<PAGE>
SEMI-ANNUAL
REPORT
AUGUST 31,2000
SALOMON BROTHERS
ASSET MANAGEMENT
SALOMON BROTHERS HIGH YIELD BOND FUND
-----------------------------------------
INSTITUTIONAL SERIES FUNDS INC. EMERGING MARKETS DEBT FUND
-----------------------------------------------------------
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
-----------------------------------------------------------
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
--------------------------------------------------------------------------------
September 20, 2000
To Our Shareholders:
We are pleased to provide you with the semi-annual report for the Salomon
Brothers Institutional High Yield Bond Fund and the Salomon Brothers
Institutional Emerging Markets Debt Fund for the period ended August 31, 2000.
HIGH YIELD BOND FUND
The Salomon Brothers Institutional High Yield Bond Fund ('High Yield Bond Fund')
seeks to maximize total return by investing primarily in a portfolio of
non-investment grade high-yield fixed income securities. For the six months
ended August 31, 2000, the Fund returned a negative 1.71%. In comparison, the
Salomon Smith Barney High Yield Market Index ('SSB High Yield Index')(1)
returned 1.00% for the same period. For the year ended August 31, 2000, High
Yield Bond Fund returned a negative 3.80%. In comparison, the SSB High Yield
Index returned 1.36% for the same period.
The U.S. high-yield bond market returned 1.00% for the six months ended
August 31, 2000, as reported by the SSB High Yield Index. While benefiting from
a strong economy, the high-yield bond market continued to feel the effects of:
uneasiness over inflation and interest rates;
investor outflows from mutual funds;
volatility in the equity markets;
reduced broker/dealer liquidity; and
cyclical and default rate concerns.
After the U.S. Federal Reserve Board ('Fed') raised interest rates by 25 basis
points(2) in February and the Nasdaq Composite Index(3) turned in a relatively
strong performance early in calendar year 2000, a string of mutual fund outflows
ensued as investors fled the interest rate-sensitive fixed income markets for
the red-hot equity markets.
As the U.S. stock market became more volatile in March and April, and the Fed
announced a 50 basis point interest rate increase with a tightening bias in May,
mutual fund outflows intensified as investors focused on the potential for
further interest rate increases. Investors also increasingly considered the
possibility of a cyclical downturn in the near term, which would exacerbate
already high default rates. As a result of the aforementioned conditions, the
high-yield bond market returned a negative 3.01%, as measured by the SSB High
Yield Index for the first three months of the period.
In June, July and August, however, benign economic data and a more passive Fed
mitigated some interest rate concerns while the high absolute yields available
in the high-yield bond market attracted investors from volatile stock markets.
As market conditions improved, high-yield bond mutual fund outflows were
mitigated during the latter half of the period and totaled $1.8 billion for the
six months ended August 31, 2000, while the market recovered to return 1.00% for
the period. However, default rate and cyclical concerns still loomed over the
market, limiting the extent of the recovery.
For the six months ended August 31, 2000, the high-yield bond market's top
performers included energy, gaming, cable & other media, utilities, housing
related and technology sectors. The performance of the energy sector was driven
by the sustained rise in oil and gas prices. The less cyclical gaming, cable &
other media and utilities sectors benefited from their perception as industries
with more cash
---------
(1) The SSB High Yield Index is a broad-based unmanaged index of high-yield
securities. An investor cannot invest directly in an index.
(2) A basis point is 0.01% or one one-hundredth of a percent.
(3) The Nasdaq Composite Index is a market value-weighted index that measures
all domestic and non-U.S.-based securities listed on the NASDAQ stock
market. An investor cannot invest directly in an index.
PAGE 1
<PAGE>
flow stability. Continued strength in U.S. housing activity supported the
performance of housing-related issuers. The worst performing groups included
telecommunications, leisure/lodging, retail, automotive, steel/metals and
services/other. The telecommunications sector underperformed due to increased
stock market volatility, heightened competition and funding concerns.
Leisure/lodging was adversely impacted by difficulties in the theatre operator
sector stemming from overcapacity. Retail suffered from concerns over slower
consumer spending and intensified competition. Automotive was negatively
affected by cyclical concerns and deteriorating conditions in the aftermarket.
Negative steel product price pressures caused by high imports and customer
inventory destocking hurt performance in steel/metals. In terms of credit
quality, the BB credit tier, which returned 4.22%, outperformed B and CCC
returns of 0.00% and a negative 4.51%, respectively, as investors continued to
favor larger, higher-quality, more liquid BB issues.
The High Yield Bond Fund underperformed the SSB High Yield Index primarily as a
result of overweightings in retail, automotive and services/other and
underweightings in utilities and housing-related. However, the High Yield Bond
Fund benefited from overweightings in energy and gaming and underweightings in
telecommunications, leisure/lodging and steel/metals. During the course of the
period, the High Yield Bond Fund responded to market conditions by increasing
its exposure to energy to an overweighting and decreasing its exposure to
steel/metals to an underweighting.
Going forward, we expect the high-yield bond market to continue to experience
volatility over the course of the fiscal year primarily as a result of several
technical factors, including:
mutual fund flows;
continued concerns over default rates;
reduced secondary market liquidity; and
continuing cyclical concerns.
In light of these conditions, we are pursuing a conservative investment strategy
geared to overweighting BB credits and pursuing selective opportunities in
undervalued B and CCC credits.
On August 31, 2000, the high-yield bond market, as measured by the SSB High
Yield Index, was yielding 12.39%, up from 11.85% at February 29, 2000. The
excess yield over U.S. Treasuries was 6.51%, 114 basis points wider to 5.37% at
the beginning of the period.
EMERGING MARKETS DEBT FUND
The Salomon Brothers Institutional Emerging Markets Debt Fund ('Emerging Markets
Debt Fund') seeks to maximize total return through primarily investing in debt
of government related and corporate issuers located in emerging market
countries. For the six months ended August 31, 2000, the Emerging Markets Debt
Fund produced a return of 9.83%. In comparison, the J.P. Morgan Emerging Markets
Bond Index Plus ('EMBI+')(4) returned 11.18% for the same period. For the year
ended August 31, 2000, Emerging Markets Debt Fund returned 36.01%. In comparison
the EMBI+ returned 35.22% for the same period.
The emerging markets' returns were driven positively by improving economic
fundamentals and rising oil prices and negatively impacted by rising interest
rates. Stable technical factors contributed to overall returns by encouraging
new investors to enter the market. Russia remains the turnaround story of the
year. It has benefited from strong political leadership, high oil prices and the
favorable debt restructuring finalized in August with the London Club.(5)
The improved outlook for world economic growth has encouraged investors to
increase commitments to emerging markets debt. Economic growth in Asia, an
important market for Latin American exports, has contributed to the better tone
in emerging markets debt. Evidence of cyclical recoveries in Brazil and
Venezuela have also improved the outlook for investors. Oil price strength over
the period continued to drive many emerging economies. Oil prices ended August
at $33.08 up approximately 10% for the period. Russia, Venezuela and Mexico all
benefit from rising oil prices.
---------
(4) EMBI+ is a total return index that tracks the traded market for U.S.
dollar-denominated Brady and other similar sovereign restructured bonds
traded in the emerging market. An investor cannot invest directly in an
index.
(5) The London Club is the official group of creditors lending to emerging
market governments.
PAGE 2
<PAGE>
The Fed raised interest rates twice during the period, increasing short-term
rates by 75 basis points. The Fed adopted this aggressive posture in order to
slow the rate of growth of the U.S. economy and keep inflation in check. The Fed
continues to maintain an inflationary bias on the economy. Emerging markets debt
outperformed other bond markets during this relatively difficult fixed income
environment. The Salomon Smith Barney Broad Investment Grade Index ('SSB BIG
Index')(6) returned 5.44% while the SSB High-Yield Index gained 1.00%.
