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SALOMON BROTHERS
INVESTMENT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1997
ASIA GROWTH FUND
CAPITAL FUND
INVESTORS FUND
TOTAL RETURN FUND
HIGH YIELD BOND FUND
STRATEGIC BOND FUND
NATIONAL INTERMEDIATE
MUNICIPAL FUND
US GOVERNMENT
INCOME FUND
NEW YORK MUNICIPAL
MONEY MARKET FUND
CASH MANAGEMENT FUND
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SALOMON BROTHERS ASSET MANAGEMENT
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[LOGO]
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OUR MESSAGE TO YOU
DEAR SHAREHOLDERS:
The first half of 1997 was characterized by an impressive 21% rise in the S&P
500 and the near-perfect combination of strong economic growth and benign
inflation readings. The Salomon Brothers Investment Series benefited from the
strong stock and bond market performance -- both domestically and overseas.
We are pleased to provide a performance review and market commentary for each of
its funds for the first six months of the year. For specific information on
individual funds please see the following pages.
ECONOMIC AND MARKET TRENDS
Economic conditions were extremely supportive of the financial markets in the
first six months of 1997. The combination of moderate growth, low inflation and
unemployment propelled stocks to new highs. Meanwhile, fixed-income securities
gained a respite from the fear of higher interest rates. The Federal Reserve's
decision to hold rates steady since its 25-basis-point hike in March comforted
the markets. Upward pressures on wages appeared to stall this spring; global
commodity prices traded sideways; and the U.S. budget deficit continued to
dwindle. Against this backdrop of quiescent inflation, financial assets thrived.
Following spectacular gains of 37.5% and 23.0%, in 1995 and 1996, respectively,
the S&P 500 continued its climb with a surge of over 20% for the first half of
the year. The Salomon Brothers Broad Investment Grade ("BIG") Bond Index
returned approximately 3%, and the Salomon Brothers High-Yield Market Index
returned just under 6%.
OUTLOOK
Although we see no immediate threat to this idyllic environment, we are taking a
somewhat cautious view on both equities and bonds. The U.S. economy, in our
view, is pausing -- not showing underlying weakness. Indeed, the cost of capital
and the enormous buildup in household wealth -- conditions that promoted rapid
growth in 1996 -- are still present. We believe that renewed economic strength
in the second half of this year could cause the Fed to raise interest rates,
because monetary conditions are not tight enough to hold the consumer -- and
potential price pressures -- in check.
On an historical basis, stocks are extremely expensive. As of June 30, the S&P
500 was trading at nearly 21 times estimated trailing earnings and at more than
18 times 12 months forward earnings. Given these high valuations and our view
that the economic setting is likely to become less favorable later this year, we
believe that fear of higher interest rates will dominate near-term earnings
gains and that concern about the profit outlook for 1998 will increase. In this
setting, prudent diversification and professional management are key elements in
a long-term investment program.
We appreciate your investment with the Salomon Brothers Investment Series, and
we look forward to serving you in the future.
Sincerely,
/s/ Michael S. Hyland
Michael S. Hyland
Chairman and President
1
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THE SALOMON BROTHERS
ASIA GROWTH FUND
INVESTMENT OBJECTIVE
Long-term capital appreciation.
INVESTMENT STRATEGY
The Fund invests at least 65% of total assets in the equity and equity-related
securities of companies located in developing nations of the Pacific Rim
(ex-Japan). Areas considered for investment include, but are not limited to,
China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore and
Thailand. In seeking to capture high long-term returns with volatility in line
with or lower than that experienced in the Asian markets, the Fund will allocate
assets among countries and industries believed most likely to benefit from
regional economic trends.
PERFORMANCE
The Asia Growth Fund (Class A Shares) enjoyed an outstanding six months in 1997
with an 18.44% returni. This compares quite favorably with the 3.66% return
posted by the Morgan Stanley Capital International All Country Asia Free X-Japan
("MSCI AC Asia Free X-Japan) Index and 5.23% return for the average Lipper Asia
Growth (ex-Japan) Fund.
THE FUND MANAGER
[PHOTO]
Giampaolo G. Guarnieri, Director and Head of Salomon Brothers Asset Management
Asia Pacific Limited (SBAM AP), has 10 years of investment industry experience.
SBAM AP is an affiliate of Salomon Brothers Asset Management Inc and serves as a
sub-advisor to the Fund. Mr. Guarnieri is primarily responsible for day-to-day
Fund management.
MARKET REVIEW
Asian ex-Japan markets' performance remained mixed with investors continuing to
underperform South Asian markets multiples on the back of structural issues.
However, North Asian ex-Japan markets were able to post strong performance as
they benefited from the cyclical recovery taking place in North Asian economies,
especially China. On the contrary, South Asian markets' performance was dismal
as these markets were affected by increasing currency volatility on the back
of sharply deteriorating fundamentals. The demise of the currency peg in
Thailand, coupled with the quasi-devaluations of the Indonesian Rupiah,
Philippine Peso and Malaysian Ringitt continued to plague the performance of
these markets. Asia's largest emerging market economies, China and India, were
able to benefit from a more liquid environment and falling interest rates which
drove equity prices higher in these countries. Global cyclicals, such as
electronics, did particularly well on a pan-regional basis, especially in Taiwan
and Singapore.
FUND HIGHLIGHTS
The outperformance of the Asia Growth Fund over the benchmark was primarily a
result of overweighting North Asian markets, such as Hong Kong/China and Taiwan,
and increasing exposure to Indian equities while de-emphasizing South Asian
markets, such as Thailand or Malaysia, which continued to be plagued by currency
volatility, slower export growth, deteriorating external balances and a high
interest rate environment. As expected, the return of Hong Kong to China was
seen as a positive factor for the Hong Kong economy and market. Hong Kong and
Taiwan equities also benefited from China's cyclical recovery and, in the case
of Hong Kong, attractive valuations and currency stability. Indian equities
benefited from a declining interest rate environ-
2
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ment and better liquidity. The Fund also benefited from an overweight posture to
selective Asian electronic shares, especially in Taiwan, Korea and Singapore,
which significantly outperformed their respective market indices. The Fund kept
a significant exposure to China-sensitive shares listed in Hong Kong, such as
China Resources, Shanghai Industrial, as well as major Hong Kong conglomerates,
such as Hutchison Whampoa and Swire Pacific, which benefited from stronger China
growth.
India proved to be a very strong performer on the back of economic reforms
announced in February which are leading the way for stronger economic growth and
further deregulation of India's major industries. The Fund benefited from
selective investments in Global Depository Receipts ("GDRs") of major Indian
companies like State Bank of India, Reliance and ICICI which outperformed local
indices significantly.
OUTLOOK
The case for Asia investing remains increasingly driven by the opening and
deregulation of Asia's major consumer economies, such as China, India and
Indonesia, which have a significant and growing consumer market. The advent of
the consumer in these countries is expected to have a significant impact on
future Asian growth leading us to remain extremely bullish on Asia investing.
Although we expect currency volatility to remain in force in certain Asian
countries in the short term, we believe that South Asian economies have started
to address key structural problems that affected their economies. We are
starting to see value emerging in certain Asian markets, such as the Philippines
or Thailand, as a result of the sharp fall of equity prices in these markets.
The return of Hong Kong to China makes China investing more attractive than
before and we expect to increase our exposure to B shares of Chinese companies
listed on the Shanghai and Shenzhen stock exchanges.
3
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LIPPER COMPARATIVE PERFORMANCE`D'
SALOMON BROTHERS ASIA GROWTH FUND
LIPPER CATEGORY: PACIFIC EX JAPAN FUNDS
<TABLE>
<CAPTION>
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YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
12/31/96-6/30/97 6/30/96-6/30/97
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
18.44% 6.03% #10 of 86 funds 27.77% 8.72% #11 of 80 funds
1st Quartile 1st Quartile
(Top 12%) (Top 14%)
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</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CLASS A NET ASSET VALUE* PUBLIC OFFERING PRICE**
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (5/6/96) 21.05% 16.03%
1 year 27.77% 21.65%
- -----------------------------------------------------------------------------------------------------
CLASS B RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (5/6/96) 20.21% 15.97%
1 year 26.88% 21.88%
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CLASS C RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (5/6/96) 20.24% 20.24%
1 year 26.92% 25.92%
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CLASS O RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (5/6/96) 21.39% 21.39%
1 year 28.18% 28.18%
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</TABLE>
TOP COUNTRY HOLDINGS@ PORTFOLIO HIGHLIGHTS (as of 6/30/97)
(as of 6/30/97)
- ------------------------------- COMMON
Hong Kong 32% STOCKS: 94% [ ]
- -------------------------------
Singapore 10% CONVERTIBLE
- ------------------------------- SECURITIES: 3% [ ] [PIE CHART]
India 9%
- ------------------------------- CASH AND
Malaysia 9% CASH EQUIVALENTS: 3% [ ]
- -------------------------------
Indonesia 8%
- -------------------------------
Korea 7% Portfolio holdings may vary.
- -------------------------------
Taiwan 6% See page 22 for all footnotes.
- -------------------------------
Thailand 5%
- -------------------------------
Philippines 4%
- -------------------------------
China 2%
- -------------------------------
@ As a % of net assets
4
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5
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THE SALOMON BROTHERS
CAPITAL FUND
INVESTMENT OBJECTIVE
Capital appreciation through investments primarily in common stocks or
securities convertible into common stock.
INVESTMENT STRATEGY
The Capital Fund seeks to achieve its investment objective through investments
in securities which are believed to have above-average price appreciation
potential. Such investments may also involve above-average risk. The Fund may
invest in seasoned, established companies, relatively small new companies as
well as new issues. The Fund will not invest more than 25% of its assets in any
particular industry.
PERFORMANCE
During the first half of 1997 the Capital Fund (Class A Shares) posted a total
return of 14.27%.(ii) This compares favorably with the Lipper Capital
Appreciation funds, average of 10.16%. The Fund lagged the S&P 500, however,
which posted a return of 20.61%. This difference in performance was due, in
part, to the Fund's lack of ownership of a handful of mega-capitalization stocks
that are heavily weighted in the S&P 500 Index. We believe these stocks do not
offer an attractive risk/reward trade-off due to their high valuations.
FUND HIGHLIGHTS
The Fund's portfolio increased its holdings in small- and mid-capitalization
stocks during the first half of 1997. We believe that many of these stocks offer
the best risk/reward trade-offs in the market, primarily due to their relative
and absolute valuations. Our focus continues to be on finding investments that
offer attractive return potential relative to their risk.
OUTLOOK
The continued strength and duration of the bull market in U.S. stocks are a
function of the ideal economic environment existing in the United States.
Growth remains moderately strong and inflation is low. At the same time, equity
valuation levels have reached very high levels based on most traditional
measures. In our view there is nothing apparent on the horizon that may
change either of these conditions. We are in an economic environment that
has created high returns for equities. Meanwhile, the stock market's rising
valuations have created a less stable situation. The market continues to move
upward because investors have been willing to take risk in order to achieve
expected returns. In this environment, our strategy will continue to be to
search for the most attractive risk/reward trade-offs, in whichever part of the
market we can find.
THE FUND MANAGER
[PHOTO]
Ross Margolies, Director and Portfolio Manager at Salomon Brothers Asset
Management Inc, has 15 years of investment industry experience in the equity,
convertible and high yield markets. Mr. Margolies is primarily responsible for
day-to-day Fund management.
6
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LIPPER COMPARATIVE PERFORMANCE`D'
SALOMON BROTHERS CAPITAL FUND
LIPPER CATEGORY: CAPITAL APPRECIATION FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
12/31/96-6/30/97 6/30/96-6/30/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
14.27% 10.16% #79 of 233 funds N/A N/A N/A
2nd Quartile
(Top 34%)
- ------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
CLASS A NET ASSET VALUE* PUBLIC OFFERING PRICE**
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (11/1/96) 23.11% 17.24%
1 year N/A N/A
- ------------------------------------------------------------------------------------------------------
CLASS B RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- ------------------------------------------------------------------------------------------------------
Since Inception (11/1/96) 22.65% 17.65%
1 year N/A N/A
- ------------------------------------------------------------------------------------------------------
CLASS C RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- ------------------------------------------------------------------------------------------------------
Since Inception (11/1/96) 22.76% 21.76%
1 year N/A N/A
- ------------------------------------------------------------------------------------------------------
CLASS O RETURN IF NOT REDEEMED* RETURN IF REDEEMED
- ------------------------------------------------------------------------------------------------------
10 year 11.12% 11.12%
5 year 17.67% 17.67%
1 year 32.67% 32.67%
- ------------------------------------------------------------------------------------------------------
</TABLE>
TOP STOCK HOLDINGS@
(as of 6/30/97)
- --------------------------------
Sears Roebuck 3.2%
- --------------------------------
Plantronics 3.0%
- --------------------------------
Samsonite 3.0%
- --------------------------------
Williams 2.6%
- --------------------------------
Bank of New York 2.6%
- --------------------------------
@ As a % of net assets
PORTFOLIO HIGHLIGHTS (as of 6/30/97)
COMMON
STOCKS: 89% [ ]
CONVERTIBLE PREFERRED [PIE CHART]
SECURITIES: 4% [ ]
CASH AND CASH Portfolio holdings may vary.
EQUIVALENTS: 7% [ ]
See page 22 for all footnotes.
7
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The Salomon Brothers
Investors Fund
INVESTMENT OBJECTIVE
Long-term growth of capital. Current income is a secondary objective.
INVESTMENT STRATEGY
The Investors Fund invests primarily in common stocks listed on the New York
Stock Exchange and other U.S. exchanges. The portfolio manager generally favors
large capitalization stocks representing well-known companies with good growth
potential at a reasonable price.
PERFORMANCE
During the first six months of 1997, the Investors Fund (Class A Shares) posted
a total return of 14.90%(iii). This compares with 20.60% for the S&P 500 and
15.52% for the average Lipper Growth & Income Fund.
MARKET OVERVIEW AND
PORTFOLIO HIGHLIGHTS
During the first six months of 1997, the U.S. stock market con tinued 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 20.60%. Significant contributors to the
Fund's performance included Tyco International, Bank of New York and Travelers.
The Fundis well diversified, with overweighted sectors including basic
industries, healthcare 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.
THE FUND MANAGER
[PHOTO]
Allan R. White, Managing Director and Portfolio Manager at Salomon Brothers
Asset Management Inc, has 16 years of investment industry experience in the
equity, convertible and fixed income markets. Mr. White is primarily
responsible for day-to-day Fund Management.
8
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LIPPER COMPARATIVE PERFORMANCE`D'
SALOMON BROTHERS INVESTORS FUND
LIPPER CATEGORY: GROWTH AND INCOME FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
12/31/96-6/30/97 6/30/96-6/30/97
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
14.90% 15.52% #406 of 626 funds 33.10% 28.07% #85 of 547 funds
3rd Quartile 1st Quartile
(Top 65%) (Top 16%)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CLASS A NET ASSET VALUE* PUBLIC OFFERING PRICE**
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (1/3/95) 32.79% 30.21%
1 year 33.10% 26.77%
- ------------------------------------------------------------------------------------------------
CLASS B RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- ------------------------------------------------------------------------------------------------
Since Inception (1/3/95) 31.82% 30.75%
1 year 32.11% 27.11%
- ------------------------------------------------------------------------------------------------
CLASS C RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- ------------------------------------------------------------------------------------------------
Since Inception (1/3/95) 31.83% 31.83%
1 year 32.12% 31.12%
- ------------------------------------------------------------------------------------------------
CLASS O RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- ------------------------------------------------------------------------------------------------
10 year 13.30% 13.30%
5 year 20.58% 20.58%
1 year 33.48% 33.48%
- ------------------------------------------------------------------------------------------------
</TABLE>
TOP STOCK HOLDINGS@
(as of 6/30/97)
- ------------------------------
Tyco International 2.7%
- ------------------------------
Bank of New York 2.7%
- ------------------------------
Canadian Pacific 2.5%
- ------------------------------
First Data 2.5%
- ------------------------------
Royal Dutch Petroleum 2.3%
- ------------------------------
@ As a % of net assets
PORTFOLIO HIGHLIGHTS (as of 6/30/97)
COMMON
STOCKS: 84% [ ]
CONVERTIBLE
SECURITIES: 2% [ ] [PIE CHART]
CASH AND
CASH EQUIVALENTS: 14% [ ]
Portfolio holdings may vary.
See page 22 for all footnotes.
9
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THE SALOMON BROTHERS
TOTAL RETURN FUND
INVESTMENT OBJECTIVE
The Fund seeks to obtain above-average income compared to a portfolio that
invests only in stocks. The Fund's secondary objective is to seek growth of
capital and income. The Fund seeks to achieve its objectives by investing in a
variety of asset classes including equities, fixed income securities and
short-term obligations.
INVESTMENT STRATEGY
The Fund seeks to increase income and provide for long-term growth. The Fund
invests primarily in large capitalization stocks that are earning dividends
greater than the S&P 500 average. Fixed income assets tend to be allocated among
investment grade securities. The Fund also allocates among securities believed
capable of achieving equity-like returns, such as high yield bonds and
convertible securities.
PERFORMANCE
The Total Return Fund (Class A Shares) posted a 9.63% return for the first six
months. (iv) This compares with a 11.62% return for a composite index of 50%
Salomon Brothers Broad Investment Grade Index and 50% S&P 500, and 10.21% for
the Lipper Balanced Average. The dividend on the Fund (Class A Shares) is 4.2
cents per share, per month, and the Fund carried an SEC yield of 4.20% as of
June 30, 1997. This dividend yield is quite substantial in relation to the 1.7%
in an all stock portfolio of the S&P 500.
MARKET REVIEW AND HIGHLIGHTS
In the equity portion of the Fund, we have continued to emphasize the energy
sector, which performed well during the period due to continued global demand.
Specifically, Dresser Industries, Suncor and Petrolite fared well. In addition,
Canadian National Railway, the Fund's largest holding, continues to show strong
earnings patterns and we believe it will continue to offer attractive returns.
Real Estate Investment Trusts ("REITs"), one of the Fund's overweight positions,
posted a sub-par performance in the first half. We look for a pickup in this
section over the balance of the year, since the higher-yielding investments are
at attractive levels after six months of underperforming.
In the fixed income portion of the Fund, we have realigned the Fund's holdings
in favor of investment-grade bonds, particularly in spread products such as
mortgages and corporate bonds. We have pared back the holdings of high yield
bonds, reflecting the pronounced narrowing of interest rate differentials to
higher grade securities.
OUTLOOK
With the huge run in the stock market, a return to more normal ized gains in the
future seems likely -- especially if signs of inflation emerge or if interest
rates begin to rise. Within the stock market, a large disparity in valuations
has arisen between the performance of the so called "favorite 50" stocks and
much of the rest of the stock market. We have decreased our holdings of these
stocks and have stressed high-growth names such as Stone & Webster, Inc., Suncor
and Canadian National Railway.
THE FUND MANAGER
[PHOTO]
Richard Dahlberg, Managing Director and Portfolio Manager at Salomon Brothers
Asset Management Inc, has 36 years of investment industry experience in the
equity markets. Mr. Dahlberg is primarily responsible for day-to-day Fund
management.
10
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LIPPER COMPARATIVE PERFORMANCE`D'
SALOMON BROTHERS TOTAL FUND RETURN
LIPPER CATEGORY: BALANCED FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
12/31/96-6/30/97 6/30/96-6/30/97
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
9.63% 10.21% #203 of 340 funds 21.81% 19.41% #76 of 303 funds
3rd Quartile 2nd Quartile
(Top 60%) (Top 26%)
- -------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1997
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CLASS A NET ASSET VALUE* PUBLIC OFFERING PRICE**
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (9/11/95) 19.64% 16.46%
1 year 21.81% 16.02%
- -----------------------------------------------------------------------------------------------------
CLASS B RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (9/11/95) 18.73% 16.30%
1 year 20.95% 15.95%
- -----------------------------------------------------------------------------------------------------
CLASS C RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (9/11/95) 18.85% 18.85%
1 year 20.97% 19.97%
- -----------------------------------------------------------------------------------------------------
CLASS O RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (9/11/95) 20.29% 20.29%
1 year 22.59% 22.59%
- -----------------------------------------------------------------------------------------------------
</TABLE>
TOP FIVE STOCK HOLDINGS@
(as of 6/30/97)
- ---------------------------------
Canadian National Railway 1.9%
- ---------------------------------
Suncor Inc. 1.6%
- ---------------------------------
Dresser Industries 1.5%
- ---------------------------------
Stone & Webster 1.5%
- ---------------------------------
Aluminum Company of America 1.4%
- ---------------------------------
@ As a % of net assets
PORTFOLIO HIGHLIGHTS (as of 6/30/97)
COMMON
STOCKS: 44% [ ]
INVESTMENT
GRADE DEBT: 23% [ ]
CASH AND
CASH EQUIVALENTS: 11% [ ] [PIE CHART]
HIGH YIELD Portfolio holdings may vary.
SECURITIES: 12% [ ]
See page 22 for all footnotes.
CONVERTIBLE
SECURITIES: 10% [ ]
11
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THE SALOMON BROTHERS
HIGH YIELD BOND FUND
INVESTMENT OBJECTIVE
To maximize current income by investing primarily in a diversified portfolio of
high yield, fixed income securities rated in medium or lower categories. As a
secondary objective, the Fund seeks capital appreciation.
INVESTMENT STRATEGY
Under normal market conditions, the Fund intends to invest at least 65% of its
assets in securities rated Baa or lower by Moody's, or those rated BBB or lower
by Standard & Poor's. A key component of the overall strategy is to determine
the optimal asset allocation between domestic high yield bonds and foreign
dollar denominated fixed income securities such as Brady Bonds and lower-rated
sovereign debt.
PERFORMANCE
The first six months of 1997 were particularly strong for the Salomon Brothers
High Yield Bond Fund (Class A Shares) which posted an attractive 7.43% return.
(v) This compares quite favorably to the 5.96% return for the High Yield Market,
as measured by the Salomon Brothers High-Yield Market Index and a 5.92% return
for the Lipper High Current Yield Bond Average.
THE FUND MANAGER
PHOTO
Peter J. Wilby, Managing Director and Portfolio Manager at Salomon Brothers
Asset Management Inc, has 13 years of investment industry experience in the high
yield and emerging debt markets. Mr. Wilby is primarily responsible for
day-to-day Fund management.
MARKET REVIEW AND HIGHLIGHTS
The U.S. corporate high-yield market continued to post strong performance,
buoyed by both fundamental economic strength and healthy technical factors. The
combination of solid economic growth and low inflation in the United States
served to improve credit quality among a broad spectrum of issuers, and new
issuances remained on track to surpass record levels this year. Spurts in
economically cyclical industries such as retailers and housing related companies
has supplemented stable growth in non cyclical industries to broadly drive
credit quality improvements. Credit losses in the market remain well below
historical norms and business valuations remain buoyed by the healthy U.S.
equity market. Meanwhile, a continued healthy pace of mutual fund cash inflows
created a strong demand for new issues. Despite some widening of yield spreads
to Treasuries in March and April, spreads contracted in May and June to finish
the period somewhat higher than the year began.
The High Yield Bond Fund continues to complement its portfolio by including
exposure to emerging market debt. This allocation, which is carefully monitored
and re-evaluated as market conditions change, is a contributing factor behind
the strong relative performance of the High Yield Bond Fund versus other
high-current-yield funds.
During the past six months, the emerging debt markets benefited from favorable
market conditions, attractive yields and positive economic and political
settings in many key countries. Swaps of newly issued global bonds for Brady
type securities have bolstered the performance of the Brady Bond Sector. In
addition, the upgrading by S&P of 12 Argentine corporates to investment grade,
based on a change of rating methodology, had a positive impact on the market.
The emerging debt market continues to benefit technically from the rapid growth
of new investors in the market.
12
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LIPPER COMPARATIVE PERFORMANCE`D'
SALOMON BROTHERS HIGH YIELD BOND FUND
LIPPER CATEGORY: HIGH CURRENT YIELD FUNDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
12/31/96-6/30/97 6/30/96-6/30/97
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
7.43% 5.92% #21 of 182 funds 19.67% 14.77% #8 of 163 funds
1st Quartile 1st Quartile
(Top 12%) (Top 5%)
- --------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
CLASS A NET ASSET VALUE* PUBLIC OFFERING PRICE**
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (2/22/95) 19.64% 17.19%
1 year 19.67% 13.95%
- ----------------------------------------------------------------------------------------------------
CLASS B RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- ----------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 18.73% 17.37%
1 year 18.75% 13.75%
- ----------------------------------------------------------------------------------------------------
CLASS C RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- ----------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 18.74% 18.74%
1 year 18.86% 17.86%
- ----------------------------------------------------------------------------------------------------
CLASS O RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- ----------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 19.85% 19.85%
1 year 20.20% 20.20%
- ----------------------------------------------------------------------------------------------------
</TABLE>
TOP U.S. HIGH YIELD HOLDINGS@ PORTFOLIO HIGHLIGHTS (as of 6/30/97)
(as of 6/30/97)
HIGH YIELD
- ------------------------------- SECURITIES: 72% [ ]
Collins & Aikman 1.3%
- ------------------------------- EMERGING [PIE CHART]
Trump Atlantic City 1.3% MARKETS DEBT: 22% [ ]
- -------------------------------
Foamex 1.1% CASH: 6% [ ]
- -------------------------------
Revlon Worldwide Inc. 1.1%
- ------------------------------- Portfolio holdings may vary.
Williams Scotsman 1.1%
- ------------------------------- See page 22 for all footnotes.
@ As a % of net assets
13
<PAGE>
<PAGE>
THE SALOMON BROTHERS
STRATEGIC BOND FUND
INVESTMENT OBJECTIVE
To seek a high level of current income. The Fund seeks to achieve its objective
by investing in a globally diverse portfolio of fixed income instruments. As a
secondary objective, the Fund seeks capital appreciation.
INVESTMENT STRATEGY
Assets of the Fund may be deployed among various sectors of the global fixed
income market, depending on the portfolio managers' analysis of current economic
and market conditions and the relative risks and opportunities presented in
various market segments.
PERFORMANCE
The Salomon Brothers Strategic Bond Fund (Class A Shares) posted a 5.35%(vi)
return for the first six months in 1997. This compares quite favorably with the
3.10% return for the Lehman Aggregate Bond Index and the Lipper Multi-Sector
Income Average of 4.28%.
MARKET REVIEW
Our investment process -- which focuses on identifying and capturing relative
value between global fixed-income markets -- led us to allocate the Fund's
weightings throughout the first half of 1997 with approximately 40% of the
portfolio invested in high-yield securities, 17% invested in emerging market
debt and 25% to investment grade securities. This allocation generated strong
investment returns, as Lipper Analytical Services ranked the Fund near the top
compared with other multi-sector bond funds.
HIGH YIELD MARKET
The U.S. corporate high-yield market continued to benefit from strong
fundamental economic strength and healthy technical factors. Credit quality
among issuers
THE FUND MANAGERS
[PHOTO]
Peter J. Wilby, Managing Director and Portfolio Manager at Salomon Brothers
Asset Management Inc, has 13 years of investment industry experience in the
high yield and emerging debt markets. Mr. Wilby is primarily responsible for the
high yield and foreign sovereign bond portions of the Fund.
[PHOTO]
Steven Guterman, Managing Director and Portfolio Manager at Salomon Brothers
Asset Management Inc, has 16 years of investment industry experience in the
fixed income securities. Mr. Guterman is primarily responsible for the
day-to-day management of the mortgage-backed securities and U.S. Government
securities portions of the Fund.
[PHOTO]
David J. Scott, Director and Portfolio Manager at Salomon Brothers Asset
Management LTD, has 9 years of investment industry experience in the global
fixed income markets. SBAM LTD provides certain advisory services to SBAM Inc
relating to currency transactions and investments in non-dollar denominated debt
securities for the Fund.
14
<PAGE>
<PAGE>
improved, in reflection of the combination of solid economic growth and low
inflation in the United States. Although new issuance is at a record pace, the
sector has been supported by strong mutual fund cash inflows and demand by
collateralized bond obligations. Spurts in economically cyclical industries such
as retailers and housing related companies has supplemented stable growth in non
cyclical industries to broadly drive credit quality improvements. Credit losses
in the market remain well below historical norms and business valuations remain
buoyed by the healthy U.S. equity market.
EMERGING MARKETS DEBT
One of the greatest benefits of a global bond fund is the ability to rotate in
or out of fixed-income sectors to enhance performance or avoid risk as
opportunities arise. During the past six months, the emerging debt markets
benefited from favorable market conditions, attractive yields and positive
economic and political settings in many key countries. Swaps of newly issued
global bonds for Brady type securities have bolstered the performance of the
Brady Bond Sector. In addition, the upgrading by S&P of 12 Argentine corporates
to investment grade, based on a change of rating methodology, had a positive
impact on the market. The emerging debt market continues to benefit technically
from the rapid growth of new investors in the market.
INVESTMENT GRADE AND
U.S. GOVERNMENT SECURITIES
Over the past six months, fixed income securities continued to be supported by
the combination of low inflation and moderate growth. The Federal Reserve's
decision to raise interest rates was widely anticipated, and since then, the
market continued to be comforted by the fact that strong growth over the past
year did not translate into higher inflation readings. The Fed has remained on
hold since its March move, but is certainly keeping a watchful eye on the
consumer and other demand-side factors.
15
<PAGE>
<PAGE>
LIPPER COMPARATIVE PERFORMANCE`D'
SALOMON BROTHERS STRATEGIC BOND FUND
LIPPER CATEGORY: MULTI-SECTOR INCOME FUNDS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
12/31/96-6/30/97 6/30/96-6/30/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
5.35% 4.28% #17 of 81 funds 13.82% 12.85% #26 of 68 funds
1st Quartile 2nd Quartile
(Top 21%) (Top 39%)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CLASS A NET ASSET VALUE* PUBLIC OFFERING PRICE**
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (2/22/95) 15.45% 13.09%
1 year 13.82% 8.40%
- -------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CLASS B RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (2/22/95) 14.56% 13.14%
1 year 13.06% 8.06%
- -------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CLASS C RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (2/22/95) 14.58% 14.58%
1 year 13.05% 12.05%
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CLASS O RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (2/22/95) 15.71% 15.71%
1 year 14.19% 14.19%
- -------------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO HIGHLIGHTS (as of 6/30/97)
EMERGING MARKETS DEBT: 17% [ ]
HIGH YIELD SECURITIES: 38% [ ]
U.S. INVESTMENT GRADE: 25% [ ]
NON-U.S. INVESTMENT GRADE: 2% [ ]
CASH AND CASH EQUIVALENTS: 18% [ ]
[PIE CHART]
Portfolio holdings may vary.
See page 22 for all footnotes.
16
<PAGE>
<PAGE>
[This page intentionally left blank]
17
<PAGE>
<PAGE>
THE SALOMON BROTHERS
NATIONAL INTERMEDIATE
MUNICIPAL FUND
INVESTMENT OBJECTIVE
To achieve a high level of current income exempt from regular federal income
taxes.
INVESTMENT STRATEGY
Under normal circumstances, at least 80% of the Fund's net assets will be
invested in municipal obligations, the interest on which is exempt from regular
federal income tax. All or a portion of the Fund's income may be subject to the
federal alternative minimum tax.
