<PAGE>
--------------------------------------------------------------------------------
SMITH BARNEY
PREMIUM TOTAL RETURN FUND
--------------------------------------------------------------------------------
CLASSIC SERIES | SEMI-ANNUAL REPORT | JUNE 30, 2000
[LOGO] Smith Barney
Mutual Funds
Your Serious Money Professionally Managed. /(SM)/
------------------------------------------------------
NOT FDIC INSURED . NOT BANK GUARANTED . MAY LOSE VALUE
------------------------------------------------------
<PAGE>
ROSS S. MARGOLIES
PORTFOLIO MANAGER
[LOGO] Classic Series
Semi-Annual Report . June 30, 2000
SMITH BARNEY
PREMIUM TOTAL RETURN FUND
[PHOTO OF ROSS S. MARGOLIES]
Ross S. Margolies has more than 18 years of securities business experience.
Education: BA in Economics from John Hopkins University; MBA in Finance from New
York University
--------------------------------------------------------------------------------
FUND OBJECTIVE
--------------------------------------------------------------------------------
The Fund seeks to provide a competitive stream of income and to capture growth
opportunities while attempting to limit downside risks.
--------------------------------------------------------------------------------
FUND FACTS
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FUND INCEPTION
--------------------------------------------------------------------------------
September 16, 1985
MANAGER'S INVESTMENT INDUSTRY EXPERIENCE
--------------------------------------------------------------------------------
18 Years
MANAGER TENURE
--------------------------------------------------------------------------------
1 Year
SYMBOLS
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CLASS A CLASS B CLASS C CLASS D
NASDAQ
--------------------------------------------------------------------------------
SOPAX SOPTX SBPLX SPTCX
Inception
--------------------------------------------------------------------------------
11/6/92 9/16/85 6/15/98 6/1/93
Average Annual Total Returns as of June 30, 2000
Without Sales Charges/(1)/
Class A Class B Class L Class O
Six-Months+ 6.49% 6.24% 6.08% 6.32%
-----------------------------------------------------------------------
One-Year 8.74 8.19 7.92 8.23
-----------------------------------------------------------------------
Five-Year 14.60 14.03 N/A 14.08
-----------------------------------------------------------------------
Ten-Year N/A 13.25 N/A N/A
-----------------------------------------------------------------------
Since Inception++ 13.51 12.96 5.40 12.99
-----------------------------------------------------------------------
With Sales Charges(2)
Class A Class B Class L Class O
-----------------------------------------------------------------------
Six-Months+ 1.18% 1.28% 4.05% 5.32%
-----------------------------------------------------------------------
One-Year 3.31 4.07 6.01 7.40
-----------------------------------------------------------------------
Five-Year 13.43 13.91 N/A 14.08
-----------------------------------------------------------------------
Ten-Year N/A 13.25 N/A N/A
-----------------------------------------------------------------------
Since Inception++ 12.75 12.96 4.89 12.99
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to Class
B, L and O shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; and Class B shares reflect the deduction of a 5.00% CDSC,
which applies if shares are redeemed within one year from purchase and
declines thereafter by 1.00% per year until no CDSC is incurred. Class L
and O shares also reflect the deduction of a 1.00% CDSC, which applies if
shares are redeemed within the first year of purchase.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception dates for Class A, B, L and O shares are November 6, 1992,
September 16, 1985, June 15, 1998 and June 1, 1993, respectively.
--------------------------------------------------------------------------------
What's Inside
<TABLE>
<S> <C>
Your Investment in the Smith Barney
Premium Total Return Fund................................................... 1
A Message from the Chairman................................................. 2
Fund at a Glance............................................................ 3
Letter from the Portfolio Manager........................................... 4
Historical Performance...................................................... 8
Growth of $10,000........................................................... 11
Schedule of Investments..................................................... 12
Statement of Assets and Liabilities......................................... 24
Statement of Operations..................................................... 25
Statements of Changes in Net Assets......................................... 26
Notes to Financial Statements............................................... 27
Financial Highlights........................................................ 33
</TABLE>
[LOGO] SMITH BARNEY
MUTUAL FUNDS
Your Serious Money. Professionally Managed.(SM)
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Investment Products: Not FDIC Insured . Not Bank Guaranteed . May Lose Value
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<PAGE>
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YOUR INVESTMENT IN THE SMITH BARNEY PREMIUM TOTAL RETURN FUND
--------------------------------------------------------------------------------
[LOGO] Income and Broad Market Participation with Some Downside Protection
Manager Ross S. Margolies and his team carefully seek to uncover
tomorrow's growth and income opportunities.
[LOGO] Diversification Matters
Because the best performing asset class can change from year to
year, investing across asset classes makes sense. Your investment in the
Fund offers you a convenient way to participate in different asset
classes. This combination may potentially help reduce overall risk to
your portfolio. Keep in mind, diversification does not assure against
market loss.
[LOGO] An Asset Allocation Model
Ross S. Margolies uses an asset allocation model which includes a
combination of equity securities, fixed income securities with a
participation in index futures, options and cash. * The strategic
combination of these three elements looks to provide current income
while maintaining the potential to provide most of the stock market's
long-term appreciation, yet more downside protection than the market as
a whole. Please note that the Fund's asset allocation is subject to
change.
[LOGO] A Commitment to Managing Your Serious Money
SSB Citi Fund Management LLC ("SSB Citi"), the investment management
division of Citigroup, is comprised of Smith Barney Asset
Management, Salomon Brothers Asset Management and Citibank Global Asset
Management, organizations with powerful investment capabilities.
SSB Citi, as a member of one of the largest financial services providers
in the world, offers you the benefits of our unparalleled global
capabilities.
At SSB Citi, you gain access to portfolio management delivered
professionally. We are proud to offer you, the serious investor, a
variety of managed solutions.
* Please note that the Fund's asset allocation is subject to change.
Futures (forward contracts traded on an established exchange) and
options (contracts that represent the right to buy and sell an
underlying asset by a specified time for a specified price) are also
known as derivative contracts. A derivative is commonly defined as a
financial instrument whose value is "derived" from, or based on, an
underlying security, asset or index. Derivatives are subject to the
same fundamental relationship between risk and potential return as are
all investments. The higher the risk of a derivative, the greater its
potential return. The lower the risk of the derivative, the lower its
potential return. The Premium Total Return Fund may, but not need to,
use derivative contracts, such as futures and options on securities,
securities indices, options on futures, and swaps in order to hedge
against the impact of adverse changes in the market value of portfolio
securities because of changes in stock market prices or interest
rates, as a substitute for buying and selling securities, and to
increase the Fund's total return. Please note that even a small
investment in derivative contracts can disproportionately increase
losses and reduce opportunities for gains when stock prices and
interest rates are changing. Moreover, the Fund may not fully benefit
from or may lose money on derivatives if changes in their value do not
correspond accurately to changes in the value of the Fund's holdings.
The other parties to certain derivative contracts present the same
types of default risk as issuers of fixed income securities. The use
of derivatives can also make the Fund less liquid and harder to value,
especially in declining markets. Principal value and investment
returns will fluctuate and investors' shares, when redeemed, may be
worth more or less than their original cost.
1 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
-------------------------------------------------------------------------------
A M E S S A G E F R O M T H E C H A I R M A N
-------------------------------------------------------------------------------
The Smith Barney Premium Total Return Fund was designed to provide the potential
for upside stock market participation, a competitive stream of income and some
downside protection. Increasing levels of market volatility have recently become
a part of the financial landscape, that in our view, clearly demonstrate the
necessity of professional money management. As professional money managers,
portfolio manager Ross S. Margolies and his team search for promising investment
opportunities.
[PICTURE OF HEATH B. McLENDON]
CHAIRMAN
The Premium Total Return Fund seeks to offer you, the serious investor, some
participation in the capital growth potential of stocks with some downside risk
controls, and to pay a regular monthly dividend.
For years, individuals and their families and businesses have considered the
investment pro-fessionals of SSB Citi Fund Management LLC for thoughtful
insights and advice. For some, the solution has been a long-term investment
strategy, incorporating multiple stock and bond mutual funds. Others have
invested with specific portfolio managers who are recognized and respected for
their insights and record.
In our opinion, the lessons of the past may be used to better understand the
challenges and opportunities of the future. We also believe that expertise is
achieved through the intelligent application of knowledge and experience. Our
portfolio managers provide asset management expertise and manage portfolios
across markets and cycles.
Whatever your investment objective may be, we believe that following a
disciplined investment plan is of paramount importance in these uncertain times.
We encourage you to work closely with your financial professional to map out an
investment plan that fits in with your objectives -- be it retirement, estate
planning or educational needs.
When you invest with SSB Citi Fund Management LLC, you can do so with the
confidence that your interests come first, your investment success is paramount
and that the ultimate in resources is being committed to your financial future.
Thank you for investing with us.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
August 1, 2000
2 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Smith Barney Premium Total Return Fund at a Glance (unaudited)
--------------------------------------------------------------------------------
Top Ten Holdings*+
1. Nabisco Group Holdings Corp............................................ 6.6%
2. Safeway Inc............................................................ 5.6
3. Federated Department Stores, Inc....................................... 4.2
4. Costco Wholesale Corp.................................................. 4.1
5. WorldCom, Inc.......................................................... 4.0
6. Bristol-Myers Squibb Co................................................ 3.8
7. GTE Corp............................................................... 3.6
8. 3Com Corp.............................................................. 3.6
9. PepsiCo, Inc........................................................... 3.6
10. Hormel Foods Corp..................................................... 2.7
Industry Diversification*+ Investment Breakdown*++
8.4% Financials 9.7% Asset-Backed Securities
13.3% Communications 4.7% Convertible Preferred Stock
23.4% Consumer Non-Cyclicals 0.4% Preferred Stock
8.7% Consumer Cyclicals 8.7% Convertible Bonds
1.7% Energy 26.5% Corporate Bonds
8.6% Healthcare 2.4% Purchased Options
0.6% Basic Materials 0.5% Repurchase Agreement
0.6% Capital Goods 47.1% Common Stock
11.9% Real Estate Investment Trust
22.1% Technology
0.7% Utilities
* All information is as of June 30, 2000. Please note that Portfolio holdings
are subject to change.
+ As a percentage of total common stock.
++ As a percentage of total investments.
3 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
Dear Shareholder,
We are pleased to present the semi-annual report for the Smith Barney Premium
Total Return Fund ("Fund") for the period ended June 30, 2000. In this report,
we discuss stock market conditions and review our investment strategy during the
reporting period. A more detailed summary of performance and current holdings
can be found in the appropriate sections that follow. We hope you find this
report to be informative and useful. Please note that the Fund's holdings are
subject to change and any discussion of holdings is as of June 30, 2000. Please
refer to pages 12 through 22 for a complete list and percentage breakdown of the
Fund's holdings.
Performance Update
For the six months ended June 30, 2000, the Fund's Class A shares, without sales
charges, returned 6.49%. The Fund's Class A shares, with sales charges, returned
1.18% for the same time period. During this same period, the U.S. stock market,
as measured by the Standard and Poor's 500 Index ("S&P 500")/1/ returned a
negative 0.43%.
We are pleased to report that the Premium Total Return Fund's relative
performance has improved over the past year./2/ We believe that our investment
strategy, which is described in greater detail later in this letter, has
contributed significantly to the Fund's performance relative to the market. (Of
course, past performance is not indicative of future results.)
-------------------------------------------------
OUR INVESTMENT STRATEGY IS DESIGNED TO
PROVIDE THE POTENTIAL FOR UPSIDE STOCK MARKET
PARTICIPATION, A COMPETITIVE STREAM OF
INCOME AND SOME DOWNSIDE PROTECTION.
-------------------------------------------------
Additional Fund performance information can be found on pages eight through ten.
Investment Strategy
The Fund's investment strategy is designed to capture as much as possible of the
stock market's long-term appreciation potential while at the same time seeking
to pay a regular monthly income dividend and having substantially lower
potential volatility than the overall stock market. Another way to view the
Fund's strategy is that our goal is to generate a compound annual return at or
around that of the S&P 500 over an entire market cycle that includes both a bull
and bear market. (Of course, no guarantees can be made that our goal will be
met.)
At the same time, because the Fund generally assumes less risk than the overall
stock market, we believe its annual volatility (i.e., a measure of risk) should
be substantially lower than that of the S&P 500. (Again, no assurances can be
made that the Fund will in fact have lower volatility than the S&P 500.)
_____________
1 The S&P 500 is a market capitalization-weighted measure of 500 widely held
common stocks. Please note that an investor cannot invest directly in an
index.
2 Ross S. Margolies, a Managing Director and Co-Chief Investment Officer of
SaBAM, and his investment team were designated portfolio managers of the Fund
on April 26, 1999. On June 30, 1999, the shareholders of the Fund approved a
new sub-investment advisory agreement ("Agreement") with Salomon Brothers
Asset Management Inc ("SaBAM"). The Agreement will be in effect for an
initial two-year period ending June 30, 2001, and may continue thereafter
from year to year only if specifically approved at least annually by the
Board of Trustees or by a vote of a majority of the outstanding voting shares
of the Fund, and in either event, the vote of a majority of the non-
interested Trustees. The Fund's investment objective -- total return
consisting of long-term capital appreciation and income -- remains unchanged.
