<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
March 15, 1999
Dear Shareholders:
We are pleased to provide this semi-annual report for Salomon Brothers 2008
Worldwide Dollar Government Term Trust Inc (the "Trust") as of January 31, 1999.
Included are a market commentary and a statement of the Trust's investments and
financial statements for the six months ended January 31, 1999.
The Salomon Brothers 2008 Worldwide Dollar Government Term Trust was recently
granted a Performance Achievement Award in the category of Global Income Funds
by Lipper Analytical Services, Inc. Lipper ranked the Fund number one in
Closed-End Fund Performance for the 5-year time period ending December 31, 1998.
During the six months ended January 31, 1999, the net asset value of the Trust
decreased from $10.51 per share to $9.05 per share. Dividends from net
investment income totaling $0.44 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 six months ended January 31, 1999, was
- -9.67%. 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 -17.20% and 3.50%, respectively.
EMERGING MARKETS DEBT SECURITIES
The six months ended January 31, 1999 began with extreme volatility and a
wide-spread sell off across all emerging markets. It closed, however, on a more
positive note, with a slight rally and feelings of cautious optimism.
In August, Russia's government defaulted on its domestic debt and devalued the
ruble. These developments caused a global flight to quality as investors reduced
their risk exposure worldwide. The EMBI+ declined by 28.74% during August, the
largest monthly decline since the Index's inception. Spreads over U.S.
Treasuries widened to 1,563 on August 27, ending the month at 1,524. For the
remainder of 1998, a rally occurred, largely due to monetary easing by the U.S.
Federal Reserve and U.S. Congressional approval of funding for the International
Monetary Fund ("IMF"). The agreement, as well as a lack of forced selling by
non-dedicated investors, caused the market to rise from September through the
end of the 1998. In January, the market again traded down as concerns over the
Brazilian devaluation of its currency led investors to demand a higher risk
premium from emerging markets debt.
The collapse in the emerging bond markets in 1998 was triggered by a variety of
events; some related to declines in fundamental creditworthiness and others
related to technical factors. Fundamentally, sovereign credit quality was
adversely affected by declining commodity prices throughout the year. This
resulted in lower fiscal revenues for many emerging market economies. In
addition, subsequent to the debt restructuring problems experienced by Asia in
1997, a significant decline in financing available to emerging market economies
developed, hindering many countries' abilities to finance short term
obligations. This problem peaked in the aftermath of the Russian domestic debt
default. Additional selling pressure developed as leveraged investors were
forced to liquidate holdings in the face of margin calls.
<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
By the end of the period, despite the market's turmoil in August and worries
stemming from Brazil's devaluation of the real, global contagion was not as
severe as might have been expected. This relative calm was due to a number of
positive world events, including the U.S. Federal Reserve monetary easing,
Congressional funding for the IMF and a reduction in leverage dedicated to
credit risk investments.
For the six months ended January 31, 1999, outperformers in the emerging markets
included Poland, Panama, Mexico, Morocco, Peru, Bulgaria, Argentina and
Venezuela. Underperformers included Russia, Ecuador and Brazil.
In conclusion, despite improved performance at the end of the period, our view
is that the emerging debt market will continue to be impacted as investors
assess their appetite for risk and evaluate the appropriate risk premium for
investing in credit sensitive fixed income assets. Although market sentiment has
certainly improved and we are confident that the long-term outlook is positive,
we expect this volatile period in the emerging markets to continue in the
short-term.
MORTGAGE-BACKED SECURITIES
The effect of falling interest rates on mortgage-backed bonds, during the latter
half of 1998, was two fold. Interest rates plummeted and prices on most mortgage
securities rose, resulting in positive returns. On the other hand, because
interest rates fell to historic lows, massive mortgage refinancing by homeowners
created a large new issue supply which, in turn, caused mortgage spreads to
widen. Mortgage securities selling above par were particularly hard hit by the
refinancing wave. Fortunately, the majority of the Fund's mortgage holdings were
in discount mortgages which outperformed the index.
* * *
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 pm 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).
