As filed with the Securities and Exchange Commission
on September 25, 1996
Registration No. [ ]
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. [ ] Post-Effective
Amendment No.
SMITH BARNEY MUNI FUNDS
(Exact name of Registrant as specified in
Charter)
Area Code and Telephone Number: (800) 224-7523
388 Greenwich Street, New York, New York 10013
(Address of principal executive offices) (Zip Code)
Christina T. Sydor, Esq.
Smith Barney Inc.
388 Greenwich Street New York, New York 10013 (22nd floor)
(Name and address of agent for service)
copy to:
John E. Baumgardner, Jr., Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Approximate date of proposed public offering: As soon as possible after the
effective date of this Registration Statement.
Registrant has registered an indefinite amount of securities pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended; accordingly, no
fee is payable herewith. Registrant's Rule 24f-2 Notice for the fiscal period
ended March 31, 1996 was filed with the Securities and Exchange Commission on
May 30, 1996.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, by action pursuant to said Section
8(a), may determine.
Total Number of Pages:
SMITH BARNEY MUNI FUNDS
CONTENTS OF
REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Letter to Shareholders
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
SMITH BARNEY MUNI FUNDS
FORM N-14 CROSS REFERENCE SHEET
Pursuant to Rule 481(a) Under the Securities Act of 1933
Prospectus/Proxy
Part A Item No. and Caption Statement Caption
Item 1. Beginning of Registration Cover Page; Cross Reference
Statement and Outside Front Sheet
Cover Page of Prospectus
Item 2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
Item 3. Synopsis Information and Summary; Risk Factors; Comparison
of Risk Factors Investment Objectives and Policies
Item 4. Information About the Transaction Summary:
Reasons for the Reorganization;
Information About the Reorganization;
Information on Shareholders' Rights;
Exhibit A
(Plan of Reorganization)
Item 5. Information About the Registrant Cover Page; Summary;
Information About the Reorganization; Comparison of
Investment Objectives and Policies;
Comparative Information on Shareholders' Rights;
Additional Information About the
Florida Portfolio and the Florida Limited Term Portfolio
,
Item 6. Information About the Summary; Information About the
Company Being Acquired Reorganization; Comparison of
Investment Objectives and Policies; Information on
Shareholder's Rights; Additional Information About the Florida Limited
Term Portfolio
Item 7. Voting Information Summary; Information About the Reorganization;
Comparative Information on Shareholders' Rights; Voting Information
Item 8. Interest of Certain Persons Financial Statements
and Experts; Legal
and Experts Matters
Item 9. Additional Information Not Applicable
Required for Reoffering By
Persons Deemed to be Underwriters
Statement of Additional
Part B Item No. and Caption Information Caption
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. Additional Information Cover Page; Statement of Additional
About the Registrant Information of Smith Barney Muni Funds dated
July 1, 1996 as amended July 29, 1996
Item 13. Additional Information Cover Page; Statement of Additional
About the Company Being Information of Smith Barney
Muni Acquired Funds dated July 1,
1996 as amended July 29, 1996
Item 14. Financial Statements Annual Report of Smith Barney
Muni Funds dated March 31, 1996
Part C Item No. and Caption Other Information
Caption
Item 15. Indemnification Incorporated by reference to Part A caption
"Comparative Information on Shareholders' Rights - Liability of
Trustees"
Item 16. Exhibits Exhibits
Item 17. Undertakings Undertakings
SMITH BARNEY MUTUAL FUNDS
Investing for your future. Every day.
A Special Notice To Shareholders Of Smith Barney Muni Funds -
Florida Limited Term Portfolio
Your Vote is Important
Dear Shareholder:
The Board of Trustees of Smith Barney Muni Funds (the "Fund") has
recently reviewed and unanimously endorsed a proposal for a
reorganization of the Smith Barney Muni Funds-Florida Limited Term
Portfolio ("Florida Limited Term Portfolio"), a separate investment
portfolio of the Fund, which it judges to be in the best interests
Florida Limited Term Portfolio shareholders.
Under the terms of the proposed reorganization, Smith Barney Muni
Funds-on behalf of its Florida Portfolio ("Florida Portfolio") would
acquire all or substantially all of the Florida Limited Term Portfolio's
assets and liabilities. After the transaction, the Florida Limited Term
Portfolio would be liquidated and you would become a shareholder of the
Florida Portfolio having received shares with an aggregate net asset
value equivalent to the aggregate net asset value of your Florida
Limited Term Portfolio investment at the time of the transaction. No
sales charge would be imposed in the transaction. The transaction would,
in the opinion of counsel, be free from Federal income taxes to you, the
Florida Limited Term Portfolio and the Florida Portfolio.
The Board of Trustees believes that the proposed reorganization is
in the best interests of Florida Limited Term Portfolio shareholders and
should provide benefits due, in part, to the substantially higher
expense ratio and substantially lower performance that would be the
result of the discontinuance of management's current voluntary waiver of
the Florida Limited Term Portfolio's fees and expenses, including the
management fee, on behalf of the shareholders.
Please complete, sign and mail the enclosed proxy card...today!
To consider this transaction, we have called a Special Meeting of
Shareholders to be held on January 10, 1997. We strongly urge your
participation by asking you to review, complete and return your proxy
promptly in the postage-paid envelope provided.
For more details about the proposed transaction, please refer to
the enclosed proxy statement. On behalf of the Board, I thank you for
your participation as a shareholder. If you sign and date your proxy
card, but do not provide voting instructions, your shares will be voted
FOR the proposal.
We thank you for your timely response and look forward to
continuing to serve your investment needs with Smith Barney Mutual
Funds. If you have any questions, please call your Financial Consultant
who will be pleased to assist you.
Sincerely,
Heath B. McLendon
Chairman of the Board
___________,1996
SMITH BARNEY MUNI FUNDS- FLORIDA LIMITED TERM PORTFOLIO
388 Greenwich Street
New York, New York 10013
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On January 10, 1997
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of Smith Barney Muni Funds-Florida Limited Term Portfolio (the
"Florida Limited Term Portfolio"), will be held at 388 Greenwich Street,
New York, New York on January 10, 1997, commencing at 10:00 a.m. New York
City time for the following purposes:
1. To consider and act upon the Plan of Reorganization (the
"Plan") dated as of [ ], 1996, providing for: (i) the
acquisition of all or substantially all of the assets of the
Florida Limited Term Portfolio by the Florida Portfolio, a
separate series of Smith Barney Muni Funds (the "Florida
Portfolio"), in exchange for shares of the Florida Portfolio and
the assumption by the Florida Portfolio of certain liabilities of
the Florida Limited Term Portfolio; (ii) the distribution of such
shares of the Florida Portfolio to shareholders of the Florida
Limited Term Portfolio in liquidation of the Florida Limited Term
Portfolio; and (iii) the subsequent termination of the Florida
Limited Term Portfolio.
2. To transact any other business which may properly come
before the Meeting or any adjournment thereof.
The Trustees of the Smith Barney Muni Funds have fixed the close of
business on November 8, 1996, as the record date for the determination of
shareholders of the Florida Limited Term Portfolio entitled to notice of and
to vote at this Meeting or any adjournment thereof (the "Record Date").
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN AND
RETURN WITHOUT DELAY THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE, SO THAT THEIR SHARES MAY BE REPRESENTED AT THE MEETING.
INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON THE
FOLLOWING PAGE. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED
BY THE SUBSEQUENT EXECUTION AND SUBMISSION OF A REVISED PROXY, BY GIVING
WRITTEN NOTICE OF REVOCATION TO THE FLORIDA LIMITED TERM PORTFOLIO AT ANY TIME
BEFORE THE PROXY IS EXERCISED OR BY VOTING IN PERSON AT THE MEETING.
By Order of the Board of Trustees
Christina T. Sydor
Secretary
[ __________], 1996
YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF
FURTHER SOLICITATION.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense involved in validating your vote if you
fail to sign your proxy card properly.
1.Individual Accounts: Sign your name exactly as it appears in
the registration on the proxy card.
2.Joint Accounts: Either party may sign, but the name of the
party signing should conform exactly to the
name shown on the registration on the proxy card.
3.All Other Accounts: The capacity of the individual signing
the proxy card should be indicated unless it is
reflected in the form of registration. For example:
Registration Valid Signatures
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Fund Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr.,
Executor
PROSPECTUS/PROXY STATEMENT DATED _______, 1996
Acquisition of the Assets of
SMITH BARNEY MUNI FUNDS-- FLORIDA LIMITED TERM PORTFOLIO
388 Greenwich Street
New York, New York 10013
(800) 224-7523
By And In Exchange For Shares of
SMITH BARNEY MUNI FUNDS-- FLORIDA PORTFOLIO
388 Greenwich Street
New York, New York 10013
(800) 224-7523
This Prospectus/Proxy Statement is being furnished to shareholders of
the Florida Limited Term Portfolio, a separate series of Smith Barney Muni
Funds (the "Florida Limited Term Portfolio"), in connection with a proposed
Plan of Reorganization (the "Plan"), to be submitted to shareholders for
consideration at a Special Meeting of Shareholders to be held on January 10,
1997 at 10.00 a.m New York City time, at the offices of Smith Barney Inc.,
located at 388 Greenwich Street, 22nd Floor, New York, New York, and any
adjournments thereof. (the "Meeting").
The Plan provides for all or substantially all of the assets of the
Florida Limited Term Portfolio to be acquired by the Florida Portfolio, a
separate series of Smith Barney Muni Funds (the "Florida Portfolio"), in
exchange for shares of the Florida Portfolio and the assumption by the Florida
Portfolio of certain liabilities of the Florida Limited Term Portfolio
(hereinafter referred to as the "Reorganization"); the Florida Limited Term
Portfolio and the Florida Portfolio are sometimes referred to hereinafter as
the "Portfolios" and individually as a "Portfolio". Following the
Reorganization, shares of the Florida Portfolio will be distributed to
shareholders of the Florida Limited Term Portfolio in liquidation of the
Florida Limited Term Portfolio and the Florida Limited Term Portfolio will be
terminated. As a result of the proposed Reorganization, each shareholder of
the Florida Limited Term Portfolio will receive that number of shares of the
Florida Portfolio having an aggregate net asset value equal to the aggregate
net asset value of such shareholder's shares of the Florida Limited Term
Portfolio. Holders of Class A shares in the Florida Limited Term Portfolio
will receive Class A shares of the Florida Portfolio, and no sales charge will
be imposed on the Class A shares of the Florida Portfolio received by the
Florida Limited Term Portfolio Class A shareholders. Holders of Class C
shares in the Florida Limited Term Portfolio will receive Class C shares of
the Florida Portfolio. No contingent deferred sales charge ("CDSC") will be
imposed upon consummation of the Reorganization. However, any CDSC which is
applicable to a shareholder's investment will continue to apply, and in
calculating the applicable CDSC payable upon the subsequent redemption of
Class A or Class C shares of the Florida Portfolio, the period during which a
Florida Limited Term Portfolio shareholder held Class A or Class C shares of
the Florida Limited Term Portfolio will be counted. Holders of Class Y shares
in the Florida Limited Term Portfolio will receive Class Y shares of the
Florida Portfolio. This transaction is being structured as a tax-free
reorganization.
