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 811-805

Salomon Brothers Investors Value Fund Inc

(Exact name of registrant as specified in charter)

125 Broad Street, New York, NY 10004

(Address of principal executive offices) (Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

300 First Stamford Place, 4^th Floor

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 451-2010

Date of fiscal year end: December 31

Date of reporting period: December 31, 2005

ITEM 1. REPORT TO STOCKHOLDERS.

The Annual Report to Stockholders is filed herewith.

EXPERIENCE

ANNUAL REPORT

DECEMBER 31, 2005

Salomon Brothers

Investment Series

All Cap Value Fund

Balanced Fund

Capital Fund

Investors Value Fund

Large Cap Growth Fund

Small Cap Growth Fund

INVESTMENT PRODUCTS: NOT FDIC INSURED Ÿ NO BANK GUARANTEE Ÿ MAY LOSE VALUE

Salomon Brothers Investment Series

Annual Report  •  December 31, 2005

What’s

Inside

What’s inside

Under a licensing agreement between Citigroup and Legg Mason, the names of funds, the names of any classes of shares of funds, and the names of investment advisers of funds, as well as all logos, trademarks and service marks related to Citigroup or any of its affiliates (“Citi Marks”) are licensed for use by Legg Mason. Citi Marks include, but are not limited to, “Smith Barney,” “Salomon Brothers,” “Citi” and “Citigroup Asset Management”. Legg Mason and its affiliates, as well as the Funds’ investment manager, are not affiliated with Citigroup.

All Citi Marks are owned by Citigroup, and are licensed for use until no later than one year after the date of the licensing agreement.

Letter from the Chairman

R. JAY GERKEN, CFA

Chairman, President and Chief

Executive Officer

Dear Shareholder,

Despite numerous obstacles, including rising short-term interest rates, surging oil prices, a destructive hurricane season and geopolitical issues, the U.S. economy continued to expand at a healthy pace during the reporting period. After a 3.8% advance in the first quarter of 2005, gross domestic product (“GDP”)ⁱ growth was 3.3% during the second quarter and 4.1% in the third quarter. While fourth quarter figures have not yet been released, another slight gain is anticipated.

Given the strength of the economy and inflationary pressures, the Federal Reserve Board (“Fed”)ⁱⁱ continued to raise interest rates throughout the period. After raising rates five times from June 2004 through December 2004, the Fed increased its target for the federal funds rateⁱⁱⁱ in 0.25% increments eight additional times over the reporting period. This represents the longest sustained Fed tightening cycle since the 1970s. All told, the Fed’s thirteen rate hikes have brought the target for the federal funds rate from 1.00% to 4.25%. After the end of the Fund’s reporting period, at its January meeting, the Fed once again raised its target for the federal funds rate by 0.25% to 4.50%.

For the one-year period ended December 31, 2005, the U.S. stock market generated positive results, with the S&P 500 Index^iv returning 4.91%. While corporate profits remained strong during the year, they were often overshadowed by rising interest rates and higher oil prices.

Looking at the fiscal year as a whole, mid-cap stocks outperformed their large- and small-cap counterparts, with the Russell Midcap^v, Russell 1000^vi, and Russell 2000^vii Indexes returning 12.65%, 6.27%, and 4.55%, respectively. From an investment style perspective, value stocks outperformed growth stocks for the sixth consecutive calendar year, with the Russell 3000 Value^viii and Russell 3000 Growth^ix Indexes returning 6.85% and 5.17%, respectively, in 2005.

Salomon Brothers Investment Series        I

Please read on for a more detailed look at prevailing economic and market conditions during the Funds’ fiscal year and to learn how those conditions have affected Fund performance.

Special Shareholder Notice

On December 1, 2005, Citigroup Inc. (“Citigroup”) completed the sale of substantially all of its asset management business, Citigroup Asset Management (“CAM”), to Legg Mason, Inc. (“Legg Mason”). As a result, the Funds’ investment manager (the “Manager”), previously an indirect wholly-owned subsidiary of Citigroup, has become a wholly-owned subsidiary of Legg Mason. Completion of the sale caused the Funds’ existing investment management contracts to terminate. The Funds’ shareholders approved new investment management contracts between the Funds’ and the Manager, which became effective on December 1, 2005.

On February 3, 2006, the Board of Directors approved a proposal to liquidate all of the assets of Salomon Brothers All Cap Value Fund and Salomon Brothers Large Cap Growth Fund. The liquidation is scheduled to occur on or about the close of business on April 21, 2006. A supplement and a Notice of Redemption was mailed to shareholders on or about February 14, 2006.

Shares of the Funds will be closed to all investments, exchange investments and systematic investments effective at the close of business on February 3, 2006. Shareholders can continue to exchange their shares for the same share class of any other open-end Salomon Brothers Fund offered in their sales channel without the imposition of a sales charge through April 21, 2006. Additionally, any applicable deferred sales charge fee will be waived effective at the close of business February 3, 2006 for any shareholder who chooses to liquidate.

