UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-7362
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Robert I. Frenkel, Esq.
Salomon Brothers Asset Management Inc
300 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 446-1013
Date of fiscal year end: December 31
Date of reporting period: June 30, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
The SEMI-ANNUAL Report to Stockholders is filed herewith.
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Letter from the Chairman [Picture
R. Jay Gerken]
R. Jay Gerken, CFA
Chairman and
Chief Executive Officer
Dear Shareholder,
The bond markets experienced a pullback over the last six months amid signs of a
strengthening economy and renewed inflationary pressures, and rising interest
rates. After a four-year period of monetary easing, which saw the Federal
Reserve Bank ("Fed") steer the key federal funds target rate /i/ down to a
four-decade low of 1%, the Fed reversed course in late June to what many
observers believe will be a protracted period of monetary tightening, or
steering short-term interest rates higher. Higher interest rates can act as a
brake on robust economic growth, helping maintain a balance between steady
growth and the inflation that generally accompanies that growth.
The Fed's increase in the federal funds rate, to 1.25% at the end of June, was
widely anticipated. As bond prices declined, the yields on most fixed-income
instruments, particularly those on longer-maturity issues, began moving up
earlier this year and continued their ascent as it became more evident that the
improving economy and higher inflation would compel the Fed to act in June. In
particular, evidence of renewed job growth - the one missing piece from the
economic recovery - drove rates higher beginning in the spring.
Intermediate-term municipal bonds, particularly those of 7- to 10-year
maturities, succumbed to more pricing pressure than 15- to 20-year issues and
short-term notes, but all these maturity classes held up better than bonds with
longer maturities of more than 22 years. /ii/
Market Overview
During the six months ended June 30, 2004, the Salomon Brothers Municipal
Partners Fund Inc. returned -3.38% based on its New York Stock Exchange ("NYSE")
market price and -1.39% based on its net asset value ("NAV") /iii/ per share.The
fund's benchmark, the unmanaged Lehman Brothers Municipal Bond Index /iv/
returned -0.68 and its Lipper general municipal debt (leveraged) closed-end
funds category average returned -1.26% over the same time frame. /v/ Please note
that Lipper performance returns are based on each fund's NAV. The average credit
rating of holdings in the fund was Aa1 (or deemed by the portfolio manager to be
of comparable credit quality). /vi/ The fund had the largest exposure to the
water-and-sewer, healthcare and transportation sectors. The fund's largest
aggregated holdings by state were New Jersey, Illinois and Ohio.
During this six-month period, the fund distributed dividends to shareholders
totaling $0.42 per share. The performance table on the following page, shows the
fund's 30-day SEC and annualized distribution yields as well as its six-month
total return based on its NAV and market price as of June 30, 2004. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. The fund's yields will vary.
Certain investors may be subject to the federal Alternative Minimum Tax, and
state and local taxes may apply. Capital gains, if any, are fully taxable.
Please consult your personal tax adviser.
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
FUND PERFORMANCE
AS OF JUNE 30, 2004
Annualized 6-Month
30-Day Distribution Total
Price Per Share SEC Yield Yield Return
$14.89 (NAV) 6.46% 5.64% -1.39%
$13.12 (NYSE) 7.35% 6.40% -3.38%
ALL FIGURES REPRESENT PAST PERFORMANCE AND ARE NOT A GUARANTEE OF FUTURE
RESULTS. THE FUND'S YIELDS WILL VARY.
Total returns are based on changes in NAV or market price, respectively. Total
returns assume the reinvestment of all dividends and/or capital gains
distributions, if any, in additional shares. Annualized distribution yield is
the fund's current monthly income dividend rate, annualized, and then divided by
the NAV or the market price noted in this report. The "SEC yield" is a return
figure often quoted by bond and other fixed income mutual funds. This quotation
is based on the most recent 30-day (or one month) period covered by the fund's
filings with the SEC. The yield figure reflects the dividends and interest
earned during the period after deduction of the fund's expenses for the period.
The annualized distribution yield assumes a current monthly income dividend rate
of $0.070 for 12 months. These yields are as of June 30, 2004 and are subject to
change.
Information About Your Fund
In recent months several issues in the mutual fund industry have come under the
scrutiny of federal and state regulators. The fund's Adviser and some of its
affiliates have received requests for information from various government
regulators regarding market timing, late trading, fees and other mutual fund
issues in connection with various investigations. The fund has been informed
that the Adviser and its affiliates are responding to those information
requests, but are not in a position to predict the outcome of these requests and
investigations.
In November 2003, Citigroup Asset Management disclosed an investigation by the
Securities and Exchange Commission ("SEC") and the U.S. Attorney relating to
Citigroup Asset Management's entry into the transfer agency business during
1997-1999. On July 20, 2004, Citigroup disclosed that it had been notified by
the Staff of the SEC that the Staff is considering recommending a civil
injunctive action and/or an administrative proceeding against certain advisory
and transfer agent entities affiliated with Citigroup relating to the creation
and operation of its internal transfer agent unit to serve primarily the Smith
Barney family of mutual funds. This internal transfer agent did not provide
services to the fund. Citigroup is cooperating with the SEC and will seek to
resolve this matter in discussion with the SEC Staff. Although there can be no
assurance, Citigroup does not believe that this matter will have a material
adverse effect on the fund.
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Looking for Additional Information?
The fund is traded under the symbol "MNP" and its closing market price is
available in most newspapers under the NYSE listings. The daily NAV is available
online under symbol XMNPX. Barron's and The Wall Street Journal's Monday
editions carry closed-end fund tables that will provide additional information.
In addition, the fund issues a quarterly press release that can be found on most
major financial web sites as well as www.sbam.com.
In a continuing effort to provide information concerning the fund, shareholders
may call 1-888-777-0102 or 1-800-SALOMON (toll free), Monday through Friday from
8:00 a.m. to 6:00 p.m. Eastern Time, for the fund's current NAV, market price
and other information.
Thank you for your investment in the Salomon Brothers Municipal Partners Fund
Inc. We appreciate your continued confidence in our stewardship of your assets
and we value our relationship with you.
Sincerely,
/s/ R. Jay Gerken
R. Jay Gerken, CFA
Chairman and Chief Executive Officer
July 20, 2004
The information provided is not intended to be a forecast of future events, a
guarantee of future results or investment advice. Views expressed may differ
from those of the firm as a whole.
RISKS: Investors could lose money on their investment in the fund. Certain
investors may be subject to the Federal Alternative Minimum Tax (AMT), and state
and local taxes will apply. Capital gains, if any, are fully taxable.
