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SALOMON BROTHERS
2008 WORLDWIDE DOLLAR
GOVERNMENT TERM TRUST INC
ANNUAL REPORT
JULY 31, 1997
---------------------------------
SALOMON BROTHERS ASSET MANAGEMENT
---------------------------------
<PAGE> 2
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
September 26, 1997
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, 1997, including market commentary, audited financial statements, the
related report of independent accountants and other information about the Trust.
During the twelve months ended July 31, 1997, the net asset value for the Trust
increased from $8.76 per share to $11.16 per share. Dividends of $0.913 per
share were paid during this period. Assuming the reinvestment of these dividends
in additional shares of the Trust, the net asset value return for the fiscal
year ended July 31, 1997 was 39.80%. During the same period, the Salomon
Brothers Brady Bond Index and the Salomon Brothers Mortgage Index returned
36.91% and 10.60%, respectively.
Emerging markets sovereign debt securities accounted for approximately 62% of
total long-term investments as of July 31, 1997. The balance of the portfolio
was held in mortgage-backed securities (34%) and municipal zero-coupon bonds
(4%).
EMERGING MARKETS DEBT SECURITIES
The emerging debt markets enjoyed a strong performance in the twelve months
ended July 31, 1997, and maintained strong investor support. These markets
benefited from favorable market conditions, attractive yields and positive
economic and political settings in many key countries, as well as from the
Federal Reserve's decision to hold U.S. interest rates steady since March.
Latin America. We believe prospects for economic growth in Latin America are
especially bright, with annual GDP growth rates of 4%-6% expected over the next
two years. In Mexico, the recent election results signal a decisive step toward
greater democracy and, in our view, are not likely to derail the ongoing reform
process. Earlier this year, Mexico's balance of payments situation improved with
the prepayment of the last $3.5 billion of its $12.5 billion U.S. Treasury loan
and the reduction of its outstanding balance to the International Monetary Fund
("IMF").
Brazil's launch of its $3 billion, 30-year global bond was the largest amount
ever issued by an emerging market borrower, and will likely allow Brazilian
corporates to obtain more attractive, longer-term financing.
Argentina aggressively tapped the markets early this year, taking advantage of
favorable global conditions. In April, a change in methodology by
S&P -- whereby, under certain circumstances, a sovereign country's rating is no
longer a ceiling for its corporate issuers -- allowed for the upgrading of
twelve Argentine corporate ratings to BBB-. This represents an
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
investment-grade rating two notches above the sovereign and spurred a strong
rally in the bonds that were upgraded.
Venezuela's privatization efforts and restructurings have continued. The
Government is planning a longer-term debt management strategy that would reduce
the amount budgeted for debt service from 40% of the budget to 25% by the year
2000. S&P upgraded Venezuela's long-term foreign currency debt to B+ from B,
reflecting the country's commitment to reform, higher world oil prices, fiscal
restraint and increased oil production.
Although political instability earlier this year caused a great deal of
volatility in Ecuador, current Government officials remain committed to
correcting the fiscal imbalances. Moody's assigned Ecuador's long-term foreign
currency debt a B-1 rating, reflecting its competitive export sector and
basically sound economic policies.
Eastern Europe. Following a period of declining economic activity and a weak
currency, Bulgaria has embarked on an impressive turnaround. In exchange for IMF
support, Bulgaria agreed to launch a currency board and to implement tight
fiscal and monetary policies. With the victory of the pro-reform UDF party
earlier this year, there is both the incentive and the political majority to
deliver swift economic reform. The momentum of stabilization and reform efforts
continues to be strong, and market expectations remain solid, as Bulgarian debt
instruments continue to outperform.
In Russia, President Yeltsin's return from a prolonged illness provided an
element of stability. The debt restructuring process is under way, with more
than 90% of an estimated US$24.3 billion in eligible debt having been
reconciled. Progress on the inflation front reflects high real interest rates
and tight monetary policy.
S&P reaffirmed the BBB- rating for Poland's long-term foreign currency debt but
raised its outlook to positive from stable. Tighter monetary policy, in the form
of a higher discount rate and greater reserve requirements, should help to
improve macroeconomic stability, but higher levels of public sector saving still
need to be achieved.
