<PAGE> 1
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
December 26, 1997
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.
Since the semi-annual report as of April 30, 1997, the net asset value of the
Fund decreased to $15.65 per share from $16.18 per share. Dividends of $0.7125
per share were declared during this period. Assuming that these dividends were
reinvested in additional shares of the Fund, the net asset value return for the
six months ended October 31, 1997 was 0.69%. During the same period, the Salomon
Brothers Brady Bond Index returned 3.09%.
For the full fiscal year ended October 31, 1997, the net asset value return for
the Fund was 12.13%, assuming reinvestment of dividends in additional shares of
the Fund, compared with a 14.95% return for the Salomon Brothers Brady Bond
Index during the same period.
Investments in securities of emerging market issuers, including both obligations
of sovereign governments and corporate issuers, totaled approximately 94% of
total long-term investments as of October 31, 1997. The remainder of the Fund's
long-term portfolio assets was invested in U.S. high-yield corporate bonds.
EMERGING MARKETS
The emerging debt markets enjoyed a strong performance during most of the 12
months ended October 31, 1997, but fell prey to the dramatic global market
sell-off that was sparked by the turmoil in Asia. The instability of financial
markets around the world -- notably the U.S. and Hong Kong -- contributed to the
significant pickup in volatility among emerging markets. Indeed, yield spreads
widened to as much as 825 basis points over Treasuries at the market's low point
in October. These volatile conditions thus led to a liquidity squeeze, as
broker/dealers grew more concerned. We continue to believe, however, that
country fundamentals remain strong and the market is attractive for long-term
investors.
Throughout most of the 12-month period, emerging debt markets benefited from
favorable market conditions, attractive yields and positive economic and
political settings in many key countries. Moreover, the combination of solid
economic growth with no signs of inflation in the U.S. and the Federal Reserve's
decision to hold interest rates steady since March also buoyed the market.
Latin America Prospects for economic growth in Latin America remain favorable.
In Mexico, the recent election results signal a decisive step toward greater
democracy and policymakers have reaffirmed their commitment to exchange rate and
interest rate flexibility. Indeed, second quarter GDP growth of 8.8% was the
highest quarterly growth rate in 15 years.
In Brazil, monetary authorities raised interest rates in an effort to stem
short-term fears of a currency devaluation. The Asian devaluations were
perceived to make it more difficult for countries like Brazil to remain
competitive, and thus, the Government was forced to act promptly to keep
investors in local currency instruments and to encourage domestic firms to
continue raising funds in the international capital markets. Earlier in the
year, Brazil launched a US$3 billion, 30-year global bond.
Argentina aggressively tapped the markets this year, taking advantage of
favorable global conditions and the upgrading in April by Standard & Poor's
("S&P") of 12 Argentine corporate ratings to BBB-. In October, the ruling
Peronist party was defeated for the first time since 1987, but the victorious
opposition indicated its support for the one-to-one fixed exchange rate between
the peso and the U.S. dollar.
Venezuela recently issued US$4 billion of new 30-year global bonds, marking its
first foray into the international capital markets in five years. Its
privatization efforts and restructurings have continued, and the Government is
planning a longer-term debt management strategy that would reduce the amount
budgeted for debt service from 40% of the budget to 25% by the year 2000. S&P
upgraded Venezuela's long-term foreign currency debt to B+ from B, reflecting
the country's commitment to reform, higher world oil prices, fiscal restraint
and increased oil production.
<PAGE> 2
Although political instability earlier this year caused a great deal of
volatility in Ecuador, current interim Government officials appear committed to
correcting the fiscal imbalances. Moody's assigned Ecuador's long-term foreign
currency debt a B1 rating, reflecting its competitive export sector and
basically sound economic policies. However, in our view, the recent announcement
that gasoline prices will not be increased significantly reduces the potential
for an International Monetary Fund ("IMF") deal.
