UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05034
Salomon Funds Trust
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Robert I. Frenkel, Esq.
c/o Citigroup Asset Management
300 First Stamford Place, 4th Floor
Stamford, CT 06902
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 725-6666
Date of fiscal year end: December 31
Date of reporting period: June 30, 2005
ITEM 1. REPORT TO STOCKHOLDERS.
June 30, 2005
SEMI-ANNUAL
REPORT
Salomon Brothers Asset Management
[ ] | National Tax Free Bond Fund | ||
Salomon Brothers | [ ] | California Tax Free Bond Fund | |
[ ] | New York Tax Free Bond Fund | ||
[ ] | Mid Cap Fund |
![]() | NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE |
Table of Contents | ||
Letter from the Chairman | 1 | |
Salomon Funds Trust | ||
National Tax Free Bond Fund: | ||
Fund at a Glance | 6 | |
Fund Expenses | 7 | |
California Tax Free Bond Fund: | ||
Fund at a Glance | 9 | |
Fund Expenses | 10 | |
New York Tax Free Bond Fund: | ||
Fund at a Glance | 12 | |
Fund Expenses | 13 | |
Mid Cap Fund: | ||
Fund at a Glance | 15 | |
Fund Expenses | 16 | |
Schedules of Investments | 18 | |
Statements of Assets and Liabilities | 33 | |
Statements of Operations | 34 | |
Statements of Changes in Net Assets | 35 | |
Financial Highlights. | 39 | |
Notes to Financial Statements | 55 |
Letter from the Chairman
Dear Shareholder, The U.S. economy overcame a number of obstacles and continued to expand during the reporting period. Rising interest rates, record high oil prices, and geopolitical issues threatened to send the economy into a “soft patch.” However, when all was said and done, first quarter 2005 gross domestic product (“GDP”)i growth was 3.8%, mirroring the solid gain that occurred during the fourth quarter of 2004. Given the overall strength of the economy, the Federal Reserve Board (“Fed”)ii continued to raise interest rates over the period in an attempt to ward off inflation. Following five rate hikes from June 2004 through December 2004, the Fed again increased its target for the federal funds rateiii in 0.25% increments four additional times during the reporting period. All told, the Fed’s nine rate hikes brought the target for the federal funds rate from 1.00% to 3.25%. Following the end of the reporting period, at their August meeting, the Fed further increased the target rate by 0.25% to 3.50%. | ![]() R. Jay Gerken, CFA Chairman, President and Chief Executive Officer |
During the six months covered by this report, the U.S. stock market was relatively flat, with the S&P 500 Indexiv returning - -0.81%. Stocks were weak early in the reporting period, as the issues discussed above caused investors to remain on the sidelines. Equities then rallied in the second quarter of 2005, as the economy appeared to be on solid footing and inflation was largely under control. Looking at the reporting period as a whole, mid-cap stocks generated superior returns, with the Russell Midcap,v Russell 1000,vi and Russell 2000vii Indexes returning 3.92%, 0.11%, and -1.25%, respectively. From a market style perspective, value-oriented stocks outperformed their growth counterparts.
During the reporting period, the fixed income market confounded many investors as short term interest rates rose in concert with the Fed rate tightening, while longer-term rates, surprisingly, declined.When the period began, the federal fund target rate was 2.25% and the yield on the 10-year Treasury was 4.24%.When the reporting period ended, the federal funds rate rose to 3.25% and the 10-year yield fell to 3.92%. Declining long-term rates, mixed economic data, and periodic flights to quality all supported bond prices. Looking at the six-month period as a whole, the overall bond market, as measured by the Lehman Brothers Aggregate Bond Index,viii returned 2.51%.
Performance Review
National Tax Free Bond Fund
For the six months ended June 30, 2005 Class A shares of the Salomon Brothers National Tax Free Bond Fund, excluding sales charges, returned 2.26%. The Lipper General Municipal Debt Funds Category Average1 was 2.44%. The Fund’s unmanaged benchmark, the Lehman Brothers Municipal 4 Years Plus Bond Index,ix
1 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended June 30, 2005, including the reinvestment of dividends and capital gains distributions, if any, calculated among the 283 funds in the Fund’s Lipper category, and excluding sales charges. |
1
returned 3.31% for the same period. The Lehman Brothers Municipal Bond Index returned 2.89% for the period.
Certain investors may be subject to the Federal Alternative Minimum Tax, and state and local taxes may apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.
California Tax Free Bond FundFor the six months ended June 30, 2005, Class A shares of the California Tax Free Bond Fund, excluding sales charges, returned 1.46%. The Lipper California Municipal Debt Funds Category Average2 was 3.11%. The Fund’s unmanaged benchmark, the Lehman Brothers Municipal California 4 Years Plus Bond Index,x returned 3.72% for the same period. The Lehman Brothers Municipal Bond Index returned 2.89% for the period.
Certain investors may be subject to the Federal Alternative Minimum Tax, and state and local taxes may apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.
New York Tax Free Bond FundFor the six months ended June 30, 2005, Class A shares of the New York Tax Free Bond Fund, excluding sales charges, returned 2.20%. The Lipper New York Municipal Debt Funds Category Average3 was 2.74%. The Fund’s unmanaged benchmarks, the Lehman Brothers Municipal Bond Indexxi and the Lehman Brothers Municipal New York 4 Years Plus Bond Index,xii returned 2.89% and 3.18%, respectively, for the same period.
Certain investors may be subject to the Federal Alternative Minimum Tax, and state and local taxes may apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.
Mid Cap FundFor the six months ended June 30, 2005, Class A shares of the Mid Cap Fund, excluding sales charges, returned 1.36%. The Lipper Mid-Cap Core Funds Category Average4 was 2.09%. The Fund’s unmanaged benchmark, the S&P MidCap 400 Index,xiii returned 3.85%, for the same period.
Special Shareholder NoticeEffective April 18, 2005, Kevin Caliendo became the new Portfolio Manager of the Mid Cap Fund. He joined Citigroup or its predecessor firms in 2002.
2 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended June 30, 2005, including the reinvestment of dividends and capital gains distributions, if any, calculated among the 129 funds in the Fund’s Lipper category, and excluding sales charges. |
3 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended June 30, 2005, including the reinvestment of dividends and capital gains distributions, if any, calculated among the 107 funds in the Fund’s Lipper category, and excluding sales charges. |
4 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended June 30, 2005 including the reinvestment of dividends and capital gains distributions, if any, calculated among the 313 funds in the Fund’s Lipper category, and excluding sales charges. |
2
PERFORMANCE SNAPSHOT
AS OF JUNE 30, 2005
(excluding sales charges)
(unaudited)
Six Months | ||
National Tax Free Bond Fund – Class A Shares | 2.26 | % |
Lehman Brothers Municipal 4 Years Plus Bond Index | 3.31 | % |
Lehman Brothers Municipal Bond Index | 2.89 | % |
Lipper General Municipal Debt Funds Category Average | 2.44 | % |
California Tax Free Bond Fund – Class A Shares | 1.46 | % |
Lehman Brothers Municipal California 4 Years Plus Bond Index | 3.72 | % |
Lehman Brothers Municipal Bond Index | 2.89 | % |
Lipper California Municipal Debt Funds Category Average | 3.11 | % |
New York Tax Free Bond Fund – Class A Shares | 2.20 | % |
Lehman Brothers Municipal Bond Index | 2.89 | % |
Lehman Brothers Municipal New York 4 Years Plus Bond Index | 3.18 | % |
Lipper New York Municipal Debt Funds Category Average | 2.74 | % |
Mid Cap Fund – Class A Shares | 1.36 | % |
S&P MidCap 400 Index | 3.85 | % |
Lipper Mid-Cap Core Funds Category Average | 2.09 | % |
The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Principal value and investment returns will fluctuate and investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance data current to the most recent month-end, please visit our website at www.citigroupam.com.
The 30-Day SEC Yield for Class A, Class B, Class C and Class O for National Tax Free Bond Fund were 3.27%, 2.66%, 2.91% and 3.66%, respectively. Current reimbursements and/or fee waivers are voluntary, and may be reduced or terminated at any time. Absent these reimbursements or waivers, performance would have been 2.70%, 2.03%, 2.30% and 2.84%, respectively.
The 30-Day SEC Yield for Class A, Class B, Class C and Class O for California Tax Free Bond Fund were 2.95%, 2.33%, 2.58% and 3.34%, respectively. Current reimbursements and/or fee waivers are voluntary, and may be reduced or terminated at any time. Absent these reimbursements or waivers, performance would have been 1.40%, 0.54%, 0.54% and –1.12%, respectively.
The 30-Day SEC Yield for Class A, Class B, Class C and Class O for New York Tax Free Bond Fund were 3.09%, 2.47%, 2.72% and 3.47%, respectively. Current reimbursements and/or fee waivers are voluntary, and may be reduced or terminated at any time. Absent these reimbursements or waivers, performance would have been 2.92%, 2.19%, 2.14% and 3.12%, respectively.
All Class A Share returns assume the reinvestment of all distributions at net asset value and the deduction of all Fund expenses. Returns have not been adjusted to include sales charges that may apply when shares are purchased or the deduction of taxes that a shareholder would pay on Fund distributions. Excluding sales charges for the National Tax Free Bond Fund, Class B shares returned 1.88%, Class C shares returned 2.01% and Class O shares returned 2.38% over the six months ended June 30, 2005. Excluding sales charges for the California Tax Free Bond Fund, Class B shares returned 1.08%, Class C shares returned 1.30% and Class O shares returned 1.72% over the six months ended June 30, 2005. Excluding sales charges for the New York Tax Free Bond Fund, Class B shares returned 1.82%, Class C shares returned 1.86% and Class O shares returned 2.33% over the six months ended June 30, 2005. Excluding sales charges for the Mid Cap Fund, Class B shares returned 1.01%, Class C shares returned 1.01% and Class O shares returned 1.60% over the six months ended June 30, 2005.
Current reimbursements and/or fee waivers for Mid Cap Fund are voluntary, and may be reduced or terminated at any time. Absent these reimbursements or waivers, performance would have been lower.
3
Special Shareholder Notice
On June 24, 2005, Citigroup Inc. (“Citigroup”) announced that it has signed a definitive agreement under which Citigroup will sell substantially all of its worldwide asset management business to Legg Mason, Inc. (“Legg Mason”).
As part of this transaction, Salomon Brothers Asset Management Inc. (the “Manager”), currently an indirect wholly owned subsidiary of Citigroup, would become an indirect wholly owned subsidiary of Legg Mason. The Manager is the investment manager to the Funds.
The transaction is subject to certain regulatory approvals, as well as other customary conditions to closing. Subject to such approvals and the satisfaction of the other conditions, Citigroup expects the transaction to be completed later this year.
Under the Investment Company Act of 1940, consummation of the transaction will result in the automatic termination of the investment management contract between the Funds and the Manager. Therefore, the Funds’ Board of Trustees will be asked to approve a new investment management contract between the Funds and the Manager. If approved by the Board, the new investment management contract will be presented to the shareholders of the Funds for their approval.
Subsequently, on August 7, 2005, the Board approved the new investment management contract between the Funds and the Manager.
Information About Your FundAs you may be aware, several issues in the mutual fund industry have recently come under the scrutiny of federal and state regulators. The Funds’ Adviser and some of its affiliates have received requests for information from various government regulators regarding market timing, late trading, fees, and other mutual fund issues in connection with various investigations. The regulators appear to be examining, among other things, the Fund’s response to market timing and shareholder exchange activity, including compliance with prospectus disclosure related to these subjects. The Funds have been informed that the Adviser and its affiliates are responding to those information requests, but are not in a position to predict the outcome of these requests and investigations.
Important information concerning the Funds and their Adviser with regard to recent regulatory developments is contained in the “Additional Information” note in the Notes to the Financial Statements included in this report.
As always, we appreciate your continued confidence and look forward to helping you continue to meet your financial goals.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000930413-05-006477/c38589_ncsrsx6x1.jpg)
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
August 9, 2005
4
The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.
RISKS:
Salomon Brothers National Tax Free Bond Fund: The Fund is a non-diversified mutual fund. This means that the Fund may invest a relatively high percentage of its assets in the obligations of a limited number of issuers. Investments in bonds are subject to interest rate and credit risks. As interest rates rise, bond prices fall, reducing the value of the Fund’s share price. The Fund may use derivatives, such as options or futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on the Fund’s performance.
Salomon Brothers California Tax Free Bond Fund: The Fund is non-diversified, which means that it is permitted to invest a higher percentage of its assets in any one issuer than a diversified fund. This may magnify the Fund’s losses from events affecting a particular issuer. Investments in bonds are subject to interest rate and credit risks. As interest rates rise, bond prices fall, reducing the value of the Fund’s share price. The Fund may use derivatives, such as options or futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on the Fund’s performance.
Salomon Brothers New York Tax Free Bond Fund: The Fund is a non-diversified mutual fund. This means that the Fund may invest a relatively high percentage of its assets in the obligations of a limited number of issuers. Investments in bonds are subject to interest rate and credit risks. As interest rates rise, bond prices fall, reducing the value of the Fund’s share price. The Fund may use derivatives, such as options or futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on the Fund’s performance.
Salomon Brothers Mid Cap Fund: Investments in mid-cap stocks may involve a higher degree of risk and volatility than large-cap stocks. Compared to large-cap companies, medium-sized companies are more likely to have more limited product lines, capital resources and management depth, and experience sharper swings in market values. The Fund may use derivatives, such as options or futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on the Fund’s performance.
Please see the Funds’ prospectus for more information on these and other risks.
All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.
i | Gross domestic product is a market value of goods and services produced by labor and property in a given country. |
ii | The Federal Reserve Board is responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices, |
and a sustainable pattern of international trade and payments. | |
iii | The federal funds rate is the interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need |
overnight loans. | |
iv | The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. |
v | The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index whose average market capital- |
ization was approximately $4.7 billion as of 6/24/05. | |
vi | The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately |
92% of the total market capitalization of the Russell 3000 Index. | |
vii | The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately |
8% of the total market capitalization of the Russell 3000 Index. | |
viii | The Lehman Brothers Aggregate Bond Index is a broad-based bond index comprised of Government, Corporate, Mortgage and Asset-backed |
issues, rated investment grade or higher, and having at least one year to maturity. | |
ix | The Lehman Brothers Municipal 4 Years Plus Bond Index is a broad measure of the municipal bond market with maturities of at least four years. |
x | The Lehman Brothers Municipal California 4 Years Plus Bond Index is a broad measure of the California municipal bond market with maturities |
of at least four years. | |
xi | The Lehman Brothers Municipal Bond Index is a broad measure of the municipal bond market with maturities of at least one year. |
xii | The Lehman Brothers Municipal NY 4 Years Plus Bond Index is a market value-weighted index of New York fixed-rate investment grade municipal |
bonds with maturity of at least four years. | |
xiii | The S&P MidCap 400 Index is a market-value weighted index which consists of 400 domestic stocks chosen for market size, liquidity, and |
industry group representation. |
5
Fund at a Glance
(unaudited)
Investment Breakdown
![](https://capedge.com/proxy/N-CSRS/0000930413-05-006477/c38589_ncsrsx8x1.jpg)
6
Fund Expenses
(unaudited)
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, reinvested dividends, or other distributions; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on January 1, 2005 and held for the six months ended June 30, 2005.
Actual Expenses
The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.
Based on Actual Total Return(1)
Actual | |||||||
Total Return | Beginning | Ending | Annualized | Expenses | |||
Without | Account | Account | Expense | Paid During | |||
Sales Charges(2) | Value | Value | Ratio | the Period(3) | |||
Class A | 2.26 | % | $1,000.00 | $1,022.60 | 0.75 | % | $3.76 |
Class B | 1.88 | 1,000.00 | 1,018.80 | 1.50 | 7.51 | ||
Class C | 2.01 | 1,000.00 | 1,020.10 | 1.25 | 6.26 | ||
Class O | 2.38 | 1,000.00 | 1,023.80 | 0.50 | 2.51 | ||
(1) | For the six months ended June 30, 2005. |
(2) | Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value and does not reflect the deduction of the applicable sales charge with respect to Class A shares or the applicable contingent deferred sales charges (CDSC) with respect to Class B and C shares. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. |
(3) | Expenses (net of voluntary fee waiver and/or expense reimbursements) are equal to each Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
7
Fund Expenses
(unaudited) (continued)
Hypothetical Example for Comparison Purposes
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Based on Hypothetical Total Return(1)
Beginning | Ending | Annualized | Expenses | ||||
Hypothetical | Account | Account | Expense | Paid During | |||
Total Return | Value | Value | Ratio | the Period(2) | |||
Class A | 5.00 | % | $1,000.00 | $1,021.08 | 0.75 | % | $3.76 |
Class B | 5.00 | 1,000.00 | 1,017.36 | 1.50 | 7.50 | ||
Class C | 5.00 | 1,000.00 | 1,018.60 | 1.25 | 6.26 | ||
Class O | 5.00 | 1,000.00 | 1,022.32 | 0.50 | 2.51 | ||
(1) | For the six months ended June 30, 2005. |
(2) | Expenses (net of voluntary fee waiver and/or expense reimbursements) are equal to each Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
8
Fund at a Glance
(unaudited)
Investment Breakdown
![](https://capedge.com/proxy/N-CSRS/0000930413-05-006477/c38589_ncsrsx11x1.jpg)
9
Fund Expenses
(unaudited)
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, reinvested dividends, or other distributions; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on January 1, 2005 and held for the six months ended June 30, 2005.
Actual ExpensesThe table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.
