<PAGE> 1
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
June 11, 1999
Dear Shareholders:
We are pleased to provide this semi-annual report for the Salomon Brothers
Worldwide Income Fund Inc. ("Fund") for the period ended April 30, 1999.
Included are market commentary, a schedule of the Fund's investments as of April
30, 1999 and financial statements for the period ended April 30, 1999. We hope
you find this report to be useful and informative.
Since the October 31, 1998 annual report, the net asset value of the Fund
increased from $9.70 per share to $11.82 per share. Income dividends of $1.10
per share were declared during the period. Assuming that these dividends were
reinvested in additional shares of the Fund, the net asset value return for the
six-months ended April 30, 1999 was 35.78%. During the same period, the JP
Morgan Emerging Markets Bond Index Plus ("EMBI+") reflected a return of 15.88%.
Investments in securities of emerging market issuers, including both obligations
of sovereign governments and corporate issuers, totaled roughly 98.6% of total
long-term investments as of April 30, 1999. The remainder of the Fund's long
term portfolio assets, or 1.4%, was invested in U.S. high yield corporate bonds.
EMERGING MARKETS DEBT SECURITIES
The global market's primary focus was on the new OPEC agreement and April's
substantial surge in oil prices. Major oil producing countries agreed to cut
production by 2.1 billion barrels per day. The positive result was not as
short-lived as with the previous two agreements, with price increases totaling
35% by month end. One of the reasons for the inability to sustain a rise in oil
prices in the past was that OPEC countries have not been known for keeping their
promises. But for oil producers -- particularly in the developing world -- the
fall in oil from nearly $20 per barrel in 1997 to $10 by the end of 1998 was
crippling to their economies, and they may not have any other choice but to
adhere to the cuts.
Kosovo's troubles had little impact on the global markets. External bonds in
Hungary, Croatia and Bulgaria traded down somewhat, but the current situation is
likely to have more of a negative impact on sentiment than on actual
fundamentals.
For the month ended March 31, 1999, the strongest performing countries in the
emerging markets included Brazil, Ecuador, Venezuela and Peru. The worst
performers included Bulgaria, Korea, Poland and Morocco. The rebound in emerging
markets debt, which began in early March, continued throughout April as the
EMBI+ Index returned 6.83% for the month, bringing year-to-date returns to
12.24%. The highest yielding countries, including Brazil,
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
Ecuador, Russia and Venezuela have provided the best returns over the course of
the recent market rally. The strong performance of emerging markets debt over
the past few months has been accompanied by improved sentiment on the part of
investors.
We believe the rally is being driven by improvements in fundamental factors that
go beyond a mere improvement in sentiment. The global economic environment has
been more supportive of emerging markets debt and certain country-specific risks
have declined over recent weeks.
Global economic developments over the last two months of the reporting period
have provided a positive backdrop for emerging economies. Continued strong
growth in the U.S. and the 50 basis point easing by the European Central Bank
have calmed investors' earlier fears that a major slowdown in the industrialized
world would have a detrimental impact on emerging markets. Within the emerging
markets, interest rate declines and surprisingly low inflation numbers in Brazil
have encouraged a resumption of private sector capital flows to the entire Latin
American region.
The trend toward economic recovery and declining interest rates in Asia
continues to reflect a restoration of investor confidence in the region. This
confidence is further reflected in the recent rally in the Japanese equity
market. Additionally, the rebound in oil prices has strengthened all oil
producing economies and especially those in emerging markets. Venezuela,
Ecuador, Algeria, Russia and Mexico have all benefited by the nearly 50%
increase in the price of oil since late February.
All other EMBI+ countries had positive returns in April. Russia, Ecuador,
Venezuela and Brazil all substantially outperformed the Index. All Index
countries have generated positive investment returns year-to-date. The macro
outlook for emerging markets debt continues to be positive. The International
Monetary Fund ("IMF") released its biannual World Economic Report which left its
1999 world growth forecast unchanged at 2.3% but increased its 2000 forecast
from 1.8% to 3.4%, reflecting continued growth in the U.S. and a rebound in Asia
and Latin America.
On April 30, 1999, top country allocations (as a percentage of total
investments) for the Fund were as follows:
- - Brazil 13.08%
- - Argentina 12.04%
- - Venezuela 11.52%
- - Mexico 10.46%
- - Russia 7.93%
- - Morocco 5.75%
- - Columbia 5.00%
- - Peru 4.68%
- - Philippines 3.91%
- - Croatia 3.69%
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
LATIN AMERICA
During January's turmoil, the IMF stated that additional financial assistance
would be provided to Latin American credits should their governments deem it
necessary (particularly, Argentina and Mexico). Latin American countries have
proven to be much more fundamentally sound than during the 1986 oil shock or the
1994 Mexican peso devaluation, and are therefore more able to withstand their
neighbor's troubles. For this reason, we remain optimistic on the region's long
term prospects but cautious on the short-term outlook for Brazil.
ARGENTINA Moody's took Argentina's foreign currency ceiling of Ba3 off of
review for possible downgrade during February 1999. This incorporated the
potential impact of the Brazil devaluation as well as low commodity prices,
according to Moody's. On Argentina's political front, the Peronist party made a
somewhat surprising move, announcing that Social Development Secretary Ramon
Ortega, whom President Menem had previously backed as the party's presidential
candidate, is planning to join forces with Governor Eduardo Duhalde in the
presidential race. Both men will compete separately in the party's primary on
April 11, but Ortega is expected to run as vice president alongside Duhalde. Due
to Argentina's considerable external debt requirements, as well as the country's
close linkage to Brazil's economy, we remain underweight.
