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SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
SEMI-ANNUAL REPORT
---------------------------------------
APRIL 30, 1998
-------------------------------------
SALOMON BROTHERS ASSET MANAGEMENT
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<PAGE> 2
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
June 20, 1998
Dear Shareholders:
We are pleased to provide this semi-annual report for the Salomon Brothers
Worldwide Income Fund Inc (the "Fund") as of April 30, 1998. Included are a
market commentary, a statement of the Fund's investments as of April 30, 1998
and financial statements for the six months ended April 30, 1998.
During the six months ended April 30, 1998, the net asset value for the Fund
increased from $15.65 per share to $16.18 per share at April 30, 1998. Dividends
totaling $1.94375 per share were paid during this period. This total represents
$0.94775 and $0.996 per share from net investment income and realized net
long-term capital gains, respectively. Assuming the reinvestment of these
dividends in additional shares of the Fund, the net asset value return for the
six months ended April 30, 1998 was 17.02%. During the same period, the JP
Morgan Emerging Markets Bond Index Plus, which we use as a measure of the return
of the overall market for emerging markets debt, returned 14.28%.
Investments in securities of emerging markets issuers, including both
obligations of sovereign governments and corporate issuers, totaled
approximately 91% of total investments at April 30, 1998. The remainder of the
Fund's long-term portfolio assets was invested in high-yield corporate bonds.
EMERGING MARKETS DEBT SECURITIES
The emerging debt markets experienced a strong rally in the six months ended
April 30, 1998, despite the volatility surrounding the Asian stock, bond and
currency crisis in October. The asset class posted a return of 14.28% as
measured by the JP Morgan Emerging Markets Bond Index Plus during that time
period. By comparison, the Salomon Brothers Broad Investment Grade Index, which
is a proxy for investment grade fixed income securities, posted a return of
3.67%.
The stripped spread on the Emerging Markets Bond Index, which is the premium
emerging market bond investors demand over U.S. Treasuries, shrunk to as low as
334 basis points (3.34%) just prior to the sell-off on October 22nd, and ended
the month with a spread of 606 basis points. While this spread widening and bond
market decline was meaningful, it fails to capture the volatility experienced in
the market over the final nine days of October when the spread on the index
fluctuated between the mid 400 basis point range and the low 800 basis point
range.
When the crisis started to take shape during mid-October, we reduced the Fund's
exposure to the emerging markets in anticipation of increased volatility. At the
time, we were worried that
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
the Asian crisis would cause significant volatility in non-Asian debt from
emerging market countries as investors curtailed their appetite for risk. During
the end of October and into November, most of the Asian countries began to take
steps to combat the weakness in their currencies: Korea exchanged over $20
billion in maturing short-term debt for longer-term bonds and subscribed to an
International Monetary Fund (IMF) reform package; Thailand and Malaysia began to
implement many IMF reforms; and China reaffirmed commitment to maintaining Hong
Kong's U.S. dollar currency peg. While we did not believe the market risk in
Asia had disappeared, these events increased our confidence in global emerging
market bond prospects and, consequently, we began to increase the Fund's
exposure to emerging market bonds. Our increased exposure was concentrated in
those countries that had sold off in sympathy with Asia but had solid
fundamentals and were not excessively reliant on the international capital
markets. Mexico and Venezuela were two such countries. We increased the Fund's
exposure to Mexico, which had previously been underweight, and we also increased
the Fund's exposure to Venezuela to a meaningful overweight. Additionally, we
continued to focus our investing in the U.S. dollar debt sector of the market,
as opposed to the local currency markets. In this volatile environment, a better
risk/reward profile was afforded via external dollar denominated debt relative
to local currency debt.
At quarter end our top country allocations (as a percentage of total
investments) were as follows:
- Brazil 16.21%
- Russia 12.05%
- Venezuela 11.58%
- Argentina 7.15%
- South Korea 5.70%
- Morocco 5.01%
- Peru 4.63%
- Mexico 4.53%
- Algeria 4.50%
LATIN AMERICA
Brady bond exchanges in three Latin American countries dominated the sector's
focus. More than USD 8 billion of outstanding Bradys were retired in exchange
for nearly USD 7 billion in global bonds. Investors tendered collateralized
Brady bonds to the countries and received uncollateralized global bonds in
return. These transactions benefited the investor who received a higher yielding
instrument and benefited the issuer who was then able to sell the collateral
backing the bonds and use the proceeds to retire more debt. In addition to the
benefits mentioned, these deals contributed to the long-run process of
eliminating the Brady market. The Brady market, which provided a resolution to
the 1980s debt crisis in Latin
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
America and several non-Latin countries, has become less necessary in today's
marketplace as the countries effected have greatly improved their
creditworthiness.
