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 811-8338
Salomon Brothers Emerging Markets Floating Rate Fund Inc.
(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.
Salomon Brothers Asset Management Inc
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: February 28
Date of reporting period: August 31, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The [Semi-Annual] Report to Stockholders is filed herewith.
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ----------------------------------------
Letter from the Chairman
DEAR SHAREHOLDER,
[R. JAY GERKEN PHOTO]
R. JAY GERKEN, CFA
Chairman and Chief
Executive Officer
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 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 management of
your Fund and its performance, not just to enact change for
change's sake. Please bear with us during this transition
period.
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
contact Investor Relations at 1-800-SALOMON. We have also
included a separate Manager Commentary along with this
report, which we hope will give you a better understanding
of your Fund and its management.
As always, thank you for entrusting your assets to us. We
look forward to helping you continue to meet your financial
goals.
Sincerely,
R. Jay Gerken
R. Jay Gerken, CFA
Chairman and Chief Executive Officer
September 23, 2003
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- --------------------------------------
Schedule of Investments (unaudited)
August 31, 2003
<Table>
<Caption>
FACE
AMOUNT SECURITY (A) VALUE
- ---------------------------------------------------------------------------------------------
Sovereign Bonds -- 93.1%
Brazil -- 29.5%
Federal Republic of Brazil:
$ 6,250,000 DCB, Series L, 2.188% due 4/15/12 (b)...................... $ 5,035,156
5,030,769 FLIRB, Series 15U, 2.125% due 4/15/09 (b).................. 4,376,769
6,174,194 MYDFA, 2.063% due 9/15/07 (b).............................. 5,525,903
2,841,176 NMB, 2.188% due 4/15/09 (b)................................ 2,517,992
-----------
17,455,820
-----------
Bulgaria -- 4.8%
2,957,144 Republic of Bulgaria, FLIRB, Series A, 1.938% due
7/28/12 (b)................................................ 2,853,644
-----------
Colombia -- 5.8%
Republic of Colombia:
900,000 7.625% due 2/15/07......................................... 957,375
1,770,000 8.700% due 2/15/16......................................... 1,699,200
650,000 11.750% due 2/25/20........................................ 765,375
-----------
3,421,950
-----------
Ecuador -- 9.6%
Republic of Ecuador:
4,550,000 12.000% due 11/15/12....................................... 3,583,125
3,475,000 7.000% due 8/15/30......................................... 2,076,313
-----------
5,659,438
-----------
Mexico -- 4.6%
United Mexican States:
1,800,000 8.375% due 1/14/11......................................... 2,079,000
600,000 8.300% due 8/15/31......................................... 645,600
-----------
2,724,600
-----------
Panama -- 5.8%
3,951,734 Republic of Panama, PDI, 1.938% due 7/17/16 (b)............. 3,438,008
-----------
Peru -- 5.2%
3,675,000 Republic of Peru, FLIRB, 4.500% due 3/7/17 (b).............. 3,105,375
-----------
Philippines -- 4.6%
Republic of Philippines:
1,378,000 DCB, 2.063% due 12/1/09 (b)................................ 1,260,870
1,305,556 FLIRB, Series B, 2.063% due 6/1/08 (b)..................... 1,223,958
270,000 NMB, 1.933% due 1/5/05 (b)................................. 267,975
-----------
2,752,803
-----------
- ---------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 2
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- --------------------------------------
Schedule of Investments (unaudited) (continued)
August 31, 2003
<Table>
<Caption>
FACE
AMOUNT SECURITY (A) VALUE
- ---------------------------------------------------------------------------------------------
Russia -- 18.2%
Russia Federation:
$ 7,020,000 8.250% due 3/31/10......................................... $ 7,792,200
3,275,000 5.000% due 3/31/30 (b)..................................... 3,000,719
-----------
10,792,919
-----------
Turkey -- 5.0%
Republic of Turkey:
1,100,000 12.375% due 6/15/09........................................ 1,248,500
1,600,000 11.500% due 1/23/12........................................ 1,720,000
-----------
2,968,500
-----------
Total Sovereign Bonds (Cost -- $50,210,016)............... 55,173,057
-----------
Loan Participations (b)(c) -- 5.1%
2,350,393 Kingdom of Morocco, Tranche A, 2.031% due 1/1/09
(J.P. Morgan Chase & Co., CS First Boston Corp.)........... 2,268,130
470,591 Kingdom of Morocco, Tranche B, 2.031% due 1/1/04
(Morgan Stanley, Merrill Lynch & Co., Inc.)................ 451,768
321,166 The People's Democratic Republic of Algeria, Tranche 1,
2.188% due 9/4/06
(J.P. Morgan Chase & Co., CS First Boston Corp., UBS
Financial Services Inc.)................................... 312,334
-----------
Total Loan Participations (Cost -- $2,946,769)............ 3,032,232
-----------
Repurchase Agreement -- 1.8%
1,035,000 State Street Bank and Trust Co., 0.930% due 9/2/03; Proceeds
at maturity -- $1,035,107; (Fully collateralized by U.S.