All index performance reflects no deduction for fees, expenses or taxes. Please
note that an investor cannot invest directly in an index.
i The federal funds rate is the interest rate that banks with excess reserves
at a Federal Reserve district bank charges other banks that need overnight
loans.
ii Source: Based upon Lehman Brothers index performance data for each
respective maturity category of municipal bonds.
iii NAV is a price that reflects the value of the fund's underlying portfolio
plus other assets, less the fund's liabilities. However, the price at which
an investor may buy or sell shares of the fund is at the fund's market
price as determined by supply of and demand for the fund's common shares,
which may be more or less than the fund's NAV.
iv The Lehman Brothers Municipal Bond Index is a broad measure of the
municipal bond market with maturities of at least one year.
v Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the six-month period ended June 30, 2004, calculated
among the 65 funds in the fund's Lipper category including the reinvestment
of dividends and capital gains, if any.
vi Bonds rated "Aa" are judged to be of high quality by all standards by
Moody's Investors Service. Together with the "Aaa" group they comprise what
are generally known as high-grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in "Aaa"
securities or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than in "Aaa" securities. Numerical modifiers
1, 2 and 3 may be applied to each generic rating from "Aa" to "B", where 1
is the highest and 3 is the lower rating within its generic category.
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (unaudited)
June 30, 2004
Face
Amount Rating(a) Security Value
-------------------------------------------------------------------------------------------------------------------
Long-Term Investments -- 98.7%
California -- 3.5%
$2,500,000 AA- California State Economic Recovery, Series A, 5.250% due 7/1/12 .............. $ 2,748,125
1,370,000 AAA Pleasant Valley, CA School District Ventura County, Series A, MBIA-Insured,
5.850% due 2/1/17 .......................................................... 1,567,787
-----------
4,315,912
-----------
Colorado -- 0.9%
1,000,000 A- Colorado Springs, CO Hospital Revenue, 6.375% due 12/15/30 ................... 1,057,290
-----------
District of Columbia -- 1.7%
2,000,000 AAA District of Columbia Revenue (American University), AMBAC-Insured,
5.625% due 10/1/26 ......................................................... 2,068,220
-----------
Georgia -- 0.0%
40,000 AAA Fulton County, GA Housing Authority, Single-Family Mortgage, Series A,
GNMA-Collateralized, 6.600% due 3/1/28 ..................................... 40,668
-----------
Hawaii -- 1.7%
2,000,000 AAA Hawaii State Airport System Revenue Refunding, Series B, FGIC-Insured,
6.000% due 7/1/19 .......................................................... 2,163,080
-----------
Illinois -- 14.6%
3,750,000 AAA Chicago, IL Board of Education (Chicago School Reform), AMBAC-Insured,
5.750% due 12/1/27 ......................................................... 4,131,975
Chicago, IL Midway Airport Revenue, MBIA-Insured:
2,000,000 AAA Series A, 5.500% due 1/1/29 ................................................ 2,029,720
2,000,000 AAA Series B, 5.625% due 1/1/29 ................................................ 2,022,540
2,000,000 Aaa* Illinois Development Finance Authority, Revolving Fund Revenue,
5.250% due 9/1/12 .......................................................... 2,190,600
1,000,000 AA+ Illinois Educational Facilities Authority Revenues (Northwestern University),
5.500% due 12/1/13 ......................................................... 1,098,300
1,500,000 A+ Illinois Health Facilities Authority Revenue Refunding
(Lutheran General Health System), Series C, 7.000% due 4/1/14 .............. 1,799,580
1,500,000 AAA Illinois State First Series, FSA-Insured, 5.500% due 5/1/16 .................. 1,659,630
3,000,000 Aa3* Illinois State Sales Tax Revenue, Series V (Pre-Refunded - Escrowed
with U.S. Treasury obligations to 6/15/05 Call @ 102), 6.375% due 6/15/20 .. 3,194,400
-----------
18,126,745
-----------
Indiana -- 2.3%
1,000,000 BBB+ Indiana State Development Finance Authority, Environmental Revenue
(USX Corp. Project), 5.250% due 12/1/22 .................................... 1,054,380
1,750,000 AAA Indiana State Revolving Fund Revenue, Series B, 5.000% due 8/1/23 ............ 1,762,372
-----------
2,816,752
-----------
-------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 4
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (unaudited) (continued)
June 30, 2004
Face
Amount Rating(a) Security Value
-------------------------------------------------------------------------------------------------------------------
Iowa -- 0.9%
$1,000,000 A1* Iowa Finance Authority, Hospital Facility Revenue, 6.750% due 2/15/16 ........ $ 1,098,570
------------
Kansas -- 1.2%
1,430,000 AA Kansas State Development Finance Authority, Health Facilities Revenue
(Sisters of Charity), Series J, 6.250% due 12/1/28 ......................... 1,542,827
------------
Maryland -- 5.6%
Maryland State Health & Higher Educational Facilities Authority Revenue:
1,500,000 Baa1* Caroll County General Hospital, 6.000% due 7/1/37 .......................... 1,552,245
1,000,000 A Surburban Hospital, Series A, 5.500% due 7/1/16 ............................ 1,057,530
University of Maryland Medical Systems:
1,000,000 A3* 6.750% due 7/1/30 ........................................................ 1,119,830
500,000 A 6.000% due 7/1/32 ........................................................ 519,945
2,500,000 Aaa* Northeast Maryland Waste Disposal Authority, Solid Waste Revenue
Refunding, AMBAC-Insured, 5.500% due 4/1/15 ................................ 2,673,450
------------
6,923,000
------------
Massachusetts -- 8.0%
3,500,000 AAA Massachusetts State GO, Series C, FGIC-Insured, 5.500% due 11/1/15 ........... 3,893,470
2,500,000 AA- Massachusetts State Health & Educational Facilities Authority Revenue
(Partners Healthcare Systems), Series C, 5.750% due 7/1/32 ................. 2,587,425
3,170,000 AAA Massachusetts State Water Pollution Abatement, Series A, 5.750% due 8/1/29 ... 3,371,105
------------
9,852,000
------------
Michigan -- 1.2%
1,500,000 AA- Michigan State Hospital Finance Authority Revenue Refunding
(Trinity Health), Credit C, 5.375% due 12/1/30 ............................. 1,511,550
------------
Minnesota -- 2.3%
2,785,000 AA+ Minnesota State Housing Finance Agency, Single-Family Mortgage,
Series H, 6.500% due 1/1/26 ................................................ 2,800,680
------------
Nevada -- 3.1%
1,350,000 AAA Clark County, NV Passenger Facility Revenue (McCarran International
Airport), Series A, MBIA-Insured, 5.750% due 7/1/23 ........................ 1,410,628
Nevada Housing Division, Single-Family Program, Series B-2:
2,255,000 Aa2* 6.400% due 10/1/25 ......................................................... 2,282,534
185,000 Aa2* 6.950% due 10/1/26 ......................................................... 186,332
------------
3,879,494
------------
New Hampshire -- 0.1%
165,000 Aa2* New Hampshire State HFA, Single-Family Residential, Series A,