MORTGAGE-BACKED SECURITIES
In the first half of this year, mortgage securities posted strong performances,
benefiting from stable Treasury rates and declining volatility. Following a weak
showing in March, when the Federal Reserve raised its federal funds rate by 25
basis points, mortgages rebounded and fared extremely well throughout the
spring. In July, mortgage-backed securities lagged the markets for both
Treasuries and corporate bonds. Following several months in which CMO issuance
was hurt by the flatter yield curve, July issuance was strong, with nearly $12
billion in new issuance.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
* * *
On September 24, 1997, Travelers Group ("Travelers") and Salomon Inc
("Salomon"), the ultimate parent company of Salomon Brothers Asset Management
Inc ("SBAM"), announced their agreement (the "Transaction") to merge Salomon
with and into Smith Barney Holdings Inc., a subsidiary of Travelers, to form a
new company expected to be called Salomon Smith Barney Holdings Inc. Travelers
is a diversified financial services company engaged in the investment services,
asset management, consumer finance and life and property casualty insurance
services.
The Transaction is expected to be completed by December 31, 1997, subject to a
number of conditions, including the receipt of U.S. and foreign regulatory
approvals and the approval of Salomon stockholders. Upon consummation of the
Transaction, Travelers will become the ultimate parent of SBAM, which will
continue to serve as investment adviser to the Trust.
In a continuing effort to provide timely information concerning the Salomon
Brothers 2008 Worldwide Dollar Government Term Trust, shareholders may call
1-888-777-0102 (a toll-free number), Monday through Friday from 8:00 am to 6:00
pm EST for the Trust's net asset value, market price and other information
regarding the Trust's portfolio holdings and allocations. Should you require
specific information regarding your Salomon Brothers 2008 Worldwide Dollar
Government Term Trust stock account, or for information regarding the Trust's
Dividend Reinvestment Plan, please call American Stock Transfer & Trust Company
at 1-800-937-5449 (1-718-921-8200 if you are calling from within New York City).
All of us at Salomon Brothers Asset Management appreciate the confidence you
have demonstrated in the past and hope to continue to serve you in future years.
Sincerely,
/s/ MICHAEL S. HYLAND
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
July 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS -- 90.3% (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------
ARGENTINA -- 18.2%
<S> <C> <C>
$39,000 Republic of Argentina, Discount Bond, 6.875%, 3/31/23*....................... $ 35,075,625
3,880 Republic of Argentina, FRB, Series L, 6.75%, 3/31/05*........................ 3,692,053
41,000 Republic of Argentina, Par Bond, 5.50%, 3/31/23*............................. 31,083,125
-------------
69,850,803
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BRAZIL -- 18.5%
4,350 Federal Republic of Brazil, DCB, 6.9375%, 4/15/12*........................... 3,643,125
10,000 Federal Republic of Brazil, Discount Bond, Series ZL, 6.875%, 4/15/24*....... 8,662,500
5,000 Federal Republic of Brazil, Investment (Exit) Bond, 6.00%, 9/15/13........... 4,025,000
2,000 Federal Republic of Brazil, NMB, Series L, 6.9375%, 4/15/09*................. 1,770,000
72,550 Federal Republic of Brazil, Par Bond, 5.25%, 4/15/24*........................ 53,233,563
-------------
71,334,188
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BULGARIA -- 5.0%
24,300 Republic of Bulgaria, Discount Bond, Tranche A, 6.6875%, 7/28/24*............ 19,288,125
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COSTA RICA -- 1.9%
9,000 Costa Rica, Principal Bond, Series B, 6.25%, 5/21/15......................... 7,425,000
-------------
ECUADOR -- 7.2%
17,000 Republic of Ecuador, Discount Bond, 6.4375%, 2/28/25*........................ 13,440,625
19,938 Republic of Ecuador, PDI Bond, 6.4375%, 2/27/15*(,)**........................ 14,305,289
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27,745,914
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MEXICO -- 15.1%
6,400 United Mexican States, Global Bond, 11.50%, 5/15/26.......................... 7,825,600
20,500 United Mexican States, Par Bond, Series A, 6.25%, 12/31/19
(including 20,500,000 rights).............................................. 16,950,937
4,000 United Mexican States, Par Bond, Series B, 6.25%, 12/31/19
(including 4,000,000 rights)............................................... 3,307,500
27,250 United Mexican States, Discount Bond, Series A, 6.86719%, 12/31/19*
(including 41,922,000 rights).............................................. 25,802,344
3,300 United Mexican States, Discount Bond, Series B, 6.83594%, 12/31/19*
(including 5,076,000 rights)............................................... 3,124,687
1,000 United Mexican States, Discount Bond, Series D, 6.8125%, 12/31/19* (including
1,538,000 rights).......................................................... 946,875
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57,957,943
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PANAMA -- 3.0%
13,368 Republic of Panama, PDI Bond, 6.6875%, 7/17/16*(,)**......................... 11,663,209
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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