The IMF's quarterly review of Argentina's performance under its Extended Fund
Facility ("EFF") resulted in an approval by the board. Also approved was an
increase in the amount of funds that can be drawn immediately, to just over U.S.
$1 billion. The credit line was last increased in November to about U.S. $810
million, but Argentine officials continue to state that they have no intention
of drawing from it. Separately, inflation in Argentina during March was 0.8%,
the lowest in over a decade. In contrast to the 1995 Mexican peso crisis, the
Brazilian crisis has posed little threat to the Argentine economy. Nonetheless,
the crisis has forced interest rates upwards while a slowdown in capital inflows
has led to stagnation in deposits.
BRAZIL An improvement in Brazil's asset prices led to strong February 1999
performance. The IMF and Brazilian government confirmed that they had reached an
agreement on new targets for this year's primary surplus, in the range of 3.0 to
3.5% of GDP, in comparison to 2.6% of GDP in the original program. In Brazil,
all measures required to meet the 1999 IMF primary fiscal targets were approved
by Congress, the last of which was the recently passed CPMF rate increase.
In addition, the government received the much anticipated $4.9 billion tranche
from the IMF, with an additional $4.9 billion expected shortly. Temporary tax
increases and stalled investment projects should allow the government to meet
the IMF targets. But before long, investors will begin to ask what will
permanently replace the temporary fixes. Among the permanent measures needed are
tax, second-stage social security, and political and judicial reforms. Tax
reform, which has been on the agenda since 1995, is a complicated matter,
because it requires a lengthy change in the constitution.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
Investors continue to express confidence in Brazil's economic leadership as
capital flows have permitted the Central Bank to ease overnight rates for the
fourth time since rates were hiked to 45% in early March 1999. The current
overnight rate has been lowered to 32%. Brazil continues to have a very large
domestic debt burden, but the Federal government remains committed to the fiscal
austerity plan approved by Congress. Further progress in expanding the primary
fiscal surplus will put additional downward pressure on domestic interest rates,
easing the impact of the overall debt burden. Lower than expected inflation
figures (15% seems to be a growing consensus) and currency stability have helped
restore a measure of confidence in the business community in Brazil. We believe
the economy could be bottoming and should show positive growth later in the
second half of 1999. While currency weakness could still have an adverse impact
on the Brazilian recovery, investor sentiment has clearly improved, permitting
Brazil to return to international capital markets in April with a successful $3
billion five-year bond issue. Brazil outperformed the EMBI+ for April, returning
8.20% for the month and 19.91% year-to-date.
COLOMBIA In Colombia, recent polls in the middle of the reporting period
showed that President Pastrana's support has risen. According to the poll, 81%
approved of the president's handling of the earthquake and 54% approved of the
government's efforts to negotiate a peace agreement with guerrilla groups.
Separately, the U.S. fully certified Colombia as an ally in the fight against
drugs during the period under review. This is a positive step in improved
communications between the two nations, and is in contrast to February of last
year, when Colombia was simply granted a "national interest waiver" (not fully
certifying the country but lifting economic sanctions against it). The new
administration's commitment to improving relations with the U.S., in addition to
promoting fiscal growth, is a positive sign for Colombia.
ECUADOR The worst emerging markets debt performer in February 1999 was
Ecuador, down 9.67% for the month. President Mahuad's approval rating waned
(from around 25% at the end of February), and his resistance to battling
Congress on fiscal measures and the resulting lack of progress on a deal with
IMF has caused real concern in the market.
In the beginning of March 1999, Ecuador's disintegration led to a run on
deposits and a degenerating financial system, with strikes and public protests
against President Mahuad's fiscal measures occurring throughout the country. But
by mid-month, the World Bank announced that it would offer "direct support" to
the Ecuadorian economy. The World Bank, Inter-American Development Bank ("IADB")
and IMF began discussions for a rescue package, leading to improved market
sentiment. At the end of March 1999, the proposed fiscal adjustment approvals
were still in Congress, due to disagreements over labor reform and income tax
measures. As such, an IMF agreement is expected, but not for several months.
Ecuador's recovery from its banking and fiscal crisis continued in April 1999.
The Banking Superintendent announced the closing of five of the nine most
troubled banks during April. This important step helped restart negotiations
with the IMF and led to an encouraging disclosure from the government that it
hopes to have a letter of intent with the IMF signed by
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
the end of May. This schedule would allow an 18-month U.S. $400 million standby
facility to be approved by the IMF Board in June. This facility will provide a
backstop to meet any shortfall in Ecuador's debt amortization schedule. The need
for the IMF facility is currently less critical than it was in February because
the rebound in the price of oil has stabilized the Ecuadorian economy.
Nonetheless, the ability of the executive branch of government to work
effectively with Congress during this recent crisis is an encouraging signal for
investors.
MEXICO The Mexican peso showed increased strength in February 1999, with first
quarter performance landing as the strongest in the world measured against the
U.S. dollar. Moreover, although the peso is expected to weaken leading into the
year 2000 and the presidential elections, Mexico's fundamentals have proven, and
should continue to be, sound. Separately, the central bank discussed with the
IMF a possible 18-month standby agreement and the negotiation of paying back $8
billion in post-crisis debt.
