SALOMON BROTHERS FUND INC /DE/, N-30D, 1997-09-08

SALOMON BROTHERS FUND INC /DE/
N-30D, 1997-09-08

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<PAGE>
The Salomon Brothers
Fund Inc

August 19, 1997

To Our Shareholders,

WE ARE PLEASED to present our semi-annual report to shareholders for the Salomon
Brothers Fund Inc for the six months ended June 30, 1997.

THE NET ASSET VALUE of each of your shares at June 30, 1997 was $19.42,
equivalent to $19.73 assuming the distributions from income and capital gains
paid during the first six months of 1997 were reinvested in additional shares
of the Fund. This represents an increase of 14.3% from $17.26 on December 31,
1996 compared to an increase of 20.6% for the Standard and Poor's Index of 500
stocks.

AT A MEETING OF THE FUND'S BOARD OF DIRECTORS held on July 29, 1997, the Board
declared a dividend of $0.07 per share from net investment income. The dividend
was payable August 19, 1997 to shareholders of record on August 8, 1997.

Investment Objective
LONG-TERM GROWTH of capital. Current income is a secondary objective.

Investment Strategy
THE FUND INVESTS PRIMARILY in common stocks listed on the New York Stock
Exchange and other U.S. exchanges. The portfolio manager maintains a long-term
focus. While we believe that economic forecasting has a role to play in helping
us identify promising stocks, we devote most of our resources to identifying
attractive companies rather than trying to predict market trends. Our stock
selection process continues to be aimed at finding companies with strong
management, accelerating operating trends, healthy balance sheets, and strong
competitive positions.

Market Overview & Portfolio Highlights
DURING THE FIRST SIX MONTHS OF 1997, the Salomon Brothers Fund returned 14.3%,
as the US stock market continued to benefit from the near perfect combination
of low inflation, moderate economic growth and favorable liquidity. The Fund's
return, while attractive in an absolute sense, underperformed the S&P 500's
return of 20.6%. Significant contributors to the Fund's performance included
Tyco International, Bank of New York and Travelers. The Fund is well
diversified, with overweighted sectors including Basic Industries, Health Care
and Energy. The Fund has underweighted positions in Technology and Utilities.

Outlook
WE ARE CAUTIOUS, although still positive, in our outlook for the market. The
market has more than doubled in the past 30 months, and volatility has been
unusually low. But we believe that the market's high valuation level is
sustainable as long as inflation remains moderate and the economy remains
healthy. The primary risks that we see to the market would be an increase in
inflation, particularly in wages, or a surge in economic growth. We are
currently finding opportunities in companies that exhibit consistent earnings
and reasonable valuations. We believe that companies which can continue to
improve their earnings late in the economic cycle will outperform in the months
ahead.

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

THE FUND HELD its Annual Meeting of Stockholders on April 29, 1997.
At the meeting, shareholders elected each of the nominees proposed for
election to the Fund's Board of Directors, voted on two items subject to
shareholder approval and ratified the selection of Price Waterhouse LLP as the
independent accountants of the Fund. The following table provides information
concerning the matters voted on at the meeting:

1. Election of Directors
Nominees Votes For Votes Withheld
- -----------------------------------------------------------------------
Charles F. Barber 67,222,080 4,512,394
Andrew L. Breech 67,295,745 4,438,729
Thomas W. Brock 67,292,736 4,441,738
Carol L. Colman 67,296,369 4,438,105
William R. Dill 67,284,018 4,450,456
Michael S. Hyland 67,290,001 4,444,473
Clifford M. Kirtland, Jr. 67,122,165 4,612,309
Robert W. Lawless 67,287,658 4,446,816
Louis P. Mattis 67,284,139 4,450,335
Thomas F. Schlafly 67,265,372 4,469,102

2. Approval of an amendment to the Investment Management Agreement to increase
the base fee component of the management fee
Votes For Votes Against Votes Abstained
- -----------------------------------------------------------------------
42,924,370 13,456,286 4,897,311

3. Approval of amended and restated Articles of Incorporation
Votes For Votes Against Votes Abstained
- -----------------------------------------------------------------------
63,279,665 3,413,970 5,040,838

4. Ratification of Price Waterhouse LLP as the Independent Accountants of the
Fund
Votes For Votes Against Votes Abstained
- -----------------------------------------------------------------------
67,925,273 909,018 2,900,184

THE FUND CURRENTLY has a share repurchase program that allows the officers of
the Fund to purchase up to one million shares of stock in the open market. Share
repurchases are made periodically out of the Fund's existing cash assets. The
Fund intends to repurchase additional shares of its stock at such times and
prices and in such amounts as is deemed advisable, however, the Fund will
discontinue share repurchases if the Board determines that the program is no
longer in the best interests of the Fund and its shareholders. We will report
all repurchases to shareholders semi-annually. Thus far the Fund has repurchased
929,500 shares since October 1995.

THE AUTOMATIC DIVIDEND reinvestment and cash payment plan remains a popular
service for many shareholders seeking to build their holdings in the Fund.
Under the terms of the Plan, shareholders may arrange to reinvest their
dividends automatically in additional shares. The Plan provides that when the
Fund's shares are traded at a discount to net asset value, dividends and
distributions will be initially payable in the form of shares purchased by the
Plan Agent, The Bank of New York, in the open market. With respect to the
December 1996, March 1997 and May 1997 dividends, the Plan Agent purchased
3,442,893 shares on behalf of participants in the Dividend Reinvestment Plan at
an average price of $16.38 for a net total of $56,409,615.

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

WE ARE PLEASED TO inform you that in response to shareholder requests, the Board
has approved some modifications to the Plan which are designed to provide
participants with more flexibility. In particular, effective for dividends
declared on or after October 15, 1997, the Plan will offer participants three
different reinvestment options: (1) shareholders may have all of their net
investment income dividends and capital gain distributions (short-term and
long-term) automatically reinvested; (2) shareholders may have all of their net
investment income dividends paid in cash and all of their capital gain
distributions (short-term and long-term) automatically reinvested; or (3)
shareholders may have their net investment income dividends automatically
reinvested and their capital gain distributions (short-term and long-term) paid
in cash. A shareholder will be deemed to have chosen option (1) unless the Bank
of New York, the Plan Agent, is notified of a change in election. Further
information regarding the Plan, including an application, is included later in
this report.

IN RESPONSE TO RECENT amendments to Maryland corporate law, the Board of
Directors recently reviewed various corporate governance provisions in the
Fund's By-Laws and approved amendments to the Fund's By-Laws to (1) increase
the percentage of stockholder voting power that is required to call a special
meeting of its stockholders to a majority of the votes entitled to be cast at
the meeting and (2) reduce the minimum permissible board committee size to one
director.

SHAREHOLDERS OF THE FUND may call 1-888-777-0102, toll free, 24 hours a day to
obtain account information, including account values, portfolio breakdown and
performance information. For information concerning your Salomon Brothers Fund
stock account, please call the Bank of New York at 1-800-432-8224.