<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
All of us at Salomon Brothers Asset Management appreciate the confidence you
have demonstrated in the past and hope to continue to serve you in the future
years.
Sincerely,
/s/ HEATH B. MCLENDON
HEATH B. MCLENDON
Chairman and President
/s/ PETER J. WILBY
PETER J. WILBY
Executive Vice President
/s/ ROGER M. LAVAN
ROGER M. LAVAN
Executive Vice President
SHAREHOLDER NOTICE. As of May 27, 1998, Roger M. Lavan assumed responsibility
for the day-to-day management of the mortgage-backed securities and U.S.
government securities portions of the Trust's portfolio.
<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (unaudited)
January 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C>
Sovereign Bonds -- 52.6%
ARGENTINA -- 10.6%
Republic of Argentina:
$68,000,000 Discount Bond, Series L-GL, 6.0625% due 3/31/23 (a)......... $ 47,090,000
9,260,000 Par Bond, Series L, 5.750% due 3/31/23 (a).................. 6,406,763
------------
53,496,763
------------
BRAZIL -- 9.5%
Federal Republic of Brazil:
11,875,000 DCB, Series L, 6.1875% due 4/15/12 (a)...................... 5,358,594
34,750,000 Discount Bond, Series Z-L, 6.125% due 4/15/24 (a)........... 18,808,438
18,648,000 EI Bond, Series L, 6.125% due 4/15/06 (a)................... 10,979,010
5,000,000 Investment (Exit) Bond, 6.000% due 9/15/13.................. 2,775,000
2,000,000 NMB, Series L, 6.1875% due 4/15/09 (a)...................... 982,500
16,050,000 Par Bond, Series Z-L, 5.500% due 4/15/24 (a)................ 8,777,344
------------
47,680,886
------------
BULGARIA -- 3.6%
Republic of Bulgaria:
24,300,000 Discount Bond, Tranche A, 5.875% due 7/28/24 (a)............ 16,979,625
2,000,000 IAB, 5.875% due 7/28/11 (a)................................. 1,328,750
------------
18,308,375
------------
ECUADOR -- 3.4%
Republic of Ecuador:
10,361,456 Bearer PDI Bond, 6.625% due 2/27/15 (a)(b).................. 3,263,861
17,000,000 Discount Bond, 6.625% due 2/28/25 (a)....................... 8,287,500
14,000,000 Par Bond, 3.500% due 2/28/25 (a)............................ 5,845,000
------------
17,396,361
------------
IVORY COAST -- 1.1%
Republic of Ivory Coast:
9,000,000 FLIRB, 2.000% due 3/29/18 (a)............................... 2,520,000
9,875,000 PDI Bond, 2.000% due 3/29/18 (a)............................ 3,184,688
------------
5,704,688
------------
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 4
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (unaudited) (continued)
January 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
MEXICO -- 10.5%
United Mexican States:
$27,250,000 Discount Bond, Series A, 6.11562% due 12/31/19 (a)
(including 41,922,000 rights)........................... $ 21,731,875
7,450,000 Discount Bond, Series B, 6.03875% due 12/31/19 (a)
(including 11,461,000 rights)........................... 5,941,375
1,000,000 Discount Bond, Series D, 6.09750% due 12/31/19 (a)
(including 1,538,000 rights)............................ 800,625
2,150,000 Par Bond, Series A, 6.25% due 12/31/19
(including 2,150,000 rights)............................ 1,639,375
29,850,000 Par Bond, Series B, 6.25% due 12/31/19
(including 29,850,000 rights)........................... 22,760,625
------------
52,873,875
------------
PANAMA -- 1.1%
Republic of Panama:
300,000 IRB, 4.000% due 7/17/14 (a)................................. 225,375
7,061,585 PDI Bond, 5.9375% due 7/17/16 (a)(b)........................ 5,278,536
------------
5,503,911
------------
PERU -- 2.8%
Republic of Peru:
5,000,000 Discount Bond, 6.500% due 3/8/27 (a)........................ 3,550,000
23,000,000 Par Bond, 3.000% due 3/7/27 (a)............................. 10,810,000
------------
14,360,000
------------
PHILIPPINES -- 1.7%
9,500,000 Republic of the Philippines, Series B, 6.500% due 12/1/17
(a)....................................................... 8,550,000
------------
RUSSIA -- 0.1%
Russia, IAN:
3,000,000 5.96875% due 12/15/15 (a)................................... 341,250
157,890 5.96875% due 12/15/15 (a)(c)................................ 17,960
Russia, Ministry of Finance, Global Bond:
650,000 11.750% due 6/10/03......................................... 210,438
350,000 8.750% due 7/24/05.......................................... 87,281
