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SALOMON BROTHERS
2008 WORLDWIDE DOLLAR
GOVERNMENT TERM TRUST INC
INTERIM REPORT
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OCTOBER 31, 1995
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SALOMON BROTHERS ASSET MANAGEMENT
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BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
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AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
December 26, 1995
Dear Shareholders:
During the quarter ended October 31, 1995, the net asset value for the Salomon
Brothers 2008 Worldwide Dollar Government Term Trust Inc (the "Trust") increased
from $7.57 per share at July 31, 1995 to $7.87 per share at October 31, 1995.
Dividends of $0.219 per share were paid to shareholders during the quarter.
Assuming that these dividends were reinvested in additional shares of the Trust,
the net asset value return for the quarter ended October 31, 1995, was 7.01%,
compared to a 5.09% return for the Salomon Brothers Brady Bond Index, which we
use as a measure of the return of the overall market for emerging market debt,
and a 2.72% return for the Salomon Brothers Mortgage Index, which we use as a
measure of the return of the overall market for mortgages. At October 31, the
Trust's stock traded at $8.125 per share, up $0.25 per share from July 31,
representing a 3% premium to the underlying net asset value of $7.87 per share.
Investments in securities of emerging market issuers totaled 55.5% of total
assets at the end of the quarter, up from 53.4% at the beginning of the quarter.
Approximately 33.1% of the Trust's total assets were invested in mortgage-backed
pass through securities and 5.4% of the Trust's total assets were invested in
planned-amortization class interest-only mortgage-backed securities, commonly
referred to as PAC IO'S. The combination of mortgage pass-throughs and PAC IO'S
represented 38.5% of the Trust's total assets at October 31, which is slightly
more than last quarter's mortgage-backed exposure which stood at 38.0% of total
assets. The remainder of the Trust's portfolio is invested in zero-coupon
municipal bonds. This allocation has not changed over the course of the quarter.
MARKET OVERVIEW
The fiscal quarter ended October 31, 1995 saw continued recovery in emerging
market debt after the dismal first calendar quarter of 1995. The decline of U.S.
interest rates and continued economic and structural reform momentum developing
in Brazil led to continued upward momentum in bond prices. The market, after its
5.09% return in the quarter ended October 31, 1995, returned 2.90% in November.
Spreads for the Salomon Brothers Brady Bond Index above U.S. Treasuries widened
modestly from 1,076 basis points at the beginning of the quarter to 1,089 basis
points at October 31.
PORTFOLIO REVIEW
U.S. dollar-denominated bonds of the Republic of Brazil remain the largest
holding of the portfolio, totaling 11.8% of total assets. Brazilian Brady Bonds
were the top performing component of the Salomon Brothers Brady Bond Index
during the fiscal quarter. The key to Brazil's economic and credit quality
improvement in 1995 has been the credibility of its new currency, the Real, and
the ability of Brazil's monetary policy to drastically reduce inflation.
Inflation is expected to total 15% in 1995, down from 1,094% in 1994. After
initiating a strong burst of consumption upon the introduction of the new
currency in July 1994, the central
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
bank has used high interest rates to bring economic growth rates down in the
later part of 1995, reducing inflationary pressures.
The key to Brazil's performance going forward, however, is fiscal policy and the
ability to reduce government expenditures, principally social spending, and to
privatize business to pay down government debt. With high real interest rates,
domestic debt levels are increasing substantially, although external debt
remains at reasonable levels. The risk in Brazil is that the political will to
downsize the government and sell off state owned companies will diminish. We
view the momentum of developments in Brazil as positive, and feel that Brazilian
external debt represents an acceptable level of risk.
Obligations of the Republic of Argentina constitute 10.4% of the Trust's total
assets. Argentine debt experienced substantial volatility during the quarter due
to worries that Finance Minister Domingo Cavallo would resign. Cavallo is the
architect of Argentina's convertibility program, which is responsible for the
sharp decline in inflation in Argentina, and is believed by the investment
community to be the key to Argentina's continued stability. Although we do not
expect Cavallo to resign, we believe Argentina's economic management team is
deeper than one man and that the country will continue to improve in its credit
characteristics even if Cavallo were to depart. We expect to continue to
maintain a large exposure to Argentina.
