<PAGE> 1
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
December 20, 1996
Dear Shareholders:
We are pleased to provide this annual report for the Salomon Brothers Worldwide
Income Fund Inc (the "Fund"), including market commentary, audited financial
statements, the related report of independent accountants and other information
about the Fund.
In the latest fiscal quarter ended October 31, 1996, the net asset value of the
Fund increased to $15.25 per share from $13.58 per share as of July 31, 1996.
Dividends of $0.35625 per share were declared during the quarter. Assuming that
these dividends were reinvested in additional shares of the Fund, the net asset
value return for the quarter was 15.06%. During the same period, the Salomon
Brothers Brady Bond Index returned 10.41%.
For the full fiscal year ended October 31, 1996, the net asset value return for
the Fund was 59.10% -- well ahead of the 39.91% return for the Salomon Brothers
Brady Bond Index over the same period.
Investments in securities of emerging market issues, including both obligations
of sovereign governments and corporate issuers, totaled approximately 83% of
total investments as of October 31, 1996. The remainder of the Fund's long-term
portfolio assets was invested in U.S. high-yield corporate bonds.
EMERGING MARKETS
The very strong performance of the emerging debt markets has been driven by a
relatively stable U.S. Treasury bond market and positive economic developments
in a number of key countries. The combination of favorable market conditions and
relatively high yields has encouraged institutional investors to increase their
asset allocations to emerging markets debt securities.
The market has been focused on developments in Russia for much of the past year.
Boris Yeltsin was reelected president in a two-round election process that
culminated in early July. Yeltsin's victory was encouraging to investors, and
offered further evidence that the citizens of emerging market countries continue
to endorse free-market reform candidates at the ballot box. Now recovering from
surgery, President Yeltsin is expected to resume his responsibilities on a
full-time basis early in the new year.
The International Monetary Fund (the "IMF") has played an important role in
encouraging free-market reforms in Russia, as well as Venezuela and Bulgaria.
One of the key elements of the IMF agreement with Russia is a provision to
increase tax revenues through improved compliance with tax regulations on the
part of Russian corporations. In Venezuela, an agreement has been reached with
the IMF that has helped stabilize the economy. Under the new terms, Venezuela
has lifted foreign exchange and interest rate controls and increased domestic
gasoline prices. The IMF has also helped promote free-market reform in Bulgaria,
although Bulgaria is in an earlier stage of its development cycle than either
Venezuela or Russia. As part of an overall IMF agreement, Bulgaria will close
money-losing banks and corporations. Discussions are now underway between the
IMF and Bulgaria's Central Bank about the establishment of a currency board that
would help curb inflation and improve monetary and fiscal discipline.
Brazil continues to make progress on an overall program of constitutional
change. The Central Bank maintains a disciplined monetary policy aimed at
reducing inflation. If progress continues, it seems likely that Brazil's debt
will be upgraded.
<PAGE> 2
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
The Moroccan economy has recovered dramatically from a severe recession in 1995.
The country's gross domestic product (GDP) is likely to grow in excess of 10% in
1996, driven largely by a recovery in the agricultural sector following the
severe drought of 1995.
In Ecuador, a populist candidate, Abdala Bucaram, has been elected President.
While investors were concerned initially about the new administration's economic
policies, Bucaram has made several reassuring appointments to key economic
posts, notably Central Bank President Augusto de la Torre. The government has
now presented a budget that includes reforms which should make the economy more
competitive.
As evidence of the overall health of the market, investors have shown a
willingness to provide long-term debt financing to several emerging market
countries, including Argentina, Mexico and the Philippines. The latter two
countries completed exchange offers of new bonds for collateralized Brady Bonds.
The Philippine offering was a 20-year fixed-rate issue and Mexico offered
30-year fixed-rate bonds. Mexico's return to the market was particularly
encouraging to investors.
HIGH-YIELD MARKET
Relatively stable interest rates in the U.S., combined with slow but steady
economic growth, have traditionally provided a very good environment for
high-yield assets. Inflows into mutual funds were at record levels for the year.
The Salomon Brothers High-Yield Index rose 4.59% for the October quarter and
11.06% for the full fiscal year.