PERFORMANCE
For the six months ended June 30, 1997, the National Intermediate Municipal Fund
(Class A Shares) achieved a total return of 2.72%.(vii) This compares favorably
with the 2.50% return achieved by the Lipper Intermediate Municipal Debt Average
and the 2.70% return posted by Lehman Brothers Municipal Bond 1 to 10 Year
Index.
MARKET REVIEW
The municipal market performed well during the first half of 1997. Volatility
remained in check, except for a brief period in March, when the Federal Reserve
raised short-term interest rates by 25 basis points. In managing the Fund, we
continue to focus on taking advantage of long-term fundamentals rather than on
short-term market trends. Thus, we emphasize rigorous credit analysis and
careful sector selection.
During the first six months of this year, the municipal market continued to be
buoyed by favorable supply/demand conditions. Strong investor demand outweighed
a modest new issue calendar. Buying was widespread, with continued interest from
property/casualty companies, individuals and mutual funds. The Fed's decision to
hold short-term interest rates steady since the move in March also lent support
to the market. The Fund benefited from extending the average maturity slightly
in April and May.
OUTLOOK
We expect positive technical factors in the municipal bond market to persist --
at least through the summer, when the issuance of debt by state and local
governments is typically slow. Issuance for the year should approximate 1996
levels. Tax-exempt securities are likely to trade in a narrower range than
taxable bonds during this period, reflecting continued positive supply/demand
factors.
THE FUND MANAGER
[PHOTO]
MARYBETH WHYTE, Director and Portfolio Manager at Salomon Brothers Asset
Management Inc, has 19 years of investment industry experience in the
municipal securities market. Ms. Whyte is responsible for day-to-day Fund
Management.
18
<PAGE>
<PAGE>
LIPPER COMPARATIVE PERFORMANCE'D'
SALOMON BROTHERS NATIONAL INTERMEDIATE MUNICIPAL FUND
LIPPER CATEGORY: INTERMEDIATE MUNICIPAL DEBT FUNDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
12/31/96-6/30/97 6/30/96-6/30/97
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
2.72% 2.50% #46 of 139 funds 7.23% 6.55% #24 of 134 funds
2nd Quartile 1st Quartile
(Top 34%) (Top 18%)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CLASS A NET ASSET VALUE* PUBLIC OFFERING PRICE**
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (2/22/95) 6.63% 4.45%
1 year 7.23% 2.10%
- -------------------------------------------------------------------------------------------------------
CLASS B RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -------------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 5.76% 4.17%
1 year 6.29% 1.29%
- -------------------------------------------------------------------------------------------------------
CLASS C RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -------------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 5.81% 5.81%
1 year 6.39% 5.39%
- -------------------------------------------------------------------------------------------------------
CLASS O RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -------------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 6.84% 6.84%
1 year 7.37% 7.37%
- -------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS@
(as of 6/30/97)
- ---------------------------- ----------------------------
New York 26% New Jersey 4%
- ---------------------------- ----------------------------
Illinois 12% Mississippi 4%
- ---------------------------- ----------------------------
Indiana 11% Massachusetts 3%
- ---------------------------- ----------------------------
Pennsylvania 9% Hawaii 2%
- ---------------------------- ----------------------------
South Carolina 8% Ohio 2%
- ---------------------------- ----------------------------
Louisiana 6% Florida 1%
- ---------------------------- ----------------------------
California 4% Alabama 1%
- ---------------------------- ----------------------------
Texas 4% Oregon 1%
- ---------------------------- ----------------------------
@As a % of net assets
QUALITY BREAKDOWN (as of 6/30/97)@
AAA: 46% [ ]
AA: 13% [ ]
[PIE CHART]
A: 18% [ ]
BBB: 23% [ ]
@As a % of net assets
Portfolio holdings may vary.
See page 22 for all footnotes.
19
<PAGE>
<PAGE>
THE SALOMON BROTHERS
U.S. GOVERNMENT INCOME FUND
INVESTMENT OBJECTIVE
To obtain a high level of current income.
INVESTMENT STRATEGY
Under normal conditions the Fund invests 100% of its net assets in debt
obligations and mortgage-backed securities issued by or guaranteed by the U.S.
government, its agencies or instrumentalities. The Fund expects to maintain an
average portfolio duration of three to five years.
PERFORMANCE
The U.S. Government Income Fund (Class A Shares) posted a 2.76% return.(viii)
This compares favorably versus the Lipper Short-Intermediate U.S. Government
Bond Average return of 2.57% for the year. The Salomon Brothers 1-5 year
Treasury Bond index returned 2.80%.
FUND REVIEW
During the first half of 1997, the Fund continued to overweight mortgage-backed
securities relative to Treasuries. This strategy proved to be advantageous for
the Fund. An environment of low volatility over the past six months has enabled
mortgages to outperform Treasuries by more than 100 basis points. The Fund also
continued to add to its "barbell" yield curve position -- overweighting short
and longer term maturities at the expense of intermediate maturities. This
strategy also enhanced performance due to the flattening of the U.S. Treasury
yield curve.
MARKET HIGHLIGHTS AND OUTLOOK
Economic conditions over the past six months have been extremely favorable. The
combination of moderate growth and low inflation has supported the financial
markets.
The Federal Reserve's decision to raise interest rates in March was widely
anticipated, and since then, the market continued to be comforted by the fact
that strong growth over the past year did not translate into higher inflation.
The Fed has remained on hold since its March move, but is certainly keeping a
watchful eye on the consumer and other demand-side factors. Indeed, we believe
that the economy will reaccelerate in the third quarter and that eventually the
Fed will raise interest rates to keep growth in check.
With respect to duration -- which measures the sensitivity of the Fund's
holdings to changes in interest rates -- we are neutral to our benchmarks at
present. We would become more defensive if, as we expect, interest rates begin
to trend higher. Should the outlook for interest rates become more constructive,
however, we would realign our weightings of mortgages versus Treasuries, because
prices of Treasuries would appreciate more in that setting.
THE FUND MANAGERS
[PHOTO]
STEVEN GUTERMAN, Managing Director and Portfolio Manager at Salomon Brothers
Asset Management Inc, has 16 years of investment industry experience in the
fixed income securities. Mr. Guterman is primarily responsible for the
day-to-day management of the mortgage-backed securities and U.S. Government
securities portions of the Fund.
[PHOTO]
ROGER LAVAN, Director and Portfolio Manager at Salomon Brothers Asset Management
Inc, has 9 years of investment industry experience in the fixed income markets.
Mr. Lavan assists in day-to-day fund management.
20
<PAGE>
<PAGE>
LIPPER COMPARATIVE PERFORMANCE`D'
SALOMON BROTHERS U.S. GOVERNMENT INCOME FUND
LIPPER CATEGORY: SHORT/INTERMEDIATE U.S. GOVERNMENT FUNDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
12/31/96-6/30/97 6/30/96-6/30/97
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
2.76% 2.57% #27 of 97 funds 7.12% 6.33% #12 of 95 funds
1st Quartile 1st Quartile
(Top 28%) (Top 13%)
- --------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CLASS A NET ASSET VALUE* PUBLIC OFFERING PRICE**
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Since Inception (2/22/95) 6.70% 4.52%
1 year 7.12% 2.00%
- -----------------------------------------------------------------------------------------------------
CLASS B RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 5.89% 4.31%
1 year 6.38% 1.38%
- -----------------------------------------------------------------------------------------------------
CLASS C RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 5.89% 5.89%
1 year 6.40% 5.40%
- -----------------------------------------------------------------------------------------------------
CLASS O RETURN IF NOT REDEEMED* RETURN IF REDEEMED**
- -----------------------------------------------------------------------------------------------------
Since Inception (2/22/95) 6.91% 6.91%
1 year 7.38% 7.38%
- -----------------------------------------------------------------------------------------------------
</TABLE>
QUALITY BREAKDOWN (as of 6/30/97)
MORTGAGE BACKED SECURITIES: 80%[ ]
U.S. GOVERNMENT SECURITIES: 2%[ ]
SHORT TERM INVESTMENTS: 18%[ ]
@As a % of net assets
[PIE CHART]
See page 22 for all footnotes.
21
<PAGE>
<PAGE>
ENDNOTES
(i) See the chart on page 4 for complete information on the performance of
all the Fund's classes of shares. Each class bears certain different
expenses, which causes the performance to vary among the classes.
(ii) See the chart on page 7 for complete information on the performance of
all the Fund's classes of shares. Each class bears certain different
expenses, which causes the performance to vary among the classes.
(iii) See the chart on page 9 for complete information on the performance of
all the Fund's classes of shares. Each class bears certain different
expenses, which causes the performance to vary among the classes.
(iv) See the chart on page 11 for complete information on the performance of
all the Fund's classes of shares. Each class bears certain different
expenses, which causes the performance to vary among the classes.
(v) See the chart on page 13 for complete information on the performance of
all the Fund's classes of shares. Each class bears certain different
expenses, which causes the performance to vary among the classes.
(vi) See the chart on page 16 for complete information on the performance of
all the Fund's classes of shares. Each class bears certain different
expenses, which causes the performance to vary among the classes.
(vii) See the chart on page 19 for complete information on the performance of
all the Fund's classes of shares. Each class bears certain different
expenses, which causes the performance to vary among the classes.
(viii) See the chart on page 21 for complete information on the performance of
all the Fund's classes of shares. Each class bears certain different
expenses, which causes the performance to vary among the classes.
`D' Lipper Analytical Services, an industry recognized analysis company,
calculates rankings based on total return performance of funds within
each category. Lipper rankings change monthly and do not reflect the
effects of sales charges. Accordingly, the results in this table for the
Class A, B, & C shares of each Fund do not reflect the effect of the
sales charges applicable to each Class, which are described in the
footnotes below. Lipper performance results represent changes in net
asset value, adjusted to reflect reinvestment of dividends and capital
gains.
* Return does not reflect the deduction of sales charge.
** Class A shares reflect the deduction of the maximum 4.75% sales charge.
Class B & C shares reflect the maximum contingent deferred sales charge
of 5% and 1%, respectively. Class O shares have no initial or contingent
deferred sales charge.
GENERAL PERFORMANCE AND RANKING NOTES
Average annual total returns are based on changes in net asset value and
assume the reinvestment of all dividends, and/or capital gains
distributions in additional shares with and without the effect of the
maximum sales charge (Class A) and the contingent deferred sales charge
(Class B and C). Class A shares reflect the deduction of an annual 0.25%
12b-1 fee. Class B & C shares are subject to an annual 12b-1 service and
distribution fee of 1.00%. Class O shares are not subject to an annual
12b-1 fee. Each fund offers Class O shares to existing Class O
shareholders. The average annual return for a period less than one year
has not been annualized. Past performance does not guarantee future
results. Investment return and principal value fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. Returns reflect a voluntary expense cap (except for
Investors and Capital Fund) imposed by SBAM to limit total Fund operating
expenses. Absent this expense cap, Fund returns would be lower. As a
result, the expense caps had a material effect on the ranking of each
Class of each Fund in its relevant Lipper category. In addition, the
expense caps had a material effect on how each Class of each Fund
performed relative to the relevant index.
22
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (June 30, 1997) (unaudited)
SALOMON BROTHERS ASIA GROWTH FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 90.9%
China -- 2.0%
150,000 Shanghai Worldbest, Class B....................................................$ 95,400
1 36,000 Shenzhen Fangda, Class B....................................................... 197,491
----------
292,891
----------
Hong Kong -- 32.2%
53,600 Asia Satellite Telecommunications Holdings..................................... 164,317
264,000 Beijing Datang Power*.......................................................... 121,825
19,000 Beijing Enterprises*........................................................... 119,682
35,500 Cheung Kong.................................................................... 350,546
43,000 China Everbright*.............................................................. 128,492
52,000 China Light & Power............................................................ 294,661
90,000 China Resources Enterprises.................................................... 441,450
51,000 Cosco Pacific.................................................................. 118,165
29,200 Dah Sing Financial............................................................. 161,695
111,000 First Pacific.................................................................. 141,845
25,000 Hang Seng Bank................................................................. 356,580
87,000 Hong Kong Land Holdings........................................................ 231,420
68,000 Hong Kong & China Gas.......................................................... 136,049
69,500 Hutchison Whampoa.............................................................. 601,056
320,000 Jiangsu Express*............................................................... 113,589
90,000 Lai Sun Development............................................................ 101,069
60,000 New World Development.......................................................... 357,807
45,000 New World Infrastructure*...................................................... 127,207
60,000 Swire Pacific, Class A......................................................... 540,195
----------
4,607,650
----------
India -- 9.1%
10,300 East India Hotel -- GDR........................................................ 169,950
19,000 Industrial Credit & Investment -- GDR.......................................... 273,125
18,000 Mahindra & Mahindra -- GDR..................................................... 265,500
9,000 Reliance Industries -- GDR..................................................... 207,000
14,500 State Bank of India -- GDR.................................................... 384,250
----------
1,299,825
----------
Indonesia -- 7.9%
108,000 PT Darya Varia Laboratoria (a)................................................. 129,893
75,500 PT Indostat (a)................................................................ 225,848
142,000 PT Lippo Life Insurance (a).................................................... 167,866
377,000 PT Putra Surya Multidana (a)*.................................................. 600,689
----------
1,124,296
----------
Korea -- 6.6%
3,600 Deasung Industrial............................................................. 188,514
6,600 Hyundai Engineering & Construction*............................................ 169,459
1,550 LG Information & Communication................................................. 192,005
1,000 Mirae*......................................................................... 228,604
1,596 Samsung Electronics............................................................ 126,709
4,532 SK Telecom -- ADR.............................................................. 45,603
----------
950,894
----------
</TABLE>
See accompanying notes to financial statements
23
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS ASIA GROWTH FUND (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Malaysia -- 8.9%
64,000 Kian Joo Can Factory.......................................................... $ 276,387
111,000 Leader Universal Holdings..................................................... 199,659
52,000 Malakoff...................................................................... 226,624
108,000 Sime Darby.................................................................... 359,429
29,500 United Engineers.............................................................. 212,718
----------
1,274,817
----------
Philippines -- 4.2%
214,000 Ayala Land, Series B.......................................................... 196,749
570,500 Belle*........................................................................ 166,547
49,600 Manila Electric, Class B...................................................... 244,465
----------
607,761
----------
Singapore -- 9.5%
18,000 Cycle & Carriage.............................................................. 186,333
94,000 DBS Land...................................................................... 297,181
29,500 Development Bank of Singapore (a)............................................. 371,407
25,000 Elec & Eltek International.................................................... 140,000
182,000 Noble Group*.................................................................. 141,960
76,500 Wing Tai Holdings............................................................. 220,452
----------
1,357,333
----------
Sri Lanka -- 0.2%
162,800 Asia Capital*................................................................. 24,355
----------
Taiwan -- 5.7%
65,500 Compal Electronics............................................................ 259,173
19,200 Compeq Manufacturing.......................................................... 136,748
73,000 Kindom Construction*.......................................................... 181,187
73,000 Sheng Yu Steel................................................................ 115,014
107,690 Yang Ming Marine Transport.................................................... 126,284
----------
818,406
----------
Thailand -- 4.6%
33,500 Bangkok Bank.................................................................. 173,903
22,800 Delta Electronics............................................................. 144,966
58,000 Industrial Finance............................................................ 68,270
9,300 Shinawatra Computer (a)....................................................... 66,990
4,000 Siam Cement................................................................... 62,133
27,500 Singer Thailand............................................................... 110,664
61,500 Thai Telephone & Telecommunications (a)*...................................... 26,605
----------
653,531
----------
Total Common Stocks
(cost $11,955,892)........................................................ 13,011,759
----------
Principal
Amount
- ---------
Convertible Corporate Bonds -- 2.9%
Cayman Islands -- 1.1%
$155,000 Guangnan Finance, 1.75%, due 06/30/00......................................... 154,031
---------
Taiwan -- 1.8%
250,000 Taiwan Semiconductor, 0.00%, due 07/03/02..................................... 258,125
---------
Total Convertible Corporate Bonds
(cost $405,000)........................................................... 412,156
---------
</TABLE>
See accompanying notes to financial statements
24
<PAGE>
<PAGE>
SALOMON BROTHERS ASIA GROWTH FUND (concluded)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Warrants* -- 2.7%
172,500 China Resources, expires 12/10/97 ........................................... $ 53,439
1,770,000 Credit Lyonnais Finance, expires 04/02/98.................................... 24,446
700,000 Hong Kong Telecom, expires 03/18/98.......................................... 53,310
900,000 Hutchison Call, expires 12/30/97............................................. 76,673
15,053 Lai Sun Hotels International Call, expires 03/20/99.......................... 1,321
390,000 Shanghai Industrial, expires 11/18/97........................................ 133,403
280,000 Swire Pacific, expires 02/14/98.............................................. 50,238
-----------
Total Warrants
(cost $316,954).......................................................... 392,830
-----------
Purchased Options* -- 0.2%
Singapore -- 0.2%
92,000 OUB Call (expiring 10/11/97, exercise price 6.5868)(cost $39,091)............ 32,172
-----------
Total Investments -- 96.7%
(cost $12,716,937)...................................................... 13,848,917
Other assets in excess of liabilities -- 3.3%............................... 466,940
-----------
Net Assets-- 100.0% $14,315,857
===========
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Maturity Contracts to In Exchange Contracts at Unrealized
Dates Receive/Deliver for Value Depreciation
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases
07/02/97 MYR 293,786 $116,540 $116,390 $(150)
Sales
07/01/97 PHP 1,197,398 45,176 45,399 (223)
-----
$(373)
=====
</TABLE>
* Non-income producing security.
(a) Foreign Shares
Abbreviations used in this statement:
ADR American Depository Receipt
GDR Global Depository Receipt
MYR Malaysian Ringgit
PHP Philippine Peso
See accompanying notes to financial statements
25
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS CAPITAL FUND INC
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 89.2%
Basic Industries -- 8.7%
50,000 Cytec Industries *...........................................................$ 1,868,750
25,000 Guilford Mills .............................................................. 520,313
50,000 Inco ........................................................................ 1,503,125
22,500 Martin Marietta Materials.................................................... 728,438
125,000 OM Group..................................................................... 4,140,625
75,000 Steel Dynamics *............................................................. 1,875,000
50,000 Union Camp................................................................... 2,500,000
18,400 Vulcan Materials............................................................. 1,444,400
------------
14,580,651
------------
Capital Goods -- 3.3%
28,000 Stone & Webster.............................................................. 1,195,250
62,000 Tyco International........................................................... 4,312,875
------------
5,508,125
------------
Consumer Cyclicals -- 17.8%
104,200 Costco Companies *........................................................... 3,425,575
20,000 Eastman Kodak................................................................ 1,535,000
75,000 Federated Department Stores *................................................ 2,606,250
135,000 Fine Host *.................................................................. 4,252,500
100,000 Guess *...................................................................... 1,012,500
100,000 Hollinger.................................................................... 854,680
42,500 Hollinger International...................................................... 475,469
75,000 Lear *....................................................................... 3,328,125
30,000 Magna International, Class A................................................. 1,805,625
112,500 Samsonite *.................................................................. 4,964,063
100,000 Sears, Roebuck............................................................... 5,375,000
------------
29,634,787
------------
Consumer Non-Cyclicals -- 15.7%
25,000 Cablevision Systems *........................................................ 1,337,500
150,000 Chiquita Brands International................................................ 2,062,500
266,700 Food Lion, Class A........................................................... 1,908,559
411,100 Food Lion, Class B........................................................... 2,954,781
140,000 Hormel Foods................................................................. 3,762,500
150,000 John B. Sanfilippo & Sons *.................................................. 1,031,250
130,000 Kroger *..................................................................... 3,770,000
15,000 Loews........................................................................ 1,501,875
125,000 Michael Foods................................................................ 2,312,500
40,000 Philip Morris Companies...................................................... 1,775,000
150,000 U.S. Satellite Broadcasting *................................................ 1,237,500
80,000 Viacom, Class B *............................................................ 2,400,000
------------
26,053,965
------------
</TABLE>
See accompanying notes to financial statements
26
<PAGE>
<PAGE>
SALOMON BROTHERS CAPITAL FUND INC (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Energy -- 11.4%
25,000 Baker Hughes................................................................. $ 967,188
1,000 Hanover Compressor*.......................................................... 22,250
100,000 Holly........................................................................ 2,481,250
100,000 Hvide Marine*................................................................ 2,212,500
75,000 Oryx Energy*................................................................. 1,584,375
100,000 Tosco........................................................................ 2,993,750
50,000 TransMontaigne Oil*.......................................................... 993,750
45,000 Ultramar Diamond Shamrock.................................................... 1,468,125
75,000 Union Pacific Resources Group................................................ 1,865,625
100,000 Williams Companies........................................................... 4,375,000
-----------
18,963,813
-----------
Financial Services -- 10.9%
75,000 AmerUs Life Holdings......................................................... 2,090,625
100,000 Bank of New York............................................................. 4,350,000
10,000 BankAmerica.................................................................. 645,625
30,000 BankBoston................................................................... 2,161,875
50,000 Glendale Federal Bank*....................................................... 1,306,250
25,000 Long Island Bancorp.......................................................... 907,813
30,000 Mercantile Bankshares........................................................ 1,200,000
30,000 Provident Companies.......................................................... 1,605,000
35,000 Travelers Group.............................................................. 2,207,188
30,000 Washington Mutual............................................................ 1,792,500
-----------
18,266,876
-----------
Health Care -- 8.0%
30,000 Aetna........................................................................ 3,071,250
35,000 Amgen........................................................................ 2,034,375
100,000 HEALTHSOUTH*................................................................. 2,493,750
35,000 Pacificare Health Systems, Class A*.......................................... 2,119,688
40,000 SmithKline Beecham--ADR....................................................... 3,665,000
-----------
13,384,063
-----------
Technology -- 9.4%
40,000 Cabletron Systems*........................................................... 1,132,500
100,000 Data General*................................................................ 2,600,000
100,000 Electric Fuel*............................................................... 662,500
60,000 First Data................................................................... 2,636,250
100,000 FORE Systems*................................................................ 1,362,500
25,000 International Business Machines.............................................. 2,254,688
100,000 Plantronics*................................................................. 5,012,500
-----------
15,660,938
-----------
Telecommunications & Utilities -- 0.1%
10,000 NTL * ....................................................................... 248,750
-----------
Transportation -- 3.9%
40,000 Canadian National Railway.................................................... 1,750,000
125,000 Canadian Pacific............................................................. 3,554,683
75,000 Carey International*......................................................... 1,143,750
-----------
6,448,433
-----------
Total Common Stocks
(cost $122,573,969)...................................................... 148,750,401
-----------
</TABLE>
See accompanying notes to financial statements
27
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS CAPITAL FUND INC (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Convertible Preferred Stocks -- 3.7%
Basic Industries -- 0.8%
34,500 AK Steel Holdings 7.00%...................................................... $1,328,250
Consumer Cyclicals -- 1.3%
25,000 Designer Finance Trust 6.00%................................................. 909,375
102,500 Hollinger International 9.75%................................................ 1,178,750
-----------
2,088,125
-----------
Energy -- 0.8%
209,200 Mesa 8.00%* ................................................................. 1,399,025
-----------
Health Care -- 0.8%
50,000 Pacificare Holdings $1.00.................................................... 1,343,750
-----------
Total Convertible Preferred Stocks
(cost $5,730,134)........................................................ 6,159,150
-----------
Contracts
- ---------
Purchased Options -- 0.4%
150 Compaq Put
(expiring July 1997, exercise price $65)................................. 1,875
300 Dupont Put
(expiring July 1997, exercise price $50)................................. 3,750
50 Gucci Put
(expiring July 1997, exercise price $60)................................. 1,875
150 Gucci Put
(expiring October 1997, exercise price $60).............................. 50,625
300 Intel Put
(expiring July 1997, exercise price $105)................................ 3,750
250 Intel Put
(expiring July 1997, exercise price $115)................................ 6,250
150 Motorola Put
(expiring July 1997, exercise price $55)................................ 938
600 NTL Call
(expiring December 1997, exercise price $17.50).......................... 622,500
100 Proctor & Gamble Put
(expiring July 1997, exercise price $110)................................ 625
250 Times Mirror Put
(expiring September 1997, exercise price $45)............................ 28,125
100 Times Mirror Put
(expiring September 1997, exercise price $55)............................ 38,750
-----------
Total Purchased Options
(cost $758,330).......................................................... 759,063
-----------
Total Investments -- 93.3%
(cost $129,062,433)...................................................... 155,668,614
-----------
</TABLE>
See accompanying notes to financial statements
28
<PAGE>
<PAGE>
SALOMON BROTHERS CAPITAL FUND INC (concluded)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Principal Value
Amount Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements -- 6.7%
$5,605,000 Repurchase Agreement, 5.95%, due 07/01/97, dated
06/30/97, with J.P. Morgan Securities, collateralized by
$5,328,000 U.S Treasury Bonds, 8.875%, due
02/15/99 valued at $5,734,260; proceeds: $5,605,926.................... $ 5,605,000
5,604,000 Repurchase Agreement, 5.875%, due 07/01/97, dated
06/30/97, with UBS Securities, collateralized by
$3,808,000 U.S Treasury Bonds, 11.25%, due
02/15/15 valued at $5,716,760; proceeds: $5,604,915.................... 5,604,000
-----------
Total Repurchase Agreements
(cost $11,209,000)...................................................... 11,209,000
------------
Liabilities in excess of other assets -- (0.0%)........................... (101,018)
------------
Net Assets -- 100.0%........................................................ $166,776,596
============
</TABLE>
* Non-income producing security.
Abbreviation used in this statement:
ADR American Depository Receipt
See accompanying notes to financial statements
29
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS INVESTORS FUND INC
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 83.5%
Basic Industries -- 9.3%
80,000 Aluminum Company of America.................................................. $ 6,030,000
315,500 Cytec Industries *........................................................... 11,791,813
174,000 Du Pont (E.I.) de Nemours.................................................... 10,940,250
85,300 Martin Marietta Materials.................................................... 2,761,588
425,500 OM Group..................................................................... 14,094,688
190,000 Praxair...................................................................... 10,640,000
120,000 Union Camp................................................................... 6,000,000
-----------
62,258,339
-----------
Capital Goods -- 7.7%
80,000 AlliedSignal................................................................. 6,720,000
195,800 Chicago Bridge & Iron........................................................ 4,332,075
127,000 General Electric............................................................. 8,302,625
385,000 Gulfstream Aerospace *....................................................... 11,357,500
64,400 Silgan Holdings *............................................................ 2,495,500
259,200 Tyco International........................................................... 18,030,600
-----------
51,238,300
-----------
Consumer Cyclicals -- 7.6%
258,100 Costco Companies *........................................................... 8,485,038
140,000 Federated Department Stores *................................................ 4,865,000
366,500 Host Marriott *.............................................................. 6,528,281
195,000 Lear *....................................................................... 8,653,125
168,200 Sears, Roebuck............................................................... 9,040,750
210,000 Sherwin-Williams............................................................. 6,483,750
53,300 UNIFI........................................................................ 1,992,088
132,200 U.S. Industries *............................................................ 4,709,625
-----------
50,757,657
-----------
Consumer Non-Cyclicals -- 8.4%
26,200 Avon Products................................................................ 1,848,738
50,000 Cablevision Systems *........................................................ 2,675,000
600,000 Chiquita Brands International................................................ 8,250,000
339,600 Food Lion, Class A........................................................... 2,430,246
175,400 Hormel Foods................................................................. 4,713,875
348,400 Kroger *..................................................................... 10,103,600
75,000 Loews........................................................................ 7,509,375
271,500 Philip Morris Companies...................................................... 12,047,813
200,000 Viacom, Class B *............................................................ 6,000,000
-----------
55,578,647
-----------
</TABLE>
See accompanying notes to financial statements
30
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTORS FUND INC (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Energy -- 10.7%
113,500 Amoco........................................................................ $ 9,867,406
175,000 Dresser Industries........................................................... 6,518,750
3,900 Hanover Compressor *......................................................... 86,775
185,400 Mobil........................................................................ 12,954,825
276,000 Royal Dutch Petroleum, 5 Guilder............................................. 15,007,500
400,000 Suncor....................................................................... 10,725,000
133,557 TOTAL -- ADR................................................................. 6,761,323
215,700 Williams Companies........................................................... 9,436,875
-----------
71,358,454
-----------
Financial Services -- 14.6%
85,600 American Express............................................................. 6,377,200
70,300 Associates First Capital..................................................... 3,901,650
52,000 BankAmerica.................................................................. 3,357,250
157,500 BankBoston................................................................... 11,349,844
414,400 Bank of New York............................................................. 18,026,400
127,800 Dime Bancorp................................................................. 2,236,500
294,000 Federal Home Loan Mortgage................................................... 10,106,250
56,600 Long Island Bancorp.......................................................... 2,055,288
113,300 Nationwide Financial Services, Class A....................................... 3,009,531
114,700 Provident Companies.......................................................... 6,136,450
176,700 SunAmerica................................................................... 8,614,125
222,685 Travelers Group.............................................................. 14,043,065
127,200 Washington Mutual............................................................ 7,600,200
-----------
96,813,753
-----------
Health Care -- 10.6%
106,500 Aetna........................................................................ 10,902,938
120,000 American Home Products....................................................... 9,180,000
200,000 Amgen........................................................................ 11,625,000
168,000 Columbia/HCA Healthcare...................................................... 6,604,500
411,000 HEALTHSOUTH *................................................................ 10,249,313
2,700 Pacificare Health Systems, Class A *......................................... 163,519
106,800 Pacificare Health Systems, Class B *......................................... 6,821,850
162,000 SmithKline Beecham-- ADR..................................................... 14,843,250
-----------
70,390,370
-----------
Real Estate Investment Trusts -- 4.9%
235,000 Arden Realty................................................................. 6,110,000
37,700 Beacon Properties............................................................ 1,258,238
150,000 Highwoods Properties......................................................... 4,800,000
112,000 Kilroy Realty................................................................ 2,828,000
146,200 Mills........................................................................ 4,047,913
174,000 Patriot American Hospitality................................................. 4,437,000
126,000 Reckson Associates Realty.................................................... 2,898,000
178,100 Sun Communities.............................................................. 5,977,481
-----------
32,356,632
-----------
</TABLE>
See accompanying notes to financial statements
31
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS INVESTORS FUND INC (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Value
Shares Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Technology -- 5.7%
90,700 Ceridian *............................................................... $ 3,832,075
35,500 DST Systems *............................................................ 1,182,594
374,600 First Data............................................................... 16,458,988
120,000 International Business Machines.......................................... 10,822,500
30,000 National Data............................................................ 1,299,375
56,600 Plantronics *............................................................ 2,837,075
49,000 Seagate Technology *..................................................... 1,724,188
------------
38,156,795
------------
Transportation -- 4.0%
225,000 Canadian National Railway................................................ 9,843,750
580,000 Canadian Pacific......................................................... 16,493,750
------------
26,337,500
------------
Total Common Stocks
(cost $351,554,985).................................................... 555,246,447
------------
Convertible Preferred Stocks -- 0.4%
Finanical Services -- 0.4%
63,400 SunAmerica $3.188 (cost $2,377,500)...................................... 2,765,825
------------
Principal
Amount
- --------
Convertible Corporate Bonds -- 1.9%
Consumer Cyclicals -- 1.5%
$ 2,000,000 Federated Department Stores, 5.00%, due 10/01/03 2,387,500
16,500,000 Time Warner, Zero Coupon, due 06/22/13 7,610,625
------------
9,998,125
------------
Technology -- 0.4%
2,500,000 National Data, 5.00%, due 11/01/03....................................... 2,650,000
-------------
Total Convertible Corporate Bonds
(cost $12,050,765).................................................... 12,648,125
-------------
Contracts
- ---------
Purchased Options -- 0.5%
21,500 S&P 500 Index Call
(expiring September 1997, exercise price $750) (cost $3,095,097)....... 3,034,188
------------
Total Investments -- 86.3%
(cost $369,078,347).................................................... 573,694,585
------------
</TABLE>
See accompanying notes to financial statements
32
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTORS FUND INC (concluded)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Principal Value
Amount Description (Note 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements -- 10.7%
$35,741,000 Repurchase Agreement, 5.95%, due 07/01/97, dated
06/30/97 with J.P. Morgan Securities, collateralized
by $33,973,000 U.S. Treasury Bonds, 8.875%, due
02/15/99, valued at $36,563,441; proceeds: $35,746,907................... $ 35,741,000
35,741,000 Repurchase Agreement, 5.875%, due 07/01/97, dated
06/30/97 with UBS Securities, collateralized by
$25,035,000 U.S. Treasury Bonds, 12.00%, due
08/15/13, valued at $36,457,219; proceeds: $35,746,833................... 35,741,000
------------
Total Repurchase Agreements
(cost $71,482,000)....................................................... 71,482,000
------------
Other assets in excess of liabilities -- 3.0%............................. 19,715,188
------------
Net Assets -- 100.0%...................................................... $664,891,773
============
</TABLE>
* Non-income producing security.