Venezuelan government bonds represent 7.5% of the Trust's total assets. During
the quarter, Venezuela began discussions with the International Monetary Fund
(IMF) regarding economic reforms. The markets' reaction to this news was
positive, but we believe an IMF agreement will not be in place before the first
quarter of 1996. While the uncollateralized Venezuelan bonds, under current
market conditions, have the most upside potential given their pure sovereign
risk, we have over 85% of our Venezuelan exposure in collateralized bonds,
consistent with the Trust's focus. These bonds do not offer as high a yield as
their uncollateralized counterparts, yet their yield is still high relative to
debt of other countries. The Trust's investments in collateralized bonds also
provide some downside protection in the form of the zero-coupon U.S. Treasury
collateralization of the principal portion of the bonds.
The Trust's fourth largest holding is in bonds of the Republic of Poland, which
represents 7.2% of the Trust's total assets. Poland has shown remarkable
economic advancements during 1995 and we expect Poland to develop into a major
European economic force. Poland was the first Brady Bond issuing country to
receive an investment grade rating, Baa3 by Moody's Investors Service, Inc. We
expect that large investment grade bond buyers will focus increasingly on
Poland.
U.S. dollar-denominated bonds of Ecuador have grown to be the fifth largest
position in the Trust during the past six months. Ecuador has experienced
significant political volatility since the spring, including Vice President
Dahik's fleeing of the country amid corruption charges. We have viewed this
volatility as a buying opportunity and remain favorable on Ecuador as a credit.
At October 31, 1995, 38.5% of the Trust's total assets were allocated to
mortgage-backed securities. The majority of the portfolio's mortgage-backed
securities are invested in pass-through securities from the Federal Home Loan
Mortgage Corporation ("Freddie Mac") and Federal National Mortgage Association
("Fannie Mae"). These issues have historically offered
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
higher yields versus U.S. Treasuries. The remainder of the portfolio's
mortgage-backed securities are invested in PAC IO'S. These securities have short
expected average lives, prepayment protection and lower the interest rate
sensitivity of the portfolio's mortgage-backed holdings. As interest rates have
fallen, the threat of mortgage prepayments has increased. We have therefore sold
some of our higher-coupon pass-throughs and purchased lower-coupon pass-throughs
which have historically been less sensitive to increasing prepayments.
The Trust's allocation to zero-coupon municipal securities remains unchanged and
currently stands at 4.6% of total assets.
We continue to believe a diversified portfolio of emerging market debt and U.S.
mortgage-backed instruments can provide meaningful risk adjusted returns over
time. While volatility in these markets will remain, the combination of
improving fundamentals in many emerging market countries and low inflation in
the United States, in our view, bodes well for dollar-based fixed income assets
going forward.
ANNUAL SHAREHOLDERS MEETING
The Trust held its annual meeting of shareholders on November 15, 1995. At the
meeting, shareholders elected the nominees proposed for election to the Trust's
Board of Directors and ratified the selection of Price Waterhouse LLP as the
independent accountants of the Trust. The following table provides information
concerning the matters voted on at the meeting:
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
NOMINEES VOTES FOR VOTES AGAINST
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<S> <C> <C>
Thomas W. Brock 32,199,974 492,446
Allan C. Hamilton 32,194,296 498,124
</TABLE>
2. RATIFICATION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS OF
THE TRUST
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES ABSTAINED UNVOTED
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<S> <C> <C> <C>
32,185,298 158,799 348,324 1
</TABLE>
We appreciate your continued interest in the Trust. A recorded periodic update
of the developments affecting the markets in which the Trust invests is
available by calling (800) 725-6666.