ALL OF US at Salomon Brothers Asset Management Inc appreciate the confidence you
have demonstrated in the past and hope to continue to serve you in future years.

Cordially,

MICHAEL S. HYLAND
Chairman and President

Page 1
<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Major Portfolio Changes for the three months ended June 30, 1997 (unaudited)

ADDITIONS+
- -------------------------------------------------
Shares
----------------
Amgen............................ 125,000
Avon Products.................... 70,300(1)
BankAmerica...................... 135,800(1)
Canadian Pacific................. 415,000
Cytec Industries................. 475,000
Dresser Industries............... 225,000
HEALTHSOUTH...................... 1,099,500(1)
Nationwide Financial Services,
Class A........................ 125,700
PacifiCare Health Systems,
Class B........................ 109,000
Philip Morris Companies.......... 190,000
Praxair.......................... 60,000
Provident Companies.............. 292,900(1)
Starwood Lodging Trust........... 125,000
TimeWarner Zero Coupon
Convertible due 6/22/13........$42,000,000(1)
Union Camp....................... 50,000
Viacom, Class B.................. 500,000(1)
Vulcan Materials................. 156,800(1)
- ----------------------------------------------------

REDUCTIONS
- ----------------------------------------------------
Shares
----------------
Associates First Capital......... 50,000
Astra AB, Class A................ 630,000(2)
Canadian National Railway........ 500,400
Ceridian......................... 242,500
Chase Manhattan Bank............. 86,400(2)
Coca-Cola Enterprises............ 1,680,000(2)
Columbia HCA/Healthcare.......... 450,000
Costco Companies................. 167,600
Crown Cork & Seal................ 267,200(2)
CUC International 3% due 2/15/02. $7,100,000(2)
Deere............................ 361,500(2)
Federal National Mortgage
Association.................... 152,500(2)
First Data....................... 120,000
Fluor............................ 250,000(2)
Food Lion, ClassA................ 985,200
Kroger........................... 210,000
Magna International, Class A..... 210,000(2)
Nalco Chemical................... 450,000(2)
Pittston Brink's Group........... 578,100(2)
Rhone-Poulenc Rorer.............. 271,100(2)
Seagate Technology............... 147,138
Silicon Graphics................. 225,000(2)
Sun.............................. 280,000(2)
Talley Manufacturing & Technology
10.75% due 10/15/03............ $2,000,000(2)
- ----------------------------------------------------
(1) New addition (2) Elimination
+ This list excludes changes resulting entirely
from stock dividends and stock splits.

Page 2

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Statement of Net Assets June 30, 1997 (unaudited)
Common Stocks -- 82.5% of Net Assets

- --------------------------------------------------------------------------------------------------------
Value
Shares Cost (Note 1a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic Industries - 8.3%
218,200 Aluminum Company of America............................ $ 14,901,003 $ 16,446,825
825,000 Cytec Industries*...................................... 31,819,425 30,834,375
460,000 Du Pont (E.I.) de Nemours.............................. 15,041,258 28,922,500
500,000 Praxair................................................ 12,131,973 28,000,000
350,000 Union Camp............................................. 17,109,933 17,500,000
156,800 Vulcan Materials....................................... 12,352,115 12,308,800
------------ ------------
103,355,707 134,012,500
------------ ------------
Capital Goods - 7.4%
200,000 AlliedSignal........................................... 3,657,240 16,800,000
315,500 General Electric....................................... 1,098,793 20,625,813
1,140,000 Gulfstream Aerospace*.................................. 27,470,704 33,630,000
711,800 Tyco International..................................... 19,605,214 49,514,587
------------ ------------
51,831,951 120,570,400
------------ ------------
Consumer Cyclicals - 8.8%
632,400 Costco Companies*...................................... 12,721,373 20,790,150
405,000 Federated Department Stores*........................... 7,668,103 14,073,750
1,144,500 Host Marriott*......................................... 12,119,158 20,386,406
585,000 Lear*.................................................. 18,918,448 25,959,375
494,700 Sears, Roebuck......................................... 12,283,660 26,590,125
630,000 Sherwin-Williams....................................... 10,664,192 19,451,250
434,000 U.S. Industries*....................................... 6,391,891 15,461,250
------------ ------------
80,766,825 142,712,306
------------ ------------
Consumer Staples - 7.4%
70,300 Avon Products.......................................... 4,008,272 4,960,544
864,800 Food Lion, Class A..................................... 6,798,280 6,188,725
525,800 Hormel Foods........................................... 12,602,983 14,130,875
990,000 Kroger*................................................ 11,877,303 28,710,000
200,000 Loews.................................................. 16,813,036 20,025,000
707,500 Philip Morris Companies................................ 22,338,628 31,395,312
500,000 Viacom, Class B........................................ 13,913,939 15,000,000
------------ ------------
88,352,441 120,410,456
------------ ------------
Energy - 11.3%
335,300 Amoco.................................................. 19,098,473 29,150,144
450,000 Dresser Industries..................................... 14,576,242 16,762,500
400 Gas Properties (100% owned)............................ 40,000 753,000(a)
570,000 Mobil.................................................. 21,712,087 39,828,750
854,000 Royal Dutch Petroleum, 5 Guilder....................... 17,192,475 46,436,250
402,777 TOTAL-- ADR............................................ 11,363,654 20,390,585
647,400 Williams Companies..................................... 16,315,572 28,323,750
Royalty Interest....................................... -- 823,500(a)
------------ ------------
100,298,503 182,468,479
------------ ------------

Page 3

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<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Statement of Net Assets June 30, 1997 (unaudited) (continued)
Common Stocks (continued)

- --------------------------------------------------------------------------------------------------------
Value
Shares Cost (Note 1a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Financial Services - 14.6%
249,700 American Express....................................... $ 4,402,485 $ 18,602,650
197,500 Associates First Capital............................... 5,727,500 10,961,250
135,800 BankAmerica............................................ 7,764,976 8,767,588
461,500 BankBoston............................................. 19,967,599 33,256,844
1,113,400 Bank of New York....................................... 15,377,469 48,432,900
882,400 Federal Home Loan Mortgage............................. 14,276,815 30,332,500
294,200 Nationwide Financial Services, Class A................. 7,261,064 7,814,687
292,900 Provident Companies.................................... 15,719,902 15,670,150
525,000 SunAmerica............................................. 6,239,151 25,593,750
576,332 Travelers Group........................................ 9,831,284 36,344,937
------------ --------------
106,568,245 235,777,256
------------ --------------
Health Care - 12.0%
319,500 Aetna.................................................. 21,783,668 32,708,813
360,000 American Home Products................................. 21,094,425 27,540,000
530,000 Amgen.................................................. 29,901,336 30,806,250
438,000 Columbia/HCA Healthcare................................ 13,346,268 17,218,875
1,099,500 HEALTHSOUTH*........................................... 21,010,026 27,418,781
7,300 PacifiCare Health Systems, Class A*.................... 576,700 442,106
286,700 PacifiCare Health Systems, Class B*.................... 23,211,267 18,312,963
441,000 SmithKline Beecham-- ADR............................... 20,462,042 40,406,625
------------ --------------
151,385,732 194,854,413
------------ --------------
Real Estate Investment Trusts - 2.4%
110,900 Beacon Properties...................................... 2,626,429 3,701,287
450,000 Highwoods Properties................................... 11,527,507 14,400,000
500,000 Starwood Lodging Trust................................. 13,409,894 21,343,750
------------ --------------
27,563,830 39,445,037
------------ --------------
Technology - 6.0%
245,000 Ceridian*.............................................. 5,566,557 10,351,250
106,000 DST Systems*........................................... 2,425,650 3,531,125
1,058,000 First Data............................................. 20,530,570 46,485,875
360,000 International Business Machines........................ 22,601,139 32,467,500
128,000 Seagate Technology*.................................... 4,278,144 4,504,000
------------ --------------
55,402,060 97,339,750
------------ --------------
Transportation - 4.3%
624,600 Canadian National Railway.............................. 15,338,910 27,326,250
1,510,000 Canadian Pacific....................................... 34,963,049 42,940,625
------------ --------------
50,301,959 70,266,875
------------ --------------
Total Common Stocks.................................... 815,827,253 1,337,857,472
------------ --------------