Abbreviation used in this statement:
ADR American Depository Receipt
See accompanying notes to financial statements
33
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS TOTAL RETURN FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
VALUE
SHARES DESCRIPTION (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks--43.9%
Basic Industries--7.0%
20,000 Aluminum Company of America..................................................$ 1,507,500
12,000 Du Pont (E.I.) de Nemours.................................................... 754,500
60,000 Lyondell Petrochemical....................................................... 1,308,750
10,000 Monsanto..................................................................... 430,625
16,000 Nalco Chemical............................................................... 618,000
20,000 Union Camp................................................................... 1,000,000
11,000 Vulcan Materials............................................................. 863,725
20,000 Weyerhauser.................................................................. 1,040,000
-----------
7,523,100
-----------
Capital Goods--3.3%
12,000 Boeing....................................................................... 636,750
8,000 Deere........................................................................ 439,000
15,000 Fluor........................................................................ 827,813
39,000 Stone & Webster.............................................................. 1,664,813
-----------
3,568,376
-----------
Consumer Cyclicals--3.3%
726 Cooper Industries............................................................ 36,119
16,000 Eastman Kodak................................................................ 1,228,000
14,000 Ford Motor................................................................... 528,500
5,000 General Motors............................................................... 278,438
12,100 May Department Stores........................................................ 571,725
18,000 Sears, Roebuck............................................................... 967,500
-----------
3,610,282
-----------
Consumer Non-Cyclicals--2.3%
61,200 Food Lion, Class B........................................................... 439,875
36,000 Food Lion, Class A........................................................... 257,623
30,000 Hormel Foods................................................................. 806,250
22,000 Philip Morris Companies...................................................... 976,250
-----------
2,479,998
-----------
Energy--7.6%
6,500 Amoco........................................................................ 565,094
3,000 Ashland...................................................................... 139,125
44,000 Dresser Industries........................................................... 1,639,000
12,000 Exxon........................................................................ 738,000
4,000 Mobil........................................................................ 279,500
8,000 Royal Dutch Petroleum, 5 Guilder............................................. 435,000
16,000 Sun.......................................................................... 496,000
66,000 Suncor....................................................................... 1,769,625
3,000 Texaco....................................................................... 326,250
17,000 USX--Marathon Group......................................................... 490,875
29,000 Williams Companies........................................................... 1,268,750
-----------
8,147,219
-----------
Financial Services--5.4%
15,000 Allstate..................................................................... 1,095,000
24,900 AmerUs Life Holdings......................................................... 694,088
20,000 Bay View Capital............................................................. 525,000
18,000 Chubb........................................................................ 1,203,750
3,500 Cigna........................................................................ 621,250
5,300 Citicorp..................................................................... 638,981
12,000 Marsh & McLennan............................................................. 856,500
5,700 Nationwide Financial Services, Class A....................................... 151,406
-----------
5,785,975
-----------
</TABLE>
See accompanying notes to financial statements
34
<PAGE>
<PAGE>
SALOMON BROTHERS TOTAL RETURN FUND (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
VALUE
SHARES DESCRIPTION (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care--2.5%
6,000 Aetna........................................................................ $614,250
12,000 American Home Products....................................................... 918,000
13,200 SmithKline Beecham--ADR..................................................... 1,209,450
-----------
2,741,700
-----------
Real Estate Investment Trusts--5.9%
30,000 Arden Realty Group........................................................... 780,000
26,000 Beacon Properties............................................................ 867,750
35,000 Bedford Property Investors................................................... 704,375
50,000 Excel Realty Trust........................................................... 1,318,750
22,000 Highwoods Properties......................................................... 704,000
30,000 Patriot American Hospitality................................................. 765,000
18,000 Prentiss Properties Trust.................................................... 461,250
35,000 Reckson Associates Realty.................................................... 805,000
-----------
6,406,125
-----------
Technology -- 1.2%
18,000 Pitney Bowes................................................................. 1,251,000
-----------
Telecommunications & Utilities--3.5%
10,000 AT&T......................................................................... 350,625
40,000 Edison International......................................................... 995,000
20,000 GTE.......................................................................... 877,500
30,000 Houston Industries........................................................... 643,125
15,000 SBC Communications........................................................... 928,125
-----------
3,794,375
-----------
Transportation--1.9%
46,000 Canadian National Railway.................................................... 2,012,500
-----------
Total Common Stocks
(cost $39,557,324)......................................................... 47,320,650
-----------
Convertible Preferred Stocks--4.3%
Basic Industries--0.5%
7,500 AK Steel Holdings 7.00%...................................................... 288,750
7,500 Boise Cascade $1.58.......................................................... 213,750
-----------
502,500
-----------
Consumer Cyclicals--0.8%
7,500 Designer Finance 6.00%....................................................... 272,813
15,000 Hollinger International 9.75%................................................ 172,500
5,000 Host Marriott 6.75%.......................................................... 292,500
1,500 Hvide Capital Trust 6.50%.................................................... 78,938
-----------
816,751
-----------
Consumer Non-Cyclicals--0.4%
6,000 Chiquita Brands $2.875....................................................... 282,750
3,000 James River $3.50............................................................ 162,000
-----------
444,750
-----------
Energy--1.0%
8,800 Enron 6.25%.................................................................. 168,463
48,700 Mesa 8.00%(a)................................................................ 325,681
5,000 Tosco 5.75%.................................................................. 285,000
5,000 Ultramar Diamond Shamrock 5.00%.............................................. 316,250
-----------
1,095,394
-----------
</TABLE>
See accompanying notes to financial statements
35
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS TOTAL RETURN FUND (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
INTEREST MATURITY VALUE
SHARES DESCRIPTION RATE DATE (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Services--0.7%
5,000 Finova Finance Trust 5.50%................................................... $ 287,500
4,000 Glendale Federal Bank 8.75%.................................................. 260,000
3,000 St. Paul Capital 6.00%....................................................... 207,750
-----------
755,250
-----------
Health Care--0.7%
5,000 Laboratory Corporation of America Holdings 8.50%............................. 285,000
3,000 McKesson $2.50............................................................... 186,375
10,000 Pacificare Holdings $1.00.................................................... 268,750
-----------
740,125
-----------
Media -- 0.2%
7,800 Cablevision Systems 8.50%.................................................... 211,575
-----------
Telecommunications & Utilities -- 0.0%
1,000 Mobile Telecommunication Technologies $2.25.................................. 24,750
-----------
Total Convertible Preferred Stocks
(cost $4,294,816).......................................................... 4,591,095
-----------
PRINCIPAL
AMOUNT
- --------
Corporate Bonds--21.7%
Basic Industries--2.9%
$ 100,000 Algoma Steel............................. 12.375% 07/15/05 110,500
250,000 Allied Waste
(Zero Coupon until 06/01/02, 11.30%
thereafter)(b).......................... 10.742 06/01/07 153,750
100,000 Alvey Systems............................ 11.375 01/31/03 103,500
200,000 Clark-Schwebel........................... 10.500 04/15/06 214,000
125,000 Commonwealth Aluminum.................... 10.750 10/01/06 130,000
100,000 Crown Paper.............................. 11.000 09/01/05 99,500
200,000 Doman Industries Limited................. 8.750 03/15/04 193,000
125,000 Foamex................................... 9.875 06/15/07 129,375
250,000 Freedom Chemical......................... 10.625 10/15/06 262,188
200,000 Norcal Waste Systems *................... 13.250 11/15/05 224,000
675,000 Pohang Iron & Steel...................... 7.500 08/01/02 682,574
100,000 Renco Metals............................. 11.500 07/01/03 106,500
200,000 Southdown................................ 10.000 03/01/06 217,500
200,000 Specialty Equipment...................... 11.375 12/01/03 218,000
250,000 Stone Container.......................... 12.250 04/01/02 255,000
-----------
3,099,387
-----------
Consumer Cyclicals--3.6%
250,000 American Builders & Contractors Supply... 10.625 05/15/07 258,750
100,000 Collins & Aikman......................... 10.000 01/15/07 98,875
250,000 Duane Reade
(Zero Coupon until 09/15/99, 15.00%
thereafter)(b)....................... 13.549 09/15/04 196,875
150,000 Finlay Fine Jewelry...................... 10.625 05/01/03 157,500
950,000 General Motors Acceptance................ 5.977 04/29/02 950,770
100,000 Herff Jones.............................. 11.000 08/15/05 108,500
200,000 Hines Horticulture....................... 11.750 10/15/05 213,000
100,000 Jitney-Jungle Stores..................... 12.000 03/01/06 111,000
400,000 Revlon Worldwide(b)...................... 10.906-11.591 03/15/01 271,000
250,000 Riddell Sports........................... 10.500 07/15/07 256,875
100,000 Speedy Muffler King...................... 10.875 10/01/06 100,000
940,000 Stand Credit Card Master Trust........... 7.850 02/07/02 970,249
200,000 Wyndham Hotel............................ 10.500 05/15/06 224,000
-----------
3,917,394
-----------
</TABLE>
See accompanying notes to financial statements
36
<PAGE>
<PAGE>
SALOMON BROTHERS TOTAL RETURN FUND (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Non-Cyclicals--4.2%
$ 100,000 American Safety Razor.................... 9.875% 08/01/05 $ 106,750
200,000 Berry Plastics........................... 12.250 04/15/04 221,500
100,000 Borg-Warner.............................. 9.125 05/01/03 100,000
100,000 Carr-Gottstein Foods..................... 12.000 11/15/05 111,000
200,000 CFP Holdings............................. 11.625 01/15/04 208,000
100,000 Cobb Theatres............................ 10.625 03/01/03 110,500
150,000 Doane Products........................... 10.625 03/01/06 159,750
250,000 Drypers.................................. 10.250 06/15/07 250,000
200,000 Eyecare Centers of America............... 12.000 10/01/03 221,000
250,000 French Fragrances........................ 10.375 05/15/07 260,000
100,000 Iron Mountain............................ 10.125 10/01/06 107,000
200,000 Jordan Industries........................ 10.375 08/01/03 212,000
800,000 Mid States Trust......................... 7.340 07/01/35 806,125
250,000 North Atlantic Trading................... 11.000 06/15/04 254,375
150,000 Pueblo Xtra International................ 9.500 08/01/03 145,500
200,000 Radnor Holdings.......................... 10.000 12/01/03 206,000
200,000 Rayovac.................................. 10.250 11/01/06 210,000
67,000 Samsonite................................ 11.125 07/15/05 74,705
100,000 Selmer................................... 11.000 05/15/05 109,000
200,000 Stroh Brewery............................ 11.100 07/01/06 210,000
200,000 Trump Atlantic City...................... 11.250 05/01/06 195,500
250,000 Williams Scottsman....................... 9.875 06/01/07 252,500
-----------
4,531,205
-----------
Energy--1.9%
250,000 Bellwether Exploration................... 10.875 04/01/07 265,000
200,000 Benton Oil & Gas......................... 11.625 05/01/03 220,250
200,000 Cliffs Drilling.......................... 10.250 05/15/03 213,000
200,000 National Energy Group.................... 10.750 11/01/06 208,500
250,000 Snyder Oil............................... 8.750 06/15/07 250,625
650,000 Sun...................................... 7.950 12/15/01 673,719
300,000 Transamerican Energy
(Zero coupon until 6/1/99, 13.00%
thereafter)(b)...................... 13.000 06/15/02 216,000
-----------
2,047,094
-----------
Financial Services--4.2%
1,500,000 Banc One................................. 7.600 05/01/07 1,541,895
625,000 Chase Manhattan Auto Owner Trust......... 6.250 11/15/00 624,414
400,000 Coleman Escrow(b)........................ 11.125 05/15/01 255,000
200,000 Dollar Financial......................... 10.875 11/15/06 215,000
750,000 Midland Bank............................. 7.650 05/01/25 784,733
1,100,000 Nationsbank Credit Card Master Trust..... 6.450 04/15/03 1,098,625
-----------
4,519,667
-----------
Health Care--1.0%
800,000 Aetna.................................... 7.625 08/15/26 796,640
100,000 Fresenius Medical Care................... 9.000 12/01/06 101,500
150,000 Integrated Health........................ 9.500 09/15/07 153,375
-----------
1,051,515
-----------
Media--1.2%
200,000 American Media Operation................. 11.625 11/15/04 218,000
200,000 Cablevision Systems...................... 10.500 05/15/16 218,000
200,000 Diamond Cable
(Zero Coupon until 12/15/00, 11.75%
thereafter)(b)...................... 11.750 12/15/05 138,500
300,000 Marcus Cable
(Zero Coupon until 06/15/00, 14.125%
thereafter)(b)...................... 12.642-12.921 12/15/05 237,000
200,000 SFX Broadcasting......................... 10.750 05/15/06 216,000
500,000 Time Warner.............................. 4.959 06/22/13 230,625
150,000 United International Holdings(b)......... 13.187 11/15/99 115,500
-----------
1,373,625
-----------
</TABLE>
See accompanying notes to financial statements
37
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS TOTAL RETURN FUND (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Technology--2.0%
$ 850,000 Empresa Electric......................... 7.300% 05/01/03 $ 852,975
200,000 Exide Electronics Group.................. 11.500 03/15/06 215,000
200,000 Packard Bioscience....................... 9.375 03/01/07 200,000
100,000 Talley Manufacturing & Technology........ 10.750 10/15/03 105,000
750,000 Xerox.................................... 8.125 04/15/02 789,120
-----------
2,162,095
-----------
Telecommunications & Utilities--0.2%
125,000 ICG Holdings
(Zero Coupon until 09/15/00, 13.50%
thereafter)(b)...................... 12.725 09/15/05 91,250
150,000 International CableTel
(Zero Coupon until 02/01/01, 11.500%
thereafter)(b)...................... 11.804 02/01/06 104,250
-----------
195,500
-----------
Transportation -- 0.5%
200,000 Central Transport Rental Group........... 9.500 04/30/03 193,000
100,000 Ryder TRS................................ 10.000 12/01/06 103,500
400,000 TFM
(Zero Coupon until 06/01/02, 11.75%
thereafter)(b)...................... 11.398 06/15/09 233,000
-----------
529,500
-----------
Total Corporate Bonds
(cost $23,038,208)................... 23,426,982
-----------
Convertible Corporate Bonds--6.1%
Basic Industries--0.5%
250,000 Coeur D'Alene Mines...................... 6.375 01/31/04 230,000
150,000 Inco..................................... 5.750 07/01/04 179,250
150,000 Inco..................................... 7.750 03/15/16 159,000
-----------
568,250
-----------
Consumer Cyclicals--1.3%
250,000 Federated Department Stores.............. 5.000 10/01/03 298,438
200,000 Guilford Mills........................... 6.000 09/15/12 204,000
600,000 Hollinger(b)............................. 6.209-6.637 10/05/13 225,000
200,000 Home Depot............................... 3.250 10/01/01 229,000
350,000 Magna International...................... 5.000 10/15/02 418,250
-----------
1,374,688
-----------
Consumer Non-Cyclicals--1.0%
150,000 Alberto-Culver........................... 5.500 06/30/05 228,938
500,000 Costco Wholesale......................... 5.750 05/15/02 517,500
250,000 Hormel Foods............................. 1.600 04/23/02 255,075
-----------
1,001,513
-----------
Energy--0.8%
300,000 Baker Hughes(b).......................... 2.584-2.875 05/05/08 231,000
300,000 Oryx Energy.............................. 7.500 05/15/14 295,500
225,000 Pogo Producing........................... 5.500 06/15/06 257,625
25,000 Pogo Producing........................... 5.500 06/15/06 28,625
-----------
812,750
-----------
Technology--1.9%
250,000 Adaptec.................................. 4.750 02/01/04 248,438
300,000 Data General............................. 6.000 05/15/04 369,000
200,000 National Data............................ 5.000 11/01/03 212,000
500,000 Silicon Graphics(b)...................... 3.931-4.265 11/02/13 238,750
850,000 Texas Instruments........................ 6.125 02/01/06 799,119
250,000 VLSI Technology.......................... 8.250 10/01/05 249,688
-----------
2,116,995
-----------
</TABLE>
See accompanying notes to financial statements
38
<PAGE>
<PAGE>
SALOMON BROTHERS TOTAL RETURN FUND (concluded)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Telecommunications & Utilities--0.6%
$ 350,000 International CableTel................... 7.000% 06/15/08 $ 332,063
1,000,000 U.S. Cellular(b)......................... 5.212-6.053 06/15/15 347,500
-----------
679,563
-----------
Total Convertible Corporate Bonds
(cost $6,359,206)...................... 6,553,759
-----------
U.S. Government & Agency--12.4%
385,372 Federal Home Loan Mortgage Corporation... 7.000 03/01/11 386,174
500,000 Federal Home Loan Mortgage Corporation... 6.500 ** 479,063
291,806 Federal Home Loan Mortgage Corporation... 6.500 03/01/26 279,985
293,840 Federal Home Loan Mortgage Corporation... 6.500 03/01/26 281,995
402,620 Federal Home Loan Mortgage Corporation... 6.500 05/01/26 386,310
500,000 Federal National Mortgage Association(c). 7.000 ** 490,000
42,541 Federal National Mortgage Association.... 6.500 10/01/10 41,927
291,646 Federal National Mortgage Association.... 6.500 10/01/11 285,995
102,245 Federal National Mortgage Association.... 7.500 08/01/23 102,971
968,755 Federal National Mortgage Association.... 7.492 11/01/24 996,306
725,000 Federal National Mortgage Association(c). 8.000 ** 741,313
90,239 Federal National Mortgage Association.... 7.000 09/01/25 88,586
89,091 Federal National Mortgage Association.... 6.500 12/01/25 85,316
291,916 Federal National Mortgage Association.... 7.000 03/01/26 286,443
500,268 Federal National Mortgage Association.... 6.500 06/01/26 479,060
1,100,000 Federal National Mortgage Association(c). 7.500 ** 1,102,750
503,495 Federal National Mortgage Association.... 7.000 03/01/27 494,055
88,629 Government National Mortgage Association. 7.500 01/15/23 89,386
196,297 Government National Mortgage Association. 7.500 03/15/26 197,033
453,360 Government National Mortgage Association. 7.500 03/15/27 455,110
200,000 U.S. Treasury Bond....................... 6.500 11/15/26 191,812
480,000 U.S. Treasury Note(d).................... 5.875 11/15/99 476,923
1,400,000 U.S. Treasury Note(d).................... 6.375 04/30/99 1,407,434
1,000,000 U.S. Treasury Note....................... 6.375 05/15/00 1,004,022
1,150,000 U.S. Treasury Note(d).................... 5.750 08/15/03 1,110,463
1,500,000 U.S. Treasury Note....................... 6.500 10/15/06 1,493,670
-----------
Total U.S. Government & Agency
(cost $13,454,804)..................... 13,434,102
-----------
Total Investments--88.4%
(cost $86,704,358)...................... 95,326,588
-----------
Repurchase Agreements--14.3%
7,703,000 Repurchase Agreement dated 06/30/97, with
J.P. Morgan Securities, collateralized by
$6,248,000 U.S. Treasury Bonds, 9.125%,
due 05/15/18 valued at $7,880,290
proceeds: $7,704,273.................... 5.950 07/01/97 7,703,000
7,702,000 Repurchase Agreement dated 06/30/97, with
UBS Securities, collateralized by
$5,233,000 U.S. Treasury Bonds, 11.25%,
due 02/15/15 valued at $7,856,041;
proceeds: $7,703,257.................... 5.875 07/01/97 7,702,000
-----------
Total Repurchase Agreements
(cost $15,405,000)...................... 15,405,000
-----------
Liabilities in excess of other assets -- (2.7%) (2,860,827)
-----------
Net Assets--100.0%........................ $107,870,761
============
</TABLE>
* Interest rate shown reflects current rate on instrument with variable rate
or step coupon rate.
** To be announced.
(a) Security pays payment-in-kind dividends through 09/30/00.
(b) Zero or step coupon bond. Interest rate shown reflects yield to maturity on
date of purchase.
(c) Mortgage Dollar Roll. See Note 1.
(d) All or part of the security is segregated as collateral for mortgage dollar
rolls and to be announced securities.