* * *
In a continuing effort to provide timely information concerning the Fund,
shareholders may call 1-800-SALOMON (1-800-725-6666), Monday through Friday from
8:30 am to 6:00 pm EST for a recorded periodic update of the developments
affecting the markets in which the Fund invests, as well as the Fund's current
net asset value, portfolio manager comments and other information regarding the
Fund's portfolio holdings and allocations. Although the Fund will continue to
issue a semi-annual and annual report to shareholders, a press release
containing financial highlights and other Fund information will be issued in
lieu of a first and third quarter interim report. This will result in some cost
savings for the Fund while still providing shareholders with current information
about the Fund. 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> 3
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS -- 90.5% (NOTE 2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARGENTINA -- 15.5%
Peso 6,806+ Republic of Argentina, BOCON, Pre 1, 3.5148%, 4/1/01*(,)**........... $ 5,518,544
2,372+ Republic of Argentina, BOCON, Pre 3, 3.5148%, 9/1/02*(,)**........... 1,648,356
1,361 Republic of Argentina, BOCON, Pro 1, 3.5148%, 4/1/07*(,)**........... 857,420
US$ 3,102+ Republic of Argentina, BOCON, Pre 2, 5.4453%, 4/1/01*(,)**........... 2,825,230
23,202+ Republic of Argentina, FRB, 6.625%, 3/31/05*......................... 19,097,735
------------
29,947,285
------------
BRAZIL -- 18.0%
36,959+ Federal Republic of Brazil, C Bond, 8.00%, 4/15/14**................. 25,501,518
6,000 Federal Republic of Brazil, Investment (Exit) Bond, 6.00%, 9/15/13... 4,095,000
6,500+ Federal Republic of Brazil, NMB, Series L, 6.5625%, 4/15/09*......... 5,110,625
------------
34,707,143
------------
BULGARIA -- 3.5%
21,000 Republic of Bulgaria, FLIRB, Series A, 2.25%, 7/28/12*............... 6,798,750
------------
COSTA RICA -- 4.2%
10,000+ Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15................. 8,000,000
------------
ECUADOR -- 16.0%
55,585+ Republic of Ecuador, PDI Bond, 6.50%, 2/27/15*(,)**.................. 30,884,398
------------
HUNGARY -- 4.4%
8,000+ National Bank of Hungary, 8.875%, 11/1/13............................ 8,550,000
------------
MEXICO -- 6.0%
630 United Mexican States, Global Bond, 11.50%, 5/15/26.................. 628,425
United Mexican States, Par Bond, Series A, 6.25%, 12/31/19 (including
2,550+ 2,550,000 rights).................................................. 1,792,969
United Mexican States, Par Bond, Series B, 6.25%, 12/31/19 (including
13,000 13,000,000 rights)................................................. 9,140,625
------------
11,562,019
------------
PANAMA -- 5.2%
4,615+ Republic of Panama, FRN, 6.62891%, 5/10/02*.......................... 4,442,323
8,500+ Republic of Panama, IRB, 3.50%, 7/17/14*............................. 5,594,062
------------
10,036,385
------------
POLAND -- 5.2%
12,201 Republic of Poland, PDI Bond, 4.00%, 10/27/14*,w..................... 10,065,825
------------
RUSSIA -- 4.0%
11,750 Russia, IAN, 12/31/15(A)............................................. 7,766,016
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 1
<PAGE> 4
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
October 31, 1996
<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%, 2/28/05w..................... $ 1,048,925
------------
URUGUAY -- 1.2%
US$ 2,500 Uruguay, DCB, Series B, 6.6875%, 2/18/07*............................ 2,387,500
------------
VENEZUELA -- 6.7%
5,000+ Republic of Venezuela, DCB, Series DL, 6.625%, 12/18/07*............. 4,103,125
4,500+ Republic of Venezuela, FLIRB, Series A, 6.625%, 3/31/07*............. 3,743,437
6,000+ Republic of Venezuela, FLIRB, Series B, 6.50%, 3/31/07*.............. 4,991,250
------------
12,837,812
------------
TOTAL SOVEREIGN BONDS (cost $145,317,145)............................ 174,592,058
------------
LOAN PARTICIPATIONS++ -- 12.2%
- -----------------------------------------------------------------------------------------------------------------
Republic of Jamaica,
556 Tranche A, 6.34375%, 10/15/00* (Chase Manhattan)................... 544,419
Kingdom of Morocco,
11,850+ Tranche A, 6.4375%, 1/1/09* (Merrill Lynch, J P Morgan)............ 9,383,719
13,235 Tranche B, 6.4375%, 1/1/04* (Morgan Stanley, Bankers Trust)........ 12,201,287
Russia,
