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SALOMON BROTHERS
WORLDWIDE INCOME FUND INC
ANNUAL REPORT
OCTOBER 31, 1998
-------------------------------------
SALOMON BROTHERS ASSET MANAGEMENT
---------------------------------
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
<PAGE> 2
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
December 7, 1998
Dear Shareholders:
We are pleased to provide this annual report for the Salomon Brothers Worldwide
Income Fund Inc (the "Fund") for the fiscal year ended October 31, 1998.
Included are market commentary, audited financial statements, the related report
of independent accountants and other information about the Fund.
Since the semi-annual report as of April 30, 1998, the net asset value for the
Fund decreased from $16.18 per share to $9.70 per share. Dividends of $0.7125
per share were declared during this period. Assuming that these dividends were
reinvested in additional shares of the Fund, the net asset value return for the
six months ended October 31, 1998 was -36.12%. During the same period, the JP
Morgan Emerging Markets Bond Index Plus "EMBI+" reflected a return of -21.34%.
For the fiscal year ended October 31, 1998, the net asset value return of the
Fund was -25.25%, assuming reinvestment of dividends in additional shared of the
Fund. This is in comparison to a return of -10.10% during the same period for
the EMBI+.
Investments in securities of emerging market issuers, including both obligations
of sovereign governments and corporate issuers, totaled approximately 93.4% of
total long term investments as of October 31, 1998. The remainder of the Fund's
long term portfolio assets, or 6.6%, was invested in US high yield corporate
bonds.
EMERGING MARKETS DEBT SECURITIES
In the twelve month period ended October 31, 1998, market concerns of global
contagion lessened, due to a number of positive world events. This was despite
the tremendous volatility that occurred in August because of continued concerns
over Russia's fiscal crisis. An illustration of the recovery in the emerging
markets was shown during September, when the EMBI+ returned 9.78%, the second
largest monthly gain since the Index's inception.
Many of the market-positive developments that occurred during the period were in
its final month: 1) The Clinton administration and the US Congress reached an
agreement on additional funding for the International Monetary Fund ("IMF")
totaling $17.9 billion. This US funding is crucial if the IMF is to play a major
role in preventing financial meltdown in Latin America; 2) the Brazilian
government reached an agreement with the IMF on fiscal targets for the next
three years, the anticipated package totaling approximately US$42 billion; and
3) in a long anticipated move, Ecuadorian President Mahuad and Peruvian
President Fujimori reached a peace agreement on the border dispute between the
two countries. A timely resolution will be most beneficial to Ecuador, allowing
Mahuad to focus on improving
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
the country's deteriorating fiscal position. Additionally, the agreement will
pave the way for billions of dollars in trade and investment for both countries.
Although performance improved at the end of the period, the emerging debt market
will continue to be negatively impacted by the global trend of investors
reducing their appetite for risk. Beginning with Asian currency problems in the
fall of 1997 and compounded by the extended Japanese recession and recent
weakness in US equity prices, investors are demanding a higher risk premium for
investing in credit sensitive fixed income assets. This higher risk premium
leads to higher borrowing costs for countries that still have access to the
capital markets, and shuts other countries out of the capital markets
completely. Russia's problems, which we will detail below, occurred in this
risk-averse investment environment. The investment environment limited the range
of Russia's policy response and compounded the severity of the sell-off which
spilled over to all other emerging market credits. Although market sentiment has
certainly improved, we do expect this volatile period in the emerging markets to
continue for the medium term.
For the twelve month period ending October 31, 1998, outperformers in the
emerging debt market were Argentina, Brazil, Bulgaria, Mexico, Morocco, Nigeria,
Panama, Peru and Poland. Underperformers included Ecuador, Russia and Venezuela.
On October 31, 1998 top country allocations (as a percentage of total net
assets) for the Fund were as follows:
- Venezuela 16.63%
- Mexico 14.05%
- Brazil 13.66%
- Argentina 11.80%
- Morocco 9.30%
- Russia 8.90%
- Philippines 7.11%
- Costa Rica 6.59%
- Peru 6.52%
- Algeria 5.10%
The following is a brief description of each sector's highlights over the past
twelve months.
LATIN AMERICA
Although the market outlook is cautious with regard to Latin America as capital
outflows continue, oil prices during the month of September surged, stabilizing
at the end of the period. The June 24 OPEC meeting that resulted in
larger-than-expected promises to cut output production, was largely responsible
for the price increase. Thus far, OPEC seems to be successfully implementing at
least some of its promises, meeting 83-93% of the production cuts.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
ARGENTINA The IMF mission completed its review of Argentina, announcing that
the country has met all of its fiscal targets for the first half of 1998.
Additionally, both the World Bank and the IMF made positive announcements with
regard to Argentina: the World Bank announced that US$4.5 billion would be
extended for debt financing, and the IMF added that the government had met all
Extended Fund Facility (EFF) performance targets, and that implementation of
structural reforms included in the program had been substantial. Despite these
positive developments, Moody's placed Argentina on review for a possible
downgrade. Separately, the government successfully reopened its global bond of
2017, selling an additional US$250 million at a spread of 660 basis points over
the U.S. Treasury. This was the first successful placement of emerging markets
debt in the international capital market since July. While Argentina's capital
raising efforts are impressive, we remain concerned that they will not have the
ability to raise the nearly $12 billion they will need in 1999 and are thus
underweight at this time.
BRAZIL At the end of the period, Brazil was downgraded to B2 during the month
by Moody's. In response to this, as well as to continued capital outflows, the
government announced a fiscal package aimed at spending cuts in 1998 and 1999.
And, in a long-anticipated move, the Brazilian government initiated discussions
with the IMF. An agreement is still pending but several institutions, including
the Inter-American Development Bank "IADB", pledged full support and quick
availability of funds to Brazil. Separately, Brazil elected a new president.
