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 811-5034
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.
Legg Mason & Co., LLC
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, 2006
ITEM 1. REPORT TO STOCKHOLDERS.
The Semi-Annual Report to Stockholders is filed herewith.
SEMI-ANNUAL
REPORT
JUNE 30, 2006
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
INVESTMENT PRODUCTS: NOT FDIC INSURED Ÿ NO BANK GUARANTEE Ÿ MAY LOSE VALUE
Semi-Annual Report • June 30, 2006
What’s
Inside
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Board Approval of Management and Subadvisory Agreements | 67 |
“Smith Barney”, “Salomon Brothers” and “Citi” are service marks of Citigroup, licensed for use by Legg Mason as the names of funds and investment managers. Legg Mason and its affiliates, as well as the Funds’ investment manager, are not affiliated with Citigroup.
R. JAY GERKEN, CFA
Chairman, President and Chief Executive Officer
Dear Shareholder,
The U.S. economy appeared to be on solid footing during the six-month reporting period. After gross domestic product (“GDP”)i rose 1.7% in the fourth quarter of 2005—the first quarter in which GDP growth did not surpass 3.0% in nearly three years—the economy rebounded sharply in the first quarter of 2006. During this time, GDP rose 5.6%, its best showing since the third quarter of 2003. Both strong consumer and business spending prompted the economic turnaround. In the second quarter of 2006, GDP growth was a more modest 2.5%, according to the Commerce Department’s initial reading for the period. The decline was largely attributed to lower consumer spending, triggered by higher interest rates and oil prices, as well as a cooling housing market. In addition, business spending fell during the quarter.
The Federal Reserve Board (“Fed”)ii continued to raise interest rates during the reporting period. Despite the “changing of the guard” from Fed Chairman Alan Greenspan to Ben Bernanke in early 2006, it was “business as usual” for the Fed, as it raised short-term interest rates four times during the period. Since it began its tightening campaign in June 2004, the Fed has increased rates 17 consecutive times, bringing the federal funds rateiii from 1.00% to 5.25%. Coinciding with its latest rate hike in June 2006, the Fed said: “The extent and timing of any additional firming…will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.”
For the six-month period ended June 30, 2006, the U.S. stock market produced positive returns, with the S&P 500 Indexiv returning 2.71%. While the economy expanded and corporate profits remained strong, the headwinds from steadily rising interest rates, inflationary pressures and the potential for additional Fed rate hikes tempered returns.
Salomon Funds Trust I
Looking at the market more closely, small-cap stocks outperformed their mid- and large-cap counterparts, with the Russell 2000v, Russell Midcapvi and Russell 1000vii Indexes returning 8.21%, 4.84% and 2.76%, respectively. From an investment style perspective, value stocks significantly outperformed growth stocks, with the Russell 3000 Valueviii and Russell 3000 Growthix Indexes returning 6.90% and –0.32%, respectively, over the reporting period.
Both short- and long-term yields rose over the reporting period, causing the overall bond market to decline. During the six months ended June 30, 2006, two-year Treasury yields increased from 4.41% to 5.16%. Over the same period, 10-year Treasury yields moved from 4.39% to 5.15%. Short-term rates rose in concert with the Fed’s repeated rate hikes, while long-term rates rose on fears of mounting inflationary pressures. Looking at the six-month period as a whole, the overall bond market, as measured by the Lehman Brothers U.S. Aggregate Indexx, returned –0.72%. Looking at the municipal market, yields of both two- and 10-year securities also rose over the reporting period.
Salomon Brothers National Tax Free Bond Fund
Special Shareholder Notices
As part of the continuing effort to integrate investment products managed by the advisers acquired with Citigroup’s asset management business, Legg Mason, Inc. (“Legg Mason”) has recommended various Fund actions in order to streamline product offerings, standardize share class pricing features, eliminate redundancies and improve efficiencies within the organization. At Board meetings held during June and July 2006, the Fund’s Board reviewed and approved these recommendations, and provided authorization to move ahead with proxy solicitations for those matters needing shareholder approval.
The Fund’s Board has approved the appointment of Legg Mason Partners Fund Advisor, LLC (“LMPFA”) as the Fund’s investment manager effective August 1, 2006. The Fund’s Board has also approved the appointment of Western Asset Management Company (“Western Asset”) as the Fund’s subadviser effective August 1, 2006. The portfolio
II Salomon Funds Trust
managers who are responsible for the day-to-day management of the Fund remain the same immediately prior to and immediately after the date of these changes. LMPFA and Western Asset are wholly-owned subsidiaries of Legg Mason.
The Fund’s Board has also approved a reorganization pursuant to which the Fund’s assets would be acquired, and its liabilities assumed by the Legg Mason Partners Managed Municipals Fund, Inc. (the “Acquiring Fund”), in exchange for shares of the Acquiring Fund. The Fund would then be liquidated, and shares of the Acquiring Fund would be distributed to Fund shareholders. Proxy materials describing the reorganization, and other initiatives requiring shareholder approval, are expected to be sent to shareholders later in 2006. If shareholder approval is obtained, Fund actions are generally expected to be implemented during the first quarter of 2007.
Performance Review
For the six months ended June 30, 2006 Class A shares of the Salomon Brothers National Tax Free Bond Fund, excluding sales charges, returned –0.36%. In comparison, the Fund’s unmanaged benchmarks, the Lehman Brothers Municipal 4 Years Plus Bond Indexxi and the Lehman Brothers Municipal Bond Indexxii returned 0.20% and 0.28%, respectively, for the same period. The Lipper General Municipal Debt Funds Category Average1 increased 0.21% over the same time frame.
Certain investors may be subject to the Federal Alternative Minimum Tax, and state and local taxes will apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.
Salomon Brothers California Tax Free Bond Fund
Special Shareholder Notices
As part of the continuing effort to integrate investment products managed by the advisers acquired with Citigroup’s asset management business, Legg Mason, Inc. (“Legg Mason”) has recommended various Fund actions in order to streamline product offerings, standardize share class pricing
1 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended June 30, 2006, including the reinvestment of dividends and capital gains distributions, if any, calculated among the 260 funds in the Fund’s Lipper category, and excluding sales charges. |
Salomon Funds Trust III
features, eliminate redundancies and improve efficiencies within the organization. At Board meetings held during June and July 2006, the Fund’s Board reviewed and approved these recommendations, and provided authorization to move ahead with proxy solicitations for those matters needing shareholder approval.
The Fund’s Board has approved the appointment of Legg Mason Partners Fund Advisor, LLC (“LMPFA”) as the Fund’s investment manager effective August 1, 2006. The Fund’s Board has also approved the appointment of Western Asset Management Company (“Western Asset”) as the Fund’s subadviser effective August 1, 2006. The portfolio managers who are responsible for the day-to-day management of the Fund remain the same immediately prior to and immediately after the date of these changes. LMPFA and Western Asset are wholly-owned subsidiaries of Legg Mason.
The Fund’s Board has also approved a reorganization pursuant to which the Fund’s assets would be acquired, and its liabilities assumed by the Legg Mason Partners California Municipals Fund, Inc. (the “Acquiring Fund”), in exchange for shares of the Acquiring Fund. The Fund would then be liquidated, and shares of the Acquiring Fund would be distributed to Fund shareholders. Proxy materials describing the reorganization, and other initiatives requiring shareholder approval, are expected to be sent to shareholders later in 2006. If shareholder approval is obtained, Fund actions are generally expected to be implemented during the first quarter of 2007.
Performance Review
For the six months ended June 30, 2006, Class A shares of the Salomon Brothers California Tax Free Bond Fund, excluding sales charges, returned –0.77%. In comparison, the Fund’s unmanaged benchmarks, the Lehman Brothers California 4 Years Plus Bond Indexxiii and the Lehman Brothers Municipal Bond Index returned 0.31% and 0.28%, respectively, for the same period. The Lipper California Municipal Debt Funds Category Average2 increased 0.15% over the same time frame.
2 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended June 30, 2006, including the reinvestment of dividends and capital gains distributions, if any, calculated among the 122 funds in the Fund’s Lipper category, and excluding sales charges. |
IV Salomon Funds Trust
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.
Salomon Brothers New York Tax Free Bond Fund
Special Shareholder Notices
As part of the continuing effort to integrate investment products managed by the advisers acquired with Citigroup’s asset management business, Legg Mason, Inc. (“Legg Mason”) has recommended various Fund actions in order to streamline product offerings, standardize share class pricing features, eliminate redundancies and improve efficiencies within the organization. At Board meetings held during June and July 2006, the Fund’s Board reviewed and approved these recommendations, and provided authorization to move ahead with proxy solicitations for those matters needing shareholder approval.
The Fund’s Board has approved the appointment of Legg Mason Partners Fund Advisor, LLC (“LMPFA”) as the Fund’s investment manager effective August 1, 2006. The Fund’s Board has also approved the appointment of Western Asset Management Company (“Western Asset”) as the Fund’s subadviser effective August 1, 2006. The portfolio managers who are responsible for the day-to-day management of the Fund remain the same immediately prior to and immediately after the date of these changes. LMPFA and Western Asset are wholly-owned subsidiaries of Legg Mason.
The Fund’s Board has also approved a reorganization pursuant to which the Fund’s assets would be acquired, and its liabilities assumed by the Legg Mason Partners New York Municipals Fund (the “Acquiring Fund”), in exchange for shares of the Acquiring Fund. The Fund would then be liquidated, and shares of the Acquiring Fund would be distributed to Fund shareholders. Proxy materials describing the reorganization, and other initiatives requiring shareholder approval, are expected to be sent to shareholders later in 2006. If shareholder approval is obtained, Fund actions are generally expected to be implemented during the first quarter of 2007.
Salomon Funds Trust V
Performance Review
For the six months ended June 30, 2006, Class A shares of the Salomon Brothers New York Tax Free Bond Fund, excluding sales charges, returned –0.52%. The Fund’s unmanaged benchmark, the Lehman Brothers Municipal Bond Index, returned 0.28% for the same period. The Lipper New York Municipal Debt Funds Category Average3 increased 0.19% over the same time frame.
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.
Salomon Brothers Mid Cap Fund
Special Shareholder Notices
As part of the continuing effort to integrate investment products managed by the advisers acquired with Citigroup’s asset management business, Legg Mason, Inc. (“Legg Mason”) has recommended various Fund actions in order to streamline product offerings, standardize share class pricing features, eliminate redundancies and improve efficiencies within the organization. At Board meetings held during June and July 2006, the Fund’s Board reviewed and approved these recommendations, and provided authorization to move ahead with proxy solicitations for those matters needing shareholder approval.
The Fund’s Board has approved the appointment of Legg Mason Partners Fund Advisor, LLC (“LMPFA”) as the Fund’s investment manager effective August 1, 2006. The Fund’s Board has also approved the appointment of CAM North America, LLC (“CAM N.A.”) as the Fund’s subadviser effective August 1, 2006. The portfolio managers who are responsible for the day-to-day management of the Fund remain the same immediately prior to and immediately after the date of these changes. LMPFA and CAM N.A. are wholly-owned subsidiaries of Legg Mason.
3 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended June 30, 2006, including the reinvestment of dividends and capital gains distributions, if any, calculated among the 104 funds in the Fund’s Lipper category, and excluding sales charges. |
VI Salomon Funds Trust
Effective July 12, 2006, Brian Posner and Brian Angerame, portfolio managers of CAM N.A., became portfolio manager and co-portfolio manager, respectively, of the Fund.
The Fund’s Board has also approved a reorganization pursuant to which the Fund’s assets would be acquired, and its liabilities assumed by the Salomon Brothers Capital Fund Inc (the “Acquiring Fund”), in exchange for shares of the Acquiring Fund. The Fund would then be liquidated, and shares of the Acquiring Fund would be distributed to Fund shareholders. Proxy materials describing the reorganization, and other initiatives requiring shareholder approval, are expected to be sent to shareholders later in 2006. If shareholder approval is obtained, Fund actions are generally expected to be implemented during the fourth quarter of 2006.
Performance Review
For the six months ended June 30, 2006, Class A shares of the Salomon Brothers Mid Cap Fund, excluding sales charges, returned 2.02%. These shares underperformed the Fund’s unmanaged benchmark, the S&P MidCap 400 Indexxiv, which returned 4.24%, for the same period. The Lipper Mid-Cap Core Funds Category Average4 increased 3.97% over the same time frame.
4 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended June 30, 2006 including the reinvestment of dividends and capital gains distributions, if any, calculated among the 328 funds in the Fund’s Lipper category, and excluding sales charges. |
Salomon Funds Trust VII
Performance Snapshot as of June 30, 2006 (excluding sales charges) (unaudited) | ||
6 Months | ||
National Tax Free Bond Fund — Class A Shares | -0.36% | |
Lehman Brothers Municipal 4 Years Plus Bond Index | 0.20% | |
Lehman Brothers Municipal Bond Index | 0.28% | |
Lipper General Municipal Debt Funds Category Average | 0.21% | |
California Tax Free Bond Fund — Class A Shares | -0.77% | |
Lehman Brothers California 4 Years Plus Bond Index | 0.31% | |
Lehman Brothers Municipal Bond Index | 0.28% | |
Lipper California Municipal Debt Funds Category Average | 0.15% | |
New York Tax Free Bond Fund — Class A Shares | -0.52% | |
Lehman Brothers Municipal Bond Index | 0.28% | |
Lipper New York Municipal Debt Funds Category Average | 0.19% | |
Mid Cap Fund — Class A Shares | 2.02% | |
S&P MidCap 400 Index | 4.24% | |
Lipper Mid-Cap Core Funds Category Average | 3.97% | |
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, investment returns and yields will fluctuate and investors’ shares, when redeemed, may be worth more or less than their original cost. Performance figures for the Funds reflect reimbursements and/or fee waivers, without which the performance would have been lower. To obtain performance data current to the most recent month-end, please visit our website at www.leggmason.com/InvestorServices. | ||
The 30-Day SEC Yield for Class A, Class B, Class C and Class O for National Tax Free Bond Fund were 3.77%, 3.17%, 3.42% and 4.17%, respectively. Absent these reimbursements or waivers, performance would have been 3.28%, 2.64%, 2.97% and 3.24%, respectively. | ||
The 30-Day SEC Yield for Class A, Class B, Class C and Class O for California Tax Free Bond Fund were 3.47%, 2.86%, 3.11% and 3.79%, respectively. Absent these reimbursements or waivers, performance would have been 2.35%, 1.17%, –0.38% and –3.78%, respectively. | ||
The 30-Day SEC Yield for Class A, Class B, Class C and Class O for New York Tax Free Bond Fund were 3.59%, 3.00%, 3.24% and 4.00%, respectively. Absent these reimbursements or waivers, performance would have been 3.50%, 2.61%, 2.93% and 3.90%, respectively. | ||
Excluding sales charges for the National Tax Free Bond Fund, Class B shares returned –0.64%, Class C shares returned –0.60% and Class O shares returned –0.15% over the six months ended June 30, 2006. Excluding sales charges for the California Tax Free Bond Fund, Class B shares returned –1.14%, Class C shares returned –1.02% and Class O shares returned –0.56% over the six months ended June 30, 2006. Excluding sales charges for the New York Tax Free Bond Fund, Class B shares returned –0.89%, Class C shares returned –0.77% and Class O shares returned –0.40% over the six months ended June 30, 2006. Excluding sales charges for the Mid Cap Fund, Class B shares returned 1.67%, Class C shares returned 1.66% and Class O shares returned 2.25% over the six months ended June 30, 2006. All share class returns assume the reinvestment of all distributions, including returns of capital, if any, 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. |
VIII Salomon Funds Trust
Information About Your Funds
As you may be aware, several issues in the mutual fund industry have come under the scrutiny of federal and state regulators. Affiliates of the Funds’ Manager have, in recent years, 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 Funds’ response to market timing and shareholder exchange activity, including compliance with prospectus disclosure related to these subjects. The Funds are not in a position to predict the outcome of these requests and investigations.
Important information with regard to recent regulatory developments that may affect the Funds is contained in the Notes to Financial Statements included in this report.
As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you meet your financial goals.
Sincerely,
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
July 28, 2006
Salomon Funds Trust IX
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. Please see the Fund’s prospectus for more information on these and other risks.
Salomon Brothers California 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. 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. Please see the Fund’s prospectus for more information on these and other risks.
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. Please see the Fund’s prospectus for more information on these and other risks.
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 Fund’s 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 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. |
vi | The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 25% of the total market capitalization of the Russell 1000 Index. |
vii | 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. |
viii | The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. (A price-to-book ratio is the price of a stock compared to the difference between a company’s assets and liabilities.) |
ix | The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. |
x | The Lehman Brothers U.S. Aggregate 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. |
xi | The Lehman Brothers 4 Years Plus Index is a broad measure of the municipal bond market with maturities of at least four years. |
xii | The Lehman Brothers Municipal Bond Index is a broad measure of the municipal bond market with maturities of at least one year. |
xiii | The Lehman Brothers California 4 Years Plus Bond Index is a broad measure of the California municipal bond market with maturities of at least four years. |
xiv | 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. |
X Salomon Funds Trust
Salomon Brothers National Tax Free Bond Fund
Salomon Funds Trust 2006 Semi-Annual Report 1
Fund at a Glance (unaudited) (continued)
Salomon Brothers California Tax Free Bond Fund
2 Salomon Funds Trust 2006 Semi-Annual Report
Fund at a Glance (unaudited) (continued)
Salomon Brothers New York Tax Free Bond Fund
Salomon Funds Trust 2006 Semi-Annual Report 3
Fund at a Glance (unaudited) (continued)
4 Salomon Funds Trust 2006 Semi-Annual Report
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 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, 2006 and held for the six months ended June 30, 2006.
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) | |||||||||||||||
Salomon Brothers National Tax Free Bond Fund | Actual Total Return Without Sales Charges(2) | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During the Period(3) | ||||||||||
Class A | (0.36 | )% | $ | 1,000.00 | $ | 996.40 | 0.75 | % | $ | 3.71 | |||||
Class B | (0.64 | ) | 1,000.00 | 993.60 | 1.50 | 7.41 | |||||||||
Class C | (0.60 | ) | 1,000.00 | 994.00 | 1.25 | 6.18 | |||||||||
Class O | (0.15 | ) | 1,000.00 | 998.50 | 0.49 | 2.43 | |||||||||
(1) | For the six months ended June 30, 2006. |
(2) | Assumes reinvestment of all distributions, including returns of capital, 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 fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. |
(3) | Expenses (net of fee waivers 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. |
Salomon Funds Trust 2006 Semi-Annual Report 5
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) | |||||||||||||||
Salomon Brothers National Tax Free Bond Fund | Hypothetical Annualized Total Return | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During 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 | 1,022.36 | 0.49 | 2.46 | ||||||||||
(1) | For the six months ended June 30, 2006. |
(2) | Expenses (net of fee waivers 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. |
6 Salomon Funds Trust 2006 Semi-Annual Report
Fund Expenses (unaudited) (continued)
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 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, 2006 and held for the six months ended June 30, 2006.
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) | |||||||||||||||
Salomon Brothers California Tax Free Bond Fund | Actual Total Return Without Sales Charges(2) | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During the Period(3) | ||||||||||
Class A | (0.77 | )% | $ | 1,000.00 | $ | 992.30 | 0.80 | % | $ | 3.95 | |||||
Class B | (1.14 | ) | 1,000.00 | 988.60 | 1.55 | 7.64 | |||||||||
Class C | (1.02 | ) | 1,000.00 | 989.80 | 1.30 | 6.41 | |||||||||
Class O | (0.56 | ) | 1,000.00 | 994.40 | 0.54 | 2.67 | |||||||||
(1) | For the six months ended June 30, 2006. |
(2) | Assumes reinvestment of all distributions, including returns of capital, 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 sale 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 fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. |
(3) | Expenses (net of fee waivers 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. |
Salomon Funds Trust 2006 Semi-Annual Report 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) | |||||||||||||||
Salomon Brothers California Tax Free Bond Fund | Hypothetical Annualized Total Return | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During 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 | 1,022.12 | 0.54 | 2.71 | ||||||||||
(1) | For the six months ended June 30, 2006. |
(2) | Expenses (net of fee waivers 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 Salomon Funds Trust 2006 Semi-Annual Report
Fund Expenses (unaudited) (continued)
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 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, 2006 and held for the six months ended June 30, 2006.