ARGENTINA During the period, the Argentine government expanded its long
maturity global bond due 2017 by USD 750 million. With the expansion, Argentina
has met USD 1.35 billion of its USD 2 billion financing requirement for the
second quarter. This is important because it gives Argentina additional
flexibility in managing its liabilities. Separately, the IMF issued mixed
comments on Argentina, praising the country for having successfully withstood
the Asian storm, but expressing concerns on the deteriorating external position.
The IMF urged Argentina to further diversify its export base instead of relying
on its import tariffs. We remain confident that Argentina will implement the
necessary reforms, but are slightly underweight awaiting the reforms.
BRAZIL Brazilian policy makers' Asian crisis management capabilities were
impressive as Brazil took several steps to defend its currency, the real, from
attack. First, they doubled interest rates, draining liquidity from the system
and increasing demand for the real. Next, President Cardoso proposed, and then
passed, a series of fiscal measures designed to lend credibility to its monetary
policy and improve the current account deficit. All this was implemented over a
very short timeframe despite significant political consequences. Finally, Brazil
made significant advances on its structural reform agenda, including pushing
forward with its privatization plan. In addition, after nearly three years of
delays, the Brazilian senate approved the administrative reform bill by a wide
margin. A prompt approval was also reached in the upper house of congress. This
approval will allow a general reduction in public expenditure at both the
federal and state levels by ending job guarantees, setting limits on salaries
and providing review evaluations for employees. While it may seem like a simple
step to improve the economic and political system, this type of progress was
previously unheard of in Brazil. The reform will enable state and municipal
governments that spend more than 60% of receipts on payrolls to dismiss workers
whose jobs are currently protected by the constitution. While the crisis in Asia
leaves prospects for another year of significant economic growth in doubt, the
government has allayed concerns surrounding their political commitment to
stabilization and reform. Brazil's success and expediency in making these
reforms have encouraged us to take a slightly overweight position.
ECUADOR Despite Ecuador's relative outperformance in November, the country's
ability to institute reform measures continues to be disappointing. Specifically
disappointing was the government's continuous delays in the auction of a 35%
stake in state-owned telephone company EMETEL. In addition, following the
failure by congress to pass an increase in the value added tax, the sucre
devalued 7.5%. We have established a marginally overweight position because we
believe we are being adequately compensated for the risk we are taking but
further reforms would need to take place for us to increase our exposure.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
MEXICO Mexico's executive branch submitted a 1998 budget proposal to congress
calling for no tax cuts and a fiscal deficit equivalent to 1.25% of GDP.
Subsequently, opposition legislators stated that they will push for tax cuts and
increases in public spending, while at the same time maintaining the fiscal
deficit at or below 1.5% of GDP. Banco de Mexico signaled on March 12 that it is
temporarily tightening its monetary stance by draining liquidity. The move is
intended to help limit the deterioration in inflationary expectations resulting
from the recent peso weakness associated with the Asian crisis. The Central Bank
explicitly linked this move with its desire to prevent an excessive short-term
deterioration in the exchange rate. We remain confident in Mexico's potential,
and increased exposure during the period.
PANAMA Panama retired USD 600 million of outstanding Brady debt and
simultaneously issued a 30-year global bond during September. The exchange
allowed Panama to improve its debt structure and lower its cost of funding. We
remain overweight in Panama.
PERU Moody's raised Peru's sovereign debt ceiling to Ba3 from B2, citing
prudent fiscal and monetary policies and an outlook for strong growth. Moody's
stated that the move was based on the country's progress, which included
macroeconomic stabilization and high average rates of growth over the past
several years. Also noted was the completion of both Paris and London Club debt
restructurings, which have reduced external debt from USD 33.5 billion to USD
28.2 billion and have significantly lessened the near-term debt service by
improving the amortization profile. The rating increase complements Standard &
Poor's previously assigned BB rating. We maintained our overweight position
during the period.
VENEZUELA Venezuela is less reliant upon the international capital markets
than the majority of Latin American countries due in large part to its enormous
oil reserves and its prudent use of above-budget oil revenues to pay down debt.
As a result, it is our contention that Venezuela will be somewhat insulated from
the market volatility that is expected to exist going forward. In addition, the
government gave a positive sign to investors with congress' approval of a
privatization plan of the aluminum sector which the government hopes will bring
in USD 2 billion. In the face of the slump in oil prices, privatization proceeds
will be the saving grace for the government's finances for 1998. We remain
overweight in Venezuela and used the Asia-related sell off to increase exposure.