Fernando Henrique Cardoso secured approximately 50% of the vote, Luiz Inacio
"Lula" da Silva about 35%, and Ciro Gomes, 11%. While Brazil is continuing to
exhibit sound monetary and political strength, we are concerned that their level
of short term local currency debt ($300 billion) is a potential problem, and
thus remain underweight.
COLOMBIA During the month of September, Colombia made a surprise move,
devaluing the peso by 9%. Although the devaluation was not a surprise, the
timing of it was, as it wasn't expected to happen until January, after the
presidential elections. Both Moody's and Standard & Poor's stated that
implementing the fiscal package in a timely fashion is important now more than
ever before; and, because of the devaluation, Congress will more than likely
speed up the process. Separately, Colombia's new President, Andres Pastrana,
traveled to Washington to meet with top officials from the World Bank and the
IADB, the first state visit to the US by a Colombian president in 23 years. As a
result of the meetings, an expected US$2 billion is to be made available to
Colombia in 1999, with $1.6 billion in new credit coming from the IADB. This
amount will bring total financing to about US$4 billion for the 1998-1999
period.
ECUADOR Events in Ecuador mirrored Colombia's somewhat during the period, in
that both countries elected new Presidents, as well as devalued their
currencies. Jamil Mahuad was the official first-round winner of the presidential
race, with 34.9% of the vote, followed by Alvaro Noboa with 26.6%. As an
experienced politician with a respected economic team, Mahuad is
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
believed to be the one with the ability to stabilize the economy. We have
established a marginally overweight position because we believe we are being
adequately compensated for the risk we are taking. Further reforms will need to
take place, however, for us to increase our exposure.
MEXICO In a long-anticipated move, the government reached an agreement with
the PAN political party on the Bank Savings Protection Fund, or FOBAPROA. We
remain confident in Mexico's potential and increased exposure during the period.
The country's limited need for new capital in 1999 leads us to believe that the
country is a relative safe haven versus other more volatile assets. We are,
however, slightly underweight due to tight spread levels.
PERU In March, 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 US$33.5 billion to $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, due to continued high growth: August's growth rate was the highest of
the year thus far at 4.8%, and this trend is expected to continue throughout the
fourth quarter. In addition, Peru's external debt servicing requirements are
limited.
VENEZUELA During the period, after months of negotiations, the IMF and the
government agreed on the terms of a "shadow" fiscal monitoring program. Unlike
the previous stand-by agreement, this program will not entail any financial
support from the IMF, only technical assistance. Venezuela's market sentiment is
suffering, however, due to several factors. First, Moody's downgraded
Venezuela's sovereign ceiling to B1 from Ba2, having placed the rating on watch
for possible downgrade on May 8. Moody's pointed to the government's inability
to address the domestic implications of external shocks. In addition, political
uncertainty continues in the region. In the presidential race, Hugo Chavez, a
former Venezuelan army colonel who led the military coup against the government
in 1992, maintained a slight lead over former governor of Carabobo, Salas Romer,
at the end of October. While we are discouraged by the downgrade, as well as
political events, we remain overweight in Venezuela for several reasons:
Venezuela's capital needs in 1999 are relatively limited; Venezuela retired a
good deal of their external debt with the proceeds of the 1997 oil boom; and
Venezuelan spreads are at historically wide levels versus other similarly rated
countries.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
EASTERN EUROPE
BULGARIA In December, 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. For comparison, the upgrade
puts Bulgaria on par with Peru and one notch below Brazil and Ecuador.
Additionally, the IMF approved the fourth tranche of a US$510 million standby
loan. Bulgaria's strides in decreasing inflation and promoting growth during the
past year have been significant: inflation in February was near 1.5%, down from
100% a year ago, and was negative 0.1% in March, largely due to falling fuel
prices. At the end of the period, the IMF approved a three-year EFF program for
Bulgaria. The amount to be disbursed will equal US$850 million, to be disbursed
in 12 tranches of $72 million each. We remain slightly overweight in Bulgaria,
due to the country's limited debt service, in addition to the country meeting
all IMF fiscal targets for the year.
RUSSIA Russia's dramatic decline during the period was due to a number of
factors: 1) the government forced a restructuring of all domestic debt; 2) the
ruble was devalued; 3) Yeltsin dismissed his Cabinet, appointing Sergey
Kireyenko as the new Prime Minister "PM", only to reverse his actions at the end
of the period, re-appointing Viktor Chernomyrdin; 4) the Duma refused to appoint
Chernomyrdin, resulting in a compromise of communist Yevgeny Primakov being
appointed the new PM. These developments devastated Russian dollar denominated
bond prices during the month of August, with prices declining as much as 80%.
The result was a tremendous shock to the market and caused a wide-spread
sell-off across all emerging markets. The timing of these events was
unfortunate, at a time when the investment community needs to be convinced of
Russia's commitment to promoting political continuity and effectively
implementing fiscal reform.
While we are extremely concerned with Russia's ability to reform both
financially and politically, we have a slightly overweight US dollar denominated
position in the Fund. We believe the Fund is adequately compensated for the risk
at these prices. It is important to note that while the Fund suffered
significant market-to-market losses in these positions, the Fund did not own
ruble denominated debt. The distinction is important in that the debt the Fund
owns was not defaulted on and is still current on all interest payments. We
believe bonds, trading at cents on the dollar, have much more upside than
downside in an unchanged environment. In addition, there is significant return
potential if the country implements any meaningful reforms.
HIGH YIELD SECURITIES
The high yield market displayed surprising resilience during the first half of
the twelve months ended October 31, 1998, in the face of the Asian currency
crisis. However, the market became
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
unhinged during the second half, as did the rest of the financial markets,
resulting from the economic crisis in Russia. A "flight-to-quality" (an increase
in investors' need for higher-quality credit) ensued with upper-tier quality
companies dramatically outperforming the lower-tier sector. The high yield
market was also hurt by an outflow of money from mutual funds and a lack of
capital from broker-dealers to support high yield positions. With the domestic
economy projected to slow, cyclical issues showed the worst performance. In
addition, companies requiring access to the capital markets (selected
telecommunications companies and liquidity-constrained companies) also performed
poorly.