Information About Your Funds

As you may be aware, several issues in the mutual fund industry have recently come under the scrutiny of federal and state regulators. The Funds’ Manager and some of its affiliates have received requests for information from various government regulators regarding market timing, late trading, fees, and other mutual fund issues in connection with various investigations. The regulators appear to be examining, among other things, the Funds’ response to market timing and shareholder exchange activity, including compliance with prospectus disclosure related to these subjects. The Funds

II       Salomon Brothers Investment Series

have been informed that the Manager and its affiliates are responding to those information requests, but are not in a position to predict the outcome of these requests and investigations.

Important information concerning the Funds and their Manager with regard to recent regulatory developments is contained in the Notes to Financial Statements included in this report.

As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you continue to meet your financial goals.

Sincerely,

R. Jay Gerken, CFA

Chairman and Chief Executive Officer

February 3, 2006

Salomon Brothers Investment Series        III

Manager’s Overview

Salomon Brothers All Cap Value Fund

Q. What were the overall market conditions during the Fund’s reporting period?

A. A resilient U.S. economy provided a positive backdrop for the stock market in 2005. Businesses across America did their part, as corporate profit growth was expected to exceed 10% for the third consecutive year. However, this did not translate into superior stock market returns, as the S&P 500 Indexⁱ gained a relatively modest 4.91% in 2005. After trading in a fairly narrow range for much of the period, there were hopes that a year-end rally, similar to what occurred in 2003 and 2004, would propel stocks higher. However, after strong gains in November, the market treaded water in December as investor sentiment weakened due to fears of continued rate hikes by the Federal Reserve Board (“Fed”)ⁱⁱ. Looking more closely at the stock market’s returns in 2005, among the Dow Jones industrial categories, oil & gas stocks generated the best returns, followed at a distance by utilities, and health care companies. In contrast, telecommunications, consumer services, and consumer goods stocks produced weak returns. 

Performance review

For the 12 months ended December 31, 2005, Class A shares of the Salomon Brothers All Cap Value Fund, excluding sales charges, returned 2.89%. The Fund’s unmanaged benchmark, the Russell 3000 Indexⁱⁱⁱ, returned 6.12% for the same period. The Lipper Multi-Cap Core Funds Category Average¹ increased 6.59% over the same time frame.

Q. What were the most significant factors affecting Fund performance?

     What were the leading contributors to performance?

A. There are periods of time, often five years or more, when bigger companies outperform and there are times when the opposite is true. During 2005, our stock selection increasingly favored larger companies where we felt there was greater value. Although we believe larger companies will do much better in absolute and relative senses in 2006, this emphasis detracted from results over the reporting period.

Market volatility reached very low levels over the last year and it is likely that somewhat higher volatility is in store for 2006. The good news is that higher volatility and even a few surprises early in the year may generate attractive investment opportunities for us. Historically, some of our most successful purchases have occurred during times of stress for either the economy or the stock market.

During the one-year period, the Fund’s holdings in the energy, financials, and information technology sectors were the largest contributors to absolute performance. In terms of individual stocks, the largest contributors to absolute returns over the period were Anadarko Petroleum Corp., GlobalSantaFe Corp., Texas Instruments Inc., Canadian Natural Resources Ltd., and Chubb Corp. The Fund sold its position in Canadian Natural Resources Ltd. during the reporting period.

Salomon Brothers Investment Series 2005 Annual Report       1

    What were the leading detractors from performance?

A. Most of the Fund’s underperformance during the period came from its consumer discretionary stocks. In this sector, we emphasized media companies, such as News Corp., Time Warner Inc., and Walt Disney Co. We believe the media segment is now selling at one of the lowest relative values to the market in the last 20 years. At current prices, we believe the media stocks contained in the portfolio represent compelling values. In 2006, the winter Olympics and the mid-term elections should help increase advertising revenues for these companies. Our approach is to “select leading business franchises selling at depressed prices for reasons we believe are temporary.” Expectations and prices in the media industry are depressed and we feel the stocks should do well in 2006.

    From a stock-specific perspective, the holdings that detracted the most from absolute returns during the reporting period were PEARSON PLC, Solectron Corp., Lucent Technologies Inc., Comcast Corp., and Aphton Corp.

Q. Were there any significant changes to the Fund during the reporting period?

A. During the final quarter of 2005, we reduced our holdings in the energy sector to a neutral weight versus the benchmark. We continue to like energy stocks longer term, but we thought the spike in oil and natural gas prices after Hurricanes Katrina and Rita had made these stocks vulnerable to a meaningful correction. We believe “contra energy” (large users of energy) actually might be better performers over the next few quarters should energy prices correct, as we expect.