Based on Actual Total Return(1)
Actual | |||||||
Total Return | Beginning | Ending | Annualized | Expenses | |||
Without | Account | Account | Expense | Paid During | |||
Sales Charges(2) | Value | Value | Ratio | the Period(3) | |||
Class A | 1.46 | % | $1,000.00 | $1,014.60 | 0.80 | % | $4.00 |
Class B | 1.08 | 1,000.00 | 1,010.80 | 1.55 | 7.73 | ||
Class C | 1.30 | 1,000.00 | 1,013.00 | 1.30 | 6.49 | ||
Class O | 1.72 | 1,000.00 | 1,017.20 | 0.55 | 2.75 | ||
(1) | For the six months ended June 30, 2005. |
(2) | Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value and does not reflect the deduction of the applicable sales charge with respect to Class A shares or the applicable contingent deferred sales charge (“CDSC”) with respect to Class B and C shares. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. |
(3) | Expenses (net of voluntary fee waiver and/or expense reimbursements) are equal to each Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
10
Fund Expenses
(unaudited) (continued)
Hypothetical Example for Comparison Purposes
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Based on Hypothetical Total Return(1)
Beginning | Ending | Annualized | Expenses | ||||
Hypothetical | Account | Account | Expense | Paid During | |||
Total Return | Value | Value | the Period(2) | ||||
Class A | 5.00 | % | $1,000.00 | $1,020.83 | 0.80 | % | $4.01 |
Class B | 5.00 | 1,000.00 | 1,017.11 | 1.55 | 7.75 | ||
Class C | 5.00 | 1,000.00 | 1,018.35 | 1.30 | 6.51 | ||
Class O | 5.00 | 1,000.00 | 1,022.07 | 0.55 | 2.76 | ||
(1) | For the six months ended June 30, 2005. |
(2) | Expenses (net of voluntary fee waiver and/or expense reimbursements) are equal to each Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
11
Fund at a Glance
(unaudited)
Investment Breakdown
![](https://capedge.com/proxy/N-CSRS/0000930413-05-006477/c38589_ncsrsx14x1.jpg)
12
Fund Expenses
(unaudited)
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, reinvested dividends, or other distributions; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on January 1, 2005 and held for the six months ended June 30, 2005.
Actual ExpensesThe table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.
Based on Actual Total Return(1)
Actual | |||||||
Total Return | Beginning | Ending | Annualized | Expenses | |||
Without | Account | Account | Expense | Paid During | |||
Sales Charges(2) | Value | Value | Ratio | the Period(3) | |||
Class A | 2.20 | % | $1,000.00 | $1,022.00 | 0.80 | % | $4.01 |
Class B | 1.82 | 1,000.00 | 1,018.20 | 1.55 | 7.76 | ||
Class C | 1.86 | 1,000.00 | 1,018.60 | 1.30 | 6.51 | ||
Class O | 2.33 | 1,000.00 | 1,023.30 | 0.55 | 2.76 | ||
(1) | For the six months ended June 30, 2005. |
(2) | Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value and does not reflect the deduction of the applicable sales charge with respect to Class A shares or the applicable contingent deferred sales charge (“CDSC”) with respect to Class B and C shares. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. |
(3) | Expenses (net of voluntary fee waiver) are equal to each Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
13
Fund Expenses
(unaudited) (continued)
Hypothetical Example for Comparison Purposes
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Based on Hypothetical Total Return(1)
Beginning | Ending | Annualized | Expenses | ||||
Hypothetical | Account | Account | Expense | Paid During | |||
Total Return | Value | Value | Ratio | the Period(2) | |||
Class A | 5.00 | % | $1,000.00 | $1,020.83 | 0.80 | % | $4.01 |
Class B | 5.00 | 1,000.00 | 1,017.11 | 1.55 | 7.75 | ||
Class C | 5.00 | 1,000.00 | 1,018.35 | 1.30 | 6.51 | ||
Class O | 5.00 | 1,000.00 | 1,022.07 | 0.55 | 2.76 | ||
(1) | For the six months ended June 30, 2005. |
(2) | Expenses (net of voluntary fee waiver) are equal to each Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
14
Fund at a Glance
(unaudited)
Investment Breakdown
![](https://capedge.com/proxy/N-CSRS/0000930413-05-006477/c38589_ncsrsx17x1.jpg)
15
Fund Expenses
(unaudited)
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, reinvested dividends, or other distributions; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on January 1, 2005 and held for the six months ended June 30, 2005.
Actual ExpensesThe table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.
Based on Actual Total Return(1)
Actual | |||||||
Total Return | Beginning | Ending | Annualized | Expenses | |||
Without | Account | Account | Expense | Paid During | |||
Sales Charges(2) | Value | Value | Ratio | the Period(3) | |||
Class A | 1.36 | % | $1,000.00 | $1,013.60 | 1.50 | % | $ 7.49 |
Class B | 1.01 | 1,000.00 | 1,010.10 | 2.25 | 11.21 | ||
Class C | 1.01 | 1,000.00 | 1,010.10 | 2.25 | 11.21 | ||
Class O | 1.60 | 1,000.00 | 1,016.00 | 1.08 | 5.40 | ||
(1) | For the six months ended June 30, 2005. |
(2) | Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value and does not reflect the deduction of the applicable sales charge with respect to Class A shares or the applicable contingent deferred sales charge (“CDSC”) with respect to Class B and C shares. Total return is not annualized, as it may not be representative of the total return for the year. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. |
(3) | Expenses (net of voluntary fee waiver) are equal to each Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
16
Fund Expenses
(unaudited) (continued)
Hypothetical Example for Comparison Purposes
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Based on Hypothetical Total Return(1)
Beginning | Ending | Annualized | Expenses | ||||
Hypothetical | Account | Account | Expense | Paid During | |||
Total Return | Value | Value | Ratio | the Period(2) | |||
Class A | 5.00 | % | $1,000.00 | $1,017.36 | 1.50 | % | $ 7.50 |
Class B | 5.00 | 1,000.00 | 1,013.64 | 2.25 | 11.23 | ||
Class C | 5.00 | 1,000.00 | 1,013.64 | 2.25 | 11.23 | ||
Class O | 5.00 | 1,000.00 | 1,019.44 | 1.08 | 5.41 | ||
(1) | For the six months ended June 30, 2005. |
(2) | Expenses (net of voluntary fee waiver) are equal to each Class’ respective annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
17
Schedules of Investments
June 30, 2005 (unaudited)
Salomon Brothers National Tax Free Bond Fund | ||||||
Face | ||||||
Rating‡ | ||||||
MUNICIPAL BONDS — 88.7% | ||||||
California — 11.9% | ||||||
$ 500,000 | AAA | California State Department of Water Resources & Power Supply Revenue, Series A, | ||||
MBIA/IBC-Insured, 6.000% due 5/1/15 | $ | 578,180 | ||||
1,000,000 | AA- | California State Economic Recovery, GO, Series A, 5.000% due 7/1/17 | 1,073,110 | |||
1,000,000 | AAA | Calleguas Las Virgines, CA, Public Financing Authority Revenue, Refunding Bonds, | ||||
Calleguas Municipal Water District, Series B, MBIA-Insured, 5.250% due 7/1/17 | 1,118,790 | |||||
450,000 | AAA | El Segundo, CA, GO, Refunding Bonds, FGIC-Insured, 5.250% due 9/1/22 | 497,822 | |||
1,250,000 | AAA | Huntington Beach, CA, Union High School District GO, Election 2004, FSA-Insured, | ||||
5.000% due 8/1/29 | 1,334,462 | |||||
370,000 | AAA | Moorpark, CA, GO, USD, Refunding Bonds, FSA-Insured, 5.000% due 8/1/23 | 399,456 | |||
Total California | 5,001,820 | |||||
Colorado — 5.8% | ||||||
500,000 | BBB+ | Colorado Health Facilities Authority Revenue, Poudre Valley Health Care, Series F, | ||||
5.000% due 3/1/25 | 509,945 | |||||
1,680,000 | Aaa (a) | Summit County, CO, School District Number RE1 Summit, GO, Series B, FSA-Insured, | ||||
5.250% due 12/1/16 | 1,905,137 | |||||
Total Colorado | 2,415,082 | |||||
Florida — 4.1% | ||||||
Miami-Dade County, FL, Aviation Revenue, Miami International Airport: | ||||||
250,000 | AAA | Series A, FGIC-Insured, 5.550% due 10/1/13 (b) | 274,383 | |||
300,000 | AAA | Series B, MBIA-Insured, 5.250% due 10/1/17 (b) | 326,514 | |||
Orlando, FL, Utilities Commission Water & Electricity Revenue, Refunding Bonds, Series C: | ||||||
630,000 | AA | 5.250% due 10/1/21 | 685,616 | |||
400,000 | AA | 5.250% due 10/1/23 | 433,212 | |||
Total Florida | 1,719,725 | |||||
Illinois — 10.0% | ||||||
1,250,000 | AAA | Chicago, IL, O’Hare International Airport Revenue, Refunding Bonds, Lien A-2, FSA-Insured, | ||||
5.750% due 1/1/19 (b) | 1,424,425 | |||||
250,000 | AAA | Cook County, IL, Refunding GO, Series A, MBIA-Insured, 5.625% due 11/15/16 | 267,095 | |||
1,500,000 | AAA | Illinois State, GO, First Series, FGIC-Insured, 6.100% due 1/1/20 | 1,680,435 | |||
750,000 | Aaa (a) | Will County, IL, GO, Community Consolidated School District Number 30-C, Troy Township, | ||||
Series B, FSA-Insured, 5.250% due 2/1/20 | 826,005 | |||||
Total Illinois | 4,197,960 | |||||
Indiana — 4.7% | ||||||
250,000 | AAA | Indiana Health Facility Financing Authority, Hospital Revenue, Community Hospital Project, | ||||
Series A, AMBAC-Insured, 5.000% due 5/1/35 | 262,860 | |||||
1,550,000 | AAA | Indiana Transportation Finance Authority Highway Revenue, Series A, FGIC-Insured, | ||||
5.250% due 6/1/29 | 1,687,810 | |||||
Total Indiana | 1,950,670 | |||||
Iowa — 0.2% | ||||||
70,000 | AAA | Iowa Finance Authority Single Family Revenue, Mortgage-Backed Securities Program, | ||||
Series A, FNMA/GNMA-Collateralized, 6.000% due 7/1/13 | 73,340 | |||||
Kentucky — 2.8% | ||||||
750,000 | AAA | Kenton County, KY, Airport Board Revenue, Refunding Bonds, Cincinnati/Northern Kentucky, | ||||
Series A, MBIA-Insured, 5.625% due 3/1/15 (b) | 826,050 | |||||
300,000 | AAA | Louisville & Jefferson County, KY, Regional Airport Authority, Airport Systems Revenue, | ||||
Series A, FSA-Insured, 5.750% due 7/1/17 (b) | 332,943 | |||||
Total Kentucky | 1,158,993 | |||||
Massachusetts — 2.0% | ||||||
260,000 | Aaa (a) | Lawrence, MA, GO, State Qualified, MBIA-Insured, 5.250% due 3/15/18 | 288,982 | |||
500,000 | AAA | Massachusetts State, GO, Consolidated Loan, Series D, FSA-Insured, | ||||
5.000% due 12/1/19 (c) | 553,720 | |||||
Total Massachusetts | 842,702 | |||||
See Notes to Financial Statements. |
18
Schedules of Investments
(unaudited) (continued)
Salomon Brothers National Tax Free Bond Fund | ||||||
Face | ||||||
Rating‡ | ||||||
Mississippi — 3.2% | ||||||
$ 65,000 | A(d) | Mississippi Higher Education Student Loan, Subordinated Series C, 6.050% due 9/1/07 (b) | $ | 65,361 | ||
1,235,000 | AA | Mississippi State, GO, Port Improvement, Series 16, 5.000% due 9/1/17 (b) | 1,279,695 | |||
Total Mississippi | 1,345,056 | |||||
New Hampshire — 2.7% | ||||||
1,000,000 | AAA | New Hampshire HEFA Revenue, University Systems of New Hampshire, AMBAC-Insured, | ||||
5.375% due 7/1/20 | 1,115,260 | |||||
New Jersey — 4.1% | ||||||
New Jersey EDA, Motor Vehicle Surcharges Revenue, Series A, MBIA-Insured: | ||||||
500,000 | AAA | 5.250% due 7/1/16 | 560,820 | |||
750,000 | AAA | 5.250% due 7/1/17 | 839,400 | |||
280,000 | AAA | Passaic Valley, NJ, Sewage Commissioners, Sewer System, Series D, AMBAC-Insured, | ||||
5.750% due 12/1/07 (e) | 299,732 | |||||
Total New Jersey | 1,699,952 | |||||
New Mexico — 1.3% | ||||||
500,000 | AAA | New Mexico Finance Authority State Transportation Revenue, Senior Lien, Series A, | ||||
MBIA-Insured, 5.250% due 6/15/23 | 550,135 | |||||
New York — 18.8% | ||||||
Metropolitan Transportation Authority, New York Services Contract, Refunding Bonds: | ||||||
750,000 | AAA | GO, Series D, FSA-Insured, 5.000% due 11/1/17 | 821,273 | |||
2,750,000 | AAA | Series A, AMBAC-Insured, 5.500% due 11/15/15 | 3,123,037 | |||
New York City, NY: | ||||||
500,000 | A+ | GO, Series A, 5.750% due 8/1/16 | 562,905 | |||
265,000 | AAA | Transitional Finance Authority Revenue, Future Tax Secured, Series B, | ||||
6.125% due 11/15/14 (c) | 304,981 | |||||
250,000 | AAA | New York State Dormitory Authority Lease Revenue, State University Dormitory Facilities, | ||||
Series A, Call 7/1/10 @ 101, 6.000% due 7/1/14 (c) | 287,150 | |||||
1,750,000 | AA | New York State Thruway Authority, State Personal Income Tax Revenue, Series A, | ||||
5.500% due 3/15/20 | 1,949,377 | |||||
750,000 | AA- | Triborough Bridge & Tunnel Authority Revenues, Refunding Bonds, Series B, | ||||
5.250% due 11/15/16 | 833,948 | |||||
Total New York | 7,882,671 | |||||
North Dakota — 0.3% | ||||||
120,000 | Aa2 (a) | North Dakota State Housing Finance Agency Revenue, Refunding Bonds, Housing Finance Program, | ||||
Home Mortgage, Series A, 6.100% due 7/1/13 (b) | 123,049 | |||||
Oregon — 5.3% | ||||||
Multnomah County, OR, Hospital Facilities Authority Revenue, Providence Health Systems: | ||||||
1,000,000 | AA | 5.250% due 10/1/16 | 1,123,600 | |||
1,000,000 | AA | 5.250% due 10/1/20 | 1,099,730 | |||
Total Oregon | 2,223,330 | |||||
Puerto Rico — 0.7% | ||||||
250,000 | AAA | Puerto Rico Commonwealth Infrastructure Financing Authority, Series C, AMBAC-Insured, | ||||
5.500% due 7/1/25 | 302,817 | |||||
Texas — 6.1% | ||||||
60,000 | AAA | Austin, TX, Airport Systems Revenue, Series A, 6.500% due 11/15/05 (b)(e) | 60,825 | |||
1,100,000 | AAA | Hidalgo County, TX, GO, Certificates of Obligation, FGIC-Insured, 5.500% due 8/15/16 | 1,239,557 | |||
85,000 | AAA | Houston, TX, GO, Refunding Bonds, Public Improvement, FSA-Insured, 5.750% due 3/1/17 | 94,747 | |||
1,000,000 | AAA | Keller, TX, GO, ISD, Refunding Bonds, 5.250% due 8/15/22 | 1,077,780 | |||
55,000 | AAA | Northside Texas ISD, GO, Refunding Bonds, PSFG, 6.000% due 8/15/16 | 62,092 | |||
Total Texas | 2,535,001 | |||||
See Notes to Financial Statements. |
19
Schedules of Investments
(unaudited) (continued)
Salomon Brothers National Tax Free Bond Fund | ||||||
Face | ||||||
Amount | ||||||
Washington — 4.7% | ||||||
$ 750,000 | Energy Northwest Washington Electric Revenue, Refunding Bonds, Columbia Generating Station, | |||||
Series A, FSA-Insured, 5.500% due 7/1/16 | $ | 830,040 | ||||
500,000 | Snohomish County, WA, School District Number 2, Everett, GO, FSA-Insured, | |||||
5.500% due 12/1/16 | 562,140 | |||||
500,000 | Tacoma, WA, Electric Systems Revenue, Refunding Bonds, Series A, FSA-Insured, | |||||
5.750% due 1/1/16 | 561,440 | |||||
Total Washington | 1,953,620 | |||||
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS | ||||||
(Cost — $35,997,818) | 37,091,183 | |||||
SHORT-TERM INVESTMENTS(f) — 9.9% | ||||||
Minnesota — 4.4% | ||||||
1,850,000 | VMIG1(a) | Minnesota State Higher EFA Revenue, St. Olaf College, Series M2, LOC-Harris Trust & Savings Bank, | ||||
2.300% due 7/1/05 | 1,850,000 | |||||
Nebraska — 5.5% | ||||||
2,300,000 | VMIG1(a) | Nebraska Educational Financing Authority Revenue, Creighton University Project, AMBAC-Insured, | ||||
2.300% due 7/1/05 | 2,300,000 | |||||
TOTAL SHORT-TERM INVESTMENTS (Cost — $4,150,000) | 4,150,000 | |||||
TOTAL INVESTMENTS — 98.6% (Cost — $40,147,818#) | 41,241,183 | |||||
Other Assets in Excess of Liabilities — 1.4% | 587,738 | |||||
TOTAL NET ASSETS — 100.0% | $ | 41,828,921 | ||||
‡ | All ratings are by Standard & Poor’s Ratings Service, unless otherwise footnoted. |
(a) | Rating by Moody’s Investors Service. |
(b) | Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (AMT). |
(c) | Pre-Refunded bonds are escrowed with U.S. government securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings. |
(d) | Rating by Fitch Rating Service. |
(e) | Bonds are escrowed to maturity by U.S. government securities and are considered by the manager to be triple-A rated even if issuer has not applied for new ratings. |
(f) | Variable rate demand obligation payable at par on demand at any time on no more than seven days notice. The coupon rate listed represents the current rate at the period end. The due dates on these securities reflect the next interest rate reset date or, when applicable, the maturity date. |
# | Aggregate cost for Federal income tax purposes is substantially the same. |
See pages 31 and 32 for definitions of ratings. | |
Abbreviations used in this schedule: | ||
AMBAC | — American Municipal Bond Assurance Corporation | |
EDA | — Economic Development Authority | |
EFA | — Education Facilities Authority | |
FGIC | — Financial Guaranty Insurance Company | |
FNMA | — Federal National Mortgage Association | |
FSA | — Financial Security Assurance | |
GNMA | — Government National Mortgage Association | |
GO | — General Obligation | |
HEFA | — Health & Educational Facilities Authority | |
IBC | — Insured Bond Certificates | |
ISD | — Independent School District | |
LOC | — Letter of Credit | |
MBIA | — Municipal Bond Investors Assurance Corporation | |
PSFG | — Permanent School Fund Guaranty | |
USD | — Unified School District |
See Notes to Financial Statements.