The Florida Portfolio and the Florida Limited Term Portfolio are both
open-end non-diversified management investment companies with identical
investment objectives. Each of the Florida Portfolio and the Florida Limited
Term Portfolio's investment objective is to seek as high a level of income
exempt from Federal income taxes as is consistent with prudent investing.
Each Portfolio invests primarily in obligations issued by the State of Florida
and its political subdivisions, agencies and instrumentalities. Each
Portfolio seeks generally to select investments that will enable its shares to
be exempt from the Florida intangibles tax. Smith Barney Mutual Funds
Management Inc. serves as investment manager (the "Manager") to both the
Florida Portfolio and the Florida Limited Term Portfolio.
The investment policies of the Florida Portfolio are substantially
similar to those of the Florida Limited Term Portfolio and are described under
"Summary of Investment Objectives and Policies" in this Prospectus/Proxy
Statement.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the Florida Portfolio
that a prospective investor should know before investing. Certain relevant
documents listed below, which have been filed with the Securities and Exchange
Commission ("SEC"), are incorporated by reference. A Statement of Additional
Information dated[_____], 1996 relating to this Prospectus/Proxy Statement and
the Reorganization, has been filed with the SEC and is incorporated by
reference into this Prospectus/Proxy Statement. A copy of such Statement of
Additional Information is available upon request and without charge by writing
to the Florida Limited Term Portfolio at the or address listed on the cover
page of this Prospectus/Proxy Statement or by contacting a Smith Barney
Financial Consultant.
1. The Prospectus dated July 29, 1996 of Smith Barney Muni Funds -
- - - Florida Portfolio and the Prospectus dated July 1, 1996 of
Smith Barney Muni Funds--Florida Limited Term Portfolio are
incorporated in their entirety by reference and a copy of each
Prospectus is included herewith.
Also accompanying this Prospectus/Proxy Statement as Exhibit A is a
copy of the Plan of Reorganization for the proposed transaction.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
Additional Materials
Summary
Risk Factors
Reasons for the Reorganization
Information about the Reorganization
Information about the Florida Portfolio
Information about the Florida Limited Term Portfolio
Summary of Investment Objectives and Policies
Comparative Information on Shareholders' Rights
Additional Information About the Florida Portfolio and
the Florida Limited Term Portfolio
Other Business
Voting Information
Financial Statements and Experts
Legal Matters
Exhibit A: Plan of Reorganization Appendix
ADDITIONAL MATERIALS
The following additional materials, which have been
incorporated by reference into the Statement of Additional
Information dated [ ________], 1996 relating to this
Prospectus/Proxy Statement and the Reorganization, will be sent
to all shareholders requesting a copy of such Statement of
Additional Information.
1.Statement of Additional Information of Smith
Barney Muni Funds dated July 1, 1996 as amended July 29, 1996.
2.Annual Report of Smith Barney Muni Funds--Florida and
Florida Limited Term Portfolios dated March 31,1996.
FEE TABLES
Following are tables showing the current costs and expenses of the
Florida Portfolio and the Florida Limited Term Portfolio and the Pro Forma
costs and expenses expected to be incurred by the Florida Portfolio after
giving effect to the Reorganization, each based on the maximum sales charge or
maximum CDSC that may be incurred at the time of purchase or redemption:
<TABLE>
<S> <C> <C> <C>
CLASS A SHARES Florida Florida Limited Pro Forma
Portfolio Term Portfolio
Shareholder Transaction Expenses
Maximum sales charge
imposed on purchases 4.00 % 2.00% 4.00%
(as a percentage of
offering price)
Maximum CDSC
(as a percentage of None* None* None*
original cost or redemption
proceeds, whichever is lower)
Annual Portfolio Operating Expenses
(as a percentage of average
net assets)
Management fees 0.50% 0.22%** %
12b-1 fees 0.15 0.15
Other expenses 0.05 0.38**
Total Portfolio Operating 0.70% 0.75%** %
Expenses
*Purchases of Class A shares, which when combined with current holdings of
Class A shares offered with a sales charge equal or exceed $500,000 in the
aggregate, will be made at net asset value with no sales charge, but will be
subject to a CDSC of 1.00% on redemptions made within 12 months.
** "Management fees" have been restated to reflect the management fee waiver
currently in effect. Absent the fee waiver, the management fee would be
incurred at the rate of 0.45% of the Class' average daily net assets for the
current fiscal period. Absent the fee waiver and expense reimbursement, total
expenses would be incurred at the rate of 1.05%.
</TABLE>
<TABLE>
<S> <C> <C> <C>
CLASS C SHARES Florida Florida Limited ProForma
Portfolio Term Portfolio Portfolio
Shareholder Transaction Expenses
Maximum sales charge
imposed on purchases None None None
(as a percentage of
offering price)
Maximum CDSC
(as a percentage of 1.00% 1.00% 1.00%
original cost or redemption
proceeds, whichever is lower)
Annual Portfolio Operating Expenses
(as a percentage of average
net assets)
Management fees 0.50% 0.22%** % 12b-1 fees* 0.70 0.35
Other expenses 0.08 0.39**
Total Portfolio Operating 1.28% .96%** %
Expenses
______________________
*Class C shares do not have a conversion feature and, therefore, are subject
to an ongoing distribution fee. As a result, long-term shareholders of Class
C shares may pay more than the economic equivalent of the maximum front-end
sales charge permitted by the National Association of Securities Dealers, Inc.
** Management fees" have been restated to reflect the management fee waiver
currently in effect. Absent the fee waiver, the management fee would be
incurred at the rate of 0.45% of the Class' average daily net assets for the
current fiscal period. Absent the management fee waiver and expense
reimbursement, total expenses would be incurred at the rate of 1.26%.
</TABLE>
<TABLE>
<S> <C> <C> <C>
CLASS Y SHARES Florida Florida Pro Forma
Portfolio Limited Term
Portfolio
Shareholder Transaction Expenses
Maximum sales charge
imposed on purchases None None None (as a percentage of
offering price)
Maximum CDSC
(as a percentage of None None None
original cost or redemption
proceeds, whichever is lower)
Annual Portfolio Operating Expenses
(as a percentage of average
net assets)
Management fees 0.50% 0.22%**
12b-1 fees -- --
Other expenses 0.05* 0.38**
Total Portfolio Operating 0.55% 0.60%**
Expenses
* "Other Expenses" for Florida Portfolio Class Y shares have been estimated
because no Florida Portfolio Class Y shares were outstanding for the period
ended March 31, 1996.
** Absent the management fee waiver and expense reimbursement, total expenses
would be incurred at the rate of 0.90%.
</TABLE>
Examples
The following examples are intended to assist an investor in
understanding the various costs that an investor will bear directly or
indirectly. The examples assume payment of operating expenses at the levels
set forth in the tables above.
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10Years*
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5.00% annual return
and (2) redemption at the end of
each time period:
Class A
Florida Portfolio $47 $61 $77 $124
Florida Limited Term Portfolio 8 43 61 111
Pro Forma
Class C
Florida Portfolio $23 $41 $70 $155
Florida Limited Term Portfolio 20 31 53 118
Pro Forma
Class Y
Florida Portfolio $ 6 $18 $31 $69
Florida Limited Term Portfolio 6 19 33 75
Pro Forma
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10Years
An investor would pay the following
expenses on the same annual return
and no redemption:
Class A
Florida Portfolio $47 $61 $77 $124
Florida Limited Term Portfolio 28 43 61 111
Pro Forma
Class C
Florida Portfolio $13 $41 $70 $155
Florida Limited Term Portfolio 10 31 53 118
Pro Forma
Class Y
Florida Portfolio $6 $18 $31 $69
Florida Limited Term Portfolio 6 19 33 75
Pro Forma
________________________
The examples also provide a means for the investor to compare expense levels
of funds with different fee structures over varying investment periods. To
facilitate such comparison, all funds are required to utilize a 5.00% annual
return assumption. However, each Portfolio's actual return will vary and may
be greater or less than 5.00%. These examples should not be considered
representations of past or future expenses and actual expenses may be greater
or less than those shown.
</TABLE>
SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Prospectus/Proxy Statement, the
Prospectus of the Florida Portfolio dated July 29, 1996 and the Florida
Limited Term Portfolio dated July 1, 1996, the Statement of Additional
Information of Smith Barney Muni Funds dated July 1, 1996 as amended July 29,
1996, and the Plan, a copy of which is attached to this Prospectus/Proxy
Statement as Exhibit A.
Proposed Reorganization. The Plan provides for the transfer of all or
substantially all of the assets of the Florida Limited Term Portfolio in
exchange for shares of the Florida Portfolio and the assumption by the Florida
Portfolio of certain liabilities of the Florida Limited Term Portfolio. The
Plan also calls for the distribution of shares of the Florida Portfolio to the
Florida Limited Term Portfolio shareholders in liquidation of the Florida
Limited Term Portfolio. As a result of the Reorganization, each shareholder of
the Florida Limited Term Portfolio will become the owner of that number of
full and fractional shares of the Florida Portfolio having an aggregate net
asset value equal to the aggregate net asset value of their shares of the
Florida Limited Term Portfolio, as of the close of business on the date that
the Florida Limited Term Portfolio's assets are exchanged for shares of the
Florida Portfolio (shareholders of Class A, Class C and Class Y shares of the
Florida Limited Term Portfolio will receive Class A, Class C and Class Y
shares, respectively, of the Florida Portfolio). See "Information About the
Reorganization."
For the reasons set forth below under "Reasons for the Reorganization,"
the Trustees of Smith Barney Muni Funds (the "Fund"), including all of the
Trustees who are "non-interested" Trustees, as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), have unanimously
concluded that the Reorganization would be in the best interests of the
shareholders of the Florida Limited Term Portfolio and that the interests of
the Florida Limited Term Portfolio's existing shareholders will not be diluted
as a result of the transaction contemplated by the Reorganization and
therefore has submitted the Plan for approval by the Florida Limited Term
Portfolio's shareholders. The Trustees of the Fund have reached similar
conclusions with respect to the Florida Portfolio and have also approved the
Reorganization with respect to the Florida Portfolio.
