UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-8092
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Robert I. Frenkel, Esq.
Salomon Brothers Asset Management Inc.
300 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 725-6666
Date of fiscal year end: OCTOBER 31
Date of reporting period: APRIL 30, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
The SEMI-ANNUAL Report to Stockholders is filed herewith.
[INSERT SHAREHOLDER REPORT]
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
LETTER FROM THE CHAIRMAN
[R. JAY GERKEN PHOTO]
R. JAY GERKEN, CFA
Chairman
DEAR SHAREHOLDER,
From last November through February, the first four months of the semi-annual
period, emerging debt markets, as represented by the J.P. Morgan Emerging
Markets Bond Index Plus ("EMBI+")(i), continued to perform positively amid a
relatively benign U.S. Treasury market. Strength in commodity prices supported
emerging markets valuations during the quarter. Latin American countries, which
constitute a large portion of the EMBI+, particularly benefited from high
commodity prices, as approximately one-third of the region's exports are
commodity based. The markets also benefited from signs of a global economic
turnaround.
While emerging market debt's fundamentals remained strong, April saw the EMBI+'s
largest sell off since July of 2001, with spreads(ii) over U.S. Treasuries
widening to levels not seen since October of last year. The sell-off was driven
almost entirely by technical factors, as many traders reacted to the upward
interest rate pressure by selling their emerging markets debt positions in an
effort to take profits, unwind existing leveraged positions and decrease their
overall risk.
Based on its market price total return of -8.17% for the six-month period ended
April 30, 2004, the Salomon Brothers Worldwide Income Fund Inc., underperformed
the EMBI+, which returned 1.48% for the same period. The fund returned 1.45%
based on its net asset value ("NAV"),(iii) for this same time frame. The fund
also underperformed its Lipper emerging markets debt closed-end funds category
average, which returned 2.23% over the same period.(iv) Please note that Lipper
performance returns are based on each fund's NAV.
The fund took advantage of its overweights in Colombia, Venezuela, and Ecuador
during the first five months of the time frame but underperformed during April's
sell off due to the portfolio's positions in the highly leveraged markets of
Brazil and Ecuador, which were the month's two worst performers in the EMBI+.
Our use of leverage, which is needed to achieve the fund's stated yield, also
detracted from the fund's performance.(v)
During the six months ended April 30, 2004, the fund distributed dividends to
shareholders totaling approximately $0.71 per share. The performance table on
the next page shows the fund's 30-day SEC yield as well as its six-month total
return based on its NAV and market price. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. THE FUND'S YIELDS WILL VARY.
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
<Table>
<Caption>
FUND PERFORMANCE AS OF APRIL 30, 2004
- ----------------------------------------------------------------------------------------------
30-DAY SIX-MONTH
PRICE PER SHARE SEC YIELD TOTAL RETURN
- -------------------------------------------------------- ------------------ ------------
$14.57 (NAV) 7.21% 1.45%
$14.03 (NYSE) 7.49% -8.17%
All figures represent past performance and are not a guarantee of future results. The fund's
yields will vary.
Total returns are based on changes in NAV or market price, respectively. Total returns assume
the reinvestment of all dividends and/or capital gains distributions, if any, in additional
shares. The "SEC yield" is a return figure often quoted by bond and other fixed income mutual
funds. This quotation is based on the most recent 30-day (or one month) period covered by the
fund's filings with the SEC. The yield figure reflects the dividends and interest and earned
during the period after deduction of the fund's expenses for the period. These yields are as
of April 30, 2004 and are subject to change.
</Table>
INFORMATION ABOUT YOUR FUND
In recent months several issues in the mutual fund industry have come under the
scrutiny of federal and state regulators. The fund's Adviser and some of its
affiliates have received requests for information from various government
regulators regarding market timing, late trading, fees and other mutual fund
issues in connection with various investigations. The fund has been informed
that the Adviser and its affiliates are responding to those information
requests, but are not in a position to predict the outcome of these requests and
investigations.
LOOKING FOR ADDITIONAL INFORMATION?
The fund is traded under the symbol "SBW" and its closing market price is
available in most newspapers under the NYSE listings. The daily NAV is available
online under symbol XSBWX. Barron's and The Wall Street Journal's Monday
editions carry closed-end fund tables that will provide additional information.
In addition, the fund issues a quarterly press release that can be found on most
major financial web sites as well as www.sbam.com.
In a continuing effort to provide information concerning the fund, shareholders
may call 1-888-777-0102 or 1-800-SALOMON (toll free), Monday through Friday from
8:00 a.m. to 6:00 p.m. Eastern Time, for the fund's current NAV, market price
and other information.
Thank you for your investment in the Salomon Brothers Worldwide Income Fund Inc.
We appreciate that you have entrusted us to manage your money and value our
relationship with you.
Sincerely,
/s/ R. JAY GERKEN
R. Jay Gerken, CFA
Chairman
May 19, 2004
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
The information provided is not intended to be a forecast of future events, a
guarantee of future results or investment advice. Views expressed may differ
from those of the firm as a whole.
RISKS: An investment in the fund is subject to investment risks, including the
possible loss of the entire principal amount that you invest. Your shares at any
point may be worth less than what you invested, even after taking into account
the reinvestment of fund dividends and distributions. The fund may invest in
foreign securities that are subject to certain risks of overseas investing,
including currency fluctuations and changes in political and economic
conditions, which could result in significant market fluctuations. These risks
are magnified in emerging or developing markets. The fund may also invest in
derivatives, such as options or futures, which can be illiquid and harder to
value, especially in declining markets. A small investment in certain
derivatives may have a potentially large impact on the fund's performance.
Derivatives can disproportionately increase losses as stated in the prospectus.
Portfolio holdings and breakdowns are as of April 30, 2004 and are subject to
change. Please refer to pages 4 through 7 for a list and percentage breakdown of
the fund's holdings.
