<PAGE>
SMITH BARNEY
TELECOMMUNICATIONS
INCOME
FUND
SEMI- ------------------
ANNUAL JUNE 30, 1995
REPORT
[LOGO] SMITH BARNEY MUTUAL FUNDS
INVESTING FOR YOUR FUTURE.
EVERY DAY.
<PAGE>
DEAR SHAREHOLDER:
[NAME OF FUND--BAR CALLOUT]
We are pleased to provide you with
the semi-annual
report for the six months ended
June 30, 1995,
including the portfolio of
investments, for the Smith
Barney Telecommunications Income
Fund. As you know, the
Fund's primary objective is to provide an
attractive level of
investment income; growth of capital is a
secondary objective. The
Fund's holdings are largely concentrated in
stocks of Bell
operating companies.
The Fund's aggregate total return (income plus
change in share
price) was 12.49% for the first six months of
1995. By comparison,
the Standard & Poor's 500 Stock Index, an
unmanaged index used to
portray common stock price movement of large
U.S. companies that
historically have paid dividends on their
stock, was 20.19%. The
Fund underperformed this index because Bell
operating companies,
whose stocks comprise 95% of the portfolio, are
viewed as stable
but slow-growth companies. The best performing
stocks in the last
six months were the high-growth companies, and
the earnings growth
rate of the Bell operating companies is only
about one half of the
S&P 500. Also, the uncertainty of deregulation
and the potential of
increased competition in the telephone business
concerned
investors.
We are optimistic on the prospects for the Bell
operating companies
and believe they will continue to provide the
Fund with a level
monthly dividend. They provide an attractive
current dividend yield
and a dividend growth rate of 3% to 5%. Their
modest but steady
earnings growth rate of 4% to 6% should help
keep their stock
prices fairly stable. However, the basic copper
wire telephone
business is evolving because of new
technologies. Not all Bell
operating companies have the same prospects,
and we have committed
our investment resources to those we believe
have the
brightest future, particularly in the area of wireless
communication. Although
wireless communication is not the Bell operating companies'
major business, it
is important to their future growth.
It is our goal in managing the Fund to provide you with a
level of income that
is competitive with a rate that is available on money market
funds or other
short-term instruments. We are also encouraged by the long-
term growth potential
of our holdings. Thank you again for your confidence in the
Fund.
Sincerely,
[SIGNATURE] [SIGNATURE]
<TABLE>
<S> <C>
Heath B. McLendon Guy R. Scott
Chairman of the Board and Investment
Officer
Investment Officer
July 28, 1995
</TABLE>
1
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS (UNAUDITED)
JUNE 30, 1995
- ------------------------------------------------------------
- --------------------
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Company
Net Assets
- ------------------------------------------------------------
- ---------
<S>
<C>
SBC COMMUNICATIONS INC.
17.6%
BELLSOUTH CORPORATION
17.4
BELL ATLANTIC CORPORATION
17.4
AMERITECH CORPORATION
13.6
U.S. WEST, INC.
9.4
AIRTOUCH COMMUNICATIONS
9.4
PACIFIC TELESIS GROUP
8.9
NYNEX CORPORATION
2.8
GENERAL ELECTRIC CAPITAL CORPORATION
2.6
SEARS ROEBUCK & COMPANY
1.8
</TABLE>
2
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
PORTFOLIO OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
(NOTE 1)
<C> <S>
<C>
- ------------------------------------------------------------
- ---------------------------------
COMMON STOCK - 96.5%
TELECOMMUNICATIONS - 96.5%
214,436 AirTouch Communications+
$ 6,111,426
199,942 Ameritech Corporation
8,797,448
201,092 Bell Atlantic Corporation
11,261,152
177,697 BellSouth Corporation
11,283,760
45,896 NYNEX Corporation
1,847,314
214,436 Pacific Telesis Group
5,736,163
239,008 SBC Communications Inc.
11,382,756
146,858 U.S. West, Inc.
6,112,964
- ------------------------------------------------------------
- ---------------------------------
TOTAL COMMON STOCK (COST $16,652,773)
62,532,983
- ------------------------------------------------------------
- ---------------------------------
CONVERTIBLE PREFERRED STOCK - 1.8% (COST $684,773)
19,852 Sears Roebuck & Company, Convertible
Preferred, Series A, Depository Shares
Representing 1/4 share, PERCS.