6.800% due 7/1/15 .......................................................... 165,376
------------
-------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
PAGE 5
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (unaudited) (continued)
June 30, 2004
Face
Amount Rating(a) Security Value
-------------------------------------------------------------------------------------------------------------------
New Jersey -- 12.3%
New Jersey EDA:
$5,150,000 AAA PCR (Public Service Electric and Gas Co. Project), Series A,
MBIA-Insured, 6.400% due 5/1/32 .......................................... $ 5,332,310
2,500,000 AA- School Facilities Construction, Series G, 5.000% due 9/1/11 ................ 2,709,950
4,450,000 AAA Water Facilities Revenue (New Jersey American Water Co., Inc. Project),
Series A, FGIC-Insured, 6.875% due 11/1/34 ............................... 4,606,417
1,000,000 A2* New Jersey Health Care Facilities Financing Authority Revenue
(Hackensack University Medical Center), 6.000% due 1/1/25 .................. 1,030,330
1,395,000 AAA New Jersey Transportation Trust Fund Authority, Transportation System,
Series A, AMBAC-Insured, 5.000% due 12/15/11 ............................... 1,513,561
-----------
15,192,568
-----------
New York -- 6.5%
600,000 AAA Nassau County, NY Interim Finance Authority, Sales Tax Secured, Series A,
AMBAC-Insured, 5.000% due 11/15/09 ......................................... 648,456
New York City, NY GO, Series A:
180,000 A 6.000% due 5/15/30 ......................................................... 190,784
820,000 A Pre-Refunded - Escrowed with U.S. government securities to 5/15/10
(Call @ 101), 6.000% due 5/15/30 ......................................... 942,246
New York City, NY Municipal Water Finance Authority,
Water & Sewer System Revenue, Series B:
1,175,000 AA 5.750% due 6/15/29 ....................................................... 1,229,320
1,000,000 AA 5.125% due 6/15/31 ....................................................... 994,910
1,250,000 AA+ New York City, NY Transitional Finance Authority Revenue, Series A,
5.500% due 11/15/17 ........................................................ 1,350,837
1,500,000 AAA New York State Environmental Facilities Corp., Clean Water & Drinking
Revolving Funds, Series B, 5.000% due 11/15/16 ............................. 1,616,325
140,000 Aaa* New York State Mortgage Agency Revenue, 24th Series, 6.125% due 10/1/30 ...... 141,996
950,000 AAA Port Authority of New York and New Jersey Construction, 96th Series,
FGIC-Insured, 6.600% due 10/1/23 ........................................... 970,121
-----------
8,084,995
-----------
Ohio -- 8.5%
1,375,000 Aaa* Butler County, OH, MBIA-Insured, 5.250% due 12/1/15 .......................... 1,489,647
2,000,000 BBB+ Miami County, OH Hospital Facilities Revenue Refunding & Improvement
(Upper Valley Medical Center), 6.250% due 5/15/13 .......................... 2,083,000
6,700,000 A+ Ohio State Water Development Authority, Solid Waste Disposal Revenue
(Cargill Inc.), 6.300% due 9/1/20 .......................................... 6,932,490
-----------
10,505,137
-----------
-------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
PAGE 6
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (unaudited) (continued)
June 30, 2004
Face
Amount Rating(a) Security Value
-------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 2.2%
$1,250,000 AAA Delaware Valley, PA Regional Financial Authority, Local Government Revenue,
Series A, AMBAC-Insured, 5.500% due 8/1/28 ................................. $ 1,327,462
1,090,000 AAA Philadelphia, PA GO, Series A, XLCA-Insured, 5.250% due 2/15/14 .............. 1,172,775
250,000 AAA Philadelphia, PA School District, Series A, FSA-Insured, 5.500% due 2/1/31 ... 259,398
-----------
2,759,635
-----------
Puerto Rico -- 3.2%
2,500,000 AAA Puerto Rico Commonwealth Refunding Revenue, FGIC-Insured,
5.500% due 7/1/13 .......................................................... 2,815,400
1,100,000 AAA Puerto Rico Commonwealth Highway & Transportation Authority,
Transportation Revenue, Series J, MBIA-Insured, 5.000% due 7/1/11 .......... 1,200,980
-----------
4,016,380
-----------
Tennessee -- 7.2%
1,000,000 Aaa* County of Montgomery, TN GO, FGIC-Insured, 5.000% due 5/1/14 ................. 1,070,270
2,900,000 AA- Humphreys County, TN IDB, Solid Waste Disposal Revenue
(E.I. du Pont de Nemours and Co. Project), 6.700% due 5/1/24 ............... 2,966,729
3,500,000 AAA Memphis-Shelby County, TN Airport Authority Revenue, Series D,
AMBAC-Insured, 6.000% due 3/1/24 ........................................... 3,747,800
1,045,000 AA Tennessee Housing Development Agency (Homeownership Program),
Series 2C, 6.350% due 1/1/31 ............................................... 1,097,386
-----------
8,882,185
-----------
Texas -- 5.0%
1,165,000 A Harris County, TX Health Facilities Development Authority,
Hospital Revenue (Memorial Hermann Healthcare System), Series A,
5.250% due 12/1/17 ......................................................... 1,193,135
2,105,000 AAA Lower Colorado River Authority, TX Revenue Refunding & Improvement,
AMBAC-Insured, 5.250% due 5/15/14 .......................................... 2,277,947
100,000 AAA North Harris Montgomery Community College District, TX Refunding,
FGIC-Insured, 5.375% due 2/15/16 ........................................... 107,099
2,500,000 AAA Texas State Turnpike Authority Revenue, First Tier, Series A,
AMBAC-Insured, 5.500% due 8/15/39 .......................................... 2,579,775
-----------
6,157,956
-----------
Virginia -- 1.3%
1,435,000 AA+ Virginia State Public School Authority Refunding Revenue
(School Financing 1997), Series D, 5.250% due 8/1/12 ....................... 1,583,063
-----------
-------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
PAGE 7
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Schedule of Investments (unaudited) (continued)
June 30, 2004
Face
Amount Rating(a) Security Value
-------------------------------------------------------------------------------------------------------------------
Washington -- 5.4%
$1,000,000 AAA Chelan County, WA Public Utility District (Chelan Hydro System No. 1),
Construction Revenue, Series A, AMBAC-Insured, 5.450% due 7/1/37 ........... $ 1,012,870
4,250,000 AAA Seattle, WA GO, Series B, FSA-Insured, 5.750% due 12/1/28 .................... 4,486,003
1,200,000 AAA Washington State Public Power Supply System Revenue Refunding
(Nuclear Project No. 1), Series A, MBIA-Insured, 5.125% due 7/1/17 ......... 1,251,576
------------
6,750,449
------------
Total Long-Term Investments (Cost -- $117,904,136) ........................... 122,294,532
------------
Short-Term Investments -- 1.3%
Idaho -- 1.3%
1,650,000 A-1+ Idaho Health Facilities Authority Revenues (St. Lukes Medical Center),
FSA-Insured, VRDO, 1.080% due 7/1/30 (Cost -- $1,650,000)................... 1,650,000
------------
Total Investments -- 100.0% (Cost -- $119,554,136**).......................... $123,944,532
============
-------------------
(a) All ratings are by Standard & Poor's Ratings Service, except for those that
are identified by an asterisk (*) which are rated by Moody's Investors
Service, Inc.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 9 and 10 for definitions of ratings and abbreviations.
