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SALOMON BROTHERS
2008 WORLDWIDE DOLLAR
GOVERNMENT TERM TRUST INC
ANNUAL REPORT
---------------------------------
JULY 31, 1996
---------------------------------
SALOMON BROTHERS ASSET MANAGEMENT
---------------------------------
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
September 20, 1996
Dear Shareholders:
We are pleased to provide this annual report for the Salomon Brothers 2008
Worldwide Dollar Government Term Trust (the "Trust") for the fiscal year ended
July 31, 1996. Included are market commentary, audited financial statements, the
related report of independent accountants and other information about the Trust.
We are pleased to report that the Trust returned 28.68%, based on net asset
value per share, during the twelve months ended July 31, 1996, significantly
outperforming the 16.11% return of the Lipper Closed-End General World Income
Fund Average. In fact, the Trust ranked #1 of 11 funds in this investment
category tracked by Lipper Analytical Services, Inc.*
The net asset value of the Trust increased from $8.61 per share on April 30,
1996 to $8.76 per share on July 31, 1996. Dividends of $0.219 per share were
declared during the quarter. Assuming reinvestment of these dividends in
additional shares of the Trust, the net asset value return for the quarter ended
July 31, 1996 was 4.36%. In comparison, the Salomon Brothers Mortgage Index
returned 1.55% and the Salomon Brothers Brady Bond Index returned 4.69% during
the same period.
On July 31, 1996, investments in securities of emerging market issuers,
including obligations of sovereign governments, totaled approximately 60% of
total investments. The balance of the portfolio was held in mortgage-backed
securities (36% of total investments) and zero-coupon municipal bonds (4%).
EMERGING MARKETS DEBT SECURITIES
After a difficult start to the year, there was a decidedly positive tone to the
emerging debt markets by the end of July 1996, as political and fundamental
economic developments continued to promote growth throughout most of the
emerging market nations.
Latin America The Mexican Finance Ministry confirmed late in July that it would
repay $7 billion of its remaining $10.5 billion in emergency borrowings from the
U.S. Treasury as well as $1 billion in debt owed to the International Monetary
Fund (the "IMF"). The repayments, financed in part with a $6 billion
floating-rate note issue, are nearly double what Mexico had initially planned.
Since these bonds will be repaid from oil-export revenues of government-owned
Petroleos Mexicanos, flowing directly to the Federal Reserve Bank of New York,
the issue was rated Baa-3 by Moody's Investors Service and BBB- by Standard and
Poor's, both higher ratings than garnered by Mexico itself.
Similarly, the Venezuelan government approved the creation of a Debt Rescue Fund
that will set aside certain oil revenues to pay down foreign debt. Also, the IMF
approved a $1.4 billion standby credit, signifying Venezuela's first formal
credit arrangement since 1989. As a further
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
positive sign, Venezuela's economy is estimated to rebound to a 4% annual growth
rate in 1997 from a negative 1.1% inflation-adjusted growth rate this year,
according to the IMF.
Eastern Europe Russia was the emerging debt market's top performer in July, as
pro-reform Boris Yeltsin soundly beat his Communist rival in a runoff
presidential election early that month. Investors' main concerns for Russia now
are Mr. Yeltsin's health and speculation over a possible successor. Separately,
the Russian Central Bank moved to draw more foreign investors into its
treasury-bill market in a bid to lower the country's rising interest payments.
Foreign investors will now be allowed greater flexibility in investing in
ruble-denominated treasury bills, including easier repatriation of profits.
Poland enjoyed another successful issue with its July 9 release of a five-year,
250 million deutschemark Eurobond, priced very competitively over comparable
German government bonds. This pricing, along with recent acceptance of Poland
into the Organization for Economic Cooperation and Development and its strong
trade relations with Germany, are believed to be among the primary reasons
German investors account for one-third of the bond issue's placement.
Positive economic developments were also in evidence in Bulgaria, as the IMF
approved a fourth standby loan for the country in July. This loan, in turn,
should pave the way for additional external financial support from the World
Bank and bilateral lenders. Of course, the success of Bulgaria's IMF and World
Bank loan programs is dependent on the nation's ongoing progress towards
recapitalization and reform of its banking system. Interest payments totaling
US$125 million on Brady bonds were paid in July as scheduled.
MORTGAGE-BACKED BONDS
After four consecutive months of negative returns, the mortgage market posted
positive returns in June and July. Nevertheless, the strength of economic
indicators such as housing, car sales and employment continued to surprise the
market and weigh on bond prices.