Page 4

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<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Statement of Net Assets June 30, 1997 (unaudited) (continued)
Convertible Preferred Stock--0.5% of Net Assets

Basic Industries - 0.2%
$ 1,000 Selmer 11% due 5/15/05................................. 982,017 1,107,500
2,500 United International Holding Zero Coupon due 11/15/99.. 1,847,040 1,943,750
------------ --------------
2,829,057 3,051,250
------------ --------------
Capital Goods - 0.2%
2,000 Terex 13.25% due 5/15/02............................... 1,847,793 2,255,000
8,000 Terex Stock Appreciation Rights*....................... -- 91,000
------------ --------------
1,847,793 2,346,000
------------ --------------
Consumer Cyclicals - 0.7%
6,000 Federated Department Stores 5% Convertible
due 10/1/03.......................................... 6,000,000 7,162,500
2,000 Finlay Fine Jewelry 10.625% due 5/1/03................. 1,927,870 2,130,000
2,000 Hines Horticulture 11.75% due 10/15/05................. 2,093,358 2,130,000
------------ --------------
10,021,228 11,422,500
------------ --------------
Consumer Staples - 0.1%
2,000 Borg-Warner Security 9.125% due 5/1/03................. 1,884,799 2,040,000
------------ --------------

Telecommunications & Utilities - 1.5%
2,000 Adelphia Communications 12.50% due 5/15/02............. 2,002,086 2,132,500
1,000 American Media Operation 11.625% due 11/15/04.......... 1,031,320 1,095,000
3,000 Marcus Cable 14.25% due 12/15/05....................... 2,417,759 2,370,000
42,000 Time Warner Zero Coupon Convertible due 6/22/13........ 19,165,840 19,372,500
------------ --------------
24,617,005 24,970,000
------------ --------------
Total Corporate Bonds and Notes........................ 41,199,882 43,829,750
------------ --------------
Purchased Options -- 0.9% of Net Assets
- --------------------------------------------------------------------------------------------------------
Premium
Contracts Paid
- --------------------------------------------------------------------------------------------------------

361 S&P 500 Index Call
(expiring 9/20/97, exercise price $700).............. 5,212,551 6,818,388
553 S&P 500 Index Call
(expiring 9/20/97, exercise price $750).............. 7,960,877 7,804,212
------------ --------------
Total Purchased Options 13,173,428 14,622,600
------------ --------------
Total Investments $877,516,813 1,404,821,060
------------ --------------
------------

Page 5

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<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Statement of Net Assets June 30, 1997 (unaudited) (concluded)
Repurchase Agreements -- 13.3% of Net Assets
- ------------------------------------------------------------------------

Principal
Amount Value
(Thousands) (Note 1a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$71,508 J.P. Morgan Securities, 5.95%, cost $71,508,000,
dated 6/30/97, $71,519,819 due 7/1/97,
collateralized by $50,000,000 U.S. Treasury Bond,
5.125%, valued at $49,437,500 due 12/31/98 and
by $22,036,000 U.S. Treasury Bond, 8.875%,
valued at $23,716,245 due 2/15/99.................................. $ 71,508,000
71,508 Merrill Lynch, Pierce, Fenner & Smith, 5.80%, cost
$71,508,000, dated 6/30/97, $71,519,521 due
7/1/97, collateralized by $73,030,000 U.S. Treasury
Bond, 6.00%, valued at $72,938,713 due 6/30/99..................... 71,508,000
71,508 UBS Securities, 5.875%, cost $71,508,000 dated 6/30/97,
$71,519,670 due 7/1/97, collateralized by $40,600,000
U.S. Treasury Bond, 12.00%, valued at $59,123,750
due 8/15/13 and by $13,578,000 U.S. Treasury Bond,
6.75%, valued at $13,815,615 due 5/31/99........................... 71,508,000
--------------
Total Repurchase Agreements.......................................... 214,524,000
--------------

Cash and Receivables - 0.6%............................ $ 10,135,413
Liabilities - (0.5)%................................... (8,443,059) 1,692,354
------------- --------------

Net Assets - equivalent to $19.42 per share
on 83,477,470 shares outstanding................................... $1,621,037,414
==============

Net Assets Consist of:
Capital stock........................................................ $ 83,477,470
Additional paid-in capital (note 3).................................. 872,240,487
Undistributed net investment income.................................. 5,950,333
Undistributed net realized gain...................................... 132,063,580
Net unrealized appreciation.......................................... 527,305,544
--------------
Net Assets........................................................... $1,621,037,414
==============

<FN>
- ------------------------
* Non-income producing security.
(a) Fair value in the opinion of the Board of Directors.
ADR - American Depository Receipt.

See accompanying notes to financial statements.

Page 6

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<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Statement of Operations for the six months ended June 30, 1997 (unaudited)
Investment Income

<TABLE>

<S> <C> <C>
Income
Dividends (net of foreign withholding tax of $328,611) .............................. $ 10,474,753
Interest............................................................................. 4,373,894
Oil royalties........................................................................ 329,001
-----------
15,177,648

Expenses
Management fee......................................................... $ 3,093,249
Shareholder meeting and reports........................................ 323,990
Legal and auditing fees................................................ 220,085
Shareholder services................................................... 122,160
Custodian.............................................................. 63,810
Stock certificates and listing fees.................................... 46,680
Directors' fees........................................................ 46,155
Other.................................................................. 154,745 4,070,874
------------ ------------
Net investment income................................................................ 11,106,774
------------

Net Realized Gain on Investments, Options and Foreign Currency Transactions.......... 132,580,565

Net Unrealized Appreciation of Investments and Options
Beginning of period.................................................... 468,101,469
End of period.......................................................... 527,305,544
------------
Increase in net unrealized appreciation.............................................. 59,204,075
------------
Net realized gain and increase in net unrealized appreciation........................ 191,784,640
------------
Net increase in net assets resulting from operations................................. $202,891,414
============

See accompanying notes to financial statements.