Eastern Europe Following a period of declining economic activity and a weak
currency, Bulgaria embarked on an impressive turnaround. In exchange for IMF
support, Bulgaria agreed to launch a currency board and to implement tight
fiscal and monetary policies. With the victory of the pro-reform UDF party
earlier this year, there is both the incentive and the political majority to
deliver swift economic reform. The momentum of stabilization and reform efforts
continues to be strong in our view, but in October, Bulgaria lost ground as
investors locked in sizable profits.
In Russia, the debt restructuring process has been completed, with more than 90%
of an estimated US$24.3 billion in eligible debt having been reconciled. The IMF
recently lauded the Government's success in controlling inflation, but warned
that budget reforms must yield tangible results.
HIGH-YIELD MARKET
The U.S. high-yield market posted a strong performance in the year ended October
31, 1997, buoyed by both fundamental and technical factors. The combination of
solid economic growth and low inflation created a very positive environment for
high-yield assets. Money flows into high-yield mutual funds continued at a
healthy pace, creating strong demand for new issues. The high-yield market grew
more volatile in October as a result of the turmoil in global markets.
Nevertheless, the decline was limited because the market was flush with cash,
mutual fund redemptions were not significant and the volatility did not reflect
a deterioration in fundamental credit quality.
***
In response to recent amendments to Maryland corporate law, the Board of
Directors recently reviewed various corporate governance provisions in the
Fund's By-Laws and approved amendments to the Fund's By-Laws to (1) increase the
percentage of stockholder voting power that is required to call a special
meeting of its stockholders to a majority of the votes entitled to be cast at
the meeting and (2) reduce the minimum permissible board committee size to one
director.
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 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
or for information regarding the Fund's Dividend Reinvestment Plan, 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, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS -- 85.5% (NOTE 2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARGENTINA -- 17.4%
US$ 4,152 + Republic of Argentina, FRB, Series L, 6.6875%, 3/31/05*.............. $ 3,466,920
5,500 Republic of Argentina, Global Bond, 9.75%, 9/19/27................... 4,730,000
15,000 Republic of Argentina, Global Bond, 11.00%, 10/9/06.................. 14,700,000
17,350 + Republic of Argentina, Par Bond, Series L, 5.50%, 3/31/23*........... 11,624,500
------------
34,521,420
------------
BRAZIL -- 19.4%
6,738 + Federal Republic of Brazil, C Bond, 8.00%, 4/15/14**................. 4,506,038
8,250 + Federal Republic of Brazil, DCB, Series L, 6.75%, 4/15/12*........... 5,548,125
21,195 Federal Republic of Brazil, IDU, Series A, 6.8125%, 1/1/01*.......... 19,181,475
6,000 + Federal Republic of Brazil, Investment (Exit) Bond, 6.00%, 9/15/13... 4,380,000
6,500 + Federal Republic of Brazil, NMB, Series L, 6.75%, 4/15/09*........... 4,757,187
------------
38,372,825
------------
BULGARIA -- 2.9%
10,500 + Republic of Bulgaria, FLIRB, Series A, 2.25%, 7/28/12*............... 5,722,500
------------
COSTA RICA -- 4.0%
10,000 + Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15................. 7,900,000
------------
ECUADOR -- 4.1%
14,303 + Republic of Ecuador, PDI Bond, 6.6875%, 2/27/15*(,)**................ 8,215,523
------------
MEXICO -- 8.9%
630 + United Mexican States, Global Bond, 11.50%, 5/15/26.................. 658,350
United Mexican States, Par Bond, Series A, 6.25%, 12/31/19 (including
