<PAGE> 1
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SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
SEMI-ANNUAL REPORT
---------------------------------------
APRIL 30, 1997
-------------------------------------
SALOMON BROTHERS ASSET MANAGEMENT
---------------------------------
<PAGE> 2
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
June 20, 1997
Dear Shareholders:
We are pleased to provide this semi-annual report for the Salomon Brothers
Worldwide Income Fund Inc (the "Fund") as of April 30, 1997. Included are a
market commentary, a statement of the Fund's investments as of April 30, 1997
and financial statements for the six months ended April 30, 1997.
During the six months ended April 30, 1997, the net asset value of the Fund
increased from $15.25 per share as of October 31, 1996, to $16.18 per share as
of April 30, 1997. Dividends of $0.7725 per share were declared during the
period. Assuming that these dividends were reinvested in additional shares of
the Fund, the net asset value return for the six months ended April 30, 1997,
was 11.35%. During the same period, the Salomon Brothers Brady Bond Index, which
we use as a measure of the return of the overall market for emerging markets
debt, returned 11.50%.
Investments in securities of emerging markets issuers, including both
obligations of sovereign governments and corporate issuers, totaled
approximately 98% of total investments at April 30, 1997. The remainder of the
Fund's long-term portfolio assets was invested in U.S. high-yield corporate
bonds.
EMERGING MARKETS
Emerging markets posted monthly gains in five of the past six months, continuing
the strong performance of 1996. The positive economic and political settings in
many key countries, combined with favorable market conditions and attractive
yields, have encouraged investors to increase their allocations in this sector.
The upgrading by Standard & Poor's, based on a change of rating methodology, of
12 Argentine corporates to investment grade had a positive impact on the market,
as did the victory of the pro-reform UDF party in Bulgaria and the Peruvian
Government's resolution of the hostage crisis. In addition, prospects for
economic growth in Latin America are especially bright. Annual GDP growth rates
of 4%-6% are expected over the next two years. In Russia, the Government's
reform efforts have been well-received by the market, and the tax collection
problems, which have restrained economic growth in the past, are being
addressed.
HIGH-YIELD MARKET
The U.S. high-yield market posted a strong performance in the six months ended
April 30, 1997, buoyed by both fundamental and technical factors. The
combination of solid economic growth and low inflation served to improve credit
among a broad spectrum of issuers. In addition, money flows into high-yield
mutual funds continued at a healthy pace and created strong demand for new
issues. And, despite some widening of spreads to Treasuries in March and April,
spreads contracted by 40 basis points for the six-month period. Outperformers
over this period include single B-rated issues and bonds in the leisure/lodging,
banking, utilities and manufacturing industries. Groups that underperformed the
market included CCC-rated issuers and bonds in the publishing, restaurants,
containers and healthcare industries.
<PAGE> 3
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
ANNUAL SHAREHOLDERS MEETING
The Fund held its annual meeting of shareholders on February 25, 1997. At the
meeting, shareholders elected 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:
1. Election of Directors
<TABLE>
<CAPTION>
NOMINEES VOTES FOR VOTES WITHHELD
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<S> <C> <C>
Thomas W. Brock 11,432,495 363,616
Charles F. Barber 11,431,812 364,299
</TABLE>
2. Ratification of Price Waterhouse LLP as the Independent Accountants of
the Fund
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINED
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<S> <C> <C>
11,361,129 272,279 162,703
* * *
</TABLE>
In a continuing effort to provide timely information concerning the Fund,
shareholders may call 1-888-777-0102 (a toll-free number), Monday through Friday
from 8:00 am to 6:00 pm EST for the Fund's current net asset value, market price
and other information regarding the Fund's portfolio holdings and allocations.
For information concerning your Salomon Brothers Worldwide Income Fund stock
account, please call American Stock Transfer & Trust Company at 1-800-937-5449
(1-718-921-8200 if you are calling from within New York City).
All of us at Salomon Brothers Asset Management appreciate the confidence you
have demonstrated in the past and hope to continue to serve you in future years.