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STATEMENT OF INVESTMENTS (continued)
July 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) SOVEREIGN BONDS (CONCLUDED) (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PERU -- 4.1%
$ 5,000 Republic of Peru, Discount Bond, 6.5625%, 3/8/27*............................ $ 4,250,000
1,800 Republic of Peru, FLIRB, 3.25%, 3/7/17*...................................... 1,086,750
23,000 Republic of Peru, Par Bond, 3.00%, 3/7/27*................................... 10,335,625
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15,672,375
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PHILIPPINES -- 2.2%
9,500 Republic of the Philippines, Par Bond, Series B, 6.25%, 12/01/17*............ 8,466,875
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VENEZUELA -- 15.1%
38,500 Republic of Venezuela, Discount Bond, Series A, 6.8125%, 3/31/20*
(including 274,890 warrants)............................................... 34,577,813
7,619 Republic of Venezuela, FLIRB, Series A, 6.75%, 3/31/07*...................... 7,142,850
14,000 Republic of Venezuela, Par Bond, Series A, 6.75%, 3/31/20
(including 70,000 warrants)................................................ 11,742,500
5,500 Republic of Venezuela, Par Bond, Series W-B, 6.75%, 3/31/20
(including 27,500 warrants)................................................ 4,613,125
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58,076,288
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TOTAL SOVEREIGN BONDS (cost $280,979,078).................................... 347,480,720
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MORTGAGE-BACKED SECURITIES -- 48.6%
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Federal Home Loan Mortgage Corp.,
49,000(#) Gold, 6.50%, 30 Year (TBA)................................................. 48,004,687
3,556 Series 1576, Class PK, 6.00%, 9/15/02 (PAC I/O)............................ 75,557
20,803 Series 1599, Class D, 6.50%, 6/15/19 (PAC I/O)............................. 2,493,152
10,633 Series 1609, Class J, 6.50%, 11/15/13 (PAC I/O)............................ 439,827
5,477 Series 1610, Class PH, 6.50%, 3/15/19 (PAC I/O)............................ 626,485
9,878 Series 1617, Class PF, 6.50%, 6/15/18 (PAC I/O)............................ 842,711
4,529 Series 1679, Class WA, 6.00%, 2/15/03 (PAC I/O)............................ 106,188
Federal National Mortgage Assoc.,
88,000(#) 6.50%, 30 Year (TBA)....................................................... 86,075,000
15,000(#) 7.00%, 30 Year (TBA)....................................................... 14,976,562
5,000(#) 7.50%, 30 Year (TBA)....................................................... 5,082,812
25,000(#) 8.00%, 30 Year (TBA)....................................................... 25,781,250
5,653 Trust 1993-169, Class QA, 6.50%, 8/25/12, (REMIC) (PAC I/O)................ 155,123
10,986 Trust 1993-183, Class EA, 6.50%, 3/25/17, (REMIC) (PAC I/O)................ 945,842
5,566 Trust 1993-183, Class EC, 6.50%, 3/25/13, (REMIC) (PAC I/O)................ 172,204
6,453 Trust 1993-189, Class PH, 6.50%, 2/25/19, (REMIC) (PAC I/O)................ 735,039
12,801 Trust 1993-202, Class Q, 6.50%, 11/25/13, (REMIC) (PAC I/O)................ 511,643
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TOTAL MORTGAGE-BACKED SECURITIES (cost $188,139,576)......................... 187,024,082
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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
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STATEMENT OF INVESTMENTS (concluded)
July 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000) ZERO-COUPON MUNICIPAL BONDS -- 5.6% (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$11,200 Austin, Texas Utility System Revenue, Ser. A, 11/15/08....................... $ 6,491,744
Edinburg, Texas Cons. Independent School District,
1,845 2/15/08.................................................................... 1,108,845
2,705 2/15/09.................................................................... 1,531,706
Harris County, Texas,
5,470 8/15/08.................................................................... 3,209,030
Texas St. Public Finance Auth. Bldg. Rev.,
10,535 2/1/08..................................................................... 6,343,545
Westmoreland County, Pennsylvania,
2,665 Series G, 6/1/08........................................................... 1,587,434
2,515 Series G, 12/1/08.......................................................... 1,462,674
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TOTAL ZERO-COUPON MUNICIPAL BONDS (cost $20,574,228)......................... 21,734,978
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REPURCHASE AGREEMENT -- .1%
- ---------------------------------------------------------------------------------------------------------------
373 J.P. Morgan, 5.75%, cost $373,000, dated 7/31/97, $373,060 due 8/1/97,
(collateralized by $405,000, Zero Coupon U.S. Treasury Strips due 8/15/98,
valued at $382,219)........................................................ 373,000
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TOTAL INVESTMENTS -- 144.6% (cost $490,065,882).............................. 556,612,780
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (44.6%)............................. (171,589,431)
