================================================================================
--------------------------------------------------------------------------------
A NEW WAY TO INVEST
--------------------------------------------------------------------------------
THE HUMANE EQUITY FUND
--------------------------------------------------------------------------------
IN HARMONY WITH YOUR VALUES
--------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
MARCH 31, 2000
[GRAPHIC OMITTED]
THE HUMANE EQUITY FUND [LOGO]
-------------------------
ANIMAL FRIENDLY INVESTING
-------------------------
-------------------------
THE HUMANE SOCIETY
-------------------------
OF THE UNITED STATES
--------------------------------------------------------------------------------
<PAGE>
THE HUMANE EQUITY FUND...
INVESTING WITH YOUR VALUES
You don't have to sacrifice your values when you choose your investments. The
Humane Equity Fund seeks to invest in companies that believe sensitivity to
animal interests makes good business sense. These are forward-looking companies
with an eye on future generations. They believe that creating sustainable growth
and respecting living things is a smart, long-term business strategy.
The cornerstone of The Humane Equity Fund is its policy of avoiding investing in
companies that directly harm animals and their habitats. The Fund is designed to
combine both financial and animal friendly criteria in all of its investment
decisions.
The Fund follows a screening process founded upon the humane treatment of
animals as defined by The Humane Society of the United States.
THANK YOU FOR INVESTING IN
THE HUMANE EQUITY FUND.
Distributor CFBDS, Inc., NASD Member. The Humane Society of the United States is
not affiliated with CFBDS, Inc.
<PAGE>
--------------------------------------------------------------------------------
Shareholder Letter
--------------------------------------------------------------------------------
[PHOTO OMITTED]
PAUL G.
IRWIN
President
The Humane Society
of the United States
Dear Shareholder:
It is a great pleasure for The Humane Society of the United States ("The HSUS")
to serve as a consultant to The Humane Equity Fund ("Fund"), and I am also
pleased to serve as a director of the Fund. We believe this Fund provides an
opportunity for indivi duals to invest for their future and from their hearts.
We are especially gratified to be working with Salomon Brothers Asset Management
Inc, a company with experience in and a commitment to socially aware investing,
and with the Fund's manager Charles P. Graves, a professional with more than 15
years' investment experience.
As the nation's largest animal protection organization, our mission is to
promote the protection of all animals, and to create understanding and
compassion for all who share our world.
This animal-friendly mutual fund clearly mirrors the ethics of The HSUS. As a
consultant to the Fund, we will receive a fee once the Fund's assets reach $50
million. But we support The Humane Equity Fund to the extent that we have
allocated a portion of our liquid assets to this new financial vehicle, as have
I personally. On behalf of everyone here at The HSUS, I thank you too, for your
support for and investment in the Fund.
Sincerely,
/s/ Paul G. Irwin
Paul G. Irwin
President
The Humane Society of the United States and Director of the Humane Equity Fund
April 25, 2000
[PHOTO OMITTED]
PAUL G.
IRWIN
President
The Humane Society
of the United States
--------------------------------------------------------------------------------
The Humane Equity Fund
1
<PAGE>
--------------------------------------------------------------------------------
Shareholder Letter
--------------------------------------------------------------------------------
[PHOTO OMITTED]
HEATH B. MCLENDON
Chairman
[PHOTO OMITTED]
CHARLES P. GRAVES III, CFA
Executive
Vice President
Dear Shareholder:
We are pleased to provide the first report of The Humane Equity Fund ("Fund")
for the period since inception, February 2, 2000, through March 31, 2000. We
hope that with your continued support, we can continue to build a fund that
looks to provide competitive returns while promoting the principles of The
Humane Society of the United States ("The HSUS").
In this report, we discuss stock market conditions and review our investment
strategy during the reporting period. A more detailed summary of performance and
current holdings can be found in the appropriate sections that follow. Any
discussion of the Fund's holdings is as of March 31, 2000. Please refer to pages
four and five for a list of the Fund's holdings. We hope you find this report to
be useful and informative.
Performance Update
The Fund invests primarily (at least 65% of its assets) in common stocks and
other equity securities of U.S. companies. (Equity securities include exchange-
traded and over-the-counter common stocks and preferred shares, debt securities
convertible into equity securities, and warrants and rights relating to equity
securities.)
For the period February 2, 2000 through March 31, 2000, the Fund returned
5.90%(1). In comparison, the Standard & Poor's 500 Index ("S&P 500")(2) returned
6.57% for the same time period.