1,188,638
- ------------------------------------------------------------
- ---------------------------------
</TABLE>
<TABLE>
<CAPTION>
FACE VALUE
- ---------
<C> <S>
<C> <C>
COMMERCIAL PAPER - 2.6% (COST $1,685,000)
$1,685,000 General Electric Capital Corporation, 6.200%
due 7/3/95
1,685,000
- ------------------------------------------------------------
- ---------------------------------
TOTAL INVESTMENTS (COST $19,022,546*)
100.9% 65,406,621
OTHER ASSETS AND LIABILITIES (NET)
(0.9) (626,164)
- ------------------------------------------------------------
- ---------------------------------
NET ASSETS
100.0% $64,780,457
- ------------------------------------------------------------
- ---------------------------------
<FN>
* Aggregate cost for Federal tax purposes was $14,945,981.
+ Non-income producing security.
PERCS - Preferred Equity Redemption Cumulative Stock.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
- ------------------------------------------------------------
- --------------------
<TABLE>
<S>
<C> <C>
ASSETS:
Investments, at value (Cost $19,022,546) (Note 1)
See accompanying schedule
$65,406,621
Dividends and interest receivable
135,280
- ------------------------------------------------------------
- -----------------------------
TOTAL ASSETS
65,541,901
- ------------------------------------------------------------
- -----------------------------
LIABILITIES:
Dividends payable
$651,445
Payable for Fund shares redeemed
36,876
Investment advisory fee payable (Note 2)
29,290
Administration fee payable (Note 2)
10,651
Custodian fees payable (Note 2)
3,550
Transfer agent fees payable (Note 2)
1,650
Due to custodian
1,266
Accrued expenses and other payables
26,716
- ------------------------------------------------------------
- -----------------------------
TOTAL LIABILITIES
761,444
- ------------------------------------------------------------
- -----------------------------
NET ASSETS
$64,780,457
- ------------------------------------------------------------
- -----------------------------
NET ASSETS consist of:
Undistributed net investment income
$ 38,586
Accumulated net realized gain on investments sold
340,036
Unrealized appreciation of investments
46,384,075
Par value
621
Paid-in capital in excess of par value
18,017,139
- ------------------------------------------------------------
- -----------------------------
TOTAL NET ASSETS
$64,780,457
- ------------------------------------------------------------
- -----------------------------
NET ASSET VALUE, offering price and redemption price per
share
($64,780,457 / 621,293 shares of beneficial interest
outstanding)
$104.27
- ------------------------------------------------------------
- -----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS
ENDED JUNE 30, 1995
- ------------------------------------------------------------
- --------------------
<TABLE>
<S>
<C> <C>
INVESTMENT INCOME:
Dividends and interest
$1,334,828
- ------------------------------------------------------------
- -----------------------------
EXPENSES:
Investment advisory fee (Note 2)
$174,540
Administration fee (Note 2)
63,469
Legal and audit fees
19,653
Custodian fees (Note 2)
12,502
Trustees' fees and expenses (Note 2)
11,310
Transfer agent fees (Note 2)
9,677
Other
15,671
- ------------------------------------------------------------
- -----------------------------
TOTAL EXPENSES
306,822
- ------------------------------------------------------------
- -----------------------------
NET INVESTMENT INCOME
1,028,006
- ------------------------------------------------------------
- -----------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
(NOTES 1 AND 3):
Net realized gain on investments sold during the period
3,563,206
Net unrealized appreciation of investments during the
period 2,887,325
- ------------------------------------------------------------
- -----------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
6,450,531
- ------------------------------------------------------------
- -----------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$7,478,537
- ------------------------------------------------------------
- -----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
6/30/95 ENDED
(UNAUDITED) 12/31/94
<S>
<C> <C>
Net investment income $
1,028,006 $ 2,564,672
Net realized gain on investments sold during the period
3,563,206 2,301,558
Net unrealized appreciation/(depreciation) of investments
during the period
2,887,325 (6,098,127)
- ------------------------------------------------------------
- -----------------------------
Net increase/(decrease) in net assets resulting from
operations
7,478,537 (1,231,897)
Distributions from net investment income
(991,170) (2,586,399)
Distributions from net realized gain on investments
(1,004,936) (3,845,617)
Net decrease in net assets from Fund share transactions
(Note 4)
(1,957,772) (2,650,191)
- ------------------------------------------------------------
- -----------------------------
Net increase/(decrease) in net assets
3,524,659 (10,314,104)
NET ASSETS:
Beginning of period
61,255,798 71,569,902
- ------------------------------------------------------------
- -----------------------------
End of period (including undistributed net investment
income of $38,586 and $1,750, respectively)
$64,780,457 $ 61,255,798
- ------------------------------------------------------------
- -----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
7
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
- --------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR YEAR
6/30/95 ENDED ENDED
(UNAUDITED) 12/31/94 12/31/93
<S>
<C> <C> <C>
Net asset value, beginning of period
$ 95.62 $107.62 $102.67
- ------------------------------------------------------------
- ----------------------------------------
Income from investment operations:
Net investment income
1.66 4.02 3.94
Net realized and unrealized gain/(loss) on investments
10.19 (5.91) 12.30
- ------------------------------------------------------------
- ----------------------------------------
Total from investment operations
11.85 (1.89) 16.24
- ------------------------------------------------------------
- ----------------------------------------
Less distributions:
Dividends from net investment income
(1.60) (4.05) (4.42)
Distributions from net realized capital gains
(1.60) (6.06) (6.87)
Distributions from capital
- -- -- --
Distributions in excess of net realized gains
- -- -- --
- ------------------------------------------------------------
- ----------------------------------------
Total distributions
(3.20) (10.11) (11.29)
- ------------------------------------------------------------
- ----------------------------------------
Net asset value, end of period
$104.27 $ 95.62 $107.62
- ------------------------------------------------------------
- ----------------------------------------
Total return++
12.49% (1.83)% 16.00%
- ------------------------------------------------------------
- ----------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of period (000's)
$64,780 $61,256 $71,570
Ratio of operating expenses to average net assets
0.97%+ 0.95% 0.93%
Ratio of net investment income to average net assets
3.24%+ 3.80% 3.47%
Portfolio turnover rate
0% 0% 0%
- ------------------------------------------------------------
- ----------------------------------------
<FN>
+ Annualized.
++ Total return represents aggregate total return for the
period indicated.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
ENDED ENDED ENDED ENDED
12/31/92 12/31/91 12/31/90 12/31/89
12/31/88 12/31/87 12/31/86 12/31/85
<S> <C> <C> <C> <C> <C>
<C> <C> <C>
$110.75 $129.06 $140.93 $ 99.10 $
90.28 $ 99.20 $ 86.19 $ 70.16
- ------------------------------------------------------------
- ------------------------------------------
4.91 5.74 6.10 5.18
5.55 5.87 5.54 5.30
6.79 (2.20) (8.98) 45.31
9.66 (4.67) 15.38 16.87
- ------------------------------------------------------------
- ------------------------------------------
11.70 3.54 (2.88) 50.49
15.21 1.20 20.92 22.17
- ------------------------------------------------------------
- ------------------------------------------
(4.55) (6.05) (5.79) (5.85)
(5.40) (7.20) (5.40) (5.34)
(15.23) (14.62) (3.20) (2.65)
(0.99) (2.92) (2.51) (0.80)
-- (1.18) -- -- --
- -- -- --
-- -- -- (0.16) --
- -- -- --
- ------------------------------------------------------------
- ------------------------------------------
(19.78) (21.85) (8.99) (8.66)
(6.39) (10.12) (7.91) (6.14)
- ------------------------------------------------------------
- ------------------------------------------
$102.67 $110.75 $129.06 $ 140.93 $
99.10 $ 90.28 $ 99.20 $ 86.19
- ------------------------------------------------------------
- ------------------------------------------
10.89% 3.30% (1.80)% 52.11%
17.12% 0.91% 24.99% 33.30%
- ------------------------------------------------------------
- ------------------------------------------
$70,637 $79,419 $94,854 $109,970
$82,546 $80,349 $95,439 $88,926
0.92% 0.90% 0.92% 0.89%
0.95% 0.97% 0.96% 1.07%
4.41% 4.57% 4.81% 4.32%
5.70% 5.84% 5.68% 6.91%
2% 18% 3% 5%
3% 6% 15% 21%
- ------------------------------------------------------------
- ------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------------
- --------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Telecommunications Trust (the "Trust") was
organized as an
unincorporated business trust under the laws of the
Commonwealth of
Massachusetts by an Agreement and Declaration of Trust dated
June 2, 1983. The
Trust is registered with the Securities and Exchange
Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"),
as a
non-diversified, open-end management investment company
consisting of two
portfolios, Smith Barney Telecommunications Growth Fund and
Smith Barney
Telecommunications Income Fund (the "Fund"), each with a
separate investment
objective. Each Fund commenced operations on January 1,
1984, by issuing shares
of the Trust in a tax-free exchange for shares of American
Telephone & Telegraph
Company with rights to the divested Bell regional operating
companies attached.