EASTERN EUROPE
BULGARIA Moody's upgraded Bulgaria's foreign currency rating to B2 from B3,
citing improved credit risk with the election of a reform-oriented government
and establishment of a currency board. In comparison, the upgrade puts Bulgaria
on par with Peru and one notch below Brazil and Ecuador. Additionally, the IMF
approved the fourth tranche of $510 million standby loan. Bulgaria's strides in
decreasing inflation and promoting growth during the past year have been
significant: inflation in March was negative 0.1% (largely due to falling fuel
prices), and was near 1.5% in February down from levels above 100% a year ago.
RUSSIA Following the Asian crisis, Russia was one of the most scrutinized and
most volatile credits in the emerging debt market. Its currency, the rouble, is
pegged to the US dollar and investors feared it would have to be devalued, much
like Asia, due to capital flight and
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
dwindling reserves brought on by the Asia crisis. In addition, the deterioration
of Russia's fiscal accounts as a result of the capital flight and a fall in oil
prices, one of its major exports, caused Standard & Poor's to lower its outlook
for Russia's long-term foreign debt rating to negative from stable. On a
positive note, negotiations between the Russian government and the IMF are
continuing with regard to the release of the next tranche of its Extended Fund
Facility Loan which was introduced in 1996 to help Russia face problems
surrounding its implementation of reforms. President Yeltsin, due to his
frustrations with the government's failure to make substantial progress on
reform, dismissed his entire Parliamentary cabinet and replaced Prime Minister
Viktor Chernomyrdin with former Energy Minister, Sergey Kiriyenko. Although this
development was cause for initial concern, Kiriyenko was approved by the Duma,
and a new cabinet was introduced, comprised of players with strong reformist
views. Separately, in a move that improved market sentiment, the 1998 budget was
passed overwhelmingly by the Duma and signed into law.
Russia will continue to remain volatile throughout 1998. Capital flight will
come and go, oil prices will remain volatile, and politics will continue to make
headlines. Fortunately, Russia has the ability and willingness to service its
obligations. For example, Russia's debt service is 12% of exports and places it
in the top 10% of emerging market countries. We continue to believe the risk
premium offered for this debt more than adequately compensates investors for the
risk.
MIDDLE EAST AND AFRICA
MOROCCO Positive news came from Morocco, as the U.S. rating agencies assigned
sovereign ratings: Moody's rated Morocco Ba1, while Standard and Poor's assigned
a rating of BB. The grades can be attributed to three main factors: 1) the
ability of Morocco to stabilize its macroeconomic performance, namely its
current account deficit, 2) the ability of Morocco to substantially attract
foreign investors and gain their confidence, and 3) the government's high
commitment to the privatization process and to liberalization.
HIGH YIELD SECURITIES
Although the economy was expected to slow as a result of the fourth quarter
Asian crisis, corporate earnings and credit quality were generally very good and
supported spread tightening for the six months ending April 30, 1998. The market
was initially down during late October, as Asian markets tumbled. However, few
bonds traded and the market recovered almost completely in a few short weeks.
The market's firmness appeared to be due to several factors, including: 1) a
high level of cash in the market, 2) a strong rally in the U.S. Treasury market
and 3) a belief that the economy will slow, but no recession will materialize,
keeping fundamental credit quality fairly healthy.
The high yield market's increase was fueled by strong demand from both retail
and institutional buyers. High yield mutual funds were aggressive buyers, as
they experienced record inflows during the period. Collateralized Bond
Obligations (CBOs), insurance companies, pension funds and other institutional
buyers have also been active participants.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
In the US market, high yield leisure/lodging, utilities, technology and gaming
were the outperforming industries during the six months ended April 30, 1998.
Consumer cyclicals, basic industries and manufacturing lagged, as investors
feared an economic slowdown would negatively affect the earnings outlook of
companies in these major industry classifications. Also included in the list of
underperformers was energy, which lagged due to the significant decline in oil
prices during the period.
The Board of Directors of the Fund recently reviewed and approved various
amendments to the Fund's bylaws. For example, the bylaw provisions relating to
timely notice for proposals to be brought before an annual meeting of
stockholders (other than a proposal under Rule 14a-8 of the Securities Exchange
Act of 1934 to be included in the Fund's proxy statement) have been amended. As
amended, a stockholder's notice must be delivered to the Fund not less than 60
days nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting. An exception applies in the event the date of the annual
meeting is substantially advanced or delayed from the anniversary date. The
Board believes that the amended timely notice provisions will provide greater
certainty to stockholders because previously, timely notice keyed off the date
of the current years's meeting or the date public disclosure of the current
year's meeting is made. In addition, the provisions provide that any business to
be brought before a special meeting of stockholders must be specified in the
notice of meeting or otherwise properly brought before the meeting by or at the
direction of the Board of Directors. Finally, upon recommendation of the Fund's
Maryland counsel, other changes to certain bylaw provisions were made to conform
to the bylaw provisions of more recently organized Maryland companies.
