<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
August 30, 1999
Dear Shareholders:
We are pleased to provide this annual report for Salomon Brothers 2008 Worldwide
Dollar Government Term Trust Inc ("Trust") as of July 30, 1999. Included in this
report is a market commentary and a schedule of the Trust's investments and
financial statements for the year ended July 30, 1999.
During the year ended July 30, 1999, the net asset value of the Trust decreased
from $10.51 per share to $8.82 per share. Dividends from net investment income
totaling $0.88 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 year ended July 30, 1999, was negative 7.73%. During the same period,
the JP Morgan Emerging Markets Bond Index Plus (EMBI+), a standard measure of
return for the emerging debt market, and the Salomon Smith Barney Mortgage
Index, a standard of measure for mortgage securities, returned negative 6.89%
and 2.90%, respectively.
EMERGING MARKETS DEBT SECURITIES
The primary events impacting emerging markets debt during the Trust's fiscal
year included the Russian domestic debt default, the currency crisis in Brazil
and the beginnings of economic recovery in Asia. Each of these events had an
impact on the countries directly involved, as well as a broader spillover impact
on the entire market.
Russia's ability to finance its budget deficit was an important factor for the
emerging debt market at the beginning of the Trust's fiscal year. Russia's
currency was under pressure in early August 1998 as investors questioned the
country's ability to maintain currency stability without meaningful fiscal
reform. The country had made some progress on fiscal reform and successfully
accessed external debt markets during June and July, which helped to relieve
some of the short-term pressure on its finances. The pro-reform government
continued to promote its reform agenda but was hampered by its inability to
increase tax collections. The progress Russia made through early August, as well
as its constructive relationship with the IMF, was severely damaged when it
chose to devalue the ruble, default on domestic debt and dismiss its government,
in the middle of August. Russia was pushed to this unlikely combination of
measures by its inability to roll over obligations in Russia's Treasury bill
market. Russia's debt securities declined by nearly 80% during August with the
decline concentrated in a three-day period following these events.
The turmoil in Russia impacted all emerging markets debt as investors fled the
asset class for the safety of the U.S. Treasury market. This flight to quality
was compounded by the forced unwinding of the substantial leverage which
financed many investments in emerging markets. The magnitude of spread widening
in emerging markets debt was similar to the Mexican peso crisis in early 1995,
although the 1998 spread widening occurred more quickly. In addition,
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
spreads in all other non-Treasury fixed income investments including investment
grade corporate debt and investment grade asset-backed securities expanded to
historically wide levels.
Emerging markets debt began to recover in September as investors recognized that
at 1,500 basis points over Treasuries, the market was dramatically oversold. The
recovery was further supported by interest rate cuts by the Federal Reserve
Board ("Fed") which totaled 75 basis points. Most emerging markets decoupled
from Russia in the recovery as investors recognized value in many oversold
countries. Russia's economic outlook was as uncertain as its political
situation. Russia began to recover in early 1999 as it reopened discussions with
the IMF, and successfully made coupon payments on its Eurobond debt. During the
first seven months of calendar 1999, Russia has been the best performing country
in the EMBI+, returning over 101% during this period.
The next major development in emerging markets during the Trust's fiscal year
was the devaluation of the Brazilian currency in January. After a few false
starts, Brazil has made major strides toward restoring market confidence in its
monetary and fiscal policy. This restoration of confidence has been led by
Arminio Fraga, the new central bank president, and complemented by the
government's ability to obtain a timely Congressional package of some key fiscal
reforms. Brazil still has a very heavy domestic debt burden, but its improvement
in monetary policy and its fiscal reforms have created an opportunity for the
country to restructure its debt.