6,300 + 6,300,000 rights).................................................. 4,914,000
United Mexican States, Par Bond, Series B, 6.25%, 12/31/19 (including
15,500 + 15,500,000 rights)................................................. 12,090,000
------------
17,662,350
------------
PANAMA -- 3.5%
2,000 + Republic of Panama, IRB, 3.75%, 7/17/14*............................. 1,420,000
7,403 + Republic of Panama, PDI Bond, 6.6875%, 7/17/16*(,)**................. 5,477,953
------------
6,897,953
------------
PERU -- 6.1%
9,000 + Republic of Peru, FLIRB, 3.25%, 3/7/17*(,#).......................... 4,545,000
13,000 + Republic of Peru, PDI Bond, 4.00%, 3/7/17*........................... 7,605,000
------------
12,150,000
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 1
<PAGE> 4
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- ------------------------
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS (CONCLUDED) (NOTE 2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
POLAND -- 5.0%
US$ 12,201 Republic of Poland, PDI Bond, 4.00%, 10/27/14*(,w)................... $ 9,943,815
------------
RUSSIA -- 0.1%
250 Russia, Principal Loan 6.71875, 12/15/20*(A)......................... 148,750
------------
URUGUAY -- 1.2%
2,500 + Uruguay, DCB, Series B, 6.8125%, 2/18/07*............................ 2,300,000
------------
VENEZUELA -- 12.9%
16,000 Republic of Venezuela, DCB, Series DL, 6.75%, 12/18/07*.............. 14,160,000
13,119 + Republic of Venezuela, FLIRB, Series A, 6.75%, 3/31/07*.............. 11,282,381
------------
25,442,381
------------
TOTAL SOVEREIGN BONDS (cost $162,475,696)............................ 169,277,517
------------
LOAN PARTICIPATIONS++ -- 27.0%
- -----------------------------------------------------------------------------------------------------------------
The People's Democratic Republic of Algeria,
10,250 Tranche A, 7.00%, 9/4/06* (Chase Manhattan)........................ 8,200,000
5,000 Tranche 3, 6.65625%, 3/4/10* (Chase Manhattan)..................... 3,700,000
Government of Jamaica,
333 Tranche A, 6.5625%, 10/15/00* (Chase Manhattan).................... 283,297
Kingdom of Morocco,
Yen 416,047 Tranche A, 2.6175%, 1/1/09* (Goldman Sachs)........................ 2,703,963
US$ 6,650 Tranche A, 6.8125%, 1/1/09* (Chase Manhattan, J.P. Morgan)......... 5,353,250
Tranche B, 6.8125%, 1/1/04* (Morgan Stanley Emerging Markets Inc.,
11,471 Bankers Trust)................................................... 9,520,588
Russia,
Bank for Foreign Economic Affairs, Vnesheconombank (B) (Chase
28,000 Manhattan, ING).................................................. 23,800,000
------------
TOTAL LOAN PARTICIPATIONS (cost $53,758,215)......................... 53,561,098
------------
CORPORATE BONDS -- 11.6%
- -----------------------------------------------------------------------------------------------------------------
Brazil,
Companhia Energetica De Sao Paulo, 9.125% until 6/26/02 (9.625%
2,000 thereafter), 6/26/07(#).......................................... 1,800,000
Indonesia,
Tjiwi Kimia International Finance Company B.V., 10.00%,
3,000 8/1/04(#).......................................................... 2,730,000
Mexico,
2,000 + Grupo Industrial Durango, 12.00%, 7/15/01.......................... 2,125,000
1,000 Hylsa S.A. de C.V., 9.25%, 9/15/07................................. 1,011,250
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 2
<PAGE> 5
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- ------------------------------------
STATEMENT OF INVESTMENTS (continued)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) CORPORATE BONDS (CONCLUDED) (NOTE 2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States,
US$ 1,500 Adelphia Communications, 10.50%, 7/15/04(#)........................ $ 1,567,500
