As filed with the Securities and Exchange Commission
on July 27, 2000
Registration Nos. 002-69938
811-3112
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 31
To The
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
AND
THE INVESTMENT COMPANY ACT OF 1940
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
(Exact name of Registrant as specified
in the Articles of Incorporation)
388 Greenwich Street, New York, New York l0013
(Address of principal executive offices)
(212) 816-6474
(Registrant's telephone number)
Christina T. Sydor
388 Greenwich Street, New York, New York l0013 (22nd
Floor)
(Name and address of agent for service)
Approximate Date of Proposed Public Offering:
Continuous
It is proposed that this filing will become
effective:
[ ] immediately upon filing pursuant to
paragraph (b)
[XX] on July 28, 2000 pursuant to paragraph (b) of
Rule 485
[ ] 60 days after filing pursuant to
paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to
paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)( ii)
of Rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new
effective date for a previously filed post-effective
Amendment.
PART A PROSPECTUS
<PAGE>
[SMITH BARNEY MUTUAL FUNDS LOGO]
Your Serious Money. Professionally Managed.(SM)
PROSPECTUS
MUNICIPAL MONEY MARKET FUND, INC.
CLASS A AND Y SHARES
---------------------------------------
JULY 28, 2000
The Securities and Exchange Commission has not
approved or disapproved these
securities or determined whether this prospectus is
accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
MUNICIPAL MONEY MARKET FUND, INC.
CONTENTS
<TABLE>
<S> <C>
Investments, risks and performance..... 2
More on the fund's investments......... 6
Management.............................. 7
Choosing a class of shares to buy....... 8
Salomon Smith Barney brokerage accounts.. 9
Letter of intent: Class Y shares........ 9
More about deferred sales charges...... 10
Buying shares........................ 11
Exchanging shares..................... 12
Redeeming shares...................... 14
Other things to know about share transactions 16
Dividends, distributions and taxes..... 18
Share price..................... 19
Financial highlights............. 20
</TABLE>
YOU SHOULD KNOW: An investment in the fund is not a
bank deposit and is not
insured or guaranteed by the FDIC or any other
government agency. There is no
assurance that the fund will be able to maintain a
stable net asset value of
$1.00 per share.
Smith Barney Mutual Funds 1
<PAGE>
INVESTMENTS, RISKS AND PERFORMANCE
INVESTMENT OBJECTIVE
The fund seeks to provide income exempt from federal
income tax from a portfolio
of high quality short-term municipal obligations
selected for liquidity and
stability of principal.
PRINCIPAL INVESTMENT STRATEGIES
KEY INVESTMENTS The fund invests at least 80% of its
assets in short-term high
quality "municipal securities," which are debt
obligations issued by any of the
50 states and their political subdivisions, agencies
and public authorities
(together with certain other governmental issuers
such as Puerto Rico, the
Virgin Islands and Guam). The interest on these
securities is exempt from
federal income tax. As a result, the interest rate on
these securities normally
is lower than it would be if the securities were
subject to federal taxation.
All of the securities in which the fund invests are
rated in one of the two
highest short-term rating categories, or if unrated,
of equivalent quality. All
of these securities have remaining maturities of 397
days or less. The fund
maintains a dollar-weighted average portfolio
maturity of 90 days or less.
SELECTION PROCESS The manager selects securities
primarily by identifying
undervalued sectors and individual securities. The
manager only selects
securities of issuers which it believes present
minimal credit risk. In
selecting individual securities, the manager:
- Uses fundamental credit analysis to estimate the
relative value and
attractiveness of various securities and sectors
- Measures the potential impact of supply/demand
imbalances for fixed versus
variable rate securities and for obligations of
different states
- Measures the yields available for securities with
different maturities and a
security's maturity in light of the outlook for
interest rates to identify
individual securities that offer return advantages
at similar risk levels
- May trade between general obligation and revenue
bonds and among various
revenue bond sectors, such as housing, hospital and
industrial development,
based on their apparent relative values
2
Municipal Money Market Fund, Inc.
<PAGE>
PRINCIPAL RISKS OF INVESTING IN THE FUND
Although the fund seeks to preserve the value of your
investment at $1 per
share, it is possible to lose money by investing in
the fund, or the fund could
underperform other short-term municipal debt
instruments or money market funds,
if:
- Interest rates rise, causing the value of the
fund's portfolio to decline
- The issuer of a security owned by the fund defaults
on its obligation to pay
principal and/or interest or the security's credit
rating is downgraded
- Municipal securities fall out of favor with
investors
- Unfavorable legislation affects the tax-exempt
status of municipal securities
- The manager's judgment about the attractiveness,
value or income potential of
a particular security proves to be incorrect
It is possible that some of the fund's income
distributions may be, and
distributions of any gains generally will be, subject
to federal taxation. Some
of the fund's income may be subject to the federal
alternative minimum tax. In
addition, distributions of the fund's income and
gains will be subject to state
personal income taxation. While not expected, the
fund may occasionally realize
taxable gains on the sale of its securities.
WHO MAY WANT TO INVEST The fund may be an
appropriate investment if you are a
taxpayer:
- In a high federal tax bracket seeking current
income exempt from federal
taxation
- Seeking exposure to short-term municipal securities
at a minimum level of
additional risk
- Are looking to allocate a portion of your assets to
money market securities
Smith Barney Mutual Funds
3
<PAGE>
RISK RETURN BAR CHART
This bar chart indicates the risks of investing in
the fund by showing changes
in the fund's performance from year to year. Past
performance does not
necessarily indicate how the fund will perform in the
future. The bar chart
shows the performance of the fund's Class A shares
for each of the past 10 full
calendar years. Class Y shares would have different
performance because of its
different expenses.
TOTAL RETURN: CLASS A
SHARES
[RISK BAR CHART]
<TABLE>
<S>
<C>
1990
5.64%
1991
4.14%
1992
2.50%
1993
1.90%
1994
2.35%
1995
3.43%
1996
2.97%
1997
3.13%
1998
2.96%
1999
2.73%
</TABLE>
CALENDAR YEARS ENDED DECEMBER
31
QUARTERLY RETURNS (PAST 10 YEARS):
Highest: 1.44% in 3rd quarter 1990; Lowest: 0.44% in
1st quarter 1994
Year to date: 1.67% through 6/30/00.
RISK RETURN TABLE
This table indicates the risks of investing in the
fund by comparing the average
annual total return of each class for the periods
shown with that of the 90-day
Treasury bill. This table assumes redemption of
shares at the end of the period,
and reinvestment of distributions and dividends.
AVERAGE ANNUAL TOTAL
RETURNS
CALENDAR YEARS ENDED DECEMBER
31, 1999
<TABLE>
<CAPTION>
CLASS INCEPTION DATE 1 YEAR 5
YEARS 10 YEARS SINCE INCEPTION
<S> <C> <C>
<C> <C> <C>
A 4/3/81 2.73%
3.04% 3.17% --
Y 2/12/96 2.87%
n/a n/a 3.02%
90 day T-bill * 4.74%
5.11% 4.95% 6.55%
</TABLE>
*Index Comparison begins on April 30, 1981.
7 DAY YIELD: AS OF DECEMBER 31, 1999:
Class A -- 3.91%; Class Y -- 3.16%.
4
Municipal Money Market Fund, Inc.
<PAGE>
FEE TABLE
This table sets forth the fees and expenses you will
pay if you invest in fund
shares.
SHAREHOLDER FEES
<TABLE>
<CAPTION>
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS Y
<S>
<C> <C>
Maximum sales charge (load) imposed on purchases
(as a % of offering price)
None None
Maximum deferred sales charge (load) (as a % of the
lower of net asset value at purchase or redemption)
None* None
</TABLE>
ANNUAL FUND OPERATING
EXPENSES
<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS Y
<S>
<C> <C>
Management fees
0.48% 0.48%
Distribution and service (12b-1) fees
0.10% None
Other expenses
0.05% 0.02%
----- -----
Total annual fund operating expenses
0.63% 0.50%
</TABLE>
*Class A Shares acquired through an exchange for
shares of another Smith Barney
Mutual Fund which were originally acquired at net
asset value subject to a
contingent deferred sales charge ("CDSC") remain
subject to the original fund's
CDSC.
EXAMPLE
This example helps you compare the costs of investing
in the fund with the costs
of investing in other mutual funds. Your actual costs
may be higher or lower.
The example assumes:
- You invest $10,000 in the fund for the period shown
- Your investment has a 5% return each year
- You reinvest all distributions and dividends
without a sales charge
- The fund's operating expenses remain the same
NUMBER OF YEARS YOU OWN YOUR
SHARES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
5 YEARS 10 YEARS
<S> <C> <C>
<C> <C>
Class A (with or without
redemptions) $64 $202
$351 $786
Class Y (with or without
redemptions) $51 $160
$280 $628
</TABLE>
Smith Barney Mutual Funds
5
<PAGE>
MORE ON THE FUND'S INVESTMENTS
MUNICIPAL SECURITIES The municipal securities in
which the fund invests include
general obligation and revenue bonds and notes and
tax-exempt commercial paper.
The fund may invest in floating or variable rate
municipal securities. Some of
these securities may have stated final maturities of
more than 397 days but have
demand features that entitle the fund to receive the
principal amount of the
securities either at any time or at specified
intervals.
STRUCTURED SECURITIES The fund may invest up to 20%
of its assets in three
types of structured securities: tender option bonds,
partnership interests and
swap-based securities. These securities represent
participation interests in a
special purpose trust or partnership holding one or
more municipal bonds and/or
municipal bond interest rate swaps. A typical swap
enables the trust or
partnership to exchange a municipal bond interest
rate for a floating or
variable, short-term municipal interest rate.
These structured securities are a type of derivative
instrument. Unlike some
derivatives, these securities are not designed to
leverage the fund's portfolio
or increase its exposure to interest rate risk.
Investments in structured securities raise certain
tax, legal, regulatory and
accounting issues which may not be presented by
investments in other municipal
bonds. These issues could be resolved in a manner
that could hurt the
performance of the fund.
DEFENSIVE INVESTING The fund may depart from its
principal investment
strategies in response to adverse market, economic or
political conditions by
taking temporary defensive positions in all types of
taxable money market and
short-term debt securities. If the fund takes a
temporary defensive position, it
may be unable to achieve its investment goal.
6
Municipal Money Market Fund, Inc.
<PAGE>
MANAGEMENT
MANAGER The fund's investment manager is SSB Citi
Fund Management LLC
(successor to SSBC Fund Management Inc.), an
affiliate of Salomon Smith Barney
Inc. The manager's address is 388 Greenwich Street,
New York, New York 10013.
The manager selects the fund's investments and
oversees its operations. The
manager and Salomon Smith Barney are subsidiaries of
Citigroup Inc. Citigroup
businesses produce a broad range of financial
services -- asset management,
banking and consumer finance, credit and charge
cards, insurance, investments,
investment banking and trading -- and use diverse
channels to make them
available to consumer and corporate customers around
the world.
MANAGEMENT FEES During the fiscal year ended March
31, 2000, the manager
received an advisory fee equal to 0.48% of the fund's
average daily net assets.
DISTRIBUTOR The fund has entered into an agreement
with Salomon Smith Barney to
distribute the fund's shares.
DISTRIBUTION PLAN The fund has adopted a Rule 12b-1
distribution plan for its
Class A shares. Under the plan, Class A shares pay a
service fee. The fee in
Class A shares is an ongoing expense and, over time,
it increases the cost of
your investment and may cost you more than other
types of sales charges.
Smith Barney Mutual Funds
7
<PAGE>
CHOOSING A CLASS OF SHARES TO BUY
You may purchase Class A shares which are sold at net
asset value with no
initial or deferred sales charge. Class A shares are
subject to ongoing
distribution and service fees.
You may purchase Class Y shares only if you are
making an initial investment of
at least $15,000,000. Class Y shares are sold at net
asset value
You may buy shares from:
- A Salomon Smith Barney Financial Consultant
- An investment dealer in the selling group or a
broker that clears through
Salomon Smith Barney -- a dealer representative
INVESTMENT MINIMUMS Minimum initial and additional
investment amounts vary
depending on the class of shares you buy and the
nature of your investment
account.
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
CLASS A
CLASS Y ALL CLASSES
<S> <C>
<C> <C>
General $1,000
$15 million $50
Uniform Gift to Minors Accounts $250
$15 million $50
</TABLE>
8
Municipal Money Market Fund, Inc.
<PAGE>
SALOMON SMITH BARNEY BROKERAGE ACCOUNTS
If you maintain certain types of securities brokerage
accounts with Salomon
Smith Barney, you may request that your free credit
balances (i.e., immediately
available funds) be invested automatically in Class A
shares of a designated
money market fund either daily or weekly. A complete
record of fund dividends,
purchases and redemptions will be included on your
regular Salomon Smith Barney
brokerage statement. In addition to this sweep
service, shareholders of Salomon
Smith Barney FMA PLUS(SM) accounts may also take
advantage of: free dividend
reinvestment, unlimited checking, 100 free ATM
withdrawals each year, gain/loss
analysis and online computer access to account
information. Contact your Salomon
Smith Barney Financial Consultant for more complete
information.
LETTER OF INTENT: CLASS Y SHARES
You may buy Class Y shares of the fund at net asset
value with no initial sales
charge. To purchase Class Y shares, you must meet the
$15,000,000 initial
investment requirement. You can use a letter of
intent to meet this requirement
by buying Class Y shares of a fund over a 13-month
period. To qualify, you must
initially invest $5,000,000.
Smith Barney Mutual Funds
9
<PAGE>
MORE ABOUT DEFERRED SALES CHARGES
If Class A shares of the fund are acquired by
exchange from another Smith Barney
fund subject to a deferred sales charge the original
deferred sales charge will
apply to these shares. If you redeem these shares
within 12 months of the date
you purchased shares of the original fund, the fund's
shares may be subject to a
deferred sales charge of 1.00%.
The deferred sales charge is based on the net asset
value at the time of
purchase or redemption, whichever is less, and
therefore you do not pay a sales
charge on amounts representing appreciation or
depreciation.
In addition, you do not pay a deferred sales charge
on:
- Shares exchanged for shares of another Smith Barney
fund
- Shares representing reinvested distributions and
dividends
- Shares no longer subject to the deferred sales
charge
Each time you place a request to redeem shares, the
fund will first redeem any
shares in your account that are not subject to a
deferred sales charge and then
the shares in your account that have been held the
longest.