Pursuant to the Fund's restated Declaration of Trust, approval of the
Reorganization will require the affirmative vote of a holders of a majority of
the shares of the Florida Limited Term Portfolio represented in person or by
proxy and entitled to vote at a meeting of shareholders at which a quorum is
present, as determined in accordance with the By-Laws. According to the By-
Laws, the presence in person or by proxy of the holders of record of one-third
of the shares of the Florida Limited Term Portfolio, issued and outstanding
and entitled to vote shall constitute a quorum at shareholder meetings. For
purposes of voting, with respect to the Reorganization, the Class A, Class C
and Class Y, shares, if any, of the Florida Limited Term Portfolio shall vote
together as a single class.
Tax Consequences. Prior to completion of the Reorganization, the Fund
will have received an opinion from counsel that, upon the Reorganization and
the transfer of the assets of the Florida Limited Term Portfolio, no gain or
loss will be recognized by the Florida Limited Term Portfolio or its
shareholders for Federal income tax purposes. The holding period and tax
basis of shares of the Florida Portfolio that are received by each Florida
Limited Term Portfolio shareholder will be the same as the holding period and
tax basis of the shares of the Florida Limited Term Portfolio previously held
by such shareholder. In addition, the holding period and tax basis of the
assets of the Florida Limited Term Portfolio in the hands of the Florida
Portfolio as a result of the Reorganization will be the same as in the hands
of the Florida Limited Term Portfolio immediately prior to the Reorganization.
Investment Objectives, Policies and Restrictions. The Florida Limited
Term Portfolio and the Florida Portfolio have identical investment objectives,
and generally similar investment policies and investment restrictions. The
Florida Portfolio and the Florida Limited Term Portfolio each seek a high
level of income exempt from Federal income taxes by investing primarily in
obligations issued by the State of Florida, and its political subdivisions,
agencies and instrumentalities. In addition, each Portfolio seeks generally
to select investments that will enable its shares to be exempt from the
Florida intangibles tax. For a discussion of the differences between the
investment policies of the Florida Portfolio and the Florida Limited Term
Portfolio see "Comparison of Investment Objectives and Policies."
Purchase and Redemption Procedures. Purchases of shares of the Florida
Portfolio and the Florida Limited Term Portfolio may be made through a
brokerage account maintained with Smith Barney Inc. ("Smith Barney"), the
Fund's distributor, a broker that clears securities transactions through Smith
Barney on a fully disclosed basis (an "Introducing Broker") or an investment
dealer in the selling group, at their respective public offering prices (net
asset value next determined plus any applicable sales charge). Class A shares
of the Florida Portfolio are subject to a maximum initial sales charge of
4.00% of the public offering price and Class A shares of the Florida Limited
Term Portfolio are sold subject to a maximum initial sales charge of 2.00% of
the public offering price. Purchases of Class A shares of both Portfolios,
which when combined with current holdings of Class A shares offered with a
sales charge equal or exceed $500,000 in the aggregate, will be made at net
asset value with no sales charge, but will be subject to a CDSC of 1.00% on
redemptions within 12 months. Class C shares of both Portfolios are sold
without an initial sales charge but are subject to higher ongoing expenses
than Class A shares, and a CDSC payable upon certain redemptions. Class Y
shares of both Portfolios are sold without an initial sales charge or CDSC,
and are available only to investors investing a minimum of $5,000,000.
Class A shares, except as set forth in the preceding paragraph, and
Class Y shares of both Portfolios may be redeemed, at their respective net
asset values per share next determined without charge. Class C shares of both
Portfolios may be redeemed at their net asset value per share, subject to a
CDSC of 1.00% if such shares are redeemed during the first 12 months following
their purchase. Shares of both Portfolios held by Smith Barney as custodian
must be redeemed by submitting a written request to a Smith Barney Financial
Consultant. All other shares may be redeemed through a Smith Barney Financial
Consultant, Introducing Broker or dealer in the selling group or by forwarding
a written request for redemption to the transfer agent, First Data Investor
Services Group, Inc. ("First Data"). See "Redemption of Shares" in the
accompanying Prospectus of the Florida Portfolio.
Exchange Privileges. The exchange privileges available to shareholders
of the Florida Portfolio are identical to those available to shareholders of
the Florida Limited Term Portfolio. Shareholders of both the Florida Limited
Term Portfolio and the Florida Portfolio may exchange at net asset value all
or a portion of their shares for shares of the same Class in certain funds of
the Smith Barney Mutual Funds. Any exchange will be a taxable event for which
a shareholder may have to recognize a gain or a loss under Federal income tax
provisions. No initial sales charge is imposed on the shares being acquired,
and no CDSC is imposed on the shares being disposed of, through an exchange.
However, a sales charge differential may apply to exchanges of Class A shares
with other Smith Barney Mutual Funds. With respect to Class C shares of the
Portfolios, the Class C shares acquired in the exchange will be deemed to have
been purchased on the same date as the Class C shares that were exchanged. See
"Exchange Privilege" in the accompanying Prospectus of the Florida Portfolio.
Dividends. The dividend and distribution policies of both Portfolios
are identical. Each Portfolio's policy is to declare and pay dividends monthly
from substantially all of the Portfolio's net investment income. and both
Portfolio's declare and distribute any realized capital gains annually. Unless
a shareholder otherwise instructs, dividends and capital gains distributions
are reinvested automatically in additional shares of the same Class at net
asset value, subject to no sales charge or CDSC. The distribution option
currently in effect for a shareholder of the Florida Limited Term Portfolio
will remain in effect after the Reorganization. After the Reorganization,
however, the former Florida Limited Term Portfolio shareholders may change
their distribution option at any time by contacting a Smith Barney Financial
Consultant. See "Dividends, Distributions and Taxes" in the accompanying
prospectus of the Florida Portfolio.
Shareholder Voting Rights. The Florida Portfolio and the Florida
Limited Term Portfolio are both open-end management investment companies. Both
the Florida and Florida Limited Term Portfolios are separate series of Smith
Barney Muni Funds., a Massachusetts business trust having a Board of Trustees.
Shareholders of both Portfolios have identical voting rights. Neither Fund
holds meetings of shareholders annually, and as permitted by Massachusetts
law, normally no meeting of shareholders is held for the purpose of electing
Trustees unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders. At that time, the Trustees
of the Fund then in office will call a shareholders' meeting for the election
of Trustees. For purposes of voting with respect to the Reorganization, the
Class A, Class C and Class Y shares, if any, of the Florida Limited Term
Portfolio shall vote together as a single class.
In addition, under the laws of the Commonwealth of Massachusetts,
shareholders of the Florida Limited Term Portfolio do not have appraisal
rights in connection with a combination or acquisition of the assets of the
Florida Limited Term Portfolio by the Florida Portfolio. Shareholders of the
Florida Limited Term Portfolio may, however, redeem their shares at net asset
value (subject to any applicable CDSC) prior to the date of the
Reorganization.
RISK FACTORS
Due to the similarities of the investment objectives and policies of the
Florida Portfolio and the Florida Limited Term Portfolio, the investment risks
are also similar. Such risks are generally those typically associated with
investing primarily in obligations issued by a single state and its political
subdivisions, agencies and instrumentalities. Such risks are discussed under
the caption "Summary of Investment Objectives and Policies."
REASONS FOR THE REORGANIZATION
The Trustees of the Fund have determined that it is advantageous to
combine the Florida Limited Term Portfolio with the Florida Portfolio. The
Portfolios have identical investment objectives, similar investment policies
and the same Manager and shareholder servicing agent. In reaching this
conclusion, the Trustees considered a number of factors as described below.
Among the factors considered by the Trustees of the Fund was the
Manager's representation that the Florida Limited Term Portfolio does not have
sufficient assets to justify maintaining the Portfolio as a stand-alone fund.
At their September 4, 1996 meeting, the Trustees were advised that the
Florida Limited Term Portfolio, which has been in existence for more than
three years, had only $13.2 million in assets as of June 28, 1996. In
contrast, the assets of the Florida Portfolio reached $165.5 million as of
June 28, 1996, suggesting that investors prefer the advantages of Florida tax
exempt income with the higher yield potential offered by the securities held
by the Florida Portfolio rather than the greater relative price stability of
the intermediate-term securities in the Florida Limited Term Portfolio. The
Trustees were also informed that the Portfolio's assets have been growing at a
very slow rate and there is no foreseeable potential for significant future
growth. In addition, the Manager reminded the Trustees that Smith Barney has
been subsidizing the Florida Limited Term Portfolio by waiving its management
fee, with the exception of one year, and absorbing expenses since the
Portfolio's inception and noted that Smith Barney may be unwilling to continue
such subsidies indefinitely. The Trustees recognized that without these
subsidies the Florida Limited Term Portfolio would have had substantially
higher expense ratios and, as a result, significantly lower performance.
Specifically, the Trustees were shown financial information which indicated
that, without Smith Barney's subsidies, the total expenses of each of the
Portfolio's Classes would be almost doubled--going from 0.53% to 1.05% for
Class A shares and from 0.74% to 1.26% for Class C shares. The Trustees were
also shown pro forma information which indicated that the total expense ratio
of the Class A shares of the combined fund (assuming the same level of assets
of each Portfolio as of June 28, 1996) would be 0.70%--a decrease of 0.35%
from the unsubsidized total expense ratio of Class A shares of the Florida
Limited Term Portfolio. With respect to Class C shares, the pro forma
information showed that the total expense ratio of Class C shares of the
combined fund would be 1.28% or 0.2% higher than the unsubsidized total
expense ratio of Class C shares of the Florida Limited Term Portfolio.
However, in reaching their conclusion, the Trustees took into consideration
the fact that for the period ended June 28, 1996 the average annual total
return and yield of the Florida Portfolio's Class C shares was higher than
that of the Florida Limited Term Portfolio's Class C shares.
The Trustees also considered that the Reorganization would permit the
shareholders of the Florida Limited Term Portfolio to pursue substantially the
same investment goals in a larger fund. A larger fund should enhance the
ability of the Manager to effect portfolio transactions on more favorable
terms and give the Manager greater investment flexibility and the ability to
select a larger number of portfolio securities for the Portfolio, with the
attendant benefits of increased diversification. In addition, the larger
aggregate asset base could potentially result in lower overall expense ratios
through the spreading of both fixed and variable costs of Portfolio operations
over a larger asset base. As a general rule, economies can be expected to be
realized with respect to fixed expenses, such as costs of printing and fees
for professional services, although expenses that are based on the value of
assets or the number of shareholder accounts, such as custody fees, would be
largely unaffected by the Reorganization. In addition, the Trustees were
advised that the Reorganization would be effected as a tax-free
reorganization.
In light of the foregoing, the Trustees of the Fund, including the non-
interested Trustees, have determined that it is in the best interests of the
Florida Limited Term Portfolio and its shareholders to combine with the
Florida Portfolio. The Trustees have also determined that a combination of
the Florida Limited Term Portfolio and the Florida Portfolio would not result
in a dilution of the interests of the Florida Limited Term Portfolio
shareholders.