4 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
Over shorter periods of time such as one year, we expect that the Fund should
post a total return (including dividends) of more than 75% of the S&P 500 during
rising markets and participate in less than 75% of the stock market's decline
during down years. We feel that these three Fund attributes -- the potential for
upside participation, competitive monthly income and potential protection -- are
appropriate based on the risk and reward needs of our shareholders.
Our core investment style is centered on a bottom-up/3/ stock picking strategy.
We focus on thoroughly understanding a company's business, its strategy,
competitive position and industry. We also seek to determine whether a
particular management is credible and the right team is in place to lead the
company under consideration. Our financial analysis focuses on a company's
resources to meet its goals and the consistency of the numbers to determine
their quality. (For instance, are receivables growing much faster than sales, a
sign that current sales may overstate a long-term trend.) Moreover, we carefully
analyze the numbers to create a framework to ascertain a stock's valuation and
risk. These and other factors are then weighed before we make a final judgement.
If all of these factors lead us to conclude that the risk and reward trade-off
of a particular security is favorable, we will then invest.
Our portfolio is designed to meet a strict set of investment objectives. We use
tools such as diversification, position weighting and asset allocation to
determine exactly how much of each security to own in the portfolio. For
instance, in the Fund, not only do our best ideas get higher weightings, our
higher risk ideas get lower weightings. We also try to make sure that the Fund's
portfolio has some exposure to important and growing parts of the economy such
as technology, telecommunications, healthcare, financials and consumer.
-------------------------------------------
AN IMPORTANT PART OF OUR INVESTMENT
STRATEGY IS CONSISTENCY.
-------------------------------------------
As mentioned previously, the Fund's investment strategy is designed to provide
our shareholders with the potential for some upside participation, a competitive
stream of income and some downside protection. The way we accomplish our
strategy is to combine equities (i.e., stocks and convertibles) with bonds and
stock market index exposure (i.e., S&P index futures and options).
The bonds provide most of the income while the stocks should provide long-term
appreciation potential based on our bottom-up stock selection process. In our
view, the index exposure assures that the Fund will participate with the stock
mar-ket, in both directions, even if our equity investment approach is
temporarily out of favor. While value strategies may be viable over the long
term, both pure value and pure growth strategies are susceptible to significant
periods of being out of favor with the market. We believe that our blend
approach to the stock holding and index portions of the Fund's portfolio assures
some stock market participation under most conditions.
In addition to our core investment strategy that seeks low volatility, we
regularly buy some puts on the stock market as an added measure of
insurance. (Puts are options that increase in value when the market goes
down, softening the impact of any decline on the portfolio.) As of June
30, 2000, this small portion of the Fund's portfolio, becomes meaningful in the
event of a sharp or large decline in the market.
Another important aspect of our investment strategy is consistency. The Fund's
shareholders that read these management discussions will note a consistency of
investment strategy and style over time. It is our belief that even an average
investment strategy (let alone a superior one) applied consistently over time
will outperform the appropriate market index over the long term. This is because
the strategy may be positioned to take advantage of the short-term overreactions
that the market has always had.
______________
3 A bottom-up approach to investing is to search for outstanding performance of
individual stocks before considering the impact of economic trends.
5 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
Market Overview and Outlook
Even though it made no headway, the stock market offered something for everyone
during the first half of 2000. Initially the speculative momentum market of 1999
continued the market rally, peaking during the second week of March. The Fed's
continued increases in interest rates then continued, leading to a dramatic
sell-off, particularly in the volatile NASDAQ/4/ market, through May. At the
same time, many oversold "Old Economy" stocks rallied as money rotated from the
Internet and Biotechology stocks into areas such as consumer staples. By the end
of the half, most of the market losses were recovered so that most broad indices
were down modestly for the half of the year.
One way to describe what happened is that "investment gravity" finally took hold
of stocks that previously seemed to continually go up. The catalyst was the
seemingly unrelated comments by U.S. President Bill Clinton and British Prime
Minister Tony Blair that genomics companies would not reap all of the benefits
of the public research money devoted to their field of science. The sell-off in
Biotechology stocks spread like a contagion to all high-priced growth stocks.
For a relatively brief time, earnings counted and stories were discounted. Then
some Internet stocks, by the end of June, the market was once again awarding
future potential a premium to proven ability.
Our view is that the Fund's investment strategy worked well throughout the
period. When the market was rising, our broad, diversified stock exposure
allowed us to participate. When the market declined, the portfolio's structure
helped to dampen the effect. Positive stock selection, particularly in companies
that we still own such as Safeway (a food and drug chain), 3Com (a network
access and interface equipment company), Nabisco Group Holdings, (a food
products company), Seagate Technology, (a supplier of data storage products) and
Devon Energy, (a leading oil and gas producer), led to the Fund's outperforming
the market. (Of course, past performance is not indicative of future results.)
----------------------------------------------------------
THE WIRELESS INTERNET, WHICH PROVIDES WEB ACCESS TO
PALM HAND-HELD DEVICES, IS BEING PROMOTED AS THE
MOST PROMISING TECHNOLOGICAL DEVELOPMENT SINCE
THE INTERNET. INDUSTRY FORECASTS SAY THAT IN FIVE
YEARS, AS MANY AS 500 MILLION PEOPLE WORLDWIDE --
ONE OF EVERY DOZEN -- WILL HAVE PHONES OR OTHER
DEVICES CAPABLE OF WIRELESS INTERNET ACCESS./5/
----------------------------------------------------------
Going forward we expect to hold many of these stocks but we will have to find
replacement ideas for some like Nabisco and Seagate which will be taken over
later this year. The convertible bonds we owned also were significant positive
Fund contributors during the reporting period -- this modest allocation to the
Fund's portfolio continues to be very important as it allows us to get exposure
to high-growth areas like Technology and Biotechnology while limiting the higher
risk of owning the stocks of the same companies.
We continue to see the growth of the Internet as one of the driving forces of
the economy going forward. If you closely examine the Fund's portfolio, you will
see that relatively little of your money is invested in traditional Internet
companies (i.e., the "dot.coms"). We find the long-term risk and reward
proposition in most of these companies to be very unattractive, a view we see
the broad market starting to embrace. Most of these companies do not have
sustainable business models (translation: in our opinion they will always lose
money), while others have valuations that assume they will be the only survivors
in any eventual shakeout in the Internet.
__________
4 The NASDAQ is a computerized system that provides brokers and dealers with
price quotations for securities traded over the counter as well as for many
New York Stock Exchange listed securities.
5 Source: "Cellular Internet Is a Format War For the Carriers," Simon Romero,
The New York Times, July 10, 2000.
6 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
However, you will see a lot of your money invested in companies that benefit
from or build the Internet. In the Fund, we own companies such as:
. 3Com, a company that split into two pieces on July 28, 2000 -- Palm, Inc.
maker of the Palm Pilot, the leading Personal Digital Assistant ("PDA")
which will soon offer wireless Internet access and the remaining 3Com
networking business helping individual access the Internet;
. Federated Department Stores, a leader in the "clicks and mortar" e-commerce
strategy and owner of several valuable Internet businesses; and
. Verizon Communications, formed from the merger of Bell Atlantic and
GTE; Verizon Communications is the leading U.S. wireless company also
offering telecom services such as local, long distance and high speed
Internet access
It is our belief that over time, the leading established companies that embrace
today's new technologies should emerge as the dominant and most profitable
companies in the economy. And while no guarantees can be given, their stocks
should recognize this over time. On the other hand, we believe the stock market
will continue to lose patience with those traditional Internet companies that
cannot transform themselves into growth companies with enough profits to support
their stock price.
We will invest in both users and manufacturers of technology when we believe
that their risk and reward ratios are favorable. At the same time, we believe
that the S&P 500 exposure in the Fund should provide some participation in the
stock market whether our particular investment style is in or out of favor.
Thank you for your investment in the Smith Barney Premium Total Return Fund. We
are looking forward to continuing to help you pursue your financial goals in the
new century.
Sincerely,
/s/ Ross S. Margolies
Ross S. Margolies
Investment Officer
August 1, 2000
7 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
-------------------------------------------------------------------------------
Historical Performance -- Class A Shares
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns/(1)/
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
6/30/00 $18.07 $17.92 $0.38 $ 0.92 $0.00 6.49%+
--------------------------------------------------------------------------------------------------------
12/31/99 21.38 18.07 0.49 3.86 0.00 5.37
--------------------------------------------------------------------------------------------------------
12/31/98 22.19 21.38 0.25 1.89 0.00 6.20
--------------------------------------------------------------------------------------------------------
12/31/97 19.14 22.19 0.38 1.25 0.00 25.19
--------------------------------------------------------------------------------------------------------
12/31/96++ 17.40 19.14 0.16 0.47 0.00 13.80+
--------------------------------------------------------------------------------------------------------
7/31/96 16.33 17.40 0.37 0.91 0.00 14.76
--------------------------------------------------------------------------------------------------------
7/31/95 15.69 16.33 0.43 0.14 0.71 12.92
--------------------------------------------------------------------------------------------------------
7/31/94 15.65 15.69 0.55 0.52 0.21 8.65
--------------------------------------------------------------------------------------------------------
Inception* -- 7/31/93 15.15 15.65 0.20 0.49 0.33 10.31+
========================================================================================================
Total $3.21 $10.45 $1.25
========================================================================================================
</TABLE>
-------------------------------------------------------------------------------
Historical Performance -- Class B Shares
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns/(1)/
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
6/30/00 $17.94 $17.79 $0.32 $ 0.92 $0.00 6.24%+
--------------------------------------------------------------------------------------------------------
12/31/99 21.26 17.94 0.39 3.86 0.00 4.85
--------------------------------------------------------------------------------------------------------
12/31/98 22.17 21.26 0.23 1.89 0.00 5.64
--------------------------------------------------------------------------------------------------------
12/31/97 19.14 22.17 0.29 1.25 0.00 24.55
--------------------------------------------------------------------------------------------------------
12/31/96++ 17.40 19.14 0.12 0.47 0.00 13.57+
--------------------------------------------------------------------------------------------------------
7/31/96 16.33 17.40 0.29 0.91 0.00 14.21
--------------------------------------------------------------------------------------------------------
7/31/95 15.69 16.33 0.34 0.14 0.72 12.36
--------------------------------------------------------------------------------------------------------
7/31/94 15.65 15.69 0.49 0.52 0.20 8.12
--------------------------------------------------------------------------------------------------------
7/31/93 15.21 15.65 0.19 0.63 0.44 11.68
--------------------------------------------------------------------------------------------------------
7/31/92 14.26 15.21 0.22 0.00 0.98 15.68
--------------------------------------------------------------------------------------------------------
7/31/91 13.30 14.26 0.24 0.00 0.96 17.53
--------------------------------------------------------------------------------------------------------
7/31/90 13.98 13.30 0.22 0.00 1.06 4.62
========================================================================================================
Total $3.34 $10.59 $4.36
========================================================================================================
</TABLE>
8 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
-------------------------------------------------------------------------------
Historical Performance -- Class L Shares
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns/(1)/
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
6/30/00 $17.97 $17.82 $0.30 $ 0.92 $0.00 6.08%+
--------------------------------------------------------------------------------------------------------
12/31/99 21.29 17.97 0.34 3.86 0.00 4.60
--------------------------------------------------------------------------------------------------------
Inception* -- 12/31/98 23.06 21.29 0.00 1.82 0.00 0.36+
========================================================================================================
Total $0.64 $ 6.60 $0.00
========================================================================================================
</TABLE>
-------------------------------------------------------------------------------
Historical Performance -- Class O Shares
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns/(1)/
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
6/30/00 $17.95 $17.81 $0.33 $ 0.92 $0.00 6.32%+
--------------------------------------------------------------------------------------------------------
12/31/99 21.28 17.95 0.40 3.86 0.00 4.83
--------------------------------------------------------------------------------------------------------
12/31/98 22.18 21.28 0.23 1.89 0.00 5.69
--------------------------------------------------------------------------------------------------------
12/31/97 19.15 22.18 0.30 1.25 0.00 24.60
--------------------------------------------------------------------------------------------------------
12/31/96++ 17.41 19.15 0.12 0.47 0.00 13.58+
--------------------------------------------------------------------------------------------------------
7/31/96 16.33 17.41 0.29 0.91 0.00 14.30
--------------------------------------------------------------------------------------------------------
7/31/95 15.69 16.33 0.35 0.14 0.71 12.36
--------------------------------------------------------------------------------------------------------
7/31/94 15.65 15.69 0.49 0.52 0.20 8.12
--------------------------------------------------------------------------------------------------------
Inception* -- 7/31/93 15.45 15.65 0.04 0.09 0.07 2.60+
========================================================================================================
Total $2.55 $10.05 $0.98
========================================================================================================
</TABLE>
-------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns/(1)/
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
6/30/00 $18.22 $18.10 $0.39 $ 0.92 $0.00 6.70%+
--------------------------------------------------------------------------------------------------------
12/31/99 21.49 18.22 0.53 3.86 0.00 5.72
--------------------------------------------------------------------------------------------------------
12/31/98 22.24 21.49 0.27 1.89 0.00 6.56
--------------------------------------------------------------------------------------------------------
12/31/97 19.17 22.24 0.44 1.25 0.00 25.61
--------------------------------------------------------------------------------------------------------
12/31/96++ 17.42 19.17 0.18 0.47 0.00 13.95+
--------------------------------------------------------------------------------------------------------
Inception* -- 7/31/96 17.57 17.42 0.21 0.46 0.00 2.93+
========================================================================================================
Total $2.02 $ 8.85 $0.00
========================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends quarterly and capital gains, if
any, annually.