Diversification is a cardinal tenet of prudent investing. However, one can also have too many companies in a portfolio. We are currently working to reduce, moderately, the number of our holdings.

Thank you for your investment in the Salomon Brothers All Cap Value Fund. As ever, we appreciate that you have chosen us to manage your assets.

Sincerely,

February 3, 2006

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

Portfolio holdings and breakdowns are as of December 31, 2005 and are subject to change and may not be representative of the portfolio manager’s current or future investments. The Fund’s top ten holdings (as a percentage of net assets) as of this date were: JPMorgan Chase & Co. (2.3%), CNASurety Corp. (2.0%), Anadarko Petroleum Corp. (2.0%), Chubb Corp. (2.0%), News Corp. (2.0%), PMI Group Inc. (1.9%), Cisco Systems Inc. (1.9%), Raytheon Corp. (1.9%), Microsoft Corp. (1.8%) and Time Warner Inc. (1.7%). Please refer to pages 43 through 46 for a list and percentage breakdown of the Fund’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio manager’s current or future investments. The Fund’s top five sector holdings (as a percentage of net assets) as of December 31, 2005 were: Financials (20.3%), Information Technology (14.8%), Consumer Discretionary (14.7%), Health Care (10.7%) and Energy (9.1%). The Fund’s portfolio composition is subject to change at any time.

All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

2       Salomon Brothers Investment Series 2005 Annual Report

Manager’s Overview

Salomon Brothers Balanced Fund

Q. What were the overall market conditions during the Fund’s reporting period?

A. The stock market entered 2005 on a strong upward trajectory after a decisive 2004 Presidential election. However, once January started, investors turned their attention to rising energy prices and interest rates. The Federal Reserve Board (“Fed”)ⁱ made very clear its intention to boost short-term interest rates from near 50-year lows to guard against potential inflation, curb real estate speculation, and reset their interest rate lever to battle future economic downturns. After loosing ground early in the year, stocks headed higher on healthy earnings and economic data. Heading into autumn, investor focus turned to energy prices. In late August, Hurricane Katrina effectively shut down New Orleans, knocking out a significant portion of the region’s oil production and refining capacity. Gasoline prices exceeded $3 a gallon, driving stock prices lower as investors worried about the broader implications the spike in energy prices would have on the economy. The end of the year saw stocks rally as energy prices eased and economic and corporate profit growth remained robust.

Performance review

For the 12 months ended December 31, 2005, Class A shares of the Salomon Brothers Balanced Fund, returned 2.73%. The Fund’s unmanaged benchmarks, the S&P 500 Indexⁱⁱ and the Citigroup Broad Investment Grade Bond Indexⁱⁱⁱ, returned 4.91% and 2.57%, respectively, for the same period. The Lipper Balanced Funds Category Average¹ increased 4.69% over the same time frame.

Q. What were the most significant factors affecting Fund performance?

     What were the leading contributors to performance?

A. Leading contributors to performance for the period included overweight positions in the energy, financials, and information technology sectors. Individual stocks that enhanced results included Suncor Energy Inc., a Canadian company that produces oil from tar sands, natural gas and other energy products. Halliburton Co., an energy services and engineering and construction company, performed well as it benefited from increasing prices in its oil services business, and a reduction in potential asbestos liability. Other standouts were Chubb Corp., a large insurance company that benefited from a healthy insurance environment, Merrill Lynch & Co., the brokerage firm that was helped by operating more efficiently in an active market, Hewlett Packard Co., which benefited from a management change, and Motorola Inc., which was also helped by a management change and strong cell phone sales. Of the stocks mentioned above, we reduced our holdings in Chubb and Motorola to protect a portion of the gains.

Salomon Brothers Investment Series 2005 Annual Report       3

     What were the leading detractors from performance?

A. Detractors from performance over the period included an overweight in the telecommunications services sector and certain holdings in the consumer discretionary and consumer staples sectors. Individual stocks that hurt performance included Verizon Inc., the largest U.S. phone company. Its shares declined as investors worried about the pending MCI acquisition, as well as Verizon’s heavy capital spending on fiber optics and infrastructure to deliver video to the home. News Corp., a global media company, performed poor on the back of investors concerns over the Internet’s impact on traditional media advertising. We reduced our exposure to New Corp because of an uncertain media environment. Comcast, the largest U.S. cable operator, also fell due to advertising concerns. Elsewhere, Wal-Mart Stores declined based on concerns that higher gas prices would slow sales, and cosmetics company Avon Products suffered from slowing sales and a restructuring that will depress earnings into 2006.

Q. Were there any significant changes to the Fund during the reporting period?

A. In 2006, the Salomon Brothers Balanced Fund will no longer pay a daily distribution. Going forward it will pay a quarterly distribution based on the income earned during the period.