In a continuing effort to provide timely information concerning the Fund,
shareholders may call 1-888-777-0102 (a toll-free number), Monday through Friday
from 8:00 am to 6:00 pm EST for the Fund's current net asset value, market price
and other information regarding the Fund's portfolio holdings and allocations.
For information concerning your Salomon Brothers Worldwide Income Fund stock
account, please call American Stock Transfer & Trust Company at 1-800-937-5449
(1-718-921-8200 if you are calling from within New York City).
All of us at Salomon Brothers Asset Management appreciate the confidence you
have demonstrated in the past and hope to continue to serve you in the future
years.
Sincerely,
/s/ HEATH B. MCLENDON
Heath B. McLendon Peter J. Wilby
Chairman and President Executive Vice President
and Portfolio Manager
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS -- 88.5% (NOTE 2)
- -------------------------------------------------------------------------------------------------------------------------
ARGENTINA -- 9.1%
US$ 6,750+ Republic of Argentina, Global Bond, 11.00%, 10/9/06......... $ 7,382,812
10,250+ Republic of Argentina, Global Bond, 11.375%, 1/30/17........ 11,339,063
------------
18,721,875
------------
BRAZIL -- 20.7%
8,800+ Federal Republic of Brazil, C Bond, 8.00%, 4/15/14(@)....... 7,265,751
25,000 Federal Republic of Brazil, DCB, Series L, 6.75%,
4/15/12*.................................................... 19,796,875
4,375 Federal Republic of Brazil, Global Bond, 9.375%, 4/7/08..... 4,295,703
625 Federal Republic of Brazil, Global Bond, 10.125%, 5/15/27... 609,844
12,500+ Federal Republic of Brazil, NMB, Series L, 6.6875%,
4/15/09*.................................................... 10,476,563
------------
42,444,736
------------
BULGARIA -- 3.4%
10,500+ Republic of Bulgaria, FLIRB, Series A, 2.25%, 7/28/12*...... 6,995,625
------------
COSTA RICA -- 4.1%
10,000+ Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15........ 8,400,000
------------
CROATIA -- 1.2%
2,750+ Republic of Croatia, Par Bond, Series A, 6.50%, 7/30/10*.... 2,442,344
------------
ECUADOR -- 4.0%
12,926+ Republic of Ecuador, PDI Bond, 6.625%, 2/27/15*(,@)......... 8,272,607
------------
MEXICO -- 5.8%
1,350+ United Mexican States, Global Bond, 11.50%, 5/15/26......... 1,628,438
4,600 United Mexican States, Global Bond, 9.875%, 1/15/07......... 4,925,827
6,300+ United Mexican States, Par Bond, Series A, 6.25%, 12/31/19
(including 6,300,000 rights).............................. 5,307,750
------------
11,862,015
------------
PANAMA -- 3.8%
2,000+ Republic of Panama, IRB, 3.75%, 7/17/14*.................... 1,568,750
7,501+ Republic of Panama, PDI Bond, 6.5625%, 7/17/16*(,@)......... 6,263,521
------------
7,832,271
------------
PERU -- 5.9%
5,250+ Republic of Peru, FLIRB, 3.25%, 3/7/17*..................... 3,274,687
13,000+ Republic of Peru, PDI Bond, 4.00%, 3/7/17*.................. 8,856,250
------------
12,130,937
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS (CONCLUDED) (NOTE 2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PHILIPPINES -- 4.0%
US$ 1,000 Republic of Philippines, Global Bond, 8.875%, 4/15/08....... $ 990,000
7,500 Republic of Philippines, Global Bond, 8.75%, 10/7/16........ 7,167,188
------------
8,157,188
------------
POLAND -- 3.0%
6,701 Republic of Poland, PDI Bond, 4.00%, 10/27/14*.............. 6,114,663
------------
RUSSIA -- 0.3%
853 Russia, IAN, 6.71875%, 12/15/15*(,#)........................ 613,358
------------
SOUTH KOREA -- 7.3%
1,000 Export-Import Bank of Korea, Global Bond, 6.50%, 2/10/02.... 916,516
750 Korea Development Bank, Global Bond, 6.625%, 11/21/03....... 667,275
750 Korea Development Bank, Global Bond, 7.25%, 6/15/01......... 710,175
500 Korea Development Bank, Global Bond, 7.25%, 5/15/06......... 445,775
3,300 Korea Development Bank, Global Bond, 7.375%, 9/17/04........ 3,010,590
2,630 Korea Development Bank, Global Bond, 7.90%, 2/1/02.......... 2,526,378
6,750 Republic of Korea, Global Bond, 8.875%, 4/15/08............. 6,651,774