The mention of country breakdowns is for informational purposes only and should
not be construed as a recommendation to purchase or sell any securities. The
information provided regarding such sectors is not a sufficient basis upon which
to make an investment decision. Investors seeking financial advice regarding the
appropriateness of investing in any securities or investment strategies
discussed should consult their financial professional. Portfolio holdings are
subject to change at any time and may not be representative of the portfolio
manager's current or future investments. The fund's top five country holdings as
of April 30, 2004 were: Brazil (30.85%); Russia (20.67%); Mexico (12.63%);
Philippines (6.40%) and Colombia (6.09%). The fund's portfolio composition is
subject to change at any time.
All index performance reflects no deduction for fees, expenses or taxes. Please
note that an investor cannot invest directly in an index.
(i)
The EMBI+ is a total return index that tracks the traded market for U.S.
dollar-denominated Brady and other similar sovereign restructured bonds traded
in the emerging markets.
(ii)
Credit spread is the difference between the yield of a particular corporate
security and a benchmark security that has the same maturity as that particular
corporate security.
(iii)
NAV is a price that reflects the value of the fund's underlying portfolio plus
other assets, less the fund's liabilities. However, the price at which an
investor may buy or sell shares of the fund is at the fund's market price as
determined by supply of and demand for the fund's shares.
(iv)
Lipper is a major independent mutual-fund tracking organization. Returns are
based on the six-month period ended April 30, 2004, calculated among 12 funds
in the fund's Lipper peer group of closed-end emerging markets debt funds,
including the reinvestment of dividends and capital gains and excluding sales
charges.
(v)
Leverage may magnify gains and increase losses in the fund's portfolio.
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
SCHEDULE OF INVESTMENTS (unaudited)
April 30, 2004
<Table>
<Caption>
FACE
AMOUNT SECURITY(A) VALUE
- --------------------------------------------------------------------------------------------------
SOVEREIGN BONDS -- 91.5%
ARGENTINA -- 0.7%
Republic of Argentina, Series L:
$ 1,260,000 6.000% due 3/31/23 (b).................................. $ 659,925
2,200,000 DISC, 2.0625% due 3/31/23 (b)(c)........................ 1,152,250
------------
1,812,175
------------
BRAZIL -- 24.1%
Federal Republic of Brazil:
995,000 10.125% due 5/15/27..................................... 876,844
1,870,000 12.250% due 3/6/30...................................... 1,907,400
1,350,000 11.000% due 8/17/40..................................... 1,260,562
24,996,504 C Bond, 8.000% due 4/15/14 (d).......................... 23,012,407
DCB, Series L:
27,741,176 Bearer, 2.125% due 4/15/12 (c)........................ 23,267,912
1,152,941 Registered, 2.125% due 4/15/12 (c).................... 965,588
3,461,538 FLIRB, 2.0625% due 4/15/09 (c).......................... 3,115,385
368 MYDFA, 2.000% due 9/15/07 (c)........................... 339
4,147,210 NMB, Series L, 2.125% due 4/15/09 (c)................... 3,732,489
------------
58,138,926
------------
BULGARIA -- 0.6%
Republic of Bulgaria:
25,000 8.250% due 1/15/15...................................... 28,750
1,480,500 IAB, 2.000% due 7/28/11 (c)............................. 1,458,292
------------
1,487,042
------------
CHILE -- 1.2%
2,500,000 Republic of Chile, 7.125% due 1/11/12..................... 2,805,264
------------
COLOMBIA -- 4.8%
Republic of Colombia:
3,000,000 8.625% due 4/1/08 (d)................................... 3,240,000
2,175,000 9.750% due 4/23/09...................................... 2,370,750
800,000 10.000% due 1/23/12..................................... 860,000
3,650,000 10.750% due 1/15/13..................................... 4,024,125
1,000,000 8.700% due 2/15/16...................................... 980,000
------------
11,474,875
------------
COSTA RICA -- 2.8%
Republic of Costa Rica:
500,000 6.914% due 1/31/08 (e).................................. 507,500
5,000,000 8.110% due 2/1/12....................................... 5,200,000
850,000 9.995% due 8/1/20 (e)................................... 960,500
------------
6,668,000
------------
DOMINICAN REPUBLIC -- 0.5%
1,550,000 Dominican Republic, 9.500% due 9/27/06.................... 1,317,500
------------
</Table>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 4
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
SCHEDULE OF INVESTMENTS (unaudited)(continued)
April 30, 2004
<Table>
<Caption>
FACE
AMOUNT SECURITY(A) VALUE
- --------------------------------------------------------------------------------------------------
ECUADOR -- 4.5%
$12,060,000 Republic of Ecuador, 12.000% due 11/15/12................. $ 10,793,700
------------
EL SALVADOR -- 2.9%
Republic of El Salvador:
4,500,000 9.500% due 8/15/06...................................... 4,983,750
925,000 7.750% (putable 1/24/13) due 1/24/23.................... 1,010,562
1,125,000 8.250% due 4/10/32...................................... 1,127,812
------------
7,122,124
------------
MALAYSIA -- 1.9%
2,450,000 Malaysia, 7.500% due 7/15/11.............................. 2,803,008
1,650,000 Petronas Capital Ltd., 7.875% due 5/22/22................. 1,870,923
------------
4,673,931
------------
MEXICO -- 9.8%
1,100,000 Petroleos Mexicanos, 9.500% due 9/15/27................... 1,278,750
United Mexican States:
4,535,000 6.375% due 1/16/13...................................... 4,603,025