-------------
NET ASSETS -- 100.0%......................................................... $ 385,023,349
=============
NET ASSET VALUE PER SHARE
($385,023,349 / 34,510,639 shares of common stock issued and outstanding).... $11.16
======
</TABLE>
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* 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.)
DCB -- Debt Conversion Bond.
FLIRB -- Front Loaded Interest Reduction Bond.
FRB -- Floating Rate Bond.
NMB -- New Money Bond.
PAC I/O -- Planned Amortization Class -- Interest Only.
PDI -- Past Due Interest.
REMIC -- Real Estate Mortgage Investment Conduit.
TBA -- To Be Announced Security.
See accompanying notes to financial statements.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
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STATEMENT OF ASSETS AND LIABILITIES
July 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $490,065,882)..................................................... $556,612,780
Cash.......................................................................................... 465
Interest receivable........................................................................... 7,412,180
Deferred organization expenses and other assets............................................... 48,285
------------
Total assets.......................................................................... 564,073,710
------------
LIABILITIES
Payable for investments purchased (Note 5).................................................... 178,465,063
Advisory fee payable.......................................................................... 186,036
Administration fee payable.................................................................... 48,615
Accrued expenses.............................................................................. 350,647
------------
Total liabilities..................................................................... 179,050,361
------------
NET ASSETS
Common Stock ($.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........................................................... 6,070,165
Accumulated net realized loss on investments.................................................. (11,161,588)
Net unrealized appreciation on investments.................................................... 66,546,898
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Net assets............................................................................ $385,023,349
------------
NET ASSET VALUE PER SHARE ($385,023,349 / 34,510,639 shares).................................. $ 11.16
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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
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STATEMENT OF OPERATIONS
For the Year Ended July 31, 1997
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
INCOME
Interest and discount earned.............................................. $ 37,588,146
EXPENSES
Investment advisory fees.................................................. $2,041,754
Administration fees....................................................... 481,963
Custodian's fees and expenses............................................. 232,002
Audit fees and expenses................................................... 74,999
Legal fees and expenses................................................... 64,001
Listing fees.............................................................. 59,670
Reports to shareholders................................................... 53,000
Transfer agent's fees and expenses........................................ 52,000
Directors' fees........................................................... 47,000
Amortization of deferred organization expenses............................ 24,999
Miscellaneous............................................................. 23,176
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Total expenses........................................................ 3,154,564
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Net investment income......................................................... 34,433,582
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions.................................. 25,184,403
Net change in unrealized appreciation on investments.......................... 54,729,325
------------
Net realized and unrealized gain on investments............................... 79,913,728
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................................... $114,347,310
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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 CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, 1997 JULY 31, 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income..................................................... $ 34,433,582 $ 32,384,326
Net realized gain (loss) on investment transactions....................... 25,184,403 (3,346,053)
Net change in unrealized appreciation on investments...................... 54,729,325 42,132,165
------------ ------------
Net increase in net assets from operations................................ 114,347,310 71,170,438
DIVIDENDS
Dividends from net investment income...................................... (31,508,214) (30,231,286)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Additional offering costs paid............................................ -- (17,416)
