Salomon Brothers
Worldwide Income
Fund Inc
- - -------------------------------------------------------------------
SEMI ANNUAL REPORT
April 30, 1995
<PAGE>
<PAGE>
Letter to Shareholders
June 20, 1995
Dear Shareholder:
Net asset value for the Salomon Brothers Worldwide Income Fund Inc (the
"Fund") rose to $9.55 per share during the three months ended April 30, 1995.
Dividends of $0.35625 were paid during the quarter. The Fund's investment
return for the period, assuming reinvestment of dividends, was 4.30% compared
with an increase of 0.12% in the Salomon Brothers Brady Bond Index. On April
28, the Fund's stock price reached $10.875, representing a 13.9% premium to net
asset value.
At quarter end, emerging markets debt securities accounted for about 75% of
the Fund's holdings; the balance of the portfolio was in U.S. high-yield debt
securities. The largest holdings in the emerging markets debt portfolio, as a
percentage of invested assets at April 30, were in the securities of Brazil
(14.7%), Argentina (11.4%), Poland (9.5%), Morocco (8.3%) and Venezuela (6.5%).
Emerging Markets
The emerging markets experienced extreme volatility during the April quarter.
In February and March the Salomon Brothers Brady Bond Index fell by 6.56% and
3.05%, respectively and rebounded by 10.53% in April. The market remained
strong in May.
Early in the year, the markets were temporarily buoyed by President Clinton's
decision to bypass Congress and commit the U.S. to a massive aid program for
Mexico. Subsequently, analysts began to focus on the damaging effects of a
new austerity program on Mexico's economy. Mexico's troubles also began to
spill over into other Latin American countries, particularly those, such as
Argentina, that require foreign capital.
-1-
<PAGE>
During February, the performance of non-Latin American emerging markets debt
securities began to diverge from that of Latin American countries. Non-Latin
Brady Bonds registered a negative .55% return for the month, while Brady Bonds
of Latin American countries fell by 7.41%.
Two events dramatically changed the tone of the markets in March. First,
Mexico announced a new austerity program on March 9th. The plan was greeted
very favorably by investors. Second, Argentina arranged a very large standby
financing program with various supranational agencies -- such as the World Bank
and the International Monetary Fund -- to slow the rate of capital flow out of
the country. These two announcements restored investor confidence, and
performance has improved dramatically since they were made.
Country Analysis
Economic reforms should take hold in Brazil over the next 12-18 months. The
country's bonds were weak performers in the quarter, falling by 3.69%, because
of a poorly handled currency devaluation. Investors were particularly
unforgiving in light of their experience with Mexico's devaluation late last
year. Market participants were also dismayed by President Cardoso's slow
progress in attacking Brazil's fiscal troubles and in obtaining the
constitutional reforms required to significantly alter the budget.
Argentina's Brady Bonds rose by 1.68% during a volatile quarter. Market
participants were impressed with the ability of the government (led by
President Menem and Finance Minister Cavallo) to pass very tough fiscal
reforms, including tax increases and budget cuts, on the eve of the May 12th
presidential election, in which Menem was reelected.
The economic and credit outlook for Poland is very good. The country has been
aggressive in reforming its economy and privatizing key industries. As a
consequence, we expect Poland to receive a strong sovereign credit rating this
year.
Morocco is likely to remain a core holding in the portfolio. Although a
drought will restrain the economy this year, the country currently has no need
for additional external capital and we believe its long-term credit
fundamentals are sound.
Venezuela's bonds performed well in the latest quarter. This was partly the
result of the high yield offered on these securities and partly the result of
a
rise in oil prices, which should benefit the economy.
-2-
<PAGE>
U.S. High-Yield Corporate Bonds
Our investment strategy in this market is unchanged. We continue to focus on
securities of companies that have improving credit fundamentals and those that
would not be hurt by a slowing U.S. economy.
Total borrowings are unchanged at $60 million.