Jordan Industries, Inc., Zero Coupon until 4/1/02 (11.75%
4,825 thereafter), 4/1/09(#)........................................... 2,774,466
1,000 Nortek Inc., 9.125%, 9/1/07(#)..................................... 1,000,000
1,500 North Atlantic Trading, 11.00%, 6/15/04(#)......................... 1,552,500
1,000 Polymer Group, 9.00%, 7/1/07(#).................................... 995,000
3,000 Revlon Worldwide, Zero Coupon, 3/15/01............................. 2,040,000
Telewest PLC, Zero Coupon until 10/1/00 (11.00% thereafter),
2,750 + 10/1/07.......................................................... 2,048,750
TFM Sa De Cv, Zero Coupon until 6/15/02 (11.75% thereafter),
3,000 6/15/09(#)....................................................... 1,875,000
1,562 + Venture Holdings Trust, 9.75%, 4/1/04.............................. 1,530,760
------------
TOTAL CORPORATE BONDS (cost $23,430,784)............................. 23,050,226
------------
REPURCHASE AGREEMENTS -- 24.3%
- -----------------------------------------------------------------------------------------------------------------
J.P. Morgan, 5.63%, cost $12,000,000, dated 10/31/97, $12,005,630 due
11/3/97, (collateralized by $38,400,000, U.S. Treasury Strips due
12,000 2/15/16, valued at $12,240,000).................................... 12,000,000
Merrill Lynch, 5.63%, cost $12,205,000, dated 10/31/97, $12,210,726
due 11/3/97, (collateralized by $12,205,000, 5.625%, U.S. Treasury
12,205 Notes due 11/30/00, valued at $12,449,100)......................... 12,205,000
State Street Bank & Trust Co., 5.55%, cost $12,000,000, dated
10/31/97, $12,005,550 due 11/3/97, (collateralized by $12,150,000,
12,000 6.125%, U.S. Treasury Notes due 3/31/98, valued at $12,241,125).... 12,000,000
Union Bank of Switzerland, 5.63%, cost $12,000,000, dated 10/31/97,
$12,005,630 due 11/3/97, (collateralized by $10,880,000, 7.125%,
12,000 U.S. Treasury Bonds due 2/15/23, valued at $12,240,000)............ 12,000,000
------------
TOTAL REPURCHASE AGREEMENTS (cost $48,205,000)....................... 48,205,000
------------
TOTAL INVESTMENTS -- 148.4% (cost $287,869,695)...................... 294,093,841
------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (48.4%)..................... (95,954,141)
------------
NET ASSETS -- 100.0%
(equivalent to $15.65 per share on 12,657,133 common shares
outstanding)......................................................... $198,139,700
============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 3
<PAGE> 6
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- ------------------------
STATEMENT OF INVESTMENTS (concluded)
October 31, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 1997:
<TABLE>
<CAPTION>
CONTRACTS IN EXCHANGE CONTRACTS AT DELIVERY UNREALIZED
TO DELIVER FOR VALUE DATE DEPRECIATION
---------------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Sale........ Yen 360,000,000 US$2,985,768 US$2,994,309 11/14/97 $8,541
</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 $9,943,815 as of October 31, 1997 was segregated to be
available for the purchase of delayed delivery and "when and if issued"
securities with a total cost of $5,544,813.
(A) "When and if issued" security issued pursuant to Russia's 1996 Financing
Plan debt restructuring. See (C).
(B) Non-income producing. Security is currently in default. See (C).
(C) Pursuant to Russia's 1996 Financing Plan, defaulted Vnesheconombank Loans
have been scheduled for restructuring. The restructuring was completed and
finalized on December 5, 1997 and the related bonds issued.
<TABLE>
<S> <C> <C>
DCB -- Debt Conversion Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
IDU -- Interest Due and Unpaid.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.
</TABLE>
See accompanying notes to financial statements.