The recession in Asia, a product of the rolling currency crisis which impacted
Thailand, Korea, Malaysia and Indonesia and threatened the currency peg in Hong
Kong, had a direct negative impact on the debt values of each of these
countries. In addition, the currency turmoil in Asia increased the risk premium
in all emerging markets debt. This increase in the risk premium represented
investor perception that there was a likelihood of currency devaluation in all
emerging markets. While this perception was unfair to many emerging markets
countries, it was a lingering concern for investors at the beginning of the
Trust's fiscal year. As the fiscal year unfolded, Asian economies began to
recover, spurred by growth in exports and a return of foreign direct investment.
While the pace of recovery is uneven, all leading Asian economies with the
exception of Hong Kong are expected to report positive real GDP growth in
calendar 1999.
Over the course of this highly eventful fiscal year for the Trust, we have
remained invested in emerging markets debt. While the market has been highly
volatile, our extensive experience in the asset class has convinced us that in
order to enjoy the long-term returns offered by the market we must ride through
the volatility. The primary rationale for remaining invested in a downturn is
that emerging market declines are usually accompanied by reduced liquidity. When
the market recovers, an equally sharp rebound also occurs with below-normal
levels of liquidity, and it is impossible to create a diversified portfolio at
the market bottom.
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
MORTGAGE-BACKED SECURITIES
The U.S. mortgage-backed securities market as measured by Salomon Smith Barney
returned a very modest 2.90% during the fiscal year. Performance of
mortgage-backed securities, in which the Trust had invested approximately 41% of
its assets as of July 30, 1999, was hampered by rising U.S. interest rates
during the first six months of 1999. The U.S. economy remained particularly
robust throughout the past year despite widespread recessions and credit
problems in the global economy. As economic growth appeared to rebound in Asia
and Europe in early 1999, U.S. interest rates began to rise, pushing bond prices
lower as investors correctly anticipated that the Fed would raise interest rates
at their June 30, 1999 meeting.
We continue to pursue the Trust's strategy of investing in a broadly diversified
portfolio of fixed income securities, which have been issued by the U.S.
government or its agencies or issued by foreign governments and collateralized
by U.S. government securities.
* * *
In a continuing effort to provide timely information concerning the Salomon
Brothers 2008 Worldwide Dollar Government Term Trust Inc, shareholders may call
1-888-777-0102 (toll free), Monday through Friday from 8:00 am to 6:00 p.m. EST
for the Trust's portfolio holdings and allocations. For information concerning
Salomon Brothers 2008 Worldwide stock account, please call American Stock
Transfer & Trust Company at 1-800-937-5449 (1-718-921-8200 if you are calling
from within New York City).
All of us at Salomon Brothers Asset Management appreciate the confidence you
have demonstrated in the past and hope to continue to serve you in the future
years.
Sincerely,
/s/ HEATH B. MCLENDON
HEATH B. MCLENDON
Chairman and President
/s/ PETER J. WILBY
PETER J. WILBY
Executive Vice President
/s/ ROGER M. LAVAN
ROGER M. LAVAN
Executive Vice President
/s/ THOMAS K. FLANAGAN
THOMAS K. FLANAGAN
Executive Vice President
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
July 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<C> <S> <C>
SOVEREIGN BONDS -- 53.9%
ARGENTINA -- 10.4%
Republic of Argentina:
$56,000,000 Discount Bond, Series L-GL, 6.000% due 3/31/23 (a)(e)..... $ 37,030,000
22,260,000 Par Bond, Series L-GP, 6.000% due 3/31/23 (a)............. 13,425,563
------------
