<PAGE>
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SALOMON BROTHERS
INVESTMENT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1996
Cash Management Fund
New York Municipal
Bond Fund
National Intermediate
Municipal Fund
U.S. Government
Income Fund
High Yield Bond Fund
Strategic Bond Fund
Total Return Fund
Asia Growth Fund
Investors Fund
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Salomon Brothers Asset Management
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SALOMON BROTHERS INVESTMENT SERIES
August 19, 1996
To Our Shareholders
This report contains a special performance review for each fund other than the
Cash Management Fund. We are very pleased with the aggregate performance of the
Investment Series Funds and our goal is to continue to reward shareholders with
high quality investment performance over time. One of the best ways to measure
our progress toward this goal is to compare the performance of our funds with
like funds. In the following pages, you can see how each of the Salomon Brothers
Investment Series Funds (other than Cash Management Fund and the Asia Growth
Fund) ranks within a universe of similar funds as compiled by Lipper Analytical
Services, a leading mutual fund rating service. (See pp. 3, 5, 7, 9, 13, 15 and
17.)
FINANCIAL MARKET RETURNS
During the first half of 1996 the stock market, as portrayed by the S&P 500
returned 10.1%. While off the pace of 1995, market performance was still strong.
The high grade bond markets (corporates, mortgages and governments) declined
1.3% as measured by the Salomon Brothers Broad Investment Grade Index. The
municipal bond market fared better than their high grade taxable counterparts
declining 0.5% as measured by the Lehman Municipal Bond Index. High yield and
emerging markets debt had positive performances, up 2.9% as measured by the
Salomon Brothers High Yield Market Index and 14.0% as measured by the Salomon
Brothers Brady Bond Index, respectively. Check your fund's individual
performance on the following pages.
THE ECONOMY
The current economic expansion is now 61 months old. This is the third longest
expansion in the post war era. At this point in the economic expansion, with a
low rate of unemployment at 5.3%, financial markets are generally fearful of
signs that inflation will begin to rise. During the first six months of 1996,
the rise of energy prices, grain prices and wages caused the long government
bond market to react quite poorly with interest rates rising from 6% to 7 1/4%.
However, the Federal Reserve did not tighten credit and the long bond market
calmed somewhat by the end of June.
Corporate profits, while slowing somewhat from the hectic expansion of 1994 and
1995, continued to show above average growth. Some of the more cyclical areas of
the economy such as paper, chemicals, metals and technology are showing lower
profitability. Other areas such as energy, financial services, retail and real
estate showed very strong growth in profitability. The stock market focused on
profits and rose despite the negative influence of the higher interest rates.
Likewise, the high yield bond market prospered as buoyant profits improved
corporate credit.
Looking ahead to the second half of 1996, we believe the economy will moderate
its growth rate. However, due to the advanced age of the economic cycle,
investors and the 'Fed' could react badly to any upward revisions in economic
growth or inflation rates. As a result any further acceleration in economic
activity is likely to be met by an increase in market volatility.
STRATEGY
The stock market has had a tremendous run up in price the last two years due to
strong profitability and preference among investors for stocks as opposed to
debt instruments. With both the economic and stock market cycles well advanced,
we are becoming risk averse and selective in our investment process. There has
been heavy speculation in many unseasoned areas and dividend yields are very
low, a situation in which shortfalls from expectations can be severely punished.
The debt markets have shown unusually disparate performance to date in 1996. The
high grade debt market is fearful of rising inflation typical of late stages of
economic cycles. Thus, we have been limiting our exposure to the risk of rising
interest rates and, have been more heavily weighting mortgage-backed and
corporate securities. The high yield market is benefiting from high earnings
levels which tends to improve the perception of credit ratings. Emerging markets
debt has experienced very positive returns as growth accelerates in emerging
economies after the credit crisis of 1993 and 1994.
OUR NEWEST ADDITION
Recognizing the need to offer our clients more diversified opportunities outside
the U.S., a new portfolio, the Asia Growth Fund, was added to the Salomon
Brothers Investment Series on April 29, 1996. We are excited by the addition of
this unique investment opportunity to the Salomon Brothers Investment Series and
we encourage you to read the market overview on page 10 provided by Mr.
Guarnieri, portfolio manager of this Fund.
At Salomon Brothers Asset Management Inc, we appreciate the confidence you have
shown in our family of funds and we intend to do everything we can to earn your
trust in the future. If you have any questions about the Salomon Brothers
Investment Series, or if you'd like a prospectus containing more information on
any of our funds, please call 800-SALOMON (800 725-6666). To receive assistance
regarding your personal account, please call your investment advisor or (800)
446-1013.
Cordially,
Michael S. Hyland
Chairman and President
PAGE 1
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SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews
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SALOMON BROTHERS HIGH YIELD BOND FUND
[Photo]
Peter J. Wilby
MEET YOUR FUND MANAGER
Peter J. Wilby, Managing Director and Portfolio Manager at
Salomon Brothers Asset Management Inc, has 13 years of
experience managing high yield and emerging market debt
securities. Mr. Wilby is primarily responsible for day-to-day
Fund management.
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 Investors Services,
Inc., or those rated BBB or lower by Standard & Poor's Corporation. A key
component of the overall strategy is to seek to determine the optimal asset
allocation between domestic high yield bonds and foreign fixed income
securities such as Brady Bonds and lower-rated sovereign debt.
MARKET REVIEW
The High Yield Bond Fund continues to complement its portfolio by including
exposure to emerging markets debt. This allocation, carefully monitored and
re-evaluated as market conditions change, is a leading contributor to the
strong relative performance of the High Yield Bond Fund versus other high
current yield funds.
In the higher-yielding sectors during the past several months, emerging debt
markets were focused on the presidential election in Russia. As expected
Boris Yeltsin, the pro-reform, free market candidate was re-elected,
continuing the trend of positive political developments in emerging market
countries. In other areas, fundamental economic developments
have been very positive in Argentina and Mexico, as both
countries struggle to recover from deep recessions.
[GRAPH]
In the U.S. corporate high-yield sector, spreads have
tightened slightly over Treasuries, and mutual fund inflows
have been high. The market has been stable, with heavy new
issue activity (including refinancings) and we expect yield
spreads over Treasuries to remain near current levels. Our
fundamental outlook is unchanged and we continue to believe
that selective buying is the best approach in this market.
PAGE 2
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SALOMON BROTHERS INVESTMENT SERIES
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LIPPER COMPARATIVE PERFORMANCE `D' `D'
SALOMON BROTHERS HIGH YIELD BOND FUND
LIPPER CATEGORY: HIGH CURRENT YIELD FUNDS
<TABLE>
<CAPTION>
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
1/1/96 - 6/30/96 6/30/95 - 6/30/96
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
9.45% 4.91% 1st Quartile 17.82% 11.32% 1st Quartile
(Top 6%) (Top 6%)
#9 of 147 #8 of 137
funds funds
CLASS B SHARES RANKING CLASS B SHARES RANKING
9.10% 1st Quartile 16.93% 1st Quartile
(Top 7%) (Top 7%)
#11 #10
CLASS C SHARES RANKING CLASS C SHARES RANKING
9.00% 1st Quartile 16.82% 1st Quartile
(Top 8%) (Top 8%)
#12 #11
CLASS O SHARES RANKING CLASS O SHARES RANKING
9.24% 1st Quartile 17.70% 1st Quartile
(Top 7%) (Top 7%)
#10 #9
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1996:
<TABLE>
<S> <C> <C>
CLASS A SHARES* NET ASSET VALUE `D' PUBLIC OFFERING PRICE
Since (2/22/95) [c] 19.61% 15.39%
1 Year 17.82% 12.24%
CLASS B SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (2/22/95) [c] 18.70% 15.23%
1 Year 16.93% 11.93%
CLASS C SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (2/22/95) [c] 18.64% 18.64%
1 year 16.82% 15.82%
CLASS O SHARES*** RETURN IF NOT REDEEMED RETURN IF REDEEMED
Since (2/22/95) [c] 19.60% 19.60%
1 year 17.70% 17.70%
</TABLE>
See page 18 for all footnotes.
PAGE 3
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SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews (continued)
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SALOMON BROTHERS STRATEGIC BOND FUND
[PHOTO]
Steven Guterman
MEET YOUR FUND MANAGERS
Peter J. Wilby, Managing Director and Portfolio Manager at
Salomon Brothers Asset Management Inc, has 13 years of
experience managing high yield and emerging market debt
securities. Mr. Wilby shares primary responsibility for
day-to-day Fund management.
Steven Guterman, Managing Director and Portfolio Manager at
Salomon Brothers Asset Management Inc, has 16 years of
experience managing fixed income securities. Mr. Guterman
shares primary responsibility for day-to-day Fund management.
[Photo]
David Scott
David Scott, Director and Portfolio Manager at our London
affliate, Salomon Brothers Asset Management Limited, has 13
years of experience managing fixed income securities. Mr.
Scott is responsible for day to day management of certain
portions of the Fund's portfolio.
INVESTMENT OBJECTIVE
To seek a high level of current income. As a secondary
objective, the Fund seeks capital appreciation.
INVESTMENT STRATEGY
The Fund seeks to achieve its objective by investing in a globally diverse
portfolio of fixed income instruments and by giving the investment manager
broad discretion to deploy the Fund's assets among certain segments of the
fixed-income market that the investment manager believes
will contribute to the achievement of the Fund's objectives.
Assets of the Strategic Bond Fund may be deployed among
various sectors of the global fixed income market, depending
on the portfolio managers' analyses of current economic and
market conditions and the relative risks and opportunities
presented in various market segments.
MARKET REVIEW
Our investment process -- which is focused on identifying
and capturing relative value between global fixed income
markets -- led us to maintain the Fund's weightings
throughout the first half of 1996, with approximately
22% of the portfolio invested in emerging market debt and
48% invested in high yield securities. This allocation
generated highly favorable investment results, as the Fund
ranked near the top compared with other multi-sector bond
funds.
[GRAPH]
Credit quality in the high yield bond market generally
continues to improve, as many U.S. corporations are using
higher earnings to pay down debt and strengthen their
balance sheets. We also continue to take a positive view of
opportunities in the emerging market debt sector, with Latin
America looking particularly attractive relative to other
regions. Exposure to Eastern European debt was reduced at
the start of the second quarter to reap profits from a strong performance
earlier in the year.
The Fund also realized gains in the non-U.S. investment grade sector. A key
move here saw a shift out of Canadian government bonds, which had rallied
relative to U.S. Treasuries as the Canadian government took steps to reduce
budget deficits at both the federal and provincial levels.
PAGE 4
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SALOMON BROTHERS INVESTMENT SERIES
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Another strategy contributing to the Fund's strong performance was
underweighting investment grade bonds during the first half of 1996. These
issues were subject to troublesome volatility through the period, as interest
rates spiked up periodically on the release of strong monthly employment
reports. Our highly-defensive 2% position in investment grade debt as of June
30, 1996 indicates our continued wariness toward this sector of the bond
market.
One of the strongest arguments for a global bond fund is the ability to
rotate in or out of fixed-income sectors as opportunities arise to enhance
performance or avoid risk. As we move into the second half of 1996, we intend
to keep searching the globe for attractive fixed income investments.
LIPPER COMPARATIVE PERFORMANCE `D' `D'
SALOMON BROTHERS STRATEGIC BOND FUND
LIPPER CATEGORY: MULTI-SECTOR INCOME FUNDS
<TABLE>
<CAPTION>
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
1/1/96 - 6/30/96 6/30/95 - 6/30/96
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
5.57% 3.16% 1st Quartile 14.26% 10.35% 1st Quartile
(Top 15%) (Top 11%)
#6 of 40 #4 of 38
funds funds
CLASS B SHARES RANKING CLASS B SHARES RANKING
4.96% 1st Quartile 13.24% 1st Quartile
(Top 20%) (Top 21%)
#8 #8
CLASS C SHARES RANKING CLASS C SHARES RANKING
5.06% 1st Quartile 13.28% 1st Quartile
(Top 18%) (Top 18%)
#7 #7
CLASS O SHARES RANKING CLASS O SHARES RANKING
5.59% 1st Quartile 14.40% 1st Quartile
(Top 13%) (Top 8%)
#5 #3
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1996:
<TABLE>
<S> <C> <C>
CLASS A SHARES* NET ASSET VALUE `D' PUBLIC OFFERING PRICE
Since (2/22/95) [c] 16.67% 12.55%
1 Year 14.26% 8.85%
CLASS B SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (2/22/95) [c] 15.67% 12.17%
1 Year 13.24% 8.24%
CLASS C SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (2/22/95) [c] 15.71% 15.71%
1 year 13.28% 12.28%
CLASS O SHARES*** RETURN IF NOT REDEEMED RETURN IF REDEEMED
Since (2/22/95) [c] 16.85% 16.85%
1 year 14.40% 14.40%
</TABLE>
See page 18 for all footnotes.
PAGE 5
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SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews (continued)
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- -
SALOMON BROTHERS INVESTORS FUND
[PHOTO]
Allan R. White
MEET YOUR FUND MANAGER
Allan R. White, Managing Director and Portfolio Manager at
Salomon Brothers Asset Management Inc, has 15 years of
experience managing equity, convertible and fixed income
securities. Mr. White is primarily responsible for day-to-day
Fund management.
INVESTMENT OBJECTIVE
Long-term growth of capital. Current income is a secondary
objective.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks listed on the New York Stock
Exchange and other U.S. exchanges. The portfolio manager maintains a
long-term investment focus. While we believe that economic forecasting has a
role to play in helping us identify promising stocks, we devote most of our
resources to identifying attractive companies rather than trying to predict
market trends. Our stock selection process continues to be aimed at finding
companies with strong management, accelerating operating trends, healthy
balance sheets and strong competitive positions.
MARKET REVIEW
Over the last eighteen months the equity markets have benefited from a
confluence of positive factors. Inflation has been benign, economic growth
has been moderate and earnings growth has been very strong. The Investors
Fund's strong relative performance in the first half of 1996 came from
security selection, and to a lesser degree, favorable sector weightings.
Large positions aiding performance included Sears, Roebuck, Praxair, Tyco
International and Stop & Shop Companies.
During the second half of the year, we believe that markets may be
characterized by more volatility than we have seen the last eighteen months.
Steady earnings growth is highly valued in uncertain market environments. As
a result, we have built up our positions in the medical sector. Operating
trends for companies such as SmithKline Beecham,
Rhone-Poulenc Rorer and Columbia/HCA Healthcare are very
favorable. We continue to search for undervalued stocks and
have begun selectively to buy high quality technology
[GRAPH] stocks, after their recent declines.
PAGE 6
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SALOMON BROTHERS INVESTMENT SERIES
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LIPPER COMPARATIVE PERFORMANCE `D' `D'
SALOMON BROTHERS INVESTORS FUND
LIPPER CATEGORY: GROWTH & INCOME FUNDS
<TABLE>
<CAPTION>
YEAR TO DATE 1 YEAR
1/1/96 - 6/30/96 6/30/95 - 6/30/96
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
12.48% 9.25% 1st Quartile 30.24% 22.14% 1st Quartile
(Top 8%) (Top 1%)
#42 of 527 #7 of 484
funds funds
CLASS B SHARES RANKING CLASS B SHARES RANKING
11.98% 1st Quartile 29.22% 1st Quartile
(Top 11%) (Top 4%)
#57 #19
CLASS C SHARES RANKING CLASS C SHARES RANKING
11.98% 1st Quartile 29.23% 1st Quartile
(Top 11%) (Top 4%)
#57 #18
CLASS O SHARES RANKING CLASS O SHARES RANKING
12.54% 1st Quartile 30.47% 1st Quartile
(Top 7%) (Top 1%)
#39 #6
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1996:
<TABLE>
<S> <C> <C>
CLASS A SHARES* NET ASSET VALUE `D' PUBLIC OFFERING PRICE
Since (1/3/95) [c] 32.58% 28.31%
1 Year 30.24% 24.02%
CLASS B SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (1/3/95) [c] 31.63% 28.68%
1 Year 29.22% 24.22%
CLASS C SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (1/3/95) [c] 31.64% 31.64%
1 year 29.23% 28.23%
CLASS O SHARES*** RETURN IF NOT REDEEMED RETURN IF REDEEMED
1 year 30.47% 30.47%
5 year 16.70% 16.70%
10 year 11.93% 11.93%
</TABLE>
See page 18 for all footnotes.
PAGE 7
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SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews (continued)
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SALOMON BROTHERS TOTAL RETURN FUND
[PHOTO]
Richard Dahlberg
MEET YOUR FUND MANAGER
Richard E. Dahlberg, Managing Director and Portfolio Manager
at Salomon Brothers Asset Management Inc, has 36 years of
experience managing equity securities. Mr. Dahlberg is
primarily responsible for day-to-day Fund management.
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 broad
variety of securities including equities, fixed income securities and short
term obligations.
INVESTMENT STRATEGY
The Fund seeks to produce substantial current income and provide for long
term growth of capital and income. The Fund invests primarily in large
capitalization stocks that are paying dividends greater than the Standard &
Poor's 500 Index average. Fixed income assets are allocated among securities
believed capable of achieving equity like returns, such as high yield bonds
and convertible securities as well as in investment grade bonds.
MARKET REVIEW
A relative newcomer to the Salomon Brothers Investment Series, the Total
Return Fund has generated impressive relative returns since inception in
September 1995. This performance was aided during the first half of 1996 by
emphasis on financial services and energy stocks and by
avoiding areas where stocks appear to be over-priced, such
as technology stocks. The emphasis on high yield bonds as
opposed to government bonds also contributed to both income
and performance.
After a long bull market, many U.S. corporations are now at
lofty valuations. We believe that long-term investment value
lies with companies that serve developing countries, where
growth rates far exceed those of the developed nations. Two
beneficiaries of this trend, Eastman Kodak and Citicorp,
generate an ever growing portion of their revenue from
non-U.S. markets.
The energy sector is also benefiting from the rising
consumption of developing countries and showing significant
potential after 15 years of lackluster relative performance.
During the first half of 1996, the Fund held a number of
energy issues, including Dresser Industries, Suncor and
Williams Cos. We feel that prices for energy stocks do not
fully reflect their long-term potential and we will continue
to look for opportunities in this area.
[GRAPH]
The Fund also benefited from investments in a number of real
estate investment trusts (REIT), which currently offer high
current yields, plus the potential for future dividend growth. Like energy
stocks, we believe REITs offer good value today and could be emerging from
years of under-performance. With electric utilities currently less attractive
due to uncertainty in the regulatory environment, we look to REITs to provide
a healthy portion of
PAGE 8
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SALOMON BROTHERS INVESTMENT SERIES
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the monthly income component investors expect from the Salomon Brothers Total
Return Fund.
Our wariness toward the technology sector significantly helped our
performance versus the stock market during the first half of 1996. A year
ago, we anticipated price declines of up to 50% in some technology stocks and
many issues have already exceeded this plunge in value. Consequently, there
may be an opportunity to buy technology issues at bargain prices over the
next 6-12 months. On the bond side of the portfolio, the Fund's emphasis on
higher yielding corporate debt greatly enhanced performance.
As is generally the case after periods of speculation in the market, we
believe that investors will be attracted to large, financially-sound
companies for their stability, yield and dividend growth potential. We will
continue to focus on the stocks of well-run, well-capitalized companies as
the prices become attractive.
LIPPER COMPARATIVE PERFORMANCE `D' `D'
SALOMON BROTHERS TOTAL RETURN FUND
LIPPER CATEGORY: BALANCED FUNDS
<TABLE>
<CAPTION>
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
1/1/96 - 6/30/96 6/30/95 - 6/30/96
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
6.49% 5.08% 1st Quartile NA NA NA
(Top 19%)
#52 of 270 funds
CLASS B SHARES RANKING CLASS B SHARES RANKING
5.98% 1st Quartile NA NA
(Top 24%)
#65
CLASS C SHARES RANKING CLASS C SHARES RANKING
6.07% 1st Quartile NA NA
(Top 23%)
#62
CLASS O SHARES RANKING CLASS O SHARES RANKING
6.61% 1st Quartile NA NA
(Top 19%)
#50
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1996:
<TABLE>
<S> <C> <C>
CLASS A SHARES* NET ASSET VALUE `D' PUBLIC OFFERING PRICE
Since (9/11/95) [c] 13.58% 8.17%
CLASS B SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (9/11/95) [c] 12.81% 7.81%
CLASS C SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (9/11/95) [c] 13.00% 12.00%
CLASS O SHARES*** RETURN IF NOT REDEEMED RETURN IF REDEEMED
Since (9/11/95) [c] 13.95% 13.95%
</TABLE>
See page 18 for all footnotes.
PAGE 9
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<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews (continued)
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SALOMON BROTHERS ASIA GROWTH FUND
[PHOTO]
Giampaolo G. Guarnieri
MEET YOUR FUND MANAGER
Giampaolo G. Guarnieri, Director, Portfolio Manager and
Co-Chief of Salomon Brothers Asset Management Asia Pacific
Limited (SBAM AP), has 10 years of experience managing equity
securities. SBAM AP is the Hong Kong 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.
INVESTMENT OBJECTIVE
Long-term capital appreciation.
INVESTMENT STRATEGY
The Fund invests primarily in the equity and equity-related securities of
companies located in developing nations of the Pacific Rim, with the
exception of Japan. Areas considered for investment include, but are not
limited to, China, Hong Kong, Indonesia, Korea, Malaysia, the Philippines,
Singapore and Thailand. In seeking to capture high long-term returns with
reduced volatility, Fund managers will allocate assets among countries and
industries believed most likely to benefit from regional
economic trends.
MARKET REVIEW
The goal of our Asia Pacific equity investment process is to
capture the region's high potential returns while actively
managing volatility by spreading risk over a number of
countries, industries and companies. Our approach to Asian
markets is as follows. First, we evaluate the region's
economy, sectors and securities. We then apply proprietary
risk management and asset allocation tools in seeking to
reduce overall portfolio volatility.
Several Pacific rim countries currently offer excellent
investment opportunities for long-term equity investors. The
overall pace of Gross Domestic Product (GDP) growth in Asia
(excluding Japan) continues to be strong and, we believe,
the average growth rate could exceed 7% for the next few
years. Earnings-per-share growth for Pacific rim stocks has
also been quite impressive and we believe this figure could
average 15% going forward. Despite these growth rates,
market valuations remain attractive, especially in Hong
Kong, where equities may trade at 12 times estimated 1996
earnings.
[GRAPH]
Long-term factors driving future growth include
infrastructure improvements, which are leading to greater
cross-border trade, intra-regional investment flows and
growing consumerism, as economic growth starts to penetrate
formerly dormant areas of Asia. As more and more Pacific rim
companies come to the equity markets for their
capital-raising needs, investors are being offered a rapidly
expanding menu of investment opportunities.
PAGE 10
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SALOMON BROTHERS INVESTMENT SERIES
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Overall, we feel these trends will support future growth in the Asia Pacific
region for some time to come.
SALOMON BROTHERS ASIA GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1996:
<TABLE>
<S> <C> <C>
CLASS A SHARES* NET ASSET VALUE `D' PUBLIC OFFERING PRICE
Since (5/06/96) [c] (2.50%) (7.14%)
CLASS B SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (5/06/96) [c] (2.60%) (7.47%)
CLASS C SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (5/06/96) [c] (2.60%) (3.57%)
CLASS O SHARES*** RETURN IF NOT REDEEMED RETURN IF REDEEMED
Since (5/06/96) [c] (2.50%) (2.50%)
<CAPTION>
</TABLE>
See page 18 for all footnotes.
PAGE 11
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SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews (continued)
SALOMON BROTHERS U.S. GOVERNMENT INCOME FUND
[PHOTO]
Roger Lavan
MEET YOUR FUND MANAGERS
Steven Guterman, Managing Director and Portfolio Manager at
Salomon Brothers Asset Management Inc, has 16 years of
experience managing fixed income securities. Mr. Guterman is
primarily responsible for day-to-day Fund management.
Roger Lavan, Director and Portfolio Manager at Salomon
Brothers Asset Management Inc, has 9 years of experience
managing fixed income securities. Mr. Lavan assists in the
day-to-day Fund management.
INVESTMENT OBJECTIVE
To obtain a high level of current income.
INVESTMENT STRATEGY
Under normal market 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.
MARKET REVIEW
During the six months ended June 30, 1996, the Fund continued to overweight
mortgage-backed securities while underweighting U.S. Treasuries. In the near
term, we believe mortgage-backed securities will continue to be attractive,
as higher interest rates have reduced the incentive for homeowners to
refinance their mortgages. Barring a significant market rally, we believe
mortgage-backed securities are likely to perform well in the coming months
and will be favored over Treasuries in the Fund.
In the first half, economic data -- such as home sales, the unemployment
rate, and average hourly earnings -- pointed towards relatively strong
economic growth with the possibility of higher levels of inflation. To
protect the Fund from higher interest rates, a move to a more defensive
stance was taken early in the second quarter. The Fund's
duration -- which measures the sensitivity of the Fund's
holdings to interest rate changes -- was shortened to
approximately 2.5 years, down from 4.0 years at the end of
1995.
In an effort to offset the lower average duration from
significantly reducing the Fund's yield, U.S. Treasury
securities were swapped into higher-yielding agency mortgage
pass-through securities. This move was also designed to
protect the Fund should the Federal Reserve raise interest
[GRAPH] rates during the second half of 1996. Looking forward, we
expect economic growth to slow over the coming months,
permitting the Fund to extend into longer maturity issues
in pursuit of higher yields.
PAGE 12
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------------------------
LIPPER COMPARATIVE PERFORMANCE `D' `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
1/1/96 - 6/30/96 6/30/95 - 6/30/96
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
(0.63%) (0.17%) 3rd Quartile 4.05% 4.37% 2nd Quartile
#66 of 91 #55 of 88
funds funds
CLASS B SHARES RANKING CLASS B SHARES RANKING
(1.12%) 4th Quartile 3.16% 4th Quartile
#84 #82
CLASS C SHARES RANKING CLASS C SHARES RANKING
(1.12%) 4th Quartile 3.16% 4th Quartile
#84 #82
CLASS O SHARES RANKING CLASS O SHARES RANKING
(0.62%) 3rd Quartile 4.19% 3rd Quartile
#63 #53
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1996:
<TABLE>
<S> <C> <C>
CLASS A SHARES* NET ASSET VALUE `D' PUBLIC OFFERING PRICE
Since (2/22/95) [c] 6.39% 2.64%
1 Year 4.05% (0.89%)
CLASS B SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (2/22/95) [c] 5.52% 1.91%
1 Year 3.16% (1.70%)
CLASS C SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (2/22/95) [c] 5.52% 5.52%
1 year 3.16% 2.19%
CLASS O SHARES*** RETURN IF NOT REDEEMED RETURN IF REDEEMED
Since (2/22/95) [c] 6.57% 6.57%
1 year 4.19% 4.19%
</TABLE>
See page 18 for all footnotes.
PAGE 13
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews (continued)
- --------------------------------------------------------------------------------
SALOMON BROTHERS NATIONAL INTERMEDIATE MUNICIPAL FUND
[PHOTO]
Marybeth Whyte
MEET YOUR FUND MANAGER
Marybeth Whyte, Director and Portfolio Manager at Salomon
Brothers Asset Management Inc, has 13 years of experience
managing municipal securities. Ms. Whyte is primarily
responsible for day-to-day Fund management.
INVESTMENT OBJECTIVE
To achieve a high level of current income exempt from regular
federal income taxes. All or a portion of the Fund's
dividends paid in respect to its shares may be subject to the
federal alternative minimum tax.
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.
MARKET REVIEW
Our approach to the municipal bond market focuses on benefiting from
long-term fundamentals rather than short-term market trends. Having witnessed
relatively high levels of volatility during the past six months, we feel it
is more important than ever to adhere to this approach, which emphasizes
rigorous credit analysis and careful sector selection.