The Trustees of the Fund have also determined that it is advantageous to
the Florida Portfolio to acquire the assets of the Florida Limited Term
Portfolio. Among other reasons, the Trustees believe that: (1) the impact of
the Reorganization on the current expenses of the Florida Portfolio will be
minimal; (2) the portfolio securities of the Florida Limited Term Portfolio
are highly compatible with those of the Florida Portfolio and will be acquired
without any cost to the Florida Portfolio; and (3) the Reorganization will be
effected as a tax-free reorganization. Accordingly, the Trustees of the Fund,
including a majority of the non-interested Trustees, determined that the
Reorganization is in the best interests of the Florida Portfolio's
shareholders and that the interests of Florida Portfolio shareholders will not
be diluted as a result of the Reorganization.
INFORMATION ABOUT THE REORGANIZATION
Plan of Reorganization. The following summary of the Plan is qualified
in its entirety by reference to the Plan (Exhibit A hereto). The Plan
provides that the Florida Portfolio will acquire all or substantially all of
the assets of the Florida Limited Term Portfolio in exchange for shares of the
Florida Portfolio and the assumption by the Florida Portfolio of certain
liabilities of the Florida Limited Term Portfolio on January 17, 1997, or such
later date as may be agreed upon by the parties (the "Closing Date").
Prior to the Closing Date, the Florida Limited Term Portfolio will
endeavor to discharge all of its known liabilities and obligations. The
Florida Portfolio will not assume any liabilities or obligations of the
Florida Limited Term Portfolio other than those reflected in an unaudited
statement of assets and liabilities of the Florida Limited Term Portfolio
prepared as of the close of regular trading on the New York Stock Exchange,
Inc. (the "NYSE"), currently 4:00 p.m. New York time, on the Closing Date.
The Florida Portfolio will assume the liability for payment of any unpaid
amounts under the Florida Limited Term Portfolio's Rule 12b-1 plan which were
carried over as of the Closing Date. The number of full and fractional Class
A, Class C and Class Y shares of the Florida Portfolio to be issued to the
Florida Limited Term Portfolio shareholders will be determined on the basis of
the Florida Portfolio's and the Florida Limited Term Portfolio's relative net
asset values per Class A, Class C and Class Y shares, respectively, computed
as of the close of regular trading on the NYSE on the Closing Date. The net
asset value per share of each Class will be determined by dividing assets,
minus liabilities, by the total number of outstanding shares.
Both the Florida Limited Term Portfolio and the Florida Portfolio
utilize the same procedures to determine the value of their respective
portfolio securities. This method of valuation will be employed for the
Reorganization and will be consistent with the requirements set forth in each
Portfolio's Prospectus, Rule 22c-1 under the 1940 Act, and with the
interpretation of such rule by the SEC's Division of Investment Management.
At or prior to the Closing Date, the Florida Limited Term Portfolio
will, and the Florida Portfolio may, declare a dividend or dividends which,
together with all previous such dividends, shall have the effect of
distributing to their respective shareholders all taxable income for the
taxable year ending on or prior to the Closing Date (computed without regard
to any deduction for dividends paid). In addition, the Florida Limited Term
Portfolio's dividend will include all of its net capital gains realized in the
taxable year ending on or prior to the Closing Date (after reductions for any
capital loss carry forward).
As soon after the Closing Date as conveniently practicable, the Florida
Limited Term Portfolio will liquidate and distribute pro rata to shareholders
of record as of the close of business on the Closing Date the full and
fractional shares of the Florida Portfolio received by the Florida Limited
Term Portfolio. Such liquidation and distribution will be accomplished by the
establishment of accounts in the names of the Florida Limited Term Portfolio's
shareholders on the share records of the Florida Portfolio's shareholder
servicing agent. Each account will represent the respective pro rata number
of full and fractional shares of the Florida Portfolio due to each of the
Florida Limited Term Portfolio's shareholders. After such distribution has
been made and the affairs have been wound up, the Florida Limited Term
Portfolio will be terminated.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan. Notwithstanding approval of the Florida Limited Term
Portfolio's shareholders, the Plan may be terminated at any time at or prior
to the Closing Date by consent of the Board of Trustees of the Fund.
Pursuant to the Fund's restated Declaration of Trust, approval of the
Reorganization will require the affirmative vote of a holders of a majority of
the shares of the Florida Limited Term Portfolio represented in person or by
proxy and entitled to vote at a meeting of shareholders at which a quorum is
present, as determined in accordance with the By-Laws. According to the By-
Laws, the presence in person or by proxy of the holders of record of one-third
of the shares of the Florida Limited Term Portfolio, issued and outstanding
and entitled to vote shall constitute a quorum at shareholder meetings. For
purposes of voting, with respect to the Reorganization, the Class A, Class C
and Class Y, shares, if any, of the Florida Limited Term Portfolio shall vote
together as a single class.
Description of the Florida Portfolio's Shares. Full and fractional
shares of the respective class of shares of beneficial interest of the Florida
Portfolio will be issued to the Florida Limited Term Portfolio in accordance
with the procedures detailed in the Plan and as described in the Florida
Portfolio's Prospectus. Generally, the Florida Portfolio does not issue share
certificates to shareholders unless a specific request is submitted to the
Florida Portfolio's shareholder servicing agent. The shares of the Florida
Portfolio to be issued to the Florida Limited Term Portfolio shareholders and
registered on the shareholder records of the shareholder servicing agent will
have no preemptive rights. See "Information on Shareholders , Rights" and the
Prospectus of the Florida Portfolio for additional information with respect to
the shares of the Florida Portfolio.
Federal Income Tax Consequences. For Federal income tax purposes, the
exchange of assets of the Florida Limited Term Portfolio for shares of the
Florida Portfolio is intended to qualify as a tax-free reorganization under
Section 368 (a) of the Internal Revenue Code of 1986, as amended (the "Code").
As a condition to the closing of the Reorganization, the Florida Limited Term
Portfolio and the Florida Portfolio will receive an opinion from Sullivan &
Cromwell, to the effect that, on the basis of certain assumptions by counsel
and certain representations by the Florida Limited Term Portfolio and the
Florida Portfolio, as well as the existing provisions of the Code, U.S.
Treasury regulations issued thereunder, current administrative rules,
pronouncements and court decisions, for Federal income tax purposes, upon
consummation of the Reorganization, the following will apply:
(1) the transfer of all or substantially all of the Florida
Limited Term Portfolio's assets in exchange for the Florida
Portfolio's shares and the assumption by the Florida
Portfolio of certain liabilities of the Florida Limited Term
Portfolio will constitute a "reorganization" within the
meaning of Section 368(a)(1)(C) of the Code, and the Florida
Portfolio and the Florida Limited Term Portfolio are each a
"party to a reorganization" within the meaning of Section
368(b) of the Code;
(2) no gain or loss will be recognized by the Florida Portfolio
upon the receipt of the assets of the Florida Limited Term
Portfolio in exchange for the Florida Portfolio's shares and
the assumption by the Florida Portfolio of certain scheduled
liabilities of the Florida Limited Term Portfolio;
(3) no gain or loss will be recognized by the Florida Limited
Term Portfolio upon the transfer of the Florida Limited Term
Portfolio's assets to the Florida Portfolio in exchange for
the Florida Portfolio's shares and the assumption by the
Florida Portfolio of certain scheduled liabilities of the
Florida Limited Term Portfolio or upon the distribution
(whether actual or constructive) of the Florida Portfolio's
shares to the Florida Limited Term Portfolio's shareholders;
(4) no gain or loss will be recognized by shareholders of the
Florida Limited Term Portfolio upon the exchange of their
Florida Limited Term Portfolio shares for the Florida
Portfolio shares;
(5) the aggregate tax basis of the Florida Portfolio shares to
be received by each Florida Limited Term Portfolio
shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Florida Limited Term
Portfolio shares surrendered in exchange therefor and the
holding period of the Florida Portfolio shares to be
received by each Florida Limited Term Portfolio shareholder
will include the period during which the shares of the
Florida Limited Term Portfolio which are surrendered in
exchange therefor were held by such shareholder (provided
the Florida Limited Term Portfolio shares were held as
capital assets on the date of the Reorganization); and
(6) the tax basis of the Florida Limited Term Portfolio's assets
to be acquired by the Florida Portfolio will be the same as
the tax basis of such assets to the Florida Limited Term
Portfolio immediately prior to the Reorganization. The
holding period of the assets of the Florida Limited Term
Portfolio in the hands of the Florida Portfolio will include
the period during which such assets were held by the Florida
Limited Term Portfolio.
Shareholders of the Florida Limited Term Portfolio should consult their
tax advisors regarding the effect, if any, of the proposed Reorganization in
light of their individual circumstances. Since the foregoing discussion only
relates to the Federal income tax consequences of the Reorganization,
shareholders of the Florida Limited Term Portfolio should also consult their
tax advisors as to state and local tax consequences, if any, of the
Reorganization.
Capitalization. The following table, which is unaudited, shows the
capitalization of the Florida Portfolio and the Florida Limited Term
Portfolio as of November 8, 1996 and on a pro forma basis as of that date,
giving effect to the proposed acquisition of assets at net asset value:
<TABLE>
<S> <C> <C> <C>
(In thousands, except
per share values)
(Unaudited)
Florida Florida Limited Pro forma for
Class A Shares Portfolio Term Portfolio
Reorganization
Net Assets............... . $
Net asset value per share.
Shares outstanding........ ,
Class C Shares
Net Assets................ $
Net asset value per share.
Shares outstanding........
Class Y Shares
Net Assets................
Net asset value per share.
Shares outstanding........
As of the Record Date, there were __________outstanding Class A
shares,__________outstanding Class C shares and______outstanding Class Y
shares of the Florida Limited Term Portfolio and __________outstanding
Class A shares, __________outstanding Class C shares and
__________outstanding Class Y shares of the Florida Portfolio. As of
the Record Date, the officers and Trustees of Smith Barney Muni Funds as
a group beneficially owned less than 1% of the outstanding shares of the
Florida Limited Term Portfolio. Except as set forth below, to the best
knowledge of the Trustees of the Fund, as of the Record Date, no
shareholder or "group" (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), owned beneficially
or of record 5% or more of a Class of shares of the Florida Limited Term
Portfolio.
</TABLE>
<TABLE>
Percentage of Class Owned of Record
or Beneficially
Name and Fund and As of the Upon Consummation
Address Class Record Date of the Reorganization
<S> <C> <C> <C>
</TABLE>
INFORMATION ABOUT THE FLORIDA AND FLORIDA LIMITED TERM PORTFOLIOS
Management's Discussion and Analysis of Market Conditions and
Portfolio Review.