Treasury Bond, 7.625% due 11/15/22;
Market value -- $1,058,481) (Cost -- $1,035,000)....... 1,035,000
-----------
Total Investments -- 100.0% (Cost -- $54,191,785*)....... $59,240,289
-----------
-----------
- ---------------------------------------------------------------------------------------------
</Table>
(a) Securities are segregated as collateral pursuant to loan agreement or swap
agreement.
(b) Rate shown reflects current rate on instruments with variable rates or step
coupon rates.
(c) Participation interests were acquired through the financial institutions
indicated parenthetically.
* Aggregate cost for Federal income tax purposes is substantially the same.
Abbreviations used in this schedule:
DCB -- Debt Conversion Bond
FLIRB -- Front Loaded Interest Reduction Bond
MYDFA -- Multi-Year Depository Facility Agreement
NMB -- New Money Bond
PDI -- Past Due Interest
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 3
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- --------------------------------------------------
Statement of Assets and Liabilities (unaudited)
August 31, 2003
<Table>
ASSETS:
Investments, at value (Cost -- $54,191,785)............. $59,240,289
Cash..................................................... 3,762,716
Receivable for securities sold........................... 8,160,739
Interest receivable...................................... 888,570
Prepaid expense.......................................... 8,492
-----------
TOTAL ASSETS............................................. 72,060,806
-----------
LIABILITIES:
Loan payable............................................. 15,000,000
Unrealized depreciation on interest rate swap contract
(Note 4)................................................ 1,595,319
Payable on interest rate swap contract................... 135,391
Loan interest payable (Note 6)........................... 60,371
Management fee payable................................... 47,782
Accrued expenses......................................... 74,776
-----------
TOTAL LIABILITIES........................................ 16,913,639
-----------
TOTAL NET ASSETS............................................ $55,147,167
-----------
-----------
NET ASSETS:
Common stock ($0.001 par value, 100,000,000 shares
authorized; 4,298,599 shares outstanding)............... $ 4,299
Additional paid-in capital............................... 57,836,033
Overdistributed net investment income.................... (430,949)
Accumulated net realized loss from investment
transactions............................................ (5,715,401)
Net unrealized appreciation of investments and interest
rate swap contract...................................... 3,453,185
-----------
TOTAL NET ASSETS............................................ $55,147,167
-----------
-----------
NET ASSET VALUE, PER SHARE ($55,147,167 [div] 4,298,599
shares).................................................... $12.83
------
------
</Table>
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SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 4
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- --------------------------------------
Statement of Operations (unaudited)
For the Six Months Ended August 31, 2003
<Table>
INVESTMENT INCOME:
Interest................................................. $ 2,594,555
-----------
EXPENSES:
Management fee (Note 2).................................. 278,167
Interest expense (Note 6)................................ 185,796
Audit and legal.......................................... 89,647
Directors' fees.......................................... 18,775
Shareholder communications............................... 16,080
Transfer agent fees...................................... 14,904
Custody.................................................. 13,054
Registration fees........................................ 12,917
Insurance................................................ 1,104
Other.................................................... 18,880
-----------
TOTAL EXPENSES........................................... 649,324
-----------
NET INVESTMENT INCOME....................................... 1,945,231
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND INTEREST RATE SWAP CONTRACT (NOTES 3 AND 4):
Net Realized Gain From Investment Transactions (excluding
short-term investments):
Proceeds from sales................................... 31,773,436
Cost of securities sold............................... 28,079,639
-----------
NET REALIZED GAIN........................................ 3,693,797
-----------
Change in Net Unrealized Appreciation (Depreciation) of
Investments and Interest Rate Swap Contract:
Beginning of period................................... (141,563)
End of period......................................... 3,453,185
-----------
INCREASE IN NET UNREALIZED APPRECIATION.................. 3,594,748
-----------
NET GAIN ON INVESTMENTS AND INTEREST RATE SWAP CONTRACT..... 7,288,545
-----------
INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 9,233,776
-----------
-----------
</Table>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 5
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ----------------------------------------------------
Statements of Changes in Net Assets
For the Six Months Ended August 31, 2003 (unaudited)
and the Year Ended February 28, 2003
<Table>
<Caption>
AUGUST 31 FEBRUARY 28
- ---------------------------------------------------------------------------------------
OPERATIONS:
Net investment income.................................... $ 1,945,231 $ 4,674,169
Net realized gain (loss)................................. 3,693,797 (3,077,592)
Increase (decrease) in net unrealized appreciation....... 3,594,748 (428,217)
----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS................... 9,233,776 1,168,360
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................... (2,372,704) (4,679,499)
Capital.................................................. -- (60,548)
----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS............................................ (2,372,704) (4,740,047)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued for reinvestment of dividends
(1,329 and 7,325 shares issued, respectively)........... 15,521 74,280