In the final month of the period, this difficult trend began to reverse,
following the surprise rate cut by the Federal Reserve. In the second half of
October of 1998, the performance of the high yield market was decidedly better.
Liquidity improved, spreads to treasuries tightened significantly and funds
began to flow back to the high yield markets. New issue activity picked up as
well, though issuers were limited to large, well-established names who were
willing to price new issues at a significant discount to existing ones.
Leading the market over the last twelve months were Utilities, Aerospace,
Containers, Cable & Media, and Technology. Sectors that lagged included
lower-rated securities, Financials, Energy, Steel and Paper.
In a continuing effort to provide timely information concerning the Salomon
Brothers Worldwide Income Fund Inc, shareholders may call 1-888-777-0102 (toll
free), 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,
<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
October 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS -- 114.4% VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARGENTINA -- 11.8%
Republic of Argentina, BOCON, Pro 1, 3.048%,
US$ 12,931 4/01/07(a),(e).............................................. $ 7,656,343
2,000 Republic of Argentina, Discount Bond, Series L-GL, 6.625%,
3/31/23(a),(e).............................................. 1,378,750
1,750 Republic of Argentina, Global Bond, 11.00%, 10/09/06........ 1,743,438
2,475 Republic of Argentina, Global Bond, 11.375%, 1/30/17(e)..... 2,400,750
1,500 Republic of Argentina, 12.143%, 4/10/05(a).................. 1,320,000
------------
14,499,281
------------
BRAZIL -- 12.5%
Federal Republic of Brazil, EI Bond, Series L, 6.125%,
2,880 4/15/06(a).................................................. 1,850,400
Federal Republic of Brazil, Discount Bond, Series ZL,
3,875 6.125%, 4/15/24 (a) 2,303,203
Federal Republic of Brazil, Global Bond, 9.375%,
5,325 4/07/08(e).................................................. 3,674,250
Federal Republic of Brazil, NMB, Series L, 6.1875%,
12,500 4/15/09(a),(e).............................................. 7,031,250
Federal Republic of Brazil, DCB, Series L, 6.6875%,
600 4/15/12(a),(e).............................................. 314,250
Federal Republic of Brazil, Bearer, DCB, Series L, 6.1875%,
375 4/15/12(a).................................................. 196,406
------------
15,369,759
------------
BULGARIA -- 5.2%
925 Republic of Bulgaria, IAB, 6.6875%, 7/28/11(a).............. 620,906
Republic of Bulgaria, FLIRB, Series A, 2.50%,
10,500 7/28/12(a),(e).............................................. 5,801,250
------------
6,422,156
------------
COLOMBIA -- 4.6%
6,550 Republic of Colombia, 8.82%, 8/13/05(a)..................... 5,665,750
------------
COSTA RICA -- 6.6%
10,000 Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15(e)..... 8,100,000
------------
CROATIA -- 6.3%
3,845 Croatia Government, Series B, 6.5625%, 7/31/06(a)........... 3,230,061
5,750 Croatia Government, Series A, 6.5625%, 7/31/10(a),(e)....... 4,513,750
------------
7,743,811
------------
ECUADOR -- 5.4%
3,000 Republic of Ecuador, Discount, 6.625%, 2/28/25(a),.......... 1,541,250
Republic of Ecuador, Bearer, IE Bond, 6.5625%,
330 12/21/04(a)................................................. 199,238
271 Republic of Ecuador, PDI Bond, 6.625%, 2/27/15(a),(b),(e)... 116,646
Republic of Ecuador, Bearer, PDI Bond, 6.625%,
11,170 2/27/15(a),(b),(e).......................................... 4,810,196
------------
6,667,330
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
October 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS (CONTINUED) VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IVORY COAST -- 0.2%
US$ 900 Ivory Coast, FLIRB, 2.00%, 3/31/18(a)....................... $ 216,000
------------
MEXICO -- 12.3%
15,275 United Mexican States, Global Bond, 11.375%, 9/15/16(e)..... 15,122,250
------------
PANAMA -- 5.1%
2,000 Republic of Panama, IRB, 4.00%, 7/17/14(a),(e).............. 1,462,500
6,432 Republic of Panama, PDI Bond, 6.6875%, 7/17/16(a),(b),(e)... 4,771,488
------------
6,233,988
------------
PERU -- 6.5%
14,075 Republic of Peru, PDI Bond, 4.00%, 3/07/17(a),(e)........... 8,013,953
------------
PHILIPPINES -- 7.1%
4,937 Republic of Philippines, 8.75%, 10/07/16(e)................. 4,184,108
1,000 Republic of Philippines, 8.875%, 4/15/08(e)................. 905,000
4,500 Republic of Philippines, Series B, 6.50%, 12/01/17.......... 3,645,000
------------
8,734,108
------------
POLAND -- 0.9%
1,201 Republic of Poland, PDI Bond, 5.00%, 10/27/14(a)............ 1,091,409
------------
RUSSIA -- 8.2%
3,825 Russia, Ministry of Finance, Global Bond, 11.00%, 7/24/18... 779,344
Russia, Ministry of Finance, Global Bond, 12.75%,
35,625 6/24/28(e).................................................. 8,550,000
Russia, Ministry of Finance, Global Bond, 11.75%,
2,625 6/10/03(d),(e).............................................. 656,250