VENEZUELA In Venezuela, the Lower House is studying President Chavez's
proposed Enabling Law, which would allow him to make changes to the tax code
without congressional approval. Included with the law are a number of important
proposed fiscal measures, such as implementation of a 15.5% value added tax and
a 0.5% tax on financial transactions. Although the measures will not privatize
the social security system nor raise domestic gasoline prices, they are positive
and should reduce the financing gap. In addition, opposing party members have
indicated that Chavez would be granted emergency decree powers that would allow
him to reduce the fiscal deficit, whether or not the measures are approved.
During the reporting period, the Chamber of Deputies approved most of President
Chavez' Enabling Law, allowing him to implement a 0.5% tax on bank transactions
and replace the existing General and Luxury Sales Tax with a Value Added Tax of
between 8% and 16.5%. Chavez rejected the special powers, however, due to
Congress' removal of social security reform and tax exemption measures. At the
end of April, IMF negotiations took place to discuss whether or not Venezuela
will negotiate a "shadow" or a formal IMF program.
Venezuela generated very strong returns in April, up 14.90%, bringing its
year-to-date returns to 25.52%. The overriding factor in Venezuela's performance
is its improved economic outlook based on the recovery in the price of oil.
Every dollar change in the price of a barrel of oil impacts the Venezuelan
fiscal budget by approximately 0.7% of GDP. This leveraged exposure to the price
of oil should create a period of reduced economic pressure in the country as it
pursues a course of political change.
President Chavez's political reform program, including the establishment of a
Constituent Assembly, is moving forward. The referendum to convene the Assembly
was approved by voters in April. An election to choose the representatives to
the Assembly will be held in June with the Assembly to convene in July and run
for six months. Meanwhile, Congress passed the proposed Enabling Law permitting
the executive branch to approve economic and financial legislation by decree.
These added presidential powers are focused on reforms related to tax collection
and reorganization of public sector ministries.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
EASTERN EUROPE
BULGARIA In Eastern Europe, the IMF approved disbursement of a U.S. $72
million tranche of financing for Bulgaria in March 1999. The IMF indicated that
economic performance over the past year had been positive, even though important
structural reforms still needed to be accomplished. Separately, Bulgaria's
cabinet approved a 1999 privatization program, which envisages U.S. $607 million
in revenue. Based on its agreement with the IMF, the government has set a target
to complete the sale of about two-thirds of state assets by the end of 1999.
The Kosovo crisis started to have an adverse effect on Bulgaria. But we think
that the turmoil is less likely to have an impact on fundamentals than on market
sentiment. Even though Bulgaria's trade transit is routed mainly through
Yugoslavia, actual trade with the Balkans is a small proportion of the total
volume (3%), and disruptions in trade flows are expected to be minimal. On the
external trade side, Bulgaria has managed to diversify its trading partners to a
large extent since the early 1990s, making it less reliant on trading partners
from the former Eastern Bloc. Separately, an IMF mission will visit Bulgaria in
May to assess the country's progress under its current 3-year EFF.
In April 1999, the NATO military action in Kosovo has had an impact on Bulgaria
as trade routes to Western Europe have been interrupted. This is the primary
direct impact on the Bulgarian economy that will lead to a decline in exports
assuming the bombing continues. This negative impact is being partly offset by
continued progress in the Bulgarian privatization program.
RUSSIA During the reporting period, a breakthrough of sorts in Russia came
when IMF Managing Director Michel Camdessus and Russian Prime Minister Yevgeny
Primakov issued a joint statement following their meeting in Moscow. Both sides
announced that they had agreed to a primary budget surplus of 2% of the gross
domestic product in 1999 "and most of the measures needed to achieve it." At the
heart of the budget shortage problem is a deficit of around 30 billion rubles,
or U.S. $1.2 billion.
To reach an agreement with the IMF, the Russian government must find ways to
raise enough revenue to fill the gap by taking unpopular steps such as imposing
a tax on gasoline or export tariffs on metals and other raw material. The
communist-controlled Lower House of Parliament, which vigorously opposes
legislation linked to the IMF, must now approve changes in the tax code.
Russia was the best performing country in EMBI+ for April with a 34% return,
bringing year-to-date returns to 45%. Russia successfully negotiated the terms
of a new $4.5 billion 18 Month standby agreement with the IMF. The new
agreement, which requires the approval of the IMF Board, carries very precise
budget targets that must be met on a quarterly basis. The IMF agreement does not
represent any new IMF money for Russia, but its approval will release additional
funding from other multilateral agencies. Russia faces severe challenges in
meeting the IMF targets, but continued access to multilateral financing is
critical for economic
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
stability. On the political front, Russia continues with business as usual. The
Duma is considering a proposal to impeach President Yeltsin, various ministers
are subject to dismissal rumors and corruption scandals are part of the daily
news. In addition, Russia has tried to apply its diplomatic skills in resolving
the crisis in Kosovo.
MOROCCO During the reporting period, Morocco's Upper House approved an amended
privatization law, following a rejection in January on the grounds it was
unconstitutional. The law aims to speed up the sale of state-run companies. The
privatization program, launched in 1993, was due to be completed by the end of
1998, with the sale of 114 companies. It is not expected that this year's
privatization targets will be met but the outlook for the next fiscal year is
optimistic. Morocco's progress with privatization has been disappointing, but,
fundamentally, Morocco has shown considerable growth in the past year.