In the first six months of 1996, robust demand from individual investors and
insurance companies helped municipal bonds outperform taxable fixed-income
securities. Even though stronger-than-expected economic data in April and May
caused bond prices to falter, losses in the municipal sector were tempered
due to strong supply/demand technicals. Individual investors
were drawn to municipal bonds as long-term yields exceeded
6.0%, the stock market became more volatile and fear of a
flat tax lessened. On the institutional side, demand from
property and casualty insurance companies continued due to
their sustained profitability. Municipals gathered
additional strength as much of the estimated $25 billion
from June maturities, redemptions and coupon payments was
reinvested in the municipal market in a period of light new
issue supply.
[GRAPH]
In coming months, anticipated cash from municipal coupon
payments, maturities and redemptions, combined with an
expected light new issue calendar should enable municipals
to continue their favorable technical position.
PAGE 14
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------------------------
LIPPER COMPARATIVE PERFORMANCE `D' `D'
SALOMON BROTHERS NATIONAL INTERMEDIATE MUNICIPAL FUND
LIPPER CATEGORY: INTERMEDIATE MUNICIPAL DEBT FUNDS
<TABLE>
<CAPTION>
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
1/1/96 - 6/30/96 6/30/95 - 6/30/96
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
(0.20%) (0.25%) 2nd Quartile 5.35% 4.93% 2nd Quartile
#70 of 143 funds #41 of 139 funds
CLASS B SHARES RANKING CLASS B SHARES RANKING
(0.54%) 3rd Quartile 4.52% 3rd Quartile
#106 #95
CLASS C SHARES RANKING CLASS C SHARES RANKING
(0.54%) 3rd Quartile 4.52% 3rd Quartile
#106 #95
CLASS O SHARES RANKING CLASS O SHARES RANKING
(0.08%) 2nd Quartile 5.59% 1st Quartile
#52 (Top 18%)
#25
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1996:
<TABLE>
<S> <C> <C>
CLASS A SHARES* NET ASSET VALUE `D' PUBLIC OFFERING PRICE
Since (2/22/95) [c] 6.20% 2.46%
1 Year 5.35% 0.30%
CLASS B SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (2/22/95) [c] 5.38% 1.75%
1 Year 4.52% (0.48%)
CLASS C SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (2/22/95) [c] 5.38% 5.38%
1 year 4.52% 3.52%
CLASS O SHARES*** RETURN IF NOT REDEEMED RETURN IF REDEEMED
Since (2/22/95) [c] 6.45% 6.45%
1 year 5.59% 5.59%
</TABLE>
See page 18 for all footnotes.
PAGE 15
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews (continued)
- --------------------------------------------------------------------------------
SALOMON BROTHERS NEW YORK MUNICIPAL BOND FUND
MEET YOUR FUND MANAGER
Marybeth Whyte, Director and Portfolio Manager at Salomon Brothers Asset
Management Inc, has 13 years of experience managing municipal securities. Ms.
Whyte is primarily responsible for day-to-day Fund management.
INVESTMENT OBJECTIVE
To achieve a high level of current income exempt from regular federal income
taxes and New York State and New York City personal income taxes, consistent
with the preservation of capital.
INVESTMENT STRATEGY
Under normal market conditions, the Fund will invest at least 65% of its net
assets in obligations the interest on which is exempt from personal income
taxes of New York State and New York City, and at least 80% of its net assets
in obligations the interest on which is exempt from regular federal income
taxes. All or a portion of the Fund's dividends paid in respect to its shares
may be subject to the federal alternative minimum tax.
MARKET REVIEW
The New York municipal market performed in line with national municipal bonds
during the first half of 1996. Municipals, including New York tax-exempts,
outpaced their taxable counterparts during this time period despite a high
level of volatility. This better relative performance was attributable to a
favorable supply/demand imbalance in the municipal market. Furthermore, this
imbalance was magnified in the New York arena, which witnessed a significant
decline in new issue supply due to the inability of the state's legislature
to pass a timely budget.
For the first six months of the year, individual investors as well as
property and casualty insurance companies were dominant buyers in the
municipal market. Individual investors were enticed by the attractive nominal
yields afforded in the marketplace. In addition, the stock market's
heightened volatility caused some individuals to increase
their asset allocation toward municipals. Property and
casualty insurance companies remain a market stalwart due to
their continued profitability. The New York municipal market
benefited from both scenarios.
Now that the New York State budget is in place we anticipate
an increase in new issues for the Empire State. Nonetheless,
we remain optimistic that the positive technicals in the
[GRAPH] municipal market will continue in the coming months.
PAGE 16
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------------------------
LIPPER COMPARATIVE PERFORMANCE `D' `D'
SALOMON BROTHERS NEW YORK MUNICIPAL BOND FUND
LIPPER CATEGORY: NEW YORK MUNICIPAL BOND FUNDS
<TABLE>
<CAPTION>
YEAR TO DATE TOTAL RETURN 1 YEAR TOTAL RETURN
1/1/96 - 6/30/96 6/30/95 - 6/30/96
<S> <C> <C> <C> <C> <C>
CLASS A SHARES LIPPER AVERAGE RANKING CLASS A SHARES LIPPER AVERAGE RANKING
(1.78%) (1.40%) 4th Quartile 5.87% 5.57% 2nd Quartile
#80 of 99 #40 of 94
funds funds
CLASS B SHARES RANKING CLASS B SHARES RANKING
(2.14%) 4th Quartile 5.10% 3rd Quartile
#89 #71
CLASS C SHARES RANKING CLASS C SHARES RANKING
(2.14%) 4th Quartile 5.11% 3rd Quartile
#89 #71
CLASS O SHARES RANKING CLASS O SHARES RANKING
(1.56%) 3rd Quartile 6.13% 2nd Quartile
#66 #30
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD THROUGH JUNE 30, 1996:
<TABLE>
<S> <C> <C>
CLASS A SHARES* NET ASSET VALUE `D' PUBLIC OFFERING PRICE
Since (1/3/95) [c] 10.21% 6.64%
1 Year 5.87% 0.84%
CLASS B SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (1/3/95) [c] 9.48% 6.25%
1 Year 5.10% 0.10%
CLASS C SHARES** RETURN IF NOT REDEEMED `D' RETURN IF REDEEMED
Since (1/3/95) [c] 9.48% 9.48%
1 year 5.11% 4.11%
CLASS O SHARES*** RETURN IF NOT REDEEMED RETURN IF REDEEMED
Since (2/1/93) [c] 4.59% 4.59%
1 year 6.13% 6.13%
</TABLE>
See page 18 for all footnotes.
PAGE 17
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio Reviews (concluded)
- --------------------------------------------------------------------------------
`D' Return does not reflect the deduction of any sales charge.
`D' `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, Class B and Class 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.Class A
shares are subject to an annual 12b-1 service fee of .25% of the
value of the average daily net assets. Class B and Class 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.
* Maximum sales charge for Class A shares is 4.75% of the public offering
price. Class A shares bear ongoing annual 12b-1 service fee of .25%.
** Maximum contingent deferred sales charge for Class B and Class C shares
are 5% and 1%, respectively, and is reduced to 0% after 6 years and 1
year, respectively. Class B and Class C shares are subject to annual
12b-1 service and distribution fees in an aggregate amount of 1.00%.
*** Each Fund offers Class O shares to existing shareholders of Class O
shares in the Investment Series. Class O shares do not have initial or
contingent deferred sales charges or ongoing distribution and service
fees.
[c] Commencement of investment operations.
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). The
average annual return for a period less than a 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 Fund) imposed by SBAM to limit total Fund
operating expenses. Absent this expense cap, Fund expenses would be higher
and returns 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.
PAGE 18
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS CASH MANAGEMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE
AMOUNT DESCRIPTION PURCHASE* DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER -- 41.5%
AUTO -- CARS -- 2.0%
$ 400,000 Ford Motor Credit................................ 5.280% 08/05/96 $ 397,947
------------
BANKS -- 4.1%
400,000 Deutsche Bank Financial.......................... 5.270 07/17/96 399,063
400,000 J. P. Morgan..................................... 4.970 09/06/96 396,300
------------
795,363
------------
BEVERAGES -- BREWED & DISTILLED -- 3.8%
750,000 Seagram (Joseph) & Sons.......................... 5.370 07/30/96 746,756
------------
COMPUTER SYSTEMS -- 4.1%
400,000 Hewlett-Packard.................................. 5.260 07/23/96 398,714
400,000 Pitney Bowes Credit.............................. 5.280 08/05/96 397,947
------------
796,661
------------
CONSUMER CYCLICAL -- MISCELLANEOUS -- 2.0%
400,000 PHH.............................................. 5.330 07/22/96 398,756
------------
FINANCE COMPANIES -- 6.6%
400,000 Commercial Credit................................ 5.290 07/26/96 398,531
400,000 General Electric Capital......................... 5.260 07/08/96 399,591
500,000 Transamerica Finance............................. 5.340 07/17/96 498,813
------------
1,296,935
------------
FINANCIAL -- BROKERAGE -- 2.0%
400,000 Goldman Sachs Group.............................. 5.330 08/12/96 397,513
------------
FOODS -- 2.1%
400,000 Heinz (H.J.)..................................... 5.290 07/02/96 399,941
------------
HOUSEHOLD PRODUCTS -- 2.0%
400,000 Procter & Gamble................................. 5.260 07/25/96 398,597
------------
MERCHANDISING -- 2.6%
500,000 Penney (J.C.) Funding............................ 5.340 07/31/96 497,775
------------
MUNICIPAL -- 6.1%
400,000 De Kalb County, Georgia.......................... 5.580 07/08/96 400,000
400,000 Methodist Hospital (Houston, Texas).............. 5.400 07/30/96 400,000
400,000 New York City, New York GO....................... 5.300 08/20/96 400,000
------------
1,200,000
------------
OIL -- INTEGRATED INTERNATIONAL -- 2.1%
400,000 Shell Oil........................................ 5.320 07/15/96 399,172
------------
UTILITIES -- COMMUNICATIONS -- 2.0%
400,000 AT&T............................................. 5.260 07/29/96 398,363
------------
TOTAL COMMERCIAL PAPER
(cost $8,123,779).............................. 8,123,779
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 19
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS CASH MANAGEMENT FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE
AMOUNT DESCRIPTION PURCHASE* DATE (NOTE 1A)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLOATING RATE NOTES -- 26.4%
CALIFORNIA -- 2.0%
$ 400,000 Pasadena, California Certificates of
Participation VR............................... 5.750% 07/02/96 $ 400,000
------------
FLORIDA -- 2.0%
400,000 Florida Housing Finance Agency VR................ 5.520 07/03/96 400,000
------------
ILLINOIS -- 2.0%
400,000 Illinois Student Assistance Commission VR........ 5.770 07/03/96 400,000
------------
MICHIGAN -- 1.1%
200,000 Genesis Health Systems VR........................ 5.590 07/03/96 200,000
------------
NEW JERSEY -- 2.7%
285,000 New Jersey Economic Development Authority VR..... 5.810 07/01/96 285,000
230,000 New Jersey Economic Development Authority VR..... 5.680 07/01/96 230,000
------------
515,000
------------
NEW YORK -- 8.7%
390,000 Fulton County, New York Industrial Development
Agency VR...................................... 5.700 07/05/96 390,000
400,000 Health Insurance Plan, Greater New York VR....... 5.550 07/03/96 400,000
350,000 New York City, New York Industrial Development
Agency VR...................................... 5.650 07/03/96 350,000
150,000 New York City, New York Industrial Development
Agency VR...................................... 5.650 07/03/96 150,000
400,000 Syracuse, New York GO VR......................... 6.400 07/03/96 400,000
------------
1,690,000
------------
NORTH CAROLINA -- 2.0%
390,000 Greensboro, North Carolina GO VR................. 5.550 07/03/96 390,000
------------
TENNESSEE -- 2.0%
400,000 Community Health Systems VR...................... 5.700 07/03/96 400,000
------------
TEXAS -- 1.9%
375,000 Texas State GO VR................................ 5.520 07/03/96 375,000
------------
VIRGINIA -- 2.0%
400,000 Virginia State Housing Development Authority
VR............................................. 5.550 07/03/96 400,000
------------
TOTAL FLOATING RATE NOTES
(cost $5,170,000).............................. 5,170,000
------------
U.S. GOVERNMENT AGENCY -- 9.2%
1,805,000 Federal Farm Credit Bank (cost $1,798,935)....... 5.260 07/24/96 1,798,935
------------
TOTAL INVESTMENTS -- 77.1%
(cost $15,092,714)............................. 15,092,714
</TABLE>
See accompanying notes to financial statements.
PAGE 20
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS CASH MANAGEMENT FUND (concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE
AMOUNT DESCRIPTION PURCHASE* DATE (NOTE 1A)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT -- 21.6%
$ 4,231,221 Repurchase Agreement dated 06/28/96 with
J.P. Morgan Securities, collateralized by
$4,227,000 U.S. Treasury Bonds, 7.250%, due
05/15/16 valued at $4,316,824; proceeds:
$4,233,132 (cost $4,231,221)................... 5.420% 07/01/96 $ 4,231,221
Other assets in excess of liabilities -- 1.3%.... 254,487
------------
NET ASSETS -- 100.0%............................. $ 19,578,422
------------
------------
</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.
PAGE 21
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS NEW YORK MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 97.1%
NEW YORK -- 93.6%
$ 150,000 Grand Central District Management Association....... 5.250% 01/01/22 $ 132,555
150,000 Metropolitan Transportation Authority New York
FSA............................................... 5.700 07/01/24 146,717
200,000 Mount Pleasant, New York
Industrial Development Agency VR.................. 3.600 07/02/96 200,000
200,000 Nassau County, New York GO FGIC..................... 5.200 08/01/12 190,762
300,000 New York City, New York GO.......................... 7.375 08/15/13 329,889
300,000 New York City, New York GO.......................... 6.750 10/01/17 306,231
100,000 New York City, New York
Industrial Development Agency VR.................. 3.200 07/03/96 100,000
300,000 New York City, New York
Municipal Water Finance Authority................. 6.000 06/15/17 298,575
150,000 New York State Dormitory Authority.................. 6.250 07/01/13 147,080
150,000 New York State Dormitory Authority.................. 5.500 07/01/25 134,468
150,000 New York State Dormitory Authority.................. 5.500 05/15/23 134,178
100,000 New York State Dormitory Authority
(City University System of New York).............. 5.750 07/01/18 95,210
140,000 New York State Dormitory Authority
(State University Educational Facilities)......... 6.000 05/15/17 135,463
200,000 New York State GO................................... 6.000 03/15/20 202,820
250,000 New York State
Local Government Assistance Corporation........... 6.000 04/01/18 250,280
100,000 New York State
Medical Care Facilities Finance Agency MBIA....... 5.900 02/15/21 99,863
200,000 New York State Mortgage Agency...................... 6.500 04/01/13 204,790
150,000 New York State Thruway Authority.................... 6.000 04/01/10 146,421
150,000 New York State
Urban Development Corporation..................... 5.500 01/01/14 139,940
150,000 New York State
Urban Development Corporation..................... 5.500 01/01/19 138,201
200,000 Port Authority of New York & New Jersey............. 5.500 09/01/13 192,670
150,000 Triborough Bridge & Tunnel Authority New York....... 5.500 01/01/17 146,045
200,000 Western Nassau County, New York
Water Authority AMBAC............................. 5.500 05/01/16 192,054
-----------
4,064,212
-----------
PUERTO RICO -- 3.5%
150,000 Commonwealth of Puerto Rico GO...................... 6.000 07/01/14 151,136
-----------
TOTAL INVESTMENTS -- 97.1%
(cost $4,217,086)................................. 4,215,348
Other assets in excess of liabilities -- 2.9%....... 127,655
-----------
NET ASSETS -- 100.0%................................ $ 4,343,003
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
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.
FSA -- Insured as to principal and interest by the Financial Security Assurance 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.
</TABLE>
See accompanying notes to financial statements.
PAGE 22
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS NATIONAL INTERMEDIATE MUNICIPAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 96.6%
CALIFORNIA -- 3.7%
$ 100,000 Los Angeles County, California Industrial
Development Authority VR......................... 4.200% 07/01/96 $ 100,000
285,000 Los Angeles, California AMBAC...................... 6.000 08/01/03 301,826
------------
401,826
------------
FLORIDA -- 1.6%
180,000 Florida Housing Finance Agency..................... 6.150 07/01/06 182,535
------------
HAWAII -- 2.2%
250,000 Hawaii State Department of Budget & Finance........ 5.600 07/01/06 247,735
------------
ILLINOIS -- 6.5%
300,000 Chicago, Illinois Metropolitan Water GO............ 5.900 12/01/06 315,243
400,000 Illinois Student Assistance Commission............. 6.400 03/01/04 413,156
------------
728,399
------------
INDIANA -- 8.7%
300,000 Indiana Secondary Market for Education AMBAC....... 5.550 12/01/05 294,171
650,000 Indiana Transportation Finance Authority........... 6.250 11/01/03 687,908
------------
982,079
------------
LOUISIANA -- 4.2%
450,000 Louisiana Public Facilities Authority.............. 6.750 09/01/06 476,271
------------
MASSACHUSETTS -- 3.8%
400,000 Commonwealth of Massachusetts Health & Educational
Facilities Authority............................. 6.500 12/01/05 429,092
------------
MICHIGAN -- 4.2%
475,000 Michigan State Housing Development Authority
FGIC............................................. 6.300 04/01/03 475,580
------------
MISSISSIPPI -- 4.3%
480,000 Mississippi Higher Education....................... 6.050 09/01/07 488,928
------------
NEW JERSEY -- 4.1%
450,000 Passaic Valley, New Jersey Sewer Commission
AMBAC............................................ 5.750 12/01/07 464,216
------------
NEW YORK -- 30.7%
450,000 New York City, New York GO......................... 6.500 02/01/02 466,349
380,000 New York City, New York Municipal Assistance
Corporation...................................... 6.000 07/01/04 404,309
500,000 New York State Dormitory Authority................. 6.000 07/02/06 503,360
700,000 New York State Dormitory Authority MBIA............ 5.600 07/01/06 708,554
400,000 New York State Dormitory Authority (State
University of New York).......................... 6.625 07/01/04 440,244
500,000 New York State Mortgage Agency..................... 5.900 10/01/06 498,045
400,000 New York State Thruway Authority MBIA.............. 6.000 01/01/04 423,756
------------
3,444,617
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 23
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS NATIONAL INTERMEDIATE MUNICIPAL FUND (concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1A)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PENNSYLVANIA -- 8.1%
$ 400,000 Geisinger Authority, Pennsylvania Health System.... 6.000% 07/01/01 $ 417,528
500,000 Monroeville, Pennsylvania Hospital Authority....... 5.750 10/01/05 489,430
------------
906,958
------------
PUERTO RICO -- 2.4%
250,000 Commonwealth of Puerto Rico Highway and
Transportation Authority MBIA.................... 6.250 07/01/06 271,295
------------
SOUTH CAROLINA -- 7.3%
750,000 South Carolina State Public Service Authority
FGIC............................................. 6.500 01/01/05 818,505
------------
TEXAS -- 4.8%
500,000 Austin, Texas Airport Systems MBIA................. 6.500 11/15/05 542,325
------------
TOTAL INVESTMENTS -- 96.6%
(cost $10,728,020)............................... 10,860,361
Other assets in excess of liabilities -- 3.4%...... 384,981
------------
NET ASSETS -- 100.0%............................... $ 11,245,342
------------
------------
</TABLE>
<TABLE>
<S> <C>
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.
</TABLE>
See accompanying notes to financial statements.
PAGE 24
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 52.7%
$ 4,350,000 U.S. Treasury Note............................... 6.125% 05/31/97 $ 4,363,572
700,000 U.S. Treasury Note............................... 6.625 06/30/01 704,592
500,000 U.S. Treasury Note............................... 6.500 08/15/05 492,810
150,000 U.S. Treasury Note............................... 5.875 11/15/05 141,305
------------
TOTAL U.S. TREASURY NOTES
(cost $5,731,180).............................. 5,702,279
------------
U.S. GOVERNMENT AGENCY -- 39.3%
100,000 Federal Home Loan Bank........................... 5.940 06/13/00 97,781
73,590 Federal Home Loan Mortgage Corporation........... 6.000 07/01/10 69,976
697,674 Federal Home Loan Mortgage Corporation........... 6.000 08/01/10 663,411
374,793 Federal Home Loan Mortgage Corporation........... 6.000 09/01/10 356,387
38,680 Federal Home Loan Mortgage Corporation........... 6.000 10/01/10 36,757
549,149 Federal Home Loan Mortgage Corporation........... 6.000 10/01/10 521,851
39,196 Federal Home Loan Mortgage Corporation........... 11.750 01/01/11 43,280
935 Federal Home Loan Mortgage Corporation........... 11.750 06/01/14 1,007
25,320 Federal Home Loan Mortgage Corporation........... 11.750 12/01/14 28,313
36,108 Federal Home Loan Mortgage Corporation........... 11.750 07/01/15 40,378
40,690 Federal Home Loan Mortgage Corporation........... 11.750 01/01/16 45,503
58,536 Federal National Mortgage Association............ 14.500 11/01/14 71,487
27,341 Federal National Mortgage Association............ 12.500 08/01/15 31,665
125,623 Federal National Mortgage Association............ 12.500 09/01/15 146,116
44,655 Federal National Mortgage Association............ 12.000 01/01/16 51,367
38,013 Federal National Mortgage Association............ 11.500 04/01/19 42,765
227,539 Federal National Mortgage Association............ 11.500 02/01/20 256,478
126,752 Federal National Mortgage Association............ 13.000 02/26/26 148,695
66,634 Federal National Mortgage Association............ 6.500 04/01/26 62,406
1,430,043 Federal National Mortgage Association............ 6.500 04/01/26 1,339,312
200,000 Government National Mortgage Association(a)...... 7.000 01/22/26 191,781
------------
TOTAL U.S. GOVERNMENT AGENCY
(cost $4,312,382).............................. 4,246,716
------------
TOTAL INVESTMENTS -- 92.0%
(cost $10,043,562)............................. 9,948,995
REPURCHASE AGREEMENT -- 16.2%
1,749,000 Repurchase Agreement dated 06/28/96, with
J.P.Morgan Securities, collateralized
by $1,564,000 U.S. Treasury Bonds,
9.125%, due 05/15/09 valued at $1,784,915;
proceeds: $1,749,790........................... 5.420 07/01/96 1,749,000
Liabilities in excess of other
assets -- (8.2%)............................... (885,489)
------------
NET ASSETS -- 100.0%............................. $ 10,812,506
------------
------------
</TABLE>
(a) Mortgage Dollar Roll. See Note 1.
See accompanying notes to financial statements.
PAGE 25
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS HIGH YIELD BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT(A) DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
CORPORATE BONDS -- 73.4%
BASIC INDUSTRIES -- 18.4%
500,000 Algoma Steel......................................... 12.375% 07/15/05 $ 485,000
500,000 Alvey Systems........................................ 11.375 01/31/03 517,500
500,000 Asia Pulp & Paper International Finance.............. 11.750 10/01/05 512,500
500,000 Clark-Schwebel....................................... 10.500 04/15/06 512,500
250,000 Foamex............................................... 11.875 10/01/04 235,000
500,000 Forest Oil........................................... 11.250 09/01/03 517,500
500,000 Harris Chemical...................................... 10.250 07/15/01 501,250
1,000,000 International Semi-Technology (Zero Coupon until
08/15/00, 11.50% thereafter)(b).................... 13.420 08/15/03 572,500
750,000 NL Industries (Zero Coupon until 10/15/98, 13.00%
thereafter)(b)..................................... 11.641 10/15/05 582,188
500,000 Norcal Waste Systems*................................ 12.750 11/15/05 520,000
500,000 Oregon Steel Mills................................... 11.000 06/15/03 515,000
250,000 Renco Metals......................................... 12.000 07/15/00 282,500
1,000,000 Renco Metals......................................... 11.500 07/01/03 1,015,000
500,000 Repap Wisconsin...................................... 9.875 05/01/06 445,000
500,000 Southdown............................................ 10.000 03/01/06 485,000
500,000 Specialty Equipment.................................. 11.375 12/01/03 516,250
500,000 Stone Container...................................... 9.875 02/01/01 488,125
500,000 Terex................................................ 13.750 05/15/02 521,875
500,000 Texas Petrochemicals................................. 11.125 07/01/06 512,500
500,000 Valcor............................................... 9.625 11/01/03 450,000
------------
10,187,188
------------
CONSUMER CYCLICALS -- 9.1%
500,000 American Skiing...................................... 12.000 07/15/06 490,000
500,000 Collins & Aikman..................................... 11.500 04/15/06 506,250
1,000,000 Hayes Wheels International........................... 11.000 07/15/06 1,012,500
500,000 Herff Jones.......................................... 11.000 08/15/05 522,500
500,000 Hills Stores......................................... 12.500 07/01/03 490,000
500,000 Hines Horticulture................................... 11.750 10/15/05 520,000
500,000 Simmons.............................................. 10.750 04/15/06 497,500
500,000 Specialty Retailer................................... 11.000 08/15/03 520,000
500,000 Wyndham Hotel........................................ 10.500 05/15/06 500,000
------------
5,058,750
------------
CONSUMER NON-CYCLICALS -- 18.3%
500,000 Americold............................................ 12.875 05/01/08 510,000
500,000 Argosy Gaming........................................ 13.250 06/01/04 506,250
500,000 Bally's Grand........................................ 10.375 12/15/03 548,750
500,000 Berry Plastics....................................... 12.250 04/15/04 540,000
500,000 Big V Supermarkets................................... 11.000 12/15/04 465,000
500,000 Borg-Warner.......................................... 9.125 05/01/03 470,000
500,000 Carr-Gottstein Foods................................. 12.000 11/15/05 512,500
500,000 Cobb Theatres........................................ 10.625 03/01/03 507,500
500,000 Dade International................................... 11.125 05/01/06 517,500
500,000 Empress River Casino................................. 10.750 04/01/02 522,500
250,000 Hollywood Casino..................................... 12.750 11/01/03 250,000
450,000 Jordan Industries (Zero Coupon until 08/01/98, 11.75%
thereafter)(b)..................................... 14.013 08/01/05 324,000
400,000 Majestic Star Casino................................. 12.750 05/15/03 434,000
500,000 Remington Product.................................... 11.000 05/15/06 497,500
500,000 Samsonite............................................ 11.125 07/15/05 507,500
</TABLE>
See accompanying notes to financial statements.