Page 7
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<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Statement of Changes in Net Assets

Six Months
Ended Year Ended
June 30, 1997 December 31,
(unaudited) 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income...................................... $ 11,106,774 $ 27,246,823
Net realized gain on investments, options and
foreign currency transactions............................ 132,580,565 150,197,562
Increase in net unrealized appreciation.................... 59,204,075 177,477,834
-------------- --------------
Increase in net assets resulting from operations........... 202,891,414 354,922,219
-------------- --------------

Distributions to Shareholders from
Net investment income...................................... (5,008,649) (27,995,467)
Net realized gain on investments........................... (17,530,317) (174,555,862)
-------------- --------------
(22,538,966) (202,551,329)
-------------- --------------
Capital Share Transactions
Repurchase of capital stock................................ -- (2,694,828)
-------------- --------------
Total increase in net assets............................... 180,352,448 149,676,062
-------------- --------------

Net Assets
Beginning of period........................................ 1,440,684,966 1,291,008,904
-------------- --------------
End of period (includes undistributed net investment income
of $5,950,333 at June 30, 1997 and distributions in
excess of net investment income of $147,792 at December
31, 1996)................................................ $1,621,037,414 $1,440,684,966
============== ==============

See accompanying notes to financial statements.

Page 8

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<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Notes to Financial Statements (unaudited)

1. Significant Accounting Policies

The Salomon Brothers Fund Inc (the "Fund") is registered as a diversified,
closed-end, management investment company under the Investment Company Act of
1940, as amended. The Fund's primary investment objectives are growth and
conservation of capital. Income receives secondary consideration. Following is a
summary of significant accounting policies consistently followed by the Fund 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 effect the reported amounts and disclosure in the financial
statements. Actual amounts could differ from those estimates.

(a) Securities Valuation. Portfolio securities listed or traded on
national securities exchanges, or reported by the NASDAQ national market
system, are valued at the last sale price, or if there have been no sales
on that day, at the mean of the current bid and ask price which represents
the current value of the security. Over-the-counter securities are valued
at the mean of the current bid and ask price. If no quotations are readily
available (as may be the case for securities of limited marketability), or
if "restricted" securities are being valued, such portfolio securities and
other assets are valued at fair value determined pursuant to procedures
established by the Board of Directors.
(b) Written Option Contracts. When the Fund writes a call option or a
put option, an amount equal to the premium received is recorded as a
liability, the value of which is marked-to-market daily to reflect the
current market value of the written option. When a written option expires,
the Fund realizes a gain equal to the amount of the premium received. When
the Fund enters into a closing purchase transaction, it realizes a gain
(or loss if the cost of the closing purchase transaction exceeds the
premium received when the option was sold) without regard to any
unrealized gain or loss on the underlying security, and the liability
related to such option is eliminated. When a call option is exercised, the
Fund realizes a gain or loss from the sale of the underlying security and
the proceeds from such sale are increased by the premium originally
received. When a put option is exercised, the amount of the premium
received reduces the cost of the security that the Fund purchases upon
exercise.
(c) Federal Income Taxes. The Fund 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 all of its taxable income to its shareholders. Therefore, no
Federal income tax or excise tax provision is required.
(d) Repurchase Agreements. When entering into repurchase agreements,
it is the Fund's policy to take possession, through its custodian, of the
underlying collateral and to monitor its value at the time the arrangement
is entered into and at all times during the term of the repurchase
agreement to ensure that it always equals or exceeds the repurchase price.
In the

Page 9

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Notes to Financial Statements (unaudited) (continued)

event of default of the obligation to repurchase, the Fund 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.
(e) Other. Securities transactions are recorded as of the trade date.
Dividend income and dividends payable are recorded on the ex-dividend
date. Interest is recognized as interest income when earned. Original
issue discount on securities purchased is accreted on an effective yield
basis over the life of the security. The Fund owns shares of real estate
investment trusts ("REITs") which report information on the source of
their distributions annually. A portion of distributions received from
REITs during the year is estimated to be a return of capital and is
recorded as a reduction of their cost.

2. Dividend After June 30, 1997
On July 29, 1997, the Fund declared a dividend of $.07 per share from net
investment income, payable August 19, 1997 to shareholders of record August 8,
1997.

3. Capital Stock Transactions
Capital stock transactions were as follows:
1997 1996
---- ----
Shares repurchased
(weighted average discount 13.9%)............. -- (179,500)
--------
Net change................................. -- (179,500)
======== ========

4. Management Fee and Other Transactions with Affiliates
The Fund retains Salomon Brothers Asset Management Inc ("SBAM"), an indirect,
wholly owned subsidiary of Salomon Inc, to act as investment manager of the Fund
subject to supervision by the Board of Directors of the Fund. SBAM furnishes the
Fund with office space and pays the compensation of its officers.

The Fund pays SBAM a base fee subject to an increase or decrease depending on
the extent, if any, to which the investment performance of the Fund exceeds or
is exceeded by the investment record of the Standard & Poor's 500 Index of
Composite Stocks ("S&P 500 Index"). For the period January 1, 1997 through April
28, 1997 the base fee was paid quarterly based on the following annual
percentages of the Fund's average daily net assets: first $350 million--.50%;
next $150 million--.40%; next $250 million--.375%; next $250 million--.35%;
excess over $1 billion--.30%. At its Annual Meeting on April 29, 1997, the
Fund's shareholders approved an amendment to the Fund's

Page 10

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Notes to Financial Statements (unaudited) (continued)

Management Agreement between the Fund and SBAM to increase the base fee
component of the management fee. Accordingly, as of April 29, 1997, the base fee
is paid quarterly based on the following annual rates:

Average Daily Net Assets Annual Fee Rate
----------------------- ----------------
First $350 million .650%
Next $150 million .550%
Next $250 million .525%
Next $250 million .500%
Over $1 billion .450%

The performance adjustment is paid quarterly based on a rolling one year period.
A performance adjustment will only be made after the investment performance of
the Fund exceeds or is exceeded by the investment record of the S&P 500 Index by
at least one percentage point. For each percentage point by which the investment
performance of the Fund exceeds or is exceeded by the investment record of the
S&P 500 Index, the base fee will be adjusted upward or downward by .01%
(annualized). The maximum annual adjustment is .10% which would occur if the
Fund's performance exceeds or is exceeded by the S&P 500 Index by ten or more
percentage points. For this purpose, the performance fee calculation is based on
the total return value of the S&P 500 Index versus the Fund's total return
calculated based on net asset value and assuming all distributions are
reinvested at net asset value on the record date of the distribution. For the
rolling one year period ended March 31, 1996, June 30, 1996, September 30, 1996
and December 31, 1996 the Fund's performance exceeded the S&P 500 Index by
1.72%, 2.50%, 5.67% and 5.51%, respectively. In 1996, this resulted in a total
increase of the base management fee of $526,920 covering the year ended December
31, 1996. For the rolling one year period ended March 31, 1997 there was no
performance adjustment. For the rolling one year period ended June 30, 1997, the
performance of the S&P 500 Index exceeded the Fund's performance by 3.47% and
resulted in a decrease of the base management fee of $128,114.