Thank you for your investment in the Salomon Brothers Balanced Fund. As ever, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the Fund’s investment goals.

Sincerely,

George J. Williamson

February 3, 2006

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

Portfolio holdings and breakdowns are as of December 31, 2005 and are subject to change and may not be representative of the portfolio manager’s current or future investments. The Fund’s top ten holdings (as a percentage of net assets) as of this date were: General Electric Co. (3.1%), U.S. Treasury Notes (2.6%), International Business Machines Corp. (2.6%), Federal National Mortgage Association (FNMA) (2.6%), Halliburton Co. (2.2%), News Corp. (2.1%), Wal-Mart Stores Inc. (2.1%), Federal National Mortgage Association (FNMA) (2.1%), Federal National Mortgage Association (FNMA) (2.0%) and Suncor Energy Inc. (2.0%). Please refer to pages 47 through 54 for a list and percentage breakdown of the fund’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio manager’s current or future investments. The Fund’s top five sector holdings (as a percentage of net assets) as of December 31, 2005 were: Financials (20.3%), Mortgage Backed Securities (18.1%), Information Technology (11.3%), Energy (7.9%) and Industrials (7.7%). The Fund’s portfolio composition is subject to change at any time.

RISKS: The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on fund performance.

All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

4       Salomon Brothers Investment Series 2005 Annual Report

Manager’s Overview

Salomon Brothers Capital Fund

Q. What were the overall market conditions during the Fund’s reporting period?

A. Despite a number of positives, the U.S. stock market failed to gain enough momentum to generate outstanding returns in 2005. While the U.S. economy expanded at a brisk pace, unemployment declined, and corporate earnings were strong, the overall stock market, as measured by the S&P 500 Indexⁱ, returned only 4.91% in 2005.

Oftentimes, investors do not like uncertainty and that appeared to be the case during the year. Record high oil prices, a series of devastating hurricanes, steadily rising short-term interest rates, and inflationary concerns preoccupied investors during much of the year. As a result, it often appeared that the market was taking one step forward and two steps back. While a year-end rally propelled the market into positive territory, it seemed anticlimactic given the strong rallies that ended 2003 and 2004.

Looking more closely at the market in 2005, energy stocks generated superior returns. This was due to sharply rising prices, which surpassed $70 a barrel in the wake of Hurricane Katrina. There were other pockets of opportunity as well. Mid-capitalization stocks generated strong returns, with Russell MidCap Indexⁱⁱ gaining 12.65%. Conversely, technology stocks had a lackluster year, with the tech-laden Nasdaq Composite returning a mere 1.37% in 2005.

Performance review

For the 12 months ended December 31, 2005, Class A shares of the Capital Fund, excluding sales charges, returned 7.52%. The Fund’s unmanaged benchmark, the Russell 3000 Indexⁱⁱⁱ, returned 6.12% for the same period. The Lipper Multi-Cap Core Funds Category Average¹ increased 6.59% over the same time frame.

Q. What were the most significant factors affecting Fund performance?

     What were the leading contributors to performance?

A. The Fund’s outperformance relative to the Russell 3000 Index was primarily attributed to security selection. Security selection was strongest in health care and energy sectors and weakest in the materials and consumer discretionary sectors. Sector Allocation was strongest in the materials and energy sectors and weakest in the industrials and telecommunication services sectors.

    The securities that contributed most to the Fund’s performance during the period included Coventry Health Care Inc., SanDisk Corp., Assurant Inc., Boeing and Pacificare Health Systems. UnitedHealth Group acquired Pacificare Health Systems during the period. During the period we sold our position in Pacificare Health systems and continue to be invested in the other securities mentioned above. We retained a position in UnitedHealth Group at the end of the period.

Salomon Brothers Investment Series 2005 Annual Report       5

     What were the leading detractors from performance?

A. The securities that detracted most from the Fund’s performance during the period were Cablevision Systems, Polycom, Nortel Networks, Smurfit-Stone Container Corp., and Teradyne Inc. During the period, we sold our positions in all of these securities.

     Q. Were there any significant changes to the Fund during the reporting period?

A. During the period, we increased our weightings in the information technology, health care and consumer staples sectors and decreased our weightings in the consumer discretionary, energy and industrials sectors.

Thank you for your investment in the Salomon Brothers Capital Fund. As ever, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the Fund’s investment goals.