------------
14,928,483
------------
URUGUAY -- 1.1%
2,368+ Uruguay, DCB, Series B, 6.75%, 2/18/07*..................... 2,344,737
------------
VENEZUELA -- 14.8%
15,238+ Republic of Venezuela, DCB, Series DL, 6.8125%, 12/18/07*... 13,685,701
12,429 Republic of Venezuela, FLIRB, Series A, 6.625%, 3/31/07*.... 11,115,804
6,250+ Republic of Venezuela, Global Bond, 9.25%, 9/15/27.......... 5,525,000
------------
30,326,505
------------
TOTAL SOVEREIGN BONDS (cost $170,503,097)................... 181,587,344
------------
LOAN PARTICIPATIONS++ -- 27.4%
- -------------------------------------------------------------------------------------------------------------------------
The People's Democratic Republic of Algeria,
9,318 Tranche A, 7.3125%, 9/4/06* (Chase Manhattan)............. 7,999,653
5,000 Tranche 3, 6.53125%, 3/4/10* (Chase Manhattan)............ 3,775,000
Government of Jamaica,
278 Tranche A, 6.50%, 10/15/00* (Chase Manhattan)............. 277,045
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) LOAN PARTICIPATIONS (CONCLUDED) (NOTE 2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kingdom of Morocco,
Yen 416,047 Tranche A, 2.4175%, 1/1/09* (Goldman Sachs)............... $2,701,607
US$ 660 Tranche A, 6.65625%, 1/1/09* (Chase Manhattan, J.P.
Morgan)................................................. 668,906
Tranche B, 6.65625%, 1/1/04* (Morgan Stanley Emerging
10,558 Markets Inc., Bankers Trust)............................ 9,761,029
Russia, Principal Loan, 6.71875%, 12/15/20* (Goldman Sachs,
48,750 J.P. Morgan)(A)........................................... 30,956,250
------------
TOTAL LOAN PARTICIPATIONS (cost $55,100,334)................ 56,139,490
------------
CORPORATE BONDS -- 11.8%
- -------------------------------------------------------------------------------------------------------------------------
Brazil,
Companhia Energetica De Sao Paulo, 9.125% until 6/26/02
2,000 (9.625% thereafter), 6/26/07(#)......................... 1,925,000
Indonesia,
3,000 Tjiwi Kimia International Finance Company B.V., 10.00%,
8/1/04(#)................................................. 2,490,000
Mexico,
2,000+ Grupo Industrial Durango, 12.00%, 7/15/01................. 2,177,500
1,000 Hylsa S.A. de C.V., 9.25%, 9/15/07........................ 996,250
United States,
1,500 Adelphia Communications, 10.50%, 7/15/04.................. 1,638,750
Jordan Industries, Inc., Zero Coupon until 4/1/02 (11.75%
4,825 thereafter), 4/1/09..................................... 3,160,479
1,000 Nortek Inc., 9.125%, 9/1/07............................... 1,025,000
1,500 North Atlantic Trading, 11.00%, 6/15/04................... 1,567,500
1,000 Polymer Group, 9.00%, 7/1/07.............................. 1,033,750
3,000 Revlon Worldwide, Zero Coupon, 3/15/01.................... 2,302,500
2,750 Telewest PLC, Zero Coupon until 10/1/00 (11.00%
thereafter), 10/1/07.................................... 2,241,250
TFM Sa De Cv, Zero Coupon until 6/15/02 (11.75%
3,000 thereafter), 6/15/09(#)................................. 2,040,000
1,562+ Venture Holdings Trust, 9.75%, 4/1/04..................... 1,565,905
------------
TOTAL CORPORATE BONDS (cost $23,916,237).................... 24,163,884
------------
TOTAL INVESTMENTS -- 127.7% (cost $249,519,668)............. 261,890,718
------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (27.7%)............ (57,036,167)
------------
NET ASSETS -- 100.0%
(equivalent to $16.18 per share on 12,657,133 common shares
outstanding)................................................ $204,854,551
============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (concluded)
April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 1998:
<TABLE>
<CAPTION>
CONTRACTS IN EXCHANGE CONTRACTS AT DELIVERY UNREALIZED
TO DELIVER FOR VALUE DATE APPRECIATION
---------- ----------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
Sale................. Yen 345,500,000 US$2,720,901 US$2,625,701 6/17/98 $95,200
</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.
