.S. and Argentina's financial woes. However, we believe positive technicals and declining risk aversion have been driving market performance more than fundamentals since November. In SBAM's view, the recent rally in the global equity markets thus far in 2002 bodes well for the emerging debt markets. The EMBI+ (ex-Argentina) returned 14.63% for the period, relatively strong performance for such volatile financial markets. EMBI+ sovereign spreads(11) over U.S. Treasury securities closed the period at 644 basis points.(12) For the remainder of 2002, we think the prospect of U.S. recovery may be supportive for Asia and Latin America. We appreciate your confidence and look forward to serving you in the future. Sincerely, Heath B. McLendon Stephen Treadway Heath B. McLendon Stephen Treadway 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
The information provided in this letter represents the opinion of the manager and is not intended to be a forecast of future events, a guarantee of future results or investment advice. Further, there is no assurance that certain securities will remain in or out of the Fund. Please refer to pages 7 through 16 for a list and percentage breakdown of the Fund's holdings. Also, please note any discussion of the Fund's holdings is as of February 28, 2002 and is subject to change. - --------- (11) Sovereign bonds are bonds issued by non-U.S. governments. Yield spread is the difference between yields on securities of the same quality but different maturities or the difference between yields on securities of the same maturity but different quality. (12) A basis point is 0.01% or one one-hundredth of a percent. GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) February 28, 2002
FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Corporate Bonds -- 40.0% Basic Industries -- 3.9% $ 450,000 Acetex Corp., 10.875% due 8/1/09............................ $ 461,250 500,000 Appleton Papers Inc., 12.500% due 12/15/08 (b).............. 472,500 1,025,000 Applied Extrusion Technologies, Inc., 10.750% due 7/1/11.... 1,081,375 1,150,000 Berry Plastics Corp., 12.250% due 4/15/04................... 1,164,375 Georgia-Pacific Corp.: 300,000 7.500% due 5/15/06.......................................... 282,750 200,000 8.875% due 5/15/31.......................................... 177,250 1,000,000 ISP Chemco Inc., 10.250% due 7/1/11......................... 1,050,000 690,000 Millennium America Inc., 9.250% due 6/15/08................. 710,700 400,000 OM Group, Inc., 9.250% due 12/15/11 (b)..................... 415,000 553,000 P&L Coal Holdings Corp., 8.875% due 5/15/08................. 591,019 250,352 PCI Chemicals Canada Inc., 10.000% due 12/31/08............. 189,329 500,000 Polymer Group Inc., 8.750% due 3/1/08 (c)................... 142,500 550,000 Radnor Holdings Corp., 10.000% due 12/1/03.................. 415,250 1,000,000 Riverwood International Corp., 10.625% due 8/1/07........... 1,070,000 625,000 UCAR Finance Inc., 10.250% due 2/15/12 (b).................. 645,313 ------------ 8,868,611 ------------ Consumer Cyclicals -- 3.3% Advance Stores Co. Inc.: 350,000 10.250% due 4/15/08 (b)..................................... 370,125 750,000 Series B, 10.250% due 4/15/08............................... 793,125 650,000 Aztar Corp., 8.875% due 5/15/07............................. 674,375 1,000,000 Choctaw Resort Development Enterprise, 9.250% due 4/1/09.... 1,035,000 Cole National Group, Inc.: 375,000 9.875% due 12/31/06......................................... 377,344 750,000 8.625% due 8/15/07.......................................... 716,250 875,000 Finlay Fine Jewelry Corp., 8.375% due 5/1/08................ 810,469 The Gap, Inc.: 125,000 6.900% due 9/15/07.......................................... 106,250 240,000 8.800% due 12/15/08 (b)..................................... 231,900 1,250,000 HMH Properties, Inc., 8.450% due 12/1/08.................... 1,259,375 680,000 Mattress Discounters Co., 12.625% due 7/15/07............... 207,400 625,000 Pillowtex Corp., 9.000% due 12/15/07 (c).................... 6,250 Saks Inc.: 250,000 7.500% due 12/1/10.......................................... 223,750 500,000 9.875% due 10/1/11.......................................... 500,000 ------------ 7,311,613 ------------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 7 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) (continued) February 28, 2002
FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Consumer Non-Cyclicals -- 8.7% $ 1,000,000 Argosy Gaming Co., 10.750% due 6/1/09....................... $ 1,113,750 625,000 Beverly Enterprises, Inc., 9.625% due 4/15/09............... 628,125 500,000 Coast Hotels & Casino, Inc., 9.500% due 4/1/09.............. 531,250 1,175,000 CONMED Corp., 9.000% due 3/15/08............................ 1,204,375 750,000 DaVita, Inc., 9.250% due 4/15/11............................ 802,500 125,000 Elizabeth Arden, Inc., 11.750% due 2/1/11................... 113,125 600,000 French Fragrance Inc., 10.375% due 5/15/07.................. 489,000 1,175,000 Harrah's Operating Co., Inc., 7.875% due 12/15/05........... 1,236,686 1,461,000 Hines Horticulture, Inc., 12.750% due 10/15/05.............. 1,453,695 375,000 Home Interiors & Gifts Inc., 10.125% due 6/1/08............. 302,344 1,500,000 Horseshoe Gaming LLC, 9.375% due 6/15/07.................... 1,597,500 1,125,000 Iasis Healthcare Corp., 13.000% due 10/15/09................ 1,102,500 550,000 InSight Health Services Corp., 9.875% due 11/1/11 (b)....... 566,500 1,065,000 MGM Grand Inc., 9.750% due 6/1/07........................... 1,159,519 725,000 North Atlantic Trading Co., 11.000% due 6/15/04............. 670,625 Park Place Entertainment Corp.: 625,000 7.875% due 12/15/05......................................... 637,500 650,000 8.875% due 9/15/08.......................................... 682,500 500,000 PETCO Animal Supplies, Inc., 10.750% due 11/1/11 (b)........ 528,750 1,000,000 Playtex Products, Inc., 9.375% due 6/1/11................... 1,065,000 Revlon Consumer Products Corp.: 200,000 8.125% due 2/1/06........................................... 129,000 500,000 9.000% due 11/1/06.......................................... 322,500 850,000 Rite Aid Corp., 7.625% due 4/15/05.......................... 488,750 1,000,000 Station Casinos Inc., 8.375% due 2/15/08.................... 1,036,250 1,000,000 Triad Hospitals, Inc., 8.750% due 5/1/09.................... 1,070,000 375,000 Vlasic Foods International Inc., 10.250% due 7/1/09 (c)..... 82,500 500,000 Windmere-Durable Holdings, 10.000% due 7/31/08.............. 502,500 ------------ 19,516,744 ------------ Energy -- 4.9% 375,000 Forest Oil Corp., 8.000% due 6/15/08........................ 381,563 750,000 Grey Wolf, Inc., 8.875% due 7/1/07.......................... 753,750 683,000 Key Energy Services Inc., 14.000% due 1/15/09............... 793,134 250,000 Nuevo Energy Co., 9.375% due 10/1/10........................ 234,375 1,000,000 Ocean Energy Inc., 8.875% due 7/15/07....................... 1,065,000 1,000,000 Pennzoil Co., 10.250% due 11/1/05........................... 1,123,750
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FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Energy -- 4.9% (continued) $ 500,000 Pioneer Natural Resource Co., 9.625% due 4/1/10............. $ 548,125 Plains Resources Inc.: 300,000 Series B, 10.250% due 3/15/06.............................. 310,500 575,000 Series F, 10.250% due 3/15/06.............................. 595,125 1,000,000 Pride International, Inc., 9.375% due 5/1/07................ 1,045,000 500,000 R&B Falcon Corp., 9.500% due 12/15/08....................... 578,125 2,000,000 United Refining Co., 10.750% due 6/15/07.................... 1,650,000 500,000 Vintage Petroleum, Inc., 9.750% due 6/30/09................. 485,000 810,000 Western Gas Resources, Inc., 10.000% due 6/15/09............ 852,525 500,000 Westport Resources Corp., 8.250% due 11/1/11 (b)............ 510,000 ------------ 10,925,972 ------------ Finance Services -- 1.4% 987,700 Airplanes Pass-Through Trust, 10.875% due 3/15/19........... 207,417 1,000,000 FelCor Lodging L.P., 9.500% due 9/15/08..................... 1,052,500 1,000,000 MeriStar Hospitality Corp., 9.125% due 1/15/11.............. 1,000,000 750,000 Sovereign Bancorp, Inc., 10.500% due 11/15/06............... 817,500 ------------ 3,077,417 ------------ Housing Related -- 0.6% 375,000 American Standard Cos. Inc., 8.250% due 6/1/09.............. 393,750 875,000 Nortek, Inc., 8.875% due 8/1/08............................. 897,969 ------------ 1,291,719 ------------ Manufacturing -- 1.4% 1,750,000 Breed Technologies Inc., 9.250% due 4/15/08 (c)............. 175 250,000 Collins & Aikman Products, 10.750% due 12/31/11 (b)......... 240,625 250,000 Dura Operating Corp., 9.000% due 5/1/09..................... 240,000 425,000 Fedders North America Inc., 9.375% due 8/15/07.............. 304,406 350,000 Foamex L.P., 9.875% due 6/15/07............................. 281,750 500,000 Jordan Industries, Inc., 10.375% due 8/1/07................. 292,500 500,000 Moll Industries, Inc., 10.500% due 7/1/08................... 92,500 700,000 Sequa Corp., 9.000% due 8/1/09.............................. 691,250 1,000,000 Terex Corp., 10.375% due 4/1/11............................. 1,080,000 ------------ 3,223,206 ------------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 9 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) (continued) February 28, 2002
FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Media and Cable -- 7.8% Adelphia Communications Corp.: $ 275,000 10.250% due 11/1/06......................................... $ 284,625 175,000 10.250% due 6/15/11......................................... 181,125 1,000,000 Century Communications Corp., zero coupon due 1/15/08....... 520,000 Charter Communications Holdings LLC: 250,000 10.250% due 1/15/10......................................... 245,000 1,050,000 Zero coupon until 1/15/05, 11.750% thereafter, due 1/15/10.................................................... 719,250 1,405,000 Zero coupon until 4/1/04, 9.920% thereafter, due 4/1/11..... 987,012 CSC Holdings Inc.: 1,000,000 9.875% due 2/15/13.......................................... 1,045,000 1,100,000 10.500% due 5/15/16......................................... 1,204,500 EchoStar DBS Corp.: 750,000 9.125% due 1/15/09 (b)...................................... 764,063 875,000 9.375% due 2/1/09........................................... 903,437 800,000 Hollinger International Publishing Inc., 9.250% due 2/1/06..................................................... 826,000 1,175,000 Insight Midwest L.P., 10.500% due 11/1/10................... 1,269,000 750,000 Mediacom LLC, 9.500% due 1/15/13............................ 787,500 550,000 Nextmedia Operating Inc., 10.750% due 7/1/11 (b)............ 588,500 NTL Communications Corp.: 180,000 11.500% due 10/1/08......................................... 62,100 900,000 Zero coupon until 10/1/03, 12.375% thereafter, due 10/1/08.................................................... 274,500 NTL Inc.: 100,000 12.750% due 4/15/05......................................... 35,500 375,000 11.500% due 2/1/06.......................................... 136,875 800,000 10.000% due 2/15/07......................................... 292,000 750,000 Zero coupon until 4/1/03, 9.750% thereafter, due 4/1/08..... 240,000 Quebecor World Inc.: 875,000 8.375% due 11/15/08......................................... 912,188 125,000 7.750% due 2/15/09.......................................... 126,563 750,000 R.H. Donnelly Inc., 9.125% due 6/1/08....................... 784,687 1,000,000 Radio One, Inc., 8.875% due 7/1/11.......................... 1,057,500 1,000,000 Rogers Communications Inc., 8.875% due 7/15/07.............. 995,000 Telewest Communications PLC: 1,065,000 11.250% due 11/1/08......................................... 601,725 390,000 Zero coupon until 2/1/05, 11.375% thereafter, due 2/1/10.... 138,450 United Pan-European Communications N.V. (c): 100,000 10.875% due 8/1/09.......................................... 13,500
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 10 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) (continued) February 28, 2002
FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Media and Cable -- 7.8% (continued) $ 1,075,000 11.250% due 2/1/10.......................................... $ 145,125 675,000 11.500% due 2/1/10.......................................... 91,125 850,000 Zero coupon until 11/1/04, 13.375% thereafter, due 11/1/09.................................................... 89,250 325,000 Zero coupon until 2/1/05, 13.750% thereafter, due 2/1/10.... 32,500 1,125,000 Yell Finance, 10.750% due 8/1/11............................ 1,209,375 ------------ 17,562,975 ------------ Services and Other -- 3.1% Allied Waste North America Inc.: 1,125,000 7.875% due 1/1/09........................................... 1,113,750 325,000 10.000% due 8/1/09.......................................... 332,312 1,225,000 American Tower Corp., 9.375% due 2/1/09..................... 814,625 550,000 Comforce Operating Inc., 12.000% due 12/1/07................ 343,750 Crown Castle International Corp.: 1,025,000 10.750% due 8/1/11.......................................... 809,750 125,000 Zero coupon until 5/15/04, 10.375% thereafter, due 5/15/11.................................................... 59,375 1,000,000 Dyncorp Inc., 9.500% due 3/1/07............................. 1,035,000 1,250,000 Holt Group, 9.750% due 1/15/06 (c).......................... 45,312 430,000 Mail-Well I Corp., 8.750% due 12/15/08...................... 376,250 1,000,000 Pierce Leahy Command Corp., 8.125% due 5/15/08.............. 1,015,000 2,000,000 Safety-Kleen Corp., 9.250% due 6/1/08 (c)................... 200 1,250,000 SBA Communications Corp., 10.250% due 2/1/09................ 712,500 Spectrasite Holdings, Inc.: 600,000 10.750% due 3/15/10......................................... 267,000 400,000 Zero coupon until 7/15/03, 12.000% thereafter, due 7/15/08.................................................... 102,000 ------------ 7,026,824 ------------ Technology -- 0.9% 1,000,000 Unisys Corp., 8.125% due 6/1/06............................. 1,007,500 1,125,000 Xerox Capital Europe PLC, 5.875% due 5/15/04................ 966,094 ------------ 1,973,594 ------------ Telecommunications -- 2.7% 700,000 American Cellular Corp., 9.500% due 10/15/09................ 570,500 250,000 Dobson Communications Corp., 10.875% due 7/1/10............. 231,250
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 11 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) (continued) February 28, 2002
FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Telecommunications -- 2.7% (continued) Global Crossing Holdings Ltd. (c): $ 1,700,000 9.125% due 11/15/06......................................... $ 42,500 250,000 9.500% due 11/15/09......................................... 6,250 Nextel Communications, Inc.: 250,000 9.375% due 11/15/09......................................... 160,000 1,475,000 Zero coupon until 9/15/02, 10.650% thereafter, due 9/15/07.................................................... 932,937 1,500,000 Zero coupon until 2/15/03, 9.950% thereafter, due 2/15/08... 828,750 1,450,000 NEXTLINK Communications Inc., 10.750% due 6/1/09 (c)........ 174,000 1,000,000 Price Communications Wireless, Inc., 11.750% due 7/15/07.... 1,052,500 625,000 Rogers Cantel Inc., 8.800% due 10/1/07...................... 578,125 525,000 Rural Cellular Corp., 9.750% due 1/15/10 (b)................ 427,875 275,000 TeleCorp PCS, Inc., 10.625% due 7/15/10..................... 312,125 Triton PCS Inc.: 375,000 8.750% due 11/15/11......................................... 346,875 250,000 Zero coupon until 5/1/03, 11.000% thereafter, due 5/1/08.... 213,750 575,000 UbiquiTel Operating Co., zero coupon until 4/15/05, 14.000% thereafter, due 4/15/10.................................... 152,375 ------------ 6,029,812 ------------ Utilities -- 1.3% Azurix Corp.: 975,000 10.375% due 2/15/07......................................... 736,125 550,000 10.750% due 2/15/10......................................... 415,250 Calpine Corp.: 500,000 8.750% due 7/15/07.......................................... 358,125 500,000 8.625% due 8/15/10.......................................... 353,750 1,125,000 CMS Energy Corp., 9.875% due 10/15/07....................... 1,165,781 ------------ 3,029,031 ------------ Total Corporate Bonds (Cost -- $101,341,594)............... 89,837,518 ------------ Convertible Bonds -- 0.7% 175,000 Ciena Corp., 3.750% due 2/1/08.............................. 108,500 1,250,000 Comverse Technology, Inc., 1.500% due 12/1/05............... 954,688 600,000 i2 Technologies, Inc., 5.250% due 12/15/06.................. 435,000 ------------ Total Convertible Bonds (Cost -- $1,484,338)............... 1,498,188 ------------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 12 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) (continued) February 28, 2002
FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Sovereign Bonds -- 57.3% Argentina -- 1.1% Republic of Argentina (c): $ 1,350,000 14.250% due 11/30/02........................................ $ 384,750 6,107,000 Structured Note, 24.505% due 4/10/05 (d)(e)................. 1,984,775 ------------ 2,369,525 ------------ Brazil -- 16.1% Federal Republic of Brazil: 2,750,000 9.625% due 7/15/05.......................................... 2,725,938 2,500,000 8.875% due 4/15/24.......................................... 1,770,625 3,075,000 12.250% due 3/6/30.......................................... 2,810,550 35,095,185 C Bond, 8.000% due 4/15/14.................................. 28,558,707 500,000 DCB, Series L, 3.250% due 4/15/12 (d)....................... 368,594 ------------ 36,234,414 ------------ Bulgaria -- 3.0% 7,650,000 Republic of Bulgaria, Discount Bond, Series A, 2.8125% due 7/28/24 (d)................................................ 6,819,210 ------------ Colombia -- 1.1% 2,450,000 Republic of Colombia, 11.750% due 2/25/20................... 2,383,237 ------------ Ecuador -- 3.5% Republic of Ecuador: 6,000,000 12.000% due 11/15/12........................................ 4,732,500 2,682,000 5.000% due 8/15/30 (b)(d)................................... 1,393,299 3,200,000 5.000% due 8/15/30 (d)...................................... 1,662,400 ------------ 7,788,199 ------------ Ivory Coast -- 0.2% 2,000,000 Ivory Coast, FLIRB, 2.000% due 3/29/18 (c).................. 400,000 ------------ Jamaica -- 0.2% 500,000 Government of Jamaica, 12.750% due 9/1/07 (b)............... 556,250 ------------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 13 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) (continued) February 28, 2002
FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Mexico -- 4.0% United Mexican States: $ 6,610,000 11.500% due 5/15/26......................................... $ 8,804,520 125,000 Discount Bond, Series D, 2.8325% due 12/31/19 (d)........... 124,844 ------------ 8,929,364 ------------ Panama -- 0.7% 1,759,260 Republic of Panama, IRB, 4.750% due 7/17/14 (d)............. 1,631,714 ------------ Peru -- 2.9% Republic of Peru (d): 4,900,000 FLIRB, 4.000% due 3/7/17.................................... 3,647,437 3,600,000 PDI, 4.500% due 3/7/17...................................... 2,884,500 ------------ 6,531,937 ------------ Philippines -- 2.0% Republic of Philippines: 675,000 4.945% due 6/18/04 (d)...................................... 681,750 2,815,000 9.875% due 1/15/19.......................................... 2,880,097 900,000 NMB, 2.875% due 1/5/05 (d).................................. 882,000 ------------ 4,443,847 ------------ Russia -- 14.2% Russia: 6,950,000 10.000% due 6/26/07......................................... 7,375,687 2,735,000 8.250% due 3/31/10.......................................... 2,611,925 5,358,693 8.250% due 3/31/10 (b)...................................... 5,117,552 7,300,000 11.000% due 7/24/18......................................... 7,783,625 13,650,540 5.000% due 3/31/30 (d)...................................... 9,030,515 ------------ 31,919,304 ------------ Turkey -- 4.0% Republic of Turkey: 4,570,000 12.375% due 6/15/09......................................... 4,798,728 1,600,000 11.500% due 1/23/12......................................... 1,608,400 2,630,000 11.875% due 1/15/30......................................... 2,642,887 ------------ 9,050,015 ------------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 14 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) (continued) February 28, 2002