9 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Average Annual Total Returns
--------------------------------------------------------------------------------
Without Sales Charges/(1)/
------------------------------------------------
Class A Class B Class L Class O Class Y
==============================================================================
Six Months Ended 6/30/00+ 6.49% 6.24% 6.08% 6.32% 6.70%
------------------------------------------------------------------------------
Year Ended 6/30/00 8.74 8.19 7.92 8.23 9.14
------------------------------------------------------------------------------
Five Years Ended 6/30/00 14.60 14.03 N/A 14.08 N/A
------------------------------------------------------------------------------
Ten Years Ended 6/30/00 N/A 13.25 N/A N/A N/A
------------------------------------------------------------------------------
Inception* through 6/30/00 13.51 12.96 5.40 12.99 13.88
==============================================================================
Without Sales Charges/(2)/
------------------------------------------------
Class A Class B Class L Class O Class Y
==============================================================================
Six Months Ended 6/30/00+ 1.18% 1.28% 4.05% 5.32% 6.70%
------------------------------------------------------------------------------
Year Ended 6/30/00 3.31 4.07 6.01 7.40 9.14
------------------------------------------------------------------------------
Five Years Ended 6/30/00 13.43 13.91 N/A 14.08 N/A
------------------------------------------------------------------------------
Ten Years Ended 6/30/00 N/A 13.25 N/A N/A N/A
------------------------------------------------------------------------------
Inception* through 6/30/00 12.75 12.96 4.89 12.99 13.88
==============================================================================
------------------------------------------------------------------------------
Cumulative Total Returns
------------------------------------------------------------------------------
Without Sales Charges/(1)/
------------------------------------------------------------------------------
Class A (Inception* through 6/30/00) 163.67%
==============================================================================
Class B (6/30/90 through 6/30/00) 247.03
------------------------------------------------------------------------------
Class L (Inception* through 6/30/00) 11.36
------------------------------------------------------------------------------
Class 0 (Inception* through 6/30/00) 137.52
------------------------------------------------------------------------------
Class Y (Inception* through 6/30/00) 77.10
==============================================================================
(1) Assumes reinvestment of all dividend and capital gain distributions, if any,
at net asset value and does not reflect the deduction of the applicable
sales charges with respect to Class A and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B, L and O
shares.
(2) Assumes reinvestment of all dividend and capital gain distributions, if any,
at net asset value. In addition, Class A and L shares reflect the deduction
of the maximum initial sales charges of 5.00% and 1.00%, respectively; Class
B shares reflect the deduction of a 5.00% CDSC, which applies if shares are
redeemed within one year from purchase and declines thereafter by 1.00% per
year until no CDSC occurs. Class L and O shares also reflect the deduction
of a 1.00% CDSC, which applies if shares are redeemed within the first year
of purchase.
++ For the period from August 1, 1996 to December 31, 1996, which reflects a
change in the fiscal year end of the Fund.
+ Total return is not annualized, as it may not be representative of the total
return for the year.
* Inception dates for Class A, B, L, O and Y shares are November 6, 1992,
September 16, 1985, June 15, 1998, June 1, 1993 and February 7, 1996,
respectively.
10 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Smith Barney Premium Total Return Fund at a Glance (unaudited)
--------------------------------------------------------------------------------
Growth of $10,000 Invested in Class B Shares of the
Smith Barney Premium Total Return Fund vs. Standard & Poor's 500 Index+
--------------------------------------------------------------------------------
June 1990 -- June 2000
[GRAPH APPEARS HERE]
Smith Barney Premium
Date Total Return Fund S&P 500
------- -------------------- ----------------
6/30/90 10,000 10,000
12/90 9,281 9,400
12/91 12,159 12,258
12/92 13,841 13,191
12/93 15,523 14,517
12/94 16,083 14,708
12/95 19,716 20,229
12/96 23,677 23,317
12/97 29,491 31,095
12/98 31,154 40,031
12/99 32,665 48,451
6/30/00 34,703 48,243
+ Hypothetical illustration of $10,000 invested in Class B shares on June 30,
1990, assuming reinvestment of dividends and capital gains, if any, at net
asset value through June 30, 2000, compared to the Standard & Poor's 500
Index. The index is composed of 500 widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange and over-the-counter
market. The index is unmanaged and is not subject to the same management
and trading expenses as a mutual fund. The performance of the Fund's other
classes may be greater or less than the Class B shares' performance
indicated on this chart, depending on whether greater or lesser sales
charges and fees were incurred by shareholders investing in the other
classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
11 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
=================================================================================================================================
<S> <C> <C>
COMMON STOCK -- 47.1%
Basic Materials -- 0.3%
400,000 Crown Cork & Seal Co., Inc. $ 6,000,000
---------------------------------------------------------------------------------------------------------------------------------
Capital Goods -- 0.3%
100,000 Illinois Tool Works Inc. 5,700,000
---------------------------------------------------------------------------------------------------------------------------------
Communications -- 6.3%
225,000 Dobson Communications Corp., Class A Shares (a) 4,331,250
585,000 GTE Corp. (b)++ 36,416,250
200,000 ICG Communications, Inc.(a) 4,412,500
150,000 Rogers Cantel Mobile Communications Inc., Class B Shares (a) 5,043,750
600,000 SBC Communications Inc. 25,950,000
100,000 Tele Danmark A/S, ADR (c) 3,400,000
87,500 Telephone & Data Systems, Inc. 8,771,875
100,000 UnitedGlobalCom Inc., Class A Shares (a)(c) 4,675,000
878,000 WorldCom, Inc.(a) 40,278,250
---------------------------------------------------------------------------------------------------------------------------------
133,278,875
---------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals -- 4.1%
1,250,000 Costco Wholesale Corp. (a)(b) 41,250,000
1,250,000 Federated Department Stores, Inc. (a)(b)(c) 42,187,500
165,000 PRIMEDIA Inc. (a)(c) 3,753,750
---------------------------------------------------------------------------------------------------------------------------------
87,191,250
---------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals -- 10.9%
200,000 Alberto-Culver Co., Class A Shares 5,250,000
200,000 AT&T Corp. - Liberty Media Group, Class A Shares (a) 4,850,000
200,000 Coca-Cola Enterprises Inc. (c) 3,262,500
1,000,000 Delhaize America, Inc., Class A Shares (c) 17,687,500
140,000 Hearst-Argyle Television, Inc. (a) 2,730,000
1,600,000 Hormel Foods Corp. (c) 26,900,000
2,543,100 Nabisco Group Holdings Corp. 65,961,656
120,000 The News Corp. Ltd., ADR 5,700,000
800,000 PepsiCo, Inc. 35,550,000
200,000 Philip Morris Co. Inc. 5,312,500
1,250,000 Safeway Inc. (a)(b)(c) 56,406,250
270,000 Sinclair Broadcast Group, Inc., Class A Shares (a) 2,970,000
50,000 Young Broadcasting Inc., Class A Shares (a) 1,284,375
---------------------------------------------------------------------------------------------------------------------------------
233,864,781
---------------------------------------------------------------------------------------------------------------------------------
Energy -- 0.8%
300,000 Devon Energy Corp. (c) 16,856,250
---------------------------------------------------------------------------------------------------------------------------------
Financials -- 3.9%
275,667 Altiva Financial Corp. (a) 2,757
500,000 The Bank of New York Co., Inc. 23,250,000
100,000 Financial Security Assurance Holdings Ltd. 7,587,500
300,000 Freddie Mac 12,150,000
350,000 Golden State Bancorp Inc. (a)(c) 6,300,000
400,000 North Fork Bancorporation, Inc. 6,050,000
350,000 SLM Holding Corp. 13,103,125
100,000 Transatlantic Holdings, Inc. 8,375,000
125,000 XL Capital Ltd., Class A Shares 6,765,625
---------------------------------------------------------------------------------------------------------------------------------
83,584,007
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30,2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
=================================================================================================================================
<S> <C> <C>
Healthcare -- 4.1%
40,000 Beckman Coulter, Inc. $ 2,335,000
650,000 Bristol-Myers Squibb Co. 37,862,500
65,000 Health Management Associates, Inc., Class A Shares (a) 849,063
180,000 Merck & Co., Inc. 13,792,500
160,000 Novartis AG, ADR (c) 6,400,000
49,000 Nycomed Amersham PLC, ADR, Class B Shares (c) 2,401,000
450,000 Schering-Plough Corp. 22,725,000
---------------------------------------------------------------------------------------------------------------------------------
86,365,063
---------------------------------------------------------------------------------------------------------------------------------
Real Estate Investment Trust -- 5.6%
260,000 AMB Property Corp. 5,931,250
125,000 Apartment Investment & Management Co., Class A Shares 5,406,250
221,000 Avalonbay Communities, Inc. (c) 9,226,750
225,000 Boston Properties, Inc. (c) 8,690,625
270,000 BRE Properties, Inc., Class A Shares 7,796,250
75,000 Cabot Industrial Trust 1,476,562
215,000 Charles E. Smith Residential Realty, Inc. 8,170,000
110,000 Cousins Properties, Inc. 4,235,000
425,000 Equity Office Properties Trust (c) 11,714,062
165,000 Equity Residential Properties Trust 7,590,000
150,000 Kimco Realty Corp. 6,150,000
175,000 The Macerich Co. 3,860,938
60,000 Pacific Gulf Properties, Inc. 1,503,750
75,000 Pan Pacific Retail Properties, Inc. 1,509,375
345,000 ProLogis Trust (c) 7,352,813
135,000 PS Business Parks, Inc., Class A Shares 3,240,000
190,000 Reckson Associates Realty Corp. 4,512,500
250,000 Regency Realty Corp. 5,937,500
315,000 Simon Property Group, Inc. 6,989,063
170,000 Spieker Properties, Inc. 7,820,000
---------------------------------------------------------------------------------------------------------------------------------
119,112,688
---------------------------------------------------------------------------------------------------------------------------------
Technology -- 10.4%
34,400 ADC Telecommunications, Inc. (a) 2,885,300
32,000 Advanced Fibre Communications, Inc. (a) 1,450,000
55,000 Advanced Micro Devices Inc. (a)(c) 4,248,750
62,476 America Online, Inc. (a) 3,295,609
23,500 Applied Materials, Inc. (a) 2,129,687
12,900 Applied Micro Circuits Corp. (a) 1,273,875
83,000 ASM International N.V. (a) 2,199,500
20,800 Braun Consulting, Inc. (a) 439,400
60,000 Celeritek, Inc. (a) 2,448,750
46,000 CIENA Corp. (a) 7,667,625
277,000 Cisco Systems, Inc. (a) 17,606,812
22,800 CMGI Inc. (a)(c) 1,044,525
250,000 Compaq Computer Corp. 6,390,625
41,700 Comverse Technology, Inc. (a) 3,878,100
49,205 Corning Inc. (c) 13,279,199
68,000 Cypress Semiconductor Corp. (a)(c) 2,873,000
116,500 Dell Computer Corp. (a) 5,744,906
85,000 Digital Microwave Corp. (a) 3,240,625
76,000 EMC Corp. (a) 5,847,250
</TABLE>
See Notes to Financial Statements.