PAGE 26
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS HIGH YIELD BOND FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT(A) DESCRIPTION RATE DATE (NOTE 1A)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
500,000 Selmer............................................... 11.000% 05/15/05 $ 527,500
500,000 Showboat Marina Casino............................... 13.500 03/15/03 542,500
250,000 Specialty Foods...................................... 11.125 10/01/02 237,500
600,000 Trump Atlantic City.................................. 11.250 05/01/06 606,000
500,000 Twin Laboratories.................................... 10.250 05/15/06 507,500
500,000 Williamhouse Regency................................. 13.000 11/15/05 566,250
------------
10,100,250
------------
ENERGY -- 2.7%
500,000 Benton Oil & Gas..................................... 11.625 05/01/03 515,000
500,000 Chesapeake Energy.................................... 9.125 04/15/06 487,500
500,000 Cliffs Drilling...................................... 10.250 05/15/03 495,000
------------
1,497,500
------------
FINANCIAL SERVICES -- 0.9%
500,000 Polysindo International Finance...................... 11.375 06/15/06 508,750
------------
HEALTH CARE -- 0.9%
500,000 Paracelsus Healthcare................................ 9.875 10/15/03 500,000
------------
MEDIA -- 7.8%
500,000 Adelphia Communications.............................. 12.500 05/15/02 507,500
500,000 American Media Operation............................. 11.625 11/15/04 510,000
500,000 Chancellor Broadcasting.............................. 9.375 10/01/04 472,500
1,000,000 Diamond Cable (Zero Coupon until 12/15/00, 11.75%
thereafter)(b)..................................... 11.750 12/15/05 587,500
1,000,000 Marcus Cable (Zero Coupon until 12/15/00, 14.125%
thereafter)(b)..................................... 12.867 12/15/05 615,000
500,000 People's Choice TV (Zero Coupon until 06/01/00,
13.125% thereafter)(b)............................. 13.125 06/01/04 290,000
500,000 SFX Broadcasting..................................... 10.750 05/15/06 496,250
750,000 United International Holdings(b)..................... 13.371 11/15/99 495,000
250,000 Wireless One, including 750 attached warrants........ 13.000 10/15/03 258,750
------------
4,232,500
------------
TECHNOLOGY -- 3.6%
500,000 Exide Electronics Group, including 500 attached
warrants........................................... 11.500 03/15/06 530,000
500,000 Talley Manufacturing & Technology.................... 10.750 10/15/03 512,500
500,000 Telex Communications................................. 12.000 07/15/04 534,375
400,000 UNC.................................................. 11.000 06/01/06 407,000
------------
1,983,875
------------
TELECOMMUNICATIONS & UTILITIES -- 8.6%
1,000,000 AES.................................................. 10.250 07/15/06 1,015,625
900,000 Arch Communications Group (Zero Coupon until
03/15/01, 10.875% thereafter)(b)................... 10.875 03/15/08 463,500
500,000 A+ Network........................................... 11.875 11/01/05 513,750
1,000,000 CS Wireless Systems (Zero Coupon until 03/01/01,
11.375% thereafter)(b)............................. 11.375 03/01/06 520,000
500,000 El Paso Electric..................................... 9.400 05/01/11 495,000
475,000 In Flight Phone, including 900 attached warrants
(Zero Coupon until 05/15/98, 14.00%
thereafter)(b)..................................... 19.691 05/15/02 171,000
500,000 Intelcom Group (Zero Coupon until 09/15/00, 13.500%
thereafter)(b)..................................... 12.725 09/15/05 300,000
</TABLE>
See accompanying notes to financial statements.
PAGE 27
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS HIGH YIELD BOND FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT(A) DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
1,000,000 International CableTel (Zero Coupon until
02/01/01, 11.500% thereafter)(b)................ 11.229% 02/01/06 $ 556,250
400,000 Western Wireless.................................. 10.500 06/01/06 396,000
600,000 Winstar Communications (Zero Coupon until
10/15/00, 14.00% thereafter)(b)................. 14.000 10/15/05 333,000
------------
4,764,125
------------
TRANSPORTATION -- 3.1%
500,000 Airplanes Pass Through Trust...................... 10.875 03/15/19 521,250
500,000 Alamo Rent-a-Car.................................. 11.750 01/31/06 517,500
250,000 Petro PSC Properties.............................. 12.500 06/01/02 241,250
500,000 Venture Holdings Trust............................ 9.750 04/01/04 425,000
------------
1,705,000
------------
TOTAL CORPORATE BONDS
(cost $40,075,060).............................. 40,537,938
------------
CONVERTIBLE CORPORATE BONDS -- 1.2%
TECHNOLOGY -- 0.8%
500,000 VLSI Technology................................... 8.250 10/01/05 443,750
------------
TELECOMMUNICATIONS & UTILITIES -- 0.4%
300,000 Winstar Communications
(Zero Coupon until 10/15/00, 14.00%
thereafter)(b).................................. 14.00 10/15/05 204,000
------------
TOTAL CONVERTIBLE CORPORATE BONDS
(cost $624,647)................................. 647,750
------------
SOVEREIGN BONDS -- 13.8%
ARGENTINA -- 3.7%
1,732,500 Republic of Argentina, FRB, Series L*............. 6.313 03/31/05 1,351,350
ARP 671,798 Republic of Argentina, BOCON, Pre 1*(c)........... 3.359 04/01/01 532,259
250,000 Republic of Argentina, Par Bond, Series L*........ 5.250 03/31/23 137,656
------------
2,021,265
------------
BRAZIL -- 2.4%
378,850 Federal Republic of Brazil, Capitalization
Bond(c)......................................... 8.000 04/15/14 236,308
500,000 Federal Republic of Brazil, Investment (Exit)
Bond............................................ 6.000 09/15/13 316,250
1,000,000 Federal Republic of Brazil, EI Bond, Series L*.... 6.500 04/15/06 803,440
------------
1,355,998
------------
BULGARIA -- 0.7%
750,000 Republic of Bulgaria, Discount Bond,
Tranche A*...................................... 6.250 07/28/24 389,063
------------
ECUADOR -- 2.0%
1,041,283 Republic of Ecuador, Registered PDI Bond*(c)...... 6.063 02/27/15 472,482
1,405,729 Republic of Ecuador, PDI Bond*(c)................. 6.063 02/27/15 637,849
------------
1,110,331
------------
MEXICO -- 1.4%
860,400 United Mexico States, Global Bond................. 11.500 05/15/26 788,879
------------
POLAND -- 0.4%
350,000 Republic of Poland, RSTA Bond*.................... 2.750 10/27/24 196,875
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 28
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS HIGH YIELD BOND FUND (concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT(A) DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
VENEZUELA -- 3.2%
2,500,000 Republic of Venezuela DCB, Series DL................. 6.625% 12/18/07 $ 1,775,000
------------
TOTAL SOVEREIGN BONDS
(cost $6,992,392).................................. 7,637,411
------------
LOAN PARTICIPATION -- 2.0%
1,500,000 Kingdom of Morocco, Tranche A*(d)
(Chase Manhattan Bank, N.A and
Morgan Guaranty Trust Company)
(cost $1,037,005).................................. 6.438 01/01/09 1,083,749
------------
TOTAL INVESTMENTS -- 90.4%
(cost $48,729,104)................................. 49,906,848
------------
REPURCHASE AGREEMENTS -- 12.1%
3,356,000 Repurchase Agreement dated 06/28/96, with J.P Morgan
Securities, collateralized by $3,000,000 U.S.
Treasury Bonds, 9.125%, due 05/15/09, valued at
$3,423,750; proceeds: $3,357,516................... 5.420 07/01/96 3,356,000
3,356,000 Repurchase Agreement dated 06/28/96, with Merrill
Lynch, Pierce, Fenner & Smith, collateralized by
$3,340,000 U.S. Treasury Bonds, 7.250%, due
05/15/16, valued at $3,423,500; proceeds:
$3,357,482......................................... 5.300 07/01/96 3,356,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $6,712,000).................................. 6,712,000
------------
Liabilities in excess of other assets -- (2.5%)...... (1,382,053)
------------
NET ASSETS -- 100.0%................................. $ 55,236,795
------------
------------
</TABLE>
* Interest rate shown reflects current rate on instrument with variable rate or
step coupon rate.
(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) Participation interest was acquired through the financial institutions
indicated parenthetically.
Abbreviations used in this statement:
<TABLE>
<S> <C>
ARP -- Argentinean Peso
DCB -- Debt Conversion Bond
EI -- Eligible Interest
FRB -- Floating Rate Bond
PDI -- Past Due Interest
RSTA -- Revolving Short Term Agreement
</TABLE>
See accompanying notes to financial statements.
PAGE 29
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS STRATEGIC BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT(A) DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
CORPORATE BONDS -- 51.1%
BASIC INDUSTRIES -- 13.1%
250,000 Algoma Steel......................................... 12.375% 07/15/05 $ 242,500
250,000 Clark-Schwebel....................................... 10.500 04/15/06 256,250
250,000 Foamex............................................... 11.875 10/01/04 235,000
250,000 NL Industries (Zero Coupon until 10/15/98, 13.00%
thereafter)(b)..................................... 12.619 10/15/05 194,063
600,000 Norcal Waste Systems*................................ 12.750 11/15/05 624,000
250,000 Renco Metals......................................... 12.000 07/15/00 282,500
250,000 Stone Container...................................... 10.750 10/01/02 253,125
250,000 Terex................................................ 13.750 05/15/02 260,938
250,000 Valcor............................................... 9.625 11/01/03 225,000
------------
2,573,376
------------
CONSUMER CYCLICALS -- 6.0%
250,000 American Skiing...................................... 12.000 07/15/06 245,000
250,000 Cole National........................................ 11.250 10/01/01 264,375
250,000 Hines Horticulture................................... 11.750 10/15/05 260,000
200,000 U.S. Leasing International........................... 8.450 01/25/05 212,632
200,000 Wyndham Hotel........................................ 10.500 05/15/06 200,000
------------
1,182,007
------------
CONSUMER NON-CYCLICALS -- 14.4%
250,000 Americold............................................ 12.875 05/01/08 255,000
250,000 Bally's Grand........................................ 10.375 12/15/03 274,375
250,000 Berry Plastics....................................... 12.250 04/15/04 270,000
250,000 Cobb Theatres........................................ 10.625 03/01/03 253,750
125,000 Hollywood Casino..................................... 12.750 11/01/03 125,000
450,000 Jordan Industries (Zero Coupon until 08/01/98, 11.75%
thereafter)(b)..................................... 14.013 08/01/05 324,000
250,000 Remington Product.................................... 11.000 05/15/06 248,750
100,000 Samsonite............................................ 11.125 07/15/05 101,500
250,000 Selmer............................................... 11.000 05/15/05 263,750
250,000 Smiths Food & Drug................................... 11.250 05/15/07 251,875
250,000 Trump Atlantic City.................................. 11.250 05/01/06 252,500
200,000 Twin Laboratories.................................... 10.250 05/15/06 203,000
------------
2,823,500
------------
ENERGY -- 2.6%
250,000 Benton Oil & Gas..................................... 11.625 05/01/03 257,500
250,000 Cliffs Drilling...................................... 10.250 05/15/03 247,500
------------
505,000
------------
FINANCIAL SERVICES -- 0.3%
60,000 Mellon Financial..................................... 9.750 06/15/01 66,581
------------
MEDIA -- 6.5%
250,000 Adelphia Communications.............................. 12.500 05/15/02 253,750
250,000 American Media Operation............................. 11.625 11/15/04 255,000
500,000 Marcus Cable (Zero Coupon until 12/15/00, 14.125%
thereafter)(b)..................................... 12.813 12/15/05 307,500
500,000 People's Choice TV (Zero Coupon until 06/01/00,
13.125% thereafter)(b)............................. 13.125 06/01/04 290,000
250,000 United International Holdings(b)..................... 13.893 11/15/99 165,000
------------
1,271,250
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 30
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS STRATEGIC BOND FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT(A) DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
TECHNOLOGY -- 3.5%
250,000 Exide Electronics Group, including 250 attached
warrants..................................... 11.500% 03/15/06 $ 265,000
400,000 Talley Manufacturing & Technology.............. 10.750 10/15/03 410,000
------------
675,000
------------
TELECOMMUNICATIONS & UTILITIES -- 3.4%
300,000 Arch Communications Group (Zero Coupon until
03/15/01, 10.875% thereafter)(b)............. 10.875 03/15/08 154,500
250,000 A+ Network..................................... 11.875 11/01/05 256,875
250,000 In Flight Phone, including 400 attached
warrants (Zero Coupon until 05/15/98, 14.00%
thereafter)(b)............................... 14.000 05/15/02 90,000
300,000 Winstar Communications
(Zero Coupon until 10/15/00, 14.00%
thereafter)(b)............................... 14.000 10/15/05 166,500
------------
667,875
------------
TRANSPORTATION -- 1.3%
250,000 Airplanes Pass Through Trust................... 10.875 03/15/19 260,625
------------
TOTAL CORPORATE BONDS
(cost $9,927,021)............................ 10,025,214
------------
CONVERTIBLE CORPORATE BONDS -- 0.5%
TELECOMMUNICATIONS & UTILITIES -- 0.5%
150,000 Winstar Communications
(Zero Coupon until 10/15/00, 14.00%
thereafter)(b) (cost $83,969)................ 14.000 10/15/05 102,000
------------
SOVEREIGN BONDS -- 23.4%
ARGENTINA -- 5.1%
955,327 Republic of Argentina, BOCON, Pre 2*(c)........ 5.422 04/01/01 859,125
250,000 Republic of Argentina, Par Bond, Series L...... 5.250 03/31/23 137,656
------------
996,781
------------
BRAZIL -- 2.1%
649,459 Federal Republic of Brazil, Capitalization
Bond(c)...................................... 8.000 04/15/14 405,100
------------
BULGARIA -- 1.3%
500,000 Republic of Bulgaria, Discount Bond, Tranche
A............................................ 6.250 07/28/24 259,375
------------
DENMARK -- 0.1%
DKK 50,000 Kingdom of Denmark............................. 7.000 12/15/04 8,380
DKK 90,000 Kingdom of Denmark............................. 9.000 11/15/98 15,572
------------
23,952
------------
ECUADOR -- 1.6%
850,000 Republic of Ecuador, Par Bond*................. 3.250 02/28/25 304,938
------------
GERMANY -- 3.9%
DEM 160,000 Government of Germany, Series 106.............. 6.000 02/20/98 108,392
DEM 760,000 Government of Germany, Series 86............... 6.000 04/20/98 515,163
DEM 230,000 Government of Germany, Series 96............... 6.000 02/16/06 148,418
------------
771,973
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 31
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS STRATEGIC BOND FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT(A) DESCRIPTION RATE DATE (NOTE 1A)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KOREA -- 2.2%
400,000 Korea Development Bank......................... 9.600% 12/01/00 $ 439,020
------------
MEXICO -- 1.7%
360,400 United Mexico States, Global Bond.............. 11.500 05/15/26 330,442
------------
NETHERLANDS -- 0.2%
NLG 60,000 Netherlands Government......................... 6.250 07/15/98 37,826
------------
POLAND -- 3.4%
500,000 Republic of Poland, PDI Bond*.................. 3.750 10/27/14 385,000
500,000 Republic of Poland, RSTA Bond*................. 2.750 10/27/24 281,250
------------
666,250
------------
VENEZUELA -- 1.8%
250,000 Republic of Venezuela DCB, Series DL*.......... 6.625 12/18/07 177,500
250,000 Republic of Venezuela FLIRB, Series B*......... 6.500 03/31/07 180,781
------------
358,281
------------
TOTAL SOVEREIGN BONDS
(cost $4,044,919)............................ 4,593,938
------------
LOAN PARTICIPATION -- 1.9%
500,000 Kingdom of Morocco, Tranche A*(d) (Chase
Manhattan Bank, N.A. and
Morgan Guaranty Trust Company)
(cost $323,254).............................. 6.438 01/01/09 361,250
------------
U.S. GOVERNMENT & AGENCY -- 17.7%
624,501 Federal Home Loan Mortgage Corporation......... 6.000 09/01/10 593,831
56,008 Federal Home Loan Mortgage Corporation......... 6.000 10/01/10 53,030
31,688 Federal National Mortgage Association.......... 13.000 11/15/15 37,174
99,801 Federal National Mortgage Association.......... 6.500 02/01/26 93,380
997,912 Federal National Mortgage Association.......... 6.500 03/01/26 933,706
60,000 U.S. Treasury Note............................. 6.125 05/31/97 60,187
340,000 U.S. Treasury Note............................. 5.625 02/28/01 328,578
600,000 U.S. Treasury Note............................. 6.250 04/30/01 594,282
250,000 U.S. Treasury Note............................. 5.875 11/15/05 235,508
530,000 U.S. Treasury Note............................. 6.875 05/15/06 535,878
------------
TOTAL U.S. GOVERNMENT & AGENCY
(cost $3,495,786)............................ 3,465,554
------------
TOTAL INVESTMENTS -- 94.6%
(cost $17,874,949)........................... 18,547,956
------------
REPURCHASE AGREEMENTS -- 9.4%
921,000 Repurchase Agreement dated
06/28/96, with J.P. Morgan
Securities, collateralized by $824,000 U.S.
Treasury Bonds, 9.125%, due 05/15/09 valued
at $940,390; proceeds: $921,416.............. 5.420 07/01/96 921,000
</TABLE>
See accompanying notes to financial statements.
PAGE 32
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS STRATEGIC BOND FUND (concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT(A) DESCRIPTION RATE DATE (NOTE 1A)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
921,000 Repurchase Agreement dated 06/28/96, with
Merrill Lynch, Pierce, Fenner & Smith,
collateralized by $920,000 U.S. Treasury
Bonds, 7.250%, due 05/15/16, valued at
$943,000; proceeds: $921,407................. 5.300% 07/01/96 $ 921,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $1,842,000)............................ 1,842,000
------------
Liabilities in excess of other
assets -- (4.0%)............................. (785,732)
------------
NET ASSETS -- 100.0%........................... $ 19,604,224
------------
------------
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
MATURITY CONTRACTS TO CONTRACTS APPRECIATION
DATES DELIVER/RECEIVE IN EXCHANGE FOR AT VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PURCHASES
07/22/96 $ 28,254 AUD 35,765 28,058 $ (196)
07/22/96 103,480 CAD 141,457 103,667 187
07/22/96 545,255 DEM 829,846 546,620 1,365
07/22/96 72,540 DKK 422,907 72,267 (273)
07/22/96 109,215 GBP 70,598 109,676 461
07/22/96 153,452 NLG 259,487 152,448 (1,004)
SALES
07/22/96 AUD 36,764 $ 28,603 28,843 (240)
07/22/96 BEF 115,822 3,780 3,699 81
07/22/96 CAD 143,141 105,019 104,901 118
07/22/96 DEM 473,349 316,559 311,795 4,764
07/22/96 DKK 604,289 104,838 103,262 1,576
07/22/96 GBP 135,193 203,514 210,027 (6,513)
07/22/96 NLG 324,331 193,337 190,543 2,794
--------------
$ 3,120
--------------
--------------
</TABLE>
* Interest rate shown reflects current rate on instrument with variable rate
or step coupon rate.
(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) Participation interest was acquired through the financial institutions
indicated parenthetically.
Abbreviations used in this statement:
<TABLE>
<S> <C>
DCB -- Debt Conversion Bond
FLIRB -- Front-Loaded Interest Reduction Bonds
PDI -- Past Due Interest
RSTA -- Revolving Short Term Agreement
AUD -- Australian Dollar
BEF -- Belgian Franc
CAD -- Canadian Dollar
DEM -- German Deutschemark
DKK -- Danish Krone
GBP -- British Pound Sterling
NLG -- Netherlands Guilder
</TABLE>
See accompanying notes to financial statements.
PAGE 33
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS TOTAL RETURN FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1A)
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 41.6%
BASIC INDUSTRIES -- 3.3%
4,600 Dow Chemical.................................................................... $ 349,600
6,000 Dupont (E.I.) de Nemours........................................................ 474,750
10,000 Nalco Chemical.................................................................. 315,000
------------
1,139,350
------------
CAPITAL GOODS -- 2.6%
4,800 Boeing.......................................................................... 418,200
8,000 Deere........................................................................... 320,000
2,200 Textron......................................................................... 175,725
------------
913,925
------------
CONSUMER CYCLICALS -- 7.2%
10,000 Ball............................................................................ 287,500
9,500 Eastman Kodak................................................................... 738,619
14,000 Ford Motor...................................................................... 453,250
5,000 General Motors.................................................................. 261,875
9,100 May Department Stores........................................................... 398,125
7,000 Sears, Roebuck.................................................................. 340,375
------------
2,479,744
------------
CONSUMER NON-CYCLICALS -- 2.8%
50,000 Food Lion....................................................................... 387,500
4,000 Philip Morris Companies......................................................... 416,000
5,000 RJR Nabisco Holdings............................................................ 155,000
------------
958,500
------------
ENERGY -- 8.6%
6,500 Amoco........................................................................... 470,438
13,000 Dresser Industries.............................................................. 383,500
3,000 Exxon........................................................................... 260,625
2,000 Mobil........................................................................... 224,250
2,000 Royal Dutch Petroleum, 5 Guilder................................................ 307,500
10,000 Suncor.......................................................................... 316,250
3,000 Texaco.......................................................................... 251,625
17,000 USX -- Marathon Group........................................................... 342,125
8,000 Williams Companies.............................................................. 396,000
------------
2,952,313
------------
FINANCIAL SERVICES -- 4.4%
8,000 Allstate........................................................................ 365,000
4,700 Associates First Capital........................................................ 176,838
2,500 Cigna........................................................................... 294,688
5,300 Citicorp........................................................................ 437,913
4,200 UNUM............................................................................ 261,450
------------
1,535,889
------------
HEALTH CARE -- 2.9%
6,500 American Home Products.......................................................... 390,813
11,200 SmithKline Beecham -- ADR....................................................... 609,000
------------
999,813
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 34
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS TOTAL RETURN FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1A)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS -- 4.5%
16,000 Beacon Properties............................................................... $ 410,000
12,000 Duke Realty Investments......................................................... 363,000
17,000 Highwoods Properties............................................................ 469,625
10,000 Patriot American Hospitality.................................................... 296,250
------------
1,538,875
------------
TELECOMMUNICATIONS & UTILITIES -- 3.9%
6,000 American Electric Power......................................................... 255,750
5,000 Ameritech....................................................................... 296,875
9,000 BellSouth....................................................................... 381,375
9,000 GTE............................................................................. 402,750
------------
1,336,750
------------
TRANSPORTATION -- 1.4%
26,000 Canadian National Railway....................................................... 477,750
------------
TOTAL COMMON STOCKS
(cost $13,363,309)............................................................ 14,332,909
------------
CONVERTIBLE PREFERRED STOCKS -- 6.8%
BASIC INDUSTRIES -- 0.1%
2,500 Coeur D'Alene Mines 7.00%....................................................... 49,375
------------
CAPITAL GOODS -- 0.5%
10,000 Coopers Industries 6.00%........................................................ 167,500
------------
CONSUMER CYCLICALS -- 0.5%
3,000 K-Mart Financing 7.75%.......................................................... 162,750
------------
CONSUMER NON-CYCLICALS -- 1.3%
5,000 James River 9.00%............................................................... 126,250
50,000 RJR Nabisco Holdings 9.25%...................................................... 325,000
------------
451,250
------------
ENERGY -- 2.4%
2,500 Ashland $3.125.................................................................. 159,688
2,500 Devon Energy $3.25.............................................................. 128,125
5,000 Enron 6.25%..................................................................... 129,375
5,000 Sun Company $1.80............................................................... 147,500
2,500 Tejas Gas 5.25%................................................................. 125,000
2,500 Unocal 7.00%.................................................................... 141,563
------------
831,251
------------
FINANCIAL SERVICES -- 0.4%
2,500 Merrill Lynch 6.50%............................................................. 135,000
------------
HEALTH CARE -- 0.4%
6,000 FHP International 5.00%......................................................... 153,000
------------
MEDIA -- 0.4%
2,500 SFX Broadcasting 6.50%.......................................................... 131,875
------------
TECHNOLOGY -- 0.8%
2,200 Elsag Bailey 5.50%.............................................................. 108,900
3,000 Greenfield Capital Trust 6.00%.................................................. 156,000
------------
264,900
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $2,254,029)............................................................. 2,346,901
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 35
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS TOTAL RETURN FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1A)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
CORPORATE BONDS -- 22.9%
BASIC INDUSTRIES -- 4.4%
$ 100,000 Acetex......................................... 9.750% 10/01/03 $ 99,000
100,000 Algoma Steel................................... 12.375 07/15/05 97,000
200,000 Alvey Systems.................................. 11.375 01/31/03 207,000
200,000 Clark-Schwebel................................. 10.500 04/15/06 205,000
100,000 Crown Paper.................................... 11.000 09/01/05 95,250
200,000 Four M......................................... 12.000 06/01/06 204,000
200,000 International Semi-Technology (Zero Coupon
until 08/15/00, 11.50% thereafter) (a)....... 13.420 08/15/03 114,500
100,000 Norcal Waste Systems*.......................... 12.750 11/15/05 104,000
200,000 Southdown...................................... 10.000 03/01/06 194,000
200,000 Specialty Equipment............................ 11.375 12/01/03 206,500
------------
1,526,250
------------
CONSUMER CYCLICALS -- 4.4%
200,000 Cole National.................................. 11.250 10/01/01 211,500
150,000 Finlay Fine Jewelry............................ 10.625 05/01/03 150,000
200,000 Flagstar....................................... 10.750 09/15/01 174,000
350,000 Hayes Wheels International..................... 11.000 07/15/06 354,375
100,000 Herff Jones.................................... 11.000 08/15/05 104,500
200,000 Hines Horticulture............................. 11.750 10/15/05 208,000
100,000 Jitney-Jungle Stores........................... 12.000 03/01/06 101,750
200,000 Wyndham Hotel.................................. 10.500 05/15/06 200,000
------------
1,504,125
------------
CONSUMER NON-CYCLICALS -- 4.2%
100,000 American Safety Razor.......................... 9.875 08/01/05 101,000
100,000 Americold...................................... 12.875 05/01/08 102,000
100,000 Bally's Grand.................................. 10.375 12/15/03 109,750
100,000 Berry Plastics................................. 12.250 04/15/04 108,000
100,000 Borg-Warner.................................... 9.125 05/01/03 94,000
100,000 Carr-Gottstein Foods........................... 12.000 11/15/05 102,500
100,000 Cobb Theatres.................................. 10.625 03/01/03 101,500
200,000 Empress River Casino........................... 10.750 04/01/02 209,000
100,000 Jordan Industries.............................. 10.375 08/01/03 95,000
200,000 Remington Product.............................. 11.000 05/15/06 199,000
100,000 Samsonite...................................... 11.125 07/15/05 101,500
100,000 Selmer......................................... 11.000 05/15/05 105,500
------------
1,428,750
------------
ENERGY -- 0.6%
200,000 Cliffs Drilling................................ 10.250 05/15/03 198,000
------------
FINANCIAL SERVICES -- 5.4%
250,000 Associates N.A................................. 5.600 01/15/01 237,590
225,000 Commercial Credit.............................. 6.875 05/01/02 223,702
175,000 Ford Motor Credit.............................. 6.250 12/08/05 161,522
200,000 Mellon Financial............................... 9.750 06/15/01 221,938
325,000 Merrill Lynch.................................. 7.375 05/15/06 324,665
350,000 Nationsbank Credit Card Master Trust........... 6.450 04/15/03 346,500
250,000 Standard Credit Card Master Trust.............. 6.750 06/07/00 251,563
100,000 USL Capital.................................... 8.125 02/15/00 103,962
------------
1,871,442
------------
HEALTH CARE -- 0.6%
200,000 Paracelsus Healthcare.......................... 9.875 10/15/03 200,000
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 36
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS TOTAL RETURN FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY VALUE
AMOUNT DESCRIPTION RATE DATE (NOTE 1A)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MEDIA -- 1.6%
$ 200,000 American Media Operation....................... 11.625% 11/15/04 $ 204,000
200,000 Diamond Cable (Zero Coupon until 12/15/00,
11.75% thereafter) (a)....................... 11.750 12/15/05 117,500
200,000 Marcus Cable (Zero Coupon until 12/15/00,
14.125% thereafter) (a)...................... 12.921 12/15/05 123,000
150,000 United International Holdings (a).............. 13.187 11/15/99 99,000
------------
543,500
------------
TECHNOLOGY -- 1.2%
200,000 Exide Electronics Group, including 200 attached
warrants..................................... 11.500 03/15/06 212,000
200,000 Talley Manufacturing & Technology.............. 10.750 10/15/03 205,000
------------
417,000
------------
TELECOMMUNICATIONS & UTILITIES -- 0.5%
200,000 Arch Communications Group (Zero Coupon until
03/15/01, 10.875% thereafter) (a)............ 10.875 03/15/08 103,000
125,000 Intelcom Group (Zero Coupon until 09/15/00,
13.500% thereafter) (a)...................... 12.725 09/15/05 75,000
------------
178,000
------------
TOTAL CORPORATE BONDS
(cost $7,891,432)............................ 7,867,067
------------
CONVERTIBLE CORPORATE BONDS -- 7.3%
BASIC INDUSTRIES -- 0.7%
100,000 Coeur D'Alene Mines............................ 6.375 01/31/04 99,000
350,000 Roche Holdings (a)............................. 6.089 04/20/10 147,875
------------
246,875
------------
CONSUMER CYCLICALS -- 2.1%
150,000 Federated Department Stores.................... 5.000 10/01/03 171,000
750,000 Hollinger (a).................................. 6.607 10/05/13 246,563
150,000 Magna International............................ 5.000 10/15/02 157,125
150,000 Price.......................................... 5.500 02/28/12 156,000
------------
730,688
------------
CONSUMER NON-CYCLICALS -- 0.9%
350,000 Texas Instruments.............................. 6.125 02/01/06 322,263
------------
ENERGY -- 1.0%
250,000 Baker Hughes (a)............................... 3.413 05/05/08 171,250
150,000 Noble Affiliates............................... 4.250 11/01/03 163,500
------------
334,750
------------
FINANCIAL SERVICES -- 0.8%
150,000 Sandoz Capital................................. 2.000 10/06/02 159,469
100,000 Trenwick Group................................. 6.000 12/15/99 107,500
------------
266,969
------------
TECHNOLOGY -- 1.2%
200,000 Data General................................... 7.750 06/01/01 196,000
125,000 EMC............................................ 4.250 01/01/01 133,750
50,000 Seagate Technology............................. 5.000 11/01/03 86,750
------------
416,500
------------
</TABLE>
See accompanying notes to financial statements.
