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SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
INTERIM REPORT
JULY 31, 1995
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SALOMON BROTHERS ASSET MANAGEMENT
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
September 22, 1995
Dear Shareholder:
Net asset value for the Salomon Brothers Worldwide Income Fund Inc (the "Fund")
rose to $10.40 per share as of July 31, 1995. Dividends of $0.35625 per share
were paid during the quarter. The investment return for the quarter ended July
31, 1995, assuming reinvestment of dividends in additional shares of the Fund,
was 12.73% compared with an increase of 11.09% in the Salomon Brothers Brady
Bond Index and an increase of 4.96% in the Salomon Brothers High-Yield Index. On
July 31, the Fund's stock price reached $11.00, representing a 5.8% premium to
net asset value.
Emerging markets sovereign debt securities accounted for 72% of the Fund's total
assets at the close of the quarter -- up from 68% three months earlier. The
balance of the portfolio was in U.S. high-yield corporate debt securities. The
largest holdings in the emerging markets debt portfolio were in the government
securities of Brazil (11% of total assets), Argentina (11%), Poland (10%),
Morocco (8%) and Ecuador (8%). In this part of the portfolio, we reduced
exposure to Venezuela and added to holdings of Ecuadorian bonds in the latest
quarter.
EMERGING MARKETS
The quarter began on a strong note, with the Brady Bond Index up 8.22% in May.
Non-Latin Brady bonds continued to register strong gains in June; Latin American
bonds were not as strong because of the decision by Brazil's central bank to
impose a new currency band on the real. Overall, the Brady Bond Index climbed by
2.25% in June, followed by a gain of 0.39% in July. The market has advanced by
another 3.0% since the close of the quarter.
COUNTRY ANALYSIS
Brazil's Senate has given final approval to four out of five constitutional
reform measures needed to address key economic problems. In July, Standard &
Poor's raised its rating of Brazil's currency to single B-plus from single B.
The upgrade was based on the success of a change in the exchange rate band,
political support for President Cardoso's administration and the country's
progress with constitutional reforms.
In Argentina, President Carlos Menem was sworn in for a second term. Menem has
promised to maintain the economic policies that have been successful in
promoting growth. The central bank also implemented new measures, including
lower reserve requirements, that are intended to improve bank liquidity.
Polish bonds have led the market for much of the year. Investors are hoping that
Moody's will assign these bonds an investment grade rating. This upgrade would
make them the first Brady bonds to be so rated.
The drought in Africa has adversely affected inflation, economic growth and the
balance of payments in Morocco. Even though the country is in a better position
to deal with the current situation than it was in 1992 and 1993, also drought
years, the drag on the agricultural sector is worrisome.
In Ecuador, the threat of an oil workers' strike diminished when the Congress
agreed to reinstate a law permitting the unionization of public-sector
employees. The news buoyed Ecuadorian Brady bond prices late in the quarter.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
U.S. HIGH-YIELD CORPORATE BONDS
The high-yield market was driven by falling U.S. interest rates in the quarter
ended July 31. Periodic concerns over a slowdown or a recession in the economy
caused volatility in the spreads between high-yield bonds and Treasury bonds.
However, spreads remain relatively attractive in light of continued growth in
the U.S. economy.
Total borrowings were unchanged at $60 million.
We appreciate your continued interest in the Fund. A recorded periodic update of
developments affecting emerging markets debt securities and high-yield corporate
bonds is available by calling (800) 725-6666.