50,455,563
------------
BRAZIL -- 11.1%
Federal Republic of Brazil:
1,145,547 C Bond, 8.000% due 4/15/14 (b)............................ 702,364
10,375,000 DCB, Series L, 5.9375% due 4/15/12 (a).................... 6,186,094
38,750,000 Discount Bond, Series Z-L, 5.875% due 4/15/24 (a)(e)...... 23,467,969
16,553,750 EI Bond, Series L, 5.875% due 4/15/06 (a)................. 12,798,118
2,000,000 NMB, Series L, 5.9375% due 4/15/09 (a).................... 1,358,750
17,450,000 Par Bond, Series Z-L, 5.750% due 4/15/24 (a).............. 9,706,563
------------
54,219,858
------------
BULGARIA -- 4.4%
Republic of Bulgaria:
24,300,000 Discount Bond, Tranche A, 6.500% due 7/28/24 (a)(e)....... 16,675,875
2,000,000 IAB, Series PDI, 6.500% due 7/28/11 (a)(c)................ 1,376,250
5,000,000 Registered IAB, Series RPDI, 6.500% due 7/28/11 (a)....... 3,440,625
------------
21,492,750
------------
ECUADOR -- 4.4%
Republic of Ecuador:
18,600,000 Discount Bond, 6.000% due 2/28/25 (a)..................... 7,916,625
36,450,000 Par Bond, 4.000% due 2/28/25 (a)(e)....................... 13,577,625
------------
21,494,250
------------
IVORY COAST -- 1.7%
Republic of Ivory Coast:
14,000,000 FLIRB, 2.000% due 3/29/18 (a)............................. 3,815,000
13,162,500 PDI Bond, 2.000% due 3/29/18 (a).......................... 4,475,250
------------
8,290,250
------------
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 4
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
July 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<C> <S> <C>
MEXICO -- 8.8%
United Mexican States:
$19,150,000 Discount Bond, Series A, 5.875% due 12/31/19 (a)(e)
(including 29,461,000 rights)........................... $ 15,655,125
4,950,000 Discount Bond, Series B, 5.875% due 12/31/19 (a)
(including 7,615,000 rights)............................ 4,046,625
200,000 Discount Bond, Series D, 6.0675% due 12/31/19 (a)
(including 308,000 rights).............................. 163,500
2,150,000 Par Bond, Series A, 6.250% due 12/31/19
(including 2,150,000 rights)............................ 1,527,844
29,850,000 Par Bond, Series B, 6.250% due 12/31/19 (e)
(including 29,850,000 rights)........................... 21,212,156
------------
42,605,250
------------
PANAMA -- 0.2%
Republic of Panama:
300,000 IRB, 4.250% due 7/17/14 (a)............................... 219,375
756,433 PDI Bond, 6.500% due 7/17/16 (a)(b)....................... 541,324
------------
760,699
------------
PERU -- 2.1%
23,000,000 Republic of Peru, Par Bond, 3.000% due 3/7/27 (a)........... 10,465,000
------------
PHILIPPINES -- 1.7%
9,500,000 Republic of the Philippines, Series B, 6.500% due 12/1/17... 8,003,750
------------
RUSSIA -- 0.1%
Russia, Ministry of Finance, Global Bond:
350,000 8.750% due 7/24/05 (c).................................... 175,000
600,000 12.750% due 6/24/28....................................... 338,250
------------
513,250
------------
VENEZUELA -- 9.0%
Republic of Venezuela:
16,190,412 DCB, Series DL, 6.3125% due 12/18/07 (a).................. 11,980,906
41,000,000 Discount Bond, Series W-A, 5.875% due 3/31/20 (a)(e)
(including 292,740 warrants)............................ 26,445,000
6,500,000 Discount Bond, Series W-B, 6.000% due 3/31/20 (a)
(including 46,410 warrants)............................. 4,192,500
1,523,800 FLIRB, Series A, 6.000% due 3/31/07 (a)................... 1,131,422
------------
43,749,828
------------
TOTAL SOVEREIGN BONDS (Cost -- $267,171,560)................ 262,050,448
------------
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 5
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
July 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ------------------------------------------------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- 41.0%
Federal Home Loan Mortgage Corporation (FHLMC):
$24,000,000 6.500%, 30 Year, Gold (TBA) (d)............................. $ 22,860,000
