UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05034
Salomon Funds Trust
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Christina T. Sydor, Esq.
300 First Stamford Place
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, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The SEMI-ANNUAL Report to Stockholders is filed herewith.
June 30, 2003
SEMI-ANNUAL
REPORT
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Salomon Brothers Asset Management
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[] National Tax Free Bond Fund
[] California Tax Free Bond Fund
Salomon Brothers [] New York Tax Free Bond Fund
- -------------------------------------- [] Mid Cap Fund
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SALOMON
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BROTHERS
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ASSET MANAGEMENT NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
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Table of Contents
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Letter from the Chairman .................................................. 1
Schedules of Investments .................................................. 2
Statements of Assets and Liabilities ...................................... 15
Statements of Operations .................................................. 16
Statements of Changes in Net Assets ....................................... 17
Notes to Financial Statements ............................................. 19
Financial Highlights ...................................................... 25
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Letter from the Chairman
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DEAR SHAREHOLDER,
The philosopher Bertrand Russell famously remarked that,
"Change is one thing, progress is another." You will
notice in the following pages that we have begun to [Photo Omitted]
implement some changes to your shareholder report and we
will be reflecting other changes in future reports. Our
aim is to make meaningful improvements in reporting on the R. JAY GERKEN, CFA
management of your Fund and its performance, not just to -------------------
enact change for change's sake. Please bear with us during Chairman, President
this transition period. and Trustee
We know that you have questions about fund managers' decisions and plans, and we
want to be sure that you have easy access to the information you need. Keeping
investors informed is, and always will be, one of my top priorities as Chairman
of your Fund. To that end, we encourage you to go to our website: www.sbam.com
where you can find additional insight on your Fund.
I invite you to read this report in full. Please take the opportunity to talk to
your financial adviser about this report or any other questions or concerns you
have about your Fund and your financial future. As always, thank you for
entrusting your assets to us. We look forward to helping you continue to meet
your financial goals.
Sincerely,
/s/ R. Jay Gerken, CFA
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R. Jay Gerken, CFA
Chairman, President and Trustee
JULY 22, 2003
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Schedules of Investments
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June 30, 2003 (unaudited)
SALOMON BROTHERS NATIONAL TAX FREE BOND FUND
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FACE
AMOUNT RATING(A) SECURITY VALUE
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MUNICIPAL BONDS AND NOTES -- 91.2%
AVIATION -- 1.4%
Austin, TX Airport System Revenue, Series A, MBIA-Insured:
$ 60,000 Aaa Pre-Refunded -- Escrowed to maturity with state and local government
securities, 6.500% due 11/15/05 ........................................... $ 67,038
440,000 Aaa Unrefunded, 6.500% due 11/15/05 ........................................... 486,288
250,000 Aaa Miami, Dade County, FL Aviation Revenue, Miami International Airport,
Series A, FGIC-Insured, 5.550% due 10/1/13 ................................ 278,695
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832,021
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EDUCATION -- 9.0%
300,000 Aaa Indiana Secondary Market for Education Loans Inc. Revenue, Series C,
AMBAC-Insured, 5.550% due 12/1/05 ......................................... 325,236
400,000 A2 Massachusetts State Health & Educational Facilities Authority Revenue,
(Dana Farber Cancer Project), Series G-1, 6.500% due 12/1/05 .............. 447,688
145,000 A++ Mississippi Higher Education Student Loan, Subseries C, 6.050% due 9/1/07 ... 146,989
250,000 A1 New York State Dormitory Authority Lease Revenue, State University Dorm
Facilities, Series A, 6.000% due 7/1/14 ................................... 297,465
1,150,000 Aaa Northside, TX Independent School District, Refunding, PSFG, 6.000% due
8/15/16 ................................................................... 1,360,669
1,300,000 Aaa Pennsylvania State Higher Education Assistance Agency, Capital Acquisition,
MBIA-Insured, 6.125% due 12/15/17 ......................................... 1,594,697
1,045,000 Aa1 University of Texas, University Revenue, Financing Systems, Series A,
(Pre-Refunded -- Escrowed with U.S. government securities to 8/19/09
Call @ 100), 5.750% due 8/15/15 (b) ....................................... 1,239,757
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5,412,501
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GENERAL OBLIGATION -- 29.0%
1,000,000 Aa1 Boulder, CO Open Space Acquisition, 5.500% due 8/15/17 ...................... 1,142,580
250,000 Aaa Cook County, IL Refunding, Series A, MBIA-Insured, 5.625% due 11/15/16 ...... 284,920
1,605,000 Aaa Georgia State, Series D, 5.800% due 11/1/16 ................................. 1,894,895
1,100,000 Aaa Hidalgo County, TX Certificates of Obligation, FGIC-Insured, 5.500% due
8/15/16 ................................................................... 1,264,846
1,000,000 Aaa Houston, TX Refunding, Public Improvement, FSA-Insured, 5.750% due 3/1/17 ... 1,162,690
Illinois State, First Series, FGIC-Insured:
1,000,000 Aaa 5.500% due 2/1/16 ......................................................... 1,134,930
1,500,000 Aaa 6.100% due 1/1/20 ......................................................... 1,740,870
Massachusetts State Construction Loan:
3,900,000 Aa2 Series A, 6.000% due 2/1/14 ............................................... 4,693,026
2,000,000 Aa2 Series B, 6.000% due 6/1/15 ............................................... 2,407,920
500,000 Aaa Snohomish County, WA School District No. 2, FSA-Insured, 5.500% due 12/1/16 571,035
1,000,000 Aaa Williamson County, TX Refunding, FSA-Insured, 5.500% due 2/15/16 ............ 1,142,830
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17,440,542
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HEALTHCARE -- 0.9%
500,000 BBB+* Indiana Health Facility Finance Authority, Hospital Revenue, Refunding,
Hancock Memorial Hospital Health Services, 5.800% due 8/15/06 ............. 545,080
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HOUSING -- 4.7%
1,365,000 Aaa Connecticut State Housing and Finance Authority, Subseries A-3, 5.950% due
5/15/17 ................................................................... 1,435,543
130,000 Aaa Florida Housing Finance Agency, SFM, Series A, FNMA/GNMA-Collateralized,
6.150% due 7/1/06 ......................................................... 136,582
220,000 Aaa Iowa Finance Authority Single Family Revenue, Mortgage Backed Securities
Program, Series A, FNMA/GNMA-Collateralized, 6.000% due 7/1/13 ............ 237,842
250,000 Aa1 Maine State Housing Authority Mortgage Purchase Revenue, Series A, 5.950%
due 11/15/11 .............................................................. 268,427
500,000 Aa1 New York State Mortgage Agency Revenue, Home Owner Mortgage, Series 46,
5.900% due 10/1/06 ........................................................ 527,420
225,000 Aa2 North Dakota State Housing Finance Agency Revenue, Refunding, Housing
Finance Program, Home Mortgage, Series A, 6.100% due 7/1/13 ............... 244,150
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2,849,964
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SEE NOTES TO FINANCIAL STATEMENTS.
2
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS NATIONAL TAX FREE BOND FUND
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FACE
AMOUNT RATING(A) SECURITY VALUE
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MISCELLANEOUS -- 3.9%
$ 500,000 Aaa Nassau County, NY Interim Finance Authority, Refunding, Sales Tax Secured,
Series B, MBIA-Insured, 5.000% due 11/15/09 ................................. $ 570,610
1,500,000 Aaa New Jersey Sports & Exposition Authority Contract, Series A, MBIA-Insured,
6.000% due 3/1/15 ........................................................... 1,770,795
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2,341,405
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POWER -- 5.0%
2,000,000 Aaa Sikeston, MO Electrical Revenue, Refunding, MBIA-Insured, 6.000% due 6/1/14 2,460,380
500,000 Aaa Tacoma, WA Electric System Revenue, Refunding, Series A, FSA-Insured, 5.750%
due 1/1/16 .................................................................. 570,705
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3,031,085
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SALES TAX -- 5.5%
1,300,000 Aaa Hamilton County, OH Sales Tax, Subseries B, AMBAC-Insured, 5.750% due 12/1/17 1,518,075
New York City, NY Transitional Finance Authority Revenue, Future Tax Secured:
1,235,000 Aa2 Series B, (Pre-Refunded -- Escrowed with U.S. government securities to
5/15/10 Call @ 101), 6.125% due 11/15/14 (b) ................................ 1,509,590
265,000 Aa2 Unrefunded, Series B, 6.125% due 11/15/14 ................................... 317,465
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3,345,130
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TRANSPORTATION -- 17.6%
Massachusetts Bay Transportation Authority, General Transportation System:
2,500,000 Aaa Series A, 5.500% due 3/1/15 ................................................. 2,943,725
1,000,000 Aaa Series C, 5.500% due 3/1/14 ................................................. 1,174,690
1,000,000 Aaa Metropolitan Transit Authority, New York Dedicated Tax Fund, Series A,
FGIC-Insured, 6.125% due 4/1/17 ........................................... 1,210,530
1,500,000 Aaa Miami, Dade County, FL Expressway Authority Toll System Revenue, FGIC-Insured,
6.000% due 7/1/13 ........................................................... 1,795,245
3,000,000 Aaa New Jersey Economic Development Authority Revenue, (Transportation Project),
Series A, FSA-Insured, 5.750% due 5/1/13 .................................... 3,465,720
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10,589,910
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WATER AND SEWER -- 14.2%
500,000 Aaa California State Department of Water & Residential Power Supply Revenue,
Series A, MBIA-Insured, 6.000% due 5/1/15 .................................. 587,045
1,000,000 Aaa Chicago, IL Wastewater Transmission Revenue, Second Lien, MBIA-Insured,
6.000% due 1/1/15 .......................................................... 1,201,120
2,280,000 Aaa Kansas State Development Finance Authority Revenue, Public Water Supply,
Revolving Loan-2, AMBAC-Insured, 5.750% due 4/1/14 ......................... 2,674,075
2,000,000 Aaa Lower Colorado River Authority, Texas Revenue, Refunding, Series B,
FSA-Insured, 6.000% due 5/15/13 ............................................ 2,362,140
280,000 Aaa Passaic Valley, NJ Sewer Commissioners, Series D, AMBAC-Insured,
(Pre-Refunded -- Escrowed to maturity with U.S. government securities),
5.750% due 12/1/07 ......................................................... 325,531
1,165,000 Aaa Pueblo, CO Board of Waterworks Revenue, Improvement, Series A, FSA-Insured,
6.000% due 11/1/15 .......................................................... 1,385,732
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8,535,643
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TOTAL MUNICIPAL BONDS AND NOTES
(Cost -- $48,672,219) ......................................................... 54,923,281
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SEE NOTES TO FINANCIAL STATEMENTS.
3
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS NATIONAL TAX FREE BOND FUND
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FACE
AMOUNT RATING(A) SECURITY VALUE
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VARIABLE RATE DEMAND NOTES (c) -- 8.8%
$ 900,000 AAA++ Lexington-Fayette Urban County Airport Corp., Kentucky Revenue, Refunding,
First Mortgage, Series C, MBIA-Insured, 1.050% due 7/1/13 ..................... $ 900,000
4,400,000 VMIG 1 Moffat County, CO Pollution Control Revenue, Adjusted, Refunding, (Pacific
Corp. Projects), AMBAC-Insured, 0.950% due 5/1/13 ............................. 4,400,000
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TOTAL VARIABLE RATE DEMAND NOTES
(Cost -- $5,300,000) ............................................................ 5,300,000
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TOTAL INVESTMENTS -- 100.0%
(Cost -- $53,972,219**) $60,223,281
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(a) All ratings are by Moody's Investors Service, except for those which are
identified by an asterisk (*) or a double dagger (++), which are rated by
Standard & Poor's Ratings Service and Fitch Ratings, respectively.
(b) Pre-Refunded bonds escrowed with U.S. government securities and bonds
escrowed to maturity with U.S. government securities are considered by the
manager to be triple-A rated even if the issuer has not applied for new
ratings.
(c) Variable rate demand notes have a demand feature under which the Fund could
tender them back to the issuer on no more than 7 days notice.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 13 and 14 for definitions of ratings and certain abbreviations.
SEE NOTES TO FINANCIAL STATEMENTS.