------------ ------------
Total increase............................................................ 82,839,096 40,921,736
------------ ------------
NET ASSETS
Beginning of period....................................................... 302,184,253 261,262,517
------------ ------------
End of period (includes undistributed net investment income of $6,070,165
and $3,144,797, respectively)........................................... $385,023,349 $302,184,253
------------ ------------
</TABLE>
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STATEMENT OF CASH FLOWS
For the Year Ended July 31, 1997
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Purchases of long-term portfolio investments............................................. $(148,261,838)
Proceeds from disposition of long-term portfolio investments and principal paydowns...... 147,826,939
Net purchase of short-term portfolio investments......................................... (373,000)
-------------
(807,899)
Net investment income.................................................................... 34,433,582
Amortization of net premium/discount on investments...................................... (938,418)
Amortization of organization expenses.................................................... 24,999
Net change in receivables/payables related to operations................................. (1,203,585)
-------------
Net cash flows provided by operating activities...................................... 31,508,679
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Cash dividends paid...................................................................... (31,508,214)
-------------
Net increase in cash......................................................................... 465
Cash at beginning of period.................................................................. 0
-------------
CASH AT END OF PERIOD........................................................................ $ 465
-------------
</TABLE>
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See accompanying notes to financial statements.
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
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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, 1997, 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 sale
price prior to the time of determination if there were a sale on the date of
determination, (ii) at the mean between the last current bid and asked prices if
there were no sales on such date and bid and asked quotations are available, and
(iii) at the bid price if there were no sales price on such date and only bid
quotations are available. Publicly traded 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
PAGE 7
<PAGE> 12
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
asset-backed 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 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 of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral may be subject to legal proceedings.
PAGE 8
<PAGE> 13
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(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, 1997, 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.
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, 1997 aggregated $148,261,838 and
$147,159,229, respectively.
PAGE 9
<PAGE> 14
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
The federal income tax cost basis of the Trust's investments at July 31, 1997
was $493,096,935 and net unrealized appreciation for federal income tax purposes
was $63,515,845 (gross unrealized appreciation -- $65,760,326; gross unrealized
depreciation -- $2,244,481).
The Trust has a capital loss carryforward as of July 31, 1997 of $8,130,534
which 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, 1997, the Trust has
outstanding contracts to repurchase mortgage-backed securities of $178,465,063
for a scheduled settlement of August 13, 1997. 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 and realized upon
disposition of the rolled security. The average monthly balance of dollar rolls
outstanding during the year ended July 31, 1997 was approximately $164,123,723.
NOTE 6. EVENTS SUBSEQUENT TO JULY 31, 1997
Subsequent to July 31, 1997, the Board of Directors of the Trust declared
dividends of $.073 per common share payable August 29, 1997 and September 30,
1997 to shareholders of record on August 12, 1997 and September 16, 1997,
respectively.
On September 24, 1997, Travelers Group ("Travelers") and Salomon Inc
("Salomon"), the ultimate parent company of the Adviser, announced their
agreement (the "Transaction") to merge Salomon with and into Smith Barney
Holdings Inc., a subsidiary of Travelers, to form a new company expected to be
called Salomon Smith Barney Holdings Inc. Travelers is a diversified financial
services company engaged in the investment services, asset management, consumer
finance and life and property casualty insurance services.
Management expects the Transaction to be completed by December 31, 1997, subject
to a number of conditions, including the receipt of U.S. and foreign regulatory
approvals and the approval of Salomon stockholders. Upon consummation of the
Transaction, as proposed, Travelers will become the ultimate parent of the
Adviser, which will continue to serve as investment adviser to the Trust.