13 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
===============================================================================================
<S> <C> <C>
Technology -- 10.4% (continued)
3,900 E-Tek Dynamics, Inc. (a) $ 1,028,869
35,000 Flextronics International Ltd. (a) 2,404,062
8,800 Hewlett-Packard Co. 1,098,900
50,000 IMS Health Inc. 900,000
47,000 Inet Technologies, Inc. (a) 2,549,750
39,500 Intel Corp. 5,280,656
48,000 International Business Machines Corp. 5,259,000
101,000 Lucent Technologies Inc. 5,984,250
58,000 MarchFirst, Inc. (a) 1,058,500
25,000 Mercury Interactive Corp. (a) 2,418,750
46,000 Micron Technology, Inc. 4,050,875
31,600 Microsoft Corp. (a) 2,528,000
95,000 National Semiconductor Corp. (a) 5,391,250
20,000 Network Appliance, Inc. (a) 1,610,000
73,000 Network Associates, Inc. (a) 1,487,375
21,000 Newport Corp. 2,254,875
190,000 NHC Communications Inc. (a)(c) 1,481,069
60,000 Nortel Networks Corp. 4,095,000
74,500 Oracle Corp. (a) 6,262,656
400,000 Seagate Technology, Inc. (a) 22,000,000
37,000 Siebel Systems, Inc. (a) 6,051,813
57,500 Sun Microsystems, Inc. (a) 5,228,906
10,000 Teradyne, Inc. (a) 735,000
32,000 Texas Instruments Inc. 2,198,000
631,000 3Com Corp. (a) 36,361,375
13,500 TranSwitch Corp. (a) 1,042,031
25,000 Xilinx, Inc. (a) 2,064,063
-----------------------------------------------------------------------------------------------
220,768,563
-----------------------------------------------------------------------------------------------
Utilities -- 0.3%
300,000 FirstEnergy Corp. (c) 7,012,500
-----------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $731,296,045) 999,733,977
===============================================================================================
CONVERTIBLE PREFERRED STOCK -- 4.7%
Basic Materials -- 0.7%
200,000 International Paper Capital Trust, 5.250% due 7/20/25 7,525,000
170,000 LTV Corp., 8.250% (d) 7,182,500
30,000 LTV Corp., Series A, 8.250% 1,267,500
-----------------------------------------------------------------------------------------------
15,975,000
-----------------------------------------------------------------------------------------------
Capital Goods -- 0.3%
300,000 Ingersoll-Rand Co., 6.750% due 5/16/01 6,112,500
-----------------------------------------------------------------------------------------------
Communications -- 0.4%
100,000 Sinclair Broadcast Group, Inc., 6.000% 3,100,000
100,000 UnitedGlobalCom, Series D, 7.000% 4,450,000
-----------------------------------------------------------------------------------------------
7,550,000
-----------------------------------------------------------------------------------------------
Consumer Cyclicals -- 0.5%
250,000 Wendy's Financing I, Series A, 5.000% due 9/15/26 11,250,000
-----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
14 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
==================================================================================================================
<S> <C> <C>
Energy -- 1.8%
200,000 Kerr-McGee Corp., 5.500% due 8/2/04 $ 9,950,000
200,000 Nuevo Financing I, Series A, 5.750% due 12/15/26 4,975,000
50,000 Pogo Trust I, Series A, 6.500% due 6/1/29 2,600,000
1,000,000 Tesoro Petroleum Corp., 7.250% due 7/1/01 10,875,000
200,000 Tosco Financing Trust, 5.750% due 12/15/26 9,550,000
------------------------------------------------------------------------------------------------------------------
37,950,000
------------------------------------------------------------------------------------------------------------------
Real Estate Investment Trust -- 1.0%
350,000 General Growth Properties, 7.250% due 7/15/08 7,612,500
130,000 Reckson Associates Realty Corp., Series A, 7.625% 2,884,375
215,000 SL Green Realty Corp., 8.000% due 4/15/08 6,087,187
100,000 Vornado Realty Trust, Series A, 6.500% 5,181,250
------------------------------------------------------------------------------------------------------------------
21,765,312
------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCK
(Cost -- $112,761,947) 100,602,812
==================================================================================================================
PREFERRED STOCK -- 0.4%
Communications -- 0.3%
55,828 CSC Holdings Inc., Series M, 11.125% due 4/1/08 5,889,854
------------------------------------------------------------------------------------------------------------------
Energy -- 0.1%
75,300 Suncor Energy, Inc., 9.125% due 3/31/48 (a) 1,797,787
------------------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost -- $7,404,982) 7,687,641
==================================================================================================================
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
==================================================================================================================
<S> <C> <C> <C>
CORPORATE BONDS -- 26.5%
Basic Materials -- 3.3%
$ 9,455,000 BB AK Steel Corp., Company Gtd., 7.875% due 2/15/09 8,438,588
7,000,000 B Avecia Group PLC, Company Gtd., 11.000% due 7/1/09 6,895,000
4,500,000 A- BHP Finance, Notes, 5.625% due 11/1/00 4,471,875
Fort James Corp., Notes:
200,000 BBB 6.234% due 3/15/01 198,000
3,000,000 BBB 6.700% due 11/15/03 2,898,750
4,750,000 B+ Huntsman ICI Chemicals, Company Gtd., 10.125% due 7/1/09 4,809,375
4,000,000 BBB+ ICI Wilmington, Company Gtd., 6.750% due 9/15/02 3,905,000
2,000,000 BBB+ ICI Wilmington, Notes, 7.500% due 1/15/02 1,987,500
10,000,000 BB Lyondell Chemical Co., Secured, Series B, 9.875% due 5/1/07 9,900,000
10,000,000 BB Norampac Inc., Sr. Notes, 9.500% due 2/1/08 9,700,000
2,500,000 B P & L Coal Holdings Corp., Company Gtd., Series B, 9.625% due 5/15/08 2,331,250
5,000,000 B Polymer Group Inc., Company Gtd., Series B, 8.750% due 3/1/08 4,175,000
10,000,000 CCC+ Renco Metals Inc., Sr. Notes, 11.500% due 7/1/03 4,050,000
7,000,000 BBB+ Temple-Inland, Debentures, 9.000% due 5/1/01 7,078,750
------------------------------------------------------------------------------------------------------------------
70,839,088
------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
15 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
==================================================================================================================
<S> <C> <C> <C>
Basic Industries -- 0.2%
Sterling Chemicals Inc., Sr. Sub. Notes:
$ 2,150,000 B Series A, 11.250% due 4/1/07 $ 1,709,250
2,500,000 B 11.750% due 8/15/06 (c) 2,062,500
------------------------------------------------------------------------------------------------------------------
3,771,750
------------------------------------------------------------------------------------------------------------------
Capital Goods -- 2.4%
10,000,000 B+ Allied Waste North America, Company Gtd., Series B, 10.000% due 8/1/09 8,400,000
American Standard, Inc.:
5,000,000 Ba3* Company Gtd., 8.250% due 6/1/09 4,812,500
3,921,000 BB- Debentures, 9.250% due 12/1/16 3,935,704
5,000,000 B BE Aerospace Inc., Sr. Sub. Notes, Series B, 9.875% due 2/1/06 4,775,000
2,000,000 B- Blount Inc., Company Gtd., 13.000% due 8/1/09 (c) 2,050,000
5,000,000 B+ Newport News Shipbuilding, Sr. Sub. Notes, 9.250% due 12/1/06 5,025,000
7,500,000 B- Nortek Inc., Sr. Sub. Notes, 9.875% due 3/1/04 (c) 7,162,500
9,000,000 BB Sequa Corp., Sr. Notes, 9.000% due 8/1/09 8,685,000
7,000,000 BBB Waste Management, Inc., Company Gtd., 6.000% due 5/15/01 6,816,250
------------------------------------------------------------------------------------------------------------------
51,661,954
------------------------------------------------------------------------------------------------------------------
Communications -- 4.6%
7,500,000 B+ Adelphia Communications, Sr. Notes, Series B, 7.750% due 5/1/09 6,337,500
10,000,000 B+ Charter Communications Holdings LLC, Sr. Disc. Notes,
zero coupon until 1/15/05, thereafter 11.750% due 1/15/10 5,737,500
7,275,000 BB- CSC Holdings Inc., Sr. Sub. Notes, 9.875% due 5/15/06 (d) 7,456,875
5,000,000 NR Dobson Communications Corp., Sr. Notes, 10.875% due 7/1/10 (c) 5,050,000
6,000,000 B+ Energis PLC, Sr. Notes, 9.750% due 6/15/09 5,910,000
10,000,000 BBB Metronet Communications, Sr. Disc. Notes,
zero coupon until 6/15/03, thereafter 9.950% due 6/15/08 8,150,000
11,750,000 B Nextel Communications, Sr. Disc. Notes,
zero coupon until 9/15/02, thereafter 10.650% due 9/15/07 9,282,500
15,000,000 B- NTL Inc., Sr. Notes, Series B, zero coupon until 4/1/03,
thereafter 9.750% due 4/1/08 9,412,500
5,000,000 BBB Orange PLC, Sr. Notes, 8.750% due 6/1/06 5,162,500
7,000,000 B+ Price Communications Wireless, Inc., Company Gtd., Series B,
9.125% due 12/15/06 7,105,000
2,000,000 BB+ Rogers Cantel Mobile Communications, Debentures, 9.375% due 6/1/08 2,070,000
10,000,000 B+ TeleWest Communications PLC, Debentures,
zero coupon until 10/1/00, thereafter 11.000% due 10/1/07 9,525,000
7,500,000 B+ United Pan-Europe Communications NV, Sr. Notes, Series B,
10.875% due 8/1/09 6,562,500
10,000,000 CCC+ U.S. Unwired, Inc., Company Gtd., Series B,
zero coupon until 11/1/04, thereafter 13.375% due 11/1/09 5,475,000
5,500,000 A- WorldCom Inc., Notes, 6.125% due 4/15/02 5,376,250
------------------------------------------------------------------------------------------------------------------
98,613,125
------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals -- 2.6%
4,000,000 A+ DaimlerChrysler North America Holding Co., Company Gtd., 7.125% due 3/1/02 4,000,000
4,235,000 BBB+ Federated Department Stores, Sr. Notes, 8.500% due 6/15/03 4,309,112
2,000,000 BBB+ Goodyear Tire & Rubber, Notes, 8.125% due 3/15/03 2,022,500
10,000,000 BB HMH Properties, Inc., Sr. Notes, Series C, 8.450% due 12/1/08 9,312,500
5,000,000 B- JL French Auto Casting, Company Gtd., Series B, 11.500% due 6/1/09 4,575,000
5,000,000 BB+ Lear Corp., Company Gtd., Series B, 7.960% due 5/15/05 4,706,250
5,000,000 BB+ Navistar International Corp., Sr. Sub. Notes, Series B, 8.000% due 2/1/08 4,612,500
</TABLE>
See Notes to Financial Statements.
16 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
==================================================================================================================
<S> <C> <C> <C>
Consumer Cyclicals -- 2.6% (continued)
$ 5,000,000 A- Sears Roebuck Acceptance, Notes, 6.900% due 8/1/03 $ 4,887,500
5,810,000 BB+ Tanger Properties L.P., Company Gtd., 8.750% due 3/11/01 5,730,112
5,000,000 BBB TRW Inc., Notes, 6.450% due 6/15/01 4,956,250
8,500,000 BB WestPoint Stevens, Inc., Sr. Notes, 7.875% due 6/15/05 7,140,000
------------------------------------------------------------------------------------------------------------------
56,251,724
------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals -- 4.1%
7,000,000 BBB- A.H. Belo Corp., Sr. Notes, 6.875% due 6/1/02 6,825,000
10,000,000 CCC AirGate PCS Inc., Sr. Sub. Notes, zero coupon until 10/1/04,
thereafter 13.500% due 10/1/09 5,700,000
5,000,000 B- Ameriking Inc., Sr. Notes, 10.750% due 12/1/06 4,231,250
7,500,000 B+ Aztar Corp., Sr. Sub. Notes, 8.875% due 5/15/07 7,106,250
4,955,000 BBB+ ConAgra Inc., Sr. Notes, 5.500% due 10/15/02 4,756,800
5,000,000 B- Duane Reade Inc., Company Gtd., 9.250% due 2/15/08 4,450,000
5,500,000 BB+ Harrah's Operating Co., Inc., Company Gtd., 7.875% due 12/15/05 5,183,750
10,000,000 B+ Horseshoe Gaming Holdings, Company Gtd., Series B, 8.625% due 5/15/09 9,475,000
5,000,000 B+ Mail-Well I Corp., Company Gtd., Series B, 8.750% due 12/15/08 4,225,000
5,000,000 B National Wine & Spirits, Company Gtd., 10.125% due 1/15/09 4,875,000
5,000,000 BB+ Park Place Entertainment Inc., Sr. Sub. Notes, 7.875% due 12/15/05 4,712,500
5,000,000 B- Premier International Foods Corp., Sr. Notes, 12.000% due 9/1/09 (d) 4,500,000
6,000,000 CCC+ Revlon Consumer Products, Sr. Notes, 8.125% due 2/1/06 4,290,000
6,000,000 BB+ Rogers Cable Systems Inc., Sr. Notes, Series B, 10.000% due 3/15/05 6,165,000
7,000,000 BBB- Seagram & Sons, Company Gtd., 6.400% due 12/15/03 6,737,500
4,000,000 BBB Time Warner Inc., Pass thru Certificates, 6.100% due 12/30/01 (d) 3,930,000
------------------------------------------------------------------------------------------------------------------
87,163,050
------------------------------------------------------------------------------------------------------------------
Consumer Services -- 1.5%
625,000 BBB Cendant Corp., Notes, 7.750% due 12/1/03 603,906
10,000,000 BB- Hollinger International Publishing, Company Gtd., 9.250% due 3/15/07 9,900,000
10,000,000 BB- K-III Communication Corp., Company Gtd., Series B, 8.500% due 2/1/06 9,500,000
3,000,000 B Pierce Leahy Corp., Sr. Sub. Notes, 11.125% due 7/15/06 3,112,500
4,000,000 BB+ Service Corp. International, Notes, 6.750% due 6/1/01 (c) 3,460,000
Sun Media Corp., Sr. Sub. Notes:
3,500,000 BB- 9.500% due 2/15/07 3,412,500
1,500,000 BB- 9.500% due 5/15/07 1,462,500
------------------------------------------------------------------------------------------------------------------
31,451,406
------------------------------------------------------------------------------------------------------------------
Energy -- 1.6%
3,000,000 BBB+ Enron Corp., Debentures, 9.125% due 4/1/03 3,108,750
3,050,000 BBB- Gulf Canada Resources, Sr. Notes, 8.375% due 11/15/05 3,034,750
5,750,000 BBB Houston Industries Inc., Debentures, 9.375% due 6/1/01 5,850,625
10,000,000 BB+ Louis Dreyfus Natural Gas, Sr. Sub. Notes, 9.250% due 6/15/04 10,112,500
6,000,000 A Virginia Electric & Power Co., First Mortgage, Series E, 7.375% due 7/1/02 6,015,000
3,500,000 BB- Western Gas Resources, Inc., Company Gtd., 10.000% due 6/15/09 3,631,250
------------------------------------------------------------------------------------------------------------------
31,752,875
------------------------------------------------------------------------------------------------------------------
Financial -- 3.8%
5,500,000 A Aetna Services, Inc., Company Gtd., 6.750% due 8/15/01 5,451,875
5,000,000 A+ Associates Corp. North America, Sr. Notes, 5.750% due 11/1/03 4,725,000
6,150,000 A+ AT&T Capital Group, Company Gtd., Series F, 6.750% due 2/4/02 6,096,188
500,000 A The Bank of New York Co., Inc., Sub. Notes, 7.625% due 7/15/02 501,875
2,000,000 A Bank One Corp., Notes, 6.400% due 8/1/02 1,965,000
4,800,000 A Bear Stearns Co. Inc., Sr. Notes, 6.450% due 8/1/02 4,692,000
</TABLE>
See Notes to Financial Statements.