----------- -----------
INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS... 15,521 74,280
----------- -----------
INCREASE (DECREASE) IN NET ASSETS........................... 6,876,593 (3,497,407)
NET ASSETS:
Beginning of period...................................... 48,270,574 51,767,981
----------- -----------
END OF PERIOD*........................................... $55,147,167 $48,270,574
----------- -----------
----------- -----------
* Includes overdistributed net investment income of:........ $(430,949) $(3,476)
----------- -----------
----------- -----------
</Table>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 6
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- --------------------------------------
Statement of Cash Flows (unaudited)
For the Six Months Ended August 31, 2003
<Table>
CASH FLOWS PROVIDED (USED) BY OPERATING AND INVESTING
ACTIVITIES:
Interest and dividend received........................... $ 1,357,662
Operating expenses paid.................................. (442,220)
Net sales of short-term investments...................... 1,138,000
Purchases of long-term investments....................... (27,547,350)
Proceeds from disposition of long-term investments....... 29,069,635
Interest paid on bank loans.............................. (189,926)
------------
NET CASH FLOWS PROVIDED BY OPERATING AND INVESTING
ACTIVITIES.............................................. 3,385,801
------------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Cash dividends paid on Common Stock...................... (2,372,704)
Proceeds from reinvestment of dividends.................. 15,521
------------
NET CASH FLOWS USED BY FINANCING ACTIVITIES................. (2,357,183)
------------
NET INCREASE IN CASH........................................ 1,028,618
Cash, Beginning of period................................... 2,734,098
------------
CASH, END OF PERIOD......................................... $ 3,762,716
------------
------------
RECONCILIATION OF INCREASE IN NET ASSETS FROM OPERATIONS TO
NET CASH FLOWS PROVIDED BY OPERATING AND INVESTING
ACTIVITIES:
INCREASE IN NET ASSETS FROM OPERATIONS................... $ 9,233,776
------------
Accretion of discount on securities...................... (1,260,500)
Amortization of premium on investments................... 52,493
Decrease in investments, at value........................ 373,875
Increase in interest and dividend receivable............. (36,040)
Increase in interest rate swap contract payable.......... 7,155
Increase in receivable for securities sold............... (2,703,801)
Increase in prepaid expenses............................. (8,492)
Decrease in payable of securities purchased.............. (2,298,335)
Decrease in interest payable on loan..................... (4,130)
Increase in accrued expenses............................. 29,800
------------
TOTAL ADJUSTMENTS........................................ (5,847,975)
------------
NET CASH FLOWS PROVIDED BY OPERATING AND INVESTING
ACTIVITIES................................................. $ 3,385,801
------------
------------
</Table>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ---------------------------------------------
Notes to Financial Statements (unaudited)
Note 1. Organization and Significant Accounting Policies
Salomon Brothers Emerging Markets Floating Rate Fund Inc. ('Fund'), formerly
known as The Emerging Markets Floating Rate Fund Inc., was incorporated in
Maryland on January 21, 1994 and is registered as a non-diversified, closed-end,
management investment company under the Investment Company Act of 1940, as
amended. The Fund commenced operations on March 25, 1994. The Fund seeks to
maintain a high level of current income by investing at least 80% of its net
assets plus any borrowings for investment purposes in floating rate debt
securities of emerging market sovereign and corporate issuers, including fixed
rate securities with respect to which the Fund has entered into interest rate
swaps to effectively convert the fixed rate interest payments received into
floating rate interest payments. As a secondary objective, the Fund seeks
capital appreciation.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America ('GAAP'). The preparation of financial statements in
accordance with GAAP requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results may differ from those estimates.
(a) SECURITIES VALUATION. In valuing the Fund's assets, all securities for
which market quotations are readily available are valued (i) at the last sale
price prior to the time of determination if there were a sale on the date of
determination, (ii) at the mean between the last current bid and asked prices if
there were no sales price on such date and bid and asked quotations are
available, and (iii) at the bid price if there were no sales price on such date
and only bid quotations are available. Publicly traded foreign government debt
securities are typically traded internationally in the over-the-counter market,
and are valued at the mean between the last current bid and asked price at the
close of business of that market. However, when the spread between bid and asked
price exceeds five percent of the par value of the security, the security is
valued at the bid price. Securities may also be valued by independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics. Short-term investments having a maturity of 60 days or
less are valued at amortized cost which approximates market value. Securities
for which reliable quotations are not readily available and all other securities
and assets are valued at fair value as determined in good faith by, or under
procedures established by, the Board of Directors.
(b) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Investment transactions are
recorded on the trade date. Interest income is accrued on a daily basis. Market
discount and premium on securities purchased are accreted on an effective yield
basis over the life of the security. The
PAGE 8
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ---------------------------------------------
Notes to Financial Statements (unaudited) (continued)
Fund uses the specific identification method for determining realized gain or
loss on sale of investments.