Interest rates did move slightly higher during the quarter ended July 31, 1996,
with long-term rates going as high as 7.18% on July 8, as investors feared that
June's employment report would force the Federal Reserve Board to raise
short-term interest rates. Instead, Board Chairman Alan Greenspan's response to
the speculation conveyed no sense of urgency to actually do so, and long-term
rates returned to 6.97%, thereby pushing bond valuations back into positive
territory.
More specifically within the mortgage market, prepayment speeds, i.e., a measure
of the number of mortgage holders who are refinancing or completing their
mortgage obligations, declined during the period. We expect that prepayment
speeds will remain relatively unexciting over the next several months, as
neither interest rates nor seasonality is anticipated to have a major influence.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
Based on this outlook, the Trust's allocation in mortgage securities is invested
primarily in discount pass-through mortgage obligations, which continue to
provide competitive yields with limited prepayment risk, and in Planned
Amortization Class Interest-Only bonds which tend to perform well in neutral and
rising interest rate environments.
* * *
We appreciate your ongoing interest in the Trust. A recorded periodic update of
the developments affecting the markets in which the Trust invests, as well as
its top holdings, net asset value and performance are available by calling
1-800-725-6666.
Also note that the annual meeting of shareholders of the Trust will be held on
November 13, 1996 at 10:00 am at Salomon Brothers Asset Management, Seven World
Trade Center in New York City. We hope those of you who are able to will attend.
Sincerely,
LOGO
MICHAEL S. HYLAND
Chairman and President
* Lipper rankings change monthly. Lipper performance results represent changes
in net asset value, adjusted to reflect reinvestment of dividends and capital
gains distributions.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
July 31, 1996
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS -- 86.2% (NOTE 2)
-----------------------------------------------------------------------------------------------------------
ARGENTINA -- 16.3%
$28,000 Republic of Argentina, Discount Bond, 6.4375%, 3/31/23*....................... $ 18,777,500
12,375 Republic of Argentina, FRB, 6.3125%, 3/31/05*................................. 9,343,125
39,500 Republic of Argentina, Par Bond, 5.25%, 3/31/23*.............................. 20,984,375
-------------
49,105,000
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BRAZIL -- 19.0%
6,562 Federal Republic of Brazil, C Bond, 8.00%, 4/15/14**.......................... 4,043,531
9,500 Federal Republic of Brazil, Discount Bond, Series ZL, 6.50%, 4/15/24*......... 6,667,813
5,000 Federal Republic of Brazil, Investment (Exit) Bond, 6.00%, 9/15/13............ 3,134,375
683 Federal Republic of Brazil, IDU, 6.6875%, 1/01/01*............................ 652,641
2,000 Federal Republic of Brazil, NMB, 6.5625%, 4/15/09*............................ 1,497,500
76,000 Federal Republic of Brazil, Par Bond, 5.00%, 4/15/24*......................... 41,420,000
-------------
57,415,860
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BULGARIA -- 5.1%
16,000 Republic of Bulgaria, Discount Bond, Tranche A, 6.6875%, 7/28/24*............. 8,360,000
13,000 Republic of Bulgaria, FLIRB, Series A, 2.25%, 7/28/12*........................ 4,355,000
5,750 Republic of Bulgaria, IAB, 6.6875%, 7/28/11*.................................. 2,738,437
-------------
15,453,437
-------------
COSTA RICA -- 2.1%
9,000 Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15.......................... 6,300,000
-------------
ECUADOR -- 10.3%
34,000 Republic of Ecuador, Discount Bond, 6.0625%, 2/28/25*......................... 19,550,000
25,320 Republic of Ecuador, PDI Bond, 6.0625%, 2/27/15*(,)**......................... 11,678,959
-------------
31,228,959
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MEXICO -- 6.0%
14,000 United Mexican States, Par Bond, Series A, 6.25%, 12/31/19
(including 14,000,000 rights)............................................... 9,012,500
14,000 United Mexican States, Par Bond, Series B, 6.25%, 12/31/19
(including 14,000,000 rights)............................................... 9,012,500
1 United Mexican States, Global Bond, 11.50%, 5/15/26........................... 1,095
-------------
18,026,095
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PHILIPPINES -- 4.1%
15,500 Republic of the Philippines, Par Bond, Series B, 6.25%, 12/01/17*............. 12,341,875
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</TABLE>
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See accompanying notes to financial statements.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (continued)
July 31, 1996
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS (CONCLUDED) (NOTE 2)
-----------------------------------------------------------------------------------------------------------
POLAND -- 11.2%
$ 3,000 Republic of Poland, Discount Bond, 6.4375%, 10/27/24*......................... $ 2,835,000
55,000 Republic of Poland, RSTA Par Bond, 2.75%, 10/27/24*........................... 31,006,250
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33,841,250
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URUGUAY -- .7%
3,000 Uruguay, Par Bond, Series A, 6.75%, 2/19/21
(including 3,000,000 rights)................................................ 2,190,000
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VENEZUELA -- 11.4%
25,000 Republic of Venezuela, Discount Bond, Series A, 6.375%, 3/31/20*
(including 178,500 warrants)................................................ 17,125,000
8,000 Republic of Venezuela, FLIRB, Series A, 6.375%, 3/31/07*...................... 5,937,500
13,000 Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20