--------------------------------------------------------------------------------
See Notes to Financial Statements.
PAGE 8
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Long-Term Security Ratings (unaudited)
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA - Bonds rated "AAA" have the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA - Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issue only in a small
degree.
A - Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
BB - Bonds rated "BB" have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments.
Moody's Investors Service ("Moody's") -- Numerical modifiers 1, 2 and 3 may be
applied to each generic rating from "Aa" to "Baa," where 1 is the highest and 3
the lowest ranking within its generic category.
Aaa - Bonds rated "Aaa" are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa - Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in "Aaa" securities.
A - Bonds rated "A" possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment some time
in the future.
Baa - Bonds rated "Baa" are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
NR - Indicates that the bond is not rated by Moody's or Standard & Poor's
as indicated.
PAGE 9
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Short-Term Security Ratings (unaudited)
SP-1 - Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
sign.
A-1 - Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety regarding
timely payment is either overwhelming or very strong; those issues
determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign.
VMIG 1 - Moody's highest rating for issues having a demand feature - VRDO.
P-1 - Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
Abbreviations* (unaudited)
ABAG - Association of Bay Area Governments ISD - Independent School District
AIG - American International Guaranty ISO - Independent System Operator
AMBAC - Ambac Assurance Corporation LOC - Letter of Credit
AMT - Alternative Minimum Tax MBIA - Municipal Bond Investors Assurance
BAN - Bond Anticipation Notes Corporation
BIG - Bond Investors Guaranty MERLOT - Municipal Exempt Receipts Liquidity
CDA - Community Development Authority Optional Tender
CGIC - Capital Guaranty Insurance Company MFH - Multi-Family Housing
CHFCLI - California Health Facility MSTC - Municipal Securities Trust
Construction Loan Insurance Certificates
CONNIE - College Construction Loan MUD - Municipal Utilities District
LEE Insurance Association MVRICS - Municipal Variable Rate Inverse
COP - Certificate of Participation Coupon Security
CSD - Central School District PART - Partnership Structure
CTFS - Certificates PCFA - Pollution Control Finance Authority
DFA - Development Finance Authority PCR - Pollution Control Revenue
EDA - Economic Development Authority PFA - Public Finance Authority
EFA - Educational Facilities Authority PFC - Public Finance Corporation
ETM - Escrowed to Maturity PSFG - Permanent School Fund Guaranty
FGIC - Financial Guaranty Insurance Company Q-SBLF - Qualified School Bond Loan Fund
FHA - Federal Housing Administration Radian - Radian Asset Assurance
FHLMC - Federal Home Loan Mortgage RAN - Revenue Anticipation Notes
Corporation RAW - Revenue Anticipation Warrants
FLAIRS - Floating Adjustable Interest Rate RDA - Redevelopment Agency
Securities RIBS - Residual Interest Bonds
FNMA - Federal National Mortgage Association RITES - Residual Interest Tax-Exempt Securities
FRTC - Floating Rate Trust Certificates SPA - Standby Bond Purchase Agreement
FSA - Federal Savings Association SWAP - Swap Structure
GIC - Guaranteed Investment Contract SYCC - Structured Yield Curve Certificate
GNMA - Government National Mortgage TAN - Tax Anticipation Notes
Association TCRS - Transferable Custodial Receipts
GO - General Obligation TECP - Tax Exempt Commercial Paper
HDC - Housing Development Corporation TFA - Transitional Finance Authority
HEFA - Health & Educational Facilities TOB - Tender Option Bond Structure
Authority TRAN - Tax and Revenue Anticipation Notes
HFA - Housing Finance Authority UFSD - Unified Free School District
IBC - Insured Bond Certificates UHSD - Unified High School District
IDA - Industrial Development Authority USD - Unified School District
IDB - Industrial Development Board VA - Veterans Administration
IDR - Industrial Development Revenue VRDD - Variable Rate Daily Demand
IFA - Industrial FinanceAgency VRDO - Variable Rate Demand Obligation
INFLOS - Inverse Floaters VRWE - Variable Rate Wednesday Demand
XLCA - XL Capital Assurance
-----------------
* Abbreviations may or may not appear in the Schedule of Investments.