Bank for Foreign Economic Affairs, Vnesheconombank, Floating Rate,
2,000 12/31/99 (B) (Chase Manhattan)..................................... 1,467,500
------------
TOTAL LOAN PARTICIPATIONS (cost $23,081,277)......................... 23,596,925
------------
CORPORATE BONDS -- 12.2%
- -----------------------------------------------------------------------------------------------------------------
Canada,
C$ 3,000+ Rogers Cable Systems, 9.65%, 1/15/14............................... 2,147,731
Mexico,
US$ 2,000+ Grupo Industrial Durango, 12.00%, 7/15/01.......................... 2,045,000
United States,
649 American Pad & Paper, Series B, 13.00%, 11/15/05................... 754,463
2,000+ Berry Plastics Corp., 12.25%, 4/15/04.............................. 2,170,000
1,000 Carr Gottstein Foods Co., 12.00%, 11/15/05......................... 1,060,000
1,000 Cliffs Drilling Co., 10.25%, 5/15/03............................... 1,037,500
1,000 Four M Corp., 12.00%, 6/1/06##..................................... 1,040,000
Jordan Industries, Inc., Zero Coupon until 8/1/98 (11.75%
3,000+ thereafter), 8/1/05.............................................. 2,325,000
Marcus Cable Co., Zero Coupon until 6/15/00 (14.25% thereafter),
1,750 12/15/05......................................................... 1,155,000
1,000 Norcal Waste Systems, 12.75%, 11/15/05*............................ 1,087,500
1,500+ Penn Traffic Co., 9.625%, 4/15/05.................................. 806,250
1,000 Remington Product Co. LLC, 11.00%, 5/15/06##....................... 1,012,500
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 2
<PAGE> 5
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (concluded)
October 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS (CONCLUDED) (NOTE 2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
US$ 1,000 Samsonite Corp., 11.125%, 7/15/05.................................. $ 1,075,000
1,000 Selmer Inc., 11.00%, 5/15/05....................................... 1,070,000
1,000 SFX Broadcasting, 10.75%, 5/15/06.................................. 1,027,500
1,250+ Valcor Inc., 9.625%, 11/1/03....................................... 1,168,750
1,562+ Venture Holdings Trust, 9.75%, 4/1/04.............................. 1,397,990
1,000 Wyndham Hotel Corp., 10.50%, 5/15/06............................... 1,055,000
------------
TOTAL CORPORATE BONDS (cost $23,739,422)............................. 23,435,184
------------
WARRANTS(#) -- 0.0%
- -----------------------------------------------------------------------------------------------------------------
Berry Plastics (Each warrant exchangeable for cash value of
2,000 Warrants $45.02.)........................................................... 90,040
------------
REPURCHASE AGREEMENTS -- 9.5%
- -----------------------------------------------------------------------------------------------------------------
State Street Bank and Trust Co., 5.47%, cost $9,210,000, dated
10/31/96, $9,211,399 due 11/1/96, (collateralized by $9,280,000,
US$ 9,210 6.00%, U.S. Treasury Notes due 8/31/97, valued at $9,396,000)...... 9,210,000
Union Bank of Switzerland, 5.50%, cost $9,210,000, dated 10/31/96,
$9,211,407 due 11/1/96, (collateralized by $9,336,000, 5.75%, U.S.
9,210 Treasury Notes due 9/30/97, valued at $9,394,350).................. 9,210,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $18,420,000)....................... 18,420,000
------------
TOTAL INVESTMENTS -- 124.4% (cost $210,557,844)...................... 240,134,207
------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (24.4%)..................... (47,120,584)
------------
NET ASSETS -- 100.0%
(equivalent to $15.25 per share on 12,657,133 common shares
outstanding)......................................................... $193,013,623
============
</TABLE>
- --------------------------------------------------------------------------------
* 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.
W Securities valued at $11,114,750 as of October 31, 1996 were segregated to
be available for the purchase of delayed delivery and "when and if issued"
securities with a total cost of $9,860,313.
(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 October 31, 1996.
(B) Non-income producing. Security is currently in default.
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.
See accompanying notes to financial statements.