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) | |||||||||||||||
Salomon Brothers New York Tax Free Bond Fund | Actual Total Return Without Sales Charges(2) | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During the Period(3) | ||||||||||
Class A | (0.52 | )% | $ | 1,000.00 | $ | 994.80 | 0.80 | % | $ | 3.96 | |||||
Class B | (0.89 | ) | 1,000.00 | 991.10 | 1.55 | 7.65 | |||||||||
Class C | (0.77 | ) | 1,000.00 | 992.30 | 1.30 | 6.42 | |||||||||
Class O | (0.40 | ) | 1,000.00 | 996.00 | 0.55 | 2.72 | |||||||||
(1) | For the six months ended June 30, 2006. |
(2) | Assumes reinvestment of all distributions, including returns of capital, 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 sale 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 fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. |
(3) | Expenses (net of fee waivers 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. |
Salomon Funds Trust 2006 Semi-Annual Report 9
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) | |||||||||||||||
Salomon Brothers New York Tax Free Bond Fund | Hypothetical Annualized Total Return | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During 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, 2006. |
(2) | Expenses (net of fee waivers 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 Salomon Funds Trust 2006 Semi-Annual Report
Fund Expenses (unaudited) (continued)
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 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, 2006 and held for the six months ended June 30, 2006.
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) | |||||||||||||||
Salomon Brothers Mid Cap Fund | Actual Total Return Without Sales Charges(2) | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During the Period(3) | ||||||||||
Class A | 2.02 | % | $ | 1,000.00 | $ | 1,020.20 | 1.50 | % | $ | 7.51 | |||||
Class B | 1.67 | 1,000.00 | 1,016.70 | 2.25 | 11.25 | ||||||||||
Class C | 1.66 | 1,000.00 | 1,016.60 | 2.25 | 11.25 | ||||||||||
Class O | 2.25 | 1,000.00 | 1,022.50 | 1.08 | 5.42 | ||||||||||
(1) | For the six months ended June 30, 2006. |
(2) | Assumes reinvestment of all distributions, including returns of capital, 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 sale 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 fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. |
(3) | Expenses (net of fee waivers 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. |
Salomon Funds Trust 2006 Semi-Annual Report 11
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) | |||||||||||||||
Salomon Brothers Mid Cap Fund | Hypothetical Annualized Total Return | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During 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, 2006. |
(2) | Expenses (net of fee waivers 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. |
12 Salomon Funds Trust 2006 Semi-Annual Report
Schedules of Investments (June 30, 2006) (unaudited)
SALOMON BROTHERS NATIONAL TAX FREE BOND FUND
Face Amount | Rating‡ | Security | Value | ||||||
MUNICIPAL BONDS — 96.8% | |||||||||
California — 8.4% | |||||||||
$ | 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 | $ | 1,064,870 | ||||
450,000 | AAA | El Segundo, CA, GO, USD, Refunding Bonds, FGIC-Insured, 5.250% due 9/1/22 | 476,888 | ||||||
1,250,000 | AAA | Huntington Beach, CA, Union High School District, GO, Election 2004, FSA-Insured, 5.000% due 8/1/29 | 1,275,737 | ||||||
Total California | 2,817,495 | ||||||||
Colorado — 3.0% | |||||||||
500,000 | BBB+ | Colorado Health Facilities Authority Revenue, Poudre Valley Health Care, Series F, 5.000% due 3/1/25 | 495,775 | ||||||
500,000 | AAA | Pueblo County, CO, School District Number 60, GO, FGIC-Insured, 5.250% due 12/15/20 | 524,170 | ||||||
Total Colorado | 1,019,945 | ||||||||
Florida — 11.2% | |||||||||
2,000,000 | AAA | Jacksonville, FL, Sales Tax Revenue, Better Jacksonville, MBIA-Insured, 5.250% due 10/1/21 | 2,116,940 | ||||||
Miami-Dade County, FL, Aviation Revenue, Miami International Airport: | |||||||||
250,000 | AAA | Series A, FGIC-Insured, 5.550% due 10/1/13 (a) | 264,953 | ||||||
300,000 | AAA | Series B, MBIA-Insured, 5.250% due 10/1/17 (a) | 313,554 | ||||||
Orlando, FL, Utilities Commission Water & Electricity Revenue, Refunding Bonds, Series C: | |||||||||
630,000 | AA | 5.250% due 10/1/21 | 661,336 | ||||||
400,000 | AA | 5.250% due 10/1/23 | 418,784 | ||||||
Total Florida | 3,775,567 | ||||||||
Illinois — 11.1% | |||||||||
1,250,000 | AAA | Chicago, IL, O’Hare International Airport Revenue, Refunding Bonds, Lien A-2, FSA-Insured, 5.750% due 1/1/19 (a) | 1,348,362 | ||||||
1,500,000 | AAA | Illinois State, GO, First Series, FGIC-Insured, 6.100% due 1/1/20 | 1,599,030 | ||||||
750,000 | Aaa(b) | Will County, IL, GO, Community Consolidated School District Number 30-C, Troy Township, Series B, FSA-Insured, 5.250% due 2/1/20 | 793,613 | ||||||
Total Illinois | 3,741,005 | ||||||||
Indiana — 5.5% | |||||||||
250,000 | AAA | Indiana Health Facility Financing Authority, Hospital Revenue, Community Hospital Project, Series A, AMBAC-Insured, 5.000% due 5/1/35 | 253,365 | ||||||
1,550,000 | AAA | Indiana Transportation Finance Authority Highway Revenue, Series A, FGIC-Insured, 5.250% due 6/1/29 | 1,617,099 | ||||||
Total Indiana | 1,870,464 | ||||||||
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 13
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Face Amount | Rating‡ | Security | Value | ||||||
Iowa — 0.2% | |||||||||
$ | 55,000 | AAA | Iowa Finance Authority Single Family Revenue, Mortgage-Backed Securities Program, Series A, FNMA/GNMA-Collateralized, 6.000% due 7/1/13 | $ | 56,471 | ||||
Kentucky — 3.3% | |||||||||
750,000 | AAA | Kenton County, KY, Airport Board Revenue, Refunding Bonds, Cincinnati/Northern Kentucky, Series A, MBIA-Insured, 5.625% due 3/1/15 (a) | 797,032 | ||||||
300,000 | AAA | Louisville & Jefferson County, KY, Regional Airport Authority, Airport Systems Revenue, Series A, FSA-Insured, 5.750% due 7/1/17 (a) | 320,229 | ||||||
Total Kentucky | 1,117,261 | ||||||||
Massachusetts — 1.6% | |||||||||
500,000 | AAA | Massachusetts State, GO, Consolidated Loan, Series D, FSA-Insured, Call 12/1/14 @ 100, 5.000% due 12/1/19 (c) | 528,780 | ||||||
Mississippi — 3.8% | |||||||||
25,000 | A(d) | Mississippi Higher Education Student Loan, Subordinated Series C, 6.050% due 9/1/07 (a) | 25,041 | ||||||
1,235,000 | AA | Mississippi State, GO, Port Improvement, Series 16, 5.000% due 9/1/17 (a) | 1,250,746 | ||||||
Total Mississippi | 1,275,787 | ||||||||
Missouri — 3.0% | |||||||||
1,000,000 | AA | Missouri State, HEFA Revenue, BJC Health System, Series A, 5.000% due 5/15/21 | 1,025,120 | ||||||
Montana — 5.2% | |||||||||
1,750,000 | AAA | Forsyth, MT, PCR, Refunding, Northwestern Corp. Colstrip, AMBAC-Insured, 4.650% due 8/1/23 | 1,739,745 | ||||||
New Hampshire — 3.1% | |||||||||
1,000,000 | AAA | New Hampshire HEFA Revenue, University Systems of New Hampshire, AMBAC-Insured, 5.375% due 7/1/20 | 1,063,410 | ||||||
New Jersey — 4.8% | |||||||||
New Jersey EDA, Motor Vehicle Surcharges Revenue, Series A, MBIA-Insured: | |||||||||
500,000 | AAA | 5.250% due 7/1/16 | 532,165 | ||||||
750,000 | AAA | 5.250% due 7/1/17 | 797,723 | ||||||
280,000 | AAA | Passaic Valley, NJ, Sewage Commissioners, Sewer System, Series D, AMBAC-Insured, 5.750% due 12/1/07 (e) | 287,725 | ||||||
Total New Jersey | 1,617,613 | ||||||||
New Mexico — 1.6% | |||||||||
500,000 | AAA | New Mexico Finance Authority State Transportation Revenue, Senior Lien, Series A, MBIA-Insured, 5.250% due 6/15/23 | 525,815 | ||||||
New York — 12.1% | |||||||||
1,300,000 | AAA | Metropolitan Transportation Authority, New York Services Contract, Refunding Bonds, Series A, AMBAC-Insured, 5.500% due 11/15/15 | 1,409,213 |
See Notes to Financial Statements.
14 Salomon Funds Trust 2006 Semi-Annual Report
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Face Amount | Rating‡ | Security | Value | ||||||
New York — 12.1% (continued) | |||||||||
New York City, NY, GO: | |||||||||
$ | 500,000 | A+ | Series A, 5.750% due 8/1/16 | $ | 540,015 | ||||
750,000 | AAA | Series D, FSA-Insured, 5.000% due 11/1/17 | 782,085 | ||||||
265,000 | AAA | New York City, NY, TFA Revenue, Future Tax Secured, Series B, Call 5/15/10 @ 101, 6.125% due 11/15/14 (c) | 288,299 | ||||||
250,000 | AA- | 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) | 270,965 | ||||||
750,000 | AA- | Triborough Bridge & Tunnel Authority Revenues, Refunding Bonds, Series B, 5.250% due 11/15/16 | 795,225 | ||||||
Total New York | 4,085,802 | ||||||||
Oregon — 6.3% | |||||||||
Multnomah County, OR, Hospital Facilities Authority Revenue, Providence Health Systems: | |||||||||
1,000,000 | AA | 5.250% due 10/1/16 | 1,063,810 | ||||||
1,000,000 | AA | 5.250% due 10/1/20 | 1,056,000 | ||||||
Total Oregon | 2,119,810 | ||||||||
Texas — 8.6% | |||||||||
500,000 | AAA | Austin, TX, Airport System Revenue, Refunding, Prior Lien, MBIA-Insured, 5.250% due 11/15/17 | 529,015 | ||||||
1,100,000 | AAA | Hidalgo County, TX, GO, Certificates of Obligation, FGIC-Insured, 5.500% due 8/15/16 | 1,180,575 | ||||||
85,000 | AAA | Houston, TX, GO, Refunding Bonds, Public Improvement, FSA-Insured, 5.750% due 3/1/17 | 90,401 | ||||||
1,000,000 | AAA | Keller, TX, GO, ISD, Refunding Bonds, 5.250% due 8/15/22 | 1,043,570 | ||||||
55,000 | AAA | Northside Texas, GO, ISD, Unrefunded Balance, PSFG, 6.000% due 8/15/16 | 59,105 | ||||||
Total Texas | 2,902,666 | ||||||||
Washington — 4.0% | |||||||||
750,000 | AAA | Energy Northwest Washington Electric Revenue, Refunding Bonds, Columbia Generating Station, Series A, FSA-Insured, 5.500% due 7/1/16 | 799,890 | ||||||
500,000 | AAA | Snohomish County, WA, School District Number 2, Everett, GO, FSA-Insured, 5.500% due 12/1/16 | 535,540 | ||||||
Total Washington | 1,335,430 | ||||||||
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS (Cost — $32,931,729) | 32,618,186 | ||||||||
SHORT-TERM INVESTMENTS (f) — 7.4% | |||||||||
Michigan — 1.8% | |||||||||
600,000 | A-1 | Michigan Strategic Fund Limited Obligation Revenue, Detriot Symphony, Series A, LOC-Standard Federal Bank, 4.040%, 7/3/06 | 600,000 | ||||||
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 15
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Face Amount | Rating‡ | Security | Value | ||||||
Pennsylvania — 5.6% | |||||||||
$ | 1,900,000 | A-1+ | Philadelphia, PA, Hospitals & Higher Education Facilities Authority, Children’s Hospital Philadelphia, SPA-Fleet National Bank, 4.000%, 7/3/06 | $ | 1,900,000 | ||||
TOTAL SHORT-TERM INVESTMENTS (Cost — $2,500,000) | 2,500,000 | ||||||||
TOTAL INVESTMENTS — 104.2% (Cost — $35,431,729#) | 35,118,186 | ||||||||
Liabilities in Excess of Other Assets — (4.2)% | (1,399,720 | ) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 33,718,466 | |||||||
‡ | All ratings are by Standard & Poor’s Ratings Service, unless otherwise noted. |
(a) | Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”). |
(b) | Rating by Moody’s Investors Service. |
(c) | Pre-Refunded bonds are escrowed with U.S. government obligations and/or U.S. government agency 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 Ratings Service. |
(e) | Bonds are escrowed to maturity by U.S. government securities and/or U.S. government agency 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 obligations have a demand feature under which the Fund can tender them back to the issuer on no more than 7 days notice. Date shown is the date of the next interest rate change. |
# | Aggregate cost for federal income tax purposes is substantially the same. |
See pages 28 and 29 for definitions of ratings. |
Abbreviations used in this schedule: | ||
AMBAC | — Ambac Assurance Corporation | |
EDA | — Economic Development 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 | |
ISD | — Independent School District | |
LOC | — Letter of Credit | |
MBIA | — Municipal Bond Investors Assurance Corporation | |
PCR | — Pollution Control Revenue | |
PSFG | — Permanent School Fund Guaranty | |
SPA | — Standby Bond Purchase Agreement | |
TFA | — Transitional Finance Authority | |
USD | — Unified School District |
Summary of Investments by Industry and Pre-Refunded Securities* (unaudited) | |||
General Obligations | 28.9 | % | |
Transportation | 22.6 | ||
Hospitals | 16.5 | ||
Utilities | 5.4 | ||
Pollution Control | 4.9 | ||
Industrial Development | 3.8 | ||
Pre-Refunded | 3.1 | ||
Water & Sewer | 3.0 | ||
Education | 3.0 | ||
Escrowed to Maturity | 0.8 | ||
Housing: Single-Family | 0.2 | ||
Finance | 0.1 | ||
Miscellaneous | 7.7 | ||
100.0 | % | ||
* | As a percentage of total investments. Please note that Fund holdings are as of June 30, 2006 and are subject to change. |
See Notes to Financial Statements.
16 Salomon Funds Trust 2006 Semi-Annual Report
Schedules of Investments (June 30, 2006) (unaudited) (continued)
SALOMON BROTHERS CALIFORNIA TAX FREE BOND FUND
Face Amount | Rating‡ | Security | Value | ||||||
MUNICIPAL BONDS — 93.1% | |||||||||
General Obligations — 45.7% | |||||||||
$ | 350,000 | AAA | Anaheim, CA, School District, GO, Refunding, FGIC-Insured, 5.000% due 8/1/23 | $ | 361,585 | ||||
350,000 | A+ | California State, GO, Refunding, 5.250% due 2/1/21 | 365,949 | ||||||
350,000 | AAA | Cerritos, CA, Community College District, GO, Refunding, AMBAC-Insured, 5.000% due 8/1/18 | 367,640 | ||||||
150,000 | AAA | El Segundo, CA, GO, USD, Refunding Bonds, FGIC-Insured, 5.250% due 9/1/22 | 158,963 | ||||||
250,000 | AAA | Los Altos, CA, School District, GO, Refunding, AMBAC-Insured, 5.000% due 8/1/21 | 261,095 | ||||||
350,000 | AAA | Moreland, CA, School District, GO, Refunding, Series B, AMBAC-Insured, 5.000% due 8/1/23 | 364,035 | ||||||
325,000 | AAA | San Francisco, CA, Community College District, GO, Election 2001, Series B, AMBAC-Insured, 5.000% due 6/15/15 | 344,874 | ||||||
350,000 | AAA | Shasta Tehama Trinity, CA, Joint Community College District, GO, Election 2002, Series B, FSA-Insured, 5.250% due 8/1/24 | 373,450 | ||||||
500,000 | AAA | Ventura, CA, Community College District, GO, Series A, MBIA-Insured, 5.500% due 8/1/23 | 539,770 | ||||||
215,000 | AAA | Walnut Valley, CA, USD, Refunding Bonds, FSA-Insured, 5.250% due 8/1/18 | 231,538 | ||||||
Total General Obligations | 3,368,899 | ||||||||
Housing: Multi-Family — 13.9% | |||||||||
1,000,000 | AAA | California Housing Finance Agency Revenue, MFH III, Series A, MBIA-Insured, 5.850% due 8/1/17 (a) | 1,025,370 | ||||||
Housing: Single-Family — 1.6% | |||||||||
120,000 | AA- | California Housing Finance Agency Revenue, Single Family Mortgage Purpose Program, Series A-2, Class III, 4.800% due 8/1/12 (a) | 120,355 | ||||||
Miscellaneous — 6.6% | |||||||||
200,000 | 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 (b) | 211,546 | ||||||
250,000 | AA | Sacramento County, CA, Sanitation District Financing Authority Revenue, Refunding Bonds, Series A, 6.000% due 12/1/14 | 270,302 | ||||||
Total Miscellaneous | 481,848 | ||||||||
Transportation — 8.5% | |||||||||
250,000 | AAA | Los Angeles, CA, Harbor Department Revenue, Refunding, Series A, MBIA-Insured, 5.000% due 8/1/19 | 263,698 | ||||||
350,000 | AAA | San Francisco CA, Bay Area Rapid Transit District Sales Tax Revenue, Unrefunded Balance, AMBAC-Insured, 5.000% due 7/1/28 | 357,696 | ||||||
Total Transportation | 621,394 | ||||||||
Utilities — 7.1% | |||||||||
500,000 | AAA | Sacramento, CA, Municipal Utility District, Electric Revenue, Refunding, Series Q, FSA-Insured, 5.250% due 8/15/21 | 525,530 | ||||||
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 17
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Face Amount | Rating‡ | Security | Value | ||||||
Water & Sewer — 9.7% | |||||||||
$ | 300,000 | AAA | Puerto Rico Commonwealth Aqueduct & Sewer Authority Revenue, Refunding Bonds, MBIA/IBC-Insured, 6.250% due 7/1/13 | $ | 339,030 | ||||
355,000 | AAA | San Francisco, CA, City & County Public Utilities Commission, Water Revenue, Series A, FSA-Insured, 5.000% due 11/1/18 | 374,131 | ||||||
Total Water & Sewer | 713,161 | ||||||||
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENT (Cost — $6,880,003) | 6,856,557 | ||||||||
SHORT-TERM INVESTMENT — 4.7% | |||||||||
Public Facilities — 4.7% | |||||||||
350,000 | A-1 | Vallejo, CA, COP, Golf Course Facilities Financing, Series 2001, LOC-Union Bank of Canada N.A., 4.000%, 7/6/06 (c) | 350,000 | ||||||
TOTAL INVESTMENTS — 97.8% (Cost — $7,230,003#) | 7,206,557 | ||||||||
Other Assets in Excess of Liabilities — 2.2% | 160,248 | ||||||||
TOTAL NET ASSETS — 100.0% | $ | 7,366,805 | |||||||
‡ | All ratings are by Standard & Poor’s Ratings Service, unless otherwise noted. |
(a) | Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”). |
(b) | Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2006. |
(c) | Variable rate demand obligations have a demand feature under which the Fund can tender them back to the issuer on no more than 7 days notice. Date shown is the date of the next interest rate change. |
# | Aggregate cost for federal income tax purposes is substantially the same. |
See pages 28 and 29 for definitions of ratings. |
Abbreviations used in this schedule: | ||
AMBAC | — Ambac Assurance Corporation | |
COP | — Certificate of Participation | |
FGIC | — Financial Guaranty Insurance Company | |
FSA | — Financial Security Assurance | |
GO | — General Obligation | |
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.