(including 100,000 warrants)................................................ 8,076,250
5,500 Republic of Venezuela, Par Bond, Series B, 6.75%, 3/31/20
(including 27,500 warrants)................................................. 3,416,875
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34,555,625
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TOTAL SOVEREIGN BONDS (cost $241,873,135)..................................... 260,458,101
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MORTGAGE-BACKED SECURITIES -- 50.7%
-----------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
49,000(#) Gold, 6.50%, 30 Year (TBA).................................................. 45,784,375
8,998 Series 1576, Class PK, 6.00%, 9/15/02 (PAC I/O)............................. 427,395
24,605 Series 1599, Class D, 6.50%, 6/15/19 (PAC I/O).............................. 3,783,010
20,617 Series 1609, Class J, 6.50%, 11/15/13 (PAC I/O)............................. 1,372,297
8,221 Series 1610, Class PH, 6.50%, 3/15/19 (PAC I/O)............................. 976,218
15,132 Series 1617, Class PF, 6.50%, 6/15/18 (PAC I/O)............................. 1,588,897
10,241 Series 1679, Class WA, 6.00%, 2/15/03 (PAC I/O)............................. 499,254
Federal National Mortgage Assoc.,
78,000(#) 6.50%, 30 Year (TBA)........................................................ 72,783,750
20,000(#) 8.00%, 30 Year (TBA)........................................................ 20,112,500
11,850 Trust 1993-169, Class QA, 6.50%, 8/25/12, (REMIC) (PAC I/O)................. 570,280
16,923 Trust 1993-183, Class EA, 6.50%, 3/25/17, (REMIC) (PAC I/O)................. 1,728,140
11,503 Trust 1993-183, Class EC, 6.50%, 3/25/13, (REMIC) (PAC I/O)................. 689,008
</TABLE>
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See accompanying notes to financial statements.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (concluded)
July 31, 1996
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
(000) MORTGAGE-BACKED SECURITIES (CONCLUDED) (NOTE 2)
-----------------------------------------------------------------------------------------------------------
$ 9,991 Trust 1993-189, Class PH, 6.50%, 2/25/19, (REMIC) (PAC I/O)................. $ 1,180,198
27,732 Trust 1993-202, Class Q, 6.50%, 11/25/13, (REMIC) (PAC I/O)................. 1,629,251
737 Trust 1993-209, Class PA, 6.00%, 11/25/99, (REMIC) (PAC I/O)................ 1,611
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TOTAL MORTGAGE-BACKED SECURITIES (cost $159,274,576).......................... 153,126,184
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ZERO-COUPON MUNICIPAL BONDS -- 6.2%
-----------------------------------------------------------------------------------------------------------
11,200 Austin, Texas Utility System Revenue, Ser. A, 11/15/08........................ 5,627,328
Edinburg, Texas Cons. Independent School District,
1,845 2/15/08..................................................................... 966,762
2,705 2/15/09..................................................................... 1,323,962
Harris County, Texas,
5,470 8/15/08..................................................................... 2,787,074
Texas St. Public Finance Auth. Bldg. Rev.,
10,535 2/1/08...................................................................... 5,532,350
Westmoreland County, Pennsylvania,
2,665 Series G, 6/1/08............................................................ 1,381,536
2,515 Series G, 12/1/08........................................................... 1,268,063
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TOTAL ZERO-COUPON MUNICIPAL BONDS (cost $19,506,076).......................... 18,887,075
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TOTAL INVESTMENTS -- 143.1% (cost $420,653,787)............................... 432,471,360
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (43.1%).............................. (130,287,107)
-------------
NET ASSETS -- 100.0%.......................................................... $ 302,184,253
============
</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. (See Note 5)
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
IAB -- Interest in Arrears 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>
See accompanying notes to financial statements.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $420,653,787)..................................................... $432,471,360
Interest receivable........................................................................... 7,163,452
Deferred organization expenses and other assets............................................... 93,254
------------
Total assets.......................................................................... 439,728,066
------------
LIABILITIES
Payable for investments purchased (Note 5).................................................... 137,050,813
Advisory fee payable.......................................................................... 156,221
Administration fee payable.................................................................... 3,852
Accrued expenses.............................................................................. 332,927
------------
Total liabilities..................................................................... 137,543,813
------------
NET ASSETS
Common Stock ($.001 par value, authorized 200,000,000 shares; 34,510,639 shares
outstanding)................................................................................ 34,511
Additional paid-in-capital.................................................................... 323,533,363
Undistributed net investment income........................................................... 3,144,797
Accumulated net realized loss on investments.................................................. (36,345,991)
Net unrealized appreciation on investments.................................................... 11,817,573
------------