7,567,913 Series 1599, Class D, 6.500% due 6/15/19 (PAC I/O) (e)...... 413,526
2,338,386 Series 1610, Class PH, 6.500% due 3/15/19 (PAC I/O) (e)..... 203,182
3,313,083 Series 1617, Class PF, 6.500% due 6/15/18 (PAC I/O) (e)..... 133,186
2,686,346 Series 2062, Class PL, 6.500% due 10/15/16 (PAC I/O) (e).... 498,653
11,577,500 Series 2075, Class IC, 6.500% due 7/15/16 (PAC I/O) (e)..... 1,895,816
13,669,846 Series 2086, Class PK, 6.500% due 5/15/18 (PAC I/O) (e)..... 1,674,556
15,485,000 Series 2098, Class IB, 6.000% due 11/15/02 (PAC I/O) (e).... 2,588,898
Federal National Mortgage Association (FNMA):
27,000,000 6.000%, 30 Year (TBA) (d)................................... 25,000,110
55,500,000 6.500%, 30 Year (TBA) (d)................................... 52,828,710
55,000,000 7.000%, 30 Year (TBA) (d)................................... 53,744,900
10,000,000 7.500%, 30 Year (TBA) (d)................................... 10,003,100
20,000,000 8.000%, 30 Year (TBA) (d)................................... 20,418,600
3,476,275 Trust 1993-183, Class EA, 6.500% due 3/25/17 (REMIC) (PAC
I/O) (e).................................................. 143,261
2,824,539 Trust 1993-189, Class PH, 6.500% due 2/25/19 (REMIC) (PAC
I/O) (e).................................................. 239,203
6,356,614 Trust 1998-15, Class PJ, 6.500% due 2/18/21 (REMIC) (PAC
I/O) (e).................................................. 1,048,841
5,032,765 Trust 1998-44, Class IA, 6.500% due 7/18/16 (REMIC) (PAC
I/O) (e).................................................. 855,570
4,026,308 Trust 1998-44, Class JB, 6.500% due 2/18/08 (REMIC) (PAC
I/O) (e).................................................. 359,851
10,000,000 Trust 1998-58, Class PD, 6.500% due 3/25/21 (REMIC) (PAC
I/O) (e).................................................. 1,678,125
16,217,041 Trust 1998-63, Class IA, 6.000% due 10/25/23 (REMIC) (PAC
I/O) (e).................................................. 2,812,643
1,600,000 Trust 1998-68, Class I, 6.500% due 12/25/19 (REMIC) (PAC
I/O) (e).................................................. 248,000
------------
TOTAL MORTGAGE-BACKED SECURITIES (Cost -- $205,473,256)....... 199,648,731
------------
ZERO COUPON MUNICIPAL BONDS -- 4.9%
11,200,000 Austin, Texas Utility System Revenue, Series A, due
11/15/08.................................................... 7,065,520
Edinburg, Texas Cons. Independent School District:
1,845,000 Due 2/15/08................................................. 1,208,014
2,705,000 Due 2/15/09................................................. 1,669,824
5,470,000 Harris County, Texas, due 8/15/08............................. 3,493,798
10,535,000 Texas State Public Finance Authority Building Revenue, due
2/1/08...................................................... 6,911,171
Westmoreland County, Pennsylvania:
2,665,000 Series G, due 6/1/08........................................ 1,719,618
2,515,000 Series G, due 12/1/08....................................... 1,583,092
------------
TOTAL ZERO COUPON MUNICIPAL BONDS (Cost -- $22,843,452)....... 23,651,037
------------
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 6
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
July 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 0.2%
$ 909,000 State Street Bank & Trust Co., 5.020% due 8/2/99; Proceeds
at maturity -- $909,380; (Fully collateralized by U.S.
Treasury Bonds,
7.500% due 11/15/24; Market value -- $929,000)
(Cost -- $909,000)...................................... $ 909,000
------------
TOTAL INVESTMENTS -- 100% (Cost -- $496,397,268)............ $486,259,216
============
</TABLE>
- --------------------------------------------------------------------------------
(a) Rate shown reflects current rate on variable rate instrument or instrument
with step coupon rates.
(b) Payment-in-kind security for which part of the income earned is capitalized
as additional principal.