PAGE 37
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
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%
$ 600,000 U.S. Cellular (a).............................. 5.486% 06/15/15 $ 204,000
------------
TOTAL CONVERTIBLE CORPORATE BONDS
(cost $2,494,338)............................ 2,522,045
------------
U.S. GOVERNMENT & AGENCY -- 11.0%
304,615 Federal Home Loan Mortgage Corporation......... 6.500 03/01/26 285,764
250,000 Federal Home Loan Mortgage Corporation (b)..... 7.000 04/01/26 240,742
46,353 Federal National Mortgage Association.......... 6.500 10/01/10 45,033
89,666 Federal National Mortgage Association.......... 9.500 08/01/22 95,977
103,583 Federal National Mortgage Association.......... 7.500 08/01/23 102,555
500,000 Federal National Mortgage Association.......... 8.000 05/11/25 503,906
97,233 Federal National Mortgage Association.......... 7.000 09/01/25 93,571
97,468 Federal National Mortgage Association.......... 6.500 12/01/25 91,197
303,435 Federal National Mortgage Association.......... 7.000 03/01/26 292,338
102,851 Government National Mortgage Association....... 7.500 01/15/23 102,082
203,460 Government National Mortgage Association....... 7.500 03/15/26 200,724
240,000 U.S. Treasury Bond............................. 7.625 02/15/25 258,600
250,000 U.S. Treasury Bond............................. 6.000 02/15/26 221,797
200,000 U.S. Treasury Note............................. 5.125 02/28/98 197,062
330,000 U.S. Treasury Note............................. 7.500 10/31/99 340,778
735,000 U.S. Treasury Note............................. 5.750 08/15/03 699,970
------------
TOTAL U.S. GOVERNMENT & AGENCY
(cost $3,833,705)............................ 3,772,096
------------
TOTAL INVESTMENTS -- 89.6%
(cost $29,836,813)........................... 30,841,018
------------
REPURCHASE AGREEMENTS -- 15.2%
2,608,000 Repurchase Agreement dated 06/28/96, with J.P.
Morgan Securities, collateralized by
$2,093,000 U.S. Treasury Bonds, 10.375%, due
11/15/12 valued at $2,660,726; proceeds:
$2,609,178................................... 5.300 07/01/96 2,608,000
2,608,000 Repurchase Agreement dated 06/28/96, with
Merrill Lynch, Pierce, Fenner & Smith,
collateralized by $2,600,000 U.S. Treasury
Bonds, 7.250%, due 05/15/16, valued at
$2,665,000; proceeds: $2,609,152............. 5.420 07/01/96 2,608,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $5,216,000)............................ 5,216,000
------------
Liabilities in excess of other
assets -- (4.8%)............................. (1,650,305)
------------
NET ASSETS -- 100.0%........................... $ 34,406,713
------------
------------
</TABLE>
(a) Zero or step coupon bond. Interest rate shown reflects yield to maturity on
date of purchase.
(b) Mortgage Dollar Roll. See Note 1.
Abbreviation used in this statement:
ADR -- American Depository Receipt
See accompanying notes to financial statements.
PAGE 38
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS ASIA GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1A)
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 79.6%
HONG KONG -- 22.6%
30,100 Asia Satellite Telecommunications Holdings*................................... $ 89,241
160,000 Cafe de Coral Holdings........................................................ 44,440
115,000 Chen Hsong Holdings........................................................... 61,654
21,000 Cheung Kong................................................................... 151,245
13,000 Citic Pacific................................................................. 52,566
51,500 Giordano International........................................................ 49,898
57,800 HKR International............................................................. 67,203
50,000 Hong Kong Telecommunications.................................................. 89,785
5,600 HSBC Holdings................................................................. 84,643
71,000 Innovative International Holdings............................................. 25,224
11,250 New World Development......................................................... 52,175
232,000 Qingling Motors Company....................................................... 77,925
40,000 Shanghai Industrial Investments*.............................................. 49,091
410,000 Shanghai Petrochemical........................................................ 116,526
130,000 Sino Hotels Holdings.......................................................... 39,886
10,000 Swire Pacific................................................................. 85,586
26,000 Varitronix International...................................................... 54,245
-----------
1,191,333
-----------
INDIA -- 5.9%
22,300 Arvind Mills -- GDR........................................................... 111,500
7,200 Ashok Leyland -- GDR*......................................................... 100,080
7,100 Reliance Industries -- GDR.................................................... 98,690
-----------
310,270
-----------
INDONESIA -- 4.6%
35,000 Lippo Karawachi............................................................... 52,632
38,000 Lippo Life Insurance(a)....................................................... 50,000
4,500 PT Hm Sampoerna*.............................................................. 51,235
50,000 PT Inti Indorayon Utama(a).................................................... 48,335
26,000 PT Telekomunikasion*(a)....................................................... 39,377
-----------
241,579
-----------
MALAYSIA -- 12.7%
20,000 Arab Malaysia................................................................. 78,573
90,000 Bolton Properties............................................................. 150,812
8,000 Malayan Banking Berhad........................................................ 76,969
20,000 Malaysia Assurance Alliance................................................... 105,833
31,000 Malaysian Airline System Berhad............................................... 98,797
112,000 Tan Chong Motor Holdings Berhad............................................... 163,432
-----------
674,416
-----------
PAKISTAN -- 1.5%
6,800 Pakistan State Oil*........................................................... 80,229
-----------
PHILIPPINES -- 2.8%
277,000 Universal Robina.............................................................. 148,015
-----------
</TABLE>
See accompanying notes to financial statements.
PAGE 39
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS ASIA GROWTH FUND (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1A)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
SINGAPORE -- 13.7%
6,400 Cerebos Pacific............................................................... $ 57,605
48,000 Hong Kong Land Holdings....................................................... 108,000
28,000 Hong Leong Finance............................................................ 98,030
35,000 Hotel Properties.............................................................. 62,013
7,600 Jardine Matheson Holdings..................................................... 55,860
11,000 Marco Polo Developments....................................................... 21,828
20,000 Sembawang..................................................................... 99,220
2,500 Singapore Press Holdings(a)................................................... 49,079
4,000 United Overseas Bank(a)....................................................... 38,271
64,000 Wing Tai Holdings............................................................. 136,073
-----------
725,979
-----------
SRI LANKA -- 0.6%
148,000 Asia Capital*................................................................. 21,331
26,000 United Motors Lanka........................................................... 12,413
-----------
33,744
-----------
THAILAND -- 15.2%
23,300 Bangkok Bank.................................................................. 220,201
3,000 BEC World*.................................................................... 16,775
22,800 Dhana Siam Finance............................................................ 117,614
15,000 Property Perfect(a)........................................................... 64,383
95,000 Siam City Bank................................................................ 87,911
27,500 Thai Farmers Bank............................................................. 203,583
41,000 Thai Telephone & Telecommunications*(a)....................................... 92,833
-----------
803,300
-----------
TOTAL COMMON STOCKS (cost $4,332,752)......................................... 4,208,865
-----------
PRINCIPAL
AMOUNT
- ---------
CONVERTIBLE CORPORATE BONDS -- 2.3%
HONG KONG -- 2.3%
$ 84,000 China Resources Enterprises, 3.00%, due 11/24/05 (cost $106,169).............. 119,616
-----------
SHARES
- ---------
WARRANTS -- 1.1%
190,000 Swire Pacific Call Warrants (expiring 05/27/97)............................... 35,591
9,000 Thai Basket Warrants (expiring 11/19/96)...................................... 20,043
-----------
TOTAL WARRANTS (cost $82,934)................................................. 55,634
-----------
CONTRACTS
- ---------
PURCHASED OPTIONS -- 0.4%
352 Hang Seng Index Call (expiring 12/30/96, exercise price HKD 11,541)
(cost $23,247).............................................................. 23,241
-----------
TOTAL INVESTMENTS -- 83.4%
(cost $4,545,102)........................................................... 4,407,356
-----------
</TABLE>
See accompanying notes to financial statements.
PAGE 40
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS ASIA GROWTH FUND (concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT DESCRIPTION (NOTE 1A)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS -- 14.6%
$ 386,098 Repurchase Agreement, 5.420% due 07/01/96, dated 06/28/96, with J.P. Morgan
Securities, collateralized by $346,000 U.S. Treasury Bonds, 9.125%, due
05/15/09 valued at $394,873; proceeds: $386,272............................. $ 386,098
386,098 Repurchase Agreement, 5.300% due 07/01/96, dated 06/28/96, with Merrill Lynch,
Pierce, Fenner & Smith, collateralized by $620,000 U.S. Treasury Strips,
Zero-Coupon, due 05/15/03, valued at $394,475; proceeds: $386,268........... 386,098
-----------
TOTAL REPURCHASE AGREEMENTS (cost $772,196)................................... 772,196
-----------
Other assets in excess of liabilities -- 2.0%................................. 106,929
-----------
NET ASSETS -- 100.0%.......................................................... $ 5,286,481
-----------
-----------
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY CONTRACTS TO CONTRACTS UNREALIZED
DATES DELIVER IN EXCHANGE FOR AT VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
SALES
07/01/96 HKD 313,201 $40,454 $40,461 $ (7)
07/03/96 MYR 108,581 43,507 43,523 (16)
07/02/96 & 07/03/96 SGD 39,162 27,741 27,762 (21)
-----
$(44)
-----
-----
</TABLE>
* Non-income producing security.
(a) Foreign Shares
Abbreviations used in this statement:
<TABLE>
<S> <C>
GDR -- Global Depository Receipt
HKD -- Hong Kong Dollar
MYR -- Malaysian Ringgit
SGD -- Singapore Dollar
</TABLE>
See accompanying notes to financial statements.
PAGE 41
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS INVESTORS FUND INC
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1A)
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS -- 94.5%
BASIC INDUSTRIES -- 8.1%
86,500 Aluminum Company of America............................................... $ 4,962,938
115,000 Dupont (E.I.) de Nemours.................................................. 9,099,375
50,650 Hanna (M.A.).............................................................. 1,057,319
134,900 Nalco Chemical............................................................ 4,249,350
141,500 OM Group.................................................................. 5,553,875
310,000 Praxair................................................................... 13,097,500
-------------
38,020,357
-------------
CAPITAL GOODS -- 9.2%
130,000 AlliedSignal.............................................................. 7,426,250
115,500 Deere..................................................................... 4,620,000
77,500 General Electric.......................................................... 6,703,750
172,000 Raytheon.................................................................. 8,879,500
255,000 Tyco International........................................................ 10,391,250
100,000 York International........................................................ 5,175,000
-------------
43,195,750
-------------
CONSUMER CYCLICALS -- 12.5%
100,000 Eastman Kodak............................................................. 7,775,000
70,000 Estee Lauder Companies, Class A........................................... 2,957,500
140,000 Federated Department Stores*.............................................. 4,777,500
110,000 Ford Motor................................................................ 3,561,250
80,000 General Motors............................................................ 4,190,000
366,500 Host Marriott*............................................................ 4,810,313
155,000 Lear*..................................................................... 5,463,750
70,000 Magna International, Class A.............................................. 3,220,000
75,000 MascoTech................................................................. 1,106,250
100,000 Melville.................................................................. 4,050,000
187,500 Sears, Roebuck............................................................ 9,117,188
105,000 Sherwin-Williams.......................................................... 4,882,500
132,200 U.S. Industries*.......................................................... 3,189,325
-------------
59,100,576
-------------
CONSUMER NON-CYCLICALS -- 11.0%
146,800 Black & Decker............................................................ 5,670,150
150,700 Coca-Cola Enterprises..................................................... 5,217,988
222,500 ConAgra................................................................... 10,095,938
186,300 Hormel Foods.............................................................. 4,983,525
209,200 Kroger*................................................................... 8,263,400
50,000 Loews..................................................................... 3,943,750
99,000 Penn Traffic*............................................................. 841,500
122,500 Philip Morris Companies................................................... 12,740,000
-------------
51,756,251
-------------
ENERGY -- 13.7%
113,500 Amoco..................................................................... 8,214,563
85,000 Chevron................................................................... 5,015,000
75,000 Dresser Industries........................................................ 2,212,500
97,700 Mobil..................................................................... 10,954,613
74,000 Royal Dutch Petroleum, 5 Guilder.......................................... 11,377,500
150,000 Suncor.................................................................... 4,743,750
55,000 Texaco.................................................................... 4,613,125
130,117 TOTAL -- ADR.............................................................. 4,830,594
51,600 Union Pacific Resources Group............................................. 1,380,300
230,000 Williams Companies........................................................ 11,385,000
-------------
64,726,945
-------------
</TABLE>
See accompanying notes to financial statements.
PAGE 42
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
SALOMON BROTHERS INVESTORS FUND INC (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1A)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES -- 13.4%
41,200 ADVANTA, Class B.......................................................... $ 1,864,300
97,500 American Express.......................................................... 4,350,931
78,300 Associates First Capital*................................................. 2,946,038
75,000 Bank of Boston............................................................ 3,712,500
207,200 Bank of New York.......................................................... 10,619,000
37,500 BayBanks.................................................................. 4,040,625
70,200 Everest Reinsurance Holdings.............................................. 1,816,425
73,500 Federal Home Loan Mortgage Corporation.................................... 6,284,250
57,500 Federal National Mortgage Association..................................... 1,926,250
160,000 Long Island Bancorp....................................................... 4,890,000
82,500 MGIC Investment........................................................... 4,630,313
120,000 SunAmerica................................................................ 6,780,000
208,265 Travelers Group........................................................... 9,502,068
-------------
63,362,700
-------------
HEALTH CARE -- 13.4%
45,000 Aetna..................................................................... 3,217,500
120,000 American Home Products.................................................... 7,215,000
210,000 Astra AB, Class A......................................................... 9,300,181
240,000 Columbia/HCA Healthcare................................................... 12,810,000
180,000 FHP International*........................................................ 4,927,500
95,800 Rhone-Poulenc Rorer....................................................... 6,430,575
225,000 SmithKline Beecham -- ADR................................................. 12,234,375
125,000 U.S. HealthCare........................................................... 6,875,000
-------------
63,010,131
-------------
REAL ESTATE INVESTMENT TRUSTS -- 3.1%
112,000 Beacon Properties......................................................... 2,870,000
150,000 Highwoods Properties...................................................... 4,143,750
96,500 Patriot American Hospitality.............................................. 2,858,813
178,100 Sun Communities........................................................... 4,786,438
-------------
14,659,001
-------------
TECHNOLOGY -- 5.5%
25,000 Ceridian*................................................................. 1,262,500
35,500 DST Systems*.............................................................. 1,136,000
180,000 EMC*...................................................................... 3,352,500
189,500 First Data................................................................ 15,088,938
16,000 First USA Paymentech*..................................................... 640,000
30,000 National Data............................................................. 1,027,500
56,600 Plantronics*.............................................................. 2,080,050
12,000 Sapient*.................................................................. 507,000
18,800 Seagate Technology*....................................................... 846,000
-------------
25,940,488
-------------
TRANSPORTATION -- 4.6%
375,000 Canadian National Railway................................................. 6,890,625
52,000 Norfolk Southern.......................................................... 4,407,000
250,000 Pittston Brink's Group.................................................... 7,281,250
45,000 Union Pacific............................................................. 3,144,375
-------------
21,723,250
-------------
</TABLE>
See accompanying notes to financial statements.
PAGE 43
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Portfolio of Investments
June 30, 1996 (unaudited)
SALOMON BROTHERS INVESTORS FUND INC (concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES DESCRIPTION (NOTE 1A)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCKS (cost $326,520,524)................................... $ 445,495,449
-------------
CONVERTIBLE PREFERRED STOCKS -- 2.6%
CONSUMER CYCLICALS -- 0.9%
75,000 K-Mart Financing 7.75%.................................................... 4,068,750
-------------
FINANCIAL SERVICES -- 0.2%
20,000 Merrill Lynch 6.50%....................................................... 1,080,000
-------------
TECHNOLOGY -- 1.5%
62,500 Ceridian 5.50%............................................................ 6,937,500
-------------
TOTAL CONVERTIBLE PREFERRED STOCKS (cost $8,051,433)...................... 12,086,250
-------------
PRINCIPAL
AMOUNT
- -----------
CONVERTIBLE CORPORATE BONDS -- 0.5%
CONSUMER CYCLICALS -- 0.5%
$ 2,000,000 Federated Department Stores, 5.00%, due 10/01/03 (cost $2,000,000)........ 2,280,000
-------------
TOTAL INVESTMENTS -- 97.6% (cost $336,571,957)............................ 459,861,699
-------------
REPURCHASE AGREEMENTS -- 2.3%
5,417,000 Repurchase Agreement, 5.42% due 07/01/96, dated 06/28/96, with J.P. Morgan
Securities, collateralized by $3,666,000 U.S. Treasury Bonds, 12.50%,
due 08/15/14 valued at $5,526,495; proceeds: $5,419,447................. 5,417,000
5,417,000 Repurchase Agreement, 5.30% due 07/01/96, dated 06/28/96, with Merrill
Lynch, Pierce, Fenner & Smith, collateralized by $8,685,000 U.S.
Treasury Strips, Zero-Coupon, due 05/15/03, valued at $5,525,831;
proceeds: $5,419,393.................................................... 5,417,000
-------------
TOTAL REPURCHASE AGREEMENTS (cost $10,834,000)............................ 10,834,000
-------------
Other assets in excess of liabilities -- (0.1%)........................... 630,370
-------------
NET ASSETS -- 100.0%...................................................... $ 471,326,069
-------------
-------------
</TABLE>
* Non-income producing security.
See accompanying notes to financial statements.
PAGE 44
<PAGE>
<PAGE>
[This page intentionally left blank]
PAGE 45
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
NATIONAL
CASH NEW YORK INTERMEDIATE
MANAGEMENT MUNICIPAL MUNICIPAL
FUND BOND FUND FUND
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Note A)............................... $15,092,714 $4,215,348 $10,860,361
Repurchase agreements, at value and cost..................... 4,231,221 -- --
Cash......................................................... -- 13,047 46,181
Receivable for securities sold............................... -- -- --
Receivable for fund shares sold.............................. 334,698 24,371 63,871
Interest and dividends receivable............................ 41,375 76,759 203,145
Receivable from investment advisor........................... 724 10,369 35,468
Deferred organization expense................................ -- 20,913 85,336
Net unrealized appreciation of forward foreign currency
contracts.................................................. -- -- --
Other assets................................................. 15,588 2,239 15,033
----------- ---------- ------------
Total assets................................................. 19,716,320 4,363,046 11,309,395
----------- ---------- ------------
LIABILITIES:
Due to custodian............................................. -- -- --
Payable for:
Securities purchased....................................... -- -- --
Fund shares redeemed....................................... 98,089 -- --
Dividends and distributions declared....................... 28,246 7,050 42,960
Affiliate transactions:
Management fees.......................................... -- -- --
Service and distribution fees............................ -- 2,365 2,828
Net unrealized depreciation of forward foreign currency
contracts.................................................. -- -- --
Accrued expenses and other liabilities....................... 11,563 10,628 18,265
----------- ---------- ------------
Total Liabilities............................................ 137,898 20,043 64,053
----------- ---------- ------------
Net assets................................................... $19,578,422 $4,343,003 $11,245,342
----------- ---------- ------------
----------- ---------- ------------
NET ASSETS CONSIST OF:
Paid-in capital.............................................. $19,580,536 $4,957,682 $11,080,059
Undistributed net investment income or (distributions in
excess of net investment income)........................... -- 4,188 4,783
Accumulated net realized gain (loss) on investments, options
and foreign currency transactions.......................... (2,114) (617,129) 28,159
Net unrealized appreciation (depreciation) on investments,
foreign currency transactions and other assets............. -- (1,738) 132,341
----------- ---------- ------------
NET ASSETS................................................... $19,578,422 $4,343,003 $11,245,342
----------- ---------- ------------
----------- ---------- ------------
Class A...................................................... $ 5,293,022 $ 657,861 $ 613,404
----------- ---------- ------------
----------- ---------- ------------
Class B...................................................... $ 2,518,866 $ 514,647 $ 650,282
----------- ---------- ------------
----------- ---------- ------------
Class C...................................................... $ 267,232 $ 274,893 $ 359,802
----------- ---------- ------------
----------- ---------- ------------
Class O...................................................... $11,499,302 $2,895,602 $ 9,621,854
----------- ---------- ------------
----------- ---------- ------------
SHARES OUTSTANDING:
Class A...................................................... 5,293,022 67,858 60,301
----------- ---------- ------------
----------- ---------- ------------
Class B...................................................... 2,518,866 53,093 63,997
----------- ---------- ------------
----------- ---------- ------------
Class C...................................................... 267,232 28,356 35,405
----------- ---------- ------------
----------- ---------- ------------
Class O...................................................... 11,501,416 298,629 946,228
----------- ---------- ------------
----------- ---------- ------------
NET ASSET VALUE:
CLASS A SHARES
Net asset value and redemption price per share............... $ 1.00 $ 9.69 $ 10.17
----------- ---------- ------------
----------- ---------- ------------
Maximum offering price per share (based on maximum sales
charge of 4.75%, except Cash Management Fund).............. $ 1.00 $ 10.17 $ 10.68
----------- ---------- ------------
----------- ---------- ------------
CLASS B SHARES
Net asset value and offering price per share *............... $ 1.00 $ 9.69 $ 10.16
----------- ---------- ------------
----------- ---------- ------------
CLASS C SHARES
Net asset value and offering price per share *............... $ 1.00 $ 9.69 $ 10.16
----------- ---------- ------------
----------- ---------- ------------
CLASS O SHARES
Net asset value, offering price and redemption price per
share...................................................... $ 1.00 $ 9.70 $ 10.17
----------- ---------- ------------
----------- ---------- ------------
Note A: Cost of investments.................................. $15,092,714 $4,217,086 $10,728,020
----------- ---------- ------------
----------- ---------- ------------
</TABLE>
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See accompanying notes to financial statements.
PAGE 46
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
<TABLE>
<CAPTION>
U.S.
GOVERNMENT HIGH YIELD STRATEGIC TOTAL ASIA INVESTORS
INCOME FUND BOND FUND BOND FUND RETURN FUND GROWTH FUND FUND
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 9,948,995 $49,906,848 $18,547,956 $30,841,018 $4,407,356 $459,861,699
1,749,000 6,712,000 1,842,000 5,216,000 772,196 10,834,000
123 773 439 913 -- 133
-- 541,719 108,175 20,115 163,244 2,512,499
-- 1,681,306 223,789 326,896 57,050 161,599
63,822 886,576 278,030 261,309 13,727 673,791
35,312 -- 7,293 39,795 4,890 --
88,209 107,460 107,840 80,319 96,870 --
-- -- 3,120 -- -- --
15,436 23,416 16,536 29,380 -- 11,325
----------- ----------- ----------- ----------- ----------- ------------
11,900,897 59,860,098 21,135,178 36,815,745 5,515,333 474,055,046
----------- ----------- ----------- ----------- ----------- ------------
-- -- -- -- 17,640 --
894,165 4,213,750 1,370,718 2,299,075 104,165 1,767,750
119,639 4,646 9,570 5,113 -- 141,230
53,145 219,747 111,194 37,217 -- --
-- 65,867 -- -- -- 582,875
2,697 75,984 15,902 41,415 4,648 5,662
-- -- -- -- 44 --
18,745 43,309 23,570 26,212 102,355 231,460
----------- ----------- ----------- ----------- ----------- ------------
1,088,391 4,623,303 1,530,954 2,409,032 228,852 2,728,977
----------- ----------- ----------- ----------- ----------- ------------
$10,812,506 $55,236,795 $19,604,224 $34,406,713 $ 5,286,481 $471,326,069
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$10,874,801 $53,413,232 $18,985,800 $33,123,472 $ 5,415,838 $318,348,116
(33,578) 18,430 (87,514) 99,837 16,073 1,934,778
65,850 642,287 31,924 179,201 (7,608) 27,753,244
(94,567) 1,162,846 674,014 1,004,203 (137,822) 123,289,931
----------- ----------- ----------- ----------- ----------- ------------
$10,812,506 $55,236,795 $19,604,224 $34,406,713 $ 5,286,481 $471,326,069
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 706,493 $21,866,216 $ 2,572,516 $13,800,023 $ 2,568,268 $ 3,292,506
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 583,057 $30,383,122 $ 5,991,853 $13,801,036 $ 2,511,271 $ 1,733,180
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 248,974 $ 2,968,256 $ 1,211,527 $ 2,115,758 $ 106,222 $ 706,481
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 9,273,982 $ 19,201 $ 9,828,328 $ 4,689,896 $ 100,720 $465,593,902
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
70,954 1,996,013 242,459 1,253,478 263,504 182,768
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
58,586 2,775,956 565,188 1,255,320 257,907 96,435
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
25,018 271,206 114,271 192,013 10,910 39,308
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
931,907 1,757 927,128 425,222 10,330 25,834,504
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 9.96 $ 10.95 $ 10.61 $ 11.01 $ 9.75 $ 18.01
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 10.46 $ 11.50 $ 11.14 $ 11.56 $ 10.24 $ 18.91
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 9.95 $ 10.95 $ 10.60 $ 10.99 $ 9.74 $ 17.97
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 9.95 $ 10.94 $ 10.60 $ 11.02 $ 9.74 $ 17.97
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$ 9.95 $ 10.93 $ 10.60 $ 11.03 $ 9.75 $ 18.02
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
$10,043,562 $48,729,104 $17,874,949 $29,836,813 $ 4,545,102 $336,571,957
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
</TABLE>
See accompanying notes to financial statements.
PAGE 47
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------
Statements of Operations
For the Six Months Ended June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
NATIONAL
CASH NEW YORK INTERMEDIATE
MANAGEMENT MUNICIPAL MUNICIPAL
FUND BOND FUND FUND
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME (Note A):
Interest.............................................. $386,944 $106,811 $ 299,209
Dividends............................................. -- -- --
-------- -------- ----------
386,944 106,811 299,209
EXPENSES:
Management fee........................................ 14,070 9,407 27,483
Registration and filing fees.......................... 13,075 3,482 12,676
Custody and administration fees....................... 12,315 5,857 10,210
Audit and tax return preparation fees................. 4,277 795 3,132
Shareholder services.................................. 3,580 1,094 21,880
Legal................................................. 1,791 -- --
Printing and postage.................................. 1,492 -- 1,243
Directors' fees and expenses.......................... 1,398 1,208 959
Amortization of organization expenses................. -- 7,056 12,009
Other................................................. 1,492 1,519 1,989
-------- -------- ----------
53,490 30,418 91,581
Management fee waived and expenses absorbed by
investment advisor.................................. (14,794) (19,776) (62,951)
Credits earned from custodian on cash balances........ (5) (1,134) (1,148)
-------- -------- ----------
38,691 9,508 27,482
Distribution and service fees:
Class A Shares........................................ -- 738 713
Class B Shares........................................ -- 2,566 2,757
Class C Shares........................................ -- 1,317 1,508
-------- -------- ----------
Net expenses.......................................... 38,691 14,129 32,460
-------- -------- ----------
Net investment income................................. 348,253 92,682 266,749
-------- -------- ----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments and options............................. -- 6,816 18,835
Foreign currency transactions....................... -- -- --
-------- -------- ----------
Net realized gain (loss).......................... -- 6,816 18,835
-------- -------- ----------
Net change in unrealized appreciation (depreciation)
on:
Investments and options............................. -- (152,298) (291,539)
Foreign currency transactions and other assets...... -- -- --
-------- -------- ----------
Net unrealized appreciation (depreciation) during
the period...................................... -- (152,298) (291,539)
-------- -------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)............... -- (145,482) (272,704)
-------- -------- ----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS.......................................... $348,253 $(52,800) $ (5,955)
-------- -------- ----------
-------- -------- ----------
Note A: Net of foreign withholding tax of:............ -- -- --
</TABLE>
* Fund's commencement of investment operations was May 6, 1996.