Sincerely,
/s/ MICHAEL S. HYLAND
-----------------------
MICHAEL S. HYLAND
Chairman and President
<PAGE> 4
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS -- 82.2% (NOTE 2)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARGENTINA -- 5.9%
US$ 18,500+ Republic of Argentina, Par Bond, 5.50%, 3/31/23*..................... $ 12,071,250
------------
BRAZIL -- 21.0%
43,781+ Federal Republic of Brazil, C Bond, 8.00%, 4/15/14**................. 33,164,391
6,000 Federal Republic of Brazil, Investment (Exit) Bond, 6.00%, 9/15/13... 4,387,800
6,500+ Federal Republic of Brazil, NMB, Series L, 6.9375%, 4/15/09*......... 5,525,000
------------
43,077,191
------------
COSTA RICA -- 4.1%
10,000+ Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15................. 8,275,000
------------
ECUADOR -- 12.0%
40,961+ Republic of Ecuador, PDI Bond, 6.4375%, 2/27/15*(,)**................ 24,576,532
------------
HUNGARY -- 4.1%
8,000+ National Bank of Hungary, 8.875%, 11/1/13............................ 8,350,000
------------
MEXICO -- 6.5%
630 United Mexican States, Global Bond, 11.50%, 5/15/26.................. 667,800
United Mexican States, Par Bond, Series A, 6.25%, 12/31/19 (including
6,550+ 6,550,000 rights).................................................. 4,740,562
United Mexican States, Par Bond, Series B, 6.25%, 12/31/19 (including
11,000 11,000,000 rights)................................................. 7,961,250
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13,369,612
------------
PANAMA -- 6.2%
6,500+ Republic of Panama, IRB, 3.50%, 7/17/14*............................. 4,777,500
9,449+ Republic of Panama, PDI Bond, 6.5625%, 7/17/16*(,)**................. 7,961,198
------------
12,738,698
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PERU -- 4.0%
9,000 Republic of Peru, FLIRB, 3.25%, 3/7/17*.............................. 4,871,250
5,500 Republic of Peru, PDI Bond, 4.00%, 3/7/17*(,#)....................... 3,300,000
------------
8,171,250
------------
POLAND -- 4.8%
12,201 Republic of Poland, PDI Bond, 4.00%, 10/27/14*(,w)................... 9,882,810
------------
RUSSIA -- 0.1%
250 Russia, IAN, 12/31/15(A)............................................. 173,750
------------
</TABLE>
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See accompanying notes to financial statements.
PAGE 1
<PAGE> 5
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS (CONCLUDED) (NOTE 2)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOUTH AFRICA -- 0.6%
ZAL 6,000 Republic of South Africa Notes, 12.00%, 2/28/05...................... $ 1,179,059
------------
URUGUAY -- 1.2%
US$ 2,500+ Uruguay, DCB, Series B, 6.50%, 2/18/07*.............................. 2,462,500
------------
VENEZUELA -- 11.7%
5,000 Republic of Venezuela, DCB, Series DL, 6.50%, 12/18/07*.............. 4,421,875
13,810+ Republic of Venezuela, FLIRB, Series A, 6.75%, 3/31/07*.............. 12,066,071
5,714+ Republic of Venezuela, FLIRB, Series B, 6.75%, 3/31/07*.............. 4,992,857
Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20
3,500 (including 17,500 warrants)........................................ 2,535,312
------------
24,016,115
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TOTAL SOVEREIGN BONDS (cost $142,693,755)............................ 168,343,767
------------
LOAN PARTICIPATIONS++ -- 27.0%
- -----------------------------------------------------------------------------------------------------------
The People's Democratic Republic of Algeria,
10,250 Tranche A, 6.91%, 9/4/06* (Chase Manhattan)........................ 8,251,250
2,000 Tranche 3, 6.50%, 3/4/10* (Chase Manhattan)........................ 1,370,000
Republic of Jamaica,
444 Tranche A, 6.625%, 10/15/00* (Chase Manhattan)..................... 426,634
Kingdom of Morocco,
11,850+ Tranche A, 6.375%, 1/1/09* (Merrill Lynch, J P Morgan)............. 10,361,344
12,353 Tranche B, 6.375%, 1/1/04* (Morgan Stanley, Bankers Trust)......... 12,283,456
Russia,
Bank for Foreign Economic Affairs, Vnesheconombank, Floating Rate,
28,000 12/31/25 (B) (Chase Manhattan, ING)................................ 22,540,000
------------
TOTAL LOAN PARTICIPATIONS (cost $53,450,332)......................... 55,232,684
------------
CORPORATE BONDS -- 4.4%
-----------------------------------------------------------------------------------------------------------
Canada,
C$ 3,000+ Rogers Cable Systems, 9.65%, 1/15/14............................... 2,094,147
Mexico,
US$ 2,000+ Grupo Industrial Durango, 12.00%, 7/15/01.......................... 2,150,000
</TABLE>
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See accompanying notes to financial statements.