20
Schedules of Investments
(unaudited) (continued)
Salomon Brothers National Tax Free Bond Fund | ||
Summary of Investments by Industry* | June 30, 2005 | |
General Obligation | 35.2 | % |
Transportation | 27.6 | |
Education | 13.5 | |
Utilities | 8.2 | |
Health Care | 7.3 | |
Industrial Development | 3.4 | |
Water & Sewer | 2.7 | |
Miscellaneous | 0.9 | |
Public Facilities | 0.7 | |
Housing: Single-Family | 0.5 | |
100.0 | % | |
* As a percentage of total investments. Please note that Fund holdings are subject to change.
See Notes to Financial Statements.
21
Schedules of Investments
(unaudited) (continued)
Salomon Brothers California Tax Free Bond Fund | ||||||
Face | ||||||
Amount | Rating‡ | |||||
MUNICIPAL BONDS — 97.0% | ||||||
General Obligation — 23.2% | ||||||
$ 150,000 | AAA | El Segundo, CA, USD, Refunding Bonds, FGIC-Insured, 5.250% due 9/1/22 | $ | 165,941 | ||
1,000,000 | AAA | Glendale, CA, USD, Series C, FSA-Insured, 5.750% due 9/1/13 | 1,109,200 | |||
250,000 | AAA | Moorpark, CA, USD, Refunding Bonds, FSA-Insured, 5.000% due 8/1/23 | 269,902 | |||
575,000 | AAA | Pomona, CA, USD, Refunding Bonds, Series A, MBIA-Insured, 6.500% due 8/1/19 | 681,501 | |||
215,000 | AAA | Walnut Valley, CA, USD, Refunding Bonds, FSA-Insured, 5.250% due 8/1/18 | 244,152 | |||
Total General Obligation | 2,470,696 | |||||
Housing: Multi-Family — 9.8% | ||||||
1,000,000 | AAA | California Housing Finance Agency Revenue, MFH III, Series A, MBIA-Insured, | ||||
5.850% due 8/1/17 (a) | 1,041,330 | |||||
Housing: Single-Family — 1.6% | ||||||
170,000 | AA- | California Housing Finance Agency Revenue, Single Family Mortgage Purpose Program, | ||||
Series A-2, Class III, 4.800% due 8/1/12 (a) | 174,242 | |||||
Miscellaneous — 5.8% | ||||||
300,000 | AAA | Puerto Rico Public Finance Corp., Commonwealth Appropriation, Refunding Bonds, Series A, | ||||
FGIC-Insured, LOC-Government Bank for Puerto Rico (Expires 4/12/12), 5.250% due 8/1/31 | 333,543 | |||||
250,000 | AA | Sacramento County, CA, Sanitation District Financing Authority Revenue, Refunding Bonds, | ||||
Series A, 6.000% due 12/1/14 | 284,042 | |||||
Total Miscellaneous | 617,585 | |||||
Transportation — 22.2% | ||||||
2,000,000 | AAA | Intermodal Container Transfer Facility Joint Powers Authority Revenue, Refunding Bonds, | ||||
Series A, AMBAC-Insured, 5.750% due 11/1/14 | 2,365,580 | |||||
Water & Sewer — 34.4% | ||||||
1,000,000 | AAA | Fresno, CA, Sewer Revenue, Series A-1, AMBAC-Insured, 6.250% due 9/1/14 | 1,210,240 | |||
1,500,000 | AAA | Puerto Rico Commonwealth Aqueduct & Sewer Authority Revenue, Refunding Bonds, | ||||
MBIA/IBC-Insured, 6.250% due 7/1/13 | 1,810,770 | |||||
560,000 | AA | San Diego County, CA Water Authority Revenue, COP, Refunding Bonds, Series A, | ||||
5.750% due 5/1/12 | 639,834 | |||||
Total Water & Sewer | 3,660,844 | |||||
TOTAL INVESTMENTS — 97.0% (Cost — $9,390,599#) | 10,330,277 | |||||
Other Assets in Excess of Liabilities — 3.0% | 324,281 | |||||
TOTAL NET ASSETS — 100.0% | $ | 10,654,558 | ||||
‡ | All ratings are by Standard & Poor’s Ratings Service, unless otherwise footnoted. |
(a) | Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (AMT). |
# | Aggregate cost for Federal income tax purposes is substantially the same. See pages 31 and 32 for definitions of ratings. |
Abbreviations used in this schedule: | ||
AMBAC | — American Municipal Bond Assurance Corporation | |
COP | — Certificate of Participation | |
FGIC | — Financial Guaranty Insurance Company | |
FSA | — Financial Security Assurance | |
IBC | — Insured Bond Certificates | |
LOC | — Letter of Credit | |
MBIA | — Municipal Bond Investors Assurance Corporation | |
MFH | — Multi-Family Housing | |
USD | — Unified School District |
See Notes to Financial Statements.
22
Schedules of Investments
(unaudited) (continued)
Salomon Brothers New York Tax Free Bond Fund | ||||||
Face | ||||||
Amount | ||||||
MUNICIPAL BONDS — 93.4% | ||||||
Education — 21.6% | ||||||
New York State Dormitory Authority Revenue: | ||||||
$ 3,000,000 | City University of New York, Consolidated Second General Resolution, Series A, AMBAC-Insured, | |||||
5.750% due 7/1/18 | $ | 3,540,240 | ||||
1,000,000 | Columbia University, Series B, 5.375% due 7/1/15 | 1,125,860 | ||||
New York University, Series A, MBIA-Insured: | ||||||
1,000,000 | 5.750% due 7/1/15 | 1,186,390 | ||||
6,300,000 | 5.750% due 7/1/27 | 7,817,544 | ||||
1,500,000 | School District Financing Program, Series A, MBIA-Insured, 5.750% due 10/1/17 | 1,715,040 | ||||
State University: | ||||||
1,070,000 | Adult Facilities, Series C, FSA-Insured, 5.750% due 5/15/17 | 1,284,664 | ||||
2,030,000 | Educational Facilities, Series B, 5.250% due 5/15/13 | 2,260,344 | ||||
New York State Municipal Bond Bank Agency, Special School Purpose Revenue, | ||||||
State Aid Withholding, Series C: | ||||||
1,000,000 | 5.500% due 6/1/16 | 1,117,970 | ||||
1,700,000 | 5.250% due 12/1/21 | 1,851,113 | ||||
Total Education | 21,899,165 | |||||
Electric — 1.7% | ||||||
1,500,000 | Long Island Power Authority, New York Electric System Revenue, Series C, MBIA/IBC-Insured, | |||||
5.500% due 9/1/21 | 1,689,585 | |||||
General Obligation — 8.6% | ||||||
2,100,000 | Erie County, NY, Public Improvement, Series A, FGIC-Insured, 5.000% due 9/1/15 | 2,299,101 | ||||
New York City, NY: | ||||||
1,000,000 | Series A, 5.750% due 8/1/16 | 1,125,810 | ||||
Series B: | ||||||
1,000,000 | 5.625% due 12/1/13 | 1,116,660 | ||||
2,450,000 | 5.750% due 8/1/14 | 2,723,297 | ||||
1,250,000 | Puerto Rico Commonwealth, Refunding, Public Improvement, Series A, MBIA-Insured, | |||||
5.500% due 7/1/16 | 1,475,138 | |||||
Total General Obligation | 8,740,006 | |||||
Health Care — 5.9% | ||||||
2,000,000 | Mental Health Services Facilities Improvement, Series D, FGIC-Insured, 5.000% due 2/15/23 | 2,161,480 | ||||
825,000 | Municipal Health Facilities Improvement Program, Series 1, FSA-Insured, 5.500% due 1/15/14 | 914,867 | ||||
2,500,000 | North Shore University Hospital, MBIA-Insured, 5.500% due 11/1/14 | 2,907,525 | ||||
Total Health Care | 5,983,872 | |||||
Housing: Single-Family — 8.8% | ||||||
1,645,000 | New York City Housing Development Corp., MFH Revenue, Series E, SONYMA-Insured, | |||||
6.100% due 11/1/19 | 1,766,089 | |||||
1,965,000 | New York State Housing Finance Agency, State University Construction, Series A, 7.900% due 11/1/06 | 2,021,906 | ||||
3,200,000 | New York State Mortgage Agency Revenue, Homeower Mortgage, Series 71, 5.350% due 10/1/18 (b) | 3,286,944 | ||||
1,640,000 | Schenectady, NY, Industrial Development Agency, Civic Facility Revenue, Union College Project, | |||||
Series A, AMBAC-Insured, 5.500% due 7/1/16 | 1,828,239 | |||||
Total Housing: Single-Family | 8,903,178 | |||||
Lease — 5.9% | ||||||
3,500,000 | Court Facilities Lease, NYC Issue, Non State Supported Debt, Series A, AMBAC-Insured, | |||||
5.500% due 5/15/28 | 4,228,175 | |||||
1,500,000 | Court Facilities, Series A, 5.500% due 5/15/17 | 1,724,490 | ||||
Total Lease | 5,952,665 | |||||
See Notes to Financial Statements.
23
Schedules of Investments
(unaudited) (continued)
Salomon Brothers New York Tax Free Bond Fund | ||||||
Face | ||||||
Amount | ||||||
Miscellaneous — 1.2% | ||||||
$ 1,090,000 | 34th Street Partnership Inc., New York, Refunding, Capital Improvement, 5.000% due 1/1/16 | $ | 1,181,168 | |||
Sales Tax — 22.4% | ||||||
New York City, NY, Transitional Finance Authority Revenue: | ||||||
Future Tax Secured: | ||||||
Series A: | ||||||
5,000,000 | 5.750% due 2/15/16 | 5,569,350 | ||||
580,000 | Unrefunded, 5.750% due 2/15/14 | 650,279 | ||||
1,155,000 | Series B, 5.375% due 2/1/15 | 1,294,166 | ||||
1,685,000 | Series A, 5.500% due 11/15/17 | 1,898,388 | ||||
New York State Local Assistance Corp., Refunded: | ||||||
3,000,000 | Series C, 5.500% due 4/1/17 | 3,469,830 | ||||
2,255,000 | Series E, 6.000% due 4/1/14 | 2,637,177 | ||||
Sales Tax Asset Receivable, Corporation New York, Series A, MBIA-Insured: | ||||||
2,500,000 | 5.250% due 10/15/18 | 2,820,575 | ||||
4,000,000 | 5.000% due 10/15/21 | 4,395,000 | ||||
Total Sales Tax | 22,734,765 | |||||
Transportation — 17.3% | ||||||
2,500,000 | Metropolitan Transportation Authority, New York Services Contract, Refunding Bonds, Series A, | |||||
AMBAC-Insured, 5.500% due 11/15/15 | 2,839,125 | |||||
Metropolitan Transportation Authority, New York Services Contract: | ||||||
1,000,000 | Commuter Facilities, Series O, 5.750% due 7/1/13 | 1,129,130 | ||||
Transportation Facilities, Series O: | ||||||
3,000,000 | 5.750% due 7/1/13 | 3,387,390 | ||||
1,000,000 | MBIA/IBC-Insured, 5.500% due 7/1/17 | 1,180,730 | ||||
New York State Thruway Authority: | ||||||
1,000,000 | Highway and Bridge Transportation Fund, Refunded, Series C, AMBAC-Insured, 5.500% due 4/1/15 | 1,125,420 | ||||
1,100,000 | Service Contract Revenue, Local Highway and Bridge, 5.500% due 4/1/14 | 1,230,240 | ||||
4,575,000 | Unrefunded Balance, Series E, 5.250% due 1/1/13 | 4,875,943 | ||||
1,500,000 | Puerto Rico Commonwealth, Highway & Transportation Authority, Highway Revenue, Series G, | |||||
FGIC-Insured, 5.250% due 7/1/16 | 1,683,720 | |||||
Total Transportation | 17,451,698 | |||||
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS | ||||||
(Cost — $89,049,538) | 94,536,102 | |||||
SHORT-TERM INVESTMENTS (c) — 5.4% | ||||||
General Obligation — 1.4% | ||||||
1,400,000 | New York City, NY, Series B, Subseries B6, MBIA-Insured, 2.180% due 7/1/05 | 1,400,000 | ||||
Industrial Development — 2.7% | ||||||
2,800,000 | Nassau County, NY, Industrial Development Agency, Civic Facilities Revenue, Refunding and | |||||
Improvement, Cold Spring Harbor, SPA-Morgan Guarantee Trust, 2.260% due 7/5/05 | 2,800,000 | |||||
See Notes to Financial Statements.
24
Schedules of Investments
(unaudited) (continued)Salomon Brothers New York Tax Free Bond Fund | ||||||
Water & Sewer — 1.3% | ||||||
$1,300,000 | New York, NY, City Municipal Water Finance Authority, Water and Sewer System Revenue, Series F, | |||||
Subseries F2, Bayerische Landesbank-Insured, 2.250% due 7/6/05 | $ | 1,300,000 | ||||
TOTAL SHORT-TERM INVESTMENTS (Cost — $5,500,000) | 5,500,000 | |||||
TOTAL INVESTMENTS — 98.8% (Cost — $94,549,538#) | 100,036,102 | |||||
Other Assets in Excess of Liabilities — 1.2% | 1,235,102 | |||||
TOTAL NET ASSETS — 100.0% | $ | 101,271,204 | ||||
‡ | All ratings are by Standard & Poor’s Ratings Service, unless otherwise footnoted. |
(a) | Rating by Moody’s Investors Service, Inc. |
(b) | Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (AMT). |
(c) | Variable rate demand obligation payable at par on demand at any time on no more than seven days notice. The coupon rate listed represents the current rate at the period end. The due dates on these securities reflect the next interest rate reset date or, when applicable, the maturity date. |
# | Aggregate cost for Federal income tax purposes is substantially the same. |
See pages 31 and 32 for definitions of ratings. |
Abbreviations used in this schedule: | ||
AMBAC | — American Municipal Bond Assurance Corporation | |
FGIC | — Financial Guaranty Insurance Company | |
FSA | — Financial Security Assurance | |
IBC | — Insured Bond Certificates | |
MBIA | — Municipal Bond Investors Assurance Corporation | |
MFH | — Multi-Family Housing | |
SPA | — Standby Bond Purchase Agreement | |
SONYMA | — State of New York Mortgage Association |
See Notes to Financial Statements.
25
Schedules of Investments
(unaudited) (continued)
Salomon Brothers Mid Cap Fund | ||||
Shares | Value | |||
COMMON STOCK — 96.5% | ||||
CONSUMER DISCRETIONARY — 16.9% | ||||
Auto Components — 1.0% | ||||
4,125 | BorgWarner, Inc. | $ | 221,389 | |
Diversified Consumer Services — 0.9% | ||||
6,100 | Education Management Corp. * | 205,753 | ||
Hotels, Restaurants & Leisure — 4.0% | ||||
2,280 | GTECH Holdings Corp. | 66,667 | ||
5,525 | Landry’s Restaurants, Inc. | 166,247 | ||
8,105 | Outback Steakhouse, Inc. | 366,670 | ||
4,125 | Station Casinos, Inc. | 273,900 | ||
873,484 | ||||
Household Durables — 1.9% | ||||
1,933 | Mohawk Industries, Inc. * | 159,472 | ||
3,500 | Ryland Group, Inc. | 265,545 | ||
425,017 | ||||
Media — 2.7% | ||||
5,325 | Entercom Communications Corp. * | 177,269 | ||
6,300 | Lamar Advertising Co., Class A Shares * | 269,451 | ||
180 | Washington Post Co., Class B Shares | 150,306 | ||
597,026 | ||||
Multi-line Retail — 1.3% | ||||
1,275 | Neiman-Marcus Group, Inc., Class A Shares | 123,573 | ||
8,675 | Saks, Inc. * | 164,565 | ||
288,138 | ||||
Specialty Retail — 4.3% | ||||
16,950 | AnnTaylor Stores Corp. * | 411,546 | ||
5,900 | Chico’s FAS, Inc. * | 202,252 | ||
4,650 | O’Reilly Automotive, Inc. * | 138,617 | ||
6,450 | PETsMART, Inc. | 195,757 | ||
948,172 | ||||
Textiles, Apparel & Luxury Goods — 0.8% | ||||
3,450 | Columbia Sportswear Co. * | 170,395 | ||
TOTAL CONSUMER DISCRETIONARY | 3,729,374 | |||
CONSUMER STAPLES — 5.0% | ||||
Food Products — 2.1% | ||||
10,860 | Hormel Foods Corp. | 318,524 | ||
3,350 | J.M. Smucker Co. | 157,249 | ||
475,773 | ||||
Household Products — 2.2% | ||||
13,200 | Church & Dwight Co., Inc. | 477,840 | ||
Personal Products — 0.7% | ||||
3,725 | Chattem, Inc. * | 154,215 | ||
TOTAL CONSUMER STAPLES | 1,107,828 | |||
See Notes to Financial Statements.