Abbreviation used in this statement:
ADR American Depository Receipt
See accompanying notes to financial statements
39
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate Bonds -- 73.7%
Basic Industries -- 15.9%
$1,000,000 Algoma Steel............................ 12.375% 07/15/05 $1,105,000
2,500,000 Allied Waste
(Zero Coupon until 06/01/02, 11.30%
thereafter)(a)........................ 10.708 06/01/07 1,537,500
1,250,000 Alvey Systems........................... 11.375 01/31/03 1,293,750
500,000 Asia Pulp & Paper International Finance. 11.750 10/01/05 551,250
3,000,000 Asia Pulp & Paper(a).................... 12.000 12/29/49 3,097,500
1,000,000 Clark-Schwebel. ....................... 10.500 04/15/06 1,070,000
2,500,000 Commonwealth Aluminum................... 10.750 10/01/06 2,600,000
500,000 Crown Paper............................. 11.000 09/01/05 497,500
1,000,000 DI Industries .......................... 8.875 07/01/07 985,000
1,500,000 Doman Industries Limited................ 8.750 03/15/04 1,447,500
3,000,000 Envirosource............................ 9.750 06/15/03 2,910,000
4,000,000 Foamex.................................. 9.875 06/15/07 4,140,000
1,500,000 Fonda Group............................. 9.500 03/01/07 1,440,000
500,000 Forest Oil.............................. 11.250 09/01/03 528,750
2,000,000 Freedom Chemical........................ 10.625 10/15/06 2,097,500
4,000,000 Glasstech............................... 12.750 07/01/04 4,040,000
5,000,000 International Semi-Technology
(Zero Coupon until 08/15/00, 11.50%
thereafter)(a)........................ 14.977 08/15/03 2,975,000
2,000,000 ISP Holdings............................ 9.000 10/15/03 2,060,000
1,000,000 Mesa Operating.......................... 10.625 07/01/06 1,135,000
3,350,000 NL Industries
(Zero Coupon until 10/15/98, 13.00%
thereafter)(a)........................ 11.641-12.072 10/15/05 3,132,250
2,000,000 Norcal Waste Systems *.................. 13.250 11/15/05 2,240,000
1,000,000 Pierce Leahy............................ 11.125 07/15/06 1,090,000
1,000,000 Plastic Containers...................... 10.000 12/15/06 1,050,000
4,000,000 Polymer Group........................... 9.000 07/01/07 3,955,000
1,000,000 Renco Metals............................ 11.500 07/01/03 1,065,000
2,000,000 Royal Oak Mines......................... 11.000 08/15/06 1,980,000
2,000,000 Sequa................................... 9.375 12/15/03 2,040,000
500,000 Southdown.............................. 10.000 03/01/06 543,750
1,500,000 Specialty Equipment..................... 11.375 12/01/03 1,635,000
1,000,000 Spinnaker Industries.................... 10.750 10/15/06 1,012,500
2,000,000 Stone Container......................... 12.250 04/01/02 2,040,000
500,000 Terex................................... 13.250 05/15/02 565,000
1,500,000 Texas Petrochemical..................... 11.125 07/01/06 1,620,000
-----------
59,479,750
-----------
</TABLE>
See accompanying notes to financial statements
40
<PAGE>
<PAGE>
SALOMON BROTHERS HIGH YIELD BOND FUND (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Cyclicals -- 13.9%
$1,750,000 American Builders & Contractors Supply.. 10.625% 05/15/07 $1,811,250
2,000,000 Anchor Advanced Products................ 11.750 04/01/04 2,120,000
1,300,000 Cole National Group..................... 9.875 12/31/06 1,361,750
5,000,000 Collins & Aikman........................ 10.000 01/15/07 4,943,750
2,500,000 CSK Auto................................ 11.000 11/01/06 2,600,000
2,000,000 Delta Beverage.......................... 9.750 12/15/03 2,090,000
3,750,000 Duane Reade
(Zero Coupon until 09/15/99, 15.00%
thereafter)(a)........................ 13.545-13.549 09/15/04 2,953,125
1,500,000 E & S Holdings.......................... 10.375 10/01/06 1,560,000
3,000,000 Finlay Enterprises
(Zero Coupon until 05/01/98, 12.00%
thereafter)(a)........................ 10.861 05/01/05 2,850,000
1,000,000 Herff Jones............................. 11.000 08/15/05 1,085,000
2,000,000 Hines Horticulture...................... 11.750 10/15/05 2,130,000
1,000,000 Hollinger............................... 9.250 02/01/06 1,020,000
1,000,000 Hollinger............................... 9.250 03/15/07 1,020,000
2,000,000 Jitney-Jungle Stores.................... 12.000 03/01/06 2,220,000
1,800,000 Lamar Advertising....................... 9.625 12/01/06 1,854,000
1,000,000 Neenah.................................. 11.125 05/01/07 1,065,000
1,000,000 Newport News Shipbuilding............... 9.250 12/01/06 1,045,000
2,250,000 Polytama................................ 11.250 06/15/07 2,331,563
3,000,000 Prime Hospitality....................... 9.750 04/01/07 3,135,000
6,000,000 Revlon Worldwide (a).................... 10.750-11.566 03/15/01 4,065,000
500,000 Simmons................................. 10.750 04/15/06 528,750
2,000,000 Speedy Muffler King..................... 10.875 10/01/06 2,000,000
2,750,000 Sun International Hotels................ 9.000 03/15/07 2,801,563
1,500,000 Universal Outdoor....................... 9.750 10/15/06 1,552,500
1,000,000 Waxman Industries
(Zero coupon until 6/01/99, 12.75%
thereafter)(a)......................... 11.436 06/01/04 847,500
1,000,000 Wyndham Hotel........................... 10.500 05/15/06 1,120,000
-----------
52,110,751
-----------
</TABLE>
See accompanying notes to financial statements
41
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS HIGH YIELD BOND FUND (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer Non-Cyclicals -- 14.3%
$1,500,000 Berry Plastics........................ 12.250% 04/15/04 $1,661,250
500,000 Borg-Warner........................... 9.125 05/01/03 500,000
1,000,000 Carr-Gottstein Foods.................. 12.000 11/15/05 1,110,000
2,000,000 CFP Holdings.......................... 11.625 01/15/04 2,080,000
500,000 Cobb Theatres......................... 10.625 03/01/03 552,500
1,000,000 Dade International.................... 11.125 05/01/06 1,115,000
1,500,000 Doane Products........................ 10.625 03/01/06 1,597,500
2,000,000 Drypers............................... 10.250 06/15/07 2,000,000
1,000,000 Ekco Group............................ 9.250 04/01/06 1,022,500
750,000 Harvey Casinos........................ 10.625 06/01/06 798,750
2,000,000 Hills Stores.......................... 12.500 07/01/03 1,555,000
1,300,000 IMED.................................. 9.750 12/01/06 1,339,000
1,000,000 Iron Mountain......................... 10.125 10/01/06 1,070,000
1,900,000 Jordan Industries..................... 10.375 08/01/03 2,014,000
2,010,483 Jordan Industries
(Zero Coupon until 04/02/09, 11.75%
thereafter)(a)....................... 11.750 04/01/09 1,105,766
3,000,000 North Atlantic Trading................ 11.000 06/15/04 3,052,500
2,400,000 Pen-Tab Industries.................... 10.875 02/01/07 2,454,000
1,000,000 Plastic Specialties................... 11.250 12/01/03 1,070,000
2,500,000 Pueblo Xtra International............. 9.500 08/01/03 2,412,500
1,000,000 Pueblo Xtra International............. 9.500 08/01/03 970,000
2,000,000 Radnor Holdings....................... 10.000 12/01/03 2,060,000
2,000,000 Rayovac............................... 10.250 11/01/06 2,100,000
500,000 Selmer................................ 11.000 05/15/05 545,000
1,000,000 Specialty Foods....................... 11.125 10/01/02 990,000
2,000,000 Stroh Brewery......................... 11.100 07/01/06 2,100,000
2,500,000 Tekni-Plex............................ 11.250 04/01/07 2,712,500
5,000,000 Trump Atlantic City................... 11.250 05/01/06 4,887,500
500,000 Twin Laboratories..................... 10.250 05/15/06 527,500
4,500,000 Urohealth Systems..................... 12.500 04/01/04 4,387,500
4,000,000 Williams Scottsman.................... 9.875 06/01/07 4,040,000
-----------
53,830,266
-----------
Energy -- 7.3%
3,000,000 Bellwether Exploration................ 10.875 04/01/07 3,180,000
3,000,000 Benton Oil & Gas...................... 11.625 05/01/03 3,303,750
1,500,000 Cliffs Drilling....................... 10.250 05/15/03 1,597,500
3,000,000 Companhia Energetica Sao Paul*........ 9.125 06/26/07 2,913,750
2,000,000 Costilla Energy....................... 10.250 10/01/06 2,070,000
2,000,000 Cross Timbers Oil..................... 9.250 04/01/07 2,065,000
750,000 Flores & Rucks........................ 9.750 10/01/06 783,750
1,000,000 Magnum Hunter Resources............... 10.000 06/01/07 992,500
2,000,000 National Energy Group................. 10.750 11/01/06 2,085,000
1,250,000 Parker Drilling....................... 9.750 11/15/06 1,314,063
1,000,000 Transamerican Energy.................. 11.500 06/15/02 970,000
3,500,000 Transamerican Energy
(Zero coupon until 06/01/99, 13.00%
thereafter)(a)...................... 13.000 06/15/02 2,520,000
3,500,000 United Refining....................... 10.750 06/15/07 3,535,000
-----------
27,330,313
-----------
</TABLE>
See accompanying notes to financial statements
42
<PAGE>
<PAGE>
SALOMON BROTHERS HIGH YIELD BOND FUND (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Services -- 3.3%
$5,000,000 Coleman Escrow(a)....................... 11.125% 05/15/01 $3,187,500
1,000,000 Dollar Financial........................ 10.875 11/15/06 1,075,000
1,500,000 DVI..................................... 9.875 02/01/04 1,503,750
1,000,000 Imperial Credit Industries.............. 9.875 01/15/07 970,000
2,000,000 Intertek Finance PLC.................... 10.250 11/01/06 2,095,000
1,500,000 K Mart Funding.......................... 9.440 07/01/18 1,413,750
2,000,000 Tembec Finance.......................... 9.875 09/30/05 2,060,000
-----------
12,305,000
-----------
Health Care -- 1.5%
1,000,000 Fresenius Medical Care.................. 9.000 12/01/06 1,015,000
3,500,000 Integrated Health....................... 9.500 09/15/07 3,578,750
1,000,000 Maxxim Medical.......................... 10.500 08/01/06 1,080,000
-----------
5,673,750
-----------
Media -- 7.1%
2,000,000 Adelphia Communications................. 12.500 05/15/02 2,120,000
500,000 American Media Operation................ 11.625 11/15/04 545,000
3,000,000 Cablevision Systems..................... 10.500 05/15/16 3,270,000
1,500,000 Chancellor Broadcasting................. 9.375 10/01/04 1,537,500
2,000,000 Citadel Broadcasting.................... 10.250 07/01/07 2,000,000
4,500,000 Diamond Cable
(Zero Coupon until 12/15/00, 11.75%
thereafter)(a) ......................... 11.15-11.75 12/15/05 3,116,250
3,000,000 Intermedia Commission of Florida
(Zero Coupon until 05/15/01, 12.50%
thereafter)(a) ......................... 11.732-12.271 05/15/06 2,160,000
4,000,000 Marcus Cable
(Zero Coupon until 06/15/00, 14.125%
thereafter)(a) ......................... 12.813-13.014 12/15/05 3,160,000
1,000,000 Rogers Cable Systems.................... 10.000 03/15/05 1,080,000
3,000,000 SFX Broadcasting........................ 10.750 05/15/06 3,240,000
3,000,000 Sun Media............................... 9.500 02/15/07 3,030,000
1,750,000 United International Holdings(a)........ 11.657-13.893 11/15/99 1,347,500
250,000 Wireless One............................ 13.000 10/15/03 159,375
-----------
26,765,625
-----------
Technology -- 3.6%
1,000,000 Derlan Manufacturing.................... 10.000 01/15/07 1,025,000
2,000,000 Dyncorp................................. 9.500 03/01/07 2,030,000
2,000,000 Exide Electronics Group................. 11.500 03/15/06 2,150,000
1,000,000 HCC Industries.......................... 10.750 05/15/07 1,062,500
2,000,000 L-3 Communications...................... 10.375 05/01/07 2,130,000
1,000,000 Mettler Toledo.......................... 9.750 10/01/06 1,050,000
2,000,000 Packard Bioscience...................... 9.375 03/01/07 2,000,000
2,000,000 Talley Manufacturing & Technology....... 10.750 10/15/03 2,100,000
-----------
13,547,500
-----------
Telecommunications & Utilities -- 3.0%
1,000,000 AES..................................... 10.250 07/15/06 1,097,500
1,500,000 AES China Generating.................... 10.125 12/15/06 1,605,000
500,000 El Paso Electric........................ 9.400 05/01/11 544,355
2,500,000 ICG Holdings
(Zero Coupon until 09/15/00, 13.50%
thereafter)(a) ......................... 11.459-12.725 09/15/05 1,825,000
2,250,000 International CableTel
(Zero Coupon until 02/01/01, 11.500%
thereafter)(a) ......................... 11.201-12.111 02/01/06 1,563,750
1,810,000 Jacor Communications.................... 9.750 12/15/06 1,882,400
1,000,000 Nextlink................................ 12.500 04/15/06 1,065,000
1,000,000 Paging Network.......................... 10.000 10/15/08 971,250
750,000 Western Wireless........................ 10.500 06/01/06 774,375
-----------
11,328,630
-----------
</TABLE>
See accompanying notes to financial statements
43
<PAGE>
<PAGE>
PORTFOLIO OF INVEStMENTS (continued) (unaudited)
SALOMON BROTHERS HIGH YIELD BOND FUND (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transportation -- 3.8%
$ 500,000 Airplanes Pass Through Trust............ 10.875% 03/15/19 $ 577,500
1,000,000 Atlantic Express........................ 10.750 02/01/04 1,045,000
5,000,000 Central Transport Rental Group.......... 9.500 04/30/03 4,825,000
3,000,000 Ryder TRS............................... 10.000 12/01/06 3,105,000
6,500,000 TFM
(Zero Coupon until 06/01/02, 11.75%
thereafter)(a) ......................... 11.499-11.767 06/15/09 3,786,250
890,000 Venture Holdings Trust.................. 9.750 04/01/04 872,200
-----------
14,210,950
-----------
Total Corporate Bonds
(cost $270,448,666)................... 276,582,535
-----------
Sovereign Bonds -- 15.2%
Argentina -- 1.0%
3,880,000 Republic of Argentina, FRB*............. 6.750 03/31/05 3,649,625
250,000 Republic of Argentina, Par Bond,
Series L* .............................. 5.500 03/31/23 173,281
-----------
3,822,906
-----------
Brazil -- 4.0%
5,000,000 Federal Republic of Brazil, DCB,
Series L* .............................. 6.938 04/15/12 4,131,250
11,766,810 Federal Republic of Brazil,
Capitalization Bond(b) ................. 8.000 04/15/14 9,457,573
375,000 Federal Republic of Brazil, Global Bond 10.125 05/15/27 361,500
1,500,000 Federal Republic of Brazil, Investment
(Exit) Bond ............................ 6.000 09/15/13 1,149,450
-----------
15,099,773
-----------
Bulgaria -- 0.2%
500,000 Republic of Bulgaria, FLIRB, Series A*.. 2.250 07/28/12 285,625
750,000 Republic of Bulgaria, Discount Bond,
Tranche A* ............................. 6.563 07/28/24 553,125
-----------
838,750
-----------
Ecuador -- 1.6%
8,448,981 Republic of Ecuador, PDI Bond*.......... 6.438 02/27/15 5,449,592
1,076,320 Republic of Ecuador, Registered PDI
Bond*(b) ............................... 6.438 02/27/15 694,226
-----------
6,143,818
-----------
Mexico -- 2.1%
4,000,000 United Mexico States, Global Bond....... 11.500 05/15/26 4,571,000
4,000,000 United Mexico States, Par Bonds,
Series A, including 4,000,000
attached warrants ...................... 6.250 12/31/19 3,092,500
-----------
7,663,500
-----------
Panama -- 1.7%
7,250,000 Government of Panama, IRB*.............. 3.500 07/17/14 5,600,625
1,014,051 Government of Panama, PDI Bond*......... 6.563 07/17/16 891,097
-----------
6,491,722
-----------
Peru -- 1.4%
8,000,000 Government of Peru, PDI Bond*........... 4.000 03/07/17 5,195,000
-----------
Poland -- 0.1%
350,000 Republic of Poland, RSTA Bond*.......... 3.250 10/27/24 223,125
-----------
Venezuela -- 3.1%
4,523,805 Republic of Venezuela, FLIRB, Series A*. 6.750 03/31/07 4,218,448
4,523,805 Republic of Venezuela, FLIRB, Series B*. 6.750 03/31/07 4,218,448
4,000,000 Republic of Venezuela, Par Bond,
including 20,000 attached warrants...... 6.750 03/31/20 3,150,000
-----------
11,586,896
-----------
Total Sovereign Bonds
(cost $52,103,618)...................... 57,065,490
-----------
</TABLE>
See accompanying notes to financial statements
44
<PAGE>
<PAGE>
SALOMON BROTHERS HIGH YIELD BOND FUND (concluded)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loan Participations -- 4.3%
Algeria -- 1.3%
$5,775,000 The People's Democratic Republic
of Algeria, Tranche A*(c) (Chase
Manhattan Bank)........................ 6.910% 09/04/06 $5,053,125
-----------
Jamaica -- 0.3%
1,500,000 Republic of Jamaica(c).................. 6.313 11/15/04 1,271,719
-----------
Morocco -- 1.6%
6,500,000 Kingdom of Morocco, Tranche A*(c)
(Chase Manhattan Bank, N.A. and
Morgan Guaranty Trust Company)......... 6.813 01/01/09 5,931,250
-----------
Russia -- 1.1%
4,500,000 Russian Bank of Foreign Economic
Affairs(c)(d) (Merrill Lynch
International)......................... -- 12/29/49 4,117,500
-----------
Total Loan Participations
(cost $14,466,416)..................... 16,373,594
-----------
Convertible Preferred Stocks -- 0.6%
SHARES
--------
Financial Services -- 0.6%
80,000 California Federal Capital, 9.125%
(cost $2,000,000)...................... 2,065,000
-----------
Warrants -- 0.0%
500 Exide Electronics Group, expires
03/15/06............................... 12,500
900 In-Flight Phone, expires 08/31/02....... 0
2,000 Terex, expires 05/15/02................. 0
750 Wireless One, expires 10/19/00.......... 0
-----------
Total Warrants
(cost $50,391)......................... 12,500
-----------
Total Investments -- 93.8%
(cost $339,069,091).................... 352,099,119
PRINCIPAL
AMOUNT
- --------
Repurchase Agreement -- 6.0%
$22,536,000 Repurchase Agreement dated 06/30/97,
with UBS Securities, collateralized
by $18,280,000 U.S. Treasury Bonds,
8.875%, due 08/15/17, valued at
$22,987,100; proceeds: $22,539,678
(cost $22,536,000)(e).................. 5.875 07/01/97 22,536,000
Other assets in excess of
liabilities - 0.2% .................... 658,322
------------
Net Assets -- 100.0%.................... $375,293,441
============
</TABLE>
* Interest rate shown reflects current rate on instrument with variable rate
or step coupon rate.
(a) Zero or step coupon bond. Interest rate shown reflects yield to maturity on
date of purchase.
(b) Payment-in-kind security for which all or part of the interest earned is
paid by the issuance of additional bonds.
(c) Participation interest was acquired through the financial institutions
indicated parenthetically.
(d) Security is in default.
(e) All or part of the security is segregated as collateral for loan
participations.
Abbreviations used in this statement:
DCB Debt Conversion Bonds
FLIRB Front-Loaded Interest Reduction Bonds
FRB Floating Rate Bonds
IRB Interest Reduction Bonds
PDI Past Due Interest
RSTA Revolving Short-Term Agreement
See accompanying notes to financial statements
45
<PAGE>
<PAGE>
Portfolio of Investments (continued) (unaudited)
SALOMON BROTHERS STRATEGIC BOND FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount(a) Description Rate Date (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Corporate Bonds -- 46.5%
Basic Industries -- 9.3%
$ 250,000 Algoma Steel............................... 12.375% 07/15/05 $ 276,250
400,000 Allied Waste
(Zero Coupon until 06/01/02, 11.30%
thereafter)(b) ........................... 10.837 06/01/07 246,000
125,000 Alvey Systems.............................. 11.375 01/31/03 129,371
250,000 Clark-Schwebel............................. 10.500 04/15/06 267,500
250,000 Crown Paper................................ 11.000 09/01/05 248,750
250,000 Doman Industries Limited................... 8.750 03/15/04 241,250
250,000 Envirosource............................... 9.750 06/15/03 242,500
250,000 Foamex..................................... 9.875 06/15/07 258,750
150,000 Fonda Group................................ 9.500 03/01/07 144,000
200,000 Forest Oil................................. 11.250 09/01/03 211,500
250,000 Freedom Chemical........................... 10.625 10/15/06 262,188
400,000 Harnischfeger Industries................... 6.875 02/15/27 395,950
400,000 International Semi-Technology
(Zero Coupon until 08/15/00, 11.50%
thereafter)(b)........................... 11.737 08/15/03 238,000
250,000 NL Industries
(Zero Coupon until 10/15/98, 13.00%
thereafter)(b) .......................... 12.619 10/15/05 233,750
250,000 Norcal Waste Systems *..................... 13.250 11/15/05 280,000
250,000 Renco Metals............................... 11.500 07/01/03 266,250
100,000 Shop Vac................................... 10.625 09/01/03 106,750
250,000 Stone Container............................ 12.250 04/01/02 255,000
250,000 Terex...................................... 13.250 05/15/02 282,500
250,000 Texas Petrochemical........................ 11.125 07/01/06 270,000
----------
4,856,259
----------
Consumer Cyclicals -- 9.7%
250,000 American Builders & Contractors Supply..... 10.625 05/15/07 258,750
250,000 Collins & Aikman........................... 10.000 01/15/07 247,188
250,000 CSK Auto................................... 11.000 11/01/06 260,000
250,000 Hines Horticulture......................... 11.750 10/15/05 266,250
250,000 Hollinger.................................. 9.250 03/15/07 255,000
2,000,000 Mid States Trust........................... 7.340 07/01/35 2,015,313
350,000 Revlon Worldwide(b)........................ 10.750 03/15/01 237,125
250,000 Riddell Sports............................. 10.500 07/15/07 256,875
250,000 Speedy Muffler King........................ 10.875 10/01/06 250,000
200,000 Sun International Hotels................... 9.000 03/15/07 203,750
250,000 Synthetic Industries....................... 9.250 02/15/07 253,750
150,000 Universal Outdoor.......................... 9.750 10/15/06 155,250
200,000 U.S. Leasing International................. 8.450 01/25/05 213,900
200,000 Wyndham Hotel.............................. 10.500 05/15/06 224,000
----------
5,097,151
----------
</TABLE>
See accompanying notes to financial statements
46
<PAGE>
<PAGE>
SALOMON BROTHERS STRATEGIC BOND FUND (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount(a) Description Rate Date (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Consumer Cyclicals -- 10.7%
$250,000 Berry Plastics............................. 12.250% 04/15/04 $ 276,875
250,000 CFP Holdings............................... 11.625 01/15/04 260,000
250,000 Cobb Theatres.............................. 10.625 03/01/03 276,250
250,000 Dade International......................... 11.125 05/01/06 278,750
250,000 Doane Products............................. 10.625 03/01/06 266,250
200,000 Dole Foods................................. 6.750 07/15/00 200,118
250,000 Eyecare Centers of America................. 12.000 10/01/03 276,250
250,000 French Fragrances.......................... 10.375 05/15/07 260,000
250,000 Iron Mountain.............................. 10.125 10/01/06 267,500
402,096 Jordan Industries
(Zero Coupon until 04/02/09, 11.75%
thereafter)(b)........................... 11.750 04/01/09 221,153
250,000 Loomis Fargo............................... 10.000 01/15/04 250,625
250,000 Pen-Tab Industries......................... 10.875 02/01/07 255,625
250,000 Pueblo Xtra International.................. 9.500 08/01/03 242,500
250,000 Radnor Holdings............................ 10.000 12/01/03 257,500
250,000 Rayovac.................................... 10.250 11/01/06 262,500
250,000 Selmer..................................... 11.000 05/15/05 272,500
250,000 Stroh Brewery ............................. 11.100 07/01/06 262,500
250,000 Tekni-Plex................................. 11.250 04/01/07 271,250
250,000 Trump Atlantic City........................ 11.250 05/01/06 244,375
200,000 Twin Laboratories ......................... 10.250 05/15/06 211,000
250,000 Urohealth Systems.......................... 12.500 04/01/04 243,750
250,000 Williams Scottsman......................... 9.875 06/01/07 252,500
----------
5,609,771
----------
Energy -- 4.8%
250,000 Bellwether Exploration..................... 10.875 04/01/07 265,000
250,000 Benton Oil & Gas........................... 11.625 05/01/03 275,313
250,000 Cliffs Drilling ........................... 10.250 05/15/03 266,250
250,000 Costilla Energy............................ 10.250 10/01/06 258,750
200,000 Cross Timbers Oil.......................... 9.250 04/01/07 206,500
250,000 National Energy Group...................... 10.750 11/01/06 260,625
400,000 Occidental Petroleum....................... 9.250 08/01/19 473,384
250,000 Snyder Oil................................. 8.750 06/15/07 250,625
350,000 Transamerican Energy
(Zero coupon until 06/01/99, 13.00%
thereafter)(b)........................... 13.000 06/15/02 252,000
----------
2,508,447
----------
Financial Services -- 2.0%
400,000 Coleman Escrow(b).......................... 11.125 05/15/01 255,000
300,000 Midland Bank............................... 7.650 05/01/25 313,893
150,000 Paine Webber Group......................... 7.000 03/01/00 151,022
350,000 U.S. West Capital Funding.................. 6.850 01/15/02 349,626
----------
1,069,541
----------
Health Care -- 1.0%
250,000 Integrated Health.......................... 9.500 09/15/07 255,625
250,000 Maxxim Medical............................. 10.500 08/01/06 270,000
----------
525,625
----------
</TABLE>
See accompanying notes to financial statements
47
<PAGE>
<PAGE>
Portfolio of Investments (continued)(unaudited)
SALOMON BROTHERS STRATEGIC BOND FUND (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount(a) Description Rate Date (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Media -- 4.2%
$150,000 Adelphia Communications.................... 12.500% 05/15/02 $ 159,000
250,000 American Media Operation................... 11.625 11/15/04 272,500
250,000 Cablevision Systems........................ 10.500 05/15/16 272,500
375,000 Diamond Cable
(Zero Coupon until 12/15/00, 11.75%
thereafter)(b)........................... 11.087 12/15/05 259,688
200,000 Intermedia Commission of Florida
(Zero Coupon until 05/15/01, 12.50%
thereafter)(b)........................... 10.529 05/15/06 144,000
500,000 Marcus Cable
(Zero Coupon until 06/15/00, 14.125%
thereafter)(b)........................... 12.813 12/15/05 395,000
250,000 SFX Broadcasting........................... 10.750 05/15/06 270,000
250,000 Sun Media.................................. 9.500 05/15/07 253,750
250,000 United International Holdings(b)........... 13.893 11/15/99 192,500
----------
2,218,938
----------
Technology -- 1.5%
250,000 Exide Electronics Group.................... 11.500 03/15/06 268,750
250,000 Packard Bioscience......................... 9.375 03/01/07 250,000
250,000 Talley Manufacturing & Technology.......... 10.750 10/15/03 262,500
----------
781,250
----------
Telecommunications & Utilities -- 1.3%
350,000 ICG Holdings
(Zero Coupon until 09/15/00, 13.50%
thereafter)(b)........................... 11.459 09/15/05 255,500
325,000 International CableTel
(Zero Coupon until 02/01/01, 11.500%
thereafter)(b)........................... 11.029 02/01/06 225,875
200,000 Jacor Communications....................... 9.750 12/15/06 208,000
----------
689,375
----------
Transportation -- 2.0%
250,000 Airplanes Pass Through Trust............... 10.875 03/15/19 288,750
250,000 Central Transport Rental Group............. 9.500 04/30/03 241,250
250,000 Ryder TRS.................................. 10.000 12/01/06 258,750
400,000 TFM
(Zero Coupon until 06/01/02, 11.75%
thereafter)(b)........................... 11.398 06/15/09 233,000
----------
1,021,750
----------
Total Corporate Bonds
(cost $23,802,672)....................... 24,378,107
----------
Sovereign Bonds -- 17.3%
Argentina -- 1.2%
485,000 Republic of Argentina, FRB*................ 6.750 03/31/05 456,203
250,000 Republic of Argentina, Par Bond, Series L * 5.500 03/31/23 173,281
----------
629,484
----------
Australia -- 0.0%
20,000 Government of Australia.................... 10.000 10/15/07 18,342
----------
Brazil -- 2.3%
500,000 Federal Republic of Brazil, DCB Bond *..... 6.938 04/15/12 413,125
952,548 Federal Republic of Brazil, Capitalization
Bond(c).................................. 8.000 04/15/14 765,610
50,000 Federal Republic of Brazil, Global Bond.... 10.125 05/15/27 48,200
----------
1,226,935
----------
</TABLE>
See accompanying notes to financial statements
48
<PAGE>
<PAGE>
SALOMON BROTHERS STRATEGIC BOND FUND (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount(a) Description Rate Date (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Bulgaria -- 0.4%
$250,000 Republic of Bulgaria, Discount Bond,
Tranche A *............................ 6.563% 07/28/24 $ 184,375
----------
Canada -- 0.5%
CAD 190,000 Government of Canada..................... 7.500 09/01/00 146,207
CAD 130,000 Government of Canada..................... 7.000 12/01/06 98,812
----------
245,019
----------
Denmark -- 0.3%
DKK 840,000 Kingdom of Denmark....................... 8.000 03/15/06 142,216
----------
Ecuador -- 0.5%
600,000 Republic of Ecuador, Par Bond *.......... 3.500 02/28/25 283,125
----------
Germany -- 0.2%
DEM 110,000 Government of Germany.................... 6.000 07/04/07 64,410
DEM 50,000 Government of Germany.................... 8.250 09/20/01 32,782
----------
97,192
----------
Ireland -- 0.5%
IEP 190,000 Irish Gilts.............................. 6.250 04/01/99 288,937
----------
Korea -- 0.8%
400,000 Korea Development Bank................... 9.600 12/01/00 434,492
----------
Mexico -- 3.3%
1,000,000 United Mexico States, Global Bond........ 11.500 05/15/26 1,142,750
750,000 United Mexico States, Par Bond, Series B,
including 750,000 attached warrants... 6.250 12/31/19 579,844
----------
1,722,594
----------
Panama -- 0.4%
250,000 Government of Panama, IRB *.............. 3.500 07/17/14 193,125
----------
Peru -- 1.2%
1,000,000 Government of Peru, PDI Bond *........... 4.000 03/07/17 649,375
----------
Poland -- 0.6%
500,000 Republic of Poland, RSTA Bond *.......... 3.250 10/27/24 318,750
----------
Russia -- 2.2%
1,500,000 Russian Government, IAN(d)............... -- 12/29/49 1,146,563
----------
Venezuela -- 2.9%
952,380 Republic of Venezuela, FLIRB, Series A *. 6.750 03/31/07 888,094
238,095 Republic of Venezuela, FLIRB, Series B *. 6.750 03/31/07 222,024
500,000 Republic of Venezuela, Par Bond,
including 2,500 attached warrants...... 6.750 03/31/20 393,750
----------
1,503,868
----------
Total Sovereign Bonds
(cost $8,187,175)...................... 9,084,392
----------
Loan Participation -- 0.9%
Morocco -- 0.9%
500,000 Kingdom of Morocco, Tranche A *(e)
(Chase Manhattan Bank, N.A. and
Morgan Guaranty Trust Company)
(cost $414,339)......................... 6.813 01/01/09 456,250
----------
</TABLE>
See accompanying notes to financial statements
49
<PAGE>
<PAGE>
Portfolio of Investments (continued)(unaudited)
SALOMON BROTHERS STRATEGIC BOND FUND (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount(a) Description Rate Date (Note 1a)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. Government & Agency -- 16.0%
$ 19,350 Federal Home Loan Mortgage Corporation..... 6.000% 10/01/10 $ 18,769
515,679 Federal Home Loan Mortgage Corporation..... 7.000 07/01/11 515,999
250,051 Federal Home Loan Mortgage Corporation..... 10.000 05/15/20 267,397
544,000 Federal National Mortgage Association...... 7.000 03/25/01 548,505
1,400,000 Federal National Mortgage Association(f)... 7.000 ** 1,372,000
25,092 Federal National Mortgage Association...... 13.000 11/15/15 29,703
103,770 Federal National Mortgage Association...... 10.400 04/25/19 112,721
94,922 Federal National Mortgage Association...... 6.500 02/01/26 90,899
4,188,114 Federal National Mortgage Association--
Interest only *.......................... 0.639 10/01/08 132,024
8,568,714 Federal National Mortgage Association--
Interest only *.......................... 0.571 10/17/36 257,396
2,000,000 U.S. Treasury Bond(g)...................... 5.750 12/31/98 1,994,060
160,000 U.S. Treasury Bond......................... 6.625 02/15/27 156,550
200,000 U.S. Treasury Inflation Index Note......... 3.449 01/15/07 197,355
900,000 U.S. Treasury Note(g)...................... 5.625 02/28/01 879,894
100,000 U.S. Treasury Note(g)...................... 6.500 08/31/01 100,484
70,000 U.S. Treasury Note......................... 6.125 12/31/01 69,311
1,000,000 U.S. Treasury Note......................... 6.625 03/31/02 1,009,060
60,000 U.S. Treasury Note......................... 6.625 05/15/07 60,497
600,000 U.S. Treasury Note......................... 6.250 05/31/99 601,686
-----------
Total U.S. Government & Agency
(cost $8,409,791)........................ 8,414,310
-----------
Shares
------
Warrants -- 0.0%
250 Exide Electronics Group, expires 03/15/06.. 6,250
400 In-Flight Phone, expires 08/31/02.......... 0
1,000 Terex, expires 05/15/02.................... 0
-----------
Total Warrants
(cost $22,396)........................... 6,250
-----------
Total Investments -- 80.7%
(cost $40,836,373)....................... 42,339,309
-----------
Principal
Amount(a)
- ----------
Repurchase Agreements -- 21.4%
$5,620,000 Repurchase Agreement dated 06/30/97, with J.P.
Morgan Securities, collateralized by $5,342,000
U.S. Treasury Bonds, 8.875%, due 02/15/99
valued at $5,749,328; proceeds: $5,620,929... 5.950 07/01/97 5,620,000
5,619,000 Repurchase Agreement dated 06/28/96, with UBS
Securities, collateralized by $3,818,000 U.S.
Treasury Bonds, 11.25%, due 02/15/15 valued
at $5,731,773; proceeds: $5,619,917........ 5.875 07/01/97 5,619,000
-----------
Total Repurchase Agreements
(cost $11,239,000)....................... 11,239,000
-----------
Liabilities in excess of other assets -- (2.1%) (1,136,242)
-----------
Net Assets -- 100.0%....................... $52,442,067
===========
</TABLE>
See accompanying notes to financial statements
50
<PAGE>
<PAGE>
SALOMON BROTHERS STRATEGIC BOND FUND (concluded)
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Unrealized
Maturity Contracts to In Exchange Contracts at Appreciation
Dates Receive/Deliver for Value (Depreciation)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases
07/16/97 CAD 1,702,968 $1,226,039 $1,234,132 $8,093
10/06/97 DEM 180,913 105,797 104,329 (1,468)
07/16/97 DKK 516,033 79,758 77,779 (1,979)
07/03/97 FRF 533,454 91,824 90,813 (1,011)
Sales
07/16/97 AUD 19,326 14,997 14,598 399
07/16/97 CAD 1,912,035 1,381,528 1,385,642 (4,114)
10/03/97 CAD 71,753 51,844 52,141 (297)
07/16/97 DKK 1,424,465 218,610 214,701 3,909
07/03/97 FRF 530,558 94,912 90,320 4,592
10/03/97 IEP 194,955 295,746 294,757 989
------
$9,113
======
</TABLE>
* Interest rate shown reflects current rate on instrument with variable rate
or step coupon rate.
** To be announced.
(a) Principal denominated in U.S. dollars unless otherwise indicated.
(b) Zero or step coupon bond. Interest rate shown reflects yield to maturity on
date of purchase.
(c) Payment-in-kind security for which all or part of the interest earned is
paid by the issuance of additional bonds.
(d) When and if issued. Security issued pursuant to Russia's Brady Plan debt
restucturing. The investment advisor believes that the Brady Plan will be
finalized and the related bonds issued. Accordingly, the Fund has
marked-to-market its investment in this security.
(e) Participation interest was acquired through the financial institutions
indicated parenthetically.
(f) Mortgage dollar roll. See Note 1.
(g) All or part of the security is segregated as collateral for mortgage dollar
rolls, to be announced securities, loan participations and when and if
issued securities.
Abbreviations used in this statement:
DCB Debt Conversion Bonds
FLIRB Front-Loaded Interest Reduction Bonds
FRB Floating Rate Bonds
IAN Interest Arrears Notes
IRB Interest Reduction Bonds
PDI Past Due Interest
RSTA Revolving Short-Term Agreement
AUD Australian Dollar
CAD Canadian Dollar
DEM German Deutschemark
DKK Danish Krone
FRF French Franc
IEP Irish Punt
See accompanying notes to financial statements
51
<PAGE>
<PAGE>
Portfolio of Investments (continued) (unaudited)
SALOMON BROTHERS U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount Description Rate Date (Note 1a)
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. Treasury Notes -- 2.3%
$300,000 U.S. Treasury Note (cost $286,048)(a)....... 6.250% 02/15/07 $293,532
----------
U.S. Government Agency -- 94.0%
1,000,000 Federal Farm Credit Corporation ............ 5.380 07/01/97 994,919
500,000 Federal Farm Credit Corporation ............ 5.400 07/11/97 498,950
100,000 Federal Home Loan Bank ..................... 5.940 06/13/00 98,859
388,413 Federal Home Loan Mortgage Corporation ..... 7.500 05/01/07 395,774
32,010 Federal Home Loan Mortgage Corporation ..... 6.000 07/01/10 31,139
35,121 Federal Home Loan Mortgage Corporation ..... 11.750 01/01/11 38,668
189,641 Federal Home Loan Mortgage Corporation(a) .. 7.000 05/01/11 189,758
465,690 Federal Home Loan Mortgage Corporation(a) .. 7.000 07/01/11 465,979
734,935 Federal Home Loan Mortgage Corporation ..... 7.000 07/01/11 735,390
357,675 Federal Home Loan Mortgage Corporation(a) .. 7.000 08/01/11 357,896
899 Federal Home Loan Mortgage Corporation ..... 11.750 06/01/14 970
24,463 Federal Home Loan Mortgage Corporation ..... 11.750 12/01/14 27,338
34,473 Federal Home Loan Mortgage Corporation ..... 11.750 07/01/15 38,524
13,763 Federal Home Loan Mortgage Corporation ..... 11.750 01/01/16 15,513
287,932 Federal Home Loan Mortgage Corporation(a) .. 8.250 04/01/17 300,587
943,585 Federal National Mortgage Association(a) ... 6.783 01/17/03 946,238
288,527 Federal National Mortgage Association ...... 6.500 12/01/03 286,170
1,500,000 Federal National Mortgage Association ...... 7.000 * 1,470,000
400,000 Federal National Mortgage Association(a) ... 7.148 10/17/09 403,703
41,859 Federal National Mortgage Association ...... 14.500 11/01/14 51,748
22,169 Federal National Mortgage Association ...... 12.500 08/01/15 25,611
94,118 Federal National Mortgage Association ...... 12.500 09/01/15 109,060
100,368 Federal National Mortgage Association ...... 13.000 11/15/15 118,810
36,317 Federal National Mortgage Association ...... 12.000 01/01/16 42,672
587,608 Federal National Mortgage Association(a) ... 12.000 01/01/16 670,978
387,691 Federal National Mortgage Association(a) ... 12.500 01/01/16 454,810
32,506 Federal National Mortgage Association ...... 11.500 04/01/19 36,587
219,911 Federal National Mortgage Association ...... 10.500 08/01/20 241,282
397,456 Federal National Mortgage Association ...... 11.000 09/01/20 443,592
2,150,000 Federal National Mortgage Association(b) ... 7.500 * 2,155,375
500,000 Student Loan Marketing Association ......... 5.380 07/31/97 497,684
----------
Total U.S. Government Agency
(cost $12,117,473) ..................... 12,144,584
----------
Total Investments -- 96.3%
(cost $12,403,521) ..................... 12,438,116
----------
</TABLE>
See accompanying notes to financial statements
52
<PAGE>
<PAGE>
SALOMON BROTHERS U.S. GOVERNMENT INCOME FUND (concluded)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount Description Rate Date (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Repurchase Agreements -- 30.8%
$1,992,000 Repurchase Agreement dated 06/30/97, with J.P.