The Fund invests in a broad range of companies, industries and sectors, without
regard to market capitalization, looking for investments with capital
appreciation potential. We utilize the style of stock selection commonly known
as "growth at a reasonable price," investing in a combination of growth and
value stocks with the common characteristic being good, timely investment
opportunity based on a company's earnings growth, dividend and risk
characteristics.
Additionally, we avoid investing in companies that directly harm animals and
their habitats by screening all potential investments using guidelines
established in conjunction with The HSUS. These guidelines include:
o No investment in pharmaceutical companies;
o No investment in cosmetics companies if there is a question about such
companies' use of animal testing;
o No investment in companies that use animals in an end product, e.g.,
meat-packing companies; and
o No investment in companies producing products adverse to the humane
treatment of animals, e.g., manufacturers of hunting and trapping
equipment.
Because we use animal friendly criteria as a component of our selection process,
the Fund's universe of investments may be smaller than that of other funds. In
some circumstances, this could cause the Fund's investment performance to be
better or worse than funds with similar investment objectives that do not have
the Fund's screening policies.
----------
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. All figures represent past performance and are
not a guarantee of future results. Investment returns and principal value
will fluctuate, and redemption value may be more or less than the original
cost.
(2) The S&P 500 is a market capitalization-weighted measure of 500 widely held
common stocks.
--------------------------------------------------------------------------------
2 2000 Semi-Annual Report to Shareholders
<PAGE>
Portfolio and Market Update
The first quarter of the new millennium was characterized by record market
volatility, especially in the technology sector, as measured by the performance
of the NASDAQ Composite Index(3) which experienced four declines of 10% or more,
rebounding each time. Yet, despite the record valuations assigned to many
technology stocks, we found that the overall stock market was, in our opinion,
fairly priced with solid fundamentals.
Even with higher market volatility and rising interest rates, we think the
strength of the U.S. economy should continue, supported by positive corporate
earnings and good underlying demographic trends.
During the period, The Humane Equity Fund was overweighted in the consumer
cyclical, transportation and financial services sectors in relation to the S&P
500, as we believe these sectors represent compelling investment opportunities.
In addition, the Fund holds a position in Avon Products, Inc., the personal
product manufacturer and marketer that pledged in 1989 not to test their
products on animals.
Although past performance is no guarantee of future results and the period
covered by this report is short-term, we are pleased to report that the Fund's
investments have performed competitively during the period. Also, due to the
Fund's selective screening process, the Fund will never directly mirror the S&P
500. However, we are confident that we have identified companies that can offer
long-term growth of capital.
Market Outlook
We anticipate a continuation of solid economic growth with only a modest upward
bias toward inflation. We expect the U.S. economy should remain relatively
stable for the remainder of 2000, as low unemployment and strong consumer
confidence will likely support demand. Additionally, we think that the Federal
Reserve Board ("Fed") has engineered a good balance between strong economic
growth and an acceptable rate of inflation. In fact, we are confident that the
Fed's tightening monetary policy may be sufficient to slow the U.S. economy
without triggering higher inflation. We also believe that the economy's "soft
landing" is likely to be at a higher annual growth rate than was previously
thought possible, due to technological advances.
In closing, we look forward to continuing to help you invest in harmony with
your values in the new century.
Sincerely,
/s/ Heath B. McLendon /s/ Charles P. Graves III, CFA
Heath B. McLendon Charles P. Graves III, CFA
Chairman Executive
Vice President
April 25, 2000
----------
(3) The NASDAQ Composite Index is a market value-weighted index that measures
all domestic and non-U.S. based securities listed on the NASDAQ stock
market.