Brokerage commissions of $75,018 were paid to Salomon Brothers Inc for
investment transactions executed on behalf of the Fund during the six months
ended June 30, 1997.

5. Portfolio Activity

The cost of securities purchased and proceeds from securities sold (other than
short-term investments and written options) during the six months ended June 30,
1997 aggregated $318,584,381 and $551,888,976, respectively.

Cost of securities held (excluding short-term investments and written
options) on June 30, 1997 for Federal income tax purposes was substantially the
same as for book purposes. As of June 30, 1997, total unrealized appreciation
and depreciation was $534,230,537 and $6,924,993, respectively, resulting in net
unrealized appreciation of $527,305,544.

Page 11

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Notes to Financial Statements (unaudited) (concluded)

Transactions in options written during the periods ended December 31, 1996
and June 30, 1997 were as follows:
Number of Premiums
Contracts Received
--------- ---------
Options outstanding at December 31, 1995............ (50) $ (4,850)
Options exercised .................................. 50 4,850
------- ---------
Options outstanding at December 31, 1996............ -- --
------- ---------
Options written..................................... (1,500) (256,851)
Options terminated in closing purchase transactions. 750 77,622
Options exercised .................................. 750 $179,229
------- ---------
Options outstanding at June 30, 1997................ -- --
======= =========

During the year ended December 31, 1996 realized gain from written option
transactions amounted to $4,850. During the year ended December 31, 1996 net
realized gain from purchased option transactions amounted to $1,214,152, for a
net realized gain on all option transactions of $1,219,002. During the six
months ended June 30, 1997 net realized gain from written option transactions
amounted to $90,539.

The risk of writing a covered call option is that the Fund may forego the
opportunity of profit if the market price of the underlying security increases
and the option is exercised. The risk in writing a put option is that the Fund
may incur a loss if the market price of the underlying security decreases and
the option is exercised. In addition, there is the risk that the Fund may not be
able to enter a closing transaction because of an illiquid secondary market.

Page 12

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S A L O M O N B R O T H E R S F U N D I N C

Financial Highlights

Selected data per share of capital stock outstanding throughout each period:

Six Months Ended
June 30, For the Year Ended December 31,
- --------------------------------------------------------------------------------------------------------
1997* 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value,
beginning of period.......... $17.26 $15.43 $12.88 $14.88 $15.16 $15.66
------ ------ ------ ------ ------ ------
Net investment income............ .13 .33 .35 .33 .34 .40
Net gains (losses) on securities
(both realized and unrealized) (a) 2.30 3.925 4.04 (.605) 1.44 .10
------ ------ ------ ------ ------ ------
Total from investment
operations............. 2.43 4.255 4.39 (.275) 1.78 .50
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment
income....................... (.06) (.335) (.35) (.335) (.34) (.40)
Distributions from net realized
gain on investments.......... (.21) (2.09) (1.49) (1.39) (1.72) (.60)
------ ------ ------ ------ ------ ------
Total dividends and
distributions.......... (.27) (2.425) (1.84) (1.725) (2.06) (1.00)
------ ------ ------ ------ ------ ------
Net asset value, end of period... $19.42 $17.26 $15.43 $12.88 $14.88 $15.16
====== ====== ====== ====== ====== ======
Market price, end of period...... $16.875 $16.00 $13.375 $10.625 $12.75 $13.75
Total investment return based on
market price per share
excluding broker commissions. +7.2% +38.7% +43.3% -3.70% +7.86% +6.44%

Ratios/Supplemental Data:
Net assets, end of period
(millions)................... $1,621 $1,441 $1,291 $1,087 $1,176 $1,109
Ratio of expenses to average
net assets................... .54%** .51% .41% .49% .41% .43%
Ratio of net investment income to
average net assets............. 1.48%** 1.96% 2.42% 2.33% 2.19% 2.62%
Portfolio turnover rate.......... 23% 52% 82% 69% 80% 42%
Average broker commission
rate......................... $0.0589 $0.0596 N/A N/A N/A N/A

<FN>
- ------------------------
(a) Includes $.015 and $.02 attributable to the increase in net asset value from
shares repurchased at a discount for the years ended 1996 and 1995,
respectively.
* Unaudited.
** Annualized.

See accompanying notes to financial statements.

Page 13
</TABLE>

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Automatic Dividend Reinvestment
and Cash Payment Plans

DIVIDEND REINVESTMENT
The Automatic Dividend Reinvestment Plan ("DR Plan") administered by The Bank of
New York, Agent for shareholders of The Salomon Brothers Fund Inc ("SBF"),
offers you a prompt, simple, and inexpensive way to put your dividends and
distributions to work through reinvestment in additional shares of capital stock
of SBF. All new shareholders will automatically be enrolled in the DR Plan,
unless the shares are held in the name of a broker or nominee. All other share
holders may enroll by simply completing the attached Authorization Card. If your
shares are held in the name of a broker or nominee, you should contact your
broker or nominee about your ability to participate in the DRPlan.

Money from dividends and distributions can lie idle for months at a time;
however, with the DR Plan your dividends and distributions are promptly invested
for you, automatically increasing your holdings in SBF. All paper work is done
for you automatically by The Bank of New York, Agent for the DR Plan, and you
will receive statements from the Agent to simplify your personal records. The DR
Plan also acts as a form of forced savings program.

The DR Plan also offers shareholders the flexibility to choose from three
different reinvestment options.

(1) shareholders may have all of their net investment income dividends and
capital gain distributions (short-term and long-term) automatically
reinvested.
(2) shareholders may have all of their net investment income dividends paid in
cash and all of their capital gain distributions (short-term and long-term)
automatically reinvested; or
(3) shareholders may have their net investment income dividends automatically
reinvested and their capital gain distributions (short-term and long-term)
paid in cash.

A shareholder will be deemed to have chosen option (1) unless the Agent is
notified of a change in election.

CASH PAYMENT PLAN
The Cash Payment Plan allows you to purchase shares of SBF conveniently and
inexpensively, without committing large dollar amounts. Under the Cash Payment
Plan, you have the option to send a check or money order of at least $25.00 to
the Agent which will be used to buy more shares of SBF. You may make these
payments regularly or from time to time, as you choose. You may also vary the
amount of each optional payment as long as it is at least $25.00. Optional cash
payments received by the Agent will be applied by the Agent to the purchase of
additional shares of SBF on the Investment Date next following receipt. The
"Investment Dates" will be each Friday (or closest business day prior thereto,
if a holiday). All cash payment shares will be purchased on the open market at
prevailing market prices and in accordance with the "Terms and Conditions of
Authorization for

Page 14

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Amended and Restated Dividend Reinvestment and Cash Payment Plans ("Terms and
Conditions") There is no maximum amount of investment under the Cash Payment
Plan.