The expectation that U.S. interest rates may continue to rise had a negative
impact on emerging markets periodically during the past six months. This
expectation had a greater negative impact than the actual rate increases. The
shift to floating currency exchange regimes in a number of emerging countries
has reduced the direct impact of U.S. interest rate increases on their
economies. Historically, higher U.S. interest rates have been associated with a
strengthening U.S. dollar. These interest rate hikes often forced emerging
market countries to raise domestic rates to defend their pegged exchange rates.
Floating exchange regimes help insulate domestic rates from moves in U.S. rates.
Nonetheless, fears of future interest rate increases impacted returns during
March, April and May. It was during this period that the Fed raised overnight
rates by 75 basis points. Most notable was the 50 basis point hike on May 16,
2000, a clear signal that the Fed continues with their bias toward tightening.
The two subsequent Federal Open Market Committee ('FOMC')(7) meetings in June
and August resulted in the fed funds rate remaining constant at 6.50%. The Fed
has now raised rates by 175 basis points over the past year.
Return volatility for emerging markets debt remained substantially lower
relative to year-earlier levels. The decline in volatility is a function of
reduced leverage in the market coupled with expanded investor interest in the
asset class. During the year ending August 31, return volatility for the EMBI+
totaled 8.13%, down substantially from 22.07% for the year-earlier period.
Individual country performance was dominated by Russia, which returned 36.31%,
as measured by the EMBI+ during the period. These impressive returns were the
result of a variety of important fundamental developments that occurred over the
course of the year.
Vladimir Putin was elected and inaugurated President. Mr. Putin has
moved aggressively to reassert federal power over Russia's vast regions.
Russia successfully concluded a debt restructuring agreement with the
London Club of creditors. The Russian government has signed the
agreements and the debt exchange closed in August 2000. The terms of the
debt exchange were favorable for Russia. Completion of the restructuring
will permit Russia to return to the international capital markets.
Tax collections continued to run ahead of budget levels, leading to a
stronger-than-anticipated fiscal balance.
Rising oil prices helped expand Russia's hard currency reserve position.
Assuming oil prices remain at current levels, Russia will end the year
with reserves in excess of $25 billion. This reserve position
substantially strengthens Russia's credit quality.
This broad range of events encouraged investors to reassess the outlook for
Russia. Russian debt prices reflected this improved outlook.
Brazil performed in line with the benchmark for the period returning 10.40%.
Positive Gross Domestic Product ('GDP')(8) growth coupled with disciplined
expenditure controls led to very good fiscal results. These improved fiscal
results have had a positive impact on Brazilian interest rates and debt levels.
The ratio of net public debt to GDP has stabilized at approximately 50%. The
appreciation of the real in
---------
(6) The SSB BIG Index includes institutionally traded U.S. Treasury bonds,
government-sponsored bonds (U.S. Agency and supranational), mortgage-backed
securities and corporate securities. An investor cannot invest directly in
an index.
(7) The FOMC is a policy-making body of the Federal Reserve System, the U.S.
central bank, that is responsible for the formulation of policy designed to
promote economic growth, full employment, stable prices and a sustainable
pattern of international trade and payments.
(8) GDP is the market value of the goods and services produced by labor and
property. GDP is comprised of consumer and government purchases, private
domestic investments and net exports of goods and services.
PAGE 3
<PAGE>
recent months has reduced the local currency value of external and dollar-linked
domestic debt. In addition, negotiations with the IMF have led to a lowering of
the target for foreign reserves, giving the central bank additional flexibility
in supporting the local currency. These developments have allowed the Brazilian
Central Bank to lower short-term interest rates. The overnight rate has fallen
from 45% in early 1999 to 16.50% currently.
There were a number of key political developments in portfolio countries during
the past six months. Presidential elections occurred in Mexico, Peru and
Venezuela. In Peru and Venezuela the incumbent was reelected. Peru and Venezuela
returned 4.21% and 10.00%, respectively, during the period. In Mexico, the PRI
party, which had dominated politics for the past 70 years, was defeated as
Vicente Fox was elected President by a larger-than-expected margin. This change
in Mexico's political order was viewed by the market as a positive development.
In addition, Mexico was upgraded by Moody's to Baa3, an investment grade credit
rating. Mexico returned 9.93% during the period.
The market closed the month of August with spreads at 650 basis points over
Treasuries, approximately 400 basis points tighter than the year-earlier level
adjusted for changes in the composition of Russian securities in the Index.
Return volatilities for emerging markets debt also declined over the period. The
decline in volatility is a function of reduced leverage in the market coupled
with expanded investor interest in the asset class. Six-month volatility for
emerging markets debt averaged approximately 8.24%, dramatically below the 15%
long-term historical level of the Index.
The forces that led to strong emerging markets performance over the last two
years continue to unfold. With the prospect of continued economic recovery in
Latin America and a reduction of political uncertainty in a number of countries,
the outlook for the market remains positive. The positive fundamental picture
has encouraged investment-grade buyers to broaden commitments to emerging
markets.
We thank you for your participation in the Salomon Brothers Institutional Series
Funds Inc and look forward to helping you pursue your financial goals in the
years to come.
Cordially,
<TABLE>
<S> <C>
HEATH B. MCLENDON PETER J. WILBY
HEATH B. MCLENDON PETER J. WILBY
Chairman of the Board Executive Vice President
JAMES E. CRAIGE BETH A. SEMMEL
JAMES E. CRAIGE BETH A. SEMMEL
Executive Vice President Executive Vice President
</TABLE>
PAGE 4
<PAGE>
SALOMON BROTHERS INSTITUTIONAL HIGH YIELD BOND FUND
The following graph depicts the performance of the Institutional High Yield Bond
Fund ('Fund') versus the Salomon Smith Barney High-Yield Market Index
('Index').* It is important to note that the Fund is a professionally managed
mutual fund while the Index is not available for investment and is unmanaged.
The comparison is shown for illustrative purposes only.
COMPARISON OF A $10,000 INVESTMENT IN THE
SALOMON BROTHERS INSTITUTIONAL HIGH YIELD BOND FUND TO THE
SALOMON SMITH BARNEY HIGH YIELD MARKET INDEX
(UNAUDITED)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
5/15/96 8/96 2/97 8/97 2/98 8/98 2/99 8/99 2/00 8/31/00
------- ---- ---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SB INSTITUTIONAL HIGH YIELD BOND FUND 10,000 10,370 11,511 12,278 12,791 12,395 12,798 12,590 12,321 12,111
SALOMON SMITH BARNEY HIGH YIELD MARKET INDEX 10,000 10,170 11,081 11,751 12,602 12,105 12,764 12,781 12,827 12,955
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
% RETURN
--------
<S> <C>
Six months ended 8/31/00'D'................................. (1.71)%
Year ended 8/31/00.......................................... (3.80)
Commencement of operations (5/15/96) through 8/31/00........ 4.56
CUMULATIVE TOTAL RETURN
Commencement of operations (5/15/96) through 8/31/00........ 21.10%
</TABLE>
-------------------
* The Salomon Smith Barney High Yield Market Index is valued at month-end
only. As a result, while the Fund's total return calculations used in this
comparison are for the period May 15, 1996 through August 31, 2000, the
Index returns are for the period June 1, 1996 through August 31, 2000.
Past performance is not predictive of future performance.
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares.
During the six months ended August 31, 2000, the Fund's investment adviser
waived a portion of its management fees, as shown in the following unaudited
financial statements. Absent such waiver, the Fund's average annual returns
would have been lower.
The investment return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
'D' Total return is not annualized, as it may not be representative of total
return for the year.