4
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS CALIFORNIA TAX FREE BOND FUND
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FACE
AMOUNT RATING(a) SECURITY VALUE
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MUNICIPAL BONDS AND NOTES -- 97.3%
GENERAL OBLIGATION -- 40.6%
$ 500,000 A2 California State, 5.250% due 10/1/14 ............................................ $ 545,840
1,000,000 Aaa Glendale, CA Unified School District, Series C, FSA-Insured, 5.750% due 9/1/13 .. 1,178,610
250,000 Aaa Lake Tahoe, CA Unified School District, Refunding, MBIA-Insured, 5.500% due
7/1/14 ........................................................................ 296,815
250,000 Aaa Los Angeles, CA Unified School District, Refunding, 5.750% due 7/1/13 ........... 299,898
250,000 Aaa Placer, CA Union High School District, Series A, FGIC-Insured, 6.000%
due 8/1/14 .................................................................... 296,623
575,000 Aaa Pomona, CA Unified School District, Refunding, Series A, MBIA-Insured, 6.500%
due 8/1/19 .................................................................... 709,861
1,150,000 Aaa Puerto Rico Commonwealth, MBIA-Insured, 6.250% due 7/1/12 ....................... 1,430,403
625,000 Aaa San Bernardino, CA City University School District, Series A, FGIC-Insured,
5.625% due 8/1/15 ............................................................. 727,931
550,000 Aa3 Santa Monica-Malibu, CA University School District, (Public School Facilities
Reconstruction Projects), 5.400% due 8/1/10 ................................... 562,931
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6,048,912
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HOUSING -- 9.7%
California Housing Finance Agency:
1,000,000 Aaa Revenue, MFH III, Series A, 5.850% due 8/1/17 ................................. 1,061,510
360,000 Aa3 SFM Purchase, Series A-2, Class III, 4.800% due 8/1/12 ........................ 378,824
-----------
1,440,334
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MISCELLANEOUS -- 2.0%
250,000 Aa3 Sacramento County, CA Sanitation District Finance Authority Revenue, Series A,
6.000% due 12/1/14 ............................................................ 296,735
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TRANSPORTATION -- 19.6%
500,000 Aaa Bay Area Government Association, California Bay Area Rapid Transit, Capital
Grant, Series A, AMBAC-Insured, 4.000% due 6/15/08 ............................ 504,340
2,000,000 Aaa Intermodal Container Transfer Facility, Joint Powers Authority Revenue,
Refunding, Series A, AMBAC-Insured, 5.750% due 11/1/14 ........................ 2,419,840
-----------
2,924,180
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WATER AND SEWER -- 25.4%
1,000,000 Aaa Fresno, CA Sewer Revenue, Series A-1, AMBAC-Insured, 6.250% due 9/1/14 .......... 1,253,280
1,500,000 Aaa Puerto Rico Commonwealth Aqueduct & Sewer Authority Revenue, Refunding,
MBIA-Insured, 6.250% due 7/1/13 ............................................... 1,879,935
560,000 Aa3 San Diego County, CA Water Authority Revenue, COP, Refunding, Series A,
5.750% due 5/1/12 ............................................................. 662,889
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3,796,104
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TOTAL MUNICIPAL BONDS AND NOTES
(Cost -- $12,860,191) ........................................................... 14,506,265
-----------
VARIABLE RATE DEMAND NOTES (b) -- 2.7%
WATER AND POWER -- 2.7%
410,000 VMIG 1 California State Department of Water Resources and Power Supply Revenue,
Series B-1, 1.000% due 5/1/22 (Cost -- $410,000) .............................. 410,000
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TOTAL INVESTMENTS -- 100.0%
(Cost -- $13,270,191*) ........................................................... $14,916,265
===========
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(a) All securities are rated by Moody's Investors Service.
(b) Variable rate demand notes have a demand feature under which the Fund could
tender them back to the issuer on no more than 7 days notice.
* Aggregate cost for Federal income tax purposes is substantially the same.
See pages 13 and 14 for definitions of ratings and certain abbreviations.
SEE NOTES TO FINANCIAL STATEMENTS.
5
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS NEW YORK TAX FREE BOND FUND
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FACE
AMOUNT RATING(a) SECURITY VALUE
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MUNICIPAL BONDS AND NOTES -- 94.8%
EDUCATION -- 23.7%
New York State Dormitory Authority Revenue:
$1,000,000 Aaa Columbia University, Series B, 5.375% due 7/1/15 ................................. $ 1,146,940
3,000,000 Aaa Consolidated Debt City, 2nd Generation, Series A, AMBAC-Insured, 5.750% due
7/1/18 ......................................................................... 3,652,440
1,610,000 A3 Mental Health Services, Series B, (Pre-Refunded --Escrowed to maturity with
U.S. government securities), 6.500% due 2/15/11 (b) ............................ 1,997,286
825,000 Aaa Municipal Health Facilities Program, Series 1, FSA-Insured, 5.500% due 1/15/14 ... 949,641
New York University, Series A, MBIA-Insured:
1,000,000 Aaa 5.750% due 7/1/15 .............................................................. 1,212,280
6,300,000 Aaa 5.750% due 7/1/27 .............................................................. 7,626,843
2,500,000 Aaa North Shore University Hospital, 5.500% due 11/1/14 .............................. 2,964,150
1,500,000 Aaa School District Financing Program, Series A, 5.750% due 10/1/17 .................. 1,764,510
State University:
1,070,000 Aaa Adult Facilities, Series C, 5.750% due 5/15/17 ................................. 1,301,002
Dorm Facilities:
1,000,000 Aaa FGIC-Insured, 5.500% due 7/1/18 .............................................. 1,130,230
1,160,000 A1 Series A, 6.000% due 7/1/15 .................................................. 1,380,238
1,515,000 Aaa Series C, MBIA-Insured, 5.750% due 7/1/13 .................................... 1,764,672
Education Facilities:
2,030,000 A3 Series B, 5.250% due 5/15/13 ................................................. 2,322,340
1,690,000 A3 Series C, 5.400% due 5/15/23 ................................................. 1,789,795
------------
31,002,367
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GENERAL OBLIGATION -- 7.1%
New York City, NY:
125,000 A2 Series A, (Pre-Refunded -- Escrowed with U.S. government securities to 8/1/06
Call @ 101.5), 6.250% due 8/1/12 (b) .......................................... 144,418
2,450,000 A2 Series B, 5.750% due 8/1/14 ..................................................... 2,743,314
Unrefunded:
3,075,000 A2 Series A, 6.250% due 8/1/12 ................................................... 3,552,671
1,185,000 A2 Series B, 6.375% due 8/15/11 .................................................. 1,298,831
1,250,000 Aaa Puerto Rico Commonwealth, Refunding, Public Improvement, Series A, MBIA-Insured,
5.500% due 7/1/16 ............................................................... 1,491,888
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9,231,122
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HIGHWAY/TOLLS -- 19.3%
New York State Thruway Authority:
5,275,000 Aa3 Refunded, Series E, 5.250% due 1/1/13 ........................................... 5,887,480
Service Contract Revenue, Local Highway & Bridge:
3,420,000 A3 Pre-Refunded -- Escrowed with U.S. government securities to 4/1/07 Call @ 102,
6.000% due 4/1/11 (b) ....................................................... 4,003,076
4,370,000 Aaa Series B, 5.375% due 4/1/13 ................................................... 4,944,393
2,995,000 A3 Unrefunded, 6.000% due 4/1/11 ................................................. 3,421,937
Puerto Rico Commonwealth Highway & Transportation Authority, Highway Revenue:
Refunded:
MBIA-Insured:
1,000,000 Aaa Series X, 5.500% due 7/1/15 ................................................. 1,195,620
2,000,000 Aaa Series Z, 6.250% due 7/1/14 ................................................. 2,517,140
1,250,000 Aaa Series W, FSA-Insured, 5.500% due 7/1/13 ...................................... 1,487,200
1,500,000 Aaa Series G, FGIC-Insured, 5.250% due 7/1/16 ....................................... 1,704,855
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25,161,701
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SEE NOTES TO FINANCIAL STATEMENTS.
6
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS NEW YORK TAX FREE BOND FUND
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FACE
AMOUNT RATING(a) SECURITY VALUE
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HOUSING -- 11.7%
New York City, NY Housing Development Corp., MFH Revenue:
$1,310,000 Aa2 Series A, 5.625% due 5/1/12 ........................................................ $ 1,335,191
1,645,000 Aa2 Series E, SONYMA-Insured, 6.100% due 11/1/19 ....................................... 1,783,805
New York State HFA:
Service Contract Obligation Revenue, Series C:
630,000 A3 Pre-Refunded -- Escrowed with U.S. government securities to 9/15/03 Call @ 102,
5.875% due 9/15/14 (b) ......................................................... 648,881
3,370,000 A3 Unrefunded, 5.875% due 9/15/14 ................................................... 3,466,618
4,255,000 Aaa State University Construction, Series A, Refunded, 7.900% due 11/1/06 .............. 4,756,877
3,200,000 Aa1 New York State Mortgage Agency Revenue, AMT, Home Owner Mortgage, Series 71, 5.350%
due 10/1/18 ........................................................................ 3,337,312
------------
15,328,684
------------
MISCELLANEOUS -- 1.0%
1,100,000 Aaa Puerto Rico Public Finance Corp., Commonwealth Appropriation, Series A, MBIA-Insured,
5.500% due 8/1/17 .................................................................. 1,254,440
------------
POWER -- 2.3%
1,500,000 Aaa Long Island Power Authority, NY Electric System Revenue, Series C, MBIA/IBC,
5.500% due 9/1/21 1,679,625
1,250,000 Aaa Puerto Rico Electric Power Authority, Power Revenue, Refunded, FSA-Insured, 5.500% due
7/1/14 .............................................................................. 1,365,623
------------
3,045,248
------------
RECREATIONAL -- 1.3%
1,500,000 Aaa New York City, NY Trust for Cultural Resources Revenue, American Museum of Natural
History, Series A, 5.600% due 4/1/18 ............................................... 1,673,115
------------
SALES TAX -- 10.9%
New York City, NY Transitional Finance Authority, Future Tax Secured:
Series A:
5,000,000 Aa2 5.750% due 2/15/16 ............................................................... 5,798,450
5,000,000 Aaa FGIC-Insured, 6.000% due 8/15/15 ................................................. 6,061,400
420,000 Aa2 Pre-Refunded -- Escrowed with U.S. government securities to 2/15/10,
Call @ 101, 5.750% due 2/15/14 (b) ............................................. 500,930
580,000 Aa2 Unrefunded, 5.750% due 2/15/14 ................................................... 676,396
1,000,000 Aa2 Series C, 5.875% due 11/1/14 ....................................................... 1,179,670
------------
14,216,846
------------
STATE AGENCIES -- 5.8%
New York State Local Assistance Corp., Refunded:
3,000,000 A1 Series C, 5.500% due 4/1/17 ........................................................ 3,506,760
2,255,000 A1 Series E, 6.000% due 4/1/14 ........................................................ 2,702,369
1,245,000 A3 New York State Urban Development Corp. Revenue, Youth Facilities, 5.875% due 4/1/09 .. 1,316,052
------------
7,525,181
------------
TRANSPORTATION -- 11.5%
Metropolitan Transportation Authority, NY:
2,300,000 Aaa Commuter Facilities Revenue, Series A, FSA-Insured, 5.125% due 7/1/17 .............. 2,662,825
2,000,000 Aaa Dedicated Tax Fund, Series A, FGIC-Insured, 6.125% due 4/1/17 ...................... 2,421,060
Service Contract, Series O:
1,000,000 A3 Commuter Facilities Revenue, 5.750% due 7/1/13 ................................... 1,184,230
Transportation Facilities Revenue:
3,000,000 A3 5.750% due 7/1/13 .............................................................. 3,552,690
1,000,000 Aaa 5.500% due 7/1/17 .............................................................. 1,196,420
SEE NOTES TO FINANCIAL STATEMENTS.