Morgan Securities, collateralized by $1,894,000
U.S. Treasury Bonds, 8.875%, due 02/15/99,
valued at $2,038,418; proceeds: $1,992,329 ............ 5.950% 07/01/97 $ 1,992,000
1,993,000 Repurchase Agreement dated 06/30/97, with
UBS Securities, collateralized by $1,355,000
U.S. Treasury Bonds, 11.25%, due 02/15/15,
valued at $2,034,194; proceeds: $1,993,325 ............ 5.875 07/01/97 1,993,000
-----------
Total Repurchase Agreements
(cost $3,985,000) ..................................... 3,985,000
-----------
Liabilities in excess of other assets -- (27.1%) ......... (3,505,298)
-----------
Net Assets-- 100.0% ...................................... $12,917,818
===========
</TABLE>
* To be announced.
(a) All or part of the security is segregated as collateral for mortgage dollar
rolls and to be announced securities.
(b) Mortgage dollar roll. See Note 1.
See accompanying notes to financial statements
53
<PAGE>
<PAGE>
Portfolio of Investments (continued) (unaudited)
SALOMON BROTHERS NATIONAL INTERMEDIATE MUNICIPAL FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount Description Rate Date (Note 1a)
- --------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Municipal Securities -- 97.2%
Alabama -- 0.8%
$100,000 McIntosh, Alabama Pollution Control VR..... 4.050% 07/01/97 $ 100,000
------------
California -- 4.3%
285,000 Los Angeles, California AMBAC.............. 6.000 08/01/03 306,583
250,000 Oakland, California Port Authority MBIA.... 6.000 11/01/05 268,085
------------
574,668
------------
Florida -- 1.4%
180,000 Florida Housing Finance Agency............. 6.150 07/01/06 184,104
------------
Hawaii -- 1.9%
250,000 Hawaii State Department of Budget &
Finance ................................. 5.600 07/01/06 257,298
------------
Illinois -- 11.6%
300,000 Chicago, Illinois Metropolitan Water GO.... 5.900 12/01/06 323,109
250,000 Chicago, Illinois O'Hare International
Airport ................................. 5.000 01/01/02 252,205
400,000 Illinois Student Assistance Commission..... 6.400 03/01/04 420,060
500,000 Springfield, Illinois Electric MBIA........ 6.000 03/01/06 538,430
------------
1,533,804
------------
Indiana -- 11.3%
500,000 Indiana Health Facilities Finance Authority 5.800 08/15/06 507,030
300,000 Indiana Secondary Market for Education
AMBAC .................................. 5.550 12/01/05 305,025
650,000 Indiana Transportation Finance Authority... 6.250 11/01/03 693,609
------------
1,505,664
------------
Louisiana -- 5.8%
450,000 Louisiana Public Facilities Authority...... 6.750 09/01/06 476,631
200,000 Louisiana State Offshore Terminal Authority
VR ...................................... 4.000 07/01/97 200,000
100,000 St. Charles Parish, Louisiana Pollution
Control VR .............................. 4.250 07/01/97 100,000
------------
776,631
------------
Massachusetts -- 3.3%
400,000 Commonwealth of Massachusetts
Health & Educational Facilities Authority . 6.500 12/01/05 437,924
------------
Mississippi -- 3.6%
460,000 Mississippi Higher Education............... 6.050 09/01/07 475,332
------------
New Jersey -- 3.6%
450,000 Passaic Valley, New Jersey
Sewer Commission AMBAC................... 5.750 12/01/07 472,676
------------
</TABLE>
See accompanying notes to financial statements
54
<PAGE>
<PAGE>
SALOMON BROTHERS NATIONAL INTERMEDIATE MUNICIPAL FUND (concluded)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount Description Rate Date (Note 1a)
- --------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York -- 25.5%
$250,000 Municipal Assistance Corporation,
New York City, New York................ 5.500% 07/01/02 $ 260,748
450,000 New York City, New York GO................. 6.500 02/01/02 478,850
500,000 New York State Dormitory Authority......... 6.000 07/01/06 527,365
700,000 New York State Dormitory Authority MBIA.... 5.600 07/01/06 732,732
400,000 New York State Dormitory Authority
(State University of New York)......... 6.625 07/01/04 447,772
500,000 New York State Mortgage Agency............. 5.900 10/01/06 506,630
400,000 New York State Thruway Authority MBIA...... 6.000 01/01/04 427,924
-----------
3,382,021
-----------
Ohio -- 1.9%
250,000 Miami County, Ohio Hospital Facilities .... 5.600 05/15/02 252,848
-----------
Oregon -- 0.7%
100,000 Oregon State GO VR......................... 4.200 07/01/97 100,000
------------
Pennsylvania -- 9.0%
400,000 Geisinger Authority, Pennsylvania Health
System ................................. 6.000 07/01/01 418,328
500,000 Monroeville, Pennsylvania Hospital Authority 5.750 10/01/05 514,835
265,000 Philadelphia, Pennsylvania Hospital Authority 5.400 07/01/04 264,237
-----------
1,197,400
-----------
South Carolina -- 8.3%
250,000 Piedmont Municipal Power Agency FGIC....... 6.000 01/01/07 268,923
750,000 South Carolina State
Public Service Authority FGIC.......... 6.500 01/01/05 829,538
-----------
1,098,461
-----------
Texas -- 4.2%
500,000 Austin, Texas Airport Systems MBIA......... 6.500 11/15/05 554,020
-----------
Total Investments -- 97.2%
(cost $12,506,458)..................... 12,902,851
Other assets in excess of liabilities -- 2.8% 368,541
-----------
Net Assets -- 100.0% $13,271,392
===========
</TABLE>
Abbreviations used in this statement:
AMBAC Insured as to principal and interest by the American Municipal Bond
Assurance Corporation.
FGIC Insured as to principal and interest by the Financial Guaranty Insurance
Corporation.
GO General Obligation.
MBIA Insured as to principal and interest by the MBIA Insurance Corporation.
VR Variable Rate Demand Note. Maturity date shown is the date of next
interest rate change.
See accompanying notes to financial statements
55
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YIELD TO
PRINCIPAL MATURITY ON DATE MATURITY VALUE
AMOUNT DESCRIPTION OF PURCHASE* DATE (NOTE 1a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal Securities -- 98.7%
New York -- 95.7%
$ 725,000 Albany County, New York
Industrial Development Agency VR...... 4.250% 07/03/97 $ 725,000
2,265,000 Albany, New York
Industrial Development Agency PUT.... 4.200 07/01/97 2,265,000
3,100,000 Amherst, New York
Industrial Development Agency PUT..... 3.850 11/01/97 3,100,000
1,770,000 Amherst, New York
Industrial Development Agency VR...... 4.400 07/03/97 1,770,000
1,550,000 Auburn, New York
Industrial Development Agency VR...... 4.400 07/02/97 1,550,000
725,000 Babylon, New York
Industrial Development Agency VR...... 4.400 07/03/97 725,000
1,700,000 Broome County, New York
Industrial Development Agency VR...... 4.250 07/03/97 1,700,000
1,000,000 Capital District Youth Center VR ......... 4.250 07/03/97 1,000,000
1,900,000 Chautauqua County, New York
Industrial Development Agency VR...... 4.400 07/02/97 1,900,000
1,870,000 Chemung County, New York
Industrial Development Agency VR...... 4.250 07/03/97 1,870,000
4,500,000 Chenango, New York
Industrial Development Agency VR...... 4.400 07/03/97 4,500,000
690,000 Colonie, New York
Housing Development Corporation VR.... 4.400 07/02/97 690,000
540,000 Colonie, New York
Industrial Development Agency VR...... 4.250 07/03/97 540,000
1,150,000 Dutchess County, New York
Industrial Development Agency VR...... 4.250 07/03/97 1,150,000
6,000,000 Erie County, New York GO RAN.............. 3.540-3.600 11/19/97 6,014,599
3,000,000 Erie County, New York GO RAN.............. 3.800 6/25/98 3,019,883
1,180,000 Erie County, New York
Industrial Development Agency VR...... 4.250 07/03/97 1,180,000
410,000 Erie County, New York
Industrial Development Agency VR...... 4.250 07/03/97 410,000
326,000 Erie County, New York
Industrial Development Agency VR...... 4.400 07/03/97 326,000
300,000 Erie County, New York
Industrial Development Agency VR...... 4.250 07/03/97 300,000
2,950,000 Islip, New York
Industrial Development Authority VR... 4.250 07/03/97 2,950,000
930,000 Metropolitan Transit Authority, New York.. 4.000 07/01/97 948,600
100,000 Metropolitan Transit Authority, New York VR 4.150 07/02/97 100,000
1,690,000 Monroe County, New York
Industrial Development Agency PUT..... 3.900 12/01/97 1,690,000
</TABLE>
See accompanying notes to financial statements
56
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YIELD TO
PRINCIPAL MATURITY ON DATE MATURITY VALUE
AMOUNT DESCRIPTION OF PURCHASE* DATE (NOTE 1a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 700,000 Monroe County, New York
Industrial Development Agency PUT`.... 4.500% 06/15/98 $ 700,000
6,500,000 Monroe County, New York
Industrial Development Agency VR...... 4.400 07/02/97 6,500,000
3,465,000 Monroe County, New York
Industrial Development Agency VR...... 4.250 07/03/97 3,465,000
3,325,000 Monroe County, New York
Industrial Development Agency VR...... 4.600 07/03/97 3,325,000
3,140,000 Monroe County, New York
Industrial Development Agency VR...... 4.600 07/03/97 3,140,000
2,600,000 Monroe County, New York
Industrial Development Agency VR...... 4.150 07/03/97 2,600,000
2,000,000 Monroe County, New York
Industrial Development Agency VR...... 4.400 07/03/97 2,000,000
1,485,000 Monroe County, New York
Industrial Development Agency VR...... 4.400 07/03/97 1,485,000
1,100,000 Monroe County, New York
Industrial Development Agency VR...... 4.400 07/03/97 1,100,000
885,000 Monroe County, New York
Industrial Development Agency VR...... 4.650 07/03/97 885,000
2,640,000 Monroe County, New York
Industrial Development Agency VR...... 4.250 07/03/97 2,640,000
3,900,000 Mount Pleasant, New York
Industrial Development Agency VR...... 4.300 07/01/97 3,900,000
2,200,000 Municipal Assistance Corporation,
New York City, New York............... 3.800 07/01/97 2,200,001
2,000,000 Municipal Assistance Corporation,
New York City, New York............... 3.800 07/01/97 2,000,001
1,050,000 Nassau County, New York
Industrial Development Agency VR...... 4.250 07/03/97 1,050,000
1,000,000 New York City, New York GO VR............. 4.000 07/01/97 1,000,000
500,000 New York City, New York GO VR............. 5.500 07/01/97 500,000
15,200,000 New York City, New York
Housing Development Corporation VR.... 4.650 07/03/97 15,200,000
2,500,000 New York City, New York
Housing Development Corporation VR.... 4.200 07/02/97 2,500,000
2,000,000 New York City, New York
Housing Development Corporation VR.... 4.700 07/03/97 2,000,000
400,000 New York City, New York
Housing Development Corporation VR.... 4.650 07/03/97 400,000
100,000 New York City, New York
Housing Development Corporation VR.... 4.100 07/02/97 100,000
12,600,000 New York City, New York
Industrial Development Agency VR...... 5.800 07/01/97 12,600,000
3,000,000 New York City, New York
Industrial Development Agency VR...... 4.150 07/02/97 3,000,000
</TABLE>
See accompanying notes to financial statements
57
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YIELD TO
PRINCIPAL MATURITY ON DATE MATURITY VALUE
AMOUNT DESCRIPTION OF PURCHASE* DATE (NOTE 1a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,600,000 New York City, New York
Industrial Development Agency VR...... 4.150% 07/02/97 $ 1,600,000
845,000 New York City, New York
Industrial Development Agency VR...... 4.150 07/03/97 845,000
500,000 New York City, New York
Industrial Development Agency VR...... 4.400 07/03/97 500,000
325,000 New York City, New York
Industrial Development Agency VR...... 4.600 07/03/97 325,000
200,000 New York City, New York
Industrial Development Agency VR...... 4.150 07/02/97 200,000
100,000 New York City, New York
Industrial Development Agency VR...... 4.150 07/02/97 100,000
100,000 New York City, New York
Industrial Development Agency VR...... 4.150 07/02/97 100,000
3,000,000 New York City, New York
Municipal Water Finance Authority TECP 3.750 07/31/97 3,000,000
300,000 New York State,
Environmental Facilities Corporation.. 3.750 09/15/97 300,613
1,145,000 New York State, Dormitory Authority P/R
(City University System of New York).. 3.750-4.000 07/01/97 1,167,900
5,579,000 New York State, Dormitory Authority TECP.. 4.200 07/10/97 5,579,000
300,000 New York State,
Energy Research & Development Authority VR 5.400 07/01/97 300,000
100,000 New York State,
Housing Finance Agency VR AMBAC....... 4.150 07/02/97 100,000
3,020,000 New York State,
Job Development Authority VR.......... 4.150 07/01/97 3,020,000
1,350,000 New York State,
Job Development Authority VR.......... 4.000 07/01/97 1,350,000
1,045,000 New York State,
Job Development Authority VR.......... 4.100 07/01/97 1,045,000
685,000 New York State,
Job Development Authority VR.......... 4.000 07/01/97 685,000
615,000 New York State,
Job Development Authority VR.......... 4.000 07/01/97 615,000
610,000 New York State,
Job Development Authority VR.......... 4.100 07/01/97 610,000
435,000 New York State,
Job Development Authority VR.......... 4.000 07/01/97 435,000
420,000 New York State,
Job Development Authority VR.......... 4.150 07/01/97 420,000
245,000 New York State,
Job Development Authority VR.......... 4.000 07/01/97 245,000
75,000 New York State,
Job Development Authority VR.......... 4.000 07/01/97 75,000
</TABLE>
See accompanying notes to financial statements
58
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YIELD TO
PRINCIPAL MATURITY ON DATE MATURITY VALUE
AMOUNT DESCRIPTION OF PURCHASE* DATE (NOTE 1a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 2,200,000 New York State,
Urban Development Corporation P/R AMBAC 3.700% 01/01/98 $ 2,284,241
22,000,000 Niagara County, New York
Industrial Development Agency TECP.... 4.750 07/01/97 22,000,000
10,000,000 Niagara County, New York
Industrial Development Agency TECP.... 5.000 07/01/97 10,000,000
20,000,000 Niagara County, New York
Industrial Development Agency VR...... 4.650 07/02/97 20,000,000
910,000 Niagara County, New York
Industrial Development Agency VR...... 4.400 07/03/97 910,000
1,470,000 Oneida County, New York
Industrial Development Agency VR...... 4.400 07/03/97 1,470,000
400,000 Oneida County, New York
Industrial Development Agency VR...... 4.380 07/03/97 400,000
3,800,000 Onondaga County, New York
Industrial Development Agency VR...... 4.400 07/02/97 3,800,000
1,400,000 Onondaga County, New York
Industrial Development Agency VR...... 4.400 07/02/97 1,400,000
3,500,000 Ontario County, New York
Industrial Development Agency VR...... 5.800 07/01/97 3,500,000
1,500,000 Rockland County, New York
Industrial Development Agency VR...... 4.400 07/03/97 1,500,000
260,000 Schoharie County, New York
Industrial Development Agency VR...... 4.380 07/03/97 260,000
2,500,000 St. Lawrence County, New York
Industrial Development Agency VR...... 4.400 07/03/97 2,500,000
1,400,000 Syracuse, New York
Industrial Development Agency PUT..... 4.500 06/15/98 1,400,000
3,550,000 Syracuse, New York
Industrial Development Agency VR...... 4.450 07/02/97 3,550,000
2,460,000 Warren & Washington Counties, New York
Industrial Development Agency VR...... 4.350 07/03/97 2,460,000
6,330,000 Wyoming County, New York
Industrial Development Agency VR...... 4.400 07/03/97 6,330,000
310,000 Wyoming County, New York
Industrial Development Agency VR...... 4.250 07/03/97 310,000
1,180,000 Yates County, New York
Industrial Development Agency VR..... 4.350 07/03/97 1,180,000
920,000 Yonkers, New York
Industrial Development Agency VR...... 4.250 07/03/97 920,000
------------
223,505,838
------------
</TABLE>
See accompanying notes to financial statements
59
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND (concluded)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YIELD TO
PRINCIPAL MATURITY ON DATE MATURITY VALUE
AMOUNT DESCRIPTION OF PURCHASE* DATE (NOTE 1a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Puerto Rico -- 3.0%
$ 7,100,000 Puerto Rico Industrial, Tourist,
Educational, Medical & Environmental
Control Facilities VR................. 4.150% 07/02/97 $ 7,100,000
------------
Total Investments -- 98.7%
(cost $230,605,838)................... 230,605,838
Other assets in excess of liabilities--1.3% 2,971,245
------------
Net Assets-- 100.0%........................ $233,577,083
============
</TABLE>
* Yield to maturity on date of purchase, except in the case of Variable Rate
Demand Notes (VR) and Put Bonds, whose yields are determined on date of the
last interest rate change. For Variable Rate Demand Notes and Put Bonds,
maturity date shown is the date of next interest rate change.
Abbreviations used in this statement:
AMBAC Insured as to principal and interest by the American Municipal Bond
Assurance Corporation.
GO General Obligation.
P/R Prerefunded in U.S. Government Securities.
PUT Optional or mandatory put. Maturity date shown is the put date as well as
the date of the next interest rate change.
RAN Revenue Anticipation Note.
TECP Tax Exempt Commercial Paper.
See accompanying notes to financial statements
60
<PAGE>
<PAGE>
SALOMON BROTHERS CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YIELD TO
PRINCIPAL MATURITY ON DATE MATURITY VALUE
AMOUNT DESCRIPTION OF PURCHASE* DATE (NOTE 1a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Certificates of Deposit-- 30.8%
Banks -- 30.8%
$ 1,000,000 ABN Amro Bank.............................. 6.050% 08/01/97 $ 1,000,197
1,000,000 Banque National de Paris................... 5.660 12/31/97 998,826
1,000,000 Bayerische Vereinsbank..................... 5.500 12/04/97 998,038
1,000,000 Crestar Bank............................... 5.710 07/22/97 1,000,000
1,000,000 Dai-Ichi-Kargo Bank........................ 5.850 07/18/97 1,000,011
1,000,000 Societe Generale........................... 5.850 10/01/97 1,000,421
1,000,000 Swiss Bank................................. 5.500 08/06/97 999,871
1,000,000 West Deutsche Landesbank................... 5.750 11/19/97 1,000,000
------------
Total Certificates of Deposit
(cost $7,997,364)........................ 7,997,364
------------
Commercial Paper -- 30.6%
Banks -- 3.9%
1,000,000 Nordbanken NA.............................. 5.620 07/01/97 1,000,000
------------
Chemicals -- 3.8%
1,000,000 Air Products & Chemicals................... 5.550 08/22/97 991,983
------------
Financial Services -- 7.6%
1,000,000 FP Funding................................. 5.800 09/25/97 986,144
1,000,000 Sigma Finance.............................. 5.660 08/19/97 992,296
------------
1,978,440
------------
Office Equipment -- 3.9%
1,000,000 Avery Dennison............................. 6.220 07/01/97 1,000,000
------------
Retail -- Convenience Stores -- 3.8%
1,000,000 Southland.................................. 5.600 08/05/97 994,556
------------
Securities Brokers -- 3.8%
1,000,000 Merrill Lynch.............................. 5.390 07/07/97 999,101
------------
Transportation -- 3.8%
1,000,000 Daimler-Benz NA............................ 5.530 08/06/97 994,470
-------------
Total Commercial Paper
(cost $7,958,550)........................ 7,958,550
-------------
Corporate Bonds -- 3.9%
Financial Services -- 3.9%
1,000,000 General Electric Capital (cost $1,010,355). 7.650 02/16/98 1,010,355
-------------
Floating Rate Notes -- 21.3%
California -- 1.6%
400,000 Pasadena, California Certificates of
Participation VR........................ 5.750 07/01/97 400,000
-------------
Florida -- 5.4%
1,000,000 Dade County, Florida Expressway
Authority VR............................ 5.600 07/03/97 1,000,000
400,000 Florida Housing Finance Agency VR.......... 5.630 07/02/97 400,000
-------------
1,400,000
-------------
Michigan -- 2.7%
700,000 Genesis Health Systems VR.................. 5.700 07/02/97 700,000
-------------
</TABLE>
See accompanying notes to financial statements
61
<PAGE>
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) (unaudited)
SALOMON BROTHERS CASH MANAGEMENT FUND (concluded)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YIELD TO
PRINCIPAL MATURITY ON DATE MATURITY VALUE
AMOUNT DESCRIPTION OF PURCHASE* DATE (NOTE 1A)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New Jersey -- 1.0%
$ 270,000 New Jersey Economic Development
Authority VR............................ 5.960% 07/07/97 $ 270,000
------------
New York -- 4.2%
400,000 Health Insurance Plan, Greater New York VR. 5.600 07/02/97 400,000
295,000 New York City, New York
Industrial Development Agency VR......... 5.750 07/02/97 295,000
100,000 New York City, New York
Industrial Development Agency VR......... 5.750 07/02/97 100,000
300,000 Syracuse, New York GO VR................... 5.850 07/02/97 300,000
------------
1,095,000
------------
North Carolina -- 1.5%
380,000 Greensboro, North Carolina GO VR........... 5.700 07/02/97 380,000
------------
Tennessee -- 1.5%
400,000 Community Health Systems VR................ 5.950 07/02/97 400,000
------------
Texas -- 3.4%
875,000 Texas State GO VR.......................... 5.630 07/02/97 875,000
------------
Total Floating Rate Notes
(cost $5,520,000)........................ 5,520,000
------------
Total Investments -- 86.6%
(cost $22,486,269)....................... 22,486,269
------------
Repurchase Agreements -- 12.5%
1,000,000 Repurchase Agreement dated 06/30/97 with
J.P Morgan Securities, collateralized by
$970,000 U.S. Treasury Bonds, 7.125%,
due 02/15/23 valued $1,025,775;
proceeds: $1,000,165..................... 5.950 07/01/97 1,000,000
1,239,158 Repurchase Agreement dated 06/30/97 with
Merrill Lynch, Pierce, Fenner & Smith,
collateralized by $1,265,000 U.S.
Treasury Bonds, 5.50%, due 11/15/98
valued at $1,266,581; proceeds:
$1,239,358............................... 5.800 07/01/97 1,239,158
1,000,000 Repurchase Agreement dated 06/30/97 with
UBS Securities, collateralized by
$1,000,000 U.S. Treasury Bonds, 6.00%,
due 08/15/99 valued at $1,020,000;
proceeds: $1,000,163..................... 5.875 07/01/97 1,000,000
------------
Total Repurchase Agreements
(cost $3,239,158)........................ 3,239,158
------------
Other assets in excess of liabilities -- 0.9% 233,893
------------
Net Assets-- 100.0%........................ $ 25,959,320
============
</TABLE>
* Yield to maturity on date of purchase, except in the case of Variable Rate
Demand Notes (VR), whose yields are determined on date of last interest rate
change. For Variable Rate Demand Notes, maturity date shown is the date of
next interest rate change.