PAGE 4
<PAGE> 7
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $287,869,695)................................................. $294,093,841
Cash......................................................................................... 717
Receivable for investments sold.............................................................. 30,455,746
Interest receivable.......................................................................... 3,771,558
Deferred organization expenses and other assets (Note 2)..................................... 32,667
------------
Total assets......................................................................... 328,354,529
------------
LIABILITIES
Payable for investments purchased............................................................ 67,784,013
Loan payable (Note 5)........................................................................ 60,000,000
Accrued interest expense on loan (Note 5).................................................... 1,929,688
Net unrealized depreciation on forward foreign currency contracts............................ 8,541
Accrued expenses............................................................................. 285,607
Advisory fee payable......................................................................... 177,412
Administration fee payable................................................................... 29,568
------------
Total liabilities.................................................................... 130,214,829
------------
NET ASSETS
Common Stock ($.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.......................................................... 1,591,813
Accumulated net realized gain on investments................................................. 12,003,819
Net unrealized appreciation on investments and foreign currency translation (Note 7)......... 7,821,715
------------
Net assets........................................................................... $198,139,700
------------
NET ASSET VALUE PER SHARE ($198,139,700 / 12,657,133 shares)................................. $ 15.65
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 5
<PAGE> 8
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1997
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
INCOME
Interest (includes discount accretion of $6,608,489)...................... $27,030,676
EXPENSES
Investment advisory fees.................................................. $1,931,142
Administration fees....................................................... 315,258
Custodian's fees and expenses............................................. 159,802
Legal fees and expenses................................................... 99,679
Accounting fees........................................................... 91,165
Audit fees and expenses................................................... 79,000
Reports to shareholders................................................... 50,564
Directors' fees........................................................... 48,000
Transfer agent's fees and expenses........................................ 39,917
Registration fees......................................................... 24,262
Amortization of deferred organization expenses (Note 2)................... 22,166
Miscellaneous............................................................. 24,740
----------
Total operating expenses...................................................... 2,885,695
Loan interest expense (Note 5)............................................ 3,973,867
----------
Total expenses................................................................ 6,859,562
-----------
Net investment income......................................................... 20,171,114
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on:
Investment transactions................................................... 25,367,616
Foreign currency transactions............................................. 138,015
-----------
25,505,631
-----------
Net change in unrealized appreciation/depreciation on:
Investments (Note 7)...................................................... (21,745,964)
Foreign currencies........................................................ (8,852)
-----------
(21,754,816)
-----------
Net gain on investments and foreign currency transactions..................... 3,750,815
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................... $23,921,929
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 6
<PAGE> 9
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------
STATEMENT OF CASH FLOWS
For the Year Ended October 31, 1997
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Purchases of short-term portfolio investments, net...................................... $ (29,785,000)
Purchases of long-term portfolio investments............................................ (401,197,679)
Proceeds from disposition of long-term portfolio investments and principal paydowns..... 439,058,465
-------------
8,075,786
Net investment income................................................................... 20,171,114
Accretion of discount on investments.................................................... (6,608,489)
Interest on payment-in-kind bonds....................................................... (2,797,193)
Amortization of organization expenses................................................... 22,166
Net change in receivables/payables related to operations................................ (67,093)
-------------
Net cash flows provided by operating activities..................................... 18,796,291
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Cash dividends paid..................................................................... (18,795,852)
-------------
Net increase in cash........................................................................ 439
Cash at beginning of period................................................................. 278
-------------
Cash at end of period....................................................................... $ 717
-------------
</TABLE>
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income............................................... $ 20,171,114 $ 25,167,683
Net realized gain on investments and foreign currency
transactions...................................................... 25,505,631 6,399,595
Net change in unrealized appreciation/depreciation on investments
and foreign currencies............................................ (21,754,816) 43,942,559
------------ ------------
Net increase in net assets from operations.......................... 23,921,929 75,509,837
DIVIDENDS
Dividends from net investment income................................ (18,795,852) (18,036,443)
------------ ------------
Total increase...................................................... 5,126,077 57,473,394
NET ASSETS
Beginning of period................................................. 193,013,623 135,540,229
------------ ------------
End of period (includes undistributed net investment income of
$1,591,813 and $243,740, respectively)............................ $198,139,700 $193,013,623
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
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 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.
PAGE 8
<PAGE> 11
SALAMON BROTHER WORLDWIDE INCOME FUND INC
- -----------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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.
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, 1997, the Fund paid interest
expense of $4,004,166.
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
PAGE 9
<PAGE> 12
SALAMON BROTHER WORLDWIDE INCOME FUND INC
- -----------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 (which subsequent to October 31, 1997 became part of Salomon Smith Barney
Holdings Inc., a wholly-owned subsidiary of the Travelers Group. See Note 10).