Sincerely,
/s/ MICHAEL S. HYLAND
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MICHAEL S. HYLAND
Chairman and President
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
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STATEMENT OF INVESTMENTS
October 31, 1995 (unaudited)
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS -- 82.99% VALUE
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ARGENTINA -- 15.52%
$28,000 Republic of Argentina, Discount Bond, 6.875%*, 3/31/23........................ $ 15,802,500
12,500 Republic of Argentina, FRB, 6.8125%*, 3/31/05................................. 7,445,313
39,500 Republic of Argentina, Par Bond, 5.00%*, 3/31/23.............................. 18,885,937
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42,133,750
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BRAZIL -- 17.72%
1,382 Federal Republic of Brazil, C Bond, 8.00%**, 4/15/14.......................... 703,188
9,500 Federal Republic of Brazil, Discount Bond, Series ZL, 6.8125%*, 4/15/24....... 5,664,375
5,000 Federal Republic of Brazil, Investment (Exit) Bond, 6.00%, 9/15/13............ 2,546,875
713 Federal Republic of Brazil, IDU, 6.6875%*, 1/01/01............................ 610,523
7,000 Federal Republic of Brazil, NMB, 6.875%*, 4/15/09............................. 4,112,500
71,000 Federal Republic of Brazil, Par Bond, 4.25%*, 4/15/24......................... 34,479,375
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48,116,836
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BULGARIA -- 6.07%
16,000 Republic of Bulgaria, Discount Bond, Series A, 6.75%*, 7/28/24................ 8,090,000
30,000 Republic of Bulgaria, FLIRB, Series A, 2.00%*, 7/28/12........................ 8,400,000
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16,490,000
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COSTA RICA -- 1.74%
9,000 Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15.......................... 4,725,000
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ECUADOR -- 9.25%
34,000 Republic of Ecuador, Discount Bond, 6.8125%*, 2/28/25......................... 16,915,000
24,682 Republic of Ecuador, PDI Bond, 6.8125%*,**, 2/28/15........................... 8,206,752
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25,121,752
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MEXICO -- 5.85%
4,000 United Mexican States, Par Bond, Series A, 6.25%, 12/31/19
(including 4,000,000 warrants expiring 6/30/03)............................. 2,355,000
23,000 United Mexican States, Par Bond, Series B, 6.25%, 12/31/19
(including 23,000,000 warrants expiring 6/30/03)............................ 13,541,250
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15,896,250
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PHILIPPINES -- 4.19%
15,500 Republic of the Philippines, Par Bond, Series B, 5.75%*, 12/01/17............. 11,377,969
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</TABLE>
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
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STATEMENT OF INVESTMENTS (continued)
October 31, 1995 (unaudited)
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT
(000) SOVEREIGN BONDS (CONTINUED) VALUE
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POLAND -- 10.77%
$ 3,000 Republic of Poland, Par Bond, 2.75%*, 10/27/24................................ $ 1,331,250
5,500 Republic of Poland, PDI Bond, 3.75%*, 10/27/14................................ 3,544,063
52,000 Republic of Poland, RSTA Par Bond, 2.75%*, 10/27/24........................... 24,375,000
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29,250,313
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URUGUAY -- .69%
3,000 Uruguay, Par Bond, Series A, 6.75%, 2/19/21
(including 3,000,000 warrants expiring 2/19/21)............................. 1,875,000
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VENEZUELA -- 11.19%
25,000 Republic of Venezuela, Discount Bond, Series A, 6.6875%*, 3/31/20
(including 178,500 warrants expiring 3/31/20)............................... 13,250,000
8,000 Republic of Venezuela, FLIRB, Series A, 6.8125%*, 3/31/07..................... 4,015,000
20,000 Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20
(including 100,000 warrants expiring 3/31/20)............................... 10,287,500
5,500 Republic of Venezuela, Par Bond, Series B, 6.75%, 3/31/20
(including 27,500 warrants expiring 3/31/20)................................ 2,829,063
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30,381,563
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TOTAL SOVEREIGN BONDS (cost $243,165,819)..................................... 225,368,433
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MORTGAGE-BACKED SECURITIES -- 57.49%
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Federal Home Loan Mortgage Corp.,
29,000# Gold, 6.50%, 30 Year (TBA).................................................. 28,157,188
14,818 Series 1576, Class PK, 6.00%, 9/15/02 (PAC I/O)............................. 921,522
27,292 Series 1599, Class D, 6.50%, 6/15/19 (PAC I/O).............................. 3,820,888
28,758 Series 1609, Class J, 6.50%, 11/15/13 (PAC I/O)............................. 2,448,955
10,681 Series 1610, Class PH, 6.50%, 3/15/19 (PAC I/O)............................. 1,371,903