Shares purchased under the Cash Payment Plan will be held as uncertificated
shares, unless separate specific instructions to issue certificates are
received. Fractional shares cannot be issued in certificate form, and dividends
and distributions on those shares held by the Agent will be automatically
reinvested.

CERTIFICATE OF DEPOSIT
If you wish, you may deposit with the Agent stock certificates representing
ownership of capital stock in SBF which you now hold. The Agent will combine the
shares represented thereby with the shares issued or purchased through the DR
Plan or Cash Payment Plan.
The actual certificates forwarded by you will be cancelled.

COST TO YOU
Except as specifically noted, you will not bear any of the costs of
administering the Plan. When the Agent makes open-market purchases, the cost of
reinvesting your dividends and distributions or purchasing additional shares
through these Plans is less than the usual brokerage commission on odd-lot
transactions because the Agent combines the purchase of shares for all
participants and passes the savings in commissions on to you. You pay your
proportionate share of the commissions paid on all open-market purchases.
Dividends and distributions, even though automatically reinvested, continue to
be taxable.

How the Automatic Dividend Reinvestment and Cash Payment Plans Work:

1. As a participant in the DR Plan, you will have three options, as follows: (i)
all net investment income dividends ("dividends") and capital gain distributions
(short-term and long-term) ("distributions") will be automatically reinvested;
(ii) all dividends will be paid in cash and all distributions will be
automatically reinvested; or (iii) all dividends will be automatically
reinvested and all distributions will be paid in cash. You will be deemed to
have elected option (i) unless notification is received by the Agent that you
elect option (ii) or option (iii).

2. If SBF declares a dividend or distribution and such dividend is to be
reinvested on your behalf, you will receive the dividend or distribution either
in newly-issued shares of SBF or in shares of SBF purchased on the New York
Stock Exchange or otherwise on the open market, depending on the relationship
between the market price per share of SBF and the net asset value per share of
SBF, as described in the terms and conditions of the DR Plan. Any newly-issued
shares will be valued at the time specified in the Plan, either at the market
price per share of SBF or at the greater of (a) the net asset value per share
of SBF and (b) 95% of the market price per share of SBF, depending on the
relationship between market price and net asset value at that time. If your
dividend or distribution is not large enough to buy a full share, the Agent will
credit you with a fractional share, computed to four decimal places, which
will earn additional dividends and distributions for you just the way full

Page 15
<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

shares do.

3. You will receive a detailed statement of your Plan account following each
investment by the Agent showing total dividends and distributions and additional
cash payments, shares purchased and issued, and total shares held by you and the
Agent on your behalf. The statement will contain a tear-off portion which you
should utilize for all transaction processing.

4. The Agent will hold the shares it has purchased for you unless you
otherwise request. This convenience provides added protection against loss,
theft, or inadvertent destruction of certificates. Certificates for full shares
held by the Agent will be issued to you upon your request. If a certificate is
lost, the replacement cost is currently 2% of the value of the shares at the
time of loss.

5. You may terminate your participation in the DR Plan at any time up to a
record date, and future dividends and distributions that were previously
reinvested will thereafter be sent directly to you. Upon termination, stock
certificates for any full shares will be issued in your name, or, upon receipt
of your instructions, your shares will be sold for you and the proceeds sent to
you less brokerage commissions and any applicable taxes. Any fractional shares
at the time of termination will be converted to cash on the basis of the then
current market price of SBF capital stock.

6. The Agent will forward all proxy materials, including a form of proxy and
return envelope, covering all shares owned by a participant to be voted and
returned by the participant to SBF or its proxy agent.

7. Your attention is directed to the Terms and Conditions set forth on page 16
which govern the operation of the Plan.

If you wish to withdraw from the DR Plan or you wish to change your reinvestment
option, please contact the Agent at the toll-free telephone number listed below.

If you withdraw and subsequently wish to re-enroll, simply complete the enclosed
Authorization Card and mail it to the address below or call the number below.
Your participation will commence with the next dividend or distribution payable
after receipt of your authorization, provided it is received prior to the record
date for the dividend or distribution. Should your authorization arrive after
the record date, your participation will take effect with the following dividend
or distribution.

If you wish to change your reinvestment option, simply call the Agent at the
toll free number listed below. Your change will be effective commencing with the
next dividend or distribution payable after your instruction to change your
election, provided you contact the Agent prior to the record date for that
dividend or distribution. Should you contact the Agent after the record date to
change your reinvestment option, the change will take effect with the following
dividend or distribution.

PLEASE BE ADVISED THAT THE AGENT MAY UTILIZE BNY BROKERAGE INC., AN AFFILIATE OF
THE AGENT, FOR ALL TRADING ACTIVITY RELATING TO THE DR PLAN AND CASH PAYMENT
PLAN ON BEHALF OF PARTICIPANTS. BNY BROKERAGE INC. RECEIVES A COMMISSION IN
CONNECTION WITH SUCH TRANSACTIONS.

REMEMBER, THE DETAILED STATEMENT OF YOUR ACCOUNT WILL INCLUDE A TEAR-OFF PORTION
WHICH YOU SHOULD UTILIZE FOR ALL TRANSACTION PROCESSING.

Page 16

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

IF YOUR SHARES ARE HELD IN THE NAME OF A BROKER OR NOMINEE, YOU SHOULD CONTACT
YOUR BROKER OR NOMINEE FOR MORE INFORMATION ABOUT YOUR ABILITY TO PARTICIPATE IN
THE DR PLAN. IF THE BROKER OR NOMINEE DOES NOT PROVIDE AN AUTOMATIC REINVESTMENT
SERVICE, IT MAY BE NECESSARY FOR YOU TO HAVE YOUR SHARES TAKEN OUT OF "STREET
NAME" AND REGISTERED IN YOUR OWN NAME TO GUARANTEE YOUR PARTICIPATION.
OTHERWISE, DIVIDENDS AND DISTRIBUTIONS WILL BE PAID IN CASH BY YOUR BROKER OR
NOMINEE.

SBF and the Agent may amend or terminate the Plan. The Agent will mail to
participants notice at least 30 days prior to the effective date of any
amendment.

Any inquiries concerning the Plans should be directed to the Agent at:

The Bank of New York
Investor Relations Department
P.O. Box 11258
New York, New York 10286-1258
1-800-432-8224

Terms and Conditions of Authorization for Amended and Restated Automatic
Dividend Reinvestment and Cash Payment Plans

1. (a) The Bank of New York (the "Agent") will act as agent for each
participant in the Amended and Restated Dividend Reinvestment Plan (the "DR
Plan") of Salomon Brothers Fund Inc (the "Corporation").

(b) Participants in the DR Plan will have three options, as follows: (i) a
participant may have all net investment income dividends ("dividends") and
capital gain distributions (short-term and long-term) ("distributions")
automatically reinvested; (ii) a participant may have all dividends paid in cash
and all distributions automatically reinvested; or (iii) a participant may have
all dividends automatically reinvested and all distributions paid in cash.
Participants will be deemed to have elected option (i) unless notification is
received by the Agent that the participant elects option (ii) or option (iii).
Participants may change elections by notifying the Agent and a change in
election will be effective with respect to a dividend or distribution if the
Agent is contacted prior to the record date; otherwise it will be effective with
the following dividend or distribution.