The Fund held its annual shareholders meeting on February 23, 1995. At the
meeting, shareholders elected each of the nominees proposed for election to the
Fund's Board of Directors and ratified the selection of Price Waterhouse LLP as
the independent accountants of the Fund. The following table provides
information concerning the matters voted on at the meeting:
<TABLE>
<CAPTION>
1. Election of Directors
Nominees Votes For Votes Against
<S> <C> <C>
Allan C. Hamilton 11,788,881 249,212
Jeswald W. Salacuse 11,787,374 250,719
Charles F. Barber 11,787,872 250,221
Thomas W. Brock 11,793,144 244,949
Michael S. Hyland 11,791,079 247,014
Daniel P. Cronin 11,791,722 246,371
</TABLE>
<TABLE>
<CAPTION>
2. Ratification of Price Waterhouse LLP as the Independent Accountants of the
Fund
Votes For Votes Against Votes Abstained Unvoted
<S> <C> <C> <C>
11,760,797 96,354 180,941 1
</TABLE>
A recorded periodic update of developments affecting emerging markets
debt securities and high-yield corporate bonds is available by calling
(800) 725-6666.
Sincerely,
Michael S. Hyland
Chairman and President
-3-
<PAGE>
SALOMON BROTHERS WORLDWIDE Portfolio of Investments[qr]
INCOME FUND INC April 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value
<C> <S> <C>
LONG-TERM INVESTMENTS--147.9%
Sovereign Bonds--81.0%
Republic of Argentina,
BOCON, Pro 1, 4.26%*,
Peso 6,655 4/1/07.................. $ 1,915,767
US$ 27,100(D) FRB, 7.3125%*, 3/31/05.... 16,226,125
5,000(D) Par Bond, 5.00%*,
3/31/23................. 2,196,875
Federal Republic of
Brazil,
EIB, Series L,
10,500(D) 7.25%*, 4/15/06........... 5,998,125
11,000(D) 7.3125*, 4/15/09.......... 5,685,625
IDU, Series A,
14,065(D) 7.8125%*, 1/1/01.......... 10,724,563
Republic of Bulgaria,
7,000(D) IAB, 7.5625%*, 7/28/11.... 2,773,750
Costa Rica,
Principal Bonds, Series B,
10,000(D) 6.25%, 5/21/15.......... 4,250,000
Republic of Ecuador,
Discount Bond,
2,500 7.25%*, 2/28/25........... 1,248,438
545 EIB, 7.6875%*, 12/21/04... 307,925
5,000 Par Bond, 3.00%*,
2/28/25................. 1,453,125
2,850 PDI, 7.25%*, 2/27/15...... 862,125
Hungary,
National Bank of
Hungary,
8,000(D) 8.875%, 11/1/13........... 4,560,000
Mexico,
Mexican Participation
Instrument Trust,
5,000 6.34%, 3/25/05............ 2,550,000
Republic of Panama,
2,000(D) 7.125%*, 5/10/02.......... 1,480,000
Republic of Poland,
Discount Bond,
1,786(D) 7.125%*, 10/27/24......... 1,236,805
Republic of Poland,
US$ 10,000(D) PDI, 3.25%*, 10/27/14..... $ 4,725,000
23,451(D) PDI, 3.25%, 10/27/14...... 11,080,598
Republic of South Africa
Notes,
ZAL 13,250 12.00%, 2/28/05........... 2,816,231
Trinidad & Tobago Notes,
US$ 3,000(D) 9.75%, 11/3/00............ 2,835,000
Uruguay,
DCB, Series B,
2,500 7.875%, 2/18/07........... 1,425,000
Republic of Venezuela,
DCB, Series DL,
10,000(D) 7.6875%*, 12/18/07........ 4,643,750
Par Bond, Series A,
15,000(D) 6.75%, 3/31/20............ 6,965,625
(including 75,000 warrants
expiring 3/31/20)
Total Sovereign Bonds
(cost $125,590,247)..... 97,960,452
------------
Loan [email protected]%
Republic of Jamaica,
Tranche A, 7.0625%*,
10/15/00
944 (Chase Manhattan)......... 812,227
Mexico,
Combined Old/New Money,
7.625%, 3/20/05
5,000 (Chase Manhattan)......... 3,050,000
Mexico Myra Trust,
7.1875%*, 10/26/26
4,000 (Chase Manhattan)......... 2,490,000
Kingdom of Morocco,
Tranche A, 7.375%*,
1/1/09
10,000 (Merrill Lynch)........... 6,175,000
Tranche B, 7.375%*, 1/1/04
13,000 (Morgan Stanley).......... 8,677,500
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
SALOMON BROTHERS WORLDWIDE Portfolio of Investments[qr]
INCOME FUND INC April 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value
<C> <S> <C>
Loan Participations (cont'd)
Panama,
Refinance**, 9/30/97
US$ 5,000 (Chase Manhattan)......... $ 2,425,000
Unrestricted**, 2/2/14
2,500 (Bankers Trust)........... 1,212,500
Russia,
Bank for Foreign Economic
Affairs,
Vnesheconombank,
Floating rate**,
12/31/99
6,000 (Chase Manhattan)....... 1,485,000
Bank for Foreign Economic
Affairs,
Vnesheconombank,
Floating rate**,
12/31/99
5,000 (Morgan Stanley)........ 1,237,500
------------
Total Loan Participations
(cost $35,596,955)...... 27,564,727
------------
Corporate Bonds--44.1%
Federal Republic of
Brazil,
900,000
Aracruz Celulose,
1,000(D) 10.375%, 1/31/02........