ALGERIA Abdelaziz Bouteflika was elected President of Algeria during April
1999. The election campaign began as an open contest, but six of seven
candidates ultimately boycotted the election amid claims of electoral fraud. On
the economic front, the Arab Monetary Fund approved a $131 million loan to
support Algeria's balance of payments. BP Amoco announced plans to widen
development of an existing gas field. The project is expected to include up to
$3 billion of foreign investment through 2003. Oil price increases have had a
substantial positive impact on Algeria's budget balance.
U.S. HIGH YIELD SECURITIES
The U.S. high yield market has rebounded strongly from the global credit crunch
experienced last fall, which was brought on by fundamental problems in Japan,
Russia and Southeast Asia. This recovery began with the Federal Reserve Board's
surprise easing of the Funds Rate in mid-October and has continued as strong
U.S. economic growth continues. Except for a brief contraction in February
following Brazil's currency devaluation, the market has consistently moved
higher. This positive momentum has been fueled by a number of fundamental and
technical factors including:
1. A strong U.S. economy;
2. rumored and announced acquisitions;
3. equity indices reaching historic highs;
4. demand for high yield paper from both retail and institutional investors;
5. a lighter-than-anticipated new issue calendar;
6. a rebound in energy prices; and,
7. more stability in global markets.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
As reported by the Salomon Smith Barney High Yield Market Index, the high yield
market returned 8.74% during the period. The average market yield at April 30,
1999 was 9.99%, down from 11.11% at October 31, 1998. In addition, the yield
premium over Treasuries finished the period at 4.71%, narrowing from 6.64% at
October 31, 1998.
Both demand for and new supply of high yield products have picked up since last
fall given the market's stabilization and the return of investor appetite for
yield. However, new issue supply has been less than anticipated and investor
demand has been disciplined, with weaker deals being canceled. These trends have
been healthy for the market.
For the six-month period ending April 30, 1999, the top performing industries in
the high yield market included Telecommunications, Cable & Media, Paper & Forest
Products, Metals/ Mining and Gaming. Among the worst of the performers was
Healthcare, due to difficulties transitioning to the newly imposed PPS Medicare
reimbursement system. In addition, despite stellar performance during March on
news that OPEC had reached an agreement to cut oil supply, the Energy sector
landed as one of the period's underperformers. Textile/Apparel and
Transportation also underperformed due to cheaper imports hurting the former and
overcapacity hurting the latter.
Our outlook for the high yield market remains positive given current valuations.
Our focus is to maintain a core portfolio of better quality, more liquid credits
while taking advantage of opportunities in selected companies where fundamentals
are solid but technicals have created compelling risk/return situations.
In a continuing effort to provide timely information about the Salomon Brothers
Worldwide Income Fund Inc., shareholders can call 1-888-777-0102 (toll free),
Monday through Friday from 8:00 a.m. to 6:00 p.m. (EST), for the Fund's current
net asset value, market price and other information regarding the Fund's
portfolio holdings and allocations. For information regarding your Salomon
Brothers Worldwide Income Fund Inc. stock account, please call American Stock
Transfer & Trust Company at 1-800-937-5449 (1-718-921-8200 if you are calling
from New York City).
Thank you for your investment in the Salomon Brothers Worldwide Income Fund Inc.
We look forward to helping you pursue your investment goals in the years to
come.
Sincerely,
<TABLE>
<S> <C>
/s/ Heath B. McLendon /s/ Peter J. Wilby
Heath B. McLendon Peter J. Wilby
Chairman and President Executive Vice President
and Portfolio Manager
</TABLE>
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (unaudited)
April 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS -- 114.5% VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARGENTINA -- 16.2%
US$ 4,200 Republic of Argentina, Global Bond, 11.750%, 4/07/09........ $ 4,352,250
15,200 Republic of Argentina, Global Bond, 11.000%, 12/04/05(e).... 15,116,400
2,675 Republic of Argentina, Global Bond, 11.375%, 1/30/17(e)..... 2,672,325
2,250 Republic of Argentina, 11.447%, 4/10/05(a).................. 2,171,250
------------
24,312,225
------------
BRAZIL -- 15.4%
14,811 Federal Republic of Brazil, C Bond, 8.000%, 4/15/14(b)...... 10,349,410
Federal Republic of Brazil, NMB, Series L, 5.9375%,
5,000 4/15/09(a),(e).............................................. 3,592,188
Federal Republic of Brazil, DCB, Series L, 5.9375%,
8,100 4/15/12(a),(e).............................................. 5,199,188
Federal Republic of Brazil, Bearer, DCB, Series L, 5.9375%,
6,175 4/15/12(a).................................................. 3,963,578
------------
23,104,364
------------
BULGARIA -- 5.7%
Republic of Bulgaria, FLIRB, Series A, 2.500%,
14,000 7/28/12(a),(e).............................................. 8,531,250
------------
COLOMBIA -- 6.8%
2,000 Republic of Colombia, 10.986%, 8/13/05(a)................... 1,920,000
2,750 Republic of Colombia, 7.270%, 6/15/03(d).................... 2,488,750
5,500 Republic of Colombia, 10.875%, 3/09/04(e)................... 5,816,250
------------
10,225,000
------------
COSTA RICA -- 4.7%
8,500 Costa Rica, Principal Bond, Series B, 6.250%, 5/21/15(e).... 7,140,000
------------
CROATIA -- 5.0%
3,762 Croatia Government, Series B, 5.8125, 7/31/06(a)............ 3,056,395
5,750 Croatia Government, Series A, 5.8125%, 7/31/10(a),(e)....... 4,499,375
------------
7,555,770
------------
ECUADOR -- 4.1%