See accompanying notes to financial statements.
PAGE 48
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
<TABLE>
<CAPTION>
U.S.
GOVERNMENT HIGH YIELD STRATEGIC TOTAL ASIA INVESTORS
INCOME FUND BOND FUND BOND FUND RETURN FUND GROWTH FUND* FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 321,588 $ 2,205,905 $757,578 $ 483,483 $ 11,029 $ 887,917
-- -- -- 192,620 17,134 4,233,202
--------- ----------- --------- ---------- --------- -----------
321,588 2,205,905 757,578 676,103 28,163 5,121,119
31,879 144,736 57,889 66,106 6,014 1,130,525
12,633 18,999 13,543 15,688 572 14,919
12,797 37,922 20,887 32,136 5,309 34,338
2,885 15,166 4,823 12,134 1,050 34,809
21,880 24,366 22,377 12,929 704 173,049
-- 3,928 1,392 8,603 397 44,754
1,642 6,714 2,139 5,023 466 121,334
959 946 959 865 455 38,786
12,419 15,049 15,101 9,535 3,130 --
1,989 2,486 2,486 2,983 467 52,874
--------- ---------- -------- ---------- --------- -----------
99,083 270,312 141,596 166,002 18,564 1,645,388
(67,192) (78,869) (65,182) (105,900) (10,904) --
(12) (391) -- (6) (218) (202)
--------- ---------- -------- ---------- ---------- -----------
31,879 191,052 76,414 60,096 7,442 1,645,186
505 19,713 1,507 10,654 907 1,450
3,203 91,216 18,796 48,595 3,589 5,448
1,321 9,199 3,375 5,964 152 1,799
--------- ---------- -------- ---------- --------- -----------
36,908 311,180 100,092 125,309 12,090 1,653,883
--------- ---------- -------- ---------- --------- -----------
284,680 1,894,725 657,486 550,794 16,073 3,467,236
--------- ---------- -------- ---------- --------- -----------
70,832 579,513 (8,120) 170,077 (5,158) 27,723,479
-- -- 27,972 -- (2,450) (57)
--------- ---------- -------- ---------- --------- -----------
70,832 579,513 19,852 170,077 (7,608) 27,723,422
--------- ---------- -------- ---------- --------- -----------
(419,971) 716,776 106,524 554,058 (137,746) 22,071,582
-- (2,058) 17,202 (2) (76) 189
--------- ---------- -------- ---------- --------- -----------
(419,971) 714,718 123,726 554,056 (137,822) 22,071,771
--------- ---------- -------- ---------- --------- -----------
(349,139) 1,294,231 143,578 724,133 (145,430) 49,795,193
--------- ---------- -------- ---------- --------- -----------
$ (64,459) $3,188,956 $801,064 $1,274,927 $(129,357) $53,262,429
--------- ---------- -------- ---------- --------- -----------
--------- ---------- -------- ---------- --------- -----------
-- -- $ 74 $ 2,226 $ 1,080 $ 90,920
-------- ---------- --------- -----------
-------- ---------- --------- -----------
</TABLE>
See accompanying notes to financial statements.
PAGE 49
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
For the Six Months Ended June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
CASH NEW YORK NATIONAL
MANAGEMENT MUNICIPAL INTERMEDIATE
FUND BOND FUND MUNICIPAL FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income............................... $ 348,253 $ 92,682 $ 266,749
Net realized gain (loss) on investments, options,
and foreign currency transactions................. -- 6,816 18,835
Net change in unrealized appreciation (depreciation)
on investments, options, foreign currency
transactions and other assets..................... -- (152,298) (291,539)
----------- ---------- --------------
Net increase (decrease) in net assets from
operations........................................ 348,253 (52,800) (5,955)
----------- ---------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class A........................................... (80,722) (14,437) (13,153)
Class B........................................... (59,501) (10,748) (10,928)
Class C........................................... (6,944) (5,521) (6,006)
Class O........................................... (201,086) (61,147) (235,808)
----------- ---------- --------------
(348,253) (91,853) (265,895)
----------- ---------- --------------
Distributions from net realized gains:
Class A........................................... -- -- --
Class B........................................... -- -- --
Class C........................................... -- -- --
Class O........................................... -- -- --
----------- ---------- --------------
-- -- --
----------- ---------- --------------
NET FUND CAPITAL SHARE TRANSACTIONS:
Class A........................................... 3,537,475 135,941 58,615
Class B........................................... 280,380 8,500 230,755
Class C........................................... 84,691 20,162 95,905
Class O........................................... 4,815,072 489,102 184,877
----------- ---------- --------------
Net increase in net assets derived from share
transactions................................. 8,717,618 653,705 570,152
----------- ---------- --------------
NET INCREASE IN NET ASSETS............................ 8,717,618 509,052 298,302
NET ASSETS:
Beginning of period................................. 10,860,804 3,833,951 10,947,040
----------- ---------- --------------
End of period (a)................................... $19,578,422 $4,343,003 $ 11,245,342
----------- ---------- --------------
----------- ---------- --------------
(a) Including undistributed net investment income or
distributions in excess of net investment income
of: -- $ 4,188 $ 4,783
---------- --------------
---------- --------------
</TABLE>
* Fund's commencement of investment operations was May 6, 1996.
See accompanying notes to financial statements.
PAGE 50
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
<TABLE>
<CAPTION>
U.S.
GOVERNMENT HIGH YIELD STRATEGIC TOTAL ASIA INVESTORS
INCOME FUND BOND FUND BOND FUND RETURN FUND GROWTH FUND* FUND
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 284,680 $ 1,894,725 $ 657,486 $ 550,794 $ 16,073 $ 3,467,236
70,832 579,513 19,852 170,077 (7,608) 27,723,422
(419,971) 714,718 123,726 554,056 (137,822) 22,071,771
----------- ----------- ----------- ------------ ------------- ------------
(64,459) 3,188,956 801,064 1,274,927 (129,357) 53,262,429
----------- ----------- ----------- ------------ ------------- ------------
(11,350) (807,825) (55,175) (172,678) -- (2,834)
(16,111) (866,865) (159,141) (159,260) -- (939)
(6,718) (87,705) (28,508) (19,475) -- (369)
(284,079) (142,364) (472,800) (99,544) -- (1,528,316)
----------- ----------- ----------- ------------ ------------- ------------
(318,258) (1,904,759) (715,624) (450,957) -- (1,532,458)
----------- ----------- ----------- ------------ ------------- ------------
-- -- -- -- -- (27,395)
-- -- -- -- -- (27,238)
-- -- -- -- -- (10,707)
-- -- -- -- -- (14,769,851)
----------- ----------- ----------- ------------ ------------- ------------
-- -- -- -- -- (14,835,191)
----------- ----------- ----------- ------------ ------------- ------------
440,847 10,643,111 2,058,584 9,888,115 2,628,051 2,785,248
33,078 19,771,540 4,100,320 8,085,022 2,573,150 934,549
(14,587) 1,637,395 792,408 1,634,312 107,637 371,070
60,946 (8,125,182) 1,059 1,055 102,000 (73,184)
----------- ----------- ----------- ------------ ------------- ------------
520,284 23,926,864 6,952,371 19,608,504 5,410,838 4,017,683
----------- ----------- ----------- ------------ ------------- ------------
137,567 25,211,061 7,037,811 20,432,474 5,281,481 40,912,463
10,674,939 30,025,734 12,566,413 13,974,239 5,000 430,413,606
----------- ----------- ----------- ------------ ------------- ------------
$10,812,506 $55,236,795 $19,604,224 $34,406,713 $ 5,286,481 $471,326,069
----------- ----------- ----------- ------------ ------------- ------------
----------- ----------- ----------- ------------ ------------- ------------
$ (33,578) $ 18,430 $ (87,514) $ 99,837 $ 16,073 $ 1,934,778
----------- ----------- ----------- ------------ ------------- ------------
----------- ----------- ----------- ------------ ------------- ------------
</TABLE>
See accompanying notes to financial statements.
PAGE 51
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
CASH NEW YORK NATIONAL
MANAGEMENT MUNICIPAL INTERMEDIATE
FUND BOND FUND MUNICIPAL FUND(a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income....................... $ 695,618 $ 202,366 $ 430,514
Net realized gain (loss) on investments,
options, and foreign currency
transactions.............................. -- (65,526) 39,589
Net change in unrealized appreciation
(depreciation) on investments, options,
foreign currency transactions and other
assets.................................... -- 481,771 423,880
----------- ----------- -----------
Net increase in net assets from
operations................................ 695,618 618,611 893,983
----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class A................................... (40,161) (11,538) (17,376)
Class B................................... (26,516) (12,739) (11,207)
Class C................................... (2,693) (9,206) (8,442)
Class O................................... (626,248) (165,524) (389,560)
----------- ----------- -----------
(695,618) (199,007) (426,585)
----------- ----------- -----------
Distributions from net realized gains:
Class A................................... -- -- (1,569)
Class B................................... -- -- (1,193)
Class C................................... -- -- (749)
Class O................................... -- -- (26,754)
----------- ----------- ------------
-- -- (30,265)
----------- ----------- ------------
Distributions in excess of net realized
gains:
Class A................................... -- -- --
Class B................................... -- -- --
Class C................................... -- -- --
Class O................................... -- -- --
----------- ----------- -----------
-- -- --
----------- ----------- -----------
NET FUND CAPITAL SHARE TRANSACTIONS:
Class A................................... 1,755,547 528,982 551,191
Class B................................... 2,238,486 504,427 417,842
Class C................................... 182,541 250,059 260,067
Class O................................... (12,442,586) (1,202,551) 9,280,727
----------- ----------- -----------
Net increase (decrease) in net assets
derived from share transactions...... (8,266,012) 80,917 10,509,827
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS......... (8,266,012) 500,521 10,946,960
NET ASSETS:
Beginning of period......................... 19,126,816 3,333,430 80
----------- ----------- -----------
End of period*.............................. $10,860,804 $ 3,833,951 $10,947,040
----------- ----------- -----------
----------- ----------- -----------
* Including undistributed net investment
income or distributions in excess of net
investment income of: -- $ 3,359 $ 3,929
----------- -----------
----------- -----------
</TABLE>
(a) Fund's commencement of investment operations was February 22, 1995.
(b) Fund's commencement of investment operations was September 11, 1995.
(c) Fund commenced investment operations in 1996.
See accompanying notes to financial statements.
PAGE 52
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
<TABLE>
<CAPTION>
U.S.
GOVERNMENT HIGH YIELD STRATEGIC TOTAL ASIA INVESTORS
INCOME FUND(a) BOND FUND(a) BOND FUND(a) RETURN FUND(b) GROWTH FUND(c) FUND
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 517,510 $ 1,503,286 $ 912,394 $ 132,091 -- $ 6,537,153
110,378 472,003 278,481 24,049 -- 49,873,168
325,404 448,128 550,288 450,147 -- 62,151,251
----------- ----------- ----------- ----------- -------------- ------------
953,292 2,423,417 1,741,163 606,287 -- 118,561,572
----------- ----------- ----------- ----------- -------------- ------------
(12,734) (428,959) (30,591) (35,724) -- (4,087)
(16,038) (212,975) (59,198) (47,121) -- (2,179)
(10,967) (42,228) (23,725) (3,465) -- (1,577)
(477,771) (790,660) (804,713) (45,781) -- (6,529,373)
----------- ----------- ----------- ----------- -------------- ------------
(517,510) (1,474,822) (918,227) (132,091) -- (6,537,216)
----------- ----------- ----------- ----------- -------------- ------------
(2,801) (146,101) (11,724) (3,900) -- (37,569)
(4,374) (137,393) (42,853) (5,711) -- (61,264)
(2,795) (17,451) (9,338) (469) -- (26,879)
(100,408) (108,284) (226,037) (4,845) -- (36,419,464)
----------- ----------- ----------- ----------- -------------- ------------
(110,378) (409,229) (289,952) (14,925) -- (36,545,176)
----------- ----------- ----------- ----------- -------------- ------------
(216) -- -- -- -- --
(1,765) -- -- -- -- --
(174) -- -- -- -- --
(2,827) -- -- -- -- --
----------- ----------- ----------- ----------- -------------- ------------
(4,982) -- -- -- -- --
----------- ----------- ----------- ----------- -------------- ------------
269,838 10,746,292 498,371 3,580,176 -- 396,175
561,475 10,103,804 1,866,229 5,255,708 -- 675,659
265,054 1,264,713 397,920 424,084 -- 264,858
9,258,070 7,371,479 9,270,829 4,250,000 -- 5,383,498
----------- ----------- ----------- ----------- -------------- ------------
10,354,437 29,486,288 12,033,349 13,509,968 -- 6,720,190
----------- ----------- ----------- ----------- -------------- ------------
10,674,859 30,025,654 12,566,333 13,969,239 -- 82,199,370
80 80 80 5,000 -- 348,214,236
----------- ----------- ----------- ----------- -------------- ------------
$10,674,939 $30,025,734 $12,566,413 $13,974,239 -- $430,413,606
----------- ----------- ----------- ----------- -------------- ------------
----------- ----------- ----------- ----------- -------------- ------------
-- $ 28,464 $ (29,376) -- -- --
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
PAGE 53
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Notes to Financial Statements (unaudited)
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, and the Salomon Brothers Investors Fund Inc (the
'Investors 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 ten 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 New York Municipal Bond Fund (the 'New York Municipal Bond 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 New York Municipal Money Fund and the
Institutional Money Market Fund which are 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. 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 their 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 Bond Fund's
objective is to achieve a high level of current income which is exempt from
regular federal income taxes and New York State and New York City personal
income taxes, consistent with the preservation of capital; 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 and Investors Fund's objective is to seek long-term growth of
capital.
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
PAGE 54
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
commenced investment operations. A summary of those expenditures that remain as
of June 30, 1996 for each Fund is as follows:
<TABLE>
<CAPTION>
FUND EXPIRATION OF AMORTIZATION AMOUNT
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
New York Municipal Bond Fund............................. February 1998 $20,913
National Intermediate Municipal Fund..................... February 2000 $85,336
U.S. Government Income Fund.............................. February 2000 $88,209
High Yield Bond Fund..................................... February 2000 $107,460
Strategic Bond Fund...................................... February 2000 $107,840
Total Return Fund........................................ September 2000 $80,319
Asia Growth Fund......................................... May 2001 $96,870
</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,
acquires such securities with more than 60 days remaining to maturity, they
will be valued at current market value (using the bid price), until the
60th day prior to maturity, and will then be valued on an amortized cost
basis.
Portfolio securities for the Cash Management 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.
PAGE 55
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Notes to Financial Statements (unaudited)
Foreign securities quoted in a foreign currency are translated into
U.S. dollars using exchange rates at 2:30 p.m. Eastern time or at such
other rates as SBAM may determine to be appropriate in computing net asset
value.
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 New York Municipal Bond Fund, National
Intermediate Municipal Fund, High Yield Bond Fund, Strategic Bond Fund,
Total Return Fund, Asia Growth Fund and Investors 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 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, 1996 was approximately $1,023,000, $618,000, $109,000 for the U.S.
Government Income Fund, Strategic Bond Fund and Total Return 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
PAGE 56
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
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 and Investors 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
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 and Investors 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.
(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,
1996 were $1,083,749 and $361,250, respectively.
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
PAGE 57
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Notes to Financial Statements (unaudited)
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.
(I) FEDERAL INCOME TAXES. Each Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies, including the distribution requirements of the Tax
Reform Act of 1986, 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.
(J) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends from net
investment income on the shares of each of the Funds (except the Asia
Growth Fund and Investors 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
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.
(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. 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
PAGE 58
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
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) is
payable monthly and is based on the following annual percentages of each Funds'
average daily net assets: .20% for the Cash Management Fund, .50% for the New
York Municipal Bond Fund and 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.
SBAM Limited provides certain advisory services to SBAM for the benefit of the
Strategic Bond Fund. SBAM Limited is compensated by SBAM at no additional
expense to the Strategic Bond Fund. SBAM has retained SBAM AP 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. SBAM Limited provides certain
administrative services to the Asia Growth Fund. For such administrative
services, SBAM Limited 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'). The base fee is paid
quarterly based on the following annual rates:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL FEE RATE
- ---------------------------------------------------------------------------------------------------
<S> <C>
First $350 million.................................................................. .500%
Next $150 million................................................................... .400%
Next $250 million................................................................... .375%
Next $250 million................................................................... .350%
Over $1 billion..................................................................... .300%
</TABLE>
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
PAGE 59
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Notes to Financial Statements (unaudited)
more percentage points. For the rolling years ended March 31, 1996 and June 30,
1996, the Investors Fund's performance exceeded the investment record of the S&P
Index by approximately two and three percent, respectively. As a result, base
management fees were increased by $19,564 at March 31, 1996, and $34,793 at June
30, 1996.
For the period ended June 30, 1996, SBAM waived management fees of $14,070,
$9,407, $27,483, $31,879, $78,869, $57,889, $66,106 and $6,014 for the Cash
Management Fund, New York Municipal Bond Fund, National Intermediate Municipal
Fund, U.S. Government Income Fund, High Yield Bond Fund, Strategic Bond Fund,
Total Return Fund and Asia Growth Fund, respectively, and voluntarily absorbed
expenses of $724, $10,369, $35,468, $35,313, $7,293, $39,794 and $4,890 for the
Cash Management Fund, New York Municipal Bond Fund, National Intermediate
Municipal Fund, U.S. Government Income Fund, Strategic Bond Fund, Total Return
Fund and Asia Growth Fund, respectively.
If in any fiscal year total expenses of any Fund, excluding taxes, interest,
brokerage and extraordinary expenses, but including the management fee, exceed
the most stringent expense limitations imposed by state securities regulations
applicable to the Fund, SBAM will pay or reimburse the Fund for the excess.
Currently, the most restrictive of these limitations on an annual basis is 2.5%
of the first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets and 1.5% of average daily net assets in
excess of $100 million. No such expense reimbursement was required for the
period ending June 30, 1996.
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 period ended June 30, 1996, credits
earned on outstanding cash balances were used to reduce custodian fees by $5,
$1,134, $1,148, $12, $391, $6, $218 and $202 for the Cash Management Fund, New
York Municipal Bond Fund, National Intermediate Municipal Fund, U.S. Government
Income Fund, High Yield Bond Fund, Total Return Fund, Asia Growth Fund and
Investors Fund, respectively.
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) 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) at the rate of
.75% of the
PAGE 60
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
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 $600 and $29,364 were paid by the Total Return Fund and
Investors 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 period ended June 30, 1996.
Salomon Brothers received $7,088 as its portion of the front-end sales charge on
sales of Class A shares of the Funds during the period ended June 30, 1996. In
addition, contingent deferred sales charges of $59,533 were paid to Salomon
Brothers in connection with redemptions of certain Class B and Class C shares of
the Funds during the period ended June 30, 1996.
PAGE 61
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
Notes to Financial Statements (unaudited)
3. CAPITAL STOCK
At June 30, 1996, 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 Bond 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. Transactions in Fund shares for the periods indicated were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------------------------------------------------------------------------------
PERIOD
ENDED
PERIOD ENDED PERIOD ENDED PERIOD ENDED DECEMBER
JUNE 30, 1996 DECEMBER 31, 1995 JUNE 30, 1996 31, 1995
-------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT FUND
Sold................. 14,605,929 $ 14,605,929 8,291,614 $ 8,291,614 1,655,915 $ 1,655,915 3,213,151
Issued as
reinvestment........ 16,602 16,602 4,672 4,672 54,017 54,017 24,262
Redeemed............. (11,085,056) (11,085,056) (6,540,739) (6,540,739) (1,429,552) (1,429,552) (998,927)
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase
(decrease).......... 3,537,475 $ 3,537,475 1,755,547 $ 1,755,547 280,380 $ 280,380 2,238,486
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
NEW YORK MUNICIPAL
BOND FUND
Sold................. 24,815 $ 243,482 53,966 $ 528,846 603 $ 6,000 52,010
Issued as
reinvestment........ 251 2,459 16 157 256 2,500 226
Redeemed............. (11,188) (110,000) (2) (21) -- -- (2)
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase
(decrease).......... 13,878 $ 135,941 53,980 $ 528,982 859 $ 8,500 52,234
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
NATIONAL INTERMEDIATE
MUNICIPAL FUND
Sold................. 10,194 $ 104,387 54,100 $ 546,146 22,218 $ 227,112 41,260
Issued as
reinvestment........ 609 6,258 710 7,331 356 3,643 163
Redeemed............. (5,093) (52,030) (221) (2,286) -- -- (2)
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase......... 5,710 $ 58,615 54,589 $ 551,191 22,574 $ 230,755 41,421
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
U.S. GOVERNMENT
INCOME FUND
Sold................. 44,329 $ 444,019 26,869 $ 269,137 45,209 $ 454,189 54,833
Issued as
reinvestment........ 209 2,094 76 721 366 3,692 637
Redeemed............. (529) (5,266) (2) (20) (42,459) (424,803) (2)
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase
(decrease).......... 44,009 $ 440,847 26,943 $ 269,838 3,116 $ 33,078 55,468
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
HIGH YIELD BOND FUND
Sold................. 1,468,353 $ 16,040,830 1,019,841 $10,701,496 1,876,222 $20,422,126 946,768
Issued as
reinvestment........ 44,637 487,360 40,936 430,949 28,874 314,901 15,920
Redeemed............. (541,174) (5,885,079) (36,582) (386,153) (89,256) (965,487) (2,574)
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase
(decrease).......... 971,816 $ 10,643,111 1,024,195 $10,746,292 1,815,840 $19,771,540 960,114
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
STRATEGIC BOND FUND
Sold................. 192,181 $ 2,041,900 53,771 $ 551,616 418,455 $ 4,433,788 174,744
Issued as
reinvestment........ 2,817 29,856 1,158 12,171 6,828 72,448 3,737
Redeemed............. (1,244) (13,172) (6,226) (65,416) (38,521) (405,916) (57)
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase......... 193,754 $ 2,058,584 48,703 $ 498,371 386,762 $ 4,100,320 178,424
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
TOTAL RETURN FUND
Sold................. 923,434 $ 10,069,072 343,940 $ 3,552,510 782,796 $ 8,497,375 518,625
Issued as
reinvestment........ 12,064 131,692 2,713 28,624 11,403 124,427 3,801
Redeemed............. (28,705) (312,649) (93) (958) (49,278) (536,780) (12,152)
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase......... 906,793 $ 9,888,115 346,560 $ 3,580,176 744,921 $ 8,085,022 510,274
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
ASIA GROWTH FUND
Sold................. 263,479 $ 2,629,041 -- -- 257,782 $ 2,573,150 --
Issued as
reinvestment........ -- -- -- -- -- -- --
Redeemed............. (100) (990) -- -- -- -- --
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase......... 263,379 $ 2,628,051 -- -- 257,782 $ 2,573,150 --
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
<PAGE>
INVESTORS FUND
Sold................. 158,489 $ 2,827,279 27,922 $ 420,791 71,052 $ 1,245,800 41,769
Issued as
reinvestment........ 905 15,456 760 12,451 844 14,319 1,335
Redeemed............. (3,189) (57,487) (2,119) (37,067) (18,550) (325,570) (15)
----------- ------------ ---------- ----------- ---------- ----------- ---------
Net increase
(decrease).......... 156,205 $ 2,785,248 26,563 $ 396,175 53,346 $ 934,549 43,089
----------- ------------ ---------- ----------- ---------- ----------- ---------
----------- ------------ ---------- ----------- ---------- ----------- ---------
<CAPTION>
<S> <C>
---------
AMOUNT
---------
<S> <C>
CASH MANAGEMENT FUND
Sold................. $ 3,213,151
Issued as
reinvestment........ 24,262
Redeemed............. (998,927)
-----------
Net increase
(decrease).......... $ 2,238,486
-----------
-----------
NEW YORK MUNICIPAL
BOND FUND
Sold................. $ 502,220
Issued as
reinvestment........ 2,229
Redeemed............. (22)
-----------
Net increase
(decrease).......... $ 504,427
-----------
-----------
NATIONAL INTERMEDIATE
MUNICIPAL FUND
Sold................. $ 416,180
Issued as
reinvestment........ 1,682
Redeemed............. (20)
-----------
Net increase......... $ 417,842
-----------
-----------
U.S. GOVERNMENT
INCOME FUND
Sold................. $ 554,953
Issued as
reinvestment........ 6,542
Redeemed............. (20)
-----------
Net increase
(decrease).......... $ 561,475
-----------
-----------
HIGH YIELD BOND FUND
Sold................. $ 9,961,848
Issued as
reinvestment........ 168,888
Redeemed............. (26,932)
-----------
Net increase
(decrease).......... $10,103,804
-----------
-----------
STRATEGIC BOND FUND
Sold................. $ 1,827,448
Issued as
reinvestment........ 39,371
Redeemed............. (590)
-----------
Net increase......... $ 1,866,229
-----------
-----------
TOTAL RETURN FUND
Sold................. $ 5,342,405
Issued as
reinvestment........ 40,062
Redeemed............. (126,759)
-----------
Net increase......... $ 5,255,708
-----------
-----------
ASIA GROWTH FUND
Sold................. --
Issued as
reinvestment........ --
Redeemed............. --
-----------
Net increase......... --
-----------
-----------
INVESTORS FUND
Sold................. $ 654,082
Issued as
reinvestment........ 21,837
Redeemed............. (260)
-----------
Net increase
(decrease).......... $ 675,659
-----------
-----------
</TABLE>
PAGE 62
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
<TABLE>
<CAPTION>
CLASS C CLASS O
- --------------------------------------------------------------------------------------------------------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
JUNE 30, 1996 DECEMBER 31, 1995 JUNE 30, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
615,246 $ 615,246 180,044 $ 180,044 24,713,872 $ 24,713,872 47,254,877 $ 47,254,877
2,345 2,345 2,497 2,497 132,142 132,142 431,706 431,706
(532,900) (532,900) -- -- (20,030,942) (20,030,942) (60,129,169) (60,129,169)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
84,691 $ 84,691 182,541 $ 182,541 4,815,072 $ 4,815,072 (12,442,586) ($12,442,586)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
2,072 $ 20,000 26,263 $ 250,020 82,225 $ 791,000 14,323 $ 137,924
17 162 6 60 5,297 51,934 17,711 169,082
-- -- (2) (21) (35,546) (353,832) (156,388) (1,509,557)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
2,089 $ 20,162 26,267 $ 250,059 51,976 $ 489,102 (124,354) ($ 1,202,551)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
9,344 $ 95,000 25,963 $ 260,000 18,216 $ 184,870 927,748 $ 9,278,117
89 905 9 87 1 7 263 2,630
-- -- (2) (20) -- -- (2) (20)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
9,433 $ 95,905 25,970 $ 260,067 18,217 $ 184,877 928,009 $ 9,280,727
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
-- -- 27,164 $ 272,000 6,016 $ 60,165 925,200 $ 9,252,000
-- -- 20 206 79 781 816 8,164
(1,470) ($ 14,587) (698) (7,152) -- -- (206) (2,094)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
(1,470) ($ 14,587) 26,486 $ 265,054 6,095 $ 60,946 925,810 $ 9,258,070
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
170,558 $1,856,734 124,291 $1,298,229 555 $ 6,051 926,518 $ 9,265,788
4,862 52,995 1,229 12,925 4 42 791 7,911
(25,283) (272,334) (4,453) (46,441) (744,322) (8,131,275) (181,791) (1,902,220)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
150,137 $1,637,395 121,067 $1,264,713 (743,763) ($ 8,125,182) 745,518 $ 7,371,479
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
77,789 $ 820,339 38,420 $ 391,367 99 $ 1,050 926,274 $ 9,263,323
1,366 14,488 625 6,573 1 9 754 7,526
(3,929) (42,419) (2) (20) -- -- (2) (20)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
75,226 $ 792,408 39,043 $ 397,920 100 $ 1,059 927,026 $ 9,270,829
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
151,159 $1,648,104 41,886 $ 423,053 96 $ 1,050 425,000 $ 4,250,000
1,081 11,855 99 1,041 1 5 -- --
(2,336) (25,647) (1) (10) -- -- -- --
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
149,904 $1,634,312 41,984 $ 424,084 97 $ 1,055 425,000 $ 4,250,000
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
10,785 $ 107,637 -- -- 10,205 $ 102,000 -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
10,785 $ 107,637 -- -- 10,205 $ 102,000 -- --
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
20,821 $ 370,527 18,595 $ 267,020 82,353 $ 1,427,645 245,958 $ 3,783,857
32 543 60 980 735,072 12,585,521 2,017,845 32,672,713
-- -- (200) (3,142) (811,385) (14,086,350) (1,987,122) (31,073,072)
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
20,853 $ 371,070 18,455 $ 264,858 6,040 ($ 73,184) 276,681 $ 5,383,498
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
- -------- ---------- ------- ---------- ----------- ------------ ----------- ------------
</TABLE>
PAGE 63
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- ----------------------------------------------------------------------
Notes to Financial Statements (unaudited)
At June 30, 1996, Salomon Brothers owned approximately the following percentages
of total shares outstanding of the following Funds:
<TABLE>
<S> <C>
New York Municipal Bond Fund........................................................... 18%
National Intermediate Municipal Fund................................................... 90%
U.S. Government Income Fund............................................................ 92%
Strategic Bond Fund.................................................................... 54%
Total Return Fund...................................................................... 16%
Asia Growth Fund....................................................................... 92%
</TABLE>
4. PORTFOLIO ACTIVITY
Cost of purchases and proceeds from sales of securities, excluding short-term
obligations, for the period ended June 30, 1996, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
New York Municipal Bond Fund............................... $ 1,454,428 $ 730,598
------------ ------------
------------ ------------
National Intermediate Municipal Fund....................... $ 1,455,790 $ 911,160
------------ ------------
------------ ------------
U.S. Government Income Fund
U.S. Government Securities............................... $ 12,541,481 $ 12,268,671
------------ ------------
------------ ------------
High Yield Bond Fund....................................... $ 40,238,316 $ 19,774,543
------------ ------------
------------ ------------
Strategic Bond Fund
U.S. Government Securities............................... $ 3,528,455 $ 1,707,386
Other Investments........................................ 10,484,525 5,591,235
------------ ------------
$ 14,012,980 $ 7,298,621
------------ ------------
------------ ------------
Total Return Fund
U.S. Government Securities............................... $ 4,677,985 $ 2,839,430
Other Investments........................................ 21,905,927 6,367,906
------------ ------------
$ 26,583,912 $ 9,207,336
------------ ------------
------------ ------------
Asia Growth Fund........................................... $ 5,185,290 $ 634,727
------------ ------------
------------ ------------
Investors Fund............................................. $155,556,486 $138,211,264
------------ ------------
------------ ------------
</TABLE>
PAGE 64
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
During the period ended June 30, 1996, net realized gain from forward foreign
currency contracts for the Strategic Bond Fund amounted to $27,577, and net
realized losses from forward currency contracts amounted to $4,262 for the Asia
Growth Fund. Net realized losses on mortgage dollar rolls amounted to $29,766
and $21,828 for the U.S. Government Income Fund and Strategic Bond Fund,
respectively.