Telecomunicacoes
Brasileiras
S.A. (Telebras),
3,000(D) 10.375%, 9/9/97........... 2,910,000
Canada,
Rogers Cable Systems,
C$ 3,000(D) 9.65%, 1/15/14.......... 1,864,656
Indonesia,
Indah Kiat International Finance,
US$ 1,500 12.50%, 6/15/06........... 1,492,500
Mexico,
Grupo Industrial
Durango,
2,000(D) 12.00%, 7/15/01........... 1,460,000
United States,
Bally's Grand,
5,000(D) Series B, 10.375%,
12/15/03................ 4,875,000
United States,
Berry Plastics Corp.,
US$ 2,000(D) 12.25%, 4/15/04........... $ 2,010,000
(including 2,000 warrants
expiring 4/15/04)
Carrols Corp.,
3,000(D) 11.50%, 8/15/03........... 2,820,000
Cole National Group, Inc.,
3,000(D) 11.25%, 10/1/01........... 2,880,000
Finlay Fine Jewelry Corp.,
3,000(D) 10.625, 5/1/03............ 2,865,000
Flagstar Corp.,
2,000(D) 10.75%, 9/15/01........... 1,895,000
2,000(D) 10.875%, 12/1/02.......... 1,895,000
General Electric Capital
Co,
5,000 66.20%*, 10/29/96 (a)..... 2,150,000
Jordan Industries, Inc.,
Zero Coupon (until
8/1/98),
5,000(D) 11.75% thereafter,
8/1/05.................. 2,900,000
Motor Wheel Corp.,
2,000(D) Series B, 11.50%,
3/1/00.................. 1,580,000
Pace Industries Inc.,
1,800(D) 10.625%, 12/1/02.......... 1,683,000
Paging Network,
3,500(D) 8.875%, 2/1/06............ 3,101,875
Parisian Inc.,
3,460(D) 9.875%, 7/15/03........... 2,387,400
Pathmark Stores Inc.,
3,500(D) 9.625%, 5/1/03............ 3,377,500
Plastic Specialty &
Technology,
2,500(D) 11.25%, 12/1/03........... 2,237,500
Santa-Fe Hotel Inc.,
1,500(D) 11.00%, 12/15/00.......... 1,477,500
(Includes 150 warrants
expiring 12/15/96)
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
SALOMON BROTHERS WORLDWIDE Portfolio of Investments[qr]
INCOME FUND INC April 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value
<C> <S> <C>
Corporate Bonds (cont'd)
United States,
U.S. Banknote Corp.,
US$ 2,000(D) 11.625%, 8/1/02........... $ 1,460,000
Valcor Inc.,
1,500(D) 9.625%, 11/1/03........... 1,353,750
Venture Holdings Trust,
2,000(D) 9.75%, 4/1/04............. 1,740,000
------------
Total Corporate Bonds
(cost $62,882,556)...... 53,315,681
------------
Total Long-Term
Investments
(cost $224,069,758)..... 178,840,860
Liabilities in excess of
other
assets--(47.9%)......... (57,953,347)
------------
Net Assets--100.0%........ $120,887,513
------------
------------
</TABLE>
- - ---------------
* Rate shown reflects current rate on variable rate instrument or
instrument with step coupon rates.