PAGE 5
<PAGE>
SALOMON BROTHERS INSTITUTIONAL EMERGING MARKETS DEBT FUND
The following graph depicts the performance of the Salomon Brothers
Institutional Emerging Markets Debt Fund ('Fund') versus the J.P. Morgan
Emerging Markets Bond Index Plus ('Index')*. It is important to note that the
Fund is a professionally managed mutual fund while the Index is not available
for investment and is unmanaged. The comparison is shown for illustrative
purposes only.
COMPARISON OF A $10,000 INVESTMENT IN THE
SALOMON BROTHERS INSTITUTIONAL EMERGING MARKETS DEBT FUND TO THE
J.P. MORGAN EMERGING MARKETS BOND INDEX PLUS
(UNAUDITED)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
10/17/96 2/97 8/97 2/98 8/98 2/99 8/99 2/00 8/31/00
-------- ---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SB INSTITUTIONAL EMERGING MARKETS DEBT FUND 10,000 11,139 12,384 12,766 7,444 9,808 11,116 13,767 15,119
J.P. MORGAN EMERGING MARKETS BOND INDEX PLUS 10,000 11,055 12,094 12,267 8,483 9,998 11,067 13,454 14,868
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS
% RETURN
--------
<S> <C>
Six months ended 8/31/00'D'................................. 9.83%
Year ended 8/31/00.......................................... 36.01
Commencement of operations (10/17/96) through 8/31/00....... 11.26
CUMULATIVE TOTAL RETURN
Commencement of operations (10/17/96) through 8/31/00....... 51.19%
</TABLE>
-------------------
* The J.P. Morgan Emerging Markets Bond Index Plus is a total return index
that tracks the traded market for U.S. dollar dominated Brady and other
similar sovereign restructured bonds traded in emerging markets.
Past performance is not predictive of future performance.
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares.
During the six months ended August 31, 2000, the Fund's investment adviser
waived a portion of its management fees, as shown in the following unaudited
financial statements. Absent such waiver, the Fund's average annual returns
would have been lower.
The investment return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
'D' Total return is not annualized, as it may not be representative of total
return for the year.
PAGE 6
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
SCHEDULES OF INVESTMENTS (UNAUDITED)
AUGUST 31, 2000
SALOMON BROTHERS INSTITUTIONAL HIGH YIELD BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
------ -------- -----
<S> <C> <C>
CORPORATE BONDS -- 94.0%
BASIC INDUSTRIES -- 9.9%
$ 150,000 AEI Resource Holdings Inc., 10.500% due 12/15/05(a)......... $ 28,125
250,000 AK Steel Corp., 7.875% due 2/15/09.......................... 233,750
125,000 Abitibi-Consolidated Inc., 8.550% due 8/1/10................ 127,812
500,000 Berry Plastics Corp., 12.250% due 4/15/04................... 480,000
250,000 Gentek Inc., 11.000% due 8/1/09............................. 255,625
250,000 Georgia Gulf Corp., 10.375% due 11/1/07..................... 260,625
250,000 Lyondell Chemical Co., Series B, 9.875% due 5/1/07.......... 254,688
250,000 Murrin Murrin Holdings Property, 9.375% due 8/31/07......... 213,750
500,000 PCI Chemicals Canada Inc., 9.250% due 10/15/07.............. 252,500
250,000 Radnor Holdings Corp., 10.000% due 12/1/03.................. 231,250
235,000 RePap New Brunswick, 10.625% due 4/15/05.................... 243,225
500,000 Republic Technology/RTI Capital Corp., 13.750% due
7/15/09................................................... 95,000
375,000 Tembec Industries Inc., 8.625% due 6/30/09.................. 375,000
-----------
3,051,350
-----------
CONSUMER CYCLICALS -- 8.6%
500,000 Advance Stores Co. Inc., Series B, 10.250% due 4/15/08...... 412,500
250,000 Cole National Group Inc., 8.625% due 8/15/07................ 166,250
350,000 Finlay Fine Jewelry Corp., 8.375% due 5/1/08................ 320,250
424,000 Guitar Center Management, 11.000% due 7/1/06................ 409,160
375,000 HMH Properties Inc., Series A, 7.875% due 8/1/05............ 359,063
500,000 Mattress Discounters Co., 12.625% due 7/15/07(a)............ 457,500
375,000 Pillowtex Corp., Series B, 9.000% due 12/15/07.............. 73,125
250,000 Tommy Hilfiger USA Inc., 6.850% due 6/1/08.................. 173,750
250,000 Westpoint Stevens Inc., 7.875% due 6/15/05.................. 217,500
250,000 Worldtex Inc., Series B, 9.625% due 12/15/07................ 71,250
-----------
2,660,348
-----------
CONSUMER NON-CYCLICALS -- 17.7%
250,000 Circus Circus Enterprise, (Mandalay Resort Group), 9.250%
due 12/1/05............................................... 248,125
500,000 Derby Cycle Corp., 10.000% due 5/15/08...................... 152,500
375,000 Duane Reade Inc., 9.250% due 2/15/08........................ 334,687
370,000 Flooring America Inc., 9.250% due 10/15/07.................. 220,150
250,000 French Fragrances Inc., Series B, 10.375% due 5/15/07....... 248,125
250,000 Fresenius Medical Care Capital Trust 1, 9.000% due
12/1/06................................................... 249,375
250,000 HCA -- The Healthcare Co., 8.750% due 9/1/10................ 251,875
375,000 Harrah's Operating Co., Inc., 7.875% due 12/15/05........... 365,625
500,000 Home Interiors & Gifts, Inc., 10.125% due 6/1/08............ 152,500
250,000 Horseshoe Gaming LLC, Series B, 8.625% due 5/15/09.......... 244,375
250,000 Imperial Holly Corp., 9.750% due 12/15/07................... 47,500
375,000 MGM Grand Inc., 9.750% due 6/1/07........................... 394,688
250,000 Mohegan Tribal Gaming Corp., 8.750% due 1/1/09.............. 245,625
375,000 North Atlantic Trading Co., Series B, 11.000% due 6/15/04... 316,875
500,000 Park Place Entertainment Inc., 7.875% due 12/15/05.......... 486,250
250,000 Premier International Foods Corp., 12.000% due 9/1/09....... 211,250
Pueblo Xtra International Inc.:
125,000 9.500% due 8/1/03......................................... 59,375
250,000 Series C, 9.500% due 8/1/03............................... 118,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
AUGUST 31, 2000
SALOMON BROTHERS INSTITUTIONAL HIGH YIELD BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
------ -------- -----
<S> <C> <C>
CONSUMER NON-CYCLICALS -- 17.7% (CONTINUED)
Revlon Consumer Products Corp.:
$ 300,000 9.000% due 11/1/06........................................ $ 216,000
200,000 8.625% due 2/1/08......................................... 104,000
500,000 Syratech Corp., 11.000% due 4/15/07......................... 283,125
250,000 Tenet Healthcare Corp., Series B, 7.875% due 6/1/08......... 237,500
250,000 United Industries Corp., Series B, 9.875% due 4/1/09........ 116,250
250,000 Vlasic Foods International Inc., 10.250% due 7/1/09......... 136,250
-----------
5,440,775
-----------
ENERGY -- 9.0%
250,000 Belco Oil & Gas Corp., Series B, 8.875% due 9/15/07......... 237,500
250,000 Comstock Resources Inc., 11.250% due 5/1/07................. 261,250
250,000 Costilla Energy Inc., 10.250% due 10/1/06(b)(c)............. 111,250
250,000 DI Industries, 8.875% due 7/1/07............................ 245,000
250,000 HS Resources Inc., 9.875% due 12/1/03....................... 251,250
250,000 Ocean Energy Inc., Series B, 8.875% due 7/15/07............. 256,250
250,000 Pioneer Natural Resource Co., 9.625% due 4/1/10............. 266,875
250,000 Plains Resources PLX, Series E, 10.250% due 3/15/06(a)...... 258,750
375,000 R & B Falcon Corp., 6.750% due 4/15/05...................... 351,094
250,000 Vintage Petroleum Inc., 9.750% due 6/30/09.................. 263,125
250,000 Western Gas Resources Inc., 10.000% due 6/15/09............. 262,500
-----------
2,764,844
-----------
FINANCIAL/LEASING -- 2.9%
ContiFinancial Corp.:
250,000 7.500% due 3/15/02(b)(d).................................. 32,500
1,125,000 8.375% due 8/15/03(b)(d).................................. 146,250
625,000 8.125% due 4/1/08(b)(d)................................... 81,250
250,000 DVI Inc., 9.875% due 2/1/04................................. 222,187
250,000 Nationwide Credit Inc., Series A, 10.250% due 1/15/08....... 167,500
250,000 Sovereign BanCorp., 10.500% due 11/15/06.................... 254,375
-----------