(c) FEDERAL INCOME TAXES. The Fund has complied and intends to continue to
comply with the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute all, or
substantially all, of its income and capital gains, if any, to its shareholders.
Therefore, no federal income tax or excise tax provision is required.
(d) DIVIDENDS AND DISTRIBUTIONS. The Fund declares and pays dividends to
shareholders monthly from net investment income. Net realized gains, if any, in
excess of loss carryovers are expected to be distributed annually. Dividends and
distributions to shareholders are recorded on the ex-dividend date. The amount
of dividends and distributions from net investment income and net realized gains
are determined in accordance with federal income tax regulations, which may
differ from GAAP. These 'book/tax' differences are either considered temporary
or permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax basis treatment; temporary differences do not require reclassifications.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes, but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains.
(e) REPURCHASE AGREEMENTS. The Fund purchases, and the custodian takes
possession of, U.S. government securities from securities dealers subject to
agreements to resell the securities to the sellers at a future date (generally,
the next business day) at an agreed-upon higher repurchase price. The Fund
requires continual maintenance of the market value (plus accrued interest) of
the collateral in amounts equal to the repurchase price.
Note 2. Management and Advisory Fees and Other Transactions
The Fund entered into a new investment advisory and administration agreement
with Salomon Brothers Asset Management Inc ('SBAM'), an indirect wholly-owned
subsidiary of Citigroup Inc. ('Citigroup'). Pursuant to a Sub-Administration
Agreement, SBAM has delegated certain administrative services to Smith Barney
Fund Management LLC ('SBFM'), another indirect wholly-owned subsidiary of
Citigroup and an affiliate of SBAM. The Fund pays SBAM a monthly fee at an
annual rate of 1.05% of the Fund's average weekly net assets for it's services.
This fee is calculated daily and paid monthly.
Certain officers and/or Directors of the Fund are also officers and/or Directors
of SBAM.
PAGE 9
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ---------------------------------------------
Notes to Financial Statements (unaudited) (continued)
Note 3. Portfolio Activity and Federal Income Tax Status
For the six months ended August 31, 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:
<Table>
Purchases................................................... $25,249,015
-----------
-----------
Sales....................................................... $31,773,436
-----------
-----------
</Table>
At August 31, 2003, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
<Table>
Gross unrealized appreciation............................... $ 5,310,678
Gross unrealized depreciation............................... (262,174)
-----------
Net unrealized appreciation................................. $ 5,048,504
-----------
-----------
</Table>
Note 4. Interest Rate Swaps
In order to manage interest rate sensitivity (duration), the Fund has entered
into an interest rate swap agreement with J.P. Morgan Chase Bank (counterparty)
pursuant to which, the Fund has guaranteed to make semi-annual payments to the
counterparty at predetermined fixed rates, in exchange for floating payments
from the counterparty at the 6-month LIBOR, based on notional principal amount.
During the term of the outstanding swap agreement, changes in the underlying
value of the swap are recorded as unrealized gains or losses. Net periodic
interest payments to be received or paid are accrued daily and recorded in the
statement of operations as an adjustment to interest income. At August 31, 2003,
the Fund had outstanding the following interest rate swap agreement:
Swap Counterparty: J.P. Morgan Chase Bank
Effective Date: 12/28/00
Notional Amount: $16,000,000
Payments Made by the Fund: Fixed Rate 6.13%
Payments Received by the Fund: Floating Rate (6-month LIBOR)
Termination Date: 12/29/10
Unrealized Depreciation as of 8/31/03: $(1,595,319)
-----------
-----------
In connection with this agreement, the Fund is exposed to off-balance sheet
market risk. Off-balance sheet market risk exists when the maximum potential
loss on a particular financial instrument is greater than the value of such
financial instrument, as reflected in the Statement of Assets and Liabilities.
Additionally, the Fund is exposed to credit risk in the event of non-performance
by the swap counterparty.
Note 5. Loan Participations
The Fund invests in fixed and floating rate loans arranged through private
negotiations between a foreign sovereign entity and one or more financial
institutions. The Fund's investment in such loans are in the form of
participations in the loans.
PAGE 10
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ---------------------------------------------
Notes to Financial Statements (unaudited) (continued)
In connection with purchasing loan participations, the Fund generally will have
no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any rights of set-off against the borrower,
and the Fund may not benefit directly from any collateral supporting the loan in
which it has purchased the participation. As a result, the Fund will assume the
credit risk of both the borrower and the lender that is selling the
participation. In the event of the insolvency of the lender selling the
participation, the Fund may be treated as a general creditor of the lender and
may not benefit from any set-off between the lender and the borrower. The Fund
may have difficulty disposing of participations because the market for such
instruments is not highly liquid.
At August 31, 2003, the Fund held loan participations with a total cost of
$2,946,769.