7
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS NEW YORK TAX FREE BOND FUND
- ------------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 11.5% (CONTINUED)
New York City Transportation Authority, Triboro Bridge Revenue, Series A,
AMBAC-Insured:
$2,500,000 Aaa 5.625% due 1/1/14 .......................................................... $ 2,852,775
1,000,000 Aaa 5.625% due 1/1/15 .......................................................... 1,148,690
------------
15,018,690
------------
WATER AND SEWER -- 0.2%
290,000 Aaa New York State Environmental Facilities Corp., Pollution Control
Revenue, State Water Revolving Fund, Series A, 7.500% due 6/15/12 .......... 290,798
------------
TOTAL MUNICIPAL BONDS AND NOTES
(Cost -- $111,102,798) ....................................................... 123,748,192
------------
VARIABLE RATE DEMAND NOTES (c) -- 5.2%
GENERAL OBLIGATION -- 1.9%
New York City, NY:
2,100,000 VMIG 1 Series B, Subseries B6, 0.950% due 8/15/05 ................................. 2,100,000
400,000 VMIG 1 Series B2, Subseries B5, 0.950% due 8/15/11 ................................ 400,000
------------
2,500,000
------------
INDUSTRIAL DEVELOPMENT -- 0.5%
600,000 A-1+* New York City Industrial Development Agency, Civic Facility Revenue,
0.980% due 12/1/14 ......................................................... 600,000
------------
SALES TAX -- 2.8%
New York City Transitional Financial Authority, NY:
1,600,000 VMIG 1 Series 3, Subseries 3E, 0.980% due 11/1/22 ................................. 1,600,000
600,000 VMIG 1 Subseries 2F, 0.980% due 11/1/22 ........................................... 2,100,000
------------
3,700,000
------------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost -- $6,800,000) ......................................................... 6,800,000
------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $117,902,798**) ..................................................... $130,548,192
============
- ----------
(a) All ratings are by Moody's Investors Service, except for those which are
identified by an asterisk (*), which are rated by Standard & Poor's Ratings
Service.
(b) Pre-Refunded bonds escrowed with U.S. government securities and bonds
escrowed to maturity with U.S. government securities are considered by the
manager to be triple-A rated even if the issuer has not applied for new
ratings.
(c) Variable rate demand notes have a demand feature under which the Fund could
tender them back to the issuer on no more than 7 days notice.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 13 and 14 for definitions of ratings and certain abbreviations.
SEE NOTES TO FINANCIAL STATEMENTS.
8
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS MID CAP FUND
- ---------------------------------------------------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------------------------------------------------
COMMON STOCK -- 99.0%
AEROSPACE & DEFENSE -- 1.1%
3,708 Alliant Techsystems Inc.* .......................................... $ 192,482
------------
AIR FREIGHT & COURIERS -- 1.2%
6,520 Expeditors International of Washington, Inc. ....................... 225,853
------------
AIRLINES -- 1.0%
4,350 JetBlue Airways Corp.* ............................................. 183,962
------------
AUTO COMPONENTS -- 0.7%
1,740 Gentex Corp.* ...................................................... 53,261
1,700 Lear Corp.* ........................................................ 78,234
------------
131,495
------------
BANKS -- 8.3%
8,800 Banknorth Group, Inc. .............................................. 224,576
6,800 Commerce Bancshares, Inc. .......................................... 264,860
10,485 Compass Bancshares, Inc. ........................................... 366,241
4,565 M&T Bank Corp. ..................................................... 384,464
8,160 National Commerce Financial Corp. .................................. 181,070
2,000 UnionBanCal Corp. .................................................. 82,740
------------
1,503,951
------------
BEVERAGES -- 0.7%
7,000 Coca-Cola Enterprises Inc. ......................................... 127,050
------------
BIOTECHNOLOGY -- 3.4%
7,000 Abgenix, Inc.* ..................................................... 73,430
3,500 CV Therapeutics, Inc.* ............................................. 103,810
5,700 Gilead Sciences, Inc.* ............................................. 316,806
2,450 Neurocrine Biosciences, Inc.* ...................................... 122,353
------------
616,399
------------
CHEMICALS -- 1.1%
3,400 Praxair, Inc. ...................................................... 204,340
------------
COMMERCIAL SERVICES & SUPPLIES -- 4.1%
9,400 ARAMARK Corp., Class B Shares* ..................................... 210,748
2,000 Career Education Corp.* ............................................ 136,840
2,200 CheckFree Corp.* ................................................... 61,248
5,500 DST Systems, Inc.* ................................................. 209,000
3,500 Manpower Inc. ...................................................... 129,815
------------
747,651
------------
COMMUNICATIONS EQUIPMENT -- 1.1%
4,700 Netscreen Technologies, Inc.* ...................................... 105,985
4,300 Plantronics, Inc.* ................................................. 93,181
------------
199,166
------------
CONSTRUCTION & ENGINEERING -- 0.7%
2,800 Jacobs Engineering Group Inc. ...................................... 118,020
------------
CONSTRUCTION MATERIALS -- 0.6%
2,700 Vulcan Materials Co. ............................................... 100,089
------------
CONTAINERS & PACKAGING -- 0.9%
4,700 AptarGroup, Inc. ................................................... 169,200
------------
SEE NOTES TO FINANCIAL STATEMENTS.
9
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS MID CAP FUND
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS -- 2.9%
4,100 Legg Mason, Inc. .............................. $ 266,295
10,000 Waddell & Reed Financial, Inc. ................ 256,700
-----------
522,995
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.4%
2,000 CenturyTel, Inc. .............................. 69,700
-----------
ELECTRIC UTILITIES -- 2.8%
2,400 Pinnacle West Capital Corp. ................... 89,880
9,100 Puget Energy, Inc. ............................ 217,217
6,900 Wisconsin Energy Corp. ........................ 200,100
-----------
507,197
-----------
ELECTRICAL EQUIPMENT & INSTRUMENTS -- 1.2%
1,100 Amphenol Corp.* ................................ 51,502
7,100 Jabil Circuit, Inc.* ........................... 156,910
-----------
208,412
-----------
ENERGY EQUIPMENT & SERVICES -- 5.2%
7,300 ENSCO International Inc. ....................... 196,370
13,000 Grant Prideco, Inc.* ........................... 152,750
13,115 Hanover Compressor Co.* ........................ 148,200
2,400 Patterson-UTI Energy, Inc.* .................... 77,760
3,200 Smith International Inc.* ...................... 117,568
5,925 Weatherford International, Inc.* ............... 248,258
-----------
940,906
-----------
FOOD & DRUG RETAILING -- 0.4%
1,500 Whole Foods Market, Inc.* ...................... 71,295
-----------
FOOD PRODUCT -- 3.2%
13,910 Hormel Foods Corp. ............................. 329,667
3,700 The J.M. Smucker Co. ........................... 147,593
4,800 Sensient Technologies Corp. .................... 110,352
-----------
587,612
-----------
GAS UTILITIES -- 1.9%
9,600 KeySpan Corp. .................................. 340,320
-----------
HEALTH CARE EQUIPMENT & SUPPLIES -- 4.7%
8,200 DENTSPLY International Inc. .................... 335,380
3,500 Respironics, Inc.* ............................. 131,320
3,300 St. Jude Medical, Inc.* ........................ 189,750
5,700 STERIS Corp.* .................................. 131,613
1,000 Varian Medical Systems, Inc.* .................. 57,570
-----------
845,633
-----------
HEALTH CARE PROVIDERS & SERVICES -- 3.4%
5,000 First Health Group Corp.* ...................... 138,000
6,500 Omnicare, Inc. ................................. 219,635
6,400 Universal Health Service, Inc. ................. 253,568
-----------
611,203
-----------
SEE NOTES TO FINANCIAL STATEMENTS.
10
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS MID CAP FUND
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE -- 5.8%
3,800 Four Seasons Hotels Inc. ........................ $ 164,388
7,290 GTECH Holdings Corp.* ........................... 274,469
7,855 Outback Steakhouse, Inc.* ....................... 306,345
8,965 Royal Caribbean Cruises Ltd. .................... 207,630
4,265 Starbucks Corp.* ................................ 104,578
-----------
1,057,410
-----------
HOUSEHOLD DURABLES -- 3.1%
3,600 Fortune Brands, Inc. ............................ 187,920
1,800 Garmin Ltd.* .................................... 71,766
2,000 Lennar Corp., Class A Shares .................... 143,000
1,633 Mohawk Industries, Inc.* ........................ 90,680
1,000 Whirlpool Corp. ................................. 63,700
-----------
557,066
-----------
INDUSTRIAL CONGLOMERATES -- 0.9%
3,945 Carlisle Cos. Inc. .............................. 166,321
-----------
INSURANCE -- 6.7%
1,000 Ambac Financial Group, Inc. ..................... 66,250
5,000 Philadelphia Consolidated Holding Corp.* ........ 202,000
5,600 Platinum Underwriters Holdings, Ltd. ............ 151,984
3,000 Radian Group Inc. ............................... 109,950
4,200 RenaissanceRe Holdings Ltd. ..................... 191,184
4,300 StanCorp Financial Group, Inc. .................. 224,546
8,700 Willis Group Holdings Ltd. ...................... 267,525
-----------
1,213,439
-----------
IT CONSULTING & SERVICES -- 1.1%
4,300 Affiliated Computer Services, Inc.* ............. 196,639
-----------
MACHINERY -- 2.7%
9,400 AGCO Corp.* ..................................... 160,552
2,300 Donaldson Co., Inc. ............................. 102,235
6,300 IDEX Corp. ...................................... 228,312
-----------
491,099
-----------
MEDIA -- 4.0%
5,000 Cox Radio, Inc.* ................................ 115,550
3,000 The E.W. Scripps Co. ............................ 266,160
6,500 Univision Communications Inc.* .................. 197,600
200 The Washington Post Co. ......................... 146,580
-----------
725,890
-----------
MULTILINE RETAIL -- 0.7%
3,550 The Neiman Marcus Group, Inc. ................... 129,930
-----------
MULTI-UTILITIES -- 1.0%
3,000 SCANA Corp. ..................................... 102,840
2,900 Vectren Corp. ................................... 72,645
------------
175,485
------------
OIL & GAS -- 1.0%
3,600 Murphy Oil Corp. ................................ 189,360
------------
PAPER & FOREST PRODUCTS -- 0.7%
11,200 Louisiana-Pacific Corp.* ........................ 121,408
------------
SEE NOTES TO FINANCIAL STATEMENTS.
11
Schedules of Investments
(unaudited) (continued)
SALOMON BROTHERS MID CAP FUND
- -----------------------------------------------------------------------------------
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------
PHARMACEUTICALS -- 2.8%
2,852 Barr Laboratories, Inc.* ............................. $ 186,806
2,700 Medicis Pharmaceutical Corp., Class A Shares ......... 153,090
5,000 Mylan Laboratories Inc. .............................. 173,850
-----------
513,746
-----------
REAL ESTATE -- 0.5%
3,100 The St. Joe Co. ...................................... 96,720
-----------
ROAD & RAIL -- 0.7%
6,000 Werner Enterprises, Inc. ............................. 127,200
-----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS -- 2.7%
2,900 KLA-Tencor Corp.* .................................... 134,821
5,000 Novellus Systems, Inc.* .............................. 183,105
2,405 Semtech Corp.* ....................................... 34,247
7,830 Teradyne, Inc.* ...................................... 135,537
-----------
487,710
-----------
SOFTWARE -- 8.0%
11,600 Borland Software Corp.* .............................. 113,332
1,700 Cognos, Inc.* ........................................ 45,900
8,240 Mercury Interactive Corp.* ........................... 318,146
2,140 National Instruments Corp.* .......................... 80,849
11,600 Network Associates, Inc.* ............................ 147,088
11,400 Quest Software, Inc.* ................................ 135,660
3,130 Synopsys, Inc.* ...................................... 193,591
23,000 TIBCO Software Inc.* ................................. 117,070
7,200 Verisity Ltd.* ....................................... 85,968
7,500 VERITAS Software Corp.* .............................. 215,025
-----------
1,452,629
-----------
SPECIALTY RETAIL -- 3.3%
6,900 Chico's FAS, Inc.* ................................... 145,245
9,700 PETsMART, Inc.* ...................................... 161,699
4,200 Tiffany & Co. ........................................ 137,256
5,400 Williams-Sonoma, Inc.* ............................... 157,680
-----------
601,880
-----------
TRADING COMPANIES & DISTRIBUTORS -- 1.4%
5,300 W.W. Grainger, Inc. .................................. 247,828
-----------
WIRELESS TELECOMMUNICATIONS SERVICES -- 0.9%
3,300 Telephone and Data Systems, Inc. ..................... 164,010
-----------
TOTAL COMMON STOCK
(Cost -- $16,071,109) ................................ 17,940,701
-----------
FACE
AMOUNT
- ----------
REPURCHASE AGREEMENT -- 1.0%
$189,400 State Street Bank and Trust Co., 1.000% due 7/1/03;
Proceeds at maturity -- $189,405; (Fully collateralized
by Federal Home Loan Bank Bonds, 1.350% due 6/9/04;
Market value -- $195,230) (Cost -- $189,400) ......... 189,400
-----------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $16,260,509**) ................................ $18,130,101
===========
- -----------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is substantially the same.