26
Schedules of Investments
(unaudited) (continued)
Salomon Brothers Mid Cap Fund | ||||
Shares | Value | |||
ENERGY — 7.9% | ||||
Energy Equipment & Services — 6.3% | ||||
10,500 | Core Laboratories NV * | $ | 281,610 | |
12,600 | Patterson-UTI Energy, Inc. | 350,658 | ||
6,600 | Precision Drilling Corp. * | 260,568 | ||
9,800 | Rowan Cos, Inc.* | 291,158 | ||
3,200 | Smith International, Inc.* | 203,840 | ||
1,387,834 | ||||
Oil, Gas & Consumable Fuels — 1.6% | ||||
6,800 | Murphy Oil Corp. | 355,164 | ||
TOTAL ENERGY | 1,742,998 | |||
FINANCIALS — 16.4% | ||||
Commercial Banks — 4.4% | ||||
2,025 | City National Corp. | 145,213 | ||
3,452 | Commerce Bancshares, Inc. | 174,015 | ||
6,085 | Compass Bancshares, Inc. | 273,825 | ||
5,125 | CVB Financial Corp. | 100,860 | ||
3,250 | Independence Community Bank Corp. | 120,022 | ||
4,650 | Popular, Inc. | 117,134 | ||
881 | Toronto-Dominion Bank | 39,301 | ||
970,370 | ||||
Diversified Financials — 3.1% | ||||
6,600 | Legg Mason, Inc. | 687,126 | ||
Insurance — 6.8% | ||||
15,000 | Assurant, Inc. | 541,500 | ||
4,600 | Max Re Capital Ltd. | 105,340 | ||
3,375 | Philadelphia Consolidated Holding Corp. * | 286,065 | ||
5,200 | Platinum Underwriters Holdings Ltd. | 165,464 | ||
7,225 | Scottish Re Group Ltd. | 175,134 | ||
1,350 | StanCorp Financial Group, Inc. | 103,383 | ||
180 | White Mountains Insurance Group Ltd. | 113,562 | ||
1,490,448 | ||||
Real Estate — 2.1% | ||||
4,750 | Developers Diversified Realty Corp. | 218,310 | ||
3,550 | Mack-Cali Realty Corp. | 160,815 | ||
2,400 | Prentiss Properties Trust | 87,456 | ||
466,581 | ||||
TOTAL FINANCIALS | 3,614,525 | |||
HEALTH CARE — 14.1% | ||||
Biotechnology — 0.9% | ||||
9,550 | Protein Design Labs, Inc. * | 193,006 | ||
Health Care Equipment & Supplies — 8.7% | ||||
1,450 | C.R. Bard, Inc. | 96,440 | ||
4,650 | DENTSPLY International, Inc. | 251,100 | ||
16,000 | DJ Orthopedics, Inc. * | 438,880 | ||
5,475 | Edwards Lifesciences Corp. * | 235,534 | ||
5,925 | Fisher Scientific International, Inc. * | 384,532 | ||
9,800 | Respironics, Inc. * | 353,878 | ||
6,275 | STERIS Corp.* | 161,707 | ||
1,922,071 | ||||
See Notes to Financial Statements.
27
Schedules of Investments
(unaudited) (continued)
Salomon Brothers Mid Cap Fund | ||||
Shares | Value | |||
Health Care Providers & Services — 1.0% | ||||
3,550 | Apria Healthcare Group, Inc. * | $ | 122,972 | |
2,800 | Community Health Systems, Inc. * | 105,812 | ||
228,784 | ||||
Pharmaceuticals — 3.5% | ||||
3,128 | Barr Pharmaceuticals, Inc. * | 152,459 | ||
10,525 | Medicis Pharmaceutical Corp., Class A Shares | 333,958 | ||
4,700 | Sepracor, Inc. * | 282,047 | ||
768,464 | ||||
TOTAL HEALTH CARE | 3,112,325 | |||
INDUSTRIALS — 14.0% | ||||
Aerospace & Defense — 1.1% | ||||
3,508 | Alliant Techsystems, Inc. * | 247,665 | ||
Airlines — 0.9% | ||||
9,575 | JetBlue Airways Corp. * | 195,713 | ||
Commercial Services & Supplies — 3.6% | ||||
4,325 | ARAMARK Corp., Class B Shares | 114,180 | ||
2,325 | ChoicePoint, Inc. * | 93,116 | ||
1,650 | HNI Corp. | 84,398 | ||
4,325 | Manpower, Inc. | 172,049 | ||
9,400 | Robert Half International, Inc. | 234,718 | ||
3,000 | RR Donnelley & Sons Co. | 103,530 | ||
801,991 | ||||
Construction & Engineering — 1.3% | ||||
10,100 | Granite Construction, Inc. | 283,810 | ||
Industrial Conglomerates — 2.2% | ||||
7,245 | Carlisle Cos., Inc. | 497,224 | ||
Machinery — 3.5% | ||||
5,575 | Actuant Corp., Class A Shares * | 267,265 | ||
2,250 | Oshkosh Truck Corp. | 176,130 | ||
4,425 | Tecumseh Products Co., Class A Shares | 121,422 | ||
9,000 | Timken Co. | 207,900 | ||
772,717 | ||||
Road & Rail — 1.4% | ||||
15,475 | Werner Enterprises, Inc. | 303,929 | ||
TOTAL INDUSTRIALS | 3,103,049 | |||
INFORMATION TECHNOLOGY — 11.1% | ||||
Communications Equipment — 1.1% | ||||
15,425 | Carrier Access Corp. * | 74,349 | ||
1,525 | Plantronics, Inc. | 55,449 | ||
6,100 | Tekelec * | 102,480 | ||
232,278 | ||||
Computers & Peripherals — 0.7% | ||||
3,225 | Diebold, Inc. | 145,480 | ||
Electronic Equipment & Instruments — 1.4% | ||||
12,700 | Aeroflex, Inc. * | 106,680 | ||
5,225 | Amphenol Corp., Class A Shares | 209,888 | ||
316,568 | ||||
See Notes to Financial Statements.
28
Schedules of Investments
(unaudited) (continued)
Salomon Brothers Mid Cap Fund | ||||
Shares | Value | |||
IT Services — 2.5% | ||||
11,900 | DST Systems, Inc. * | $ | 556,920 | |
Semiconductors & Semiconductor Equipment — 2.6% | ||||
3,400 | Lam Research Corp. * | 98,396 | ||
17,050 | LSI Logic Corp. * | 144,754 | ||
7,525 | National Semiconductor Corp. | 165,776 | ||
7,000 | Novellus Systems, Inc. * | 172,970 | ||
581,896 | ||||
Software — 2.8% | ||||
15,300 | Parametric Technology Corp. * | 97,614 | ||
7,150 | Quest Software, Inc. * | 97,455 | ||
63,560 | TIBCO Software, Inc. * | 415,682 | ||
610,751 | ||||
TOTAL INFORMATION TECHNOLOGY | 2,443,893 | |||
MATERIALS — 4.7% | ||||
Chemicals — 2.2% | ||||
3,450 | FMC Corp. * | 193,683 | ||
7,125 | Lubrizol Corp. | 299,321 | ||
493,004 | ||||
Construction Materials — 1.3% | ||||
5,290 | Rinker Group Ltd., ADR | 280,846 | ||
Containers & Packaging — 1.2% | ||||
4,225 | AptarGroup, Inc. | 214,630 | ||
1,675 | Sonoco Products Co. | 44,388 | ||
259,018 | ||||
TOTAL MATERIALS | 1,032,868 | |||
TELECOMMUNICATION SERVICES — 0.8% | ||||
Wireless Telecommunication Services — 0.8% | ||||
2,325 | Telephone & Data Systems, Inc. | 94,883 | ||
2,325 | Telephone & Data Systems, Inc., Special Shares | 89,141 | ||
TOTAL TELECOMMUNICATION SERVICES | 184,024 | |||
UTILITIES — 5.6% | ||||
Electric Utilities — 0.5% | ||||
4,900 | Westar Energy, Inc. | 117,747 | ||
Multi-Utilities — 5.1% | ||||
8,100 | Sempra Energy | 334,611 | ||
5,575 | SCANA Corp. | 238,108 | ||
6,300 | Southwestern Energy Co. * | 295,974 | ||
6,700 | Wisconsin Energy Corp. | 261,300 | ||
1,129,993 | ||||
TOTAL UTILITIES | 1,247,740 | |||
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENT | ||||
(Cost — $16,437,992) | 21,318,624 | |||
See Notes to Financial Statements.
29
Schedules of Investments
(unaudited) (continued)
Salomon Brothers Mid Cap Fund | |||||
Face | |||||
Amount | Value | ||||
SHORT-TERM INVESTMENT — 3.6% | |||||
Repurchase Agreement — 3.6% | |||||
$ 798,000 | Interest in $599,362,000 joint tri-party repurchase agreement dated 6/30/05 with Merrill Lynch & Co., Inc., | ||||
3.350% due 7/1/05; Proceeds at maturity — $798,074; (Fully collateralized by various U.S. Treasury obligations | |||||
�� | and U.S. government agency obligations, 0.000% to 4.625% due 6/16/06 to 1/13/33; Market value — $813,961) | ||||
(Cost — $798,000) | $ | 798,000 | |||
TOTAL INVESTMENTS — 100.1% (Cost — $17,235,992#) | 22,116,624 | ||||
Liabilities in Excess of Other Assets — (0.1)% | (22,957 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 22,093,667 | |||
* | Non-income producing security. | |
# | Aggregate cost for Federal income tax purposes is substantially the same. | |
Abbreviation used in this schedule: ADR — American Depositary Receipt |
See Notes to Financial Statements.
30
Bond Ratings
(unaudited)
The definitions of the applicable rating symbols are set forth below:
Standard & Poor’s Ratings Service (“Standard & Poor’s”) — Ratings from “AA” to “CCC” may be modified by the addition of a plus (+) or minus (–) sign to show relative standings within the major rating categories.
AAA | — | Bonds rated “AAA” have the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay |
principal is extremely strong. | ||
AA | — | Bonds rated “AA” have a very strong capacity to pay interest and repay principal and differ from the highest rated |
issues only in a small degree. | ||
A | Bonds rated “A” have a strong capacity to pay interest and repay principal although they are somewhat more | |
susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated | ||
categories. | ||
BBB | — | Bonds rated “BBB” are regarded as having an adequate capacity to pay interest and repay principal. Whereas they |
normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are | ||
more likely to lead to a weakened capacity to pay interest and repay principal for bonds in this category than in | ||
higher rated categories. | ||
BB, B, CCC | ||
and CC | — | Bonds rated “BB”, “B”, “CCC” and “CC” are regarded, on balance, as predominantly speculative with respect to |
capacity to pay interest and repay principal in accordance with the terms of the obligation. “BB” represents a lower | ||
degree of speculation than “B”, and “CC” the highest degree of speculation. While such bonds will likely have | ||
some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to | ||
adverse conditions. | ||
D | — | Bonds rated “D” are in default and payment of interest and/or repayment of principal is in arrears. |
Moody’s Investors Service (“Moody’s”) — Numerical modifiers 1, 2 and 3 may be applied to each generic rating from “Aa” to “Ce,” where 1 is the highest and 3 the lowest ranking within its generic category.
Aaa | — | Bonds rated “Aaa” are judged to be of the best quality. They carry the smallest degree of investment risk and are |
generally referred to as “gilt edge.” Interest payments are protected by a large or by an exceptionally stable margin | ||
and principal is secure. While the various protective elements are likely to change, such changes as can be | ||
visualized are most unlikely to impair the fundamentally strong position of such issues. | ||
Aa | — | Bonds rated “Aa” are judged to be of high quality by all standards. Together with the “Aaa” group they comprise |
what are generally known as high grade bonds. They are rated lower than the best bonds because margins of | ||
protection may not be as large as in “Aaa” securities or fluctuation of protective elements may be of greater | ||
amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in | ||
“Aaa” securities. | ||
A | Bonds rated “A” possess many favorable investment attributes and are to be considered as upper medium grade | |
obligations. Factors giving security to principal and interest are considered adequate but elements may be present | ||
which suggest a susceptibility to impairment some time in the future. | ||
Baa | — | Bonds rated “Baa” are considered as medium grade obligations, i.e., they are neither highly protected nor poorly |
secured. Interest payments and principal security appear adequate for the present but certain protective elements | ||
may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding | ||
investment characteristics and in fact have speculative characteristics as well. | ||
Ba | — | Bonds rated “Ba” are judged to have speculative elements; their future cannot be considered as well assured. Often |
the protection of interest and principal payments may be very moderate and therefore not well safeguarded during | ||
both good and bad times over the future. Uncertainty of position characterizes bonds in this class. | ||
B | Bonds rated “B” are generally lack characteristics of desirable investments. Assurance of interest and principal | |
payments or of maintenance of other terms of the contract over any long period of time may be small. | ||
Caa | — | Bonds rated “Caa” are of poor standing. These may be in default, or present elements of danger may exist with |
respect to principal or interest. |
31
Bond Ratings
(unaudited) (continued)
Ca | — | Bonds rated “Ca” represent obligations which are speculative in a high degree. Such issues are often in default or |
have other marked short-comings. |
Fitch Rating Service (“Fitch”) — Ratings from “AAA” to “CC” may be modified by the addition of a plus (+) or minus (–) sign to show relative standings within the major rating categories
AAA | — | Bonds rated “AAA” have the highest rating assigned by Fitch. Capacity to pay interest and repay principal is |
extremely strong. | ||
AA | Bonds rated “AA” have a very strong capacity to pay interest and repay principal and differ from the highest rated | |
issues only in a small degree. | ||
A | — | Bonds rated “A” have a strong capacity to pay interest and repay principal although they are somewhat more |
susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated | ||
categories. | ||
BBB | — | Bonds rated “BBB” are regarded as having an adequate capacity to pay interest and repay principal. Whereas they |
normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are | ||
more likely to lead to a weakened capacity to pay interest and repay principal for bonds in this category than in | ||
higher rated categories. | ||
BB, B, CCC | ||
and CC | — | Bonds rated “BB”, “B”, “CCC��� and “CC” are regarded, on balance, as predominantly speculative with respect to |
capacity to pay interest and repay principal in accordance with the terms of the obligation. “BB” represents a lower | ||
degree of speculation than “B”, and “CC” the highest degree of speculation. While such bonds will likely have | ||
some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to | ||
adverse conditions. | ||
NR | — | Indicates that the bond is not rated by Standard & Poor’s, Moody’s, or Fitch. |
Short-Term Security Ratings
(unaudited)
SP-1 | — | Standard & Poor’s highest rating indicating very strong or strong capacity to pay principal and interest; those issues |
determined to possess overwhelming safety characteristics are denoted with a plus (+) sign. | ||
A-1 | — | Standard & Poor’s highest commercial paper and variable-rate demand obligation (VRDO) rating indicating that |
the degree of safety regarding timely payment is either overwhelming or very strong; those issues determined to | ||
possess overwhelming safety characteristics are denoted with a plus (+) sign. | ||
VMIG 1 | — | Moody’s highest rating for issues having a demand feature — VRDO. |
P-1 | — | Moody’s highest rating for commercial paper and for VRDO prior to the advent of the VMIG 1 rating. |
F-1 | — | Fitch’s highest rating indicating the strongest capacity for timely payment of financial commitments; those issues |
determined to possess overwhelming strong credit feature are denoted with a plus (+) sign. |
32
Statements of Assets and Liabilities
June 30, 2005 (unaudited)
Salomon Brothers | ||||||||||||||||
ASSETS: | ||||||||||||||||
Investments, at cost | $ | 40,147,818 | $ | 9,390,599 | $ | 94,549,538 | $ | 17,235,992 | ||||||||
Investments, at value | $ | 41,241,183 | $ | 10,330,277 | $ | 100,036,102 | $ | 22,116,624 | ||||||||
Cash | 99,642 | 196,735 | 283,342 | 957 | ||||||||||||
Dividends and interest receivable | 558,796 | 167,897 | 1,479,763 | 20,620 | ||||||||||||
Receivable for Fund shares sold | 801 | 187 | 949 | 298 | ||||||||||||
Receivable from manager | 411 | 389 | — | — | ||||||||||||
Prepaid expenses | 30,915 | 29,313 | 36,222 | 23,478 | ||||||||||||
Total Assets | 41,931,748 | 10,724,798 | 101,836,378 | 22,161,977 | ||||||||||||
LIABILITIES: | ||||||||||||||||
Payable for Fund shares repurchased | 28,564 | 3,878 | 396,782 | 87 | ||||||||||||
Dividends payable | 11,764 | 1,314 | 8,067 | — | ||||||||||||
Distribution fees payable | 10,475 | 2,279 | 21,099 | 1,375 | ||||||||||||
Transfer agent fees payable | 9,897 | 6,668 | 13,144 | 10,018 | ||||||||||||
Trustees’ fees payable | 902 | 135 | 1,642 | 1,459 | ||||||||||||
Management fees payable | — | — | 26,408 | 7,239 | ||||||||||||
Accrued expenses | 41,225 | 55,966 | 98,032 | 48,132 | ||||||||||||
Total Liabilities | 102,827 | 70,240 | 565,174 | 68,310 | ||||||||||||
Total Net Assets | $ | 41,828,921 | $ | 10,654,558 | $ | 101,271,204 | $ | 22,093,667 | ||||||||
NET ASSETS: | ||||||||||||||||
Par value (Note 6) | — | — | — | $ | 1,126 | |||||||||||
Paid-in capital in excess of par value | $ | 44,923,849 | $ | 12,560,926 | $ | 99,993,613 | 16,591,630 | |||||||||
Accumulated net investment loss | — | — | — | (19,209 | ) | |||||||||||
Accumulated net realized gain (loss) on investments and | ||||||||||||||||
foreign currency transactions | (4,188,293 | ) | (2,846,046 | ) | (4,208,973 | ) | 639,482 | |||||||||
Net unrealized appreciation on investments and foreign currencies | 1,093,365 | 939,678 | 5,486,564 | 4,880,638 | ||||||||||||
Total Net Assets | $ | 41,828,921 | $ | 10,654,558 | $ | 101,271,204 | $ | 22,093,667 | ||||||||
Shares Outstanding: | ||||||||||||||||
Class A | 3,176,510 | 989,567 | 8,424,303 | 153,544 | ||||||||||||
Class B | 210,502 | 12,694 | 26,982 | 17,107 | ||||||||||||
Class C | 109,674 | 4,267 | 5,157 | 16,041 | ||||||||||||
Class O | 13,604 | 205 | 4,801 | 938,983 | ||||||||||||
Net Asset Value: | ||||||||||||||||
Class A (and redemption price) | $ | 11.91 | $ | 10.58 | $ | 11.97 | $ | 19.41 | ||||||||
Class B (and offering price)* | $ | 11.93 | $ | 10.59 | $ | 11.97 | $ | 18.94 | ||||||||
Class C (and offering price)* | $ | 11.93 | $ | 10.59 | $ | 11.94 | $ | 19.01 | ||||||||
Class O (offering price and redemption price) | $ | 11.93 | $ | 10.59 | $ | 11.96 | $ | 19.69 | ||||||||
Maximum Public Offering Price Per Share: | ||||||||||||||||
Class A (based on maximum sales charges of 4.00%, 4.00%, | ||||||||||||||||
4.00% and 5.75%, respectively) | $ | 12.41 | $ | 11.02 | $ | 12.47 | $ | 20.59 | ||||||||
* Redemption price per share is equal to net asset value less any applicable contingent deferred sales charges.