If you redeemed shares of a Smith Barney fund in the
past 60 days and paid a
deferred sales charge, you may buy shares of the fund
at the current net asset
value and be credited with the amount of the deferred
sales charge, if you
notify your Salomon Smith Barney Financial Consultant
or dealer representative.
Salomon Smith Barney receives deferred sales charges
as partial compensation for
its expenses in selling shares, including the payment
of compensation to your
Salomon Smith Barney Financial Consultant or dealer
representative.
DEFERRED SALES CHARGE WAIVERS
The deferred sales charge for Class A shares will
generally be waived:
- For involuntary redemptions of small account
balances
- For 12 months following the death or disability of
a shareholder
If you want to learn more about additional waivers of
deferred sales charges,
contact your Salomon Smith Barney Financial
Consultant or dealer representative
or consult the Statement of Additional Information
("SAI").
10
Municipal Money Market Fund, Inc.
<PAGE>
BUYING SHARES
<TABLE>
<C> <S>
Through a You should contact your
Salomon Smith Barney
Salomon Smith Financial Consultant or dealer
representative to
Barney Financial open a brokerage account and
make arrangements
Consultant to buy shares.
or dealer
representative If you do not provide the
following information,
your order will be rejected:
- Class of shares being bought
- Dollar amount or number of
shares being bought
You should pay for your shares
through your
brokerage account no later
than the third
business day after you place
your order. Salomon
Smith Barney or your dealer
representative may
charge an annual account
maintenance fee.
-----------------------------------------------------
------------------
Through the Certain investors who are
clients of the selling
fund's sub-transfer group are eligible to buy
shares directly from
agent the fund.
- Write the sub-transfer agent
at the following
address:
SMITH BARNEY MUNICIPAL MONEY
MARKET FUND, INC.
(SPECIFY CLASS OF SHARES)
C/O PFPC GLOBAL FUND
SERVICES
P.O. BOX 9699
PROVIDENCE, RHODE ISLAND
02940-9699
- Enclose a check to payable
to the fund for the
shares. For initial
purchases, complete and
send an account application.
- For more information, call
the transfer agent
at 1-800-451-2010.
For more information, contact
your Salomon Smith
Barney Financial Consultant,
dealer
representative or the transfer
agent or consult
the SAI.
</TABLE>
Smith Barney Mutual Funds
11
<PAGE>
EXCHANGING SHARES
<TABLE>
<C> <S>
Smith Barney offers You should contact your
Salomon Smith Barney
a distinctive Financial Consultant or dealer
representative
family of funds to exchange into other Smith
Barney funds. Be
tailored to help sure to read the prospectus of
the Smith
meet the varying Barney fund you are exchanging
into. An
needs of both exchange is a taxable
transaction.
large and small
investors - You may exchange shares only
for shares of
the same class of another
Smith Barney fund.
Not all Smith Barney funds
offer all
classes.
- Not all Smith Barney funds
may be offered
in your state of residence.
Contact your
Salomon Smith Barney
Financial Consultant,
dealer representative or the
transfer
agent.
- You must meet the minimum
investment amount
for each fund (except for
systematic
changes).
- If you hold share
certificates, the
sub-transfer agent must
receive the
certificates endorsed for
transfer or with
signed stock powers
(documents transferring
ownership of certificates)
before the
exchange is effective.
- The fund may suspend or
terminate your
exchange privilege if you
engage in an
excessive pattern of
exchanges.
-----------------------------------------------------
---------------
Sales charges Your shares may be subject to
an initial
sales charge at the time of
the exchange. For
more information, contact your
Salomon Smith
Barney Financial Consultant,
dealer
representative or the transfer
agent.
Your deferred sales charge (if
any) will
continue to be measured from
the date of your
original purchase of another
fund's shares
subject to a deferred sales
charge.
-----------------------------------------------------
---------------
</TABLE>
12
Municipal Money Market Fund, Inc.
<PAGE>
<TABLE>
<C> <S>
By telephone If you do not have a brokerage
account, you
may be eligible to exchange
shares through
the transfer agent. You must
complete an
authorization form to
authorize telephone
transfers. If eligible, you
may make
telephone exchanges on any day
the New York
Stock Exchange is open. Call
the transfer
agent at 1-800-451-2010
between 9:00 a.m. and
4:00 p.m. (Eastern time).
You can make telephone
exchanges only between
accounts that have identical
registrations.
-----------------------------------------------------
---------------
By mail If you do not have a Salomon
Smith Barney
brokerage account, contact
your dealer
representative or write to the
sub-transfer
agent at the address on the
following page.
</TABLE>
Smith Barney Mutual Funds
13
<PAGE>
REDEEMING SHARES
<TABLE>
<C> <S>
Generally Contact your Salomon Smith
Barney Financial
Consultant or dealer
representative to redeem
shares of the fund.
If you hold share
certificates, the
sub-transfer agent must
receive the
certificates endorsed for
transfer or with
signed stock powers before the
redemption is
effective.
If the shares are held by a
fiduciary or
corporation, other documents
may be required.
Your redemption proceeds will
be sent within
three business days after your
request is
received in good order.
However, if you
recently purchased your shares
by check, your
redemption proceeds will not
be sent to you
until your original check
clears, which may
take up to 15 days.
If you have a Salomon Smith
Barney brokerage
account, your redemption
proceeds will be
placed in your account and not
reinvested
without your specific
instruction. In other
cases, unless you direct
otherwise, your
redemption proceeds will be
paid by check
mailed to your address of
record.
-----------------------------------------------------
---------------
By mail For accounts held directly at
the fund, send
written requests to the sub-
transfer agent at
the following address:
SMITH BARNEY MUNICIPAL MONEY
MARKET FUND,
INC.
(SPECIFY CLASS OF SHARES)
C/O PFPC GLOBAL FUND
SERVICES
P.O. BOX 9699
PROVIDENCE, RHODE ISLAND
02940-9699
Your written request must
provide the
following:
- Your account number
- The class of shares and the
dollar amount
or number of shares to be
redeemed
- Signatures of each owner
exactly as the
account is registered
</TABLE>
14
Municipal Money Market Fund, Inc.
<PAGE>
<TABLE>
<C> <S>
By telephone If you do not have a brokerage
account, you
may be eligible to redeem
shares in amounts
up to $10,000 per day through
the transfer
agent. You must complete an
authorization
form to authorize telephone
redemptions. If
eligible, you may request
redemptions by
telephone on any day the New
York Stock
Exchange is open. Call the
transfer agent at
1-800-451-2010 between 9:00
a.m. and 4:00
p.m. (Eastern time).
Your redemption proceeds can
be sent by check
to your address of record or
by wire transfer
to a bank account designated
on your
authorization form. You must
submit a new
authorization form to change
the bank account
designated to receive wire
transfers and you
may be asked to provide
certain other
documents.
-----------------------------------------------------
---------------
For more information, contact
your Salomon
Smith Barney Financial
Consultant or dealer
representative or consult the
SAI.
</TABLE>
Smith Barney Mutual Funds
15
<PAGE>
OTHER THINGS TO KNOW ABOUT SHARE TRANSACTIONS
When you buy, exchange or redeem shares, your request
must be in good order.
This means you have provided the following
information, without which your
request will not be processed:
- Name of the fund
- Account number
- Class of shares being bought, exchanged or redeemed
- Dollar amount or number of shares being bought,
exchanged or redeemed
- Signature of each owner exactly as the account is
registered
A request to purchase becomes effective only when
Salomon Smith Barney, a
selling group member or the transfer agent receives,
or converts the purchase
amount into, federal funds. The transfer agent will
try to confirm that any
telephone exchange or redemption request is genuine
by recording calls, asking
the caller to provide a personal identification
number for the account, sending
you a written confirmation or requiring other
confirmation procedures from time
to time.
SIGNATURE GUARANTEES To be in good order, your
redemption request must include
a signature guarantee if you:
- Are redeeming over $10,000 of shares
- Are sending signed share certificates or stock
powers to the sub-transfer
agent
- Instruct the sub-transfer agent to mail the check
to an address different from
the one on your account
- Changed your account registration
- Want the check paid to someone other than the
account owner(s)
- Are transferring the redemption proceeds to an
account with a different
registration
You can obtain a signature guarantee from most banks,
dealers, brokers, credit
unions and federal savings and loan institutions, but
not from a notary public.
The fund has the right to:
- Suspend the offering of shares
- Waive or change minimum and additional investment
amounts
- Reject any purchase or exchange order
- Change, revoke or suspend the exchange privilege
- Suspend telephone transactions
16
Municipal Money Market Fund, Inc.
<PAGE>
- Suspend or postpone redemptions of shares on any
day when trading on the New
York Stock Exchange is restricted, or as otherwise
permitted by the Securities
and Exchange Commission
- Pay redemption proceeds by giving you securities.
You may pay transaction
costs to dispose of the securities.
SMALL ACCOUNT BALANCES If your account falls below
$500 because of a redemption
of fund shares, the fund may ask you to bring your
account up to $500. If your
account is still below $500 after 60 days, the fund
may close your account and
send you the redemption proceeds.
EXCESSIVE EXCHANGE TRANSACTIONS The manager may
determine that a pattern of
frequent exchanges is detrimental to the fund's
performance and other
shareholders. If so, the fund may limit additional
purchases and/or exchanges by
the shareholder.
SHARE CERTIFICATES The fund does not issue share
certificates unless a written
request signed by all registered owners is made to
the sub-transfer agent. If
you hold share certificates it will take longer to
exchange or redeem shares.
Smith Barney Mutual Funds
17
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS The fund declares a dividend of
substantially all of its net
investment income on each day the New York Stock
Exchange (NYSE) is open. Income
dividends are paid monthly. The fund generally makes
capital gain distributions,
if any, once a year, typically in December. The fund
may pay additional
distributions and dividends at other times if
necessary for the fund to avoid a
federal tax. Capital gain distributions and dividends
are reinvested in
additional fund shares of the same class you hold.
The fund expects
distributions to be primarily from income. You do not
pay a sales charge on
reinvested distributions or dividends. Alternatively,
you can instruct your
Salomon Smith Barney Financial Consultant, dealer
representative or the transfer
agent to have your distributions and/or dividends
paid in cash. You can change
your choice at any time to be effective as of the
next distribution or dividend,
except that any change given to the transfer agent
less than five days before
the payment date will not be effective until the next
distribution or dividend
is paid.
TAXES In general, redeeming shares, exchanging
shares and receiving
distributions (whether in cash or additional shares)
are all taxable events.
<TABLE>
<CAPTION>
TRANSACTION FEDERAL TAX
STATUS
<S> <C>
Redemption or exchange Usually no gain or loss;
loss may
of shares result to extent of any
deferred
sales charge
Long-term capital gain Long-term capital gain
distributions
Short-term capital gain Ordinary income
distributions
Dividends Exempt if from interest
on
tax-exempt securities,
otherwise
ordinary income
</TABLE>
The fund anticipates that it will normally not earn
or distribute any long-term
capital gains.
After the end of each year, the fund will provide you
with information about the
distributions and dividends you received and any
redemptions of shares during
the previous year. If you do not provide the fund
with your correct taxpayer
identification number and any required
certifications, you may be subject to
back-up withholding of 31% of your distributions and
dividends. Because each
shareholder's circumstances are different and special
tax rules may apply, you
should consult your tax adviser about your investment
in the fund.
18
Municipal Money Market Fund, Inc.
<PAGE>
SHARE PRICE
You may buy, exchange or redeem shares at their net
asset value, plus any
applicable sales charge, next determined after
receipt of your request in good
order. The fund's net asset value is the value of its
assets minus its
liabilities. Net asset value is calculated separately
for each class of shares.
The fund calculates its net asset value every day the
New York Stock Exchange is
open. The Exchange is closed on certain holidays
listed in the SAI. This
calculation is done when regular trading closes on
the Exchange (normally 4:00
p.m., Eastern time).
The fund uses the amortized cost method to value its
portfolio securities. Using
this method, the fund constantly amortizes over the
remaining life of a security
the difference between the principal amount due at
maturity and the cost of the
security to the fund. The fund intends to use its
best efforts to continue to
maintain a constant net asset value of $1.00.
<TABLE>
<CAPTION>
FORM OF PURCHASE IS
EFFECTIVE
PURCHASE PAYMENT AND DIVIDENDS
BEGIN
<S> <C> <C>
-- Payment in federal If received before At
the close of
funds the close of regular
regular trading on
trading on the the
Exchange on that
Exchange: day
-- Having a If received after the At
the close of
sufficient cash close of regular
regular trading on
balance in your trading on the the
Exchange on the
account with Exchange: next
business day
Salomon Smith
Barney or a
selling group
member
---------------------------------------------------
----------------
-- Other forms of At the close of
payment, with regular trading on
conversion into, the Exchange on the
or advance of, next business day
federal funds by
Salomon Smith
Barney or a
selling group
member
-- Other forms of
payment received
by the transfer
agent
</TABLE>
Salomon Smith Barney or members of the selling group
must transmit all orders to
buy, exchange or redeem shares to the fund's agent
before the agent's close of
business.
Smith Barney Mutual Funds
19
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help
you understand the
performance of each class for the past 5 years.
Certain information reflects
financial results for a single share. Total return
represents the rate that a
shareholder would have earned (or lost) on a fund
share assuming reinvestment of
all dividends and distributions. The information in
the following tables was
audited by KPMG LLP, independent accountants, whose
report, along with the
fund's financial statements, is included in the
annual report (available upon
request).
FOR A CLASS A SHARE OF CAPITAL STOCK
OUTSTANDING
THROUGHOUT EACH YEAR ENDED
MARCH 31:
<TABLE>
<CAPTION>
2000 1999
1998 1997 1996
<S> <C> <C>
<C> <C> <C>
-----------------------------------------------------
------------------------
Net asset value, beginning of
year $1.00 $1.00
$1.00 $1.00 $1.00
-----------------------------------------------------
------------------------
Net investment income(1) 0.028 0.028
0.031 0.029 0.033
Dividends from net investment
income (0.028) (0.028)
(0.031) (0.029) (0.033)
-----------------------------------------------------
------------------------
Net asset value, end of year $1.00 $1.00
$1.00 $1.00 $1.00
-----------------------------------------------------
------------------------
Total return 2.89% 2.84%
3.15% 2.94% 3.34%
-----------------------------------------------------
------------------------
Net assets, end of year
(millions) $7,003 $7,104
$6,336 $5,562 $5,395
-----------------------------------------------------
------------------------
Ratios to average net assets:
Expenses(1)(2) 0.63% 0.62%
0.61% 0.67% 0.63%
Net investment income 2.84 2.79
3.10 2.90 3.28
-----------------------------------------------------
------------------------
</TABLE>
<TABLE>
<C> <S>
(1) The manager has waived a part of its fees for
the years
ended March 31, 1996. If such fees were not
waived, the per
share effect on net investment income and
expense ratios
would have been as follows:
</TABLE>
<TABLE>
<CAPTION>
PER SHARE
DECREASES OF NET EXPENSE RATIOS
INVESTMENT INCOME WITHOUT FEE WAIVERS
1996 1996
-------------------------------------------------
---------------------------------------
<S> <C>
<C>
Class A
$0.0001 $0.64%
-------------------------------------------------
---------------------------------------
</TABLE>
<TABLE>
<C> <S>
(2) As a result of voluntary expense limitations,
expense ratios
did not exceed 0.70% of any class of the fund.