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 invests in money market instruments maturing in
thirteen months or less whose short-term credit ratings are within the two
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 Bond Fund pursues its investment objectives by investing at
least 80% of its net assets in obligations that are exempt from regular 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 Bond 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 Statement 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.
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
PAGE 65
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- ----------------------------------------------------------------------
Notes to Financial Statements (unaudited)
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.
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. 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.
6. TAX INFORMATION
At December 31, 1995, the Cash Management Fund and New York Municipal Bond Fund
had net capital loss carry-forwards available to offset future capital gains as
follows:
<TABLE>
<CAPTION>
NEW YORK
CASH MUNICIPAL
YEAR OF MANAGEMENT BOND
EXPIRATION FUND FUND
<S> <C> <C>
1999............................................................... $ 894 --
2000............................................................... 396 --
2001............................................................... 409 --
2002............................................................... 415 $305,822
2003............................................................... -- 318,123
------ --------
$2,114 $623,945
------ --------
------ --------
</TABLE>
PAGE 66
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
At June 30, 1996, 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>
NET
GROSS GROSS UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York Municipal Bond........ $ 4,217,086 $ 68,726 $ (70,464) $ (1,738)
National Intermediate
Municipal.................... 10,728,020 172,994 (40,653) 132,341
U.S. Government Income......... 11,792,562 108 (94,675) (94,567)
High Yield Bond................ 55,441,104 1,768,808 (591,064) 1,177,744
Strategic Bond................. 19,716,949 908,498 (235,491) 673,007
Total Return................... 35,052,813 1,323,593 (319,388) 1,004,205
Asia Growth Growth............. 5,317,298 87,547 (225,293) (137,746)
Investors...................... 347,405,957 127,747,762 (4,458,020) 123,289,742
</TABLE>
PAGE 67
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- ---------------------------------------------------
Financial Highlights
Selected data per share of capital stock outstanding throughout each period:
CASH MANAGEMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995 1996 (UNAUDITED) 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000
------ ------ ------ ------
Net investment income................... 0.025 0.044 0.025 0.043
Dividends from net investment income.... (0.025) (0.044) (0.025) (0.043)
------ ------ ------ ------
Net asset value, end of period.......... $ 1.000 $ 1.000 $ 1.000 $ 1.000
------ ------ ------ ------
------ ------ ------ ------
Net assets, end of period (thousands)... $5,293 $1,756 $2,519 $2,238
Total return*........................... +2.5 % +4.5 % +2.5 % +4.4 %
Ratios to average net assets:
Expenses................................ 0.55 %** 0.55 % 0.55 %** 0.55 %
Net investment income................... 4.93 %** 5.42 % 4.96 %** 5.38 %
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......... $ 0.024 $ 0.037 $ 0.024 $ 0.037
Expense ratio........................... 0.76 %** 1.35 % 0.76 %** 1.34 %
<CAPTION>
CLASS C
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period.... $ 1.000 $ 1.000
------ ------
Net investment income................... 0.025 0.043
Dividends from net investment income.... (0.025) (0.043)
------ ------
Net asset value, end of period.......... $ 1.000 $ 1.000
------ ------
------ ------
Net assets, end of period (thousands)... $ 267 $183
Total return*........................... +2.5 % +4.4 %
Ratios to average net assets:
Expenses................................ 0.55 %** 0.55 %
Net investment income................... 4.94 %** 5.40 %
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......... $ 0.024 $ 0.036
Expense ratio........................... 0.76 %** 1.34 %
</TABLE>
NEW YORK MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995 1996 (UNAUDITED) 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $10.11 $ 8.96 $10.11 $ 8.96
----- ----- ----- -----
Net investment income................... 0.24 0.42 0.21 0.36
Net gain (loss) on securities and
futures (both realized and
unrealized)............................ (0.42) 1.14 (0.43) 1.14
----- ----- ----- -----
Total from investment operations........ (0.18) 1.56 (0.22) 1.50
----- ----- ----- -----
Dividends from net investment income.... (0.24) (0.41) (0.20) (0.35)
Distributions from net realized gain on
securities and futures................. -- -- -- --
----- ----- ----- -----
Total dividends and distributions....... (0.24) (0.41) (0.20) (0.35)
----- ----- ----- -----
Net asset value, end of period.......... $ 9.69 $10.11 $ 9.69 $10.11
----- ----- ----- -----
----- ----- ----- -----
Net assets, end of period (thousands)... $658 $546 $515 $528
Total return*........................... - 1.8 % +17.7 % - 2.1 % +17.0 %
Ratios to average net assets:
Expenses................................ 0.74%** 0.75% 1.50%** 1.50%
Net investment income................... 4.94%** 5.12% 4.22%** 4.30%
Portfolio turnover rate................. 21% 22% 21% 22%
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......... $ 0.19 $ 0.24 $ 0.15 $ 0.17
Expense ratio........................... 1.86%** 2.96% 2.61%** 3.70%
<CAPTION>
CLASS C
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995
- ---------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period.... $10.11 $ 8.96
----- -----
Net investment income................... 0.21 0.36
Net gain (loss) on securities and
futures (both realized and
unrealized)............................ (0.43) 1.14
----- -----
Total from investment operations........ (0.22) 1.50
----- -----
Dividends from net investment income.... (0.20) (0.35)
Distributions from net realized gain on
securities and futures................. -- --
----- -----
Total dividends and distributions....... (0.20) (0.35)
----- -----
Net asset value, end of period.......... $ 9.69 $10.11
----- -----
----- -----
Net assets, end of period (thousands)... $ 275 $266
Total return*........................... - 2.1 % +17.0 %
Ratios to average net assets:
Expenses................................ 1.50 %** 1.50%
Net investment income................... 4.23 %** 4.38%
Portfolio turnover rate................. 21% 22%
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......... $ 0.15 $ 0.18
Expense ratio........................... 2.61 %** 3.71%
</TABLE>
(a) February 1, 1993 commencement of investment operations, through December 31,
1993.
* 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.
PAGE 68
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS O
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1996 (UNAUDITED) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------ ------- ------- ------- ------- -------
0.025 0.055 0.038 0.027 0.033 0.055
(0.025) (0.055) (0.038) (0.027) (0.033) (0.055)
------ ------- ------- ------- ------- -------
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
$ 11,499 $ 6,684 $19,127 $15,049 $11,613 $22,982
+2.5 % +5.6 % +3.9 % +2.7 % +3.4 % +5.7 %
0.55 %** 0.55 % 0.61 % 0.65 % 0.65 % 0.65 %
4.96 %** 5.46 % 3.79 % 2.68 % 3.41 % 5.43 %
$ 0.024 $ 0.047 $ 0.036 $ 0.025 $ 0.030 $ 0.053
0.76 %** 1.34 % 0.81 % 0.85 % 0.85 % 0.85 %
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CLASS O
SIX MONTHS YEAR ENDED PERIOD ENDED
ENDED DECEMBER 31, DECEMBER 31,
JUNE 30, ----------------------------------------
1996 (UNAUDITED) 1995 1994 1993(a)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$10.11 $ 8.98 $ 10.44 $ 10.00
----- ------ ------- -----
0.25 0.53 0.55 0.46
(0.41) 1.12 (1.46) 0.46
----- ------ ------- -----
(0.16) 1.65 (0.91) 0.92
----- ------ ------- -----
(0.25) (0.52) (0.55) (0.46)
-- -- -- (0.02)
----- ------ ------- -----
(0.25) (0.52) (0.55) (0.48)
----- ------ ------- -----
$ 9.70 $10.11 $ 8.98 $ 10.44
----- ------ ------- -----
----- ------ ------- -----
$2,896 $2,494 $3,333 $8,364
- 1.6 % +18.8 % - 8.8 % +9.4 %
0.51%** 0.50% 0.50% 0.50%**
5.24%** 5.50% 5.72% 4.99%**
21 % 22 % 63 % 24 %
$ 0.20 $ 0.32 $ 0.49 $ 0.40
1.62%** 2.71% 1.17% 1.24%**
</TABLE>
See accompanying notes to financial statements.
PAGE 69
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- ---------------------------------------------------
Financial Highlights
Selected data per share of capital stock outstanding throughout each period:
NATIONAL INTERMEDIATE MUNICIPAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995(a) 1996 (UNAUDITED) 1995(a)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $10.43 $10.00 $10.42 $10.00
------ ------ ------ ------
Net investment income................ 0.24 0.40 0.20 0.34
Net gain on investments (both
realized and unrealized)............ (0.26) 0.46 (0.26) 0.45
------ ------ ------ ------
Total from investment operations..... (0.02) 0.86 (0.06) 0.79
------ ------ ------ ------
Dividends from net investment
income.............................. (0.24) (0.40) (0.20) (0.34)
Distributions from net realized gain
on investments...................... -- (0.03) -- (0.03)
------ ------ ------ ------
Total dividends and distributions.... (0.24) (0.43) (0.20) (0.37)
------ ------ ------ ------
Net asset value, end of period....... $10.17 $10.43 $10.16 $10.42
------ ------ ------ ------
------ ------ ------ ------
Net assets, end of period
(thousands)......................... $613 $569 $650 $432
Total return*........................ -0.2 % +8.7 % -0.5 % +8.0 %
Ratios to average net assets:
Expenses............................. 0.75%** 0.75%** 1.50%** 1.50%**
Net investment income................ 4.69%** 4.63%** 3.92%** 3.85%**
Portfolio turnover rate.............. 9% 29% 9% 29%
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...... $ 0.18 $ 0.32 $ 0.14 $ 0.25
Expense ratio........................ 1.92%** 1.71%** 2.66%** 2.45%**
</TABLE>
U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
[CAPTION]
<TABLE>
CLASS A CLASS B
---------------------------------------------------------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995(a) 1996 (UNAUDITED) 1995(a)
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period... $10.32 $10.00 $10.32 $10.00
------ ------ ------ ------
Net investment income.................. 0.28 0.49 0.22 0.43
Net gain on investments (both realized
and unrealized)....................... (0.35) 0.43 (0.33) 0.43
Total from investment operations....... (0.07) 0.92 (0.11) 0.86
------ ------ ------ ------
Dividends from net investment income... (0.29) (0.49) (0.26) (0.43)
------ ------ ------ ------
Distributions from net realized gain on
investments........................... -- (0.10) -- (0.10)
Distributions in excess of net realized
gain on investments................... -- (0.01) -- (0.01)
------ ------ ------ ------
Total dividends and distributions...... (0.29) (0.60) (0.26) (0.54)
------ ------ ------ ------
Net asset value, end of period......... $ 9.96 $10.32 $ 9.95 $10.32
------ ------ ------ ------
------ ------ ------ ------
Net assets, end of period
(thousands)........................... $706 $278 $583 $572
Total return*.......................... -0.6 % +9.5 % -1.1 % +8.8 %
Ratios to average net assets:
Expenses............................... 0.84%** 0.85%** 1.59%** 1.60%**
Net investment income.................. 5.06%** 5.67%** 4.39%** 4.85%**
Portfolio turnover rate................ 134% 230% 134% 230%
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........ $ 0.21 $ 0.40 $ 0.16 $ 0.34
Expense ratio.......................... 2.11%** 1.90%** 2.86%** 2.64%**
</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.
PAGE 70
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
CLASS C CLASS O
- ----------------------------------------------------------------------------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995(a) 1996 (UNAUDITED) 1995(a)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$10.42 $10.00 $10.43 $10.00
------ ------ ------ ------
0.20 0.34 0.25 0.42
(0.26) 0.45 (0.26) 0.46
------ ------ ------ ------
(0.06) 0.79 (0.01) 0.88
------ ------ ------ ------
(0.20) (0.34) (0.25) (0.42)
-- (0.03) -- (0.03)
------ ------ ------ ------
(0.20) (0.37) (0.25) (0.45)
------ ------ ------ ------
$10.16 $10.42 $10.17 $10.43
------ ------ ------ ------
------ ------ ------ ------
$360 $271 $9,622 $9,675
-0.5 % +8.0 % -0.1 % +9.0 %
1.50%** 1.50%** 0.50%** 0.50%**
3.94%** 3.85%** 4.94%** 4.86%**
9% 29% 9% 29%
$ 0.14 $ 0.25 $ 0.19 $ 0.34
2.67%** 2.46%** 1.67%** 1.46%**
</TABLE>
- --------------------------------------------------------------------------------
[CAPTION]
<TABLE>
- ---------------------------------------------------------------------------------
CLASS C CLASS O
- ---------------------------------------------------------------------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995(a) 1996 (UNAUDITED) 1995(a)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$10.32 $10.00 $10.32 $10.00
------ ------ ------ ------
0.22 0.43 0.27 0.52
(0.33) 0.43 (0.33) 0.42
------ ------ ------ ------
(0.11) 0.86 (0.06) 0.94
(0.26) (0.43) (0.31) (0.52)
------ ------ ------ ------
-- (0.10) -- (0.10)
-- (0.01) -- --
------ ------ ------ ------
(0.26) (0.54) (0.31) (0.62)
------ ------ ------ ------
$ 9.95 $10.32 $ 9.95 $10.32
------ ------ ------ ------
------ ------ ------ ------
$249 $273 $9,274 $9,552
-1.1 % +8.8 % -0.6 % +9.7 %
1.60%** 1.60%** 0.60%** 0.60%**
4.47%** 4.92%** 5.46%** 5.92%**
134% 230% 134% 230%
$ 0.16 $ 0.34 $ 0.21 $ 0.42
2.87%** 2.64%** 1.87%** 1.64%**
</TABLE>
See accompanying notes to financial statements.
PAGE 71
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- ---------------------------------------------------
Financial Highlights
Selected data per share of capital stock outstanding throughout each period:
HIGH YIELD BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995(a) 1996 (UNAUDITED) 1995(a)
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................. $ 10.53 $ 10.00 $ 10.53 $ 10.00
-------- -------- -------- --------
Net investment income................................ 0.56 0.92 0.52 0.85
Net gain on investments (both realized and
unrealized)........................................ 0.42 0.67 0.43 0.68
-------- -------- -------- --------
Total from investment operations..................... 0.98 1.59 0.95 1.53
-------- -------- -------- --------
Dividends from net investment income................. (0.56) (0.91) (0.53) (0.85)
Distributions from net realized gain on
investments........................................ -- (0.15) -- (0.15)
-------- -------- -------- --------
Total dividends and distributions.................... (0.56) (1.06) (0.53) (1.00)
-------- -------- -------- --------
Net asset value, end of period....................... $ 10.95 $ 10.53 $ 10.95 $ 10.53
-------- -------- -------- --------
-------- -------- -------- -------
Net assets, end of period (thousands)................ $21,866 $10,789 $30,383 $10,108
Total return*........................................ +9.5 % +16.6 % +9.1 % +15.7 %
Ratios to average net assets:
Expenses............................................. 1.24%** 1.24%** 1.99%** 1.96%**
Net investment income................................ 10.24%** 10.58%** 9.36%** 9.53%**
Portfolio turnover rate.............................. 54% 109% 54% 109%
Before waiver of management fee 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...................... $ 0.53 $ 0.87 $ 0.49 $ 0.80
Expense ratio........................................ 1.66%** 1.80%** 2.40%** 2.51%**
</TABLE>
STRATEGIC BOND FUND
- --------------------------------------------------------------------------------
[CAPTION]
<TABLE>
CLASS A CLASS B
----------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995(a) 1996 (UNAUDITED) 1995(a)
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................. $ 10.53 $ 10.00 $ 10.53 $ 10.00
-------- -------- -------- --------
Net investment income................................ 0.50 0.84 0.45 0.76
Net gain on investments (both realized and
unrealized)........................................ 0.08 0.78 0.08 0.79
-------- --------- -------- --------
Total from investment operations..................... 0.58 1.62 0.53 1.55
-------- --------- -------- ---------
Dividends from net investment income................. (0.50) (0.85) (0.46) (0.78)
Distributions from net realized gain on
investments........................................ -- (0.24) -- (0.24)
-------- --------- -------- ---------
Total dividends and distributions.................... (0.50) (1.09) (0.46) (1.02)
-------- --------- -------- ---------
Net asset value, end of period....................... $ 10.61 $ 10.53 $ 10.60 $ 10.53
-------- --------- -------- ---------
-------- --------- -------- ---------
Net assets, end of period (thousands)................ $ 2,573 $ 513 $ 5,992 $ 1,879
Total return*........................................ +5.6 % +16.8 % +5.0 % +16.1 %
Ratios to average net assets:
Expenses............................................. 1.23%** 1.23%** 1.98%** 1.97%**
Net investment income................................ 8.39%** 9.51%** 7.67%** 8.75%**
Portfolio turnover rate.............................. 53% 161% 53% 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...................... $ 0.45 $ 0.76 $ 0.40 $ 0.69
Expense ratio........................................ 2.07%** 2.11%** 2.82%** 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 represent 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.
PAGE 72
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------------------------
[CAPTION]
<TABLE>
CLASS C CLASS O
- ----------------------------------------------------------------------------------
SIX MONTHS ENDED
SIX MONTHS ENDED PERIOD ENDED JUNE 30, PERIOD ENDED
JUNE 30, DECEMBER 31, 1996 DECEMBER 31,
1996 (UNAUDITED) 1995(a) (UNAUDITED)SS 1995(a)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 10.53 $ 10.00 $ 10.54 $ 10.00
-------- -------- -------- -------
0.52 0.85 0.58 0.95
0.42 0.68 0.38 0.67
-------- -------- -------- -------
0.94 1.53 0.96 1.62
-------- -------- -------- --------
(0.53) (0.85) (0.57) (0.93)
-- (0.15) -- (0.15)
-------- -------- -------- --------
(0.53) (1.00) (0.57) (1.08)
-------- -------- -------- -------
$ 10.94 $ 10.53 $ 10.93 $ 10.54
-------- -------- -------- --------
-------- -------- -------- --------
$ 2,968 $ 1,274 $ 19 $ 7,854
+9.0 % +15.8 % +9.2 % +16.8 %
1.99%** 1.98%** 0.99%** 1.00%**
9.42%** 9.61%** 10.70%** 10.59%**
54% 109% 54% 109%
$ 0.50 $ 0.80 $ 0.56 $ 0.90
2.40%** 2.54%** 1.40%** 1.55%**
</TABLE>
- --------------------------------------------------------------------------------
[CAPTION]
<TABLE>
CLASS C CLASS O
----------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995(a) 1996 (UNAUDITED) 1995(a)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 10.53 $ 10.00 $ 10.53 $ 10.00
-------- -------- -------- --------
0.45 0.77 0.47 0.87
0.08 0.78 0.11 0.77
-------- -------- -------- -------
0.53 1.55 0.58 1.64
-------- -------- -------- -------
(0.46) (0.78) (0.51) (0.87)
-- (0.24) -- (0.24)
--------- --------- -------- -------
(0.46) (1.02) (0.51) (1.11
--------- --------- -------- -------
$ 10.60 $ 10.53 $ 10.60 $ 10.53
-------- -------- -------- -------
-------- --------- -------- -------
$ 1,212 $ 411 $ 9,828 $ 9,763
+5.1 % +16.1 % +5.6 % +17.0 %
1.98%** 1.99%** 1.00%** 0.99%**
7.66%** 8.77%** 8.92%** 9.74%**
53% 161% 53% 161%
$ 0.40 $ 0.70 $ 0.43 $ 0.79
2.82%** 2.87%** 1.84%** 1.87%**
</TABLE>
See accompanying notes to financial statements.
PAGE 73
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- ---------------------------------------------------
Financial Highlights
Selected data per share of capital stock outstanding throughout each period:
TOTAL RETURN FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
----------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED PERIOD ENDED PERIOD
JUNE 30, ENDED JUNE 30, ENDED
1996 DECEMBER 31, 1996 DECEMBER 31,
(UNAUDITED) 1995(a)SS (UNAUDITED) 1995(a)SS
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 10.55 $10.00 $ 10.54 $10.00
-------- ------ ------- ------
Net investment income........................... 0.27 0.15 0.23 0.13
Net gain on investments (both realized and
unrealized)................................... 0.41 0.52 0.40 0.51
------- ------ ------- ------
Total from investment operations................ 0.68 0.67 0.63 0.64
------- ------ ------- ------
Dividends from net investment income............ (0.22) (0.11) (0.18) (0.09)
Distributions from net realized gain on
investments................................... -- (0.01) -- (0.01)
------- ------ -------- ------
Total dividends and distributions............... (0.22) (0.12) (0.18) (0.10)
------- ------ -------- ------
Net asset value, end of period.................. $ 11.01 $10.55 $ 10.99 $10.54
------- ------ -------- ------
------- ------ -------- ------
Net assets, end of period (thousands)........... $13,800 $3,658 $13,801 $5,378
Total return*................................... +6.5 % +6.7 % +6.0 % +6.4 %
Ratios to average net assets:
Expenses........................................ 0.75%** 0.74%** 1.50%** 1.49%**
Net investment income........................... 4.87%** 4.82%** 4.12%** 4.06%**
Portfolio turnover rate......................... 44% 16% 44% 16%
Average Broker Commission Rate................. . $0.0539 N/A $0.0539 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................. $ 0.22 $ 0.13 $ 0.18 $ 0.11
Expense ratio................................... 1.63%** 1.45%** 2.38%** 2.19%**
</TABLE>
ASIA GROWTH FUND
- --------------------------------------------------------------------------------
[CAPTION]
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS O
-----------------------------------------------------------------
PERIOD ENDED JUNE 30, 1996 (UNAUDITED) (b)
<S> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 10.00 $10.00 $ 10.00 $10.00
------- ------ -------- ------
Net investment income........................... 0.03 0.02 0.02 0.04
Net gain on investments (both realized and
unrealized)................................... (0.28) (0.28) (0.28) (0.29)
------- ------ ------- ------
Total from investment operations................ (0.25) (0.26) (0.26) (0.25)
-------- ------ ------- ------
Net asset value, end of period.................. $ 9.75 $ 9.74 $ 9.74 $ 9.75
------- ------ -------- ------
------- ------ -------- ------
Net assets, end of period (thousands)........... $ 2,568 $2,511 $ 106 $ 101
Total return *.................................. -2.5 % -2.6 % -2.6 % -2.5 %
Ratios to average net assets:
Expenses........................................ 1.24%** 1.99%** 1.99%** 0.99%**
Net investment income........................... 2.49%** 1.77%** 1.76%** 2.79%**
Portfolio turnover rate......................... 14% 14 % 14 % 14 %
Average Broker Commission Rate.................. $0.0080 $0.0080 $0.0080 $0.0080
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................. $ 0.01 $ 0.00 $ 0.00 $ 0.02
Expense ratio................................... 2.72%** 3.47%** 3.47%** 2.47%**
</TABLE>
(a) September 11, 1995, commencement of investment operations, through December
31, 1995.
(b) May 6, 1996, commencement of investment operations, through June 30, 1996.
SS Per share information calculated using the average shares outstanding
method, which more accurately represent 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.
PAGE 74
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- ---------------------------------------------------------
[CAPTION]
<TABLE>
<CAPTION>
CLASS C CLASS O
- ----------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED PERIOD ENDED PERIOD
JUNE 30, ENDED JUNE 30, ENDED
1996 DECEMBER 31, 1996 DECEMBER 31,
(UNAUDITED) 1995(a)SS (UNAUDITED) 1995(a)SS
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 10.56 $10.00 $ 10.57 $10.00
------- ------ ------- ------
0.18 0.14 0.28 0.17
0.46 0.51 0.41 0.52
------- ------ ------- ------
0.64 0.65 0.69 0.69
------- ------ ------- ------
(0.18) (0.08) (0.23) (0.11)
-- (0.01) -- (0.01)
------- ------ ------- ------
(0.18) (0.09) (0.23) (0.12)
-------- ------ ------- ------
$ 11.02 $10.56 $ 11.03 $10.57
------- ------ ------- ------
------- ------ ------- ------
$ 2,116 $ 445 $ 4,690 $4,494
+6.1 % +6.5 % +6.6 % +6.9 %
1.49%** 1.51%** 0.51%** 0.51%**
4.07%** 4.26%** 5.16%** 5.30%**
44% 16% 44% 16%
$0.0539 N/A $0.0539 N/A
$ 0.14 $ 0.11 $ 0.23 $ 0.15
2.38%** 2.22%** 1.39%** 1.22%**
</TABLE>
See accompanying notes to financial statements.