904,062
-----------
HOUSING RELATED -- 0.8%
250,000 Nortek Inc., Series B, 8.875% due 8/1/08.................... 233,750
-----------
MANUFACTURING -- 8.8%
165,000 Anchor Advanced Products, Inc., Series B, 11.750% due
4/1/04.................................................... 127,875
375,000 Breed Technologies Inc., 9.250% due 4/15/08(b)(d)........... 4,687
500,000 Federal-Mogul Corp., 7.500% due 1/15/09..................... 365,000
500,000 Foamex L.P., 9.875% due 6/15/07............................. 377,500
250,000 High Voltage Engineering Corp., 10.500% due 8/15/04......... 173,750
250,000 Hines Horticulture Inc., 11.750% due 10/15/05............... 253,750
250,000 Indesco International Inc., 9.750% due 4/15/08.............. 93,750
125,000 International Utility Structures Inc., 10.750% due 2/1/08... 94,375
500,000 JH Heafner Co., Series D, 10.000% due 5/15/08............... 212,500
500,000 Key Plastics Inc., Series B, 10.250% due 3/15/07(b)(d)...... 52,500
250,000 Lear Corp., Series B, 8.110% due 5/15/09.................... 236,563
250,000 Sequa Corp., 9.000% due 8/1/09.............................. 250,625
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 8
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
AUGUST 31, 2000
SALOMON BROTHERS INSTITUTIONAL HIGH YIELD BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
------ -------- -----
<S> <C> <C>
MANUFACTURING -- 8.8% (CONTINUED)
$ 250,000 Stellex Industries Inc., 9.500% due 11/1/07(b)(d)........... $ 36,250
250,000 Tenneco Automotive Inc., 11.625% due 10/15/09............... 216,250
250,000 Winsloew Furniture, Inc., 12.750% due 8/15/07............... 231,250
-----------
2,726,625
-----------
MEDIA -- 12.4%
Adelphia Communications Corp.:
200,000 Series B, 10.500% due 7/15/04............................. 200,500
250,000 Series B, 9.875% due 3/1/07............................... 242,187
250,000 Albrittion Communications, Series B, 9.750% due 11/30/07.... 242,500
1,000,000 Charter Communications Holdings LLC, zero coupon until
4/1/04, 9.920% thereafter, due 4/1/11..................... 602,500
250,000 Citadel Broadcasting Co., 10.250% due 7/1/07................ 261,250
500,000 CSC Holdings Inc., 9.875% due 2/15/13....................... 511,250
Hollinger International Publishing Inc.:
100,000 9.250% due 2/1/06......................................... 101,000
212,000 9.250% due 3/15/07........................................ 214,120
375,000 NTL Inc., Series B, zero coupon until 2/1/01, 11.500%
thereafter, due 2/1/06.................................... 354,843
375,000 Rogers Communications, Inc., 8.875% due 7/15/07............. 376,875
375,000 Telewest Communications PLC, 9.625% due 10/1/06............. 358,125
500,000 United International Holdings, zero coupon until 2/15/03,
10.750% thereafter, due 2/15/08........................... 352,500
-----------
3,817,650
-----------
SERVICES/OTHER -- 10.1%
375,000 Allied Waste Industries, Inc., Series B, 10.000% due
8/1/09.................................................... 336,562
250,000 American Business Information Inc., 9.500% due 6/15/08...... 211,875
375,000 Aqua Chemical Inc., 11.250% due 7/1/08...................... 238,125
500,000 Axiohm Transaction Solutions, Inc., 9.750% due
10/1/07(b)(d)............................................. 102,500
250,000 Avis Rent A Car, Inc., 11.000% due 5/1/09................... 273,750
250,000 COMFORCE Operating Inc., 12.000% due 12/1/07................ 126,875
250,000 Crown Castle International Corp., 10.750% due 8/1/11........ 261,250
250,000 Dyncorp Inc., 9.500% due 3/1/07............................. 193,750
500,000 Holt Group, 9.750% due 1/15/06.............................. 70,000
250,000 Loomis Fargo & Co., 10.000% due 1/15/04..................... 250,625
250,000 Mail-Well Corp., Series B, 8.750% due 12/15/08.............. 217,500
250,000 Pierce Leahy Corp., 11.125% due 7/15/06..................... 261,250
500,000 Primark Corp., 9.250% due 12/15/08.......................... 547,500
500,000 Safety-Kleen Corp., 9.250% due 6/1/08(b)(d)................. 25,000
-----------
3,116,562
-----------
TECHNOLOGY -- 0.8%
250,000 Polaroid Corp., 11.500% due 2/15/06......................... 259,375
-----------
TELECOMMUNICATIONS -- 9.7%
250,000 Covad Communications Group, 12.000% due 2/15/10............. 193,750
250,000 Exodus Communications Inc., 11.625% due 7/15/10(a).......... 255,625
Global Crossing Holding Ltd.:
125,000 9.125% due 11/15/06....................................... 124,688
125,000 9.500% due 11/15/09....................................... 125,938
ICG Holdings Inc.:
250,000 Zero coupon until 9/15/00, 13.500% thereafter, due
9/15/05................................................. 131,250
250,000 Zero coupon until 5/1/01, 12.500% thereafter, due 5/1/06.. 118,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 9
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
AUGUST 31, 2000
SALOMON BROTHERS INSTITUTIONAL HIGH YIELD BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
------ -------- -----
<S> <C> <C>
TELECOMMUNICATIONS -- 9.7% (CONTINUED)
$ 250,000 Intermedia Communications, Series B, 8.500% due 1/15/08..... $ 207,500
200,000 Leap Wireless International Inc., 12.500% due 4/15/10....... 179,000
125,000 NEXTLINK Communications, 10.750% due 6/1/09................. 121,563
600,000 Nextel Communications, Inc., zero coupon until 10/31/02,
9.750% thereafter, due 10/31/07........................... 463,500
200,000 PSINET Inc., 11.500% due 11/1/08............................ 176,500
250,000 Sitel Corp., 9.000% due 3/15/06............................. 233,750
375,000 Telecorp PCS Inc., 10.625% due 7/15/10(a)................... 391,875
750,000 Viatel Inc., zero coupon until 4/15/03, 12.500% thereafter,
due 4/15/08............................................... 258,750
-----------
2,982,439
-----------
TRANSPORTATION -- 1.9%
250,000 Enterprise Shipholding Corp., 8.875% due 5/1/08............. 138,750
250,000 Northwest Airlines Inc., 7.625% due 3/15/05................. 233,125
250,000 Stena AB, 8.750% due 6/15/07................................ 216,250
-----------
588,125
-----------
UTILITIES -- 1.4%
250,000 Azurix Corp., 10.375% due 2/15/07(a)........................ 197,500
250,000 Calpine Corp., 8.750% due 7/15/07........................... 248,125
-----------
445,625
-----------
TOTAL CORPORATE BONDS
(Cost -- $35,809,855)....................................... 28,991,530
-----------
CONVERTIBLE CORPORATE BONDS -- 1.3%
500,000 Quantum Corp., 7.000% due 8/1/04 (Cost -- $417,040)......... 401,565
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 1.3%
493,850 Airplanes Pass Through Trust, 10.875% due 3/15/19
(Cost -- $507,040)........................................ 402,883
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
------ -------- -----
<S> <C> <C>
PREFERRED STOCK(B) -- 0.8%
2,640 Rural Cellular Corp.(c)..................................... 232,980
TCR Holding Corp.:
439 Class B................................................... 5
241 Class C................................................... 2
636 Class D................................................... 6
1,316 Class E................................................... 13
-----------
TOTAL PREFERRED STOCK (Cost -- $262,844).................... 233,006
-----------
WARRANTS(B) -- 0.0%
200 Leap Wireless International Inc., Expire 4/15/10............ 2,300
500 Mattress Discounters, Expire 7/15/07........................ 5,000
500 Republic Technologies/RTI Capital Corp., Expire 7/15/09..... 50
250 Winsloew Furniture Corp., Expire 1/11/01.................... 3,750
-----------
TOTAL WARRANTS (Cost -- $18,668)............................ 11,100
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 10
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
AUGUST 31, 2000
SALOMON BROTHERS INSTITUTIONAL HIGH YIELD BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
------ -------- -----
<S> <C> <C>
REPURCHASE AGREEMENT -- 2.6%
$ 802,000 Warburg Dillon Read LLC, 6.600% due 9/1/00; Proceeds at
maturity -- $802,147; (Fully collateralized by U.S.