PAGE 10
<PAGE> 15
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE AUGUST 27, 1993*
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
JULY 31, 1997 JULY 31, 1996 JULY 31, 1995 JULY 31, 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........... $ 8.76 $ 7.57 $ 7.75 $ 9.40++
----------- ----------- ----------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.......................... 1.00 .94 .89 .77
Net realized and unrealized gain (loss) on
investments.................................. 2.31 1.12 (.19) (1.65)
----------- ----------- ----------- --------
Total from investment operations........... 3.31 2.06 .70 (.88)
----------- ----------- ----------- --------
LESS DIVIDENDS:
Dividends from net investment income........... (.91) (.87) (.88) (.75)
----------- ----------- ----------- --------
Offering costs with respect to issuance of
shares....................................... -- -- -- (.02)
----------- ----------- ----------- --------
Net asset value, end of period................. $ 11.16 $ 8.76 $ 7.57 $ 7.75
----------- ----------- ----------- --------
Market price per share, end of period.......... $ 9.875 $ 8.625 $ 7.875 $ 7.875
----------- ----------- ----------- --------
TOTAL INVESTMENT RETURN(a):.................... 26.20% 21.39% 12.05% (8.89%)+
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................. .93% 1.01% 1.01% .89%#
Net investment income...................... 10.11% 11.27% 12.20% 9.36%#
SUPPLEMENTAL DATA:
Net assets, end of period (000)............ $ 385,023 $ 302,184 $ 261,263 $267,439
Average net assets (000)................... $ 340,495 $ 287,466 $ 250,594 $304,526
Portfolio turnover rate.................... 30% 32% 52% 11%
Asset coverage to dollar rolls outstanding
at period end............................ 316% 320% 302% 299%
Total mortgage dollar rolls outstanding at
period end (000)......................... $ 178,465 $ 137,051 $ 129,147 $134,549
</TABLE>
- --------------------------------------------------------------------------------
* 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.
See accompanying notes to financial statements.
PAGE 11
<PAGE> 16
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 statement of investments, and the related statements of operations, of cash
flows and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Salomon Brothers 2008
Worldwide Dollar Government Term Trust Inc (the "Trust") at July 31, 1997, 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 three years in the period then ended and
for the period August 27, 1993 (commencement of investment 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, 1997 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 19, 1997 (except as to Note 6 which
is as of September 26, 1997)
PAGE 12
<PAGE> 17
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited)
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS:
<TABLE>
<CAPTION>
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
NET INVESTMENT 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
August 1, 1996
to October 31, 1996 8,721,821 7,949,929 .23 24,992,853
November 1, 1996
to January 31, 1997 10,055,843 9,239,583 .27 22,400,570
February 1, 1997
to April 30, 1997 8,862,492 8,068,980 .23 (10,122,279)
May 1, 1997
to July 31, 1997 9,947,990 9,175,090 .27 42,642,584
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON 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
August 1, 1996
to October 31, 1996 .72 32,942,782 .95 7,557,830
November 1, 1996
to January 31, 1997 .65 31,640,153 .92 8,834,724
February 1, 1997
to April 30, 1997 (.29) (2,053,299) (.06) 7,557,830
May 1, 1997
to July 31, 1997 1.23 51,817,674 1.50 7,557,830
- ---------------------------------------------------------------------------------------------------------------------
<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
August 1, 1996
to October 31, 1996 .219 9 1/4 8 5/8
November 1, 1996
to January 31, 1997 .256 9 3/8 8 3/4
February 1, 1997
to April 30, 1997 .219 9 5/8 8 7/8
May 1, 1997
to July 31, 1997 .219 9 15/16 9 1/4
- -----------------------------------------------------------
</TABLE>
* Commencement of investment operations.
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.
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
ALAN M. MANDEL
Treasurer
LAURIE A. PITTI
Assistant Treasurer
NOEL DAUGHERTY
Secretary
JENNIFER MUZZEY
Assistant Secretary
--------------------------
SALOMON BROTHERS
2008 WORLDWIDE DOLLAR
GOVERNMENT TERM TRUST INC
Seven World Trade Center
New York, New York 10048
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
AMERICAN STOCK TRANSFER & TRUST COMPANY ---------------------
40 WALL STREET BULK RATE
NEW YORK, NEW YORK 10005 U.S. POSTAGE
PAID
STATEN ISLAND, NY
PERMIT NO.
169
---------------------