--------------------------------------------------------------------------------
The Humane Equity Fund 3
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investemnts (unaudited) March 31, 2000
--------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
COMMON STOCK--87.8%
Consumer Durables--2.5%
4,600 Black & Decker Corp. $ 172,788
2,700 Newell Rubbermaid Inc. 66,994
--------------------------------------------------------------------------------
239,782
--------------------------------------------------------------------------------
Consumer Non-Durables--2.2%
7,000 Avon Products, Inc. 203,438
--------------------------------------------------------------------------------
Consumer Services--4.8%
3,180 CBS Corp. 180,068
2,600 Convergys Corp.* 100,425
2,900 Infinity Broadcasting Corp.* 93,888
2,100 Readers Digest Association, Class A Shares 74,288
--------------------------------------------------------------------------------
448,669
--------------------------------------------------------------------------------
Electronic Technology--17.4%
4,400 Cisco Systems Inc.* 340,175
3,500 Compaq Computer Inc. 93,187
2,000 Dell Computer Corp.* 107,875
1,960 EMC Corp. 245,000
1,500 Intel Corp. 197,906
1,100 International Business Machines Corp. 129,800
520 Koninklijke Philips Electronics, Inc. 89,082
580 Motorola Inc. 82,577
3,700 Solectron Corp.* 148,231
2,300 Sun Microsystems Inc.* 215,517
--------------------------------------------------------------------------------
1,649,350
--------------------------------------------------------------------------------
Finance--15.7%
780 American International Group Inc. 85,410
6,000 Associates First Capital Corp., Class A Shares 128,625
3,000 Bank of New York Co. Inc. 124,688
1,900 The Charles Schwab Corp. 107,944
3,500 Chase Manhattan Corp. 305,156
3,600 Federal Home Loan Mortgage Corp. 159,075
1,600 JP Morgan & Co. 210,800
1,630 Marsh & McLennan Corp. 179,809
980 State Street Corp. 94,938
1,700 XL Capital Ltd., Class A Shares 94,138
--------------------------------------------------------------------------------
1,490,583
--------------------------------------------------------------------------------
Industrial Services--2.3%
2,800 AES Corp. 220,500
--------------------------------------------------------------------------------
Non-Energy Minerals--2.4%
2,100 Alcoa Inc. 147,525
1,600 Nucor Corp. 80,000
--------------------------------------------------------------------------------
227,525
--------------------------------------------------------------------------------
Process Industries--1.3%
3,000 Praxair Inc. 124,875
--------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
4 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investemnts (unaudited)(continued) March 31, 2000
--------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Producer Manufacturing--5.9%
6,300 Deere & Co. $ 239,400
1,800 Ford Motor Co. 82,688
1,800 Illinois Tool Works Inc. 99,450
3,100 Pitney Bowes Inc. 138,531
--------------------------------------------------------------------------------
560,069
--------------------------------------------------------------------------------
Retail Trade--10.3%
3,000 Best Buy Co. Inc.* 258,000
1,300 Home Depot Inc. 83,850
7,700 Kroger Co. 135,231
3,400 Lowes Cos. 198,475
5,500 Office Depot Inc.* 63,594
7,500 Staples Inc.* 150,000
1,600 Wal-Mart Corp. 88,800
--------------------------------------------------------------------------------
977,950
--------------------------------------------------------------------------------
Technology Services--9.4%
2,600 America Online Inc.* 174,850
4,400 Automatic Data Processing, Inc. 212,300
2,600 Electronic Data Systems Corp. 166,888
1,000 Microchip Technology Inc.* 65,750
2,400 Oracle Corp.* 187,350
3,500 Progress Software Corp.* 82,031
--------------------------------------------------------------------------------
889,169
--------------------------------------------------------------------------------
Transportation--5.6%
16,000 Southwest Airlines Co. 333,000
3,100 United Parcel Service Inc. 195,300
--------------------------------------------------------------------------------
528,300
--------------------------------------------------------------------------------
Utilities--8.0%
2,200 Alltel Corp. 138,737
1,500 AT&T Corp. 84,375
1,900 Enron Corp. 142,262
1,000 Intermedia Communications Inc.* 48,312
1,800 MCI Worldcom Inc.* 81,562
1,100 MGC Communications Inc.* 78,650
2,900 SBC Communications Inc. 121,800
800 Time Warner Inc.* 63,600
--------------------------------------------------------------------------------
759,298
--------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost--$7,799,320) 8,319,508
================================================================================
Face
amount SECURITY VALUE
================================================================================
REPURCHASE AGREEMENT--12.2%
$1,159,000 CS First Boston Corp., 5.850% due 4/3/00;
Proceeds at maturity--$1,159,565;
(Fully collateralized by U.S. Treasury Notes,
4.000% due 10/31/01; Market value--$1,182,359)
(Cost--$1,159,000) 1,159,000
================================================================================
TOTAL INVESTMENTS
(Cost--$8,958,320**) $9,478,508
================================================================================
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
The Humane Equity Fund 5
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liablilies (unaudited) March 31, 2000
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost-- $7,799,320) $8,319,508
Repurchase agreement, at value (Cost-- $1,159,000) 1,159,000
Cash 550
Receivable from investment advisor 30,182
Dividends and interest receivable 5,566
--------------------------------------------------------------------------------
Total Assets 9,514,806
--------------------------------------------------------------------------------
LIABILITIES:
Distribution fees payable 3,388
Administration fees payable 758
Accrued expenses 9,147
--------------------------------------------------------------------------------
Total Liabilities 13,293
--------------------------------------------------------------------------------
Total Net Assets $9,501,513
================================================================================
NET ASSETS:
Par value of capital shares $ 897
Capital paid in excess of par value 8,965,987
Accumulated net investment income 14,441
Net unrealized appreciation on investments 520,188
--------------------------------------------------------------------------------
Total Net Assets $9,501,513
================================================================================
Shares Outstanding 897,079
--------------------------------------------------------------------------------
Net Asset Value $10.59
================================================================================
See Notes to Financial Statements.