3,000 Republic of Ecuador, Discount, 6.000%, 2/28/25(a)........... 1,561,875
Republic of Ecuador, Bearer, Series IE, 6.000%,
320 12/21/04(a)................................................. 184,000
275 Republic of Ecuador, PDI Bond, 6.000%, 2/27/15(a),(b),(e)... 116,183
Republic of Ecuador, Bearer, PDI Bond, 6.000%,
10,180 2/27/15(a),(b),(e).......................................... 4,301,185
------------
6,163,243
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (unaudited)(continued)
April 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS (CONTINUED) VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IVORY COAST -- 1.5%
US$ 8,550 Ivory Coast, FLIRB, 2.000%, 3/31/18(a)...................... $ 2,233,687
------------
MEXICO -- 9.8%
4,850 United Mexican States, Global Bond, 10.375%, 2/17/09(e)..... 5,195,563
8,425 United Mexican States, Global Bond, 11.375%, 9/15/16(e)..... 9,630,870
------------
14,826,433
------------
PANAMA -- 3.0%
2,000 Republic of Panama, IRB, 4.000%, 7/17/14(a),(e)............. 1,576,250
3,750 Republic of Panama, PDI Bond, 5.9375%, 7/17/16(a),(b),(e)... 2,948,063
------------
4,524,313
------------
PERU -- 6.4%
14,075 Republic of Peru, PDI Bond, 4.500%, 3/07/17(a),(e).......... 9,579,797
------------
PHILIPPINES -- 5.3%
4,087 Republic of Philippines, 8.750%, 10/07/16(e)................ 3,984,825
4,500 Republic of Philippines, Series B, 6.500%, 12/01/17......... 4,005,000
------------
7,989,825
------------
POLAND -- 0.7%
1,201 Republic of Poland, Bearer, PDI Bond, 5.000%, 10/27/14(a)... 1,113,177
------------
RUSSIA -- 10.4%
Russia, Ministry of Finance, Global Bond, 11.000%,
1,825 7/24/18..................................................... 741,406
Russia, Ministry of Finance, Global Bond, 12.750%,
31,375 6/24/28(e).................................................. 13,452,031
Russia, Ministry of Finance, Global Bond, 11.750%,
2,625 6/10/03(d),(e).............................................. 1,194,375
2,913 Russia, IAN, 5.96875%, 12/15/15(a),(d)...................... 236,676
------------
15,624,488
------------
SOUTH KOREA -- 2.7%
Export-Import Bank of Korea, Global Bond, 7.250%,
750 6/25/01(e).................................................. 752,063
Export-Import Bank of Korea, Global Bond, 6.500%,
1,000 2/10/02(e).................................................. 978,200
750 Korea Development Bank, Global Bond, 6.625%, 11/21/03(e).... 728,475
1,630 Korea Development Bank, Global Bond, 7.900%, 2/01/02(e)..... 1,654,450
------------
4,113,188
------------
URUGUAY -- 1.2%
2,105 Uruguay, DCB, Series B, 6.000%, 2/19/07(a),(e).............. 1,789,474
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (unaudited)(continued)
April 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS (CONCLUDED) VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VENEZUELA -- 15.6%
Republic of Venezuela, DCB, Series DL, 5.9375%,
US$ 2,786 12/18/07(a),(e)............................................. $ 2,245,988
Republic of Venezuela, FLIRB, Series A, 6.000%,
18,857 3/31/07(a),(e).............................................. 14,838,185
6,825 Republic of Venezuela, Global Bond, 13.625%, 8/15/18(e)..... 6,483,750
------------
23,567,923
------------
TOTAL SOVEREIGN BONDS (cost $170,664,693)................... 172,394,157
------------
LOAN PARTICIPATIONS(c) -- 12.4%
- ----------------------------------------------------------------------------------------------------------------------------
The People's Democratic Republic of Algeria:
1,864 Tranche A, 6.750%, 3/04/00 (Chase Manhattan)(a)........... 1,677,272
3,591 Tranche 1, 6.000%, 9/04/06 (Chase Manhattan)(a)........... 1,939,091
5,000 Tranche 3, 6.000%, 3/04/10 (Chase Manhattan)(a)........... 2,525,000
Government of Jamaica,
167 Tranche A, 5.8125%, 10/15/00 (Chase Manhattan)(a)......... 156,639
Kingdom of Morocco:
Yen 396,236 Tranche A, 3.0175%, 1/01/09 (Goldman Sachs)(a)............ 2,563,049
Tranche A, 6.0625%, 1/01/09 (JP Morgan, Chase
US$ 1,928 Manhattan)(a)............................................. 1,571,787
Tranche B, 6.0625%, 1/01/04 (Morgan Stanley Emerging
8,824 Markets Inc., Bankers Trust)(a),(e)..................... 7,632,353
Russia, Principal Loan, 5.96875%, 12/15/20 (Chase Manhattan,
8,100 Goldman Sachs, ING, JP Morgan)(a),(e),(f),(g)............. 597,375
------------
TOTAL LOAN PARTICIPATIONS (cost $24,513,623)................ 18,662,566
------------
CORPORATE BONDS -- 7.6%
- ----------------------------------------------------------------------------------------------------------------------------
Brazil,
Companhia Energetica De Sao Paul, 9.125% until 6/26/02
2,000 (9.625% thereafter), 6/26/07(e)......................... 1,780,000
Indonesia,
Tjiwi Kimia International Finance Company B.V., 10.000%,
3,000 8/01/04(e)................................................ 1,860,000
Mexico:
2,000 Grupo Industrial Durango, 12.000%, 7/15/01(e)............. 2,015,000
1,000 Hylsa S.A. de C.V., 9.250%, 9/15/07(e).................... 828,750
TFM Sa De Cv, Zero Coupon until 6/15/02 (11.750%
3,000 thereafter), 6/15/09(e)................................. 1,935,000
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 11
<PAGE> 12
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (unaudited)(concluded)
April 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) CORPORATE BONDS (CONCLUDED) VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States:
Jordan Industries, Inc., Zero Coupon until 4/01/02
US$ 4,825 (11.750% thereafter), 4/01/09(e)........................ $ 2,942,865
------------
TOTAL CORPORATE BONDS (cost $13,552,441).................... 11,361,615
------------
WARRANTS(g) -- 1.4%
- ----------------------------------------------------------------------------------------------------------------------------
8,700 Shares Republic of Argentina, expiring 12/03/99.................... 304,500
33,400 Shares United Mexican States, expiring 2/18/00..................... 1,795,250
------------