------------
656,929
------------
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 5
<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (unaudited) (continued)
January 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C>
VENEZUELA -- 8.2%
Republic of Venezuela:
$17,142,793 DCB, Series DL, 5.9375% due 12/18/07 (a).................... $ 10,199,962
41,000,000 Discount Bond, Series W-A, 5.8125% due 3/31/20 (a)
(including 292,740 warrants)............................ 25,625,000
6,500,000 Discount Bond, Series W-B, 5.875% due 3/31/20 (a)
(including 46,410 warrants)............................. 4,062,500
1,619,040 FLIRB, Series A, 6.125% due 3/31/07 (a)..................... 967,376
------------
40,854,838
------------
TOTAL SOVEREIGN BONDS (Cost -- $279,898,212)................ 265,386,626
------------
MORTGAGE-BACKED SECURITIES -- 42.5%
Federal Home Loan Mortgage Corp.:
49,000,000 6.50%, 30 Year, Gold, (TBA)................................. 49,490,000
11,320,354 Series 1599, Class D, 6.50% due 6/15/19 (PAC I/O) (e)....... 481,115
2,765,613 Series 1610, Class PH, 6.50% due 3/15/19 (PAC I/O) (e)...... 248,214
4,441,668 Series 1617, Class PF, 6.50% due 6/15/18 (PAC I/O) (e)...... 241,493
2,686,346 Series 2062, Class PL, 6.50% due 10/15/16 (PAC I/O) (e)..... 475,987
11,577,500 Series 2075, Class IC, 6.50% due 7/15/16 (PAC I/O) (e)...... 1,866,872
13,669,846 Series 2086, Class PK, 6.50% due 5/15/18 (PAC I/O) (e)...... 1,794,167
15,485,000 Series 2098, Class IB, 6.00% due 11/15/02 (PAC I/O) (e)..... 2,709,875
Federal National Mortgage Association:
52,000,000 6.00%, 30 Year (TBA)........................................ 51,415,000
76,500,000 6.50%, 30 Year (TBA)........................................ 77,169,375
20,000,000 8.00%, 30 Year (TBA)........................................ 20,768,600
4,814,900 Trust 1993-183, Class EA, 6.50% due 3/25/17, (REMIC) (PAC
I/O) (e).................................................. 268,017
3,338,875 Trust 1993-189, Class PH, 6.50% due 2/25/19, (REMIC) (PAC
I/O) (e).................................................. 300,499
6,356,614 Trust 1998-15, Class PJ, 6.50% due 2/18/21, (REMIC) (PAC
I/O) (e).................................................. 997,194
4,026,308 Trust 1998-44, Class JB, 6.50% due 2/18/08, (REMIC) (PAC
I/O) (e).................................................. 425,000
5,032,765 Trust 1998-44, Class IA, 6.50% due 7/18/16, (REMIC) (PAC
I/O) (e).................................................. 830,406
1,000,000 Trust 1998-58, Class PD, 6.50% due 3/25/21, (REMIC) (PAC
I/O) (e).................................................. 1,590,625
16,217,041 Trust 1998-63, Class IA, 6.00% due 10/25/23, (REMIC) (PAC
I/O) (e).................................................. 2,878,525
16,000,000 Trust 1998-68, Class I, 6.50% due 12/25/19, (REMIC) (PAC
I/O) (e).................................................. 248,000
------------
TOTAL MORTGAGE-BACKED SECURITIES (Cost -- $213,626,452)..... 214,198,964
------------
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 6
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (unaudited) (continued)
January 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ZERO COUPON MUNICIPAL BONDS(E) -- 4.9%
$11,200,000 Austin, Texas Utility System Revenue, Series A, 11/15/08.... $ 7,418,768
Edinburg, Texas Cons. Independent School District:
1,845,000 2/15/08..................................................... 1,261,260
2,705,000 2/15/09..................................................... 1,755,680
5,470,000 Harris County, Texas, 8/15/08............................... 3,661,563
10,535,000 Texas St. Public Finance Auth. Bldg. Rev., 2/1/08........... 7,213,631
Westmoreland County, Pennsylvania:
2,665,000 Series G, 6/1/08............................................ 1,799,408
2,515,000 Series G, 12/1/08........................................... 1,662,793
------------
TOTAL ZERO COUPON MUNICIPAL BONDS (Cost -- $22,270,158)..... 24,773,103
------------
TOTAL INVESTMENTS -- 100% (COST -- $515,794,822)............ $504,358,693
============
</TABLE>
- --------------------------------------------------------------------------------
(a) Rate shown reflects current rate on variable rate instrument or instrument
with step coupon rates.