(through March 31, 1996)
We have summarized the period's prevailing economic and market conditions
below and outlined the various investment strategies employed by the
Portfolios during this time. .
Market and Economic Overview
Interest rates declined steadily over the first nine months of the fiscal
yearin response to low inflation and very sluggish economic growth. Over the
last three months of the fiscal year, however, interest rates rose sharply as
economic reports pointed to much stronger growth than was expected by most
market participants and concerns over the stalemated federal budget
negotiations continued.
In the past few months, the volatility of the municipal bond market has
increased and municipal bond yields have reached their highest levels in over
a year. However, despite continued uncertainty over the direction of short-
term interest rates, there were some signs of a possible municipal bond market
turnaround as the higher yields offered by municipal bonds began to attract a
growing number of individual and institutional investors. In our view,
municipal bonds represent good value and now may be the time for individuals
to consider participating in the tax-exempt market.
Florida Economic Highlights
Strong growth in service employment and trade have helped to keep Florida's
economic growth robust. Florida's economy continues to broaden and diversify
with substantial activity in the insurance and banking industries and export-
related industries on top of the Sunshine State's solid base of agriculture
and tourism. In addition, Florida has begun to attract a younger population
and we believe this changing demographic mix should be positive for the
State's economy over the long term.
Florida currently has a double-A rating from Moody's Investors Services, Inc.
and a double-A rating from Standard & Poor's Corporation, two major credit
report and bond rating agencies. We are confident that Florida's strong
economy will enable it to maintain its solid, double-A credit rating for the
foreseeable future.
1
<PAGE>
Florida Limited Term Portfolio's Performance
and Investment Strategy
For the year ended March 31, 1996, the Florida Limited Term Portfolio had a
tonal return of 7.35% and outperformed its intermediate-term Florida municipal
bond fund peer group average of 6.49%. Over 94% of the Florida Limited Term
Portfolio was in investment-grade securities. (An investment-grade security is
a security with a rating of BBB/Baa or better from S&P or Moody's.)
As an intermediate-term municipal bond fund, the Florida Limited Term
Portfolios restricted to an average life no longer than ten years. As of
March 31 1996, the Portfolio's weighted average maturity was just over 8 years
and the Portfolio had a heavy emphasis on premium bonds in the intermediate
range because these types of issues generally provide attractive income while
offering some protection from market volatility. The largest sectors of the
Florida Limited Term Portfolio were various types of bonds escrowed with U.S.
government securities (roughly 30%), hospitals (21%), housing (about 12%) and
pollution-control revenue bonds (approximately 14%).As turbulence in the
municipal bond market has increased, we have continued to emphasize a high-
quality credit orientation and a slightly defensive posture in the Florida
Limited Term Portfolio. In addition, we believe certain types of
intermediate-term municipal bonds can provide investors with an attractive
level of income without the higher interest rate risk of longer-term maturity
issues. Florida Portfolio's Performance and Investment Strategy
Florida Portfolio's Performance and Investment Strategy
For the year ended March 31, 1996, the Florida Portfolio generated a total
return of 8.65% for Class A shares which compares favorably with its Lipper
Analytical Services, Inc. peer group average of 7.13%. (Lipper Analytical
Services, Inc. is a major fund tracking organization.)
During the period covered by this report, the Florida Portfolio maintained its
high credit quality. Over 82% of the Portfolio was in investment-grade
securities. Approximately 50% of the Florida Portfolio had a triple-A rating
and most of these issues were credit-enhanced and insured primarily with the
Municipal Bond Insurance Association (MBIA), the American Bond Assurance
Corporation (AMBAC) or the Financial Guarantee Insurance Corporation (FGIC).
The average weighted maturity of the Florida Portfolio was just over 19 years
and the Portfolio had excellent call protection. The three largest sectors of
the broadly diversified Florida Portfolio were housing (just under
17%),hospitals (just below 13%) and prerefunded bonds (just under 12%) because
we believe these issues represented good value.
Because of recent increased turbulence in the municipal bond market, we
believe the Portfolio's high credit-quality orientation, good call protection
and broad sector diversification is a prudent investment strategy. In our
view, this investment approach should continue to provide investors with a
competitive
stream of income while at the same time helping to minimize the fluctuation of
the Portfolio's net asset value in a volatile market.
Outlook While the day-to-day volatility in the fixed income markets is likely
to continue, the sharp increase in interest rates over the last two months has
made long-term municipal bonds more attractive on a relative basis. In our
view, competitive pressures in the global economy and changing demographics
should help to keep inflation in check. (Labor costs constitute roughly two-
thirds of the total cost of all finished goods.) We believe long-term
municipal bonds currently represent good value and offer investors a healthy
risk premium over inflation. In addition, with long-term municipal bonds
providing roughly 90% of the yield available on comparable maturity Treasury
securities, we believe investors are well compensated for the potential risks
of all but the most radical tax reform proposals currently in circulation. It
was not too long ago that the "flat tax" issue was touted as potentially the
biggest issue of the upcoming Presidential election in November. The exit of
Republican candidate Steven Forbes from the Presidential race has caused the
flat tax to recede from the political debate. However, between now and
November, tax reform again could move into the political spotlight as the
campaign intensifies. In closing, we believe there is little chance that
radical tax reforms will be enacted. In our view, the municipal bond market
remains quite attractive and we believe the Portfolios are well positioned in
the current environment
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion, which summarizes the investment objectives,
policies and restrictions of the Florida Portfolio and the Florida Limited
Term Portfolio, is based upon and qualified in its entirety by the investment
objectives, policies and restriction sections of the Prospectuses of the
Florida Portfolio and the Florida Limited Term Portfolio. For a full
discussion of the investment objectives, policies and restrictions of each
Portfolio, refer to the Prospectus, which accompanies this Prospectus/Proxy
Statement, under the captions, "Investment Objective and Management Policies."
Investment Objective. The principal investment objective of the Florida
Portfolio is identical to that of the Florida Limited Term Portfolio, in that
each seeks as high a level of income exempt from Federal income taxes as is
consistent with prudent investing. Both the Florida Portfolio's and the
Florida Limited Term Portfolio's investment objective is fundamental and, as
such, may be changed only by the "vote of a majority of the outstanding voting
securities," as defined in the 1940 Act. The investment policies of the
Florida Portfolio and the Florida Limited Term Portfolio are non-fundamental
and, as such, may be changed by the Board of Trustees, without shareholder
approval, provided such change is not prohibited by the investment
restrictions (which are set forth in the Statement of Additional Information)
or applicable law, and any such change will first be disclosed in the then
current prospectus.
Primary Investments. The Florida Portfolio and the Florida Limited
Term Portfolio invest primarily in obligations issued by the State of Florida,
its political subdivisions, agencies and instrumentalities, the interest from
which is in the opinion of bond counsel for the various issuers, exempt from
Federal income taxes at the time of their issuance ("Municipal Obligations").
Such obligations are issued to raise money for a variety of public projects
that enhance the quality of life including health facilities, housing,
airports, schools, highways and bridges. The Portfolios operate subject to a
fundamental policy providing that , under normal market conditions, the
Portfolios will invest at least 65% of their total assets in municipal
obligations issued by the State of Florida, its political subdivisions and
their agencies and instrumentalities and in other municipal obligations which
are exempt from the Florida intangibles tax. The Portfolios also operate
subject to a fundamental policy that, under normal market conditions, the
Portfolios will seek to invest at least 100% of their assets and the
Portfolios will not invest less than 80% of their assets in municipal
obligations the interest on which is exempt from Federal income taxes(other
than the alternative minimum tax). Each Portfolio may invest without limit in
municipal obligations whose interest is a tax preference for purposes of the
Federal alternative minimum tax. The Florida Limited Term Portfolio, however,
invests at least 80% of its assets in obligations with remaining maturities of
less than ten years and the dollar-weighted average maturity of the entire
portfolio will normally not exceed ten years. The Florida Portfolio is not
restricted with respect to either the maturities of the obligations or the
dollar-weighted average maturity of the whole Portfolio and invests in
obligations of varying maturities.
Municipal bonds purchased for the Portfolios must, at the time of
purchase, be investment-grade municipal bonds and at least two-thirds of the
Portfolios' municipal bonds must be rated in the category of A or better.
Investment grade bonds are those rated Aaa, Aa, A and Baa by Moody's Investors
Service, Inc. ("Moody's) and AAA, AA, A and BBB by Standard & Poor's
Corporation ("S&P) or have an equivalent rating by any nationally recognized
statistical rating organization; prerefunded bonds escrowed by U.S. Treasury
obligations will be considered AAA-rated even though the issuer does not
obtain a new rating. Up to one-third of the assets of the Portfolios may be
invested in municipal bonds rated Baa or BBB or in unrated municipal bonds,
if, based upon credit analysis by the Manager, it is believed that such
securities are at least of comparable quality to those securities in which the
Portfolios may invest. After the Portfolios purchase a municipal bond, the
issuer may cease to be rated or its rating may be reduced below the minimum
required for purchase. Such an event would not require the elimination of the
issue from the Portfolio but the Manager will consider such an event in
determining whether the Portfolio should continue to hold the security. The
Portfolios' short-term municipal obligations will be limited to high grade
obligations (obligations that are secured by the full faith and credit of the
United States or are rated MIG1 or MIG2, VMIG1 or VMIG2 or Prime-1 or Aa or
better by Moody's or SP-1+, SP-1, SP-2, or A-1 or AA or better by S&P or have
an equivalent rating by any nationally recognized statistical rating
organization or obligations determined by the Manager to be equivalent). Among
the types of short-term instruments in which the Portfolios may invest are
floating or variable rate term demand instruments, tax-exempt commercial paper
(generally having a maturity of less than nine months), and other types of
notes generally having maturities of less than three years, such as Tax
Anticipation Notes, Revenue Anticipation Notes, Tax and Revenue Anticipation
Notes and Bond Anticipation Notes. Demand instruments usually have an
indicated maturity of more than one year, but contain a demand feature that
enables the holder to redeem the investment on no more than 30 days' notice;
variable rate demand instruments provide for automatic establishment of a new
interest rate on set dates; floating rate demand instruments provide for
automatic adjustment of their interest rates whenever some other specified
interest rate changes (e.g., the prime rate). The Portfolios may purchase
participation interests ("Participations") in variable rate tax-exempt
securities (such as Industrial Development Bonds) owned by banks.
Participations are frequently backed by an irrevocable letter of credit or
guarantee of a bank that the Manager has determined meets the prescribed
quality standards for the Portfolios. Participations will be purchased only if
management believes interest income on such Participations will be tax-exempt
when distributed as dividends to shareholders.