See Notes to Financial Statements.
33
Statements of Operations
For the Six Months Ended June 30, 2005 (unaudited)
Salomon Brothers | ||||||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
Interest | $ | 865,578 | $ | 251,517 | $ | 2,216,502 | $ | 7,605 | ||||||||
Dividends | — | — | — | 102,968 | ||||||||||||
Less: Foreign taxes withheld | — | — | — | (252 | ) | |||||||||||
Total Investment Income | 865,578 | 251,517 | 2,216,502 | 110,321 | ||||||||||||
EXPENSES: | ||||||||||||||||
Management fees (Note 2) | 101,959 | 26,895 | 254,449 | 83,829 | ||||||||||||
Distribution fees (Notes 2 and 4) | 64,342 | 14,032 | 128,447 | 6,127 | ||||||||||||
Custody | 26,041 | 31,376 | 27,672 | 19,926 | ||||||||||||
Shareholder reports (Note 4) | 22,300 | 11,502 | 13,915 | 11,860 | ||||||||||||
Transfer agent fees (Note 4) | 21,281 | 2,009 | 20,106 | 4,054 | ||||||||||||
Registration fees | 20,651 | 17,310 | 21,653 | 21,695 | ||||||||||||
Audit and tax fees | 11,528 | 14,341 | 14,388 | 7,490 | ||||||||||||
Legal fees | 7,284 | 13,410 | 18,001 | 11,572 | ||||||||||||
Insurance | 1,124 | 302 | 2,284 | 208 | ||||||||||||
Trustees’ fees (Note 2) | 660 | 421 | 630 | 367 | ||||||||||||
Miscellaneous expenses | 2,050 | 2,413 | 41 | 2,305 | ||||||||||||
Total Expenses | 279,220 | 134,011 | 501,586 | 169,433 | ||||||||||||
Less: Management fee waivers and expense reimbursements (Note 2) | (112,920 | ) | (90,395 | ) | (93,249 | ) | (39,903 | ) | ||||||||
Net Expenses | 166,300 | 43,616 | 408,337 | 129,530 | ||||||||||||
Net Investment Income (Loss) | 699,278 | 207,901 | 1,808,165 | (19,209 | ) | |||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||||||||||
AND FOREIGN CURRENCY TRANSACTIONS (NOTES 1 AND 3): | ||||||||||||||||
Net Realized Gain (Loss) From: | ||||||||||||||||
Investment transactions | 1,290,060 | 94,401 | 1,667,639 | 232,390 | ||||||||||||
Foreign currency transactions | — | — | — | (12 | ) | |||||||||||
Net Realized Gain | 1,290,060 | 94,401 | 1,667,639 | 232,378 | ||||||||||||
Change in Net Unrealized Appreciation/Depreciation From: | ||||||||||||||||
Investments | (1,076,842 | ) | (141,422 | ) | (1,304,559 | ) | 120,175 | |||||||||
Foreign currencies | — | — | — | 6 | ||||||||||||
Change in Net Unrealized Appreciation/Depreciation | (1,076,842 | ) | (141,422 | ) | (1,304,559 | ) | 120,181 | |||||||||
Net Gain (Loss) on Investments and Foreign Currency Transactions | 213,218 | (47,021 | ) | 363,080 | 352,559 | |||||||||||
Increase in Net Assets From Operations | $ | 912,496 | $ | 160,880 | $ | 2,171,245 | $ | 333,350 | ||||||||
See Notes to Financial Statements.
34
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2005 (unaudited)
and the Year Ended December 31, 2004
Salomon Brothers | ||||||||
National Tax Free | ||||||||
Bond Fund | ||||||||
OPERATIONS: | ||||||||
Net investment income | $ | 699,278 | $ | 1,641,800 | ||||
Net realized gain | 1,290,060 | 1,905,407 | ||||||
Change in net unrealized appreciation/depreciation | (1,076,842 | ) | (2,200,438 | ) | ||||
Increase in Net Assets From Operations | 912,496 | 1,346,769 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 5): | ||||||||
Net investment income | (699,278 | ) | (1,641,800 | ) | ||||
Decrease in Net Assets From Distributions to Shareholders | (699,278 | ) | (1,641,800 | ) | ||||
FUND SHARE TRANSACTIONS (NOTE 6): | ||||||||
Net proceeds from sale of shares | 2,832,671 | 5,247,209 | ||||||
Reinvestment of distributions | 637,010 | 1,515,194 | ||||||
Cost of shares repurchased | (3,839,906 | ) | (13,101,406 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (370,225 | ) | (6,339,003 | ) | ||||
Decrease in Net Assets | (157,007 | ) | (6,634,034 | ) | ||||
NET ASSETS: | ||||||||
Beginning of period | 41,985,928 | 48,619,962 | ||||||
End of period | $ | 41,828,921 | $ | 41,985,928 | ||||
See Notes to Financial Statements.
35
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2005 (unaudited)
and the Year Ended December 31, 2004
Salomon Brothers | ||||||||
California Tax Free | ||||||||
Bond Fund | ||||||||
OPERATIONS: | ||||||||
Net investment income | $ | 207,901 | $ | 452,685 | ||||
Net realized gain | 94,401 | 177,941 | ||||||
Change in net unrealized appreciation/depreciation | (141,422 | ) | (291,413 | ) | ||||
Increase in Net Assets From Operations | 160,880 | 339,213 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 5): | ||||||||
Net investment income | (207,901 | ) | (452,685 | ) | ||||
Decrease in Net Assets From Distributions to Shareholders | (207,901 | ) | (452,685 | ) | ||||
FUND SHARE TRANSACTIONS (NOTE 6): | ||||||||
Net proceeds from sale of shares | 16,764 | 103,073 | ||||||
Reinvestment of distributions | 205,194 | 342,606 | ||||||
Cost of shares repurchased | (928,311 | ) | (2,139,861 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (706,353 | ) | (1,694,182 | ) | ||||
Decrease in Net Assets | (753,374 | ) | (1,807,654 | ) | ||||
NET ASSETS: | ||||||||
Beginning of period | 11,407,932 | 13,215,586 | ||||||
End of period | $ | 10,654,558 | $ | 11,407,932 | ||||
See Notes to Financial Statements.
36
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2005 (unaudited)
and the Year Ended December 31, 2004
Salomon Brothers | ||||||||
New York Tax Free | ||||||||
Bond Fund | ||||||||
OPERATIONS: | ||||||||
Net investment income | $ | 1,808,165 | $ | 4,090,455 | ||||
Net realized gain | 1,667,639 | 3,220,509 | ||||||
Change in net unrealized appreciation/depreciation | (1,304,559 | ) | (3,957,020 | ) | ||||
Increase in Net Assets From Operations | 2,171,245 | 3,353,944 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 5): | ||||||||
Net investment income | (1,808,165 | ) | (4,090,455 | ) | ||||
Decrease in Net Assets From Distributions to Shareholders | (1,808,165 | ) | (4,090,455 | ) | ||||
FUND SHARE TRANSACTIONS (NOTE 6): | ||||||||
Net proceeds from sale of shares | 758,293 | 1,011,044 | ||||||
Reinvestment of distributions | 1,787,729 | 4,043,985 | ||||||
Cost of shares repurchased | (6,283,637 | ) | (17,747,024 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (3,737,615 | ) | (12,691,995 | ) | ||||
Decrease in Net Assets | (3,374,535 | ) | (13,428,506 | ) | ||||
NET ASSETS: | ||||||||
Beginning of period | 104,645,739 | 118,074,245 | ||||||
End of period | $ | 101,271,204 | $ | 104,645,739 | ||||
See Notes to Financial Statements.
37
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2005 (unaudited)
and the Year Ended December 31, 2004
Salomon Brothers | ||||||||
Mid Cap | ||||||||
OPERATIONS: | ||||||||
Net investment loss | $ | (19,209 | ) | $ | (55,263 | ) | ||
Net realized gain | 232,378 | 2,301,990 | ||||||
Change in net unrealized appreciation/depreciation | 120,181 | 546,408 | ||||||
Increase in Net Assets From Operations | 333,350 | 2,793,135 | ||||||
FUND SHARE TRANSACTIONS (NOTE 6): | ||||||||
Net proceeds from sale of shares | 3,064,936 | 2,003,952 | ||||||
Cost of shares repurchased | (4,008,346 | ) | (2,974,409 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (943,410 | ) | (970,457 | ) | ||||
Increase (Decrease) in Net Assets | (610,060 | ) | 1,822,678 | |||||
NET ASSETS: | ||||||||
Beginning of period | 22,703,727 | 20,881,049 | ||||||
End of period* | $ | 22,093,667 | $ | 22,703,727 | ||||
* Includes accumulated net investment loss of: | $ | (19,209 | ) | $ | — | |||
See Notes to Financial Statements.
38
Financial Highlights
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers National Tax Free Bond Fund | ||||||||||||||||||||||||
2005 | (1)(2) | 2004 | (2) | 2003 | (2) | 2002 | (2) | 2001 | 2000 | |||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.85 | $ | 11.91 | $ | 11.79 | $ | 11.13 | $ | 11.26 | $ | 10.54 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.20 | 0.44 | 0.46 | 0.48 | 0.50 | 0.51 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.06 | (0.06 | ) | 0.13 | 0.66 | (0.12 | ) | 0.73 | ||||||||||||||||
Total Income From Operations | 0.26 | 0.38 | 0.59 | 1.14 | 0.38 | 1.24 | ||||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.20 | ) | (0.44 | ) | (0.47 | ) | (0.48 | ) | (0.51 | ) | (0.52 | ) | ||||||||||||
Total Distributions | (0.20 | ) | (0.44 | ) | (0.47 | ) | (0.48 | ) | (0.51 | ) | (0.52 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.91 | $ | 11.85 | $ | 11.91 | $ | 11.79 | $ | 11.13 | $ | 11.26 | ||||||||||||
Total Return(3) | 2.26 | % | 3.28 | % | 5.07 | % | 10.41 | % | 3.39 | % | 12.10 | % | ||||||||||||
Net Assets, End of Period (000s) | $ | 37,848 | $ | 37,343 | $ | 42,210 | $ | 50,325 | $ | 62,440 | $ | 72,875 | ||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 1.30 | %(4) | 1.26 | % | 1.10 | % | 1.18 | % | 1.52 | % | 1.32 | % | ||||||||||||
Net expenses(5)(6) | 0.75 | (4) | 0.75 | 0.75 | 0.76 | 0.80 | 0.80 | |||||||||||||||||
Net expenses after fees paid indirectly | N/A | N/A | N/A | N/A | 0.80 | (7) | 0.80 | (7) | ||||||||||||||||
Net investment income | 3.49 | (4) | 3.73 | 3.92 | 4.22 | 4.28 | 4.67 | |||||||||||||||||
Portfolio Turnover Rate | 24 | % | 41 | % | 42 | % | 12 | % | 15 | % | 46 | % |
(1) | For the six months ended June 30, 2005 (unaudited). |
(2) | Per share amounts have been calculated using the average shares method. |
(3) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | The investment manager voluntarily waived a portion of its fees and/or reimbursed expenses. |
(6) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.75%. Prior to January 30, 2002, the expense limitation was 0.80%. |
(7) | Reflects the expense offset arrangements with its service providers. |
39
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers National Tax Free Bond Fund | ||||||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | 2001 | (3) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.87 | $ | 11.93 | $ | 11.80 | $ | 11.14 | $ | 11.46 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.16 | 0.35 | 0.37 | 0.40 | 0.07 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.06 | (0.06 | ) | 0.13 | 0.65 | (0.31 | ) | |||||||||||||
Total Income (Loss) From Operations | 0.22 | 0.29 | 0.50 | 1.05 | (0.24 | ) | ||||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.16 | ) | (0.35 | ) | (0.37 | ) | (0.39 | ) | (0.08 | ) | ||||||||||
Total Distributions | (0.16 | ) | (0.35 | ) | (0.37 | ) | (0.39 | ) | (0.08 | ) | ||||||||||
Net Asset Value, End of Period | $ | 11.93 | $ | 11.87 | $ | 11.93 | $ | 11.80 | $ | 11.14 | ||||||||||
Total Return(4) | 1.88 | % | 2.51 | % | 4.35 | % | 9.59 | % | (2.09 | )% | ||||||||||
Net Assets, End of Period (000s) | $ | 2,511 | $ | 2,944 | $ | 4,330 | $ | 4,839 | $ | 4,599 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 2.06 | %(5) | 2.01 | % | 1.85 | % | 1.91 | % | 2.22 | %(5) | ||||||||||
Net expenses(6)(7) | 1.50 | (5) | 1.50 | 1.50 | 1.49 | 1.53 | (5) | |||||||||||||
Net expenses after fees paid directly | N/A | N/A | N/A | N/A | 1.53 | (5)(8) | ||||||||||||||
Net investment income | 2.76 | (5) | 2.98 | 3.16 | 3.43 | 3.55 | (5) | |||||||||||||
Portfolio Turnover Rate | 24 | % | 41 | % | 42 | % | 12 | % | 15 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period October 12, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fees and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.50%. |
(8) | Reflects the expense offset arrangements with its service providers. |
40
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers National Tax Free Bond Fund | ||||||||||||||||||||
2005 | (3) | 2004 | 2003 | 2002 | 2001 | (4) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.87 | $ | 11.92 | $ | 11.80 | $ | 11.13 | $ | 11.42 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.18 | 0.38 | 0.40 | 0.43 | 0.05 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.06 | (0.05 | ) | 0.12 | 0.66 | (0.28 | ) | |||||||||||||
Total Income (Loss) From Operations | 0.24 | 0.33 | 0.52 | 1.09 | (0.23 | ) | ||||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.18 | ) | (0.38 | ) | (0.40 | ) | (0.42 | ) | (0.06 | ) | ||||||||||
Total Distributions | (0.18 | ) | (0.38 | ) | (0.40 | ) | (0.42 | ) | (0.06 | ) | ||||||||||
Net Asset Value, End of Period | $ | 11.93 | $ | 11.87 | $ | 11.92 | $ | 11.80 | $ | 11.13 | ||||||||||
Total Return(5) | 2.01 | % | 2.85 | % | 4.53 | % | 9.96 | % | (2.10 | )% | ||||||||||
Net Assets, End of Period (000s) | $ | 1,308 | $ | 1,539 | $ | 1,923 | $ | 1,763 | $ | 1,314 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 1.80 | %(6) | 1.76 | % | 1.60 | % | 1.67 | % | 1.94 | %(6) | ||||||||||
Net expenses(7)(8) | 1.25 | (6) | 1.25 | 1.25 | 1.25 | 1.25 | (6) | |||||||||||||
Net expenses after fees paid directly | N/A | N/A | N/A | N/A | 1.25 | (6)(9) | ||||||||||||||
Net investment income | 3.02 | (6) | 3.22 | 3.41 | 3.69 | 3.73 | (6) | |||||||||||||
Portfolio Turnover Rate | 24 | % | 41 | % | 42 | % | 12 | % | 15 | % |
(1) | On April 29, 2004, Class 2 shares were renamed Class C shares. |
(2) | Per share amounts have been calculated using the average shares method. |
(3) | For the six months ended June 30, 2005 (unaudited). |
(4) | For the period November 19, 2001 (inception date) to December 31, 2001. |
(5) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(6) | Annualized. |
(7) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(8) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.25%. |
(9) | Reflects the expense offset arrangements with its service providers. |
41
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers National Tax Free Bond Fund | ||||||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | 2001 | (3) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.87 | $ | 11.93 | $ | 11.79 | $ | 11.13 | $ | 11.42 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.22 | 0.47 | 0.49 | 0.50 | 0.06 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.06 | (0.06 | ) | 0.14 | 0.67 | (0.29 | ) | |||||||||||||
Total Income (Loss) From Operations | 0.28 | 0.41 | 0.63 | 1.17 | (0.23 | ) | ||||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.22 | ) | (0.47 | ) | (0.49 | ) | (0.51 | ) | (0.06 | ) | ||||||||||
Total Distributions | (0.22 | ) | (0.47 | ) | (0.49 | ) | (0.51 | ) | (0.06 | ) | ||||||||||
Net Asset Value, End of Period | $ | 11.93 | $ | 11.87 | $ | 11.93 | $ | 11.79 | $ | 11.13 | ||||||||||
Total Return(4) | 2.38 | % | 3.54 | % | 5.48 | % | 10.69 | % | (2.01 | )% | ||||||||||
Net Assets, End of Period (000s) | $ | 162 | $ | 160 | $ | 157 | $ | 216 | $ | 362 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 1.16 | %(5) | 1.01 | % | 0.85 | % | 0.91 | % | 1.19 | %(5) | ||||||||||
Net expenses(6)(7) | 0.50 | (5) | 0.50 | 0.50 | 0.50 | 0.50 | (5) | |||||||||||||
Net expenses after fees paid directly | N/A | N/A | N/A | N/A | 0.50 | (5)(8) | ||||||||||||||
Net investment income | 3.74 | (5) | 3.97 | 4.18 | 4.39 | 4.48 | (5) | |||||||||||||
Portfolio Turnover Rate | 24 | % | 41 | % | 42 | % | 12 | % | 15 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period November 19, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.50%. |
(8) | Reflects the expense offset arrangements with its service providers. |
42
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers California Tax Free Bond Fund | ||||||||||||||||||||||||
2005 | (1)(2) | 2004 | (2) | 2003 | (2) | 2002 | (2) | 2001 | 2000 | |||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.63 | $ | 10.70 | $ | 10.63 | $ | 10.17 | $ | 10.31 | $ | 9.43 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.20 | 0.40 | 0.39 | 0.39 | 0.43 | 0.44 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.05 | ) | (0.07 | ) | 0.07 | 0.46 | (0.14 | ) | 0.88 | |||||||||||||||
Total Income From Operations | 0.15 | 0.33 | 0.46 | 0.85 | 0.29 | 1.32 | ||||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.20 | ) | (0.40 | ) | (0.39 | ) | (0.39 | ) | (0.43 | ) | (0.44 | ) | ||||||||||||
Total Distributions | (0.20 | ) | (0.40 | ) | (0.39 | ) | (0.39 | ) | (0.43 | ) | (0.44 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 10.58 | $ | 10.63 | $ | 10.70 | $ | 10.63 | $ | 10.17 | $ | 10.31 | ||||||||||||
Total Return(3) | 1.46 | % | 3.19 | % | 4.40 | % | 8.47 | % | 2.83 | % | 14.33 | % | ||||||||||||
Net Assets, End of Period (000s) | $ | 10,473 | $ | 11,242 | $ | 13,009 | $ | 15,280 | $ | 16,332 | $ | 20,748 | ||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 2.48 | %(4) | 1.97 | % | 1.40 | % | 2.05 | % | 2.43 | % | 1.82 | % | ||||||||||||
Net expenses(5)(6) | 0.80 | (4) | 0.80 | 0.80 | 0.80 | 0.80 | 0.80 | |||||||||||||||||