1,038 Russia, IAN, 6.625%, 12/15/15(a),(d)........................ 108,984
------------
10,094,578
------------
SOUTH KOREA -- 3.7%
Export-Import Bank of Korea, Global Bond, 7.25%,
750 6/25/01(e).................................................. 671,850
Export-Import Bank of Korea, Global Bond, 6.50%,
1,000 2/10/02(e).................................................. 855,700
750 Korea Development Bank, Global Bond, 6.625%, 11/21/03(e).... 607,725
2,630 Korea Development Bank, Global Bond, 7.90%, 2/01/02(e)...... 2,365,422
------------
4,500,697
------------
URUGUAY -- 1.4%
2,237 Uruguay, DCB, Series B, 6.6875%, 2/18/07(a),(e)............. 1,688,816
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
October 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS (CONCLUDED) VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VENEZUELA -- 16.6%
Republic of Venezuela, DCB, Series DL, 6.625%,
US$ 4,071 12/18/07(a),(e)............................................. $ 2,475,941
Republic of Venezuela, FLIRB, Series A, 6.125%,
23,071 3/31/07(a),(e).............................................. 12,977,397
6,825 Republic of Venezuela, Global Bond, 13.625%, 8/15/18(e)..... 4,982,250
------------
20,435,588
------------
TOTAL SOVEREIGN BONDS (cost $166,419,584)................... 140,599,474
------------
LOAN PARTICIPATIONS(c) -- 15.3%
- -------------------------------------------------------------------------------------------------------------------------
The People's Democratic Republic of Algeria,
2,795 Tranche A, 7.1875%, 3/04/00 (Chase Manhattan)(a).......... 2,362,159
3,591 Tranche 1, 6.375%, 9/04/06 (Chase Manhattan)(a)........... 1,705,682
5,000 Tranche 3, 6.40625%, 3/04/10 (Chase Manhattan)(a)......... 2,200,000
Government of Jamaica,
222 Tranche A, 6.1875%, 10/15/00 (Chase Manhattan)(a)......... 208,859
Kingdom of Morocco,
Yen 416,047 Tranche A, 2.5175%, 1/01/09 (Goldman Sachs)(a)............ 2,427,390
Tranche A, 6.5625%, 1/01/09 (JP Morgan, Chase
US$ 1,500 Manhattan)(a)............................................. 1,132,500
Tranche B, 6.4375%, 1/01/04 (Morgan Stanley Emerging
9,706 Markets Inc., Bankers Trust)(a),(e)..................... 7,861,764
Russia, Principal Loan, 6.625%, 12/15/20 (Chase Manhattan,
10,850 Goldman Sachs, ING, JP Morgan)(a),(e),(f)................. 840,875
------------
TOTAL LOAN PARTICIPATIONS (cost $27,232,025)................ 18,739,229
------------
CORPORATE BONDS -- 13.6%
- -------------------------------------------------------------------------------------------------------------------------
Brazil,
Companhia Energetica De Sao Paulo, 9.125% until 6/26/02
2,000 (9.625% thereafter), 6/26/07(e)......................... 1,420,000
Indonesia,
Tjiwi Kimia International Finance Company B.V., 10.00%,
3,000 8/01/04(d),(e) ......................................... 1,500,000
Mexico,
2,000 Grupo Industrial Durango, 12.00%, 7/15/01(e).............. 1,480,000
1,000 Hylsa S.A. de C.V., 9.25%, 9/15/07(e)..................... 665,000
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (concluded)
October 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) CORPORATE BONDS (CONCLUDED) VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States,
US$ 1,500 Adelphia Communications, 10.50%, 7/15/04(e)............... $ 1,646,250
Jordan Industries, Inc., Zero Coupon until 4/01/02 (11.75%
4,825 thereafter), 4/01/09(e)................................. 2,991,599
1,500 North Atlantic Trading, 11.00%, 6/15/04(e)................ 1,440,000
1,000 Polymer Group, 9.00%, 7/01/07(e).......................... 940,000
2,250 Revlon Worldwide, Zero Coupon, 3/15/01(e)................. 1,327,500
Telewest PLC, Zero Coupon until 10/01/00 (11.00%
2,750 thereafter), 10/01/07(e)................................ 2,076,500
TFM Sa De Cv, Zero Coupon until 6/15/02 (11.75%
3,000 thereafter), 6/15/09(e)................................. 1,207,500
------------
TOTAL CORPORATE BONDS (cost $21,343,624).................... 16,694,349
------------
TOTAL INVESTMENTS -- 143.3% (cost $214,995,233)............. 176,033,052
------------
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS -- (43.3%)... (53,166,321)
------------
NET ASSETS -- 100.0%
(equivalent to $9.70 per share on 12,673,198 common shares
outstanding)................................................ $122,876,731
============
</TABLE>
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 1998:
<TABLE>
<CAPTION>
CONTRACTS IN EXCHANGE CONTRACTS AT DELIVERY UNREALIZED
TO DELIVER FOR VALUE DATE DEPRECIATION
---------- ----------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
Sale................. Yen 345,500,000 US$2,952,991 US$2,974,653 11/27/98 $(21,662)
</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) Portion of income earned is capitalized as Russia Interest in Arrears
Notes.
<TABLE>
<C> <C> <S>
BOCON -- Bonos De Consolidacion.
DCB -- Debt Conversion Bond.
EI -- Eligible Interest.
FLIRB -- Front Loaded Interest Reduction Bond.
IAB -- Interest in Arrears Bond.
IAN -- Interest in Arrears Note.