Note 6. Loan
At August 31, 2003, the Fund had $15,000,000 outstanding of an available
$20,000,000 loan pursuant to a revolving credit and security agreement with CXC
Inc., a commercial paper conduit issuer for which Citicorp North America Inc.,
another affiliate of SBAM, acts as administrative agent. The loans generally
bear interest at a variable rate based on the weighted average interest rates of
the underlying commercial paper or LIBOR, plus any applicable margin. Securities
held by the Fund are subject to a lien, granted to the lenders, to the extent of
the borrowing outstanding and any additional expenses.
Note 7. Credit and Market Risk
The yields on emerging market debt obligations and high-yield corporate debt
obligations reflect, among other things, perceived credit risk. The Fund's
investment in securities rated below investment grade typically involves risks
not associated with higher rated securities including, among others, overall
greater risk of timely and ultimate payment of interest and principal, greater
market price volatility and less liquid secondary market trading. The
consequences of political, social, economic or diplomatic changes may have
disruptive effects on the market prices of investments held by the Fund. At
August 31, 2003, the Fund has a concentration of credit risk in sovereign debt
of emerging market countries.
Note 8. Dividends Subsequent to August 31, 2003
On July 17, 2003, the Board of Directors of the Fund declared three dividends
from the net investment income, each in the amount of $0.092 per share, payable
on September 26, 2003, October 31, 2003 and November 28, 2003 to shareholders of
record on September 16, 2003, October 15, 2003 and November 18, 2003,
respectively.
PAGE 11
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ----------------------------------
Financial Highlights
For a share of capital stock outstanding throughout each year ended
February 28, unless otherwise noted:
<Table>
<Caption>
2003(1) 2003 2002 2001 2000(2) 1999
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD.......... $11.23 $12.07 $11.84 $12.08 $10.21 $15.55
------ ------- ------- ------- ------ --------
INCOME (LOSS) FROM OPERATIONS:
Net investment income (3).................... 0.45 1.08 1.25 1.48 1.57 1.62
Net realized and unrealized gain (loss)
(3)........................................ 1.70 (0.82) 0.48 (0.13) 1.89 (5.09)
------ ------- ------- ------- ------ --------
Total Income (Loss) From Operations........... 2.15 0.26 1.73 1.35 3.46 (3.47)
------ ------- ------- ------- ------ --------
LESS DISTRIBUTIONS FROM:
Net investment income........................ (0.55) (1.09) (1.50) (1.59) (1.59) (1.59)
Net realized gains........................... -- -- -- -- -- (0.28)
Capital...................................... -- (0.01) -- -- -- --
------ ------- ------- ------- ------ --------
Total Distributions........................... (0.55) (1.10) (1.50) (1.59) (1.59) (1.87)
------ ------- ------- ------- ------ --------
NET ASSET VALUE, END OF PERIOD................ $12.83 $11.23 $12.07 $11.84 $12.08 $10.21
------ ------- ------- ------- ------ --------
------ ------- ------- ------- ------ --------
MARKET PRICE, END OF PERIOD................... $12.86 $11.30 $11.75 $12.85 $11.00 $12.1875
------ ------- ------- ------- ------ --------
------ ------- ------- ------- ------ --------
TOTAL RETURN,
BASED ON MARKET PRICE (4).................... 19.01%'DD' 6.92% 3.94% 33.58% 3.74% (13.64)%
NET ASSETS, END OF PERIOD (000s).............. $55,147 $48,271 $51,768 $50,576 $51,405 $43,162
RATIOS TO AVERAGE NET ASSETS:
Total expenses, including interest expense... 2.45%'D' 2.65% 1.81% -- -- --
Total expenses, excluding interest expense
(operating expenses)....................... 1.75%'D' 1.69% 1.54% 1.52% 1.51% 1.58%
Net investment income (3).................... 7.33%'D' 10.16% 10.95% 12.48% 14.02% 12.95%
PORTFOLIO TURNOVER RATE....................... 39% 87% 142% 221% 172% 163%
Loans Outstanding, End of Period (000s)....... $15,000 $15,000 $15,000 -- -- --
Weighted Average Loans (000s)................. $15,000 $15,000 $14,566 -- -- --
Weighted Average Interest Rate on Loans....... 2.46% 2.97% 3.51% -- -- --
- ------------------------------------------------------------------------------------------------------------
</Table>
(1) For the six months ended August 31, 2003 (unaudited).
(2) For the year ended February 29, 2000.
(3) Effective March 1, 2001, the Fund adopted a change in the accounting method
that requires the Fund to amortize premiums and accrete all discounts.
Without the adoption of this change, for the year ended February 28, 2002,
the change to net investment income, net realized and unrealized gain and
the ratio of net investment income to average net assets was less than
$0.01, $0.01 and 0.01%, respectively. Per share information, ratios and
supplemental data for the periods prior to March 1, 2001 have not been
restated to reflect this change in presentation.