TOTAL WARRANTS (cost $1,329,847) 2,099,750
------------
TOTAL INVESTMENTS -- 135.9% (cost $210,060,604)............. 204,518,088
------------
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS -- (35.9%)... (53,996,231)
------------
NET ASSETS -- 100.0%
(equivalent to $11.82 per share on 12,732,327 common shares
outstanding)................................................ $150,521,857
============
</TABLE>
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 1999:
<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$2,960,963 US$2,915,068 6/29/99 45,895
</TABLE>
(a) Rate shown reflects current rate on variable rate instrument or instrument
with step coupon rates.
(b) Payment-in-kind security for which part of the income earned is capitalized
as additional principal.
(c) Participation interests were acquired through the financial institutions
indicated parenthetically.
(d) Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.
(e) All or a portion of this security is segregated as collateral pursuant to a
loan agreement.
(f) Security is currently in default.
(g) Non-income producing security.
<TABLE>
<C> <C> <S>
DCB -- Debt Conversion Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
IAN -- Interest in Arrears Note.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 12
<PAGE> 13
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
April 30, 1999
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $210,060,604)................ $204,518,088
Receivable for investments sold............................. 8,508,141
Interest receivable......................................... 5,095,169
Net unrealized appreciation on forward foreign currency
contracts................................................. 45,895
Prepaid expenses............................................ 6,736
------------
Total assets........................................ 218,174,029
------------
LIABILITIES
Loan payable(Note 5)........................................ 60,000,000
Accrued interest expense on loan(Note 5).................... 1,702,824
Payable for investments purchased........................... 3,459,887
Payable to bank due to overdraft............................ 2,034,431
Accrued expenses............................................ 332,287
Accrued management fee...................................... 105,208
Accrued administration...................................... 17,535
------------
Total liabilities................................... 67,652,172
------------
NET ASSETS
Common Stock ($.001 par value, authorized 100,000,000;
12,732,327 shares outstanding)............................ 12,732
Additional paid-in capital.................................. 177,464,375
Undistributed net investment income......................... 2,333,580
Accumulated net realized loss on investments................ (23,791,487)
Net unrealized depreciation on investments.................. (5,497,343)
------------
Net assets.......................................... $150,521,857
------------
NET ASSET VALUE PER SHARE ($150,521,857/12,732,327
shares)................................................... $ 11.82
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 13
<PAGE> 14
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
For the Six Months Ended April 30, 1999
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
INCOME
Interest............................................ $14,684,473
EXPENSES
Interest on loan.................................... $ 1,698,006
Management fee...................................... 580,707
Administration fee.................................. 96,626
Custody fee......................................... 69,424
Printing and mailing fees........................... 39,672
Legal fee........................................... 37,688
Accounting fee...................................... 35,704
Audit & Tax fees.................................... 32,728
Transfer Agent fees................................. 20,815
Registration fees................................... 11,965
Directors' fees & expenses.......................... 16,290
Amortization of deferred organization expense....... 3,582
Other............................................... 3,356
-----------
2,646,563
-----------
Net Investment Income................................... 12,037,910
-----------
NET REALIZED GAIN/(LOSS) ON:
Investments......................................... (4,532,347)
Foreign Currency Transactions....................... 87,010 (4,445,337)
----------- -----------
CHANGE IN NET UNREALIZED APPRECIATION ON:
Investments......................................... 33,419,665
Translation of Foreign Denominated Assets and
Liabilities......................................... 59,185 33,478,850
----------- -----------
Net Realized Loss and Change in Net Unrealized
Appreciation.............................................. 29,033,513
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $41,071,423
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 14
<PAGE> 15
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (unaudited)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income................................... $ 12,037,910 $ 23,671,782
Net realized loss on investments........................ (4,445,337) (18,669,880)
Change in net unrealized appreciation................... 33,478,850 (46,797,908)
------------ ------------
Net increase (decrease) in net assets from operations... 41,071,423 (41,796,006)
------------ ------------
DIVIDENDS
From capital gains...................................... -- (21,074,711)
From net investment income.............................. (14,025,487) (12,547,816)
------------ ------------
(14,025,487) (33,622,527)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares issued in reinvestment of dividends
(59,129 shares issued)................................ 599,190 155,564
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... 27,645,126 (75,262,969)
------------ ------------