</TABLE>
20
Municipal Money Market Fund, Inc.
<PAGE>
FOR A CLASS Y SHARE OF CAPITAL STOCK
OUTSTANDING
THROUGHOUT EACH YEAR ENDED
MARCH 31:
<TABLE>
<CAPTION>
2000 1999
1998 1997 1996(2)
<S> <C> <C>
<C> <C> <C>
-----------------------------------------------------
----------------------
Net asset value, beginning of
year $1.00 $1.00
$1.00 $1.00 $1.00
-----------------------------------------------------
----------------------
Net investment income 0.030 0.029
0.032 0.030 0.004
Dividends from net investment
income (0.030) (0.029)
(0.032) (0.030) (0.004)
-----------------------------------------------------
----------------------
Net asset value, end of year $1.00 $1.00
$1.00 $1.00 $1.00
-----------------------------------------------------
----------------------
Total return 3.03% 2.95%
3.25% 3.04% .039%(++)
-----------------------------------------------------
----------------------
Net assets, end of year
(thousands) $463 $24.0
$0.5 $5.0 $18.0
-----------------------------------------------------
----------------------
Ratio to average net assets:
Expenses(1) 0.50% 0.49%
0.52% 0.57% 0.55(+)
Net investment income 2.87 2.90
3.23 3.00 2.81(+)
-----------------------------------------------------
----------------------
</TABLE>
<TABLE>
<C> <S>
(1) As a result of the voluntary expense
limitations, expense
ratios will not exceed 0.70% of any class of the
fund.
(2) For the period from February 12, 1996 (inception
date) to
March 31, 1996.
(++) Total return is not annualized, as it may not be
representative of the total return for the year.
(+) Annualized.
</TABLE>
Smith Barney Mutual Funds
21
<PAGE>
[SALOMON SMITH BARNEY LOGO]
MUNICIPAL MONEY MARKET FUND, INC.
SHAREHOLDER REPORTS Annual and semiannual reports to
shareholders provide
additional information about the fund's investments.
These reports discuss the
market conditions and investment strategies that
affected the fund's
performance.
The fund sends only one report to a household if more
than one account has the
same address. Contact your Salomon Smith Barney
Financial Consultant, dealer
representative or the transfer agent if you do not
want this policy to apply to
you.
STATEMENT OF ADDITIONAL INFORMATION The statement of
additional information
provides more detailed information about the fund and
is incorporated by
reference into (is legally part of) this prospectus.
You can make inquiries about the fund or obtain
shareholder reports or the
statement of additional information (without charge)
by contacting your Salomon
Smith Barney Financial Consultant or dealer
representative, by calling the fund
at 1-800-451-2010, or by writing to the fund at Smith
Barney Mutual Funds, 388
Greenwich Street, MF2, New York, New York 10013.
Visit our web site. Our web site is located at
WWW.SMITHBARNEY.COM
Information about the funds (including the SAI) can
be reviewed and copied at
the Securities and Exchange Commission's (the
"Commission") Public Reference
Room in Washington D.C. In addition, information on
the operation of the Public
Reference Room may be obtained by calling the
Commission at 1-202-942-8090.
Reports and other information about the funds are
available on the EDGAR
Database on the Commission's Internet site at
HTTP://WWW.SEC.GOV. Copies of this
information may be obtained for a duplicating fee by
electronic request at the
following E-mail address: [email protected], or by
writing the Commission's
Public Reference Section, Washington, D.C. 20549-
0102.
If someone makes a statement about the fund that is
not in this prospectus, you
should not rely upon that information. Neither the
fund nor the distributor is
offering to sell shares of the fund to any person to
whom the fund may not
lawfully sell its shares.
(SM)Salomon Smith Barney is a service mark of Salomon
Smith Barney Inc.
(Investment Company Act
file no. 811-03112)
FD2310 7/00
PART B STATEMENT OF ADDITIONAL INFORMATION
Smith Barney
MUNICIPAL MONEY MARKET FUND, INC.
388 Greenwich Street
New York, New York 10013
(800) 451-2010
Statement Of Additional
Information
July 28, 2000
This Statement of Additional Information (the
"SAI") expands upon and supplements the information
contained in the current prospectus of Smith Barney
Municipal Money Market Fund Inc. (the "fund") dated
July 28, 2000, as amended or supplemented from time
to
time, and should be read in conjunction with the
fund's prospectus. Additional information about the
fund's investments is available in the fund's annual
and semi-annual reports to shareholders. The fund's
prospectus and copies of the reports may be obtained
free of charge from your Salomon Smith Barney
Financial Consultant or by writing or calling the
fund
at the address or telephone number set forth above.
This SAI, although not in itself a prospectus, is
incorporated by reference into the prospectus in its
entirety.
TABLE OF CONTENTS
DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND 2
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 5
INVESTMENT RESTRICTIONS 11
INVESTMENT MANAGEMENT 12
PURCHASE OF SHARES 14
REDEMPTION OF SHARES 15
DISTRIBUTOR 17
DISTRIBUTION ARRANGEMENTS 18
PERFORMANCE DATA 19
VALUATION OF SHARES 19
EXCHANGE PRIVILEGE 20
TAXES 21
ADDITIONAL INFORMATION 23
FINANCIAL STATEMENTS 23
OTHER INFORMATION 23
APPENDIX A - RATINGS OF MUNICIPAL OBLIGATIONS A-1
DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND
The names of the Directors and executive
officers of the fund, together with information as to
their principal business occupations during the past
five years, are set forth below. Each Director who is
an "interested person" of the fund, as defined in the
Investment Company Act of 1940, as amended (the "1940
Act"), is indicated by an asterisk.
LEE ABRAHAM, Director
Retired; Director or Trustee of 12 investment
companies associated with Citigroup Inc.
("Citigroup"). Director of R.G. Barry Corp., a
footwear manufacturer, Signet Group plc, a specialty
retailer, and eNote.com, Inc., a computer hardware
company. Formerly Chairman and Chief Executive
Officer
of Associated Merchandising Corporation, a major
retail merchandising and sourcing organization and
formerly Director of Galey & Lord and Liz Claiborne.
His address is 106 Barnes Road, Stamford, Connecticut
06902; Age 72.
ALLAN J. BLOOSTEIN, Director
President of Allan J. Bloostein Associates, a
consulting firm; Director or Trustee of 19 investment
companies associated with Citigroup. Director of CVS
Corporation, a drugstore chain, and Taubman Centers
Inc., a real estate development company; Retired Vice
Chairman and Director of The May Department Stores
Company. His address is 27 West 67th Street, New
York, New York 10023; Age 70.
JANE F. DASHER, Director
Investment Officer; Korsant Partners, a family
investment company. Director or Trustee of 12
investment companies associated with Citigroup. Prior
to 1997, Independent Financial Consultant. Her
address
is 283 Greenwich Avenue, Greenwich, Connecticut
06830;
Age 50.
DONALD R. FOLEY, Director
Retired; Director or Trustee of 12 investment
companies associated with Citigroup. Formerly Vice
President of Edwin Bird Wilson, Incorporated (an
advertising agency); His address is 3668 Freshwater
Drive, Jupiter, Florida 33477; Age 77.
RICHARD E. HANSON, JR., Director
Head of School, The New Atlanta Jewish Community High
School, Atlanta Georgia. Director or Trustee of 12
investment companies associated with Citigroup.
Formerly Headmaster, The Peck School, Morristown, New
Jersey. His address is 2751 Vermont Route 140,
Poultney, Vermont 05764; Age 58.
PAUL HARDIN, Director
Professor of Law at University of North Carolina at
Chapel Hill. Director or Trustee of 14 investment
companies associated with Citigroup. Director of The
Summit Bancorporation; Formerly, Chancellor of the
University of North Carolina at Chapel Hill; His
address is 12083 Morehead, Chapel Hill, North
Carolina
27514; Age 69.
*HEATH B. McLENDON, Chairman of the Board, President
and Chief Executive Officer
Managing Director of Salomon Smith Barney; Chairman,
Co-Chairman or Trustee of the Board of 78 investment
companies associated with Citigroup. Director and
President of SSB Citi Fund Management LLC ("SSB Citi"
or the "manager")(successor to SSBC Fund Management
Inc.) and Travelers Investment Advisers, Inc.
("TIA").
His address is 7 World Trade Center, New York, New
York 10048; Age 67.
RODERICK C. RASMUSSEN, Director
Investment Counselor; Director or Trustee of 12
investment companies associated with Citigroup.
Formerly Vice President of Dresdner and Company Inc.
(investment counselors); His address is 9 Cadence
Court, Morristown, New Jersey 07960; Age 74.
JOHN P. TOOLAN, Director
Retired; Director or Trustee of 12 investment
companies associated with Citigroup. Trustee of John
Hancock Funds; Formerly, Director and Chairman of
Smith Barney Trust Company, Director of Smith Barney
Holdings Inc. and various subsidiaries, Senior
Executive Vice President, Director and Member of the
Executive Committee of Smith Barney; His address is
13
Chadwell Place, Morristown, New Jersey 07960; Age 69.
*LEWIS E. DAIDONE, Senior Vice President and
Treasurer
Managing Director of Salomon Smith Barney; Chief
Financial Officer of the Smith Barney mutual funds;
Treasurer and Senior Vice President or Executive Vice
President of 61 investment companies associated with
Citigroup; Director and Senior Vice President of the
SSB Citi and TIA; His address is 125 Broad Street,
New
York, New York 10004; Age 42.
*JOSEPH P. DEANE, Vice President and Investment
Officer
Investment Officer of SSB Citi; Managing Director of
Salomon Smith Barney; Investment Officer of ten
investment companies associated with Citigroup; His
address is 388 Greenwich Street, New York, New York
10013; Age 51.
*JOSEPH BENEVENTO, Vice President
Director of Salomon Smith Barney and Vice President
of
Smith Barney Muni Funds and Smith Barney
Institutional
Cash Management Fund, Inc.; His address is 388
Greenwich Street, New York, New York 10013; Age 32.
*IRVING DAVID, Controller
Director of Salomon Smith Barney. Formerly Assistant
Treasurer of First Investment Management Company.
Controller or Assistant Treasurer of 53 investment
companies associated with Citigroup; His address is
125 Broad Street, New York, New York 10004; Age 39.
*CHRISTINA T. SYDOR, Secretary
Managing Director of Salomon Smith Barney; Secretary
of 61 investment companies associated with Citigroup;
Secretary and General Counsel of the manager and TIA;
Her address is 388 Greenwich Street, New York, New
York 10013; Age 49.
The officers of the fund are compensated by
Salomon Smith Barney and are not separately
compensated by the fund.
As of July 7, 2000, the Directors and officers
of the fund as a group owned less than 1% of the
outstanding common stock of the fund. As of July 7,
2000, to the knowledge of the fund and the Board, the
following shareholders or "groups" (as that term is
used in Section 13(d) of the Securities Act of 1934)
beneficially owned more than 5% of the outstanding
shares of the fund:
Class Y Shares
Charles P. Ryan and
Cecily B. Ryan Ten In Com
122 Oxford Blvd.
Garden City, NY 11530-2716
Owned 502,696.830 (94.89%) shares
Kevin Timothy Ryan
13590 Prosperity Farms Road
Palm Beach, FL 33410-1218
Owned 27,050.540 (5.10%) shares
THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
The following table shows the compensation paid
by the fund to each director during the fund's last
fiscal year. None of the officers of the fund
received
any compensation from the fund for such period. Fees
for directors who are not "interested persons" of the
fund and who are directors of a group of funds
sponsored by Salomon Smith Barney are set at $60,000
per annum and are allocated based on relative net
assets of each fund in the group. In addition, these
directors received $100 per fund or portfolio for
each
meeting attended and plus travel and out-of-pocket
expenses incurred in connection with board meetings.
The board meeting fees and out-of-pocket expenses are
borne equally by each individual fund or portfolio in
the group. During the fiscal year ended March 31,
2000, the fund incurred expenses which totaled
$14,695. Officers and interested directors of the
fund are compensated by Salomon Smith Barney.
COMPENSATION TABLE
Name of Director
Aggregate
Compensation
from the
fund
For Fiscal
Year Ended
3/31/00
Pension or
Retirement
Benefits
Accrued as
Part of
fund's
Expenses
Total
Compensation
from Fund
Complex for
Calendar
Year as of
12/31/99
Total Number
of Funds for
Which Director
Serves within
Fund Complex
Lee Abraham
$4,052
$0
$71,133
12
Allen J. Bloostein
4,052
0
112,483
19
Jane Dasher
4,626
0
65,7333
12
Donald R. Foley**
4,506
0
71,300
12
Richard E. Hanson,
Jr .
4,626
0
68,233
12
Paul Hardin
4,626
0
90,450
14
Heath B. McLendon*
0
0
0
78
Roderick C.
Rasmussen
4,626
0
71,200
12
John P. Toolan**
4,626
0
69,100
12
* Designates a director who is an "interested
person"
of the fund.