(4) Total return is calculated assuming a purchase of common stock at the
current market price on the first day and a sale at the current market
price on the last day of each period reported. For purposes of this
calculation, dividends are assumed to be reinvested at prices obtained
under the Fund's dividend reinvestment plan and the broker commission
paid to purchase or sell a share is excluded.
'DD' Total return is not annualized, as it may not be representative of the
total return for the year.
'D' Annualized.
PAGE 12
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- -------------------------------------------------
Additional Stockholder Information (unaudited)
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS
The Fund held its Annual Meeting of Stockholders on June 19, 2003, for the
purpose of voting upon the election of R. Jay Gerken and Leslie H. Gelb as
Class II Directors of the Fund, to serve until the 2006 Annual Meeting of
Stockholders, and Carol L. Colman and Daniel P. Cronin as Class III Directors of
the Fund, to serve until the 2004 Annual Meeting of Stockholders. The following
table provides information concerning the matter voted upon at the Meeting.
1. ELECTION OF DIRECTORS
<Table>
<Caption>
NOMINEES VOTES FOR VOTES WITHHELD
- -------- --------- --------------
CLASS II -- TO SERVE UNTIL THE YEAR 2006
R. Jay Gerken............................................... 3,856,034 122,458
Leslie H. Gelb.............................................. 3,859,125 119,367
CLASS III -- TO SERVE UNTIL THE YEAR 2004
Carol L. Colman............................................. 3,876,824 101,668
Daniel P. Cronin............................................ 3,878,625 99,867
</Table>
At August 31, 2003, in addition to Carol L. Colman, Daniel P. Cronin, Leslie H.
Gelb and R. Jay Gerken, the other Directors of the Fund were as follows:
William R. Hutchinson
Riordan Roett
Jeswald W. Salacuse
PAGE 13
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ------------------------------------------
Dividend Reinvestment Plan (unaudited)
1. Each shareholder initially purchasing shares of common stock ('Shares') of
Salomon Brothers Emerging Markets Floating Rate Fund Inc. ('Fund') on or after
September 6, 1996 will be deemed to have elected to be a participant in the
Amended and Restated Dividend Reinvestment and Cash Purchase Plan ('Plan'),
unless the shareholder specifically elects in writing (addressed to the Agent at
the address below or to any nominee who holds Shares for the shareholder in its
name) to receive all income dividends and distributions of capital gains in
cash, paid by check, mailed directly to the record holder by or under the
direction of American Stock Transfer & Trust Company as the Fund's
dividend-paying agent ('Agent'). A shareholder whose Shares are held in the name
of a broker or nominee who does not provide an automatic reinvestment service
may be required to take such Shares out of 'street name' and register such
Shares in the shareholder's name in order to participate, otherwise dividends
and distributions will be paid in cash to such shareholder by the broker or
nominee. Each participant in the Plan is referred to herein as a 'Participant.'
The Agent will act as Agent for each Participant, and will open accounts for
each Participant under the Plan in the same name as their Shares are registered.
2. Unless the Fund declares a dividend or distribution payable only in the form
of cash, the Agent will apply all dividends and distributions in the manner set
forth below.
3. If, on the determination date, the market price per Share equals or exceeds
the net asset value per Share on that date (such condition, a 'market premium'),
the Agent will receive the dividend or distribution in newly issued Shares of
the Fund on behalf of Participants. If, on the determination date, the net asset
value per Share exceeds the market price per Share (such condition, a 'market
discount'), the Agent will purchase Shares in the open-market. The determination
date will be the fourth New York Stock Exchange trading day (a New York Stock
Exchange trading day being referred to herein as a 'Trading Day') preceding the
payment date for the dividend or distribution. For purposes herein, 'market
price' will mean the average of the highest and lowest prices at which the
Shares sell on the New York Stock Exchange on the particular date, or if there
is no sale on that date, the average of the closing bid and asked quotations.
4. Purchases made by the Agent will be made as soon as practicable commencing on
the Trading Day following the determination date and terminating no later than
30 days after the dividend or distribution payment date except where temporary
curtailment or suspension of purchase is necessary to comply with applicable
provisions of federal securities law; provided, however, that such purchases
will, in any event, terminate on the Trading Day prior to the 'ex-dividend' date
next succeeding the dividend or distribution payment date.
5. If (i) the Agent has not invested the full dividend amount in open-market
purchases by the date specified in paragraph 4 above as the date on which such
purchases must terminate or (ii) a market discount shifts to a market premium
during the purchase period, then the Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued Shares (x) in the case of (i) above, at the close of business on
the date the Agent is required to terminate making open-market purchases as
specified in paragraph 4
PAGE 14
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
above or (y) in the case of (ii) above, at the close of business on the date
such shift occurs; but in no event prior to the payment date for the dividend or
distribution.