PAGE 3
<PAGE> 6
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $210,557,844)................................................. $240,134,207
Cash......................................................................................... 278
Receivable for investments sold.............................................................. 19,552,639
Interest receivable.......................................................................... 3,544,844
Deferred organization expenses and other assets.............................................. 56,688
------------
Total assets......................................................................... 263,288,656
------------
LIABILITIES
Payable for investments purchased............................................................ 7,872,813
Loan payable (Note 5)........................................................................ 60,000,000
Loan interest payable (Note 5)............................................................... 1,959,987
Accrued expenses............................................................................. 270,790
Advisory fee payable......................................................................... 146,961
Administration fee payable................................................................... 24,482
------------
Total liabilities.................................................................... 70,275,033
------------
NET ASSETS
Common Stock ($.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.......................................................... 243,740
Accumulated net realized loss on investments................................................. (13,529,001)
Net unrealized appreciation on investments and foreign currency translation.................. 29,576,531
------------
Net assets........................................................................... $193,013,623
------------
NET ASSET VALUE PER SHARE ($193,013,623 / 12,657,133 shares)................................. $ 15.25
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 4
<PAGE> 7
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1996
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
INCOME
Interest (includes discount accretion of $9,685,002)...................... $31,621,091
EXPENSES
Investment advisory fees.................................................. $1,485,137
Administration fees....................................................... 247,523
Reports to shareholders................................................... 138,410
Custodian's fees and expenses............................................. 105,409
Audit fees and expenses................................................... 86,867
Legal fees and expenses................................................... 67,465
Transfer agent's fees and expenses........................................ 60,650
Accounting fees........................................................... 57,416
Directors' fees........................................................... 51,521
Registration fees......................................................... 25,828
Amortization of organization expenses..................................... 22,227
Miscellaneous............................................................. 24,969
----------
Total operating expenses...................................................... 2,373,422
Loan interest expense (Note 5)............................................ 4,079,986
----------
Total expenses................................................................ 6,453,408
-----------
Net investment income......................................................... 25,167,683
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on:
Investment transactions................................................... 6,309,107
Foreign currency transactions............................................. 90,488
-----------
6,399,595
-----------
Net change in unrealized appreciation/depreciation on:
Investments............................................................... 43,905,024
Foreign currencies........................................................ 37,535
-----------
43,942,559
-----------
Net gain on investments and foreign currency transactions..................... 50,342,154
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................... $75,509,837
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 5
<PAGE> 8
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Year Ended October 31, 1996
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Sales of short-term portfolio investments, net.......................................... $ (11,735,292)
Purchases of long-term portfolio investments............................................ (201,236,340)
Proceeds from disposition of long-term portfolio investments and principal paydowns..... 220,516,442
-------------
7,544,810
Net investment income................................................................... 25,167,683
Accretion of discount on investments.................................................... (9,685,002)
Interest on payment-in-kind bonds....................................................... (5,089,216)
Amortization of organization expenses................................................... 22,227
Net change in receivables/payables related to operations................................ (774,531)
-------------
Net cash flows provided by operating activities..................................... 17,185,971
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Cash dividends paid..................................................................... (19,539,427)
-------------
Net cash used for financing activities.............................................. (19,539,427)
-------------
Net decrease in cash........................................................................ (2,353,456)
Cash at beginning of period................................................................. 2,353,734
-------------
Cash at end of period....................................................................... $ 278
-------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 6
<PAGE> 9
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income............................................... $ 25,167,683 $ 21,624,206
Net realized gain (loss) on investments and foreign currency
transactions...................................................... 6,399,595 (28,807,083)
Net change in unrealized appreciation/depreciation on investments
and foreign currencies............................................ 43,942,559 17,573,778
------------ ------------
Net increase in net assets from operations.......................... 75,509,837 10,390,901
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income................................ (18,036,443) (17,770,598)
Distributions in excess of net investment income.................... -- (265,818)
------------ ------------
Total dividends and distributions................................... (18,036,443) (18,036,416)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets from initial public offering of shares... -- 26,656+
------------ ------------
Total increase (decrease)........................................... 57,473,394 (7,618,859)
NET ASSETS
Beginning of period................................................. 135,540,229 143,159,088
------------ ------------
End of period (includes undistributed net investment income of
$243,740 and distributions in excess of net investment income of
$973,643 for the year ended October 31, 1996 and 1995,
respectively)..................................................... $193,013,623 $135,540,229
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
+ Adjustment to offering costs.