14,164,000 5.875% due 1/15/14...................................... 13,774,490
3,525,000 6.625% due 3/3/15....................................... 3,571,706
525,000 8.300% due 8/15/31...................................... 565,687
------------
23,793,658
------------
PANAMA -- 4.3%
Republic of Panama:
1,350,000 9.625% due 2/8/11....................................... 1,532,250
4,975,000 9.375% due 1/16/23...................................... 5,223,750
2,625,000 8.875% due 9/30/27...................................... 2,664,375
972,200 IRB, 2.000% due 7/17/14 (c)............................. 909,007
------------
10,329,382
------------
PERU -- 3.4%
Republic of Peru:
525,000 9.125% due 2/21/12...................................... 555,187
2,675,000 9.875% due 2/6/15....................................... 2,889,000
2,200,000 8.750% due 11/21/33..................................... 1,958,000
3,048,500 PDI Bond, 5.000% due 3/7/17 (c)......................... 2,697,922
------------
8,100,109
------------
PHILIPPINES -- 5.0%
Republic of the Philippines:
250,000 8.375% due 3/12/09 (d).................................. 262,813
875,000 9.000% due 2/15/13 (d).................................. 892,500
1,125,000 9.375% (putable 1/18/12) due 1/18/17.................... 1,175,625
50,000 9.875% due 1/15/19...................................... 51,500
1,068,000 9.500% (putable 10/21/06) due 10/21/24.................. 1,169,457
</Table>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 5
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
SCHEDULE OF INVESTMENTS (unaudited)(continued)
April 30, 2004
<Table>
<Caption>
FACE
AMOUNT SECURITY(A) VALUE
- --------------------------------------------------------------------------------------------------
PHILIPPINES -- 5.0% (CONTINUED)
$ 3,175,000 10.625% due 3/16/25..................................... $ 3,417,094
4,080,000 DCB, 2.0625% due 12/1/09 (c)............................ 3,692,400
1,500,000 FLIRB, Series B, 2.0625% due 6/1/08 (c)................. 1,391,250
------------
12,052,639
------------
RUSSIA -- 16.1%
Russian Federation:
13,050,000 11.000% due 7/24/18..................................... 16,834,500
24,100,000 5.000% due 3/31/30 (c).................................. 22,126,813
------------
38,961,313
------------
TURKEY -- 4.4%
Republic of Turkey:
6,090,000 12.375% due 6/15/09..................................... 7,308,000
2,825,000 11.500% due 1/23/12..................................... 3,354,688
------------
10,662,688
------------
VENEZUELA -- 4.5%
Republic of Venezuela:
3,725,000 5.375% due 8/7/10....................................... 2,914,813
3,875,000 9.375% due 1/13/34...................................... 3,167,813
4,095,105 DCB, Series DL, 2.125% due 12/18/07 (c)................. 3,854,518
642,831 FLIRB, Series A, 2.0625% due 3/31/07 (c)................ 605,065
475,000 Series A, 6.750% due 3/31/20............................ 415,625
------------
10,957,834
------------
TOTAL SOVEREIGN BONDS (Cost -- $215,993,379).............. 221,151,160
------------
LOAN PARTICIPATION (C)(F) -- 4.1%
MOROCCO -- 4.1%
10,024,676 Kingdom of Morocco, Tranche A, 2.03125% due 1/2/09 (CS
First Boston Corp., J.P. Morgan Chase & Co. and UBS
Financial Services Inc.) (Cost -- $9,401,915)........... 9,874,306
------------
CORPORATE BONDS -- 4.4%
MEXICO -- 4.4%
PEMEX, Project Funding Master Trust:
325,000 6.125% due 8/15/08...................................... 339,625
8,000,000 9.125% due 10/13/10..................................... 9,400,000
250,000 8.000% due 11/15/11..................................... 276,500
650,000 7.375% due 12/15/14..................................... 682,500
------------
TOTAL CORPORATE BONDS (Cost -- $9,724,740)................ 10,698,625
------------
</Table>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 6
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
SCHEDULE OF INVESTMENTS (unaudited)(continued)
April 30, 2004
<Table>
<Caption>
WARRANTS/
RIGHTS SECURITY(A) VALUE
- --------------------------------------------------------------------------------------------------
WARRANTS AND RIGHTS (g)(h) -- 0.0%
2,000 (Warrants) Asia Pulp & Paper (Exercise price of $7.8375 per share
expiring on 3/15/05. Each warrant exercisable for 12.914
shares of common stock.) (e)............................ $ 0
76,755 (Rights) Venezuela Discount Rights................................. 0
------------
TOTAL WARRANTS AND RIGHTS (Cost -- $0).................... 0
------------
TOTAL INVESTMENTS -- 100.0% (Cost -- $235,120,034*)....... $241,724,091
============
<Caption>
FACE
AMOUNT
- ---------------
LOANED SECURITIES COLLATERAL
$6,792,925 State Street Navigator Securities Lending Trust Prime
Portfolio
(Cost -- $6,792,925).................................... $ 6,792,925
============
</Table>
- ------------------
(a) All securities, except for those that are on loan, are segregated as
collateral pursuant to a revolving credit facility.
(b) Security is currently in default.
(c) Rate shown reflects current rate on variable rate instruments or instruments
with step coupon rates.
(d) All or portion of this security is on loan (See Note 9).
(e) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions that are exempt from
registration, normally to qualified institutional buyers. This security has
been deemed liquid pursuant to guidelines approved by the Board of
Directors.
(f) Participation interests were acquired through the financial institutions
indicated parenthetically.
(g) Non-income producing security.
(h) Security is valued in accordance with fair valuation procedures.
* Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviations used in this schedule:
C Bond -- Capitalization Bond
DCB -- Debt Conversion Bond
DISC -- Discount Bond
FLIRB -- Front Loaded Interest Reduction Bond
IAB -- Interest-in-Arrears Bond
IRB -- Interest Reduction Bond
MYDFA -- Multi-Year Depository Facility Agreement
NMB -- New Money Bond
PDI -- Past Due Interest
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
April 30, 2004
<Table>
ASSETS:
Investments, at value (Cost -- $235,120,034).............. $241,724,091
Loaned securities collateral, at value
(Cost -- $6,792,925) (Note 9)........................... 6,792,925
Cash...................................................... 869,214
Interest receivable....................................... 4,237,887
Receivable for securities sold............................ 2,622,271
------------
TOTAL ASSETS.............................................. 256,246,388
------------
LIABILITIES:
Loan payable (Note 5)..................................... 60,000,000
Payable for loaned securities collateral (Note 9)......... 6,792,925
Payable for securities purchased.......................... 360,564
Payable to broker -- variation margin..................... 164,063
Management fee payable.................................... 146,685
Interest payable (Note 5)................................. 106,177
Administration fee payable................................ 24,448
Accrued expenses.......................................... 196,682
------------
TOTAL LIABILITIES......................................... 67,791,544
------------
TOTAL NET ASSETS............................................ $188,454,844
============
NET ASSETS:
Common stock ($0.001 par value, authorized 100,000,000
shares; 12,935,517 shares outstanding).................. $ 12,936
Additional paid-in capital................................ 180,097,263
Overdistributed net investment income..................... (612,393)
Accumulated net realized loss from investment
transactions, options and futures contracts............. (241,434)
Net unrealized appreciation of investments and futures
contracts............................................... 9,198,472
------------
TOTAL NET ASSETS............................................ $188,454,844
============
NET ASSET VALUE, PER SHARE ($188,454,844 / 12,935,517 shares
outstanding).............................................. $14.57
============
</Table>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 8
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
STATEMENT OF OPERATIONS (unaudited)
For the Six Months Ended April 30, 2004
<Table>
INCOME:
Interest.................................................. $ 10,194,735
------------
EXPENSES:
Management fee (Note 2)................................... 890,053
Interest expense (Note 5)................................. 705,662
Administration fee (Note 2)............................... 148,342
Audit and legal........................................... 59,514
Custody................................................... 41,688
Shareholder communications................................ 31,448
Directors' fees........................................... 25,126
Transfer agency services.................................. 17,622
Registration fees......................................... 1,971
Insurance................................................. 1,820
Other..................................................... 5,538
------------
TOTAL EXPENSES............................................ 1,928,784
------------
NET INVESTMENT INCOME....................................... 8,265,951
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS,
FUTURES CONTRACTS AND FOREIGN CURRENCIES (NOTES 3 AND 4):
Realized Gain (Loss) From:
Investment transactions................................. 8,744,515
Options written......................................... 39,405
Futures contracts....................................... (2,110,100)
Foreign currency transactions........................... 2,052
------------
NET REALIZED GAIN......................................... 6,675,872
------------
Change in Net Unrealized Appreciation (Depreciation) From:
Investments............................................. (14,471,296)
Futures contracts....................................... 2,594,415
Foreign currencies...................................... (2,172)
------------
DECREASE IN NET UNREALIZED APPRECIATION................... (11,879,053)
------------
NET LOSS ON INVESTMENTS, OPTIONS, FUTURES CONTRACTS AND
FOREIGN CURRENCIES........................................ (5,203,181)
------------
INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 3,062,770
============
</Table>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 9
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 2004 (unaudited)
and the Year Ended October 31, 2003
<Table>
<Caption>
2004 2003
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income..................................... $ 8,265,951 $ 18,999,749
Net realized gain......................................... 6,675,872 8,149,328
Increase (decrease) in net unrealized appreciation........ (11,879,053) 40,035,851
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS.................... 3,062,770 67,184,928
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... (9,210,489) (18,873,675)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS............................................ (9,210,489) (18,873,675)
------------ ------------
FUND SHARE TRANSACTIONS:
Proceeds from shares issued in reinvestment of dividends
(17,005 and 50,367 shares issued, respectively)......... 265,669 695,931
------------ ------------
INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS....... 265,669 695,931
------------ ------------
INCREASE (DECREASE) IN NET ASSETS........................... (5,882,050) 49,007,184
NET ASSETS:
Beginning of period....................................... 194,336,894 145,329,710
------------ ------------
END OF PERIOD*............................................ $188,454,844 $194,336,894
============ ============
* Includes undistributed (overdistributed) net investment
income of:................................................ $(612,393) $330,093
============ ============
</Table>
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SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 10
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
STATEMENT OF CASH FLOWS (unaudited)
For the Six Months Ended April 30, 2004
<Table>
CASH FLOWS PROVIDED (USED) BY OPERATING AND INVESTING
ACTIVITIES:
Interest received......................................... $ 8,070,059
Operating expenses paid................................... (1,293,129)
Net sales of short-term investments....................... 5,284,000
Realized gain on foreign currency transactions............ 2,052
Realized gain on options written.......................... 39,405
Realized loss on futures contracts........................ (2,110,100)
Net change in unrealized appreciation on futures
contracts............................................... 2,594,415
Net change in unrealized depreciation on foreign
currencies.............................................. (2,172)
Net purchases of long-term investments.................... (124,046,914)
Proceeds from disposition of long-term investments........ 121,812,753
Open payable to broker -- variation margin................ 164,063
Interest paid............................................. (709,580)
-------------
NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES... 9,804,852
-------------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Cash dividends paid on Common Stock....................... (9,210,489)
Proceeds from reinvestment of dividends................... 265,669
-------------
NET CASH USED BY FINANCING ACTIVITIES..................... (8,944,820)
-------------
NET INCREASE IN CASH........................................ 860,032
Cash, Beginning of period................................... 9,182
-------------
CASH, END OF PERIOD......................................... $ 869,214
=============
RECONCILIATION OF INCREASE IN NET ASSETS FROM OPERATIONS TO
NET CASH FLOWS PROVIDED (USED) BY OPERATING AND INVESTING
ACTIVITIES:
INCREASE IN NET ASSETS FROM OPERATIONS.................... $ 3,062,770
-------------
Accretion of discount on investments...................... (1,888,739)
Amortization of premium on investments.................... 376,478
Decrease in investments, at value......................... 9,268,825
Increase in interest receivable........................... (612,415)
Increase in receivable for investments sold............... (852,769)
Increase in payable of investments purchased.............. 360,564
Increase in variation margin payable...................... 164,063
Decrease in interest payable.............................. (3,918)
Decrease in prepaid expenses.............................. 6,011
Decrease in accrued expenses.............................. (76,018)
-------------
TOTAL ADJUSTMENTS......................................... 6,742,082
-------------
NET CASH FLOWS PROVIDED BY OPERATING AND INVESTING
ACTIVITIES................................................ $ 9,804,852
=============
</Table>
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SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 11
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Salomon Brothers Worldwide Income Fund Inc. ("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 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.
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 accounting principles generally accepted in the
United States of America ("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.
(a) 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 sale price prior to the time of determination if there
was a sale price on the date of determination, (ii) at the mean between the last
current bid and asked prices if there was no sale price on such date and bid and
asked quotations are available and (iii) at the bid price if there was no sale
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 are 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 the direction of the Board
of Directors.
(b) REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is the
Fund's policy that a 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 12
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
(c) 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.