PAGE 2
<PAGE> 6
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
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STATEMENT OF INVESTMENTS (concluded)
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS (CONCLUDED) (NOTE 2)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States,
Jordan Industries, Inc., Zero Coupon until 4/1/02 (11.75%
US$ 4,825 thereafter), 4/1/09(#)........................................... $ 2,533,209
1,000 Remington Product Co. LLC, 11.00%, 5/15/06......................... 850,000
1,562+ Venture Holdings Trust, 9.75%, 4/1/04.............................. 1,452,660
------------
TOTAL CORPORATE BONDS (cost $9,506,143).............................. 9,080,016
------------
REPURCHASE AGREEMENT -- 1.7%
- -----------------------------------------------------------------------------------------------------------
Union Bank of Switzerland, 5.30%, cost $3,425,000, dated 4/30/97,
$3,425,504 due 5/1/97, (collateralized by $2,414,000, 11.25%, U.S.
3,425 Treasury Bonds due 2/15/15, valued at $3,494,265).................. 3,425,000
------------
TOTAL INVESTMENTS -- 115.3% (cost $209,075,230)...................... 236,081,467
------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (15.3%)..................... (31,349,262)
------------
NET ASSETS -- 100.0%
(equivalent to $16.18 per share on 12,657,133 common shares
outstanding)......................................................... $204,732,205
===========
</TABLE>
- --------------------------------------------------------------------------------
* 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.
# Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.
W Security valued at $9,882,810 as of April 30, 1997 was segregated to be
available for the purchase of a "when and if issued" security with a total
cost of $134,375.
(A) "When and if issued" security issued pursuant to Russia's Brady Plan debt
restructuring. The Investment Adviser believes that this restructuring will
be completed and finalized and that the related Brady Bonds will be issued.
Accordingly, the Fund has marked-to-market its investment in this security
at April 30, 1997.
(B) Non-income producing. Security is currently in default.
<TABLE>
<S> <C> <C>
DCB -- Debt Conversion Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
IAN -- Interest in Arrears Note.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.
ZAL -- South African Rand.
</TABLE>
See accompanying notes to financial statements.
PAGE 3
<PAGE> 7
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $209,075,230)................................................. $236,081,467
Cash......................................................................................... 854
Receivable for investments sold.............................................................. 37,414,664
Interest receivable.......................................................................... 3,149,717
Deferred organization expenses and other assets.............................................. 59,576
------------
Total assets......................................................................... 276,706,278
------------
LIABILITIES
Payable for investments purchased............................................................ 9,714,757
Loan payable (Note 5)........................................................................ 60,000,000
Loan interest payable (Note 5)............................................................... 1,915,522
Accrued expenses............................................................................. 174,833
Advisory fee payable......................................................................... 134,567
Administration fee payable................................................................... 34,394
------------
Total liabilities.................................................................... 71,974,073
------------
NET ASSETS
Common Stock ($.001 par value, authorized 100,000,000 shares; 12,657,133 shares
outstanding)............................................................................... 12,657
Additional paid-in capital................................................................... 176,709,696
Undistributed net investment income.......................................................... 1,118,881
Accumulated net realized loss on investments................................................. (113,958)
Net unrealized appreciation on investments and foreign currency translation.................. 27,004,929
------------
Net assets........................................................................... $204,732,205
------------
NET ASSET VALUE PER SHARE ($204,732,205 / 12,657,133 shares)................................. $ 16.18
------------
</TABLE>
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See accompanying notes to financial statements.