PAGE 10
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Statement of Assets and Liabilities (unaudited)
June 30, 2004
ASSETS:
Investments, at value (Cost -- $119,554,136) ................................................... $123,944,532
Cash ........................................................................................... 39,748
Interest receivable ............................................................................ 1,860,696
Receivable for securities sold ................................................................. 50,472
Prepaid expenses ............................................................................... 10,494
------------
TOTAL ASSETS ................................................................................... 125,905,942
------------
LIABILITIES:
Management fee payable ......................................................................... 56,507
Preferred dividends payable .................................................................... 3,067
Accrued expenses ............................................................................... 114,615
------------
TOTAL LIABILITIES .............................................................................. 174,189
------------
AUCTION RATE PREFERRED STOCK
(800 SHARES AUTHORIZED AND ISSUED AT $50,000 PER SHARE) (NOTE 4) ............................... 40,000,000
------------
TOTAL NET ASSETS .................................................................................... $ 85,731,753
============
NET ASSETS:
Common Stock ($0.001 par value, 100,000,000 shares authorized; 5,757,094 shares outstanding) ... $ 5,757
Additional paid-in capital ..................................................................... 79,673,514
Undistributed net investment income ............................................................ 1,492,143
Accumulated net realized gain from investment transactions ..................................... 169,943
Net unrealized appreciation of investments ..................................................... 4,390,396
------------
TOTAL NET ASSETS .................................................................................... $ 85,731,753
============
NET ASSET VALUE PER SHARE OF COMMON STOCK ($85,731,753 / 5,757,094 shares outstanding) .............. $14.89
=======
--------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
Page 11
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2004
INVESTMENT INCOME:
Interest ........................................................................................ $ 3,250,345
------------
EXPENSES:
Management fee (Note 2) ......................................................................... 350,584
Auction agent fees .............................................................................. 54,123
Audit and tax services .......................................................................... 36,218
Shareholder communications ...................................................................... 33,763
Directors' fees ................................................................................. 33,521
Legal ........................................................................................... 19,308
Listing fees .................................................................................... 10,756
Transfer agency services ........................................................................ 10,353
Custody ......................................................................................... 6,197
Insurance ....................................................................................... 1,511
Other ........................................................................................... 12,434
------------
TOTAL EXPENSES .................................................................................. 568,768
------------
NET INVESTMENT INCOME ............................................................................... 2,681,577
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3):
Realized Gain From Investment Transactions (excluding short-term investments):
Proceeds from sales ........................................................................... 15,672,685
Cost of securities sold ....................................................................... 15,210,227
------------
NET REALIZED GAIN ............................................................................... 462,458
------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period ........................................................................... 8,533,659
End of period ................................................................................. 4,390,396
------------
DECREASE IN NET UNREALIZED APPRECIATION ......................................................... (4,143,263)
------------
NET LOSS ON INVESTMENTS ............................................................................. (3,680,805)
------------
DIVIDENDS PAID TO AUCTION RATE PREFERRED STOCKHOLDERS
FROM NET INVESTMENT INCOME ...................................................................... (214,679)
------------
DECREASE IN NET ASSETS FROM OPERATIONS .............................................................. $ (1,213,907)
============
---------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
PAGE 12
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2004 (unaudited)
and the Year Ended December 31, 2003
2004 2003
------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income.................................................. $ 2,681,577 $ 5,463,074
Net realized gain .................................................... 462,458 161,658
Increase (decrease) in net unrealized appreciation..................... (4,143,263) 598,838
Dividends paid to Auction Rate Preferred Stockholders
from net investment income .......................................... (214,679) (405,855)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS...................... (1,213,907) 5,817,715
----------- -----------
DISTRIBUTIONS PAID TO COMMON STOCK SHAREHOLDERS FROM:
Net investment income.................................................. (2,417,979) (4,835,959)
----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS PAID TO
COMMON STOCK SHAREHOLDERS............................................ (2,417,979) (4,835,959)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......................................... (3,631,886) 981,756
NET ASSETS:
Beginning of period.................................................... 89,363,639 88,381,883
----------- -----------
END OF PERIOD*......................................................... $85,731,753 $89,363,639
=========== ===========
* Includes undistributed net investment income of:......................... $ 1,492,143 $ 1,443,224
=========== ===========
------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
PAGE 13
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements (unaudited)
Note 1. Organization and Significant Accounting Policies
Salomon Brothers Municipal Partners Fund Inc. ("Fund"), was incorporated in
Maryland on November 24, 1992 and is registered as a diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended. The Board of Directors authorized 100 million shares of $0.001 par
value common stock. The Fund's primary investment objective is to seek a high
level of current income which is exempt from federal income taxes, consistent
with the preservation of capital. As a secondary investment objective, the Fund
intends to enhance portfolio value by purchasing tax exempt securities that, in
the opinion of Salomon Brothers Asset Management Inc ("SBAM"), an indirect
wholly-owned subsidiary of Citigroup Inc. ("Citigroup"), may appreciate in value
relative to other similar obligations in the marketplace.
The following are a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with U.S. generally accepted accounting principles
("GAAP"), which requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
amounts could differ from those estimates.
SECURITIES VALUATION. Tax-exempt securities are 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.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
recorded on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis. Interest income is accrued on a daily
basis. The Fund amortizes premiums and accretes discounts on securities
purchased using the effective interest method.
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 substantially
all of its income and capital gains, if any, to its shareholders. Therefore, no
federal income tax or excise tax provision is required. The character of income
and gains to be distributed are determined in accordance with income tax
regulations which may differ from GAAP.
PAGE 14
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements (unaudited) (continued)
DIVIDENDS AND DISTRIBUTIONS. The Fund declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Long-term
capital gains, if any, in excess of loss carryovers are expected to be
distributed annually. Dividends and distributions to common shareholders are
recorded on the ex-dividend date. Dividends and distributions to preferred
shareholders are accrued on a weekly basis and are determined as described in
Note 4. 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.
Note 2. Management and Advisory Fees and Other Transactions
SBAM acts as the investment adviser and administrator of the Fund. SBAM provides
all management, advisory and administration services for the Fund. As
compensation for its services, the Fund pays SBAM an investment management fee
at an annual rate of 0.55% of the Fund's average weekly net assets. For purposes
of calculating this fee, the liquidation value of any outstanding preferred
stock of the Fund is not deducted in determining the Fund's average weekly net
assets. This fee is calculated daily and paid monthly.
SBAM has delegated certain administrative services to Smith Barney Fund
Management LLC ("SBFM"), another indirect wholly-owned subsidiary of Citigroup,
pursuant to a Sub-Administration Agreement between SBAM and SBFM.
Note 3. Investments
For the six months ended June 30, 2004, the aggregate cost of purchases and
proceeds from sales of investments (including maturities of long-term
investments, but excluding short-term investments) were as follows:
Purchases.......................................................... $14,379,322
===========
Sales.............................................................. $15,672,685
===========
At June 30, 2004, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
Gross unrealized appreciation...................................... $ 5,181,726
Gross unrealized depreciation...................................... (791,330)
-----------
Net unrealized appreciation........................................ $ 4,390,396
===========
PAGE 15
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements (unaudited) (continued)
Note 4. Auction Rate Preferred Stock
On April 2, 1993, the Fund closed its public offering of 800 shares of $0.001
par value Auction Rate Preferred Stock ("Preferred Stock") at an offering price
of $50,000 per share. The Preferred Stock has a liquidation preference of
$50,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) and subject to certain restrictions, are
redeemable in whole or in part.
Dividend rates generally reset every 7 days and are determined by auction
procedures. The dividend rates on the Preferred Stock during the six months
ended June 30, 2004 ranged from 0.860% to 1.400%. The weighted average dividend
rate for the six months ended June 30, 2004 was 1.076%.
The Fund is subject to certain restrictions relating to the Preferred Stock. The
Fund may not declare dividends or make other distributions on shares of common
stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
Preferred Stock would be less than 200%. The Preferred Stock is also subject to
mandatory redemption at $50,000 per share plus any accumulated or unpaid
dividends, whether or not declared, if certain requirements relating to the
composition of the assets and liabilities of the Fund as set forth in its
Articles Supplementary are not satisfied.
The Preferred Stock, which are entitled to one vote per share, generally vote
with the common shares but vote separately as a class to elect two directors and
on certain matters affecting the rights of the Preferred Stock.
The issuance of preferred stock poses certain risks to holders of common stock,
including, among others the possibility of greater market price volatility and
in certain market conditions, the yield to holders of common stock may be
adversely affected.