FACE AMOUNT SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Venezuela -- 4.3% Republic of Venezuela: $ 3,000,000 13.625% due 8/15/18......................................... $ 2,568,750 5,500,000 Discount Bond, Series W-A, 3.1875% due 3/31/20 (including 39,270 rights) (d)......................................... 3,905,021 4,000,270 NMB, Series A, 3.000% due 12/18/05 (d)...................... 3,235,218 ------------ 9,708,989 ------------ Total Sovereign Bonds (Cost -- $122,181,841)............... 128,766,005 ------------ Loan Participations (d)(f) -- 0.5% 627,447 Kingdom of Morocco, Tranche B, 2.78125% due 1/1/04 (Morgan Stanley Emerging Markets Inc.)..................... 574,114 The People's Democratic Republic of Algeria: 10,491 Tranche 1, 4.3125% due 9/4/06 (J.P. Morgan Chase & Co.)..... 9,705 639,013 Tranche 3, 4.3125% due 3/4/10 (J.P. Morgan Chase & Co. and CS First Boston Corp.).................................... 562,332 ------------ Total Loan Participations (Cost -- $1,002,659)............. 1,146,151 ------------ SHARES - ------------ Common Stock (g) -- 0.2% 12,166 Axiohm Transaction Solutions, Inc. ......................... 0 29,245 Imperial Sugar Co. ......................................... 232,499 44,962 UnitedGlobalCom., Inc., Class A Shares...................... 179,848 ------------ Total Common Stock (Cost -- $1,034,225).................... 412,347 ------------ Preferred Stock -- 0.0% 12 Anvil Holdings Inc., Series B, 13.000%...................... 153 1,000,000 APP Finance (II) Mauritius Ltd., Series A................... 22,500 400 CSC Holdings Inc., Series M, 11.125%........................ 41,100 TCR Holding Corp. (g): 4,091 Class B..................................................... 4 2,250 Class C..................................................... 2 5,932 Class D..................................................... 6 12,271 Class E..................................................... 12 ------------ Total Preferred Stock (Cost -- $44,271).................... 63,777 ------------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 15 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Schedule of Investments (unaudited) (continued) February 28, 2002
SHARES SECURITY(a) VALUE - ---------------------------------------------------------------------------------------------- Warrants and Rights (g) -- 0.1% 1,837,253 ContiFinancial Corp., Units of Interest (Represents interests in a trust in the liquidation of ContiFinancial Corp. and its affiliates).................................. $ 141,266 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).............................................. 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).............................................. 0 1,000 Mattress Discounters Co. (Exercise price of $0.01 per share expiring on 7/15/07. Each warrant exercisable for 4.85 shares of Class A common stock and 0.539 shares of Class L common stock).............................................. 1,625 8,000 Terex Corp., Stock Appreciation Rights (Expiring 5/15/02)... 163,000 750 UbiquiTel Operating Co. (Exercise price of $22.74 per share expiring on 4/15/10. Each warrant exercisable for 5.965 shares of common stock).................................... 24,094 ------------ Total Warrants and Rights (Cost -- $183,058)............... 330,485 ------------ FACE AMOUNT SECURITY VALUE - ---------------------------------------------------------------------------------------------- Repurchase Agreement -- 1.2% $ 2,619,000 UBS PaineWebber Inc., 1.870% due 3/1/02; Proceeds at maturity -- $2,619,136; (Fully collateralized by U.S. Treasury Notes, 9.875% due 11/15/15; Market value -- $2,672,430) (Cost -- $2,619,000)......... 2,619,000 ------------ Total Investments -- 100% (Cost -- $229,890,986).......... $224,673,471 ------------ ------------
- -------------------------------------------------------------------------------- (a) All securities segregated as collateral pursuant to loan agreement. (b) Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. (c) Security is currently in default. (d) Rate shown reflects current rate on instrument with variable rate or step coupon rates. (e) Coupon rate is derived from a formula based on the yields of other Argentina bonds. (f ) Participation interests were acquired through the financial institutions indicated parenthetically. (g) Non-income producing security. Abbreviations used in this schedule: C Bond -- Capitalization Bond. DCB -- Debt Conversion Bond. FLIRB -- Front Loaded Interest Reduction Bond. IRB -- Interest Reduction Bond. NMB -- New Money Bond. PDI -- Past Due Interest.