** Non-income producing security.
(D) All or a portion of this security is segregated as collateral pursuant to
a loan agreement. See Note 4.
@ Loan Participation Notes were acquired through the financial institutions
indicated parenthetically. See Note 1.
BOCON--Bonos de Consolidacion.
DCB--Debt Conversion Bonds.
EIB--Eligible Interest Bonds.
FRB--Floating Rate Bonds.
IAB--Interest in Arrears Bonds.
IDU--Interest Due and Unpaid Bonds.
PDI--Past Due Interest Bonds.
ZAL--South African Rand.
(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.
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
SALOMON BROTHERS WORLDWIDE
INCOME FUND INC
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
April 30,
Assets 1995
--------------
<S> <C>
Investments, at value (cost
$224,069,758)...................... $ 178,840,860
Interest receivable.................. 4,830,242
Forward contracts-amount receivable
from counterparties................ 158,676
Deferred organization expenses and
other assets....................... 102,275
--------------
Total assets..................... 183,932,053
--------------
Liabilities
Due to custodian..................... 392,782
Loan payable (Note 4)................ 60,000,000
Loan interest payable (Note 4)....... 1,900,938
Forward contracts-amount payable to
counterparties..................... 529,222
Accrued expenses..................... 122,216
Advisory fee payable................. 85,185
Administration fee payable........... 14,197
--------------
Total liabilities................ 63,044,540
--------------
Net Assets........................... $ 120,887,513
--------------
--------------
Net assets were comprised of:
Common stock, at par............... $ 12,657
Paid-in capital in excess of par... 176,710,254
--------------
176,722,911
Distributions in excess of net
investment income................ (3,195,032)
Accumulated net realized loss on
investments...................... (6,856,281)
Net unrealized depreciation on
investments and foreign currency
translation...................... (45,784,085)
--------------
Net assets, April 30, 1995......... $ 120,887,513
--------------
--------------
Net asset value per share:
($120,887,513 / 12,657,133 shares
of common stock issued and
outstanding)..................... $9.55
--------------
--------------
</TABLE>
SALOMON BROTHERS WORLDWIDE
INCOME FUND INC
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income April 30, 1995
--------------
<S> <C>
Income
Interest (including discount
accretion of $2,407,980)......... $ 12,730,704
--------------
Expenses
Investment advisory fees........... 549,092
Administration fees................ 91,515
Custodian's fees and expenses...... 67,000
Reports to shareholders............ 36,000
Audit fees and expenses............ 25,000
Legal fees and expenses............ 21,000
Directors' fees.................... 15,000
Transfer agent's fees and
expenses........................... 13,000
Amortization of organization
expenses........................... 12,462
Registration fees.................. 12,000
Insurance.......................... 5,000
Miscellaneous...................... 1,191
--------------
Total operating expenses......... 848,260
Loan interest expense (Note 4)..... 2,371,666
--------------
Total expenses................... 3,219,926
--------------
Net investment income................ 9,510,778
--------------
Realized and Unrealized
Loss on Investments and
Foreign Currency Transactions
Net realized loss on:
Investment transactions............ (8,832,732)
Foreign currency transactions...... (113,792)
--------------
(8,946,524)
--------------
Net change in unrealized depreciation
on:
Investments........................ (13,574,782)
Foreign currencies................. (269,497)
--------------
(13,844,279)
--------------
Net loss on investments and foreign
currency transactions.............. (22,790,803)
--------------
Net Decrease in Net Assets
Resulting from Operations............ $(13,280,025)
--------------
--------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-7-
<PAGE>
<PAGE>
SALOMON BROTHERS WORLDWIDE
INCOME FUND INC
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Increase (Decrease) in Cash April 30, 1995
--------------
<S> <C>
Cash flows provided by operating
activities:
Purchases of short-term portfolio
investments including options,
net............................. $ (294,000)
Purchases of long-term portfolio
investments..................... (80,900,363)
Proceeds from disposition of