The following is a summary of significant accounting
policies consistently
followed by the Fund in the preparation of its financial
statements:
Portfolio valuation: Investments in securities which are
traded on a national
securities exchange are valued at the last reported sales
price or, in the
absence of a recorded sale, at the mean of the closing bid
and asked prices.
Over-the-counter securities are valued at the closing bid
price. Short-term
investments with maturities of 60 days or less from the
valuation date are
valued on the basis of amortized cost.
Repurchase agreements: The Fund engages in repurchase
agreement transactions.
Under the terms of a typical repurchase agreement, the Fund
takes possession of
an underlying debt obligation 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. The value of
the collateral is at
least equal at all times to the total amount of the
repurchase obligations,
including interest. In the event of counterparty default,
the Fund has the right
to use the collateral to offset losses incurred. There is
potential loss to the
Fund in the event that the Fund is delayed or prevented from
exercising its
rights to dispose of the collateral securities including the
risk of a possible
decline in the value of the underlying securities during the
period while the
Fund seeks to assert its rights. The Fund's investment
adviser or sub-investment
adviser, acting under the supervision of the Board of
Trustees, reviews the
value of the collateral and the creditworthiness of those
banks and dealers with
which the Fund enters into repurchase agreements to evaluate
potential risks.
10
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (continued)
- ------------------------------------------------------------
- --------------------
Securities transactions and investment income: Securities
transactions are
recorded as of the trade date. Dividend income and
distributions to shareholders
are recorded on the ex-dividend date. Interest income is
recorded on the accrual
basis. Realized gains or losses on sales of investments are
determined on the
basis of identified cost.
Dividends and distributions to shareholders: Dividends from
net investment
income, if any, of the Fund are declared quarterly and are
paid on the last
Friday of the calendar quarter. Distributions, if any, of
any net short- and
long-term capital gains earned by the Fund will be made
annually after the close
of the fiscal year in which they are earned. Additional
distributions of net
investment income and capital gains from the Fund may be
made at the discretion
of the Trust's Board of Trustees in order to avoid the
application of a 4.00%
nondeductible excise tax on certain undistributed amounts of
ordinary income and
capital gains.
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles. These differences are primarily due to differing
treatments of
income and gains on various investment securities held by
the Fund, timing
differences and differing characterization of distributions
made by the Fund.
Federal taxes: It is the Fund's policy to qualify as a
regulated investment
company, if such qualification is in the best interest of
its shareholders, by
complying with the requirements of the Internal Revenue Code
of 1986, as
amended, applicable to regulated investment companies and by
distributing
substantially all of its taxable income to its shareholders.
Therefore, no
Federal income tax provision is required.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER
TRANSACTIONS
The Trust on behalf of the Fund has entered into an
investment advisory
agreement (the "Advisory Agreement") with Smith Barney
Strategy Advisers Inc.
("SBSA"), a division of Smith Barney Mutual Funds
Management, Inc. ("SBMFM").
SBMFM is a wholly-owned subsidiary of Smith Barney Holdings
Inc. ("Holdings"),
which is in turn a wholly-owned subsidiary of Travelers
Group Inc. Under this
agreement, the Fund paid a monthly fee at the annual rate of
0.55% of the value
of the Fund's average daily net assets.
11
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (continued)
- ------------------------------------------------------------
- --------------------
The Fund has entered into a sub-investment advisory
agreement (the "Sub-Advisory
Agreement") with The Boston Company Advisors, Inc. ("Boston
Advisors"), an
indirect wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). Under
the terms of the Sub-Advisory Agreement, SBSA pays Boston
Advisors a monthly fee
based on the value of the Fund's average daily net assets.
The Fund also entered into an administration agreement ( the
"Administration
Agreement") with SBMFM. For administration services
rendered, the Fund pays
SBMFM a monthly fee at the annual rate of 0.20% of the value
of the Fund's
average daily net assets.
