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SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
INTERIM REPORT
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JULY 31, 1996
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SALOMON BROTHERS ASSET MANAGEMENT
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
September 20, 1996
Dear Shareholders:
We are pleased to provide this interim report for the Salomon Brothers Worldwide
Income Fund (the "Fund") as of July 31, 1996. Included are market commentary and
a statement of the Fund's current investments.
We are pleased to report that the Fund returned 47.20%, based on net asset value
per share, for the twelve months ended July 31, 1996, significantly
outperforming the 37.61% return of the Lipper Closed-End Emerging Market Debt
Fund Average. In fact, the Fund ranked #3 of 13 funds in this investment
category tracked by Lipper Analytical Services, Inc., placing it in the first
quartile.*
The net asset value of the Fund increased from $13.11 per share on April 30,
1996 to $13.58 per share on July 31, 1996. Dividends of $0.35625 per share were
declared during the quarter. Assuming reinvestment of these dividends in
additional shares of the Fund, the net asset value return for the quarter ended
July 31, 1996 was 6.40%. In comparison, the Salomon Brothers High-Yield Market
Index returned 1.99% and the Salomon Brothers Brady Bond Index returned 4.69%
during the same period.
On July 31, 1996, investments in securities of emerging market issuers,
including obligations of sovereign governments and companies, totaled
approximately 80% of total investments. The remainder of the Fund's portfolio
was invested primarily in U.S. high-yield debt.
EMERGING MARKETS DEBT
After a difficult start to the year, there was a decidedly positive tone to the
emerging debt markets by the end of July 1996, as political and fundamental
economic developments continued to promote growth throughout most of the
emerging market nations.
Latin America The Mexican Finance Ministry confirmed late in July that it would
repay $7 billion of its remaining $10.5 billion in emergency borrowings from the
U.S. Treasury as well as $1 billion in debt owed to the International Monetary
Fund (the "IMF"). The repayments, financed in part with a $6 billion
floating-rate note issue, are nearly double what Mexico had initially planned.
Since these bonds will be repaid from oil-export revenues of government-owned
Petroleos Mexicanos, flowing directly to the Federal Reserve Bank of New York,
the issue was rated Baa-3 by Moody's Investors Service and BBB- by Standard and
Poor's, both higher ratings than garnered by Mexico itself.
Similarly, the Venezuelan government approved the creation of a Debt Rescue Fund
that will set aside certain oil revenues to pay down foreign debt. Also, the IMF
approved a $1.4 billion standby credit, signifying Venezuela's first formal
credit arrangement since 1989. As a further
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
positive sign, Venezuela's economy is estimated to rebound to a 4% annual growth
rate in 1997 from a negative 1.1% inflation-adjusted growth rate this year,
according to the IMF.
Eastern Europe Russia was the emerging debt market's top performer in July, as
pro-reform Boris Yeltsin soundly beat his Communist rival in a runoff
presidential election early that month. Investors' main concerns for Russia now
are Mr. Yeltsin's health and speculation over a possible successor. Separately,
the Russian Central Bank moved to draw more foreign investors into its
treasury-bill market in a bid to lower the country's rising interest payments.
Foreign investors will now be allowed greater flexibility in investing in
ruble-denominated treasury bills, including easier repatriation of profits.
Poland enjoyed another successful issue with its July 9 release of a five-year,
250 million deutschemark Eurobond, priced very competitively over comparable
German government bonds. This pricing, along with recent acceptance of Poland
into the Organization for Economic Cooperation and Development and its strong
trade relations with Germany, are believed to be among the primary reasons
German investors account for one-third of the bond issue's placement.
Positive economic developments were also in evidence in Bulgaria, as the IMF
approved a fourth standby loan for the country in July. This loan, in turn,
should pave the way for additional external financial support from the World
Bank and bilateral lenders. Of course, the success of Bulgaria's IMF and World
Bank loan programs is dependent on the nation's ongoing progress towards
recapitalization and reform of its banking system. Interest payments totaling
US$125 million on Brady bonds were paid in July as scheduled.
U.S. HIGH-YIELD SECURITIES
High-yield bonds in the gaming and retailing industries continued to lead the
market during the quarter ended July 31, 1996. Additionally, shorter maturity
and lower-quality bonds outperformed higher rated, longer maturity, and
zero-coupon bonds during the period, as the former sectors tend to be less
sensitive to changes in U.S. treasury rates than the latter.
Strong cash flows into high-yield mutual funds during the quarter helped both to
absorb a record $20 billion new issue supply and to support the general market.
In fact, the $3.5 billion of fund inflows was the second largest quarterly
figure ever recorded and should provide support for the market looking ahead.