The Fund's Adviser 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.
The Adviser also serves as Administrator to the Fund and Prudential Mutual Fund
Management, Inc. serves as Sub-administrator. The Administrator and
Sub-administrator performs certain administrative services necessary for the
operation of the Fund. Under the terms of the Administration 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, 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
PAGE 10
<PAGE> 13
SALAMON BROTHER WORLDWIDE INCOME FUND INC
- -----------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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, 1997 aggregated $461,108,879 and $449,961,572,
respectively.
The federal income tax basis of the Fund's investments at October 31, 1997 was
$287,325,697 and net unrealized appreciation for federal income tax purposes was
$6,768,144 (gross unrealized appreciation -- $14,174,852; gross unrealized
depreciation -- $7,406,708).
During the year ended October 31, 1997, permanent book/tax differences of
$27,189 arising from foreign currency losses have been reclassified to
undistributed net investment income from accumulated net realized gain on
investments. Net investment income, net realized gains on investments and net
assets were not affected by this reclassification.
During the year ended October 31, 1997, the Fund utilized capital loss
carryforwards for federal income tax purposes of $12,954,095 to offset net
realized capital gains.
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, 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. 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 $100,772,837 on October 31, 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
PAGE 11
<PAGE> 14
SALAMON BROTHER WORLDWIDE INCOME FUND INC
- -----------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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. "WHEN AND IF" ISSUED BONDS
"When and if " issued bonds are recorded as investments in the Fund's portfolio
and marked-to-market to reflect the current value of the bonds. When the Fund
sells a "when and if " issued bond, an unrealized gain or loss is recorded equal
to the difference between the selling price and purchase cost of the bond.
Settlement of trades (i.e., receipt and delivery) of the "when and if " issued
bond is contingent upon the successful issuance of such bond. In the event its
sponsor is unable to successfully issue the security, all trades in "when and
if " issued bonds become null and void, and, accordingly, the Fund will reverse
any gain or loss recorded on such transactions.
For the year ended October 31, 1997, the Fund sold approximately $12 million of
"when and if " issued Russian Principal Loans and IAN bonds and recorded a net
unrealized gain of $1,606,250. Settlement of the transactions and recognition of
the realized gain occurred on December 5, 1997, upon the successful closing of
Russia's 1996 Financing Plan.
NOTE 8. 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
October 31, 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 governmental supervision and regulation of
foreign securities markets and the risks of loss from currency devaluations and
other exchange rate fluctuations.
PAGE 12
<PAGE> 15
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
NOTE 9. 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, 1997, the Fund has an outstanding contract to sell 360,000,000
Japanese Yen for US$ 2,985,768 for a scheduled settlement of November 14, 1997.
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 10. EVENTS SUBSEQUENT TO OCTOBER 31, 1997
Subsequent to October 31, 1997, the Board of Directors of the Fund declared a
dividend of $.11875 per common share payable November 28, 1997 to shareholders
of record on November 18, 1997.
Subsequent to October 31, 1997, the Board of Directors of the Fund declared a
dividend of $1.350 per common share payable December 31, 1997 to shareholders of
record on December 23, 1997. The distribution consists of a dividend from net
investment income of $.354 per share and a distribution from realized net
long-term capital gains of $.996 per share.
The Loan Agreement with Morgan Guaranty Trust Company was renewed on November 6,
1997 at an interest rate of 6.34375%, which is equal to six-month LIBOR plus
1.375%, and the maturity date is May 6, 1998.