See accompanying notes to financial statements.
PAGE 7
<PAGE> 10
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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> 11
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 losses on foreign currency transactions represent 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 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> 12
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 year ended October 31, 1996, the Fund paid interest
expense of $4,379,271.
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> 13
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 October 31, 1996, 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 year ended October 31, 1996 aggregated $206,025,780 and $221,387,823,
respectively.
The federal income tax basis of the Fund's investments at October 31, 1996 was
$211,132,750 and, accordingly, net unrealized appreciation for federal income
tax purposes was $29,001,457 (gross unrealized appreciation -- $31,211,101;
gross unrealized depreciation -- $2,209,644).
During the year ended October 31, 1996, permanent book/tax differences of
$5,913,857 arising from foreign currency losses have been reclassified to
undistributed net investment income from accumulated net realized loss on
investments. Net investment income, net realized gains on investments and net
assets were not affected by this reclassification.
During the current year, 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.
PAGE 11
<PAGE> 14
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 May 6, 1996 at an interest rate of 6.60156%, which is equal to
six-month LIBOR plus 1.375% and the maturity date is November 6, 1996. 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 $141,734,480 on October 31, 1996 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
PAGE 12
<PAGE> 15
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
consequences of political, social, economic or diplomatic changes may have
disruptive effects on the market prices of investments held by the Fund. At
October 31, 1996, 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 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
October 31, 1996, 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 OCTOBER 31, 1996
Subsequent to October 31, 1996, the Board of Directors of the Fund declared
dividends of $.11875 per common share payable November 29, 1996 and $.17875 per
common share payable December 30, 1996 to shareholders of record on November 13,
1996 and December 17, 1996, respectively.
The Loan Agreement with Morgan Guaranty Trust Company was renewed on 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.
PAGE 13
<PAGE> 16
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
<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
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
PAGE 14
<PAGE> 17
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 31, 1993*
YEAR ENDED YEAR ENDED THROUGH
OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............... $ 10.71 $ 11.31 $ 14.03++
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............................. 1.99 1.71 1.02
Net realized and unrealized gain (loss) on
investments...................................... 3.98 (.89) (2.60)
-------- -------- --------
Total from investment operations............... 5.97 .82 (1.58)
-------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income............... (1.43) (1.37) (1.01)
Distributions in excess of net investment income... -- (.05) (.06)
-------- -------- --------
Total distributions............................ (1.43) (1.42) (1.07)
-------- -------- --------
Offering costs with respect to issuance of
shares........................................... -- -- (.07)
-------- -------- --------
Net asset value, end of period..................... $ 15.25 $ 10.71 $ 11.31
======== ======== ========
Market price per share, end of period.............. $ 14.00 $ 11.375 $ 10.75
======== ======== ========
TOTAL INVESTMENT RETURN(A)......................... 37.34% 20.61% (16.55)%+
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................. 3.91% 5.04% 2.90%#
Operating expenses............................. 1.44% 1.42% 1.36%#
Interest expense............................... 2.47% 3.62% 1.54%#
Net investment income.......................... 15.25% 16.70% 10.24%#
SUPPLEMENTAL DATA:
Net assets, end of period (000)................ $193,014 $135,540 $143,159
Average net assets (000)....................... $165,059 $129,516 $151,954
Portfolio turnover rate........................ 97% 101% 13%
Asset coverage for Loan outstanding............ 422% 326% 339%
Weighted average bank loan (000)............... $ 60,000 $ 60,000 $ 39,934
Weighted average interest rate on bank loan.... 6.80% 7.83% 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.
+ 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.
PAGE 15
<PAGE> 18
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Salomon Brothers Worldwide Income Fund Inc
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, of cash
flows and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Salomon Brothers Worldwide
Income Fund Inc (the "Fund") at October 31, 1996, the results of its operations
and cash flows for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the two years in the period then ended and for the period December 31, 1993
(commencement of operations) through October 31, 1994, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1996 by
correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmation from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
December 23, 1996
PAGE 16
<PAGE> 19
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
PURSUANT TO CERTAIN RULES OF THE SECURITIES AND EXCHANGE COMMISSION, THE
FOLLOWING ADDITIONAL DISCLOSURE IS PROVIDED.