A Portion of income earned is capitalized as Russia Interest in Arrears Notes.
+ 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.
<TABLE>
<S> <C> <C>
DCB -- Debt Conversion Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
IAN -- Interest in Arrears Notes.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.
</TABLE>
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $249,519,668)................ $261,890,718
Receivable for investments sold............................. 2,218,750
Net unrealized appreciation on forward foreign currency
contracts................................................. 95,200
Interest receivable......................................... 3,993,647
Deferred organization expenses and other assets (Note 2).... 40,948
------------
Total assets........................................ 268,239,263
------------
LIABILITIES
Loan payable (Note 5)....................................... 60,000,000
Accrued interest expense on loan (Note 5)................... 1,851,615
Payable to bank............................................. 1,070,561
Accrued expenses............................................ 284,976
Advisory fee payable........................................ 152,194
Administration fee payable.................................. 25,366
------------
Total liabilities................................... 63,384,712
------------
NET ASSETS
Common Stock ($.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......................... 1,668,963
Accumulated net realized gain on investments................ 13,997,949
Net unrealized appreciation on investments and foreign
currency translation (Note 7)............................. 12,465,286
------------
Net assets.......................................... $204,854,551
------------
NET ASSET VALUE PER SHARE ($204,854,551 / 12,657,133
shares)................................................... $ 16.18
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1998 (unaudited)
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
INCOME
Interest (includes discount accretion of
$3,827,096)......................................... $15,090,218
EXPENSES
Investment advisory fees............................ $ 897,720
Administration fees................................. 149,560
Custodian's fees and expenses....................... 69,424
Reports to shareholders............................. 39,672
Legal fees and expenses............................. 37,687
Accounting fees..................................... 35,704
Audit fees and expenses............................. 32,728
Transfer agent's fees and expenses.................. 20,815
Directors' fees..................................... 20,332
Amortization of deferred organization expenses (Note
2).................................................. 10,992
Registration fees................................... 5,052
Miscellaneous....................................... 2,975
----------
Total operating expenses................................ 1,322,661
Loan interest expense (Note 5)...................... 1,915,262
----------
Total expenses.......................................... 3,237,923
-----------
Net investment income................................... 11,852,295
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain on:
Investment transactions............................. 14,600,634
Foreign currency transactions....................... 220,672
-----------
14,821,306
-----------
Net change in unrealized appreciation on:
Investments (Note 7)................................ 4,540,654
Foreign currencies.................................. 102,917
-----------
4,643,571
-----------
Net gain on investments and foreign currency
transactions........................................... 19,464,877
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.............. $31,317,172
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 12
<PAGE> 14
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Six Months Ended April 30, 1998 (unaudited)
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net sales of short-term portfolio investments........... $ 48,205,000
Purchases of long-term portfolio investments............ (242,936,733)
Proceeds from disposition of long-term portfolio
investments and principal paydowns..................... 211,974,668
-------------
17,242,935
Net investment income................................... 11,852,295
Accretion of discount on investments.................... (3,827,096)
Interest on payment-in-kind bonds....................... (1,398,596)
Amortization of organization expenses................... 10,992
Net change in receivables/payables related to
operations............................................. (349,487)
-------------
Net cash flows provided by operating activities..... 23,531,043
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Cash dividends paid..................................... (24,602,321)
-------------
Net decrease in cash........................................ (1,071,278)
Cash at beginning of period................................. 717
-------------
Cash at end of period....................................... $ (1,070,561)
-------------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1998 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income................................... $ 11,852,295 $ 20,171,114
Net realized gain on investments and foreign currency
transactions.......................................... 14,821,306 25,505,631
Net change in unrealized appreciation/depreciation on
investments and foreign currencies.................... 4,643,571 (21,754,816)
------------ ------------
Net increase in net assets from operations.............. 31,317,172 23,921,929
------------ ------------
DIVIDENDS
Distributions from net realized gains................... (12,606,504) --
Dividends from net investment income.................... (11,995,817) (18,795,852)
------------ ------------
(24,602,321) (18,795,852)
------------ ------------
TOTAL INCREASE IN NET ASSETS................................ 6,714,851 5,126,077
------------ ------------
NET ASSETS
Beginning of period..................................... 198,139,700 193,013,623
------------ ------------
End of period (includes undistributed net investment
income of $1,668,963 and $1,591,813, respectively).... $204,854,551 $198,139,700
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 13
<PAGE> 15
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(unaudited)
NOTE 1. ORGANIZATION
The Salomon Brothers Worldwide Income Fund Inc (the "Fund") was incorporated in
Maryland on October 21, 1993 and is registered under the Investment Company Act
of 1940, as amended, as a non-diversified, closed-end management investment
company. The Fund commenced operations on December 31, 1993. The Fund seeks to
maintain a high level of current income by investing primarily in a portfolio of
high-yield foreign sovereign debt securities and high-yield non-U.S. and U.S.