On November 28, 1997, Salomon Inc, the ultimate parent company of the Adviser,
merged with and into Smith Barney Holdings Inc., a subsidiary of Travelers Group
Inc. (" Travelers"), to form a new company called Salomon Smith Barney Holdings
Inc. (the "Transaction"). Upon consummation of the Transaction, Travelers became
the ultimate parent company of the Adviser, which continues to serve as
investment adviser to the Fund. Under certain interpretations, the Transaction
might be deemed to create an "assignment," as defined in the Investment Company
Act of 1940 of the investment advisory agreement between the Fund and the
Adviser, which, if so interpreted, would have resulted in the termination of the
agreement. Accordingly, the Board of Directors of the Fund approved a new
investment advisory agreement, identical in all material respects to the
existing agreement, which became effective on November 28, 1997. The new
investment advisory agreement will be presented to stockholders for approval at
a special meeting of stockholders scheduled to be held on January 15, 1998.
PAGE 13
<PAGE> 16
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 31,
YEAR ENDED 1993*
OCTOBER YEAR ENDED YEAR ENDED THROUGH
31, OCTOBER OCTOBER OCTOBER 31,
1997 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............................... 1.59 1.99 1.71 1.02
Net realized and unrealized gain (loss) on
investments....................................... .30 3.98 (.89) (2.60)
-------- -------- -------- --------
Total from investment operations................ 1.89 5.97 .82 (1.58)
-------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income................ (1.49) (1.43) (1.37) (1.01)
Distributions in excess of net investment income.... -- -- (.05) (.06)
-------- -------- -------- --------
Total distributions (1.49) (1.43) (1.42) (1.07)
-------- -------- -------- --------
Offering costs with respect to issuance of shares... -- -- -- (.07)
-------- -------- -------- --------
Net asset value, end of period...................... $ 15.65 $ 15.25 $ 10.71 $ 11.31
======== ======== ======== ========
Market price per share, end of period............... $13.8125 $ 14.00 $ 11.375 $ 10.75
======== ======== ======== ========
TOTAL INVESTMENT RETURN(a).......................... 8.93% 37.34% 20.61% (16.55)%+
RATIOS TO AVERAGE NET ASSETS:
Total expenses, including interest expense...... 3.24% 3.91% 5.04% 2.90%#
Total expenses, excluding interest expense
(operating expenses).......................... 1.36% 1.44% 1.42% 1.36%#
Net investment income........................... 9.52% 15.25% 16.70% 10.24%#
SUPPLEMENTAL DATA:
Net assets, end of period (000)................. $198,140 $193,014 $135,540 $143,159
Average net assets (000)........................ $211,806 $165,059 $129,516 $151,954
Portfolio turnover rate......................... 175% 97% 101% 13%
Asset coverage for Loan outstanding............. 430% 422% 326% 339%
Weighted average bank loan (000)................ $ 60,000 $ 60,000 $ 60,000 $ 39,934
Weighted average interest rate on bank loan..... 6.62% 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 14
<PAGE> 17
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, 1997, 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 three 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, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations 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 10036
December 16, 1997
PAGE 15
<PAGE> 18
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- ----------------------------------------
SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited)
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS:
<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)
May 1, 1997
to July 31, 1997............. 6,531,327 4,820,659 .381 24,275,638 1.918 29,096,297 2.299
August 1, 1997
to October 31, 1997.......... 6,519,795 4,699,606 .371 (31,370,200) (2.478) (26,670,594) (2.107)
<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
May 1, 1997
to July 31, 1997............. 4,509,104 .356 16 3/16 14 5/8
August 1, 1997
to October 31, 1997.......... 4,509,104 .356 16 3/16 13 9/16
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
See accompanying notes to financial statements.
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.
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
ALAN M. MANDEL
Treasurer
LAURIE A. PITTI
Assistant Treasurer
NOEL DAUGHERTY
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)
1-888-777-0102
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
- --------------------------------------------------------------------------------
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> 24
------------------------------------------------------------------
SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
ANNUAL REPORT
---------------------------------------
OCTOBER 31, 1997
-------------------------------------
SALOMON BROTHERS ASSET MANAGEMENT
---------------------------------
<PAGE> 25
---------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY BULK RATE
40 WALL STREET U.S. POSTAGE
NEW YORK, NEW YORK 10005 PAID
STATEN ISLAND, NY
PERMIT NO.
169
---------------------