(c) Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.
(d) Mortgage dollar roll (See Note 4).
(e) Segregated as collateral for mortgage dollar rolls outstanding at year end.
Abbreviations used in this schedule:
C Bond -- Capitalization Bond.
DCB -- Debt Conversion Bond.
EI -- Eligible Interest.
FLIRB -- Front Loaded Interest Reduction Bond.
IAB -- Interest in Arrears Bond.
IRB -- Interest Reduction 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 notes to financial statements.
PAGE 7
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
July 30, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $496,397,268).............. $486,259,216
Receivable for securities sold............................ 34,429,057
Interest receivable....................................... 6,213,466
Prepaid expenses.......................................... 5,954
------------
TOTAL ASSETS.............................................. 526,907,693
------------
LIABILITIES:
Payable for securities purchased.......................... 221,610,469
Payable to bank........................................... 604,766
Investment advisory fee payable........................... 152,721
Administration fee payable................................ 37,125
Accrued expenses.......................................... 158,445
------------
TOTAL LIABILITIES......................................... 222,563,526
------------
TOTAL NET ASSETS.......................................... $304,344,167
============
NET ASSETS:
Common stock ($0.001 par value, 200,000,000 shares
authorized; 34,510,639 shares outstanding).............. $ 34,511
Additional paid-in capital................................ 323,533,363
Undistributed net investment income....................... 7,455,594
Accumulated net realized loss on investments.............. (16,541,249)
Net unrealized depreciation on investments................ (10,138,052)
------------
TOTAL NET ASSETS.......................................... $304,344,167
============
NET ASSET VALUE, PER SHARE ($304,344,167 / 34,510,639
shares)................................................... $8.82
============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 8
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended July 30, 1999
<TABLE>
<S> <C>
INCOME:
Interest.................................................. $ 35,993,007
------------
EXPENSES:
Investment advisory fees (Note 2)......................... 1,918,077
Administration fees (Note 2).............................. 462,099
Custody................................................... 113,113
Shareholder communications................................ 77,587
Audit and tax services.................................... 58,853
Shareholder and system servicing fees..................... 56,792
Legal fees................................................ 39,237
Listing fees.............................................. 32,250
Directors' fees and expenses.............................. 31,099
Amortization of deferred organization costs (Note 1)...... 1,718
Other..................................................... 11,704
------------
TOTAL EXPENSES............................................ 2,802,529
------------
NET INVESTMENT INCOME....................................... 33,190,478
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 3):
Net Realized Loss From Security Transactions.............. (10,106,093)
------------
Change in Net Unrealized Appreciation (Depreciation) of
Investments:
Beginning of Year....................................... 40,908,201
End of Year............................................. (10,138,052)
------------
INCREASE IN NET UNREALIZED DEPRECIATION................... (51,046,253)
------------
NET LOSS ON INVESTMENTS..................................... (61,152,346)
------------
DECREASE IN NET ASSETS FROM OPERATIONS...................... $(27,961,868)
============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 9
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JULY 30, 1999 JULY 31, 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income................................... $ 33,190,478 $ 31,314,914
Net realized gain (loss)................................ (10,106,093) 4,726,432
Increase in net unrealized depreciation................. (51,046,253) (25,638,697)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....... (27,961,868) 10,402,649
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (30,231,322) (32,888,641)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS.......................................... (30,231,322) (32,888,641)
------------ ------------
DECREASE IN NET ASSETS.................................. (58,193,190) (22,485,992)
NET ASSETS:
Beginning of Year....................................... 362,537,357 385,023,349
------------ ------------
END OF YEAR*............................................ $304,344,167 $362,537,357
============ ============
*Includes undistributed net investment income of:........... $7,455,594 $4,496,438
============ ============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Year Ended July 30, 1999
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Purchases of long-term portfolio investments............ $(202,017,165)
Proceeds from disposition of long-term portfolio
investments and principal paydowns..................... 185,372,747
Net sales of short-term portfolio investments........... 30,919,000
-------------
14,274,582
Net investment income................................... 33,190,478
Adjustments to reconcile net investment income to net
cash provided by operating activities:
Amortization of net premium/discount on
investments......................................... (5,486,039)
Amortization of organization expenses............... 1,718
Capitalized income on payment-in-kind securities.... (593,207)
Net change in receivables/payables related to
operations.......................................... 272,929
-------------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES......... 41,660,461
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Decrease in dollar roll transactions (Note 4)........... (12,034,828)
Cash dividends paid..................................... (30,231,322)
-------------
NET CASH FLOWS USED BY FINANCING ACTIVITIES............. (42,266,150)
-------------
NET DECREASE IN CASH........................................ (605,689)
Cash, Beginning of Year..................................... 923
-------------
PAYABLE TO BANK, END OF YEAR................................ $ (604,766)
=============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 10
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Salomon Brothers 2008 Worldwide Dollar Government Term Trust Inc ("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 30, 1999, 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.