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 16 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------------------- Statement of Assets and Liabilities (unaudited) February 28, 2002 ASSETS: Investments, at value (Cost -- $229,890,986)............ $224,673,471 Cash..................................................... 759 Receivable for securities sold........................... 5,433,815 Interest receivable...................................... 5,294,245 Prepaid expenses......................................... 26,802 ------------ TOTAL ASSETS............................................. 235,429,092 ------------ LIABILITIES: Loan payable (Note 4).................................... 75,000,000 Payable for securities purchased......................... 3,335,581 Loan interest payable (Note 4)........................... 371,084 Management fee payable................................... 129,806 Accrued expenses......................................... 77,884 ------------ TOTAL LIABILITIES........................................ 78,914,355 ------------ TOTAL NET ASSETS............................................ $156,514,737 ------------ ------------ NET ASSETS: Common Stock ($0.001 par value, 100,000,000 shares authorized; 14,903,025 shares outstanding).............. $ 14,903 Additional paid-in capital............................... 206,968,461 Overdistributed net investment income.................... (424,212) Accumulated net realized loss from security transactions............................................ (44,826,900) Net unrealized depreciation of investments............... (5,217,515) ------------ TOTAL NET ASSETS............................................ $156,514,737 ------------ ------------ NET ASSET VALUE, PER SHARE ($156,514,737 [div] 14,903,025 shares outstanding)........................................ $10.50 ------ ------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 17 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------- Statement of Operations (unaudited) For the Six Months Ended February 28, 2002 INVESTMENT INCOME: Interest................................................. $ 12,807,937 Less: Interest expense (Note 4).......................... (1,611,989) ------------ Total Investment Income.................................. 11,195,948 ------------ EXPENSES: Management fee (Note 2).................................. 827,334 Loan fees................................................ 68,907 Audit and tax services................................... 27,521 Shareholder communications............................... 25,092 Legal fees............................................... 20,828 Custody.................................................. 19,637 Transfer agent fees...................................... 19,141 Listing fees............................................. 15,640 Directors' fees.......................................... 15,472 Other.................................................... 13,519 ------------ TOTAL EXPENSES........................................... 1,053,091 ------------ NET INVESTMENT INCOME....................................... 10,142,857 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3): Realized Loss From Security Transactions (excluding short-term securities): Proceeds from sales................................... 113,082,493 Cost of securities sold............................... 118,247,301 ------------ NET REALIZED LOSS........................................ (5,164,808) ------------ Change in Net Unrealized Depreciation of Investments: Beginning of period................................... (6,874,022) End of period......................................... (5,217,515) ------------ DECREASE IN NET UNREALIZED DEPRECIATION.................. 1,656,507 ------------ NET LOSS ON INVESTMENTS..................................... (3,508,301) ------------ INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 6,634,556 ------------ ------------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 18 GLOBAL PARTNERS INCOME FUND INC. - ---------------------------------------------------- Statements of Changes in Net Assets For the Six Months Ended February 28, 2002 (unaudited) and the Year Ended August 31, 2001
2002 2001 - ----------------------------------------------------------------------------------------- OPERATIONS: Net investment income.................................... $ 10,142,857 $ 20,388,910 Net realized loss........................................ (5,164,808) (17,727,748) Decrease in net unrealized depreciation.................. 1,656,507 1,088,446 ------------ ------------ INCREASE IN NET ASSETS FROM OPERATIONS................... 6,634,556 3,749,608 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income.................................... (10,593,789) (20,942,196) Capital.................................................. -- (120,661) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS............................................ (10,593,789) (21,062,857) ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares issued on reinvestment of dividends (60,518 and 93,967 shares issued, respectively)......... 676,797 1,040,840 ------------ ------------ INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS... 676,797 1,040,840 ------------ ------------ DECREASE IN NET ASSETS...................................... (3,282,436) (16,272,409) NET ASSETS: Beginning of period...................................... 159,797,173 176,069,582 ------------ ------------ END OF PERIOD*........................................... $156,514,737 $159,797,173 ------------ ------------ ------------ ------------ *Includes undistributed (overdistributed) net investment income of:.................................................. $(424,212) $26,720 ------------ ------------ ------------ ------------