19,979 Series 1617, Class PF, 6.50%, 6/15/18 (PAC I/O)............................. 2,285,135
14,335 Series 1679, Class WA, 6.00%, 2/15/03 (PAC I/O)............................. 1,021,399
Federal National Mortgage Assoc.,
78,000# 6.50%, 30 Year (TBA)........................................................ 75,684,375
20,000# 7.50%, 30 Year (TBA)........................................................ 20,209,376
10,000# 8.00%, 30 Year (TBA)........................................................ 10,250,000
17,113 Trust 1993-169, Class QA, 6.50%, 8/25/12, (REMIC) (PAC I/O)................. 1,211,275
22,249 Trust 1993-183, Class EA, 6.50%, 3/25/17, (REMIC) (PAC I/O)................. 2,512,855
16,829 Trust 1993-183, Class EC, 6.50%, 3/25/13, (REMIC) (PAC I/O)................. 1,302,433
</TABLE>
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
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STATEMENT OF INVESTMENTS (continued)
October 31, 1995 (unaudited)
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT
(000) MORTGAGE-BACKED SECURITIES (CONTINUED) VALUE
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$13,121 Trust 1993-189, Class PH, 6.50%, 2/25/19, (REMIC) (PAC I/O)................. $ 1,627,790
39,351 Trust 1993-202, Class Q 6.50%, 11/25/13, (REMIC) (PAC I/O).................. 3,160,367
4,448 Trust 1993-209, Class PA, 6.00%, 11/25/99, (REMIC) (PAC I/O)................ 113,973
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TOTAL MORTGAGE-BACKED SECURITIES (cost $157,785,628).......................... 156,099,434
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ZERO-COUPON MUNICIPAL BONDS -- 6.90%
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11,200 Austin, Texas Utility System Revenue, Ser. A, 11/15/08........................ 5,583,872
Edinburg, Texas Cons. Independent School District,
1,845 2/15/08..................................................................... 957,407
2,705 2/15/09..................................................................... 1,317,037
Harris County, Texas,
5,470 8/15/08..................................................................... 2,763,772
Texas St. Public Finance Auth. Bldg. Rev.,
10,535 2/1/08...................................................................... 5,478,200
Westmoreland County, Pennsylvania,
2,665 Series G, 6/1/08............................................................ 1,371,409
2,515 Series G, 12/1/08........................................................... 1,260,493
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TOTAL ZERO-COUPON MUNICIPAL BONDS (cost $18,742,236).......................... 18,732,190
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TOTAL INVESTMENTS -- 147.38% (cost $419,693,683).............................. 400,200,057
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LIABILITIES IN EXCESS OF OTHER ASSETS -- (47.38%)............................. (128,658,140)
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NET ASSETS -- 100%............................................................ $ 271,541,917
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NET ASSET VALUE PER SHARE ($271,541,917 / 34,510,639 shares of common stock
issued and outstanding)..................................................... $7.87
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</TABLE>
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<TABLE>
<C> <S> <C> <C>
* Rate shown reflects current rate on variable rate instrument or instrument with step coupon rates.
** Payment-in-kind security for which part of the interest earned is capitalized as additional principal.
# Mortgage dollar roll.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
IDU -- Interest Due and Unpaid.
NMB -- New Money Bond.
PAC I/O -- Planned Amortization Class -- Interest Only.
PDI -- Past Due Interest.
REMIC -- Real Estate Mortgage Investment Conduit.
RSTA -- Restructured Trade Agreement.
TBA -- To Be Announced Security.
</TABLE>
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
DIRECTORS
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
THOMAS W. BROCK
Chairman and Chief Executive Officer,
Salomon Brothers Asset Management Inc
DANIEL P. CRONIN
Vice President -- General Counsel,
Pfizer International Inc.
ALLAN C. HAMILTON
Consultant; formerly
Vice President and
Treasurer, Exxon Corp.
MICHAEL S. HYLAND
President;
Salomon Brothers
Asset Management Inc
OFFICERS
MICHAEL S. HYLAND
Chairman and President
STEVEN GUTTERMAN
Executive Vice President
PETER J. WILBY
Executive Vice President
LAWRENCE H. KAPLAN
Executive Vice President
ALAN M. MANDEL
Treasurer
LAURIE A. PITTI
Assistant Treasurer
TANA E. TSELEPIS
Secretary
SALOMON BROTHERS
2008 WORLDWIDE DOLLAR
GOVERNMENT TERM TRUST INC
Seven World Trade Center
New York, New York 10048
For information call (toll free)
1-800-SALOMON
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
Investors Bank and Trust Company
89 South Street, P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
New York, New York 10036
LEGAL COUNSEL
Simpson Thacher & Bartlett
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
SBG
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Trust may purchase, from time to time, shares of
its common stock market prices.
This report is for stockholder information.
This is not a prospectus intended for use in
the purchase or sale of Trust shares.
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