NET ASSETS
Beginning of period..................................... 122,876,731 198,139,700
------------ ------------
End of period(includes undistributed net investment
income of $2,333,580 and $4,234,147, respectively).... $150,521,857 $122,876,731
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 15
<PAGE> 16
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS (unaudited)
For the Six Months Ended April 30, 1999
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Purchases of long-term portfolio investments and options
on investments......................................... $(77,310,027)
Proceeds from disposition of long-term portfolio
investments, options on investments and principal
paydowns............................................... 79,966,253
------------
2,656,226
Net investment income................................... 12,037,910
Accretion of discount on investments.................... (4,061,994)
Interest on payment-in-kind bonds....................... (299,225)
Amortization of organization expenses................... 3,582
Net change in receivables/payables related to
operations............................................. 1,677,677
------------
Net cash flows provided by operating activities..... 12,014,176
------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Proceeds from shares issued in reinvestment of
dividends.............................................. 599,190
Cash distributions paid................................. (14,025,487)
------------
Net cash used for financing activities.............. (13,426,297)
------------
Net decrease in cash........................................ (1,412,121)
Cash at beginning of period................................. (622,310)
------------
Cash at end of period....................................... $ (2,034,431)
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 16
<PAGE> 17
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 17
<PAGE> 18
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)(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 six months ended April 30, 1999, the Fund paid
interest expense of $1,698,006.
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 18
<PAGE> 19
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)(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. As of April 30, 1999, all deferred
organization expenses have been fully amortized.
NOTE 3. MANAGEMENT AND ADMINISTRATION FEES AND OTHER TRANSACTIONS
The Fund has an Investment Advisory Agreement with Salomon Brothers Asset
Management Inc (the "Adviser"), a wholly-owned subsidiary of Salomon Smith
Barney Holdings Inc. ("SSBH"). The Fund's Adviser is responsible for the day to
day 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 agreement with the Adviser was most recently approved
by shareholders at an annual meeting held on January 15, 1998. Approval of the
agreement was necessary due to the merger of Salomon Inc., which had been the
ultimate parent company of the Adviser, with and into SSBH, which occurred on
November 28, 1997. 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, 1999, 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 19
<PAGE> 20
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
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, 1999 aggregated $79,333,952 and $87,392,004,
respectively.
The federal income tax basis of the Fund's investments at April 30, 1999 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized depreciation for federal income tax purposes was $5,542,516
(gross unrealized appreciation -- $13,424,681; gross unrealized
depreciation -- $18,967,197).
During the six months ended April 30, 1999, permanent book/tax differences of
$87,010 arising from foreign currency transactions have been reclassified to
undistributed net investment income from accumulated net realized loss on
investments. Net investment income, net realized gains (losses) on investments
and net assets were not affected by this reclassification.
At October 31, 1998, the Fund had, for Federal income tax purposes,
approximately $17,450,000 of unused capital loss carryforwards, available to
offset future realized capital gains which expire on October 31, 2006. To the
extent that these carryforward losses are used to offset capital gains, it is
probable that the gains so offset will not be distributed.
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 April 30, 1999 at an interest rate of 7.89% and a maturity date of
May 14, 1999. 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 $129,973,762 on April 30,
1999 and is being held in a segregated account by the Fund's custodian. The loan
was renewed on May 14, 1999 with an interest rate of 7.86938% and a maturity
date of May 21, 1999. The loan was not renewed on May 21, 1999.
On May 21, 1999, the Fund borrowed $60,000,000 pursuant to a credit agreement
with ING Barings (v.s.) Capital LLC. The interest rate on the loan is 7.1875%
and the maturity date is November 22, 1999. Interest payable every three months.
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.
PAGE 20
<PAGE> 21
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
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. The market value of the Fund's loan
participations at April 30, 1999 was $18,662,566.
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, 1999, 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 21
<PAGE> 22
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
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, 1999, the Fund has an outstanding contract to sell 345,500,000
Japanese Yen for US$ 2,960,963 for a scheduled settlement of June 29, 1999.
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 APRIL 30, 1999
Subsequent to April 30, 1999, the Board of Directors of the Fund declared
dividends of $.11875 per common share payable May 28 and June 25, 1999 to
shareholders of record on May 18 and June 15, 1999, respectively.