17 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
==================================================================================================================
<S> <C> <C> <C>
Financial -- 3.8% (continued)
$ 7,000,000 BBB- Capital One Bank, Sr. Notes, 6.150% due 6/1/01 $ 6,930,000
7,000,000 BBB+ Comdisco Inc., Notes, 6.130% due 8/1/01 6,842,500
Contifinancial Corp., Sr. Notes:
1,960,000 D 7.500% due 3/15/02 (e) 245,000
1,750,000 D 8.125% due 4/1/08 (c)(e) 218,750
5,275,000 D 8.375% due 8/15/03 (c)(e) 659,375
4,000,000 BBB- Dime Bancorp Inc., Sr. Notes, 7.000% due 7/25/01 3,965,000
5,000,000 BBB+ Gatx Capital Corp., Notes, 6.500% due 11/1/00 4,984,500
700,000 A General Motors Acceptance Company, Sr. Unsubordinated, 6.750% due 2/7/02 693,875
2,000,000 A- Heller Financial Inc., Notes, Series I, 6.500% due 7/22/02 1,962,500
6,000,000 BBB+ IKON Capital Inc., Notes, Series C, 6.730% due 6/15/01 5,895,000
1,000,000 A Lehman Brothers Holdings, Inc., Notes, Series E, 6.625% due 12/27/02 973,750
2,650,000 AA- Morgan Stanley Dean Witter & Co., Notes, 7.750% due 6/15/05 2,666,562
3,000,000 A- PNC Funding Corp., Company Gtd., 6.950% due 9/1/02 2,973,750
5,000,000 BB+ Sovereign Bancorp., Sr. Notes, 10.500% due 11/15/06 4,962,500
7,000,000 A- Textron Financial Corp., Notes, Series D, 7.180% due 10/15/02 (d) 6,965,000
6,900,000 A Transamerica Finance Corp., Notes, 7.250% due 8/15/02 6,882,750
------------------------------------------------------------------------------------------------------------------
81,252,750
------------------------------------------------------------------------------------------------------------------
Healthcare -- 0.7%
3,040,000 B+ Fresenius Medical Capital Trust I, Company Gtd., 9.000% due 12/1/06 2,895,600
5,660,000 B+ Fresenius Medical Capital Trust II, Company Gtd., 7.875% due 2/1/08 5,051,550
7,250,000 BB+ Tenet Healthcare Corp., Sr. Notes, 9.250% due 9/1/10 (d) 7,340,625
------------------------------------------------------------------------------------------------------------------
15,287,775
------------------------------------------------------------------------------------------------------------------
Transportation -- 0.9%
7,000,000 BBB Royal Caribbean Cruises, Sr. Notes, 7.125% due 9/18/02 6,746,250
7,000,000 BBB- Union Pacific Corp., Notes, 5.780% due 10/15/01 6,868,750
5,000,000 CCC+ U.S. Airways Inc., Sr. Notes, 9.625% due 2/1/01 4,981,250
------------------------------------------------------------------------------------------------------------------
18,596,250
------------------------------------------------------------------------------------------------------------------
Utilities -- 0.8%
Columbia Energy Group,Notes:
5,000,000 BBB+ Series A, 6.390% due 11/28/00 4,987,500
771,000 BBB+ Series B, 6.610% due 11/28/02 759,435
7,000,000 BBB+ Niagara Mohawk Power, First Mortgage, 6.875% due 3/1/01 6,965,000
4,000,000 BBB+ Texas Utilities, First Mortgage, 7.375% due 8/1/01 4,005,000
------------------------------------------------------------------------------------------------------------------
16,716,935
------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost -- $591,290,468) 563,358,682
==================================================================================================================
CONVERTIBLE BONDS -- 8.7%
Basic Industries -- 0.3%
7,000,000 BB+ INCO Ltd., 7.750% due 3/15/16 5,915,000
------------------------------------------------------------------------------------------------------------------
Capital Goods -- 0.2%
5,000,000 BB- Mark IV Industries, 4.750% due 11/1/04 4,643,750
------------------------------------------------------------------------------------------------------------------
Communications -- 0.5%
2,500,000 A+ Bell Atlantic Financial Services Corp., 4.250% due 9/15/05 (d)++ 3,040,625
10,000,000 CCC+ NTL Inc., 5.750% due 12/15/09 (d) 7,987,500
------------------------------------------------------------------------------------------------------------------
11,028,125
------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
==================================================================================================================
<S> <C> <C> <C>
Consumer Cyclicals -- 0.4%
$ 2,500,000 CCC+ Amazon.Com Inc., 4.750% due 2/1/09 $ 1,584,375
Sunbeam Corp.:
30,000,000 Caa2* Zero coupon due 3/25/18 (d)(e) 4,875,000
10,000,000 Caa2* Zero coupon due 3/25/18 (e) 1,625,000
------------------------------------------------------------------------------------------------------------------
8,084,375
------------------------------------------------------------------------------------------------------------------
Energy -- 1.5%
5,000,000 BBB+ Devon Energy Corp., zero coupon due 6/27/20 (d) 2,231,250
6,000,000 A- Diamond Offshore, 3.750% due 2/15/07 6,255,000
3,000,000 B- Friede Goldman Halter Inc., 4.500% due 9/15/04 1,818,750
10,000,000 BBB- Kerr-McGee Corp., 7.500% due 5/15/14 9,637,500
1,000,000 Caa1* Lomak Petroleum, 6.000% due 2/1/07 600,000
7,500,000 BB- Pogo Producing Co., 5.500% due 6/15/06 6,290,625
5,000,000 BBB- SEACOR Holdings Inc., 5.375% due 11/15/06 5,075,000
------------------------------------------------------------------------------------------------------------------
31,908,125
------------------------------------------------------------------------------------------------------------------
Healthcare -- 1.0%
5,000,000 NR Affymetrix Inc., 4.750% due 2/15/07 (d) 3,912,500
2,500,000 B Alpharma Inc., 3.000% due 6/1/06 (d) 4,915,625
2,500,000 NR Invitrogen Corp., 5.500% due 3/1/07 (d) 2,653,125
7,500,000 NR Vertex Pharmaceuticals Inc., 5.000% due 3/14/07 (d) 10,753,125
------------------------------------------------------------------------------------------------------------------
22,234,375
------------------------------------------------------------------------------------------------------------------
Real Estate Investment Trust -- 0.2%
3,445,000 BBB Health Care Properties, 6.000% due 11/8/00 (d) 3,302,894
700,000 B1* The Macerich Co., 7.250% due 12/15/02 (c)(d) 624,750
------------------------------------------------------------------------------------------------------------------
3,927,644
------------------------------------------------------------------------------------------------------------------
Technology -- 4.6%
4,000,000 B+ Adaptec Inc., 4.750% due 2/1/04 3,375,000
5,000,000 CCC+ Advanced Micro Devices Inc., 6.000% due 5/15/05 (c) 10,718,750
4,000,000 NR Arbor Software, 4.500% due 3/15/05 3,520,000
2,500,000 B2* ASM Lithography Holdings N.V., 4.250% due 11/30/04 (d) 3,343,750
30,000,000 B- Aspect Telecommunications, zero coupon due 8/10/18 (b) 12,300,000
2,500,000 B Cypress Semiconductor, 6.000% due 10/1/02 (b) 4,496,875
7,500,000 A DSC Communications Corp., 7.000% due 8/1/04 8,578,125
3,000,000 B- Integrated Process Equipment, 6.250% due 9/15/04 2,373,750
7,500,000 B- Juniper Networks Inc., 4.750% due 3/15/07 8,325,000
25,000,000 NR Network Associates, zero coupon due 2/13/18 8,906,250
12,500,000 B+ Quantum Corp., 7.000% due 8/1/04 9,882,874
5,000,000 NR Redback Networks Inc., 5.000% due 4/1/07 (d) 5,675,000
5,000,000 CCC+ TriQuint Semiconductor Inc., 4.000% due 3/1/07 (c)(d) 4,568,750
2,500,000 B- Wind River System, 5.000% due 8/1/02 (b) 3,171,875
15,000,000 A- Xerox Corp., 0.570% due 4/21/18 7,950,000
------------------------------------------------------------------------------------------------------------------
97,185,999
------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS
(Cost -- $156,426,801) 184,927,393
==================================================================================================================
</TABLE>
See Notes to Financial Statements.
19 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
==================================================================================================================
<S> <C> <C> <C>
ASSET-BACKED SECURITIES -- 9.7%
$ 2,429,023 BBB Coast-Plymouth Tax Lien Capital, LLC, Series 1999-A,
Class B, Floating Rate 8.810% due 11/15/04 $ 2,407,769
2,000,000 BBB- Contimortgage Home Equity Loan Trust, Series 1999-3,
Class B, Floating Rate 7.000% due 12/25/29 1,279,688
Countrywide Asset-Backed Certificates, Series 1999-2:
2,000,000 BBB Class BV, Floating Rate 9.251% due 5/25/29 2,015,000
3,000,000 AA Class MV1, Floating Rate 7.091% due 5/25/29 2,988,750
4,025,000 A Class MV2, Floating Rate 7.551% due 5/25/29 4,004,875
Countrywide Asset-Backed Certificates, Series 1999-3:
1,000,000 Baa2* Class BV, Floating Rate 9.751% due 10/25/30 996,563
4,000,000 A2* Class MV2, Floating Rate 7.851% due 10/25/30 3,986,250
300,000 Baa3* CS First Boston Mortgage Securities Corp., Series 1998-FL1A,
Class F, Floating Rate 7.491% due 1/10/01 297,938
5,000,000 NR Diversified Asset Securitization Holdings, Series 1,
Class A1, Floating Rate 6.967% due 12/30/34 4,993,750
8,500,000 Baa1* Donaldson, Lufkin & Jenrette Commercial Mortgage Corp.,
Series 1998-ST1A, Class B1, Floating Rate 7.568% due 12/8/00 8,482,734
3,798,317 AAA Equicon Home Equity Loan Trust, Series 1992-7,
Class B, Floating Rate 7.700% due 9/18/13 3,765,082
6,000,000 A First Dominion Funding I, Series 1A,
Class B, Floating Rate 6.841% due 7/10/13 5,655,000
5,000,000 Baa2* First Dominion Funding II, Series 1A,
Class C, Floating Rate 8.760% due 4/25/14 4,975,000
15,000,000 AA Fortress CBO Investments I, Limited, Series 1A,
Class B, Floating Rate 7.451% due 7/25/38 15,053,906
3,250,000 A- GMPT Commercial Mortgage Backed Securities, Series 1999-C1A,
Class E, Floating Rate 7.951% due 8/15/04 3,250,000
5,000,000 NR Guaranteed Residential Securities Trust, Series 1999-A,
Class F, Floating Rate 6.951% due 1/28/30 4,993,750
7,000,000 A- Highland Legacy Limited CLO, Series 1A,
Class B2, Floating Rate 7.891% due 6/1/11 6,997,813
12,000,000 NR Magnetite CBO, Series 1A,
Floating Rate 7.170% due 8/25/12 12,000,000
2,608,000 BBB Merrill Lynch Mortgage Investors, Inc., Series 1999-NC1,
Class B, Floating Rate 9.551% due 6/20/30 2,634,080
8,500,000 NR Nomura Depositor Trust, Series 1998-ST1A,
Class A3A, Floating Rate 7.201% due 1/15/03 8,381,797
1,050,006 NR Paragon Residual Interest, Series 1999-R,
Class A, Floating Rate 9.474% due 5/15/05 1,034,256
2,500,000 A- Pennant CBO Limited, Series 1A,
Class B, Floating Rate 7.856% due 3/14/11 2,519,922
4,000,000 A3* Sabre Funding Ltd., Series 1A,
Class A3, Floating Rate 7.479% due 12/31/40 3,956,252
Salomon Brothers Mortgage Securities VII:
11,703,000 BBB Series 1999-AQ1, Class M3, Floating Rate 9.651% due 4/25/29 11,761,515
10,968,000 A2* Series 1999-NC3, Class M2, Floating Rate 7.841% due 7/25/29 11,029,695
7,500,000 Baa2* Series 1999-NC4, Class M3, Floating Rate 9.443% due 9/25/29 7,584,375
Sasco Floating Rate Commercial Mortgage:
5,864,719 A2* Series 1998-C3A, Class D, Floating Rate 7.401% due 6/25/01 5,818,901
949,246 A3* Series 1999-C3, Class G, Floating Rate 8.101% due 3/20/02 952,805
</TABLE>
See Notes to Financial Statements.