** Pursuant to the fund's deferred compensation
plan,
the indicated directors have elected to defer the
following amounts of their compensation from the
fund: Donald R Foley: $1,530, John P. Toolan:
$4,626,and Roderick C. Rasmussen $449; and the
following amounts of their total compensation from
the Fund Complex: Donald R. Foley: $21,600 and John
P. Toolan: $69,100.
Upon attainment of age 80 the fund's current
directors are required to change to emeritus
status. Directors Emeritus are entitled to serve
in emeritus status for a maximum of 10 years during
which time they are paid 50% of the annual retainer
fee and meeting fees otherwise applicable to the
fund's directors, together with reasonable out-of-
pocket expenses for each meeting attended. During
the fund's last fiscal year, aggregate compensation
from the fund to Emeritus Directors totaled $2,320.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The prospectus discusses the fund's investment
objective and the policies. The following discussion
supplements the description of the fund's investment
policies in the prospectus. The fund will pursue its
objective by investing in a diversified portfolio of
municipal obligations, the interest on which is
exempt
from federal income tax in the opinion of counsel to
the various issuers. The fund operates as a money
market fund, and utilizes certain investment policies
so that, to the extent reasonably possible, its price
per share will not change from $1.00, although no
assurance can be given that this goal will be
achieved
on a continuous basis. For example, the fund will
not purchase a security which, after giving effect to
any demand features, has a remaining maturity of
greater than 397 days, or maintain a dollar-weighted
average portfolio maturity in excess of 90 days.
In general, municipal obligations are debt
obligations (bonds or notes) issued by or on behalf
of
states, territories and possessions of the United
States and their political subdivisions, agencies and
instrumentalities the interest on which is exempt
from
Federal income tax in the opinion of bond counsel to
the issuer. Municipal obligations are issued to
obtain funds for various public purposes, many of
which may enhance the quality of life, including the
construction of a wide range of public facilities,
such as airports, bridges, highways, housing,
hospitals, mass transportation, schools, streets,
water and sewer works, gas, and electric utilities.
They may also be issued to refund outstanding
obligations, to obtain funds for general operating
expenses, or to obtain funds to loan to other public
institutions and facilities and in anticipation of
the
receipt of revenue or the issuance of other
obligations. In addition, the term "municipal
obligations" includes certain types of industrial
development bonds ("IDBs") issued by public
authorities to obtain funds to provide various
privately-operated facilities for business and
manufacturing, housing, sports, convention or trade
show facilities, airport, mass transit, port and
parking facilities, air or water pollution control
facilities, and certain facilities for water supply,
gas, electricity or sewerage or solid waste disposal.
Opinions relating to the validity of municipal
obligations and to the exemption of interest thereon
from federal income tax are rendered by bond counsel
to the respective issuers at the time of issuance.
Neither the fund nor SSB Citi will review the
proceedings relating to the issuance of municipal
obligations or the bases for such opinions.
Except for temporary defensive purposes, at
least 80% of the fund's assets will be invested in
municipal obligations that produce income that is
exempt from federal income tax (other than the
alternative minimum tax). In each of the fund's
prior
fiscal years, 100% of its income has been exempt from
federal income tax and the fund's shares have had a
stable $1.00 price.
The fund's investments are limited to United
States dollar-denominated instruments that, at the
time of acquisition (including any related credit
enhancement features) have received a rating in one
of
the two highest categories for short-term debt
obligations from the "Requisite NRSROs," securities
of
issuers that have received such a rating with respect
to other comparable securities, and comparable
unrated
securities. "Requisite NRSROs" means (a) any two
nationally recognized statistical rating
organizations
("NRSROs") that have issued a rating with respect to
a
security or class of debt obligations of an issuer,
or
(b) one NRSRO, if only one NRSRO has issued such
rating at the time that the fund acquires the
security. The NRSROs currently designated as such by
the SEC are Standard & Poor's Ratings Group (S&P"),
Moody's Investors Service, Inc. ("Moody's"), Duff and
Phelps Inc., Fitch IBCA, Inc. ("Fitch") and Thomson
BankWatch.
The yields on municipal obligations are
dependent on a variety of factors, including general
market conditions, supply and demand, general
conditions of the municipal market, size of a
particular offering, the maturity of the obligation
and the rating of the issue. The ratings of NRSROs
such as Moody's and S&P represent their opinions as
to
the quality to the municipal obligations that they
undertake to rate. It should be emphasized, however,
that such ratings are general and are not absolute
standards of quality. Consequently, municipal
obligations with the same maturity, coupon and rating
may have different yields when purchased in the open
market, while municipal obligations of the same
maturity and coupon with different ratings may have
the same yield.
Municipal obligations, which are issued by
states, municipalities and their agencies, may
include
municipal notes and bonds. The two principal
classifications of municipal obligations are "general
obligation" and "revenue." General obligations are
secured by a municipal issuer's pledge of its full
faith, credit, and taxing power for the payment of
principal and interest. Revenue obligations are
payable only from the revenues derived from a
particular facility or class of facilities or, in
some
cases, from the proceeds of a special excise tax or
other specific revenue source. Although IDBs are
issued by municipal authorities, they are generally
secured by the revenues derived from payments of the
industrial user. The payment of the principal and
interest on IDBs is dependent solely on the ability
of
the user of the facilities financed by the bonds to
meet its financial obligations and the pledge, if
any,
of real and personal property so financed as security
for such payment.
For purposes of diversification and
concentration under the 1940 Act, the identification
of the issuer of municipal obligations depends on the
terms and conditions of the obligation. If the
assets
and revenues of an agency, authority, instrumentality
or other political subdivision are separate from
those
of the government creating the subdivision and the
obligation is backed only by the assets and revenues
of the subdivision, such subdivision is regarded as
the sole issuer. Similarly, in the case of an IDB or
a pollution control revenue bond, if the bond is
backed only by the assets and revenues of the non-
governmental user, the non-governmental user is
regarded as the sole issuer. If in either case the
creating government or another entity guarantees an
obligation, the guaranty is regarded as a separate
security and treated as an issue of such guarantor.
Similar criteria apply for purposes of the
diversification requirements under Subchapter M of
the
Internal Revenue Code of 1986, as amended (the
"Code").
Among the types of obligations in which the
fund
may invest are floating or variable rate instruments
subject to demand features ("demand instruments");
tax-exempt commercial paper; and notes such as Tax
Anticipation Notes, Revenue Anticipation Notes, Tax
and Revenue Anticipation Notes and Bond Anticipation
Notes. Demand instruments usually have an indicated
maturity of more than 13 months but have a demand
feature (or "put") that entitles the holder to
receive
the principal amount of the underlying security and
may be exercised either (a) at any time on no more
than 30 days' notice; or (b) at specified intervals
not exceeding one year and upon no more than 30 days'
notice. Demand features generally consist of a
letter
of credit issued by a domestic or foreign bank. A
variable rate instrument provides for adjustment of
its interest rate on set dates and upon such
adjustment can reasonably be expected to have a
market
value that approximates its amortized cost; a
floating
rate instrument provides for adjustment of its
interest rate whenever a specified interest rate
(e.g., the prime rate) changes and at any time can
reasonably be expected to have a market value that
approximates its amortized cost.
The fund may purchase participation interests in
variable-rate tax-exempt securities (such as
Industrial Development Bonds) owned by banks.
Participations are frequently backed by an
irrevocable
letter of credit or guarantee of a bank that the
manager has determined meets the prescribed quality
standards for the fund. Participation interests will
be purchased only; if management believes interest
income on such interests will be tax-exempt when
distributed as dividends to shareholders.
Investments in participation interests in
variable-rate tax-exempt securities (such as IDBs)
purchased from banks give the purchaser an undivided
interest in the tax-exempt security in the proportion
that the fund participation interest bears to the
total principal amount of the tax-exempt security
with
a demand repurchase feature. Participation interests
are frequently backed by an irrevocable letter of
credit or guarantee of a bank that the manager, under
the supervision of the board of directors (the
"board"), has determined meets the prescribed quality
standards for the fund. The fund has the right to
sell the instrument back to the bank and draw on the
letter of credit on demand on seven days' notice or
less, for all or any part of its participation
interest in the tax-exempt security, plus accrued
interest. The fund intends to exercise the demand
under the letter of credit only (1) upon a default
under the terms of the documents of the tax-exempt
security, (2) as needed to provide liquidity in order
to meet redemptions, or (3) to maintain a high
quality
investment portfolio. Banks will retain a service
and
letter of credit fee and a fee for issuing repurchase
commitments in an amount equal to the excess of the
interest paid on the tax-exempt securities over the
negotiated yield at which the instruments were
purchased by the fund. The manager will monitor the
pricing, quality and liquidity of the variable-rate
demand instruments held by the fund, including the
IDBs supported by bank letters of credit or
guarantees, on the basis of published financial
information, reports of rating agencies and other
bank
analytical services to which the manager may
subscribe.
Private Activity Bonds. The fund may invest
without limits in private activity bonds. Interest
income on certain types of private activity bonds
issued after August 7, 1986 to finance non-
governmental activities is a specific tax preference
item for purposes of the federal individual and
corporate alternative minimum taxes. Individual and
corporate shareholders may be subject to a federal
alternative minimum tax to the extent that the fund's
dividends are derived from interest on those bonds.
These private activity bonds are included in the term
"municipal obligations" for purposes of determining
compliance with the 80% test described above.
Dividends derived from interest on any tax-exempt
municipal obligations are a component of the "current
earnings" adjustment for purposes of the federal
corporate alternative minimum tax.
Structured Securities. The fund may invest up
to 20% of the value of its assets in one or more of
the three principal types of derivative product
structures described below. Derivative products are
typically structured by a bank, broker-dealer or
other
financial institution. A derivative product
generally consists of a trust or partnership through
which the fund holds an interest in one or more
underlying bonds coupled with a conditional right to
sell ("put") the fund's interest in the underlying
bonds at par plus accrued interest to a financial
institution (a "Liquidity Provider"). Typically, a
derivative product is structured as a trust or
partnership which provides for pass-through tax-
exempt
income. There are currently three principal types of
derivative structures: (1) "Tender Option Bonds",
which are instruments which grant the holder thereof
the right to put an underlying bond at par plus
accrued interest at specified intervals to a
Liquidity
Provider; (2) "Swap Products", in which the trust or
partnership swaps the payments due on an underlying
bond with a swap counterparty who agrees to pay a
floating municipal money market interest rate:; and
(3) "Partnerships", which allocate to the partners
income, expenses, capital gains and losses in
accordance with a governing partnership agreement.
Investments in derivative products raise
certain
tax, legal, regulatory and accounting issues which
may
not be presented by investments in other municipal
bonds. There is some risk that certain issues could
be resolved in a manner that could adversely impact
the performance of the fund. For example, the tax-
exempt treatment of the interest paid to holders of
derivative products is premised on the legal
conclusion that the holders of such derivative
products have an ownership interest in the underlying
bonds. While the fund receives an opinion of legal
counsel to the effect that the income from each
derivative product is tax-exempt to the same extent
as
the underlying bond, the Internal Revenue Service
(the
"IRS") has not issued a ruling on this subject. Were
the IRS to issue an adverse ruling, there is a risk
that the interest paid on such derivative products
would be deemed taxable.
The fund intends to limit the risk of
derivative
products by purchasing only those derivative products
that are consistent with the fund's investment
objective and policies. The fund will not use such
instruments to leverage securities. Hence,
derivative
products' contributions to the overall market risk
characteristics of a fund will not materially alter
its risk profile and will be fully representative of
the fund's maturity guidelines.
The fund will not invest more than 10% of the
value of its assets in illiquid securities, which may
include certain derivative products and will include
any repurchase transactions that do not mature within
seven days.
When-Issued Securities. The fund may purchase
municipal obligations on a "when-issued" basis (i.e.,
for delivery beyond the normal settlement date at a
stated price and yield). The payment obligation and
the interest rate that will be received on the
municipal obligations purchased on a when-issued
basis
are each fixed at the time the buyer enters into the
commitment. Although the fund will purchase municipal
obligations on a when-issued basis only with the
intention of actually acquiring the securities, the
fund may sell these securities before the settlement
date if it is deemed advisable as a matter of
investment strategy.
Municipal obligations are subject to changes in
value based upon the public's perception of the
creditworthiness of the issuers and changes, real or
anticipated, in the level of interest rates. In
general, municipal obligations tend to appreciate
when
interest rates decline and depreciate when interest
rates rise. Purchasing municipal obligations on a
when-issued basis, therefore, can involve the risk
that the yields available in the market when the
delivery takes place may actually be higher than
those
obtained in the transaction itself. To account for
this risk, a separate account of the fund consisting
of cash or liquid debt securities equal to the amount
of the when-issued commitments will be established at
the fund's custodian bank or in the fund's records.
For the purpose of determining the adequacy of the
securities in the account, the deposited securities
will be valued at market or fair value. If the market
or fair value of such securities declines, additional
cash or liquid securities will be placed in the
account on a daily basis so the value of the account
will equal the amount of such commitments by the
fund.
Placing securities rather than cash in the segregated
account may have a leveraging effect on the fund's
net
assets. That is, to the extent the fund remains
substantially fully invested in securities at the
same
time it has committed to purchase securities on a
when-issued basis, there will be greater fluctuations
in its net assets than if it had set aside cash to
satisfy its purchase commitments. Upon the settlement
date of the when-issued securities, the fund will
meet
obligations from then-available cash flow, sale of
securities held in the segregated account, sale of
other securities or, although it normally would not
expect to do so, from the sale of the when-issued
securities themselves (which may have a value greater
or less than the fund's
payment obligations). Sales of securities to meet
such
obligations may involve the realization of capital
gains, which are not exempt from federal income
taxes.
When the fund engages in when-issued
transactions, it relies on the seller to consummate
the trade. Failure of the seller to do so may result
in the fund's incurring a loss or missing an
opportunity to obtain a price considered to be
advantageous.
Stand-By Commitments. The fund may acquire
"stand-by commitments" with respect to municipal
obligations held in its portfolio. Under a stand-by
commitment a dealer agrees to purchase, at the fund's
option, specified municipal obligations at a
specified
price. The fund intends to enter into stand-by
commitments only with dealers, banks and broker-
dealers that, in the opinion of the manager, present
minimal credit risks. In evaluating the
creditworthiness of the issuer of a stand-by
commitment, the manager will review periodically the
issuer's assets, liabilities, contingent claims and
other relevant financial information. Because the
fund invests in securities backed by banks and other
financial institutions, change in the credit quality
of these institutions could cause losses to the fund
and affect its share price. The fund will acquire
stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights
thereunder for trading purposes.