18 Salomon Funds Trust 2006 Semi-Annual Report
Schedules of Investments (June 30, 2006) (unaudited) (continued)
SALOMON BROTHERS NEW YORK TAX FREE BOND FUND
Face Amount | Rating‡ | Security | Value | ||||||
MUNICIPAL BONDS — 93.5% | |||||||||
Education — 24.5% | |||||||||
New York State Dormitory Authority Revenue: | |||||||||
$ | 3,000,000 | AAA | City University of New York, Consolidated Second General Resolution, Series A, AMBAC-Insured, 5.750% due 7/1/18 | $ | 3,355,590 | ||||
New York University, Series A, MBIA-Insured: | |||||||||
1,000,000 | AAA | 5.750% due 7/1/15 | 1,115,810 | ||||||
6,300,000 | AAA | 5.750% due 7/1/27 | 7,194,852 | ||||||
1,500,000 | AAA | School District Financing Program, Series A, MBIA-Insured, | 1,632,285 | ||||||
State University: | |||||||||
1,070,000 | AAA | Adult Facilities, Series C, FSA-Insured, 5.750% due 5/15/17 | 1,204,403 | ||||||
2,030,000 | AA- | Educational Facilities, Series B, 5.250% due 5/15/13 | 2,158,255 | ||||||
New York State Municipal Bond Bank Agency, Special School Purpose Revenue, State Aid Withholding, Series C: | |||||||||
1,000,000 | A+ | 5.500% due 6/1/16 | 1,066,050 | ||||||
1,700,000 | A+ | 5.250% due 12/1/21 | 1,775,888 | ||||||
1,640,000 | Aaa(a) | Schenectady, NY, Industrial Development Agency, Civic Facility Revenue, Union College Project, Series A, AMBAC-Insured, 5.500% due 7/1/16 | 1,744,845 | ||||||
Total Education | 21,247,978 | ||||||||
Escrowed to Maturity (b) — 5.8% | |||||||||
Metropolitan Transportation Authority, New York Services Contract, | |||||||||
Transportation Facilities, Series O: | |||||||||
3,000,000 | AAA | 5.750% due 7/1/13 | 3,215,670 | ||||||
1,000,000 | AAA | MBIA/IBC-Insured, 5.500% due 7/1/17 | 1,101,750 | ||||||
675,000 | AAA | New York State Housing Finance Agency, State University Construction, Series A, 7.900% due 11/1/06 | 677,012 | ||||||
Total Escrowed to Maturity | 4,994,432 | ||||||||
General Obligations — 8.9% | |||||||||
2,100,000 | Aaa(a) | Erie County, NY, Public Improvement, Series A, FGIC-Insured, | 2,195,949 | ||||||
New York City, NY: | |||||||||
1,000,000 | A+ | Series B, 5.625% due 12/1/13 | 1,073,690 | ||||||
1,260,000 | A+ | Unrefunded Balance, GO, Series B, 5.750% due 8/1/14 | 1,349,788 | ||||||
1,600,000 | A+ | New York City, NY, GO, Series A, 5.750% due 8/1/16 | 1,728,048 | ||||||
1,250,000 | AAA | Puerto Rico Commonwealth, Refunding, Public Improvement, Series A, MBIA-Insured, 5.500% due 7/1/16 | 1,371,800 | ||||||
Total General Obligations | 7,719,275 | ||||||||
Hospitals — 5.5% | |||||||||
New York State Dormitory Authority Revenue: | |||||||||
2,000,000 | AAA | Mental Health Services Facilities Improvement, Series D, | 2,054,820 | ||||||
2,500,000 | AAA | North Shore University Hospital, MBIA-Insured, | 2,735,250 | ||||||
Total Hospitals | 4,790,070 | ||||||||
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 19
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Face Amount | Rating‡ | Security | Value | ||||||
Housing: Multi-Family — 2.0% | |||||||||
$ | 1,645,000 | AA | New York City Housing Development Corp., MFH Revenue, Series E, SONYMA-Insured, 6.100% due 11/1/19 | $ | 1,723,828 | ||||
Housing: Single-Family — 3.8% | |||||||||
3,200,000 | Aa1(a) | New York State Mortgage Agency Revenue, Homeowner Mortgage, Series 71, 5.350% due 10/1/18 (c) | 3,263,904 | ||||||
Lease — 4.6% | |||||||||
3,500,000 | AAA | New York State Dormitory Authority Revenue, Court Facilities Lease, NYC Issue, Non State Supported Debt, Series A, AMBAC-Insured, 5.500% due 5/15/28 | 3,951,990 | ||||||
Pre-Refunded (d) — 5.0% | |||||||||
1,190,000 | A+ | New York City, NY, GO, Series B, Call 8/1/10 @ 101, | 1,280,369 | ||||||
580,000 | AAA | New York City, NY, TFA Revenue, Future Tax Secured, Series A, Call 2/15/10 @ 101, 5.750% due 2/15/14 | 621,012 | ||||||
1,500,000 | A+ | New York State Dormitory Authority Revenue, Court Facilities, Series A, Call 5/15/13 @ 100, 5.500% due 5/15/17 | 1,628,100 | ||||||
785,000 | AAA | New York State Thruway Authority, Highway and Bridge Transportation Fund, Series C, AMBAC-Insured, Call 4/1/12 @ 100, | 847,690 | ||||||
Total Pre-Refunded | 4,377,171 | ||||||||
Sales Tax — 18.2% | |||||||||
New York City, NY, TFA Revenue: | |||||||||
1,155,000 | AAA | Future Tax Secured, Series B, 5.375% due 2/1/15 | 1,230,191 | ||||||
1,685,000 | AAA | Series A, 5.500% due 11/15/17 | 1,810,886 | ||||||
175,000 | AAA | Unrefunded, Future Tax, Series A, 5.750% due 2/15/16 | 186,643 | ||||||
New York State Local Assistance Corp., Refunded: | |||||||||
3,000,000 | AAA | Series C, 5.500% due 4/1/17 | 3,252,690 | ||||||
2,255,000 | AAA | Series E, 6.000% due 4/1/14 | 2,491,910 | ||||||
Sales Tax Asset Receivables Corporation New York, Series A, MBIA-Insured: | |||||||||
2,500,000 | AAA | 5.250% due 10/15/18 | 2,669,125 | ||||||
4,000,000 | AAA | 5.000% due 10/15/21 | 4,164,680 | ||||||
Total Sales Tax | 15,806,125 | ||||||||
Tax Allocation — 1.3% | |||||||||
1,090,000 | Aa3(a) | 34th Street Partnership Inc., New York, Refunding, Capital Improvement, 5.000% due 1/1/16 | 1,125,926 | ||||||
Transportation — 12.0% | |||||||||
2,500,000 | AAA | Metropolitan Transportation Authority, New York Services Contract, Refunding Bonds, Series A, AMBAC-Insured, 5.500% due 11/15/15 | 2,710,025 | ||||||
New York State Thruway Authority: | |||||||||
215,000 | AAA | Highway and Bridge Transportation Fund Unrefunded Balance, Series C, AMBAC-Insured, 5.500% due 4/1/15 | 230,914 | ||||||
1,100,000 | AA- | Service Contract Revenue, Local Highway and Bridge, | 1,177,935 | ||||||
4,575,000 | AA- | Unrefunded Balance, Series E, 5.250% due 1/1/13 | 4,705,845 |
See Notes to Financial Statements.
20 Salomon Funds Trust 2006 Semi-Annual Report
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Face Amount | Rating‡ | Security | Value | ||||||
Transportation — 12.0% (continued) | |||||||||
$ | 1,500,000 | AAA | Puerto Rico Commonwealth, Highway & Transportation Authority, Highway Revenue, Series G, FGIC-Insured, 5.250% due 7/1/16 | $ | 1,594,500 | ||||
Total Transportation | 10,419,219 | ||||||||
Utilities — 1.9% | |||||||||
1,500,000 | AAA | Long Island Power Authority, New York Electric System Revenue, Series C, MBIA/IBC-Insured, 5.500% due 9/1/21 | 1,614,510 | ||||||
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS (Cost — $80,090,121) | 81,034,428 | ||||||||
SHORT-TERM INVESTMENTS (e) — 5.5% | |||||||||
Finance — 0.2% | |||||||||
190,000 | A-1+ | New York City, NY, TFA Revenue, NYC Recovery, Series 1, Subordinated Series 1-D, LIQ-Landesbank Hessen, 4.000%, 7/3/06 | 190,000 | ||||||
General Obligation — 0.6% | |||||||||
500,000 | A-1+ | New York, NY, GO, Series B2, Subordinated Series B5, MBIA-Insured, SPA-Landesbank Hessen-Thuringen, 3.920%, 7/3/06 | 500,000 | ||||||
Hospital — 2.5% | |||||||||
2,215,000 | A-1+ | New York State Dormitory Authority Revenue, Mental Health Services Facilities, Series F-2C, FSA Insured, SPA-Dexia Credit Local, 3.950%, 7/6/06 | 2,215,000 | ||||||
Housing: Multi-Family — 1.7% | |||||||||
1,500,000 | VMIG1(a) | New York State Housing Finance Agency Revenue, 1500 Lexington Associates LLC, Series A, Remarketed 4/15/04, LIQ-FNMA, | 1,500,000 | ||||||
Industrial Development — 0.5% | |||||||||
400,000 | A-1+ | New York City, NY, IDA Revenue, Civic Facilities Revenue, Lycee Francais Development NY Project, Series B, LOC-JP Morgan Chase Bank, 4.000%, 7/3/06 | 400,000 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost — $4,805,000) | 4,805,000 | ||||||||
TOTAL INVESTMENTS — 99.0% (Cost — $84,895,121#) | 85,839,428 | ||||||||
Other Assets in Excess of Liabilities — 1.0% | 855,834 | ||||||||
TOTAL NET ASSETS — 100.0% | $ | 86,695,262 | |||||||
‡ | All ratings are by Standard & Poor’s Ratings Service, unless otherwise noted. |
(a) | Rating by Moody’s Investors Service. |
(b) | Bonds are escrowed to maturity by U.S. government securities and/or U.S. government agency securities and are considered by the Manager to be triple-A rated even if issuer has not applied for new ratings. |
(c) | Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”). |
(d) | Pre-Refunded bonds are escrowed with U.S. government obligations and/or U.S. government agency securities and are considered by the Manager to be triple-A rated even if issuer has not applied for new ratings. |
(e) | Variable rate demand obligations have a demand feature under which the Fund can tender them back to the issuer on no more than 7 days notice. Date shown is the date of the next interest rate change. |
# | Aggregate cost for federal income tax purposes is substantially the same. |
See pages 28 and 29 for definitions of ratings. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 21
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Abbreviations used in this schedule: | ||
AMBAC | — Ambac Assurance Corporation | |
FGIC | — Financial Guaranty Insurance Company | |
FNMA | — Federal National Mortgage Association | |
FSA | — Financial Security Assurance | |
GO | — General Obligation | |
IBC | — Insured Bond Certificates | |
IDA | — Industrial Development Authority | |
LIQ | — Liquidity Facility | |
LOC | — Letter of Credit | |
MBIA | — Municipal Bond Investors Assurance Corporation | |
MFH | — Multi-Family Housing | |
SONYMA | — State of New York Mortgage Association | |
SPA | — Standby Bond Purchase Agreement | |
TFA | — Transitional Finance Authority |
See Notes to Financial Statements.
22 Salomon Funds Trust 2006 Semi-Annual Report
Schedules of Investments (June 30, 2006) (unaudited) (continued)
SALOMON BROTHERS MID CAP FUND
Shares | Security | Value | ||||
COMMON STOCKS — 96.3% | ||||||
CONSUMER DISCRETIONARY — 15.0% | ||||||
Auto Components — 1.2% | ||||||
4,125 | BorgWarner Inc. | $ | 268,538 | |||
Hotels, Restaurants & Leisure — 5.1% | ||||||
2,280 | GTECH Holdings Corp. | 79,299 | ||||
5,525 | Landry’s Restaurants Inc. | 179,286 | ||||
11,805 | OSI Restaurant Partners Inc. | 408,453 | ||||
6,825 | Station Casinos Inc. | 464,646 | ||||
Total Hotels, Restaurants & Leisure | 1,131,684 | |||||
Household Durables — 1.3% | ||||||
1,933 | Mohawk Industries Inc.* | 135,987 | ||||
3,500 | Ryland Group Inc. | 152,495 | ||||
Total Household Durables | 288,482 | |||||
Media — 2.1% | ||||||
6,300 | Lamar Advertising Co., Class A Shares* | 339,318 | ||||
180 | Washington Post Co., Class B Shares | 140,402 | ||||
Total Media | 479,720 | |||||
Multiline Retail — 0.6% | ||||||
8,675 | Saks Inc.* | 140,275 | ||||
Specialty Retail — 4.7% | ||||||
16,950 | AnnTaylor Stores Corp.* | 735,291 | ||||
5,900 | Chico’s FAS Inc.* | 159,182 | ||||
4,650 | O’Reilly Automotive Inc.* | 145,033 | ||||
Total Specialty Retail | 1,039,506 | |||||
TOTAL CONSUMER DISCRETIONARY | 3,348,205 | |||||
CONSUMER STAPLES — 5.1% | ||||||
Food Products — 2.5% | ||||||
10,860 | Hormel Foods Corp. | 403,341 | ||||
3,350 | J.M. Smucker Co. | 149,745 | ||||
Total Food Products | 553,086 | |||||
Household Products — 2.1% | ||||||
13,200 | Church & Dwight Co. Inc. | 480,744 | ||||
Personal Products — 0.5% | ||||||
3,725 | Chattem Inc.* | 113,128 | ||||
TOTAL CONSUMER STAPLES | 1,146,958 | |||||
ENERGY — 12.4% | ||||||
Energy Equipment & Services — 7.9% | ||||||
10,500 | Core Laboratories NV* | 640,920 | ||||
12,600 | Patterson-UTI Energy Inc. | 356,706 | ||||
9,800 | Rowan Cos. Inc. | 348,782 |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 23
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Shares | Security | Value | ||||
Energy Equipment & Services — 7.9% (continued) | ||||||
6,400 | Smith International Inc. | $ | 284,608 | |||
2,756 | Weatherford International Ltd.* | 136,753 | ||||
Total Energy Equipment & Services | 1,767,769 | |||||
Oil, Gas & Consumable Fuels — 4.5% | ||||||
6,800 | Murphy Oil Corp. | 379,848 | ||||
6,600 | Precision Drilling Trust | 219,120 | ||||
12,600 | Southwestern Energy Co.* | 392,616 | ||||
Total Oil, Gas & Consumable Fuels | 991,584 | |||||
TOTAL ENERGY | 2,759,353 | |||||
FINANCIALS — 12.9% | ||||||
Commercial Banks — 3.5% | ||||||
2,025 | City National Corp. | 131,807 | ||||
3,624 | Commerce Bancshares Inc. | 181,381 | ||||
6,085 | Compass Bancshares Inc. | 338,326 | ||||
6,406 | CVB Financial Corp. | 100,318 | ||||
881 | Toronto-Dominion Bank | 44,729 | ||||
Total Commercial Banks | 796,561 | |||||
Insurance — 7.3% | ||||||
15,000 | Assurant Inc. | 726,000 | ||||
4,600 | Max Re Capital Ltd. | 100,464 | ||||
10,125 | Philadelphia Consolidated Holding Corp.* | 307,395 | ||||
5,200 | Platinum Underwriters Holdings Ltd. | 145,496 | ||||
7,225 | Scottish RE Group Ltd. | 120,513 | ||||
2,700 | StanCorp Financial Group Inc. | 137,457 | ||||
180 | White Mountains Insurance Group Ltd. | 87,660 | ||||
Total Insurance | 1,624,985 | |||||
Real Estate Investment Trusts (REITs) — 2.1% | ||||||
1,656 | Brandywine Realty Trust | 53,273 | ||||
4,750 | Developers Diversified Realty Corp. | 247,855 | ||||
3,550 | Mack-Cali Realty Corp. | 163,016 | ||||
Total Real Estate Investment Trusts (REITs) | 464,144 | |||||
TOTAL FINANCIALS | 2,885,690 | |||||
HEALTH CARE — 13.3% | ||||||
Biotechnology — 1.9% | ||||||
7,100 | Nektar Therapeutics* | 130,214 | ||||
16,150 | PDL BioPharma Inc.* | 297,321 | ||||
Total Biotechnology | 427,535 | |||||
Health Care Equipment & Supplies — 7.6% | ||||||
1,450 | C.R. Bard Inc. | 106,227 | ||||
4,650 | DENTSPLY International Inc. | 281,790 | ||||
16,000 | DJ Orthopedics Inc.* | 589,280 | ||||
5,475 | Edwards Lifesciences Corp.* | 248,729 |
See Notes to Financial Statements.
24 Salomon Funds Trust 2006 Semi-Annual Report
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Shares | Security | Value | ||||
Health Care Equipment & Supplies — 7.6% (continued) | ||||||
9,800 | Respironics Inc.* | $ | 335,356 | |||
6,275 | STERIS Corp. | 143,447 | ||||
Total Health Care Equipment & Supplies | 1,704,829 | |||||
Health Care Providers & Services — 0.8% | ||||||
3,550 | Apria Healthcare Group Inc.* | 67,095 | ||||
2,800 | Community Health Systems Inc.* | 102,900 | ||||
Total Health Care Providers & Services | 169,995 | |||||
Pharmaceuticals — 3.0% | ||||||
3,128 | Barr Pharmaceuticals Inc.* | 149,174 | ||||
10,525 | Medicis Pharmaceutical Corp., Class A Shares | 252,600 | ||||
4,700 | Sepracor Inc.* | 268,558 | ||||
Total Pharmaceuticals | 670,332 | |||||
TOTAL HEALTH CARE | 2,972,691 | |||||
INDUSTRIALS — 17.6% | ||||||
Aerospace & Defense — 1.2% | ||||||
3,508 | Alliant Techsystems Inc.* | 267,836 | ||||
Airlines — 1.3% | ||||||
23,812 | JetBlue Airways Corp.* | 289,078 | ||||
Commercial Services & Supplies — 5.5% | ||||||
4,325 | ARAMARK Corp., Class B Shares | 143,201 | ||||
2,325 | ChoicePoint Inc.* | 97,115 | ||||
1,650 | HNI Corp. | 74,827 | ||||
6,625 | Manpower Inc. | 427,975 | ||||
3,000 | R.R. Donnelley & Sons Co. | 95,850 | ||||
9,400 | Robert Half International Inc. | 394,800 | ||||
Total Commercial Services & Supplies | 1,233,768 | |||||
Construction & Engineering — 2.0% | ||||||
10,100 | Granite Construction Inc. | 457,227 | ||||
Industrial Conglomerates — 2.6% | ||||||
7,245 | Carlisle Cos. Inc. | 574,529 | ||||
Machinery — 3.6% | ||||||
5,575 | Actuant Corp., Class A Shares | 278,471 | ||||
4,500 | Oshkosh Truck Corp. | 213,840 | ||||
9,000 | Timken Co. | 301,590 | ||||
Total Machinery | 793,901 | |||||
Road & Rail — 1.4% | ||||||
15,475 | Werner Enterprises Inc. | 313,678 | ||||
TOTAL INDUSTRIALS | 3,930,017 | |||||
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 25
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Shares | Security | Value | ||||
INFORMATION TECHNOLOGY — 12.8% | ||||||
Communications Equipment — 0.9% | ||||||
10,400 | ADC Telecommunications Inc.* | $ | 175,344 | |||
1,525 | Plantronics Inc. | 33,870 | ||||
Total Communications Equipment | 209,214 | |||||
Electronic Equipment & Instruments — 2.0% | ||||||
12,700 | Aeroflex Inc.* | 148,209 | ||||
5,225 | Amphenol Corp., Class A Shares | 292,391 | ||||
Total Electronic Equipment & Instruments | 440,600 | |||||
Internet Software & Services — 1.0% | ||||||
8,700 | SINA Corp.* | 217,326 | ||||
IT Services — 3.1% | ||||||
11,900 | DST Systems Inc.* | 708,050 | ||||
Semiconductors & Semiconductor Equipment — 3.0% | ||||||
3,400 | Lam Research Corp.* | 158,508 | ||||
17,050 | LSI Logic Corp.* | 152,598 | ||||
7,525 | National Semiconductor Corp. | 179,471 | ||||
7,000 | Novellus Systems Inc.* | 172,900 | ||||
Total Semiconductors & Semiconductor Equipment | 663,477 | |||||
Software — 2.8% | ||||||
6,120 | Parametric Technology Corp.* | 77,785 | ||||
7,150 | Quest Software Inc.* | 100,386 | ||||
63,560 | TIBCO Software Inc.* | 448,098 | ||||
Total Software | 626,269 | |||||
TOTAL INFORMATION TECHNOLOGY | 2,864,936 | |||||
MATERIALS — 4.7% | ||||||
Chemicals — 2.3% | ||||||
3,450 | FMC Corp. | 222,146 | ||||
7,125 | Lubrizol Corp. | 283,931 | ||||
Total Chemicals | 506,077 | |||||
Construction Materials — 1.4% | ||||||
5,290 | Rinker Group Ltd., ADR | 320,680 | ||||
Containers & Packaging — 1.0% | ||||||
4,225 | AptarGroup Inc. | 209,602 | ||||
TOTAL MATERIALS | 1,036,359 | |||||
TELECOMMUNICATION SERVICES — 0.8% | ||||||
Wireless Telecommunication Services — 0.8% | ||||||
2,325 | Telephone & Data Systems Inc. | 96,255 | ||||
2,325 | Telephone & Data Systems Inc., Special Shares | 90,442 | ||||
TOTAL TELECOMMUNICATION SERVICES | 186,697 | |||||
See Notes to Financial Statements.