IE -- Interest Equalization.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PDI -- Past Due Interest.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 10
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SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost -- $214,995,233)................ $176,033,052
Receivable for investments sold............................. 3,117,154
Interest receivable......................................... 5,053,513
Deferred organizational expenses............................ 3,582
Prepaid expenses............................................ 10,964
------------
Total assets........................................ 184,218,265
------------
LIABILITIES
Payable to bank due to overdraft............................ 622,310
Payable for investments purchased........................... 254,813
Loan Payable (Note 5)....................................... 60,000,000
Accrued interest expense on loan (Note 5)................... 10,652
Net unrealized depreciation on forward foreign currency
contracts................................................. 21,662
Accrued management fee...................................... 88,635
Accrued administration...................................... 14,912
Accrued expenses............................................ 328,550
------------
Total liabilities................................... 61,341,534
------------
NET ASSETS
Common Stock ($.001 par value, authorized 100,000,000;
12,673,198 shares outstanding)............................ 12,673
Additional paid-in capital.................................. 176,865,244
Undistributed net investment income......................... 4,234,147
Accumulated net realized loss on investment................. (19,259,140)
Net unrealized depreciation on investments and foreign
currency translations..................................... (38,976,193)
------------
Net assets.......................................... $122,876,731
------------
NET ASSET VALUE PER SHARE ($122,876,731 / 12,673,198
shares)................................................... $ 9.70
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 11
<PAGE> 13
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1998
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
INCOME
Interest (includes discount accretion of
$7,738,307)....................................... $ 29,846,364
EXPENSES
Interest on loan (Note 5)........................... $ 3,840,964
Management fee...................................... 1,609,890
Administration fee.................................. 268,394
Custody fee......................................... 129,999
Printing and mailing fees........................... 50,000
Legal fee........................................... 41,000
Accounting fee...................................... 65,000
Audit & tax fees.................................... 58,000
Transfer agent fee.................................. 41,975
Registration fee.................................... 24,190
Directors' fees & expenses.......................... 23,000
Amortization of deferred organization expense
(Note 2).......................................... 22,170
------------
Total expenses.......................................... 6,174,582
------------
Net investment income................................... 23,671,782
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investments......................................... (18,720,573)
Options transactions................................ 5,430
Foreign currency transactions....................... 45,263 (18,669,880)
------------ ------------
Change in net unrealized appreciation on:
Investments......................................... (46,792,577)
Foreign currencies.................................. (5,331) (46,797,908)
------------ ------------
Net realized loss and change in net unrealized
appreciation.......................................... (65,467,788)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS.............. $(41,796,006)
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 12
<PAGE> 14
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income................................... $ 23,671,782 $ 20,171,114
Net realized gain (loss) on investments................. (18,669,880) 25,505,631
Change in net unrealized appreciation................... (46,797,908) (21,754,816)
------------ ------------
Net increase (decrease) in Net Assets From Operations... (41,796,006) 23,921,929
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income.............................. (21,074,711) (18,795,852)
From realized gains..................................... (12,547,816) --
------------ ------------
Decrease in Net Assets From Distributions to
Shareholders.......................................... (33,622,527) (18,795,852)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares issued in reinvestment of dividends
(16,065 and 0 shares issued).......................... 155,564 --
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... (75,262,969) 5,126,077
------------ ------------
NET ASSETS
Beginning of year....................................... 198,139,700 193,013,623
------------ ------------
End of year (includes undistributed net investment
income of $4,292,835 and $1,591,813, respectively).... $122,876,731 $198,139,700
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 13
<PAGE> 15
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Year Ended October 31, 1998
<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 and options
on investments......................................... (347,737,018)
Proceeds from disposition of long-term portfolio
investments, options on investments and principal
paydowns............................................... 321,553,985
-------------
22,021,967
Net investment income................................... 23,671,782
Accretion of discount on investments.................... (7,738,307)
Interest on payment-in-kind bonds....................... (1,868,149)
Amortization of organization expenses................... 22,170
Net change in receivables/payables related to
operations............................................. (3,265,527)
-------------
Net cash flows provided by operating activities..... 32,843,936
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Proceeds from shares issued in reinvestment of
dividends.............................................. 155,564
Cash distributions paid................................. (33,622,527)
-------------
Net cash used for financing activities.............. (33,466,963)
-------------
Net decrease in cash........................................ (623,027)
Cash at beginning of year................................... 717
-------------
Cash at end of year......................................... $ (622,310)
-------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
PAGE 14
<PAGE> 16
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
The Salomon Brothers Worldwide Income Fund Inc (the "Fund") was incorporated in
Maryland on October 21, 1993 and is registered under the Investment Company Act
of 1940, as amended, as a non-diversified, closed-end management investment
company. The Fund commenced operations on December 31, 1993. The Fund seeks to
maintain a high level of current income by investing primarily in a portfolio of
high-yield foreign sovereign debt securities and high-yield non-U.S. and U.S.
corporate debt securities. As a secondary objective, the Fund seeks capital
appreciation.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
("GAAP"). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
SECURITIES VALUATION. In valuing the Fund's assets, all securities for which
market quotations are readily available are valued (except as described below)
(i) at the last sales price prior to the time of determination if there were a
sales price on the date of determination, (ii) at the mean between the last
current bid and asked prices if there were no sales price on such date and bid
and asked quotations are available and (iii) at the bid price if there were no
sales price on such date and only bid quotations are available. Publicly traded
sovereign bonds are typically traded internationally in the over-the-counter
market and will be valued at the mean between the last current bid and asked
price as of the close of business of that market. However, where the spread
between bid and asked price exceeds five percent of the par value of the
security, the security is valued at the bid price. Securities may be valued by
independent pricing services which use prices provided by market-makers or
estimates of market values obtained from yield data relating to instruments or
securities with similar characteristics. Short-term investments having a
maturity of 60 days or less are valued at amortized cost which approximates
market value. Securities for which reliable quotations are not readily available
are valued at fair value as determined in good faith by, or under procedures
established by the Board of Directors.
REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is the
Fund's policy that its custodian takes possession of the underlying collateral
securities, the value of which at least equals the principal amount of the
repurchase transaction, including accrued interest. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral is
marked-to-market to ensure the adequacy of the collateral. If the seller
defaults and the value of the collateral declines or if bankruptcy proceedings
are commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
PAGE 15
<PAGE> 17
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities -- at
the 12:00 noon rate of exchange reported by Reuters;
(ii) purchases and sales of investment securities, income and expenses -- at the
rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the period, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the period. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of portfolio securities sold during
the period.
Net realized gains on foreign currency transactions represent net foreign
exchange gains from disposition of foreign currency, gains or losses realized
between the trade and settlement dates on security transactions, and the
difference between amounts of interest recorded on the Fund's books and the U.S.
dollar equivalent amounts actually received. Net currency gains and losses from
valuing foreign currency denominated assets, except portfolio securities, and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation/depreciation on investments and foreign currency
translation.
FORWARD CURRENCY CONTRACTS. A forward currency contract ("forward contract")
is a commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The contracts are valued on each valuation date at
current exchange rates and any unrealized gain or loss is included in net
unrealized appreciation or depreciation on investments and foreign currencies.
The Fund records realized gains or losses on delivery of the currency or at the
time the forward contract is extinguished (compensated) by entering into a
closing transaction prior to delivery. This gain or loss, if any, is included in
net realized gain (loss) on foreign currency transactions.
CASH FLOW INFORMATION. The Fund invests in securities and distributes
dividends and distributions from net investment income and from net realized
gains which are paid in cash and may be reinvested at the discretion of
shareholders. These activities are reported in the Statement of Changes in Net
Assets and additional information on cash receipts and cash payments is
presented in the Statement of Cash Flows.
Accounting practices that do not affect reporting activities on a cash basis
include carrying investments at value and amortizing discounts or premiums on
debt obligations. For the year ended October 31, 1998, the Fund paid interest
expense of $5,760,000.
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 16
<PAGE> 18
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
of its taxable income and capital gains, if any, to shareholders. Therefore, no
federal income tax or excise tax provision is required.
DIVIDENDS. The Fund declares and pays dividends monthly from net investment
income. Net long-term capital gains, if any, in excess of loss carryforwards
will be distributed annually. Dividends are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in accordance
with federal income tax regulations which may differ from generally accepted
accounting principles. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences do not require
reclassifications. Dividends and distributions which exceed net investment
income and net realized capital gains for financial reporting purposes, but not
for tax purposes are reported as distributions in excess of net investment
income and distributions in excess of net realized capital gains.
DEFERRED ORGANIZATION EXPENSES. A total of $116,182 was incurred in connection
with the organization of the Fund. These costs have been deferred and are being
amortized on a straight-line basis over a period of sixty months from the date
the Fund commenced investment operations.
NOTE 3. MANAGEMENT AND ADMINISTRATION FEES AND OTHER TRANSACTIONS
The Fund has an Investment Advisory Agreement with Salomon Brothers Asset
Management Inc (the "Adviser"), 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 October 31, 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 17
<PAGE> 19
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (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 year ended October 31, 1998 aggregated $280,087,756 and $290,996,684,
respectively.
The federal income tax basis of the Fund's investments at October 31, 1998 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized depreciation for federal income tax purposes was $38,962,181
(gross unrealized appreciation -- $3,474,119; gross unrealized
depreciation -- $42,436,300).
During the year ended October 31, 1998, permanent book/tax differences of
$45,263 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 October 30, 1998 at an interest rate of 5.57859%, which is equal to
six-month LIBOR plus 1.375% and the maturity date is April 30, 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 $130,007,188 on October 31, 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 18
<PAGE> 20
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
("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 October 31, 1998 was $18,739,229.
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
October 31, 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.
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
PAGE 19
<PAGE> 21
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
payables denominated in a foreign currency. Forward contracts involve elements
of market risk in excess of the amount reflected in the Statement of Assets and
Liabilities. The Fund bears the risk of an unfavorable change in the foreign
exchange rate underlying the forward contract. Risks may also arise upon
entering into these contracts from the potential inability of the counterparties
to meet the terms of their contracts. As of October 31, 1998, the Fund has an
outstanding contract to sell 345,500,000 Japanese Yen for US$ 2,952,991 for a
scheduled settlement of November 27, 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. EVENTS SUBSEQUENT TO OCTOBER 31, 1998
Subsequent to October 31, 1998, the Board of Directors of the Fund declared
dividends of $.11875 per common share payable November 27, 1998, December 24,
1998 and January 29, 1999 to shareholders of record on November 17, 1998,
December 15, 1998 and January 12, 1999, respectively.
Subsequent to October 31, 1998, the Board of Director of the Fund also declared
a dividend of $.39225 per common share, payable December 24, 1998, to
shareholders of record on December 15, 1998.
NOTE 11. BYLAW AMENDMENT
The Board of Directors of the Fund recently reviewed and approved various
amendments to the Fund's bylaws. For example, the bylaws 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 not 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 year'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.
PAGE 20
<PAGE> 22
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Data for a share of common stock outstanding throughout each year:
<TABLE>
<CAPTION>
DECEMBER 31,
1993*
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997 1996 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............................ 1.87 1.59 1.99 1.71 1.02
Net realized and unrealized gain (loss) on
investments.................................... (5.16) .30 3.98 (.89) (2.60)
-------- -------- -------- -------- --------
Total from investment operations............. (3.29) 1.89 5.97 .82 (1.58)
-------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....................... (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............ (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................... $ 9.70 $ 15.65 $ 15.25 $ 10.71 $ 11.31
======== ======== ======== ======== ========
Market price per share, end of period............ $ 10.875 $13.8125 $ 14.00 $ 11.375 $ 10.75
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN(a)....................... 4.83% 8.93% 37.34% 20.61% (16.55)%+
RATIOS TO AVERAGE NET ASSETS:
Total expenses, including interest expense... 3.48% 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........................ 13.35% 9.52% 15.25% 16.70% 10.24%#
SUPPLEMENTAL DATA:
Net assets, end of period (000).............. $122,877 $198,140 $193,014 $135,540 $143,159
Average net assets (000)..................... $177,337 $211,806 $165,059 $129,516 $151,954
Portfolio turnover rate...................... 122% 175% 97% 101% 13%
Asset coverage for Loan outstanding.......... 305% 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....................................... 6.40% 6.62% 6.80% 7.83% 5.88%#
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
(a) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported. Dividends and
distributions are assumed, for purposes of this calculation, to be
reinvested at prices obtained under the Fund's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment return for periods of less than one full year are not
annualized.