Abbreviation used in this statement:
GO General Obligation
See accompanying notes to financial statements
62
<PAGE>
<PAGE>
[This page intentionally left blank]
63
<PAGE>
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Asia Capital Investors
Growth Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C> <C>
Investments, at value (Note A) .................................. $ 13,848,917 $155,668,614 $573,694,585
Repurchase agreements, at value and cost ........................ -- 11,209,000 71,482,000
Cash (including foreign currency) ............................... 682,061 1,137 716
Receivable for securities sold .................................. 237,805 1,115,568 4,385,598
Receivable for Fund shares sold ................................. 341,105 186,204 17,816,535
Interest and dividends receivable ............................... 5,947 151,100 587,118
Receivable from investment advisor .............................. 116,945 -- --
Deferred organization expense ................................... 85,535 -- --
Net unrealized appreciation of forward foreign currency contracts -- -- --
Other assets .................................................... -- -- --
------------ ------------ ------------
Total assets .................................................... 15,318,315 168,331,623 667,966,552
------------ ------------ ------------
LIABILITIES:
Payable for:
Securities purchased ........................................ 911,660 1,191,718 1,713,777
Fund shares redeemed ........................................ 31,414 209,300 299,473
Dividends and distributions declared ........................ -- -- --
Affiliate transactions: ..................................... -- -- --
Management fees ......................................... -- 126,206 803,027
Service and distribution fees ........................... 15,975 4,975 92,663
Due to custodian ................................................ -- -- --
Net unrealized depreciation of forward foreign currency contracts 373 -- --
Accrued expenses and other liabilities .......................... 43,036 22,828 165,839
------------ ------------ ------------
Total liabilities ............................................... 1,002,458 1,555,027 3,074,779
------------ ------------ ------------
Net Assets: ..................................................... $ 14,315,857 $166,776,596 $664,891,773
============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital ................................................. $ 12,447,787 $124,376,067 $411,919,554
Undistributed net investment income or (distributions in excess
of net investment income) ....................................... (6,051) 488,512 2,097,117
Accumulated net realized gain (loss) on investments, options and
foreign currency transactions.................................... 751,136 15,305,958 46,258,963
Net unrealized appreciation on investments, foreign currency
transactions and other assets ................................... 1,122,985 26,606,059 204,616,139
------------ ------------ ------------
Net Assets: ..................................................... $ 14,315,857 $166,776,596 $664,891,773
============ ============ ============
Class A ......................................................... $ 7,114,889 $ 2,647,485 $ 43,864,224
============ ============ ============
Class B ......................................................... $ 5,454,216 $ 1,014,382 $ 32,278,130
============ ============ ============
Class C ......................................................... $ 1,462,140 $ 1,002,459 $ 8,029,858
============ ============ ============
Class O ......................................................... $ 284,612 $162,112,270 $580,719,561
============ ============ ============
Shares Outstanding:
Class A ......................................................... 597,685 118,821 2,045,959
============ ============ ============
Class B ......................................................... 459,133 45,622 1,512,343
============ ============ ============
Class C ......................................................... 123,104 45,049 376,087
============ ============ ============
Class O ......................................................... 23,870 7,258,812 27,065,340
============ ============ ============
Net Asset Value:
Class A Shares
Net asset value and redemption price per share .................. $ 11.90 $ 22.28 $ 21.44
============ ============ ============
Maximum offering price per share (based on maximum sales charge
of 4.75%, except Cash Management Fund and New York
Municipal Money Fund) ........................................... $ 12.49 $ 23.39 $ 22.51
============ ============ ============
Class B Shares
Net asset value and offering price per share * .................. $ 11.88 $ 22.23 $ 21.34
============ ============ ============
CLASS C SHARES
Net asset value and offering price per share * .................. $ 11.88 $ 22.25 $ 21.35
============ ============ ============
Class O Shares
Net asset value, offering price and redemption price per share .. $ 11.92 $ 22.33 $ 21.46
============ ============ ============
Note A: Cost of investments ..................................... $ 12,716,937 $129,062,433 $369,078,347
============ ============ ============
</TABLE>
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes to financial statements
64
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
U.S. National New York Cash
Total High Yield Strategic Government Intermediate Municipal Management
Return Fund Bond Fund Bond Fund Income Fund Municipal Fund Money Fund Fund
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 95,326,588 $ 352,099,119 $ 42,339,309 $ 12,438,116 $ 12,902,851 $ 230,605,838 $ 22,486,269
15,405,000 22,536,000 11,239,000 3,985,000 -- -- 3,239,158
14,057 43 269 33 55,582 -- --
-- 2,070,000 3,130,545 500,283 -- -- --
1,341,822 6,751,402 990,489 49,777 25,019 2,172,935 110,018
655,953 6,146,193 683,811 65,960 237,766 1,126,166 257,783
-- -- -- 41,088 43,580 -- --
61,197 78,012 78,290 64,039 61,859 -- --
-- -- 9,113 -- -- -- --
-- 86,310 -- -- -- 111,441 --
- ------------- ------------- ------------- ------------- ------------- ------------- -------------
112,804,617 389,767,079 58,470,826 17,144,296 13,326,657 234,016,380 26,093,228
- ------------- ------------- ------------- ------------- ------------- ------------- -------------
4,565,270 11,795,640 5,456,580 4,120,719 -- -- --
128,371 556,156 258,862 34,994 -- 213,967 50,372
42,533 1,305,149 136,098 57,422 44,503 12,105 67,253
20,856 192,873 83,251 -- -- 77,867 14,796
156,118 591,984 90,071 5,676 3,890 -- --
-- -- -- -- -- 60,494 --
-- -- -- -- -- -- --
20,708 31,836 3,897 7,667 6,872 74,864 1,487
- ------------- ------------- ------------- ------------- ------------- ------------- -------------
4,933,856 14,473,638 6,028,759 4,226,478 55,265 439,297 133,908
- ------------- ------------- ------------- ------------- ------------- ------------- -------------
$ 107,870,761 $ 375,293,441 $ 52,442,067 $ 12,917,818 $ 13,271,392 $ 233,577,083 $ 25,959,320
============= ============= ============= ============= ============= ============= =============
$ 97,757,891 $ 361,835,764 $ 51,132,423 $ 12,890,380 $ 12,873,594 $ 233,810,177 $ 25,961,452
110,917 (1,405,848) (404,886) (3,886) 1,380 -- --
1,379,723 1,880,527 203,994 (3,271) 25 (233,094) (2,132)
8,622,230 12,982,998 1,510,536 34,595 396,393 -- --
- ------------- ------------- ------------- ------------- ------------- ------------- -------------
$ 107,870,761 $ 375,293,441 $ 52,442,067 $ 12,917,818 $ 13,271,392 $ 233,577,083 $ 25,959,320
============= ============= ============= ============= ============= ============= =============
$ 39,593,371 $ 122,608,058 $ 13,783,718 $ 1,676,247 $ 838,390 $ 2,330,653 $ 9,788,099
============= ============= ============= ============= ============= ============= =============
$ 55,929,223 $ 212,766,424 $ 28,015,346 $ 1,487,912 $ 938,664 $ 25,000 $ 3,150,215
============= ============= ============= ============= ============= ============= =============
$ 11,263,294 $ 38,064,392 $ 10,303,358 $ 352,268 $ 526,278 $ 25,000 $ 436,378
============= ============= ============= ============= ============= ============= =============
$ 1,084,873 $ 1,854,567 $ 339,645 $ 9,401,391 $ 10,968,060 $ 231,196,430 $ 12,584,628
============= ============= ============= ============= ============= ============= =============
3,123,910 10,390,912 1,265,231 166,928 80,804 2,330,695 9,788,107
============= ============= ============= ============= ============= ============= =============
4,416,442 18,068,698 2,573,747 148,245 90,660 25,000 3,150,217
============= ============= ============= ============= ============= ============= =============
887,203 3,233,366 946,137 35,089 50,816 25,000 436,378
============= ============= ============= ============= ============= ============= =============
85,163 157,189 31,203 936,872 1,057,732 231,430,339 12,586,750
============= ============= ============= ============= ============= ============= =============
$ 12.67 $ 11.80 $ 10.89 $ 10.04 $ 10.38 $ 1.00 $ 1.00
============= ============= ============= ============= ============= ============= =============
$ 13.30 $ 12.39 $ 11.43 $ 10.54 $ 10.90 $ 1.00 $ 1.00
============= ============= ============= ============= ============= ============= =============
$ 12.66 $ 11.78 $ 10.89 $ 10.04 $ 10.35 $ 1.00 $ 1.00
============= ============= ============= ============= ============= ============= =============
$ 12.70 $ 11.77 $ 10.89 $ 10.04 $ 10.36 $ 1.00 $ 1.00
============= ============= ============= ============= ============= ============= =============
$ 12.74 $ 11.80 $ 10.89 $ 10.03 $ 10.37 $ 1.00 $ 1.00
============= ============= ============= ============= ============= ============= =============
$ 86,704,358 $ 339,069,091 $ 40,836,373 $ 12,403,521 $ 12,506,458 $ 230,605,838 $ 22,486,269
============= ============= ============= ============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements
65
<PAGE>
<PAGE>
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Asia
Growth Capital Investors
Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Interest.................................................... $ 7,988 $ 264,048 $ 1,129,202
Dividends (Note A).......................................... 60,869 1,188,573 4,591,396
---------- ----------- -----------
68,857 1,452,621 5,720,598
Expenses:
Management fee.............................................. 36,538 689,700 1,448,543
Custody and administration fees............................. 100,975 35,299 37,333
Shareholder services........................................ 25,830 28,650 214,200
Registration and filing fees................................ 16,600 16,500 15,000
Amortization of organization expenses....................... 10,740 -- --
Printing.................................................... 1,810 40,550 90,500
Audit and tax return preparation fees....................... 1,810 46,800 54,250
Legal....................................................... 1,680 56,950 54,950
Directors' fees and expenses................................ 905 33,150 37,350
Other....................................................... 1,810 8,501 18,552
---------- ----------- -----------
198,698 956,100 1,970,678
Management fee waived and expenses absorbed by
investment advisor.......................................... (153,483) -- --
Credits earned from custodian on cash balances.............. -- (4) (228)
---------- ----------- -----------
45,215 956,096 1,970,450
Distribution and service fees:
Class A shares.............................................. 5,632 2,151 23,738
Class B shares.............................................. 19,335 3,146 98,979
Class C shares.............................................. 2,915 2,383 25,030
---------- ----------- -----------
Net expenses................................................ 73,097 963,776 2,118,197
---------- ----------- -----------
Net investment income (loss)................................ (4,240) 488,845 3,602,401
========== =========== ===========
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments................................................. 769,793 15,580,171 46,342,708
Options written............................................. -- (210,494) (29,563)
Foreign currency transactions............................... (10,789) (1,268) (1,403)
---------- ----------- -----------
759,004 15,368,409 46,311,742
---------- ----------- -----------
Net change in unrealized appreciation (depreciation) on:
Investments................................................. 1,078,789 4,863,951 33,381,372
Foreign currency transactions and other assets.............. (8,941) (93) 98
---------- ----------- -----------
1,069,848 4,863,858 33,381,470
---------- ----------- -----------
Net realized and unrealized gain (loss)..................... 1,828,852 20,232,267 79,693,212
---------- ----------- -----------
Net increase in net assets from operations.................. $1,824,612 $20,721,112 $83,295,613
========== =========== ===========
Note A: Net of foreign withholding tax of:.................. $ 5,330 $ 38,874 $ 91,170
========== =========== ===========
</TABLE>
See accompanying notes to financial statements
66
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
U.S. National New York Cash
Total High Yield Strategic Government Intermediate Municipal Management
Return Fund Bond Fund Bond Fund Income Fund Municipal Fund Money Fund Fund
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1,365,653 $13,595,538 $1,792,173 $419,765 $325,827 $4,857,289 $725,983
552,739 76,544 -- -- -- -- --
---------- ----------- ---------- -------- -------- --------- --------
1,918,392 13,672,082 1,792,173 419,765 325,827 4,857,289 725,983
206,799 1,031,738 157,200 37,688 29,954 251,337 26,065
45,290 96,340 31,809 14,489 10,020 113,626 21,255
56,905 114,043 54,530 28,340 28,185 56,071 7,220
26,295 49,460 4,420 14,635 15,385 12,089 16,650
9,483 14,603 14,654 11,986 11,579 -- --
9,050 31,475 5,430 1,810 1,810 27,635 2,708
9,955 34,270 5,895 1,810 1,810 30,163 3,623
6,410 14,560 1,810 905 905 13,523 910
905 905 905 905 905 978 908
2,869 6,894 4,810 3,905 3,905 5,810 3,608
---------- ----------- ---------- -------- -------- --------- --------
373,961 1,394,288 281,463 116,473 104,458 511,232 82,947
(185,942) (32,382) (73,950) (78,776) (73,534) -- (11,269)
(20) (13) (9) (9) (970) -- --
---------- ----------- ---------- -------- -------- --------- --------
187,999 1,361,893 207,504 37,688 29,954 511,232 71,678
36,228 116,527 16,912 1,854 935 -- --
196,681 781,317 102,710 6,839 3,943 -- --
31,136 120,586 35,713 2,109 2,534 -- --
---------- ----------- ---------- -------- -------- --------- --------
452,044 2,380,323 362,839 48,490 37,366 511,232 71,678
---------- ----------- ---------- -------- -------- --------- --------
1,466,348 11,291,759 1,429,334 371,275 288,461 4,346,057 654,305
========== =========== ========== ======== ======== ========= ========
1,380,946 2,102,344 181,910 2,188 -- (8,318) (8)
-- -- -- -- -- -- --
(49) -- 25,277 -- -- -- --
---------- ----------- ---------- -------- -------- --------- --------
1,380,897 2,102,344 207,187 2,188 -- (8,318) (8)
---------- ----------- ---------- -------- -------- --------- --------
4,285,759 5,753,128 525,824 (13,024) 50,520 -- --
(1,681) (15,941) 20,537 -- -- -- --
---------- ----------- ---------- -------- -------- --------- --------
4,284,078 5,737,187 546,361 (13,024) 50,520 -- --
---------- ----------- ---------- -------- -------- --------- --------
5,664,975 7,839,531 753,548 (10,836) 50,520 (8,318) (8)
---------- ----------- ---------- -------- -------- --------- --------
$7,131,323 $19,131,290 $2,182,882 $360,439 $338,981 $4,337,739 $654,297
========== =========== ========== ======== ======== ========== ========
$ 4,373 $ -- $ -- $ -- $ -- $ -- $ --
========== =========== ========== ======== ======== ========== ========
</TABLE>
See accompanying notes to financial statements
67
<PAGE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Asia
Growth Capital Investors
Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income (loss)................................ $ (4,240) $ 488,845 $ 3,602,401
Net realized gain (loss) on investments, options,
and foreign currency transactions.......................... 759,004 15,368,409 46,311,742
Net change in unrealized appreciation (depreciation)
on investments, foreign currency transactions
and other assets........................................... 1,069,848 4,863,858 33,381,470
----------- ------------ ------------
Net increase in net assets from operations.................. 1,824,612 20,721,112 83,295,613
----------- ------------ ------------
Dividends and distributions to shareholders:
Dividends from net investment income:
Class A................................................... (11,004) -- (46,865)
Class B................................................... (924) -- (23,302)
Class C................................................... (214) -- (5,957)
Class O................................................... (478) -- (1,431,273)
----------- ------------ ------------
(12,620) -- (1,507,397)
----------- ------------ ------------
Distributions from net realized gains:
Class A................................................... (104,352) (11,743) (149,318)
Class B................................................... (89,299) (9,584) (137,678)
Class C................................................... (11,184) (3,102) (30,508)
Class O................................................... (4,097) (2,614,000) (5,604,683)
----------- ------------ ------------
(208,932) (2,638,429) (5,922,187)
----------- ------------ ------------
Net fund capital share transactions:
Class A................................................... 2,637,730 2,084,017 30,357,639
Class B................................................... 1,643,967 721,634 20,076,873
Class C................................................... 1,077,054 803,344 5,366,955
Class O................................................... 128,678 8,449,548 (7,433,549)
---------- ------------ ------------
Net increase (decrease) in net assets derived from
share transactions.................................. 5,487,429 12,058,543 48,367,918
---------- ------------ ------------
Net increase (decrease) in net assets ...................... 7,090,489 30,141,226 124,233,947
Net assets:
Beginning of period....................................... 7,225,368 136,635,370 540,657,826
----------- ------------ ------------
End of period (a)......................................... $14,315,857 $166,776,596 $664,891,773
=========== ============ ============
(a) Including undistributed net investment income or
(distributions in excess of net investment income) of:..... $ (6,051) $ 488,512 $ 2,097,117
=========== ============ ============
</TABLE>
See accompanying notes to financial statements
68
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
U.S. National New York Cash
Total High Yield Strategic Government Intermediate Municipal Management
Return Fund Bond Fund Bond Fund Income Fund Municipal Fund Money Fund Fund
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,466,348 $ 11,291,759 $ 1,429,334 $ 371,275 $ 288,461 $ 4,346,057 $ 654,305
1,380,897 2,102,344 207,187 2,188 -- (8,318) (8)
4,284,078 5,737,187 546,361 (13,024) 50,520 -- --
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
7,131,323 19,131,290 2,182,882 360,439 338,981 4,337,739 654,297
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
(593,786) (4,492,565) (626,263) (43,328) (17,323) (23,036) (225,848)
(675,213) (7,046,310) (865,631) (34,972) (15,687) (1,283) (94,278)
(105,278) (1,084,337) (300,136) (10,733) (10,130) (431) (9,683)
(14,359) (74,395) (32,254) (286,128) (245,515) (4,321,307) (324,496)
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
(1,388,636) (12,697,607) (1,824,284) (375,161) (288,655) (4,346,057) (654,305)
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
(54,116) (132,020) (10,136) (1,451) (524) -- --
(74,677) (214,885) (14,138) (1,219) (601) -- --
(11,003) (32,266) (6,122) (234) (379) -- --
(970) (2,323) (224) (8,336) (7,121) -- --
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
(140,766) (381,494) (30,620) (11,240) (8,625) -- --
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
16,316,877 54,708,759 5,369,324 490,247 138,052 1,970,782 1,612,989
24,981,606 102,479,012 13,533,925 223,422 235,001 -- (769,861)
7,346,427 23,727,070 5,668,151 (68,201) 57,221 -- 1,495
815,179 1,428,122 (3,484,757) 47,895 1,146,966 (42,529,416) (1,640,676)
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
49,460,089 182,342,963 21,086,643 693,363 1,577,240 (40,558,634) (796,053)
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
55,062,010 188,395,152 21,414,621 667,401 1,618,941 (40,566,952) (796,061)
52,808,751 186,898,289 31,027,446 12,250,417 11,652,451 274,144,035 26,755,381
- ------------ ------------ ----------- ----------- ----------- ------------ -----------
$107,870,761 $375,293,441 $52,442,067 $12,917,818 $13,271,392 $233,577,083 $25,959,320
============ ============ =========== =========== =========== ============ ===========
$ 110,917 $ (1,405,848) $ (404,886) $ (3,886) $ 1,380 $ -- --
============ ============ =========== =========== =========== ============ ===========
</TABLE>
See accompanying notes to financial statements
69
<PAGE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Asia
Growth Capital Investors
Fund* Fund Fund
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income....................................... $ 21,810 $ 792,904 $ 6,424,058
Net realized gain (loss) on investments, options, and
foreign currency transactions.............................. 314,293 22,862,752 52,051,843
Net change in unrealized appreciation (depreciation) on
investments, options, foreign currency transactions
and other assets........................................... 53,137 10,601,610 70,016,509
---------- ------------ ------------
Net increase in net assets from operations................. 389,240 34,257,266 128,492,410
---------- ------------ ------------
Dividends and distributions to shareholders:
Dividends from net investment income:
Class A................................................... (16,828) (233) (52,117)
Class B................................................... (1,406) (120) (15,140)
Class C................................................... (329) (120) (3,893)
Class O................................................... (728) (797,069) (6,351,142)
---------- ------------ ------------
(19,291) (797,542) (6,422,292)
---------- ------------ ------------
Dividends in excess of net investment income:
Class A................................................... -- -- --
Class B................................................... -- -- --
Class C................................................... -- -- --
Class O................................................... -- -- --
---------- ------------ ------------
-- -- --
---------- ------------ ------------
Distributions from net realized gains:
Class A................................................... (53,543) (6,217) (766,906)
Class B................................................... (46,007) (3,992) (609,635)
Class C................................................... (3,591) (3,992) (111,830)
Class O................................................... (1,798) (25,587,085) (59,558,730)
---------- ------------ ------------
(104,939) (25,601,286) (61,047,101)
---------- ------------ ------------
Net fund capital share transactions:
Class A................................................... 3,549,887 342,420 10,214,466
Class B................................................... 3,050,781 218,589 8,511,239
Class C................................................... 237,212 130,425 1,554,480
Class O................................................... 117,478 25,656,871 28,941,018
---------- ------------ ------------
Net increase in net assets derived from
share transactions....................................... 6,955,358 26,348,305 49,221,203
---------- ------------ ------------
Net increase in net assets................................. 7,220,368 34,206,743 110,244,220
Net assets:
Beginning of period........................................ 5,000 102,428,627 430,413,606
---------- ------------ ------------
End of period (a).......................................... $7,225,368 $136,635,370 $540,657,826
========== ============ ============
(a) Including undistributed net investment income or
(distributions in excess of net investment income) of:..... $ 10,809 $ (333) $ 2,113
========== ============ ============
</TABLE>
* Fund's commencement of investment operations was May 6, 1996.
See accompanying notes to financial statements
70
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
U.S. National New York Cash
Total High Yield Strategic Government Intermediate Municipal Management
Return Fund Bond Fund Bond Fund Income Fund Municipal Fund Money Fund Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,499,194 $ 6,682,737 $ 1,567,734 $ 601,020 $ 537,550 $ 6,389,305 $ 913,254
540,089 1,779,535 550,506 88,860 23,657 2,563 (10)
3,888,005 6,797,683 413,887 (277,785) (78,007) -- --
- ----------- ------------ ----------- ----------- ----------- ------------- -----------
5,927,268 15,259,955 2,532,127 412,095 483,200 6,391,868 913,244
- ----------- ------------ ----------- ----------- ----------- ------------- -----------
(608,681) (2,693,853) (223,497) (35,750) (28,388) (802) (264,829)
(585,187) (3,488,256) (463,295) (35,916) (23,706) (142) (137,835)
(76,316) (390,999) (103,804) (12,551) (13,552) (142) (13,718)
(195,785) (138,093) (812,077) (516,803) (474,259) (6,388,219) (496,872)
- ----------- ------------ ----------- ----------- ----------- ------------- -----------
(1,465,969) (6,711,201) (1,602,673) (601,020) (539,905) (6,389,305) (913,254)
- ----------- ------------ ----------- ----------- ----------- ------------- -----------
-- -- (1,487) -- -- -- --
-- -- (3,010) -- -- -- --
-- -- (706) -- -- -- --
-- -- (4,733) -- -- -- --
- ----------- ------------ ----------- ----------- ----------- ------------ -----------
-- -- (9,936) -- -- -- --
- ----------- ------------ ----------- ----------- ----------- ------------ -----------
(152,704) (611,200) (125,860) (4,728) (1,449) -- --
(203,017) (942,499) (218,299) (5,771) (1,467) -- --
(25,301) (118,077) (67,806) (2,179) (976) -- --
(28,599) (10,856) (58,871) (65,419) (20,439) -- --
- ----------- ------------ ----------- ----------- ----------- ------------ -----------
(409,621) (1,682,632) (470,836) (78,097) (24,331) -- --
- ----------- ------------ ----------- ----------- ----------- ------------ -----------
15,969,336 52,531,457 7,803,194 914,633 131,024 359,913 6,419,571
20,798,943 93,129,376 12,296,600 707,635 271,514 25,000 1,681,592
2,758,002 12,100,036 4,143,135 157,310 198,788 25,000 252,342
(4,743,447) (7,754,436) (6,230,578) 62,922 185,121 47,182,964 7,541,082
- ----------- ------------ ----------- ----------- ----------- ------------ -----------
34,782,834 150,006,433 18,012,351 1,842,500 786,447 47,592,877 15,894,587
- ----------- ------------ ----------- ----------- ----------- ------------ -----------
38,834,512 156,872,555 18,461,033 1,575,478 705,411 47,595,440 15,894,577
13,974,239 30,025,734 12,566,413 10,674,939 10,947,040 226,548,595 10,860,804
- ----------- ------------ ----------- ----------- ----------- ------------ -----------
$52,808,751 $186,898,289 $31,027,446 $12,250,417 $11,652,451 $274,144,035 $26,755,381
=========== ============ =========== =========== =========== ============ ===========
$ 33,205 $ -- $ (9,936) $ -- $ 1,574 $ -- $ --
=========== ============ =========== =========== =========== ============ ===========
</TABLE>
See accompanying notes to financial statements
71
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
The Salomon Brothers Investment Series (the "Investment Series") consists of
certain portfolios of the Salomon Brothers Series Funds Inc (the "Series
Funds"), as indicated below, the Salomon Brothers Investors Fund Inc (the
"Investors Fund") and the Salomon Brothers Capital Fund Inc (the "Capital
Fund"). The Series Funds were incorporated in Maryland on April 17, 1990 as an
open-end management investment company, and currently operate as a series
company comprised of nine portfolios: Salomon Brothers Cash Management Fund (the
"Cash Management Fund"), Salomon Brothers New York Municipal Money Market Fund
(the "New York Municipal Money Fund"), Salomon Brothers Institutional Money
Market Fund (the "Institutional Money Market Fund"), Salomon Brothers National
Intermediate Municipal Fund (the "National Intermediate Municipal Fund"),
Salomon Brothers U.S. Government Income Fund (the "U.S. Government Income
Fund"), Salomon Brothers High Yield Bond Fund (the "High Yield Bond Fund"),
Salomon Brothers Strategic Bond Fund (the "Strategic Bond Fund"), Salomon
Brothers Total Return Fund (the "Total Return Fund"), and Salomon Brothers Asia
Growth Fund (the "Asia Growth Fund"). Separate financial statements are prepared
for the Institutional Money Market Fund which is not part of the Investment
Series. All of the other portfolios of the Series Funds are included in the
Investment Series, which also includes the Investors Fund, a diversified
open-end management investment company incorporated in Maryland on April 2, 1958
and the Capital Fund, a non-diversified open-end management investment company
incorporated in Maryland on August 23, 1976. The Investment Series operates
under a multiple class pricing structure, with each portfolio of the Investment
Series (individually, a "Fund") offering Class A, Class B, Class C, and Class O
shares, each with its own expense structure. Each Fund has a specific investment
objective: the Cash Management Fund's objective is to seek as high a level of
current income as is consistent with liquidity and the stability of principal;
the New York Municipal Money Fund's objective is to seek as high a level of
current income exempt from federal, New York State and New York City personal
income taxes as is consistent with liquidity and the stability of principal; the
National Intermediate Municipal Fund's objective is to seek a high level of
current income which is exempt from regular federal income taxes; the U.S.
Government Income Fund's objective is to seek a high level of current income;
the High Yield Bond Fund's primary objective is to maximize current income; the
Strategic Bond Fund's primary objective is to seek a high level of current
income; the Total Return Fund's primary objective is to obtain above-average
income (compared to a portfolio entirely invested in equity securities); the
Asia Growth Fund's objective is to seek long-term growth of capital
appreciation; the Investors Fund's primary objective is to seek long-term growth
of capital; the Capital Fund's objective is to seek capital appreciation through
investments primarily in common stock, or securities convertible into common
stocks, which are believed to have above average price appreciation potential.
72
<PAGE>
<PAGE>
Certain costs incurred in connection with each Fund's organization, which were
payable to Salomon Brothers Asset Management Inc ("SBAM") have been deferred and
are being amortized by the Funds over a 60 month period from the date each Fund
commenced investment operations. A summary of those expenditures that remain as
of June 30, 1997 for each Fund is as follows:
<TABLE>
<CAPTION>
Fund Expiration of Amortization Amount
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Asia Growth Fund................................. May 2001 $85,535
Total Return Fund................................ September 2000 $61,197
High Yield Bond Fund............................. February 2000 $78,012
Strategic Bond Fund.............................. February 2000 $78,290
U.S. Government Income Fund...................... February 2000 $64,039
National Intermediate Municipal Fund............. February 2000 $61,859
</TABLE>
The following is a summary of significant accounting policies followed by the
Investment Series 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 of certain reported amounts in the financial statements.
Actual amounts could differ from those estimates.
(a) Investment Valuation. Portfolio securities listed or traded on
national securities exchanges, or reported on 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 asked price which
represents the current value of the security. Over-the-counter securities
are valued at the mean of the current bid and asked price. Debt securities
are valued by using either market quotations or independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics. Publicly traded sovereign bonds are typically
traded internationally on the over-the-counter market and are valued at the
mean of the last current bid and asked price as of the close of business of
that market. Short-term securities with less than 60 days remaining to
maturity when acquired by a Fund will be valued at amortized cost which
approximates market value. If a Fund, other than the Cash Management Fund
and New York Municipal Money Fund, acquires such securities with more than
60 days remaining to maturity, they will be valued at current market value,
until the 60th day prior to maturity, and will then be valued on an
amortized cost basis.
Portfolio securities for the Cash Management Fund and the New York
Municipal Money Fund are valued using the amortized cost method, which
involves initially valuing an investment at its cost and thereafter
assuming a constant amortization to maturity of any premium or discount.
This method results in a value approximating market value.
Prior governmental approval for foreign investments may be required
under certain circumstances in some emerging market countries, and the
extent of foreign investment in domestic companies may be subject to
limitation in other emerging market countries. Foreign ownership
limitations also may be imposed by the charters of individual companies in
emerging market countries to prevent, among other things, violation of
foreign investment limitations. As a result, an additional class of shares
(identified as "Foreign Shares" in the Portfolio of Investments) may be
created and offered for investment by such companies. The "local" and
"foreign" shares' market values may differ.
Foreign securities quoted in a foreign currency are translated into
U.S. dollars using exchange rates at 2:30 p.m. Eastern time (12:30 p.m. for
the Asia Growth Fund), or at such other rates as SBAM may determine to be
appropriate in computing net asset value.
73
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
Securities for which reliable quotations or prices from pricing services
are not readily available (as may be the case for securities of limited
marketability) and all other assets are valued at their respective fair value
as determined in good faith by, or under procedures established by,
the Board of Directors.
(b) Futures Contracts. The National Intermediate Municipal Fund, High
Yield Bond Fund, Strategic Bond Fund, Total Return Fund, Asia Growth Fund,
Investors Fund and Capital Fund may enter into futures contracts, which
involves paying or receiving variation margin, which will be recorded as
unrealized gain or loss until the contract is closed. When the contract is
closed, a realized gain or loss will be recognized. Outstanding contracts
may involve elements of market risk in excess of amounts reported in the
financial statements.
(c) Option Contracts. When a Fund writes or purchases a call or a put
option, an amount equal to the premium received or paid by the Fund is
recorded as a liability or asset, the value of which is marked-to-market
daily to reflect the current market value of the option. When the option
expires, the Fund realizes a gain or loss equal to the amount of the
premium received or paid. When the Fund exercises an option or enters into
a closing transaction by purchasing or selling an offsetting option, it
realizes a gain or loss without regard to any unrealized gain or loss on
the underlying security. When a written 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 written put option is exercised, the amount of the premium received
reduces the cost of the security that the Fund purchased upon exercise of
the option.
(d) Mortgage Rolls. The U.S. Government Income Fund, Strategic Bond
Fund and Total Return Fund may enter into mortgage "dollar rolls" in which
a Fund sells mortgage-backed securities for delivery in the current month
and simultaneously contracts to repurchase substantially similar (same
type, coupon and maturity) securities on a specified future date. The Fund
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 until disposition of the rolled security. The average
daily balance of dollar rolls outstanding during the six months ended June
30, 1997 was approximately $1,253,000, $2,567,000 and $2,301,000 for the
Total Return Fund, Strategic Bond Fund and U.S. Government Income Fund,
respectively.
(e) Repurchase Agreements. When entering into repurchase agreements, it
is each Fund's policy that the Fund take possession, through its custodian,
of the underlying collateral and monitor the collateral's value at the time
the agreement is entered into and on a daily basis during the term of the
repurchase agreement to ensure that it always equals or exceeds the
repurchase price. 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.
(f) Foreign Currency Translation. The accounting records of each Fund
are maintained in U.S. dollars. Investment securities and other assets and
liabilities of the High Yield Bond Fund, Strategic Bond Fund, Total Return
Fund, Asia Growth Fund, Investors Fund and Capital Fund denominated in a
foreign currency are translated into U.S. dollars at the prevailing rates
of exchange each day. Purchases and sales of securities, income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts, disposition
of foreign currencies, currency gains and losses realized between the trade
and settlement dates on securities transactions and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effect of changes in foreign currency exchange rates
on
74
<PAGE>
<PAGE>
investments in securities are not segregated in the Statements of
Operations from the effects of changes in market prices of those
securities, but are included with the net realized and unrealized gain or
loss on investments.
(g) Forward Foreign Currency Contracts. The High Yield Bond Fund,
Strategic Bond Fund, Total Return Fund, Asia Growth Fund, Investors Fund
and Capital Fund may enter into forward foreign currency contracts. A
forward foreign currency contract is an agreement between two parties to
buy and sell a currency at a set price on a future date. The contract is
marked-to-market daily and the change in value is recorded by the Fund as
an unrealized gain or loss. When a forward foreign currency contract is
extinguished, through either delivery or offset by entering into another
forward foreign currency contract, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the time it
was opened and the value of the contract at the time it was extinguished or
offset.
(h) Loan Participations. The High Yield Bond Fund, Strategic Bond Fund
and Total Return Fund may invest in fixed and floating rate loans arranged
through private negotiations between a foreign sovereign entity and one or
more financial institutions ("lender"). The market values of the High Yield
Bond Fund and the Strategic Bond Fund's loan participations at June 30,
1997 were $16,373,594 and $456,250, respectively.
(i) Federal Income Taxes. Each Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its income, including any net
realized gains, to shareholders. Therefore, no Federal income tax or excise
tax provision is required.
The Asia Growth Fund may be subject to taxes imposed by countries in
which it invests. Such taxes are generally based on income and/or capital
gains earned or repatriated. Taxes are accrued and applied to net
investment income, net realized gains and net unrealized appreciation as
such income and/or gains are earned.
(j) Dividends and Distributions to Shareholders. Dividends from net
investment income on the shares of each of the Funds (except the Asia
Growth Fund, Investors Fund, and Capital Fund) are declared each business
day to shareholders of record that day, and are paid on the last business
day of the month. Dividends from net investment income for the Asia Growth
Fund and the Capital Fund will be declared on an annual basis. Dividends
from net investment income for the Investors Fund are declared on a
quarterly basis. Distributions of net realized gains to shareholders of
each Fund, if any, are declared at least annually. Dividends and
distributions to shareholders of each Fund are recorded on the ex-dividend
date and are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles due primarily to
differences in the treatment of foreign currency gains/losses, deferral of
wash sales, and post-October losses incurred by each Fund. Permanent
book/tax differences are reclassified within the capital accounts based on
their federal income tax basis treatment; temporary differences do not
require reclassifications. Dividends and distributions which exceed net
investment income and net realized gains for financial reporting purposes
but not for tax purposes are reported as distributions in excess of net
investment income and distributions in excess of net realized capital
gains.
(k) Class Accounting. Investment income, common expenses and gain
(loss) on investments are allocated to the various classes of a Fund on the
basis of daily net assets of each class. Distribution and shareholder
servicing fees relating to a specific class are charged directly to that
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
75
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
(l) Expenses. Direct expenses are charged to the Fund that incurred
them, and general expenses of the Investment Series are allocated to the
Funds based on each Fund's relative net assets.
(m) Other. Investment transactions are recorded as of the trade date.
Dividend income is recorded on the ex-dividend date (except for the Asia
Growth Fund, where certain dividends may be recorded as soon as the fund is
informed of such dividend). Interest income, including the accretion of
discounts or amortization of premiums, is recognized when earned. Gains or
losses on sales of securities are calculated for financial accounting and
Federal income tax purposes on the identified cost basis. Net investment
income (other than distribution fees) and unrealized and realized gains or
losses are allocated daily to each class of shares based upon the relative
proportion of each class's net assets to the Fund's total net assets.
2. Management Fee and Other Agreements
Each Fund retains SBAM, an indirect wholly owned subsidiary of Salomon Inc, to
act as investment manager of each Fund, subject to the supervision by the Board
of Directors of each Fund. SBAM furnishes the Investment Series with office
space and certain services and facilities required for conducting the business
of the Investment Series and pays the compensation of its officers. The
management fee for these services for each Fund (except the Investors Fund and
Capital Fund) is payable monthly and is based on the following annual
percentages of each Fund's average daily net assets: .20% for the Cash
Management Fund and New York Municipal Money Fund, .50% for the National
Intermediate Municipal Fund, .60% for the U.S. Government Income Fund, .75% for
the High Yield Bond Fund and Strategic Bond Fund, .55% for the Total Return Fund
and .80% for the Asia Growth Fund. The management fee for the Capital Fund is
payable monthly and is based on the following annual percentages of the Fund's
average daily net assets: first $100 million--1%; next $100 million--.75% ; next
$200 million--.625%; excess over $400 million--.50%. SBAM Limited, an affiliate
of SBAM, provides certain advisory services to SBAM for the benefit of the
Strategic Bond Fund, as well as, certain administrative services for the Asia
Growth Fund. SBAM Limited is compensated by SBAM at no additional expense to the
Strategic Bond and Asia Growth Fund. SBAM has retained SBAM AP, an affiliate of
SBAM, to act as sub-advisor to the Asia Growth Fund. SBAM AP is compensated by
SBAM at no additional expense to the Asia Growth Fund.