Repurchase Agreements. The fund may enter into
repurchase agreements with banks which are the
issuers
of instruments acceptable for purchase by the fund
and
with certain dealers on the Federal Reserve Bank of
New York's list of reporting dealers. A repurchase
agreement is a contract under which the buyer of a
security simultaneously commits to resell the
security
to the seller at an agreed-upon price on an agreed-
upon date. Under the terms of a typical repurchase
agreement, the fund would acquire an underlying debt
obligation for a relatively short period of time
(usually not more than seven days) subject to an
obligation of the seller to repurchase, and the fund
to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the fund's
holding period. This arrangement results in a fixed
rate of return that is not subject to market
fluctuations during the fund's holding period. Under
each repurchase agreement, the selling institution
will be required to maintain the value of the
securities subject to the repurchase agreement at not
less than their repurchase price. Repurchase
agreements could involve certain risks in the event
of
default or insolvency of the other party, including
possible delays or restrictions upon the fund's
ability to dispose of the underlying securities, the
risk of a possible decline in the value of the
underlying securities during the period in which the
fund seeks to assert its rights to them, the risk of
incurring expenses associated with asserting those
rights and the risk of losing all or part of the
income from the agreement. In evaluating these
potential risks, the manager, acting under the
supervision of the fund's board of directors, reviews
on an ongoing basis the value of the collateral and
the creditworthiness of those banks and dealers with
which the fund enters into repurchase agreements.
Puts. Among the types of securities that the
fund may purchase are municipal obligations having
put
features. A "put" is a right to sell a specified
underlying security or securities within a specified
period of time and at a specified exercise price that
may be sold, transferred or assigned only with the
underlying security or securities. The types of puts
that the fund may purchase include "demand features"
and "standby commitments." A "standby commitment"
entitles the holder to achieve same day settlement
and
to receive an exercise price equal to the amortized
cost of the underlying security plus accrued
interest,
if any, at the time of exercise. Although it is
permissible for the fund to purchase securities with
standby commitments, as a practical matter, it is
unlikely that the fund would have the need or the
opportunity to do so because such puts are not
commonly available.
Other Factors to be Considered. The fund
anticipates being as fully invested as practicable in
tax-exempt securities. The fund may invest in
taxable
investments due to market conditions or pending
investment of proceeds from sales of shares or
proceeds from the sale of portfolio securities or in
anticipation of redemptions. However, the fund
generally expects to invest the proceeds received
from
the sale of shares in municipal obligations as soon
as
reasonably possible, which is generally within one
day. At no time will more than 20% of the fund's net
assets be invested in taxable investments except when
the manager has determined that market conditions
warrant the fund adopting a temporary defensive
investment posture. To the extent the fund's assets
are invested for temporary defensive purposes, such
assets will not be invested in a manner designed to
achieve the l.c. fund's investment objective.
The fund may invest in securities the
disposition of which is subject to legal or
contractual restrictions. The sale of restricted
securities often requires more time and results in
higher dealer discounts or other selling expenses
than
does the sale of securities that are not subject to
restrictions on resale. Restricted securities may
sell at a price lower than similar securities that
are
not subject to restrictions on resale.
Securities may be sold in anticipation of a
market decline (a rise in interest rates) or
purchased
in anticipation of a market rise (a decline in
interest rates). In addition, a security may be sold
and another purchased at approximately the same time
to take advantage of what the manager believes to be
a
temporary disparity in the normal yield relationship
between the two securities. The fund believes that,
in general, the secondary market for tax-exempt
securities in the fund's portfolio may be less liquid
than that for taxable fixed-income securities.
Accordingly, the ability to make purchases and sales
of securities in the foregoing manner may be limited.
Yield disparities may occur for reasons not directly
related to the investment quality of particular
issues
or the general movement of interest rates, but
instead
due to such factors as changes in the overall demand
for or supply of various types of tax-exempt
securities or changes in the investment objectives of
investors.
The fund may engage in short-term trading to
attempt to take advantage of short-term market
variations or may dispose of a portfolio security
prior to its maturity if it believes such disposition
advisable or it needs to generate cash to satisfy
redemptions. In such cases, the fund may realize a
gain or loss. From its commencement of operations,
the fund has not realized any significant gain or
loss
during any fiscal year.
From time to time, proposals have been
introduced before Congress for the purpose of
restricting or eliminating the federal income tax
exemption for interest on municipal obligations, and
similar proposals may be introduced in the future.
If
one of these proposals were enacted, the availability
of tax exempt obligations for investment by the fund
and the value of the fund's portfolio would be
affected. The fund's board of directors would then
reevaluate the fund's investment objective and
policies.
INVESTMENT RESTRICTIONS
The fund is subject to certain restrictions and
policies that are "fundamental," which means that
they
may not be changed without a "vote of a majority of
the outstanding voting securities" of the fund, as
defined under the 1940 Act. The fund is subject to
other restrictions and policies that are "non-
fundamental" and which may be changed by the fund's
board of directors without shareholder approval,
subject to any applicable disclosure requirements.
Fundamental Policies. Without the approval of a
majority of its outstanding voting securities, the
fund may not:
1. issue "senior securities" as defined in
the 1940 Act and the rules, regulations and
orders thereunder, except as permitted under the
1940 Act and the rules, regulations and orders
thereunder.
2. invest more than 25% of its total assets
in securities, the issuers of which conduct
their principal business activities in the same
industry. For purposes of this limitation,
securities of the U.S. government (including its
agencies and instrumentalities) and securities
of state or municipal governments and their
political subdivisions are not considered to be
issued by members of any industry.
3. borrow money, except that (a) the fund may
borrow from banks for temporary or emergency
(not leveraging) purposes, including the meeting
of redemption requests which might otherwise
require the untimely disposition of securities,
and (b) the fund may, to the extent consistent
with its investment policies, enter into reverse
repurchase agreements, forward roll transactions
and similar investment strategies and
techniques. To the extent that it engages in
transactions described in (a) and (b), the fund
will be limited so that no more than 33 -1/3% of
the value of its total assets (including the
amount borrowed), valued at the lesser of cost
or market, less liabilities (not including the
amount borrowed) is derived from such
transactions.
4. make loans. This restriction does not
apply to: (a) the purchase of debt obligations
in which the fund may invest consistent with its
investment objectives and policies; (b)
repurchase agreements; and (c) loans of its
portfolio securities, to the fullest extent
permitted under the Act.
5. engage in the business of underwriting
securities issued by other persons, except to
the extent that the fund may technically be
deemed to be an underwriter under the Securities
Act of 1933, as amended, in disposing of
portfolio securities.
6. purchase or sell real estate, real estate
mortgages, commodities or commodity contracts,
but this restriction shall not prevent the fund
from (a) investing in securities of issuers
engaged in the real estate business or the
business of investing in real estate (including
interests in limited partnerships owning or
otherwise engaging in the real estate business
or the business of investing in real estate) and
securities which are secured by real estate or
interests therein; (b) holding or selling real
estate received in connection with securities
it holds or held; (c) trading in futures
contracts and options on futures contracts
(including options on currencies to the extent
consistent with the funds' investment objective
and policies); or (d) investing in real estate
investment trust securities.
7. invest in a manner that would cause the
fund to fail to be a "diversified company" under
the Act and the rules, regulations and orders
thereunder.
Nonfundamental Policies. As nonfundamental policies,
the fund may not:
1. purchase any securities on margin (except for
such short-term credits as are necessary for
the clearance of purchases and sales of
portfolio securities) or sell any securities
short (except "against the box"). For
purposes of this restriction, the deposit or
payment by the fund of underlying securities
and other assets in escrow and collateral
agreements with respect to initial or
maintenance margin in connection with futures
contracts and related options and options on
securities, indexes or similar items is not
considered to be the purchase of a security
on margin.
2. purchase or otherwise acquire any security
if, as a result, more than 10% of its net
assets would be invested in securities that
are illiquid.
All of the foregoing restrictions which are
stated in terms of percentages will apply at the time
an investment is made; a subsequent increase or
decrease in the percentage that may result from
changes in values or net assets will not result in a
violation of the restriction.
INVESTMENT MANAGEMENT
SSB Citi serves as investment adviser to the
fund pursuant to a written agreement (the "Management
Agreement"), which was approved by the fund's board
of
directors, including a majority of the directors who
are not interested persons of the fund or Salomon
Smith Barney (the "independent directors"). Subject
to
the supervision and direction of the fund's board of
directors, the manager manages the fund's portfolio
in
accordance with the fund's stated investment
objective
and policies, makes investment decisions for the
fund,
places orders to purchase and sell securities, and
employs professional portfolio managers and
securities
analysts who provide research services to the fund.
The manager pays the salary of any officer and
employee who is employed by both it and the trust.
The manager bears all expenses in connection with the
performance of its services. SSB Citi is a wholly
owned subsidiary of Salomon Smith Barney Holdings
Inc.
("Holdings"), which in turn is a wholly owned
subsidiary of Citigroup Inc. SSB Citi (through
predecessor entities) has been in the investment
counseling business since 1968 and renders investment
advice to a wide variety of individual, institutional
and investment company clients that had aggregate
assets under management as of June 30, 2000 in
excess
of $212 billion.
The fund's Management Agreement with the
manager
was approved by shareholders on September 16, 1994,
became effective on November 7, 1994, and was amended
as of September 3, 1997. The Management Agreement
provides that the fund's management fee will be
calculated as follows: 0.50% of the first $2.5
billion
of average daily net assets; 0.475% of the next $2.5
billion of average daily net assets; 0.45% of the
next
$2.5 billion of average daily net assets; and 0.40%
of
average daily net assets over $7.5 billion.
For the fiscal years ended March 31, 1998, 1999
and 2000, the management fees were $27,985,733,
$32,200,646 and $32,557,540 respectively, and there
were no expense limitation reimbursements (see
"Management" in the Prospectus).
The Management Agreement further provides that
all other expenses not specifically assumed by the
manager are borne by the fund. Expenses payable by
the
fund include, but are not limited to, charges of
custodians (including sums as custodian and sums for
keeping books and for rendering other services to the
fund), transfer agents and registrars, expenses of
registering or qualifying shares for sale (including
the printing of the fund's registration statements
and
prospectuses), out-of-pocket expenses of directors
and
fees of directors who are not "interested persons" of
the fund as defined in the 1940 Act, association
membership dues, charges of auditors and legal
counsel,
expenses of preparing, printing and distributing all
proxy material, reports and notices to shareholders,
insurance expense, costs of performing portfolio
valuations, interest, taxes, fees and commissions of
every kind, expenses of issue, repurchase or
redemption
of shares, and all other costs incident to the fund's
corporate existence. No sales or promotion expenses
are incurred by the fund, but expenses incurred in
complying with laws regulating the issue or sale of
the
fund's shares, which are paid by the fund, are not
deemed sales or promotion expenses.
The Management Agreement will continue in effect
if specifically approved annually by a majority of
the
directors of the fund who are not parties to such
contract or "interested persons" of any such party.
The Management Agreement may be terminated without
penalty by either of the parties on 60 days' written
notice and must terminate in the event of its
assignment. It may be amended or modified only if
approved by vote of the holders of a majority of the
fund's outstanding shares as defined in the Act.
The Management Agreement provides that the
manager is not liable for any act or omission in the
course of or in connection with rendering services
under the Management Agreement in the absence of
willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligation or duties. The
Management Agreement permits the manager to render
services to others and to engage in other activities.
Code of Ethics
Pursuant to Rule 17j-1 of the 1940 Act, the
fund, its investment adviser and principal
underwriter
has adopted a code of ethics that permits personnel
to
invest in securities for their own accounts,
including
securities that may be purchased or held by the fund.
All personnel must place the interests of clients
first and avoid activities, interests and
relationships that might interfere with the duty to
make decisions in the best interests of the clients.
All personal securities transactions by employees
must
adhere to the requirements of the code and must be
conducted in such a manner as to avoid any actual or
potential conflict of interest, the appearance of
such
a conflict, or the abuse of an employee's position of
trust and responsibility.
A copy of the Fund's Code of Ethics is on file with
the Securities and Exchange Commission (the "SEC").
Counsel
Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019, serves as counsel to the fund.
Sullivan & Cromwell, 125 Broad Street, New York, New
York, 10004 serves as counsel to the directors who
are
not "interested persons" of the fund.
Auditors
KPMG LLP, 757 Third Avenue, New York, New
York
10017, has been selected to serve as the fund's
independent auditor and to render an opinion on the
fund's financial statements and highlights for the
fiscal year ended March 31, 2001.
Custodian, Transfer Agent and Sub-Transfer Agent
PNC Bank, National Association, located at 17th
and Chestnut Streets, Philadelphia, Pennsylvania
19103, serves as the fund's custodian. Under the
custody agreement, PNC holds the fund's portfolio
securities and keeps all necessary accounts and
records. For its services, PNC receives a monthly
fee
based upon the month-end market value of securities
held in custody and also receives securities
transaction charges. The assets of the fund are held
under bank custodianship in compliance with the 1940
Act.
Citi Fiduciary Trust Company, (the "transfer
agent") located at 125 Broad Street, New York, New
York 10004, serves as the fund's transfer agent.
Under the transfer agency agreement, the transfer
agent maintains the shareholder account records for
the fund, handles certain communications between
shareholders and the fund, and distributes dividends
and distributions payable by the fund. For these
services, the transfer agent receives a monthly fee
computed on the basis of the number of shareholder
accounts it maintains for the fund during the month,
and is reimbursed for out-of-pocket expenses.
PFPC Global Fund Services ("PFPC" or "sub-
transfer agent"), located at P.O. Box 9699
Providence,
R.I. 02940-9699 serves as the fund's sub-transfer
agent to render certain shareholder record keeping
and
accounting services functions. Under the transfer
agency agreement, PFPC maintains the shareholder
account records for the fund, handles certain
communications between shareholders and the fund, and
distributes dividends and distributions payable by
the
fund. For these services, PFPC receives a monthly
fee
computed on the basis of the number of shareholder
accounts it maintains for the fund during the month,
and is reimbursed for out-of-pocket expenses.
PURCHASE OF SHARES
Investors may purchase shares from a Salomon
Smith Barney Financial Consultant or a broker that
clears through Salomon Smith Barney ("Dealer
Representative"). In addition, certain investors,
may
purchase shares directly from the fund. When
purchasing shares of the fund, investors must specify
whether the purchase is for Class A or Class Y
shares.
Salomon Smith Barney and Dealer Representatives may
charge their customers an annual account maintenance
fee in connection with a brokerage account through
which an investor purchases or holds shares.
Accounts
held directly at PFPC are not subject to a
maintenance
fee. The minimum initial investment for Class A is
$1,000 and the minimum subsequent investment is $50.
There are no minimum investment requirements in Class
A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, and
Directors or Trustees of any Travelers-affiliated
funds, including the Smith Barney mutual funds, and
their spouses and children. The minimum initial
investment for Class Y is $15,000,000. Subsequent
investments of at least $50 may be made for either
class. There are no minimum investment requirements
in
Class A for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, and
Directors or Trustees of any Citigroup-affiliated
Funds, including the Smith Barney mutual funds, and
their spouses and children. The fund reserves the
right to waive or change minimums, to decline any
order to purchase its shares and to suspend the
offering of shares from time to time. Shares
purchased will be held in the shareholder's account
by
the fund's sub-transfer agent. Share Certificates
are
issued only upon a shareholder's written request to
the sub-transfer agent.