20 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
==================================================================================================================
<S> <C> <C> <C>
ASSET-BACKED SECURITIES -- 9.7% (continued)
Saxon Asset Securities Trust:
$ 5,000,000 Aa2* Series 1998-3, Class MV1, Floating Rate 7.151% due 4/25/28 $ 4,987,500
4,000,000 Aa2* Series 1999-2, Class MV1, Floating Rate 7.101% due 5/25/29 3,978,125
530,510 Baa2* Series 1999-3, Class BF1A, Floating Rate 8.640% due 7/25/02 528,521
2,156,869 Baa2* Series 1999-3, Class BV1A, Floating Rate 9.200% due 8/25/01 2,157,880
Southern Pacific Thrift and Loan Assoc., Series 1996-C1:
5,000,000 NR Class C, Floating Rate 7.610% due 4/25/28 5,012,500
3,000,000 NR Class D, Floating Rate 8.110% due 4/25/28 3,015,000
Stanfield CLO Ltd.:
10,000,000 AAA Series 1A, Class A1, Floating Rate 6.931% due 7/15/14 10,050,000
6,000,000 A3* Series 1A, Class B1, Floating Rate 7.781% due 7/15/14 6,011,250
3,000,000 A3* Series 2, Class B1, Floating Rate 8.088% due 4/15/15 2,985,000
Structured Asset Securities Corp.:
6,000,000 BBB Series 1999-BC1, Class B, Floating Rate 9.401% due 1/25/29 5,934,375
5,456,000 A2* Series 1999-RM1, Class M2, Floating Rate 7.910% due 7/25/29 5,449,180
1,000,000 A- Sutter CBO, Series 1999-1,
Class A4L, Floating Rate 8.663% due 11/30/11 1,002,500
11,500,000 A2* WMC Mortgage Loan Pass-Through Certificates, Series 1999-A,
Class M2, Floating Rate 8.151% due 10/15/29 11,557,500
------------------------------------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost -- $206,715,679) 206,486,797
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
CONTRACTS SECURITY VALUE
==================================================================================================================
<S> <C> <C>
PURCHASED OPTIONS -- 2.4%
Purchased Calls -- 2.1%
S&P 500 Index:
750 Call @ $1,350, Expire 7/00 8,006,250
250 Call @ $1,400, Expire 8/00 2,062,500
2,000 Call @ $1,300, Expire 9/00 35,075,000
------------------------------------------------------------------------------------------------------------------
45,143,750
------------------------------------------------------------------------------------------------------------------
Purchased Puts -- 0.3%
Bristol-Myers Squibb Co.:
3,000 Put @ $60, Expire 7/00 843,750
3,000 Put @ $65, Expire 9/00 2,362,500
S&P 500 Index:
1,000 Put @ $1,400, Expire 7/00 662,500
500 Put @ $1,425, Expire 7/00 606,250
500 Put @ $1,300, Expire 9/00 493,750
500 Put @ $1,350, Expire 9/00 825,000
500 Put @ $1,200, Expire 12/00 600,000
Telephone and Data Systems:
475 Put @ $95, Expire 7/00 95,000
125 Put @ $100, Expire 7/00 52,344
2,500 WorldCom, Inc. Put @ $45, Expire 7/00 320,313
------------------------------------------------------------------------------------------------------------------
6,861,407
------------------------------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS
(Cost -- $67,703,425) 52,005,157
==================================================================================================================
</TABLE>
See Notes to Financial Statements.
21 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
=====================================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT -- 0.5%
$ 11,419,000 J.P. Morgan & Co. Inc., 6.500% due 7/3/00; Proceeds at maturity -- $11,425,185;
(Fully collateralized by U.S. Treasury Bonds and Notes, 3.375% to 7.875%
due 7/15/02 to 2/15/21; Market value -- $11,647,386) (Cost -- $11,419,000) $ 11,419,000
=====================================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $1,885,018,347**) $2,126,221,459
=====================================================================================================================
</TABLE>
(a) Non-income producing security.
(b) Security segregated by Custodian to cover written call options and to
maintain the margin requirement on S&P 500 Index futures contracts.
(c) All or a portion of this security is on loan (See Note 7).
(d) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions that are exempt from
registration, normally to qualified institutional buyers.
(e) Security is currently in default.
+ All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's")
with the exception of those identified by an asterisk (*), which are rated
by Moody's Investors Service, Inc. ("Moody's").
++ On July 3, 2000, Bell Atlantic Corp. and GTE Corp. merged. The surviving
company was renamed Verizon Communications.
** Aggregate cost for Federal income tax purposes is substantially the same.
See page 23 for definition of bond ratings.
See Notes to Financial Statements.
22 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
-------------------------------------------------------------------------------
Bond Ratings (unaudited)
-------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's -- Ratings from "AA" to "CCC" may be modified by the addition
of a plus (+) or a minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small
degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in higher rated categories.
BB, -- Bonds rated "BB" and "B" are regarded, on balance, as predominantly
B, speculative with respect to capacity to pay
CCC interest and repay principal in accordance with the terms of the
obligation. "BB" indicates a lower degree of
and CC speculation and "CC" the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.
D -- Bonds rated "D" are in default, and payment of interest and/or repayment
of principal is in arrears.
Moody's -- Numerical modifiers 1, 2, and 3 may be applied to each generic rating
from "Aa" to "Caa", where 1 is the highest and 3 the lowest rating within its
generic category.
Aaa -- Bonds rated "Aaa" are judged to be of 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 these bonds.
Aa -- Bonds rated "Aa" are judged to be of the high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than 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 that make the long-term risks appear somewhat
larger than in Aaa securities.
A -- Bonds rated "A" possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security
to the principal and interest are considered adequate, but elements may
be present that suggest a susceptibility to impairment some time in the
future.
Baa -- Bonds rated "Baa" are considered to be medium grade obligations; that is
they are neither highly protected nor poorly secured. Interest payment
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. These bonds lack outstanding
investment characteristics and may have speculative characteristics as
well.
Ba -- Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby may not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B -- Bonds rated "B" generally lack characteristics of desirable investments.
Assurance of interest and principal payment or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Bonds rated "Caa" are of poor standing. These issues may be in default,
or present elements of danger may exist with respect to principal or
interest.
NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's.
23 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $1,885,018,347) $ 2,126,221,459
Cash 386
Collateral for securities on loan (Note 7) 105,650,243
Dividends and interest receivable 16,694,481
Receivable for securities sold 11,716,221
Receivable for Fund shares sold 792,078
Receivable from broker - variation margin 378,750
--------------------------------------------------------------------------------------------------------------------
Total Assets 2,261,453,618
--------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities on loan (Note 7) 105,650,243
Payable for securities purchased 18,798,410
Income dividend payable 6,900,777
Options written (Premiums received -- $2,229,091) (Note 5) 3,075,672
Investment advisory fees payable 974,005
Distribution fees payable 455,573
Administration fees payable 366,138
Payable for Fund shares purchased 64,312
Accrued expenses 601,607
--------------------------------------------------------------------------------------------------------------------
Total Liabilities 136,886,737
--------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 2,124,566,881
====================================================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 119,067
Capital paid in excess of par value 1,688,999,342
Undistributed net investment income 18,384,607
Accumulated net realized gain from security transactions, options and futures contracts 177,802,334
Net unrealized appreciation of investments, options and futures contracts 239,261,531
--------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 2,124,566,881
====================================================================================================================
Shares Outstanding:
Class A 35,457,676
---------------------------------------------------------------------------------------------------------------
Class B 75,399,481
---------------------------------------------------------------------------------------------------------------
Class L 1,194,656
---------------------------------------------------------------------------------------------------------------
Class O 2,607,373
---------------------------------------------------------------------------------------------------------------
Class Y 4,407,843
---------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 17.92
---------------------------------------------------------------------------------------------------------------
Class B * $ 17.79
---------------------------------------------------------------------------------------------------------------
Class L ** $ 17.82
---------------------------------------------------------------------------------------------------------------
Class O ** $ 17.81
---------------------------------------------------------------------------------------------------------------
Class Y (and redemption price) $ 18.10
---------------------------------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $ 18.86
Class L (net asset value plus 1.01% of net asset value per share) $ 18.00
====================================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from purchase (See Note 2).
** Redemption price is NAV of Class L and O shares reduced by a 1.00% CDSC if
shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
24 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 46,243,597
Dividends 22,641,561
Less: Foreign withholding tax (26,564)
--------------------------------------------------------------------------------------------------------------
Total Investment Income 68,858,594
--------------------------------------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 2) 6,542,474
Investment advisory fees (Note 2) 6,177,900
Administration fees (Note 2) 2,246,509
Shareholder and system servicing fees 940,771
Shareholder communications 259,288
Custody 71,075
Registration fees 49,863
Audit and legal 23,684
Trustees' fees 7,616
Other 12,944
--------------------------------------------------------------------------------------------------------------
Total Expenses 16,332,124
--------------------------------------------------------------------------------------------------------------
Net Investment Income 52,526,470
--------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
OPTIONS AND FUTURES CONTRACTS (NOTES 3, 4 AND 5):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 160,648,118
Options purchased (2,578,475)
Options written (41,113,270)
Futures contracts 16,717,175
--------------------------------------------------------------------------------------------------------------
Net Realized Gain 133,673,548
--------------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
of Investments, Options and Futures Contracts:
Beginning of period 296,920,524
End of period 239,261,531
--------------------------------------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (57,658,993)
--------------------------------------------------------------------------------------------------------------
Net Gain on Investments, Options and Futures Contracts 76,014,555
--------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $128,541,025
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
25 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
For the Six Months Ended June 30,2000 (unaudited)
and the Year Ended December 31,1999
<TABLE>
<CAPTION>
2000 1999
====================================================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 52,526,470 $ 72,465,004
Net realized gain 133,673,548 742,412,274
Decrease in net unrealized appreciation (57,658,993) (693,844,806)
------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 128,541,025 121,032,472
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (41,931,901) (65,811,807)
Net realized gains (105,940,795) (514,998,084)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (147,872,696) (580,809,891)
------------------------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 89,060,598 220,257,176
Net asset value of shares issued for reinvestment of dividends 110,052,106 452,975,960
Cost of shares reacquired (600,110,052) (1,885,922,917)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Fund Share Transactions (400,997,348) (1,212,689,781)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets (420,329,019) (1,672,467,200)
NET ASSETS:
Beginning of period 2,544,895,900 4,217,363,100
------------------------------------------------------------------------------------------------------------------------------------
End of period* $2,124,566,881 $2,544,895,900
====================================================================================================================================
* Includes undistributed net investment income of: $ 18,384,607 $ 7,790,038
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
26 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Premium Total Return Fund ("Fund"), a separate investment fund
of Smith Barney Income Funds ("Trust"), a Massachusetts business trust, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Trust consists of this
Fund and seven other separate investment funds: Smith Barney Exchange Reserve
Fund, Smith Barney Convertible Fund, Smith Barney High Income Fund, Smith Barney
Municipal High Income Fund, Smith Barney Diversified Strategic Income Fund,
Smith Barney Balanced Fund and Smith Barney Total Return Bond Fund. The
financial statements and financial highlights for the other Funds are presented
in separate shareholder reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) investments are
valued at market value or, in the absence of market value with respect to any
portfolio securities, at fair value as determined by or under the direction of
the Board of Trustees. Portfolio securities that are traded primarily on a
domestic or foreign exchange are valued at the last sale price on that exchange
or, if there were no sales during the day, at the current quoted bid price.