(b) Payment-in-kind security for which part of the income earned is capitalized
as additional principal.
(c) Pursuant to Rule 144A under the Securities Act of 1933, this security can
only be sold to qualified institutional investors.
(d) Mortgage dollar rolls (See Note 4).
(e) Segregated as collateral for mortgage dollar rolls outstanding at year end.
DCB -- Debit Conversion Bond.
EI -- Eligible Interest.
FLIRB -- Front Loaded Interest Reduction Bond.
IAB -- Interest in Arrears Bond.
IAN -- Interest in Arrears Note.
IRB -- Interest Reduction Bond.
NMB -- New Money Bond.
PAC I/O-- Planned Amortization Class -- Interest Only.
PDI -- Past Due Interest.
REMIC -- Real Estate Mortgage Investment Conduit.
TBA -- To Be Announced Security.
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 7
<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
(unaudited)
January 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $515,794,822).............. $504,358,693
Interest receivable....................................... 7,573,007
Receivable for securities sold............................ 1,312,333
------------
TOTAL ASSETS.............................................. 513,244,033
------------
LIABILITIES:
Payable for securities purchased (Note 5)................. 198,109,896
Payable to bank........................................... 2,261,482
Investment advisory fee payable........................... 150,503
Administration fee payable................................ 33,580
Accrued expenses.......................................... 228,286
------------
TOTAL LIABILITIES......................................... 200,783,747
------------
TOTAL NET ASSETS.......................................... $312,460,286
============
NET ASSETS:
Common stock ($0.001 par value, authorized 200,000,000;
34,510,639 shares outstanding).......................... $ 34,511
Additional paid-in capital................................ 323,533,363
Undistributed net investment income....................... 5,220,739
Accumulated net realized loss on investments.............. (4,892,198)
Net unrealized depreciation on investments................ (11,436,129)
------------
TOTAL NET ASSETS.......................................... $312,460,286
============
NET ASSET VALUE, PER SHARE ($312,460,286 / 34,510,639
shares)................................................... $9.05
============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 8
<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
(unaudited)
For the Six Months Ended January 31, 1999
<TABLE>
<S> <C>
INCOME:
Interest.................................................. $ 17,321,088
------------
EXPENSES:
Investment advisory fees (Note 2)......................... 952,084
Administration fees (Note 2).............................. 235,469
Custodian fees and expenses............................... 119,670
Reports to shareholders................................... 38,793
Audit fees and expenses................................... 35,652
Legal fees and expenses................................... 27,922
Transfer agent............................................ 25,930
Directors' fees and expenses.............................. 20,444
Listing fees.............................................. 16,125
Amortization of deferred organization costs (Note 1)...... 1,718
Other..................................................... 7,319
------------
TOTAL EXPENSES............................................ 1,481,126
------------
NET INVESTMENT INCOME....................................... 15,839,962
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.......................... 1,542,958
Change in net unrealized appreciation on investments...... (52,344,330)
------------
NET REALIZED GAIN AND CHANGE IN NET UNREALIZED
APPRECIATION............................................ (50,801,372)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS................ $(34,961,410)
============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 9
<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended January 31, 1999 (unaudited)
and the Year Ended July 31, 1998
<TABLE>
<CAPTION>
1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income................................... $ 15,839,962 $ 31,314,914
Net realized gain....................................... 1,542,958 4,726,432