PAGE 75
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- ---------------------------------------------------
Financial Highlights
Selected data per share of capital stock outstanding throughout each period:
INVESTORS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
-----------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995 1996 (UNAUDITED) 1995
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $16.62 $13.61 $16.61 $13.61
----- ----- ----- -----
Net investment income................... 0.08 0.19 0.04 0.10
Net gain (loss) on investments (both
realized and unrealized)............... 1.95 4.55 1.92 4.54
----- ----- ----- -----
Total from investment operations........ 2.03 4.74 1.96 4.64
----- ----- ----- -----
Dividends from net investment income.... (0.06) (0.23) (0.02) (0.14)
Distributions from net realized gain on
investments............................ (0.58) (1.50) (0.58) (1.50)
----- ----- ----- -----
Total dividends and distributions....... (0.64) (1.73) (0.60) (1.64)
----- ----- ----- -----
Net asset value, end of period.......... $18.01 $16.62 $17.97 $16.61
----- ----- ----- -----
----- ----- ----- -----
Net assets, end of period (thousands)... $3,293 $ 441 $1,733 $ 716
Total return*........................... +12.5 % +35.3 % +12.0 % +34.5 %
Ratios to average net assets:
Expenses................................ 1.02%** 0.94% 1.74%** 1.71%
Net investment income................... 1.22%** 1.41% 0.58%** 0.63%
Portfolio turnover rate................. 33% 86% 33% 86%
Average Broker Commission Rate.......... $0.0591 N/A $0.0591 N/A
<CAPTION>
CLASS C
--------------------------------------------
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1996 (UNAUDITED) 1995
--------------------------------------------
<S> <C> <C>
Net asset value, beginning of period.... $ 16.61 $13.61
----- -----
Net investment income................... 0.03 0.09
Net gain (loss) on investments (both
realized and unrealized)............... 1.93 4.55
----- ------
Total from investment operations........ 1.96 4.64
----- ------
Dividends from net investment income.... (0.02) (0.14)
Distributions from net realized gain on
investments............................ (0.58) (1.50)
----- ------
Total dividends and distributions....... (0.60) (1.64)
----- ------
Net asset value, end of period.......... $ 17.97 $16.61
----- ------
----- ------
Net assets, end of period (thousands)... $ 706 $ 306
Total return*........................... +12.0 % +34.5 %
Ratios to average net assets:
Expenses................................ 1.75 %** 1.68%
Net investment income................... 0.52 %** 0.66%
Portfolio turnover rate................. 33% 86%
Average Broker Commission Rate.......... $ 0.0591 N/A
</TABLE>
* 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.
PAGE 76
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS O
- ---------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30,1996 ----------------------------------------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$16.61 $13.63 $15.60 $ 16.10 $17.10 $14.54
----- ----- ----- ----- ----- -----
0.13 0.27 0.27 0.32 0.41 0.44
1.92 4.48 (0.48) 2.03 0.79 3.68
----- ----- ----- ----- ----- -----
2.05 4.75 (0.21) 2.35 1.20 4.12
----- ----- ----- ----- ----- -----
(0.06) (0.27) (0.27) (0.33) (0.41) (0.46)
(0.58) (1.50) (1.49) (2.52) (1.79) (1.10)
----- ----- ----- ----- ----- -----
(0.64) (1.77) (1.76) (2.85) (2.20) (1.56)
----- ----- ----- ----- ----- -----
$18.02 $16.61 $13.63 $ 15.60 $16.10 $17.10
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
$465,594 $428,950 $348,214 $386,147 $370,350 $378,615
+12.5 % +35.4 % - 1.3 % +15.1 % +7.4 % +29.3 %
:
0.73%** 0.69% 0.69% 0.68% 0.68% 0.70%
1.54%** 1.67% 1.75% 1.90% 2.47% 2.67%
33% 86% 66% 79% 48% 44%
$0.0591 N/A N/A N/A N/A N/A
</TABLE>
See accompanying notes to financial statements.
PAGE 77
<PAGE>
<PAGE>
[This page intentionally left blank]
PAGE 78
<PAGE>
<PAGE>
[This page intentionally left blank]
PAGE 79
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------
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
89 South Street
Boston, Massachusetts 02111
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 and Chief Executive Officer,
Salomon Brothers Asset Management
Inc; Managing Director, Salomon
Brothers Inc
CAROL L. COLMAN
President, Colman Consulting Co., Inc.
DANIEL P. CRONIN**
Vice President-General Counsel,
Pfizer International Inc.
WILLIAM R. DILL*
President, Anna Maria College; formerly
Consultant and Director of the Office of
Global Enterprise, University of
Southern Maine
MICHAEL S. HYLAND
Chairman and President; President,
Salomon Brothers Asset Management Inc;
Managing Director, Salomon Brothers Inc
CLIFFORD M. KIRTLAND, JR.*
Formerly Chairman,
Cox Communications, Inc.
ROBERT W. LAWLESS*
President and Chief Executive Officer,
Texas Tech University
LOUIS P. MATTIS*
Formerly Chairman and President,
Sterling Winthrop, Inc.
THOMAS F. SCHLAFLY*
Of counsel to law firm of Peper, Martin,
Jensen, Maichel & Hetlage; 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
MAUREEN O'CALLAGHAN**
Executive Vice President
BETH 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 MILUNOVICH*
Vice President
NANCY A. NOYES**
Vice President
ALAN M. MANDEL
Treasurer
TANA E. TSELEPIS
Secretary
JANET S. TOLCHIN
Assistant Treasurer
REJI PAUL
Assistant Treasurer
JENNIFER G. MUZZEY
Assistant Secretary
- --------------------------------------------------------------------------------
*Only on The Salomon Brothers Investors Fund Inc
**Only on The Salomon Brothers Series Funds Inc
<PAGE>
<PAGE>
SALOMON BROTHERS INVESTMENT SERIES
- --------------------------------------------------------------------------------
The Salomon Brothers Investment Series*
Seven World Trade Center
New York, New York 10048
1-800-SALOMON (1-800-725-6666)
Salomon Brothers Cash Management Fund
A GENERAL PURPOSE MONEY MARKET FUND that aims to produce as high a level of
current income as is consistent with liquidity and stability of principal. The
fund invests in high-quality, short-term money market instruments.
Salomon Brothers New York Municipal Bond Fund
A MUNICIPAL BOND FUND that seeks to achieve a high level of current income which
is exempt from regular Federal income taxes and New York State and New York City
personal income taxes as is consistent with the preservation of capital. Income
may not be exempt from certain state or local taxes.
Salomon Brothers National Intermediate
Municipal Fund
A MUNICIPAL BOND FUND that invests towards the goal of achieving a high level of
current income which is exempt from regular Federal income taxes. The Fund
expects to maintain a dollar-weighted average portfolio maturity of 3 to 10
years.
Salomon Brothers U.S. Government
Income Fund
THE FUND seeks to maintain a high level of current income by investing under
normal market conditions 100% of its assets in debt obligations and
mortgage-backed securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities. The Fund expects to maintain an average portfolio
effective duration of three to five years.
Salomon Brothers High Yield Bond Fund
THE FUND primarily seeks to maximize current income by investing in a
diversified portfolio of high yield fixed-income securities rated in medium or
lower rating categories or determined by the investment manager to be of
comparable quality. As a secondary objective, the Fund will seek capital
appreciation. The Fund may invest up to 35% of its assets in foreign fixed
income securities.
Salomon Brothers Strategic Bond Fund
THE FUND primarily seeks a high level of current income by investing in a
globally diverse portfolio of fixed-income investments and by giving the
investment manager broad discretion to deploy the Fund's assets among certain
segments of the fixed-income markets that the investment manager believes will
best contribute to the achievement of the Fund's objectives. As a secondary
objective, the Fund seeks capital appreciation.
Salomon Brothers Total Return Fund
THE FUND seeks to obtain above average income, compared to a portfolio invested
entirely in equity securities, and, as a secondary objective to take advantage
of opportunities for growth of capital and income. The Fund invests in a broad
variety of securities including equity securities, fixed income securities and
short-term obligations.
Salomon Brothers Asia Growth Fund
THE FUND seeks long-term capital appreciation. The Fund expects to achieve its
objective by investing at least 65% of its total assets in equity and
equity-related securities of 'Asian companies' (as defined in the Prospectus).
Salomon Brothers Investors Fund Inc
AN EQUITY FUND emphasizing long-term growth of capital with current income as a
secondary goal. The Fund invests primarily in common stocks of well-known
companies.
- --------------------------------------------------------------------------------
* For more complete information about the Salomon Brothers Investment Series
Funds, you may obtain a prospectus by calling the telephone number listed
above.
This report is submitted for the general information of the shareholders of
Salomon Brothers Investment Series Funds. It is not authorized for
distribution to prospective investors unless accompanied or preceded by an
effective Prospectus for the Funds, which contains information concerning the
Funds' investment policies and expenses as well as other pertinent
information.
<PAGE>
<PAGE>
SALOMON BROTHERS ASSET MANAGEMENT INC
P.O. BOX 9109
BOSTON, MA 02205-9109
BULK RATE
U.S. POSTAGE
PAID
BOSTON, MA
PERMIT NO.
54201
<PAGE>
<PAGE>
Salomon Brothers Asset Management Inc
P.O. Box 9109
Boston, MA 02205-9109
BULK RATE
U.S. POSTAGE PAID
BOSTON, MA
PERMIT No. 54201
SALOMON BROTHERS
NEW YORK MUNICIPAL
MONEY MARKET FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
SALOMON BROTHERS ASSET MANAGEMENT
<PAGE>
<PAGE>
Salomon Brothers
New York Municipal Money Market Fund
August 19, 1996
To Our Shareholders:
WE ARE PLEASED to provide this semi-annual report of the Salomon Brothers New
York Municipal Money Market Fund which includes market commentary and a
statement of the Fund's current investments, for the period ended June 30, 1996.
THE FUND'S ANNUALIZED YIELD for the seven days ended June 30, 1996 was 3.25%.
For the same period, shareholders reinvesting their dividends earned a
compounded effective annualized yield of 3.30%. During the six month period
ended June 30, 1996, the Fund returned 1.63% which exceeded the 1.42% average
return of New York municipal money market funds as measured by Lipper Analytical
Services*. This investment return ranked the Salomon Brothers New York Municipal
Money Market Fund #1 of 40 funds for the period.
ON JULY 17, 1996, the Fund's Board of Directors approved the implementation by
the Fund of the Multiple Class Pricing System currently in place for the other
funds which are part of the Salomon Brothers Investment Series family of funds.
UNDER THE Multiple Class Pricing System, the Funds in the Investment Series
offer different classes of shares. Except for the money market funds, like the
Fund, each class has different distribution and sales charge options. You will
continue to have the ability to purchase additional shares of the New York
Municipal Money Market Fund without paying any sales charges or distribution
fees and shares you currently hold also will not be subject to any sales charge
or distribution fees. In addition, you will be able to exchange your shares of
the Fund for shares of the other funds in the Investment Series, without
imposition of any sales charges, distribution or service fees.
FOLLOWING IMPLEMENTATION, you will no longer have the ability to exchange your
shares of the Fund for shares of Salomon Brothers Opportunity Fund Inc, but it
is anticipated that the Salomon Brothers Capital Fund Inc will be joining the
Investment Series and should that occur your ability to exchange for shares of
the Capital Fund will continue. The Fund will no longer have its own prospectus
and statement of additional information, but will be combined with the other
Funds in the Investment Series.
Economic Review
ECONOMIC GROWTH ACCELERATED during the first half of 1996 and
stronger-than-expected gains in employment and hourly wages lent support to the
possibility of higher inflation. We believe that this acceleration however, will
prove to be self-limiting: Gross Domestic Product growth will slow toward trend
level during the next six to nine months.
<PAGE>
<PAGE>
RECENTLY, THERE HAS been evidence that the pace of economic expansion has cooled
from its heated first-half pace. Thus, the Federal Reserve has been spared the
need for a much-anticipated summer tightening of credit. After some slowing in
consumer and factory activity in June and July, policymakers again have assumed
a wait-and-see posture. However, while market rates have retreated from their
earlier peaks, the risk of renewed interest rate pressures remains high. Hiring
demands are well above trend, and forward-looking labor market indicators signal
continued strength. Upbeat consumer sentiment echoes these solid labor gains,
belying any notion that consumers will continue to pull back. If consumers
return, a backdrop of lean inventories and limited slack could spark renewed
vigor in manufacturing and revived inflation concerns. Thus, the debate over
potential Fed tightening is likely to linger for some time.
ALL OF US at Salomon Brothers Asset Management Inc appreciate the confidence you
have demonstrated in the past and hope to continue to justify such confidence in
the future. Please call us with any questions at 1-800-SALOMON (1-800-725-6666).
To receive assistance regarding your personal account, please call your
investment adviser or First Data Investor Services Group directly at
1-800-446-1013.
Cordially,
/s/ MICHAEL S. HYLAND
MICHAEL S. HYLAND
Chairman and President
*Lipper rankings change monthly and do not reflect the effects of sales charges.
Lipper performance results represent changes in net asset value, adjusted to
reflect reinvestment of dividends and capital gains. Past performance is no
guarantee of future results.
PAGE 2
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- ----------------------
Portfolio of Investments
June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE (NOTE
AMOUNT DESCRIPTION PURCHASE* DATE 1A)
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
MUNICIPAL SECURITIES -- 97.3%
NEW YORK -- 90.6%
$ 1,050,000 Albany County, New York
Industrial Development Agency PUT..................... 4.150% 12/01/96 $ 1,050,000
100,000 Albany County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 100,000
2,410,000 Albany, New York
Industrial Development Agency PUT..................... 4.250 07/01/96 2,410,000
2,185,000 Amherst, New York
Industrial Development Agency VR...................... 3.700 07/05/96 2,185,000
950,000 Auburn, New York
Industrial Development Agency VR...................... 3.550 07/03/96 950,000
875,000 Babylon, New York
Industrial Development Agency VR...................... 3.750 07/05/96 875,000
2,025,000 Broome County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 2,025,000
2,200,000 Chautauqua County, New York
Industrial Development Agency VR...................... 3.550 07/03/96 2,200,000
1,990,000 Chemung County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 1,990,000
710,000 Colonie, New York
Housing Development Corporation VR.................... 3.700 07/03/96 710,000
3,525,000 Colonie, New York
Industrial Development Agency PUT..................... 4.150 12/01/96 3,525,000
585,000 Colonie, New York
Industrial Development Agency VR...................... 3.650 07/05/96 585,000
1,275,000 Dutchess County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 1,275,000
1,210,000 Erie County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 1,210,000
500,000 Erie County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 500,000
400,000 Erie County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 400,000
388,400 Erie County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 388,400
1,140,000 Fulton County, New York
Industrial Development Agency PUT..................... 4.150 12/01/96 1,140,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 3
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- ----------------------
Portfolio of Investments (continued)
June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE (NOTE
AMOUNT DESCRIPTION PURCHASE* DATE 1A)
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,805,000 Fulton County, New York
Industrial Development Agency VR...................... 3.350% 07/05/96 $ 1,805,000
1,820,000 Monroe County, New York
Industrial Development Agency PUT..................... 3.750 12/01/96 1,820,000
700,000 Monroe County, New York
Industrial Development Agency PUT..................... 4.050 06/15/97 700,000
6,500,000 Monroe County, New York
Industrial Development Agency VR...................... 3.600 07/03/96 6,500,000
3,925,000 Monroe County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 3,925,000
3,325,000 Monroe County, New York
Industrial Development Agency VR...................... 3.550 07/05/96 3,325,000
3,000,000 Monroe County, New York
Industrial Development Agency VR...................... 3.550 07/05/96 3,000,000
2,700,000 Monroe County, New York
Industrial Development Agency VR...................... 3.450 07/05/96 2,700,000
2,190,000 Monroe County, New York
Industrial Development Agency VR...................... 3.750 07/05/96 2,190,000
1,700,000 Monroe County, New York
Industrial Development Agency VR...................... 3.600 07/03/96 1,700,000
1,535,000 Monroe County, New York
Industrial Development Agency VR...................... 3.750 07/05/96 1,535,000
1,420,000 Monroe County, New York
Industrial Development Agency VR...................... 3.750 07/05/96 1,420,000
945,000 Monroe County, New York
Industrial Development Agency VR...................... 3.750 07/05/96 945,000
225,000 Monroe County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 225,000
560,000 Mount Pleasant, New York
Industrial Development Agency VR...................... 3.600 07/02/96 560,000
1,090,000 Nassau County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 1,090,000
6,000,000 New York City, New York GO VR........................... 3.650 07/01/96 6,000,000
4,000,000 New York City, New York GO VR........................... 3.450 07/03/96 4,000,000
2,100,000 New York City, New York GO VR........................... 3.750 07/01/96 2,100,000
2,000,000 New York City, New York GO VR........................... 3.550 07/01/96 2,000,000
2,000,000 New York City, New York GO VR........................... 3.750 07/01/96 2,000,000
1,700,000 New York City, New York GO VR........................... 3.250 07/03/96 1,700,000
1,000,000 New York City, New York GO VR........................... 3.600 07/01/96 1,000,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 4
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE (NOTE
AMOUNT DESCRIPTION PURCHASE* DATE 1A)
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 New York City, New York GO VR........................... 3.750% 07/01/96 $ 1,000,000
1,000,000 New York City, New York GO VR........................... 3.850 07/01/96 1,000,000
500,000 New York City, New York GO VR........................... 3.400 07/03/96 500,000
15,200,000 New York City, New York
Housing Development Corporation VR.................... 3.900 07/05/96 15,200,000
2,000,000 New York City, New York
Housing Development Corporation VR.................... 3.950 07/05/96 2,000,000
800,000 New York City, New York
Housing Development Corporation VR.................... 3.400 07/03/96 800,000
12,000,000 New York City, New York
Industrial Development Agency VR...................... 4.300 07/01/96 12,000,000
1,535,000 New York City, New York
Industrial Development Agency VR...................... 3.750 07/05/96 1,535,000
1,300,000 New York City, New York
Industrial Development Agency VR...................... 3.650 07/05/96 1,300,000
995,000 New York City, New York
Industrial Development Agency VR...................... 3.100 07/03/96 995,000
780,000 New York City, New York
Industrial Development Agency VR...................... 3.750 07/05/96 780,000
600,000 New York City, New York
Industrial Development Agency VR...................... 3.750 07/05/96 600,000
505,000 New York City, New York
Industrial Development Agency VR...................... 3.650 07/05/96 505,000
400,000 New York City, New York
Industrial Development Agency VR...................... 3.750 07/05/96 400,000
200,000 New York City, New York
Industrial Development Agency VR...................... 3.200 07/03/96 200,000
115,000 New York City, New York
Industrial Development Agency VR...................... 3.650 07/05/96 115,000
4,000,000 New York City, New York
Municipal Water Finance Authority P/R................. 3.65 - 3.72 06/15/97 4,275,023
3,200,000 New York City, New York
Municipal Water Finance Authority VR FGIC............. 3.600 07/01/96 3,200,000
3,175,000 New York City, New York
Trust for Cultural Resources VR....................... 3.450 07/03/96 3,175,000
1,200,000 New York City, New York
Trust for Cultural Resources VR....................... 3.400 07/03/96 1,200,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 5
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- ----------------------
Portfolio of Investments (continued)
June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE (NOTE
AMOUNT DESCRIPTION PURCHASE* DATE 1A)
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,200,000 New York City, New York
Trust for Cultural Resources VR....................... 3.450% 07/03/96 $ 1,200,000
10,458,000 New York State,
Dormitory Authority TECP.............................. 4.000 10/01/96 10,458,000
4,900,000 New York State,
Energy Research & Development VR...................... 3.500 07/01/96 4,900,000
500,000 New York State,
Energy Research & Development VR...................... 3.450 07/01/96 500,000
1,600,000 New York State,
Job Development Authority VR.......................... 3.650 07/01/96 1,600,000
1,390,000 New York State,
Job Development Authority VR.......................... 3.860 07/01/96 1,390,000
1,160,000 New York State,
Job Development Authority VR.......................... 3.860 07/01/96 1,160,000
1,020,000 New York State,
Job Development Authority VR.......................... 3.670 07/01/96 1,020,000
820,000 New York State,
Job Development Authority VR.......................... 3.670 07/01/96 820,000
700,000 New York State,
Job Development Authority VR.......................... 3.650 07/01/96 700,000
675,000 New York State,
Job Development Authority VR.......................... 3.670 07/01/96 675,000
245,000 New York State,
Job Development Authority VR.......................... 3.670 07/01/96 245,000
85,000 New York State,
Job Development Authority VR.......................... 3.670 07/01/96 85,000
1,045,000 Niagara County, New York
Industrial Development Agency VR...................... 3.750 07/05/96 1,045,000
1,760,000 Oneida County, New York
Industrial Development Agency VR...................... 3.750 07/05/96 1,760,000
530,000 Oneida County, New York
Industrial Development Agency VR...................... 3.550 07/05/96 530,000
3,800,000 Onondaga County, New York
Industrial Development Agency VR...................... 3.500 07/03/96 3,800,000
1,400,000 Onondaga County, New York
Industrial Development Agency VR...................... 3.500 07/03/96 1,400,000
3,500,000 Ontario County, New York
Industrial Development Agency VR...................... 5.400 07/01/96 3,500,000
400,000 Rockland County, New York GO MBIA....................... 3.650 10/15/96 401,739
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 6
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE (NOTE
AMOUNT DESCRIPTION PURCHASE* DATE 1A)
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,650,000 Rockland County, New York
Industrial Development Agency VR...................... 3.750% 07/05/96 $ 1,650,000
345,000 Schoharie County, New York
Industrial Development Agency VR...................... 3.550 07/05/96 345,000
2,555,000 St. Lawrence County, New York
Industrial Development Agency VR...................... 3.550 07/05/96 2,555,000
1,450,000 Syracuse, New York
Industrial Development Agency PUT..................... 4.050 06/15/97 1,450,000
3,550,000 Syracuse, New York
Industrial Development Agency VR...................... 3.600 07/03/96 3,550,000
6,660,000 Wyoming County, New York
Industrial Development Agency VR...................... 3.750 07/05/96 6,660,000
640,000 Wyoming County, New York
Industrial Development Agency VR...................... 3.650 07/05/96 640,000
1,315,000 Yates County, New York
Industrial Development Agency VR...................... 3.350 07/05/96 1,315,000
1,080,000 Yonkers, New York
Industrial Development Agency VR...................... 3.650 07/05/96 1,080,000
------------
182,973,162
PUERTO RICO -- 6.7%
13,600,000 Puerto Rico Industrial, Tourist, Educational,
Medical & Environmental Control Facilities VR......... 3.650 07/03/96 13,600,000
------------
TOTAL INVESTMENTS -- 97.3% (COST $196,573,162).......... 196,573,162
Other assets in excess of liabilities -- 2.7%........... 5,382,001
------------
NET ASSETS -- 100.0%.................................... $201,955,163
------------
------------
</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:
<TABLE>
<S> <C> <C>
GO -- GENERAL OBLIGATION
FGIC -- INSURED AS TO PRINCIPAL AND INTEREST BY THE FINANCIAL GUARANTY INSURANCE CORPORATION.
MBIA -- INSURED AS TO PRINCIPAL AND INTEREST BY THE MBIA INSURANCE CORPORATION.
P/R -- PRE-REFUNDED IN U.S. TREASURY SECURITIES.
PUT -- OPTIONAL OR MANDATORY PUT. MATURITY DATE SHOWN IS THE PUT DATE AS WELL AS THE DATE OF THE NEXT
INTEREST RATE CHANGE.
TECP -- TAX EXEMPT COMMERCIAL PAPER
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 7
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------
Statement of Assets and Liabilities
June 30, 1996 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $196,573,162)..................................................... $196,573,162
Cash.......................................................................................... 132,903
Receivable for Fund shares sold............................................................... 4,967,185
Interest receivable........................................................................... 600,754
------------
Total assets.......................................................................... 202,274,004
------------
LIABILITIES
Payable for Fund shares redeemed.............................................................. 136,474
Dividend payable.............................................................................. 19,421
Management fee payable........................................................................ 29,326
Accrued expenses.............................................................................. 133,620
------------
Total liabilities..................................................................... 318,841
------------
NET ASSETS (equivalent to $1.00 per share on 202,184,309 shares of $.001 par value
capital stock outstanding)................................................................... $201,955,163
------------
------------
</TABLE>
- ---------------------------------
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
<TABLE>
<S> <C> <C>
INCOME
Interest.................................................................................... $3,744,546
EXPENSES
Management fee................................................................... $ 195,853
Custody and administration fees.................................................. 122,207
Audit and tax return preparation fees............................................ 89,708
Shareholder services............................................................. 54,700
Legal............................................................................ 24,217
Printing......................................................................... 10,045
Directors' fees and expenses..................................................... 1,398
Registration and filing fees..................................................... 1,243
Other............................................................................ 68,413
---------
567,784
Credits earned from custodian on cash balances................................... (2,134) 565,650
--------- ----------
Net investment income....................................................................... 3,178,896
NET REALIZED LOSS ON SECURITIES SOLD............................................................ (950)
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS...................................................... $3,177,946
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 8
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income............................................. $ 3,178,896 $ 8,261,332
Net realized gain (loss) on securities sold....................... (950) 27,905
---------------- -------------
Net increase in net assets from operations........................ 3,177,946 8,289,237
---------------- -------------
DIVIDENDS FROM NET INVESTMENT INCOME.................................. (3,178,896) (8,261,332)
---------------- -------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales of shares..................................... 123,703,311 298,776,320
Net asset value of shares issued in reinvestment of dividends..... 3,062,639 7,924,931
Payment for redemption of shares.................................. (151,358,432) (349,968,556)
---------------- -------------
Net decrease in net assets derived from share transactions........ (24,592,482) (43,267,305)
---------------- -------------
Net decrease in net assets........................................ (24,593,432) (43,239,400)
NET ASSETS
Beginning of period............................................... 226,548,595 269,787,995
---------------- -------------
End of period..................................................... $ 201,955,163 $226,548,595
---------------- -------------
---------------- -------------
</TABLE>
- -----------------------------
Financial Highlights
SELECTED DATA PER SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 ------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
<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................... 0.016 0.037+ 0.027 0.023 0.031 0.047
Dividends from net investment income.... (0.016) (0.037) (0.027) (0.023) (0.031) (0.047)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.......... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Net assets, end of period (thousands)... $201,955 $226,549 $269,788 $262,413 $263,685 $154,782
Total investment return................. +1.6% +3.7% +2.7% +2.3% +3.1% +4.8%
Ratios to average net assets:
Expenses............................ 0.58%* 0.43%+ 0.41% 0.41% 0.42% 0.60%
Net investment income............... 3.25%* 3.67% 2.63% 2.31% 3.07% 4.63%
</TABLE>
* ANNUALIZED.
+ NET INVESTMENT INCOME PER SHARE WOULD HAVE BEEN $.037 AND THE EXPENSE RATIO
TO AVERAGE NET ASSETS WOULD HAVE BEEN .45% FOR THE YEAR ENDED DECEMBER 31,
1995, BEFORE WAIVER OF MANAGEMENT FEE AND CREDITS EARNED ON CUSTODIAN CASH
BALANCES.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 9
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- --------------------------
Notes to Financial Statements
(unaudited)
1. Organization and Significant Accounting Policies
Salomon Brothers Series Funds Inc (the "Company") was incorporated in Maryland
on April 17, 1990 as an open-end management investment company, and currently
operates as a series company comprised of ten portfolios: Salomon Brothers Cash
Management Fund (the "Cash Management Fund"), Salomon Brothers New York
Municipal Money Market Fund, (the "Fund"), Salomon Brothers Institutional Money
Market Fund (the "Institutional Money Market Fund"), Salomon Brothers New York
Municipal Bond Fund (the "New York Municipal Bond 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"). The Fund is included in this
report. The 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 Cash Management
Fund, Institutional Money Market Fund, New York Municipal Bond Fund, National
Intermediate Municipal Fund, U.S. Government Income Fund, High Yield Bond Fund,
Strategic Bond Fund, Total Return Fund, and Asia Growth Fund are reported in
separate reports and are not included herein.