Sincerely,

Kevin Caliendo

Portfolio Manager

February 3, 2006

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

Portfolio holdings and breakdowns are as of December 31, 2005 and are subject to change and may not be representative of the portfolio manager’s current or future investments. The Fund’s top ten holdings (as a percentage of net assets) as of this date were: Barrick Gold Corp. (4.1%), Coventry Health Care Inc. (4.0%), Sprint Nextel Corp. (3.7%), Merrill Lynch & Co. Inc. (3.1%), Capital One Financial Corp. (3.1%), Abbott Laboratories (3.1%), Nasdaq-100 Index Tracking Stock (3.0%), UnitedHealth Group Inc. (2.8%), Comverse Technology Inc. (2.7%) and National-Oilwell Varco Inc. (2.7%). Please refer to pages 55 through 57 for a list and percentage breakdown of the Fund’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio manager’s current or future investments. The Fund’s top five sector holdings (as a percentage of net assets) as of December 31, 2005 were: Information Technology (17.6%), Health Care (16.4%), Financials (12.2%), Consumer Discretionary (8.4%) and Exchanges Traded Funds (7.7%). The Fund’s portfolio composition is subject to change at any time.

RISKS: Investments in small- and medium capitalization companies may involve a higher degree of risk and volatility than investments in larger, more established companies. The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance.

All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

6       Salomon Brothers Investment Series 2005 Annual Report

Manager’s Overview

Salomon Brothers Investors Value Fund

Q. What were the overall market conditions during the Fund’s reporting period?

A. There was no shortage of problems for the U.S. economy to overcome during the reporting period. These included record high oil prices, rising short-term interest rates, the devastation inflicted by Hurricanes Katrina and Rita, geopolitical issues and falling consumer confidence. However, the U.S. economy proved to be resilient and provided a positive backdrop for the stock market in 2005.

Businesses across America did their part with record levels of profits for the third consecutive year, strong underlying fundamentals and well-balanced growth. Unfortunately, this did not translate into strong stock market returns, as the S&P 500 Indexⁱ gained a modest 4.91% in 2005.

After much speculation about a fourth quarter rally, the U.S. equity market had an unremarkable finish. The year ended with equities falling in October due to concerns over inflation and continued interest rate hikes by the Federal Reserve Board (“Fed”)ⁱⁱ, rallying in November, as better-than-expected corporate earnings and falling oil prices buoyed investor confidence and finally, treading water in December with increased merger and acquisition activity offset by a cooling housing market.

The Fed continued to raise interest rates over the period in an attempt to ward off inflation. All told, the Fed’s rate hikes have brought the target for the federal funds rateⁱⁱⁱ to 4.25%. After the end of the Fund’s reporting period, at its January meeting, the Fed once again raised its target for the federal funds rate by 0.25% to 4.50%. This represents the longest sustained Fed tightening cycle since 1977-1979. In addition, the yield curve inverted, as the yield on the two-year Treasury note surpassed that of 10-year Treasuries. This anomaly was notable since it has often foreshadowed economic recessions.

Looking more closely at the stock market’s returns in 2005, the top-performing sector of the S&P 500 Index was energy, gaining 31.35%, followed at a distance by the utilities and financials sectors, rising 16.84% and 6.48% respectively. In contrast, the consumer discretionary, telecommunication services and technology sectors produced weak returns.

Performance Review

For the 12 months ended December 31, 2005, Class A shares of the Salomon Brothers Investors Value Fund, excluding sales charges, returned 6.15%. The Fund’s unmanaged benchmark, the S&P 500 Index, returned 4.91% for the same period. The S&P 500/Citigroup Value Index^iv returned 5.82% over the same period. The Lipper Large-Cap Value Funds Category Average¹ increased 5.72% over the same time frame.

Salomon Brothers Investment Series 2005 Annual Report       7

Q. What were the most significant factors affecting Fund performance?

     What were the leading contributors to performance?

A. The Fund’s outperformance relative to the S&P 500/ Citigroup Value Index^iv during the period was mainly attributable to security selection. Overall, sector allocation had only a marginal impact with an overweight position in both energy and technology contributing positively to performance; however, this benefit was mostly offset by the underweight position in utilities and the overweight position in consumer discretionary, which held back performance.

    Top contributors during the period included Altria Group, Marathon Oil, ENSCO International, Boeing and Loews Corp.

     What were the leading detractors from performance?

A. Stocks that detracted from performance came from a number of different sectors and included Lexmark International, Comcast, Solectron, Liberty Media and Verizon Communications. In October, Lexmark shares fell sharply after the company pre-announced it was slashing its profit forecast. The company underestimated the competitive pressures in the printer industry and was forced to cut prices to stem market share losses. We sold our position in the Fund since we believe the investment thesis was impaired. We also sold our positions in Comcast, Solectron and Verizon Communications during the period.

Q. Were there any significant changes to the Fund during the reporting period?

A. During the period, we have reduced our technology and energy exposure in the portfolio and increased our healthcare and consumer staples weightings. We are currently overweight in healthcare, consumer staples and consumer discretionary and underweight in industrials, technology and utilities versus the S&P 500/Citigroup Value Index.