Net change in unrealized appreciation................... (52,344,330) (25,638,697)
------------ ------------
Net Increase (Decrease) in Net Assets From Operations... (34,961,410) 10,402,649
DIVIDENDS:
From net investment income.............................. (15,115,661) (32,888,641)
------------ ------------
Decrease in Net Assets.................................. (50,077,071) (22,485,992)
------------ ------------
TOTAL NET ASSETS:
Beginning of period..................................... 362,537,357 385,023,349
------------ ------------
End of Period (includes undistributed net investment
income of $5,220,739 and $4,496,438, respectively).... $312,460,286 $362,537,357
============ ============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
(unaudited)
For the Six Months Ended January 31, 1999
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Purchases of long-term portfolio investments............ $(162,124,914)
Proceeds from disposition of long-term portfolio
investments and principal paydowns..................... 130,091,802
Net sales of short-term portfolio investments........... 31,828,000
-------------
(205,112)
Net investment income................................... 15,839,962
Capitalized income on payment-in-kind securities........ (237,400)
Amortization of net premium/discount on investments..... (1,525,896)
Amortization of organization expenses................... 1,718
Net change in receivables/payables related to
operations............................................. (1,020,016)
-------------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES......... 12,853,256
-------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Cash dividends paid..................................... (15,115,661)
-------------
NET DECREASE IN CASH........................................ (2,262,405)
Cash, beginning of period................................... 923
-------------
PAYABLE TO BANK, END OF PERIOD.............................. $ (2,261,482)
=============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
PAGE 10
<PG$PCN>
SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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 January 29, 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
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (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 January 31, 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.
(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
PAGE 12
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
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 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 agreement
with the Adviser was most recently approved by shareholders at a special meeting
held on January 15, 1998. Approval of the agreement was necessary due to the
merger of Salomon Inc., which had been the ultimate parent company of the
Adviser, with and into SSBH, which occurred on November 28, 1997.
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 the 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 January 31, 1999, the Adviser owned 13,485 shares of the Trust.
NOTE 3. PORTFOLIO ACTIVITY AND FEDERAL INCOME TAX STATUS
Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the six months ended January 31, 1999 aggregated
$162,124,914 and $130,155,524, respectively.
The Federal income tax cost basis of the Trust's investments at January 31, 1999
was $515,794,822 and net unrealized depreciation for federal income tax purposes
was $11,436,129 (gross unrealized appreciation -- $18,046,448; gross unrealized
depreciation -- $29,482,577).
PAGE 13
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
The Trust has a capital loss carryforward as of July 31, 1998 of $3,393,044
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 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 January 31, 1999, the Trust
has outstanding contracts to repurchase mortgage-backed securities of
$198,109,896 for a scheduled settlement of February 11, 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 six months ended January
31, 1999 was approximately $195,044,483.
NOTE 5. EVENTS SUBSEQUENT TO JANUARY 31, 1999
Subsequent to January 31, 1999, the Board of Directors of the Trust declared
dividends of $0.073 per common share payable February 26, 1999 and March 26,
1999 to shareholders of record on February 17, 1999 and March 16, 1999,
respectively.