DIVIDEND REINVESTMENT PLAN
For those shareholders not currently participating in the Fund's Dividend
Reinvestment Plan (the "Plan"), we encourage you to do so. The Plan offers a
prompt, simple and inexpensive way to put your dividends and distributions to
work through reinvestment in additional shares of capital stock of the Fund.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
Shareholders may enroll in the Plan by completing an Authorization Card attached
to the Terms and Conditions of the Plan, which can be obtained by contacting
American Stock Transfer & Trust Company at 1-800-937-5449 (1-718-921-8200 if you
are calling from within New York City). Shareholders who initially purchased
shares of the Fund on or after September 6, 1996 are automatically enrolled in
the Plan. If your shares are held in the name of a broker or nominee, you should
contact your broker or nominee for more information about your ability to
participate in the Plan.
* * *
As we continue to pursue the Fund's investment objective of maintaining a high
level of current income through a portfolio of high-yield non-U.S. and U.S.
corporate debt securities, we appreciate your ongoing interest in the Fund. A
recorded periodic update of the developments affecting the markets in which the
Fund invests, as well as its top holdings, net asset value and performance are
available by calling 1-800-725-6666.
Sincerely,
/s/ MICHAEL S. HYLAND
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MICHAEL S. HYLAND
Chairman and President
* Lipper rankings change monthly. Lipper performance results represent changes
in net asset value, adjusted to reflect reinvestment of dividends and capital
gains distributions.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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STATEMENT OF INVESTMENTS
July 31, 1996 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS -- 98.4% VALUE
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ARGENTINA -- 15.1%
Peso 5,368+ Republic of Argentina, BOCON, Pre 1, 3.4752%, 4/1/01*(,)**............ $ 4,073,946
2,338 Republic of Argentina, BOCON, Pre 3, 3.4752%, 9/1/02*(,)**............ 1,425,292
US$ 3,060 Republic of Argentina, BOCON, Pre 2, 5.50%, 4/1/01*(,)**.............. 2,715,975
23,438+ Republic of Argentina, FRB, 6.3125%, 3/31/05*......................... 17,754,474
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25,969,687
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BRAZIL -- 21.8%
50,855+ Federal Republic of Brazil, C Bond, 8.00%, 4/15/14**.................. 31,402,665
2,000 Federal Republic of Brazil, Investment (Exit) Bond, 6.00%, 9/15/13.... 1,253,750
6,500+ Federal Republic of Brazil, NMB, Series L, 6.5625%, 4/15/09*.......... 4,866,875
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37,523,290
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BULGARIA -- 6.7%
34,250+ Republic of Bulgaria, FLIRB, Series A, 2.25%, 7/28/12*................ 11,473,750
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COSTA RICA -- 4.0%
10,000+ Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15.................. 6,800,000
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ECUADOR -- 13.9%
51,946+ Republic of Ecuador, PDI Bond, 6.0625%, 2/28/15*(,)**................. 23,960,159
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HUNGARY -- 4.6%
8,000+ National Bank of Hungary, 8.875%, 11/1/13............................. 7,930,000
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MEXICO -- 6.2%
11,732+ United Mexican States, Global Bond, 11.50%, 5/15/26................... 10,705,450
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PANAMA -- 4.0%
4,615+ Republic of Panama, FRN, 6.62891%, 5/10/02*........................... 4,384,630
4,000+ Republic of Panama, IRB, 3.50%, 7/17/14*.............................. 2,390,000
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6,774,630
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POLAND -- 5.5%
12,201 Republic of Poland, PDI Bond, 3.75%, 10/27/14*........................ 9,486,277
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RUSSIA -- 3.7%
11,750 Russia, IAN, 12/31/15*(A)............................................. 6,315,625
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SOUTH AFRICA -- 0.7%
ZAL 6,000 Republic of South Africa Notes, 12.00%, 2/28/05....................... 1,132,720
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</TABLE>
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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STATEMENT OF INVESTMENTS (continued)
July 31, 1996 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS (CONCLUDED) VALUE
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URUGUAY -- 1.2%
US$ 2,500+ Uruguay, DCB, Series B, 6.6875%, 2/18/07*............................. $ 2,112,500
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VENEZUELA -- 11.0%
19,500+ Republic of Venezuela, FLIRB, Series A, 6.375%, 3/31/07*.............. 14,503,125
6,000+ Republic of Venezuela, FLIRB, Series B, 6.50%, 3/31/07*............... 4,462,500
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18,965,625
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TOTAL SOVEREIGN BONDS (cost $152,614,212)............................. 169,149,713
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LOAN PARTICIPATIONS++ -- 10.9%
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Republic of Jamaica,
667 Tranche A, 6.50%, 10/15/00* (Chase Manhattan)....................... 646,650
Kingdom of Morocco,
9,350+ Tranche A, 6.4375%, 1/1/09* (Merrill Lynch, J P Morgan)............. 6,831,344
13,235 Tranche B, 6.4375%, 1/1/04* (Morgan Stanley, Bankers Trust)......... 11,192,095
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TOTAL LOAN PARTICIPATIONS (cost $19,562,811).......................... 18,670,089
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</TABLE>
<TABLE>
<CAPTION>