Net expenses after fees paid indirectly | N/A | N/A | N/A | N/A | 0.81 | (7) | 0.81 | (7) | ||||||||||||||||
Net investment income | 3.88 | (4) | 3.80 | 3.64 | 3.71 | 4.04 | 4.52 | |||||||||||||||||
Portfolio Turnover Rate | 10 | % | 5 | % | 0 | % | 9 | % | 8 | % | 58 | % |
(1) | For the six months ended June 30, 2005 (unaudited). |
(2) | Per share amounts have been calculated using the average shares method. |
(3) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(6) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.80%. |
(7) | Reflects the expense offset arrangements with its service providers. |
43
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers California Tax Free Bond Fund | ||||||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | 2001 | (3) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.64 | $ | 10.71 | $ | 10.63 | $ | 10.18 | $ | 10.51 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.16 | 0.32 | 0.31 | 0.30 | 0.07 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.05 | ) | (0.07 | ) | 0.08 | 0.46 | (0.32 | ) | ||||||||||||
Total Income (Loss) From Operations | 0.11 | 0.25 | 0.39 | 0.76 | (0.25 | ) | ||||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.16 | ) | (0.32 | ) | (0.31 | ) | (0.31 | ) | (0.08 | ) | ||||||||||
Total Distributions | (0.16 | ) | (0.32 | ) | (0.31 | ) | (0.31 | ) | (0.08 | ) | ||||||||||
Net Asset Value, End of Period | $ | 10.59 | $ | 10.64 | $ | 10.71 | $ | 10.63 | $ | 10.18 | ||||||||||
Total Return(4) | 1.08 | % | 2.42 | % | 3.70 | % | 7.66 | % | (2.39 | )% | ||||||||||
Net Assets, End of Period (000s) | $ | 135 | $ | 127 | $ | 178 | $ | 247 | $ | 52 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 3.32 | %(5) | 2.70 | % | 2.11 | % | 2.76 | % | 3.19 | %(5) | ||||||||||
Net expenses(6)(7) | 1.55 | (5) | 1.55 | 1.55 | 1.53 | 1.56 | (5) | |||||||||||||
Net expenses after fees paid indirectly | N/A | N/A | N/A | N/A | 1.57 | (5)(8) | ||||||||||||||
Net investment income | 3.11 | (5) | 3.04 | 2.86 | 2.88 | 3.23 | (5) | |||||||||||||
Portfolio Turnover Rate | 10 | % | 5 | % | 0 | % | 9 | % | 8 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period October 5, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.55%. |
(8) | Reflects the expense offset arrangements with its service providers. |
44
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers California Tax Free Bond Fund | ||||||||||||||||
2005 | (3) | 2004 | 2003 | 2002 | (4) | |||||||||||
Net Asset Value, Beginning of Period | $ | 10.63 | $ | 10.70 | $ | 10.63 | $ | 10.76 | ||||||||
Income (Loss) From Operations: | ||||||||||||||||
Net investment income | 0.18 | 0.35 | 0.33 | 0.10 | ||||||||||||
Net realized and unrealized gain (loss) | (0.04 | ) | (0.07 | ) | 0.07 | (0.13 | ) | |||||||||
Total Income (Loss) From Operations | 0.14 | 0.28 | 0.40 | (0.03 | ) | |||||||||||
Less Distributions From: | ||||||||||||||||
Net investment income | (0.18 | ) | (0.35 | ) | (0.33 | ) | (0.10 | ) | ||||||||
Total Distributions | (0.18 | ) | (0.35 | ) | (0.33 | ) | (0.10 | ) | ||||||||
Net Asset Value, End of Period | $ | 10.59 | $ | 10.63 | $ | 10.70 | $ | 10.63 | ||||||||
Total Return(5) | 1.30 | % | 2.67 | % | 3.87 | % | (0.28 | )% | ||||||||
Net Assets, End of Period (000s) | $ | 45 | $ | 37 | $ | 27 | $ | 26 | ||||||||
Ratios to Average Net Assets: | ||||||||||||||||
Gross expenses | 3.34 | %(6) | 2.60 | % | 1.89 | % | 2.51 | %(6) | ||||||||
Net expenses(7)(8) | 1.30 | (6) | 1.29 | 1.30 | 1.30 | (6) | ||||||||||
Net investment income | 3.37 | (6) | 3.27 | 3.14 | 3.07 | (6) | ||||||||||
Portfolio Turnover Rate | 10 | % | 5 | % | 0 | % | 9 | % |
(1) | On April 29, 2004, Class 2 shares were renamed Class C shares. |
(2) | Per share amounts have been calculated using the average shares method. |
(3) | For the six months ended June 30, 2005 (unaudited). |
(4) | For the period September 9, 2002 (inception date) to December 31, 2002. |
(5) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(6) | Annualized. |
(7) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(8) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.30%. |
45
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers California Tax Free Bond Fund | ||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | (3) | |||||||||||
Net Asset Value, Beginning of Period | $ | 10.63 | $ | 10.71 | $ | 10.63 | $ | 10.81 | ||||||||
Income (Loss) From Operations: | ||||||||||||||||
Net investment income | 0.22 | 0.43 | 0.42 | 0.09 | ||||||||||||
Net realized and unrealized gain (loss) | (0.04 | ) | (0.08 | ) | 0.08 | (0.18 | ) | |||||||||
Total Income (Loss) From Operations | 0.18 | 0.35 | 0.50 | (0.09 | ) | |||||||||||
Less Distributions From: | ||||||||||||||||
Net investment income | (0.22 | ) | (0.43 | ) | (0.42 | ) | (0.09 | ) | ||||||||
Total Distributions | (0.22 | ) | (0.43 | ) | (0.42 | ) | (0.09 | ) | ||||||||
Net Asset Value, End of Period | $ | 10.59 | $ | 10.63 | $ | 10.71 | $ | 10.63 | ||||||||
Total Return(4) | 1.72 | % | 3.35 | % | 4.76 | % | (0.79 | )% | ||||||||
Net Assets, End of Period (000s) | $ | 2 | $ | 2 | $ | 2 | $ | 2 | ||||||||
Ratios to Average Net Assets: | ||||||||||||||||
Gross expenses | 4.82 | %(5) | 1.73 | % | 1.06 | % | 1.70 | %(5) | ||||||||
Net expenses(6)(7) | 0.55 | (5) | 0.53 | 0.45 | 0.47 | (5) | ||||||||||
Net investment income | 4.50 | (5) | 4.03 | 3.94 | 3.94 | (5) | ||||||||||
Portfolio Turnover Rate | 10 | % | 5 | % | 0 | % | 9 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period October 8, 2002 (inception date) to December 31, 2002. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.55%. |
46
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers New York Tax Free Bond Fund | ||||||||||||||||||||||||
2005 | (1)(2) | 2004 | (2) | 2003 | (2) | 2002 | (2) | 2001 | 2000 | |||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.92 | $ | 11.99 | $ | 11.91 | $ | 11.26 | $ | 11.44 | $ | 10.79 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.21 | 0.44 | 0.47 | 0.49 | 0.54 | 0.60 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.05 | (0.07 | ) | 0.08 | 0.65 | (0.16 | ) | 0.61 | ||||||||||||||||
Total Income From Operations | 0.26 | 0.37 | 0.55 | 1.14 | 0.38 | 1.21 | ||||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.21 | ) | (0.44 | ) | (0.47 | ) | (0.49 | ) | (0.56 | ) | (0.56 | ) | ||||||||||||
Total Distributions | (0.21 | ) | (0.44 | ) | (0.47 | ) | (0.49 | ) | (0.56 | ) | (0.56 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.97 | $ | 11.92 | $ | 11.99 | $ | 11.91 | $ | 11.26 | $ | 11.44 | ||||||||||||
Total Return(3) | 2.20 | % | 3.17 | % | 4.77 | % | 10.25 | % | 3.32 | % | 11.54 | % | ||||||||||||
Net Assets, End of Period (000s) | $ | 100,829 | $ | 104,260 | $ | 116,982 | $ | 127,482 | $ | 140,416 | $ | 172,420 | ||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 0.98 | %(4) | 0.96 | % | 0.96 | % | 1.00 | % | 1.21 | % | 1.16 | % | ||||||||||||
Net expenses(5)(6) | 0.80 | (4) | 0.80 | 0.80 | 0.80 | 0.80 | 0.80 | |||||||||||||||||
Net investment income | 3.56 | (4) | 3.72 | 3.95 | 4.19 | 4.53 | 4.81 | |||||||||||||||||
Portfolio Turnover Rate | 24 | % | 21 | % | 12 | % | 13 | % | 16 | % | 15 | % |
(1) | For the six months ended June 30, 2005 (unaudited). |
(2) | Per share amounts have been calculated using the average shares method. |
(3) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(6) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.80%. |
47
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers New York Tax Free Bond Fund | ||||||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | 2001 | (3) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.92 | $ | 11.99 | $ | 11.91 | $ | 11.26 | $ | 11.53 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.16 | 0.35 | 0.38 | 0.32 | 0.04 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.05 | (0.07 | ) | 0.08 | 0.73 | (0.26 | ) | |||||||||||||
Total Income (Loss) From Operations | 0.21 | 0.28 | 0.46 | 1.05 | (0.22 | ) | ||||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.16 | ) | (0.35 | ) | (0.38 | ) | (0.40 | ) | (0.05 | ) | ||||||||||
Total Distributions | (0.16 | ) | (0.35 | ) | (0.38 | ) | (0.40 | ) | (0.05 | ) | ||||||||||
Net Asset Value, End of Period | $ | 11.97 | $ | 11.92 | $ | 11.99 | $ | 11.91 | $ | 11.26 | ||||||||||
Total Return(4) | 1.82 | % | 2.41 | % | 3.94 | % | 9.43 | % | (1.88 | )% | ||||||||||
Net Assets, End of Period (000s) | $ | 323 | $ | 275 | $ | 363 | $ | 218 | $ | 14 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 1.79 | %(5) | 1.71 | % | 1.71 | % | 1.74 | % | 1.96 | %(5) | ||||||||||
Net expenses(6)(7) | 1.55 | (5) | 1.55 | 1.55 | 1.55 | 1.55 | (5) | |||||||||||||
Net investment income | 2.79 | (5) | 2.96 | 3.18 | 3.32 | 3.50 | (5) | |||||||||||||
Portfolio Turnover Rate | 24 | % | 21 | % | 12 | % | 13 | % | 16 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period November 19, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.55%. |
48
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers New York Tax Free Bond Fund | ||||||||||||||||
2005 | (3) | 2004 | 2003 | 2002 | (4) | |||||||||||
Net Asset Value, Beginning of Period | $ | 11.90 | $ | 12.00 | $ | 11.92 | $ | 11.72 | ||||||||
Income (Loss) From Operations: | ||||||||||||||||
Net investment income | 0.18 | 0.38 | 0.41 | 0.18 | ||||||||||||
Net realized and unrealized gain (loss) | 0.04 | (0.10 | ) | 0.08 | 0.21 | |||||||||||
Total Income From Operations | 0.22 | 0.28 | 0.49 | 0.39 | ||||||||||||
Less Distributions From: | ||||||||||||||||
Net investment income | (0.18 | ) | (0.38 | ) | (0.41 | ) | (0.19 | ) | ||||||||
Total Distributions | (0.18 | ) | (0.38 | ) | (0.41 | ) | (0.19 | ) | ||||||||
Net Asset Value, End of Period | $ | 11.94 | $ | 11.90 | $ | 12.00 | $ | 11.92 | ||||||||
Total Return(5) | 1.86 | % | 2.40 | % | 4.18 | % | 3.30 | % | ||||||||
Net Assets, End of Period (000s) | $ | 62 | $ | 33 | $ | 636 | $ | 37 | ||||||||
Ratios to Average Net Assets: | ||||||||||||||||
Gross expenses | 1.70 | %(6) | 1.45 | % | 1.47 | % | 1.50 | %(6) | ||||||||
Net expenses(7)(8) | 1.30 | (6) | 1.30 | 1.30 | 1.30 | (6) | ||||||||||
Net investment income | 3.00 | (6) | 3.31 | 3.38 | 3.63 | (6) | ||||||||||
Portfolio Turnover Rate | 24 | % | 21 | % | 12 | % | 13 | % |
(1) | On April 29, 2004, Class 2 shares were renamed Class C shares. |
(2) | Per share amounts have been calculated using the average shares method. |
(3) | For the six months ended June 30, 2005 (unaudited). |
(4) | For the period July 19, 2002 (inception date) to December 31, 2002. |
(5) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(6) | Annualized. |
(7) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(8) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.30%. |
49
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers New York Tax Free Bond Fund | ||||||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | 2001 | (3) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.91 | $ | 11.98 | $ | 11.90 | $ | 11.25 | $ | 11.59 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.22 | 0.47 | 0.50 | 0.52 | 0.09 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.05 | (0.07 | ) | 0.08 | 0.64 | (0.33 | ) | |||||||||||||
Total Income (Loss) From Operations | 0.27 | 0.40 | 0.58 | 1.16 | (0.24 | ) | ||||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.22 | ) | (0.47 | ) | (0.50 | ) | (0.51 | ) | (0.10 | ) | ||||||||||
Total Distributions | (0.22 | ) | (0.47 | ) | (0.50 | ) | (0.51 | ) | (0.10 | ) | ||||||||||
Net Asset Value, End of Period | $ | 11.96 | $ | 11.91 | $ | 11.98 | $ | 11.90 | $ | 11.25 | ||||||||||
Total Return(4) | 2.33 | % | 3.44 | % | 4.99 | % | 10.54 | % | (2.04 | )% | ||||||||||
Net Assets, End of Period (000s) | $ | 57 | $ | 78 | $ | 93 | $ | 92 | $ | 1 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 0.84 | %(5) | 0.71 | % | 0.71 | % | 0.75 | % | 0.94 | %(5) | ||||||||||
Net expenses(6)(7) | 0.55 | (5) | 0.55 | 0.55 | 0.56 | 0.53 | (5) | |||||||||||||
Net investment income | 3.80 | (5) | 3.96 | 4.20 | 4.40 | 4.76 | (5) | |||||||||||||
Portfolio Turnover Rate | 24 | % | 21 | % | 12 | % | 13 | % | 16 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period October 29, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.55%. |
50
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers Mid Cap Fund | ||||||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | 2001 | (3) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.15 | $ | 16.89 | $ | 13.18 | $ | 16.47 | $ | 13.71 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment loss | (0.04 | ) | (0.10 | ) | (0.08 | ) | (0.06 | ) | (0.01 | ) | ||||||||||
Net realized and unrealized gain (loss) | 0.30 | 2.36 | 3.79 | (3.23 | ) | 2.77 | ||||||||||||||
Total Income (Loss) From Operations | 0.26 | 2.26 | 3.71 | (3.29 | ) | 2.76 | ||||||||||||||
Net Asset Value, End of Period | $ | 19.41 | $ | 19.15 | $ | 16.89 | $ | 13.18 | $ | 16.47 | ||||||||||
Total Return(4) | 1.36 | % | 13.38 | % | 28.15 | % | (19.98 | )% | 3.65 | % | ||||||||||
Net Assets, End of Period (000s) | $ | 2,981 | $ | 1,489 | $ | 270 | $ | 116 | $ | 47 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 1.69 | %(5) | 2.08 | % | 1.60 | % | 1.91 | % | 1.93 | %(5) | ||||||||||
Net expenses(6)(7) | 1.50 | (5) | 1.50 | 1.50 | 1.42 | 1.36 | (5) | |||||||||||||
Net investment loss | (0.45 | )(5) | (0.56 | ) | (0.56 | ) | (0.44 | ) | (0.69 | )(5) | ||||||||||
Portfolio Turnover Rate | 27 | % | 66 | % | 78 | % | 71 | % | 26 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period November 30, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.50%. |
51
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers Mid Cap Fund | ||||||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | 2001 | (3) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 18.75 | $ | 16.66 | $ | 13.10 | $ | 16.47 | $ | 16.31 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment loss | (0.11 | ) | (0.23 | ) | (0.19 | ) | (0.16 | ) | (0.01 | ) | ||||||||||
Net realized and unrealized gain (loss) | 0.30 | 2.32 | 3.75 | (3.21 | ) | 0.17 | ||||||||||||||
Total Income (Loss) From Operations | 0.19 | 2.09 | 3.56 | (3.37 | ) | 0.16 | ||||||||||||||
Net Asset Value, End of Period | $ | 18.94 | $ | 18.75 | $ | 16.66 | $ | 13.10 | $ | 16.47 | ||||||||||
Total Return(4) | 1.01 | % | 12.55 | % | 27.18 | % | (20.46 | )% | 0.98 | % | ||||||||||
Net Assets, End of Period (000s) | $ | 324 | $ | 291 | $ | 152 | $ | 108 | $ | 12 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 2.73 | %(5) | 2.63 | % | 2.33 | % | 2.42 | % | 2.73 | %(5) | ||||||||||
Net expenses(6)(7) | 2.25 | (5) | 2.25 | 2.25 | 1.95 | 2.15 | (5) | |||||||||||||
Net investment loss | (1.26 | )(5) | (1.37 | ) | (1.31 | ) | (0.99 | ) | (1.50 | )(5) | ||||||||||
Portfolio Turnover Rate | 27 | % | 66 | % | 78 | % | 71 | % | 26 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period November 30, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 2.25%. |
52
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers Mid Cap Fund | ||||||||||||||||
2005 | (3) | 2004 | 2003 | 2002 | (4) | |||||||||||
Net Asset Value, Beginning of Period | $ | 18.82 | $ | 16.72 | $ | 13.15 | $ | 16.43 | ||||||||
Income (Loss) From Operations: | ||||||||||||||||
Net investment loss | (0.11 | ) | (0.24 | ) | (0.19 | ) | (0.04 | ) | ||||||||
Net realized and unrealized gain (loss) | 0.30 | 2.34 | 3.76 | (3.24 | ) | |||||||||||
Total Income (Loss) From Operations | 0.19 | 2.10 | 3.57 | (3.28 | ) | |||||||||||
Net Asset Value, End of Period | $ | 19.01 | $ | 18.82 | $ | 16.72 | $ | 13.15 | ||||||||
Total Return(5) | 1.01 | % | 12.56 | % | 27.15 | % | (19.96 | )% | ||||||||
Net Assets, End of Period (000s) | $ | 305 | $ | 234 | $ | 109 | $ | 26 | ||||||||
Ratios to Average Net Assets: | ||||||||||||||||
Gross expenses | 2.63 | %(6) | 2.67 | % | 2.35 | % | 2.27 | %(6) | ||||||||
Net expenses(7)(8) | 2.25 | (6) | 2.25 | 2.25 | 1.68 | (6) | ||||||||||
Net investment loss | (1.25 | )(6) | (1.38 | ) | (1.31 | ) | (0.51 | )(6) | ||||||||
Portfolio Turnover Rate | 27 | % | 66 | % | 78 | % | 71 | % |
(1) | On April 29, 2004, Class 2 shares were renamed Class C shares. |
(2) | Per share amounts have been calculated using the average shares method. |
(3) | For the six months ended June 30, 2005 (unaudited). |
(4) | For the period May 7, 2002 (inception date) to December 31, 2002. |
(5) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(6) | Annualized. |