Letter of Intent - Class Y Shares. A
Letter of Intent may be used as a way for investors
to
meet the minimum investment requirement for Class Y
shares. Such investors must make an initial minimum
purchase of $5,000,000 in Class Y shares of the fund
and agree to purchase a total of $15,000,000 of Class
Y Shares of the fund within 13 months from the date
of
the Letter. If a total investment of $15,000,000 is
not made within the 13-month period, all Class Y
shares purchased during such period will be
transferred to Class A shares, where they will be
subject to all fees (including a service fee of
0.25%)
and expenses applicable to the fund's Class A shares,
which may include a deferred sales charge of 1.00%.
Please contact a Salomon Smith Barney Financial
Consultant or the transfer agent for further
information.
REDEMPTION OF SHARES
Shareholders may redeem their shares without
charge on any day a fund calculates its net asset
value. See "Valuation of Shares." Redemption
requests
received in proper form before 12 noon, Eastern time,
are priced at the net asset value as next determined
on that day. Redemption requests received after 12
noon, Eastern time, are priced at the net asset value
next determined. Redemption requests must be made
through a Salomon Smith Barney Financial Consultant,
or a dealer representative through whom the shares
were purchased, except that shareholders who
purchased
shares of the fund from the transfer agent may also
redeem shares directly through the transfer Agent. A
shareholder desiring to redeem shares represented by
certificates also must present the certificates to a
Salomon Smith Barney Financial Consultant, dealer
representative or the sub-transfer agent endorsed for
transfer (or accompanied by an endorsed stock power),
signed exactly as the shares are registered.
Redemption requests involving shares represented by
certificates will not be deemed received until the
certificates are received by sub-transfer agent in
proper form.
The fund normally transmits redemption proceeds
on the business day following receipt of a redemption
request but, in any event, payment will be made
within
three days thereafter, exclusive of days on which the
New York Stock Exchange Inc. (the "NYSE") is closed
and the settlement of securities does not otherwise
occur, or as permitted under the 1940 Act in
extraordinary circumstances. Generally, if the
redemption proceeds are remitted to a Salomon Smith
Barney brokerage account, these funds will not be
invested for the shareholder's benefit without
specific instruction and Salomon Smith Barney will
benefit from the use of temporarily uninvested funds.
A shareholder who pays for fund shares by personal
check will be credited with the proceeds of a
redemption of those shares only after the purchase
check has been collected, which may take up to
fifteen
days or more. A shareholder who anticipates the need
for more immediate access to his or her investment
should purchase shares with Federal funds, by bank
wire or with a certified or cashier's check.
Fund shareholders who purchase securities
through a Salomon Smith Barney Financial Consultant
or
dealer representative may take advantage of special
redemption procedures under which Class A shares of
the fund will be redeemed automatically to the extent
necessary to satisfy debit balances arising in the
shareholder's account with a Salomon Smith Barney
Financial Consultant or dealer representative. One
example of how an automatic redemption may occur
involves the purchase of securities. If a
shareholder
purchases securities but does not pay for them by the
settlement date, the number of fund shares necessary
to cover the debit will be redeemed automatically as
of the settlement date, which usually occurs three
business days after the trade date. Class A shares
that are subject to a deferred sales charge (see
"Redemption of Shares") are not eligible for such
automatic redemption and will only be redeemed upon
specific request. If the shareholder does not
request
redemption of such shares, the shareholder's account
with a Salomon Smith Barney Financial Consultant or
dealer representative may be margined to satisfy
debit
balances if sufficient fund shares that are not
subject to any applicable deferred sales charge are
unavailable. No fee is currently charged with
respect
to these automatic transactions. Shareholders not
wishing to participate in these arrangements should
notify their Salomon Smith Barney Financial
Consultant
or dealer representative.
A written redemption request must (a) state the
class and number or dollar amount of shares to be
redeemed, (b) identify the shareholder's account
number and (c) be signed by each registered owner
exactly as the shares are registered. If the shares
to be redeemed were issued in certificate form, the
certificates must be endorsed for transfer (or be
accompanied by an endorsed stock power) and must be
submitted to the sub-transfer agent together with the
redemption request. Any signature appearing on a
written redemption request in excess of $10,000,
share
certificate or stock power must be guaranteed by an
eligible guarantor institution such as a domestic
bank, savings and loan institution, domestic credit
union, member bank of the Federal Reserve System or
member firm of a national securities exchange.
Written redemption requests of $10,000 or less do not
require a signature guarantee unless more than one
such redemption request is made in any 10-day period.
Redemption proceeds will be mailed to an investor's
address of record. The sub-transfer agent may
require
additional supporting documents for redemptions made
by corporations, executors, administrators, trustees
or guardians. A redemption request will not be
deemed
properly received until the sub-transfer agent
receives all required documents in proper form.
Telephone Redemption and Exchange Program. To
determine if a shareholder is entitled to participate
in this program, he or she should contact the
transfer
agent at 1-800-451-2010. Once eligibility is
confirmed, the shareholder must complete and return a
Telephone/Wire Authorization Form, along with a
signature guarantee, that will be provided by the
sub-
transfer agent upon request. (Alternatively, an
investor may authorize telephone redemptions on the
new account application with the applicant's
signature
guarantee when making his/her initial investment in
the fund.)
Redemptions. Redemption requests of up to
$10,000 of any class or classes of a fund's shares
may
be made by eligible shareholders by calling the
transfer agent at 1-800-451-2010. Such requests may
be made between 9:00 a.m. and 4:00 p.m. (Eastern
time)
on any day the NYSE is open. Requests received after
the close of regular trading on the NYSE are priced
at
the net asset value next determined. Redemptions of
shares (i) by retirement plans or (ii) for which
certificates have been issued are not permitted under
this program.
A shareholder will have the option of having
the
redemption proceeds mailed to his/her address of
record or wired to a bank account predesignated by
the
shareholder. Generally, redemption proceeds will be
mailed or wired, as the case may be, on the next
business day following the redemption request. In
order to use the wire procedures, the bank receiving
the proceeds must be a member of the Federal Reserve
System or have a correspondent relationship with a
member bank. The fund reserves the right to charge
shareholders a nominal fee for each wire redemption.
Such charges, if any, will be assessed against the
shareholder's account from which shares were
redeemed.
In order to change the bank account designated to
receive redemption proceeds, a shareholder must
complete a new Telephone/Wire Authorization Form and,
for the protection of the shareholder's assets, will
be required to provide a signature guarantee and
certain other documentation.
Exchanges. Eligible shareholders may make
exchanges by telephone if the account registration of
the shares of the fund being acquired is identical to
the registration of the shares of the fund exchanged.
Such exchange requests may be made by calling the
transfer agent at 1-800-451-2010 between 9:00 a.m.
and
4:00 p.m. (Eastern time) on any day on which the NYSE
is open. See "Exchange Privilege" for more
information.
Additional information regarding Telephone
Redemption and Exchange Program. Neither the funds
nor their agents will be liable for following
instructions communicated by telephone that are
reasonably believed to be genuine. Each fund and its
agents will employ procedures designed to verify the
identity of the caller and legitimacy of instructions
(for example, a shareholder's name and account number
will be required and phone calls may be recorded).
Each fund reserves the right to suspend, modify or
discontinue the telephone redemption and exchange
program or to impose a charge for this service at any
time following at least seven (7) days prior notice
to
shareholders.
Deferred Sales Charge Class A shares which were
originally acquired in one of the other Smith Barney
mutual funds at net asset value subject to a deferred
sales charge, continue to be subject to any
applicable
deferred sales charge of the original fund.
Therefore,
such Class A shares that are redeemed within 12
months
of the date of purchase of the original fund may be
subject to a deferred sales charge of 1.00%. The
amount of any deferred sales charge will be paid to
and retained by Salomon Smith Barney. The deferred
sales charge will be assessed based on an amount
equal
to the account value at the time of redemption, and
will not be imposed on increases in value above the
initial purchase price in the original fund. In
addition, no charge will be assessed on shares
derived
from reinvestment of dividends or capital gains
distributions.
In determining the applicability of any
deferred
sales charge, it will be assumed that a redemption is
made first of shares representing capital
appreciation, next of shares representing the
reinvestments of dividends and capital gain
distributions and finally of other shares held by the
shareholder for the longest period of time. The
length of time that Class A and shares have been held
will be calculated from the date that the shares were
initially acquired in one of the other Smith Barney
mutual funds, and the amount of shares being redeemed
will be considered to represent, as applicable, the
value of capital appreciation or dividend and capital
gain distribution reinvestments in such other funds.
For federal income tax purposes, the amount of the
deferred sales charge will reduce the gain (if any)
or
increase the loss (if any), as the case may be, on
redemption.
The deferred sales charge on Class A shares, if
any, will be waived on (a) exchanges (see "Exchange
Privilege" below); (b) redemptions of shares within
twelve months following the death or disability of
the
shareholder; (c) redemption of shares made in
connection with qualified distributions from
retirement plans or IRAs upon the attainment of age
59
1/2; (d) involuntary redemptions; and (e) redemptions
of shares to effect a combination of a Portfolio with
any investment company by merger, acquisition of
assets or otherwise. In addition, a shareholder who
has redeemed shares from other funds of the Smith
Barney mutual funds may, under certain circumstances,
reinvest all or part of the redemption proceeds
within
60 days and receive pro rata credit for any deferred
sales charge imposed on the prior redemption.
Deferred sales charge waivers will be granted
subject to confirmation (by Salomon Smith Barney in
the case of shareholders who are also Salomon Smith
Barney clients or by First Data in the case of all
other shareholders) of the shareholder's status or
holdings, as the case may be.
DISTRIBUTOR
Distributor. Salomon Smith Barney Inc.,
located
at 388 Greenwich Street, New York, New York 10013,
serves as the fund's distributor on a best efforts
basis pursuant to a distribution agreement dated June
5, 2000 (the "Distribution Agreement"), which was
approved by the fund's board of directors. This
Distribution Agreement replaces the Distribution
Agreement with CFBDS, Inc. Prior to the merger of
Travelers Group, Inc. and Citicorp on October 8,
1998,
Salomon Smith Barney served as the fund's
distributor.
Brokerage. The manager places orders for the
purchase and sale of securities for the funds of the
fund. All of the portfolio transactions have been
principal transactions with major dealers in money
market instruments, on which no brokerage commissions
are paid. Purchases from or sales to dealers serving
as market-makers include the spread between the bid
and asked prices. No portfolio transactions are
handled by Salomon Smith Barney.
When payment is made by the investor before the
settlement date, unless otherwise noted by the
investor, the funds will be held as a free credit
balance in the investor's brokerage account, and
Salomon Smith Barney may benefit from the temporary
use of the funds. The investor may designate another
use for the funds prior to the settlement date, such
as an investment in a money market fund (other than
the Salomon Smith Barney Exchange Reserve Fund) of
the
Smith Barney mutual funds. If the investor instructs
Salomon Smith Barney to invest in a Smith Barney
money
market fund, the amount of the investment will be
included as part of the average daily net assets of
both the fund and the money market fund, and
affiliates of Smith Barney that serve the funds in an
investment advisory or administrative capacity will
benefit from the fact they are receiving fees from
both such investment companies for managing these
assets, computed on the basis of their average daily
net assets. The fund's board of directors has been
advised of the benefits to Smith Barney resulting
from
these settlement procedures and will take such
benefits into consideration when reviewing the
Advisory, Administration and Distribution Agreements
for continuance.
For the fiscal year ended March 31, 2000,
Salomon Smith Barney incurred distribution expenses
totaling $6,401,590 consisting of $981,160 for mutual
fund marketing, $1,410,488 for overhead expenses,
$324,963 for branch fixed expenses, $112,467 for
money
market processing fees, and $3,572,512 to Salomon
Smith Barney Financial Consultants.
DISTRIBUTION ARRANGEMENTS
To compensate Salomon Smith Barney for the
services it provides and for the expense it bears
under the Distribution Agreement, the fund has
adopted
a services and distribution plan (the "Plan")
pursuant
to Rule 12b-1 under the 1940 Act. Under the Plan,
the
fund pays Salomon Smith Barney a service fee at the
rate of 0.10% of the average balance of class shares
held in the accounts of the customers of financial
consultants. The fee is used by Salomon Smith Barney
to pay its financial consultants for servicing
shareholder accounts for as long as shareholders
remain a holder of the class.
The following service and distribution fees
were
incurred during the fiscal years ended as indicated:
Distribution Plan
Fees
03/31/00
03/31/99
03/31/98
Class
A..................
....
$6,810,9
49
$6,723,3
38
$5,800,02
8
Under its terms, the Plan continues from
year to
year, provided such continuance is approved annually
by vote of the fund's board of directors, including a
majority of the Independent Directors who have no
direct or indirect financial interest in the
operation
of the Plan or in the Distribution Agreement. The
Plan
may not be amended to increase the amount of the
service and distribution fees without shareholder
approval, and all amendments of the Plan also must be
approved by the Directors and Independent Directors
in
the manner described above. The Plan may be
terminated
with respect to a Class at any time, without penalty,
by vote of a majority of the Independent Directors or
by vote of a majority of the outstanding voting
securities of the Class (as defined in the 1940 Act).
Pursuant to the Plan, Salomon Smith Barney will
provide the board of directors periodic reports of
the
amounts expended under the Plan and the purpose for
which such expenditures were made.
PERFORMANCE DATA
From time to time, the fund may quote yield,
effective yield and taxable equivalent yield of its
Class A and Class Y shares in advertisements or in
reports and other communications to shareholders.
The fund's yield for the seven-day period ended
March 31, 2000 for Class A shares was 3.16% (the
effective yield was 3.21%) and for Class Y shares was
3.28% (the effective yield was 3.34%) with an average
dollar-weighted portfolio maturity of 60 days. The
tax-equivalent yield was 4.94% and 5.13%, for Class A
and Class Y shares, respectively, assuming the
payment
of Federal income taxes at a rate of 36% and the tax-
equivalent effective yield was 6.13% and 6.45%, for
Class A and Class Y shares, respectively, assuming
the
payment of Federal income taxes at a rate of 36%.