corporate debt securities. As a secondary objective, the Fund seeks capital
appreciation.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
("GAAP"). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
SECURITIES VALUATION. In valuing the Fund's assets, all securities for which
market quotations are readily available are valued (except as described below)
(i) at the last sales price prior to the time of determination if there were a
sales price on the date of determination, (ii) at the mean between the last
current bid and asked prices if there were no sales price on such date and bid
and asked quotations are available and (iii) at the bid price if there were no
sales price on such date and only bid quotations are available. Publicly traded
sovereign bonds are typically traded internationally in the over-the-counter
market and will be valued at the mean between the last current bid and asked
price as of the close of business of that market. However, where the spread
between bid and asked price exceeds five percent of the par value of the
security, the security is valued at the bid price. Securities may be valued by
independent pricing services which use prices provided by market-makers or
estimates of market values obtained from yield data relating to instruments or
securities with similar characteristics. Short-term investments having a
maturity of 60 days or less are valued at amortized cost which approximates
market value. Securities for which reliable quotations are not readily available
are valued at fair value as determined in good faith by, or under procedures
established by the Board of Directors.
REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is the
Fund's policy that its custodian takes possession of the underlying collateral
securities, the value of which at least equals the principal amount of the
repurchase transaction, including accrued interest. To the extent that any
repurchase transaction exceeds one business day, the value of the 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 14
<PAGE> 16
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 six months ended April 30, 1998, the Fund paid
interest expense of $1,915,262.
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 15
<PAGE> 17
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 perform 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 April 30, 1998, 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.
PAGE 16
<PAGE> 18
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
The Fund pays each Director not affiliated with the Adviser a fee of $5,000 per
year, a fee of $700 for attendance at each in-person meeting, a fee of $100 for
participation in each telephonic meeting and reimbursement for travel and
out-of-pocket expenses for each board and committee meeting attended.
NOTE 4. PORTFOLIO ACTIVITY AND FEDERAL INCOME TAX STATUS
Purchases and sales of investment securities, other than short-term investments,
for the six months ended April 30, 1998 aggregated $175,152,720 and
$173,288,233, respectively.
The federal income tax basis of the Fund's investments at April 30, 1998 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized appreciation for federal income tax purposes was $12,371,050
(gross unrealized appreciation -- $12,860,577; gross unrealized
depreciation -- $489,527).
During the six months ended April 30, 1998, permanent book/tax differences of
$220,672 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 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. 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 $120,400,962 on April 30, 1998 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
PAGE 17
<PAGE> 19
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
("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. "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.
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
April 30, 1998, 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 18
<PAGE> 20
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
(unaudited)
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
April 30, 1998, the Fund has an outstanding contract to sell 345,500,000
Japanese Yen for US$ 2,720,901 for a scheduled settlement of June 17, 1998.
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. ANNUAL SHAREHOLDERS MEETING
The Fund held it's annual meeting on January 15, 1998. At the meeting,
shareholders approved a new investment advisory agreement between Salomon
Brothers Asset Management Inc ("SBAM") and the Fund, elected each of the
nominees proposed for election to the Fund's Board of Directors and ratified the
selection of Price Waterhouse LLP as the independent accountants of the Fund.
Approval of the agreement was necessary due to the merger of Salomon Inc, which
had been the ultimate parent company of SBAM, with and into Smith Barney
Holdings Inc., a subsidiary of Travelers Group Inc., which occurred on November
28, 1997. Travelers is now the ultimate parent company of SBAM. The following
table provides information concerning the matters voted on at the meeting:
JANUARY 15, 1998
1. Approval of a new investment advisory agreement between SBAM and the Fund.
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINED UNVOTED
- ---------- ------------- --------------- -------
<S> <C> <C> <C>
11,078,372 384,904 217,545 7
</TABLE>
2. Election of directors.
<TABLE>
<CAPTION>
NOMINEES VOTES FOR VOTES WITHHELD
- ---------------- ---------- --------------
<S> <C> <C>
Daniel P. Cronin 11,228,968 451,860
Riordan Roett 11,246,954 433,874
</TABLE>
PAGE 19
<PAGE> 21
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
3. Ratification of Price Waterhouse LLP as the Independent Accountants of the
Fund.