Over-the-counter securities are valued on the basis of the bid price at the
close of business each day. Options are generally valued at the mean of the
quoted bid and asked prices. Investments in U.S. government securities (other
than short-term securities) are valued at the mean of the quoted bid and asked
price; (c)securities maturing within 60 days are valued at cost plus accreted
discount, or minus amortized premium, which approximates value; (d) interest
income, adjusted for amortization of premium and accretion of discount, is
recorded on the accrual basis; (e) dividend income is recorded on the ex-
dividend date; foreign dividend income is recorded on the ex-dividend date or as
soon as practical after the Fund determines the existence of a dividend
declaration after exercising reasonable due diligence; (f) dividends and
distributions to shareholders are recorded on the ex-dividend date; (g) gains or
losses on the sale of securities are calculated by using the specific
identification method; (h) the accounting records are maintained in U.S.
dollars. All assets and liabilities denominated in foreign currencies are
translated into U.S. dollars based on the rate of exchange of such currencies
against U.S. dollars on the date of valuation. Purchases and sales of
securities, and income and expenses are translated at the rate of exchange
quoted on the respective date that such transactions are recorded. Differences
between income and expense amounts recorded and collected or paid are adjusted
when reported by the custodian bank; (i) direct expenses are charged to each
class; management fees and general fund expenses are allocated on the basis of
relative net assets of each class; (j) the character of income and gains
distributed are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. At December 31, 1999,
reclassifications were made to the Fund's capital accounts to reflect permanent
book/tax differences and income and gains available for distributions under
income tax regulations. Accordingly, a portion of accumulated net realized gains
amounting to $153,385,958 was reclassified to paid-in capital. Net investment
income, net realized gains and net assets were not affected by this change; (k)
the Fund intends to comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, pertaining to regulated investment companies
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes; and (l) estimates and
assumptions are required to be made regarding assets, liabilities and changes in
net assets resulting from operations when financial statements are prepared.
Changes in the economic environment, financial markets and any other parameters
used in determining these estimates could cause actual results to differ.
In addition, the Fund may from time to time enter into options and/or futures
contracts in order to hedge market risk.
2. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment adviser to the Trust. The Fund pays SSBC an
advisory fee calculated at an annual rate of 0.55% of the average daily net
assets. This fee is calculated daily and paid monthly.
SSBC has entered into a sub-advisory agreement with Salomon Brothers Asset
Management ("SaBAM"), an affiliate of SSBC. Pursuant to the sub-advisory
agreement, SaBAM is responsible for the day-to-day portfolio operations and
investment decisions for the Fund. SSBC pays SaBAM a monthly fee calculated at
an annual rate of 0.375% of the average daily net assets of the Fund. This fee
is paid monthly.
27 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
SSBC acts as the Fund's administrator for which the Fund pays a fee calculated
at an annual rate of 0.20% of the average daily net assets. This fee is
calculated daily and paid monthly.
Citi Fiduciary Trust Company ("CFTC"), formerly known as Smith Barney Private
Trust Company, another subsidiary of Citigroup, acts as the Fund's transfer
agent and PFPC Global Fund Services ("PFPC") acts as the Fund's sub-transfer
agent. CFTC receives account fees and asset-based fees that vary according to
the size and type of account. PFPCis responsible for shareholder recordkeeping
and financial processing for all shareholder accounts and is paid by CFTC. For
the six months ended June 30, 2000, the Fund paid transfer agent fees of
$863,461 to CFTC.
Effective June 5,2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, became the Fund's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Fund's portfolio agency
transactions. Certain other broker-dealers continue to sell Fund shares to the
public as members of the selling group. For the six months ended June 30, 2000,
SSB and its affiliates received brokerage commissions of $37,668.
There are maximum initial sales charges of 5.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
5.00% on Class B shares, which applies if redemption occurs within one year from
purchase and declines thereafter by 1.00% per year until no CDSC is incurred.
Class L and O shares also have a 1.00% CDSC, which applies if redemption occurs
within the first year of purchase. In addition, Class A shares have a 1.00%
CDSC, which applies if redemption occurs within the first year of purchase. This
CDSC only applies to those purchases of Class A shares which, when combined with
current holdings of Class A shares, equal or exceed $500,000 in the aggregate.
These purchases do not incur an initial sales charge.
For the six months ended June 30,2000, CFBDS and SSB received sales charges of
$68,000 and $30,000 on sales of the Fund's Class A and Class L
shares, respectively. In addition, CDSCs paid to SSB were approximately:
Class A Class B Class L
===================================================================
CDSCs $1,000 $1,476,000 $5,000
===================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to
Class A, B, L and O shares calculated at the annual rate of 0.25% of the average
daily net assets of each respective class. The Fund also pays a distribution fee
with respect to Class B, L and O shares calculated at the annual rate of 0.50%,
0.75% and 0.45% of the average daily net assets of each class, respectively. For
the six months ended June 30, 2000, total Distribution Plan fees incurred were:
Distribution
Plan Fees
==================================================
Class A $ 786,158
--------------------------------------------------
Class B 5,476,937
--------------------------------------------------
Class L 103,876
--------------------------------------------------
Class O 175,503
==================================================
All officers and one Trustee of the Trust are employees of SSB.
3. Investments
During the six months ended June 30, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term securities) were as follows:
==================================================
Purchases $ 762,057,645
--------------------------------------------------
Sales 1,164,953,560
==================================================
At June 30, 2000, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
==================================================
Gross unrealized appreciation $ 345,423,032
--------------------------------------------------
Gross unrealized depreciation (104,219,920)
--------------------------------------------------
Net unrealized appreciation $ 241,203,112
==================================================
4. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are received or made and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Fund records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transactions and the Fund's basis in the contract.
28 Smith BarneyPremium Total Return Fund | 2000 Semi-Annual Report
to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
The Fund enters into such contracts to hedge a portion of its portfolio. The
Fund bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts) and the credit
risk should a counter-party fail to perform under such contracts.
At June 30, 2000, the Fund had the following open futures contracts:
<TABLE>
<CAPTION>
# of Basis Market Unrealized
Purchased Contracts Contracts Expiration Value Value Loss
===========================================================================================
<S> <C> <C> <C> <C> <C>
S&P 500 150 9/00 $56,148,750 $55,053,750 $(1,095,000)
===========================================================================================
</TABLE>
5. Option Contracts
Premiums paid when put or call options are purchased by the Fund,represent
investments, which are marked-to-market daily. When a purchased option expires,
the Fund will realize a loss in the amount of the premium paid. When the Fund
enters into a closing sales transaction, the Fund will realize a gain or loss
depending on whether the proceeds from the closing sales transaction are greater
or less than the premium paid for the option. When the Fund exercises a put
option, it will realize a gain or loss from the sale of the underlying security
and the proceeds from such sale will be decreased by the premium originally
paid. When the Fund exercises a call option, the cost of the security which the
Fund purchases upon exercise will be increased by the premium originally paid.
At June 30, 2000, the Fund had three purchased call options with a total cost of
$53,102,750 and ten purchased put options with a total cost of $14,600,675.
When a Fund writes a call or put option, an amount equal to the premium received
by the Fund is recorded as a liability, the value of which is marked-to-market
daily. When a written option expires, the Fund realizes a gain equal to the
amount of the premium received. When the Fund enters into a closing purchase
transaction, the Fund realizes a gain or loss depending upon whether the cost of
the closing transaction is greater or less than the premium originally
received, without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is eliminated. When a written
call option is exercised the proceeds of the security sold will be increased by
the premium originally received. When a written put option is exercised, the
amount of the premium originally received will reduce the cost of the security
which the Fund purchases upon exercise. When written index options are
exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Fund enters into options for hedging purposes. The risk in writing a
covered call option is that the Fund gives up the opportunity to participate in
any increase in the price of the underlying security beyond the exercise
price. The risk in writing a put option is that the Fund is exposed to the risk
of loss if the market price of the underlying security declines.
The following written covered call option transactions occurred during the six
months ended June 30, 2000:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
============================================================================================
<S> <C> <C>
Options written, outstanding at December 31, 1999 4,845 $ 1,900,335
Options written during the six months ended June 30, 2000 9,445 15,298,768
Options cancelled in closing purchase transactions (11,880) (14,796,537)
Options expired (465) (173,475)
-------------------------------------------------------------------------------------------
Options written, outstanding at June 30, 2000 1,945 $ 2,229,091
============================================================================================
</TABLE>
29 Smith BarneyPremium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
The following table represents the written covered call option contracts open at
June 30, 2000:
<TABLE>
<CAPTION>
Number of Strike
Contracts Expiration Price Value
===============================================================================================================
<S> <C> <C> <C> <C>
150 Affymetrix, Inc. 11/18/00 $200 $ (420,000)
370 Alpharma Inc. 9/16/00 50 (545,750)
475 Telephone and Data Systems, Inc. 7/22/00 110 (78,672)
250 Vertex Pharmaceuticals Inc. 7/22/00 90 (471,875)
250 Vertex Pharmaceuticals Inc. 10/21/00 85 (793,750)
250 Vertex Pharmaceuticals Inc. 10/21/00 90 (721,875)
200 Wind River Systems, Inc. 8/19/00 45 (43,750)
---------------------------------------------------------------------------------------------------------------
Total Covered Call Options Written
(Premiums received -- $2,229,091) $(3,075,672)
===============================================================================================================
</TABLE>
The following written covered put option transactions occurred during the six
months ended June 30, 2000:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
====================================================================================================================
<S> <C> <C>
Options written, outstanding at December 31, 1999 -- $ 0
Options written during the six months ended June 30, 2000 1,500 4,189,110
Options cancelled in closing purchase transactions (1,500) (4,189,110)
--------------------------------------------------------------------------------------------------------------------
Options written, outstanding at June 30, 2000 -- $ 0
====================================================================================================================
</TABLE>
6. Repurchase Agreements
The Fund purchases (and its custodian takes possession of) U.S. government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day) at
an agreed-upon higher repurchase price. The Fund requires continual maintenance
of the market value of the collateral in amounts at least equal to the
repurchase price.
7. Lending of Portfolio Securities
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations, and receives a lenders fee. Fees earned by the Fund on securities
lending are recorded in interest income. Loans of securities by the Fund are
collateralized by cash, U.S. Government securities or high quality money market
instruments that are maintained at all times in an amount at least equal to the
current market value of the loaned securities, plus a margin which may vary
depending on the type of securities loaned. The custodian establishes and
maintains the collateral in a segregated account. The Fund maintains exposure
for the risk of any losses in the investment of amounts received as collateral.
30 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
30
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
At June 30, 2000, the Fund had loaned common stocks having a value of
$105,677,503 and holds the following collateral for loaned securities:
Security Description Value
===========================================================================
Time Deposits:
Banco Bilbia VI, 7.13% due 7/3/00 $ 24,674,070
Bank Brussels, 7.13% due 7/3/00 1,333,764
CAISSE, 6.94% and 7.06% due 7/3/00 36,922,850
Credit Suisse, 7.13% to 7.16% due 7/3/00 6,714,129
Norwest Bank, 6.88% due 7/3/00 1,711,214
San Paolo, 7.00% due 7/3/00 12,337,035
Floating Rate Notes:
Amsouth Bank, 5.73% due 1/25/01 11,476,237
Commerzbank AG, 5.89% due 3/12/01 463,450
First Union, 6.51% due 5/21/01 10,017,494
---------------------------------------------------------------------------
Total $105,650,243
===========================================================================
Interest income earned by the Fund from securities loaned for the six months
ended June 30, 2000 was $176,268.
8. Shares of Beneficial Interest
At June 30, 2000, the Trust had an unlimited number of shares of beneficial
interest authorized with a par value of $0.001 per share. The Fund has the
ability to issue multiple classes of shares. Each share of a class represents an
identical interest and has the same rights, except that each class bears certain
direct expenses specifically related to the distribution of its shares.