(d) 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.
(e) OPTION CONTRACTS. When the Fund writes or purchases a call or a put
option, an amount equal to the premium received or paid by the Fund is recorded
as a liability or asset, the value of which is marked-to-market to reflect the
current market value of the option. When the option expires, the Fund realizes a
gain or loss equal to the amount of the premium received or paid. When the Fund
enters into a closing transaction by purchasing or selling an offsetting option,
it realizes a gain or loss without regard to any unrealized gain or loss on the
underlying security. When a written call option is exercised, the Fund realizes
a gain or loss from the sale of the underlying security and the proceeds from
such sale are increased by the
PAGE 13
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
premium originally received on the option. When a written put option is
exercised, the amount of the premium received reduces the cost of the security
that the Fund purchased upon exercise of the option.
(f) 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.
(g) 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 and amortizes premium on securities purchased using the
effective interest method.
(h) FEDERAL INCOME TAXES. It is the Fund's intention to continue to comply
with the provisions of the Internal Revenue Code of 1986, as amended, applicable
to regulated investment companies and to distribute substantially all of its
taxable income and capital gains, if any, to its shareholders. Therefore, no
Federal income tax or excise tax provision is required. The character of income
and gains to be distributed are determined in accordance with income tax
regulations which may differ from U.S. generally accepted accounting principles.
(i) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. 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 GAAP. 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 tax purposes are reported as
distributions in excess of net investment income and distributions in excess of
net realized capital gains.
(j) YEAR END TAX RECLASSIFICATIONS. The character of income and gains to be
distributed is determined in accordance with income tax regulations which may
differ from U.S. generally accepted accounting principles.
PAGE 14
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATION FEES AND OTHER TRANSACTIONS
The Fund has an Investment Advisory Agreement with Salomon Brothers Asset
Management Inc ("Adviser"), an indirect wholly-owned subsidiary of Citigroup
Inc. ("Citigroup"). The 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 Fund pays the Adviser a monthly fee for its investment advisory services at
an annual rate of 0.90% of the value of the Fund's average weekly net assets.
The Adviser also serves as Administrator to the Fund and Prudential Investments
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 0.150% of the value of
the Fund's average weekly net assets up to $250 million and 0.125% of the value
of such net assets in excess of $250 million for its services, out of which the
Administrator pays the Sub-Administrator 80% of such fees collected for its
services.
Certain officers and/or directors of the Fund are also officers and/or directors
of the Adviser.
The Fund pays each Director not affiliated with the Adviser a fee of $5,000 per
year, a fee of $700 for attendance at each in-person meeting, a fee of $100 for
participation in each telephonic meeting and reimbursement for travel and
out-of-pocket expenses for each board and committee meeting attended.
NOTE 3. PORTFOLIO ACTIVITY
During the six months ended April 30, 2004, the aggregate cost of purchases and
proceeds from sales of investments (including maturities of long-term
investments, but excluding short-term investments) were as follows:
<Table>
Purchases................................................... $116,983,059
============
Sales....................................................... $124,407,478
============
</Table>
At April 30, 2004, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
<Table>
Gross unrealized appreciation............................... $10,633,939
Gross unrealized depreciation............................... (4,029,882)
-----------
Net unrealized appreciation................................. $ 6,604,057
===========
</Table>
PAGE 15
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
NOTE 4. FUTURES CONTRACTS
Securities or cash equal to the initial margin amount are either deposited with
the broker or segregated by the custodian upon entering into the futures
contract. Additional securities are also segregated up to the current market
value of the futures contracts. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
received or made and recognized as assets due from or liabilities due to broker,
depending upon whether unrealized gains or losses are incurred. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transactions and
the Fund's basis in the contract. The Fund enters into such contracts typically
to hedge a portion of its portfolio. The Fund bears the market risk that arises
from changes in the value of the financial instruments and securities indices.
At April 30, 2004, the Fund had the following open futures contracts:
<Table>
<Caption>
NUMBER
OF UNREALIZED
CONTRACTS TO SELL CONTRACTS EXPIRATION BASIS VALUE MARKET VALUE GAIN
- ----------------- --------- ---------- ----------- ------------ ----------
U.S. Treasury 10 Year Note... 500 6/04 $57,844,415 $55,250,000 $2,594,415
</Table>
NOTE 5. LOAN
At April 30, 2004, the Fund had a $66,000,000 loan available pursuant to a
revolving credit and security agreement, of which the Fund had $60,000,000
outstanding with CXC, LLC, an affiliate of Citigroup, a commercial paper conduit
issuer for which Citicorp North America, Inc., an affiliate of the Adviser, acts
as administrative agent. The loans generally bear interest at a variable rate
based on the weighted average interest rates of the underlying commercial paper
or LIBOR, plus any applicable margin. Securities held by the Fund are subject to
a lien, granted to the lenders, to the extent of the borrowing outstanding and
any additional expenses. For the six months ended April 30, 2004, the annualized
weighted average interest rate of the loan was 2.18%. The Fund paid interest
expense of $653,713.
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").
PAGE 16
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
Participations typically result in the Fund having a contractual relationship
only with the Lender, not with the sovereign borrower. The Fund has the right to
receive payments of principal, interest and any fees to which it is entitled
only from the Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower.
In connection with purchasing Participations, the Fund generally has no right to
enforce compliance by the borrower with the terms of the loan agreements
relating to the loan, nor any rights of set-off against the borrower, and the
Fund will not benefit directly from any collateral supporting the Loan in which
it has purchased the Participation. As a result, the Fund assumes the credit
risk of both the borrower and the Lender that is selling the Participation. In
the event of the insolvency of the Lender selling the Participation, the Fund
may be treated as a general creditor of the Lender and may not benefit from any
set-off between the Lender and the borrower. The Fund may have difficulty
disposing of Participations and Assignments because the market for such
instruments is not highly liquid.
At April 30, 2004, the Fund held loan participations with a total cost of
$9,401,915.
NOTE 7. CREDIT 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 involves 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, 2004, the Fund had a concentration of credit risk in sovereign debt of
emerging market countries.