--------------------------------------------------------------------------------
6 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Period Ended March 31, 2000 (a)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 22,593
Dividends 11,499
--------------------------------------------------------------------------------
Total Investment Income 34,092
--------------------------------------------------------------------------------
EXPENSES:
Shareholder and system servicing fees 17,400
Shareholder communications 15,000
Investment advisory fees (Note 2) 8,809
Audit fees 5,000
Distribution fees (Note 2) 3,388
Registration fees 2,290
Directors' fees 2,000
Administration fees (Note 2) 1,355
Custody 900
Other 2,500
--------------------------------------------------------------------------------
Total Expenses 58,642
Less: Management fee waiver (Note 2) (38,991)
--------------------------------------------------------------------------------
Net Expenses 19,651
--------------------------------------------------------------------------------
Net Investment Income 14,441
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (note 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales --
Cost of securities sold --
--------------------------------------------------------------------------------
Net Realized Gain --
--------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period --
End of period 520,188
--------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 520,188
--------------------------------------------------------------------------------
Net Gain on Investments 520,188
--------------------------------------------------------------------------------
Increase in Net Assets From Operations $534,629
================================================================================
(a) For the period from February 2, 2000 (commencement of operations) to March
31, 2000.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
The Human Equity Fund 7
<PAGE>
--------------------------------------------------------------------------------
Statement of Changes in Net Assets For the Period Ended March 31, 2000 (a)
(unaudited)
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 14,441
Net realized gain --
Increase in net unrealized appreciation 520,188
--------------------------------------------------------------------------------
Increase in Net Assets From Operations 534,629
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income --
--------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders --
--------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 8,966,884
Net asset value of shares issued for reinvestment of dividends --
Cost of shares reacquired --
--------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 8,966,884
--------------------------------------------------------------------------------
Increase in Net Assets 9,501,513
NET ASSETS:
Beginning of period --
--------------------------------------------------------------------------------
End of period* $9,501,513
================================================================================
* Includes accumulated net investment income of: $14,441
================================================================================
(a) For the period from February 2, 2000 (commencement of operations) to March
31, 2000.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
8 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Humane Equity Fund ("Fund") is a separate diversified investment portfolio
of SSB Citi Funds, Inc. ("Series"), a Maryland Corporation, registered under the
Investment Com pa ny Act of 1940, as amend ed, as a diversified, open-end
management investment company.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities traded on
national securities markets are valued at the closing prices on such markets;
securities for which no sales price were reported and U.S. government agen cies
and obligations are valued at current quoted mean prices; (c) securities that
have a maturity of more than 60 days are valued at prices based on market quo
tations for securities of similar type, yield and maturity; (d) securities
maturing within 60 days are valued at cost plus accreted discount, or minus
amortized premium, which approximates value; (e) dividend income is recorded on
the ex-dividend date and interest income is recorded on an accrual basis; (f)
gains or losses on the sale of securities are cal culated by using the specific
iden tification method; (g) divi dends and dis tri butions to share holders are
re corded on the ex-dividend date; (h) the accounting records are maintained in
U.S. dollars. All assets and liabilities de nomi nated in foreign currencies are
translated into U.S. dollars based on the rate of exchange of such currencies
against U.S. dollars on the date of valuation. Purchases and sales of
securities, and income and expenses are translated at the rate of exchange
quoted on the respective date that such transactions are recorded. Differences
between income or ex pense amounts recorded and collected or paid are ad justed
when reported by the custodian bank; (i) the Fund in tends to com ply with the
applicable provisions of the Internal Revenue Code of 1986, as amended,
pertaining to regulated investment companies and to make dis tri bu tions of
taxable income sufficient to relieve it from substantially all Federal income
and excise taxes; (j) the character of income and gains to be distributed are
determined in accordance with in come tax regulations which may differ from
generally accepted accounting principles; and (k) estimates and assump tions are
required to be made regarding assets, liabilities and changes in net assets
resulting from operations when financial statements are prepared. Changes in the
economic en vi ron ment, financial markets and any other parameters used in
determining these estimates could cause actual results to differ.