- --------------------------------------- Statement of Cash Flows (unaudited) For the Six Months Ended February 28, 2002 CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: Proceeds from sales of portfolio securities and principal paydowns................................................ $ 114,130,688 Purchases of portfolio securities........................ (112,354,212) Net purchases of short-term securities................... (366,000) ------------- 1,410,476 Net investment income.................................... 10,142,857 Adjustments to reconcile net investment income to net cash provided by operating activities: Accretion of discount on securities................... (2,166,026) Net change in receivables/payables related to operations.......................................... 530,056 ------------- NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES.......... 9,917,363 ------------- CASH FLOWS USED BY FINANCING ACTIVITIES: Proceeds from shares issued in reinvestment of distributions........................................... 676,797 Distributions paid....................................... (10,593,789) ------------- NET CASH FLOWS USED BY FINANCING ACTIVITIES.............. (9,916,992) ------------- NET INCREASE IN CASH........................................ 371 Cash, Beginning of period................................... 388 ------------- CASH, END OF PERIOD......................................... $ 759 ------------- -------------
- -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS. PAGE 19 GLOBAL PARTNERS INCOME FUND INC. - ---------------------------------------------- Notes to Financial Statements (unaudited) 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 accounting principles generally accepted in the United States of America ('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 20 GLOBAL PARTNERS INCOME FUND INC. - ---------------------------------------------- Notes to Financial Statements (unaudited) (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. 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 six months ended February 28, 2002, the Fund paid interest expenses of $1,539,405. 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. At August 31, 2001, reclassifications were made to the capital accounts of the Fund to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations. Net investment income, net realized gains and net assets were not affected by this change. PAGE 21 GLOBAL PARTNERS INCOME FUND INC. - ---------------------------------------------- Notes to Financial Statements (unaudited) (continued) Note 2. Management and Advisory Fees and Other Transactions The Fund has entered into a management agreement with PIMCO Advisors L.P. ('Investment Manager'), 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 Smith Barney Holdings Inc. ('SSBH'), which, in turn, is a subsidiary of Citigroup Inc., 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 Smith Barney Fund Management LLC ('SBFM'), an affiliate of the Investment Adviser, pursuant to a Sub-Administration Agreement between the Investment Adviser and SBFM. 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 February 28, 2002, Salomon Smith Barney Inc., another subsidiary of SSBH, 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 six months ended February 28, 2002, the aggregate cost of purchases and proceeds from sales of investments (including maturities, but excluding short-term securities) were as follows: Purchases................................................... $112,221,217 ------------ ------------ Sales....................................................... $113,082,493 ------------ ------------
PAGE 22 GLOBAL PARTNERS INCOME FUND INC. - ---------------------------------------------- Notes to Financial Statements (unaudited) (continued) At February 28, 2002, the aggregate gross unrealized appreciation and depreciation of investments for Federal income tax purposes were substantially as follows: Gross unrealized appreciation............................... $ 14,504,077 Gross unrealized depreciation............................... (19,721,592) ------------ Net unrealized depreciation................................. $ (5,217,515) ------------ ------------
Note 4. Bank Loan The Fund had outstanding a $75,000,000 loan pursuant to a secured loan agreement with ING Baring (U.S.) Capital Corporation which matured on November 20, 2001. At February 28, 2002, the Fund had outstanding a $75,000,000 loan pursuant to a revolving credit and security agreement with CXC Inc., a commercial paper conduit issuer for which Citicorp North America Inc. acts as administrative agent. The agreement between the Fund and CXC Inc. commenced on November 20, 2001. The loans generally bear interest at a variable rate based on the weighted average interest rates of the underlying commercial paper or LIBOR, plus any applicable margin. Securities held by the Fund are subject to a lien, granted to the lenders, to the extent of the borrowing outstanding and any additional expenses. 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 February 28, 2002, the Fund held loan participations with a total cost of $1,002,659. In connection with purchasing loan participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the participation. As a result, the Fund will assume the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling the participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower. PAGE 23 GLOBAL PARTNERS INCOME FUND INC. - ---------------------------------------------- Notes to Financial Statements (unaudited) (continued) 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 unrealized gain or loss recorded on such transactions. 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, 2001, the Fund had, for Federal income tax purposes, a capital loss carryforward of approximately $24,085,000, available to offset future capital gains. 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. The amount and expiration of the carryforwards are indicated below. Expiration occurs on August 31 of the year indicated:
2007 2009 ---- ---- Carryforward Amounts......................... $15,469,000 $8,616,000