NOTE 8. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in U.S.
companies and the U.S. government. These risks include revaluation of currencies
and future adverse political and economic developments. Moreover, securities of
many foreign companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies and the U.S. government.
PAGE 17
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
NOTE 9. LENDING OF PORTFOLIO SECURITIES
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations. Fees earned by the Fund on securities lending are recorded in
interest income. Loans of securities by the Fund are collateralized by cash,
U.S. government securities or high quality money market instruments that are
maintained at all times in an amount at least equal to the current market value
of the securities loaned, plus a margin which may vary depending on the type of
securities loaned. The custodian establishes and maintains the collateral in a
segregated account. The Fund maintains exposure for the risk of any losses in
the investment of amounts received as collateral.
At April 30, 2004, the Fund loaned securities having a market value of
$4,922,707. The Fund received cash collateral amounting to $6,792,925 which was
invested in the State Street Navigator Securities Lending Trust Prime Portfolio.
Income earned by the Fund from securities lending for the six months ended April
30, 2004 was $3,884.
NOTE 10. DIVIDENDS SUBSEQUENT TO APRIL 30, 2004
On February 5, 2004, the Board of Directors declared a dividend from net
investment income in the amount of $0.11875 per share, payable on May 28, 2004
to shareholders of record on May 18, 2004.
On May 14, 2004, the Board of Directors declared three dividends from net
investment income, each in the amount of $0.11875 per share, payable on June 25,
2004, July 30, 2004 and August 27, 2004 to shareholders of record on June 15,
2004, July 13, 2004 and August 17, 2004, respectively.
NOTE 11. ADDITIONAL INFORMATION
The Fund has received the following information from Citigroup Asset Management
("CAM"), the Citigroup business unit which includes the Fund's Investment
Manager and other investment advisory companies, all of which are indirect,
wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an
affiliate, into the transfer agent business in the period 1997-1999. As CAM
currently understands the facts, at the time CAM decided to enter the transfer
agent business, CAM sub-contracted for a period of five years certain of the
transfer agency services to a third party and also concluded a revenue guarantee
agreement with this sub-contractor providing that the sub-contractor would
guarantee certain benefits to
PAGE 18
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
CAM or its affiliates (the "Revenue Guarantee Agreement"). In connection with
the subsequent purchase of the sub-contractor's business by an affiliate of the
current sub-transfer agent (PFPC Inc.) used by CAM on many of the funds it
manages, this Revenue Guarantee Agreement was amended eliminating those benefits
in exchange for arrangements that included a one-time payment from the
sub-contractor.
The Boards of CAM-managed funds (the "Boards") were not informed of the Revenue
Guarantee Agreement with the sub-contractor at the time the Boards considered
and approved the transfer agent arrangements. Nor were the Boards informed of
the subsequent amendment to the Revenue Guarantee Agreement when that occurred.
CAM has begun to take corrective actions. CAM will pay to the applicable funds
approximately $17 million (plus interest) that CAM and its affiliates received
from the Revenue Guarantee Agreement and its amendment. The Fund did not
implement the contractual arrangement described above and therefore will not
receive any portion of the payment. CAM also plans an independent review to
verify that the transfer agency fees charged by CAM were fairly priced as
compared to competitive alternatives. CAM is instituting new procedures and
making changes designed to ensure no similar arrangements are entered into in
the future.
CAM has briefed the SEC, the New York State Attorney General and other
regulators with respect to this matter, as well as the U.S. Attorney who is
investigating the matter. CAM is cooperating with governmental authorities on
this matter, the ultimate outcome of which is not yet determinable.
The Fund's transfer agent is American Stock Transfer & Trust Company, which is
not affiliated with CAM or PFPC Inc.
PAGE 19
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
FINANCIAL HIGHLIGHTS
Data for a share of common stock outstanding throughout each year ended October
31, unless otherwise noted:
<Table>
<Caption>
2004(1)(2) 2003(2) 2002(2) 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $15.04 $11.29 $12.24 $12.96 $11.77 $ 9.70
------- -------- -------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(3)............ 0.64 1.47 1.57 1.57 1.78 1.74
Net realized and unrealized gain
(loss)(3)......................... (0.40) 3.74 (1.01) (0.52) 1.08 2.15
------- -------- -------- -------- -------- --------
Total Income From Operations.......... 0.24 5.21 0.56 1.05 2.86 3.89
------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS FROM:
Net investment income............... (0.71) (1.46) (1.51) (1.77) (1.67) (1.82)
------- -------- -------- -------- -------- --------
Total Distributions................... (0.71) (1.46) (1.51) (1.77) (1.67) (1.82)
------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD........ $14.57 $15.04 $11.29 $12.24 $12.96 $11.77
======= ======== ======== ======== ======== ========
MARKET PRICE, END OF PERIOD........... $14.03 $16.00 $11.60 $13.00 $11.50 $11.0625
======= ======== ======== ======== ======== ========
TOTAL RETURN(4)....................... (8.17)%++ 53.18% 0.61% 30.15% 20.06% 20.49%
RATIOS TO AVERAGE NET ASSETS:
Total expenses, including interest
expense........................... 1.95%+ 2.11% 2.67% 4.04% 4.34% 4.22%
Total expenses, excluding interest
expense (operating expenses)...... 1.24%+ 1.30% 1.46% 1.32% 1.24% 1.36%
Net investment income(3)............ 8.36%+ 10.77% 12.91% 12.13% 13.65% 16.06%
SUPPLEMENTAL DATA:
Net assets, end of period (000's)... $188,455 $194,337 $145,330 $156,701 $165,459 $150,184
Average net assets (000's).......... $198,876 $176,471 $156,343 $163,117 $165,290 $137,389
Portfolio turnover rate............. 45% 100% 143% 192% 119% 80%
Asset coverage for loan
outstanding....................... 414% 424% 342% 361% 376% 350%
Weighted average bank loan
(000's)........................... $60,000 $60,000 $60,000 $60,000 $60,000 $60,000
Weighted average interest rate on
bank loan......................... 2.18%+ 2.38% 3.10% 7.29% 8.44% 6.45%
</Table>
- --------------------------------------------------------------------------------
<Table>
(1) For the six months ended April 30, 2004 (unaudited).