6. In the event that all or part of a dividend or distribution amount is to be
paid in newly issued Shares, such Shares will be issued to Participants in
accordance with the following formula: (i) if, on the valuation date, the net
asset value per share is less than or equal to the market price per Share, then
the newly issued Shares will be valued at net asset value per Share on the
valuation date; provided, however, that if the net asset value is less than 95%
of the market price on the valuation date, then such Shares will be issued at
95% of the market price and (ii) if, on the valuation date, the net asset value
per share is greater than the market price per Share, then the newly issued
Shares will be issued at the market price on the valuation date. The valuation
date will be the dividend or distribution payment date, except that with respect
to Shares issued pursuant to paragraph 5 above the valuation date will be the
date such Shares are issued. If a date that would otherwise be a valuation date
is not a Trading Day, the valuation date will be the next preceding Trading Day.
7. Participants have the option of making additional cash payments to the Agent,
monthly, in a minimum amount of $250, for investment in Shares. The Agent will
use all such funds received from Participants to purchase Shares in the open
market on or about the first business day of each month. To avoid unnecessary
cash accumulations, and also to allow ample time for receipt and processing by
the Agent, Participants should send in voluntary cash payments to be received by
the Agent approximately 10 days before an applicable purchase date specified
above. A Participant may withdraw a voluntary cash payment by written notice, if
the notice is received by the Agent not less than 48 hours before such payment
is to be invested.
8. Purchases by the Agent pursuant to paragraphs 4 and 7 above may be made on
any securities exchange on which the Shares of the Fund are traded, in the
over-the-counter market or in negotiated transactions, and may be on such terms
as to price, delivery and otherwise as the Agent shall determine. Funds held by
the Agent uninvested will not bear interest, and it is understood that, in any
event, the Agent shall have no liability in connection with any inability to
purchase Shares within the time periods herein provided, or with the timing of
any purchases effected. The Agent shall have no responsibility as to the value
of the Shares acquired for the Participant's account. The Agent may commingle
amounts of all Participants to be used for open-market purchases of Shares and
the price per Share allocable to each Participant in connection with such
purchases shall be the average price (including brokerage commissions) of all
Shares purchased by the Agent.
9. The Agent will maintain all Participants' accounts in the Plan and will
furnish written confirmations of all transactions in each account, including
information needed by Participants for personal and tax records. The Agent will
hold Shares acquired pursuant to the Plan in noncertificated form in the
Participant's name or that of its nominee, and each Participant's proxy will
include those Shares purchased pursuant to the Plan. The Agent will forward to
Participants any proxy solicitation material and will vote any Shares so held
for Participants only in accordance
PAGE 15
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
with the proxy returned by Participants to the Fund. Upon written request, the
Agent will deliver to Participants, without charge, a certificate or
certificates for the full Shares.
10. The Agent will confirm to Participants each acquisition made for their
respective accounts as soon as practicable but not later than 60 days after the
date thereof. Although Participants may from time to time have an undivided
fractional interest (computed to three decimal places) in a Share of the Fund,
no certificates for fractional shares will be issued. Dividends and
distributions on fractional shares will be credited to each Participant's
account. In the event of termination of a Participant's account under Plan, the
Agent will adjust for any such undivided fractional interest in cash at the
market value of the Fund's Shares at the time of termination less the pro rata
expense of any sale required to make such an adjustment.
11. Any share dividends or split shares distributed by the Fund on Shares held
by the Agent for Participants will be credited to their respective accounts. In
the event that the Fund makes available to Participants rights to purchase
additional Shares or other securities, the Shares held for Participants under
the Plan will be added to other Shares held by the Participants in calculating
the number of rights to be issued to Participants.
12. The Agent's service fee for handling capital gains distributions or income
dividends will be paid by the Fund. Participants will be charged a pro rata
share of brokerage commissions on all open-market purchases.
13. Participants may terminate their accounts under the Plan by notifying the
Agent in writing. Such termination will be effective immediately if notice is
received by the Agent not less than 10 days prior to any dividend or
distribution record date; otherwise such termination will be effective on the
first Trading Day after the payment date for such dividend or distribution with
respect to any subsequent dividend or distribution. The Plan may be amended or
terminated by the Fund as applied to any voluntary cash payments made and any
income dividend or capital gains distribution paid subsequent to written notice
of the change or termination sent to Participants at least 30 days prior to the
record date for the income dividend or capital gains distribution. The Plan may
be amended or terminated by the Agent, with the Fund's prior written consent, on
at least 30 days' written notice to Participants. Notwithstanding the preceding
two sentences, the Agent or the Fund may amend or supplement the Plan at any
time or times when necessary or appropriate to comply with applicable law or
rules or policies of the Securities and Exchange Commission or any other
regulatory authority. Upon any termination, the Agent will cause a certificate
or certificates for the full Shares held by each Participant under the Plan and
cash adjustment for any fraction to be delivered to each Participant without
charge. If the Participant elects by notice to the Agent in writing in advance
of such termination to have the Agent sell part or all of a Participant's Shares
and remit the proceeds to Participant, the Agent is authorized to deduct a
brokerage commission for this transaction from the proceeds.