long-term portfolio investments
and principal paydowns.......... 81,520,562
--------------
326,199
Net investment income............. 9,510,778
Net accretion on investments...... (2,407,980)
Amortization of organization
expenses........................ 12,462
Net change in receivables/payables
related to operations........... 2,149,744
--------------
Net cash flows provided by
operating activities............ 9,591,203
--------------
Cash flows used for financing activities:
Adjustment to estimated net
proceeds from initial public
offering of Fund shares......... 26,656
Cash dividends paid............... (10,521,218)
--------------
Net cash used for financing
activities...................... (10,494,562)
--------------
Effect of changes in exchange
rate............................ (268,225)
--------------
Net decrease in cash.............. (1,171,584)
Cash at beginning of period....... 778,802
--------------
Due to custodian at end of
period............................ $ (392,782)
--------------
--------------
</TABLE>
SALOMON BROTHERS WORLDWIDE
INCOME FUND INC
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months December 31, 1993*
Increase (Decrease) Ended Through
in Net Assets April 30, 1995 October 31, 1994
-------------- ------------------
<S> <C> <C>
Operations
Net investment
income............. $ 9,510,778 $ 12,970,453
Net realized loss
on investments
and foreign
currency
transactions..... (8,946,524) (1,040,505)
Net change in
unrealized
depreciation on
investments and
foreign
currencies....... (13,844,279) (31,939,806)
-------------- ------------------
Net decrease in net
assets resulting
from
operations....... (13,280,025) (20,009,858)
-------------- ------------------
Dividends and
distributions
Dividends from net
investment
income........... (5,823,174) (12,818,926)
Distributions in
excess of net
investment
income........... (3,195,032) (708,383)
-------------- ------------------
Total dividends and
distributions.... (9,018,206) (13,527,309)
-------------- ------------------
Capital share
transactions
Net increase in net
assets from
initial public
offering
of shares........ 26,656(D) 160,467,500
Increase in net
assets from
underwriters'
over-allotment
option........... -- 16,128,750
-------------- ------------------
Net increase in net
assets from
capital share
transactions..... 26,656 176,596,250
-------------- ------------------
Total increase
(decrease)......... (22,271,575) 143,059,083
Net Assets
Beginning of
period............. 143,159,088 100,005
-------------- ------------------
End of period........ $120,887,513 $143,159,088
-------------- ------------------
-------------- ------------------
</TABLE>
- - ---------------
* Commencement of investment operations.
(D) Adjustment for actual vs. estimated offering costs.
See Notes to Financial Statements. See Notes to Financial Statements.
-8-
<PAGE>
<PAGE>
SALOMON BROTHERS WORLDWIDE
INCOME FUND INC
Notes to Financial Statements
(Unaudited)
The Salomon Brothers Worldwide Income Fund Inc (the ``Fund'') was organized
in Maryland on October 21, 1993 and is registered under the Investment Company
Act of 1940, as amended, as a non-diversified, closed-end management investment
company. Prior to the commencement of investment operations on December 31,
1993, the Fund had no operations, other than those relating to its organization
and registration, and the sale and issuance to Salomon Brothers Asset Management
Inc (the ``Adviser'') of 7,133 shares of its common stock for an aggregate
purchase price of $100,005 on December 16, 1993. The investment objective of the
Fund is to maintain a high level of current income by investing primarily in a
portfolio of high yield foreign sovereign debt securities and high yield
non-U.S. and U.S. corporate debt securities. As a secondary objective, the Fund
will seek capital appreciation. No assurance can be given that the Fund's
investment objectives will be achieved.
The Fund's investment in securities rated below investment grade typically
involve risk 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 market prices of the securities in which the Fund invests are
expected to fluctuate with changes in interest rates and the perceived credit
quality of such assets. The Fund's investment in sovereign bonds may be affected
by political, social, economic or diplomatic changes in such countries.
Note 1. Accounting The following is a summary
Policies of significant accounting poli-
cies consistently followed by the Fund.