Treasury Strip, 12.750% due 11/1/01; Market
value -- $818,296) (Cost -- $802,000)..................... $ 802,000
-----------
TOTAL INVESTMENTS -- 100%
(Cost -- $37,817,447*)...................................... $30,842,084
-----------
-----------
</TABLE>
-------------------
(a) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. The security may be resold in transactions that are exempt from
registration, normally to qualified institutional buyers.
(b) Non-income producing security.
(c) Payment-in-kind security for which all or part of the dividend earned is
paid by the issuance of additional stock.
(d) Currently in default.
* Aggregate cost for Federal income tax puposes is substantially the same.
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 11
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
AUGUST 31, 2000
SALOMON BROTHERS INSTITUTIONAL EMERGING MARKETS DEBT FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT(a) SECURITY VALUE
--------- -------- -----
<S> <C> <C>
SOVEREIGN BONDS -- 93.6%
ARGENTINA -- 15.9%
Republic of Argentina:
1,000,000 8.750% due 7/10/02........................................ $ 929,000
1,750,000 11.595% due 4/10/05(b).................................... 1,694,875
1,100,000 11.750% due 4/7/09........................................ 1,029,325
950,000 11.750% due 6/15/15....................................... 864,500
2,500,000 11.375% due 1/30/17....................................... 2,237,500
2,700,588ARS BOCON Pro 1, 2.696% due 4/1/07(b)......................... 1,958,587
-----------
8,713,787
-----------
BRAZIL -- 16.3%
Federal Republic of Brazil:
1,799,000 14.500% due 10/15/09...................................... 2,020,727
2,556,000 12.750% due 1/15/20....................................... 2,527,245
1,960,000 12.250% due 3/6/30........................................ 1,857,100
1,767,000 11.000% due 8/17/40....................................... 1,448,940
250,000 DCB, Series L, 7.437% due 4/15/12(b)...................... 194,375
1,325,000 Par Bond, Series Z-L, 6.000% due 4/15/24.................. 915,078
-----------
8,963,465
-----------
BULGARIA -- 4.8%
Republic of Bulgaria:
375,000 Discount Bond, Series A, 7.750% due 7/28/24(b)............ 305,859
3,035,000 FLIRB, Series A, 3.000% due 7/28/12(b).................... 2,340,744
-----------
2,646,603
-----------
COLOMBIA -- 3.6%
Republic of Colombia:
25,000 10.875% due 3/9/04........................................ 24,312
500,000 8.700% due 2/15/16(b)..................................... 346,250
950,000 11.750% due 2/25/20....................................... 836,000
250,000 8.375% due 2/15/27........................................ 169,375
400,000 FRN, 12.832% due 8/13/05(b)............................... 397,000
250,000 FRN, 9.750% due 4/23/09(b)................................ 227,344
-----------
2,000,281
-----------
COSTA RICA -- 1.1%
Republic of Costa Rica:
125,000 9.335% due 5/15/09........................................ 127,813
450,000 9.995% due 8/1/20(c)...................................... 457,875
-----------
585,688
-----------
CROATIA -- 1.6%
Republic of Croatia:
863,637 Series A, 7.750% due 7/31/10(b)........................... 803,181
78,675 Series B, 7.750% due 7/31/06(b)........................... 75,430
-----------
878,611
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 12
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
AUGUST 31, 2000
SALOMON BROTHERS INSTITUTIONAL EMERGING MARKETS DEBT FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT(a) SECURITY VALUE
--------- -------- -----
<S> <C> <C>
ECUADOR -- 0.6%
Republic of Ecuador:
20,000 12.000% due 11/15/12(b)(c)................................ $ 13,030
880,000 4.000% due 8/15/30(b)(c).................................. 340,780
-----------
353,810
-----------
IVORY COAST -- 0.7%
Republic of Ivory Coast:
1,375,000 FLIRB, 3.750% due 3/29/18(d)(e)........................... 254,375
712,500 PDI Bond, 4.500% due 3/29/18(d)(e)........................ 138,938
-----------
393,313
-----------
JAMAICA -- 1.2%
700,000 Government of Jamaica, 12.750% due 9/1/07................... 687,750
-----------
MEXICO -- 8.8%
2,200,000 Petro Mexicanos, 9.250% due 3/30/18......................... 2,172,500
2,232,000 United Mexican States, 11.375% due 9/15/16.................. 2,645,478
-----------
4,817,978
-----------
PANAMA -- 4.4%
Republic of Panama:
1,625,000 8.875% due 9/30/27........................................ 1,417,813
500,000 IRB, 4.500% due 7/17/14(b)................................ 416,875
669,007 PDI Bond, 7.750% due 7/17/16(b)(f)........................ 565,311
-----------
2,399,999
-----------
PERU -- 2.3%
1,925,000 Government of Peru, FLIRB, 3.750% due 3/7/17(b)............. 1,257,266
-----------
PHILLIPINES -- 2.6%
Republic of Philippines:
1,125,000 9.875% due 1/15/19........................................ 973,125
500,000 10.625% due 3/16/25....................................... 446,250
-----------
1,419,375
-----------
POLAND -- 0.9%
725,000 Republic of Poland, RSTA Bond, 4.000% due 10/27/24(b)....... 496,172
-----------
RUSSIA -- 16.9%
Russia:
1,880,270 8.250% due 3/31/10(b)..................................... 1,337,341
2,045,000 12.750% due 6/24/28....................................... 1,873,731
13,914,250 2.250% due 3/31/30(b)..................................... 6,070,092
-----------
9,281,164
-----------
VENEZUELA -- 11.9%
Republic of Venezuela:
2,157,497 13.625% due 8/15/18 (including 7,947 rights).............. 2,055,938
1,825,000 9.250% due 9/15/27........................................ 1,252,406
714,281 DCB, Series DL, 7.875% due 12/18/07(b).................... 615,621
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 13
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
AUGUST 31, 2000
SALOMON BROTHERS INSTITUTIONAL EMERGING MARKETS DEBT FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT(a) SECURITY VALUE
--------- -------- -----
VENEZUELA -- 11.9% (CONTINUED)
<S> <C> <C>
1,300,000 Discount Bond, Series W-A, 7.375% due 3/31/20............. $ 1,066,000
1,500,000 Discount Bond, Series W-B, 7.875% due 3/31/20............. 1,230,000
333,330 FLIRB, Series A, 7.437% due 3/31/07(b).................... 288,643
-----------
6,508,608
-----------
TOTAL SOVEREIGN BONDS
(Cost -- $47,881,924)..................................... 51,403,870
-----------
LOAN PARTICIPATIONS(g) -- 6.4%
ALGERIA -- 4.0%
The People's Democratic Republic of Algeria,
929,546 Tranche 1, 7.187% due 9/4/06 (Chase Manhattan Bank)(b).... 804,057
1,700,000 Tranche 3, 7.187% due 3/4/10 (Chase Manhattan Bank)(b).... 1,391,875
-----------
2,195,932
-----------
MOROCCO -- 2.4%
1,407,376 Kingdom of Morocco, Tranche A, 7.750% due 1/1/09
(Bank of America, Chase Manhattan Bank and J.P.