Municipal Obligations. Municipal Obligations are classified as
general obligation and revenue. General obligations are secured by a municipal
issuer's pledge of its full faith, credit and taxing power for the payment of
principal and interest. Revenue obligations are payable only from the revenues
derived from a particular facility or class of facilities or, in some cases
from the proceeds of a special excise tax or other specific revenue source,
but not from general taxing power. Notes are short-term obligations of issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues.
In attempting to achieve their investment objective, the Portfolios may
employ, among others, the following portfolio strategies:
Illiquid Securities. The Florida Portfolio and the Florida Limited Term
Portfolio may invest up to 10% and 15%, respectively, of the value of its net
assets in illiquid securities, including those that are not readily marketable
or for which there is no readily established market.
Municipal Bond Index Futures. Each Portfolio may invest in municipal
bond index futures (currently traded on the Chicago Board of Trade) or in
listed contracts based on U.S. Government securities as a hedging policy in
pursuit of its investment objective; provided that immediately thereafter not
more than 331/3% of its net assets would be hedged or the amount of margin
deposit on the Portfolio's existing futures contracts would not exceed 5% of
the value of its total assets. Since any income would be taxable, it is
anticipated that such investments would be made only in those circumstances
when the Manager anticipates the possibility of an extreme change in interest
rates or in market conditions but does not wish to liquidate the Portfolio's
securities.
Temporary Investments. Under normal circumstances, the Portfolios may
invest up to 20% of their assets in taxable fixed income securities, but only
in obligations issued or guaranteed by the full faith and credit of the United
States, and may invest more than 20% of its assets in U.S. Government
securities during periods when in the Manager's opinion a temporary defensive
posture is warranted, including any period when the Portfolio's monies
available for investment exceed the municipal obligations available for
purchase that meet the Portfolio's rating, maturity and other investment
criteria.
When Issued Securities. Each Portfolio may purchase new issues of
Municipal Obligations on a when-issued basis, which means that delivery and
payment for such securities normally take place within 45 days after the date
of the commitment to purchase. Each Portfolio will not accrue income with
respect to a when-issued security prior to its stated delivery date. When-
issued securities may decline in value before this actual delivery to a
Portfolio. Each Portfolio will establish a segregated account with the
Portfolio's custodian consisting of cash or other liquid high grade debt
securities) in an amount equal to the purchase price of the Fund's when-issued
commitments. The Portfolio generally will purchase Municipal Obligations on a
when-issued basis only with the intention of actually acquiring the
securities, but the Portfolio may sell such securities before the delivery
date if it is deemed advisable.
The Portfolios may also engage in short -term trading consistent with
their investment objective
Restrictions. Each Portfolio has adopted the following fundamental
investment restrictions for the protection of its shareholders, which
restrictions may not be changed without the approval of the holders of a
majority, as defined in the 1940 Act, of the voting securities of the
respective Portfolio:
1. The Portfolios may not invest more than 25% of their total assets taken
at market value in any one industry, except that securities of the U.S.
Government, its agencies and instrumentalities, and Municipal Obligations of
Florida are not considered an industry for purposes of this limitation.
2. Neither Portfolio may borrow money, except that each Portfolio may borrow
from banks for temporary purposes (such as facilitating redemptions or for
extraordinary or emergency purposes) in an amount not exceeding 10% of the
value of such Portfolio's total assets at the time the borrowing is made (not
including the amount borrowed) and no investments will be made while
borrowings exceed 5% of total assets. Each Portfolio is further prohibited
from pledging, or mortgaging its assets, except to secure permitted borrowing.
3. Neither Portfolio may make loans, except to the extent the purchase of
bonds or other evidences of indebtedness or the entry into repurchase
agreements or deposits with banks, including the Portfolio's custodian, may be
considered loans.
4. Neither Portfolio may purchase securities on margin.
5. Neither Portfolios may make short sales of securities.
6. Neither Portfolio may purchase or hold any real estate, except that each
Portfolio may invest in securities secured by real estate or interests therein
or issued by persons (other than real estate investment trusts) which deal in
real estate or interests therein.
7. Neither Portfolio may purchase or sell commodities and commodity
contracts, except that each Portfolio may invest in or sell municipal bond
index futures contracts as described above, provided that immediately
thereafter not more than 33 1/3% of its net assets would be hedged or the
amount of margin deposits on the Portfolio's existing futures contracts would
not exceed 5% of the value of its total assets.
8. Neither Portfolio may act as an underwriter of securities of other
issuers.
9. Neither Portfolio may write or purchase puts, calls, straddles, or spread
options.
Other Restrictions. As a matter of operating policy, the Portfolios may not
(1) purchase oil, gas or other mineral lease rights or royalty contracts or
exploration or development programs, except that each Portfolio may invest in
securities of issuers which operate, invest in, or sponsor such programs; or
(2) invest more than 5% of their assets in unseasoned issuers, including their
predecessors, which have been in operation for less than three years.
INFORMATION ON SHAREHOLDERS' RIGHTS
General. The Florida Portfolio and the Florida Limited Term Portfolio,
each a series of Smith Barney Muni Funds, are open-end, non-diversified
management investment companies registered under the 1940 Act, which
continuously offer to sell shares at their current net asset value. Smith
Barney Muni Funds were organized on August 14, 1985 under the laws of
Massachusetts and is a business entity commonly known as a Massachusetts
business trust. Smith Barney Muni Funds is governed by its Declaration of
Trust, By-Laws and Trustees. Each Portfolio is also governed by Massachusetts
state and federal law.
The beneficial interest in the Portfolios is divided into shares,
all with a par value of $.001 per share. The number of authorized shares of
Smith Barney Muni Funds that may be issued is unlimited. The Trustees of Smith
Barney Muni Funds have authorized the issuance of twenty series of shares,
each representing shares in one of twenty portfolios, and may authorize the
issuance of additional series of shares in the future. In each Portfolio,
Class A shares, Class C shares and Class Y shares represent interests in the
assets of the Portfolio and have identical voting, dividend, liquidation and
other rights on the same terms and conditions except that expenses related to
the distribution of each class of shares are borne solely by each class and
each class of shares has exclusive voting rights with respect to provisions of
each Portfolio's Rule 12b-1 distribution plan which pertains to a particular
class.
. Trustees The Declaration of Trust of Smith Barney Muni Funds provides
that the term of office of each Trustee shall be from the time of his or her
election until the termination of the trust or until such Trustee sooner dies,
resigns or is removed. A Trustee of Smith Barney Muni Funds may be removed
with cause by written instrument, signed by at least two-thirds of the
remaining Trustees. Vacancies on the Board of Smith Barney Muni Funds may be
filled by the Trustees remaining in office. A meeting of shareholders will be
required for the purpose of electing additional Trustees whenever fewer than a
majority of the Trustees then in office were elected by shareholders.
Voting Rights. Neither Portfolio holds a meeting of shareholders
annually, and there normally is no meeting of shareholders for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders. A meeting of
shareholders of a Portfolio, for any purpose, must be called upon the written
request of shareholders holding at least 25% of such Portfolio's outstanding
shares. On each matter submitted to a vote of the shareholders of a Portfolio,
each shareholder is entitled to one vote for each whole share owned and a
proportionate, fractional vote for each fractional share outstanding in the
shareholder's name on the Portfolio's books. With respect to matters relating
to Smith Barney Muni Funds requiring a majority shareholder vote as described
in the Declaration of Trust, a majority of shares represented in person or by
proxy and entitled to vote at a meeting of shareholders at which a quorum is
present shall decide such matter. In cases where the vote is submitted to the
holders of one or more but not all series or classes, a majority of the
outstanding shares of the particular series or class affected by the matter
shall decide such matter.
Liquidation or Termination. In the event of the liquidation or
termination of any of the portfolios of Smith Barney Muni Funds, the
shareholders of the respective Portfolio are entitled to receive, when, and as
declared by the Trustees, as the case may be, the excess of the assets over
the liabilities belonging to the liquidated or terminated portfolio of Smith
Barney Muni Funds. The assets so distributed to shareholders of the
liquidated or terminated portfolio of Smith Barney Muni Funds will be
distributed among the shareholders in proportion to the number of shares of
the particular class held by them and recorded on the books of the liquidated
or terminated portfolio of Smith Barney Muni Funds.
Liability of Trustees.. Under the Declaration of Trust and By-Laws of
Smith Barney Muni Funds, a Trustee will be personally liable only for his or
her own willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee. The
Declaration of Trust of Smith Barney Muni Funds further provides that Trustees
and officers will be indemnified for the expenses of litigation against them
unless it is determined that the person did not act in good faith in the
reasonable belief that the person's actions were in or not opposed to the best
interest of Smith Barney Muni Funds or the person's conduct is determined to
constitute willful misfeasance, bad faith, gross negligence or reckless
disregard of the person's duties.
Rights of Inspection. Shareholders of Smith Barney Muni Funds have the
same inspection rights as are permitted shareholders of a Massachusetts
corporation under Massachusetts corporate law. Currently, each shareholder of
a Massachusetts corporation is permitted to inspect the records, accounts and
books of a corporation for any legitimate business purpose.
Shareholder Liability. Under Massachusetts law, shareholders of a
Massachusetts business trust may, under certain circumstances, be held
personally liable for the obligations of such Massachusetts business trust.
Smith Barney Muni Funds' Declaration of Trust, however, disclaims shareholder
liability for acts or obligations of Smith Barney Muni Funds and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Fund. Smith Barney Muni Fund's Declaration of
Trust also provides for indemnification out of the property of Smith Barney
Muni Funds for all losses and expenses of any shareholder held personally
liable for the obligations of the fund. Shares of the Florida Portfolio issued
to the shareholders of the Florida Limited Term Portfolio in the
Reorganization will be fully paid and nonassessable when issued, transferable
without restrictions and will have no preemptive rights.
The foregoing is only a summary of certain characteristics of the
operations of the Florida and Florida Limited Term Portfolios. The foregoing
is not a complete description of the documents cited. Shareholders should
refer to the provisions of the trust documents and Massachusetts law governing
the Portfolios for a more thorough description.
.
ADDITIONAL INFORMATION ABOUT
THE FLORIDA PORTFOLIO
AND THE FLORIDA LIMITED TERM PORTFOLIO
The Florida Limited Term Portfolio. Information about the Florida
Limited Term Portfolio is incorporated herein by reference from its current
Prospectus dated July 1, 1996, a copy of which is enclosed herewith, and in
the Statement of Additional Information dated July 1, 1996 as amended July 29,
1996, which has been filed with the SEC. A copy of such Statement of
Additional Information is available upon request and without charge by writing
to Smith Barney Muni Funds on behalf of the Florida Limited Term Portfolio at
388 Greenwich Street, New York, New York 10013 or by calling (800) 224-7523.
The Florida Portfolio. Information concerning the operation and
management of the Florida Portfolio is incorporated herein by reference from
its current Prospectus dated July 29, 1996, a copy of which is enclosed
herewith, and the Statement of Additional Information dated July 1, 1996 as
amended July 29, 1996, which has been filed with the SEC. A copy of such
Statement of Additional Information is available upon request and without
charge by writing to Smith Barney Muni Funds on behalf of the Florida
Portfolio at 388 Greenwich Street, New York, New York 10013 or by calling
(800) 224-7523.