- --------------------------------------------------------------------------------
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT PLAN
1. Each shareholder initially purchasing shares of common stock ("Shares") of
Salomon Brothers Worldwide Income Fund Inc (the "Fund") on or after September 6,
1996 will be deemed to have elected to be a participant in the Amended and
Restated Dividend Reinvestment Plan (the "Plan"), unless the shareholder
specifically elects in writing (addressed to the Agent at the address below or
to any nominee who holds Shares for the shareholder in its name) to receive all
income dividends and distributions of capital gains in cash, paid by check,
mailed directly to the record holder by or under the direction of American Stock
Transfer & Trust Company as the Fund's dividend-paying agent (the "Agent"). A
shareholder whose Shares are held in the name of a broker or nominee who does
not provide an automatic reinvestment service may be required to take such
Shares out of "street name" and register such Shares in the shareholder's name
in order to participate, otherwise dividends and distributions will be paid in
cash to such shareholder by the broker or nominee. Each participant in the Plan
is referred to herein as a "Participant." The Agent will act as Agent for each
Participant, and will open accounts for each Participant under the Plan in the
same name as their Shares are registered.
2. Unless the Fund declares a dividend or distribution payable only in the form
of cash, the Agent will apply all dividends and distributions in the manner set
forth below.
3. If, on the determination date, the market price per Share equals or exceeds
the net asset value per Share on that date (such condition, a "market premium"),
the Agent will receive the dividend or distribution in newly issued Shares of
the Fund on behalf of Participants. If, on the determination date, the net asset
value per Share exceeds the market price per Share (such condition, a "market
discount"), the Agent will purchase Shares in the open-market. The determination
date will be the fourth New York Stock Exchange trading day (a New York Stock
Exchange trading day being referred to herein as a "Trading Day") preceding the
payment date for the dividend or distribution. For purposes herein, "market
price" will mean the average of the highest and lowest prices at which the
Shares sell on the New York Stock Exchange on the particular date, or if there
is no sale on that date, the average of the closing bid and asked quotations.
4. Purchases made by the Agent will be made as soon as practicable commencing on
the Trading Day following the determination date and terminating no later than
30 days after the dividend or distribution payment date except where temporary
curtailment or suspension of purchase is necessary to comply with applicable
provisions of federal securities law; provided, however, that such purchases
will, in any event, terminate on the Trading Day prior to the "ex-dividend" date
next succeeding the dividend or distribution payment date.
5. If (i) the Agent has not invested the full dividend amount in open-market
purchases by the date specified in paragraph 4 above as the date on which such
purchases must terminate or
PAGE 17
<PAGE> 20
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
(ii) a market discount shifts to a market premium during the purchase period,
then the Agent will cease making open-market purchases and will receive the
uninvested portion of the dividend amount in newly issued Shares (x) in the case
of (i) above, at the close of business on the date the Agent is required to
terminate making open-market purchases as specified in paragraph 4 above or (y)
in the case of (ii) above, at the close of business on the date such shift
occurs; but in no event prior to the payment date for the dividend or
distribution.
6. In the event that all or part of a dividend or distribution amount is to be
paid in newly issued Shares, such Shares will be issued to Participants in
accordance with the following formula: (i) if, on the valuation date, the net
asset value per share is less than or equal to the market price per Share, then
the newly issued Shares will be valued at net asset value per Share on the
valuation date; provided, however, that if the net asset value is less than 95%
of the market price on the valuation date, then such Shares will be issued at
95% of the market price and (ii) if, on the valuation date, the net asset value
per share is greater than the market price per Share, then the newly issued
Shares will be issued at the market price on the valuation date. The valuation
date will be the dividend or distribution payment date, except that with respect
to Shares issued pursuant to paragraph 5 above, the valuation date will be the
date such Shares are issued. If a date that would otherwise be a valuation date
is not a Trading Day, the valuation date will be the next preceding Trading Day.
7. The open-market purchases provided for above may be made on any securities
exchange on which the Shares of the Fund are traded, in the over-the-counter
market or in negotiated transactions, and may be on such terms as to price,
delivery and otherwise as the Agent shall determine. Funds held by the Agent
uninvested will not bear interest, and it is understood that, in any event, the
Agent shall have no liability in connection with any inability to purchase
Shares within the time periods herein provided, or with the timing of any
purchases effected. The Agent shall have no responsibility as to the value of
the Shares acquired for the Participant's account. The Agent may commingle
amounts of all Participants to be used for open-market purchases of Shares and
the price per Share allocable to each Participant in connection with such
purchases shall be the average price (including brokerage commissions) of all
Shares purchased by the Agent.