The Fund and SBMFM have also entered into a sub-
administration agreement (the
"Sub-Administration Agreement") with Boston Advisors. Under
the Sub-
Administration Agreement, SBMFM pays Boston Advisors a
portion of its
administration fee at a rate agreed upon from time to time
between SBMFM and
Boston Advisors.
For the six months ended June 30, 1995, the Fund incurred
total brokerage
commissions of $6,350, of which $2,050 was paid to Smith
Barney Inc. ("Smith
Barney").
No officer, director or employee of Smith Barney or any of
its affiliates
receives any compensation from the Trust for serving as a
Trustee or officer of
the Trust. The Trust pays each of its Trustees who is not an
officer, director
or employee of Smith Barney or any of its affiliates $4,500
per annum plus $250
per meeting attended and reimburses each such Trustee for
travel and
out-of-pocket expenses.
Boston Safe Deposit and Trust Company, an indirect wholly
owned subsidiary of
Mellon, serves as the Trust's custodian. The Shareholder
Services Group, Inc., a
subsidiary of First Data Corporation, serves as the Trust's
transfer agent.
3. SECURITIES TRANSACTIONS
Proceeds from sales of securities, excluding short-term
obligations, aggregated
$5,071,312 during the six months ended June 30, 1995. No
purchases were made
during the six months ended June 30, 1995.
At June 30, 1995, aggregate gross unrealized appreciation
for all securities in
which there was an excess of value over tax cost was
$50,460,640.
12
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (continued)
- ------------------------------------------------------------
- --------------------
4. SHARES OF BENEFICIAL INTEREST
The Trustees have authority to issue an unlimited number of
shares of beneficial
interest of the Trust, with par value of $.001 per share.
The Fund, however, has
not offered additional shares since its inception, except
for shares purchased
through the reinvestment of dividends. Each Fund constitutes
a sub-trust under
an Amended and Restated Master Trust Agreement. Shares of
two sub-trusts have
been authorized by the Trustees of the Trust. The shares of
the Fund are
described herein.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
6/30/95
12/31/94
SHARES
AMOUNT SHARES AMOUNT
<S> <C> <C>
<C> <C>
- ------------------------------------------------------------
- ---------------------------------
Issued as reinvestment of dividends 3,649 $
364,096 8,675 $ 883,503
Issued as reinvestment of capital gains 3,258
339,724 13,862 1,358,512
Redeemed (26,200)
(2,661,592) (46,981) (4,892,206)
- ------------------------------------------------------------
- ---------------------------------
Net decrease (19,293)
$(1,957,772) (24,444) $(2,650,191)
- ------------------------------------------------------------
- ---------------------------------
</TABLE>
5. CONCENTRATION OF CREDIT
Because the Fund concentrates its investments in one
industry, its portfolio may
be subject to greater risk and market fluctuations than a
portfolio of
securities representing a broader range of investment
alternatives. The risks
could adversely affect the ability and inclination of the
issuers within the
telecommunications industry to declare or pay dividends and
the ability of
holders of common stock to realize any value from the assets
of the issuer upon
liquidation or bankruptcy.
6. LINE OF CREDIT
The Fund and several affiliated entities participate in a
$50 million line of
credit provided by Bank of America, N.A. under an Amended
and Restated Line of
Credit Agreement (the "Agreement") dated April 30, 1992, and
renewed effective
May 31, 1994, primarily for temporary or emergency purposes,
including the
meeting of redemption requests that otherwise might require
the untimely
disposition of securities. The Fund may borrow up to the
lesser of $25 million
or 25% of its net assets. However, pursuant to the Fund's
prospectus, the Fund
may only borrow up to 10% of its net assets. Under the terms
of the Agreement,
as amended, the Fund and the other affiliated entities are
charged an aggregate
13
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (continued)
- ------------------------------------------------------------
- --------------------
commitment fee of $100,000 which is allocated equally among
each of the
participants. The Agreement requires, among other
provisions, each participating
fund to maintain a ratio of net assets (not including funds
borrowed pursuant to
the Agreement) to aggregate amount of indebtedness pursuant
to the Agreement of
no less than 5 to 1. At June 30, 1995, the Fund had no
outstanding borrowings.