The Fund is required to maintain certain asset coverages with respect to the
Preferred Stock. If the Fund fails to maintain these coverages and does not cure
any such failure within the required time period, the Fund is required to redeem
a requisite number of the Preferred Stock in order to meet the applicable
requirement. Additionally, failure to meet the foregoing asset requirements
would restrict the Fund's ability to pay dividends to common shareholders.
PAGE 16
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements (unaudited) (continued)
Note 5. Concentration of Credit Risk
Since the Fund invests a portion of its assets in issuers located in a single
state, it may be affected by economic and political developments in a specific
state or region. Certain debt obligations held by the Fund are entitled to the
benefit of insurance, standby letters of credit or other guarantees of banks or
other financial institutions.
Note 6. Events Subsequent to June 30, 2004
COMMON STOCK DIVIDENDS. On May 14, 2004, the Board of Directors of the Fund
declared two common share dividends from net investment income, each in the
amount of $0.070 per share, payable on July 30 and August 27, 2004 to
shareholders of record on July 13 and August 17, 2004, respectively. In
addition, on July 29, 2004, the Board of Directors of the Fund declared three
common share dividends from net investment income, each in the amount of $0.070
per share, payable on September 24, October 29, and November 26, 2004 to
shareholders of record on September 14, October 13 and November 16, 2004,
respectively.
PREFERRED STOCK DIVIDENDS. The Board of Directors designated each of the
following dividend periods as a Special Rate Period. With each auction date, the
regular auction procedure resumes, subject to the Fund's ability to designate
any subsequent dividend period as a Special Rate Period.
Auction Commencement of Rate Effective Preferred
Date Rate Period Through Rate
--------------------------------------------------------------------------------
6/28/04 6/29/04 7/5/04 1.400%
7/2/04 7/6/04 7/12/04 1.400
7/12/04 7/13/04 7/19/04 1.250
7/19/04 7/20/04 7/26/04 1.200
7/26/04 7/27/04 8/2/04 1.050
--------------------------------------------------------------------------------
Note 7. Additional Information
Citigroup has been notified by the Staff of the Securities and Exchange
Commission ("SEC") that the Staff is considering recommending a civil injunctive
action and/or an administrative proceeding against Citigroup Asset Management
("CAM"), including its applicable investment advisory companies and Citicorp
Trust Bank ("CTB"), an internal transfer agent, relating to the creation and
operation of the internal transfer agent unit to serve certain CAM-managed
funds. CTB did not provide services to the Fund. This notification arises out of
a previously disclosed investigation by the SEC and the U.S. Attorney and
relates to CTB's entry in 1999 into the transfer agency business, CAM's
retention of, and agreements with an
PAGE 17
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Notes to Financial Statements (unaudited) (continued)
unaffiliated sub-transfer agent, the adequacy of the disclosures made to the
fund boards that approved the transfer agency arrangements, (including CAM's
failure to disclose a related revenue guarantee agreement benefiting CAM and its
affiliates), and CAM's operation of and compensation for the transfer agency
business. The revenue guarantee described above was terminated in 1999 and CAM
will be paying the applicable funds, primarily through fee waivers, a total of
approximately $17 million (plus interest) that is the amount of the revenue
received by Citigroup relating to the revenue guarantee. The Fund did not
implement the contractual arrangement described above and therefore will not
receive any portion of the payment. Citigroup is cooperating fully in the
investigation and will seek to resolve the matter in discussions with the SEC
Staff. Although there can be no assurance, Citigroup does not believe that this
matter will have a material adverse effect on the Fund.
PAGE 18
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Financial Highlights
Data for a share of common stock outstanding throughout each year ended December
31, unless otherwise noted:
2004(1) 2003 2002 2001 2000 1999
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD. $15.52 $15.35 $14.38 $14.25 $13.12 $14.92
------ ------ ------ ------ ------ -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income................... 0.47 0.95 1.00 1.03 1.06 1.02
Net realized and unrealized gain (loss) (0.64) 0.13 0.86 0.04 1.14 (1.77)
Dividends paid to Auction Rate
Preferred Stockholders from net
investment income.................... (0.04) (0.07) (0.10) (0.21) (0.29) (0.25)
------ ------ ------ ------ ------ -------
Total Income (Loss) From Operations....... (0.21) 1.01 1.76 0.86 1.91 (1.00)
------ ------ ------ ------ ------ -------
DISTRIBUTIONS PAID TO COMMON STOCK
SHAREHOLDERS FROM:
Net investment income................... (0.42) (0.84) (0.79) (0.73) (0.78) (0.80)
------ ------ ------ ------ ------ -------
Total Distributions Paid to Common
Stock Shareholders ..................... (0.42) (0.84) (0.79) (0.73) (0.78) (0.80)
------ ------ ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD............ $14.89 $15.52 $15.35 $14.38 $14.25 $13.12
====== ====== ====== ====== ====== =======
MARKET VALUE, END OF PERIOD............... $13.12 $14.00 $13.40 $12.59 $12.0625 $10.9375
====== ====== ====== ====== ======== ========
TOTAL RETURN, BASED ON MARKET PRICE(2) (3.38)%++ 11.07% 12.93% 10.52% 17.90% (17.52)%
RATIOS TO AVERAGE NET ASSETS
OF COMMON STOCK SHAREHOLDERS(3):
Operating expenses...................... 1.30%+ 1.32% 1.34% 1.33% 1.36% 1.30%
Net investment income................... 6.12%+ 6.17% 6.70% 7.10% 7.84% 7.18%
NET ASSETS OF COMMON STOCK
SHAREHOLDERS, END OF PERIOD (000s)...... $85,732 $89,364 $88,382 $82,778 $82,067 $75,513
PORTFOLIO TURNOVER RATE................... 11% 57% 71% 34% 31% 54%
AUCTION RATE PREFERRED STOCK:
Total Amount Outstanding (000s)......... $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
Asset Coverage Per Share................ 157,165 161,705 160,478 153,473 152,584 144,391
Involuntary Liquidating Preference
Per Share............................ 50,000 50,000 50,000 50,000 50,000 50,000
Average Market Value Per Share.......... 50,000 50,000 50,000 50,000 50,000 50,000
----------------------------------------------------------------------------------------------------------
(1) For the six months ended June 30, 2004 (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.
(3) Ratios calculated on the basis of income and expenses relative to the
average net assets of common shares and excludes the effect of dividend
payments to preferred stockholders.