Thank you for your investment in the Salomon Brothers Investors Value Fund. As ever, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the Fund’s investment goals.

Sincerely,

Mark J. McAllister, CFA Co-Portfolio Manager		Robert Feitler Co-Portfolio Manager

February 3, 2006

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

Portfolio holdings and breakdowns are as of December 31, 2005 and are subject to change and may not be representative of the portfolio manager’s current or future investments. The Fund’s top ten holdings (as a percentage of net assets) as of this date were: Bank of America Corp. (3.7%), Altria Group Inc. (3.5%), Sprint Nextel Corp. (3.2%), Total SA (2.9%), Merrill Lynch & Co. Inc. (2.8%), Kroger Co. (2.8%), Capital One Financial Corp. (2.7%), News Corp. (2.6%), American International Group Inc. (2.6%) and UnitedHealth Group Inc. (2.3%). Please refer to pages 58 through 60 for a list and percentage breakdown of the Fund’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio manager’s current or future investments. The Fund’s top five sector holdings (as a percentage of net assets) as of December 31, 2005 were: Financials (32.3%), Consumer Discretionary (12.9%), Health Care (11.4%), Consumer Staples (11.0%) and Energy (10.3%). The Fund’s portfolio composition is subject to change at any time.

RISKS: The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance.

All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

8       Salomon Brothers Investment Series 2005 Annual Report

Manager’s Overview

Salomon Brothers Large Cap Growth Fund

Q. What were the overall market conditions during the Fund’s reporting period?

A. Looking back at 2005, after early weakness through the first quarter, the markets improved during the summer on the back of good economic data, positive corporate profits and lower oil prices, only to sell-off sharply early in the fall as investors were hit with the uncertainty surrounding Hurricanes Katrina and Rita and the pending challenges of rebuilding. Showing considerable resilience, a year-end rally led by strong earnings and weaker oil prices began in late October and produced positive full-year returns for almost all major equity indexes. High quality companies (small, medium and large) have led this rally. Also of note, was the resurgence of interest in growth stocks in what has been a decidedly value-oriented market over the last 4-5 years. Investors have shown interest in companies that can generate consistent earnings-per-share (EPS) growth and organic revenue growth, as opposed to reliance on broad moves in the economy. Furthermore, many years of cost cutting have allowed leadership companies to operate near peak margins while allowing more revenue to drop to the bottom line.

Over the last 12 months the markets traded in one of the tightest ranges of the last 15 years, making stock selection paramount to performance in managing a concentrated, low-turnover portfolio. The markets are also trading at 9-year lows on a price-to-earnings basis even though interest rates and inflation remain benign.

Performance Review

For the 12 months ended December 31, 2005, Class A shares of the Salomon Brothers Large Cap Growth Fund, excluding sales charges, returned 4.77%. The Fund’s unmanaged benchmarks, the Russell 1000 Growth Indexⁱ returned 5.26% for the same period. The Lipper Large-Cap Growth Funds Category Average¹ increased 6.18% over the same time frame.

Q. What were the most significant factors affecting Fund performance?

A. The Fund had strong returns for the period in the health care, consumer staples, financials and information technology sectors, but experienced losses in its positions in the consumer discretionary and industrials sectors. The Fund did not hold any energy or utilities sector stocks, which were the two best performing sectors in the benchmark index for the period due in large part to the record high prices for oil set in the wake of the Gulf hurricanes. These underweights had a negative effect on performance relative to the benchmark and the underweight to energy stocks in particular was a factor in the Fund’s underperformance of the benchmark index for the period. However, relative to the benchmark index, the impact of stock selection for the period, especially in health care and consumer staples, was positive.

Salomon Brothers Investment Series 2005 Annual Report       9

     What were the leading contributors to performance?

A. The greatest contributors to performance for the period included positions in Genentech Inc. and Amgen Inc. in health care, Gillette in consumer staples (which was acquired by Procter & Gamble Co. during the period), and Red Hat Inc. and Motorola Inc., both in information technology. All five top contributors were still held by the Fund at the close of the year (the Fund’s position in Gillette was replaced by shares of P&G).

     What were the leading detractors from performance?

A. The greatest detractors from performance for the period included positions in Biogen Idec Inc. in health care, Dell Inc., Juniper Networks Inc. and Xilinx Inc. in information technology, and Time Warner Inc. in consumer discretionary. The Fund maintained positions in all five of these top detractors at the close of the year.

Q. Were there any significant changes to the Fund during the reporting period?

A. The Fund experienced a historically consistent level of portfolio turnover during the year, but the managers did not make any significant alterations to the portfolio or its sector allocation.

Thank you for your investment in the Salomon Brothers Large Cap Growth Fund. As ever, we appreciate that you have chosen us to manage your assets.