SEE NOTES TO FINANCIAL STATEMENTS.
12
- --------------------------------------------------------------------------------
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
"BBB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issue only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB -- Bonds rated "BBB" have 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 debt in this category than in higher rated categories.
MOODY'S INVESTORS SERVICE ("MOODY'S") -- Numerical modifiers 1, 2 and 3 may be
applied to each generic rating from "Aa" to "Baa," 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 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" are judged to 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 judged 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.
FITCH RATINGS ("FITCH") -- Ratings from "AA" to "A" 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 lowest expectation of credit risk. They
are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.
AA -- Bonds rated "AA" have a very low expectation of credit risk. They
indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to
foreseeable events.
A -- Bonds rated "A" have a low expectation of credit risk. The capacity
for timely payment of financial commitments is considered strong.
This capacity may, nevertheless, be more vulnerable to changes in
circumstances or in economic conditions than is the case for higher
ratings.
NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's,
or Fitch.
13
- --------------------------------------------------------------------------------
Short-Term Security Ratings
- --------------------------------------------------------------------------------
(unaudited)
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Abbreviations*
- --------------------------------------------------------------------------------
(unaudited)
AMT -- Alternative Minimum Tax
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FSA -- Federal Savings Association
HFA -- Housing Finance Agency
MBIA -- Municipal Bond Investors Assurance Corporation
MBIA/IBC -- Municipal Bond Investors Assurance Corporation Insured Bond
Certificates
MFH -- Multi-Family Housing
PSFG -- Permanent School Fund Guaranty
SFM -- Single-Family Mortgage
SONYMA -- State of New York Mortgage Association
- -----------
* Abbreviations may or may not appear on the schedules of investments.
14
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
June 30, 2003 (unaudited)
SALOMON BROTHERS
-------------------------------------------------------------
NATIONAL CALIFORNIA NEW YORK MID
TAX FREE TAX FREE TAX FREE CAP
BOND FUND BOND FUND BOND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost ........................................... $ 53,972,219 $ 13,270,191 $ 117,902,798 $ 16,260,509
============= ============= ============= =============
Investments, at value .......................................... $ 60,223,281 $ 14,916,265 $ 130,548,192 $ 18,130,101
Cash ........................................................... 643,655 161,272 32,675 24,713
Dividends and interest receivable .............................. 726,162 250,875 2,179,486 8,010
Receivable for Fund shares sold ................................ 289,792 12,017 786 242,027
Other assets ................................................... 4,398 -- -- --
------------- ------------- ------------- -------------
TOTAL ASSETS ................................................... 61,887,288 15,340,429 132,761,139 18,404,851
------------- ------------- ------------- -------------
LIABILITIES:
Payable for Fund shares purchased .............................. 1,184,139 18,118 1,139,300 156,055
Management fees payable ........................................ 18,612 23,855 71,324 11,542
Dividends payable .............................................. 9,804 376 17,672 --
Distribution and service plan fees payable ..................... 5,921 1,222 5,789 193
Payable for securities purchased ............................... -- -- -- 216,643
Accrued expenses ............................................... 58,226 32,521 57,298 26,098
------------- ------------- ------------- -------------
TOTAL LIABILITIES .............................................. 1,276,702 76,092 1,291,383 410,531
------------- ------------- ------------- -------------
TOTAL NET ASSETS ................................................. $ 60,610,586 $ 15,264,337 $ 131,469,756 $ 17,994,320
============= ============= ============= =============
NET ASSETS:
Par value of shares of beneficial interest ..................... $ -- $ -- $ -- $ 1,239
Capital paid in excess of par value ............................ 62,868,219 16,782,916 128,080,037 18,760,611
Overdistributed net investment income .......................... -- (224) -- --
Accumulated net investment loss ................................ -- -- -- (4,874)
Accumulated net realized loss from investment transactions ..... (8,508,695) (3,164,429) (9,255,675) (2,632,248)
Net unrealized appreciation of investments ..................... 6,251,062 1,646,074 12,645,394 1,869,592
------------- ------------- ------------- -------------
TOTAL NET ASSETS ................................................. $ 60,610,586 $ 15,264,337 $ 131,469,756 $ 17,994,320
============= ============= ============= =============
SHARES OUTSTANDING:
Class A ........................................................ 4,417,591 1,380,663 10,758,773 10,773
============= ============= ============= =============
Class B ........................................................ 430,712 26,226 28,441 9,730
============= ============= ============= =============
Class 2 ........................................................ 170,642 2,451 42,061 5,472
============= ============= ============= =============
Class O ........................................................ 13,000 189 7,770 1,213,164
============= ============= ============= =============
NET ASSET VALUE:
CLASS A SHARES
Net asset value and redemption price ........................... $12.04 $10.83 $12.13 $14.45
============= ============= ============= =============
Maximum offering price per share (based on maximum sales charges
of 4.00%, 4.00%, 4.00% and 5.75%, respectively) .............. $12.54 $11.28 $12.64 $15.33
============= ============= ============= =============
CLASS B SHARES
Net asset value and offering price per share* .................. $12.05 $10.83 $12.14 $14.31
============= ============= ============= =============
CLASS 2 SHARES
Net asset value*+ .............................................. $12.05 $10.83 $12.14 $14.36
============= ============= ============= =============
Maximum offering price per share (based on maximum sales charge
of 1.00% for Mid Cap Fund) .................................. N/A N/A N/A $14.51
============= ============= ============= =============
CLASS O SHARES
Net asset value, offering price and redemption price per share . $12.05 $10.84 $12.12 $14.52
============= ============= ============= =============
- -----------
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charges.
+ Net asset value and offering price for National Tax Free Bond Fund,
California Tax Free Bond Fund and New York Tax Free Bond Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
15
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2003 (unaudited)
SALOMON BROTHERS
-------------------------------------------------------------
NATIONAL CALIFORNIA NEW YORK MID
TAX FREE TAX FREE TAX FREE CAP
BOND FUND BOND FUND BOND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest ........................................................... $ 1,393,684 $ 332,494 $ 3,044,573 $ 82,769
Dividends .......................................................... -- -- -- 2,242
------------ ----------- ------------ -----------
TOTAL INVESTMENT INCOME ............................................ 1,393,684 332,494 3,044,573 85,011
------------ ----------- ------------ -----------
EXPENSES:
Management fees (Note 2) ........................................... 146,828 38,121 319,333 62,156
Distribution and service plan fees (Note 4) ........................ 97,647 20,143 161,107 1,092
Shareholder servicing fees (Note 4) ................................ 26,365 4,588 31,739 4,625
Custody ............................................................ 18,360 4,602 19,698 7,800
Registration fees .................................................. 15,105 1,500 18,500 8,850
Audit and legal .................................................... 14,638 4,180 30,199 12,990
Shareholder communications (Note 4) ................................ 12,045 2,104 20,280 8,012
Trustees' fees ..................................................... 414 705 1,139 755
Other .............................................................. 1,305 229 1,935 470
------------ ----------- ------------ -----------
TOTAL EXPENSES ..................................................... 332,707 76,172 603,930 106,750
Less: Management fee waiver (Note 2) ............................... (88,232) (14,271) (91,557) (16,093)
------------ ----------- ------------ -----------
NET EXPENSES ....................................................... 244,475 61,901 512,373 90,657
------------ ----------- ------------ -----------
NET INVESTMENT INCOME (LOSS) ......................................... 1,149,209 270,593 2,532,200 (5,646)
------------ ----------- ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3):
Realized Gain (Loss) From Investment Transactions
(excluding short-term investments):
Proceeds from sales .............................................. 9,986,186 40,000 12,500,476 8,072,173
Cost of securities sold .......................................... 8,899,318 40,000 11,583,807 8,634,730
------------ ----------- ------------ -----------
NET REALIZED GAIN (LOSS) ........................................... 1,086,868 -- 916,669 (562,557)
------------ ----------- ------------ -----------
Change in Net Unrealized Appreciation (Depreciation) of Investments:
Beginning of period .............................................. 6,008,579 1,364,122 11,148,055 (339,672)
End of period .................................................... 6,251,062 1,646,074 12,645,394 1,869,592
------------ ----------- ------------ -----------
INCREASE IN NET UNREALIZED APPRECIATION ............................ 242,483 281,952 1,497,339 2,209,264
------------ ----------- ------------ -----------
NET GAIN ON INVESTMENTS .............................................. 1,329,351 281,952 2,414,008 1,646,707
------------ ----------- ------------ -----------
INCREASE IN NET ASSETS FROM OPERATIONS ............................... $ 2,478,560 $ 552,545 $ 4,946,208 $ 1,641,061
============ =========== ============ ===========
SEE NOTES TO FINANCIAL STATEMENTS.
16
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2003 (unaudited)
SALOMON BROTHERS
------------------------------------------------------------
NATIONAL CALIFORNIA NEW YORK MID
TAX FREE TAX FREE TAX FREE CAP
BOND FUND BOND FUND BOND FUND FUND
- --------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) ................................... $ 1,149,209 $ 270,593 $ 2,532,200 $ (5,646)
Net realized gain (loss) ....................................... 1,086,868 -- 916,669 (562,557)
Increase in net unrealized appreciation ........................ 242,483 281,952 1,497,339 2,209,264
------------ ----------- ------------ -----------
INCREASE IN NET ASSETS FROM OPERATIONS ......................... 2,478,560 552,545 4,946,208 1,641,061
------------ ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 5):
Net investment income .......................................... (1,174,964) (270,817) (2,596,476) --
------------ ----------- ------------ -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ...... (1,174,964) (270,817) (2,596,476) --
------------ ----------- ------------ -----------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares ............................... 22,476,551 445,007 18,965,245 193,224
Net asset value of shares issued for reinvestment of dividends . 1,028,314 262,033 2,442,264 --
Cost of shares reacquired ...................................... (21,340,599) (1,279,864) (20,116,561) (702,096)
------------ ----------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS . 2,164,266 (572,824) 1,290,948 (508,872)
------------ ----------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS ................................. 3,467,862 (291,096) 3,640,680 1,132,189
NET ASSETS:
Beginning of period ............................................ 57,142,724 15,555,433 127,829,076 16,862,131
------------ ----------- ------------ -----------
END OF PERIOD* ................................................. $ 60,610,586 $15,264,337 $131,469,756 $17,994,320
============ =========== ============ ===========
* Note:
Includes overdistributed net investment income of: .............. -- $ (224) -- --
============ =========== ============ ===========
Includes accumulated net investment loss of: .................... -- -- -- $ (4,874)
============ =========== ============ ===========
SEE NOTES TO FINANCIAL STATEMENTS.
17
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended December 31, 2002
SALOMON BROTHERS
------------------------------------------------------------
NATIONAL CALIFORNIA NEW YORK MID
TAX FREE TAX FREE TAX FREE CAP
BOND FUND BOND FUND BOND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) ...................................... $ 2,578,835 $ 571,813 $ 5,624,766 $ (26,545)
Net realized gain (loss) .......................................... 830,498 241,828 1,142,668 (1,838,330)
Increase (decrease) in net unrealized appreciation ................ 2,771,921 439,711 6,424,227 (2,522,919)
------------ ----------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ................. 6,181,254 1,253,352 13,191,661 (4,387,794)
------------ ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 AND 5):
Net investment income ............................................. (2,554,278) (571,813) (5,604,635) --
------------ ----------- ------------ -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS ......... (2,554,278) (571,813) (5,604,635) --
------------ ----------- ------------ -----------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares .................................. 12,580,286 316,275 5,149,564 573,929
Net asset value of shares issued for reinvestment of dividends .... 1,905,237 475,153 4,279,240 --
Cost of shares reacquired ......................................... (29,684,776) (2,301,539) (29,617,857) (2,318,445)
------------ ----------- ------------ -----------
DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS ............... (15,199,253) (1,510,111) (20,189,053) (1,744,516)
------------ ----------- ------------ -----------
DECREASE IN NET ASSETS ............................................... (11,572,277) (828,572) (12,602,027) (6,132,310)
NET ASSETS:
Beginning of year ................................................. 68,715,001 16,384,005 140,431,103 22,994,441
------------ ----------- ------------ -----------
END OF YEAR* ...................................................... $ 57,142,724 $15,555,433 $127,829,076 $16,862,131
============ =========== ============ ===========
* Includes undistributed net investment income of: ................... $ 25,755 -- $ 64,276 $ 772
============ =========== ============ ===========
SEE NOTES TO FINANCIAL STATEMENTS.