Securities Valuation: In valuing the Fund's assets, all securities for which
market quotations are readily available are valued (except as described below)
(i) at the last sales price prior to the time of determination if there were a
sales price on the date of determination, (ii) at the mean between the last
current bid and asked prices if there were no sales price 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
sovereign bonds are typically traded internationally in the over-the-counter
market and will be valued at the mean between the last current bid and asked
price as of the close of business of that market. Securities may 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 and any
other securities and assets are valued at fair value as determined in good
faith by, or under procedures established by, the Board of Directors.
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian takes possession of the underlying collateral
securities, the value of which at least equals the principal amount of the
repurchase transaction, including accrued interest. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. If
the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities--at
the 12:00 noon rate of exchange reported by Reuters;
(ii) purchases and sales of investment securities, income and expenses--at
the rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the period. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from
-9-
<PAGE>
<PAGE>
changes in the market prices of portfolio securities sold during the period.
Net realized losses on foreign currency transactions of $113,792 represents
net foreign exchange losses from disposition of foreign currency, gains or
losses realized between the trade and settlement dates on security transactions,
and the difference between amounts of interest recorded on the Fund's books and
the U.S. dollar equivalent amounts actually received. Net currency gains and
losses from valuing foreign currency denominated assets, except portfolio
securities, and liabilities at period end exchange rates are reflected as a
component of unrealized depreciation on foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at current exchange rates and any
unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments. Gain or loss is realized on the settlement date of
the contract equal to the difference between the settlement value of the
original and renegotiated forward contracts. This gain or loss, if any, is
included in net realized gain (loss) on foreign currency transactions. Risks may
arise upon entering into these contracts from the potential inability of the
counterparties to meet the terms of their contracts.
Loan Participations: The Fund invests in U.S. dollar-denominated fixed and
floating rate loans (``Loans'') arranged through private negotiations between
a
foreign sovereign entity and one or more financial institutions (``Lenders'').
The Fund invests in such Loans in the form of participations in Loans
(``Participations'') or assignments of all or a portion of loans from third
parties (``Assignments''). Participations typically result in the Fund having
a
contractual relationship only with the Lender, not with the sovereign borrower.
The Fund has the right to receive payments of principal, interest and any fees
to which it is entitled only from the Lender selling the Participation and only
upon receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, the Fund generally has no right to enforce compliance
by the borrower with the terms of the loan agreements relating to the loan, nor
any rights of set-off against the borrower, and the Fund will not benefit
directly from any collateral supporting the Loan in which it has purchased the
Participation. As a result, the Fund assumes the credit risk of both the
borrower and the Lender that is selling the Participation. The Fund may have
difficulty disposing of Participations and Assignments because the market for
such instruments is not highly liquid.
Cash Flow Information: The Fund invests in securities and distributes dividends
and distributions from net investment income and from net realized gains which
are paid in cash and may be reinvested at the discretion of shareholders. These
activities are reported in the Statement of Changes in Net Assets and 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 amortizing discounts or premiums on
debt obligations. For the six month period November 1, 1994 through April 30,
1995, the Fund paid interest expense of $697,499.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Fund accretes discount on securities purchased using the
effective interest method.
Taxes: It is the Fund's intention to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders. Therefore,
no federal income tax provision is required.
Dividends and Distributions: The Fund declares and pays dividends and
distributions monthly first from net investment income, then from realized
short-term capital gains and other sources, if necessary. Net long-term capital
gains, if any, in excess of loss carryforwards will be distributed annually.
Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles. These ``book/tax'' differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their federal tax basis treatment; temporary differences do not require
reclassifications. Dividends which exceed net investment
-10-
<PAGE>
<PAGE>
income for financial reporting purposes, but not for tax purposes are reported
as distributions in excess of net investment income.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain and
Return of Capital Distributions by Investment Companies. During the six months
ended April 30, 1995 the Fund reclassified $2,979,221 of net foreign currency
losses to distributions in excess of net investment income from accumulated net
realized loss on investments.
Net investment income, net realized gains and net assets were not affected
by
this change.
Deferred Organization Expenses: A total of $116,182 was incurred in connection
with the organization of the Fund. These costs have been deferred and are being
amortized on a straight-line basis over a period of sixty months from the date
the Fund commenced investment operations.