At June 30, 2000, total paid-in capital amounted to the following for each
class:
<TABLE>
<CAPTION>
Class A Class B Class L Class O Class Y
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Total Paid-in Capital $ 599,466,210 $ 915,712,000 $ 27,910,571 $ 52,315,011 $ 93,714,617
========================================================================================================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
----------------------------------- ----------------------------------
Shares Amount Shares Amount
===========================================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 3,857,981 $ 70,034,786 5,576,417 $ 114,564,826
Shares issued on reinvestment 1,922,833 34,335,475 6,613,942 120,314,446
Shares reacquired (7,256,781) (130,284,431) (17,182,305) (350,048,640)
----------------------------------------------------------------------------------------------------------------------------
Net Decrease (1,475,967) $ (25,914,170) (4,991,946) $ (115,169,368)
============================================================================================================================
Class B
Shares sold 713,335 $ 12,864,962 3,352,189 $ 68,275,906
Shares issued on reinvestment 4,059,597 71,960,902 17,523,284 316,413,809
Shares reacquired (24,620,339) $ (439,603,657) (71,868,845) (1,468,014,821)
----------------------------------------------------------------------------------------------------------------------------
Net Decrease (19,847,407) $ (354,777,793) (50,993,372) $(1,083,325,106)
============================================================================================================================
</TABLE>
31 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
31
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
--------------------------------- ---------------------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class L
Shares sold 191,216 $ 3,443,880 503,863 $ 10,440,957
Shares issued on reinvestment 65,777 1,168,163 243,173 4,381,254
Shares reacquired (360,211) (6,403,917) (645,526) (13,037,142)
--------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (103,218) $ (1,791,874) 101,510 $ 1,785,069
==========================================================================================================================
Class O
Shares sold 29,997 $ 537,762 110,823 $ 2,284,326
Shares issued on reinvestment 145,896 2,587,566 656,558 11,866,451
Shares reacquired (889,844) (15,849,773) (2,548,374) (52,147,892)
--------------------------------------------------------------------------------------------------------------------------
Net Decrease (713,951) $ (12,724,445) (1,780,993) $ (37,997,115)
==========================================================================================================================
Class Y
Shares sold 121,070 $ 2,179,208 1,261,008 $ 24,691,161
Shares reacquired (435,538) (7,968,274) (131,721) (2,674,422)
--------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (314,468) $ (5,789,066) 1,129,287 $ 22,016,739
==========================================================================================================================
</TABLE>
32 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
32
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares 2000/(1)/(2)/ 1999/(2)/ 1998/(2)/ 1997/(2)/ 1996/(2)/(3)/ 1996/(4)/
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.07 $ 21.38 $ 22.19 $ 19.14 $ 17.40 $ 16.33
------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.45 0.54 0.33 0.39 0.16 0.37
Net realized and unrealized gain 0.70 0.50 1.00 4.29 2.21 1.98
------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.15 1.04 1.33 4.68 2.37 2.35
------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.38) (0.49) (0.25) (0.38) (0.16) (0.37)
Net realized gains (0.92) (3.86) (1.89) (1.25) (0.47) (0.91)
------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.30) (4.35) (2.14) (1.63) (0.63) (1.28)
------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 17.92 $ 18.07 $ 21.38 $ 22.19 $ 19.14 $ 17.40
------------------------------------------------------------------------------------------------------------------------------
Total Return 6.49%++ 5.37% 6.20% 25.19% 13.80%++ 14.76%
------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $635,533 $667,303 $896,342 $833,540 $ 608,203 $534,329
------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.12%+ 1.12% 1.12% 1.11% 1.12%+ 1.12%
Net investment income 5.04+ 2.63 1.48 1.89 2.05+ 2.16
------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 35% 93% 43% 43% 30% 58%
==============================================================================================================================
<CAPTION>
Class B Shares 2000/(1)/(2)/ 1999/(2)/ 1998/(2)/ 1997/(2)/ 1996/(2)/(3)/ 1996/(4)/
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 17.94 $ 21.26 $ 22.17 $ 19.14 $ 17.40 $ 16.33
------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.39 0.41 0.22 0.29 0.12 0.28
Net realized and unrealized gain 0.70 0.52 0.99 4.28 2.21 1.99
------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.09 0.93 1.21 4.57 2.33 2.27
------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.32) (0.39) (0.23) (0.29) (0.12) (0.29)
Net realized gains (0.92) (3.86) (1.89) (1.25) (0.47) (0.91)
------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.24) (4.25) (2.12) (1.54) (0.59) (1.20)
------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 17.79 $ 17.94 $ 21.26 $ 22.17 $ 19.14 $ 17.40
------------------------------------------------------------------------------------------------------------------------------
Total Return 6.24%++ 4.85% 5.64% 24.55% 13.57%++ 14.21%
------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $ 1,342 $ 1,709 $ 3,110 $ 3,170 $ 2,355 $ 2,021
------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.63%+ 1.63% 1.61% 1.60% 1.54%+ 1.62%
Net investment income 4.49+ 2.02 0.99 1.39 1.63+ 1.66
------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 35% 93% 43% 43% 30% 58%
==============================================================================================================================
</TABLE>
(1) For the six months ended June 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from August 1, 1996 to December 31, 1996, which reflects a
change in the fiscal year-end of the Fund.
(4) For the fiscal year August 1, 1995 through July 31, 1996.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
33 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares 2000/(1)/(2)/ 1999/(2)/ 1998/(2)/(3)/
==============================================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 17.97 $ 21.29 $ 23.06
------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.37 0.40 0.06
Net realized and unrealized gain (loss) 0.70 0.48 (0.01)
------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.07 0.88 0.05
------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.30) (0.34) --
Net realized gains (0.92) (3.86) (1.82)
------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.22) (4.20) (1.82)
------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 17.82 $ 17.97 $ 21.29
------------------------------------------------------------------------------------------------------------------------------
Total Return 6.08%++ 4.60% 0.36%++
------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $ 21,293 $23,318 $ 25,471
------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.88%+ 1.88% 1.82%+
Net investment income 4.25+ 1.93 0.55+
------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 35% 93% 43%
==============================================================================================================================
<CAPTION>
Class O Shares 2000/(1)/(2)/ 1999/(2)/ 1998/(2)/(4)/ 1997/(2)/ 1996/(2)/(5)/ 1996/(4)/
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 17.95 $ 21.28 $ 22.18 $ 19.15 $ 17.41 $ 16.33
------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.40 0.42 0.23 0.30 0.12 0.29
Net realized and unrealized gain 0.71 0.51 0.99 4.28 2.21 1.99
------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.11 0.93 1.22 4.58 2.33 2.28
------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.33) (0.40) (0.23) (0.30) (0.12) (0.29)
Net realized gains (0.92) (3.86) (1.89) (1.25) (0.47) (0.91)
------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.25) (4.26) (2.12) (1.55) (0.59) (1.20)
------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 17.81 $ 17.95 $ 21.28 $ 22.18 $ 19.15 $ 17.41
------------------------------------------------------------------------------------------------------------------------------
Total Return 6.32%++ 4.83% 5.69% 24.60% 13.58%++ 14.30%
------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $ 46,428 $59,629 $108,576 $93,676 $42,637 $31,044
------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.60%+ 1.60% 1.59% 1.56% 1.55%+ 1.59%
Net investment income 4.52+ 2.05 1.02 1.41 1.61+ 1.68
------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 35% 93% 43% 43% 30% 58%
==============================================================================================================================
</TABLE>
(1) For the six months ended June 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from June 15, 1998 (inception date) to December 31, 1998.
(4) On June 12, 1998, Class C shares were renamed Class O shares.
(5) For the period from August 1, 1996 to December 31, 1996, which reflects a
change in the fiscal year-end of the Fund.
(6) For the fiscal year August 1, 1995 through July 31, 1996.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
34 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended December 31, except where noted:
<TABLE>
<CAPTION>
Class Y Shares 2000/(1)/(2)/ 1999/(2)/ 1998/(2)/ 1997/(2)/ 1996/(2)/(3)/ 1996/(4)/
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.22 $ 21.49 $ 22.24 $ 19.17 $ 17.42 $ 17.57
------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.49 0.64 0.40 0.47 0.17 0.19
Net realized and unrealized gain 0.70 0.48 1.01 4.29 2.23 0.33
------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.19 1.12 1.41 4.76 2.40 0.52
------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.39) (0.53) (0.27) (0.44) (0.18) (0.21)
Net realized gains (0.92) (3.86) (1.89) (1.25) (0.47) (0.46)
------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.31) (4.39) (2.16) (1.69) (0.65) (0.67)
------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 18.10 $ 18.22 $ 21.49 $ 22.24 $ 19.17 $ 17.42
------------------------------------------------------------------------------------------------------------------------------
Total Return 6.70%++ 5.72% 6.56% 25.61% 13.95%++ 2.93%++
------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $ 79,797 $86,047 $77,210 $50,882 $26,585 $13,192
------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.78%+ 0.77% 0.76% 0.76% 0.80%+ 0.87%+
Net investment income 5.40+ 3.08 1.82 2.22 2.36+ 2.24+
------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 35% 93% 43% 43% 30% 58%
==============================================================================================================================
</TABLE>
(1) For the six months ended June 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from August 1, 1996 to December 31, 1996, which reflects a
change in the fiscal year-end of the Fund.
(4) For the period from February 7, 1996 (inception date) to July 31, 1996.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
35 Smith Barney Premium Total Return Fund | 2000 Semi-Annual Report to
Shareholders
<PAGE>
(This page intentionally left blank.)
<PAGE>
SMITH BARNEY
PREMIUM TOTAL RETURN FUND
TRUSTEES INVESTMENT ADVISER
Lee Abraham SSB Citi Fund Management LLC
Allan J.Bloostein
Jane F.Dasher DISTRIBUTORS
Donald R.Foley Salomon Smith Barney Inc.
Richard E.Hanson, Jr.
Paul Hardin CUSTODIAN
Heath B.McLendon, Chairman PFPC Trust Company
Roderick C.Rasmussen
John P.Toolan
TRANSFER AGENT
Citi Fiduciary Trust Company
OFFICERS 125 Broad Street,11th Floor
Heath B.McLendon New York, New York 10004
President and
Chief Executive Officer
SUB-TRANSFER AGENT
PFPC Global Fund Services
Lewis E.Daidone P.O.Box 9699
Senior Vice President Providence, Rhode Island
and Treasurer 02940-9699
Ross S.Margolies
Investment Officer
Anthony Pace
Controller
Christina T.Sydor
Secretary
<PAGE>
Smith Barney Premium Total Return Fund
THE SMITH BARNEY FAMILY OF FUNDS
EQUITY FUNDS
Aggressive Growth Fund
Appreciation Fund
Balanced Fund
Concert Peachtree Growth Fund
Concert Social Awareness Fund
Convertible Fund
Financial Services Fund
Fundamental Value Fund
Health Sciences Fund
Large Cap Blend Fund
Large Capitalization Growth Fund
Large Cap Value Fund
Mid Cap Blend Fund
Natural Resources Fund
Premier Selections All Cap Fund
Premier Selections Global Growth Fund
Premier Selections Large Cap Fund
-------------------------
Premium Total Return Fund
-------------------------
S&P 500 Index Fund
Small Cap Bond Fund
Small Cap Growth Fund
Small Cap Value Fund
Technology Fund
TAX-EXEMPT FIXED INCOME FUNDS+
Arizona Municipals Fund*
California Municipals Fund*
Florida Portfolio*
Georgia Portfolio*
Intermediate Maturity CA Municipals Fund*
Intermediate Maturity NY Municipals Fund*
Limited Term Portfolio
Managed Municipals Fund
Massachusetts Municipals Fund*
Municipal High Income Fund
National Portfolio
New Jersey Municipals Fund*
New York Portfolio*
Oregon Municipals Fund*
Pennsylvania Portfolio*
MONEY MARKET FUNDS
California Money Market Portfolio*
Institutional Cash Management Fund
Massachusetts Money Market Portfolio*
Municipal Money Market
Money Funds, Inc.
TAXABLE FIXED-INCOME FUNDS
Adjustable Rate Government Income Fund
Diversified Strategic Income Fund
Government Securities Fund
High Income Fund
Investment Grade Bond Fund
Managed Governments Fund
Short-Term High Grade Bond Fund
Total Return Bond Fund
U.S. Government Securities Fund
GLOBAL/INTERNATIONAL FUNDS**
Emerging Markets Portfolio
European Portfolio
Global Government Bond Portfolio
Hansberger Global Small Cap Value Fund
Hansberger Global Value Fund
International Equity Portfolio
Pacific Portfolio
CONCERT ALLOCATION SERIES
Global Portfolio
High Growth Portfolio
Growth Portfolio
Balanced Portfolio
Conservative Portfolio
Income Portfolio
This report is submitted for the general information of shareholders of Smith
Barney Income Funds -- Smith Barney Premium Total Return Fund. It is not for
distribution to prospective investors unless accompanied by a current Prospectus
for the Fund, which contains information concerning the Fund's investment
policies and expenses as well as other pertinent information. If used as sales
material after September 30, 2000, this report must be accompanied by
performance information for the most recently completed calendar quarter.
Smith Barney Premium Total Return Fund
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
For complete information on any of the above Smith Barney Mutual Funds,
including management fees and expenses, call or write for a free prospectus.
Read it carefully before you invest or send money.
1-888-GET-SERIOUS
www.smithbarney.com/mutualfunds
+A portion of the income from the tax-free funds many be subject to
federal, state and local taxes.
*Not available in all states.
**Investments in non-U.S. securities involve risks relating to political, social
and economic developments abroad, as well as risks resulting from the
differences between the regulations to which U.S. issuers and markets are
subject.
Salomon Smith Barney
--------------------
A member of citigroup
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