Net assets............................................................................ $302,184,253
------------
NET ASSET VALUE PER SHARE ($302,184,253 / 34,510,639 shares).................................. $ 8.76
------------
</TABLE>
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See accompanying notes to financial statements.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended July 31, 1996
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
INCOME
Interest and discount earned............................................... $35,275,387
EXPENSES
Investment advisory fees................................................... $1,726,136
Administration fees........................................................ 420,615
Custodian's fees and expenses.............................................. 209,897
Reports to shareholders.................................................... 151,443
Audit fees and expenses.................................................... 145,161
Transfer agent's fees and expenses......................................... 70,317
Legal fees and expenses.................................................... 65,284
Directors' fees............................................................ 43,617
Amortization of deferred organization expenses............................. 25,067
Listing fees............................................................... 18,615
Insurance.................................................................. 8,161
Miscellaneous.............................................................. 6,748
----------
Total expenses......................................................... 2,891,061
-----------
Net investment income.......................................................... 32,384,326
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions................................... (3,346,053)
Net change in unrealized appreciation on investments........................... 42,132,165
-----------
Net realized and unrealized gain on investments................................ 38,786,112
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................................... $71,170,438
-----------
</TABLE>
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See accompanying notes to financial statements.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, 1996 JULY 31, 1995
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income..................................................... $ 32,384,326 $ 30,581,716
Net realized loss on investment transactions.............................. (3,346,053 ) (32,112,770 )
Net change in unrealized appreciation on investments...................... 42,132,165 25,586,089
------------ ------------
Net increase in net assets from operations................................ 71,170,438 24,055,035
DIVIDENDS
Dividends from net investment income...................................... (30,231,286 ) (30,231,321 )
------------ ------------
CAPITAL SHARE TRANSACTIONS
Additional offering costs paid............................................ (17,416 ) --
------------ ------------
Total increase (decrease)................................................. 40,921,736 (6,176,286 )
------------ ------------
NET ASSETS
Beginning of period....................................................... 261,262,517 267,438,803
------------ ------------
End of period (includes undistributed net investment income of $3,144,797
and $991,757 for the year ended July 31, 1996 and 1995, respectively)... $302,184,253 $261,262,517
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Year Ended July 31, 1996
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Purchases of long-term portfolio investments............................................. $(149,651,337)
Proceeds from disposition of long-term portfolio investments and principal paydowns...... 134,886,506
Net sales of short-term portfolio investments............................................ 1,053,000
-------------
(13,711,831)
Net investment income.................................................................... 32,384,326
Amortization of net premium/discount on investments...................................... 3,961,565
Amortization of organization expenses.................................................... 25,067
Net change in receivables/payables related to operations................................. (332,235)
-------------
Net cash flows provided by operating activities...................................... 22,326,892
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Net increase from dollar roll transactions............................................... 7,903,813
Cash dividends paid...................................................................... (30,231,286)
-------------
Net cash flows used by financing activities.......................................... (22,327,473)
-------------
Net decrease in cash......................................................................... (581)
Cash at beginning of period.................................................................. 581
-------------
CASH AT END OF PERIOD........................................................................ $ 0
-------------
</TABLE>
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See accompanying notes to financial statements.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
The Salomon Brothers 2008 Worldwide Dollar Government Term Trust Inc (the
"Trust") was incorporated in Maryland on May 24, 1993 and is registered as a
non-diversified, closed-end, management investment company under the Investment
Company Act of 1940, as amended. The Trust commenced operations on August 27,
1993. The investment objective of the Trust is to manage a portfolio of fixed
income securities that will return $10 per share to investors on or about
November 30, 2008 while providing high monthly income. No assurance can be given
that the Trust's investment objective will be achieved.