18
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
(unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
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")
are separate non-diversified series of Salomon Funds Trust ("Trust"), a
Massachusetts business trust. Salomon Brothers Mid Cap Fund ("Mid Cap Fund") is
a separate diversified series of the Trust. The Trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
National Tax Free Bond Fund, California Tax Free Bond Fund, New York Tax Free
Bond Fund and Mid Cap Fund ("Fund(s)"), as of June 30, 2003 offer Class A
shares, Class B shares, Class 2 shares and Class O shares. Expenses of each Fund
are borne pro rata by the holders of each class of shares, except that each
class bears expenses unique to that class (including the Rule 12b-1 distribution
and service plan fees applicable to such class), and votes as a class only with
respect to its own Rule 12b-1 plan.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the Funds are as
follows:
(a) INVESTMENT SECURITY VALUATIONS. Equity securities listed on securities
exchanges or reported through the NASDAQ system are valued at closing prices.
Unlisted securities or listed securities for which last sale prices are not
available are valued at last quoted bid prices. Debt securities (other than
short-term obligations maturing in 60 days or less) are valued on the basis of
valuations furnished by a pricing service which takes into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, and other market data,
without exclusive reliance upon quoted prices or exchange or over-the-counter
prices, since such valuations are believed to reflect more accurately the fair
value of the securities. Short-term obligations (maturing in 60 days or less)
are valued at amortized cost, which approximates market value. Securities, if
any, for which there are no such valuations or quotations are valued at fair
value as determined in good faith by or under guidelines established by the
Trustees.
(b) INCOME. Interest income, adjusted for amortization of premium and
accretion of discount, is recorded on an accrual basis. Dividend income is
recorded on the ex-dividend date.
(c) FEDERAL INCOME TAXES. Each Fund has complied with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
distributed all of its income, including any net realized gains, to
shareholders. Therefore, no Federal income tax or excise tax provision is
required for such Funds.
(d) DISTRIBUTIONS. The Funds distinguish between distributions on a tax
basis and a financial reporting basis and require that only distributions in
excess of tax basis earnings and profits be reported in the financial statements
as a return of capital. Differences in the recognition or classification of
income between the financial statements and tax earnings and profits which
result in temporary over-distributions for financial statement purposes, are
classified as distributions in excess of accumulated net investment income or
accumulated net realized gains.
(e) OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold. Realized gains and losses are determined on
the identified cost basis. Distributions to shareholders and shares issuable to
shareholders electing to receive distributions in shares are recorded on the
ex-dividend date.
19
Notes to Financial Statements
(unaudited) (continued)
(f) EXPENSES. The Funds bear all their costs of its operations other than
expenses specifically assumed by the Manager. Expenses incurred by the Trust
with respect to any two or more funds or series are allocated in proportion to
the average net assets of each fund, except when allocations of direct expenses
to each fund can otherwise be made fairly. Expenses directly attributable to a
fund are charged to that fund.
(g) REPURCHASE AGREEMENTS. It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian's bank's
vault, all securities held as collateral in support of repurchase agreements.
Additionally, procedures have been established to monitor, on a daily basis, the
market value of the repurchase agreements underlying investments to ensure the
existence of a proper level of collateral.
2. MANAGEMENT AGREEMENT AND AFFILIATED TRANSACTIONS
Salomon Brothers Asset Management Inc ("Manager"), an indirect wholly-owned
subsidiary of Citigroup Inc. ("Citigroup"), acts as investment manager to the
Funds. The Manager is responsible for overall management of the Funds' business
affairs, and has a separate Management Agreement with each Fund. The Manager or
an affiliate also provides certain administrative services to each Fund. These
administrative services include providing general office facilities and
supervising the overall administration of each Fund.
The management fees paid to the Manager are accrued daily and payable monthly.
The management fee is computed at the annual rate of 0.50%, 0.50%, 0.50% and
0.75% of the average daily net assets of National Tax Free Bond Fund, California
Tax Free Bond Fund, New York Tax Free Bond Fund and Mid Cap Fund, respectively.
For the six months ended June 30, 2003, the Manager waived management fees of
$88,232, $14,271, $91,557 and $16,093 for National Tax Free Bond Fund,
California Tax Free Bond Fund, New York Tax Free Bond Fund and Mid Cap Fund,
respectively.
Citigroup Global Markets Inc. ("CGM"), formerly known as Salomon Smith Barney
Inc., another indirect wholly-owned subsidiary of Citigroup, acts as the Funds'
distributor. For the six months ended June 30, 2003, CGM did not receive any
brokerage commissions from 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 are maximum initial sales charges of 5.75% and 1.00% for Class A and
2 shares, respectively, of Mid Cap Fund. There is a contingent deferred sales
charge ("CDSC") of 5.00% on Class B shares of the Funds, which applies if
redemption occurs within one year from purchase payment and declines thereafter
by 1.00% per year until no CDSC is incurred. Class 2 shares of the Funds also
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.
During the six months ended June 30, 2003, sales charges received by CGM and
contingent deferred sales charges ("CDSCs") paid to CGM were as follows:
SALES CHARGES CDSCS
------------------ ------------------
CLASS A CLASS 2 CLASS A CLASS B
- --------------------------------------------------------------------------------
National Tax Free Bond Fund .......... $28,015 $ -- $ 21 $ 2,326
California Tax Free Bond Fund ........ 7,737 -- -- --
New York Tax Free Bond Fund .......... 31,861 -- 3,780 --
Mid Cap Fund ......................... 690 1 -- 321
20
Notes to Financial Statements
(unaudited) (continued)
3. INVESTMENTS
During the six months ended June 30, 2003, the aggregate cost of purchases and
proceeds from sales of investments (including maturities of long-term
investments, but excluding short-term investments) were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
National Tax Free Bond Fund ......................... $6,666,679 $ 9,986,186
========== ===========
California Tax Free Bond Fund ....................... -- $ 40,000
========== ===========
New York Tax Free Bond Fund ......................... $8,502,110 $12,500,476
========== ===========
Mid Cap Fund ........................................ $7,952,528 $ 8,072,173
========== ===========
At June 30, 2003, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
- --------------------------------------------------------------------------------
National Tax Free Bond Fund ......... $ 6,268,672 $ (17,610) $ 6,251,062
California Tax Free Bond Fund ....... 1,646,074 -- 1,646,074
New York Tax Free Bond Fund ......... 12,731,266 (85,872) 12,645,394
Mid Cap Fund ........................ 2,469,698 (600,106) 1,869,592
4. CLASS SPECIFIC EXPENSES
Pursuant to a Distribution and Service Plan, each Fund pays a service fee with
respect to its Class A, B and 2 shares calculated at the annual rate of 0.25% of
the average daily net assets of each respective class. Each Fund also pays a
distribution fee with respect to Class B shares calculated at the annual rate of
0.75% of the average daily net assets of that class. National Tax Free Bond
Fund, California Tax Free Bond Fund and New York Tax Free Bond Fund each pay a
distribution fee with respect to Class 2 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 2 shares calculated at the annual rate of
0.75% of the average daily net assets of that class. For the six months ended
June 30, 2003, total Distribution and Service Plan fees incurred, which are
accrued daily and paid monthly, were as follows:
CLASS A CLASS B CLASS 2
- --------------------------------------------------------------------------------
National Tax Free Bond Fund .................... $ 64,205 $26,167 $7,275
California Tax Free Bond Fund .................. 18,686 1,360 97
New York Tax Free Bond Fund .................... 158,961 1,496 650
Mid Cap Fund ................................... 157 644 291
For the six months ended June 30, 2003, total Shareholder Servicing fees were as
follows:
CLASS A CLASS B CLASS 2 CLASS O
- --------------------------------------------------------------------------------
National Tax Free Bond Fund ............ $23,070 $2,326 $890 $ 79
California Tax Free Bond Fund .......... 4,494 86 8 0*
New York Tax Free Bond Fund ............ 31,594 75 47 23
Mid Cap Fund ........................... 37 36 18 4,534
- ----------
* Amount represents less than $1.00.
21
Notes to Financial Statements
(unaudited) (continued)
For the six months ended June 30, 2003, total Shareholder Communication expenses
were as follows:
CLASS A CLASS B CLASS 2 CLASS O
- --------------------------------------------------------------------------------
National Tax Free Bond Fund ............. $10,530 $1,084 $387 $ 44
California Tax Free Bond Fund ........... 2,072 28 3 1
New York Tax Free Bond Fund ............. 20,183 48 35 14
Mid Cap Fund ............................ 66 65 34 7,847
5. DISTRIBUTIONS PAID TO SHAREHOLDERS BY CLASS
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2003 DECEMBER 31, 2002
---------------- -----------------
NATIONAL TAX FREE BOND FUND:
NET INVESTMENT INCOME
Class A ............................... $1,050,765 $2,335,292
Class B ............................... 85,931 153,307
Class 2 ............................... 34,098 56,538
Class O ............................... 4,170 9,141
---------- ----------
Total ................................. $1,174,964 $2,554,278
========== ==========
CALIFORNIA TAX FREE BOND FUND:
NET INVESTMENT INCOME
Class A ............................... $ 266,569 $ 568,333
Class B ............................... 3,816 3,227
Class 2 ............................... 394 236
Class O ............................... 38 17
---------- ----------
Total ................................. $ 270,817 $ 571,813
========== ==========
NEW YORK TAX FREE BOND FUND:
NET INVESTMENT INCOME
Class A ............................... $2,586,855 $5,601,061
Class B ............................... 4,803 1,580
Class 2 ............................... 2,863 346
Class O ............................... 1,955 1,648
---------- ----------
Total ................................. $2,596,476 $5,604,635
========== ==========
6. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest without par value for National
Tax Free Bond Fund, California Tax Free Bond Fund and New York Tax Free Bond
Fund and with a par value of $0.001 per share for Mid Cap Fund.