PAGE 4
<PAGE> 8
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1997 (unaudited)
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
INCOME
Interest (includes discount accretion of $3,333,077)...................... $13,979,554
EXPENSES
Investment advisory fees.................................................. $ 909,575
Administration fees....................................................... 151,596
Custodian's fees and expenses............................................. 76,309
Reports to shareholders................................................... 51,572
Audit fees and expenses................................................... 32,728
Accounting fees........................................................... 29,753
Legal fees and expenses................................................... 25,785
Transfer agent's fees and expenses........................................ 24,999
Directors' fees........................................................... 20,332
Registration fees......................................................... 12,031
Amortization of organization expenses..................................... 10,992
Miscellaneous............................................................. 3,020
----------
Total operating expenses...................................................... 1,348,692
Loan interest expense (Note 5)............................................ 1,980,013
----------
Total expenses................................................................ 3,328,705
-----------
Net investment income......................................................... 10,650,849
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on:
Investment transactions................................................... 13,415,150
Foreign currency transactions............................................. 1,829
-----------
13,416,979
-----------
Net change in unrealized appreciation/depreciation on:
Investments............................................................... (2,570,126)
Foreign currencies........................................................ (1,476)
-----------
(2,571,602)
-----------
Net gain on investments and foreign currency transactions..................... 10,845,377
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................... $21,496,226
-----------
</TABLE>
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See accompanying notes to financial statements.
PAGE 5
<PAGE> 9
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Six Months Ended April 30, 1997 (unaudited)
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Sales of short-term portfolio investments, net.......................................... $ 14,995,000
Purchases of long-term portfolio investments............................................ (206,938,672)
Proceeds from disposition of long-term portfolio investments and principal paydowns..... 196,099,809
-------------
4,156,137
Net investment income................................................................... 10,650,849
Accretion of discount on investments.................................................... (3,333,077)
Interest on payment-in-kind bonds....................................................... (1,945,379)
Amortization of organization expenses................................................... 10,992
Net change in receivables/payables related to operations................................ 238,698
-------------
Net cash flows provided by operating activities..................................... 9,778,220
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Cash dividends paid..................................................................... (9,777,644)
-------------
Net increase in cash........................................................................ 576
Cash at beginning of period................................................................. 278
-------------
Cash at end of period....................................................................... $ 854
-------------
</TABLE>
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See accompanying notes to financial statements.
PAGE 6
<PAGE> 10
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income.................................................. $ 10,650,849 $ 25,167,683
Net realized gain on investments and foreign currency transactions..... 13,416,979 6,399,595
Net change in unrealized appreciation/depreciation on investments and
foreign currencies................................................... (2,571,602) 43,942,559
------------ ------------
Net increase in net assets from operations............................. 21,496,226 75,509,837
DIVIDENDS
Dividends from net investment income................................... (9,777,644) (18,036,443)
------------ ------------
Total increase......................................................... 11,718,582 57,473,394
NET ASSETS
Beginning of period.................................................... 193,013,623 135,540,229
------------ ------------
End of period (includes undistributed net investment income of
$1,118,881 and $243,740, respectively)............................... $204,732,205 $193,013,623
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 7
<PAGE> 11
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(unaudited)
NOTE 1. ORGANIZATION
The Salomon Brothers Worldwide Income Fund Inc (the "Fund") was incorporated 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. The Fund commenced operations on December 31, 1993. The Fund seeks 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 seeks capital
appreciation.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
("GAAP"). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
SECURITIES VALUATION. In valuing the Fund's assets, all securities for which
market quotations are readily available are valued (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. However, where the spread
between bid and asked price exceeds five percent of the par value of the
security, the security is valued at the bid price. Securities may be valued by
independent pricing services which use prices provided by market-makers or
estimates of market values obtained from yield data relating to instruments or
securities with similar characteristics. Short-term investments having a
maturity of 60 days or less are valued at amortized cost which approximates
market value. Securities for which reliable quotations are not readily available
are valued at fair value as determined in good faith by, or under procedures
established by the Board of Directors.