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 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
PAGE 11
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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 COSTS. A total of $125,000 was incurred in
connection with the organization of the Trust. These costs have been deferred
and amortized ratably over a five-year period from commencement of operations.
As of July 30, 1999, the amortization of these costs had been completed.
(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 12
<PAGE>
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 premium or accreting
discount on debt obligations.
NOTE 2. MANAGEMENT AND ADMINISTRATION FEES AND OTHER TRANSACTIONS
The Trust has an Investment Advisory Agreement with Salomon Brothers Asset
Management Inc ("Adviser"), a wholly-owned subsidiary of Salomon Brothers
Holding Company Inc., which in turn is wholly owned by Salomon Smith Barney
Holdings, Inc. ("SSBH"), 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.
The Trust pays the Adviser a monthly fee for its advisory services at an annual
rate of 0.60% of the value of the Trust's average weekly net assets. Pursuant to
an administrative agreement dated September 1, 1995, the Adviser serves as
Administrator and Prudential Mutual Fund Management, Inc. as Sub-administrator
("Sub-administrator"). Under an amended Agreement, the Trust pays the
Administrator a monthly fee at an annual rate of 0.15% of the value of the
Trust's average weekly net assets up to $250 million and 0.125% of the value of
such net assets in excess of $250 million for its services, out of which the
Administrator pays the Sub-administrator eighty percent of such fees collected
for its services.
At July 30, 1999, the Adviser owned 13,485 shares of the Trust.
NOTE 3. PORTFOLIO ACTIVITY AND FEDERAL INCOME TAX STATUS
During the year ended July 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including principal paydowns, but excluding
short-term securities) were as follows:
<TABLE>
<S> <C>
Purchases................................................... $201,895,428
============
Sales....................................................... $185,978,106
============
</TABLE>
At July 30, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation............................... $ 13,604,267
Gross unrealized depreciation............................... (23,742,319)
------------
Net unrealized depreciation................................. $(10,138,052)
============
</TABLE>
PAGE 13
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4. 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 30, 1999, the Trust has
outstanding net contracts to repurchase mortgage-backed securities of
$187,786,771 for a scheduled settlement of August 16, 1999. 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 financing arrangements; 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 30, 1999
was $194,362,184.
NOTE 5. EVENTS SUBSEQUENT TO JULY 30, 1999
Subsequent to July 30, 1999, the Board of Directors of the Trust declared
dividends of $0.073 per common share payable August 27, 1999 and September 24,
1999 to shareholders of record on August 17, 1999 and September 14, 1999,
respectively.