++ Total Return in not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
Page 19
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Additional Stockholder Information (unaudited)
Result of Annual Meeting of Stockholders
The Annual Meeting of Stockholders of Salomon Brothers Municipal Partners Fund
Inc. was held on April 30, 2004, for the purpose of considering and voting upon
the election of Dr. Riordan Roett as Class I Director, Jeswald W. Salacuse as a
Class IIIDirector and William R. Hutchinson as a Class IIIDirector. The
following table provides information concerning the matter voted upon at the
Meeting:
1. Election of Directors*
Common Common Preferred Preferred
Shares Shares Shares Shares
Nominees For Withheld For Withheld
---------- ----------- ----------- ----------- -----------
Dr. Riordan Roett N/A N/A 532 2
William R. Hutchinson 5,035,009 381,845 532 2
Jeswald W. Salacuse 5,035,009 381,845 532 2
--------------
* At June 30, 2004, in addition to the above listed Directors, the other
Directors of the Fund were as follows:
Carol L. Colman (Class I)
Daniel P. Cronin (Class II)
Leslie H. Gelb (Class I)
R. Jay Gerken (Class II)
PAGE 20
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Dividend Reinvestment Plan (unaudited)
Pursuant to certain rules of the Securities and Exchange Commission, the
following additional disclosure is provided.
Pursuant to the Fund's Dividend Reinvestment Plan ("Plan"), holders of Common
Stock whose shares of Common Stock are registered in their own names will be
deemed to have elected to have all distributions automatically reinvested by
EquiServe Trust Company, N.A. ("Plan Agent") in Fund shares pursuant to the
Plan, unless they elect to receive distributions in cash. Holders of Common
Stock who elect to receive distributions in cash will receive all distributions
in cash by check in dollars mailed directly to the holder by the Plan Agent as
dividend-paying agent. Holders of Common Stock who do not wish to have
distributions automatically reinvested should notify the Plan Agent at the
address below. Distributions with respect to Common Stock registered in the name
of a bank, broker-dealer or other nominee (i.e., in "street name") will be
reinvested under the Plan unless the service is not provided by the bank,
broker-dealer or other nominee or the holder elects to receive dividends and
distributions in cash. Investors who own shares registered in the name of a
bank, broker-dealer or other nominee should consult with such nominee as to
participation in the Plan through such nominee, and may be required to have
their shares registered in their own names in order to participate in the Plan.
The Plan Agent serves as agent for the holders of Common Stock in administering
the Plan. After the Fund declares a dividend on the Common Stock or determines
to make a capital gain distribution, the Plan Agent will, as agent for the
participants, receive the cash payment and use it to buy the Fund's Common Stock
in the open market, on the New YorkStock Exchange or elsewhere, for the
participants' accounts. The Fund will not issue any new shares of Common Stock
in connection with the Plan.
Participants have the option of making additional cash payments to the Plan
Agent, monthly, in a minimum amount of $250, for investment in the Fund's Common
Stock. The Plan Agent will use all such funds received from participants to
purchase shares of Common Stock 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 Plan Agent, it is suggested
that participants send in voluntary cash payments to be received by the Plan
Agent approximately ten 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 Plan Agent not less than 48 hours before such payment
is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares of Common Stock in
the account of each Plan participant will be held by the Plan Agent in the name
of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan.
In the case of holders of Common Stock, such as banks, broker-dealers or other
nominees, who hold shares for others who are beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of shares of Common Stock
certified from time to time by the holders as representing the total amount
registered in such holders' names and held for the account of beneficial owners
that have not elected to receive distributions in cash.
PAGE 21
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Dividend Reinvestment Plan (unaudited) (continued)
There is no charge to participants for reinvesting dividends or capital gains
distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. However, each participant will pay a pro rata
share of brokerage commissions incurred with respect to the Plan Agent's open
market purchases in connection with the reinvestment of dividends and
distributions and voluntary cash payments made by the participant. The receipt
of dividends and distributions under the Plan will not relieve participants of
any income tax which may be payable on such dividends or distributions.
Participants may terminate their accounts under the Plan by notifying the Plan
Agent in writing. Such termination will be effective immediately if notice in
writing is received by the Plan Agent not less than ten days prior to any
dividend or distribution record date. Upon termination, the Plan Agent will send
the participant a certificate for the full shares held in the account and a cash
adjustment for any fractional shares or, upon written instruction from the
participant, the Plan Agent will sell part or all of the participant's shares
and remit the proceeds to the participant, less a $2.50 fee plus brokerage
commission for the transaction.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to all participants in the
Plan at least 30 days before the record date for the dividend or distribution.
The Plan also may be amended by the Fund or the Plan Agent upon at least 30
days' written notice to participants in the Plan.
All correspondence concerning the Plan should be directed tothe Plan Agent, P.O.
Box 43010, Providence, Rhode Island 02940-3010.
-----------------------------------
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.
Beginning August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 will be
available (1) without charge, upon request, by calling 1-800-446-1013 and (2) on
the SEC's web site at www.sec.gov.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by telephoning the Fund (toll-free) at 1-800-446-1013 and by
visiting the SEC's web site at www.sec.gov.
This report is transmitted to the shareholders of Salomon Brothers Municipal
Partners Fund Inc. 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.
PAGE 22
SALOMON BROTHERS MUNICIPAL PARTNERS FUND INC.
Directors Salomon Brothers Municipal Partners Fund Inc.
125 Broad Street
CAROL L. COLMAN 10th Floor, MF-2
New York, New York 10004
DANIEL P. CRONIN Telephone 1-888-777-0102
LESLIE H. GELB INVESTMENT MANAGER
Salomon Brothers Asset Management Inc
R. JAY GERKEN, CFA 399 Park Avenue
New York, New York 10022
WILLIAM R. HUTCHINSON
AUCTION AGENT
RIORDAN ROETT Deutsche Bank
60 Wall Street
JESWALD W. SALACUSE New York, New York 10005
CUSTODIAN
State Street Bank and Trust Company
Officers 225 Franklin Street
Boston, Massachusetts 02110
R. JAY GERKEN, CFA
Chairman and TRANSFER AGENT
Chief Executive Officer EquiServe Trust Company, N.A.
P.O. Box 43010
PETER J. WILBY, CFA Providence, Rhode Island 02940-3010
President
LEGAL COUNSEL
ANDREW B. SHOUP Simpson Thacher & Bartlett LLP
Senior Vice President and 425 Lexington Avenue
Chief Administrative Officer New York, New York 10017-3954
FRANCES M. GUGGINO INDEPENDENT REGISTERED PUBLIC
Chief Financial Officer ACCOUNTING FIRM
and Treasurer PricewaterhouseCoopers LLP
1177 Avenue of the Americas
ROBERT E. AMODEO New York, New York 10036
Executive Vice President
NEW YORK STOCK EXCHANGE SYMBOL
ANDREW BEAGLEY* MNP
Chief Compliance Officer
JOSEPH T. VOPLE
Controller
ROBERT I. FRENKEL
Secretary and
Chief Legal Officer
---------
* As of July 29, 2004.