2. Investment Advisory Agreement, Administration Agreement and Other
Transactions
Salomon Brothers Asset Management Inc ("SBAM"), an indirect wholly owned
subsidiary of Salomon Smith Barney Holdings, Inc. ("SSBH"), which, in turn, is
wholly owned by Citigroup Inc., acts as advisor to the Fund. Under the
investment advisory agreement, the Fund pays a fee calculated at the annual rate
of 0.65% of its average daily net assets. This fee is calculated daily and paid
monthly.
SSB Citi Fund Management LLC ("SSBC"), another subsidiary of SSBH, acts as
administrator to the Fund. As compensation for its services the Fund pays SSBC a
fee calculated at an annual rate of 0.10% of its average daily net assets. This
fee is calculated daily and paid monthly. For the period ended March 31, 2000,
SBAM waived all of its investment advisory fee and reimbursed expenses of
$30,182.
In addition, The Humane Society of the United States ("HSUS"), acting as a
consultant, assists SBAM in its determination of which investments meet the
Fund's animal friendly criteria. SBAM from its investment advisory fee pays HSUS
a fee of 0.07% of the Fund's average daily net assets. This fee will begin to
accure
--------------------------------------------------------------------------------
The Humane Equity Fund 9
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
when the Fund's aggregate net assets equal or exceed $50 million.
CFBDS, Inc. acts as the Fund's distributor.
Salomon Smith Barney Inc. acts as the primary broker for its portfolio agency
transactions. For the period ended March 31, 2000, SSB did not receive any
brokerage commissions.
Pursuant to a Distribution Plan, the Fund pays service and/or distribution fees
cal culated at the annual rate of 0.25% of the average daily net assets.
3. Investments
During the period ended March 31, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $7,799,320
--------------------------------------------------------------------------------
Sales --
================================================================================
At March 31, 2000, aggregate gross unrealized ap pre ci ation and depreciation
of investments for Fed eral in come tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $ 759,278
Gross unrealized depreciation (239,090)
--------------------------------------------------------------------------------
Net unrealized appreciation $ 520,188
================================================================================
4. Repurchase Agreements
The Fund purchases (and its custodian takes possession of) U.S. government
securities from banks and 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 main tenance
of the market value of the collateral in amounts at least equal to the
repurchase price.
5. Reverse Repurchase Agreement
The Fund may enter into reverse repurchase agreement transactions for leveraging
purposes. A reverse repurchase agreement involves a sale by the Fund of
securities with an agreement by the Fund to repurchase the same securities at an
agreed upon price and date. A reverse repurchase agreement in volves the risk
that the market value of the securities sold by the Fund may decline below the
repurchase price of the securities. The Fund will establish a segre gated
account with its custodian, in which the Fund will maintain liquid securities
equal in value to its obligations with respect to reverse repur chase
agreements.
During the period ended March 31, 2000, the Fund did not enter into any reverse
repurchase agreements.
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking to market" on a daily basis to re flect
the market value of the contract at the end of each day's trading. Variation
margin payments are made or received and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Fund records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transactions and the Fund's basis in the contract.
The Fund enters into such contracts to hedge a portion of its portfolio. The
Fund bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
--------------------------------------------------------------------------------
10 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
At March 31, 2000, the Fund had no open futures contracts.
7. Option Contracts
Premiums paid when put or call options are purchased by the Fund represent
investments which are marked-to-market daily. When a purchase option expires,
the Fund will realize a loss in the amount of the premium paid. When the fund
enters into a closing sales transaction, the Fund will realize a gain or loss
depending on whether the proceeds from the closing sales transaction are greater
or less than the premium paid for the option. When the Fund exer cises a put
option, it will realize a gain or loss from the sale of the underlying security
and the proceeds from such sale will be decreased by the premium originally
paid. When the Fund exercises a call option, the cost of the security which the
Fund purchases upon exercise will be increased by the premium originally paid.