26 Salomon Funds Trust 2006 Semi-Annual Report
Schedules of Investments (June 30, 2006) (unaudited) (continued)
Shares | Security | Value | |||||
UTILITIES — 1.7% | |||||||
Multi-Utilities — 1.7% | |||||||
8,100 | Sempra Energy | $ | 368,388 | ||||
TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENT (Cost — $15,134,994) | 21,499,294 | ||||||
Face Amount | |||||||
SHORT-TERM INVESTMENT — 3.7% | |||||||
Repurchase Agreement — 3.7% | |||||||
$ | 826,000 | Interest in $457,185,000 joint tri-party repurchase agreement dated 6/30/06 with Merrill Lynch, Pierce, Fenner & Smith Inc., 5.200% due 7/3/06; Proceeds at maturity — $826,358; (Fully collateralized by U.S. Treasury Note, 4.125% due 8/15/08; Market value — $842,521) (Cost — $826,000) | 826,000 | ||||
TOTAL INVESTMENTS — 100.0% (Cost — $15,960,994#) | 22,325,294 | ||||||
Liabilities in Excess of Other Assets — 0.0% | (5,612 | ) | |||||
TOTAL NET ASSETS — 100.0% | $ | 22,319,682 | |||||
* | 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.
Salomon Funds Trust 2006 Semi-Annual Report 27
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 a 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 issue 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 “Caa,” 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” 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. |
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. |
C | — Bonds rated “C” are the lowest class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. |
28 Salomon Funds Trust 2006 Semi-Annual Report
Bond Ratings (unaudited) (continued)
Fitch Ratings Service (“Fitch”) — 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 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. |
MIG 1 | — Moody’s highest rating for short-term municipal obligations. |
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. |
Salomon Funds Trust 2006 Semi-Annual Report 29
Statements of Assets and Liabilities (June 30, 2006) (unaudited)
National Tax Free Bond Fund | California Tax Free Bond Fund | |||||||
ASSETS: | ||||||||
Investments, at cost | $ | 35,431,729 | $ | 7,230,003 | ||||
Investments, at value | $ | 35,118,186 | $ | 7,206,557 | ||||
Cash | 144,459 | 61,864 | ||||||
Dividends and Interest receivable | 499,537 | 122,819 | ||||||
Receivable for securities sold | 5,000 | — | ||||||
Receivable for Fund shares sold | 623 | 172 | ||||||
Receivable from investment manager | 248 | 11,753 | ||||||
Prepaid expenses | 32,276 | 26,593 | ||||||
Total Assets | 35,800,329 | 7,429,758 | ||||||
LIABILITIES: | ||||||||
Payable for Fund shares repurchased | 2,009,147 | 11,262 | ||||||
Dividend payable | 11,447 | 1,435 | ||||||
Distribution fees payable | 8,947 | 1,677 | ||||||
Trustees’ fees payable | 1,261 | 985 | ||||||
Investment management fee payable | — | — | ||||||
Accrued expenses | 51,061 | 47,594 | ||||||
Total Liabilities | 2,081,863 | 62,953 | ||||||
Total Net Assets | $ | 33,718,466 | $ | 7,366,805 | ||||
NET ASSETS: | ||||||||
Par value (Note 7) | — | — | ||||||
Paid-in capital in excess of par value | $ | 38,165,962 | $ | 9,721,910 | ||||
Undistributed net investment income | — | — | ||||||
Accumulated net realized loss on investments and foreign currency transactions | (4,133,953 | ) | (2,331,659 | ) | ||||
Net unrealized appreciation (depreciation) on investments and foreign currencies | (313,543 | ) | (23,446 | ) | ||||
Total Net Assets | $ | 33,718,466 | $ | 7,366,805 | ||||
Shares Outstanding: | ||||||||
Class A | 2,662,132 | 715,299 | ||||||
Class B | 156,716 | 12,617 | ||||||
Class C | 93,776 | 2,661 | ||||||
Class O | 13,778 | 214 | ||||||
Net Asset Value: | ||||||||
Class A (and redemption price) | $11.52 | $10.08 | ||||||
Class B (and offering price)* | $11.54 | $10.09 | ||||||
Class C (and offering price)* | $11.53 | $10.08 | ||||||
Class O (offering price and redemption price) | $11.54 | $10.09 | ||||||
Maximum Public Offering Price Per Share: | ||||||||
Class A (based on maximum sales charge of 4.00% and 4.00%, respectively) | $12.00 | $10.50 | ||||||
* | Redemption price per share is equal to net asset value less any applicable CDSC (See Note 2). |
See Notes to Financial Statements.
30 Salomon Funds Trust 2006 Semi-Annual Report
Statements of Assets and Liabilities (June 30, 2006) (unaudited) (continued)
New York Tax Free Bond Fund | Mid Cap Fund | |||||||
ASSETS: | ||||||||
Investments, at cost | $ | 84,895,121 | $ | 15,960,994 | ||||
Investments, at value | $ | 85,839,428 | $ | 22,325,294 | ||||
Cash | 1,900 | 377 | ||||||
Dividends and Interest receivable | 1,318,222 | 26,478 | ||||||
Receivable for securities sold | — | — | ||||||
Receivable for Fund shares sold | 960 | 7,043 | ||||||
Receivable from investment manager | — | — | ||||||
Prepaid expenses | 29,615 | 16,619 | ||||||
Total Assets | 87,190,125 | 22,375,811 | ||||||
LIABILITIES: | ||||||||
Payable for Fund shares repurchased | 358,689 | 10,885 | ||||||
Dividend payable | 12,334 | — | ||||||
Distribution fees payable | 18,179 | 1,210 | ||||||
Trustees’ fees payable | 898 | 922 | ||||||
Investment management fee payable | 22,879 | 8,852 | ||||||
Accrued expenses | 81,884 | 34,260 | ||||||
Total Liabilities | 494,863 | 56,129 | ||||||
Total Net Assets | $ | 86,695,262 | $ | 22,319,682 | ||||
NET ASSETS: | ||||||||
Par value (Note 7) | — | $ | 1,094 | |||||
Paid-in capital in excess of par value | $ | 89,478,477 | 15,947,230 | |||||
Undistributed net investment income | — | 34,002 | ||||||
Accumulated net realized loss on investments and foreign currency transactions | (3,727,522 | ) | (26,955 | ) | ||||
Net unrealized appreciation (depreciation) on investments and foreign currencies | 944,307 | 6,364,311 | ||||||
Total Net Assets | $ | 86,695,262 | $ | 22,319,682 | ||||
Shares Outstanding: | ||||||||
Class A | 7,525,382 | 127,427 | ||||||
Class B | 19,709 | 27,344 | ||||||
Class C | 5,202 | 16,350 | ||||||
Class O | 11,836 | 922,838 | ||||||
Net Asset Value: | ||||||||
Class A (and redemption price) | $11.46 | $20.17 | ||||||
Class B (and offering price)* | $11.46 | $19.52 | ||||||
Class C (and offering price)* | $11.44 | $19.60 | ||||||
Class O (offering price and redemption price) | $11.45 | $20.47 | ||||||
Maximum Public Offering Price Per Share: | ||||||||
Class A (based on maximum sales charge of 4.00% and 5.75%, respectively) | $11.94 | $21.40 | ||||||
* | Redemption price per share is equal to net asset value less any applicable CDSC (See Note 2). |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 31
Statements of Operations (For the six months ended June 30, 2006) (unaudited)
National Tax Free Bond Fund | California Tax Free Bond Fund | New York Tax Free Bond Fund | Mid Cap Fund | |||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
Interest | $ | 794,199 | $ | 208,225 | $ | 2,002,727 | $ | 31,613 | ||||||||
Dividends | — | — | — | 140,486 | ||||||||||||
Less: Foreign taxes withheld | — | — | — | (1,542 | ) | |||||||||||
Total Investment Income | 794,199 | 208,225 | 2,002,727 | 170,557 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment management fee (Note 2) | 94,885 | 21,803 | 225,859 | 87,645 | ||||||||||||
Distribution fees (Note 5) | 57,568 | 11,472 | 113,694 | 7,738 | ||||||||||||
Shareholder reports (Note 5) | 29,722 | 4,764 | 10,534 | 12,485 | ||||||||||||
Registration fees | 21,215 | 21,768 | 21,777 | 23,859 | ||||||||||||
Transfer agent fees (Note 5) | 17,018 | 644 | 15,591 | 3,194 | ||||||||||||
Audit and tax | 11,830 | 11,612 | 12,831 | 8,873 | ||||||||||||
Legal fees | 11,325 | 14,544 | 27,809 | 17,165 | ||||||||||||
Custody fees | 8,857 | 4,856 | 175 | 903 | ||||||||||||
Trustees’ fees | 5,688 | 5,801 | 4,366 | 5,050 | ||||||||||||
Insurance | 1,395 | 188 | 824 | 316 | ||||||||||||
Miscellaneous expenses | 7,537 | 3,172 | 5,991 | 4,048 | ||||||||||||
Total Expenses | 267,040 | 100,624 | 439,451 | 171,276 | ||||||||||||
Less: Fee waivers and/or expense reimbursements (Note 2) | (115,454 | ) | (65,377 | ) | (79,399 | ) | (34,721 | ) | ||||||||
Net Expenses | 151,586 | 35,247 | 360,052 | 136,555 | ||||||||||||
Net Investment Income | 642,613 | 172,978 | 1,642,675 | 34,002 | ||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (NOTES 1 AND 3): | ||||||||||||||||
Net Realized Gain From: | ||||||||||||||||
Investment transactions | 35,539 | 436,283 | 429,686 | 85,732 | ||||||||||||
Foreign currency transactions | — | — | — | 32 | ||||||||||||
Net Realized Gain | 35,539 | 436,283 | 429,686 | 85,764 | ||||||||||||
Change in Net Unrealized | ||||||||||||||||
Investments | (826,405 | ) | (663,403 | ) | (2,499,541 | ) | 398,146 | |||||||||
Foreign currencies | — | — | — | 14 | ||||||||||||
Change in Net Unrealized | (826,405 | ) | (663,403 | ) | (2,499,541 | ) | 398,160 | |||||||||
Net Gain (Loss) on Investments and Foreign Currency Transactions | (790,866 | ) | (227,120 | ) | (2,069,855 | ) | 483,924 | |||||||||
Increase (Decrease) in Net Assets | $ | (148,253 | ) | $ | (54,142 | ) | $ | (427,180 | ) | $ | 517,926 | |||||
See Notes to Financial Statements.
32 Salomon Funds Trust 2006 Semi-Annual Report
Statements of Changes in Net Assets
For the six months ended June 30, 2006 (unaudited) and the year ended December 31, 2005 | ||||||||
Salomon Brothers National Tax Free Bond Fund | 2006 | 2005 | ||||||
OPERATIONS: | ||||||||
Net investment income | $ | 642,613 | $ | 1,350,953 | ||||
Net realized gain | 35,539 | 1,308,861 | ||||||
Change in net unrealized appreciation/depreciation | (826,405 | ) | (1,657,345 | ) | ||||
Increase (Decrease) in Net Assets From Operations | (148,253 | ) | 1,002,469 | |||||
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 6): | ||||||||
Net investment income | (642,613 | ) | (1,350,953 | ) | ||||
Decrease in Net Assets From Distributions to Shareholders | (642,613 | ) | (1,350,953 | ) | ||||
FUND SHARE TRANSACTIONS (NOTE 7): | ||||||||
Net proceeds from sale of shares | 2,575,414 | 3,893,404 | ||||||
Reinvestment of distributions | 585,211 | 1,230,768 | ||||||
Cost of shares repurchased | (7,887,889 | ) | (7,525,020 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (4,727,264 | ) | (2,400,848 | ) | ||||
Decrease in Net Assets | (5,518,130 | ) | (2,749,332 | ) | ||||
NET ASSETS: | ||||||||
Beginning of period | 39,236,596 | 41,985,928 | ||||||
End of period | $ | 33,718,466 | $ | 39,236,596 | ||||
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 33
Statements of Changes in Net Assets (continued)
For the six months ended June 30, 2006 (unaudited) and the year ended December 31, 2005 | ||||||||
Salomon Brothers California Tax Free Bond Fund | 2006 | 2005 | ||||||
OPERATIONS: | ||||||||
Net investment income | $ | 172,978 | $ | 403,437 | ||||
Net realized gain | 436,283 | 172,505 | ||||||
Change in net unrealized appreciation/depreciation | (663,403 | ) | (441,143 | ) | ||||
Increase (Decrease) in Net Assets From Operations | (54,142 | ) | 134,799 | |||||
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 6): | ||||||||
Net investment income | (172,978 | ) | (403,437 | ) | ||||
Decrease in Net Assets From Distributions to Shareholders | (172,978 | ) | (403,437 | ) | ||||
FUND SHARE TRANSACTIONS (NOTE 7): | ||||||||
Net proceeds from sale of shares | 24,922 | 117,953 | ||||||
Reinvestment of distributions | 170,272 | 398,073 | ||||||
Cost of shares repurchased | (2,085,309 | ) | (2,171,280 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (1,890,115 | ) | (1,655,254 | ) | ||||
Decrease in Net Assets | (2,117,235 | ) | (1,923,892 | ) | ||||
NET ASSETS: | ||||||||
Beginning of period | 9,484,040 | 11,407,932 | ||||||
End of period | $ | 7,366,805 | $ | 9,484,040 | ||||
See Notes to Financial Statements.
34 Salomon Funds Trust 2006 Semi-Annual Report
Statements of Changes in Net Assets (continued)
For the six months ended June 30, 2006 (unaudited) and the year ended December 31, 2005 | ||||||||
Salomon Brothers New York Tax Free Bond Fund | 2006 | 2005 | �� | |||||
OPERATIONS: | ||||||||
Net investment income | $ | 1,642,675 | $ | 3,527,498 | ||||
Net realized gain | 429,686 | 1,719,404 | ||||||
Change in net unrealized appreciation/depreciation | (2,499,541 | ) | (3,347,275 | ) | ||||
Increase (Decrease) in Net Assets From Operations | (427,180 | ) | 1,899,627 | |||||
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 6): | ||||||||
Net investment income | (1,642,675 | ) | (3,527,498 | ) | ||||
Decrease in Net Assets From Distributions to Shareholders | (1,642,675 | ) | (3,527,498 | ) | ||||
FUND SHARE TRANSACTIONS (NOTE 7): | ||||||||
Net proceeds from sale of shares | 757,671 | 1,618,336 | ||||||
Reinvestment of distributions | 1,603,856 | 3,477,331 | ||||||
Cost of shares repurchased | (7,887,282 | ) | (13,822,663 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (5,525,755 | ) | (8,726,996 | ) | ||||
Decrease in Net Assets | (7,595,610 | ) | (10,354,867 | ) | ||||
NET ASSETS: | ||||||||
Beginning of period | 94,290,872 | 104,645,739 | ||||||
End of period | $ | 86,695,262 | $ | 94,290,872 | ||||
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 35
Statements of Changes in Net Assets (continued)
For the six months ended June 30, 2006 (unaudited) and the year ended December 31, 2005 | ||||||||
Salomon Brothers Mid Cap Fund | 2006 | 2005 | ||||||
OPERATIONS: | ||||||||
Net investment income | $ | 34,002 | $ | 93,111 | ||||
Net realized gain | 85,764 | 584,218 | ||||||
Change in net unrealized appreciation/depreciation | 398,160 | 1,204,497 | ||||||
Increase in Net Assets From Operations | 517,926 | 1,881,826 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 6): | ||||||||
Net investment income | — | (96,001 | ) | |||||
Net realized gains | — | (1,102,837 | ) | |||||
Decrease in Net Assets From Distributions to Shareholders | — | (1,198,838 | ) | |||||
FUND SHARE TRANSACTIONS (NOTE 7): | ||||||||
Net proceeds from sale of shares | 992,881 | 3,842,025 | ||||||
Reinvestment of distributions | — | 1,190,885 | ||||||
Cost of shares repurchased | (2,234,787 | ) | (5,375,963 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (1,241,906 | ) | (343,053 | ) | ||||
Increase (Decrease) in Net Assets | (723,980 | ) | 339,935 | |||||
NET ASSETS: | ||||||||
Beginning of period | 23,043,662 | 22,703,727 | ||||||
End of period* | $ | 22,319,682 | $ | 23,043,662 | ||||
* Includes undistributed net investment income of: | $34,002 | — | ||||||
See Notes to Financial Statements.
36 Salomon Funds Trust 2006 Semi-Annual Report
Salomon Brothers National Tax Free Bond Fund
Financial Highlights
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class A Shares | 2006(1)(2) | 2005(1) | 2004(1) | 2003(1) | 2002(1) | 2001 | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.76 | $ | 11.85 | $ | 11.91 | $ | 11.79 | $ | 11.13 | $ | 11.26 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.20 | 0.40 | 0.44 | 0.46 | 0.48 | 0.50 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.24 | ) | (0.09 | ) | (0.06 | ) | 0.13 | 0.66 | (0.12 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.04 | ) | 0.31 | 0.38 | 0.59 | 1.14 | 0.38 | |||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.20 | ) | (0.40 | ) | (0.44 | ) | (0.47 | ) | (0.48 | ) | (0.51 | ) | ||||||||||||
Total Distributions | (0.20 | ) | (0.40 | ) | (0.44 | ) | (0.47 | ) | (0.48 | ) | (0.51 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.52 | $ | 11.76 | $ | 11.85 | $ | 11.91 | $ | 11.79 | $ | 11.13 | ||||||||||||
Total Return(3) | (0.36 | )% | 2.63 | % | 3.28 | % | 5.07 | % | 10.41 | % | 3.39 | % | ||||||||||||
Net Assets, End of Period (000s) | $30,670 | $35,671 | $37,343 | $42,210 | $50,325 | $62,440 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 1.35 | %(4) | 1.39 | % | 1.26 | % | 1.10 | % | 1.18 | % | 1.52 | % | ||||||||||||
Net expenses(5)(6) | 0.75 | (4) | 0.75 | 0.75 | 0.75 | 0.76 | 0.80 | |||||||||||||||||
Net investment income | 3.44 | (4) | 3.37 | 3.73 | 3.92 | 4.22 | 4.28 | |||||||||||||||||
Portfolio Turnover Rate | 14 | % | 36 | % | 41 | % | 42 | % | 12 | % | 15 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(4) | Annualized. |
(5) | Reflects fee waivers and/or expense reimbursements. |
(6) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 0.75%. Prior to January 30, 2002, the expense limitation was 0.80%. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 37
Salomon Brothers National Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class B Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.77 | $ | 11.87 | $ | 11.93 | $ | 11.80 | $ | 11.14 | $ | 11.46 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.16 | 0.31 | 0.35 | 0.37 | 0.40 | 0.07 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.23 | ) | (0.10 | ) | (0.06 | ) | 0.13 | 0.65 | (0.31 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.07 | ) | 0.21 | 0.29 | 0.50 | 1.05 | (0.24 | ) | ||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.16 | ) | (0.31 | ) | (0.35 | ) | (0.37 | ) | (0.39 | ) | (0.08 | ) | ||||||||||||
Total Distributions | (0.16 | ) | (0.31 | ) | (0.35 | ) | (0.37 | ) | (0.39 | ) | (0.08 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.54 | $ | 11.77 | $ | 11.87 | $ | 11.93 | $ | 11.80 | $ | 11.14 | ||||||||||||
Total Return(4) | (0.64 | )% | 1.78 | % | 2.51 | % | 4.35 | % | 9.59 | % | (2.09 | )% | ||||||||||||
Net Assets, End of Period (000s) | $1,808 | $2,271 | $2,944 | $4,330 | $4,839 | $4,599 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 2.14 | %(5) | 2.15 | % | 2.01 | % | 1.85 | % | 1.91 | % | 2.22 | %(5) | ||||||||||||
Net expenses(6)(7) | 1.50 | (5) | 1.50 | 1.50 | 1.50 | 1.49 | 1.53 | (5) | ||||||||||||||||
Net investment income | 2.69 | (5) | 2.63 | 2.98 | 3.16 | 3.43 | 3.55 | (5) | ||||||||||||||||
Portfolio Turnover Rate | 14 | % | 36 | % | 41 | % | 42 | % | 12 | % | 15 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period October 12, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 1.50%. Prior to January 30, 2002, the expense limitation was 1.55%. |
See Notes to Financial Statements.