Note 2. Agreements The Fund has an Investment
Advisory Agreement with the Adviser, an indirect
wholly-owned subsidiary of Salomon Inc, pursuant to which the Adviser acts as
the Fund's investment adviser and is responsible 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.
The Fund also has an Administration Agreement with Prudential Mutual Fund
Management, Inc. (the ``Administrator''), pursuant to which the Administrator
performs administrative services necessary for the operation of the Fund.
The Fund pays the Adviser a monthly fee for its advisory services at an
annual rate of .90% of the value of the Fund's average weekly net assets. The
Fund pays the Administrator a monthly fee for its administration services at an
annual rate of .15% of the value of the Fund's average weekly net assets up to
$250 million and .125% of the value of such net assets in excess of $250
million.
Note 3. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments, for the six months ended
April 30, 1995 aggregated $76,501,613 and $78,853,481, respectively.
At April 30, 1995, the Fund had outstanding forward currency contracts, both
to purchase and sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Purchase Contracts Payable Value Appreciation
- - ------------------ --------------- ---------- -------------
<S> <C> <C> <C>
Netherland
Guilders
Expiring 7/1/96 $,3,062,336 $3,221,012 $ 158,676
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contracts Receivable Value (Depreciation)
- - ----------------- --------------- ---------- ---------------
<S> <C> <C> <C>
Netherland
Guilders
Expiring 7/1/96 $ 2,691,790 $3,221,012 $(529,222)
</TABLE>
The federal income tax basis of the Fund's investments at April 30, 1995 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized depreciation for federal income tax purposes was $45,228,898
(gross unrealized appreciation-$1,546,337; gross unrealized
depreciation-$46,775,235).
For federal income tax purposes, the Fund had a capital loss carryforward as
of October 31, 1994 of approximately $889,000 which expires in 2002.
Accordingly, no capital gain distributions are expected to be paid to
shareholders until net gains have been realized in excess of such amount.
Note 4. Bank Loan The Fund borrowed
$60,000,000 pursuant to a secured term loan
agreement (the ``Loan'') with Morgan Guaranty Trust Company of New York. The
Loan agreement was renewed on December 12, 1994 at an interest rate of 8.1875%,
which is equal to six-month LIBOR plus 1.375% and the maturity date is June 12,
1995. Interest is payable upon maturity. In accordance with the terms of the
Loan, the Fund must maintain a level of collateral to debt of between 175-225%.
The collateral for the Loan was valued at $135,055,022 on April 30, 1995 and is
being held in a segregated account by the Fund's custodian.
Note 5. Capital There are 100 million shares
of $.001 par value common stock authorized. Of the
12,657,133 shares outstanding at April 30, 1995, the Adviser owned 7,133 shares.
The Fund sold 12,650,000 shares of common stock in its initial public
offering at a price of $15 per share and received net proceeds of $176,622,906,
after deducting offering expenditures and underwriting commissions. Initial
offering costs of $793,344 were charged to paid-in capital at the time of the
issuance of such shares.
-11-
<PAGE>
<PAGE>
Note 6. Dividends Subsequent to April 30,
1995, the Board of Directors of the Fund declared
dividends of $.11875 per common share payable May 31, 1995 and June 30, 1995 to
shareholders of record on May 11, 1995 and June 12, 1995, respectively.