+ Based on beginning period price of $14.03 (initial offering price of $15.00
less sales load of $.975) and end of period market value of $10.75 per
share.
++ Net asset value immediately after closing of initial public offering was
$13.96.
# Annualized.
See accompanying notes to financial statements.
PAGE 21
<PAGE> 23
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Salomon Brothers Worldwide Income Fund Inc
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations, of cash
flows and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Salomon Brothers Worldwide
Income Fund Inc (the "Fund") at October 31, 1998, the results of its operations
and cash flows for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the four years in the period then ended and for the period December 31, 1993
(commencement of investment operations) through October 31, 1994, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
December 18, 1998
PAGE 22
<PAGE> 24
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
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)
<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
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
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
See accompanying notes to financial statements.
PAGE 23
<PAGE> 25
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- -------------------------------------------------------------------------
TAX INFORMATION (unaudited)
For Federal tax purposes, the Fund hereby designates for the fiscal year ended
October 31, 1998:
- - Long-term capital gain distributions paid of $12,547,816.
- ---------------------------------------------------------------------------
OTHER INFORMATION (unaudited)
Year 2000. The investment management services provided to the Fund by the
Investment Adviser depend in large part on the smooth functioning of its
computer systems. Many computer software systems in use today cannot recognize
the year 2000, but revert to 1900 or some other date, due to the manner in which
the dates were encoded or calculated. The capability of these systems to
recognize the year 2000 could have a negative impact on the Investment Adviser's
provision of investment advisory services, including handling of securities
trades, pricing and account services. The Investment Adviser has advised the
Fund that it has been reviewing all of their computer systems and actively
working on necessary changes to its systems to prepare for the year 2000 and
expects that given the extensive testing which it is undertaking, its systems
will be year 2000 compliant before such date. In addition, the Investment
Adviser has been advised by certain of the Fund's service providers that they
are also in the process of modifying their systems with the same goal. There
can, however, be no assurance that the Investment Adviser or any other service
provider will be successful in achieving year 2000 compliance, or that
interaction with other non-complying computer systems will not impair services
to the Fund at that time.
PAGE 24
<PAGE> 26
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF
DIVIDEND REINVESTMENT PLAN
Pursuant to certain rules of the Securities and Exchange Commission, the
following additional disclosure is provided.
1. Each shareholder initially purchasing shares of common stock ("Shares") of
Salomon Brothers Worldwide Income Fund Inc (the "Fund") on or after September 6,
1996 will be deemed to have elected to be a participant in the Amended and
Restated Dividend Reinvestment Plan (the "Plan"), unless the shareholder
specifically elects in writing (addressed to the Agent at the address below or
to any nominee who holds Shares for the shareholder in its name) to receive all
income dividends and distributions of capital gains in cash, paid by check,
mailed directly to the record holder by or under the direction of American Stock
Transfer & Trust Company as the Fund's dividend-paying agent (the "Agent"). A
shareholder whose Shares are held in the name of a broker or nominee who does
not provide an automatic reinvestment service may be required to take such
Shares out of "street name" and register such Shares in the shareholder's name
in order to participate, otherwise dividends and distributions will be paid in
cash to such shareholder by the broker or nominee. Each participant in the Plan
is referred to herein as a "Participant." The Agent will act as Agent for each
Participant, and will open accounts for each Participant under the Plan in the
same name as their Shares are registered.
2. Unless the Fund declares a dividend or distribution payable only in the form
of cash, the Agent will apply all dividends and distributions in the manner set
forth below.
3. If, on the determination date, the market price per Share equals or exceeds
the net asset value per Share on that date (such condition, a "market premium"),
the Agent will receive the dividend or distribution in newly issued Shares of
the Fund on behalf of Participants. If, on the determination date, the net asset
value per Share exceeds the market price per Share (such condition, a "market
discount"), the Agent will purchase Shares in the open-market. The determination
date will be the fourth New York Stock Exchange trading day (a New York Stock
Exchange trading day being referred to herein as a "Trading Day") preceding the
payment date for the dividend or distribution. For purposes herein, "market
price" will mean the average of the highest and lowest prices at which the
Shares sell on the New York Stock Exchange on the particular date, or if there
is no sale on that date, the average of the closing bid and asked quotations.
4. Purchases made by the Agent will be made as soon as practicable commencing on
the Trading Day following the determination date and terminating no later than
30 days after the dividend or distribution payment date except where temporary
curtailment or suspension of purchase is necessary to comply with applicable
provisions of federal securities law; provided,
PAGE 25
<PAGE> 27
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF
DIVIDEND REINVESTMENT PLAN (continued)
however, that such purchases will, in any event, terminate on the Trading Day
prior to the "ex-dividend" date next succeeding the dividend or distribution
payment date.
5. If (i) the Agent has not invested the full dividend amount in open-market
purchases by the date specified in paragraph 4 above as the date on which such
purchases must terminate or (ii) a market discount shifts to a market premium
during the purchase period, then the Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued Shares (x) in the case of (i) above, at the close of business on
the date the Agent is required to terminate making open-market purchases as
specified in paragraph 4 above or (y) in the case of (ii) above, at the close of
business on the date such shift occurs; but in no event prior to the payment
date for the dividend or distribution.