The Trust will seek to achieve its investment objective by investing
substantially all (at least 90%) of its assets, under normal conditions, in
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, securities issued or guaranteed by foreign governments
(sovereign bonds) and collateralized in full as to principal due at their
maturity by U.S. government securities, and zero coupon obligations of municipal
issuers. The market prices of the securities in which the Trust invests are
expected to fluctuate with changes in interest rates and the perceived credit
quality of such assets. The Trust's investments in sovereign bonds may be
affected by political, social, economic or diplomatic changes in such countries
and the Trust's investment in such securities increases the risk that the Trust
will return less than $10 per share in the year 2008. At July 31, 1996, a
significant portion of the Trust's investments is in sovereign debt of emerging
market countries. In addition, the Trust's investment in mortgage-backed
securities is subject to the risk that rapid principal repayment, including
prepayment, may have an adverse effect on the yield to maturity of such
securities.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
("GAAP"). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual amounts could differ
from those estimates.
(a) SECURITIES VALUATION. In valuing the Trust's assets, all securities for
which market quotations are readily available are valued (i) at the last sales
price prior to the time of determination if there were a sale on the date of
determination or (ii) at the bid price if there were no sale on such date.
Publicly traded foreign government debt securities 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, when 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. The Trust values mortgage-backed and asset-backed
PAGE 7
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
securities and other debt securities on the basis of current market quotations
provided by dealers or independent pricing services which use prices provided by
market-makers or estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics.
Short-term investments having a maturity of 60 days or less are valued at
amortized cost, which approximates market value. Securities for which reliable
quotations are not readily available are valued at fair value as determined in
good faith by, or under procedures established by, the Board of Directors.
(b) INVESTMENT TRANSACTIONS. Investment 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 Trust accretes discount
or amortizes premium on securities purchased using the effective interest
method.
(c) FEDERAL INCOME TAXES. The Trust has complied and intends to continue to
comply with the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute sufficient
taxable income to shareholders. Therefore, no federal income tax or excise tax
provision is required.
(d) DIVIDENDS AND DISTRIBUTIONS. The Trust declares and pays dividends to
shareholders monthly from net investment income. Net realized gains, if any, in
excess of loss carryovers are expected to be distributed annually. Dividends and
distributions to shareholders are recorded on the ex-dividend date. The amount
of dividends and distributions from net investment income and net realized gains
are determined in accordance with federal income tax regulations, which may
differ from GAAP. To the extent these differences are permanent in nature, such
amounts are reclassified within the components of net assets. The Trust
currently intends to retain, until the final liquidating distribution, income in
an amount approximately equal to the tax-exempt income accrued on the zero
coupon obligations of municipal issuers in which it invests but in no event
greater than 10% of the Trust's net investment income per year.
(e) DEFERRED ORGANIZATION EXPENSES. A total of $125,000 was incurred in
connection with the organization of the Trust. These costs have been deferred
and are being amortized ratably over a five-year period from commencement of
operations.
(f) REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is the
Trust's policy to take possession, through its custodian, of the underlying
collateral and to monitor its value at the time the arrangement is entered into
and at all times during the term of the repurchase agreement to ensure that it
equals or exceeds the repurchase price. In the event of default of the
obligation to repurchase, the Trust has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation. Under certain
circumstances, in the event
PAGE 8
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
of default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.
(g) CASH FLOW INFORMATION. The Trust invests in securities and distributes net
investment income and net realized gains which are paid in cash and may be
reinvested at the discretion of shareholders. These activities are reported in
the Statement of Changes in Net Assets and additional information on cash
receipts and cash payments is presented in the Statement of Cash Flows.
Accounting practices that do not affect reporting activities on a cash basis
include carrying investments at value and amortizing discounts or premiums on
debt obligations.
NOTE 3. MANAGEMENT AND ADMINISTRATION FEES AND OTHER TRANSACTIONS
The Trust has an Investment Advisory Agreement with Salomon Brothers Asset
Management Inc (the "Adviser"), an indirect wholly-owned subsidiary of Salomon
Inc, pursuant to which the Adviser acts as the Trust's investment adviser and is
responsible for the management of the Trust's portfolio in accordance with the
Trust's investment objectives and policies and for making decisions to buy,
sell, or hold particular securities. Through August 31, 1995, the Trust also had
an Administration Agreement with Prudential Mutual Fund Management, Inc. (the
"Administrator"), pursuant to which the Administrator performed administrative
services necessary for the operation of the Trust.
The Trust pays the Adviser a monthly fee for its advisory services at an annual
rate of .60% of the value of the Trust's average weekly net assets. The Trust
paid the Administrator a monthly fee for its administration services at an
annual rate of .15% of the value of the Trust's average weekly net assets up to
$250 million and .125% of the value of such net assets in excess of $250
million.