To compute current yield the fund divides
the
net change, exclusive of capital changes, in the
value
of a hypothetical pre-existing account having a
balance of one share at the beginning of a recent
seven-day base period by the value of the account at
the beginning of the base period and multiplying this
base period return by 365/7. Effective yield is
computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-
existing account having a balance of one share at the
beginning of the period and dividing such net change
by the value of the account at the beginning of the
base period to obtain the base period return, and
then
compounding the base period return by adding 1,
raising the sum to a power equal to 365/7, and
subtracting 1 from the result. The fund also quotes
the average dollar-weighted portfolio maturity of the
corresponding seven-day period. In addition, the fund
may publish a tax-equivalent yield based on federal
tax rates that demonstrates the taxable yield
necessary to produce an after-tax yield equivalent to
the fund's yield. The tax-equivalent yield does not
include any element of non tax-exempt income.
The fund's equivalent taxable 7-day yield and
effective yield for a Class of shares is computed by
dividing that portion of the Class' 7-day yield and
effective yield which is tax-exempt by one minus a
stated income tax rate and adding the product to that
portion, if any, of the Class' yield that is not tax-
exempt.
Although principal is not insured, it is
not
expected that the net asset value of the fund's
shares
will fluctuate because the fund uses the amortized
cost method of valuation. (See "Valuation of Shares"
below.) The investor should remember that yield is a
function of the type, quality and maturity of the
instruments in the portfolio, and the fund's
operating
expenses. While current yield information may be
useful, investors should realize that current yield
will fluctuate and that the yield figures set forth
above are based on historical earnings and are not
intended to indicate future performance. Each Class'
net investment income changes in response to
fluctuation in interest rates and the expenses of the
fund. The yield figures may not provide a basis for
comparison with bank deposits or other investments
that pay a fixed yield for a stated period of time.
VALUATION OF SHARES
Each Class' net asset value per share is
calculated on each day, Monday through Friday, except
days on which the NYSE is closed. The NYSE currently
is scheduled to be closed on New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas, and on the preceding
Friday or subsequent Monday when one of these
holidays
falls on a Saturday or Sunday, respectively. Because
of the differences in distribution fees and Class-
specific expenses, the per share net asset value of
each Class may differ. The following is a
description
of the procedures used by the fund in valuing its
assets.
The fund uses the "amortized cost method"
for
valuing portfolio securities pursuant to Rule 2a-7
under the 1940 Act (the "Rule"). The amortized cost
method of valuation of the fund's portfolio
securities
(including any securities held in the separate
account
maintained for "when-issued" securities) involves
valuing a security at its cost at the time of
purchase
and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of
the
impact of fluctuating interest rates on the market
value of the instrument. The market value of
portfolio securities will fluctuate on the basis of
the creditworthiness of the issuers of such
securities
and with changes in interest rates generally. While
the amortized cost method provides certainty in
valuation, it may result in periods during which
value, as determined by amortized cost, is higher or
lower than the price the fund would receive if it
sold
the instrument. During such periods the yield to
investors in the fund may differ somewhat from that
obtained in a similar company that uses mark-to-
market
values for all its portfolio securities. For
example,
if the use of amortized cost resulted in a lower
(higher) aggregate portfolio value on a particular
day, a prospective investor in the fund would be able
to obtain a somewhat higher (lower) yield than would
result from investment in such similar company, and
existing investors would receive less (more)
investment income. The purpose of this method of
valuation is to attempt to maintain a constant net
asset value per share, and it is expected that the
price of the fund's shares will remain at $1.00;
however, shareholders should be aware that despite
procedures that will be followed to have a stabilized
price, including maintaining a maximum dollar-
weighted
average portfolio maturity of 90 days, investing in
securities that have or are deemed to have remaining
maturities of only 397 days or less and investing in
only United States dollar-denominated instruments
determined by the board of directors to be of high
quality with minimal credit risks and which are
Eligible Securities as defined below, there is no
assurance that at some future date there will not be
a
rapid change in prevailing interest rates, a default
by an issuer or some other event that could cause the
fund's price per share to change from $1.00.
An Eligible Security is defined in the
Rule to
mean a security which: (a) has a remaining maturity
of 397 days or less; (b) (i) is rated in the two
highest short-term rating categories by any two NSROs
that have issued a short-term rating with respect to
the security or class of debt obligations of the
issuer, or (ii) if only one NRSRO has issued a short-
term rating with respect to the security, then by
that
NRSRO; (c) was a long-term security at the time of
issuance whose issuer has outstanding a short-term
debt obligation which is comparable in priority and
security and has a rating as specified in clause (b)
above; or (d) if no rating is assigned by any NRSRO
as
provided in clauses (b) and (c) above, the unrated
security is determined by the Directors to be of
comparable quality to any such rated security.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each
class may be exchanged for shares of the same class
in
any of the Smith Barney mutual funds, to the extent
shares are offered for sale in the shareholder's
state
of residence. Exchanges of Class A and Class Y
shares
are subject to minimum investment requirements and
all
shares are subject to other terms or requirements of
the fund into which exchanges are made and a sales
charge may apply.
Class A Exchanges. Class A shares of each fund
will be subject to the applicable sales charge upon
the exchange of such shares for Class A shares of
another fund of the Smith Barney mutual funds sold
with a sales charge.
Class Y Exchanges. Class Y shareholders of a
fund who wish to exchange all or a portion of their
Class Y shares for Class Y shares in any of the funds
identified above may do so without imposition of any
charge.
Additional Information Regarding the Exchange
Privilege. Excessive exchange transactions may be
detrimental to each fund's performance and its
shareholders. The investment manager may determine
that a pattern of frequent exchanges is excessive and
contrary to the best interests of a fund's other
shareholders. In this event the fund may, at its
discretion, decide to limit additional purchases
and/or exchanges by the shareholder. Upon such a
determination the fund will provide notice in writing
or by telephone to the shareholder at least 15 days
prior to suspending the exchange privilege and during
the 15 day period the shareholder will be required to
(a) redeem his or her shares in the fund or (b)
remain
invested in the Portfolio or exchange into any of the
funds of the Smith Barney mutual funds ordinarily
available, which position the shareholder would be
expected to maintain for a significant period of
time.
All relevant factors will be considered in
determining
what constitutes an abusive pattern of exchanges.
Certain shareholders may be able to exchange
shares by telephone. See "Redemption of Shares -
Telephone Redemption and Exchange Program."
Exchanges
will be processed at the net asset value next
determined, plus any applicable sales charge.
Redemption procedures discussed above are also
applicable for exchanging shares, and exchanges will
be made upon receipt of all supporting documents in
proper form. If the account registration of the
shares of the fund being acquired is identical to the
registration of the shares of the fund exchanged, no
signature guarantee is required. Before exchanging
shares, investors should read the current prospectus
describing the shares to be acquired. These exchange
privileges are available to shareholders resident in
any state in which the fund shares being acquired may
legally be sold. The fund reserves the right to
modify or discontinue exchange privileges upon 60
days' prior notice to shareholders.
TAXES
The following is a summary of selected
federal
income tax considerations that may affect the fund
and
its shareholders. This summary is not intended as a
substitute for individual tax advice and investors
are
urged to consult their own tax advisors as to the tax
consequences of an investment in the fund.
As described above and in the prospectus,
the
fund is designed to provide shareholders with current
income which is excluded from gross income for
federal
income tax purposes. The fund is not intended to
constitute a balanced investment program and is not
designed for investors seeking capital gains or
maximum tax-exempt income irrespective of
fluctuations
in principal. Investment in the fund would not be
suitable for tax-exempt institutions, qualified
retirement plans, H.R. 10 plans and individual
retirement accounts because such investors would not
gain any additional tax benefit from the receipt of
tax-exempt income.
The fund has qualified and intends to
continue
to qualify each year as a "regulated investment
company" under the Code. Provided that the fund (a)
qualifies as a regulated investment company and (b)
distributes to its shareholders at least 90% of its
taxable net investment income and net short-term
capital gains in excess of net long-term capital
losses and 90% of its tax-exempt interest income
(reduced by certain expenses for its taxable year),
the fund will not be liable for federal income taxes
to the extent its taxable net investment income and
its net realized short-term and long-term capital
gains, if any, are distributed to its shareholders.
The fund also intends to satisfy conditions that will
enable it to pay "exempt-interest dividends" to its
shareholders. Exempt-interest dividends are
generally
not subject to regular federal income taxes, although
they may be considered taxable for certain state and
local income (or intangible) tax purposes.
Because the fund will distribute exempt-
interest
dividends, interest on indebtedness incurred by a
shareholder to purchase or carry fund shares is not
deductible for federal income tax purposes to the
extent it is deemed related to such exempt-interest
dividends. If a shareholder receives exempt-interest
dividends with respect to any share and if such share
is held by the shareholder for six months or less,
then for federal income tax purposes, any loss on the
sale or exchange of such share, to the extent of such
exempt-interest dividend, will be disallowed. In
addition, the Code may require a shareholder, if he
or
she receives exempt-interest dividends, to treat as
taxable income a portion of certain otherwise non-
taxable social security and railroad retirement
benefit payments. Furthermore, that portion of any
exempt-interest dividends paid by the fund which
represents income derived from "private activity
bonds" held by the fund will not retain its federal
tax-exempt status in the hands of a shareholder who
is
a "substantial user" of a facility financed by such
bonds or a "related person" thereof. Moreover some or
all of the fund's dividends and distributions may be
a
specific tax preference item, or a component of an
adjustment item, for purposes of the federal
individual and corporate alternative minimum taxes.
In
addition, the receipt of fund dividends and
distributions may affect a foreign corporate
shareholder's federal "branch profits" tax liability
and the federal "excess net passive income" tax
liability of a shareholder of a Subchapter S
corporation. Shareholders should consult their own
tax
advisors as to whether they are (a) substantial users
with respect to a facility or related to such users
within the meaning of the Code and (b) subject to a
federal alternative minimum tax, the federal branch
profits tax or the federal excess net passive income
tax.
Long term capital gains, if any, realized
by the
fund will be distributed annually as described in the
prospectus. Such distributions ("capital gain
dividends") will be taxable to shareholders as long-
term capital gains, regardless of how long they have
held fund shares, and will be designated as capital
gain dividends in a written notice mailed to
shareholders after the close of the fund's taxable
year. If a shareholder receives a capital gain
dividend with respect to any share and redeems or
sells the share before it has been held by the
shareholder for more than six months, then any loss
(to the extent not disallowed pursuant to the other
six-month rule described above relating to exempt-
interest dividends) on the sale or other disposition
of such share will be treated as a long-term capital
loss to the extent of the capital gain dividend.
Each shareholder will receive after the
close of
the calendar year an annual statement as to the
federal income tax status of his or her dividends and
distributions from the fund for the prior calendar
year. Any dividends attributable to interest on
municipal obligations generally will be taxable as
ordinary dividends for state personal income tax
purposes even if such dividends are excluded from
gross income for federal income tax purposes except,
in certain states, to the extent they are
attributable
to interest on obligations of those states and
certain
of their agencies or instrumentalities and any other
applicable requirements are satisfied.. These
statements also will designate the amount of exempt-
interest dividends that is a specific preference item
for purposes of the federal individual and corporate
alternative minimum taxes. Each shareholder also will
receive, if appropriate, written notice after the
close of the fund's taxable year as to the federal
income tax status of his or her dividends and
distributions. Shareholders should consult their tax
advisors as to any state and local taxes that may
apply to these dividends and distributions. The
dollar amount of dividends excluded or exempt from
federal income taxation and the dollar amount subject
to federal income taxation, if any, will vary for
each
shareholder depending upon the size and duration of
such shareholder's investment in the fund.
At March 31, 2000, the unused capital
loss
carryovers of the fund were approximately $501,000.
These amounts are available to be applied against any
future realized gains. The carryovers expire as
follows: $323,000 in 2001, $37,000 in 2002, $72,000
in 2003 and $69,000 in 2005.
ADDITIONAL INFORMATION
The fund was incorporated under the laws
of the
State of Maryland on April 1, 1980, and is registered
with the SEC as a non-diversified, open-end
management
investment company.
Class A and Class Y shares represent
interests
in the assets of the fund and have identical voting,
dividend, liquidation and other rights on the same
terms and conditions except that expenses related to
the distribution of each Class of shares are borne
solely by each Class and each Class of shares has
exclusive voting rights with respect to provisions of
the fund's Rule 12b-1 distribution plan which pertain
to a particular Class. Fund shares do not have
cumulative voting rights; are fully paid when issued;
have no preemptive, subscription or conversion
rights;
and are redeemable.
The fund does not hold annual shareholder
meetings. There normally will be no meetings of
shareholders for the purpose of electing Directors
unless and until such time as less than a majority of
the Directors holding office have been elected by
shareholders. The Directors will call a meeting for
any purpose upon written request of shareholders
holding at least 10% of the fund's outstanding
shares,
and the fund will assist shareholders in calling such
a meeting as required by the 1940 Act. When matters
are submitted for shareholder vote, shareholders of
each Class will have on vote for each full share
owned
and proportionate, fractional vote for any fractional
share held of that Class. Generally, shares of the
fund will be voted on a fund-wide basis on all
matters
except matters affecting only the interests of one
Class.
The fund sends to each of its
shareholders a
semi-annual report and an audited annual report,
which
include listings of the investment securities held by
the fund at the end of the reporting period. In an
effort to reduce the fund's printing and mailing
costs, the fund plans to consolidate the mailing of
its semi-annual and annual reports by household.
This
consolidation means that a household having multiple
accounts with the identical address of record will
receive a single copy of each report. Shareholders
who do not want this consolidation to apply to their
account should contact their Financial Consultants or
the transfer agent.
FINANCIAL STATEMENTS
The fund's financial information will be
incorporated by reference to the fund's Annual Report
to shareholders for the fiscal year ended March 31,
2000. The Annual Report was filed on June 5, 2000,
accession number 0001005477-00-004510.
OTHER INFORMATION
Styles of Fund Management: In an industry where the
average portfolio manager has seven years of
experience (source: ICI, 1998), the portfolio
managers
of Smith Barney mutual funds average 21 years in the
industry and 15 years with the firm.
Smith Barney mutual funds offers more than 60 mutual
funds. We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.
That's why we offer four "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.
Style Pure Series - Our style Pure Series funds stay
fully invested within their asset class and
investment
style, enabling investors to make asset allocation
decisions in conjunction with their Salomon Smith
Barney Financial Consultant.
Classic Investor Series - Our Classic Investor Series
funds offer a range of equity and fixed income
strategies that seek to capture opportunities across
asset classes and investment styles using disciplined
investment approaches.