Sincerely,
/s/ MICHAEL S. HYLAND
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MICHAEL S. HYLAND
Chairman and President
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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STATEMENT OF INVESTMENTS
July 31, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) LONG-TERM INVESTMENTS -- 139.5% VALUE
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<S> <C> <C> <C>
SOVEREIGN BONDS -- 97.7%
Republic of Argentina,
Peso 7,551 BOCON, Pro 1, 3.9016%*, 4/1/07...................................... $ 2,584,542
US$ 27,100+ FRB, 7.3125%*, 3/31/05.............................................. 16,632,625
5,000+ Par Bond, 5.00%*, 3/31/23........................................... 2,328,125
Federal Republic of Brazil,
19,159+ Capitalized Bond, 8.00%**, 4/15/14.................................. 9,280,373
3,000+ NMB, Series L, 7.3125%*, 4/15/09.................................... 1,605,000
13,775+ IDU, Series A, 6.6875%*, 1/1/01..................................... 11,166,359
2,000+ Par Bond, 4.25%*, 4/15/24........................................... 876,250
Republic of Bulgaria,
2,600 Discount Bond, Series A, 6.75%*, 7/28/24............................ 1,252,875
35,750 FLIRB, Series A, 2.00%*, 7/28/12.................................... 9,026,875
Costa Rica,
10,000+ Principal Bond, Series B, 6.25%, 5/21/15............................ 4,500,000
Republic of Ecuador,
2,500+ Discount Bond, 7.25%*, 2/28/25...................................... 1,271,875
531+ EIB, 6.75%*, 12/21/04............................................... 309,526
7,000+ Par Bond, 3.00%*, 2/28/25........................................... 2,222,500
37,297 PDI, 7.25%*,**, 2/27/15............................................. 11,841,956
Hungary,
8,000+ National Bank of Hungary, 8.875%, 11/1/13........................... 6,520,000
Mexico,
5,000 Mexican Participation Instrument Trust, 6.34%, 3/25/05.............. 2,850,000
9,750+ United Mexican States, Par Bond, Series B, 6.25%, 12/31/19.......... 5,868,281
Republic of Panama,
7,000+ FRN, 7.25%*, 5/10/02................................................ 5,477,500
Republic of Poland,
1,786+ Discount Bond, 7.125%*, 10/27/24.................................... 1,356,244
31,201+ PDI, 3.25%*, 10/27/14............................................... 18,233,084
Republic of South Africa Notes,
ZAL 6,000 12.00%, 2/28/05..................................................... 1,312,487
Trinidad & Tobago Notes,
US$ 3,000+ 9.75%, 11/3/00...................................................... 2,880,000
Uruguay,
2,500 DCB, Series B, 6.75%*, 2/18/07...................................... 1,650,000
</TABLE>
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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STATEMENT OF INVESTMENTS (continued)
July 31, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) LONG-TERM INVESTMENTS (CONTINUED) VALUE
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<S> <C> <C> <C>
Republic of Venezuela,
Par Bond, Series A, 6.75%, 3/31/20.................................. $ 7,546,875
US$ 15,000+ (including 75,000 warrants expiring 3/31/20) ------------
TOTAL SOVEREIGN BONDS
(cost $144,257,876)................................................... 128,593,352
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LOAN PARTICIPATIONS@ -- 12.3%
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Republic of Jamaica,
833 Tranche A, 6.625%*, 10/15/00 (Chase Manhattan)...................... 724,997
Kingdom of Morocco,
11,350 Tranche A, 7.375%*, 1/1/09 (Merrill Lynch).......................... 6,653,938
13,000 Tranche B, 7.375%*, 1/1/04 (Morgan Stanley)......................... 8,791,250
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TOTAL LOAN PARTICIPATIONS
(cost $21,049,508).................................................... 16,170,185
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CORPORATE BONDS -- 29.5%
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Federal Republic of Brazil,
1,000+ Aracruz Celulose, 10.375%, 1/31/02.................................. 933,750
3,000+ Telecomunicacoes Brasileiras S.A. (Telebras), 10.375%, 9/9/97....... 3,045,000
Canada,
C$ 3,000 Rogers Cable Systems, 9.65%, 1/15/14................................ 1,840,424
Indonesia,
US$ 1,500 Indah Kiat International Finance, 12.50%, 6/15/06................... 1,530,000
Mexico,
2,000+ Grupo Industrial Durango, 12.00%, 7/15/01........................... 1,750,000
United States,
2,000 Bally's Grand, Series B, 10.375%, 12/15/03.......................... 1,987,500
2,000+ Berry Plastics Corp., 12.25%, 4/15/04............................... 2,125,000
(including 2,000 warrants expiring 4/15/04)
3,000+ Cole National Group, Inc., 11.25%, 10/1/01.......................... 2,947,500
2,000+ Finlay Fine Jewelry Corp., 10.625%, 5/1/03.......................... 1,950,000
2,000+ Flagstar Corp., 10.75%, 9/15/01..................................... 1,890,000
5,000+ General Electric Capital Corp., 66.20%*, 10/29/96(a)................ 2,325,000
Jordan Industries, Inc., Zero Coupon (until 8/1/98), 11.75%
5,000 thereafter, 8/1/05.................................................. 3,025,000
1,500 Motor Wheel Corp., Series B, 11.50%, 3/1/00......................... 1,327,500
</TABLE>
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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STATEMENT OF INVESTMENTS (continued)