Note 9. Dividends Subsequent to February 28, 2002 On January 24 2002, the Board of Directors of the Fund declared two dividends from net investment income, each in the amount of $0.11875 per share, payable on March 22 and April 26, 2002, to shareholders of record on March 12 and April 16, 2002, respectively. PAGE 24 GLOBAL PARTNERS INCOME FUND INC. - ---------------------------------- Financial Highlights For a share of common stock outstanding throughout each fiscal year ended August 31, unless otherwise noted:
2002(1) 2001 2000 1999 1998 1997 - ----------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD............................ $10.77 $11.94 $10.98 $ 9.76 $16.18 $13.88 -------- -------- -------- -------- -------- -------- INCOME (LOSS) FROM OPERATIONS: Net investment income.......................... 0.68 1.38 1.44 1.59 1.55 1.55 Net realized and unrealized gain (loss).................................. (0.24) (1.12) 0.95 1.30 (5.53) 2.46 -------- -------- -------- -------- -------- -------- Total Income (Loss) From Operations............. 0.44 0.26 2.39 2.89 (3.98) 4.01 -------- -------- -------- -------- -------- -------- LESS DISTRIBUTIONS FROM: Net investment income.......................... (0.71) (1.42) (1.43) (1.67) (1.62) (1.71) Net realized gains............................. -- -- -- -- (0.49) -- Capital........................................ -- (0.01) -- -- -- -- Excess of net realized capital gains........... -- -- -- -- (0.33) -- -------- -------- -------- -------- -------- -------- Total Distributions............................. (0.71) (1.43) (1.43) (1.67) (2.44) (1.71) -------- -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD.................. $10.50 $10.77 $11.94 $10.98 $ 9.76 $16.18 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- MARKET VALUE, END OF PERIOD..................... $12.45 $11.88 $11.6250 $11.3125 $8.5625 $15.4375 TOTAL RETURN, BASED ON MARKET VALUE(2)....................... 11.65%'DD' 16.26% 17.57% 53.57% (34.35)% 31.28% RATIOS TO AVERAGE NET ASSETS: Total expenses, including interest expense..... 3.53%'D' 4.90% 4.95% 4.22% 3.54% 3.55% Total expenses, excluding interest expense (operating expenses)......................... 1.39%'D' 1.28% 1.30% 1.27% 1.31% 1.31% Net investment income.......................... 13.42%'D' 12.53% 12.53% 14.26% 10.56% 10.14% PORTFOLIO TURNOVER RATE......................... 51% 92% 111% 102% 144% 107% NET ASSETS, END OF PERIOD (000S)................ $156,515 $159,797 $176,070 $162,004 $142,129 $234,735 Bank Loans Outstanding, End of Period (000s)........................... $75,000 $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 $75,000 Weighted Average Interest Rate on Bank Loans.................................. 4.33%'D' 7.86% 8.28% 6.42% 6.34% 6.65% - -----------------------------------------------------------------------------------------------------------------
(1) For the six months ended February 28, 2002 (unaudited). (2) For purposes of this calculation, dividends on common shares are assumed to be reinvested at prices obtained under the Fund's dividend reinvestment plan and the broker commission paid to purchase or sell a share is excluded. 'DD' Total return is not annualized, as it may not be representative of the total return for the year. 'D' Annualized. PAGE 25 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 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. PAGE 26 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------------------------------------------------- Form of Terms and Conditions of Amended and Restated Dividend Reinvestment and Cash Purchase Plan (unaudited) (continued) 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 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 PAGE 27 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------------------------------------------------- Form of Terms and Conditions of Amended and Restated Dividend Reinvestment and Cash Purchase Plan (unaudited) (continued) 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 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 PAGE 28 GLOBAL PARTNERS INCOME FUND INC. - -------------------------------------------------------------------------------- Form of Terms and Conditions of Amended and Restated Dividend Reinvestment and Cash Purchase Plan (unaudited) (continued) 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. The report is transmitted to the shareholders of the Fund for their information. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase at market prices from time to time shares of its common stock in the open market. PAGE 29 (This page intentionally left blank.) GLOBAL PARTNERS INCOME FUND INC. - --------- Directors 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, Smith Barney 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 STEPHEN TREADWAY Co-Chairman of the Board; Executive Vice President, PIMCO Advisors L.P. Chairman and President, PIMCO Funds Distributors LLC CHARLES F. BARBER, Emeritus Consultant; formerly Chairman, ASARCO Inc. - ------- Officers HEATH B. MCLENDON Co-Chairman of the Board STEPHEN TREADWAY Co-Chairman of the Board LEWIS E. DAIDONE Executive Vice President and Treasurer JAMES E. CRAIGE Executive Vice President 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. 125 Broad Street 10th Floor, MF-2 New York, New York 10004 Telephone 1-888-777-0102 INVESTMENT MANAGER PIMCO Advisors L.P. 800 Newport Center Drive Suite 100 Newport Beach, California 92660 INVESTMENT ADVISER Salomon Brothers Asset Management Inc 388 Greenwich Street New York, New York 10013 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 - -------------------------------------------------------------------------------- American Stock Transfer & Trust Company FIRST-CLASS MAIL 40 Wall Street U.S. POSTAGE New York, New York 10005 PAID BROOKLYN, NY PERMIT No. 1726 Global Partners Income Fund Inc. Semi-Annual Report February 28, 2002 STATEMENT OF DIFFERENCES The dagger symbol shall be expressed as..................................'D' The double dagger symbol shall be expressed as...........................'DD' -----END PRIVACY-ENHANCED MESSAGE-----