Both the Florida Portfolio and the Florida Limited Term Portfolio are
subject to the informational requirements of the Exchange Act and in
accordance therewith file reports and other information including proxy
material, reports and charter documents with the SEC. These reports can be
inspected and copies obtained at the Public Reference Facilities maintained by
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the New York
Regional Office of the SEC, 75 Park Place, New York, New York 10007. Copies
of such material can also be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, SEC, Washington, D.C. 20549 at
prescribed rates.
OTHER BUSINESS
The Trustees of Smith Barney Muni Funds do not intend to present any
other business at the Meeting. If, however, any other matters are properly
brought before the Meeting, the persons named in the accompanying form of
proxy will vote thereon in accordance with their judgment.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Trustees of the Fund to be used at the
Special Meeting of Shareholders to be held at 10:00 a.m. New York City time on
January 10, 1997, at 388 Greenwich Street, New York, New York 10013 and at any
adjournments thereof. This Prospectus/Proxy Statement, along with a Notice of
the Meeting and a proxy card, is first being mailed to shareholders of the
Florida Limited Term Portfolio on or about November 30, 1996. Only
shareholders of record as of the close of business on the Record Date will be
entitled to notice of, and to vote at, the Meeting or any adjournment thereof.
The holders of a majority of the shares of the Florida Limited Term Portfolio
outstanding at the close of business on the Record Date present in person or
represented by proxy will constitute a quorum for the Meeting. For purposes of
determining a quorum for transacting business at the Meeting, abstentions and
broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which
the brokers or nominees do not have discretionary power) will be treated as
shares that are present but which have not been voted. For this reason,
abstentions and broker "non-votes" will have the effect of a "no" vote for
purposes of obtaining the requisite approval of the Plan. If the enclosed
form of proxy is properly executed and returned in time to be voted at the
Meeting, the proxies named therein will vote the shares represented by the
proxy in accordance with the instructions marked thereon. Unmarked proxies
will be voted FOR the proposed Reorganization and FOR any other matters deemed
appropriate. A proxy may be revoked at any time on or before the Meeting by
written notice to the Secretary of the Smith Barney Muni Funds, 388 Greenwich
Street, New York, New York 10013. Unless revoked, all valid proxies will be
voted in accordance with the specifications thereon or, in the absence of such
specifications, FOR approval of the Plan and the Reorganization contemplated
thereby.
Pursuant to the Fund's restated Declaration of Trust, approval of the
Reorganization will require the affirmative vote of a holders of a majority of
the shares of the Florida Limited Term Portfolio represented in person or by
proxy and entitled to vote at a meeting of shareholders at which a quorum is
present, as determined in accordance with the By-Laws. According to the By-
Laws, the presence in person or by proxy of the holders of record of one-third
of the shares of the Florida Limited Term Portfolio, issued and outstanding and
entitled to vote shall constitute a quorum at the Meeting. For purposes of
voting with respect to the Reorganization, the Class A Class C, and Class Y
shares, if any, will vote together as a single class. Shareholders of the
Florida Limited Term Portfolio are entitled to one vote for each share.
Fractional shares are entitled to proportional voting rights.
Proxy solicitations will be made primarily by mail, but proxy
solicitations may also be made by telephone, telegraph or personal interviews
conducted by officers or employees of Smith Barney and its affiliates and/or
by First Data, the transfer agent of the Fund. In addition, Applied Mailing
Systems, Inc., an affiliate of the transfer agent ("Applied Mailing") or an
agent of Applied Mailing, may call shareholders of the Florida Limited Term
Portfolio to ask if they would be willing to have their votes recorded by
telephone. The telephone voting procedure is designed to authenticate the
shareholder's identity by asking the shareholder to provide his social
security number, in the case of an individual, or a taxpayer identification
number, in the case of an entity. The shareholder's telephone vote will be
recorded and a confirmation will be sent to the shareholder to ensure that the
vote has been taken in accordance with the shareholder's instructions.
Shareholders voting by telephone may vote for or against each proposal
separately. Although a shareholder's vote may be taken by telephone, each
shareholder will receive a copy of this Prospectus/Proxy Statement and may
vote by mail using the enclosed proxy card. The Fund has been advised that
this telephonic voting system complies with Massachusetts state law. The
aggregate cost of solicitation of the shareholders of the Florida Limited Term
Portfolio is expected to be approximately [ ].Expenses of the
Reorganization, including the costs of proxy solicitation, the preparation of
this Prospectus/Proxy Statement and enclosures attached hereto and
reimbursement of expenses for forwarding solicitation material to beneficial
owners of shares of the Florida Limited Term Prospectus and expenses incurred
in connection with the preparation of this Prospectus/ Proxy Statement will be
borne by [the Florida and Florida Limited Term Portfolio in proportion to
their assets]
In the event that sufficient votes to approve the Reorganization are not
received by the Portfolio by January 10, 1997, the persons named as proxies
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. In determining whether to adjourn the Meeting, the
following factors may be considered: the percentage of votes actually cast,
the percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect
to the reasons for the solicitation. Any such adjournment will require an
affirmative vote by the holders of a majority of the shares present in person
or by proxy and entitled to vote at the Meeting. The persons named as proxies
will vote upon such adjournment after consideration of the best interests of
all shareholders.
The votes of the shareholders of the Florida Portfolio are not being
solicited by this Prospectus/Proxy Statement.
FINANCIAL STATEMENTS AND EXPERTS
The statements of assets and liabilities, including the schedules of
investments, of the Florida Limited Term Portfolio and the Florida Portfolio
as of March 31, 1996, and the related statements of operations, for the year
then ended, changes in net assets for each of the years in the two-year period
then ended and financial highlights for each of the years in the five-year
period then ended, have been incorporated by reference into the Statement of
Additional Information relating to this Prospectus/Proxy Statement in reliance
on the report of KPMG Peat Marwick LLP, independent auditors for the Florida
Limited Term Portfolio and the Florida Portfolio, given on the authority of
such firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the
Florida Portfolio will be passed upon Sullivan & Cromwell, 125 Broad Street,
New York, NY 10004. In rendering such opinion, Sullivan & Cromwell may rely
on an opinion of Goodwin, Procter & Hoar as to certain matters under
Massachusetts law.
THE TRUSTEES OF THE FUND, INCLUDING THE "NON-INTERESTED" TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL OF THE PLAN, AND ANY UNMARKED
PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN
FAVOR OF APPROVAL OF THE PLAN.
EXHIBIT A
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan") is adopted as of this [ ]the
day of [ ], 1996, by Smith Barney Muni Funds ("Smith Barney Muni
Funds"), a Massachusetts business trust with its principal place of business
at 388 Greenwich Street, New York, New York 10013, on behalf of the Florida
Portfolio (the "Acquiring Fund") and the Florida Limited Term Portfolio (the
"Acquired Fund").
This Plan is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1)(C) of the United
States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all or
substantially all of the assets of the Acquired Fund in exchange for Class A,
Class C and Class Y shares of beneficial interest of the Acquiring Fund
(collectively, the "Acquiring Fund Shares" and each, an "Acquiring Fund
Share") and the assumption by the Acquiring Fund of certain scheduled
liabilities of the Acquired Fund and the distribution, after the Closing Date
herein referred to, of Acquiring Fund Shares to the shareholders of the
Acquired Fund in liquidation of the Acquired Fund and the termination of the
Acquired Fund, all upon the terms and conditions hereinafter set forth in this
Plan.
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING FUND
SHARES AND ASSUMPTION OF THE ACQUIRED FUND'S SCHEDULED LIABILITIES AND
LIQUIDATION AND TERMINATION OF THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth, the Acquired
Fund agrees to transfer its assets as set forth in paragraph 1.2 to the
Acquiring Fund, and the Acquiring Fund agrees in exchange therefor: (i) to
deliver to the Acquired Fund the number of Class A Acquiring Fund Shares,
including fractional Class A Acquiring Fund Shares, determined by dividing the
value of the Acquired Fund's net assets attributable to its Class A shares,
computed in the manner and as of the time and date set forth in paragraph 2.1,
by the net asset value of one Class A Acquiring Fund Share, computed in the
manner and as of the time and date set forth in paragraph 2.2; (ii) to deliver
to the Acquired Fund the number of Class C Acquiring Fund Shares, including
fractional Class C Acquiring Fund Shares, determined by dividing the value of
the Acquired Fund's net assets attributable to its Class C shares, computed in
the manner and as of the time and date set forth in paragraph 2.1, by the net
asset value of one Class C Acquiring Fund Share, computed in the manner and as
of the time and date set forth in paragraph 2.2; and (iii) to deliver to the
Acquired Fund the number of Class Y Acquiring Fund Shares, including
fractional Class Y Acquiring Fund Shares, determined by dividing the value of
the Acquired Fund's net assets attributable to its Class Y shares computed in
the manner and as of the time and date set forth in paragraph 2.1, by the net
asset value of one Class Y Acquiring Fund Share, computed in the manner and as
of the time and date set forth in paragraph 2.2.; and (iv) to assume certain
scheduled liabilities of the Acquired Fund, as set forth in paragraph 1.3.
Such transactions shall take place at the closing provided for in paragraph
3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all or substantially all of its property, including,
without limitation, all cash, securities and dividends or interest receivables
which are owned by the Acquired Fund and any deferred or prepaid expenses
shown as an asset on the books of the Acquired Fund on the closing date
provided in paragraph 3.1 (the "Closing Date").
1.3. The Acquired Fund will endeavor to discharge all its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund
shall assume all liabilities, expenses, costs, charges and reserves reflected
on an unaudited Statement of Assets and Liabilities of the Acquired Fund as of
the Valuation Date (as defined in paragraph 2.1), in accordance with generally
accepted accounting principles consistently applied from the prior audited
period. The Acquiring Fund shall assume only those liabilities of the
Acquired Fund reflected in that unaudited Statement of Assets and Liabilities
and shall not assume any other liabilities, whether absolute or contingent,
not reflected thereon.