The Investors 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
Investors 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 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%
76
<PAGE>
<PAGE>
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 Investors 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 Investors 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 Investors Fund's performance exceeds or is exceeded by the S&P 500
Index by ten or more percentage points. 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 investment record of the S&P 500 Index exceeded
the Investors Fund's performance by approximately three percent. As a result,
base management fees were decreased by $35,131 for the six months ended June 30,
1997.
For the six months ended June 30, 1997, SBAM waived management fees of $36,538,
$185,942, $32,382, $73,950, $37,688, $29,954, and $11,269 for the Asia Growth
Fund, Total Return Fund, High Yield Bond Fund, Strategic Bond Fund, U.S.
Government Income Fund, National Intermediate Municipal Fund, and Cash
Management Fund, respectively, and voluntarily absorbed expenses of $116,945,
$41,088, and $43,580 for the Asia Growth Fund, U.S. Government Income Fund, and
National Intermediate Municipal Fund, respectively.
Investors Bank & Trust Company serves as custodian and administrator for each
Fund, which includes performing certain administrative services in connection
with the operation of each Fund. During the six months ended June 30, 1997,
credits earned on outstanding cash balances were used to reduce custodian fees.
Each Fund has an agreement with Salomon Brothers Inc ("Salomon Brothers"), an
affiliate of the Investment Adviser, to distribute its shares pursuant to a
multiple pricing system. Each class (except for Class O) of each Fund (except
for the Cash Management Fund and New York Municipal Money Fund) is authorized
pursuant to a services and distribution plan applicable to that class of shares
(the "Class A Plan," the "Class B Plan," and the "Class C Plan," collectively,
the "Plans") adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), to pay Salomon Brothers an annual service fee
with respect to Class A, Class B, and Class C shares of the applicable Funds at
the rate of .25% of the value of the average daily net assets of the respective
class. Salomon Brothers is also paid an annual distribution fee with respect to
Class B and Class C shares of each Fund (except for the Cash Management Fund and
New York Municipal Money Fund) at the rate of .75% of the value of the average
daily net assets of the respective class. Class O shares are not subject to a
services and distribution plan fee.
Brokerage commissions of $300, $31,518 and $22,200 were paid by the Total Return
Fund, Investors Fund and Capital Fund, respectively, to Salomon Brothers, the
Funds' distributor and an indirect wholly-owned subsidiary of Salomon Inc, for
transactions executed on behalf of the Funds for the six months ended June 30,
1997.
Salomon Brothers received $8,389 as its portion of the front-end sales charge on
sales of Class A shares of the Funds during the period ended June 30, 1997. In
addition, contingent deferred sales charges of $321,787 were paid to Salomon
Brothers in connection with redemptions of certain Class B and Class C shares of
the Funds during the six months ended June 30, 1997.
3. Capital Stock
At June 30, 1997, the Series Funds had 10,000,000,000 shares of authorized
capital stock, par value $.001 per share, of which the Cash Management Fund, New
York Municipal Money Fund, National Intermediate Municipal Fund, U.S. Government
Income Fund, High Yield Bond Fund, and Strategic Bond Fund, each had
1,000,000,000 shares authorized. The Total Return Fund and Asia Growth Fund had
999,999,992 and 1,000,000,008 shares authorized, respectively. The Investors
Fund had 50,000,000 shares of authorized capital stock, par value $1.00 per
share. The Capital Fund had 25,000,000 shares of authorized capital stock, par
value $.001 per share. Transactions in Fund shares for the periods indicated
were as follows:
77
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Class A Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Period Ended Six Months Ended Period Ended
June 30, 1997 December 31, 1996 June 30, 1997 December 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Asia Growth Fund
Sold ..................... 272,829 $ 2,989,708 356,682 $ 3,537,272 151,734 $ 1,637,253 305,714 $ 3,042,058
Issued as reinvestment ... 4,663 47,952 2,175 22,436 2,762 28,862 846 8,723
Redeemed ................. (37,752) (399,930) (1,037) (9,821) (2,048) (22,148) -- --
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase ............. 239,740 $ 2,637,730 357,820 $ 3,549,887 152,448 $ 1,643,967 306,560 $ 3,050,781
========== ============ ========== ============ ========= ============ ========= ===========
Capital Fund
Sold ..................... 110,303 $ 2,262,767 17,551 $ 347,514 48,143 $ 1,003,690 11,001 $ 218,589
Issued as reinvestment ... 607 11,477 121 2,304 481 9,583 -- --
Redeemed ................. (9,377) (190,227) (384) (7,398) (14,003) (291,639) -- --
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase ............. 101,533 $ 2,084,017 17,288 $ 342,420 34,621 $ 721,634 11,001 $ 218,589
========== ============ ========== ============ ========= ============ ========= ===========
Investors Fund
Sold ..................... 1,544,292 $ 31,828,754 557,317 $ 10,367,582 1,047,030 $ 20,775,849 473,935 $ 8,823,215
Issued as reinvestment ... 9,842 188,463 43,043 791,687 7,747 149,907 30,569 561,476
Redeemed ................. (85,348) (1,659,578) (49,750) (944,803) (42,648) (848,883) (47,379) (873,452)
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase (decrease) .. 1,468,786 $ 30,357,639 550,610 $ 10,214,466 1,012,129 $ 20,076,873 457,125 $ 8,511,239
========== ============ ========== ============ ========= ============ ========= ===========
Total Return Fund
Sold ..................... 1,622,943 $ 19,761,920 1,634,908 $ 18,197,811 2,126,510 $ 25,982,760 1,941,522 $21,665,343
Issued as reinvestment ... 44,461 544,087 56,167 639,053 53,061 648,545 57,560 656,054
Redeemed ................. (329,071) (3,989,130) (252,184) (2,867,528) (136,270) (1,649,699) (136,340) (1,522,454)
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase (decrease) .. 1,338,333 $ 16,316,877 1,438,891 $ 15,969,336 2,043,301 $ 24,981,606 1,862,742 $20,798,943
========== ============ ========== ============ ========= ============ ========= ===========
High Yield Bond Fund
Sold ..................... 5,314,734 $ 62,012,318 5,579,873 $ 62,422,667 8,966,787 $104,390,343 8,434,142 $94,520,293
Issued as reinvestment ... 233,633 2,718,460 178,995 2,017,850 280,477 3,256,631 173,250 1,963,617
Redeemed ................. (870,060) (10,022,019) (1,070,460) (11,909,060) (444,887) (5,167,962) (301,187) (3,354,534)
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase (decrease) .. 4,678,307 $ 54,708,759 4,688,408 $ 52,531,457 8,802,377 $102,479,012 8,306,205 $93,129,376
========== ============ ========== ============ ========= ============ ========= ===========
Strategic Bond Fund
Sold ..................... 932,602 $ 10,104,057 749,039 $ 8,090,137 1,247,420 $ 13,476,853 1,214,882 $13,060,764
Issued as reinvestment ... 45,939 495,174 22,056 238,009 42,055 453,430 33,453 360,441
Redeemed ................. (483,979) (5,229,907) (49,131) (524,952) (36,730) (396,358) (105,759) (1,124,605)
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase (decrease) .. 494,562 $ 5,369,324 721,964 $ 7,803,194 1,252,745 $ 13,533,925 1,142,576 $12,296,600
========== ============ ========== ============ ========= ============ ========= ===========
U.S. Government
Income Fund
Sold ..................... 49,337 $ 494,764 117,000 $ 1,173,487 39,805 $ 398,515 114,615 $ 1,149,715
Issued as reinvestment ... 1,897 18,625 1,688 16,972 1,076 10,762 1,043 10,504
Redeemed ................. (2,310) (23,142) (27,629) (275,826) (18,516) (185,855) (45,248) (452,584)
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase (decrease) .. 48,924 $ 490,247 91,059 $ 914,633 22,365 $ 223,422 70,410 $ 707,635
========== ============ ========== ============ ========= ============ ========= ===========
National Intermediate
Municipal Fund
Sold ..................... 13,227 $ 135,255 30,133 $ 310,751 22,335 $ 231,647 45,974 $ 472,141
Issued as reinvestment ... 770 7,621 1,305 13,429 327 3,354 623 6,378
Redeemed ................. (466) (4,824) (18,756) (193,156) -- -- (20,022) (207,005)
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase ............. 13,531 $ 138,052 12,682 $ 131,024 22,662 $ 235,001 26,575 $ 271,514
========== ============ ========== ============ ========= ============ ========= ===========
New York Municipal
Money Fund
Sold ..................... 2,526,644 $ 2,526,644 359,251 $ 359,251 171,196 $ 171,196 25,000 $ 25,000
Issued as reinvestment ... 22,572 22,572 662 662 823 823 -- --
Redeemed ................. (578,434) (578,434) -- -- (172,019) (172,019) -- --
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase (decrease) .. 1,970,782 $ 1,970,782 359,913 $ 359,913 0 $ 0 25,000 $ 25,000
========== ============ ========== ============ ========= ============ ========= ===========
Cash Management Fund
Sold ..................... 13,169,468 $ 13,169,468 34,309,623 $ 34,309,623 2,900,619 $ 2,900,619 4,686,602 $ 4,686,602
Issued as reinvestment ... 52,810 52,810 59,295 59,295 (3,628) (3,628) 111,779 111,779
Redeemed .................(11,609,289) (11,609,289) (27,949,347) (27,949,347) (3,666,852) (3,666,852) (3,116,789) (3,116,789)
---------- ------------ ---------- ------------ --------- ------------ --------- -----------
Net increase (decrease) .. 1,612,989 $ 1,612,989 6,419,571 $ 6,419,571 (769,861) $ (769,861) 1,681,592 $ 1,681,592
========== ============ ========== ============ ========= ============ ========= ===========
</TABLE>
See accompanying notes to financial statements
78
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Class C Class O
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Period Ended Six Months Ended Period Ended
June 30, 1997 December 31, 1996 June 30, 1997 December 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
100,414 $ 1,090,071 34,069 $ 333,338 11,762 $ 127,402 12,221 $ 121,183
922 9,437 19 190 126 1,288 37 387
(2,111) (22,454) (10,334) (96,316) (1) (12) (400) (4,092)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
99,225 $ 1,077,054 23,754 $ 237,212 11,887 $ 128,678 11,858 $ 117,478
========== =========== ========= =========== ============ ============= ============ =============
43,576 $ 908,076 6,531 $ 130,425 931,204 $ 19,070,708 1,669,366 $ 33,303,396
155 3,078 -- -- 125,209 2,497,846 1,304,403 24,802,608
(5,213) (107,810) -- -- (637,082) (13,119,006) (1,619,111) (32,449,133)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
38,518 $ 803,344 6,531 $ 130,425 419,331 $ 8,449,548 1,354,658 $ 25,656,871
========== =========== ========= =========== ============ ============= ============ =============
287,644 $ 5,671,950 100,645 $ 1,851,974 188,483 $ 3,669,872 350,444 $ 6,256,570
1,855 35,668 5,651 103,990 282,421 5,452,921 2,822,018 50,986,119
(17,247) (340,663) (20,916) (401,484) (836,339) (16,556,342) (1,570,151) (28,301,671)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
272,252 $ 5,366,955 85,380 $ 1,554,480 (365,435) $ (7,433,549) 1,602,311 $ 28,941,018
========== =========== ========= =========== ============ ============= ============ =============
631,512 $ 7,780,356 278,826 $ 3,090,704 67,076 $ 813,336 17,355 $ 195,012
8,405 103,323 7,242 82,831 1,235 15,207 456 5,295
(43,481) (537,252) (37,410) (415,533) (1,080) (13,364) (425,004) (4,943,754)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
596,436 $ 7,346,427 248,658 $ 2,758,002 67,231 $ 815,179 (407,193) $ (4,743,447)
========== =========== ========= =========== ============ ============= ============ =============
2,073,399 $24,140,771 1,118,377 $12,586,569 118,090 $ 1,369,990 32,418 $ 371,211
65,895 765,156 29,193 330,589 6,516 75,744 495 5,673
(101,156) (1,178,857) (73,411) (817,122) (1,524) (17,612) (744,326) (8,131,320)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
2,038,138 $23,727,070 1,074,159 $12,100,036 123,082 $ 1,428,122 (711,413) $ (7,754,436)
========== =========== ========= =========== ============ ============= ============ =============
552,305 $ 5,975,749 425,748 $ 4,594,269 1,356 $ 14,651 1,757 $ 18,841
23,022 248,483 13,409 144,660 129 1,622 59 642
(51,917) (556,081) (55,475) (595,794) (323,231) (3,501,030) (575,895) (6,250,061)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
523,410 $ 5,668,151 383,682 $ 4,143,135 (321,746) $ (3,484,757) (574,079) $ (6,230,578)
========== =========== ========= =========== ============ ============= ============ =============
12,631 $ 126,850 16,846 $ 170,867 4,476 $ 45,020 6,017 $ 60,175
391 3,915 103 1,029 292 2,875 276 2,756
(19,899) (198,966) (1,471) (14,586) -- -- (1) (9)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
(6,877) $ (68,201) 15,478 $ 157,310 4,768 $ 47,895 6,292 $ 62,922
========== =========== ========= =========== ============ ============= ============ =============
5,026 $ 52,000 18,942 $ 195,000 113,663 $ 1,169,519 18,217 $ 184,880
508 5,221 368 3,788 779 8,011 24 241
-- -- -- -- (2,962) (30,564) -- --
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
5,534 $ 57,221 19,310 $ 198,788 111,480 $ 1,146,966 18,241 $ 185,121
========== =========== ========= =========== ============ ============= ============ =============
-- -- 25,000 $ 25,000 124,347,124 $ 124,347,124 310,065,551 $ 310,065,551
-- -- -- -- 4,229,063 4,229,063 6,167,495 6,167,495
-- -- -- -- (171,105,603) (171,105,603) (269,050,082) (269,050,082)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
-- -- 25,000 $ 25,000 (42,529,416) $ (42,529,416) 47,182,964 $ 47,182,964
========== =========== ========= =========== ============ ============= ============ =============
1,555,810 $ 1,555,810 1,086,079 $ 1,086,079 39,073,262 $ 39,073,262 51,041,652 $ 51,041,652
2,763 2,763 4,192 4,192 211,036 211,036 342,904 342,904
(1,557,078) (1,557,078) (837,929) (837,929) (40,924,974) (40,924,974) (43,843,474) (43,843,474)
- ---------- ----------- --------- ----------- ------------ ------------- ------------ -------------
1,495 $ 1,495 252,342 $ 252,342 (1,640,676) $ (1,640,676) 7,541,082 $ 7,541,082
========== =========== ========= =========== ============ ============= ============ =============
</TABLE>
See accompanying notes to financial statements
79
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
At June 30, 1997, Salomon Brothers owned approximately the following percentages
of total shares outstanding of the following Funds:
Asia Growth Fund..................................................... 42%
Strategic Bond Fund.................................................. 1%
U.S. Government Income Fund.......................................... 76%
National Intermediate Municipal Fund................................. 78%
4. Portfolio Activity
Cost of purchases and proceeds from sales of securities, excluding short-term
obligations, for the six months ended June 30, 1997, were as follows:
Purchases Sales
- ------------------------------------------------------------------------------
Asia Growth Fund............................. $ 13,770,458 $ 8,530,813
============= =============
Capital Fund................................. $ 125,839,333 $ 124,075,750
============= =============
Investors Fund............................... $ 163,439,078 $ 191,704,999
============= =============
Total Return Fund
U.S. Government Securities................. $ 12,532,657 $ 5,516,707
Other Investments.......................... 52,247,092 10,146,911
------------- -------------
$ 64,779,750 $ 22,251,209
============= =============
High Yield Bond Fund......................... $ 243,999,475 $ 76,199,935
============= =============
Strategic Bond Fund
U.S. Government Securities................. $ 9,166,303 $ 8,235,826
Other Investments.......................... 22,105,880 10,146,911
------------- -------------
$ 31,272,183 $ 18,382,737
============= =============
U.S. Government Income Fund
U.S. Government Securities................. $ 18,645,128 $ 19,072,686
============= =============
National Intermediate Municipal Fund......... $ 1,584,091 $ --
============= =============
Transactions in options written for the Funds during the six months ended June
30, 1997 were as follows:
<TABLE>
<CAPTION>
Capital Fund Investors Fund
----------------------- ---------------------
Number of Premiums Number of Premiums
Contracts Received Contracts Received
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at December 31, 1996.............. -- -- -- --
Options written....................................... (1,725) $(252,958) (500) $(85,617)
Options terminated in closing purchase transactions... 1,325 238,446 250 25,874
Options expired....................................... 400 14,512 -- --
Options exercised..................................... -- -- 250 59,743
------ --------- ---- --------
Options outstanding at June 30, 1997.................. -- -- -- --
====== ========= ==== ========
</TABLE>
80
<PAGE>
<PAGE>
5. Portfolio Investment Risks
Credit and Market Risk. Funds that invest in high yield and emerging market
instruments are subject to certain credit and market risks. The yields of high
yield and emerging market debt obligations reflect, among other things,
perceived credit risk. The Funds' investment in securities rated below
investment grade typically involve risks not associated with higher rated
securities including, among others, greater risk of timely and ultimate payment
of interest and principal, greater market price volatility and less liquid
secondary market trading. The consequences of political, social, economic or
diplomatic changes may have disruptive effects on the market prices of
investments held by the Funds. The Funds' investment in non-dollar denominated
securities may also result in foreign currency losses caused by devaluations and
exchange rate fluctuations.
The Cash Management Fund and New York Municipal Money Fund invest in money
market instruments maturing in thirteen months or less whose short-term credit
ratings are within the highest ratings categories of two nationally recognized
statistical rating organizations ("NRSROs") or if rated by only one NRSRO, that
NRSRO, or, if not rated, are believed by the investment manager to be of
comparable quality. The New York Municipal Money Fund pursues its investment
objective by investing at least 80% of its net assets in obligations that are
exempt from federal income taxes and at least 65% of its net assets in
obligations that are exempt from personal income taxes of the State and City of
New York. Because the New York Municipal Money Fund invests primarily in
obligations of the State and City of New York, it is more susceptible to factors
adversely affecting issuers of such obligations than a fund that is more
diversified.
Financial Instruments with Off-Balance Sheet Risk. Certain Funds enter into
forward foreign currency contracts ("forward contracts") to facilitate
settlement of foreign currency denominated portfolio transactions or to manage
foreign currency exposure associated with foreign currency denominated
securities. Forward contracts involve elements of market risk in excess of the
amounts reflected in the Statements of Assets and Liabilities. The Funds bear
the risk of an unfavorable change in the foreign exchange rate underlying the
forward contract. Risks may also arise upon entering into these contracts from
the potential inability of the counterparties to meet the terms of their
contracts.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the possibility of lower
levels of governmental supervision and regulation of foreign securities markets
and the possibility of political or economic instability.
Funds that enter into mortgage dollar rolls are subject to the risk that the
market value of the securities the Fund is obligated to repurchase under the
agreement may decline below the repurchase price. In the event the buyer of
securities under a mortgage dollar roll files for bankruptcy or becomes
insolvent, the Fund's use of proceeds of the dollar roll may be restricted
pending a determination by the other party, or its trustee or receiver, whether
to enforce the Fund's obligation to repurchase the securities.
Consistent with their objective to seek high current income, the High Yield Bond
Fund and the Strategic Bond Fund may invest in instruments whose values and
interest rates may be linked to foreign currencies, interest rates, indices or
some other financial indicator. The value at maturity or interest rates for
these instruments will increase or decrease according to the change in the
indicator to which it is indexed. These securities are generally more volatile
in nature and the risk of loss of principal is greater.
81
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
A risk in writing a 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
into a closing transaction because of an illiquid secondary market.
In connection with purchasing participations, the Fund generally will have no
right to enforce compliance by the borrower, and the Fund may not benefit
directly from any collateral supporting the loan in which it has purchased the
participation. As a result, the Fund will assume the credit risk of both the
borrower and the lender that is selling the participation. In the event of the
insolvency of the lender selling the participation, the Fund may be treated as a
general creditor of the lender and may not benefit from any set-off between the
lender and the borrower.
6. Tax Information
At December 31, 1996, the New York Municipal Money Fund and the Cash Management
Fund had net capital loss carry-forwards available to offset future capital
gains as follows:
New York
Municipal Cash
Year of Money Management
Expiration Fund Fund
- --------------------------------------------------------------------------------
1999.............................................. $ 64,677 $ 894
2000.............................................. 94,778 396
2001.............................................. -- 409
2002.............................................. 65,321 415
2003.............................................. -- --
2004.............................................. -- 10
-------- ------
$224,776 $2,124
======== ======
At June 30, 1997, the cost for Federal income tax purposes and gross unrealized
appreciation and depreciation in value of investments held in each Fund were as
follows:
<TABLE>
<CAPTION>
Gross Gross Net
Aggregate Unrealized Unrealized Unrealized
Cost Appreciation (Depreciation) Appreciation
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asia Growth Fund..................... $ 12,716,937 $ 1,610,993 $ (479,013) $ 1,131,980
Capital Fund......................... 129,062,433 28,486,131 (1,879,950) 26,606,181
Investors Fund....................... 369,078,347 207,292,975 (2,676,737) 204,616,238
Total Return Fund.................... 86,704,358 9,041,586 (419,356) 8,622,230
High Yield Bond Fund................. 339,069,091 14,725,794 (1,695,766) 13,030,028
Strategic Bond Fund.................. 40,836,373 1,717,423 (214,487) 1,502,936
U.S. Government Income Fund.......... 12,403,521 62,944 (28,349) 34,595
National Intermediate Municipal Fund. 12,506,458 396,393 -- 396,393
</TABLE>
82
<PAGE>
<PAGE>
[This page intentionally left blank]
83
<PAGE>
<PAGE>
Financial Highlights
Selected data per share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
ASIA GROWTH FUND'SS'
- ----------------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------------------
Six Months Six Months
Ended Period Ended Period
June 30, Ended June 30, Ended
1997 December 31, 1997 December 31,
(unaudited) 1996(a) (unaudited) 1996(a)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............... $10.32 $10.00 $10.31 $10.00
------ ------ ------ ------
Net investment income .............................. 0.01 0.05 (0.03) 0.01
Net gain on investments
(both realized and unrealized) .................. 1.85 0.47 1.85 0.46
------ ------ ------ ------
Total from investment operations ................ 1.86 0.52 1.82 0.47
------ ------ ------ ------
Dividends from net investment income ............... (0.03) (0.05) (0.00) (0.01)
Distributions from net realized gain on investments (0.25) (0.15) (0.25) (0.15)
------ ------ ------ ------
Total dividends and distributions ............... (0.28) (0.20) (0.25) (0.16)
------ ------ ------ ------
Net asset value, end of period ..................... $11.90 $10.32 $11.88 $10.31
====== ====== ====== ======
Net assets, end of period (thousands) .............. $7,115 $3,693 $5,454 $3,163
Total return* ...................................... +18.4% +5.2% +18.1% +4.7%
Ratios to average net assets:
Expenses ........................................ 1.24%** 1.24%** 1.99%** 1.99%**
Net investment income ........................... 0.25%** 0.90%** -0.47%** 0.20%**
Portfolio turnover rate ............................ 95% 119% 95% 119%
Average Broker Commission Rate ..................... $0.0055 $0.0052 $0.0055 $0.0052
Before waiver of management fee, expenses
absorbed by SBAM and credits earned on custodian
cash balances, net investment income per share
and expense ratios would have been:
Net investment income per share ............... ($0.16) ($0.18) ($0.20) ($0.23)
Expense ratio ................................. 4.60%** 5.50%** 5.35%** 6.25%**
</TABLE>
<TABLE>
<CAPTION>
CAPITAL FUND
- --------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------------
Six Months Six Months
Ended Period Ended Period
June 30, Ended June 30, Ended
1997'SS' December 31, 1997'SS' December 31,
(unaudited) 1996(b)'SS' (unaudited) 1996(b)'SS'
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .............. $19.88 $21.98 $19.90 $21.98
------ ------ ------ ------
Net investment income ............................. 0.05 0.01 (0.03) (0.02)
Net gain (loss) on investments
(both realized and unrealized) ................. 2.73 1.54 2.74 1.56
------ ------ ------ ------
Total from investment operations ............... 2.78 1.55 2.71 1.54
------ ------ ------ ------
Dividends from net investment income .............. -- (0.15) -- (0.12)
Distributions from net realized gain on investments (0.38) (3.50) (0.38) (3.50)
Distributions in excess of net realized gains ..... -- -- -- --
------ ------ ------ ------
Total dividends and distributions .............. (0.38) (3.65) (0.38) (3.62)
------ ---- ------ ------
Net asset value, end of period .................... $22.28 $19.88 $22.23 $19.90
====== ====== ====== ======
Net assets, end of period (thousands) ............. $2,647 $344 $1,014 $219
Total return* ..................................... +14.3% +7.7% +14.0% +7.6%
Ratios to average net assets:
Expenses ....................................... 1.52%** 1.88%** 2.28%** 2.73%**
Net investment income .......................... 0.48%** 0.18%** -0.27%** -0.66%**
Portfolio turnover rate ........................... 86% 191% 86% 191%
Average Broker Commission Rate .................... $0.0494 $0.0586 $0.0494 $0.0586
</TABLE>
(a) May 6, 1996, commencement of investment operations, through December 31,
1996.
(b) November 1, 1996, commencement of investment operations, through December
31, 1996.
'SS' Per share information calculated using the average shares outstanding
method, which more accurately represents amounts.
* Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends at the net asset value
on the ex-dividend date, and a sale at net asset value on the last day of
each period reported. Initial sales charge or contingent deferred sales
charge is not reflected in the calculation of total return. Total return
calculated for a period of less than one year is not annualized.
** Annualized.
See accompanying notes to financial statements
84
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Class C Class O
- ---------------------------------------------------------------------------------------------
Six Months Six Months
Ended Period Ended Period
June 30, Ended June 30, Ended
1997 December 31, 1997 December 31,
(unaudited) 1996(a) (unaudited) 1996(a)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$10.30 $10.00 $10.32 $10.00
------ ------ ------ ------
(0.02) 0.01 0.03 0.07
1.85 0.45 1.85 0.46
------ ------ ------ ------
1.83 0.46 1.88 0.53
------ ------ ------ ------
(0.00) (0.01) (0.03) (0.06)
(0.25) (0.15) (0.25) (0.15)
------ ------ ------ ------
(0.25) (0.16) (0.28) (0.21)
------ ------ ------ ------
$11.88 $10.30 $11.92 $10.32
====== ====== ====== ======
$1,462 $246 $285 $124
+18.1% +4.6% +18.7% +5.3%
2.00%** 2.00%** 0.99%** 0.99%**
-0.45%** 0.08%** 0.55%** 1.21%**
95% 119% 95% 119%
$0.0055 $0.0052 $0.0055 $0.0052
($0.20) ($0.20) ($0.15) ($0.18)
5.36%** 6.26%** 4.35%** 5.25%**
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Class C Class O
- ------------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Period Ended
June 30, Ended June 30, Year Ended December 31,
1997'SS' December 31, 1997'SS' -------------------------------------------------------------------
(unaudited) 1996(b)'SS' (unaudited) 1996'SS' 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$19.91 $21.98 $ 19.88 $ 18.67 $ 15.62 $ 20.80 $ 19.64 $ 19.06
------ ------ -------- -------- -------- ------- -------- --------
(0.03) (0.02) 0.07 0.13 0.14 0.03 0.028 0.10
2.75 1.57 2.76 5.70 5.27 (2.87) 3.242 0.80
------ ------ -------- -------- -------- ------- -------- --------
2.72 1.55 2.83 5.83 5.41 (2.84) 3.27 0.90
------ ------ -------- -------- -------- ------- -------- --------
-- (0.12) -- (0.15) (0.14) (0.03) (0.035) (0.105)
(0.38) (3.50) (0.38) (4.47) (2.22) (1.51) (2.075) (0.215)
-- -- -- -- -- (0.80) -- --
------ ------ -------- -------- -------- ------- -------- --------
(0.38) (3.62) (0.38) (4.62) (2.36) (2.34) (2.11) (0.32)
------ ------ -------- -------- -------- ------- -------- --------
$22.25 $19.91 $ 22.33 $ 19.88 $ 18.67 $ 15.62 $ 20.80 $ 19.64
====== ====== ======== ======== ======== ======= ======== ========
$1,002 $ 130 $162,112 $135,943 $102,429 $86,704 $113,905 $103,356
+14.0% +7.7% +14.5% +33.3% +34.9% -14.2% +17.2% +4.7%
2.28%** 2.45%** 1.27%** 1.38% 1.36% 1.30% 1.31% 1.34%
-0.29%** -0.05%** 0.66%** 0.67% 0.74% 0.12% 0.13% 0.58%
86% 191% 86% 191% 217% 152% 104% 41%
$0.0494 $0.0586 $0.0494 $0.0586 N/A N/A N/A N/A
</TABLE>
85
<PAGE>
<PAGE>
Financial Highlights (continued)
Selected data per share of capital stock outstanding throughout each period:
INVESTORS FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------------------------------------
Six Months Six Months
Ended Ended
June 30, Year Ended December 31, June 30, Year Ended December 31,
1997 ----------------------- 1997 -----------------------
(unaudited) 1996 1995 (unaudited) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 18.89 $ 16.62 $13.61 $ 18.86 $ 16.61 $13.61
------- ------- ------ ------- ------- ------
Net investment income ................. 0.06 0.19 0.19 0.02 0.08 0.10
Net gain (loss) on investments
(both realized and unrealized) ..... 2.74 4.63 4.55 2.69 4.60 4.54
------- ------- ------ ------- ------- ------
Total from investment operations ... 2.80 4.82 4.74 2.71 4.68 4.64
------- ------- ------ ------- ------- ------
Dividends from net investment income .. (0.04) (0.22) (0.23) (0.02) (0.10) (0.14)
Distributions from net realized gain on
investments ........................ (0.21) (2.33) (1.50) (0.21) (2.33) (1.50)
------- ------- ------ ------- ------- ------
Total dividends and distributions .. (0.25) (2.55) (1.73) (0.23) (2.43) (1.64)
------- ------- ------ ------- ------- ------
Net asset value, end of period ........ $ 21.44 $ 18.89 $16.62 $ 21.34 $ 18.86 $16.61
======= ======= ====== ======= ======= ======
Net assets, end of period (thousands) . $43,864 $10,905 $ 441 $32,278 $ 9,433 $ 716
Total return * ........................ +14.9% +30.3% +35.3% +14.5% +29.2% +34.5%
Ratios to average net assets:
Expenses ........................... 0.94%** 1.06% 0.94% 1.69%** 1.82% 1.71%
Net investment income .............. 1.10%** 0.94% 1.41% 0.36%** 0.21% 0.63%
Portfolio turnover rate ............... 30% 58% 86% 30% 58% 86%
Average Broker Commission Rate ........ $0.0600 $0.0593 N/A $0.0600 $0.0593 N/A
</TABLE>
TOTAL RETURN FUND'SS'
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Year Period Ended Year Period
June 30, Ended Ended June 30 Ended Ended
1997 December 31, December 31, 1997, December 31, December 31,
(unaudited) 1996 1995(a) (unaudited) 1996 1995(a)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................ $ 11.82 $ 10.55 $10.00 $ 11.82 $ 10.54 $10.00
------- ------- ------ ------- ------- ------
Net investment income ............................... 0.26 0.54 0.15 0.22 0.45 0.13
Net gain on investments
(both realized and unrealized) ................... 0.86 1.35 0.52 0.85 1.35 0.51
------- ------- ------ ------- ------- ------
Total from investment operations ................. 1.12 1.89 0.67 1.07 1.80 0.64
------- ------- ------ ------- ------- ------
Dividends from net investment income ................ (0.25) (0.52) (0.11) (0.21) (0.42) (0.09)
Distributions from net realized gain on
investments ...................................... (0.02) (0.10) (0.01) (0.02) (0.10) (0.01)
------- ------- ------ ------- ------- ------
Total dividends and distributions ................ (0.27) (0.62) (0.12) (0.23) (0.52) (0.10)
------- ------- ------ ------- ------- ------
Net asset value, end of period ...................... $12.67 $ 11.82 $10.55 $ 12.66 $ 11.82 $10.54
======= ======= ====== ======= ======= ======
Net assets, end of period (thousands) ............... $39,593 $21,109 $3,658 $55,929 $28,043 $5,378
Total return * ...................................... +9.6% +18.3% +6.7% +9.2% +17.4% +6.4%
Ratios to average net assets:
Expenses ......................................... 0.75%** 0.75% 0.74%** 1.50%** 1.50% 1.49%**
Net investment income ............................ 4.34%** 4.81% 4.82%** 3.61%** 4.06% 4.06%**
Portfolio turnover rate ............................. 33% 76% 16% 33% 76% 16%
Average Broker Commission Rate ...................... $0.0592 $0.0534 N/A $0.0592 $0.0534 N/A
Before waiver of management fee, expenses
absorbed by SBAM and credits earned on custodian
cash balances, net investment income per share and
expense ratios would have been:
Net investment income per share .................. $ 0.23 $ 0.44 $ 0.13 $ 0.19 $ 0.36 $ 0.11
Expense ratio .................................... 1.24%** 1.61% 1.45%** 2.00%** 2.36% 2.19%**
</TABLE>
(a) September 11, 1995, commencement of investment operations, through December
31, 1995.