Morgan)(b)................................................ 1,300,064
-----------
TOTAL LOAN PARTICIPATIONS
(Cost -- $3,070,976)...................................... 3,495,996
-----------
TOTAL INVESTMENTS -- 100%
(Cost -- $50,952,900*).................................... $54,899,866
-----------
-----------
</TABLE>
-------------------
<TABLE>
<S> <C>
(a) Face amount denominated in U.S. dollars unless otherwise
indicated.
(b) Interest rate shown reflects current rate on instruments
with variable rate or step coupon rate.
(c) Security is exempt from registration under Rule 144A of the
Securities Act of 1933. The security may be resold in
transactions that are exempt from registration, normally to
qualified institutional buyers.
(d) Currently in default.
(e) Non-income producing security.
(f) Payment-in-kind security for which all or part of the
interest earned is paid by the issuance of additional bonds.
(g) Participation interest was acquired through the financial
institutions indicated parenthetically.
* Aggregate cost for Federal income tax purposes is
substantially the same.
</TABLE>
Abbreviations used in this schedule:
-----------------------------------
ARS -- Argentinian Peso.
BOCON -- Bonos De Consolidacion.
DCB -- Debt Conversion Bonds.
FLIRB -- Front-Loaded Interest Reduction Bonds.
FRN -- Floating Rate Notes.
IRB -- Interest Reduction Bond.
PDI -- Past Due Interest.
RSTA -- Revolving Short-Term Agreement.
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 14
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
AUGUST 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING
HIGH YIELD MARKETS
BOND FUND DEBT FUND
--------- ---------
<S> <C> <C>
ASSETS:
Investments, at value (Cost -- $37,817,447 and
$50,952,900, respectively)............................ $30,842,084 $54,899,866
Cash.................................................... 50 54,235
Interest receivable..................................... 757,504 2,054,780
Deferred organization costs............................. 8,938 14,249
Receivable for securities sold.......................... -- 2,138,472
----------- -----------
TOTAL ASSETS............................................ 31,608,576 59,161,602
----------- -----------
LIABILITIES:
Payable for securities purchased........................ 256,172 --
Management fees payable................................. 2,232 22,377
Accrued expenses........................................ 22,485 35,132
----------- -----------
TOTAL LIABILITIES....................................... 280,889 57,509
----------- -----------
TOTAL NET ASSETS............................................ $31,327,687 $59,104,093
----------- -----------
----------- -----------
NET ASSETS:
Par value of capital shares............................. $ 4,194 $ 8,532
Capital paid in excess of par value..................... 39,164,818 52,408,769
Undistributed net investment income..................... 3,184,147 3,729,569
Accumulated net realized loss from security
transactions.......................................... (4,050,109) (989,743)
Net unrealized appreciation (depreciation) of
investments........................................... (6,975,363) 3,946,966
----------- -----------
TOTAL NET ASSETS............................................ $31,327,687 $59,104,093
----------- -----------
----------- -----------
SHARES OUTSTANDING.......................................... 4,193,784 8,531,616
----------- -----------
----------- -----------
NET ASSET VALUE, PER SHARE.................................. $7.47 $6.93
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 15
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED AUGUST 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING
HIGH YIELD MARKETS
BOND FUND DEBT FUND
--------- ---------
<S> <C> <C>
INVESTMENT INCOME:
Interest................................................ $ 2,511,844 $ 3,254,923
Dividends............................................... 14,300 --
----------- -----------
TOTAL INVESTMENT INCOME................................. 2,526,144 3,254,923
----------- -----------
EXPENSES:
Management fees (Note 2)................................ 111,861 174,866
Registration fees....................................... 13,616 10,000
Audit fees.............................................. 12,512 12,512
Administration fees (Note 2)............................ 11,186 12,490
Shareholder and system servicing fees................... 10,920 6,760
Shareholder communications.............................. 8,096 8,012
Amortization of deferred organization costs (Note 1).... 6,427 6,427
Legal................................................... 6,047 7,360
Custody................................................. 3,100 10,120
Directors' fees......................................... 2,944 2,908
Other................................................... 2,788 2,974
----------- -----------
TOTAL EXPENSES.......................................... 189,497 254,429
Less: Management fee waiver (Note 2).................... (66,450) (67,073)
----------- -----------
NET EXPENSES............................................ 123,047 187,356
----------- -----------
NET INVESTMENT INCOME....................................... 2,403,097 3,067,567
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3):
Realized Gain (Loss) From Security Transactions
(excluding short-term securities):
Proceeds from sales..................................... 35,231,171 56,797,708
Cost of securities sold................................. 37,010,522 52,658,573
----------- -----------
NET REALIZED GAIN (LOSS).................................. (1,779,351) 4,139,135
----------- -----------
Change in Net Unrealized Appreciation (Depreciation)
of Investments:
Beginning of period..................................... (5,541,310) 5,892,680
End of period........................................... (6,975,363) 3,946,966
----------- -----------
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION)...... (1,434,053) (1,945,714)
----------- -----------
NET GAIN (LOSS) ON INVESTMENTS.............................. (3,213,404) 2,193,421
----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS........... $ (810,307) $ 5,260,988
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 16
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED AUGUST 31, 2000 (UNAUDITED)
AND THE YEAR ENDED FEBRUARY 29, 2000
HIGH YIELD BOND FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AUGUST 31 FEBRUARY 29
--------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income................................... $ 2,403,097 $ 3,994,886
Net realized loss....................................... (1,779,351) (1,550,604)
Increase in net unrealized depreciation................. (1,434,053) (4,039,797)
------------- -------------
DECREASE IN NET ASSETS FROM OPERATIONS.................. (810,307) (1,595,515)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... -- (3,600,480)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS.......................................... -- (3,600,480)
------------- -------------
FUND SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of shares............................ 16,367,091 19,230,876
Net asset value of shares issued for reinvestment of
dividends............................................. -- 3,477,771
Cost of shares reacquired............................... (35,643,767) (3,464,575)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS............................... (19,276,676) 19,244,072
------------- -------------
INCREASE (DECREASE) IN NET ASSETS........................... (20,086,983) 14,048,077
NET ASSETS:
Beginning of period..................................... 51,414,670 37,366,593
------------- -------------
END OF PERIOD*.......................................... $ 31,327,687 $ 51,414,670
------------- -------------
------------- -------------
*Includes undistributed net investment income of:........... $3,184,147 $781,050
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 17
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE SIX MONTHS ENDED AUGUST 31, 2000 (UNAUDITED)
AND THE YEAR ENDED FEBRUARY 29, 2000
EMERGING MARKETS DEBT FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AUGUST 31 FEBRUARY 29
--------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income................................... $ 3,067,567 $ 5,175,861
Net realized gain....................................... 4,139,135 4,701,749
Increase (decrease) in net unrealized appreciation...... (1,945,714) 6,071,429
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS.................. 5,260,988 15,949,039
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... -- (4,900,147)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS.......................................... -- (4,900,147)
------------- -------------
FUND SHARE TRANSACTIONS (NOTE 5):
Proceeds from sale of shares............................ 24,082,534 26,831,439
Net asset value of shares issued for reinvestment of
dividends............................................. -- 4,405,082
Cost of shares reacquired............................... (32,668,898) (10,379,302)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS............................... (8,586,364) 20,857,219
------------- -------------
INCREASE (DECREASE) IN NET ASSETS........................... (3,325,376) 31,906,111
NET ASSETS:
Beginning of period..................................... 62,429,469 30,523,358
------------- -------------
END OF PERIOD*.......................................... $ 59,104,093 $ 62,429,469
------------- -------------
------------- -------------
*Includes undistributed net investment income of:........... $3,729,569 $662,002
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 18
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Salomon Brothers Institutional High Yield Bond Fund ('High Yield Bond Fund') and
Salomon Brothers Institutional Emerging Markets Debt Fund ('Emerging Markets
Debt Fund') are portfolios constituting the Salomon Brothers Institutional
Series Funds Inc ('Institutional Series'). The Institutional Series is an
open-end investment company incorporated in Maryland on January 19, 1996. Each
Fund has a specific investment objective: the High Yield Bond Fund's objective
is to maximize total return by investing primarily in a portfolio of high-yield
fixed-income securities that offer a yield above that generally available on
debt securities in the four highest rating categories of the recognized rating
services; the Emerging Markets Debt Fund's objective is to maximize total return
by investing primarily in debt securities of government, government related and
corporate issuers located in emerging market countries.