38 Salomon Funds Trust 2006 Semi-Annual Report
Salomon Brothers National Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class C Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.77 | $ | 11.87 | $ | 11.92 | $ | 11.80 | $ | 11.13 | $ | 11.42 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.17 | 0.34 | 0.38 | 0.40 | 0.43 | 0.05 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.24 | ) | (0.10 | ) | (0.05 | ) | 0.12 | 0.66 | (0.28 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.07 | ) | 0.24 | 0.33 | 0.52 | 1.09 | (0.23 | ) | ||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.17 | ) | (0.34 | ) | (0.38 | ) | (0.40 | ) | (0.42 | ) | (0.06 | ) | ||||||||||||
Total Distributions | (0.17 | ) | (0.34 | ) | (0.38 | ) | (0.40 | ) | (0.42 | ) | (0.06 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.53 | $ | 11.77 | $ | 11.87 | $ | 11.92 | $ | 11.80 | $ | 11.13 | ||||||||||||
Total Return(4) | (0.60 | )% | 2.04 | % | 2.85 | % | 4.53 | % | 9.96 | % | (2.10 | )% | ||||||||||||
Net Assets, End of Period (000s) | $1,081 | $1,133 | $1,539 | $1,923 | $1,763 | $1,314 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 1.84 | %(5) | 1.92 | % | 1.76 | % | 1.60 | % | 1.67 | % | 1.94 | %(5) | ||||||||||||
Net expenses(6)(7) | 1.25 | (5) | 1.25 | 1.25 | 1.25 | 1.25 | 1.25 | (5) | ||||||||||||||||
Net investment income | 2.94 | (5) | 2.88 | 3.22 | 3.41 | 3.69 | 3.73 | (5) | ||||||||||||||||
Portfolio Turnover Rate | 14 | % | 36 | % | 41 | % | 42 | % | 12 | % | 15 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period November 19, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 1.25%. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 39
Salomon Brothers National Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class O Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.77 | $ | 11.87 | $ | 11.93 | $ | 11.79 | $ | 11.13 | $ | 11.42 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.21 | 0.43 | 0.47 | 0.49 | 0.50 | 0.06 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.23 | ) | (0.10 | ) | (0.06 | ) | 0.14 | 0.67 | (0.29 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.02 | ) | 0.33 | 0.41 | 0.63 | 1.17 | (0.23 | ) | ||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.21 | ) | (0.43 | ) | (0.47 | ) | (0.49 | ) | (0.51 | ) | (0.06 | ) | ||||||||||||
Total Distributions | (0.21 | ) | (0.43 | ) | (0.47 | ) | (0.49 | ) | (0.51 | ) | (0.06 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.54 | $ | 11.77 | $ | 11.87 | $ | 11.93 | $ | 11.79 | $ | 11.13 | ||||||||||||
Total Return(4) | (0.15 | )% | 2.80 | % | 3.54 | % | 5.48 | % | 10.69 | % | (2.01 | )% | ||||||||||||
Net Assets, End of Period (000s) | $159 | $162 | $160 | $157 | $216 | $362 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 1.41 | %(5) | 2.11 | % | 1.01 | % | 0.85 | % | 0.91 | % | 1.19 | %(5) | ||||||||||||
Net expenses(6)(7) | 0.49 | (5) | 0.50 | 0.50 | 0.50 | 0.50 | 0.50 | (5) | ||||||||||||||||
Net investment income | 3.68 | (5) | 3.61 | 3.97 | 4.18 | 4.39 | 4.48 | (5) | ||||||||||||||||
Portfolio Turnover Rate | 14 | % | 36 | % | 41 | % | 42 | % | 12 | % | 15 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period November 19, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets were capped so as not to exceed 0.50%. |
See Notes to Financial Statements.
40 Salomon Funds Trust 2006 Semi-Annual Report
Salomon Brothers California Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class A Shares | 2006(1)(2) | 2005(1) | 2004(1) | 2003(1) | 2002(1) | 2001 | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.36 | $ | 10.63 | $ | 10.70 | $ | 10.63 | $ | 10.17 | $ | 10.31 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.20 | 0.41 | 0.40 | 0.39 | 0.39 | 0.43 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.28 | ) | (0.28 | ) | (0.07 | ) | 0.07 | 0.46 | (0.14 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.08 | ) | 0.13 | 0.33 | 0.46 | 0.85 | 0.29 | |||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.20 | ) | (0.40 | ) | (0.40 | ) | (0.39 | ) | (0.39 | ) | (0.43 | ) | ||||||||||||
Total Distributions | (0.20 | ) | (0.40 | ) | (0.40 | ) | (0.39 | ) | (0.39 | ) | (0.43 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 10.08 | $ | 10.36 | $ | 10.63 | $ | 10.70 | $ | 10.63 | $ | 10.17 | ||||||||||||
Total Return(3) | (0.77 | )% | 1.29 | % | 3.19 | % | 4.40 | % | 8.47 | % | 2.83 | % | ||||||||||||
Net Assets, End of Period (000s) | $7,211 | $9,310 | $11,242 | $13,009 | $15,280 | $16,332 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 2.28 | %(4) | 2.43 | % | 1.97 | % | 1.40 | % | 2.05 | % | 2.43 | % | ||||||||||||
Net expenses(5)(6) | 0.80 | (4) | 0.80 | 0.80 | 0.80 | 0.80 | 0.80 | (7) | ||||||||||||||||
Net investment income | 3.98 | (4) | 3.87 | 3.80 | 3.64 | 3.71 | 4.04 | |||||||||||||||||
Portfolio Turnover Rate | 55 | % | 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, 2006 (unaudited). |
(3) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(4) | Annualized. |
(5) | Reflects fee waivers and/or expense reimbursements. |
(6) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 0.80%. |
(7) | Ratio reflects the expense offset arrangements with its service providers. Excluding the effect of this offset arrangement the ratio of net expenses to average net assets would have been 0.81%. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 41
Salomon Brothers California Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class B Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.37 | $ | 10.64 | $ | 10.71 | $ | 10.63 | $ | 10.18 | $ | 10.51 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.16 | 0.33 | 0.32 | 0.31 | 0.30 | 0.07 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.28 | ) | (0.27 | ) | (0.07 | ) | 0.08 | 0.46 | (0.32 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.12 | ) | 0.06 | 0.25 | 0.39 | 0.76 | (0.25 | ) | ||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.16 | ) | (0.33 | ) | (0.32 | ) | (0.31 | ) | (0.31 | ) | (0.08 | ) | ||||||||||||
Total Distributions | (0.16 | ) | (0.33 | ) | (0.32 | ) | (0.31 | ) | (0.31 | ) | (0.08 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 10.09 | $ | 10.37 | $ | 10.64 | $ | 10.71 | $ | 10.63 | $ | 10.18 | ||||||||||||
Total Return(4) | (1.14 | )% | 0.54 | % | 2.42 | % | 3.70 | % | 7.66 | % | (2.39 | )% | ||||||||||||
Net Assets, End of Period (000s) | $127 | $134 | $127 | $178 | $247 | $52 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 3.44 | %(5) | 3.47 | % | 2.70 | % | 2.11 | % | 2.76 | % | 3.19 | %(5) | ||||||||||||
Net expenses(6)(7) | 1.55 | (5) | 1.55 | 1.55 | 1.55 | 1.53 | 1.56 | (5)(8) | ||||||||||||||||
Net investment income | 3.21 | (5) | 3.11 | 3.04 | 2.86 | 2.88 | 3.23 | (5) | ||||||||||||||||
Portfolio Turnover Rate | 55 | % | 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, 2006 (unaudited). |
(3) | For the period October 5, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 1.55%. |
(8) | Ratio reflects the expense offset arrangements with its service providers. Excluding the effect of this offset arrangement the ratio of net expenses to average net assets would have been 1.57% |
See Notes to Financial Statements.
42 Salomon Funds Trust 2006 Semi-Annual Report
Salomon Brothers California Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class C Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002(3) | |||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.36 | $ | 10.63 | $ | 10.70 | $ | 10.63 | $ | 10.76 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.18 | 0.35 | 0.35 | 0.33 | 0.10 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.28 | ) | (0.27 | ) | (0.07 | ) | 0.07 | (0.13 | ) | |||||||||||
Total Income (Loss) From Operations | (0.10 | ) | 0.08 | 0.28 | 0.40 | (0.03 | ) | |||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.18 | ) | (0.35 | ) | (0.35 | ) | (0.33 | ) | (0.10 | ) | ||||||||||
Total Distributions | (0.18 | ) | (0.35 | ) | (0.35 | ) | (0.33 | ) | (0.10 | ) | ||||||||||
Net Asset Value, End of Period | $ | 10.08 | $ | 10.36 | $ | 10.63 | $ | 10.70 | $ | 10.63 | ||||||||||
Total Return(4) | (1.02 | )% | 0.79 | % | 2.67 | % | 3.87 | % | (0.28 | )% | ||||||||||
Net Assets, End of Period (000s) | $27 | $38 | $37 | $27 | $26 | |||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 3.88 | %(5) | 3.45 | % | 2.60 | % | 1.89 | % | 2.51 | %(5) | ||||||||||
Net expenses(6)(7) | 1.30 | (5) | 1.30 | 1.29 | 1.30 | 1.30 | (5) | |||||||||||||
Net investment income | 3.50 | (5) | 3.36 | 3.27 | 3.14 | 3.07 | (5) | |||||||||||||
Portfolio Turnover Rate | 55 | % | 10 | % | 5 | % | 0 | % | 9 | % | ||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period September 9, 2002 (inception date) to December 31, 2002. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 1.30%. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 43
Salomon Brothers California Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class O Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002(3) | |||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.36 | $ | 10.63 | $ | 10.71 | $ | 10.63 | $ | 10.81 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.21 | 0.43 | 0.43 | 0.42 | 0.09 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.27 | ) | (0.27 | ) | (0.08 | ) | 0.08 | (0.18 | ) | |||||||||||
Total Income (Loss) From Operations | (0.06 | ) | 0.16 | 0.35 | 0.50 | (0.09 | ) | |||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.21 | ) | (0.43 | ) | (0.43 | ) | (0.42 | ) | (0.09 | ) | ||||||||||
Total Distributions | (0.21 | ) | (0.43 | ) | (0.43 | ) | (0.42 | ) | (0.09 | ) | ||||||||||
Net Asset Value, End of Period | $ | 10.09 | $ | 10.36 | $ | 10.63 | $ | 10.71 | $ | 10.63 | ||||||||||
Total Return(4) | (0.56 | )% | 1.57 | % | 3.35 | % | 4.76 | % | (0.79 | )% | ||||||||||
Net Assets, End of Period (000s) | $2 | $2 | $2 | $2 | $2 | |||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 6.48 | %(5) | 6.00 | % | 1.73 | % | 1.06 | % | 1.70 | %(5) | ||||||||||
Net expenses(6)(7) | 0.54 | (5) | 0.55 | 0.53 | 0.45 | 0.47 | (5) | |||||||||||||
Net investment income | 4.20 | (5) | 4.14 | 4.03 | 3.94 | 3.94 | (5) | |||||||||||||
Portfolio Turnover Rate | 55 | % | 10 | % | 5 | % | 0 | % | 9 | % | ||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period October 9, 2002 (inception date) to December 31, 2002. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets were capped so as not to exceed 0.55%. |
See Notes to Financial Statements.
44 Salomon Funds Trust 2006 Semi-Annual Report
Salomon Brothers New York Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class A Shares | 2006(1)(2) | 2005(1) | 2004(1) | 2003(1) | 2002(1) | 2001 | ||||||||||||||||||
Net Asset Value, | $ | 11.73 | $ | 11.92 | $ | 11.99 | $ | 11.91 | $ | 11.26 | $ | 11.44 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.21 | 0.42 | 0.44 | 0.47 | 0.49 | 0.54 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.27 | ) | (0.19 | ) | (0.07 | ) | 0.08 | 0.65 | (0.16 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.06 | ) | 0.23 | 0.37 | 0.55 | 1.14 | 0.38 | |||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.21 | ) | (0.42 | ) | (0.44 | ) | (0.47 | ) | (0.49 | ) | (0.56 | ) | ||||||||||||
Total Distributions | (0.21 | ) | (0.42 | ) | (0.44 | ) | (0.47 | ) | (0.49 | ) | (0.56 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.46 | $ | 11.73 | $ | 11.92 | $ | 11.99 | $ | 11.91 | $ | 11.26 | ||||||||||||
Total Return(3) | (0.52 | )% | 1.94 | % | 3.17 | % | 4.77 | % | 10.25 | % | 3.32 | % | ||||||||||||
Net Assets, End of Period (000s) | $86,274 | $93,549 | $104,260 | $116,982 | $127,482 | $140,416 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 0.96 | %(4) | 0.98 | % | 0.96 | % | 0.96 | % | 1.00 | % | 1.21 | % | ||||||||||||
Net expenses(5)(6) | 0.80 | (4) | 0.80 | 0.80 | 0.80 | 0.80 | 0.80 | |||||||||||||||||
Net investment income | 3.64 | (4) | 3.54 | 3.72 | 3.95 | 4.19 | 4.53 | |||||||||||||||||
Portfolio Turnover Rate | 1 | % | 34 | % | 21 | % | 12 | % | 13 | % | 16 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(4) | Annualized. |
(5) | Reflects fee waivers and/or expense reimbursements. |
(6) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 0.80%. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 45
Salomon Brothers New York Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class B Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.73 | $ | 11.92 | $ | 11.99 | $ | 11.91 | $ | 11.26 | $ | 11.53 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.17 | 0.33 | 0.35 | 0.38 | 0.32 | 0.04 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.27 | ) | (0.19 | ) | (0.07 | ) | 0.08 | 0.73 | (0.26 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.10 | ) | 0.14 | 0.28 | 0.46 | 1.05 | (0.22 | ) | ||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.17 | ) | (0.33 | ) | (0.35 | ) | (0.38 | ) | (0.40 | ) | (0.05 | ) | ||||||||||||
Total Distributions | (0.17 | ) | (0.33 | ) | (0.35 | ) | (0.38 | ) | (0.40 | ) | (0.05 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.46 | $ | 11.73 | $ | 11.92 | $ | 11.99 | $ | 11.91 | $ | 11.26 | ||||||||||||
Total Return(4) | (0.89 | )% | 1.18 | % | 2.41 | % | 3.94 | % | 9.43 | % | (1.88 | )% | ||||||||||||
Net Assets, End of Period (000s) | $226 | $294 | $275 | $363 | $218 | $14 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 2.63 | %(5) | 2.22 | % | 1.71 | % | 1.71 | % | 1.74 | % | 1.96 | %(5) | ||||||||||||
Net expenses(6)(7) | 1.55 | (5) | 1.55 | 1.55 | 1.55 | 1.55 | 1.55 | (5) | ||||||||||||||||
Net investment income | 2.90 | (5) | 2.78 | 2.96 | 3.18 | 3.32 | 3.50 | (5) | ||||||||||||||||
Portfolio Turnover Rate | 1 | % | 34 | % | 21 | % | 12 | % | 13 | % | 16 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period November 19, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 1.55%. |
See Notes to Financial Statements.
46 Salomon Funds Trust 2006 Semi-Annual Report
Salomon Brothers New York Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class C Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002(3) | |||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.71 | $ | 11.90 | $ | 12.00 | $ | 11.92 | $ | 11.72 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment income | 0.18 | 0.36 | 0.38 | 0.41 | 0.18 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.27 | ) | (0.19 | ) | (0.10 | ) | 0.08 | 0.21 | ||||||||||||
Total Income (Loss) From Operations | (0.09 | ) | 0.17 | 0.28 | 0.49 | 0.39 | ||||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net investment income | (0.18 | ) | (0.36 | ) | (0.38 | ) | (0.41 | ) | (0.19 | ) | ||||||||||
Total Distributions | (0.18 | ) | (0.36 | ) | (0.38 | ) | (0.41 | ) | (0.19 | ) | ||||||||||
Net Asset Value, End of Period | $ | 11.44 | $ | 11.71 | $ | 11.90 | $ | 12.00 | $ | 11.92 | ||||||||||
Total Return(4) | (0.77 | )% | 1.43 | % | 2.40 | % | 4.18 | % | 3.30 | % | ||||||||||
Net Assets, End of Period (000s) | $59 | $60 | $33 | $636 | $37 | |||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 4.43 | %(5) | 4.22 | % | 1.45 | % | 1.47 | % | 1.50 | %(5) | ||||||||||
Net expenses(6)(7) | 1.30 | (5) | 1.29 | 1.30 | 1.30 | 1.30 | (5) | |||||||||||||
Net investment income | 3.13 | (5) | 3.01 | 3.31 | 3.38 | 3.63 | (5) | |||||||||||||
Portfolio Turnover Rate | 1 | % | 34 | % | 21 | % | 12 | % | 13 | % | ||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period July 19, 2002 (inception date) to December 31, 2002. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 1.30%. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 47
Salomon Brothers New York Tax Free Bond Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class O Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.72 | $ | 11.91 | $ | 11.98 | $ | 11.90 | $ | 11.25 | $ | 11.59 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income | 0.22 | 0.45 | 0.47 | 0.50 | 0.52 | 0.09 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (0.27 | ) | (0.19 | ) | (0.07 | ) | 0.08 | 0.64 | (0.33 | ) | ||||||||||||||
Total Income (Loss) From Operations | (0.05 | ) | 0.26 | 0.40 | 0.58 | 1.16 | (0.24 | ) | ||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.22 | ) | (0.45 | ) | (0.47 | ) | (0.50 | ) | (0.51 | ) | (0.10 | ) | ||||||||||||
Total Distributions | (0.22 | ) | (0.45 | ) | (0.47 | ) | (0.50 | ) | (0.51 | ) | (0.10 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.45 | $ | 11.72 | $ | 11.91 | $ | 11.98 | $ | 11.90 | $ | 11.25 | ||||||||||||
Total Return(4) | (0.40 | )% | 2.19 | % | 3.44 | % | 4.99 | % | 10.54 | % | (2.04 | )% | ||||||||||||
Net Assets, End of Period (000s) | $136 | $388 | $78 | $93 | $92 | $1 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 1.11 | %(5) | 1.63 | % | 0.71 | % | 0.71 | % | 0.75 | % | 0.94 | %(5) | ||||||||||||
Net expenses(6)(7) | 0.55 | (5) | 0.55 | 0.55 | 0.55 | 0.56 | 0.53 | (5) | ||||||||||||||||
Net investment income | 3.86 | (5) | 3.89 | 3.96 | 4.20 | 4.40 | 4.76 | (5) | ||||||||||||||||
Portfolio Turnover Rate | 1 | % | 34 | % | 21 | % | 12 | % | 13 | % | 16 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period October 29, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 0.55%. |
See Notes to Financial Statements.