Sincerely,

Alan Blake

Portfolio Manager

February 3, 2006

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

Portfolio holdings and breakdowns are as of December 31, 2005 and are subject to change and may not be representative of the portfolio manager’s current or future investments. The Fund’s top ten holdings (as a percentage of net assets) as of this date were: Amazon.com Inc. (6.3%), Genetech Inc. (6.2%), Amgen Inc. (5.3%), Texas Instruments Inc. (4.3%), Merrill Lynch & Co. Inc. (4.2%), Procter & Gamble Co. (3.8%), Motorola Inc. (3.8%), Time Warner Inc. (3.5%), Home Depot Inc. (3.4%) and Berkshire Hathaway Inc. (3.2%). Please refer to pages 61 through 62 for a list and percentage breakdown of the Fund’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio manager’s current or future investments. The Fund’s top five sector holdings (as a percentage of net assets) as of December 31, 2005 were: Information Technology (30.8%), Consumer Discretionary (22.6%), Health Care (22.5%), Financials (13.0%) and Consumer Staples (10.4%). The Fund’s portfolio composition is subject to change at any time.

RISKS: The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on fund performance.

All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

10       Salomon Brothers Investment Series 2005 Annual Report

Manager’s Overview

Salomon Brothers Small Cap Growth Fund

Q. What were the overall market conditions during the Fund’s reporting period?

A. The year started poorly for the equity market. Rising oil prices and rising interest rates negatively affected market sentiment and Wall Street perception of future economic growth. Despite this backdrop, the US economy continued its steady expansion through the year and corporate earnings growth was robust. While select areas of consumer spending were affected, generally the US economy took the higher rates and higher gas prices in its stride. The equity market stayed volatile throughout the year but eventually ended the year higher for the third year straight.

The Federal Reserve Board (“Fed”)ⁱ continued to raise short-term interest rates over the period in an attempt to stifle inflation. From June 2004 through the end of the reporting period, the Fed raised short-term interest rates thirteen times, which brought the target for the federal funds rateⁱⁱ to 4.25%. After the end of the Fund’s reporting period, at its January meeting, the Fed once again raised its target for the federal funds rate by 0.25% to 4.50%. Towards the end of 2005, there were indications that the Fed was close to the end of the rate raise cycle.

Overall, both large- and small-capitalization stocks rose during 2005 with the large-cap S&P 500 Indexⁱⁱⁱ returning 4.91% and the small-cap Russell 2000 Index^iv returning 4.55%. Among small-cap equities, value stocks outperformed growth stocks as reflected by the performance of the Russell 2000 Value Index^v, which returned 4.71%, versus the Russell 2000 Growth Index^vi, which returned 4.15%. Within the Russell 2000 Growth Index, strongest performance came from the energy, utilities and materials sectors. The bottom performing sectors included information technology, consumer discretionary and financials. Rate sensitive sectors generally underperformed, while the energy and commodities sectors benefited due to higher natural resources prices.

Performance Review

For the 12 months ended December 31, 2005, Class A shares of the Salomon Brothers Small Cap Growth Fund, excluding sales charges, returned 4.82%. The Fund’s unmanaged benchmarks, the Russell 2000 Index and the Russell 2000 Growth Index, returned 4.55% and 4.15%, respectively, for the same period. The Lipper Small Cap Growth Funds Category Average¹ increased 5.66% over the same time frame.

Q. What were the most significant factors affecting Fund performance?

     What were the leading contributors to performance?

A. The Fund’s out-performance relative to the Russell 2000 Growth Index was primarily attributable to security selection, which was strongest in telecommunication services and healthcare and weakest in materials and energy. Relative to the benchmark, sector allocation was strongest in the consumer discretionary and telecommunication services sectors and weakest in the information technology and consumer staples sectors.

Salomon Brothers Investment Series 2005 Annual Report       11

Individual stocks that were the greatest contributors to performance during the period were Transkaryotic Therapies Inc., a biopharmaceutical company, SpectraSite, a wireless tower operator, Abgenix, a biopharmaceutical company, Electronics for Imaging, a designer and marketer of digital imaging and print solutions and ADC Telecommunications, a communications infrastructure firm. The Fund sold its position in Transkaryotic Therapies, Inc. and maintained its positions in the other securities Spectrasite was acquired by American Towers during the period and the Fund maintained the American Towers position.

What were the leading detractors from performance?

A. The largest detractors from performance during the period included NPS Pharmaceuticals, a biopharmaceutical company, TIBCO Software Inc., a developer and marketer of software solutions, ActivCard Corp., a security software services company, Tekelec, a designer, manufacturer and marketer of telecommunications networks and RF Micro Devices Inc., a wireless communications and applications company. The Fund sold its positions in NPS Pharmaceuticals, Inc., ActivCard Corp. and Tekelec during the period and maintained its positions in TIBCO Software Inc. and RF Micro Devices Inc.