Effective September 1, 1995, the Administration Agreement was amended to provide
for the appointment of the Adviser as Administrator and Prudential Mutual Fund
Management, Inc. as Sub-administrator (the "Sub-administrator"). Under the
amended Agreement, the Trust pays the Administrator a monthly fee at an annual
rate of .15% of the value of the Trust's average weekly net assets up to $250
million and .125% of the value of such net assets in excess of $250 million for
its services, out of which the Administrator pays the Sub-administrator eighty
percent of such fees collected for its services.
At July 31, 1996, the Adviser owned 13,485 shares of the Trust.
The Trust pays each Director not affiliated with the Adviser a fee of $5,000 per
year, plus a fee of $700 and reimbursement for travel and out-of-pocket expenses
for each board and committee meeting attended.
PAGE 9
<PAGE> 14
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4. PORTFOLIO ACTIVITY AND FEDERAL INCOME TAX STATUS
Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the year ended July 31, 1996 aggregated $149,651,337 and
$134,731,506, respectively.
The federal income tax cost basis of the Trust's investments at July 31, 1996
was $423,649,042 and, accordingly, net unrealized appreciation for federal
income tax purposes was $8,822,318 (gross unrealized
appreciation -- $31,077,015; gross unrealized depreciation -- $22,254,697).
Pursuant to federal income tax regulations, the Trust elected to treat capital
losses of $2,412,950, incurred in the period November 1, 1995 through July 31,
1996, as having occurred on August 1, 1996. In addition, the Trust has a capital
loss carryforward as of July 31, 1996 of $30,901,987 of which $1,007,552 expires
in 2003 and $29,894,435 expires in 2004. To the extent future capital gains are
offset by such capital losses, the Trust does not anticipate distributing such
gains to shareholders.
NOTE 5. BORROWINGS
DOLLAR ROLLS. The Trust enters into dollar rolls in which the Trust sells
mortgage-backed securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar (same type, coupon and maturity)
securities to settle on a specified future date. At July 31, 1996, the Trust
contracted to repurchase mortgage-backed securities of $137,050,813 for a
scheduled settlement on August 12, 1996. During the roll period the Trust
forgoes principal and interest paid on the securities. The Trust is compensated
by a fee paid by the counterparty. Dollar rolls are accounted for as a financing
arrangement; the fee is accrued into interest income ratably over the term of
the dollar roll and any gain or loss on the roll is deferred until disposition
of the rolled security. The average monthly balance of dollar rolls outstanding
during the year ended July 31, 1996 was approximately $136,757,374.
NOTE 6. DIVIDENDS
Subsequent to July 31, 1996, the Board of Directors of the Trust declared
dividends of $.073 per common share payable August 30, 1996 and September 30,
1996 to shareholders of record on August 13, 1996 and September 17, 1996,
respectively.
PAGE 10
<PAGE> 15
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
NOTE 7. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED AND
UNREALIZED GAINS
NET INVESTMENT (LOSSES) ON
INCOME INVESTMENTS
----------------------------- ----------------
QUARTERLY PERIOD TOTAL INCOME AMOUNT PER SHARE AMOUNT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
August 27, 1993*
to October 31, 1993 $4,213,943 $3,742,547 $.11 $ 15,377,808
November 1, 1993
to January 31, 1994 8,223,079 7,493,911 .22 9,305,565
February 1, 1994
to April 30, 1994 8,123,521 7,473,849 .22 (75,995,205)
May 1, 1994
to July 31, 1994 8,424,530 7,757,590 .22 (5,419,573)
August 1, 1994
to October 31, 1994 7,420,417 6,804,657 .20 (7,250,281)
November 1, 1994
to January 31, 1995 8,390,082 7,653,347 .22 (19,106,384)
February 1, 1995
to April 30, 1995 8,331,322 7,787,434 .23 4,051,303
May 1, 1995
to July 31, 1995 8,968,424 8,336,278 .24 15,778,681
August 1, 1995
to October 31, 1995 8,600,890 7,951,429 .23 9,887,863
November 1, 1995
to January 31, 1996 8,980,759 8,256,058 .24 45,110,600
February 1, 1996
to April 30, 1996 8,799,010 7,991,738 .23 (20,711,120)
May 1, 1996
to July 31, 1996 8,894,728 8,185,101 .24 4,498,769
<CAPTION>
NET REALIZED AND
UNREALIZED GAINS NET INCREASE
(LOSSES) ON (DECREASE) IN NET ASSETS DIVIDENDS AND
INVESTMENTS RESULTING FROM OPERATIONS DISTRIBUTIONS