48 Salomon Funds Trust 2006 Semi-Annual Report
Salomon Brothers Mid Cap Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class A Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.77 | $ | 19.15 | $ | 16.89 | $ | 13.18 | $ | 16.47 | $ | 13.71 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income (loss) | (0.01 | ) | 0.02 | (0.10 | ) | (0.08 | ) | (0.06 | ) | (0.01 | ) | |||||||||||||
Net realized and unrealized gain (loss) | 0.41 | 1.60 | 2.36 | 3.79 | (3.23 | ) | 2.77 | |||||||||||||||||
Total Income (Loss) From Operations | 0.40 | 1.62 | 2.26 | 3.71 | (3.29 | ) | 2.76 | |||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | — | (0.01 | ) | — | — | — | — | |||||||||||||||||
Net realized gains | — | (0.99 | ) | — | — | — | — | |||||||||||||||||
Total Distributions | — | (1.00 | ) | — | — | — | — | |||||||||||||||||
Net Asset Value, End of Period | $ | 20.17 | $ | 19.77 | $ | 19.15 | $ | 16.89 | $ | 13.18 | $ | 16.47 | ||||||||||||
Total Return(4) | 2.02 | % | 8.50 | % | 13.38 | % | 28.15 | % | (19.98 | )% | 3.65 | % | ||||||||||||
Net Assets, End of Period (000s) | $2,570 | $3,149 | $1,489 | $270 | $116 | $47 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 1.95 | %(5) | 2.06 | % | 2.08 | % | 1.60 | % | 1.91 | % | 1.93 | %(5) | ||||||||||||
Net expenses(6)(7) | 1.50 | (5) | 1.50 | 1.50 | 1.50 | 1.42 | 1.36 | (5) | ||||||||||||||||
Net investment income (loss) | (0.06 | )(5) | 0.09 | (0.56 | ) | (0.56 | ) | (0.44 | ) | (0.69 | )(5) | |||||||||||||
Portfolio Turnover Rate | 0 | % | 34 | % | 66 | % | 78 | % | 71 | % | 26 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period November 30, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 1.50%. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 49
Salomon Brothers Mid Cap Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class B Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.20 | $ | 18.75 | $ | 16.66 | $ | 13.10 | $ | 16.47 | $ | 16.31 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment loss | (0.07 | ) | (0.12 | ) | (0.23 | ) | (0.19 | ) | (0.16 | ) | (0.01 | ) | ||||||||||||
Net realized and unrealized gain (loss) | 0.39 | 1.56 | 2.32 | 3.75 | (3.21 | ) | 0.17 | |||||||||||||||||
Total Income (Loss) From Operations | 0.32 | 1.44 | 2.09 | 3.56 | (3.37 | ) | 0.16 | |||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net realized gains | — | (0.99 | ) | — | — | — | — | |||||||||||||||||
Total Distributions | — | (0.99 | ) | — | — | — | — | |||||||||||||||||
Net Asset Value, End of Period | $ | 19.52 | $ | 19.20 | $ | 18.75 | $ | 16.66 | $ | 13.10 | $ | 16.47 | ||||||||||||
Total Return(4) | 1.67 | % | 7.70 | % | 12.55 | % | 27.18 | % | (20.46 | )% | 0.98 | % | ||||||||||||
Net Assets, End of Period (000s) | $534 | $341 | $291 | $152 | $108 | $12 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 3.59 | %(5) | 3.96 | % | 2.63 | % | 2.33 | % | 2.42 | % | 2.73 | %(5) | ||||||||||||
Net expenses(6)(7) | 2.25 | (5) | 2.25 | 2.25 | 2.25 | 1.95 | 2.15 | (5) | ||||||||||||||||
Net investment loss | (0.73 | )(5) | (0.63 | ) | (1.37 | ) | (1.31 | ) | (0.99 | ) | (1.50 | )(5) | ||||||||||||
Portfolio Turnover Rate | 0 | % | 34 | % | 66 | % | 78 | % | 71 | % | 26 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period December 18, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 2.25%. |
See Notes to Financial Statements.
50 Salomon Funds Trust 2006 Semi-Annual Report
Salomon Brothers Mid Cap Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class C Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002(3) | |||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.28 | $ | 18.82 | $ | 16.72 | $ | 13.15 | $ | 16.43 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Net investment loss | (0.08 | ) | (0.11 | ) | (0.24 | ) | (0.19 | ) | (0.04 | ) | ||||||||||
Net realized and unrealized gain (loss) | 0.40 | 1.56 | 2.34 | 3.76 | (3.24 | ) | ||||||||||||||
Total Income (Loss) From Operations | 0.32 | 1.45 | 2.10 | 3.57 | (3.28 | ) | ||||||||||||||
Less Distributions From: | ||||||||||||||||||||
Net realized gains | — | (0.99 | ) | — | — | — | ||||||||||||||
Total Distributions | — | (0.99 | ) | — | — | — | ||||||||||||||
Net Asset Value, End of Period | $ | 19.60 | $ | 19.28 | $ | 18.82 | $ | 16.72 | $ | 13.15 | ||||||||||
Total Return(4) | 1.66 | % | 7.73 | % | 12.56 | % | 27.15 | % | (19.96 | )% | ||||||||||
Net Assets, End of Period (000s) | $321 | $354 | $234 | $109 | $26 | |||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||
Gross expenses | 3.50 | %(5) | 3.94 | % | 2.67 | % | 2.35 | % | 2.27 | %(5) | ||||||||||
Net expenses(6)(7) | 2.25 | (5) | 2.25 | 2.25 | 2.25 | 1.68 | (5) | |||||||||||||
Net investment loss | (0.79 | )(5) | (0.58 | ) | (1.38 | ) | (1.31 | ) | (0.51 | )(5) | ||||||||||
Portfolio Turnover Rate | 0 | % | 34 | % | 66 | % | 78 | % | 71 | % | ||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period May 7, 2002 (inception date) to December 31, 2002. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 2.25%. |
See Notes to Financial Statements.
Salomon Funds Trust 2006 Semi-Annual Report 51
Salomon Brothers Mid Cap Fund
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended December 31, unless otherwise noted:
Class O Shares(1) | 2006(2) | 2005 | 2004 | 2003 | 2002 | 2001(3) | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 20.02 | $ | 19.38 | $ | 17.02 | $ | 13.23 | $ | 16.48 | $ | 15.07 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.04 | 0.10 | (0.04 | ) | (0.02 | ) | (0.02 | ) | (0.01 | ) | ||||||||||||||
Net realized and unrealized gain (loss) | 0.41 | 1.63 | 2.40 | 3.81 | (3.23 | ) | 1.42 | |||||||||||||||||
Total Income (Loss) From Operations | 0.45 | 1.73 | 2.36 | 3.79 | (3.25 | ) | 1.41 | |||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | — | (0.10 | ) | — | — | — | — | |||||||||||||||||
Net realized gains | — | (0.99 | ) | — | — | — | — | |||||||||||||||||
Total Distributions | — | (1.09 | ) | — | — | — | — | |||||||||||||||||
Net Asset Value, End of Period | $ | 20.47 | $ | 20.02 | $ | 19.38 | $ | 17.02 | $ | 13.23 | $ | 16.48 | ||||||||||||
Total Return(4) | 2.25 | % | 8.94 | % | 13.87 | % | 28.65 | % | (19.72 | )% | (6.48 | )% | ||||||||||||
Net Assets, End of Period (000s) | $18,895 | $19,200 | $20,690 | $20,350 | $16,612 | $22,935 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Gross expenses | 1.31 | %(5) | 1.41 | % | 1.53 | % | 1.33 | % | 1.54 | % | 2.97 | %(5) | ||||||||||||
Net expenses(6)(7) | 1.08 | (5) | 1.08 | 1.08 | 1.08 | 1.07 | 1.08 | (5) | ||||||||||||||||
Net investment income (loss) | 0.39 | (5) | 0.49 | (0.24 | ) | (0.13 | ) | (0.13 | ) | (0.17 | )(5) | |||||||||||||
Portfolio Turnover Rate | 0 | % | 34 | % | 66 | % | 78 | % | 71 | % | 26 | % | ||||||||||||
(1) | Per share amounts have been calculated using the average shares method. |
(2) | For the six months ended June 30, 2006 (unaudited). |
(3) | For the period September 10, 2001 (inception date) to December 31, 2001. |
(4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Total returns for periods of less than one year are not annualized. |
(5) | Annualized. |
(6) | Reflects fee waivers and/or expense reimbursements. |
(7) | As a result of an expense limitation, the ratio of expenses to average net assets did not exceed 1.08%. |
See Notes to Financial Statements.
52 Salomon Funds Trust 2006 Semi-Annual Report
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”) and Salomon Brothers New York Tax Free Bond Fund (“New York Tax Free Bond Fund”) each are a separate non-diversified series of the Salomon Funds Trust (the “Trust”). Salomon Brothers Mid Cap Fund (“Mid Cap Fund”) is a separate diversified series of the Trust. The Trust, a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), as an open-end management investment company.
The following are significant accounting policies consistently followed by the Funds and 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. 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 municipal obligations, quotations from municipal bond dealers, market transactions in comparable securities and various other 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. 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 value, 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 their 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 the California Tax Free Bond Fund and the New York Tax Free Bond Fund invests 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
Salomon Funds Trust 2006 Semi-Annual Report 53
Notes to Financial Statements (unaudited) (continued)
ex-dividend date. Foreign dividend income, with respect to the Mid Cap Fund is recorded on the ex-dividend date or as soon as practical after the Fund determines 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, the Funds’ 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.
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 Fund’s 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, and are paid monthly. The Funds intend to satisfy conditions that will enable interest from municipal securities, which is exempt from federal 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) REIT Distributions. The character of distributions received from Real Estate Investment Trusts (“REITs”) held by the Mid Cap Fund is generally comprised of net investment income, capital gains, and return of capital. It is the policy of the Fund to estimate the character of distributions received from underlying REITs based on historical data provided by the REITs. After each calendar year end, REITs report the true tax char - -
54 Salomon Funds Trust 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
acter of these distributions. Differences between the estimated and actual amounts reported by the REITs are reflected in the Fund’s records in the year in which they are reported by the REITs.
(h) 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.
(i) 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 in the 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.
(j) 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 its 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.
(k) 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. There were no reclassifications during the current period for National Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund. Additionally during the current period, Undistributed Realized Gains and Cost of Investments have each been reduced by $1,197 as a result of return of capital distributions paid by REITs for the Mid Cap Fund.
2. | Investment Management Agreement and Other Transactions with Affiliates |
For the period of this report, Salomon Brothers Asset Management Inc (“SBAM”), an indirect wholly-owned subsidiary of Legg Mason, Inc. (“Legg Mason”), acted as the investment manager of the Funds. Under the investment management agreement, the Funds paid an investment management fee calculated at an 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. This fee is calculated daily and paid monthly.
During the six months ended June 30, 2006, the Funds had the following expense limitations, which resulted in management fee waivers and expense reimbursements.
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 | ||||||||
Salomon Funds Trust 2006 Semi-Annual Report 55
Notes to Financial Statements (unaudited) (continued)
During the six months ended June 30, 2006, SBAM waived a portion of its fee in the amount of $94,885, $21,803, $79,399 and $34,721 for National Tax Free Bond Fund, California Tax Free Bond Fund, New York Tax Free Bond Fund and Mid Cap Fund, respectively. In addition, during the six months ended June 30, 2006, the Funds were reimbursed for expenses in the amount of $20,569 and $43,574 for National Tax Free Bond Fund and California Tax Free Bond Fund, respectively.
Citigroup Global Markets Inc. (“CGM”), and Legg Mason Investor Services, LLC (“LMIS”), a wholly-owned broker-dealer subsidiary of Legg Mason, serve as co-distributors of the Funds.
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 also a 4.00% contingent deferred sales charge (“CDSC”) on Class B shares of the National Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund which applies if shares are redeemed within 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. There is a 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. 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, 2006, LMIS and its affiliates received initial sales charges of approximately $2,000 and $20 from New York Tax Free Bond Fund and Mid Cap Fund, respectively, on sales of the Funds’ Class A shares. In addition, for the period ended June 30, 2006, LMIS and its affiliates did not receive any CDSCs.
Certain officers and one Trustee of the Trust are employees of Legg Mason or its affiliates and do not receive compensation from the Trust.
The Trustees of the Trust have adopted a Retirement Plan (the “Plan”) for all Trustees who are not “interested persons” of the Funds, within the meaning of the 1940 Act. Under the Plan, each Trustee is required to retire from the Board as of the last day of the calendar year in which such Trustee attains age 75. 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 the Manager 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 entirety of the calendar year of the Trustee’s retirement (assuming no change in relevant facts for the balance of the year following the Trustee’s retirement). Amounts under the Plan may be paid in installments
56 Salomon Funds Trust 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
or in a lump sum (discounted to present value). Benefits under the Plan are unfunded. Two former Trustees are currently receiving payments under the Plan. In addition, three other former Trustees received full payments under the Plan. The Trust’s allocable share of expenses of the Plan for the six month ended June 30, 2006 was $4,730.
3. | Investments |
During the six months ended June 30, 2006, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
Purchases | Sales | |||||
National Tax Free Bond Fund | $ | 5,298,912 | $ | 10,314,182 | ||
California Tax Free Bond Fund | 4,552,507 | 6,713,503 | ||||
New York Tax Free Bond Fund | 660,876 | 7,886,161 | ||||
Mid Cap Fund | 48,736 | 362,647 | ||||
At June 30, 2006, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:
Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation/ Depreciation | |||||||||
National Tax Free Bond Fund | $ | 151,053 | $ | (464,596 | ) | $ | (313,543 | ) | |||
California Tax Free Bond Fund | 47,197 | (70,643 | ) | (23,446 | ) | ||||||
New York Tax Free Bond Fund | 2,061,514 | (1,117,207 | ) | 944,307 | |||||||
Mid Cap Fund | 6,728,216 | (363,916 | ) | 6,364,300 | |||||||
4. | Line of Credit |
The Funds, along with affiliated funds, entered into an agreement with a syndicate of banks which allows the funds collectively to borrow up to $250 million. Interest on borrowing, if any, is charged to the specific fund executing the borrowing at the base rate of the bank. The line of credit requires a quarterly payment of a commitment fee based on the average daily unused portion of the line of credit. For the six months ended June 30, 2006, the commitment fee allocated to the National Tax Free Bond Fund, California Tax Free Bond Fund, New York Tax Free Bond Fund and the Mid Cap were $1,104, $241, $2,674 and $700, respectively. Since the line of credit was established, there have been no borrowings.
Salomon Funds Trust 2006 Semi-Annual Report 57
Notes to Financial Statements (unaudited) (continued)
5. | Class Specific Expenses |
The Funds have adopted a Rule 12b-1 distribution plan and under that 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 its 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. Distribution fees are accrued daily and paid monthly.
For the six months ended June 30, 2006, class specific expenses were as follows:
National Tax Free Bond Fund | Distribution Fees | Transfer Agent Fees | Shareholder Reports Expenses | ||||||
Class A | $ | 43,339 | $ | 15,304 | $ | 26,893 | |||
Class B | 10,067 | 1,032 | 1,758 | ||||||
Class C | 4,162 | 562 | 746 | ||||||
Class O | — | 120 | 325 | ||||||
Total | $ | 57,568 | $ | 17,018 | $ | 29,722 | |||
California Tax Free Bond Fund | |||||||||
Class A | $ | 10,694 | $ | 498 | $ | 4,324 | |||
Class B | 659 | 84 | 268 | ||||||
Class C | 119 | 48 | 137 | ||||||
Class O | — | 14 | 35 | ||||||
Total | $ | 11,472 | $ | 644 | $ | 4,764 | |||
New York Tax Free Bond Fund | |||||||||
Class A | $ | 112,081 | $ | 15,379 | $ | 7,727 | |||
Class B | 1,390 | 113 | 1,230 | ||||||
Class C | 223 | 71 | 827 | ||||||
Class O | — | 28 | 750 | ||||||
Total | $ | 113,694 | $ | 15,591 | $ | 10,534 | |||
Mid Cap Fund | |||||||||
Class A | $ | 3,519 | $ | 951 | $ | 5,066 | |||
Class B | 2,484 | 544 | 2,750 | ||||||
Class C | 1,735 | 256 | 1,887 | ||||||
Class O | — | 1,443 | 2,782 | ||||||
Total | $ | 7,738 | $ | 3,194 | $ | 12,485 | |||
58 Salomon Funds Trust 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
6. | Distributions to Shareholders by Class |
National Tax Free Bond Fund | Six Months Ended June 30, 2006 | Year Ended December 31, 2005 | ||||
Net Investment Income | ||||||
Class A | $ | 596,259 | $ | 1,239,386 | ||
Class B | 27,117 | 67,445 | ||||
Class C | 16,299 | 38,317 | ||||
Class O | 2,938 | 5,805 | ||||
Total | $ | 642,613 | $ | 1,350,953 | ||
California Tax Free Bond Fund | ||||||
Net Investment Income | ||||||
Class A | $ | 170,264 | $ | 397,920 | ||
Class B | 2,116 | 4,137 | ||||
Class C | 553 | 1,291 | ||||
Class O | 45 | 89 | ||||
Total | $ | 172,978 | $ | 403,437 | ||
New York Tax Free Bond Fund | ||||||
Net Investment Income | ||||||
Class A | $ | 1,631,126 | $ | 3,511,403 | ||
Class B | 4,026 | 8,763 | ||||
Class C | 931 | 1,746 | ||||
Class O | 6,592 | 5,586 | ||||
Total | $ | 1,642,675 | $ | 3,527,498 | ||
Mid Cap Fund | ||||||
Net Investment Income | ||||||
Class A | — | $ | 2,155 | |||
Class O | — | 93,846 | ||||
Total | — | $ | 96,001 | |||
Net Realized Gains | ||||||
Class A | — | $ | 147,356 | |||
Class B | — | 17,030 | ||||
Class C | — | 16,855 | ||||
Class O | — | 921,596 | ||||
Total | — | $ | 1,102,837 | |||
7. | 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.