Q. Were there any significant changes to the Fund during the reporting period?

A. There were no significant changes made to the portfolio during the reporting period with the exception of reducing the weighting in the information technology sector, and adding to the weighting in the telecommunication services sector. Technology sector returns became relatively unattractive to the broader market. Our addition to the telecommunication services weighting primarily reflects our increased investment in the wireless sector during the period.

Thank you for your investment in the Salomon Brothers Small Cap Growth Fund. As ever, we appreciate that you have chosen us to manage your assets.

Sincerely,

Vincent Gao, CFA

Portfolio Manager

February 3, 2006

The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.

Portfolio holdings and breakdowns are as of December 31, 2005 and are subject to change and may not be representative of the portfolio manager’s current or future investments. The Fund’s top ten holdings (as a percentage of net assets) as of this date were: American Tower Corp. (3.0%), R.H. Donnelly Corp (2.9%), MSC Industrial Direct Co. Inc. (2.3%), Zarlink Semiconductor Inc. (2.0%), Electronics for Imaging Inc. (1.7%), RealNetworks Inc. (1.6%), Sohu.com Inc. (1.6%), Health Net Inc. (1.5%), DJ Orthopedics Inc. (1.4%) and TIBCO Software Inc. (1.4%). Please refer to pages 63 through 67 for a list and percentage breakdown of the Fund’s holdings.

The mention of sector breakdowns is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. The information provided regarding such sectors is not a sufficient basis upon which to make an investment decision. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional. Portfolio holdings are subject to change at any time and may not be representative of the portfolio manager’s current or future investments. The Fund’s top five sector holdings (as a percentage of net assets) as of December 31, 2005 were: Information Technology (26.4%), Health Care (16.2%), Consumer Discretionary (12.1%), Industrials (8.7%) and Financials (7.4%). The Fund’s portfolio composition is subject to change at any time.

RISKS: Investments in small- and medium capitalization companies may involve a higher degree o risk and volatility than investments in larger, more established companies. The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance.

All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

12       Salomon Brothers Investment Series 2005 Annual Report

Fund at a Glance (unaudited)

Salomon Brothers All Cap Value Fund

Salomon Brothers Investment Series 2005 Annual Report       13

Fund at a Glance (unaudited) (continued)

Salomon Brothers Balanced Fund

14       Salomon Brothers Investment Series 2005 Annual Report

Fund at a Glance (unaudited) (continued)

Salomon Brothers Capital Fund

Salomon Brothers Investment Series 2005 Annual Report       15

Fund at a Glance (unaudited) (continued)

Salomon Brothers Investors Value Fund

16       Salomon Brothers Investment Series 2005 Annual Report

Fund at a Glance (unaudited) (continued)

Salomon Brothers Large Cap Growth Fund

Salomon Brothers Investment Series 2005 Annual Report       17

Fund at a Glance (unaudited) (continued)

Salomon Brothers Small Cap Growth Fund

18       Salomon Brothers Investment Series 2005 Annual Report

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payment; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on July 1, 2005 and held for the six months ended December 31, 2005.

Actual Expenses

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.

Salomon Brothers Investment Series 2005 Annual Report       19

Fund Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

20       Salomon Brothers Investment Series 2005 Annual Report

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payment; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on July 1, 2005 and held for the six months ended December 31, 2005.

Actual Expenses

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.

Salomon Brothers Investment Series 2005 Annual Report       21

Fund Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

22       Salomon Brothers Investment Series 2005 Annual Report

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payment; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on July 1, 2005 and held for the six months ended December 31, 2005.

Actual Expenses

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.

Salomon Brothers Investment Series 2005 Annual Report       23

Fund Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

24       Salomon Brothers Investment Series 2005 Annual Report

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payment; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on July 1, 2005 and held for the six months ended December 31, 2005.

Actual Expenses

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.

Salomon Brothers Investment Series 2005 Annual Report       25

Fund Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

26       Salomon Brothers Investment Series 2005 Annual Report

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payment; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on July 1, 2005 and held for the six months ended December 31, 2005.

Actual Expenses

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.

Salomon Brothers Investment Series 2005 Annual Report       27

Fund Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

28       Salomon Brothers Investment Series 2005 Annual Report

Fund Expenses (unaudited)

Example

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payment; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested on July 1, 2005 and held for the six months ended December 31, 2005.

Actual Expenses

The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.

Salomon Brothers Investment Series 2005 Annual Report       29

Fund Expenses (unaudited) (continued)

Hypothetical Example for Comparison Purposes

The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

30       Salomon Brothers Investment Series 2005 Annual Report

Fund Performance

Salomon Brothers All Cap Value Fund

Salomon Brothers Investment Series 2005 Annual Report       31

Fund Performance (continued)

Salomon Brothers Balanced Fund