NOTE 11. ANNUAL SHAREHOLDERS MEETING
On December 17, 1998, the Annual Meeting of the Fund's Stockholders was held for
the purpose of voting on the following matters:
1. The election of Heath B. McLendon and Jeswald W. Salacuse as directors
of the Fund; and
2. The ratification of the selection of PricewaterhouseCoopers LLP as the
Fund's independent accountants for the fiscal year ended October 31, 1999.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
% OF SHARES VOTES % OF SHARES
NAME OF DIRECTORS VOTES FOR VOTED AGAINST VOTED
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Heath B. McLendon 11,309,553 98.5% 177,585 1.5%
Jeswald W. Salacuse 11,310,553 98.5% 176,585 1.5%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 22
<PAGE> 23
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
The results of the vote on Proposal 2 were as follows:
<TABLE>
<CAPTION>
% OF SHARES VOTES % OF SHARES VOTES % OF SHARES
VOTES FOR VOTED AGAINST VOTED ABSTAINED ABSTAINED
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11,366,652 99.0% 45,002 0.4% 75,484 0.6%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 23
<PAGE> 24
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (unaudited)
Data for a share of common stock outstanding throughout each year:
<TABLE>
<CAPTION>
DECEMBER 31,
FOR THE SIX YEAR ENDED 1993*
MONTHS ENDED YEAR ENDED OCTOBER YEAR ENDED YEAR ENDED THROUGH
APRIL 30, OCTOBER 31, 31, OCTOBER OCTOBER OCTOBER 31,
1999 1998 1997 31, 1996 31, 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period.............................. $ 9.70 $ 15.65 $ 15.25 $ 10.71 $ 11.31 $ 14.03++
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................. .95 1.87 1.59 1.99 1.71 1.02
Net realized and unrealized gain
(loss) on investments............... 2.27 (5.16) .30 3.98 (.89) (2.60)
-------- -------- -------- -------- -------- --------
Total from investment
operations...................... 3.22 (3.29) 1.89 5.97 .82 (1.58)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income............ (1.10) (1.66) (1.49) (1.43) (1.37) (1.01)
From net realized gains............... -- (1.00) -- -- -- --
In excess of net investment income.... -- -- -- -- (.05) (.06)
-------- -------- -------- -------- -------- --------
Total dividends and
distributions................... (1.10) (2.66) (1.49) (1.43) (1.42) (1.07)
-------- -------- -------- -------- -------- --------
Offering costs with respect to
issuance of shares.................. -- -- -- -- -- (.07)
-------- -------- -------- -------- -------- --------
Net asset value, end of period........ $ 11.82 $ 9.70 $ 15.65 $ 15.25 $ 10.71 $ 11.31
======== ======== ======== ======== ======== ========
Market price per share, end of
period.............................. $ 12.000 $ 10.875 $13.8125 $ 14.00 $ 11.375 $ 10.75
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN(a)............ 22.66% 4.83% 8.93% 37.34% 20.61% (16.55)%+
RATIOS TO AVERAGE NET ASSETS:
Total expenses, including interest
expense......................... 4.05%# 3.48% 3.24% 3.91% 5.04% 2.90%#
Total expenses, excluding interest
expense (operating expenses).... 1.45%# 1.32% 1.36% 1.44% 1.42% 1.36%#
Net investment income............. 18.40%# 13.35% 9.52% 15.25% 16.70% 10.24%#
SUPPLEMENTAL DATA:
Net assets, end of period (000)... $150,522 $122,877 $198,140 $193,014 $135,540 $143,159
Average net assets (000).......... $131,936 $177,337 $211,806 $165,059 $129,516 $151,954
Portfolio turnover rate........... 42% 122% 175% 97% 101% 13%
Asset coverage for Loan
outstanding..................... 351% 305% 430% 422% 326% 339%
Weighted average bank loan
(000)........................... $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 39,934
Weighted average interest rate on
bank loan....................... 5.63% 6.40% 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 24
<PAGE> 25
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>
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
May 1, 1998
to July 31, 1998............ 7,207,593 5,598,937 .442 (25,557,878) (2.019) (19,958,941) (1.577)
August 1, 1998
to October 31, 1998......... 7,548,553 6,220,550 .492 (59,374,787) (4.680) (53,154,237) (4.188)
November 1, 1998
to January 31, 1999......... 7,463,852 6,159,112 .484 4,274,672 .336 10,433,784 .82
February 1, 1999
to April 30, 1999........... 7,220,621 5,878,798 .466 24,758,841 1.934 30,637,639 2.40
<CAPTION>
DIVIDENDS AND
DISTRIBUTIONS
---------------------- SHARE PRICE
PER -------------------
QUARTERLY PERIOD AMOUNT SHARE HIGH LOW
- ----------------------------- --------------------------------------------
<S> <C> <C> <C> <C>
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
May 1, 1998
to July 31, 1998............ 4,509,112 .356 15 1/4 13 7/8
August 1, 1998
to October 31, 1998......... 4,511,094 .356 14 1/2 7 1/8
November 1, 1998
to January 31, 1999......... 9,492,434 .744 12 1/4 9 5/8
February 1, 1999
to April 30, 1999........... 4,533,053 .356 12.00 10 3/16
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
See accompanying notes to financial statements.
PAGE 25
<PAGE> 26
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 and Director, Mutual
Management Corp. and Travelers
Investment Advisors, Inc.;
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
LEWIS E. DAIDONE
Executive Vice President and Treasurer
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
ANTHONY PACE
Assistant Controller
- ----------------------
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
PricewaterhouseCoopers 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> 27
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005
BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
SBWSEMI 4/99
------------------------------------------------------------------
SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
SEMI-ANNUAL REPORT
APRIL 30, 1999
-------------------------------------
SALOMON BROTHERS ASSET MANAGEMENT
-------------------------------------