REPURCHASE AGREEMENTS. When entering into 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
PAGE 8
<PAGE> 12
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
collateral is marked-to-market 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 changes in the market prices of portfolio securities sold during
the period.
Net realized gains on foreign currency transactions represent net foreign
exchange gains 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 net
unrealized appreciation/depreciation on investments and foreign currency
translation.
FORWARD CURRENCY CONTRACTS. A forward currency contract ("forward contract")
is a commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The contracts are valued on each valuation date at
current exchange rates and any unrealized gain or loss is included in net
unrealized appreciation or depreciation on investments and foreign currencies.
The Fund records realized gains or losses on delivery of the currency or at the
time the forward contract is extinguished (compensated) by entering into a
closing transaction prior to delivery. This gain or loss, if any, is included in
net realized gain (loss) on foreign currency transactions.
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.
PAGE 9
<PAGE> 13
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 months ended April 30, 1997, the Fund paid
interest expense of $2,024,478.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
recorded on the trade date. Realized 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 and capital gains, if any, to
shareholders. Therefore, no federal income tax or excise tax provision is
required.
DIVIDENDS. The Fund declares and pays dividends monthly from net investment
income. Net long-term capital gains, if any, in excess of loss carryforwards
will be distributed annually. Dividends 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 and distributions which exceed net investment
income and net realized capital gains for financial reporting purposes, but not
for tax purposes are reported as distributions in excess of net investment
income and distributions in excess of net realized capital gains.
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 3. MANAGEMENT AND ADMINISTRATION FEES AND OTHER TRANSACTIONS
The Fund has an Investment Advisory Agreement with Salomon Brothers Asset
Management Inc (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 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.
PAGE 10
<PAGE> 14
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
Through August 31, 1995, the Fund also had an Administration Agreement with
Prudential Mutual Fund Management, Inc. (the "Administrator"), pursuant to which
the Administrator performed administrative services necessary for the operation
of the Fund. The Fund paid 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.
Effective September 1, 1995, the Administration Agreement was amended to provide
for the appointment of the Adviser as Administrator and Prudential Mutual Fund
Management, Inc. as Sub-administrator (the "Sub-administrator"). Under the
amended Agreement, the Fund pays the Administrator a monthly fee 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 for
its services, out of which the Administrator pays the Sub-administrator eighty
percent of such fees collected for its services.
At April 30, 1997, the Adviser owned 8,474 shares of the Fund.
Certain officers and/or directors of the Fund are also officers and/or directors
of the Adviser.
The Fund pays each Director not affiliated with the Adviser a fee of $5,000 per
year, a fee of $700 for attendance at each in-person meeting, a fee of $100 for
participation in each telephonic meeting and reimbursement for travel and
out-of-pocket expenses for each board and committee meeting attended.
NOTE 4. PORTFOLIO ACTIVITY AND FEDERAL INCOME TAX STATUS
Purchases and sales of investment securities, other than short-term investments,
for the six months ended April 30, 1997 aggregated $208,780,616 and
$213,961,834, respectively.
The federal income tax basis of the Fund's investments at April 30, 1997 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized appreciation for federal income tax purposes was $27,006,237
(gross unrealized appreciation -- $29,118,728; gross unrealized
depreciation -- $2,112,491).
During the year ended October 31, 1996, the Fund utilized capital loss
carryforwards for federal income tax purposes of $12,517,812. The Fund has a
remaining capital loss carryforward as of October 31, 1996 of $12,954,095 which
expires in 2003. Accordingly, no capital gain distributions are expected to be
paid to shareholders until net gains have been realized in excess of such
amount.