(2) Per share amounts have been calculated using the monthly
average shares method.
(3) Effective November 1, 2001, the Fund adopted a change in the
accounting method that requires the Fund to amortize
premiums and accrete all discounts. Without the adoption of
this change, for the year ended October 31, 2002, net
investment income, net realized and unrealized loss and the
ratio of net investment income to average net assets would
have been $1.58, $(1.02) and 12.97%, respectively. Per share
information, ratios and supplemental data for the periods
prior to November 1, 2001 have not been restated to reflect
this change in presentation.
(4) 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. For purposes of this calculation,
dividends and distributions are assumed to be reinvested at
prices obtained under the Fund's dividend reinvestment plan
and the broker commissions paid to purchase or sell a share
is excluded.
++ Total return is not annualized, as it may not be
representative of the total return for the year.
+ Annualized.
</Table>
PAGE 20
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
ADDITIONAL SHAREHOLDER INFORMATION (unaudited)
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS
The Fund held its Annual Meeting of Stockholders on February 27, 2004, for the
purpose of voting on the election of William R. Hutchinson as a Class II
Director of the Fund, to serve until the 2006 Annual Meeting of Stockholders,
and the election of Daniel P. Cronin and Riordan Roett as Class III Directors of
the Fund, to serve until the 2007 Annual Meeting of Stockholders. The following
table provides information concerning the matter voted upon at the Meeting:
Election of Directors
<Table>
<Caption>
VOTES FOR
NOMINEE ---------- VOTES WITHHELD
- ------- --------------
Daniel P. Cronin 11,757,054 112,628
William R. Hutchinson 11,742,609 127,074
Riordan Roett 11,743,328 126,354
</Table>
At April 30, 2004, in addition to Messrs. Cronin, Hutchinson and Roett, the
other Directors of the Fund were as follows:
Carol L. Colman
Leslie H. Gelb
R. Jay Gerken
Jeswald W. Salacuse
PAGE 21
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT
PLAN (unaudited)
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. ("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 ("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 ("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 22
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT
PLAN (unaudited) (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.
PAGE 23
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT
PLAN (unaudited) (continued)
8. The Agent will maintain all Participant accounts in the Plan and will furnish
written confirmations of all transactions in each account, including information
needed by Participants for personal and tax records. The Agent will hold Shares
acquired pursuant to the Plan in noncertificated form in the Participant's name
or that of its nominee, and each Participant's proxy will include those Shares
purchased pursuant to the Plan. The Agent will forward to Participants any proxy
solicitation material and will vote any Shares so held for Participants only in
accordance with the proxy returned by Participants to the Fund. Upon written
request, the Agent will deliver to Participants, without charge, a certificate
or certificates for the full Shares.
9. The Agent will confirm to Participants each acquisition made for their
respective accounts as soon as practicable but not later than 60 days after the
date thereof. Although Participants 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
PAGE 24
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT
PLAN (unaudited) (continued)
30 days' written notice to Plan Participants. Notwithstanding the preceding two
sentences, the Agent or the Fund may amend or supplement the Plan at any time or
times when necessary or appropriate to comply with applicable law or rules or
policies of the Securities and Exchange Commission or any other regulatory
authority. Upon any termination, the Agent will cause a certificate or
certificates for the full Shares held by each Participant under the Plan and
cash adjustment for any fraction to be delivered to each Participant without
charge. If the Participant elects by notice to the Agent in writing in advance
of such termination to have the Agent sell part or all of a Participant's Shares
and remit the proceeds to Participant, the Agent is authorized to deduct a $2.50
fee plus brokerage commission for this transaction from the proceeds.
13. Any amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Agent receives
written notice of the termination of the Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its place and
stead of a successor Agent under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent under
these terms and conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will be authorized to
pay to such 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.
PAGE 25
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
FORM OF AMENDED AND RESTATED TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT
PLAN (unaudited) (continued)
16. All correspondence concerning the Plan should be directed to the Agent at 59
Maiden Lane, New York, New York 10038.
----------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request, by telephoning the Fund (toll-free) at 1-800-446-1013 and by
visiting the SEC's web site at www.sec.gov.
The report is transmitted to the shareholders of the Fund for their information.
This is not a prospectus, circular or representation intended for use in the
purchase of shares of the Fund or any securities mentioned in this report.
PAGE 26
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
DIRECTORS
CAROL L. COLMAN
DANIEL P. CRONIN
LESLIE H. GELB
R. JAY GERKEN, CFA
WILLIAM R. HUTCHINSON
RIORDAN ROETT
JESWALD W. SALACUSE
OFFICERS
R. JAY GERKEN, CFA
Chairman
PETER J. WILBY, CFA
President
ANDREW B. SHOUP
Senior Vice President,
Chief Administrative Officer
and Treasurer
JAMES E. CRAIGE, CFA
Executive Vice President
THOMAS K. FLANAGAN, CFA
Executive Vice President
MAUREEN O'CALLAGHAN
Executive Vice President
BETH A. SEMMEL, CFA
Executive Vice President
FRANCES M. GUGGINO
Controller
ROBERT I. FRENKEL
Secretary and
Chief Legal Officer
SALOMON BROTHERS
WORLDWIDE INCOME FUND INC.
125 Broad Street
10th Floor, MF-2
New York, New York 10004
Telephone 1-888-777-0102
INVESTMENT ADVISER AND ADMINISTRATOR
Salomon Brothers Asset
Management Inc
399 Park Avenue
New York, New York 10022
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
LEGAL COUNSEL
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017-3909
NEW YORK STOCK EXCHANGE SYMBOL
SBW
PAGE 27
SALOMON BROTHERS
WORLDWIDE INCOME FUND INC.
SEMI-ANNUAL REPORT
April 30, 2004
[WORLD GRAPHIC]
[SALOMON BROTHERS LOGO]
AMERICAN STOCK TRANSFER & TRUST COMPANY
59 MAIDEN LANE
NEW YORK, NEW YORK 10038
SBWSEMI 4/04
04-6756
ITEM 2. CODE OF ETHICS.