The following is a summary of significant accounting policies followed by the
Institutional 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 the
Fund are valued at amortized cost which approximates market value. If the
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.
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) OPTION CONTRACTS. When the 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 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.
(C) REPURCHASE AGREEMENTS. When entering into repurchase agreements, it is
each Fund's policy that the Fund takes 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 the market value of the collateral (plus
accrued interest) 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.
PAGE 19
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
(D) FOREIGN CURRENCY TRANSLATION. The accounting records of each Fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities of the Funds 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 foreign 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 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.
(E) FORWARD FOREIGN CURRENCY CONTRACTS. Each Fund may enter into forward
foreign currency contracts in connection with planned purchases or sales of
securities or to hedge the value of portfolio securities. 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.
(F) LOAN PARTICIPATIONS. Each 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 total cost of
the Emerging Markets Debt Fund's loan participations at August 31, 2000 was
$3,070,976.
(G) FEDERAL INCOME TAXES. Each Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies by
distributing all of its income, including any net realized gains, to
shareholders. Therefore, no Federal income tax or excise tax provision is
required.
(H) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Each Fund declares
dividends from net investment income annually. 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 Federal income tax
regulations which may differ from GAAP. These differences are 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 dividends in excess of net
investment income and distributions in excess of net realized capital gains.
(I) EXPENSES. Direct expenses are charged to the Fund that incurred them,
and general expenses of the Institutional Series are allocated to the Funds
based on each Fund's relative net assets.
(J) DEFERRED ORGANIZATION COSTS. Certain costs incurred in connection with
each Fund's organization have been deferred and are being amortized by the
Funds over a 60-month period from the date each Fund commenced investment
operations. In the event that any of the initial shares purchased by Salomon
Brothers Asset Management Inc ('SBAM') are redeemed, proceeds of such
redemption will be reduced by the proportionate amount of the unamortized
deferred organization costs which the number of shares redeemed bears to the
total number of initial shares purchased.
PAGE 20
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
(K) YEAR END TAX RECLASSIFICATIONS. The character of income and gains to be
distributed are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. At February 29,
2000, reclassifications were made to the capital accounts of the High Yield
Bond Fund and Emerging Markets Debt Fund to reflect permanent book/tax
differences and income and gains available for distributions under income
tax regulations. Net investment income, net realized gains and net assets
were not affected by this change.
(L) OTHER. Investment transactions are recorded as of the trade date.
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.
2. MANAGEMENT FEE AND OTHER AGREEMENTS
Each Fund retains SBAM, a wholly-owned subsidiary of Salomon Smith Barney
Holdings Inc. ('SSBH'), to act as investment manager of each Fund, subject to
the supervision by the Board of Directors of the Institutional Series. Among
other things, SBAM furnishes the Funds with office space and certain services
and facilities required for conducting the business of the Funds, and pays the
compensation of its officers. The management fee for these services for each
Fund is based on the following annual percentages of each Fund's average daily
net assets: 0.50% for the High Yield Bond Fund and 0.70% for the Emerging
Markets Debt Fund. SBAM also acts as the administrator of each Fund for which it
receives a fee calculated at an annual rate of 0.05% of each Fund's average
daily net assets. These fees are calculated daily and paid monthly.
For the six months ended August 31, 2000, SBAM waived management fees of $66,450
and $67,073 for the High Yield Bond Fund and Emerging Markets Debt Fund,
respectively.
3. PORTFOLIO ACTIVITY
For the six months ended August 31, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<CAPTION>
EMERGING
HIGH YIELD MARKETS
BOND FUND DEBT FUND
--------- ---------
<S> <C> <C>
Purchases.......................................... $19,902,688 $54,063,817
----------- -----------
----------- -----------
Sales.............................................. $35,231,171 $56,797,708
----------- -----------
----------- -----------
</TABLE>
At August 31, 2000, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
<TABLE>
<CAPTION>
EMERGING
HIGH YIELD MARKETS
BOND FUND DEBT FUND
--------- ---------
<S> <C> <C>
Gross unrealized appreciation...................... $ 749,877 $ 4,471,574
Gross unrealized depreciation...................... (7,725,240) (524,608)
----------- -----------
Net unrealized appreciation (depreciation)......... $(6,975,363) $ 3,946,966
----------- -----------
----------- -----------
</TABLE>
PAGE 21
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
4. PORTFOLIO INVESTMENT RISKS
CREDIT AND MARKET RISK. Funds that invest in emerging markets and high-yield
debt instruments are subject to certain credit and market risks. The yields of
debt obligations reflect, among other things, perceived credit risk. 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 in emerging market countries 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.
Foreign securities and currency transactions 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.
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.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK. Each Fund may 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. The High Yield Bond Fund and Emerging Markets Debt 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.
A risk in writing a covered call option is that the Fund may forego the
opportunity of profit if the market price of the underlying security increases
and the option is exercised. A 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.