Transactions in Fund shares for the periods indicated were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2003 DECEMBER 31, 2002
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
NATIONAL TAX FREE BOND FUND
CLASS A
Shares sold ............................ 1,743,601 $ 20,791,055 927,942 $ 10,792,434
Shares issued on reinvestment .......... 79,733 949,242 156,772 1,805,886
Shares reacquired ...................... (1,672,294) (19,998,114) (2,427,845) (27,982,377)
---------- ------------ ---------- ------------
Net Increase (Decrease) ................ 151,040 $ 1,742,183 (1,343,131) $(15,384,057)
========== ============ ========== ============
CLASS B
Shares sold ............................ 90,674 $ 1,071,822 90,980 $ 1,056,513
Shares issued on reinvestment .......... 4,149 49,448 4,924 57,019
Shares reacquired ...................... (74,174) (885,746) (98,816) (1,134,866)
---------- ------------ ---------- ------------
Net Increase (Decrease) ................ 20,649 $ 235,524 (2,912) $ (21,334)
========== ============ ========== ============
22
Notes to Financial Statements
(unaudited) (continued)
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2003 DECEMBER 31, 2002
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
NATIONAL TAX FREE BOND FUND (CONTINUED)
CLASS 2
Shares sold ............................ 46,226 $ 549,976 52,043 $ 601,296
Shares issued on reinvestment .......... 2,168 25,856 2,927 33,839
Shares reacquired ...................... (27,175) (324,933) (23,560) (272,469)
---------- ------------ ---------- ------------
Net Increase ........................... 21,219 $ 250,899 31,410 $ 362,666
========== ============ ========== ============
CLASS O
Shares sold ............................ 5,206 $ 63,698 10,969 $ 130,043
Shares issued on reinvestment .......... 318 3,768 736 8,493
Shares reacquired ...................... (10,875) (131,806) (25,846) (295,064)
---------- ------------ ---------- ------------
Net Decrease ........................... (5,351) $ (64,340) (14,141) $ (156,528)
========== ============ ========== ============
CALIFORNIA TAX FREE BOND FUND
CLASS A
Shares sold ............................ 37,691 $ 403,606 6,173 $ 65,159
Shares issued on reinvestment .......... 24,289 260,010 45,319 474,173
Shares reacquired ...................... (118,613) (1,268,250) (219,955) (2,269,510)
---------- ------------ ---------- ------------
Net Decrease ........................... (56,633) $ (604,634) (168,463) $ (1,730,178)
========== ============ ========== ============
CLASS B
Shares sold ............................ 3,870 $ 41,401 21,068 $ 223,389
Shares issued on reinvestment .......... 148 1,588 68 727
Shares reacquired ...................... (1,072) (11,614) (3,009) (32,029)
---------- ------------ ---------- ------------
Net Increase ........................... 2,946 $ 31,375 18,127 $ 192,087
========== ============ ========== ============
CLASS 2*
Shares sold ............................ -- $ -- 2,392 $ 25,737
Shares issued on reinvestment .......... 37 397 22 236
---------- ------------ ---------- ------------
Net Increase ........................... 37 $ 397 2,414 $ 25,973
========== ============ ========== ============
CLASS O**
Shares sold ............................ -- $ -- 184 $ 1,990
Shares issued on reinvestment .......... 3 38 2 17
---------- ------------ ---------- ------------
Net Increase ........................... 3 $ 38 186 $ 2,007
========== ============ ========== ============
NEW YORK TAX FREE BOND FUND
CLASS A
Shares sold ............................ 1,531,748 $ 18,366,439 412,505 $ 4,799,341
Shares issued on reinvestment .......... 202,976 2,438,090 367,305 4,277,764
Shares reacquired ...................... (1,675,505) (20,104,859) (2,550,243) (29,592,962)
---------- ------------ ---------- ------------
Net Increase (Decrease) ................ 59,219 $ 699,670 (1,770,433) $(20,515,857)
========== ============ ========== ============
CLASS B
Shares sold ............................ 10,738 $ 128,359 18,994 $ 223,640
Shares issued on reinvestment .......... 299 3,600 112 1,312
Shares reacquired ...................... (877) (10,696) (2,103) (24,895)
---------- ------------ ---------- ------------
Net Increase ........................... 10,160 $ 121,263 17,003 $ 200,057
========== ============ ========== ============
CLASS 2*
Shares sold ............................ 39,001 $ 470,447 3,089 $ 36,969
Shares issued on reinvestment .......... 46 551 10 119
Shares reacquired ...................... (85) (1,006) -- --
---------- ------------
Net Increase ........................... 38,962 $ 469,992 3,099 $ 37,088
========== ============ ========== ============
CLASS O
Shares sold ............................ -- $ -- 7,677 $ 89,614
Shares issued on reinvestment .......... 2 23 4 45
---------- ------------ ---------- ------------
Net Increase ........................... 2 $ 23 7,681 $ 89,659
========== ============ ========== ============
23
Notes to Financial Statements
(unaudited) (continued)
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2003 DECEMBER 31, 2002
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
MID CAP FUND
CLASS A
Shares sold ............................ 3,232 $ 42,700 8,025 $ 132,571
Shares reacquired ...................... (1,225) (16,800) (2,094) (32,639)
---------- ------------ ---------- ------------
Net Increase ........................... 2,007 $ 25,900 5,931 $ 99,932
========== ============ ========== ============
CLASS B
Shares sold ............................ 5,154 $ 60,880 15,452 $ 234,122
Shares reacquired ...................... (3,687) (48,028) (7,933) (128,569)
---------- ------------ ---------- ------------
Net Increase ........................... 1,467 $ 12,852 7,519 $ 105,553
========== ============ ========== ============
CLASS 2*
Shares sold ............................ 3,498 $ 44,285 4,572 $ 64,941
Shares reacquired ...................... -- -- (2,598) (33,939)
---------- ------------ ---------- ------------
Net Increase ........................... 3,498 $ 44,285 1,974 $ 31,002
========== ============ ========== ============
CLASS O
Shares sold ............................ 3,315 $ 45,359 8,594 $ 142,295
Shares reacquired ...................... (45,988) (637,268) (144,785) (2,123,298)
---------- ------------ ---------- ------------
Net Decrease ........................... (42,673) $ (591,909) (136,191) $ (1,981,003)
========== ============ ========== ============
- ----------
* Inception dates for Class 2 shares were as follows:
California Tax Free Bond Fund -- September 9, 2002
New York Tax Free Bond Fund -- July 19, 2002
Mid Cap Fund -- May 7, 2002
** Inception date for Class O shares of California Tax Free Bond Fund was
October 8, 2002.
24
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, unless otherwise noted:
SALOMON BROTHERS NATIONAL TAX FREE BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------------
2003(1) 2002 2001 2000 1999 1998
------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $ 11.79 $ 11.13 $ 11.26 $ 10.54 $ 11.43 $ 10.92
------- ------- ------- ------- -------- --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income .................................. 0.23* 0.48* 0.50 0.51 0.47 0.52
Net realized and unrealized gain (loss) ................ 0.26 0.66 (0.12) 0.73 (0.90) 0.55
------- ------- ------- ------- -------- --------
Total Income (Loss) From Operations ....................... 0.49 1.14 0.38 1.24 (0.43) 1.07
------- ------- ------- ------- -------- --------
LESS DISTRIBUTIONS FROM:
Net investment income .................................. (0.24) (0.48) (0.51) (0.52) (0.45) (0.54)
Net realized gains ..................................... -- -- -- -- (0.01) (0.02)
------- ------- ------- ------- -------- --------
Total Distributions ....................................... (0.24) (0.48) (0.51) (0.52) (0.46) (0.56)
------- ------- ------- ------- -------- --------
NET ASSET VALUE, END OF PERIOD ............................ $ 12.04 $ 11.79 $ 11.13 $ 11.26 $ 10.54 $ 11.43
======= ======= ======= ======= ======== ========
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .......................... $53,205 $50,325 $62,440 $72,875 $106,449 $259,447
Ratio of expenses to average net assets (2)(3) ......... 0.75%+ 0.76% 0.80% 0.80% 0.80% 0%**
Ratio of expenses to average net assets
after fees paid indirectly (2) ....................... N/A N/A 0.80 0.80 0.81 0**
Ratio of net investment income to average net assets ... 4.00+ 4.22 4.28 4.67 4.14 4.49
PORTFOLIO TURNOVER RATE ................................... 12% 12% 15% 46% 112% 57%
TOTAL RETURN (4) .......................................... 4.20%++ 10.41% 3.39% 12.10% (3.86)% 10.05%
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the period, the expenses were
not reduced for fees paid indirectly and the Manager had not voluntarily assumed expenses, the net investment income per share and
the ratios would have been as follows:
Net investment income per share ........................ $ 0.22* $ 0.44* $ 0.43 $ 0.46 $ 0.42 $ 0.36
Ratio of expenses to average net assets ................ 1.05%+ 1.18% 1.52% 1.32% 1.20% 1.37%
Ratio of net investment income to average net assets ... 3.70+ 3.80 3.56 4.15 3.74 3.12
SALOMON BROTHERS NATIONAL TAX FREE BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
-------------------------------
2003(1) 2002 2001(5)
-------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $ 11.80 $ 11.14 $ 11.46
------- ------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income .................................. 0.19* 0.40* 0.07*
Net realized and unrealized gain (loss) ................ 0.25 0.65 (0.31)
------- ------- -------
Total Income (Loss) From Operations ....................... 0.44 1.05 (0.24)
------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income .................................. (0.19) (0.39) (0.08)
------- ------- -------
Total Distributions ....................................... (0.19) (0.39) (0.08)
------- ------- -------
NET ASSET VALUE, END OF PERIOD ............................ $ 12.05 $ 11.80 $ 11.14
======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .......................... $ 5,192 $ 4,839 $ 4,599
Ratio of expenses to average net assets (2)(6) ......... 1.50%+ 1.49% 1.53%+
Ratio of expenses to average net assets
after fees paid indirectly (2) ....................... N/A N/A 1.53+
Ratio of net investment income to average net assets ... 3.25+ 3.43 3.55+
PORTFOLIO TURNOVER RATE ................................... 12% 12% 15%
TOTAL RETURN (4) .......................................... 3.78%++ 9.59% (2.09)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the period, the expenses were
not reduced for fees paid indirectly and the Manager had not voluntarily assumed expenses, the net investment income per share and
the ratios would have been as follows:
Net investment income per share ........................ $ 0.17* $ 0.35* $ 0.06*
Ratio of expenses to average net assets ................ 1.80%+ 1.91% 2.22%+
Ratio of net investment income to average net assets ... 2.95+ 3.02 2.86+
- ----------------
(1) For the six months ended June 30, 2003 (unaudited).
(2) The expense ratio has been readjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund to increase its
expense ratio by the effect of any expense offset arrangements with its
service providers.
(3) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.75% for Class A shares. Prior to
January 30, 2002 the expense limitation was 0.80%.
(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 be reduced.
(5) For the period October 12, 2001 (inception date) to December 31, 2001.
(6) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.50% for Class B shares.
* Per share amounts have been calculated using the monthly average shares
method.
** Percentage represents less than 0.01%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
25
Financial Highlights
(continued)
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, unless otherwise noted:
SALOMON BROTHERS NATIONAL TAX FREE BOND FUND
- ---------------------------------------------------------------------------------------------
CLASS 2 SHARES
-------------------------------
2003(1) 2002 2001(2)
-------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $ 11.80 $ 11.13 $ 11.42
------- ------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income .................................. 0.20* 0.43* 0.05*
Net realized and unrealized gain (loss) ................ 0.26 0.66 (0.28)
------- ------- -------
Total Income (Loss) From Operations ....................... 0.46 1.09 (0.23)
------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income .................................. (0.21) (0.42) (0.06)
------- ------- -------
Total Distributions ....................................... (0.21) (0.42) (0.06)
------- ------- -------
NET ASSET VALUE, END OF PERIOD ............................ $ 12.05 $ 11.80 $ 11.13
======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .......................... $ 2,057 $ 1,763 $ 1,314
Ratio of expenses to average net assets (3)(4) ......... 1.25%+ 1.25% 1.25%+
Ratio of expenses to average net assets after fees
paid indirectly (3) .................................. N/A N/A 1.25+
Ratio of net investment income to average net assets ... 3.48+ 3.69 3.73+
PORTFOLIO TURNOVER RATE ................................... 12% 12% 15%
TOTAL RETURN (5) .......................................... 3.91%++ 9.96% (2.10)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period, the expenses were not reduced for fees paid
indirectly and the Manager had not voluntarily assumed expenses, the net
investment income per share and the ratios would have been as follows:
Net investment income per share ........................ $ 0.19* $ 0.38* $ 0.04*
Ratio of expenses to average net assets ................ 1.55%+ 1.67% 1.94%+
Ratio of net investment income to average net assets ... 3.18+ 3.27 3.04+
SALOMON BROTHERS NATIONAL TAX FREE BOND FUND
- ---------------------------------------------------------------------------------------------
CLASS O SHARES
-------------------------------
2003(1) 2002 2001(2)
-------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $ 11.79 $ 11.13 $ 11.42
------- ------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income .................................. 0.26* 0.50* 0.06*
Net realized and unrealized gain (loss) ................ 0.25 0.67 (0.29)
------- ------- -------
Total Income (Loss) From Operations ....................... 0.51 1.17 (0.23)
------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income .................................. (0.25) (0.51) (0.06)
------- ------- -------
Total Distributions ....................................... (0.25) (0.51) (0.06)
------- ------- -------
NET ASSET VALUE, END OF PERIOD ............................ $ 12.05 $ 11.79 $ 11.13
======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .......................... $ 157 $ 216 $ 362
Ratio of expenses to average net assets (3)(6) ......... 0.50%+ 0.50% 0.50%+
Ratio of expenses to average net assets after fees
paid indirectly (3) .................................. N/A N/A 0.50+
Ratio of net investment income to average net assets ... 4.27+ 4.39 4.48+
PORTFOLIO TURNOVER RATE ................................... 12% 12% 15%
TOTAL RETURN (5) .......................................... 4.37%++ 10.69% (2.01)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period, the expenses were not reduced for fees paid
indirectly and the Manager had not voluntarily assumed expenses, the net
investment income per share and the ratios would have been as follows:
Net investment income per share ........................ $ 0.24* $ 0.46* $ 0.05*
Ratio of expenses to average net assets ................ 0.80%+ 0.91% 1.19%+
Ratio of net investment income to average net assets ... 3.96+ 3.98 3.79+
- ----------
(1) For the six months ended June 30, 2003 (unaudited).