The Concert Allocation Series - As a fund of funds,
investors can select a Concert Portfolio that may
help
their investment needs. As needs change, investors
can easily choose another long-term, diversified
investment from our Concert family.
Special Discipline Series - Our Special Discipline
Series funds are designed for investors who are
looking beyond more traditional market categories:
from natural resources to a roster of state-specific
municipal funds.
APPENDIX A
RATINGS OF MUNICIPAL OBLIGATIONS
Description of Ratings of State and Local Government
Municipal Notes
Notes are assigned distinct rating symbols in
recognition of the differences between short-term
credit risk and long-term risk. Factors affecting
the
liquidity of the borrower and short-term cyclical
elements are critical in short-term ratings, while
other factors of major importance in bond risk, long-
term secular trends for example, may be less
important
over the short run.
Moody's Investors Service, Inc. ("Moody's"):
Moody's ratings for state and municipal short-term
obligations will be designated Moody's Investment
Grade ("MIG"). A short-term rating may also be
assigned on an issue having a demand feature - a
variable rate demand obligation. Such ratings will
be
designated as VMIG. Short-term ratings on issues
with
demand features are differentiated by the use of the
VMIG symbol to reflect such characteristics as
payment
upon periodic demand rather than fixed maturity dates
and payment relying on external liquidity.
Additionally, investors should be alert to the fact
that the source of payment may be limited to the
external liquidity with no or limited legal recourse
to the issuer in the event the demand is not met.
MIG 1/VMIG 1 -- This designation denotes best
quality.
There is present strong protection by established
cash
flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2/VMIG 2 -- This designation denotes high
quality.
Margins of protection are ample although not so
large
as in the preceding group.
Standard & Poor's Ratings Group:
SP-1+ -- This rating indicates a very strong or
strong
capacity to pay principal and interest and the
possession of overwhelming safety characteristics.
Description of Two Highest Municipal Bond Ratings
Moody's Investors Service, Inc.:
Aaa -- Bonds that are rated Aaa are judged to be the
best quality. They carry the smallest degree of
investment risk and are generally referred to as
"gilt
edge." Interest payments are protected by a large or
by an exceptionally stable margin and principal is
secure. While the various protective elements are
likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds that are rated Aa are judged to be of
high
quality by all standards. Together with the Aaa
group
they comprise what are generally known as high grade
bonds. They are rated owner than the best bonds
because margins of protection may not be as large as
in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be
other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
Standard & Poor's Ratings Group ("S&P"):
AAA -- Debt rated 'AAA' has the highest rating
assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.
AA -- Debt rated 'AA' has a very strong capacity to
pay interest and repay principal and differs from the
highest rated issues only in small degree.
Description of Highest Commercial Paper Ratings
Moody's Investors Service, Inc.:
Prime 1 -- Issuers rated Prime-1 (or related
supporting institutions) have a superior capacity for
repayment of short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced
by the following characteristics: leading market
positions in well-established industries; high rates
of return on funds employed; conservative
capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in
earnings coverage of fixed financial charges and high
internal cash generation; and well established access
to a range of financial markets and assured sources
of
alternate liquidity.
Standard & Poor's Ratings Group:
A-1 -- This designation indicates that the degree of
safety regarding timely payment is either
overwhelming
or very strong. Those issues determined to possess
overwhelming safety characteristics are denoted with
a
plus (+) sign designation.
* * *
After purchase by the fund, a security may cease to
be
rated or its rating may be reduced below the minimum
required for purchase by the fund. Neither event
will
require a sale of such security by the fund; however,
the manager will consider such event in determining
whether the fund should continue to hold the
security.
To the extent that a rating may change as a result of
changes in rating services or their rating systems,
the fund will attempt to use comparable ratings as
standards for investments in accordance with the
investment policies contained in the Prospectus.
1
3
PART C Other Information
Item 23. Exhibits
(a)(1) Articles of Amendment dated March 31,
1981 are incorporated
by reference to Exhibit 1(a) to Post-Effective
Amendment No. 14.
(a)(2) Articles of Amendment and Restatement of
Articles of Incorporation
dated October 28, 1980 are incorporated by reference
to Exhibit 1(b) to Post-Effective Amendment
No. 14.
(a)(3) Articles of Amendment dated July 22, 1991
are incorporated by
reference to Exhibit 1(c) to Post-Effective Amendment
No. 15.
(a)(4) Articles of Amendment dated November 10,
1992 are
incorporated by reference to Exhibit 1(d) to Post-
Effective Amendment No. 20
(a)(5) Articles Supplementary dated December 8,
1992 are
incorporated by refence to Exhibit 1(e) to Post-
Effective Amendment No. 20.
(a)(6)Articles of Amendment dated October 14, 1994
are incorporated by
reference to Exhibit 1(f) to Post-Effective Amendment
No. 26
(a)(7) Articles of Amendment dated November 4,
1994 are incorporated by
reference to Exhibit 1(g) to Post-Effective Amendment
No. 26
(a)(8)Articles Supplementary dated November 7, 1994
are incorporated by
reference to Exhibit 1(h) to Post-Effective Amendment
No. 26
(a)(9)Articles Supplementary dated November 7, 1994
are incorporated by
reference to Exhibit 1(i) to Post-Effective Amendment
No. 26
(b) Bylaws of the Fund are incorporated by
reference to Exhibit 2 to
Post-Effective Amendment No. 11 to Registration
Statement No. 2-
69938.
(c) Not applicable.
(d)(1) Management Agreement between Registrant
and Mutual Management
Corp. is incorporated by reference to Exhibit (5) to
Post-Effective Amendment No. 23 to the
Registration Statement.
(d)(2) Transfer and Assumption of Management
Agreement is incorporated
by reference to Exhibit 5(b) to Post-Effective
Amendment No. 26.
(e)(1) Underwriting Agreement between Registrant
and Smith Barney, Harris
Upham & Co. Incorporated is incorporated by reference
to Exhibit 6 to Post-Effective Amendment
No. 12.
(e)(2)Distribution Agreement between the Registrant
and CFBDS Inc. is incorporated by reference to Post-
Effective Amendment No. 30.
(e)(3) Selling Group Agreement between Registrant and
CFBDS, Inc. is incorporated
by reference to Post-Effective Amendment No. 30.
(e)(4) Form of Distribution Agreement between
Registrant and Salomon Smith Barney Inc.
is filed herein.
(f) Not applicable.
(g) Custodian Agreement between Registrant and
Provident National Bank is
incorporated by reference to Exhibit 8 to Post-
Effective Amendment No. 5.
(h)(1) Transfer Agency Agreement between Registrant
and First Data Investor Services
Group Inc. is incorporated by reference to Exhibit 9
to Post-Effective Amendment No. 26.
(h)(2) Transfer Agency Agreement dated October 1,
1999 between the Registrant and Citi
Fiduciary Trust Company (f/k/a Smith Barney Private
Trust Company) is filed herein.
(h)(3) Sub-Transfer Agency Agreement dated October 1,
1999 between Citi Fiduciary
Trust Company ( f/k/a Smith Barney Private Trust
Company) and First Data Investor
Services Group, Inc. is filed herein.
(i) Not Applicable.
(j)(1) Auditors' Report (see the Annual Report
to Shareholders which
is incorporated by reference in the Statement of
Additional Information).
(j)(2) Auditors' Consent is filed herein.
(j)(3) Powers of Attorney are filed herein.
(k) Not applicable.
(l) Subscription Agreement between Registrant and
National Securities &
Research Corporation is incorporated by reference to
Exhibit 13 to Post-Effective Amendment
No. 14.
(m)(1) Plan of Distribution pursuant to Rule
12b-1 of Registrant is incorporated by
reference to Exhibit 15 to Post-Effective Amendment
No. 23.
(m)(2) Plan of Distribution pursuant to Rule
12b-1 of Registrant is
incorporated by reference to Post-Effective Amendment
No. 30.
(m)(3) Form of Amended and Restated Shareholder
Services
and Distribution Plan pursuant to Rule 12b-1 of
Registrant is filed herein.
(n) Financial Data Schedule is filed herein.
(o) Amended and Restated Plan pursuant to Rule 18f-
3 is incorporated by reference
To Exhibit 18 to Post-Effective Amendment No.28.
(p) Code of Ethics North America is filed herein.
Item 24. Persons Controlled by or under Common
Control with Registrant
(None)
Item 25. Indemnification
Reference is made to ARTICLE Eighth of
Registrant's Articles of Incorporation for a
complete statement of its terms. Subparagraph (c) of
Article EIGHTH provides: "Notwithstanding
the foregoing provisions, no officer or director of
the Corporation shall be indemnified for or insured
against any liability to the Corporation or its
shareholders to which he would otherwise be subject
by
reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved
in the conduct of his office.
Registrant is a named assured on a joint
insured bond pursuant to Rule 17g-1 of the Investment
Company Act of 1940. Other assureds include SSB Citi
Fund Management LLC (successor to SSBC Fund
Management Inc., formerly known as Mutual Management
Corp.) ("SSB Citi") and affiliated investment
companies.
Item 26. Business and other Connections of
Investment Adviser
Investment Adviser - - SSB Citi Fund Management LLC
("SSB Citi") (successor to SSBC Fund Management Inc.
("SSBC")
SSB Citi was incorporated in December 1968 under the
laws of the State of Delaware. On September 21, 1999,
SSB Citi was converted into a Delaware Limited
Liability Company. SSB Citi is a wholly owned
subsidiary of Salomon Smith Barney Holdings Inc.
("Holdings") (formerly known as Smith Barney Holdings
Inc.) which in turn is a wholly owned subsidiary of
Citigroup Inc. ("Citigroup"). SSB Citi is registered
as an investment adviser under the Investment Advisers
Act of 1940 (the "Advisers Act").
The list required by this Item 26 of officers and
directors of SSB Citi together with information as to
any other business, profession, vocation or employment
of a substantial nature engaged in by such officers
and directors during the past two years, is
incorporated by reference to Schedules A and D of FORM
ADV filed by SSB Citi pursuant to the Advisers Act
(SEC File No. 801-8314).
Item 27.Principal Underwriters
(a) Salomon Smith Barney, Inc. ("Salomon Smith
Barney")
the Registrant's Distributor, is also the distributor
for the
following Smith Barney funds: Concert
Investment Series, Consulting Group Capital Markets
Funds,
Greenwich Street Series Fund,
Smith Barney Adjustable Rate Government Income
Fund, Smith Barney Aggressive Growth Fund Inc., Smith
Barney
Appreciation Fund Inc., Smith Barney Arizona
Municipals Fund Inc.,
Smith Barney California Municipals Fund Inc., Smith
Barney Concert
Allocation Series Inc., Smith Barney Equity Funds,
Smith Barney
Fundamental Value Fund Inc., Smith Barney Funds,
Inc., Smith Barney
Income Funds, Smith Barney Institutional Cash
Management Fund, Inc.,
Smith Barney Investment Funds Inc., Smith Barney
Investment Trust,
Smith Barney Managed Governments Fund Inc., Smith
Barney Managed
Municipals Fund Inc., Smith Barney Massachusetts
Municipals Fund,
Smith Barney Money Funds, Inc., Smith Barney Muni
Funds, Smith Barney
Natural Resources Fund Inc., Smith Barney New Jersey
Municipals
Fund Inc., Smith Barney Oregon Municipals Fund Inc.,
Smith Barney
Principal Return Fund, Smith Barney Small Cap Blend
Fund, Inc., Smith
Barney Telecommunications Trust, Smith Barney
Variable Account Funds,
Smith Barney World Funds, Inc., Travelers Series Fund
Inc., and
various series of unit investment trusts.
(b) The information required by this Item 27 with
respect to each
director and officer of Salomon Smith Barney is
incorporated by reference to
Schedule A of Form BD filed by Salomon Smith Barney
pursuant to the Securities and
Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. Location of Accounts and Records
Item 28. Location of Accountants and Records
(1) Smith Barney Municipal MoneyMarket Fund
Inc.
388 Greenwich Street
New York, New York 10013
(2) SSB Citi Fund Management LLC
388 Greenwich Street
New York, New York 10013
(3) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, Pennsylvania 19103
(4) Citi Fiduciary Trust Company
125 Broad Street
New York, New York 10004
(5) PFPC Global Fund Services
P. O. Box 9699
Providence, RI 02940-9699
(6) Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Item 29. Management Services
Not applicable.
Item 30. Undertakings
None
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, and the Investment Company
Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for
effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the
undersigned, and where applicable, the true and
lawful attorney-in-fact, thereto duly authorized, in
the City of New York and State of New York, on the
27th day of July 2000.
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
BY/s/ Heath
B. McLendon
Heath B.
McLendon
Chairman of
the Board, President and
Chief
Executive Officer
Pursuant to the requirements of the Securities Act of
1933, this Post-Effective Amendment to the
Registration Statement has been signed below by the
following persons in the capacities and on the date
indicated.
Signatures Title
Date
/s/ Heath B. McLendon Chairman of the
Board, July 27, 2000
(Heath B. McLendon) President and
Chief
Executive Officer
/s/ Lee Abraham* Director
July 27, 2000
Lee Abraham
/s/ Allan J. Bloostein* Director
July 27, 2000
Allan J. Bloostein
/s/ Richard E. Hanson, Jr.* Director
July 27, 2000
Richard E. Hanson, Jr.
/s/ Jane Dasher* Director
July 27, 2000
Jane Dasher
/s/Donald R. Foley* Director
July 27, 2000
(Donald R. Foley)
/s/Paul Hardin* Director
July 27, 2000
(Paul Hardin)
/s/Roderick C. Rasmussen* Director
July 27, 2000
(Roderick C. Rasmussen)
Signatures Title
Date
/s/John P. Toolan* Director
July 27, 2000
(John P. Toolan)
/s/ Lewis E. Daidone Senior Vice
President July 27, 2000
(Lewis E. Daidone) and Treasurer
*By: /s/ Christina T. Sydor
Secretary July 27, 2000
Christina T. Sydor
Pursuant to Power of Attorney
EXHIBIT INDEX
Exhibit No. Exhibit
(e)(4) Form of Distribution Agreement
(h)(2) Transfer Agency Agreement
(h)(3) Sub-Transfer Agency Agreement
(j)(2) Auditor's Consent
(j)(3) Powers of Attorney
(m)(3) Form of Amended and Restated
Shareholder Services and Distribution Plan
(n) Financial Data Schedule
(p) Code of Ethics