------------ --------------------------------- -------------
QUARTERLY PERIOD PER SHARE AMOUNT PER SHARE AMOUNT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
August 27, 1993*
to October 31, 1993 $ .44 $19,120,355 $ .55 $2,519,277
November 1, 1993
to January 31, 1994 .27 16,799,476 .49 8,248,043
February 1, 1994
to April 30, 1994 (2.21) (68,521,356) (1.99) 7,557,829
May 1, 1994
to July 31, 1994 ( .15) 2,338,017 .07 7,557,830
August 1, 1994
to October 31, 1994 ( .21) (445,624) ( .01) 7,557,829
November 1, 1994
to January 31, 1995 ( .55) (11,453,037) ( .33) 7,557,830
February 1, 1995
to April 30, 1995 .11 11,838,737 .34 7,557,830
May 1, 1995
to July 31, 1995 .46 24,114,959 .70 7,557,832
August 1, 1995
to October 31, 1995 .28 17,839,292 .51 7,557,830
November 1, 1995
to January 31, 1996 1.31 53,366,658 1.55 7,557,831
February 1, 1996
to April 30, 1996 ( .60) (12,719,382) ( .37) 7,557,830
May 1, 1996
to July 31, 1996 .13 12,683,870 .37 7,557,795
<CAPTION>
DIVIDENDS AND
DISTRIBUTIONS SHARE PRICE
-------------- ----------------------------
QUARTERLY PERIOD PER SHARE HIGH LOW
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
August 27, 1993*
to October 31, 1993 $.073 $10 1/8 $9 5/8
November 1, 1993
to January 31, 1994 .239 10 9 1/8
February 1, 1994
to April 30, 1994 .219 10 7 3/4
May 1, 1994
to July 31, 1994 .219 8 1/2 7 3/4
August 1, 1994
to October 31, 1994 .219 8 1/4 7 1/8
November 1, 1994
to January 31, 1995 .219 7 7/8 6 3/8
February 1, 1995
to April 30, 1995 .219 7 1/2 6 7/8
May 1, 1995
to July 31, 1995 .219 8 1/4 7 3/8
August 1, 1995
to October 31, 1995 .219 8 1/8 7 5/8
November 1, 1995
to January 31, 1996 .219 8 7/8 7 3/4
February 1, 1996
to April 30, 1996 .219 9 8
May 1, 1996
to July 31, 1996 .219 8 3/4 8 3/8
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
PAGE 11
<PAGE> 16
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE AUGUST 27, 1993*
YEAR ENDED YEAR ENDED THROUGH
JULY 31, 1996 JULY 31, 1995 JULY 31, 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................... $ 7.57 $ 7.75 $ 9.40++
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... .94 .89 .77
Net realized and unrealized gain (loss) on investments... 1.12 (.19) (1.65)
-------- -------- --------
Total from investment operations..................... 2.06 .70 (.88)
-------- -------- --------
LESS DIVIDENDS:
Dividends from net investment income..................... (.87) (.88) (.75)
-------- -------- --------
Offering costs with respect to issuance of shares........ -- -- (.02)
-------- -------- --------
Net asset value, end of period........................... $ 8.76 $ 7.57 $ 7.75
-------- -------- --------
Market price per share, end of period.................... $ 8.625 $ 7.875 $ 7.875
-------- -------- --------
TOTAL INVESTMENT RETURN(A):.............................. 21.39% 12.05% (8.89%)+
RATIOS TO AVERAGE NET ASSETS:
Total expenses....................................... 1.01% 1.01% .89%#
Net investment income................................ 11.27% 12.20% 9.36%#
SUPPLEMENTAL DATA:
Net assets, end of period (000)...................... $302,184 $261,263 $267,439
Average net assets (000)............................. $287,466 $250,594 $304,526
Portfolio turnover rate.............................. 32% 52% 11%
Asset coverage to dollar rolls outstanding at period
end................................................ 320% 302% 299%
Total mortgage dollar rolls outstanding at period end
(000).............................................. $137,051 $129,147 $134,549
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
* Commencement of investment operations.
+ Return calculated based on beginning of period price of $9.40 (initial offering price of $10.00 less
sales load of $.60) and end of period market value of $7.875 per share. The calculated return has not
been annualized.
++ Net asset value immediately after closing of initial public offering was $9.38.
(a) Total investment return is calculated assuming a purchase of common stock at the current market price on
the first day and a sale at the current market price on the last day of each period reported. For
purposes of this calculation, dividends are assumed to be reinvested at prices obtained under the
Trust's dividend reinvestment plan and the broker commission paid to purchase or sell a share is
excluded. Total investment returns for periods of less than one full year are not annualized.