PAGE 16
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
- ------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
14. Any amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Agent receives
written notice of the termination of the Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its place and
stead of a successor Agent under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent under
these terms and conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will be authorized to
pay to such successor Agent, for each Participant's account, all dividends and
distributions payable on Shares of the Fund held in each Participant's name or
under the Plan for retention or application by such successor Agent as provided
in these terms and conditions.
15. In the case of Participants, such as banks, broker-dealers or other
nominees, which hold Shares for others who are beneficial owners ('Nominee
Holders'), the Agent will administer the Plan on the basis of the number of
Shares certified from time to time by each Nominee Holder as representing the
total amount registered in the Nominee Holder's name and held for the account of
beneficial owners who are to participate in the Plan.
16. The Agent shall at all times act in good faith and use its best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement and to comply with applicable law, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by its negligence, bad faith, or willful misconduct or that of its
employees.
17. All correspondence concerning the Plan should be directed to the Agent at 59
Maiden Lane, New York, New York 10038.
-------------------
This report is transmitted to the shareholders of Salomon Brothers Emerging
Markets Floating Rate Fund Inc. for their information. This is not a prospectus,
circular or representation intended for use in the purchase of shares of the
Fund or any securities mentioned in this report.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
PAGE 17
<Page>
SALOMON BROTHERS EMERGING MARKETS FLOATING RATE FUND INC.
<Table>
- --------- ---------------------------------------
Directors Salomon Brothers Emerging Markets
Floating Rate Fund Inc.
CAROL L. COLMAN 125 Broad Street
DANIEL P. CRONIN 10th Floor, MF-2
LESLIE H. GELB New York, New York 10004
R. JAY GERKEN, CFA
WILLIAM R. HUTCHINSON TELEPHONE
RIORDAN ROETT 1-888-777-0102
JESWALD W. SALACUSE
INVESTMENT MANAGER
- ------- Salomon Brothers Asset Management Inc
Officers 399 Park Avenue
New York, New York 10022
R. JAY GERKEN, CFA
Chairman and CUSTODIAN
Chief Executive Officer State Street Bank and Trust Company
225 Franklin Street
PETER J. WILBY, CFA Boston, Massachusetts 02110
President
DIVIDEND DISBURSING AND TRANSFER AGENT
LEWIS E. DAIDONE American Stock Transfer & Trust Company
Executive Vice President and 59 Maiden Lane
Chief Administrative Officer New York, New York 10038
JAMES E. CRAIGE, CFA LEGAL COUNSEL
Executive Vice President Simpson Thacher & Bartlett LLP
425 Lexington Avenue
THOMAS K. FLANAGAN, CFA New York, New York 10017
Executive Vice President
INDEPENDENT AUDITORS
FRANCES M. GUGGINO PricewaterhouseCoopers LLP
Controller 1177 Avenue of the Americas
New York, New York 10036
CHRISTINA T. SYDOR
Secretary NEW YORK STOCK EXCHANGE SYMBOL
EFL
</Table>
PAGE 18
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
Salomon Brothers
Emerging Markets
Floating Rate Fund Inc.
Semi-Annual Report
AUGUST 31, 2003
---------------
SALOMON
---------------
BROTHERS
---------------
Asset Management
EFLSEMI 8/03
03-5549
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-3(c) under the Investment
Company Act of 1940, as amended (the "1940 Act")) are
effective as of a date within 90 days of the filing
date of this report that includes the disclosure
required by this paragraph, based on their evaluation
of the disclosure controls and procedures required by
Rule 30a-3(b) under the 1940 Act and 15d-15(b) under
the Securities Exchange Act of 1934.
(b) There were no changes in the registrant's internal
control over financial reporting (as defined in Rule
30a-3(d) under the 1940 Act) that occurred during the
registrant's last fiscal half-year (the registrant's
second fiscal half-year in the case of an annual
report) that have materially affected, or are likely
to materially affect the registrant's internal
control over financial reporting.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) Attached hereto.
<Table>
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
</Table>
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 Brothers Emerging Markets Floating Rate Fund Inc.
By: /s/ R. Jay Gerken
R. Jay Gerken
Chief Executive Officer of
Salomon Brothers Emerging Markets Floating Rate Fund Inc.
Date: October 29, 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 Brothers Emerging Markets Floating Rate Fund Inc.
Date: October 29, 2003
By: /s/ Lewis E. Daidone
Chief Administrative Officer of
Salomon Brothers Emerging Markets Floating Rate Fund Inc.
Date: October 29, 2003
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as................................ 'SS'
The dagger symbol shall be expressed as................................. 'D'
The double dagger symbol shall be expressed as.......................... 'DD'
The division sign shall be expressed as................................. [div]