8. The Agent will maintain all Participant accounts in the Plan and will furnish
written confirmations of all transactions in each account, including information
needed by Participants for personal and tax records. The Agent will hold Shares
acquired pursuant to the Plan in noncertificated form in the Participant's name
or that of its nominee, and each Participant's proxy will include those Shares
purchased pursuant to the Plan. The Agent will forward to Participants any proxy
solicitation material and will vote any Shares so held for Participants only in
accordance with the proxy returned by Participants to the Fund. Upon written
request, the Agent will deliver to Participants, without charge, a certificate
or certificates for the full Shares.
9. The Agent will confirm to Participants each acquisition made for their
respective accounts as soon as practicable but not later than 60 days after the
date thereof. Although Participants
PAGE 18
<PAGE> 21
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
may from time to time have an undivided fractional interest (computed to three
decimal places) in a Share of the Fund, no certificates for fractional shares
will be issued. Dividends and distributions on fractional shares will be
credited to each Participant's account. In the event of termination of a
Participant's account under the Plan, the Agent will adjust for any such
undivided fractional interest in cash at the market value of the Fund's Shares
at the time of termination less the pro rata expense of any sale required to
make such an adjustment.
10. Any share dividends or split shares distributed by the Fund on Shares held
by the Agent for Participants will be credited to their respective accounts. In
the event that the Fund makes available to Participants rights to purchase
additional Shares or other securities, the Shares held for Participants under
the Plan will be added to other Shares held by the Participants in calculating
the number of rights to be issued to Participants.
11. The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. Participants will be charged a pro rata
share of brokerage commissions on all open-market purchases.
12. Participants may terminate their accounts under the Plan by notifying the
Agent in writing. Such termination will be effective immediately if notice is
received by the Agent not less than ten days prior to any dividend or
distribution record date; otherwise such termination will be effective on the
first trading day after the payment date for such dividend or distribution with
respect to any subsequent dividend or distribution. The Plan may be amended or
terminated by the Fund as applied to any dividend or capital gains distribution
paid subsequent to written notice of the change or termination sent to
Participants at least 30 days prior to the record date for the dividend or
capital gains distribution. The Plan may be amended or terminated by the Agent,
with the Fund's prior written consent, on at least 30 days' written notice to
Plan Participants. Notwithstanding the preceding two sentences, the Agent or the
Fund may amend or supplement the Plan at any time or times when necessary or
appropriate to comply with applicable law or rules or policies of the Securities
and Exchange Commission or any other regulatory authority. Upon any termination,
the Agent will cause a certificate or certificates for the full Shares held by
each Participant under the Plan and cash adjustment for any fraction to be
delivered to each Participant without charge. If the Participant elects by
notice to the Agent in writing in advance of such termination to have the Agent
sell part or all of a Participant's Shares and remit the proceeds to
Participant, the Agent is authorized to deduct a $2.50 fee plus brokerage
commission for this transaction from the proceeds.
13. Any amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Agent receives
written notice of the termination of the Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its place and
stead of a successor Agent under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent under
these terms and conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will be authorized to
pay to such
PAGE 19
<PAGE> 22
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
successor Agent, for each Participant's account, all dividends and distributions
payable on Shares of the Fund held in each Participant's name or under the Plan
for retention or application by such successor Agent as provided in these terms
and conditions.
14. In the case of Participants, such as banks, broker-dealers or other
nominees, which hold Shares for others who are beneficial owners ("Nominee
Holders"), the Agent will administer the Plan on the basis of the number of
Shares certified from time to time by each Nominee Holder as representing the
total amount registered in the Nominee Holder's name and held for the account of
beneficial owners who are to participate in the Plan.
15. The Agent shall at all times act in good faith and use its best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement and to comply with applicable law, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by its negligence, bad faith, or willful misconduct or that of its
employees.
16. All correspondence concerning the Plan should be directed to the Agent at 40
Wall Street, 46th Floor, New York, New York 10005.
PAGE 20
<PAGE> 23
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
TANA E. TSELEPIS
Secretary
JENNIFER MUZZEY
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
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
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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SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
ANNUAL REPORT
OCTOBER 31, 1996
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SALOMON BROTHERS ASSET MANAGEMENT
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AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005
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BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
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