# Annualized.
</TABLE>
See accompanying notes to financial statements.
PAGE 12
<PAGE> 17
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Salomon Brothers 2008 Worldwide Dollar
Government Term Trust Inc
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, of cash
flows and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Salomon Brothers 2008
Worldwide Dollar Government Term Trust Inc (the "Trust") at July 31, 1996, the
results of its operations and cash flows for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the two years in the period then ended and for
the period August 27, 1993 (commencement of operations) through July 31, 1994,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at July
31, 1996 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
September 18, 1996
PAGE 13
<PAGE> 18
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- ---------------------------------------------------------------------------
OTHER INFORMATION
Pursuant to certain rules of the Securities and Exchange Commission the
following additional disclosure is provided.
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), stockholders
may elect to have all distributions automatically reinvested by American Stock
Transfer & Trust Company (the "Plan Agent") in Trust Shares pursuant to the
Plan. Each registered Stockholder will receive from the Trust, as soon as
practicable, an authorization card to be signed and returned if the Stockholder
elects to participate in the Plan. Stockholders who do not participate in the
Plan will receive all distributions in cash paid by check in dollars mailed
directly to the stockholder by the custodian, as dividend disbursing agent. In
the case of stockholders, such as banks, brokers or nominees, that hold Shares
for others who are the beneficial owners, the Plan Agent will administer the
Plan on the basis of the number of Shares certified from time to time by the
stockholders as representing the total amount registered in such stockholders'
names and held for the account of beneficial owners who are participants in the
Plan. Investors that own shares registered in the name of a bank, broker-dealer
or other nominee should consult with such nominee as to the participation in the
Plan through such nominee, and may be required to have their shares registered
in their own names in order to participate in the Plan.
The Plan Agent serves as agent for the stockholders in administering the Plan.
After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust Shares in the open market, on the New York
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue any new shares in connection with the Plan.
The Plan Agent maintains all stockholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by stockholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant, and each stockholder's proxy will include those shares purchased
pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions. The Plan Agent's fees for the reinvestment of dividends and
capital gains distributions will be paid by the Trust. However, each participant
will pay a pro rata share of brokerage commissions incurred with respect to the
Plan Agent's open market purchases in connection with the reinvestment of
dividends and distributions. Brokerage charges for purchasing small amounts of
stock for individual accounts through the Plan are expected to be less than the
usual brokerage charges for such transactions because the Plan Agent will be
purchasing stock for all participants in blocks and prorating the lower
commission thus attainable.
The receipt of dividends and distributions under the Plan will not relieve
participants of any federal income tax that may be payable on such dividends or
distributions. See "Taxation -- Taxation of Stockholders."
PAGE 14
<PAGE> 19
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- ---------------------------------------------------------------------------
OTHER INFORMATION (concluded)
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Trust and the Plan Agent reserve the right to terminate the Plan as applied
to any dividend or distribution paid subsequent to written notice of the
termination sent to members of the Plan at least 30 days before the record date
for such dividend or distribution. The Plan also may be amended by the Trust or
the Plan Agent, but (except when necessary or appropriate to comply with
applicable law, rules or policies of a regulatory authority) only by at least 30
days' written notice to participants in the Plan. All correspondence concerning
the Plan should be directed to the Plan Agent at 40 Wall Street, 46th Floor, New
York, New York 10005.
PAGE 15
<PAGE> 20
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
Managing Director, Salomon Brothers Inc
President, Salomon Brothers
Asset Management Inc
RIORDAN ROETT
Professor and Director,
Latin American Studies Program,
Paul H. Nitze School of
Advanced International Studies,
Johns Hopkins University
JESWALD W. SALACUSE
Henry J. Braker
Professor of Commercial Law,
The Fletcher School of Law & Diplomacy,
Tufts University
- ---------
OFFICERS
MICHAEL S. HYLAND
Chairman and President
STEVEN GUTERMAN
Executive Vice President
PETER J. WILBY
Executive Vice President
LAWRENCE H. KAPLAN
Executive Vice President
and General Counsel
ALAN M. MANDEL
Treasurer
LAURIE A. PITTI
Assistant Treasurer
TANA E. TSELEPIS
Secretary
JENNIFER MUZZEY
Assistant 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
1177 Avenue of the Americas
New York, New York 10036
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
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 at market prices.
- ------------------------------------------------------
This report is for stockholder information.
This is not a prospectus intended for use in
the purchase or sale of Trust shares.
- --------------------------------------------------------------------------------
<PAGE> 21
---------------------
BULK RATE
U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
---------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
NEW YORK, NEW YORK 10005