(2) For the period November 19, 2001 (inception date) to December 31, 2001.
(3) The expense ratio has been readjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund to increase its
expense ratio by the effect of any expense offset arrangements with its
service providers.
(4) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.25% for Class 2 shares.
(5) 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 be reduced.
(6) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.50% for Class O shares.
* Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
26
Financial Highlights
(continued)
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, unless otherwise noted:
SALOMON BROTHERS CALIFORNIA TAX FREE BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------------
2003(1) 2002 2001 2000 1999 1998(2)
------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $ 10.63 $ 10.17 $ 10.31 $ 9.43 $ 10.08 $ 10.00
------- ------- ------- ------- -------- --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income .................................. 0.19* 0.39* 0.43 0.44 0.40 0.07
Net realized and unrealized gain (loss) ................ 0.20 0.46 (0.14) 0.88 (0.65) 0.08
------- ------- ------- ------- -------- --------
Total Income (Loss) From Operations ....................... 0.39 0.85 0.29 1.32 (0.25) 0.15
------- ------- ------- ------- -------- --------
LESS DISTRIBUTIONS FROM:
Net investment income .................................. (0.19) (0.39) (0.43) (0.44) (0.40) (0.07)
------- ------- ------- ------- -------- --------
Total Distributions ....................................... (0.19) (0.39) (0.43) (0.44) (0.40) (0.07)
------- ------- ------- ------- -------- --------
NET ASSET VALUE, END OF PERIOD ............................ $ 10.83 $ 10.63 $ 10.17 $ 10.31 $ 9.43 $ 10.08
======= ======= ======= ======= ======== ========
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .......................... $14,952 $15,280 $16,332 $20,748 $ 34,396 $ 96,706
Ratio of expenses to average net assets (3)(4) ......... 0.80%+ 0.80% 0.80% 0.80% 0.70% --
Ratio of expenses to average net assets
after fees paid indirectly (3) ....................... N/A N/A 0.81 0.81 0.70 --
Ratio of net investment income to average net assets ... 3.56+ 3.71 4.04 4.52 4.06 4.16%+
PORTFOLIO TURNOVER RATE ................................... 0% 9% 8% 58% 116% 1%
TOTAL RETURN (5) .......................................... 3.68%++ 8.47% 2.83% 14.33% (2.54)% 1.49%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the period, the expenses were
not reduced for fees paid indirectly and the Manager had not voluntarily assumed expenses, the net investment income per share and
the ratios would have been as follows:
Net investment income per share ........................ $ 0.18* $ 0.26* $ 0.24 $ 0.34 $ 0.33 $ 0.04
Ratio of expenses to average net assets ................ 0.98%+ 2.05% 2.43% 1.82% 1.41% 1.60%+
Ratio of net investment income to average net assets ... 3.38+ 2.46 2.41 3.52 3.35 2.56+
SALOMON BROTHERS CALIFORNIA TAX FREE BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
-------------------------------
2003(1) 2002 2001(6)
-------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $ 10.63 $ 10.18 $ 10.51
------- ------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income .................................. 0.15* 0.30* 0.07*
Net realized and unrealized gain (loss) ................ 0.20 0.46 (0.32)
------- ------- -------
Total Income (Loss) From Operations ....................... 0.35 0.76 (0.25)
------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income .................................. (0.15) (0.31) (0.08)
------- ------- -------
Total Distributions ....................................... (0.15) (0.31) (0.08)
------- ------- -------
NET ASSET VALUE, END OF PERIOD ............................ $ 10.83 $ 10.63 $ 10.18
======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .......................... $ 284 $ 247 $ 52
Ratio of expenses to average net assets (3)(7) ......... 1.55%+ 1.53% 1.56%+
Ratio of expenses to average net assets
after fees paid indirectly (3) ....................... N/A N/A 1.57%+
Ratio of net investment income to average net assets ... 2.80+ 2.88 3.23+
PORTFOLIO TURNOVER RATE ................................... 0% 9% 8%
TOTAL RETURN (5) .......................................... 3.20%++ 7.66% (2.39)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the period, the expenses were
not reduced for fees paid indirectly and the Manager had not voluntarily assumed expenses, the net investment income per share and
the ratios would have been as follows:
Net investment income per share ........................ $ 0.14* $ 0.17* $ 0.03*
Ratio of expenses to average net assets ................ 1.73%+ 2.76% 3.19%+
Ratio of net investment income to average net assets ... 2.62+ 1.66 1.60+
- ----------------
(1) For the six months ended June 30, 2003 (unaudited).
(2) For the period November 2, 1998 (inception date) to December 31, 1998.
(3) The expense ratio has been readjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund to increase its
expense ratio by the effect of any expense offset arrangements with its
service providers.
(4) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.80% for Class A shares.
(5) 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 be reduced.
(6) For the period October 5, 2001 (inception date) to December 31, 2001.
(7) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.55% for Class B shares.
* Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
27
Financial Highlights
(continued)
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, unless otherwise noted:
SALOMON BROTHERS CALIFORNIA TAX FREE BOND FUND
- --------------------------------------------------------------------------------
CLASS 2 SHARES
----------------------
2003(1) 2002(2)
----------------------
NET ASSET VALUE, BEGINNING OF PERIOD ................... $10.63 $10.76
------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income ............................... 0.16* 0.10*
Net realized and unrealized gain (loss) ............. 0.20 (0.13)
------ ------
Total Income (Loss) From Operations .................... 0.36 (0.03)
------ ------
LESS DISTRIBUTIONS FROM:
Net investment income ............................... (0.16) (0.10)
------ ------
Total Distributions .................................... (0.16) (0.10)
------ ------
NET ASSET VALUE, END OF PERIOD ......................... $10.83 $10.63
====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) ....................... $ 26 $ 26
Ratio of expenses to average net assets (3)(4) ...... 1.30%+ 1.30%+
Ratio of net investment income to
average net assets ................................ 3.05+ 3.07+
PORTFOLIO TURNOVER RATE ................................ 0% 9%
TOTAL RETURN (5) ....................................... 3.43%++ (0.28)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period and the Manager had not voluntarily assumed
expenses, the net investment income per share and the ratios would have been as
follows:
Net investment income per share ..................... $ 0.15* $ 0.06*
Ratio of expenses to average net assets ............. 1.49%+ 2.51%+
Ratio of net investment income to
average net assets ................................ 2.87+ 1.86+
SALOMON BROTHERS CALIFORNIA TAX FREE BOND FUND
- --------------------------------------------------------------------------------
CLASS O SHARES
----------------------
2003(1) 2002(6)
----------------------
NET ASSET VALUE, BEGINNING OF PERIOD ................... $10.63 $10.81
------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income ............................... 0.21* 0.09*
Net realized and unrealized gain (loss) ............. 0.20 (0.18)
------ ------
Total Income (Loss) From Operations .................... 0.41 (0.09)
------ ------
LESS DISTRIBUTIONS FROM:
Net investment income ............................... (0.20) (0.09)
------ ------
Total Distributions .................................... (0.20) (0.09)
------ ------
NET ASSET VALUE, END OF PERIOD ......................... $10.84 $10.63
====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) ....................... $ 2 $ 2
Ratio of expenses to average net assets (3)(7) ...... 0.42%+ 0.47%+
Ratio of net investment income to
average net assets ................................ 3.90+ 3.94+
PORTFOLIO TURNOVER RATE ................................ 0% 9%
TOTAL RETURN (5) ....................................... 3.92%++ (0.79)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period and the Manager had not voluntarily assumed
expenses, the net investment income per share and the ratios would have been as
follows:
Net investment income per share ..................... $ 0.20* $ 0.06*
Ratio of expenses to average net assets ............. 0.60%+ 1.70%+
Ratio of net investment income to
average net assets ................................ 3.72+ 2.72+
- ----------
(1) For the six months ended June 30, 2003 (unaudited).
(2) For the period September 9, 2002 (inception date) to December 31, 2002.
(3) The expense ratio has been readjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund to increase its
expense ratio by the effect of any expense offset arrangements with its
service providers.
(4) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.30% for Class 2 shares.
(5) 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 be reduced.
(6) For the period October 8, 2002 (inception date) to December 31, 2002.
(7) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.55% for Class O shares.
* Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
28
Financial Highlights
(continued)
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, unless otherwise noted:
SALOMON BROTHERS NEW YORK TAX FREE BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
----------------------------------------------------------------------
2003(1) 2002 2001 2000 1999 1998
----------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ..................... $ 11.91 $ 11.26 $ 11.44 $ 10.79 $ 11.69 $ 11.42
-------- -------- -------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income ................................. 0.24* 0.49* 0.54 0.60 0.51 0.49
Net realized and unrealized gain (loss) ............... 0.22 0.65 (0.16) 0.61 (0.94) 0.28
-------- -------- -------- -------- -------- --------
Total Income (Loss) From Operations ...................... 0.46 1.14 0.38 1.21 (0.43) 0.77
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS FROM:
Net investment income ................................. (0.24) (0.49) (0.56) (0.56) (0.47) (0.50)
-------- -------- -------- -------- -------- --------
Total Distributions ...................................... (0.24) (0.49) (0.56) (0.56) (0.47) (0.50)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD ........................... $ 12.13 $ 11.91 $ 11.26 $ 11.44 $ 10.79 $ 11.69
======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) ......................... $130,520 $127,482 $140,416 $172,420 $224,144 $459,591
Ratio of expenses to average net assets (2) ........... 0.80%+ 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income to
average net assets .................................. 3.97+ 4.19 4.53 4.81 4.40 4.24
PORTFOLIO TURNOVER RATE .................................. 7% 13% 16% 15% 30% 17%
TOTAL RETURN (3) ......................................... 3.90%++ 10.25% 3.32% 11.54% (3.73)% 6.89%
Note: If Agents of the Fund, had not voluntarily agreed to waive all or a portion of their fees for the period indicated and the
expenses were not reduced for fees paid indirectly, the net investment income per share and the ratios would have been as follows:
Net investment income per share ....................... $ 0.23* $ 0.46* $ 0.51 $ 0.55 $ 0.47 $ 0.45
Ratio of expenses to average net assets ............... 0.94%+ 1.00% 1.21% 1.16% 1.13% 1.09%
Ratio of net investment income to
average net assets .................................. 3.82+ 3.99 4.12 4.45 4.07 3.95
SALOMON BROTHERS NEW YORK TAX FREE BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
-------------------------------
2003(1) 2002 2001(4)
-------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD ..................... $ 11.91 $ 11.26 $ 11.53
------- ------- -------
INCOME (LOSS) FROM OPERATIONS:
Net investment income ................................. 0.19* 0.32* 0.04*
Net realized and unrealized gain (loss) ............... 0.23 0.73 (0.26)
------- ------- -------
Total Income (Loss) From Operations ...................... 0.42 1.05 (0.22)
------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income ................................. (0.19) (0.40) (0.05)
------- ------- -------
Total Distributions ...................................... (0.19) (0.40) (0.05)
------- ------- -------
NET ASSET VALUE, END OF PERIOD ........................... $ 12.14 $ 11.91 $ 11.26
======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) ......................... $ 345 $ 218 $ 14
Ratio of expenses to average net assets (5) ........... 1.55%+ 1.55% 1.55%+
Ratio of net investment income to
average net assets .................................. 3.20+ 3.32 3.50+
PORTFOLIO TURNOVER RATE .................................. 7% 13% 16%
TOTAL RETURN (3) ......................................... 3.56%++ 9.43% (1.88)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion of their fees for the period, the expenses were
not reduced for fees paid indirectly and the Manager had not voluntarily assumed expenses, the net investment income per share and
the ratios would have been as follows:
Net investment income per share ....................... $ 0.18* $ 0.31* $ 0.04*
Ratio of expenses to average net assets ............... 1.69%+ 1.74% 1.96%+
Ratio of net investment income to
average net assets .................................. 3.06+ 3.13 3.09+
- ----------------
(1) For the six months ended June 30, 2003 (unaudited).