Salomon Brothers
Municipal Partners
Fund Inc.
Semi-Annual Report
JUNE 30, 2004
EquiServe Trust Company, N.A.
P.O. Box 43010
Providence, Rhode Island 02940-3010
MNPSEMI 6/04 SALOMON
04-7053 BROTHERS
Asset Management
ITEM 2. CODE OF ETHICS.
Not Applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not Applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Board of Directors of the Fund has delegated the authority to
develop policies and procedures relating to proxy voting to the
Manager. The Manager is part of Citigroup Asset Management ("CAM"), a
group of investment adviser affiliates of Citigroup, Inc.
("Citigroup"). Along with the other investment advisers that comprise
CAM, the Manager has adopted a set of proxy voting policies and
procedures (the "Policies") to ensure that the Manager votes proxies
relating to equity securities in the best interest of clients.
In voting proxies, the Manager is guided by general fiduciary
principles and seeks to act prudently and solely in the best interest
of clients. The Manager attempts to consider all factors that could
affect the value of the investment and will vote proxies in the manner
that it believes will be consistent with efforts to maximize
shareholder values. The Manager may utilize an external service
provider to provide it with information and/or a recommendation with
regard to proxy votes. However, such recommendations do not relieve the
Manager of its responsibility for the proxy vote.
In the case of a proxy issue for which there is a stated position in
the Policies, CAM generally votes in accordance with such stated
position. In the case of a proxy issue for which there is a list of
factors set forth in the Policies that CAM considers in voting on such
issue, CAM votes on a case-by-case basis in accordance with the general
principles set forth above and considering such enumerated factors. In
the case of a proxy issue for which there is no stated position or list
of factors that CAM considers in voting on such issue, CAM votes on a
case-by-case basis in accordance with the general principles set forth
above. Issues for which there is a stated position set forth in the
Policies or for which there is a list of factors set forth in the
Policies that CAM considers in voting on such issues fall into a
variety of categories, including election of directors, ratification of
auditors, proxy and tender offer defenses, capital structure issues,
executive and director
compensation, mergers and corporate restructurings, and social and
environmental issues. The stated position on an issue set forth in the
Policies can always be superseded, subject to the duty to act solely in
the best interest of the beneficial owners of accounts, by the
investment management professionals responsible for the account whose
shares are being voted. Issues applicable to a particular industry may
cause CAM to abandon a policy that would have otherwise applied to
issuers generally. As a result of the independent investment advisory
services provided by distinct CAM business units, there may be
occasions when different business units or different portfolio managers
within the same business unit vote differently on the same issue.
In furtherance of the Manager's goal to vote proxies in the best
interest of clients, the Manager follows procedures designed to
identify and address material conflicts that may arise between the
Manager's interests and those of its clients before voting proxies on
behalf of such clients. To seek to identify conflicts of interest, CAM
periodically notifies CAM employees (including employees of the
Manager) in writing that they are under an obligation (i) to be aware
of the potential for conflicts of interest with respect to voting
proxies on behalf of client accounts both as a result of their personal
relationships and due to special circumstances that may arise during
the conduct of CAM's and the Manager's business, and (ii) to bring
conflicts of interest of which they become aware to the attention of
compliance personnel. The Manager also maintains and considers a list
of significant relationships that could present a conflict of interest
for the Manager in voting proxies. The Manager is also sensitive to the
fact that a significant, publicized relationship between an issuer and
a non-CAM affiliate might appear to the public to influence the manner
in which the Manager decides to vote a proxy with respect to such
issuer. Absent special circumstances or a significant, publicized
non-CAM affiliate relationship that CAM or the Manager for prudential
reasons treats as a potential conflict of interest because such
relationship might appear to the public to influence the manner in
which the Manager decides to vote a proxy, the Manager generally takes
the position that non-CAM relationships between Citigroup and an issuer
(e.g. investment banking or banking) do not present a conflict of
interest for the Manager in voting proxies with respect to such issuer.
Such position is based on the fact that the Manager is operated as an
independent business unit from other Citigroup business units as well
as on the existence of information barriers between the Manager and
certain other Citigroup business units.
CAM maintains a Proxy Voting Committee, of which the Manager personnel
are members, to review and address conflicts of interest brought to its
attention by compliance personnel. A proxy issue that will be voted in
accordance with a stated position on an issue or in accordance with the
recommendation of an independent third party is not brought to the
attention of the Proxy Voting Committee for a conflict of interest
review because the Manager's position is that to the extent a conflict
of interest issue exists, it is resolved by voting in accordance with a
pre-determined policy or in accordance with the recommendation of an
independent third party. With respect to a conflict of interest brought
to its attention, the
Proxy Voting Committee first determines whether such conflict of
interest is material. A conflict of interest is considered material to
the extent that it is determined that such conflict is likely to
influence, or appear to influence, the Manager's decision-making in
voting proxies. If it is determined by the Proxy Voting Committee that
a conflict of interest is not material, the Manager may vote proxies
notwithstanding the existence of the conflict.
If it is determined by the Proxy Voting Committee that a conflict of
interest is material, the Proxy Voting Committee is responsible for
determining an appropriate method to resolve such conflict of interest
before the proxy affected by the conflict of interest is voted. Such
determination is based on the particular facts and circumstances,
including the importance of the proxy issue and the nature of the
conflict of interest. Methods of resolving a material conflict of
interest may include, but are not limited to, disclosing the conflict
to clients and obtaining their consent before voting, or suggesting to
clients that they engage another party to vote the proxy on their
behalf.
ITEM 8. [RESERVED]
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-
3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act")) are effective as of a date within 90 days of the
filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the
disclosure controls and procedures required by Rule 30a-3(b)
under the 1940 Act and 15d-15(b) under the Securities Exchange
Act of 1934.
(b) There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under
the 1940 Act) that occurred during the registrant's last
fiscal half-year (the registrant's second fiscal half-year in
the case of an annual report) that have materially affected,
or are likely to materially affect the registrant's internal
control over financial reporting.
ITEM 11. EXHIBITS.
(a) Not applicable.
(b) Attached hereto.
Exhibit 99.CERT Certifications pursuant to section 302
of the Sarbanes-Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to be
signed on its behalf by the undersigned, there unto duly authorized.
Salomon Brothers Municipal Partners Fund Inc.
By: /s/ R. Jay Gerken
R. Jay Gerken
Chief Executive Officer of
Salomon Brothers Municipal Partners Fund Inc.
Date: September 8, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ R. Jay Gerken
R. Jay Gerken
Chief Executive Officer of
Salomon Brothers Municipal Partners Fund Inc.
Date: September 8, 2004
By: /s/ Frances M. Guggino
Frances M. Guggino
Chief Financial Officer of
Salomon Brothers Municipal Partners Fund Inc.
Date: September 8, 2004