(7) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(8) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 2.25% |
53
Financial Highlights
(continued)For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Salomon Brothers Mid Cap Fund | ||||||||||||||||||||
2005 | (2) | 2004 | 2003 | 2002 | 2001 | (3) | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.38 | $ | 17.02 | $ | 13.23 | $ | 16.48 | $ | 15.07 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment loss | (0.01 | ) | (0.04 | ) | (0.02 | ) | (0.02 | ) | (0.01 | ) | ||||||||||
Net realized and unrealized gain (loss) | 0.32 | 2.40 | 3.81 | (3.23 | ) | 1.42 | ||||||||||||||
Total Income (Loss) From Operations | 0.31 | 2.36 | 3.79 | (3.25 | ) | 1.41 | ||||||||||||||
Net Asset Value, End of Period | $ | 19.69 | $ | 19.38 | $ | 17.02 | $ | 13.23 | $ | 16.48 | ||||||||||
Total Return(4) | 1.60 | % | 13.87 | % | 28.65 | % | (19.72 | )% | (6.48 | )% | ||||||||||
Net Assets, End of Period (000s) | $ | 18,484 | $ | 20,690 | $ | 20,350 | $ | 16,612 | $ | 22,935 | ||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 1.46 | %(5) | 1.53 | % | 1.33 | % | 1.54 | % | 2.97 | %(5) | ||||||||||
Net expenses(6)(7) | 1.08 | (5) | 1.08 | 1.08 | 1.07 | 1.08 | (5) | |||||||||||||
Net investment loss | (0.10 | )(5) | (0.24 | ) | (0.13 | ) | (0.13 | ) | (0.17 | )(5) | ||||||||||
Portfolio Turnover Rate | 27 | % | 66 | % | 78 | % | 71 | % | 26 | % |
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2005 (unaudited). |
(3) | For the period September 10, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect voluntary fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | The investment manager voluntarily waived a portion of its fee and/or reimbursed expenses. |
(7) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.08%. |
54
Notes to Financial Statements
(unaudited)
1. Organization and Significant Accounting Policies
The Salomon Brothers National Tax Free Bond Fund (“National Tax Free Bond Fund”), Salomon Brothers California Tax Free Bond Fund (“California Tax Free Bond Fund”), Salomon Brothers New York Tax Free Bond Fund (“New York Tax Free Bond Fund”) each are a separate non-diversified series of Salomon Funds Trust (“Trust”), a Massachusetts business trust. Salomon Brothers Mid Cap Fund (“Mid Cap Fund”) is a separate diversified series of the Trust. The Trust is registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as an open-end management investment company.
The following are significant accounting policies consistently followed by the Funds. These policies are in conformity with U.S. generally accepted accounting principles (“GAAP”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ.
(a) Investment Valuation. Securities are valued at the mean between the bid and asked prices provided by an independent pricing service that are based on transactions in municipal obligations, quotations from municipal bond dealers, market transactions in comparable securities and various relationships between securities. Equity securities for which market quotations are available are valued at the last sale price or official closing price on the primary market or exchange on which they trade. Debt securities are valued at the mean between the bid and asked prices provided by an independent pricing service that are based on transactions in debt obligations, quotations from bond dealers, market transactions in comparable securities and various relationships between securities. When prices are not readily available, or are determined not to reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Funds calculate their net asset values, the Funds may value these investments at fair value as determined in accordance with the procedures approved by the Funds’ Board of Trustees. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value.
(b) Repurchase Agreements. When entering into repurchase agreements, it is the Funds’ policy that its custodian or a third party custodian take possession of the underlying collateral securities, the market value of which at least equals the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market to ensure the adequacy of the collateral. If the seller defaults and the market value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Funds may be delayed or limited.
(c) Fund Concentration. Since California Tax Free Bond Fund and Salomon Brothers New York Tax Free Bond Fund invest primarily in obligations of issuers within California and New York, respectively, they are subject to possible concentration risks associated with the economic, political, or legal developments or industrial or regional matters specifically affecting California and New York respectively.
(d) Security Transactions and Investment Income. Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Foreign dividend income is recorded on the ex-dividend date or as soon as practical after the Funds determine the existence of a dividend declaration after exercising reasonable due diligence. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults on an expected interest payment, each Fund’s policy is to generally halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default.
(e) Foreign Currency Translation. The Mid Cap Fund’s investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts based upon prevailing exchange rates on the respective dates of such transactions.
The Mid Cap Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
55
Notes to Financial Statements
(unaudited) (continued)Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds’ books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities, at the date of valuation, resulting from changes in exchange rates.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.
(f) Distributions to Shareholders. Distributions from net investment income for National Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund are declared each business day to shareholders of record that day, and are paid on the last business day of the month. The Funds intend to satisfy conditions that will enable interest from municipal securities, which is exempt from federal income tax and certain state income taxes, to retain such tax-exempt status when distributed to the shareholders of the Funds. Distributions from net investment income for the Mid Cap Fund, if any, are declared on an annual basis. Distributions of net realized gains, if any, are taxable and are declared at least annually. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(g) Class Accounting. Investment income, common expenses and realized/unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Fees relating to a specific class are charged directly to that class.
(h) Expenses. The Funds bear all their costs of its operations other than expenses specifically assumed by the Manager. Expenses incurred by the Trust with respect to any two or more funds or series are allocated in proportion to the average net assets of each fund, except when allocations of direct expenses to each fund can otherwise be made fairly. Expenses directly attributable to a fund are charged to that fund.
(i) Federal and Other Taxes. It is the Funds’ policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Funds intend to distribute substantially all of their income and net realized gains on investments, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Funds’ financial statements. Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.
(j) Reclassification. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share.
2. Management Agreement and Other Transactions with Affiliates
Salomon Brothers Asset Management Inc (“Manager”), an indirect wholly-owned subsidiary of Citigroup Inc. (“Citigroup”), acts as investment manager to the Funds. The Manager is responsible for overall management of the Funds’ business affairs, and has a separate Management Agreement with each Fund. The Manager or an affiliate also provides certain administrative services to each Fund. These administrative services include providing general office facilities and supervising the overall administration of each Fund.
The management fees paid to the Manager are accrued daily and payable monthly. The management fee is computed at the annual rate of 0.50%, 0.50%, 0.50% and 0.75% of the average daily net assets of National Tax Free Bond Fund, California Tax Free Bond Fund, New York Tax Free Bond Fund and Mid Cap Fund, respectively.
For the six months ended June 30, 2005, the Funds had the following voluntary expense limitations, which resulted in management fee waivers and expense reimbursements.
56
Notes to Financial Statements
(unaudited) (continued)
Class A | Class B | Class C | Class O | |||||||||
National Tax Free Bond Fund | 0.75 | % | 1.50 | % | 1.25 | % | 0.50 | % | ||||
California Tax Free Bond Fund | 0.80 | 1.55 | 1.30 | 0.55 | ||||||||
New York Tax Free Bond Fund | 0.80 | 1.55 | 1.30 | 0.55 | ||||||||
Mid Cap Fund | 1.50 | 2.25 | 2.25 | 1.08 |
For the six months ended June 30, 2005, the Manager voluntarily waived management fees of $101,959, $26,895, $93,249 and $39,903 for National Tax Free Bond Fund, California Tax Free Bond Fund, New York Tax Free Bond Fund and Mid Cap Fund, respectively. In addition, for the six months ended June 30, 2005, the Manager has reimbursed expenses totaling $10,961 and $63,500, for the National Tax Free Bond Fund and the California Tax Free Bond Fund, respectively. These expense limitations can be terminated at any time by the Manager.
Citigroup Global Markets Inc. (“CGM”) another indirect wholly-owned subsidiary of Citigroup, acts as the Funds’ distributor.
There is a maximum initial sales charge of 4.00% for Class A shares of National Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund. There is also a maximum initial sales charge of 5.75% for Class A shares of Mid Cap Fund. There is a contingent deferred sales charge (“CDSC”) of 5.00% on Class B shares of the Mid Cap Fund, which applies if redemption occurs within one year from purchase payment and declines thereafter by 1.00% a year until no CDSC is incurred. There is also a 4.00% CDSC on Class B shares of the National Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund in the first year after purchase payment, 3.00% in the second year, 2.00% in the third year, 1.00% in the fourth and fifth year and no deferred sales charge after the fifth year. Class C shares of the Funds have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. In certain cases, Class A shares of the Funds have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. This CDSC only applies to those purchases of Class A shares, which, when combined with current holdings of Class A shares, equal or exceed $1,000,000 in the aggregate. These purchases do not incur an initial sales charge. Class O shares of the Funds have no initial or contingent deferred sales charges.
For the six months ended June 30, 2005, sales charges received by CGM and contingent deferred sales charges (“CDSCs”) paid to CGM were as follows:
National Tax Free Bond Fund | $10,743 | $2,032 | — | ||||||
California Tax Free Bond Fund | 2 | — | — | ||||||
New York Tax Free Bond Fund | 9,178 | — | — | ||||||
Mid Cap Fund | 2,249 | 467 | $41 |
For the six months ended June 30, 2005, there were no brokerage commissions paid to CGM and its affiliates for the Mid Cap Fund.
All officers and one trustee of the Trust are employees of Citigroup or its affiliates and do not receive compensation from the Trust.
The Trust has adopted a Retirement Plan (“Plan”) for all Trustees who are not “interested persons” of the Trust, within the meaning of the 1940 Act. Under the Plan, all Trustees are required to retire from the Board as of the last day of the calender year in which the applicable Trustee attains age 75 (certain Trustees who had already attained age 75 when the Plan was adopted were required to retire effective December 31, 2003). Trustees may retire under the Plan before attaining the mandatory retirement age. Trustees who have served as Trustee of the Trust or any of the investment companies associated with Citigroup for at least ten years when they retire are eligible to receive the maximum retirement benefit under the Plan. The maximum retirement benefit is an amount equal to five times the amount of retainer and regular meeting fees payable to a Trustee during the calender year ending on or immediately prior to the applicable Trustee’s retirement. Amounts under the Plan may be paid in installments or in a lump sum (discounted to present value). Benefits under the Plan are unfunded. Three former Trustees are currently receiving payments under the Plan. In addition, two other former Trustees elected to receive a lump sum payment under the Plan. The Trust’s allocable share of expenses of the Plan for the six months ended June 30, 2005 was $2,236.
57
Notes to Financial Statements
(unaudited) (continued)3. Investments
During the six months ended June 30, 2005, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
National Tax Free Bond Fund | $ | 9,613,927 | $ | 13,165,366 | ||
California Tax Free Bond Fund | $ | 1,005,106 | $ | 1,543,694 | ||
New York Tax Free Bond Fund | $ | 23,037,515 | $ | 31,428,893 | ||
Mid Cap Fund | $ | 5,866,955 | $ | 7,518,600 | ||
At June 30, 2005, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:
National Tax Free Bond Fund | $ | 1,099,151 | $ | (5,786 | ) | $ | 1,093,365 | ||
California Tax Free Bond Fund | 939,678 | — | 939,678 | ||||||
New York Tax Free Bond Fund | 5,517,906 | (31,342 | ) | 5,486,564 | |||||
Mid Cap Fund | 5,223,517 | (342,885 | ) | 4,880,632 |
4. Class Specific Expenses
Pursuant to a Distribution Plan, each Fund pays a service fee with respect to its Class A, B and C shares calculated at the annual rate of 0.25% of the average daily net assets of each respective class. Each Fund also pays a distribution fee with respect to Class B shares calculated at the annual rate of 0.75% of the average daily net assets of that class. National Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund each pay a distribution fee with respect to Class C shares calculated at the annual rate of 0.50% of the average daily net assets of that class. Mid Cap Fund pays a distribution fee with respect to Class C shares calculated at the annual rate of 0.75% of the average daily net assets of that class. For the six months ended June 30, 2005, total Distribution fees, which are accrued daily and paid monthly, were as follows:
National Tax Free Bond Fund | $ 45,692 | $13,536 | $5,114 | |||||
California Tax Free Bond Fund | 13,234 | 659 | 139 | |||||
New York Tax Free Bond Fund | 126,684 | 1,560 | 203 | |||||
Mid Cap Fund | 3,231 | 1,574 | 1,322 | |||||
For the six months ended June 30, 2005, total Transfer Agent fees were as follows: | ||||||||
National Tax Free Bond Fund | $19,083 | $1,387 | $664 | $ 147 | ||||
California Tax Free Bond Fund | 1,837 | 80 | 69 | 23 | ||||
New York Tax Free Bond Fund | 19,838 | 157 | 63 | 48 | ||||
Mid Cap Fund | 690 | 473 | 270 | 2,621 | ||||
For the six months ended June 30, 2005, total Shareholder Reports expenses were as follows: | ||||||||
National Tax Free Bond Fund | $19,929 | $1,512 | $754 | $ 105 | ||||
California Tax Free Bond Fund | 11,307 | 148 | 43 | 4 | ||||
New York Tax Free Bond Fund | 13,844 | 45 | 16 | 10 | ||||
Mid Cap Fund | 813 | 171 | 132 | 10,744 |
58
Notes to Financial Statements
(unaudited) (continued)5. Distributions Paid to Shareholders by Class
National Tax Free Bond Fund: | ||||||
Net Investment Income | ||||||
Class A | $ | 638,395 | $ | 1,479,484 | ||
Class B | 37,336 | 104,620 | ||||
Class C† | 20,568 | 51,441 | ||||
Class O | 2,979 | 6,255 | ||||
Total | $ | 699,278 | $ | 1,641,800 | ||
California Tax Free Bond Fund: | ||||||
Net Investment Income | ||||||
Class A | $ | 205,180 | $ | 447,687 | ||
Class B | 2,052 | 3,952 | ||||
Class C† | 624 | 962 | ||||
Class O | 45 | 84 | ||||
Total | $ | 207,901 | $ | 452,685 | ||
New York Tax Free Bond Fund: | ||||||
Net Investment Income | ||||||
Class A | $ | 1,801,741 | $ | 4,065,038 | ||
Class B | 4,348 | 9,382 | ||||
Class C† | 810 | 12,510 | ||||
Class O | 1,266 | 3,525 | ||||
Total | $ | 1,808,165 | $ | 4,090,455 | ||
† On April 29, 2004, Salomon Brothers Class 2 shares were renamed as Salomon Brothers Class C shares.
6. Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest without par value for National Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund and with a par value of $0.001 per share for Mid Cap Fund .