CORPORATE BONDS -- 16.6%
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<S> <C> <C> <C>
Canada,
C$ 3,000+ Rogers Cable Systems, 9.65%, 1/15/14................................ 1,931,260
Mexico,
US$ 2,000+ Grupo Industrial Durango, 12.00%, 7/15/01........................... 2,022,500
United States,
2,000+ Berry Plastics Corp., 12.25%, 4/15/04............................... 2,130,000
1,000 Carr Gottstein Foods Co., 12.00%, 11/15/05.......................... 1,030,000
1,000 Cliffs Drilling Co., 10.25%, 5/15/03##.............................. 1,000,000
1,000 Four M Corp., 12.00%, 6/1/06##...................................... 1,025,000
International Semi-Tech, Zero Coupon until 8/15/00 (11.50%
2,000 thereafter), 8/15/03.............................................. 1,110,000
Jordan Industries, Inc., Zero Coupon until 8/1/98 (11.75%
5,000+ thereafter), 8/1/05............................................... 3,500,000
Marcus Cable Co., Zero Coupon until 6/15/00 (14.25% thereafter),
1,750 12/15/05.......................................................... 1,085,000
1,000 Norcal Waste Systems, 12.75%, 11/15/05*(,)##........................ 1,055,000
1,500+ Penn Traffic Co., 9.625%, 4/15/05................................... 1,136,250
2,500+ Plastic Specialty & Technology, 11.25%, 12/1/03..................... 2,475,000
1,000 Remington Product Co. LLC, 11.00%, 5/15/06##........................ 990,000
1,000 Samsonite Corp., 11.125%, 7/15/05................................... 1,030,000
1,000 Selmer Inc., 11.00%, 5/15/05........................................ 1,040,000
</TABLE>
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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STATEMENT OF INVESTMENTS (concluded)
July 31, 1996 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL
AMOUNT
(000) CORPORATE BONDS (CONCLUDED) VALUE
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US$ 1,000 SFX Broadcasting, 10.75%, 5/15/06##................................. $ 1,007,500
1,250+ Valcor Inc., 9.625%, 11/1/03........................................ 1,143,750
2,000+ Venture Holdings Trust, 9.75%, 4/1/04............................... 1,700,000
1,000 William House Regency, Inc., 13.00%, 11/15/05....................... 1,125,000
1,000 Wyndham Hotel Corp., 10.50%, 5/15/06................................ 1,002,500
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TOTAL CORPORATE BONDS (cost $29,710,593).............................. 28,538,760
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WARRANTS(#)
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Berry Plastics (exercise price of $18.797 per share expiring on
2,000 Warrants 4/15/04 for 1.13237 shares of common stock)......................... 90,040
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REPURCHASE AGREEMENTS -- 12.4%
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State Street Bank and Trust Co., 5.53%, cost $10,606,000, dated
7/31/96, $10,607,629 due 8/1/96, (collateralized by $10,715,000,
US$ 10,606 6.125%, U.S. Treasury Notes due 5/15/98, valued at $10,822,150)..... 10,606,000
Union Bank of Switzerland, 5.55%, cost $10,606,000, dated 7/31/96,
$10,607,635 due 8/1/96, (collateralized by $10,029,000, 7.75%, U.S.
10,606 Treasury Notes due 2/15/01, valued at $10,818,784).................. 10,606,000
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TOTAL REPURCHASE AGREEMENTS........................................... 21,212,000
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TOTAL INVESTMENTS -- 138.3% (cost $223,099,616)....................... 237,660,602
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LIABILITIES IN EXCESS OF OTHER ASSETS -- (38.3%)...................... (65,774,273)
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NET ASSETS -- 100.0%.................................................. $171,886,329
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NET ASSET VALUE PER SHARE
($171,886,329 / 12,657,133 shares of common stock issued and
outstanding).......................................................... $13.58
======
</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 all or 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.
# Non-income producing.
## Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.
(A) "When and if issued" security.
<TABLE>
<S> <C> <C> <C>
BOCON -- Bonos de Consolidacion.
DCB -- Debt Conversion Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
FRN -- Floating Rate Note.
IAN -- Interest in Arrears Note.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.
ZAL -- South African Rand.
</TABLE>
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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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
Managing Director, Salomon Brothers Inc
President, Salomon Brothers
Asset Management Inc
RIORDAN ROETT
Professor and Director,
Latin American Studies Program,
Paul H. Nitze School of
Advanced International Studies,
Johns Hopkins University
JESWALD W. SALACUSE
Henry J. Braker
Professor of Commercial Law,
The Fletcher School of Law & Diplomacy, Tufts University
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OFFICERS
MICHAEL S. HYLAND
Chairman and President
THOMAS FLANAGAN
Executive Vice President
PETER J. WILBY
Executive Vice President
LAWRENCE H. KAPLAN
Executive Vice President
and General Counsel
ALAN M. MANDEL
Treasurer
LAURIE A. PITTI
Assistant Treasurer
TANA E. TSELEPIS
Secretary
JENNIFER MUZZEY
Assistant Secretary
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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 AND ADMINISTRATOR
Salomon Brothers Asset Management Inc
Seven World Trade Center
New York, New York 10048
SUB-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
425 Lexington Avenue
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
SBW
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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