(c) Unless the Corporation declares a dividend or distribution which may be
paid to shareholders only in the form of cash, the Agent will apply all
dividends and distributions which are to be reinvested on behalf of a
participant in the manner set forth below.

2. (a) If, on the determination date, the market price per share plus estimated
brokerage commissions equals or exceeds the net asset value per share on that
date (such condition, a "market premium"), the Agent shall receive the dividend
or distribution in newly issued shares of the Corporation on behalf of
shareholders. If, on the determination date, the net asset value per share
exceeds the market price per share plus estimated brokerage commissions on that
date (such condition, a "market discount"), the Agent will purchase shares in
the open market. The determination date will be the fourth New York Stock
Exchange trading day (a New York Stock Exchange trading day being referred to
herein as a "Trading Day") preceding the payment date for the dividend or
distribution. For purposes herein, "market price" shall mean the average of the
highest and lowest prices at which the Corporation's stock sells on the New York
Stock Exchange on the particular date, or if there is no sale on that date, the
average of the closing bid and asked quotations.

(b) Purchases by the Agent shall be made in accordance with the conditions
set forth in Item 4 below and may be made on any securities exchange where such
shares are traded, in the over-the-counter market, or in negotiated
transactions, and may be on such terms as to price, delivery, and otherwise as
the Agent may determine. Such purchases shall be made as soon as practicable
commencing on the Trading Day following the determination date and ending no
later than 30 days after the dividend or distribution date except where
temporary curtailment or suspension of purchase is necessary to comply with
applicable provisions of federal securities laws; provided, however, that such
purchases

Page 17

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

shall, in any event, terminate on the earlier of (i) 60 days after the dividend
or distribution payment date and (ii) the Trading Day prior to the "ex-dividend
date" next succeeding the dividend or distribution payment date.

(c) If (i) the Agent is unable to invest the full dividend or distribution
amount in open market purchases during the purchase period provided for in
paragraph (b) above or (ii) a market discount shifts to a market premium during
the purchase period, the Agent will cease making open market purchases and will
receive the uninvested portion of the dividend or distribution amount in newly
issued shares (x) in the case of (i) above, at the close of business on the date
the Agent is required to terminate making open-market purchases as specified in
paragraph (b) above or (y) in the case of (ii) above at the close of business on
the date such shift occurs; but in no event prior to the payment date for the
dividend or distribution.

(d) In the event that all or part of a dividend or distribution amount is to
be to paid in newly issued shares, such shares will be issued to participants in
accordance with the following formula: (i) if, on the valuation date, the net
asset value per share is less than or equal to the market price per share, then
the newly issued shares shall be valued at net asset value per share on the
valuation date; provided, however, that if the net asset value per share is less
than 95% of the market price per share on the valuation date, then such shares
will be issued at 95% of the market price and (ii) if, on the valuation date,
the net asset value per share is greater than the market price per share, the
newly issued shares will be valued at the market price per share on the
valuation date. The valuation date shall be the dividend or distribution payment
date except that with respect to shares issued pursuant to paragraph (c) above,
the valuation date shall be the date such shares are issued. If a date that
would otherwise be a valuation date is not a Trading Day, the valuation date
shall be the next preceding Trading Day.

3. Under the Cash Payment Plan (together with the DR Plan, the "Plans"), cash
payments of at least $25.00 made from time to time by the participant and
received by the Agent will be applied by the Agent in the purchase of additional
shares of capital stock of the Corporation on the Investment Date next following
receipt. The "Investment Date" will be each Friday (or closest business day
prior thereto if a holiday). All cash payment shares will be purchased by the
Agent on the open market at prevailing market prices and in accordance with the
conditions set forth in Item 4 below. Participants have an unconditional right
to obtain the return of any cash payments up to 48 hours prior to such
Investment Date. Checks must be drawn on United States banks and denominated in
U.S. dollars only. Third party checks will not be accepted. There is no maximum
amount of investment under the Cash Payment Plan. The Agent reserves the right
to sell additional shares from the participant's account to satisfy any returned
checks.

4. In making cash purchases for the participant's account, the Agent will
combine the participant's funds with those of the other participants. The price
at which the Agent shall be deemed to have acquired shares shall be the average
price (including brokerage commissions) of all shares purchased by it in
connection with a particular dividend or distribution under the DR Plan or in
connection with a particular investment under the Cash Payment Plan, as the case
may be.

It is understood that (i) the Agent may hold the shares of all participants
together in its name or in the name of its nominee, (ii) the Agent may utilize
BNY Brokerage Inc., an affiliate of the Agent, for all trading activity relating
to the DR Plan and Cash Payment Plan on behalf of participants and that BNY
Brokerage Inc. receives a commission in connection with such transactions, (iii)
that government regulations may require the temporary curtailment or suspension
of purchase of shares under the Plans and accordingly, the Agent shall not be
accountable for its inability to make purchases at such times and (iv) that the
Agent shall have no responsibility as to the market value of the shares acquired
for the participant's account.

The Agent will confirm the purchases so made as soon as practicable after
the purchases are made.

5. No certificate with respect to reinvested dividends and distributions will be
issued to a participant unless he or she so requests. No certificate for a
fractional share will be issued.

6. Participants shall not bear any of the costs of administering the Plan. Each
account will bear its proportionate share of brokerage commissions paid on open
market purchases.

7. It is understood that the investment of dividends and distributions does not
relieve the participant of any taxes which may be payable on such dividends and
distributions. The Agent will report annually to each participant the amount of
dividends and distributions credited to his account during the year.

8. (a) The Agent will forward all proxy materials, including a form of proxy and
return envelope, covering all shares owned by a participant to be voted and
returned by the participant to the Corporation or its proxy agent.

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

(b) A participant may terminate his or her account under the DR Plan or
change his or her election pursuant to paragraph 1(b), at any time by notifying
the Agent prior to the next dividend or distribution record date. Participation
shall be terminated by written notice similarly received of the death, or
adjudicated incompetency of a participant.

(c) In the event written notice of termination, death or adjudicated
incompetency is received by the Agent after a dividend or distribution record
date, but prior to the determination by the Agent of the number of shares to be
issued to or purchased for the participant following such dividend or
distribution record date, participation in the DR Plan shall be terminated
immediately following such determination. Upon termination by reason of notice
of death, or adjudicated incompetency, no newly issued shares shall be credited
to the participant's account and no purchase of shares shall be made for the
participant's account. The participant's shares and any cash dividends or
distributions paid thereon shall be retained by the Agent subject to the Terms
and Conditions until such time as such participant's legal representatives shall
have been appointed and shall have furnished proof sufficient to the Agent of
his right to receive such shares and such dividends or distributions. Upon
termination by the participant, the Agent will send the participant a
certificate of the full shares in his or her account and a check in an amount
equal to the then current market price of any fractional share or, the Agent,
upon receipt of instructions from the participant, will sell the participant's
full and fractional shares as soon as practicable following termination and send
to the participant a check representing the proceeds, less brokerage commissions
and any applicable taxes.