Salomon Funds Trust 2006 Semi-Annual Report 59
Notes to Financial Statements (unaudited) (continued)
Transactions in Fund shares for the periods indicated were as follows:
Six Months Ended June 30, 2006 | Year Ended December 31, 2005 | |||||||||||||
National Tax Free Bond Fund | Shares | Amount | Shares | Amount | ||||||||||
Class A | ||||||||||||||
Shares sold | 205,942 | $ | 2,424,958 | 324,787 | $ | 3,842,029 | ||||||||
Shares issued on reinvestment | 47,158 | 549,469 | 96,935 | 1,144,052 | ||||||||||
Shares repurchased | (624,757 | ) | (7,251,431 | ) | (537,914 | ) | (6,340,704 | ) | ||||||
Net Decrease | (371,657 | ) | $ | (4,277,004 | ) | (116,192 | ) | $ | (1,354,623 | ) | ||||
Class B | ||||||||||||||
Shares sold | 8,397 | $ | 98,027 | 3,757 | $ | 44,068 | ||||||||
Shares issued on reinvestment | 1,797 | 20,972 | 4,327 | 51,135 | ||||||||||
Shares repurchased | (46,336 | ) | (541,383 | ) | (63,291 | ) | (748,406 | ) | ||||||
Net Decrease | (36,142 | ) | $ | (422,384 | ) | (55,207 | ) | $ | (653,203 | ) | ||||
Class C | ||||||||||||||
Shares sold | 4,487 | $ | 52,357 | 559 | $ | 6,630 | ||||||||
Shares issued on reinvestment | 1,165 | 13,595 | 2,818 | 33,302 | ||||||||||
Shares repurchased | (8,106 | ) | (94,372 | ) | (36,789 | ) | (435,744 | ) | ||||||
Net Decrease | (2,454 | ) | $ | (28,420 | ) | (33,412 | ) | $ | (395,812 | ) | ||||
Class O | ||||||||||||||
Shares sold | 6 | $ | 72 | 58 | $ | 677 | ||||||||
Shares issued on reinvestment | 101 | 1,175 | 193 | 2,279 | ||||||||||
Shares repurchased | (61 | ) | (703 | ) | (14 | ) | (166 | ) | ||||||
Net Increase | 46 | $ | 544 | 237 | $ | 2,790 | ||||||||
California Tax Free Bond Fund | ||||||||||||||
Class A | ||||||||||||||
Shares sold | 2,209 | $ | 22,576 | 9,160 | $ | 96,417 | ||||||||
Shares issued on reinvestment | 16,575 | 169,802 | 37,890 | 397,169 | ||||||||||
Shares repurchased | (202,506 | ) | (2,069,308 | ) | (205,857 | ) | (2,160,798 | ) | ||||||
Net Decrease | (183,722 | ) | $ | (1,876,930 | ) | (158,807 | ) | $ | (1,667,212 | ) | ||||
Class B | ||||||||||||||
Shares sold | 228 | $ | 2,346 | 967 | $ | 10,222 | ||||||||
Shares issued on reinvestment | 17 | 178 | 31 | 322 | ||||||||||
Shares repurchased | (555 | ) | (5,677 | ) | (31 | ) | (324 | ) | ||||||
Net Increase (Decrease) | (310 | ) | $ | (3,153 | ) | 967 | $ | 10,220 | ||||||
Class C | ||||||||||||||
Shares sold | — | — | 1,076 | $ | 11,314 | |||||||||
Shares issued on reinvestment | 24 | $ | 247 | 47 | 493 | |||||||||
Shares repurchased | (1,003 | ) | (10,324 | ) | (965 | ) | (10,158 | ) | ||||||
Net Increase (Decrease) | (979 | ) | $ | (10,077 | ) | 158 | $ | 1,649 | ||||||
Class O | ||||||||||||||
Shares issued on reinvestment | 4 | $ | 45 | 9 | $ | 89 | ||||||||
Net Increase | 4 | $ | 45 | 9 | $ | 89 | ||||||||
60 Salomon Funds Trust 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
Six Months Ended June 30, 2006 | Year Ended December 31, 2005 | |||||||||||||
New York Tax Free Bond Fund | Shares | Amount | Shares | Amount | ||||||||||
Class A | ||||||||||||||
Shares sold | 64,418 | $ | 755,581 | 102,008 | $ | 1,209,701 | ||||||||
Shares issued on reinvestment | 137,470 | 1,596,587 | 293,368 | 3,470,489 | ||||||||||
Shares repurchased | (650,971 | ) | (7,572,256 | ) | (1,164,766 | ) | (13,773,628 | ) | ||||||
Net Decrease | (449,083 | ) | $ | (5,220,088 | ) | (769,390 | ) | $ | (9,093,438 | ) | ||||
Class B | ||||||||||||||
Shares sold | 120 | $ | 1,393 | 4,031 | $ | 48,060 | ||||||||
Shares issued on reinvestment | 128 | 1,497 | 256 | 3,027 | ||||||||||
Shares repurchased | (5,601 | ) | (65,026 | ) | (2,246 | ) | (26,187 | ) | ||||||
Net Increase (Decrease) | (5,353 | ) | $ | (62,136 | ) | 2,041 | $ | 24,900 | ||||||
Class C | ||||||||||||||
Shares sold | 60 | $ | 697 | 2,541 | $ | 30,575 | ||||||||
Shares issued on reinvestment | 20 | 233 | 41 | 488 | ||||||||||
Shares repurchased | — | — | (204 | ) | (2,394 | ) | ||||||||
Net Increase | 80 | $ | 930 | 2,378 | $ | 28,669 | ||||||||
Class O | ||||||||||||||
Shares sold | — | — | 28,032 | $ | 330,000 | |||||||||
Shares issued on reinvestment | 478 | $ | 5,539 | 285 | 3,327 | |||||||||
Shares repurchased | (21,758 | ) | (250,000 | ) | (1,713 | ) | (20,454 | ) | ||||||
Net Increase (Decrease) | (21,280 | ) | $ | (244,461 | ) | 26,604 | $ | 312,873 | ||||||
Mid Cap Fund | ||||||||||||||
Class A | ||||||||||||||
Shares sold | 32,357 | $ | 668,311 | 178,293 | $ | 3,400,336 | ||||||||
Shares issued on reinvestment | — | — | 7,364 | 146,329 | ||||||||||
Shares repurchased | (64,239 | ) | (1,313,602 | ) | (104,089 | ) | (1,959,865 | ) | ||||||
Net Increase (Decrease) | (31,882 | ) | $ | (645,291 | ) | 81,568 | $ | 1,586,800 | ||||||
Class B | ||||||||||||||
Shares sold | 14,219 | $ | 283,448 | 6,446 | $ | 119,748 | ||||||||
Shares issued on reinvestment | — | — | 699 | 13,509 | ||||||||||
Shares repurchased | (4,616 | ) | (92,165 | ) | (4,936 | ) | (92,857 | ) | ||||||
Net Increase | 9,603 | $ | 191,283 | 2,209 | $ | 40,400 | ||||||||
Class C | ||||||||||||||
Shares sold | 82 | $ | 1,658 | 6,208 | $ | 115,575 | ||||||||
Shares issued on reinvestment | — | — | 804 | 15,606 | ||||||||||
Shares repurchased | (2,092 | ) | (41,160 | ) | (1,061 | ) | (20,270 | ) | ||||||
Net Increase (Decrease) | (2,010 | ) | $ | (39,502 | ) | 5,951 | $ | 110,911 | ||||||
Class O | ||||||||||||||
Shares sold | 1,904 | $ | 39,464 | 10,508 | $ | 206,366 | ||||||||
Shares issued on reinvestment | — | — | 50,294 | 1,015,441 | ||||||||||
Shares repurchased | (38,055 | ) | (787,860 | ) | (169,341 | ) | (3,302,971 | ) | ||||||
Net Decrease | (36,151 | ) | $ | (748,396 | ) | (108,539 | ) | $ | (2,081,164 | ) | ||||
Salomon Funds Trust 2006 Semi-Annual Report 61
Notes to Financial Statements (unaudited) (continued)
8. | Capital Loss Carryforward |
As of December 31, 2005, National Tax Free Bond Fund has a net capital loss carryforward of $4,169,492, of which $738,200 expires in 2007 and $3,431,292 expires in 2008. California Tax Free Bond Fund had a net capital loss carryforward of $2,765,037, of which $2,053,541 expires in 2007 and $711,496 expires in 2008. New York Tax Free Bond Fund has a net capital loss carryforward of $4,157,208, of which $3,954,329 expires in 2008 and $202,879 expires in 2009. These amounts will be available to offset any future taxable capital gains.
9. | Regulatory Matters |
On 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 Inc. (“SBFM”) and CGM relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds (the “Affected Funds”).
The SEC order finds that SBFM and CGM willfully violated Section 206(1) of the Investment Advisers Act of 1940 (“Advisers Act”). Specifically, the order finds that SBFM and CGM knowingly or recklessly failed to disclose to the boards of the Affected 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 CAM, the Citigroup business unit that, at the time, included the Affected Funds’ 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 for, among other things, a guarantee by First Data of specified amounts of asset management and investment banking fees to CAM and CGM. The order also finds that SBFM and CGM 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 Affected Funds’ best interests and that no viable alternatives existed. SBFM and CGM 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 CGM 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 Affected 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 prepared and submitted for approval by the SEC. The order also requires that transfer agency fees received from the Affected Funds since December 1, 2004 less certain expenses be placed in escrow and provides that a portion of such fees may
62 Salomon Funds Trust 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
be subsequently distributed in accordance with the terms of the order. On April 3, 2006, an aggregate amount of approximately $9 million was distributed to the affected Funds.
The order required 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 submitted a proposal to serve as transfer agent or sub-transfer agent, SBFM and CGM would have been required, at their expense, to engage an independent monitor to oversee a competitive bidding process. On November 21, 2005, and within the specified timeframe, the Funds’ Board selected a new transfer agent for the Funds. No Citigroup affiliate submitted a proposal to serve as transfer agent. Under the order, SBFM also must comply with an amended version of a vendor policy that Citigroup instituted in August 2004.
Although there can be no assurance, SBFM does not believe that this matter will have a material adverse effect on the Affected Funds.
These Funds were not one of the Affected Funds and therefore did not implement the transfer agent arrangement described above and therefore have not received and will not receive any portion of the distributions.
On December 1, 2005, Citigroup completed the sale of substantially all of its global asset management business, including SBFM, to Legg Mason.
10. | Legal Matters |
Beginning in August 2005, five class action lawsuits alleging violations of federal securities laws and state law were filed against CGM and SBFM (collectively, the “Defendants”) based on the May 31, 2005 settlement order issued against the Defendants by the SEC described in Note 9. The complaints seek injunctive relief and compensatory and punitive damages, removal of SBFM as the investment manager for the Smith Barney family of funds, rescission of the Funds’ management and other contracts with SBFM, recovery of all fees paid to SBFM pursuant to such contracts, and an award of attorneys’ fees and litigation expenses.
On October 5, 2005, a motion to consolidate the five actions and any subsequently filed, related action was filed. That motion contemplates that a consolidated amended complaint alleging substantially similar causes of action will be filed in the future.
As of the date of this report, the Funds’ investment manager believes that 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 Funds’ investment manager and its affiliates to continue to render services to the Funds under their respective contracts.
* * *
Beginning in June 2004, class action lawsuits alleging violations of the federal securities laws were filed against CGM and a number of its then affiliates, including SBFM and SBAM, which were then investment adviser or manager to certain of the Funds (the “Managers”), substantially all of the mutual funds then managed by the Managers (the “Defendant Funds”), and Board Members of the Defendant Funds (collectively, the “Defendants”). The complaints alleged, among other things, that CGM created various
Salomon Funds Trust 2006 Semi-Annual Report 63
Notes to Financial Statements (unaudited) (continued)
undisclosed incentives for its brokers to sell Smith Barney and Salomon Brothers funds. In addition, according to the complaints, the Managers caused the Defendant Funds to pay excessive brokerage commissions to CGM for steering clients towards proprietary funds. The complaints also alleged that the defendants breached their fiduciary duty to the Defendant 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 Defendant Funds failed to adequately disclose certain of the allegedly wrongful conduct. The complaints sought injunctive relief and compensatory and punitive damages, rescission of the Defendant Funds’ contracts with the Managers, recovery of all fees paid to the Managers 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. On May 27, 2005, all of the Defendants filed motions to dismiss the Complaint. On July 26, 2006, the court issued a decision and order (1) finding that plaintiffs lacked standing to sue on behalf of the shareholders of the Funds in which none of the plaintiffs had invested (including National Tax Free Bond Fund, California Tax Free Bond Fund, New York Tax Free Bond Fund and Mid Cap Fund) and dismissing those Funds from the case (although stating that they could be brought back into the case if standing as to them could be established), and (2) other than one stayed claim, dismissing all of the causes of action against the remaining Defendants, with prejudice, except for the cause of action under Section 36(b) of the Investment Company Act, which the court granted plaintiffs leave to repeal as a derivative claim.
11. | Other Matters |
On September 16, 2005, the staff of the SEC informed SBFM and SBAM that the staff is considering recommending that the SEC institute administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the Investment Company Act (and related Rule 19a-1). The notification is a result of an industry wide inspection by the SEC and is based upon alleged deficiencies in disclosures regarding dividends and distributions paid to shareholders of certain funds. Section 19(a) and related Rule 19a-1 of the Investment Company Act generally require funds that are making dividend and distribution payments to provide shareholders with a written statement disclosing the source of the dividends and distributions, and, in particular, the portion of the payments made from each of net investment income, undistributed net profits and/or paid-in capital. In connection with the contemplated proceedings, the staff may seek a cease and desist order and/or monetary damages from SBFM or SBAM.
Although there can be no assurance, SBAM believes that this matter is not likely to have a material adverse effect on the Funds.
12. | Subsequent Events |
The Funds’ Board has approved the appointment of Legg Mason Partners Fund Advisor, LLC (“LMPFA”) as investment manager effective August 1, 2006. The Funds’ Board has also approved the appointment of Western Asset Management Company (“Western
64 Salomon Funds Trust 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
Asset”) as the subadviser for the National Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund effective August 1, 2006. Additional, the Board has approved the appointment of CAM North America, LLC (“CAM N.A.”) as the subadviser for the Mid Cap Fund effective August 1, 2006. The portfolio managers who are responsible for the day-to-day management of each Fund remain the same immediately prior to and immediately after the date of these changes. LMPFA, CAM N.A. and Western Asset are wholly-owned subsidiaries of Legg Mason.
LMPFA will provide administrative and certain oversight services to each Fund. LMPFA will delegate to the subadvisers the day-to-day portfolio management of each Fund, except, in the case of the Mid Cap Fund, for the management of cash and short-term investments. Each Fund’s investment management fee will remain unchanged. For its services, LMPFA will pay the relevant subadviser 70% of the net management fee that it receives from the relevant Fund.
The Funds’ Board has also approved several reorganizations pursuant to which the National Tax Free Bond Fund’s, California Tax Free Bond Fund’s, New York Tax Free Bond Fund’s and Mid Cap Fund’s (collectively known as “the Acquired Fund”) assets would be acquired, and their liabilities assumed by the Legg Mason Partners Managed Municipals Fund, Inc., the Legg Mason Partners California Municipals Fund, Inc., the Legg Mason Partners New York Municipals Fund and the Salomon Brothers Capital Fund, Inc., respectively (“the Acquiring Funds”), in exchange for shares of the relevant Acquiring Funds. The Acquired Fund would then be liquidated, and shares of the relevant Acquiring Funds would be distributed to shareholders of the relevant Acquired Fund.
Under the reorganizations, shareholders of the Acquired Fund would receive shares of their Acquiring Funds with the same aggregate net asset value as their shares of the relevant Acquired Fund. It is anticipated that as a result of the reorganizations, shareholders of the Acquired Fund would recognize no gain or less for Federal income tax purposes. The reorganizations are relevant subject to the satisfaction of certain conditions, including approval by shareholders of the Acquired Fund.
The Funds’ Board has also approved certain share class modifications which, among other things, will standardize share class features for all funds in the fund complex. The features standardized include such things as sales load, distribution charges and other costs. These modifications are expected to be implemented during the fourth quarter of 2006.
The Funds’ Board has also approved a number of other initiatives designed to streamline and restructure the fund complex, and has authorized seeking shareholder approval for those initiatives where shareholder approval is required. As a result, each Fund’s shareholders will be asked to elect a new Board, approve matters that will result in the Funds being grouped for organizational and governance purposes with other funds in the fund complex, and domicile the Funds as Maryland business trusts, with all funds operating under uniform charter documents. Each Fund’s shareholders also will be asked to approve investment matters, including standardized fundamental investment policies.
Proxy materials describing these matters are expected to be sent to shareholders later in 2006. If shareholder approval is obtained, these matters generally are expected to be implemented during the first quarter of 2007.
Salomon Funds Trust 2006 Semi-Annual Report 65
Notes to Financial Statements (unaudited) (continued)
13. Recent Accounting Pronouncement
During June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation 48 (“FIN 48” or the “Interpretation”), Accounting for Uncertainty in Income Taxes—an interpretation of FASB statement 109. FIN 48 supplements FASB Statement 109 by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. FIN 48 prescribes a comprehensive model for how a fund should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the fund has taken or expects to take on a tax return. FIN 48 requires that the tax effects of a position be recognized only if it is “more likely than not” to be sustained based solely on its technical merits. Management must be able to conclude that the tax law, regulations, case law, and other objective information regarding the technical merits sufficiently support the position’s sustainability with a likelihood of more than 50 percent. FIN 48 is effective for fiscal periods beginning after December 15, 2006, which for each Fund will be January 1, 2007. At adoption, the financial statements must be adjusted to reflect only those tax positions that are more likely than not to be sustained as of the adoption date. Management of the Funds is currently evaluating the impact that FIN 48 will have on the financial statements.
66 Salomon Funds Trust 2006 Semi-Annual Report
Board Approval of Management and Subadvisory Agreements (unaudited)
Salomon Brothers National Tax Free Bond Fund
At a meeting held in person on June 19, 2006, the Fund’s Board, including a majority of the Board Members who are not “interested persons” of the Fund or Legg Mason Partners Fund Advisor, LLC (the “Manager”) or any sub-investment adviser or proposed sub-investment adviser as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”), approved a new management agreement (the “New Management Agreement”) between the Fund and the Manager. The Fund’s Board, including a majority of the Independent Board Members, also approved one or more new subadvisory agreements between the Manager and Western Asset Management Company (the “Subadviser”) (the “New Subadvisory Agreement”). The New Management Agreement and the New Subadvisory Agreement replaced the Fund’s prior management agreement with Salomon Brothers Asset Management Inc and were entered into in connection with an internal reorganization of the Manager’s and the prior manager’s parent organization, Legg Mason. In approving the New Management Agreement and New Subadvisory Agreement, the Board, including the Independent Board Members, considered the factors discussed below, among other things.
The Board noted that the Manager will provide administrative and certain oversight services to the Fund, and that the Manager will delegate to the Subadviser the day-to-day portfolio management of the Fund. The Board Members reviewed the qualifications, backgrounds and responsibilities of the senior personnel that will provide oversight and general management services and the portfolio management team that would be primarily responsible for the day-to-day management of the Fund. The Board Members noted that the portfolio management team was expected to be the same as then managing the Fund.
The Board Members received and considered information regarding the nature, extent and quality of services expected to be provided to the Fund by the Manager under the New Management Agreement and by the Subadviser under the New Subadvisory Agreement. The Board Members’ evaluation of the services expected to be provided by the Manager and the Subadviser took into account the Board Members’ knowledge and familiarity gained as Fund Board Members, including as to the scope and quality of Legg Mason’s investment management and other capabilities and the quality of its administrative and other services. The Board Members considered, among other things, information and assurances provided by Legg Mason as to the operations, facilities and organization of the Manager and the Subadviser and the qualifications, backgrounds and responsibilities of their senior personnel. The Board Members further considered the financial resources available to the Manager, the Subadviser and Legg Mason. The Board Members concluded that, overall, the nature, extent and quality of services expected to be provided under the New Management Agreement and the New Subadvisory Agreement were acceptable.
The Board Members also received and considered performance information for the Fund as well as comparative information with respect to a peer group of funds (the
Salomon Funds Trust 67
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
“Performance Universe”) selected by Lipper, Inc. (“Lipper”), an independent provider of investment company data. The Board Members were provided with a description of the methodology Lipper used to determine the similarity of the Fund to the funds included in the Performance Universe. The Board Members noted that they had received and discussed with management, at periodic intervals, information comparing the Fund’s performance against, among other things, its benchmark. The Board Members reviewed and considered the management fee that would be payable by the Fund to the Manager in light of the nature, extent and quality of the management services expected to be provided by the Manager, including the fee waiver and/or expense reimbursement arrangements currently in place. Additionally, the Board Members received and considered information comparing the Fund’s management fee and overall expenses with those of comparable funds in both the relevant expense group and a broader group of funds, each selected and provided by Lipper. The Board Members also reviewed and considered the subadvisory fee that would be payable by the Manager to the Subadviser in light of the nature, extent and quality of the management services expected to be provided by the Subadviser. The Board Members noted that the Manager, and not the Fund, will pay the subadvisory fee to the Subadviser. The Board Members determined that the Fund’s management fee and the Fund’s subadvisory fee were reasonable in light of the nature, extent and quality of the services expected to be provided to the Fund under the New Management Agreement and the New Subadvisory Agreement.