PAGE 14
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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> <C>
1999(1) 1998 1997 1996 1995 1994(2)
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period........................ $10.51 $ 11.16 $ 8.76 $ 7.57 $ 7.75 $ 9.40++
------- ------- ------ ------ ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income..................................... 0.46 0.91 1.00 0.94 0.89 0.77
Net realized and unrealized gain (loss)................... (1.48) (0.61) 2.31 1.12 (0.19) (1.65)
------- ------- ------ ------ ------ ------
Total (Loss) From Operations.............................. (1.02) 0.30 3.31 2.06 0.70 (0.88)
------- ------- ------ ------ ------ ------
LESS DIVIDENDS:
Dividends from net investment income...................... (0.44) (0.95) (0.91) (0.87) (0.88) (0.75)
------- ------- ------ ------ ------ ------
OFFERING COSTS WITH RESPECT TO ISSUANCE
OF COMMON STOCK........................................... -- -- -- -- -- (0.02)
------- ------- ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.05 $ 10.51 $11.16 $ 8.76 $ 7.57 $ 7.75
------- ------- ------ ------ ------ ------
MARKET PRICE PER SHARE, END OF PERIOD....................... $9.3125 $9.6875 $9.875 $8.625 $7.875 $7.875
------- ------- ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3).................................. 0.89% 7.95% 26.20% 21.39% 12.05% (8.89)%+
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................ 0.92%++ 0.90% 0.93% 1.01% 1.01% 0.89%++
Net investment income..................................... 9.85%++ 8.38% 10.11% 11.27% 12.20% 9.36%++
SUPPLEMENTAL DATA:
Net assets, end of period (millions)...................... $ 312 $ 363 $ 385 $ 302 $ 261 $ 267
Average net assets (millions)............................. $ 322 $ 374 $ 340 $ 287 $ 251 $ 305
Portfolio turnover rate................................... 26% 34% 30% 32% 52% 11%
Asset coverage to dollar rolls outstanding
at period end........................................... 258%* 273%* 316% 320% 302% 299%
Total mortgage dollar rolls outstanding
at period end (millions)................................ $ 198 $ 209 $ 178 $ 137 $ 129 $ 135
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
(1) For the six months ended January 31, 1999 (unaudited).
(2) For the period from August 27, 1993 (commencement of
operations) to July 31, 1994.
+ 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.
(3) 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.
* Securities have been segregated to cover all outstanding
mortgage dollar rolls at year-end. See Statement of
Investments.
</TABLE>
PAGE 15
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
SELECTED QUARTERLY FINANCIAL INFORMATION
(unaudited)
<TABLE>
<CAPTION>
NET REALIZED AND NET INCREASE
NET INVESTMENT UNREALIZED (DECREASE) IN
INCOME GAIN (LOSS) NET ASSETS
--------------------- ----------------------- -----------------------
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
<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
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of investment operations.
PAGE 16
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
ADDITIONAL SHAREHOLDER INFORMATION(unaudited)
On December 17, 1998, the Annual Meeting of the Fund's Stockholders was held for
the purpose of voting on the following matters:
1. The election of Heath B. McLendon to serve until the year 1999; Riordan
Roett and Jeswald W. Salacuse to serve until the year 2001 as Directors
of the Fund; and
2. The ratification of the selection of PricewaterhouseCoopers LLP as the
Fund's independent auditors for the fiscal year ending July 31, 1999.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
SHARES VOTED % OF SHARES SHARES VOTED % OF SHARES
NAME OF DIRECTORS FOR VOTED FOR AGAINST VOTED AGAINST
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Heath B. McLendon 31,820,606 98.5% 469,252 1.5%
Riordan Roett 31,814,488 98.5% 475,370 1.5%
Jeswald W.
Salacuse 31,816,888 98.5% 472,970 1.5%
</TABLE>
The results of the vote on Proposal 2 were as follows:
<TABLE>
<CAPTION>
% OF SHARES % OF SHARES VOTES % OF SHARES
VOTES FOR VOTED FOR VOTES AGAINST VOTED AGAINST ABSTAINED ABSTAINED
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
31,767,546 98.4% 263,048 0.8% 259,262 0.8%
</TABLE>
PAGE 17
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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.
PAGE 18
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SALOMON BROTHERS 2008 WORLDWIDE DOLLAR GOVERNMENT TERM TRUST INC
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN (unaudited) (continued)
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."
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
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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, Smith Barney Inc.
President and Director, Mutual
Management Corp. and Travelers
Investment Advisors, Inc.;
Chairman, Smith Barney Strategy 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
Assistant Controller
--------------------------
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.
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