Not Applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not Applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Board of Directors of the Fund has delegated the authority to
develop policies and procedures relating to proxy voting to the
Manager. The Manager is part of Citigroup Asset Management ("CAM"),
a group of investment adviser affiliates of Citigroup, Inc.
("Citigroup"). Along with the other investment advisers that
comprise CAM, the Manager has adopted a set of proxy voting policies
and procedures (the "Policies") to ensure that the Manager votes
proxies relating to equity securities in the best interest of
clients.
In voting proxies, the Manager is guided by general fiduciary
principles and seeks to act prudently and solely in the best
interest of clients. The Manager attempts to consider all factors
that could affect the value of the investment and will vote proxies
in the manner that it believes will be consistent with efforts to
maximize shareholder values. The Manager may utilize an external
service provider to provide it with information and/or a
recommendation with regard to proxy votes. However, such
recommendations do not relieve the Manager of its responsibility for
the proxy vote.
In the case of a proxy issue for which there is a stated position in
the Policies, CAM generally votes in accordance with such stated
position. In the case of a proxy issue for which there is a list of
factors set forth in the Policies that CAM considers in voting on
such issue, CAM votes on a case-by-case basis in accordance with the
general principles set forth above and considering such enumerated
factors. In the case of a proxy issue for which there is no stated
position or list of factors that CAM considers in voting on such
issue, CAM votes on a case-by-case basis in accordance with the
general principles set forth above. Issues for which there is a
stated position set forth in the Policies or for which there is a
list of factors set forth in the Policies that CAM considers in
voting on such issues fall into a variety of categories, including
election of directors, ratification of auditors, proxy and tender
offer defenses, capital structure issues, executive and director
compensation, mergers and corporate restructurings, and social and
environmental issues. The stated position on an issue set forth in
the Policies can always be superseded, subject to the duty to act
solely in the best interest of the beneficial owners of accounts, by
the investment management professionals responsible for the account
whose shares are being voted. Issues applicable to a particular
industry may cause CAM to abandon a policy that would have otherwise
applied to issuers generally. As a result of the independent
investment advisory services provided by distinct CAM business
units, there may be occasions when different business units or
different portfolio managers within the same business unit vote
differently on the same issue.
In furtherance of the Manager's goal to vote proxies in the best
interest of clients, the Manager follows procedures designed to
identify and address material conflicts that may arise between the
Manager's interests and those of its clients before voting proxies
on behalf of such clients. To seek to identify conflicts of
interest, CAM periodically notifies CAM employees (including
employees of the Manager) in writing that they are under an
obligation (i) to be aware of the potential for conflicts of
interest with respect to voting proxies on behalf of client accounts
both as a result of their personal relationships and due to special
circumstances that may arise during the conduct of CAM's and the
Manager's business, and (ii) to bring conflicts of interest of which
they become aware to the attention of compliance personnel. The
Manager also maintains and considers a list of significant
relationships that could present a conflict of interest for the
Manager in voting proxies. The Manager is also sensitive to the fact
that a significant, publicized relationship between an issuer and a
non-CAM affiliate might appear to the public to influence the manner
in which the Manager decides to vote a proxy with respect to such
issuer. Absent special circumstances or a significant, publicized
non-CAM affiliate relationship that CAM or the Manager for
prudential reasons treats as a potential conflict of interest
because such relationship might appear to the public to influence
the manner in which the Manager decides to vote a proxy, the Manager
generally takes the position that non-CAM relationships between
Citigroup and an issuer (e.g. investment banking or banking) do not
present a conflict of interest for the Manager in voting proxies
with respect to such issuer. Such position is based on the fact that
the Manager is operated as an independent business unit from other
Citigroup business units as well as on the existence of information
barriers between the Manager and certain other Citigroup business
units.
CAM maintains a Proxy Voting Committee, of which the Manager
personnel are members, to review and address conflicts of interest
brought to its attention by compliance personnel. A proxy issue that
will be voted in accordance with a stated position on an issue or in
accordance with the recommendation of an independent third party is
not brought to the attention of the Proxy Voting Committee for a
conflict of interest review because the Manager's position is that
to the extent a conflict of interest issue exists, it is resolved by
voting in accordance with a pre-determined policy or in accordance
with the recommendation of an independent third party. With respect
to a conflict of interest brought to its attention, the
Proxy Voting Committee first determines whether such conflict of
interest is material. A conflict of interest is considered material
to the extent that it is determined that such conflict is likely to
influence, or appear to influence, the Manager's decision-making in
voting proxies. If it is determined by the Proxy Voting Committee
that a conflict of interest is not material, the Manager may vote
proxies notwithstanding the existence of the conflict.
If it is determined by the Proxy Voting Committee that a conflict of
interest is material, the Proxy Voting Committee is responsible for
determining an appropriate method to resolve such conflict of
interest before the proxy affected by the conflict of interest is
voted. Such determination is based on the particular facts and
circumstances, including the importance of the proxy issue and the
nature of the conflict of interest. Methods of resolving a material
conflict of interest may include, but are not limited to, disclosing
the conflict to clients and obtaining their consent before voting,
or suggesting to clients that they engage another party to vote the
proxy on their behalf.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-
3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act")) are effective as of a date within 90 days of the
filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the
disclosure controls and procedures required by Rule 30a-3(b)
under the 1940 Act and 15d-15(b) under the Securities Exchange
Act of 1934.
(b) There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under
the 1940 Act) that occurred during the registrant's last
fiscal half-year (the registrant's second fiscal half-year in
the case of an annual report) that have materially affected,
or are likely to materially affect the registrant's internal
control over financial reporting.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) Attached hereto.
Exhibit 99.CERT Certifications pursuant to section 302 of
the Sarbanes-Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this Report
to be signed on its behalf by the undersigned, there unto duly authorized.
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
By: /s/ R. Jay Gerken
R. Jay Gerken
Chief Executive Officer of
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
Date: July 6, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ R. Jay Gerken
R. Jay Gerken
Chief Executive Officer of
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
Date: July 6, 2004
By: /s/ ANDREW B. SHOUP
ANDREW B. SHOUP
Chief Administrative Officer of
SALOMON BROTHERS WORLDWIDE INCOME FUND INC.
Date: July 6, 2004