Note 7. Quarterly Data
<TABLE>
<CAPTION>
Net realized and
unrealized
gains (losses) on Net increase (decrease)
Net investment
investments and in net assets
income
foreign currencies resulting from operations
Total Per
Per Per
Quarterly period income Amount share
Amount share Amount share
------------------------ ---------- ------------------------
- - -------------------------- --------------------------
<S> <C> <C> <C> <C>
<C> <C> <C>
December 31, 1993*
to January 31, 1994 $ 855,302 $ 666,958 $.053 $
651,408 $ .051 $ 1,318,366 $ .104
February 1, 1994
to April 30, 1994 3,755,934 3,068,100 .242
(30,047,353) (2.374) (26,979,253) (2.132)
May 1, 1994
to July 31, 1994 5,659,468 4,838,529 .382
(4,196,038) (.332) 642,491 .050
August 1, 1994
to October 31, 1994 6,377,379 4,396,866 .347
611,672 .048 5,008,538 .395
November 1, 1994
to January 31, 1995 6,109,343 4,500,735 .356
(54,531,478) (4.308) (50,030,743) (3.952)
February 1, 1995
to April 30, 1995 6,621,361 5,010,043 .396
31,740,675 2.508 36,750,718 2.904
<CAPTION>
Dividends
and distributions Share
Per price
Quarterly period Amount share High Low
------------------------ --------------------- ---------------
<S> <C> <C> <C> <C>
December 31, 1993*
to January 31, 1994 -- -- $ 15 1/8 $15
February 1, 1994
to April 30, 1994 $4,509,103 $.356 15 1/8 12
May 1, 1994
to July 31, 1994 4,509,103 .356 13 1/2 11 1/8
August 1, 1994
to October 31, 1994 4,509,103 .356 12 5/8 10 3/4
November 1, 1994
to January 31, 1995 4,509,103 .356 11 3/4 9 1/4
February 1, 1995
to April 30, 1995 4,509,103 .356 11 1/8 9 3/8
</TABLE>
* Commencement of investment operations.
-12-
<PAGE>
<PAGE>
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Six Months December 31, 1993*
ended through
April 30, 1995 October 31, 1994
- - -------------- -------------------
<S>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......................................
$ 11.31 $ 14.03
- - -------------- ----------
Income from investment operations:
Net investment income......................................................
.75 1.02
Net realized and unrealized losses on investments..........................
(1.80) (2.60)
- - -------------- ----------
Total from investment operations.........................................
(1.05) (1.58)
- - -------------- ----------
Less distributions:
Dividends from net investment income.......................................
(.46) (1.01)
Distributions in excess of net investment income...........................
(.25) (.06)
- - -------------- ----------
Total distributions......................................................
(.71) (1.07)
- - -------------- ----------
Offering costs with respect to issuance of shares..........................
-- (.07)
- - -------------- ----------
Net asset value, end of period.............................................
$ 9.55 $ 11.31(D)(D)
- - -------------- ----------
- - -------------- ----------
Market price per share, end of period......................................
$ 10.875 $ 10.75
- - -------------- ----------
- - -------------- ----------
TOTAL INVESTMENT RETURN(a):................................................
8.51% (16.55)%(D)
RATIOS TO AVERAGE NET ASSETS#:
Total expenses.............................................................
5.28% 2.90%
Operating expenses.........................................................
1.39% 1.36%
Interest expense...........................................................
3.89% 1.54%
Net investment income......................................................
15.59% 10.24%
SUPPLEMENTAL DATA:
Net assets, end of period (000)............................................
$120,888 $ 143,159
Average net assets (000)...................................................
$123,012 $ 151,954
Portfolio turnover rate....................................................
41% 13%
Asset coverage for Loan outstanding........................................
301% 339%
Weighted average bank loan (000)...........................................
$ 60,000 $ 39,934
Weighted average interest rate on bank loan (annualized)...................
7.85% 5.88%
</TABLE>
- - ---------------
* Commencement of investment operations.
(a) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported. Dividends and
distributions are assumed, for purposes of this calculation, to be
reinvested at prices obtained under the Fund's dividend reinvestment
plan.
Total investment return does not reflect brokerage commissions. Total
investment return for periods of less than one full year are not
annualized.
(D) Based on beginning period price of $14.03 (initial offering price of
$15.00 less sales load of $.975) and end of period market value of $10.75
per share.
(D)(D) Net asset value immediately after closing of initial public offering
was $13.96.
# Annualized.
-13-
<PAGE>
<PAGE>
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
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
Independent Accountants
Price Waterhouse LLP
New York, New York 10036
Legal Counsel
Simpson Thacher & Bartlett
New York, New York 10017
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.
The accompanying financial statements as of April 30, 1995 were
not audited and, accordingly, no opinion is expressed on them.
This report is for stockholder information. This is
not a prospectus intended for use in the purchase or
sale of Fund shares.
Salomon Brothers Worldwide
Income Fund Inc
Seven World Trade Center
New York, NY 10048
For information call (toll free)
1-800-SALOMON
79548T109