PAGE 14
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH YEAR ENDED JULY 31,
EXCEPT WHERE NOTED:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1999(1) 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year.......................... $ 10.51 $ 11.16 $ 8.76 $ 7.57 $ 7.75
------- ------- ------ ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income..................................... 0.96 0.91 1.00 0.94 0.89
Net realized and unrealized gain (loss)................... (1.77) (0.61) 2.31 1.12 (0.19)
------- ------- ------ ------ ------
Total Income (Loss) From Operations....................... (0.81) 0.30 3.31 2.06 0.70
------- ------- ------ ------ ------
LESS DISTRIBUTIONS FROM:
Net investment income..................................... (0.88) (0.95) (0.91) (0.87) (0.88)
------- ------- ------ ------ ------
NET ASSET VALUE, END OF YEAR................................ $ 8.82 $ 10.51 $11.16 $ 8.76 $ 7.57
------- ------- ------ ------ ------
MARKET PRICE PER SHARE, END OF YEAR......................... $9.4375 $9.6875 $9.875 $8.625 $7.875
------- ------- ------ ------ ------
TOTAL RETURN(2)............................................. 7.08% 7.95% 26.20% 21.39% 12.05%
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................ 0.87% 0.90% 0.93% 1.01% 1.01%
Net investment income..................................... 10.34% 8.38% 10.11% 11.27% 12.20%
SUPPLEMENTAL DATA:
Net assets, end of year (millions)........................ $304 $363 $385 $302 $261
Average net assets (millions)............................. $321 $374 $340 $287 $251
Portfolio turnover rate................................... 37% 34% 30% 32% 52%
Asset coverage to dollar rolls outstanding
at end of year.......................................... 262%* 273%* 316% 320% 302%
Total mortgage dollar rolls outstanding
at end of year (millions)............................... $188 $209 $178 $137 $129
</TABLE>
- --------------------------------------------------------------------------------
(1) For the year ended July 30, 1999.
(2) 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 year 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.
* Securities have been segregated to cover all outstanding mortgage dollar
rolls at year-end.
PAGE 15
<PAGE>
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 schedule 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 30, 1999, the
results of its operations and its 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 five years in the period then ended, 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
30, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
September 15, 1999
PAGE 16
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited)
<TABLE>
<CAPTION>
NET INCREASE
NET REALIZED AND (DECREASE) IN
NET INVESTMENT UNREALIZED NET ASSETS
INCOME GAIN (LOSS) FROM OPERATIONS
--------------------- ----------------------- -----------------------
TOTAL PER PER PER
QUARTERLY PERIOD INCOME AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
August 1, 1996
to October 31, 1996 $ 8,721,821 $7,949,929 $0.23 $ 24,992,853 $ 0.72 $ 32,942,782 $ 0.95
November 1, 1996
to January 31, 1997 10,055,843 9,239,583 0.27 22,400,570 0.65 31,640,153 0.92
February 1, 1997
to April 30, 1997 8,862,492 8,068,980 0.23 (10,122,279) (0.29) (2,053,299) (0.06)
May 1, 1997
to July 31, 1997 9,947,990 9,175,090 0.27 42,642,584 1.23 51,817,674 1.50
August 1, 1997
to October 31, 1997 9,048,527 8,154,274 0.24 (29,740,658) (0.86) (21,586,384) (0.63)
November 1, 1997
to January 30, 1998 8,981,298 8,128,516 0.23 22,838,755 0.66 30,967,271 0.90
February 1, 1998
to April 30, 1998 8,447,475 7,577,564 0.22 2,798,247 0.08 10,375,811 0.30
May 1, 1998
to July 31, 1998 8,218,403 7,454,560 0.22 (16,808,609) (0.49) (9,354,049) (0.27)
August 1, 1998
to October 31, 1998 8,054,107 7,309,404 0.21 (45,868,771) (1.33) (38,559,367) (1.12)
November 1, 1998
to January 31, 1999 9,266,981 8,530,558 0.25 (4,932,601) (0.15) 3,597,957 0.10
February 1, 1999
to April 30, 1999 9,514,167 8,766,158 0.25 25,700,672 0.75 34,466,830 1.00
May 1, 1999
to July 30, 1999 9,157,752 8,584,358 0.25 (36,051,646) (1.04) (27,467,288) (0.79)