'SS' Per share information calculated using the average shares outstanding
method, which more accurately represents amounts.
* Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends at the net asset value
on the payable date, and a sale at net asset value on the last day of each
period reported. Initial sales charge or contingent deferred sales charge
is not reflected in the calculation of total return. Total return
calculated for a period of less than one year is not annualized.
** Annualized.
See accompanying notes to financial statements
86
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Class C Class O
- ------------------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Ended
June 30, Year Ended December 31, June 30, Year Ended December 31,
1997 ----------------------- 1997 -----------------------------------------------------------------
(unaudited) 1996 1995 (unaudited) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 18.86 $ 16.61 $13.61 $ 18.90 $ 16.61 $ 13.63 $ 15.60 $ 16.10 $ 17.10
------- ------- ------ -------- -------- -------- -------- -------- --------
0.02 0.07 0.09 0.11 0.25 0.27 0.27 0.32 0.41
2.70 4.60 4.55 2.71 4.62 4.48 (0.48) 2.03 0.79
------- ------- ------ -------- -------- -------- -------- -------- --------
2.72 4.67 4.64 2.82 4.87 4.75 (0.21) 2.35 1.20
------- ------- ------ -------- -------- -------- -------- -------- --------
(0.02) (0.09) (0.14) (0.05) (0.25) (0.27) (0.27) (0.33) (0.41)
(0.21) (2.33) (1.50) (0.21) (2.33) (1.50) (1.49) (2.52) (1.79)
------- ------- ------ -------- -------- -------- -------- -------- --------
(0.23) (2.42) (1.64) (0.26) (2.58) (1.77) (1.76) (2.85) (2.20)
------- ------- ------ -------- -------- -------- -------- -------- --------
$ 21.35 $ 18.86 $16.61 $ 21.46 $ 18.90 $ 16.61 $ 13.63 $ 15.60 $ 16.10
======= ======= ====== ======== ======== ======== ======== ======== ========
$ 8,030 $ 1,959 $ 306 $580,720 $518,361 $428,950 $348,214 $386,147 $370,350
+14.5% +29.3% +34.5% +15.1% +30.6% +35.4% -1.3% +15.1% +7.4%
1.69%** 1.80% 1.68% 0.68%** 0.76% 0.69% 0.69% 0.68% 0.68%
0.36%** 0.23% 0.66% 1.29%** 1.36% 1.67% 1.75% 1.90% 2.47%
30% 58% 86% 30% 58% 86% 66% 79% 48%
$0.0600 $0.0593 N/A $ 0.0600 $ 0.0593 N/A N/A N/A N/A
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Class C Class O
- -----------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Year Period Ended Year Period
June 30, Ended Ended June 30, Ended Ended
1997 December 31, December 31, 1997 December 31, December 31,
(unaudited) 1996 1995(a) (unaudited) 1996 1995(a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 11.85 $ 10.56 $10.00 $ 11.88 $ 10.57 $10.00
------- ------- ------ ------- ------- ------
0.22 0.46 0.14 0.29 0.57 0.17
0.86 1.35 0.51 0.86 1.39 0.52
------- ------- ------ ------- ------- ------
1.08 1.81 0.65 1.15 1.96 0.69
------- ------- ------ ------- ------- ------
(0.21) (0.42) (0.08) (0.27) (0.55) (0.11)
(0.02) (0.10) (0.01) (0.02) (0.10) (0.01)
------- ------- ------ ------- ------- ------
(0.23) (0.52) (0.09) (0.29) (0.65) (0.12)
------- ------- ------ ------- ------- ------
$ 12.70 $ 11.85 $10.56 $ 12.74 $ 11.88 $10.57
======= ======= ====== ======= ======= ======
$11,263 $ 3,445 $ 445 $ 1,085 $ 213 $4,494
+9.2% +17.5% +6.5% +9.8% +19.0% +6.9%
1.50%** 1.50% 1.51%** 0.51%** 0.50% 0.51%**
3.59%** 4.07% 4.26%** 4.73%** 5.13% 5.30%**
33% 76% 16% 33% 76% 16%
$0.0592 $0.0534 N/A $0.0592 $0.0534 N/A
$ 0.19 $ 0.36 $ 0.11 $ 0.26 $ 0.47 $ 0.15
1.99%** 2.36% 2.22%** 1.00%** 1.36% 1.22%**
</TABLE>
See accompanying notes to financial statements
87
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
Selected data per share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
HIGH YIELD BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended Period Ended June 30, Year Ended Period Ended
1997 December 31, December 31, 1997 December 31, December 31,
(unaudited) 1996 1995(a) (unaudited) 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.54 $ 10.53 $ 10.00 $ 11.53 $ 10.53 $ 10.00
-------- ------- ------- -------- -------- -------
Net investment income............... 0.52 1.10 0.92 0.48 1.02 0.85
Net gain on investments
(both realized and unrealized)... 0.32 1.11 0.67 0.32 1.11 0.68
-------- ------- ------- -------- -------- -------
Total from investment operations. 0.84 2.21 1.59 0.80 2.13 1.53
-------- ------- ------- -------- -------- -------
Dividends from net investment income (0.56) (1.10) (0.91) (0.53) (1.03) (0.85)
Distributions from net realized
gain on investments............. (0.02) (0.10) (0.15) (0.02) (0.10) (0.15)
-------- ------- ------- -------- -------- -------
Total dividends and distributions... (0.58) (1.20) (1.06) (0.55) (1.13) (1.00)
-------- ------- ------- -------- -------- -------
Net asset value, end of period...... $ 11.80 $ 11.54 $ 10.53 $ 11.78 $ 11.53 $ 10.53
======== ======= ======= ======== ======== =======
Net assets, end of period
(thousands)...................... $122,608 $65,935 $10,789 $212,766 $106,797 $10,108
Total return*....................... +7.4% +21.9% +16.6% +6.9% +21.2% +15.7%
Ratios to average net assets:
Expenses......................... 1.24%** 1.24% 1.24%** 1.99%** 1.99% 1.96%**
Net investment income............ 8.71%** 9.38% 10.58%** 7.94%** 8.49% 9.53%**
Portfolio turnover rate............. 29% 85% 109% 29% 85% 109%
Before applicable waiver of
management fee and credits earned
on custodian cash balances, net
investment income per share and
expense ratios would have been:
Net investment income per share $ 0.52 $ 1.09 $ 0.87 $ 0.48 $ 1.01 $ 0.80
Expense ratio.................. 1.27%** 1.50% 1.80%** 2.01%** 2.24% 2.51%**
<CAPTION>
STRATEGIC BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended Period Ended June 30, Year Ended Period Ended
1997'SS' December 31, December 31, 1997'SS' December 31, December 31,
(unaudited) 1996'SS' 1995(a) (unaudited) 1996'SS' 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.83 $ 10.53 $ 10.00 $ 10.82 $ 10.53 $ 10.00
-------- ------- ------- -------- -------- -------
Net investment income............... 0.39 0.87 0.84 0.35 0.79 0.76
Net gain on investments
(both realized and unrealized)... 0.18 0.55 0.78 0.19 0.53 0.79
-------- ------- ------- -------- -------- -------
Total from investment operations. 0.57 1.42 1.62 0.54 1.32 1.55
-------- ------- ------- -------- -------- -------
Dividends from net investment
income.......................... (0.50) (0.94) (0.85) (0.46) (0.85) (0.78)
Dividends in excess of net
investment income............... -- (0.01) -- -- (0.01) --
Distributions from net realized
gain on investments............ (0.01) (0.17) (0.24) (0.01) (0.17) (0.24)
-------- ------- ------- -------- -------- -------
Total dividends and distributions (0.51) (1.12) (1.09) (0.47) (1.03) (1.02)
-------- ------- ------- -------- -------- -------
Net asset value, end of period...... $ 10.89 $ 10.83 $ 10.53 $ 10.89 $ 10.82 $ 10.53
======== ======= ======= ======== ======== =======
Net assets, end of period
(thousands)...................... $ 13,784 $ 8,345 $ 513 $ 28,015 $ 14,291 $ 1,879
Total return*....................... +5.4% +14.1% +16.8% +5.1% +13.0% +16.1%
Ratios to average net assets:
Expenses......................... 1.25%** 1.24% 1.23%** 1.99%** 1.98% 1.97%**
Net investment income............ 7.36%** 8.09% 9.51%** 6.55%** 7.34% 8.75%**
Portfolio turnover rate............. 52% 122% 161% 52% 122% 161%
Before waiver of management fee,
expenses absorbed by SBAM and
credits earned on custodian cash
balances, net investment income
per share and expense ratios
would have been:
Net investment income per share $ 0.37 $ 0.79 $ 0.76 $ 0.33 $ 0.71 $ 0.69
Expense ratio.................. 1.60%** 1.98% 2.11%** 2.34%** 2.73% 2.85%**
</TABLE>
(a) February 22, 1995, commencement of investment operations, through December
31, 1995.
'SS' Per share information calculated using the average shares outstanding
method, which more accurately represents amounts.
* Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends at the net asset value
on the payable date, and a sale at net asset value on the last day of each
period reported. Initial sales charge or contingent deferred sales charge
is not reflected in the calculation of total return. Total return
calculated for a period of less than one year is not annualized.
** Annualized.
See accompanying notes to financial statements
88
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Class C Class O
- ------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended Period Ended June 30, Year Ended Period Ended
1997 December 31, December 31, 1997 December 31, December 31,
(unaudited) 1996 1995(a) (unaudited) 1996'SS' 1995(a)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 11.52 $ 10.53 $10.00 $11.53 $10.54 $10.00
------- ------- ------ ------ ------ ------
0.48 1.02 0.85 0.53 1.16 0.95
0.32 1.10 0.68 0.33 1.05 0.67
------- ------- ------ ------ ------ ------
0.80 2.12 1.53 0.86 2.21 1.62
------- ------- ------ ------ ------ ------
(0.53) (1.03) (0.85) (0.57) (1.12) (0.93)
(0.02) (0.10) (0.15) (0.02) (0.10) (0.15)
------- ------- ------ ------ ------ ------
(0.55) (1.13) (1.00) (0.59) (1.22) (1.08)
------- ------- ------ ------ ------ ------
$ 11.77 $ 11.52 $10.53 $11.80 $11.53 $10.54
======= ======= ====== ====== ====== ======
$38,064 $13,773 $1,274 $1,855 $ 393 $7,854
+7.0% +21.1% +15.8% +7.6% +22.0% +16.8%
1.99%** 1.99% 1.98%** 0.99%** 0.99% 1.00%**
7.91%** 8.43% 9.61%** 8.93%** 10.64% 10.59%**
29% 85% 109% 29% 85% 109%
$ 0.48 $ 1.01 $ 0.80 $ 0.53 $ 1.13 $ 0.90
2.01%** 2.24% 2.54%** 1.01%** 1.24% 1.55%**
<CAPTION>
- ------------------------------------------------------------------------------------------------
Class C Class O
- ------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended Period Ended June 30, Year Ended Period Ended
1997'SS' December 31, December 31, 1997'SS' December 31, December 31,
(unaudited) 1996'SS' 1995(a) (unaudited) 1996'SS' 1995(a)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 10.82 $ 10.53 $10.00 $10.82 $10.53 $10.00
------- ------- ------ ------ ------ ------
0.35 0.78 0.77 0.40 0.92 0.87
0.19 0.54 0.78 0.19 0.51 0.77
------- ------- ------ ------ ------ ------
0.54 1.32 1.55 0.59 1.43 1.64
------- ------- ------ ------ ------ ------
(0.46) (0.85) (0.78) (0.51) (0.96) (0.87)
-- (0.01) -- -- (0.01) --
(0.01) (0.17) (0.24) (0.01) (0.17) (0.24)
------- ------- ------ ------ ------ ------
(0.47) (1.03) (1.02) (0.52) (1.14) (1.11)
------- ------- ------ ------ ------ ------
$ 10.89 $ 10.82 $10.53 $10.89 $10.82 $10.53
======= ======= ====== ====== ====== ======
$10,303 $ 4,575 $ 411 $ 340 $3,817 $9,763
+5.1% +13.1% +16.1% +5.6% +14.2% +17.0%
1.99%** 1.98% 1.99%** 0.95%** 1.00% 0.99%**
6.52%** 7.26% 8.77%** 7.34%** 8.65% 9.74%**
52% 122% 161% 52% 122% 161%
$ 0.33 $ 0.70 $ 0.70 $ 0.38 $ 0.84 $ 0.79
2.34%** 2.72% 2.87%** 1.31%** 1.74% 1.87%**
</TABLE>
See accompanying notes to financial statements
89
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
Selected data per share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended Period Ended June 30, Year Ended Period Ended
1997 December 31, December 31, 1997 December 31, December 31,
(unaudited) 1996 1995(a) (unaudited) 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $10.07 $10.32 $10.00 $10.06 $10.32 $10.00
------ ------ ------ ------ ------ ------
Net investment income............ 0.29 0.54 0.49 0.25 0.46 0.43
Net gain on investments
(both realized and unrealized) (0.02) (0.19) 0.43 -- (0.20) 0.43
------ ------ ------ ------ ------ ------
Total from investment
operations................. 0.27 0.35 0.92 0.25 0.26 0.86
------ ------ ------ ------ ------ ------
Dividends from net investment
income........................ (0.29) (0.54) (0.49) (0.26) (0.46) (0.43)
Distributions from net realized
gain on investments........... (0.01) (0.06) (0.10) (0.01) (0.06) (0.10)
Distributions in excess of net
realized gain on investments.. -- -- (0.01) -- -- (0.01)
------ ------ ------ ------ ------ ------
Total dividends and
distributions.............. (0.30) (0.60) (0.60) (0.27) (0.52) (0.54)
------ ------ ------ ------ ------ ------
Net asset value, end of period... $10.04 $10.07 $10.32 $10.04 $10.06 $10.32
====== ====== ====== ====== ====== ======
Net assets, end of period
(thousands)................... $1,676 $1,188 $ 278 $1,488 $1,266 $ 572
Total return*.................... +2.8% +3.6% +9.5% +2.5% +2.7% +8.8%
Ratios to average net assets:
Expenses...................... 0.85%** 0.84% 0.85%** 1.60%** 1.59% 1.60%**
Net investment income......... 5.80%** 5.22% 5.67%** 5.07%** 4.51% 4.85%**
Portfolio turnover rate.......... 172% 365% 230% 172% 365% 230%
Before applicable waiver of
management fee, expenses
absorbed by SBAM and credits
earned on custodian cash
balances, net investment
income per share and expense
ratios would have been:
Net investment income per
share..................... $ 0.23 $ 0.38 $ 0.40 $ 0.19 $0.30 $ 0.34
Expense ratio............... 2.10%** 2.21% 1.90%** 2.85%** 2.96% 2.64%**
<CAPTION>
NATIONAL INTERMEDIATE MUNICIPAL FUND
- ---------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended Period Ended June 30, Year Ended Period Ended
1997 December 31, December 31, 1997 December 31, December 31,
(unaudited) 1996 1995(a) (unaudited) 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $10.35 $10.43 $10.00 $10.33 $10.42 $10.00
------ ------ ------ ------ ------ ------
Net investment income............ 0.24 0.48 0.40 0.20 0.40 0.34
Net gain on investments
(both realized and unrealized) 0.04 (0.06) 0.46 0.03 (0.06) 0.45
------ ------ ------ ------ ------ ------
Total from investment
operations................. 0.28 0.42 0.86 0.23 0.34 0.79
------ ------ ------ ------ ------ ------
Dividends from net investment
income........................ (0.24) (0.48) (0.40) (0.20) (0.41) (0.34)
Distributions from net realized
gain on investments........... (0.01) (0.02) (0.03) (0.01) (0.02) (0.03)
------ ------ ------ ------ ------ ------
Total dividends and
distributions.............. (0.25) (0.50) (0.43) (0.21) (0.43) (0.37)
------ ------ ------ ------ ------ ------
Net asset value, end of period... $10.38 $10.35 $10.43 $10.35 $10.33 $10.42
====== ====== ====== ====== ====== ======
Net assets, end of period
(thousands)................... $ 838 $ 696 $ 569 $ 939 $ 702 $ 432
Total return*.................... +2.7% +4.2% +8.7% +2.3% +3.4% +8.0%
Ratios to average net assets:
Expenses...................... 0.75%** 0.75% 0.75%** 1.50%** 1.50% 1.50%**
Net investment income......... 4.68%** 4.62% 4.63%** 3.92%** 3.88% 3.85%**
Portfolio turnover rate.......... 0% 19% 29% 0% 19% 29%
Before applicable waiver of
management fee, expenses
absorbed by SBAM and credits
earned on custodian cash
balances, net investment
income per share and expense
ratios would have been:
Net investment income per
share.................. $ 0.18 $ 0.35 $ 0.32 $ 0.14 $ 0.27 $ 0.25
Expense ratio............. 1.99%** 2.02% 1.71%** 2.74%** 2.77% 2.45%**
</TABLE>
(a) February 22, 1995, commencement of investment operations, through December
31, 1995.
* Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends at the net asset value
on the payable date, and a sale at net asset value on the last day of each
period reported. Initial sales charge or contingent deferred sales charge is
not reflected in the calculation of total return. Total return calculated
for a period of less than one year is not annualized.
** Annualized.
See accompanying notes to financial statements
90
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Class C Class O
- ------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended Period Ended June 30, Year Ended Period Ended
1997 December 31, December 31, 1997 December 31, December 31,
(unaudited) 1996 1995(a) (unaudited) 1996 1995(a)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10.05 $10.32 $10.00 $10.06 $10.32 $10.00
------ ------ ------ ------ ------ ------
0.25 0.46 0.43 0.30 0.56 0.52
0.01 (0.21) 0.43 (0.01) (0.20) 0.42
------ ------ ------ ------ ------ ------
0.26 0.25 0.86 0.29 0.36 0.94
------ ------ ------ ------ ------ ------
(0.26) (0.46) (0.43) (0.31) (0.56) (0.52)
(0.01) (0.06) (0.10) (0.01) (0.06) (0.10)
-- -- (0.01) -- -- --
------ ------ ------ ------ ------ ------
(0.27) (0.52) (0.54) (0.32) (0.62) (0.62)
------ ------ ------ ------ ------ ------
$10.04 $10.05 $10.32 $10.03 $10.06 $10.32
====== ====== ====== ====== ====== ======
$ 352 $ 422 $ 273 $9,401 $9,375 $9,552
+2.5% +2.7% +8.8% +2.9% +3.7% +9.7%
1.60%** 1.60% 1.60%** 0.60%** 0.60% 0.60%**
5.05%** 4.51% 4.92%** 6.09%** 5.53% 5.92%**
172% 365% 230% 172% 365% 230%
$ 0.19 $ 0.31 $ 0.34 $ 0.24 $ 0.41 $ 0.42
2.85%** 2.97% 2.64%** 1.86%** 1.97% 1.64%**
<CAPTION>
- ----------------------------------------------------------------------------------------------
Class C Class O
- ----------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended Period Ended June 30, Year Ended Period Ended
1997 December 31, December 31, 1997 December 31, December 31,
(unaudited) 1996 1995(a) (unaudited) 1996 1995(a)
- ----------------------------------------------------------------------------------------------
$10.33 $10.42 $10.00 $ 10.34 $10.43 $10.00
------ ------ ------ ------- ------ ------
0.20 0.40 0.34 0.25 0.50 0.42
0.04 (0.06) 0.45 0.04 (0.07) 0.46
------ ------ ------ ------- ------ ------
0.24 0.34 0.79 0.29 0.43 0.88
------ ------ ------ ------- ------ ------
(0.20) (0.41) (0.34) (0.25) (0.50) (0.42)
(0.01) (0.02) (0.03) (0.01) (0.02) (0.03)
------ ------ ------ ------- ------ ------
(0.21) (0.43) (0.37) (0.26) (0.52) (0.45)
------ ------ ------ ------- ------ ------
$10.36 $10.33 $10.42 $ 10.37 $10.34 $10.43
====== ====== ====== ======= ====== ======
$ 526 $ 468 $ 271 $10,968 $9,786 $9,675
+2.4% +3.4% +8.0% +2.9% +4.3% +9.0%
1.50%** 1.50% 1.50%** 0.50%** 0.50% 0.50%**
3.94%** 3.88% 3.85%** 4.94%** 4.88% 4.86%**
0% 19% 29% 0% 19% 29%
$ 0.14 $ 0.27 $ 0.25 $ 0.19 $ 0.37 $ 0.34
2.74%** 2.77% 2.46%** 1.74%** 1.77% 1.46%**
</TABLE>
See accompanying notes to financial statements
91
<PAGE>
<PAGE>
Financial Highlights (concluded)
Selected data per share of capital stock outstanding throughout each period:
NEW YORK MUNICIPAL MONEY FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Period Ended June 30, Period Ended
1997 December 31, 1997 December 31,
(unaudited) 1996(a) (unaudited) 1996(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........................... $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------
Net investment income .......................................... 0.017 0.006 0.017 0.006
Dividends from net investment income ........................... (0.017) (0.006) (0.017) (0.006)
------ ------ ------ ------
Net asset value, end of period ................................. $1.000 $1.000 $1.000 $1.000
====== ====== ====== ======
Net assets, end of period (thousands) .......................... $2,331 $360 $25 $25
Total return* .................................................. +1.7% +0.6% +1.7% +0.6%
Ratios to average net assets:
Expenses .................................................... 0.41%** 0.38%** 0.40%** 0.40%**
Net investment income ....................................... 3.55%** 3.56%** 3.32%** 3.40%**
Before applicable waiver of management fee and credits earned on
custodian cash balances, net investment income per share and
expense ratios would have been:
Net investment income per share ........................... -- $0.006 -- $0.006
Expense ratio ............................................. -- 0.39%** -- 0.41%**
</TABLE>
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended December 31, June 30, Year Ended December 31,
1997 ----------------------- 1997 -----------------------
(unaudited) 1996 1995 (unaudited) 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------
Net investment income .............................. 0.025 0.050 0.044 0.025 0.050 0.043
Dividends from net investment income ............... (0.025) (0.050) (0.044) (0.025) (0.050) (0.043)
------ ------ ------ ------ ------ ------
Net asset value, end of period ..................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ======
Net assets, end of period (thousands) .............. $9,788 $8,175 $1,756 $3,150 $3,920 $2,238
Total return* ...................................... +2.5% +5.1% +4.5% +2.5% +5.1% +4.4%
Ratios to average net assets:
Expenses ........................................ 0.55%** 0.55% 0.55% 0.55%** 0.55% 0.55%
Net investment income ........................... 5.02%** 4.95% 5.42% 5.02%** 4.95% 5.38%
Before applicable waiver of management fee, expenses
absorbed by SBAM and credits earned on custodian
cash balances, net investment income per share
and expense ratios would have been:
Net investment income per share ............... $0.024 $0.047 $0.037 $0.024 $0.047 $0.037
Expense ratio ................................. 0.64%** 0.82% 1.35% 0.64%** 0.82% 1.34%
</TABLE>
(a) November 1, 1996, commencement of investment operations, through December
31, 1996.
* Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends at the net asset value
on the payable date, and a sale at net asset value on the last day of each
period reported. Total return calculated for a period of less than one year
is not annualized.
** Annualized.
See accompanying notes to financial statements
92
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Class C Class O
- ----------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Ended
June 30, Period Ended June 30, Year Ended December 31,
1997 December 31, 1997 ------------------------------------------------------------
(unaudited) 1996(a) (unaudited) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$1.000 $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------ ------ -------- -------- -------- -------- -------- --------
0.017 0.006 0.017 0.032 0.037 0.027 0.023 0.031
(0.017) (0.006) (0.017) (0.032) (0.037) (0.027) (0.023) (0.031)
------ ------ -------- -------- -------- -------- -------- --------
$1.000 $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====== ====== ======== ======== ======== ======== ======== ========
$ 25 $ 25 $231,196 $273,734 $226,549 $269,788 $262,413 $263,685
+1.7% +0.6% +1.7% +3.3% +3.7% +2.7% +2.3% +3.1%
0.40%** 0.40%** 0.41%** 0.53% 0.43% 0.41% 0.41% 0.42%
3.48%** 3.40%** 3.46%** 3.25% 3.67% 2.63% 2.31% 3.07%
-- $0.006 -- $0.032 $0.037 -- -- --
-- 0.41%** -- 0.53% 0.45% -- -- --
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Class C Class O
- ------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Ended
June 30, Year Ended December 31, June 30, Year Ended December 31,
1997 ----------------------- 1997 -----------------------------------------------------
(unaudited) 1996 1995 (unaudited) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- ------- ------- ------- -------
0.025 0.050 0.043 0.025 0.050 0.055 0.038 0.027 0.033
(0.025) (0.050) (0.043) (0.025) (0.050) (0.055) (0.038) (0.027) (0.033)
------- ------- ------- ------- ------- ------- ------- ------- -------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= ======= ======= ======= =======
$ 436 $ 435 $ 183 $12,585 $14,225 $ 6,684 $19,127 $15,049 $11,613
+2.5% +5.1% +4.4% +2.5% +5.1% +5.6% +3.9% +2.7% +3.4%
0.55%** 0.55% 0.55% 0.55%** 0.55% 0.55% 0.61% 0.65% 0.65%
5.05%** 4.95% 5.40% 5.02%** 4.95% 5.46% 3.79% 2.68% 3.41%
$ 0.024 $ 0.047 $ 0.036 $ 0.024 $ 0.047 $ 0.047 $ 0.036 $ 0.025 $ 0.030
0.64%** 0.82% 1.34% 0.64%** 0.82% 1.34% 0.81% 0.85% 0.85%
</TABLE>
See accompanying notes to financial statements
93
<PAGE>
<PAGE>
ANNUAL SHAREHOLDERS MEETINGS
The following Funds held Special Meetings of Stockholders on April 29, 1997. The
following table provides information concerning the matters voted on at the
meetings:
SALOMON BROTHERS INVESTORS FUND
1. Approval of an amendment to the Management Agreement to increase the base fee
component of the management fee
Votes For Votes Against Votes Abstained
- --------------------------------------------------------------------------------
13,766,582 2,854,699 923,083
2. Approval of amended and restated Articles of Incorporation
Votes For Votes Against Votes Abstained
- --------------------------------------------------------------------------------
15,530,999 1,117,016 896,349
3. Approval of an amendment to the Fund's Fundamental Investment Policy
regarding the borrowing of money to meet redemption requests
Votes For Votes Against Votes Abstained
- --------------------------------------------------------------------------------
15,469,679 1,165,573 909,112
4. Approval of an amendment to the Fund's Fundamental Investment Policy
regarding the lending of portfolio securities
Votes For Votes Against Votes Abstained
- --------------------------------------------------------------------------------
14,748,255 1,681,944 1,114,164
SALOMON BROTHERS NEW YORK MUNICIPAL BOND FUND
1. Approval of a proposal to liquidate the Fund
Votes For Votes Against Votes Abstained
- --------------------------------------------------------------------------------
258,403 13,278 11,858
94
<PAGE>
<PAGE>
[This page intentionally left blank]
95
<PAGE>
<PAGE>
[This page intentionally left blank]
96
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
INVESTMENT MANAGER
Salomon Brothers Asset Management Inc
7 World Trade Center
New York, New York 10048
DISTRIBUTOR
Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
DIVIDEND DISBURSING AND TRANSFER AGENT
First Data Investor Services Group, Inc.
53 State Street
Boston, Massachusetts 02109-2873
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
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.
DANIEL P. CRONIN**
Vice President-General Counsel,
Pfizer International 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.; formerly Executive Vice
President, Richardson-Vicks, 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
JAMES E. CRAIGE**
Executive Vice President
RICHARD E. DAHLBERG
Executive Vice President
THOMAS K. FLANAGAN**
Executive Vice President
GIAMPAOLO G. GUARNIERI**
Executive Vice President
STEVEN GUTERMAN**
Executive Vice President
ROSS S. MARGOLIES***
Executive Vice President
MAUREEN O'CALLAGHAN**
Executive Vice President
BETH A. SEMMEL**
Executive Vice President
ALLAN R. WHITE, III*,***
Executive Vice President
MARYBETH WHYTE**
Executive Vice President
PETER J. WILBY**
Executive Vice President
LAWRENCE H. KAPLAN
Executive Vice President
and General Counsel
ELIZA LAU**
Vice President
PAMELA P. MILUNOVICH*
Vice President
NANCY A. NOYES**
Vice President
ALAN M. MANDEL
Treasurer
NOEL B. DAUGHERTY
Secretary*,***
Assistant Secretary**
JENNIFER G. MUZZEY
Secretary**
Assistant Secretary*,***
JANET S. TOLCHIN
Assistant Treasurer
REJI PAUL
Assistant Treasurer
- ------------------------------------------------------
*Only on the Salomon Brothers Investors Fund Inc
**Only on the Salomon Brothers Series Funds Inc
***Only on the Salomon Brothers Capital Fund Inc
<PAGE>
<PAGE>
------------------------------------------
Salomon Brothers Asset Management
-----------------------------------------
SEVEN WORLD TRADE CENTER NEW YORK, NEW YORK 10048
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as.............................'SS'
The dagger symbol shall be expressed as..............................`D'
<PAGE>