PAGE 22
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
5. CAPITAL STOCK
At August 31, 2000, the Institutional Series had 10,000,000,000 shares of
authorized capital stock, par value $0.001 per share. Transactions in Fund
shares for the periods indicated were as follows:
For the Six Months Ended August 31, 2000:
<TABLE>
<CAPTION>
EMERGING
HIGH YIELD MARKETS
BOND FUND DEBT FUND
--------- ---------
<S> <C> <C>
Shares sold........................................... 2,201,621 3,687,082
Shares issued as reinvestment......................... -- --
Shares reacquired..................................... (4,776,912) (5,046,548)
---------- ----------
Net decrease.......................................... (2,575,291) (1,359,466)
---------- ----------
---------- ----------
</TABLE>
For the Year Ended February 29, 2000:
<TABLE>
<CAPTION>
EMERGING
HIGH YIELD MARKETS
BOND FUND DEBT FUND
--------- ---------
<S> <C> <C>
Shares sold........................................... 2,408,383 4,702,059
Shares issued as reinvestment......................... 452,246 734,180
Shares reacquired..................................... (437,990) (1,708,096)
---------- ----------
Net increase.......................................... 2,422,639 3,728,143
---------- ----------
---------- ----------
</TABLE>
6. CAPITAL LOSS CARRYFORWARDS
At February 29, 2000, the High Yield Bond Fund and the Emerging Markets Debt
Fund had, for Federal income tax purposes, approximately $1,611,000 and
$4,446,000, respectively, of capital loss carryforwards available to offset
future capital gains. To the extent that these carryforward losses can be used
to offset realized capital gains, it is probable that the gains so offset will
not be distributed. Expirations occur on February 28, of the years below:
<TABLE>
<CAPTION>
2007 2008
---- ----
<S> <C> <C>
High Yield Bond Fund................................. $ 112,000 $1,499,000
Emerging Markets Debt Fund........................... 4,446,000 --
</TABLE>
PAGE 23
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
FINANCIAL HIGHLIGHTS
SELECTED DATA PER SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR ENDED
FEBRUARY 28, EXCEPT WHERE NOTED:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD BOND FUND
-----------------------------------------------
2000(a) 2000(b) 1999 1998 1997(c)
------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 7.60 $ 8.60 $ 9.67 $ 11.13 $10.00
------- ------- ------- ------- ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income*.................... 0.43 0.80 1.04 1.51 0.57
Net realized and unrealized gain (loss)... (0.56) (1.11) (1.05) (0.34) 0.93
------- ------- ------- ------- ------
Total Income (Loss) From Operations......... (0.13) (0.31) (0.01) 1.17 1.50
------- ------- ------- ------- ------
LESS DISTRIBUTIONS FROM:
Net investment income..................... -- (0.69) (1.00) (1.66) (0.36)
Net realized gains........................ -- -- (0.06) (0.97) (0.01)
------- ------- ------- ------- ------
Total Distributions......................... -- (0.69) (1.06) (2.63) (0.37)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD.............. $ 7.47 $ 7.60 $ 8.60 $ 9.67 $11.13
------- ------- ------- ------- ------
------- ------- ------- ------- ------
NET ASSETS, END OF PERIOD (000S)............ $31,328 $51,415 $37,367 $22,664 $6,575
------- ------- ------- ------- ------
------- ------- ------- ------- ------
TOTAL RETURN................................ (1.7)%'DD' (3.7)% 0.1% 11.1% 15.1%'DD'
RATIOS TO AVERAGE NET ASSETS:
Expenses(d)............................... 0.55%'D' 0.55% 0.55% 0.55% 0.55%'D'
Net investment income..................... 10.74%'D' 9.70% 8.80% 9.10% 9.36%'D'
PORTFOLIO TURNOVER RATE..................... 50% 39% 102% 189% 151%
Before waiver of management fee, expenses
reimbursed by SBAM and credits earned from
and fees waived by the custodian, net
investment income per share and expense
ratios would have been:
Net investment income per share*........ $0.42 $0.77 $0.94 $0.93 $0.29
Expense ratio........................... 0.85%'D' 0.89% 1.39% 4.03% 5.22%'D'
</TABLE>
-------------------
(a) For the six months ended August 31, 2000 (unaudited).
(b) For the year ended February 29, 2000.
(c) For the period from May 15, 1996 (inception date) to February 28, 1997.
(d) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets will not exceed 0.55%.
* Per share amounts have been calculated using the monthly average shares
method.
'DD' Total return is not annualized, as it may not be representative of the
total return for the year.
'D' Annualized.
PAGE 24
<PAGE>
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
FINANCIAL HIGHLIGHTS
SELECTED DATA PER SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR ENDED
FEBRUARY 28, EXCEPT WHERE NOTED:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING MARKETS DEBT FUND
---------------------------------------------------
2000(a) 2000(b) 1999 1998 1997(c)
------- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 6.31 $ 4.95 $ 7.21 $ 10.91 $10.00
------- ------- ------- ------- ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income*.................... 0.39 0.65 0.62 1.69 0.35
Net realized and unrealized gain (loss)... 0.23 1.32 (2.29) (0.27) 0.78
------- ------- ------- ------- ------
Total Income (Loss) From Operations......... 0.62 1.97 (1.67) 1.42 1.13
------- ------- ------- ------- ------
LESS DISTRIBUTIONS FROM:
Net investment income..................... -- (0.61) (0.59) (1.77) (0.20)
Net realized gains........................ -- -- (0.00)** (3.35) (0.02)
------- ------- ------- ------- ------
Total Distributions......................... -- (0.61) (0.59) (5.12) (0.22)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD.............. $ 6.93 $ 6.31 $ 4.95 $ 7.21 $10.91
------- ------- ------- ------- ------
------- ------- ------- ------- ------
NET ASSETS, END OF PERIOD (000S)............ $59,104 $62,429 $30,523 $14,596 $6,211
------- ------- ------- ------- ------
------- ------- ------- ------- ------
TOTAL RETURN................................ 9.8%'DD' 40.4% (23.1)% 14.6% 11.4%'DD'
RATIOS TO AVERAGE NET ASSETS:
Expenses(d)............................... 0.75%'D' 0.75% 0.75% 0.75% 0.75%'D'
Net investment income..................... 12.28%'D' 11.12% 13.61% 8.53% 8.94%'D'
PORTFOLIO TURNOVER RATE..................... 113% 203% 295% 549% 136%
Before waiver of management fee, expenses
reimbursed by SBAM and credits earned from
and fees waived by the custodian, net
investment income per share and expense
ratios would have been:
Net investment income per share*........ $0.38 $0.63 $0.59 $1.18 $0.08
Expense ratio........................... 1.02%'D' 1.02% 1.50% 3.34% 7.57%'D'
</TABLE>
-------------------
(a) For the six months ended August 31, 2000 (unaudited).
(b) For the year ended February 29, 2000.
(c) For the period from October 17, 1996 (inception date) to February 28,
1997.
(d) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets will not exceed 0.75%.
* Per share amounts have been calculated using the monthly average shares
method.
** Amount represents less than $0.01 per share.
'DD' Total return is not annualized, as it may not be representative of the
total return for the year.
'D' Annualized.
PAGE 25
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<PAGE>
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<PAGE>
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<PAGE>
TELEPHONE
1-888-777-0102, TOLL FREE
DISTRIBUTOR
CFBDS, Inc.
INVESTMENT MANAGER
Salomon Brothers Asset Management Inc
Seven World Trade Center
New York, New York 10048
CUSTODIAN
PFPC Trust Company
8800 Tinicom Blvd.
Suite 200
Philadelphia, Pennsylvania 19153
DIVIDEND DISBURSING AND TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9764
Providence, RI 02940-9764
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
DIRECTORS
CHARLES F. BARBER
Consultant; formerly Chairman;
ASARCO Inc.
CAROL L. COLMAN
Consultant, Colman Consulting
DANIEL P. CRONIN
Vice President-General Counsel,
Pfizer International Inc.
HEATH B. MCLENDON
Chairman and President, Managing Director,
Salomon Smith Barney Inc.; President and Director,
SSB Citi Fund Management LLC and Travelers Investment Adviser, Inc.
OFFICERS
HEATH B. MCLENDON
Chairman and President
LEWIS E. DAIDONE
Executive Vice President
and Treasurer
JAMES E. CRAIGE
Executive Vice President
THOMAS K. FLANAGAN
Executive Vice President
MAUREEN O'CALLAGHAN
Executive Vice President
BETH A. SEMMEL
Executive Vice President
PETER J. WILBY
Executive Vice President
ANTHONY PACE
Controller
CHRISTINA T. SYDOR
Secretary
----------------------------------------------------------------
Salomon Brothers Institutional Series Funds Inc
--------------------------------------------------------------
<PAGE>
[SSB CITI LOGO]
----------------------
Asset Management Group
A member of citigroup
INSTSEMI 8/00
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as............................ 'D'
The double dagger symbol shall be expressed as.....................'DD'