<CAPTION>
DIVIDENDS AND
DISTRIBUTIONS SHARE PRICE
---------------------- --------------
PER
QUARTERLY PERIOD AMOUNT SHARE HIGH LOW
- --------------------- ---------------------------------------
<S> <C> <C> <C> <C>
August 1, 1996
to October 31, 1996 $ 7,557,830 $0.219 9 1/4 8 5/8
November 1, 1996
to January 31, 1997 8,834,724 0.256 9 3/8 8 3/4
February 1, 1997
to April 30, 1997 7,557,830 0.219 9 5/8 8 7/8
May 1, 1997
to July 31, 1997 7,557,830 0.219 9 15/16 9 1/4
August 1, 1997
to October 31, 1997 7,557,831 0.219 10 3/16 9
November 1, 1997
to January 30, 1998 10,215,150 0.296 10 3/16 9 3/8
February 1, 1998
to April 30, 1998 7,557,830 0.219 10 3/16 9 7/8
May 1, 1998
to July 31, 1998 7,557,830 0.219 10 3/16 9 5/8
August 1, 1998
to October 31, 1998 7,557,830 0.219 9 13/16 7 3/4
November 1, 1998
to January 31, 1999 7,557,831 0.219 9 5/8 8 11/16
February 1, 1999
to April 30, 1999 7,557,831 0.219 9 7/16 9 1/16
May 1, 1999
to July 30, 1999 7,557,830 0.219 9 1/2 9 3/16
</TABLE>
- --------------------------------------------------------------------------------
PAGE 17
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN (unaudited)
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.
PAGE 18
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN (unaudited) (continued)
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.
- ---------------------------------------------------------------------------
OTHER INFORMATION (unaudited)
Year 2000. The investment management services provided to the Trust by SBAM
depend in large part on the smooth functioning of its computer systems. Many
computer software systems in use today cannot recognize the year 2000, but
revert to 1900 or some other date, due to the manner in which the dates were
encoded or calculated. The capability of these systems to recognize the year
2000 could have a negative impact on SBAM's provision of investment advisory
services, including handling of securities trades, pricing and account services.
SBAM has advised the Trust that it has been reviewing all of their computer
systems and actively working on necessary changes to its systems to prepare for
the year 2000 and expects that given the extensive testing which it is
undertaking its systems will be year 2000 compliant before such date. In
addition, SBAM has been advised by certain of the Trust's service providers that
they are also in the process of modifying their systems with the same goal.
There can, however, be no assurance that SBAM or any other service provider will
be successful in achieving year 2000 compliance, or that interaction with other
non-complying computer systems will not impair services to the Trust at that
time.
PAGE 19
<PAGE>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- -----------
DIRECTORS
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
DANIEL P. CRONIN
Vice President -- General Counsel,
Pfizer International Inc.
HEATH B. McLENDON
Managing Director, Salomon Smith
Barney Inc.
President and Director, SSBC Fund
Management Inc. and Travelers
Investment Advisors, Inc.
RIORDAN ROETT
Professor and Director,
Latin American Studies Program,
Paul H. Nitze School of
Advanced International Studies,
Johns Hopkins University
JESWALD W. SALACUSE
Henry J. Braker
Professor of Commercial Law,
The Fletcher School of Law & Diplomacy,
Tufts University
- ---------
OFFICERS
HEATH B. McLENDON
Chairman and President
LEWIS E. DAIDONE
Senior Vice President and Treasurer
PETER J. WILBY
Executive Vice President
THOMAS K. FLANAGAN
Executive Vice President
JAMES E. CRAIGE
Executive Vice President
ROGER M. LAVAN
Executive Vice President
ANTHONY PACE
Controller
CHRISTINA T. SYDOR
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
PNC Bank N.A.
200 Stevens Drive
Lester, PA 19113
TRANSFER AGENT
American Stock Transfer & Trust
Company
40 Wall Street
New York, New York 10005
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
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>
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<PAGE>
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