If a participant disposes of all shares registered in his or her name on the
books of the Corporation, the Agent will at its discretion, continue to reinvest
dividends and distributions on the shares in the participant's DR Plan account
until otherwise notified by the participant.

9. The Agent may terminate either Plan by notice in writing remitted to all
participants. In such event the Agent will send the participant a certificate
for the full shares in his or her account and cash for any fractional shares at
the then current market price as indicated in Item 8.

10. The Agent shall not be liable hereunder for any act done in good faith, or
for any good faith omissions to act, including, without limitation, any claims
of liability (1) arising out of any such act or omission to act which occurs
prior to the termination of participation pursuant to Item 8 above and (2) with
respect to the prices at which shares are purchased or sold for the
participant's account and the times such purchases or sales are made.

11. The participant agrees to notify the Agent promptly in writing of any change
of address. Notices to the participant may be given by letter addressed to the
participant at his last address of record with the Agent.

THE SALOMON BROTHERS FUND INC
AUTHORIZATION TO PARTICIPATE IN THE DIVIDEND
REINVESTMENT PLAN FOR SHAREOWNERS OF
THE SALOMON BROTHERS FUND INC
COMMON SHARES

I wish to participate in the Dividend Reinvestment Plan. I appoint The Bank
of New York (the Agent) and authorize THE SALOMON BROTHERS FUND INC to pay to
the Agent for my account all net investment income dividends and capital gain
distributions (short-term and long-term) payable to me on the Common Shares that
are now or may hereafter be registered in my name.
I authorize the Agent to apply all such dividends and distributions in the
following manner, subject to the terms and conditions of the Plan set forth in
the brochure describing the Plan.

/ / (1) All net investment income dividends and capital gain distributions
(short-term and long-term) payable to me shall be automatically reinvested
/ / (2) All net investment income dividends payable to me shall be paid in
cash and all capital gain distributions (short-term and long-term) payable to me
shall be automatically reinvested
/ / (3) All net investment income dividends payable to me shall be
reinvested and all capital gain distributions (short-term and long-term) shall
be paid in cash
(Choose one of the above.)
I understand that if I do not choose one of the above, I will be deemed to
have chosen option (1).
I understand that the appointment of The Bank of New York as the Agent is
subject to the terms and conditions of the Plan set forth in the brochure
describing the Plan.
In addition, please invest the enclosed optional cash payment in the
amount of $____________ as directed by the terms and conditions of the Plan.
(Please sign on the reverse side of this card.)

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

12. These Terms and Conditions may be amended or supplemented by the Agent at
any time or times by mailing appropriate notice at least 30 days prior to the
effective date thereof to the participant at his last address of record. The
amendment or supplement shall conclusively be deemed to be accepted by the
participant unless prior to effective date thereof the Agent receives written
notice of the termination of the participant's account. Any such amendment may
include the appointment by the Agent in its place and stead of a successor agent
under these Terms and Conditions provided such successor is a bank or trust
company organized under the laws of the United States or any state thereof. The
Corporation is authorized to pay to such successor agent for the account of each
participant in the Plan all dividends and distributions payable on shares of the
Corporation's capital stock held by the Agent for the participant or by the
participant himself or herself, the shares to be applied by such successor agent
as provided in these Terms and Conditions.

13. You may effect "book-to-book" transfers, which involve transferring shares
from an existing participant account in the Plan to a new participant account by
providing the Bank with a written request in accordance with the terms and
conditions of the Plan. All participants in the current account must sign the
request and their signatures must be guaranteed by a bank, broker or financial
institution that is a member of a signature Guarantee Medallion Program. The new
participant account will automatically be coded for full dividend reinvestment
unless otherwise instructed.

14. The Terms and Conditions of this authorization shall be governed by the
laws of the State of New York.

Any inquiries regarding the Plans should be directed to the Agent at:

THE BANK OF NEW YORK
Investor Relations Department
P.O. Box 11258
New York, New York 10286-1258
1-800-432-8224

If you desire to participate in The Salomon Brothers Fund Inc Dividend
Reinvestment Plan as described in the brochure, please sign and return this
card to:
THE BANK OF NEW YORK
P.O. Box 1958
Newark, NJ 07101-9774
Att: Dividend Reinvestment Department

DATED:____________________, 19____

PLEASE SIGN, DATE AND RETURN
USING THE ENCLOSED ENVELOPE

----------------------------------
Signature

----------------------------------
Signature (if held jointly)

Please sign exactly as your name(s) appear hereon.
THIS IS NOT A PROXY

<PAGE>
S A L O M O N B R O T H E R S F U N D I N C

Directors

CHARLES F. BARBER
Consultant; formerly Chairman, ASARCO
Incorporated

ANDREW L. BREECH
President, Dealer Operating Control
Service, Inc.

THOMAS W. BROCK
Chairman, Managing Director and Chief
Executive Officer, Salomon Brothers Asset
Management Inc; Managing Director and
member of the Management Board,
Salomon Brothers Inc

CAROL L. COLMAN
President, Colman Consulting Co., Inc.

WILLIAM R. DILL
Consultant; formerly President, Boston
Architectural Center; formerly President,
Anna Maria College

MICHAEL S. HYLAND
Chairman and President, President and
Managing Director, Salomon Brothers Asset
Management Inc; Managing Director,
Salomon Brothers Inc

CLIFFORD M. KIRTLAND, JR.
Member of the Advisory Committee, Nero-
Moseley Partners; formerly Director, Oxford
Industries, Inc., Shaw Industries, Inc. and
Graphic Industries, Inc.; formerly Chairman,
Cox Communications, Inc.

ROBERT W. LAWLESS
President and Chief Executive Officer,
University of Tulsa; formerly President and
Chief Executive Officer, Texas Tech University
and Tech University Health Sciences Center

LOUIS P. MATTIS
Consultant; formerly Chairman and President,
Sterling Winthrop Inc.

THOMAS F. SCHLAFLY
Of counsel to Peper, Martin, Jensen, Maichel &
Hetlage (law firm); President, The Saint Louis
Brewery, Inc.

Officers

MICHAEL S. HYLAND
Chairman and President

RICHARD E. DAHLBERG
Executive Vice President

ALLAN R. WHITE, III
Executive Vice President

LAWRENCE H. KAPLAN
Executive Vice President
and General Counsel

MICHAEL A. KAGAN
Vice President

MARTIN L. ROBERTS
Vice President

ALAN M. MANDEL
Treasurer

NOEL B. DAUGHERTY
Secretary

JANET S. TOLCHIN
Assistant Treasurer

REJI PAUL
Assistant Treasurer

JENNIFER G. MUZZEY
Assistant Secretary

<PAGE>
Salomon Brothers Asset Management
Seven World Trade Center
New York, New York 10048

The Salomon Brothers
Fund Inc

Semi-Annual Report
JUNE 30, 1997

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Salomon Brothers Asset Management
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