July 31, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) LONG-TERM INVESTMENTS (CONTINUED) VALUE
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<S> <C> <C> <C>
US$ 2,460+ Parisian Inc., 9.875%, 7/15/03...................................... $ 1,968,000
1,500+ Pathmark Stores Inc., 9.625%, 5/1/03................................ 1,477,500
2,000 Penn Traffic Co., 9.625%, 4/15/05................................... 1,780,000
2,500+ Plastic Specialty & Technology, 11.25%, 12/1/03..................... 2,287,500
2,000+ U.S. Banknote Corp., 11.625%, 8/1/02................................ 1,560,000
1,500+ Valcor Inc., 9.625%, 11/1/03........................................ 1,395,000
2,000+ Venture Holdings Trust, 9.75%, 4/1/04............................... 1,710,000
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TOTAL CORPORATE BONDS
(cost $45,161,190).................................................... 38,854,674
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TOTAL LONG-TERM INVESTMENTS
(cost $210,468,574)................................................... 183,618,211
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</TABLE>
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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STATEMENT OF INVESTMENTS (concluded)
July 31, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) SHORT-TERM INVESTMENT -- 3.7% VALUE
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<S> <C> <C> <C>
REPURCHASE AGREEMENT
State Street Bank and Trust Company, 5.55%, dated 7/31/95, due 8/1/95
in the amount of $4,908,757 (collateralized by $4,865,000 U.S.
Treasury Notes, 6.25%, due 8/31/96, value -- $5,010,950) (cost
US$ 4,908 $4,908,000)........................................................... $ 4,908,000
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TOTAL INVESTMENTS -- 143.2%
(cost $215,376,574)................................................... 188,526,211
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LIABILITIES IN EXCESS OF OTHER ASSETS -- (43.2%)...................... (56,906,664)
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NET ASSETS -- 100.0%.................................................. $131,619,547
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Net asset value per share ($131,619,547 / 12,657,133 shares of common
stock issued and outstanding)......................................... $10.40
======
</TABLE>
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* Rate shown reflects current rate on variable rate instrument or instrument
with step coupon rates.
** Payment-in-kind security for which part of the interest earned is capitalized
as additional principal.
+ All or a portion of this security is segregated as collateral pursuant to a
loan agreement.
@ Loan Participation Notes were acquired through the financial institutions
indicated parenthetically.
<TABLE>
<S> <C> <C>
BOCON -- Bonos de Consolidacion.
DCB -- Debt Conversion Bond.
EIB -- Eligible Interest Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
FRN -- Floating Rate Note.
IDU -- Interest Due and Unpaid Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest Bond.
ZAL -- South African Rand.
</TABLE>
(a) The Fund's proceeds at maturity for General Electric Capital Corp. will
be increased or decreased by the percentage fluctuation in the Mexican
Spot Tesobono rate between the date of issuance and the date of
maturity of the note. Coupon resets quarterly and is based on the 91
day Mexican Cetes rate.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
DIRECTORS
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
THOMAS W. BROCK
Chairman and Chief Executive Officer,
Salomon Brothers Asset Management Inc
DANIEL P. CRONIN
Vice President -- General Counsel,
Pfizer International Inc.
ALLAN C. HAMILTON
Consultant; formerly Vice President
and Treasurer, Exxon Corp.
MICHAEL S. HYLAND
President;
Salomon Brothers Asset Management Inc
JESWALD W. SALACUSE
Henry J. Braker
Professor of Commercial Law,
The Fletcher School of Law & Diplomacy, Tufts University
OFFICERS
MICHAEL S. HYLAND
Chairman and President
THOMAS FLANAGAN
Executive Vice President
PETER J. WILBY
Executive Vice President
ALAN M. MANDEL
Treasurer
TANA E. TSELEPIS
Secretary
LAURIE A. PITTI
Assistant Treasurer
SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
Seven World Trade Center
New York, New York 10048
For information call (toll free)
1-800-SALOMON
INVESTMENT ADVISER
Salomon Brothers Asset Management Inc
Seven World Trade Center
New York, New York 10048
ADMINISTRATOR
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, New York 10292
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
TRANSFER AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
LEGAL COUNSEL
Simpson Thacher & Bartlett
New York, New York 10017
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Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase, from time to time, shares of
its common stock at market prices.
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This report is for stockholder information.
This is not a prospectus intended for use in
the purchase or sale of Fund shares.
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BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
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AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005