Following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles ("GAAP"). The preparation of
financial statements in accordance with GAAP requires management to make
estimates of certain reported amounts in the financial statements. Actual
amounts could differ from those estimates.
(A) SECURITIES VALUATION. Portfolio securities 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 and does not include unrealized gains or losses.
(B) FEDERAL INCOME TAXES. The Fund has complied and intends to continue
to comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies, including the distribution requirements of
the Tax Reform Act of 1986, 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.
PAGE 10
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
(C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends on the shares
of the Fund are declared each business day to shareholders of record at
twelve noon (New York time) on that day, and paid on the last business day of
the month. Distributions of net realized gains to shareholders, if any, are
declared annually and recorded on the ex-dividend date. Dividends and
distributions are determined in accordance with income tax regulations, which
may differ from GAAP.
(D) EXPENSES. Direct expenses are charged to the Fund, and general
expenses of the Company are allocated to the Fund based on relative average
net assets for the period the expense was incurred.
(E) OTHER. Investment transactions are recorded as of the trade date.
Interest income, including the accretion of discounts or the amortization of
premiums, is recognized when earned. Gains or losses on sales of securities
are calculated on the identified cost basis.
2. Management Fee and Other Agreements
The Company retains Salomon Brothers Asset Management Inc ("SBAM"), an indirect
wholly owned subsidiary of Salomon Inc, to act as investment manager of the
Fund, subject to the supervision by the Board of Directors of the Company. SBAM
furnishes the Company with office space and certain services and facilities
required for conducting the business of the Company and pays the compensation of
its officers. The management fee for these services is payable monthly and is
based on an annual rate of .20% of the Fund's average daily net assets.
If in any fiscal year total expenses of the Fund, excluding taxes, interest,
brokerage and extraordinary expenses, but including the management fee, exceed
the most stringent expense limitations imposed by state securities regulations
applicable to the Fund, SBAM will pay or reimburse the Fund for the excess.
Currently, the most restrictive of these limitations on an annual basis is 2.5%
of the first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets and 1.5% of average daily net assets in
excess of $100 million. No such expense reimbursement was required for the six
months ended June 30, 1996.
Investors Bank & Trust Company serves as custodian and administrator for the
Fund, which includes performing custodial and certain administrative services in
connection with the operation of the Fund. During the six months ended June 30,
1996, custodian fees were reduced by $2,134 for the Fund, relating to credits
earned on cash balances held by the custodian.
The Fund has an agreement with Salomon Brothers Inc to distribute its shares.
PAGE 11
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- --------------------------
Notes to Financial Statements
(unaudited)
3. Capital Stock
At June 30, 1996, the Company had 10,000,000,000 shares of authorized capital
stock, par value $.001 per share, of which the Fund had 1,000,000,000 shares
authorized.
Net assets consist of:
<TABLE>
<S> <C>
Par value..................................................................................... $ 202,184
Paid-in capital in excess of par.............................................................. 201,981,268
Accumulated net realized loss on investments.................................................. (228,289)
------------
Net assets.................................................................................... $201,955,163
------------
------------
</TABLE>
4. Portfolio Activity
The Fund invests in money market instruments maturing in thirteen months or less
whose short-term credit ratings are within the two 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 Fund pursues its investment
objective by investing, under normal market conditions, at least 65% of its
total assets in obligations that are exempt from Federal income tax and from
personal income taxes of the State of New York and its cities. Because the Fund
invests primarily in obligations of the State of New York and its cities, it is
more susceptible to factors adversely affecting issuers of such obligations than
a fund that is more diversified.
At December 31, 1995, the Fund had net capital loss carry-forwards available to
offset future capital gains as follows:
<TABLE>
<CAPTION>
YEAR OF EXPIRATION
<S> <C>
- -------------------------------------------------------------------------------------------------------------
1999.............................................................................................. $ 67,240
2000.............................................................................................. 94,778
2002.............................................................................................. 65,321
---------
$ 227,339
---------
---------
</TABLE>
5. Subsequent Event
On July 17, 1996, the Board of Directors of the Fund approved the implementation
of a multiple class pricing system. In connection with such implementation, the
Fund will designate all outstanding shares of capital stock as Class O and will
create three new classes designated Class A, Class B and Class C shares.
PAGE 12
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- -----
Directors
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
CAROL L. COLMAN
President, Colman Consulting Co., Inc.
DANIEL P. CRONIN
Vice President-General Counsel,
Pfizer International Inc.
MICHAEL S. HYLAND
President,
Salomon Brothers Asset Management Inc;
Managing Director, Salomon Brothers 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
MAUREEN O'CALLAGHAN
EXECUTIVE VICE PRESIDENT
BETH SEMMEL
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
NANCY A. NOYES
VICE PRESIDENT
ALAN M. MANDEL
TREASURER
TANA E. TSELEPIS
SECRETARY
JANET S. TOLCHIN
ASSISTANT TREASURER
REJI PAUL
ASSISTANT TREASURER
JENNIFER G. MUZZEY
ASSISTANT SECRETARY
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
SALOMON BROTHERS NEW YORK MUNICIPAL MONEY MARKET FUND
- ------------------
Salomon Brothers New York
- ---------------------------
Municipal Money Market Fund
7 World Trade Center
New York, New York 10048
1-800-SALOMON (1-800-725-6666)
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
89 South Street
Boston, Massachusetts 02111
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
- ------------------------------------------------
The Salomon Brothers Family of Funds*
Salomon Brothers Capital Fund Inc
PRIMARILY AN EQUITY FUND emphasizing capital appreciation. Current income is
incidental. The Fund invests in securities believed to have above-average
appreciation possibilities and may involve above-average risk.
Salomon Brothers Opportunity Fund Inc
AN EQUITY FUND that invests for long-term capital appreciation. Current income
is secondary. The Fund may employ speculative investment techniques to attain
its goals.
- --------------------------------------------------------------------------------
* For more complete information about the Salomon Brothers Family of Funds, you
may obtain a Prospectus by calling 1-800-SALOMON (1-800-725-6666).
This report is submitted for the general information of the shareholders of
Salomon Brothers Family of Funds. It is not authorized for distribution to
prospective investors unless accompanied or preceded by an effective
Prospectus for the Funds, which contains information concerning the Funds'
investment policies and expenses as well as other pertinent information.
<PAGE>
<PAGE>
Salomon Brothers Asset Management Inc
c/o Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
SALOMON BROTHERS
INSTITUTIONAL
MONEY MARKET FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
SALOMON BROTHERS ASSET MANAGEMENT
<PAGE>
<PAGE>
Salomon Brothers
Institutional Money Market Fund
August 19, 1996
To Our Shareholders:
WE ARE PLEASED to provide this semi-annual report of the Salomon Brothers
Institutional Money Market Fund which includes market commentary and a statement
of the Fund's current investments, for the period ended June 30, 1996.
THE SALOMON BROTHERS Institutional Money Market Fund's annualized yield for the
seven days ended June 30, 1996 was 5.21%. For the same period, shareholders
reinvesting their dividends earned compounded effective annualized yields for
the Fund of 5.35%.
EFFECTIVE APRIL 29, 1996, the Fund was restructured as a general purpose money
market fund to be marketed primarily to institutional investors. This
restructuring was approved by shareholders at a special meeting held on March
26, 1996.
Economic Review
ECONOMIC GROWTH accelerated during the first half of 1996 and
stronger-than-expected gains in employment and hourly wages lent support to the
possibility of higher inflation. We believe that this acceleration however, will
prove to be self-limiting: Gross Domestic Product growth will slow toward trend
level during the next six to nine months.
RECENTLY, THERE HAS been evidence that the pace of economic expansion has cooled
from its heated first-half pace. Thus, the Federal Reserve has been spared the
need for a much-anticipated summer tightening of credit. After some slowing in
consumer and factory activity in June and July, policymakers again have assumed
a wait-and-see posture. However, while market rates have retreated from their
earlier peaks, the risk of renewed interest rate pressures remains high. Hiring
demands are well above trend, and forward-looking labor market indicators signal
continued strength. Upbeat consumer sentiment echoes these solid labor gains,
belying any notion that consumers will continue to pull back. If consumers
return, a backdrop of lean inventories and limited slack could spark renewed
vigor in manufacturing and revived inflation concern. Thus, the debate over
potential Fed tightening is likely to linger for some time.
<PAGE>
<PAGE>
The Fund held a Special Meeting of Stockholders on March 26, 1996. The following
table provides information concerning the matters voted on at the meeting:
1. Amendment to the Fund's investment objective to permit the Fund to
operate as a general purpose money market fund:
Votes For Votes Against Votes Abstained
--------------------------------------------------------------------------
5,680,780 396,296 275,656
2. Amendment to the Fund's investment limitations to permit the Fund to
enter into repurchase agreements:
Votes For Votes Against Votes Abstained
--------------------------------------------------------------------------
5,699,699 377,377 275,656
3. Amendment to the management contract with the Fund's investment manager,
Salomon Brothers Asset Management Inc, to change the management fee:
Votes For Votes Against Votes Abstained
--------------------------------------------------------------------------
5,613,140 419,644 319,948
ALL OF US at Salomon Brothers Asset Management Inc appreciate the confidence you
have demonstrated in the past and hope to continue to justify such confidence in
the future. Please call us with any questions or to receive a prospectus
containing more complete information regarding the Funds at 212-783-7407. To
receive assistance regarding your personal account, please call Investors Bank &
Trust at 1-800-347-6028.
Cordially,
/s/ MICHAEL S. HYLAND
MICHAEL S. HYLAND
Chairman and President
PAGE 2
<PAGE>
<PAGE>
SALOMON BROTHERS INSTITUTIONAL MONEY MARKET FUND
- ----------------------
Portfolio of Investments
June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
YIELD TO
MATURITY ON
PRINCIPAL DATE OF MATURITY VALUE (NOTE
AMOUNT DESCRIPTION PURCHASE DATE 1A)
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER -- 25.4%
AUTO -- CARS -- 2.5%
$ 250,000 Ford Motor Credit....................................... 5.280% 07/22/96 $ 249,230
------------
BANKS -- 1.7%
175,000 J. P. Morgan............................................ 5.250 07/26/96 174,362
------------
COMPUTER SYSTEMS -- 2.5%
250,000 IBM Credit.............................................. 5.280 07/19/96 249,340
------------
FINANCE COMPANIES -- 4.2%
250,000 General Electric Capital................................ 5.270 08/19/96 248,207
175,000 Transamerica Finance.................................... 5.350 07/22/96 174,454
------------
422,661
------------
FINANCIAL -- BROKERAGE -- 2.4%
250,000 Goldman Sachs Group..................................... 5.330 07/23/96 249,186
------------
FOODS -- 4.2%
250,000 Cargill................................................. 5.350 07/08/96 249,740
175,000 Heinz (H.J.)............................................ 5.340 07/24/96 174,403
------------
424,143
------------
MERCHANDISING -- 5.4%
175,000 Penney (J.C.) Funding................................... 5.270 07/26/96 174,360
175,000 Penney (J.C.) Funding................................... 5.340 07/31/96 174,221
200,000 Toys "R" Us............................................. 5.330 07/08/96 199,793
------------
548,374
------------
UTILITIES -- COMMUNICATIONS -- 2.5%
250,000 Bell Atlantic Financial Services........................ 5.320 07/09/96 249,704
------------
TOTAL COMMERCIAL PAPER (COST $2,567,000)................ 2,567,000
------------
U.S. GOVERNMENT AGENCY -- 74.8%
2,935,000 Federal Farm Credit Bank................................ 5.260 07/24/96 2,925,136
1,270,000 Federal Home Loan Mortgage Corporation.................. 5.260 07/15/96 1,266,341
1,300,000 Federal Home Loan Mortgage Corporation.................. 5.270 07/15/96 1,298,397
2,065,000 Federal Home Loan Mortgage Corporation.................. 5.240 07/17/96 2,060,191
------------
TOTAL U.S. GOVERNMENT AGENCY (COST $7,550,065).......... 7,550,065
------------
TOTAL INVESTMENTS -- 100.2% (COST $10,117,065).......... 10,117,065
Liabilities in excess of other assets -- (0.2%)......... (17,523)
------------
NET ASSETS -- 100.0%.................................... $ 10,099,542
------------
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 3
<PAGE>
<PAGE>
SALOMON BROTHERS INSTITUTIONAL MONEY MARKET FUND
- -------------------------------------------------
Statement of Assets and Liabilities
June 30, 1996 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $10,117,065)....................................................... $10,117,065
Cash........................................................................................... 13,883
Receivable from investment advisor............................................................. 18,542
Receivable for Fund shares sold................................................................ 643
Interest receivable............................................................................ 19
-----------
Total assets........................................................................... 10,150,152
-----------
LIABILITIES
Dividend payable............................................................................... 30,016
Accrued expenses............................................................................... 20,594
-----------
Total liabilities...................................................................... 50,610
-----------
NET ASSETS (equivalent to $1.00 per share on 10,099,832 shares of $.001 par value
capital stock outstanding).................................................................... $10,099,542
-----------
-----------
</TABLE>
- ---------------------------------
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
<TABLE>
<S> <C> <C>
INCOME
Interest...................................................................................... $ 220,913
EXPENSES
Management fee..................................................................... $ 5,522
Custody and administration fees.................................................... 14,227
Audit and tax return preparation fees.............................................. 7,500
Registration and filing fees....................................................... 6,000
Printing........................................................................... 4,500
Legal.............................................................................. 2,500
Directors' fees and expenses....................................................... 1,384
Shareholder services............................................................... 483
Other.............................................................................. 3,241
---------
45,357
Management fee waived and expenses absorbed by investment advisor.................. (24,064)
Credits earned from custodian on cash balances..................................... (266) 21,027
--------- ---------
Net investment income......................................................................... 199,886
NET REALIZED LOSS ON SECURITIES SOLD.............................................................. (379)
---------
NET INCREASE IN NET ASSETS FROM OPERATIONS........................................................ $ 199,507
---------
---------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 4
<PAGE>
<PAGE>
SALOMON BROTHERS INSTITUTIONAL MONEY MARKET FUND
- ---------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED
1996 DECEMBER 31,
(UNAUDITED) 1995
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income............................................. $ 199,886 $ 744,110
Net realized gain (loss) on securities sold....................... (379) 6,443
---------------- ------------
Net increase in net assets from operations........................ 199,507 750,553
---------------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income.............................. (199,886) (744,110)
Distributions from net realized gains............................. -- (959)
---------------- ------------
(199,886) (745,069)
CAPITAL SHARE TRANSACTIONS
Proceeds from sales of shares..................................... 15,799,870 79,773,668
Net asset value of shares issued in reinvestment of dividends..... 108,937 555,617
Payment for redemption of shares.................................. (17,234,354) (96,624,438)
---------------- ------------
Net decrease in net assets derived from share transactions........ (1,325,547) (16,295,153)
---------------- ------------
Contribution from investment advisor.............................. -- 48,447
---------------- ------------
Net decrease in net assets........................................ (1,325,926) (16,241,222)
NET ASSETS
Beginning of period............................................... 11,425,468 27,666,690
---------------- ------------
End of period..................................................... $ 10,099,542 $11,425,468
---------------- ------------
---------------- ------------
</TABLE>
- -----------------------------
Financial Highlights
SELECTED DATA PER SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1996 -------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
<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............................. 0.023+ 0.049+ 0.036 0.028 0.034 0.054+
Dividends from net investment income.............. (0.023) (0.049) (0.036) (0.028) (0.034) (0.054)
----------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Net assets, end of period (thousands)............. $10,100 $11,425 $27,667 $34,120 $50,554 $35,414
Total investment return........................... +2.4% +5.0% +3.6% +2.9% +3.4% +5.5%
Ratios to average net assets:
Expenses...................................... 0.49%*+ 0.65%+ 0.45% 0.35% 0.44% 0.54%+
Net investment income......................... 4.64%* 4.89% 3.53% 2.83% 3.42% 5.23%
</TABLE>
* ANNUALIZED.
+ NET INVESTMENT INCOME PER SHARE WOULD HAVE BEEN $.020, $.049 AND $.052 AND
THE EXPENSE RATIOS TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.05%, .70% AND
.64%, RESPECTIVELY, FOR THE PERIOD ENDED JUNE 30, 1996 AND THE YEARS ENDED
DECEMBER 31, 1995 AND 1991, BEFORE APPLICABLE WAIVER OF MANAGEMENT FEE,
EXPENSES ABSORBED BY SBAM AND CREDITS EARNED ON CUSTODIAN CASH BALANCES.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 5
<PAGE>
<PAGE>
SALOMON BROTHERS INSTITUTIONAL MONEY MARKET FUND
- --------------------------
Notes to Financial Statements
(unaudited)
1. Organization and Significant Accounting Policies
Salomon Brothers Series Funds Inc (the "Company") was incorporated in Maryland
on April 17, 1990 as an open-end management investment company, and currently
operates as a series company comprised of ten 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 "Fund"), Salomon Brothers New York
Municipal Bond Fund (the "New York Municipal Bond 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"). The Fund is included in this
report. The Fund changed its name from Salomon Brothers U.S. Treasury Securities
Money Market Fund to its current name on April 29, 1996. Prior to April 29,
1996, the Fund's objective was to seek a high level of current income by
investing only in short-term United States government and government agency
securities. The Fund's current objective is to seek as high a level of current
income as is consistent with liquidity and the stability of principal. The Cash
Management Fund, New York Municipal Money Fund, New York Municipal Bond Fund,
National Intermediate Municipal Fund, U.S. Government Income Fund, High Yield
Bond Fund, Strategic Bond Fund, Total Return Fund, and Asia Growth Fund are
reported in separate reports and are not included herein.
Following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles ("GAAP"). The preparation of
financial statements in accordance with GAAP requires management to make
estimates of certain reported amounts in the financial statements. Actual
amounts could differ from those estimates.
(A) SECURITIES VALUATION. Portfolio securities 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 and does not include unrealized gains or losses.
(B) FEDERAL INCOME TAXES. The Fund has complied and intends to continue
to comply with the requirements of the Internal Revenue Code applicable to
regulated
PAGE 6
<PAGE>
<PAGE>
SALOMON BROTHERS INSTITUTIONAL MONEY MARKET FUND
investment companies, including the distribution requirements of the Tax
Reform Act of 1986, 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.
(C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends on the shares
of the Fund are declared each business day to shareholders of record at
twelve noon (New York time) on that day, and paid on the last business day of
the month. Distributions of net realized gains to shareholders, if any, are
declared annually and recorded on the ex-dividend date. Dividends and
distributions are determined in accordance with income tax regulations, which
may differ from GAAP.
(D) EXPENSES. Direct expenses are charged to the Fund, and general
expenses of the Company are allocated to the Fund based on relative average
net assets for the period the expense was incurred.
(E) OTHER. Investment transactions are recorded as of the trade date.
Interest income, including the accretion of discounts or the amortization of
premiums, is recognized when earned. Gains or losses on sales of securities
are calculated on the identified cost basis.
2. Management Fee and Other Agreements
The Company retains Salomon Brothers Asset Management Inc ("SBAM"), an indirect
wholly owned subsidiary of Salomon Inc, to act as investment manager of the
Fund, subject to the supervision by the Board of Directors of the Company. SBAM
furnishes the Company with office space and certain services and facilities
required for conducting the business of the Company and pays the compensation of
its officers. The management fee for these services is payable monthly and is
based on an annual rate of .20% of the Fund's average daily net assets. Prior to
April 29, 1996, the management fee was based on an annual rate of .10% of the
Fund's average daily net assets.
If in any fiscal year total expenses of the Fund, excluding taxes, interest,
brokerage and extraordinary expenses, but including the management fee, exceed
the most stringent expense limitations imposed by state securities regulations
applicable to the Fund, SBAM will pay or reimburse the Fund for the excess.
Currently, the most restrictive of these limitations on an annual basis is 2.5%
of the first $30 million of average daily net assets, 2.0% of the next $70
million of average daily net assets and 1.5% of average daily net assets in
excess of $100 million. No such expense reimbursement was required for the six
months ended June 30, 1996.
PAGE 7
<PAGE>
<PAGE>
SALOMON BROTHERS INSTITUTIONAL MONEY MARKET FUND
- --------------------------
Notes to Financial Statements
(unaudited)
Under a voluntary agreement between SBAM and the Fund, SBAM has agreed to reduce
or otherwise limit the expenses of the Fund (exclusive of taxes, interest and
extraordinary expenses such as litigation and indemnification expenses), on an
annualized basis, to .18% of the Fund's average daily net assets for a period
ending April 29, 1997, and to no more than .25% thereafter. For the six months
ended June 30, 1996, SBAM voluntarily waived management fees of $5,522 and
voluntarily absorbed $18,542 of expenses.
Investors Bank & Trust Company serves as custodian, administrator and
shareholder servicing agent for the Fund, which includes performing custodial
and certain administrative services in connection with the operation of the
Fund. During the six months ended June 30, 1996, custodian fees were reduced by
$266 for the Fund, relating to credits earned on cash balances held by the
custodian.
The Fund has an agreement with Salomon Brothers Inc to distribute its shares.
3. Capital Stock
At June 30, 1996, the Company had 10,000,000,000 shares of authorized capital
stock, par value $.001 per share, of which the Fund had 1,000,000,000 shares
authorized.
Net assets consist of:
<TABLE>
<S> <C>
Par value...................................................................................... $ 10,100
Paid-in capital in excess of par............................................................... 10,089,732
Undistributed net investment income............................................................ 265
Accumulated net realized loss on investments................................................... (555)
-----------
Net assets..................................................................................... $10,099,542
-----------
-----------
</TABLE>
4. Portfolio Activity
The Fund invests in money market instruments maturing in thirteen months or less
whose short-term credit ratings are within the two 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.
At December 31, 1995, the Fund had $176 in net capital loss carry-forwards
expiring in 2002 available to offset future capital gains.
PAGE 8
<PAGE>
<PAGE>
SALOMON BROTHERS INSTITUTIONAL MONEY MARKET FUND
- -----
Directors
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
CAROL L. COLMAN
President, Colman Consulting Co., Inc.
DANIEL P. CRONIN
Vice President-General Counsel,
Pfizer International Inc.
MICHAEL S. HYLAND
President,
Salomon Brothers Asset Management Inc;
Managing Director, Salomon Brothers 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
MAUREEN O'CALLAGHAN
EXECUTIVE VICE PRESIDENT
BETH SEMMEL
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
NANCY A. NOYES
VICE PRESIDENT
ALAN M. MANDEL
TREASURER
TANA E. TSELEPIS
SECRETARY
JANET S. TOLCHIN
ASSISTANT TREASURER
REJI PAUL
ASSISTANT TREASURER
JENNIFER G. MUZZEY
ASSISTANT SECRETARY
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
SALOMON BROTHERS INSTITUTIONAL MONEY MARKET FUND
- --------------------------------
Salomon Brothers Institutional Money Market Fund
7 World Trade Center
New York, New York 10048
1-800-SALOMON (1-800-725-6666)
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, DIVIDEND DISBURSING AND TRANSFER AGENT
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
- ----------------------------------------------
The Salomon Brothers Institutional Investment Series*
Salomon Brothers Institutional High Yield Bond Fund
The High Yield Bond Fund's investment objective is to maximize total returns.
The Fund seeks to achieve its objective 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 and which generally entail increased credit and
market risks.
Salomon Brothers Institutional
Emerging Markets Debt Fund
The Emerging Market Debt Fund's objective is to maximize total return. The Fund
seeks to achieve its objective by investing at least 80% of its total assets in
debt securities of government, government-related and corporate issuers in
emerging market countries and of entities organized to restructure outstanding
debt of such issuers.
Salomon Brothers Institutional Asia Growth Fund
The Asia Growth Fund's investment objective is to achieve long-term capital
appreciation. The Fund seeks to achieve its objective by investing at least 65%
of its assets in equity and equity-related securities of "Asian Companies" (as
defined in the prospectus).
- --------------------------------------------------------------------------------
* For more complete information about the Salomon Brothers Institutional
Investment Series, you may obtain a Prospectus by calling 1-800-SALOMON
(1-800-725-6666).
This report is submitted for the general information of the shareholders of
Salomon Brothers Institutional Investment Series. It is not authorized for
distribution to prospective investors unless accompanied or preceded by an
effective Prospectus for the Funds, which contains information concerning the
Funds' investment policies and expenses as well as other pertinent
information.
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as `D'
The cent sign shall be expressed as [c]
The section symbol shall be expressed as SS
<PAGE>
<PAGE>
GRAPHIC APPENDIX
Page 2.
Pie chart of Portfolio Highlights as of June 30, 1996, for the Salomon Brothers
High Yield Bond Fund broken down as follows: 75% in High Yield Securities, 16%
in Emerging Markets Debt, 9% in Net Short-Term Investments. Footnote to pie
chart: 'Portfolio holdings may vary'.
Page 4.
Pie chart of Portfolio Highlights as of June 30, 1996, for the Salomon Brothers
Strategic Bond Fund broken down as follows: 50% in High Yield Securities, 21% in
Emerging Markets Debt, 18% in U.S. Government & Mortgage-Backed Securities, 5%
in Net Short-Term Investments, 4% in Sovereign Debt, 2% in Investment Grade
Debt. Footnote to pie chart: 'Portfolio holdings may vary'.
Page 6.
Pie chart of Portfolio Highlights as of June 30, 1996, for the Salomon Brothers
Investors Fund broken down as follows: 95% in Stocks, 3% in Convertible
Securities, 2% in Net Short-Term Investments. Footnote to pie chart: 'Portfolio
holdings may vary'.
Page 8.
Pie chart of Portfolio Highlights as of June 30, 1996, for the Salomon Brothers
Total Return Fund broken down as follows: 42% in Stocks, 18% in High Yield
Securities, 16% in Investment Grade Bonds, 14% in Convertible Securities, 10% in
Net Short-Term Investments. Footnote to pie chart: 'Portfolio holdings may
vary'.
Page 10.
Pie chart of Portfolio Highlights as of June 30, 1996, for the Salomon Brothers
Asia Growth Fund broken down as follows: 25% in Hong Kong, 17% in Net Short-Term
Investments, 15% in Thailand, 14% in Singapore, 12% in Malaysia, 6% in India, 5%
in Indonesia, 3% in Philippines, 2% in Pakistan, 1% in Sri Lanka. Footnote to
pie chart: 'Portfolio holdings may vary'.
Page 12.
Pie chart of Portfolio Highlights as of June 30, 1996, for the Salomon Brothers
U.S. Government Income Fund broken down as follows: 53% in U.S. Treasury Notes,
39% in U.S. Government Agency, 8% in Net Short-Term Investments. Footnote to
pie chart: 'Portfolio holdings may vary'.
Page 14.
Chart listing the Portfolio Highlights as of June 30, 1996, for the Salomon
Brothers National Intermediate Municipal Fund broken down as follows: 31% in New
York, 9% in Indiana, 8% in Pennsylvania, 7% in South Carolina, 7% in Illinois,
5% in Texas, 4% in Mississippi, 4% in Louisiana, 4% in Michigan, 4% in New
Jersey, 4% in Massachusetts, 4% in California, 3% in Net Short-Term Investments,
2% in Puerto Rico, 2% in Hawaii, 2% in Florida. Footnote to chart: 'Portfolio
holdings may vary'.
Page 16.
Pie chart of Portfolio Highlights as of June 30, 1996, for the Salomon Brothers
New York Municipal Bond Fund broken down as follows: 94% in New York, 4% in
Puerto Rico, 2% in Net Short-Term Investments. Footnote to pie chart: 'Portfolio
holdings may vary'.
<PAGE>