During the six months ended June 30, 1995, the Fund had an
average outstanding
daily balance of $59,116 with interest rates ranging from
6.000% to 6.375%.
Interest expense totalled $1,838, which has been offset
against interest income
on the Statement of Operations for the six months ended June
30, 1995.
14
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
PARTICIPANTS
- ------------------------------------------------------------
- --------------------
DISTRIBUTOR
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISER AND
ADMINISTRATOR
Smith Barney Mutual Funds
Management Inc.
388 Greenwich Street
New York, New York 10013
SUB-INVESTMENT ADVISOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
COUNSEL
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
15
<PAGE>
Smith Barney
Telecommunications Income Fund
- ------------------------------------------------------------
- --------------------
GLOSSARY OF COMMONLY USED MUTUAL FUND TERMS
- ------------------------------------------------------------
- --------------------
Capital Gain (or Loss) This is the increase (or decrease)
in the market value
(price) of a security in your portfolio. If a stock or bond
appreciates in
price, there is a capital gain; if it depreciates, there is
a capital loss. A
capital gain or loss is "realized" upon the sale of a
security; if net capital
gains exceed net capital losses, there may be a capital gain
distribution to
shareholders.
CDSC (Contingent Deferred Sales Charge) One kind of back-
end load, a CDSC is
imposed if shares are redeemed during the first few years of
ownership. The CDSC
may be expressed as a percentage of either the original
purchase price or the
redemption proceeds. Most CDSCs decline over time, and some
will not be charged
if shares are redeemed after a certain period of time.
Distribution Rate This is the rate at which a mutual fund
pays out (or
distributes) interest, dividends and realized capital gains
to shareholders. A
fund's distribution rate is usually expressed as an
annualized percent of the
fund's offering price.
Dividend This is income generated by securities in a
portfolio and distributed
after expenses to shareholders.
Front-End Sales Charge This is the sales charge applied to
an investment at the
time of initial purchase.
Net Asset Value (NAV) Net asset value is the total market
value of all
securities held by a fund, minus any liabilities, divided by
the number of
shares outstanding. It is the value of a single share of a
mutual fund on a
given day. The total value of your investment would be the
NAV multiplied by the
number of shares you own.
SEC Yield This standardized calculation of a mutual fund's
yield is based on a
formula developed by the Securities and Exchange Commission
(SEC) to allow funds
to be compared on an equal basis. It is an annualized yield
based on the
portfolio's potential earnings from dividends, interest and
yield to maturity of
its holdings, and it reflects the payments of all portfolio
expenses for the
most recent 30-day period. Mutual funds are required to use
this figure when
stating yield.
Total Return Total return measures a fund's performance,
taking into account
the combination of dividends paid and the gain or loss in
the value of the
securities held in the portfolio. It may be expressed on an
average annual basis
or cumulative basis (total change over a given period). In
addition, total
return may be expressed with or without the effects of sales
charges or the
reinvestment of dividends and capital gains.
Whenever a fund reports any type of performance, it must
also report the average
annual total return according to the standardized
calculation developed by the
SEC. The SEC average annual total return calculation
includes the effects of all
fees and sales charges and assumes the reinvestment of all
dividends and capital
gains.
16
<PAGE>
TELECOMMUNICATIONS SMITH BARNEY
INCOME FUND ------------
TRUSTEES A MEMBER OF TRAVELERS GROUP
[LOGO]
Paul R. Ades
Herbert Barg
Alger B. Chapman
Dwight B. Crane
Frank G. Hubbard
Allan Johnson
Heath B. McLendon
Ken Miller
John F. White
OFFICERS
Heath B. McLendon
Chairman of the Board
and Investment Officer
Jessica Bibliowicz
President
This report is
submitted for the SEMI-
Lewis B. Daidone general information of
the ANNUAL
Senior Vice President shareholders of Smith
Barney REPORT
and Treasurer Telecommunications
Income
Fund. It is not a
prospectus,
Guy R. Scott circular or
representation
Investment Officer intended for use in the
purchase
or sale of shares of
the Fund or
Thomas M. Reynolds of any securities
mentioned in
Controller this report.
Christina T. Sydor
Secretary
SMITH BARNEY
MUTUAL FUNDS
388 Greenwich Street
New York, New York
10013
[LOGO] RECYCLED
RECYCLABLE Fund 11
FD 0412 8/95