At March 31, 2000, the Fund had no open purchased call or put option contracts.
When a Fund writes a covered call or put option, an amount equal to the premium
received by the Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Fund realizes a gain
equal to the amount of the premium received. When the Fund enters into a closing
purchase transaction, the Fund realizes a gain or loss depending upon whether
the cost of the closing transaction is greater or less than the premium
originally received without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a written call option is exercised, the cost of the security sold will be
de creased by the premium originally received. When a put option is exercised,
the amount of the premium originally received will reduce the cost of the
security which the Fund purchases upon exercise. When written index options are
exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Fund en ters into options for hedging purposes. The risk in writing a
covered call option is that the Fund gives up the opportunity to participate in
any increase in the price of the underlying security beyond the exercise price.
The risk in writing a put option is that the Fund is exposed to the risk of a
loss if the market price of the underlying security declines.
During the period ended March 31, 2000, the Fund did not write any options.
8. Shares of Capital Stock
At March 31, 2000, the Series had 500,000,000 shares of capital stock authorized
with a par value of $0.001 per share. Each share represents an equal
proportionate interest and has an equal entitlement to any dividends and
distributions made by the Fund.
Transactions in shares of the Fund were as follows:
Period Ended
March 31, 2000*
================================================================================
Shares sold 897,079
Shares reacquired --
--------------------------------------------------------------------------------
Net Increase 897,079
================================================================================
* For the period February 2, 2000 (commencement of operations) to March 31,
2000.
--------------------------------------------------------------------------------
The Humane Equity Fund 11
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout the period
ended March 31, 2000:
2000(1)
================================================================================
Net Asset Value, Beginning of Period $10.00
--------------------------------------------------------------------------------
Income From Operations:
Net investment income(2) 0.02
Net realized and unrealized gain 0.57
--------------------------------------------------------------------------------
Total Income From Operations 0.59
--------------------------------------------------------------------------------
Less Distributions From:
Net investment income --
--------------------------------------------------------------------------------
Total Distributions --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $10.59
--------------------------------------------------------------------------------
Total Return++ 5.90%
--------------------------------------------------------------------------------
Net Assets, End of Period (000s) $9,502
--------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses(2)(3) 1.45%
Net investment income 1.06
--------------------------------------------------------------------------------
Portfolio Turnover Rate 0%
================================================================================
(1) For the period February 2, 2000 (commencement of operations) to March 31,
2000 (unaudited).
(2) The Investment Advisor has waived all of its fees for the period ended
March 31, 2000. In addition, the Investment Advisor reimbursed the Fund
for expenses of $30,182 for the period ended April 30, 2000. If such fees
were not waived and expenses not reimbursed, the per share decrease in net
investment income and actual annualized expense ratio would have been
$0.05 and 4.32%, respectively.
(3) As a result of a voluntary expense limitation, the expense ratio will not
exceed 1.45%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
12 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Management of Fund
--------------------------------------------------------------------------------
Directors
Andrew L. Breech
Carol L. Colman
William R. Dill
Paul G. Irwin
Clifford M. Kirtland, Jr.
Robert W. Lawless
Heath B. McLendon, Chairman
Officers
Heath B. McLendon
President
Lewis E. Daidone
Executive Vice President and Treasurer
Charles P. Graves
Executive Vice President
Anthony Pace
Controller
Christina T. Sydor
Secretary
Investment Advisor
Salomon Brothers Asset Management Inc
Distributor
CFBDS, Inc.
Custodian
PFPC Trust Company
Transfer Agent
Boston Financial Data Services Inc.
P.O. Box 9121
Boston, Massachusetts 02205-9121
This report is submitted for the general information of shareholders of The
Humane Equity Fund, but it may also be used as sales literature when preceded or
accompanied by a current Prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the Fund. If used as
sales material after June 30, 2000, this report must be accompanied by
performance information for the most recently completed calendar quarter.
The Humane Equity Fund
7 World Trade Center
New York, New York 10048
--------------------------------------------------------------------------------
The Humane Equity Fund
<PAGE>
[THE HUMANE EQUITY FUND LOGO]
---------------------------
Salomon Brothers
Asset Management
---------------------------
Distributor: CFBDS, Inc., NASD member
1-877-552-5420
www.humanefund.com
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