6. In the event that all or part of a dividend or distribution amount is to be
paid in newly issued Shares, such Shares will be issued to Participants in
accordance with the following formula: (i) if, on the valuation date, the net
asset value per share is less than or equal to the market price per Share, then
the newly issued Shares will be valued at net asset value per Share on the
valuation date; provided, however, that if the net asset value is less than 95%
of the market price on the valuation date, then such Shares will be issued at
95% of the market price and (ii) if, on the valuation date, the net asset value
per share is greater than the market price per Share, then the newly issued
Shares will be issued at the market price on the valuation date. The valuation
date will be the dividend or distribution payment date, except that with respect
to Shares issued pursuant to paragraph 5 above, the valuation date will be the
date such Shares are issued. If a date that would otherwise be a valuation date
is not a Trading Day, the valuation date will be the next preceding Trading Day.
7. The open-market purchases provided for above may be made on any securities
exchange on which the Shares of the Fund are traded, in the over-the-counter
market or in negotiated transactions, and may be on such terms as to price,
delivery and otherwise as the Agent shall determine. Funds held by the Agent
uninvested will not bear interest, and it is understood that, in any event, the
Agent shall have no liability in connection with any inability to purchase
Shares within the time periods herein provided, or with the timing of any
purchases effected. The Agent shall have no responsibility as to the value of
the Shares acquired for the Participant's account. The Agent may commingle
amounts of all Participants to be used for open-market purchases of Shares and
the price per Share allocable to each Participant in connection with such
purchases shall be the average price (including brokerage commissions) of all
Shares purchased by the Agent.
8. The Agent will maintain all Participant accounts in the Plan and will furnish
written confirmations of all transactions in each account, including information
needed by Participants for personal and tax records. The Agent will hold Shares
acquired pursuant to the Plan in
PAGE 26
<PAGE> 28
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF
DIVIDEND REINVESTMENT PLAN (continued)
noncertificated form in the Participant's name or that of its nominee, and each
Participant's proxy will include those Shares purchased pursuant to the Plan.
The Agent will forward to Participants any proxy solicitation material and will
vote any Shares so held for Participants only in accordance with the proxy
returned by Participants to the Fund. Upon written request, the Agent will
deliver to Participants, without charge, a certificate or certificates for the
full Shares.
9. The Agent will confirm to Participants each acquisition made for their
respective accounts as soon as practicable but not later than 60 days after the
date thereof. Although Participants may from time to time have an undivided
fractional interest (computed to three decimal places) in a Share of the Fund,
no certificates for fractional shares will be issued. Dividends and
distributions on fractional shares will be credited to each Participant's
account. In the event of termination of a Participant's account under the Plan,
the Agent will adjust for any such undivided fractional interest in cash at the
market value of the Fund's Shares at the time of termination less the pro rata
expense of any sale required to make such an adjustment.
10. Any share dividends or split shares distributed by the Fund on Shares held
by the Agent for Participants will be credited to their respective accounts. In
the event that the Fund makes available to Participants rights to purchase
additional Shares or other securities, the Shares held for Participants under
the Plan will be added to other Shares held by the Participants in calculating
the number of rights to be issued to Participants.
11. The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. Participants will be charged a pro rata
share of brokerage commissions on all open-market purchases.
12. Participants may terminate their accounts under the Plan by notifying the
Agent in writing. Such termination will be effective immediately if notice is
received by the Agent not less than ten days prior to any dividend or
distribution record date; otherwise such termination will be effective on the
first trading day after the payment date for such dividend or distribution with
respect to any subsequent dividend or distribution. The Plan may be amended or
terminated by the Fund as applied to any dividend or capital gains distribution
paid subsequent to written notice of the change or termination sent to
Participants at least 30 days prior to the record date for the dividend or
capital gains distribution. The Plan may be amended or terminated by the Agent,
with the Fund's prior written consent, on at least 30 days' written notice to
Plan Participants. Notwithstanding the preceding two sentences, the Agent or the
Fund may amend or supplement the Plan at any time or times when necessary or
appropriate to comply with applicable law or rules or policies of the Securities
and Exchange Commission or any other regulatory authority. Upon any termination,
the Agent will cause a certificate or certificates for the full Shares held by
each Participant under the Plan and cash
PAGE 27
<PAGE> 29
SALOMON BROTHERS WORLDWIDE INCOME FUND INC
- --------------------------------------------------------------------------------
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF
DIVIDEND REINVESTMENT PLAN (continued)
adjustment for any fraction to be delivered to each Participant without charge.
If the Participant elects by notice to the Agent in writing in advance of such
termination to have the Agent sell part or all of a Participant's Shares and
remit the proceeds to Participant, the Agent is authorized to deduct a $2.50 fee
plus brokerage commission for this transaction from the proceeds.
13. Any amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Agent receives
written notice of the termination of the Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its place and
stead of a successor Agent under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent under
these terms and conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will be authorized to
pay to such successor Agent, for each Participant's account, all dividends and
distributions payable on Shares of the Fund held in each Participant's name or
under the Plan for retention or application by such successor Agent as provided
in these terms and conditions.
14. In the case of Participants, such as banks, broker-dealers or other
nominees, which hold Shares for others who are beneficial owners ("Nominee
Holders"), the Agent will administer the Plan on the basis of the number of
Shares certified from time to time by each Nominee Holder as representing the
total amount registered in the Nominee Holder's name and held for the account of
beneficial owners who are to participate in the Plan.
15. The Agent shall at all times act in good faith and use its best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement and to comply with applicable law, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by its negligence, bad faith, or willful misconduct or that of its
employees.
16. All correspondence concerning the Plan should be directed to the Agent at 40
Wall Street, 46th Floor, New York, New York 10005.
PAGE 28
<PAGE> 30
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.
- --------------------------------------------------------------------------------