NOTE 5. 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
PAGE 11
<PAGE> 15
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
November 6, 1996 at an interest rate of 6.5625%, which is equal to six-month
LIBOR plus 1.375% and the maturity date is May 6, 1997. 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 $118,445,134 on April 30, 1997 and is being held in a segregated
account by the Fund's custodian.
The net asset value of the Fund could be negatively affected if the Fund were
required to liquidate assets in other than an orderly manner and/or in adverse
market conditions to repay any bank loans outstanding.
NOTE 6. 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.
NOTE 7. CREDIT AND MARKET RISK
The yields of emerging market debt obligations and high yield corporate debt
obligations reflect, among other things, perceived credit risk. The Fund's
investment in securities rated below investment grade typically involve risks
not associated with higher rated securities including, among others, overall
greater risk of timely and ultimate payment of interest and principal, greater
market price volatility and less liquid secondary market trading. The
consequences of political, social, economic or diplomatic changes may have
disruptive effects on the market prices of investments held by the Fund. At
April 30, 1997, the Fund has a concentration of credit risk in sovereign debt of
emerging market countries.
Investing in foreign securities may also involve certain considerations and
risks not typically associated with those of domestic origin as a result of,
among other factors, the level of
PAGE 12
<PAGE> 16
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
governmental supervision and regulation of foreign securities markets and the
risks of loss from currency devaluations and other exchange rate fluctuations.
NOTE 8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Fund enters into forward 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. Forward
contracts involve elements of market risk in excess of the amount reflected in
the Statement of Assets and Liabilities. The Fund bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward contract.
Risks may also arise upon entering into these contracts from the potential
inability of the counterparties to meet the terms of their contracts. As of
April 30, 1997, the Fund did not have any outstanding forward contracts.
Consistent with its objective to seek high current income, the Fund invests in
instruments whose values and interest rates may be linked to foreign currencies,
interest rates, indices or some other financial indicator. The value at maturity
or interest rates for these instruments will increase or decrease according to
the change in the indicator to which it is indexed. These securities are
generally more volatile in nature and the risk of loss of principal or interest
is greater.
NOTE 9. EVENTS SUBSEQUENT TO APRIL 30, 1997
Subsequent to April 30, 1997, the Board of Directors of the Fund declared
dividends of $.11875 per common share payable May 30, 1997 and June 30, 1997 to
shareholders of record on May 13, 1997 and June 17, 1997, respectively.
The Loan Agreement with Morgan Guaranty Trust Company was renewed on May 6, 1997
at an interest rate of 6.50%, which is equal to six-month LIBOR plus 1.375%, and
the maturity date is November 6, 1997.
PAGE 13
<PAGE> 17
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(concluded)
NOTE 10. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED AND
CHANGE IN UNREALIZED NET INCREASE
GAINS (LOSSES) ON (DECREASE) IN NET
NET INVESTMENT INVESTMENTS AND ASSETS RESULTING FROM
INCOME FOREIGN CURRENCIES 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
May 1, 1995
to July 31, 1995............... 7,260,442 5,647,319 .446 9,571,130 .756 15,218,449 1.202
August 1, 1995
to October 31, 1995............ 8,164,877 6,466,109 .511 1,986,368 .157 8,452,477 .668
November 1, 1995
to January 31, 1996............ 7,973,433 6,446,891 .509 35,190,168 2.780 41,637,059 3.290
February 1, 1996
to April 30, 1996.............. 7,977,538 6,270,053 .495 (8,530,399) (.674) (2,260,346) (.179)
May 1, 1996
to July 31, 1996............... 7,736,752 6,151,223 .486 4,345,548 .343 10,496,771 .829
August 1, 1996
to October 31, 1996............ 7,933,368 6,299,516 .498 19,336,837 1.528 25,636,353 2.026