(2) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.80% for Class A shares.
(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 be reduced.
(4) For the period November 19, 2001 (inception date) to December 31, 2001.
(5) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.55% for Class B shares.
* Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
29
Financial Highlights
(continued)
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, unless otherwise noted:
SALOMON BROTHERS NEW YORK TAX FREE BOND FUND
- --------------------------------------------------------------------------------
CLASS 2 SHARES
-----------------
2003(1) 2002(2)
-----------------
NET ASSET VALUE, BEGINNING OF PERIOD .......... $11.92 $11.72
------ ------
INCOME FROM OPERATIONS:
Net investment income ...................... 0.19* 0.18*
Net realized and unrealized gain ........... 0.23 0.21
------ ------
Total Income From Operations .................. 0.42 0.39
------ ------
LESS DISTRIBUTIONS FROM:
Net investment income ...................... (0.20) (0.19)
------ ------
Total Distributions ........................... (0.20) (0.19)
------ ------
NET ASSET VALUE, END OF PERIOD ................ $12.14 $11.92
====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .............. $ 511 $ 37
Ratio of expenses to average net assets (3) 1.29%+ 1.30%+
Ratio of net investment income to
average net assets ....................... 3.29+ 3.63+
PORTFOLIO TURNOVER RATE ....................... 7% 13%
TOTAL RETURN (4) .............................. 3.58%++ 3.30%++
Note: If Agents of the Fund, had not voluntarily agreed to waive all or a
portion of their fees for the period indicated and the expenses were not reduced
for fees paid indirectly, the net investment income per share and the ratios
would have been as follows:
Net investment income per share ............ $ 0.19* $ 0.17*
Ratio of expenses to average net assets .... 1.43%+ 1.50%+
Ratio of net investment income to
average net assets ....................... 3.16+ 3.45+
SALOMON BROTHERS NEW YORK TAX FREE BOND FUND
- --------------------------------------------------------------------------------
CLASS O SHARES
----------------------------
2003(1) 2002 2001(5)
----------------------------
NET ASSET VALUE, BEGINNING OF PERIOD .......... $11.90 $11.25 $11.59
------ ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income ...................... 0.25* 0.52* 0.09*
Net realized and unrealized gain (loss) .... 0.22 0.64 (0.33)
------ ------ ------
Total Income (Loss) From Operations ........... 0.47 1.16 (0.24)
------ ------ ------
LESS DISTRIBUTIONS FROM:
Net investment income ...................... (0.25) (0.51) (0.10)
------ ------ ------
Total Distributions ........................... (0.25) (0.51) (0.10)
------ ------ ------
NET ASSET VALUE, END OF PERIOD ................ $12.12 $11.90 $11.25
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .............. $ 94 $ 92 $ 1
Ratio of expenses to average net assets (6) 0.55%+ 0.56% 0.53%+
Ratio of net investment income to
average net assets ....................... 4.21+ 4.40 4.76+
PORTFOLIO TURNOVER RATE ....................... 7% 13% 16%
TOTAL RETURN (4) .............................. 3.99%++ 10.54% (2.04)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period, the expenses were not reduced for fees paid
indirectly and the Manager had not voluntarily assumed expenses, the net
investment income per share and the ratios would have been as follows:
Net investment income per share ............ $ 0.24* $ 0.50* $ 0.09*
Ratio of expenses to average net assets .... 0.69%+ 0.75% 0.94%+
Ratio of net investment income to
average net assets ....................... 4.07+ 4.21 4.35+
- ----------
(1) For the six months ended June 30, 2003 (unaudited).
(2) For the period July 19, 2002 (inception date) to December 31, 2002.
(3) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.30% for Class 2 shares.
(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 be reduced.
(5) For the period October 29, 2001 (inception date) to December 31, 2001.
(6) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.55% for Class O shares.
* Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
30
Financial Highlights
(continued)
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, unless otherwise noted:
SALOMON BROTHERS MID CAP FUND
- --------------------------------------------------------------------------------
CLASS A SHARES
----------------------------
2003(1) 2002 2001(2)
----------------------------
NET ASSET VALUE, BEGINNING OF PERIOD .......... $13.18 $16.47 $13.71
------ ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment loss ........................ (0.03)* (0.06)* (0.01)*
Net realized and unrealized gain (loss) .... 1.30 (3.23) 2.77
------ ------ ------
Total Income (Loss) From Operations ........... 1.27 (3.29) 2.76
------ ------ ------
NET ASSET VALUE, END OF PERIOD ................ $14.45 $13.18 $16.47
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .............. $ 155 $ 116 $ 47
Ratio of expenses to average net assets (3) 1.41%+ 1.42% 1.36%+
Ratio of net investment loss to
average net assets ....................... (0.39)+ (0.44) (0.69)+
PORTFOLIO TURNOVER RATE ....................... 49% 71% 26%
TOTAL RETURN (4) .............................. 9.64%++ (19.98)% 3.65%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period, the expenses were not reduced for fees paid
indirectly and the Manager had not voluntarily assumed expenses, the net
investment loss per share and the ratios would have been as follows:
Net investment loss per share .............. $(0.03)* $(0.13)* $(0.04)*
Ratio of expenses to average net assets .... 1.41%+ 1.91% 1.93%+
Ratio of net investment loss to
average net assets ....................... (0.39)+ (0.93) (1.26)+
SALOMON BROTHERS MID CAP FUND
- --------------------------------------------------------------------------------
CLASS B SHARES
----------------------------
2003(1) 2002 2001(5)
------ ------ ------
NET ASSET VALUE, BEGINNING OF PERIOD .......... $13.10 $16.47 $16.31
------ ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment loss ........................ (0.07)* (0.16)* (0.01)*
Net realized and unrealized gain (loss) .... 1.28 (3.21) 0.17
------ ------ ------
Total Income (Loss) From Operations ........... 1.21 (3.37) 0.16
------ ------ ------
NET ASSET VALUE, END OF PERIOD ................ $14.31 $13.10 $16.47
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .............. $ 139 $ 108 $ 12
Ratio of expenses to average net assets (6) 2.10%+ 1.95% 2.15%+
Ratio of net investment loss to
average net assets ....................... (1.09)+ (0.99) (1.50)+
PORTFOLIO TURNOVER RATE ....................... 49% 71% 26%
TOTAL RETURN (4) .............................. 9.24%++ (20.46)% 0.98%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period, the expenses were not reduced for fees paid
indirectly and the Manager had not voluntarily assumed expenses, the net
investment loss per share and the ratios would have been as follows:
Net investment loss per share .............. $(0.07)* $(0.23)* $(0.01)*
Ratio of expenses to average net assets .... 2.10%+ 2.42% 2.73%+
Ratio of net investment loss to
average net assets ....................... (1.09)+ (1.46) (2.09)+
- ----------
(1) For the six months ended June 30, 2003 (unaudited).
(2) For the period November 30, 2001 (inception date) to December 31, 2001.
(3) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.50% for Class A shares.
(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 be reduced.
(5) For the period December 18, 2001 (inception date) to December 31, 2001.
(6) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 2.25% for Class B shares.
* Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
31
Financial Highlights
(continued)
For a share of each class of beneficial interest outstanding throughout the
period ended December 31, unless otherwise noted:
SALOMON BROTHERS MID CAP FUND
- --------------------------------------------------------------------------------
CLASS 2 SHARES
-----------------
2003(1) 2002(2)
-----------------
NET ASSET VALUE, BEGINNING OF PERIOD .......... $13.15 $16.43
------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment loss ........................ (0.07)* (0.04)*
Net realized and unrealized gain (loss) .... 1.28 (3.24)
------ ------
Total Income (Loss) From Operations ........... 1.21 (3.28)
------ ------
NET ASSET VALUE, END OF PERIOD ................ $14.36 $13.15
====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .............. $ 79 $ 26
Ratio of expenses to average net assets (3) 2.13%+ 1.68%+
Ratio of net investment loss to
average net assets ....................... (1.11)+ (0.51)+
PORTFOLIO TURNOVER RATE ....................... 49% 71%
TOTAL RETURN (4) .............................. 9.20%++ (19.96)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period, the expenses were not reduced for fees paid
indirectly and the Manager had not voluntarily assumed expenses, the net
investment loss per share and the ratios would have been as follows:
Net investment loss per share .............. $(0.07)* $(0.09)*
Ratio of expenses to average net assets .... 2.13%+ 2.27%+
Ratio of net investment loss to
average net assets ....................... (1.11)+ (1.09)+
SALOMON BROTHERS MID CAP FUND
- --------------------------------------------------------------------------------
CLASS O SHARES
----------------------------
2003(1) 2002 2001(5)
----------------------------
NET ASSET VALUE, BEGINNING OF PERIOD .......... $13.23 $16.48 $15.07
------ ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment loss ........................ (0.00)*# (0.02)* (0.01)*
Net realized and unrealized gain (loss) .... 1.29 (3.23) 1.42
------ ------ ------
Total Income (Loss) From Operations ........... 1.29 (3.25) 1.41
------ ------ ------
NET ASSET VALUE, END OF PERIOD ................ $14.52 $13.23 $16.48
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (000s) .............. $17,621 $16,612 $22,935
Ratio of expenses to average net assets (6) 1.08%+ 1.07% 1.08%+
Ratio of net investment loss to
average net assets ....................... (0.05)+ (0.13) (0.17)+
PORTFOLIO TURNOVER RATE ....................... 49% 71% 26%
TOTAL RETURN (4) .............................. 9.75%++ (19.72)% (6.48)%++
Note: If Agents of the Fund had not voluntarily agreed to waive all or a portion
of their fees for the period, the expenses were not reduced for fees paid
indirectly and the Manager had not voluntarily assumed expenses, the net
investment loss per share and the ratios would have been as follows:
Net investment loss per share .............. $(0.02)* $(0.09)* $(0.10)*
Ratio of expenses to average net assets .... 1.28%+ 1.54% 2.97%+
Ratio of net investment loss to
average net assets ....................... (0.12)+ (0.60) (2.05)+
- ----------
(1) For the six months ended June 30, 2003 (unaudited).
(2) For the period May 7, 2002 (inception date) to December 31, 2002.
(3) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 2.25% for Class 2 shares.
(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 be reduced.
(5) For the period September 10, 2001 (inception date) to December 31, 2001.
(6) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.08% for Class O shares.
* Per share amounts have been calculated using the monthly average shares
method.
# Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
32
Salomon Funds Trust
TRUSTEES
ELLIOTT J. BERV
MARK T. FINN
R. JAY GERKEN, CFA
DIANA R. HARRINGTON
SUSAN B. KERLEY
C. OSCAR MORONG, JR.
WALTER E. ROBB, III
OFFICERS
R. JAY GERKEN, CFA
CHAIRMAN AND PRESIDENT
LEWIS E. DAIDONE
SENIOR VICE PRESIDENT AND
CHIEF ADMINISTRATIVE OFFICER
RICHARD L. PETEKA
CHIEF FINANCIAL OFFICER AND TREASURER
KAPREL OZSOLAK
CONTROLLER
ROBERT I. FRENKEL
SECRETARY
INVESTMENT MANAGER
Salomon Brothers Asset Management Inc
399 Park Avenue
New York, NY 10022
DISTRIBUTOR
Citigroup Global Markets Inc.
TRANSFER AGENT
Citicorp Trust Bank, fsb.
125 Broad Street, 11th Floor
New York, NY 10004
SUB-TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
LEGAL COUNSEL
Bingham McCutchen LLP
150 Federal Street
Boston, MA 02110
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 BROTHERS ASSET MANAGEMENT
399 Park Avenue
New York, New York 10022
1-800-SALOMON
www.sbam.com ================
SALOMON
(C)Citigroup Global Markets Inc. ----------------
Member NASD, SIPC BROTHERS
================
SBTAXSEMI 6/03 03-3640 ASSET MANAGEMENT
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. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. 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-2(c) under the
Investment Company Act of 1940, as amended) are effective based on
their evaluation of the disclosure controls and procedures as of a
date within 90 days of the filing date of this document.
(b) In the last 90 days, there have been no significant changes in the
Registrant's internal controls or in other factors that could
significantly affect these controls.
ITEM 10. 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: August 28, 2003
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: August 28, 2003
By: /s/ Richard Peteka
(Richard Peteka)
Chief Financial Officer of
Salomon Funds Trust
Date: August 28, 2003