The Board Members received and considered a pro-forma profitability analysis of Legg Mason and its affiliates in providing services to the Fund, including information with respect to the allocation methodologies used in preparing the profitability data. The Board Members recognized that Legg Mason may realize economies of scale based on its internal reorganization and synergies of operations. The Board Members noted that it was not possible to predict with a high degree of confidence how Legg Mason’s and its affiliates’ profitability would be affected by its internal reorganization and by other factors including potential economies of scale, but that based on their review of the pro forma profitability analysis, their most recent prior review of the profitability of the predecessor manager and its affiliates from their relationship with the Fund and other factors considered, they determined that the management fee was reasonable. The Board Members noted that they expect to receive and evaluate profitability information on an annual basis.
In their deliberations, the Board Members also considered the information that had been received, the factors that had been identified and the conclusions that had been reached by the Board in connection with the Board’s most recent approval of the Fund’s prior management agreement, in addition to information provided in connection with the Board’s evaluation of the terms and conditions of the New Management Agreement and the New Subadvisory Agreement.
The Board Members considered Legg Mason’s advice and the advice of its counsel that the New Management Agreement and the New Subadvisory Agreement were being
68 Salomon Funds Trust
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
entered into in connection with an internal reorganization within Legg Mason that did not involve an actual change of control or management. The Board Members further noted that the terms and conditions of the New Management Agreement are substantially identical to those of the Fund’s previous management agreement except for the identity of the Manager, and that the initial term of the New Management Agreement (after which it will continue in effect only if such continuance is specifically approved at least annually by the Board, including a majority of the Independent Board Members) was the same as that under the prior management agreement.
In light of all of the foregoing, the Board, including the Independent Board Members, approved the New Management Agreement and the New Subadvisory Agreement. No single factor reviewed by the Board Members was identified as the principal factor in determining whether to approve the New Management Agreement and the New Subadvisory Agreement. The Independent Board Members were advised by separate independent legal counsel throughout the process. The Independent Board Members also discussed the proposed approval of the New Management Agreement and the New Subadvisory Agreement in private sessions with their independent legal counsel at which no representatives of the Manager or Subadviser were present.
Salomon Brothers California Tax Free Bond Fund
At a meeting held in person on June 19, 2006, the Fund’s Board, including a majority of the Board Members who are not “interested persons” of the Fund or Legg Mason Partners Fund Advisor, LLC (the “Manager”) or any sub-investment adviser or proposed sub-investment adviser as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”), approved a new management agreement (the “New Management Agreement”) between the Fund and the Manager. The Fund’s Board, including a majority of the Independent Board Members, also approved one or more new subadvisory agreements between the Manager and Western Asset Management Company (the “Subadviser”) (the “New Subadvisory Agreement”). The New Management Agreement and the New Subadvisory Agreement replaced the Fund’s prior management agreement with Salomon Brothers Asset Management Inc and were entered into in connection with an internal reorganization of the Manager’s and the prior manager’s parent organization, Legg Mason. In approving the New Management Agreement and New Subadvisory Agreement, the Board, including the Independent Board Members, considered the factors discussed below, among other things.
The Board noted that the Manager will provide administrative and certain oversight services to the Fund, and that the Manager will delegate to the Subadviser the day-to-day portfolio management of the Fund. The Board Members reviewed the qualifications, backgrounds and responsibilities of the senior personnel that will provide oversight and general management services and the portfolio management team that would be primarily responsible for the day-to-day management of the Fund. The Board Members noted that the portfolio management team was expected to be the same as then managing the Fund.
Salomon Funds Trust 69
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
The Board Members received and considered information regarding the nature, extent and quality of services expected to be provided to the Fund by the Manager under the New Management Agreement and by the Subadviser under the New Subadvisory Agreement. The Board Members’ evaluation of the services expected to be provided by the Manager and the Subadviser took into account the Board Members’ knowledge and familiarity gained as Fund Board Members, including as to the scope and quality of Legg Mason’s investment management and other capabilities and the quality of its administrative and other services. The Board Members considered, among other things, information and assurances provided by Legg Mason as to the operations, facilities and organization of the Manager and the Subadviser and the qualifications, backgrounds and responsibilities of their senior personnel. The Board Members further considered the financial resources available to the Manager, the Subadviser and Legg Mason. The Board Members concluded that, overall, the nature, extent and quality of services expected to be provided under the New Management Agreement and the New Subadvisory Agreement were acceptable.
The Board Members also received and considered performance information for the Fund as well as comparative information with respect to a peer group of funds (the “Performance Universe”) selected by Lipper, Inc. (“Lipper”), an independent provider of investment company data. The Board Members were provided with a description of the methodology Lipper used to determine the similarity of the Fund to the funds included in the Performance Universe. The Board Members noted that they had received and discussed with management, at periodic intervals, information comparing the Fund’s performance against, among other things, its benchmark. The Board Members reviewed and considered the management fee that would be payable by the Fund to the Manager in light of the nature, extent and quality of the management services expected to be provided by the Manager, including the fee waiver and/or expense reimbursement arrangements currently in place. Additionally, the Board Members received and considered information comparing the Fund’s management fee and overall expenses with those of comparable funds in both the relevant expense group and a broader group of funds, each selected and provided by Lipper. The Board Members also reviewed and considered the subadvisory fee that would be payable by the Manager to the Subadviser in light of the nature, extent and quality of the management services expected to be provided by the Subadviser. The Board Members noted that the Manager, and not the Fund, will pay the subadvisory fee to the Subadviser. The Board Members determined that the Fund’s management fee and the Fund’s subadvisory fee were reasonable in light of the nature, extent and quality of the services expected to be provided to the Fund under the New Management Agreement and the New Subadvisory Agreement.
The Board Members received and considered a pro-forma profitability analysis of Legg Mason and its affiliates in providing services to the Fund, including information with respect to the allocation methodologies used in preparing the profitability data. The Board
70 Salomon Funds Trust
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
Members recognized that Legg Mason may realize economies of scale based on its internal reorganization and synergies of operations. The Board Members noted that it was not possible to predict with a high degree of confidence how Legg Mason’s and its affiliates’ profitability would be affected by its internal reorganization and by other factors including potential economies of scale, but that based on their review of the pro forma profitability analysis, their most recent prior review of the profitability of the predecessor manager and its affiliates from their relationship with the Fund and other factors considered, they determined that the management fee was reasonable. The Board Members noted that they expect to receive and evaluate profitability information on an annual basis.
In their deliberations, the Board Members also considered the information that had been received, the factors that had been identified and the conclusions that had been reached by the Board in connection with the Board’s most recent approval of the Fund’s prior management agreement, in addition to information provided in connection with the Board’s evaluation of the terms and conditions of the New Management Agreement and the New Subadvisory Agreement.
The Board Members considered Legg Mason’s advice and the advice of its counsel that the New Management Agreement and the New Subadvisory Agreement were being entered into in connection with an internal reorganization within Legg Mason that did not involve an actual change of control or management. The Board Members further noted that the terms and conditions of the New Management Agreement are substantially identical to those of the Fund’s previous management agreement except for the identity of the Manager, and that the initial term of the New Management Agreement (after which it will continue in effect only if such continuance is specifically approved at least annually by the Board, including a majority of the Independent Board Members) was the same as that under the prior management agreement.
In light of all of the foregoing, the Board, including the Independent Board Members, approved the New Management Agreement and the New Subadvisory Agreement. No single factor reviewed by the Board Members was identified as the principal factor in determining whether to approve the New Management Agreement and the New Subadvisory Agreement. The Independent Board Members were advised by separate independent legal counsel throughout the process. The Independent Board Members also discussed the proposed approval of the New Management Agreement and the New Subadvisory Agreement in private sessions with their independent legal counsel at which no representatives of the Manager or Subadviser were present.
Salomon Brothers New York Tax Free Bond Fund
At a meeting held in person on June 19, 2006, the Fund’s Board, including a majority of the Board Members who are not “interested persons” of the Fund or Legg Mason Partners Fund Advisor, LLC (the “Manager”) or any sub-investment adviser or proposed sub-investment adviser as defined in the Investment Company Act of 1940, as amended (the
Salomon Funds Trust 71
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
“1940 Act”) (the “Independent Board Members”), approved a new management agreement (the “New Management Agreement”) between the Fund and the Manager. The Fund’s Board, including a majority of the Independent Board Members, also approved one or more new subadvisory agreements between the Manager and Western Asset Management Company (the “Subadviser”) (the “New Subadvisory Agreement”). The New Management Agreement and the New Subadvisory Agreement replaced the Fund’s prior management agreement with Salomon Brothers Asset Management Inc and were entered into in connection with an internal reorganization of the Manager’s and the prior manager’s parent organization, Legg Mason. In approving the New Management Agreement and New Subadvisory Agreement, the Board, including the Independent Board Members, considered the factors discussed below, among other things.
The Board noted that the Manager will provide administrative and certain oversight services to the Fund, and that the Manager will delegate to the Subadviser the day-to-day portfolio management of the Fund. The Board Members reviewed the qualifications, backgrounds and responsibilities of the senior personnel that will provide oversight and general management services and the portfolio management team that would be primarily responsible for the day-to-day management of the Fund. The Board Members noted that the portfolio management team was expected to be the same as then managing the Fund.
The Board Members received and considered information regarding the nature, extent and quality of services expected to be provided to the Fund by the Manager under the New Management Agreement and by the Subadviser under the New Subadvisory Agreement. The Board Members’ evaluation of the services expected to be provided by the Manager and the Subadviser took into account the Board Members’ knowledge and familiarity gained as Fund Board Members, including as to the scope and quality of Legg Mason’s investment management and other capabilities and the quality of its administrative and other services. The Board Members considered, among other things, information and assurances provided by Legg Mason as to the operations, facilities and organization of the Manager and the Subadviser and the qualifications, backgrounds and responsibilities of their senior personnel. The Board Members further considered the financial resources available to the Manager, the Subadviser and Legg Mason. The Board Members concluded that, overall, the nature, extent and quality of services expected to be provided under the New Management Agreement and the New Subadvisory Agreement were acceptable.
The Board Members also received and considered performance information for the Fund as well as comparative information with respect to a peer group of funds (the “Performance Universe”) selected by Lipper, Inc. (“Lipper”), an independent provider of investment company data. The Board Members were provided with a description of the methodology Lipper used to determine the similarity of the Fund to the funds included in the Performance Universe. The Board Members noted that they had received and discussed with management, at periodic intervals, information comparing the Fund’s
72 Salomon Funds Trust
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
performance against, among other things, its benchmark. The Board Members reviewed and considered the management fee that would be payable by the Fund to the Manager in light of the nature, extent and quality of the management services expected to be provided by the Manager, including the fee waiver and/or expense reimbursement arrangements currently in place. Additionally, the Board Members received and considered information comparing the Fund’s management fee and overall expenses with those of comparable funds in both the relevant expense group and a broader group of funds, each selected and provided by Lipper. The Board Members also reviewed and considered the subadvisory fee that would be payable by the Manager to the Subadviser in light of the nature, extent and quality of the management services expected to be provided by the Subadviser. The Board Members noted that the Manager, and not the Fund, will pay the subadvisory fee to the Subadviser. The Board Members determined that the Fund’s management fee and the Fund’s subadvisory fee were reasonable in light of the nature, extent and quality of the services expected to be provided to the Fund under the New Management Agreement and the New Subadvisory Agreement.
The Board Members received and considered a pro-forma profitability analysis of Legg Mason and its affiliates in providing services to the Fund, including information with respect to the allocation methodologies used in preparing the profitability data. The Board Members recognized that Legg Mason may realize economies of scale based on its internal reorganization and synergies of operations. The Board Members noted that it was not possible to predict with a high degree of confidence how Legg Mason’s and its affiliates’ profitability would be affected by its internal reorganization and by other factors including potential economies of scale, but that based on their review of the pro forma profitability analysis, their most recent prior review of the profitability of the predecessor manager and its affiliates from their relationship with the Fund and other factors considered, they determined that the management fee was reasonable. The Board Members noted that they expect to receive and evaluate profitability information on an annual basis.
In their deliberations, the Board Members also considered the information that had been received, the factors that had been identified and the conclusions that had been reached by the Board in connection with the Board’s most recent approval of the Fund’s prior management agreement, in addition to information provided in connection with the Board’s evaluation of the terms and conditions of the New Management Agreement and the New Subadvisory Agreement.
The Board Members considered Legg Mason’s advice and the advice of its counsel that the New Management Agreement and the New Subadvisory Agreement were being entered into in connection with an internal reorganization within Legg Mason that did not involve an actual change of control or management. The Board Members further noted that the terms and conditions of the New Management Agreement are substantially identical to those of the Fund’s previous management agreement except for the identity of the Manager, and that the initial term of the New Management Agreement (after which it
Salomon Funds Trust 73
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
will continue in effect only if such continuance is specifically approved at least annually by the Board, including a majority of the Independent Board Members) was the same as that under the prior management agreement.
In light of all of the foregoing, the Board, including the Independent Board Members, approved the New Management Agreement and the New Subadvisory Agreement. No single factor reviewed by the Board Members was identified as the principal factor in determining whether to approve the New Management Agreement and the New Subadvisory Agreement. The Independent Board Members were advised by separate independent legal counsel throughout the process. The Independent Board Members also discussed the proposed approval of the New Management Agreement and the New Subadvisory Agreement in private sessions with their independent legal counsel at which no representatives of the Manager or Subadviser were present.
Salomon Brothers Mid Cap Fund
At a meeting held in person on June 19, 2006, the Fund’s Board, including a majority of the Board Members who are not “interested persons” of the Fund or Legg Mason Partners Fund Advisor, LLC (the “Manager”) or any sub-investment adviser or proposed sub-investment adviser as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”), approved a new management agreement (the “New Management Agreement”) between the Fund and the Manager. The Fund’s Board, including a majority of the Independent Board Members, also approved one or more new subadvisory agreements between the Manager and CAM North America, LLC (the “Subadviser”) (the “New Subadvisory Agreement”). The New Management Agreement and the New Subadvisory Agreement replaced the Fund’s prior management agreement with Salomon Brothers Asset Management Inc and were entered into in connection with an internal reorganization of the Manager’s and the prior manager’s parent organization, Legg Mason. In approving the New Management Agreement and New Subadvisory Agreement, the Board, including the Independent Board Members, considered the factors discussed below, among other things.
The Board noted that the Manager will provide administrative and certain oversight services to the Fund, and that the Manager will delegate to the Subadviser the day-to-day portfolio management of the Fund. The Board Members reviewed the qualifications, backgrounds and responsibilities of the senior personnel that will provide oversight and general management services and the portfolio management team that would be primarily responsible for the day-to-day management of the Fund. The Board Members noted that the portfolio management team was expected to be the same as then managing the Fund.
The Board Members received and considered information regarding the nature, extent and quality of services expected to be provided to the Fund by the Manager under the New Management Agreement and by the Subadviser under the New Subadvisory Agreement. The Board Members’ evaluation of the services expected to be provided by the
74 Salomon Funds Trust
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
Manager and the Subadviser took into account the Board Members’ knowledge and familiarity gained as Fund Board Members, including as to the scope and quality of Legg Mason’s investment management and other capabilities and the quality of its administrative and other services. The Board Members considered, among other things, information and assurances provided by Legg Mason as to the operations, facilities and organization of the Manager and the Subadviser and the qualifications, backgrounds and responsibilities of their senior personnel. The Board Members further considered the financial resources available to the Manager, the Subadviser and Legg Mason. The Board Members concluded that, overall, the nature, extent and quality of services expected to be provided under the New Management Agreement and the New Subadvisory Agreement were acceptable.
The Board Members also received and considered performance information for the Fund as well as comparative information with respect to a peer group of funds (the “Performance Universe”) selected by Lipper, Inc. (“Lipper”), an independent provider of investment company data. The Board Members were provided with a description of the methodology Lipper used to determine the similarity of the Fund to the funds included in the Performance Universe. The Board Members noted that they had received and discussed with management, at periodic intervals, information comparing the Fund’s performance against, among other things, its benchmark. The Board Members reviewed and considered the management fee that would be payable by the Fund to the Manager in light of the nature, extent and quality of the management services expected to be provided by the Manager, including the fee waiver and/or expense reimbursement arrangements currently in place. Additionally, the Board Members received and considered information comparing the Fund’s management fee and overall expenses with those of comparable funds in both the relevant expense group and a broader group of funds, each selected and provided by Lipper. The Board Members also reviewed and considered the subadvisory fee that would be payable by the Manager to the Subadviser in light of the nature, extent and quality of the management services expected to be provided by the Subadviser. The Board Members noted that the Manager, and not the Fund, will pay the subadvisory fee to the Subadviser. The Board Members determined that the Fund’s management fee and the Fund’s subadvisory fee were reasonable in light of the nature, extent and quality of the services expected to be provided to the Fund under the New Management Agreement and the New Subadvisory Agreement.
The Board Members received and considered a pro-forma profitability analysis of Legg Mason and its affiliates in providing services to the Fund, including information with respect to the allocation methodologies used in preparing the profitability data. The Board Members recognized that Legg Mason may realize economies of scale based on its internal reorganization and synergies of operations. The Board Members noted that it was not possible to predict with a high degree of confidence how Legg Mason’s and its affiliates’ profitability would be affected by its internal reorganization and by other factors including
Salomon Funds Trust 75
Board Approval of Management and Subadvisory Agreements (unaudited) (continued)
potential economies of scale, but that based on their review of the pro forma profitability analysis, their most recent prior review of the profitability of the predecessor manager and its affiliates from their relationship with the Fund and other factors considered, they determined that the management fee was reasonable. The Board Members noted that they expect to receive and evaluate profitability information on an annual basis.
In their deliberations, the Board Members also considered the information that had been received, the factors that had been identified and the conclusions that had been reached by the Board in connection with the Board’s most recent approval of the Fund’s prior management agreement, in addition to information provided in connection with the Board’s evaluation of the terms and conditions of the New Management Agreement and the New Subadvisory Agreement.
The Board Members considered Legg Mason’s advice and the advice of its counsel that the New Management Agreement and the New Subadvisory Agreement were being entered into in connection with an internal reorganization within Legg Mason that did not involve an actual change of control or management. The Board Members further noted that the terms and conditions of the New Management Agreement are substantially identical to those of the Fund’s previous management agreement except for the identity of the Manager, and that the initial term of the New Management Agreement (after which it will continue in effect only if such continuance is specifically approved at least annually by the Board, including a majority of the Independent Board Members) was the same as that under the prior management agreement.
In light of all of the foregoing, the Board, including the Independent Board Members, approved the New Management Agreement and the New Subadvisory Agreement. No single factor reviewed by the Board Members was identified as the principal factor in determining whether to approve the New Management Agreement and the New Subadvisory Agreement. The Independent Board Members were advised by separate independent legal counsel throughout the process. The Independent Board Members also discussed the proposed approval of the New Management Agreement and the New Subadvisory Agreement in private sessions with their independent legal counsel at which no representatives of the Manager or Subadviser were present.
76 Salomon Funds Trust
Salomon Funds Trust
TRUSTEES Elliott J. Berv Donald M. Carlton A. Benton Cocanougher Mark T. Finn R. Jay Gerken, CFA Chairman Stephen Randolph Gross Diana R. Harrington Susan B. Kerley Alan G. Merten R. Richardson Pettit
| INVESTMENT MANAGER Legg Mason Partners Fund Advisor, LLC
SUBADVISERS Western Asset Management Company CAM North American, LLC
DISTRIBUTORS Citigroup Global Markets Inc. Legg Mason Investor Services, LLC
CUSTODIAN State Street Bank and Trust Company
TRANSFER AGENT PFPC Inc. 4400 Computer Drive Westborough, Massachusetts 01581
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 345 Park Avenue New York, New York 10154 |
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.
www.leggmason.com/InvestorServices
©2006 Legg Mason Investor Services, LLC.
Member NASD, SIPC
SAM0900 8/06 | SR06-120 |
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.
SALOMON FUNDS TRUST
Legg Mason Partners Fund
125 Broad Street
10th Floor, MF-2
New York, New York 10004
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 prior 12-month period ended June 30th of each year 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.leggmason.com/InvestorServices and (3) on the SEC’s website at www.sec.gov.
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.
Included herein under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
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 8, 2006 |
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 8, 2006 |
By: | /s/ Frances M. Guggino | |
(Frances M. Guggino) | ||
Chief Financial Officer of | ||
Salomon Funds Trust | ||
Date: September 8, 2006 |