Transactions in Fund shares for the periods indicated were as follows:
Six Months Ended | Year Ended | |||||||||||||
June 30, 2005 | December 31, 2004 | |||||||||||||
National Tax Free Bond Fund: | ||||||||||||||
Class A | ||||||||||||||
Shares sold | 238,322 | $ | 2,821,937 | 399,951 | $ | 4,729,930 | ||||||||
Shares issued on reinvestment | 49,853 | 590,172 | 119,112 | 1,404,733 | ||||||||||
Shares repurchased | (261,646 | ) | (3,099,525 | ) | (912,491 | ) | (10,736,075 | ) | ||||||
Net Increase (Decrease) | 26,529 | $ | 312,584 | (393,428 | ) | $ | (4,601,412 | ) | ||||||
Class B | ||||||||||||||
Shares sold | 397 | $ | 4,706 | 15,285 | $ | 180,614 | ||||||||
Shares issued on reinvestment | 2,339 | 27,726 | 5,526 | 65,272 | ||||||||||
Shares repurchased | (40,299 | ) | (477,990 | ) | (135,749 | ) | (1,606,261 | ) | ||||||
Net Decrease | (37,563 | ) | $ | (445,558 | ) | (114,938 | ) | $ | (1,360,375 | ) | ||||
Class C† | ||||||||||||||
Shares sold | 491 | $ | 5,827 | 28,401 | $ | 336,249 | ||||||||
Shares issued on reinvestment | 1,514 | 17,950 | 3,533 | 41,714 | ||||||||||
Shares repurchased | (21,973 | ) | (262,320 | ) | (63,541 | ) | (759,070 | ) | ||||||
Net Decrease | (19,968 | ) | $ | (238,543 | ) | (31,607 | ) | $ | (381,107 | ) | ||||
59
Notes to Financial Statements
(unaudited) (continued)
Six Months Ended | Year Ended | |||||||||||||
June 30, 2005 | December 31, 2004 | |||||||||||||
National Tax Free Bond Fund: | ||||||||||||||
Class O | ||||||||||||||
Shares sold | 17 | $ | 201 | 35 | $ | 416 | ||||||||
Shares issued on reinvestment | 98 | 1,162 | 295 | 3,475 | ||||||||||
Shares repurchased | (6 | ) | (71 | ) | — | — | ||||||||
Net Increase | 109 | $ | 1,292 | 330 | $ | 3,891 | ||||||||
California Tax Free Bond Fund: | ||||||||||||||
Class A | ||||||||||||||
Shares sold | 72 | $ | 762 | 3,382 | $ | 36,153 | ||||||||
Shares issued on reinvestment | 19,408 | 204,823 | 32,295 | 341,214 | ||||||||||
Shares repurchased | (87,741 | ) | (928,092 | ) | (193,754 | ) | (2,030,872 | ) | ||||||
Net Decrease | (68,261 | ) | $ | (722,507 | ) | (158,077 | ) | $ | (1,653,505 | ) | ||||
Class B | ||||||||||||||
Shares sold | 734 | $ | 7,802 | 5,482 | $ | 56,920 | ||||||||
Shares issued on reinvestment | 15 | 150 | 59 | 712 | ||||||||||
Shares repurchased | (15 | ) | (156 | ) | (10,204 | ) | (108,989 | ) | ||||||
Net Increase (Decrease) | 734 | $ | 7,796 | (4,663 | ) | $ | (51,357 | ) | ||||||
Class C† | ||||||||||||||
Shares sold | 775 | $ | 8,200 | 934 | $ | 10,000 | ||||||||
Shares issued on reinvestment | 16 | 176 | 57 | 596 | ||||||||||
Shares repurchased | (6 | ) | (63 | ) | — | — | ||||||||
Net Increase | 785 | $ | 8,313 | 991 | $ | 10,596 | ||||||||
Class O | ||||||||||||||
Shares issued on reinvestment | 4 | $ | 45 | 8 | $ | 84 | ||||||||
Net Increase | 4 | $ | 45 | 8 | $ | 84 | ||||||||
† On April 29, 2004, Salomon Brothers Class 2 shares were renamed as Salomon Brothers Class C shares.
60
Notes to Financial Statements
(unaudited) (continued)
Six Months Ended | Year Ended | |||||||||||||
June 30, 2005 | December 31, 2004 | |||||||||||||
New York Free Bond Fund: | ||||||||||||||
Class A | ||||||||||||||
Shares sold | 57,441 | $ | 682,894 | 83,761 | $ | 982,898 | ||||||||
Shares issued on reinvestment | 150,078 | 1,785,959 | 340,507 | 4,038,786 | ||||||||||
Shares repurchased | (527,071 | ) | (6,262,347 | ) | (1,438,761 | ) | (17,014,042 | ) | ||||||
Net Decrease | (319,552 | ) | $ | (3,793,494 | ) | (1,014,493 | ) | $ | (11,992,358 | ) | ||||
Class B | ||||||||||||||
Shares sold | 3,899 | $ | 46,508 | 601 | $ | 7,083 | ||||||||
Shares issued on reinvestment | 127 | 1,511 | 360 | 4,277 | ||||||||||
Shares repurchased | (65 | ) | (766 | ) | (8,253 | ) | (98,365 | ) | ||||||
Net Increase (Decrease) | 3,961 | $ | 47,253 | (7,292 | ) | $ | (87,005 | ) | ||||||
Class C† | ||||||||||||||
Shares sold | 2,399 | $ | 28,891 | 1,771 | $ | 21,063 | ||||||||
Shares issued on reinvestment | 20 | 237 | 73 | 877 | ||||||||||
Shares repurchased | (6 | ) | (70 | ) | (52,134 | ) | (619,617 | ) | ||||||
Net Increase (Decrease) | 2,413 | $ | 29,058 | (50,290 | ) | $ | (597,677 | ) | ||||||
Class O | ||||||||||||||
Shares issued on reinvestment | 2 | $ | 22 | 3 | $ | 45 | ||||||||
Shares repurchased | (1,713 | ) | (20,454 | ) | (1,263 | ) | (15,000 | ) | ||||||
Net Decrease | (1,711 | ) | $ | (20,432 | ) | (1,260 | ) | $ | (14,955 | ) | ||||
Mid Cap Fund: | ||||||||||||||
Class A | ||||||||||||||
Shares sold | 148,057 | $ | 2,797,365 | 69,961 | $ | 1,208,200 | ||||||||
Shares repurchased | (72,254 | ) | (1,355,199 | ) | (8,186 | ) | (149,561 | ) | ||||||
Net Increase | 75,803 | $ | 1,442,166 | 61,775 | $ | 1,058,639 | ||||||||
Class B | ||||||||||||||
Shares sold | 4,647 | $ | 84,885 | 13,142 | $ | 225,451 | ||||||||
Shares repurchased | (3,072 | ) | (56,364 | ) | (6,762 | ) | (118,424 | ) | ||||||
Net Increase | 1,575 | $ | 28,521 | 6,380 | $ | 107,027 | ||||||||
Class C† | ||||||||||||||
Shares sold | 3,878 | $ | 71,205 | 8,819 | $ | 154,317 | ||||||||
Shares repurchased | (246 | ) | (4,490 | ) | (2,897 | ) | (47,775 | ) | ||||||
Net Increase | 3,632 | $ | 66,715 | 5,922 | $ | 106,542 | ||||||||
Class O | ||||||||||||||
Shares sold | 5,831 | $ | 111,481 | 23,472 | $ | 415,984 | ||||||||
Shares repurchased | (134,376 | ) | (2,592,293 | ) | (151,712 | ) | (2,658,649 | ) | ||||||
Net Decrease | (128,545 | ) | $ | (2,480,812 | ) | (128,240 | ) | $ | (2,242,665 | ) | ||||
† On April 29, 2004, Salomon Brothers Class 2 shares were renamed as Salomon Brothers Class C shares.
61
Notes to Financial Statements
(unaudited) (continued)7. Capital Loss Carryforward
On December 31, 2004 National Tax Free Bond Fund had a net capital loss carryforward of $5,478,353, of which $2,047,061 expires in 2007 and $3,431,292 expires in 2008. California Tax Free Bond Fund had a net capital loss carryforward of $2,940,447, of which $2,228,951 expires in 2007 and $711,496 expires in 2008. New York Tax Free Bond Fund had a net capital loss carryforward of $5,863,800, of which $397,721 expires in 2007, $5,263,200 expires in 2008 and $202,879 in 2009.
8. Additional Shareholder InformationOn May 31, 2005, the U.S. Securities and Exchange Commission (“SEC”) issued an order in connection with the settlement of an administrative proceeding against Smith Barney Fund Management LLC (“SBFM”) and Citigroup Global Markets Inc. (“CGMI”) relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds (the “Funds”).
The SEC order finds that SBFM and CGMI willfully violated Section 206(1) of the Investment Advisers Act of 1940 (“Advisers Act”). Specifically, the order finds that SBFM and CGMI knowingly or recklessly failed to disclose to the boards of the Funds in 1999 when proposing a new transfer agent arrangement with an affiliated transfer agent that: First Data Investors Services Group (“First Data”), the Funds’ then-existing transfer agent, had offered to continue as transfer agent and do the same work for substantially less money than before; and that Citigroup Asset Management (“CAM”), the Citigroup business unit that includes the fund’s investment manager and other investment advisory companies, had entered into a side letter with First Data under which CAM agreed to recommend the appointment of First Data as sub-transfer agent to the affiliated transfer agent in exchange, among other things, for a guarantee by First Data of specified amounts of asset management and investment banking fees to CAM and CGMI. The order also finds that SBFM and CGMI willfully violated Section 206(2) of the Advisers Act by virtue of the omissions discussed above and other misrepresentations and omissions in the materials provided to the Funds’ boards, including the failure to make clear that the affiliated transfer agent would earn a high profit for performing limited functions while First Data continued to perform almost all of the transfer agent functions, and the suggestion that the proposed arrangement was in the Funds’ best interests and that no viable alternatives existed. SBFM and CGMI do not admit or deny any wrongdoing or liability. The settlement does not establish wrongdoing or liability for purposes of any other proceeding.
The SEC censured SBFM and CGMI and ordered them to cease and desist from violations of Sections 206(1) and 206(2) of the Advisers Act. The order requires Citigroup to pay $208.1 million, including $109 million in disgorgement of profits, $19.1 million in interest, and a civil money penalty of $80 million. Approximately $24.4 million has already been paid to the Funds, primarily through fee waivers. The remaining $183.7 million, including the penalty, has been paid to the U.S. Treasury and will be distributed pursuant to a plan to be prepared by Citigroup and submitted within 90 days of the entry of the order for approval by the SEC. The order also requires that transfer agency fees received from the Funds since December 1, 2004 less certain expenses be placed in escrow and provides that a portion of such fees may be subsequently distributed in accordance with the terms of the order.
The order requires SBFM to recommend a new transfer agent contract to the Fund boards within 180 days of the entry of the order; if a Citigroup affiliate submits a proposal to serve as transfer agent or sub-transfer agent, an independent monitor must be engaged at the expense of SBFM and CGMI to oversee a competitive bidding process. Under the order, Citigroup also must comply with an amended version of a vendor policy that Citigroup instituted in August 2004. That policy, as amended, among other things, requires that when requested by a Fund board, CAM will retain at its own expense an independent consulting expert to advise and assist the board on the selection of certain service providers affiliated with Citigroup.
At this time, there is no certainty as to how the proceeds of the settlement will be distributed, to whom such distributions will be made, the methodology by which such distributions will be allocated, and when such distributions will be made. Although there can be no assurance, Citigroup does not believe that this matter will have a material adverse effect on the Funds.
The Funds did not implement the tranfer arrangement described above and therefore will not receive any portion of the distributions.
62
Notes to Financial Statements
(unaudited) (continued)9. Legal Matters
Beginning in June, 2004, class action lawsuits alleging violations of the federal securities laws were filed against Citigroup Global Markets Inc. (the “Distributor”) and a number of its affiliates, including Smith Barney Fund Management LLC and Salomon Brothers Asset Management Inc (the “Advisers”), substantially all of the mutual funds managed by the Advisers (the “Funds”), and directors or trustees of the Funds (collectively, the “Defendants”). The complaints alleged, among other things, that the Distributor created various undisclosed incentives for its brokers to sell Smith Barney and Salomon Brothers funds. In addition, according to the complaints, the Advisers caused the Funds to pay excessive brokerage commissions to the Distributor for steering clients towards proprietary funds. The complaints also alleged that the defendants breached their fiduciary duty to the Funds by improperly charging Rule 12b-1 fees and by drawing on fund assets to make undisclosed payments of soft dollars and excessive brokerage commissions. The complaints also alleged that the Funds failed to adequately disclose certain of the allegedly wrongful conduct. The complaints sought injunctive relief and compensatory and punitive damages, rescission of the Funds’ contracts with the Advisers, recovery of all fees paid to the Advisers pursuant to such contracts and an award of attorneys’ fees and litigation expenses.
On December 15, 2004, a consolidated amended complaint (the “Complaint”) was filed alleging substantially similar causes of action. While the lawsuit is in its earliest stages, to the extent that the Complaint purports to state causes of action against the Funds, Citigroup Asset Management believes the Funds have significant defenses to such allegations, which the Funds intend to vigorously assert in responding to the Complaint.
Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future.
As of the date of this report, Citigroup Asset Management and the Funds believe that the resolution of the pending lawsuit will not have a material effect on the financial position or results of operations of the Funds or the ability of the Advisers and their affiliates to continue to render services to the Funds under their respective contracts.
10. Other MattersOn June 24, 2005, Citigroup announced that it has signed a definitive agreement under which Citigroup will sell substantially all of its worldwide asset management business to Legg Mason, Inc. (“Legg Mason”).
As part of this transaction, SBAM (the “Manager”), currently an indirect wholly owned subsidiary of Citigroup, would become an indirect wholly owned subsidiary of Legg Mason. The Manager is the investment manager to the Funds.
The transaction is subject to certain regulatory approvals, as well as other customary conditions to closing. Subject to such approvals and the satisfaction of the other conditions, Citigroup expects the transaction to be completed later this year.
Under the 1940 Act, consummation of the transaction will result in the automatic termination of the investment management contract between the Funds and the Manager. Therefore, the Funds’ Board of Trustees will be asked to approve a new investment management contract between the Funds and the Manager. If approved by the Board, the new investment management contract will be presented to the shareholders of the Funds for their approval.
Subsequently, on August 7, 2005, the Board approved the new investment contract between the Funds and the Manager.
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Salomon Funds Trust
Investment Manager | Officers R. Jay Gerken, CFA Chairman,President and Chief Executive Officer Andrew B. Shoup Senior Vice President and Chief Administrative Officer Frances M. Guggino Chief Financial Officer and Treasurer Andrew Beagley Chief Anti-Money Laundering Compliance Officer and Chief Compliance Officer Wendy S. Setnicka Controller Robert I. Frenkel Secretary and Chief Legal Officer | |
Salomon Brothers Asset Management Inc | ||
399 Park Avenue | ||
NewYork, NY 10022 | ||
Distributor | ||
Citigroup Global Markets Inc. | ||
388 Greenwich Street | ||
NewYork, NewYork 10013 | ||
Transfer Agent | ||
PFPC Inc. | ||
P.O. Box 9764 | ||
Providence, RI 02940-9764 | ||
Custodian | ||
State Street Bank and Trust Company | ||
225 Franklin Street | ||
Boston, MA 02110 | ||
Legal Counsel | Trustees Elliott J. Berv Mark T. Finn R. Jay Gerken, CFA Stephen Randolph Gross Diana R. Harrington Susan B. Kerley | |
Bingham McCutchen LLP | ||
150 Federal Street | ||
Boston, MA 02110 | ||
Independent Registered Public | ||
Accounting Firm | ||
KPMG LLP | ||
345 Park Avenue | ||
New York, NewYork 10154 |
Salomon Funds Trust
Salomon Brothers National Tax Free Bond Fund
Salomon Brothers California Tax Free Bond Fund
Salomon Brothers New York Tax Free Bond Fund
Salomon Brothers Mid Cap Fund
The Funds are separate investment Funds of the Salomon Funds Trust,
a Massachusetts business trust.
This report is submitted for the general information of the shareholders of Salomon Funds Trust, but it may also be used as sales literature when preceded or accompanied by the current Prospectus.
This report must be preceded or accompanied by a free prospectus. Investors should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the Funds. Please read the prospectus carefully before investing.
Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Funds, shareholders can call 1-800-446-1013.
Information on how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, and a description of the policies and procedures that the funds use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling 1-800-446-1013, (2) on the funds’ website at www.citigroupam.com and (3) on the SEC’s website at www.sec.gov.
SALOMON BROTHERS ASSET MANAGEMENT 399 Park Avenue New York, New York 10022 1-800-SALOMON www.citigroupam.com ©Citigroup Global Markets Inc. Member NASD, SIPC SBTAXSEMI 06/05 05-8931 | ![]() |
ITEM 2. | CODE OF ETHICS. | ||
Not applicable. | |||
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. | ||
Not applicable. | |||
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. | ||
Not applicable. | |||
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. | ||
Not applicable. | |||
ITEM 6. | SCHEDULE OF INVESTMENTS. | ||
Not applicable. | |||
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END | ||
MANAGEMENT INVESTMENT COMPANIES. | |||
Not applicable. | |||
ITEM 8. | [RESERVED] | ||
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY | ||
AND AFFILIATED PURCHASERS. | |||
Not applicable. | |||
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. | ||
Not applicable. | |||
ITEM 11. | CONTROLS AND PROCEDURES. | ||
(a) | The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934. | ||
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting. |
ITEM 12. | EXHIBITS. | |||
(a) Not applicable. | ||||
(b) Attached hereto. | ||||
Exhibit 99.CERT | Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |||
Exhibit 99.906CERT | Certifications pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.
Salomon Funds Trust
By: | /s/ R. Jay Gerken | ||
(R. Jay Gerken) | |||
Chief Executive Officer of | |||
Salomon Funds Trust | |||
Date: | September 7, 2005 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ R. Jay Gerken | ||
(R. Jay Gerken) | |||
Chief Executive Officer of | |||
Salomon Funds Trust | |||
Date: | September 7, 2005 | ||
By: | /s/ Frances M. Guggino | ||
(Frances M. Guggino) | |||
Chief Financial Officer of | |||
Salomon Funds Trust | |||
Date: | September 7, 2005 | ||