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINED UNVOTED
- ---------- ------------- --------------- -------
<S> <C> <C> <C>
11,222,852 326,898 131,075 3
</TABLE>
NOTE 11. EVENTS SUBSEQUENT TO APRIL 30, 1998
Subsequent to April 30, 1998, the Board of Directors of the Fund declared
dividends of $.11875 per common share payable May 29, 1998 and June 30, 1998 to
shareholders of record on May 12, 1998 and June 16, 1998, respectively.
The Loan Agreement with Morgan Guaranty Trust Company was renewed on May 6, 1998
at an interest rate of 6.28125%, which is equal to six-month LIBOR plus 1.375%,
and the maturity date is November 6, 1998.
PAGE 20
<PAGE> 22
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DECEMBER 31,
SIX MONTHS YEAR ENDED 1993*
ENDED OCTOBER YEAR ENDED YEAR ENDED THROUGH
APRIL 30, 31, OCTOBER OCTOBER OCTOBER 31,
1998 1997 31, 1996 31, 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 15.65 $ 15.25 $ 10.71 $ 11.31 $ 14.03++
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................. .94 1.59 1.99 1.71 1.02
Net realized and unrealized gain (loss) on
investments.......................................... 1.54 .30 3.98 (.89) (2.60)
-------- -------- -------- -------- --------
Total from investment operations................... 2.48 1.89 5.97 .82 (1.58)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income................... (.95) (1.49) (1.43) (1.37) (1.01)
Distributions from net realized gains.................. (1.00) -- -- -- --
Distributions in excess of net investment income....... -- -- -- (.05) (.06)
-------- -------- -------- -------- --------
Total distributions................................ (1.95) (1.49) (1.43) (1.42) (1.07)
-------- -------- -------- -------- --------
Offering costs with respect to issuance of shares...... -- -- -- -- (.07)
-------- -------- -------- -------- --------
Net asset value, end of period......................... $ 16.18 $ 15.65 $ 15.25 $ 10.71 $ 11.31
======== ======== ======== ======== ========
Market price per share, end of period.................. $ 14.875 $13.8125 $ 14.00 $ 11.375 $ 10.75
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN(A)............................. 22.53% 8.93% 37.34% 20.61% (16.55)%+
RATIOS TO AVERAGE NET ASSETS:
Total expenses, including interest expense......... 3.23%# 3.24% 3.91% 5.04% 2.90%#
Total expenses, excluding interest expense
(operating expenses)............................. 1.32%# 1.36% 1.44% 1.42% 1.36%#
Net investment income.............................. 11.81%# 9.52% 15.25% 16.70% 10.24%#
SUPPLEMENTAL DATA:
Net assets, end of period (000).................... $204,846 $198,140 $193,014 $135,540 $143,159
Average net assets (000)........................... $202,325 $211,806 $165,059 $129,516 $151,954
Portfolio turnover rate............................ 68% 175% 97% 101% 13%
Asset coverage for Loan outstanding................ 441% 430% 422% 326% 339%
Weighted average bank loan (000)................... $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 39,934
Weighted average interest rate on bank loan........ 6.35%# 6.62% 6.80% 7.83% 5.88%#
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
* 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 21
<PAGE> 23
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)
November 1, 1997
to January 31, 1998.......... 8,094,991 6,467,875 .511 11,435,981 .904 17,903,856 1.415
February 1, 1998
to April 30, 1998............ 6,995,227 5,384,420 .425 8,028,896 .635 13,413,316 1.060
<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
November 1, 1997
to January 31, 1998.......... 20,093,217 1.589 15 3/4 13 5/8
February 1, 1998
to April 30, 1998............ 4,509,104 .356 15 11/16 14 11/16
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
See accompanying notes to financial statements.
PAGE 22
<PAGE> 24
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------
DIRECTORS
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
DANIEL P. CRONIN
Vice President -- General Counsel,
Pfizer International Inc.
HEATH B. MCLENDON
Managing Director, Smith Barney Inc.
President, Mutual Management Corp.;
Chairman, Smith Barney Strategy Advisors 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
HEATH B. MCLENDON
Chairman and President
THOMAS FLANAGAN
Executive Vice President
PETER J. WILBY
Executive Vice President
BETH A. SEMMEL
Executive Vice President
MAUREEN O'CALLAGHAN
Executive Vice President
JAMES E. CRAIGE
Executive Vice President
ALAN M. MANDEL
Controller
NOEL DAUGHERTY
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
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> 25
---------------------
BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
---------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005