November 1, 1996
to January 31, 1997............ 7,325,883 5,660,634 .447 19,679,979 1.555 25,340,613 2.002
February 1, 1997
to April 30, 1997.............. 6,653,671 4,990,215 .394 (8,834,602) (.698) (3,844,387) (.304)
<CAPTION>
DIVIDENDS AND
DISTRIBUTIONS
----------- SHARE PRICE
PER --------
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
May 1, 1995
to July 31, 1995............... 4,509,105 .356 11 3/4 10 3/4
August 1, 1995
to October 31, 1995............ 4,509,105 .356 11 5/8 11
November 1, 1995
to January 31, 1996............ 4,509,110 .356 13 3/8 11 1/8
February 1, 1996
to April 30, 1996.............. 4,509,109 .356 13 1/2 12 1/8
May 1, 1996
to July 31, 1996............... 4,509,113 .357 13 3/8 12 5/8
August 1, 1996
to October 31, 1996............ 4,509,111 .356 14 1/4 13 1/4
November 1, 1996
to January 31, 1997............ 5,268,534 .416 13 7/8 14 7/8
February 1, 1997
to April 30, 1997.............. 4,509,110 .356 14 15 1/4
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
PAGE 14
<PAGE> 18
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS DECEMBER 31,
ENDED 1993*
APRIL 30, YEAR ENDED YEAR ENDED THROUGH
1997 OCTOBER OCTOBER OCTOBER 31,
(UNAUDITED) 31, 1996 31, 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $ 15.25 $ 10.71 $ 11.31 $ 14.03++
----------- ---------- ---------- ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................... .84 1.99 1.71 1.02
Net realized and unrealized gain (loss) on
investments....................................... .86 3.98 (.89) (2.60)
----------- ---------- ---------- ------------
Total from investment operations................ 1.70 5.97 .82 (1.58)
----------- ---------- ---------- ------------
LESS DISTRIBUTIONS:
Dividends from net investment income................ (.77) (1.43) (1.37) (1.01)
Distributions in excess of net investment income.... -- -- (.05) (.06)
----------- ---------- ---------- ------------
Total distributions (.77) (1.43) (1.42) (1.07)
----------- ---------- ---------- ------------
Offering costs with respect to issuance of shares... -- -- -- (.07)
----------- ---------- ---------- ------------
Net asset value, end of period...................... $ 16.18 $ 15.25 $ 10.71 $ 11.31
=========== ========== ========== ============
Market price per share, end of period............... $ 14.625 $ 14.00 $ 11.375 $ 10.75
=========== ========== ========== ============
TOTAL INVESTMENT RETURN(A).......................... 10.11% 37.34% 20.61% (16.55)%+
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................. 3.28%# 3.91% 5.04% 2.90%#
Operating expenses.............................. 1.33%# 1.44% 1.42% 1.36%#
Interest expense................................ 1.95%# 2.47% 3.62% 1.54%#
Net investment income........................... 10.50%# 15.25% 16.70% 10.24%#
SUPPLEMENTAL DATA:
Net assets, end of period (000)................. $ 204,732 $193,014 $135,540 $143,159
Average net assets (000)........................ $ 204,648 $165,059 $129,516 $151,954
Portfolio turnover rate......................... 84% 97% 101% 13%
Asset coverage for Loan outstanding............. 441% 422% 326% 339%
Weighted average bank loan (000)................ $ 60,000 $ 60,000 $ 60,000 $ 39,934
Weighted average interest rate on bank loan..... 3.30% 6.80% 7.83% 5.88%#
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
* 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.
+ 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.
++ Net asset value immediately after closing of initial public offering was $13.96.
# Annualized.
</TABLE>
See accompanying notes to financial statements.
PAGE 15
<PAGE> 19
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
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
- ---------
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
JENNIFER MUZZEY
Secretary
NOEL DAUGHERTY
Assistant Secretary
- ----------------------
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
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
This report is for stockholder information.
This is not a prospectus intended for use in
the purchase or sale of Fund shares.
- --------------------------------------------------------------------------------
<PAGE> 20
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005
---------------------
BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
---------------------