1.4. As provided in paragraph 3.3, as soon after the Closing Date as is
conveniently practicable (the "Liquidation Date"), the Acquired Fund will
liquidate and distribute pro rata to the Acquired Fund's shareholders of
record determined as of the close of business on the Closing Date (the
"Acquired Fund Shareholders"), the Acquiring Fund Shares it receives pursuant
to paragraph 1.1. Shareholders of Class A, Class C and Class Y shares of the
Acquired Fund shall receive Class A, Class C and Class Y shares, respectively,
of the Acquiring Fund. Such liquidation and distribution will be accomplished
by the transfer of the Acquiring Fund Shares then credited to the account of
the Acquired Fund on the books of the Acquiring Fund to open accounts on the
share records of the Acquiring Fund in the name of the Acquired Fund's
shareholders and representing the respective pro rata number of the Acquiring
Fund Shares due such shareholders. All issued and outstanding shares of the
Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund, although share certificates representing interests in the Acquired Fund
will represent a number of Acquiring Fund Shares after the Closing Date as
determined in accordance with paragraph 1.1. The Acquiring Fund shall not
issue certificates representing the Acquiring Fund Shares in connection with
such exchange.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent. Acquiring Fund Shares will be issued in
the manner described in the Acquiring Fund's current prospectus and statement
of additional information.
1.6. Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the Acquired Fund Shares
on the books of the Acquired Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.7. The Acquired Fund shall, following the Closing Date and the making
of all distributions pursuant to paragraph 1.4, be terminated under the laws
of the Commonwealth of Massachusetts and in accordance with its governing
documents.
2. VALUATION
2.1. The value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets computed as of the
close of regular trading on the New York Stock Exchange, Inc. (the "NYSE") on
the Closing Date (such time and date being hereinafter called the "Valuation
Date"), using the valuation procedures set forth in the Acquiring Fund's then
current prospectus or statement of additional information.
2.2. The net asset value of Acquiring Fund Shares shall be the net
asset value per share computed as of the close of regular trading on the NYSE
on the Valuation Date, using the valuation procedures set forth in the
Acquiring Fund's then current prospectus or statement of additional
information.
2.3. All computations of value shall be made by Smith Barney Mutual
Funds Management Inc. in accordance with its regular practice as pricing agent
for the Acquired Fund and the Acquiring Fund, respectively.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be January 17, 1997, or such later date as
the Acquired Fund and the Acquiring Fund may adopt by resolution of Smith
Barney Muni Funds' Board of Trustees. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business on
the Closing Date unless otherwise provided. The Closing shall be held as of
5:00 p.m. at the offices of Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013, or at such other time and/or place as Smith Barney Muni Funds
may adopt by resolution of its Board of Trustees.
3.2. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be
restricted or (b) trading or the reporting of trading on the NYSE or elsewhere
shall be disrupted so that accurate appraisal of the value of the net assets
of the Acquiring Fund or the Acquired Fund is impracticable, the Closing Date
shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
3.3. The Acquired Fund shall deliver at the Closing a list of the names
and addresses of the Acquired Fund's shareholders and the number and
percentage ownership of outstanding shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited to the
Acquired Fund's account on the Closing Date.
3.4. The Closing is contingent upon receipt by Smith Barney Muni Funds
of a favorable opinion of Sullivan & Cromwell, addressed to Smith Barney Muni
Funds and satisfactory to Christina T. Sydor, Esq., as Secretary of Smith
Barney Muni Funds, based upon certain assumptions by counsel and certain
representations by the Acquiring Fund and the Acquired Fund substantially to
the effect that for federal income tax purposes:
(a) the transfer of all or substantially all of the Acquired Fund's
assets in exchange for the Acquiring Fund Shares and the assumption by
the Acquiring Fund of certain scheduled liabilities of the Acquired Fund
will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) of the Code, and the Acquiring Fund and the Acquired Fund
will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code; (b) no gain or loss will be recognized by the
Acquiring Fund upon the receipt of the assets of the Acquired Fund in
exchange for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of certain scheduled liabilities of the Acquired Fund;
(c) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund
of certain scheduled liabilities of the Acquired Fund or upon the
distribution (whether actual or constructive) of the Acquiring Fund
Shares to the Acquired Fund's shareholders; (d) no gain or loss will be
recognized by shareholders of the Acquired Fund upon the exchange of
their Acquired Fund shares for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of certain scheduled liabilities of the
Acquired Fund; (e) the aggregate tax basis for the Acquiring Fund Shares
to be received by each of the Acquired Fund's shareholders pursuant to
the Reorganization will be the same as the aggregate tax basis of the
Acquired Fund shares held by such shareholder immediately prior to the
Reorganization, and the holding period of the Acquiring Fund Shares to
be received by each Acquired Fund shareholder will include the period
during which the Acquired Fund shares exchanged therefor were held by
such shareholder (provided that the Acquired Fund shares were held as
capital assets on the date of the Reorganization); and (f) the tax basis
of the Acquired Fund's assets to be acquired by the Acquiring Fund will
be the same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization, and the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will
include the period during which those assets were held by the Acquired
Fund.
4. BROKERAGE FEES AND EXPENSES
4.1. No brokers or finders will be entitled to receive any payments in
connection with the transactions provided for herein.
4.2. Except as may be otherwise provided herein,[ the Acquiring Fund
and the Acquired Fund] shall each be liable, in proportion to their assets,
for the expenses incurred in connection with entering into and carrying out
the provisions of this Plan, including the expenses of: (i) counsel and
independent accountants associated with the Reorganization; (ii) printing and
mailing the Prospectus/Proxy Statement and soliciting proxies in connection
with the meeting of shareholders of the Acquired Fund; (iii) any special
pricing fees associated with the valuation of the Acquired Fund's or the
Acquiring Fund's portfolio on the Closing Date; (iv) expenses associated with
preparing this Plan and preparing and filing the Registration Statement under
the 1933 Act covering the Acquiring Fund Shares to be issued in the
Reorganization; (v) registration or qualification fees and expenses of
preparing and filing such forms, if any, necessary under applicable state
securities laws to qualify the Acquiring Fund Shares to be issued in
connection with the Reorganization. The Acquired Fund shall be liable for:
(i) all fees and expenses related to the liquidation and termination of the
Acquired Fund; and (ii) fees and expenses of the Acquired Fund's custodian and
transfer agent incurred in connection with the Reorganization. The Acquiring
Fund shall be liable for any fees and expenses of the Acquiring Fund's
custodian and transfer agent incurred in connection with the Reorganization.
Consistent with the provisions of paragraph 1.3, the Acquired
Fund, prior to the Closing, shall pay for or include in the unaudited
Statement of Assets and Liabilities prepared pursuant to paragraph 1.3 all of
its known and reasonably estimated expenses associated with the transactions
contemplated by this Plan.
5. TERMINATION
5.1. This Plan and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Trustees of Smith
Barney Muni Funds, at any time prior to the Closing Date if circumstances
should develop that, in the opinion of the Board, make proceeding with the
Plan inadvisable.
5.2. In the event of any such termination, the Acquired Fund and the
Acquiring Fund shall each bear the expenses incurred by it incidental to the
preparation and carrying out of this Plan as provided in paragraph 4.
6. GOVERNING LAW
This Plan shall be governed by and construed in accordance with the laws
of the State of New York.
______________
STATEMENT OF ADDITIONAL INFORMATION DATED,[ ]1996
Acquisition Of The Assets Of
FLORIDA LIMITED TERM PORTFOLIO
a separate investment portfolio of
SMITH BARNEY MUNI FUNDS
388 Greenwich Street
New York, New York 10013
(800) 224-7523
By And In Exchange For Class A, Class C and Class Y Shares
Of
FLORIDA PORTFOLIO
a separate investment portfolio of
SMITH BARNEY MUNI FUNDS
388 Greenwich Street
New York, New York
10013
(800) 224-7523
This Statement of Additional Information, relating specifically to the
proposed transfer of all or substantially all of the assets of the Florida
Limited Term Portfolio (the "Acquired Fund") to the Florida Portfolio (the
"Acquiring Fund") in exchange for Class A, Class C and Class Y shares of the
Acquiring Fund and the assumption by the Acquiring Fund of certain scheduled
liabilities of the Acquired Fund, consists of this cover page and the
following described documents, each of which accompanies this Statement of
Additional Information and is incorporated herein by reference.
1. Statement of Additional Information of Smith Barney Muni Funds dated
July 1, 1996 as amended July 29, 1996..
2. Annual Report of Smith Barney Muni Funds, Florida and Florida
Limited Term Portfolios for the year ended March 31, 1996.
This Statement of Additional Information is not a prospectus. A
Prospectus/Proxy Statement, dated [_______], 1996, relating to the above-
referenced matter may be obtained without charge by calling or writing either
the Acquiring Fund or the Acquired Fund at the telephone numbers or addresses
set forth above or by contacting any Smith Barney Financial Consultant or by
calling toll-free 1-800-224-7523. This Statement of Additional Information
should be read in conjunction with the Prospectus/Proxy Statement dated [
______], 1996.
The date of this Statement of Additional Information is[______] , 1996
PROSPECTUS OF SMITH BARNEY MUNI FUNDS--FLORIDA PORTFOLIO DATED JULY 29,1996 --
IS INCORPORATED BY REFERENCE TO POST EFFECTIVE AMENDMENT NO. 38 TO THE SMITH
BARNEY MUNI FUNDS REGISTRATION STATEMENT ON FORM N1-A FILED ON JULY 26, 1996.
REFERENCE NOS. 2-99861 AND 811-4395
ACCESSION NUMBER: 91155-96-291
STATEMENT OF ADDITIONAL INFORMATION OF SMITH BARNEY MUNI FUNDS DATED JULY 1,
1996 as amended July 29, 1996.
Reference Nos. 2-99861and 811-4395
ACCESSION NUMBER: 91155-96-291
Annual Report of Smith Barney Muni Funds, Florida and Florida Limited Term
Portfolios for the fiscal year ended March 31, 1996.
ACCESSION NUMBER: 91155-96-223
PART C
OTHER INFORMATION
Item 15. Indemnification
The response to this item is incorporated by reference to
"Liability of Trustees" under the caption "Comparative Information
on Shareholder's Rights" in Part A of this Registration Statement.
Item 16. Exhibits
(1)(a) Restated Declaration of Trust dated as of January 29,
1986 is incorporated herein by reference to Exhibit 1 to Pre-
Effective Amendment No. 1 to the Registration Statement.*
(b) Instrument of the Trustees Establishing and Designating
Classes of shares of Certain Series of the Trust is
incorporated herein by reference to Exhibit 1(b) to Post-
Effective Amendment No. 24 to the Registration Statement. *
(2) Bylaws of the Trust are incorporated by reference to Exhibit
2 to Pre-Effective Amendment No. 2 to the Registration
Statement. *
(3) Not applicable.
(4) Plan of Reorganization (filed herewith as Exhibit A to
Registrant's Prospectus/Proxy Statement).
(5) Not applicable.
(6) (a) Management Agreement between The Florida Portfolio and
Mutual Management Corp. is incorporated by reference to Exhibit
5(h) to Post-Effective Amendment No. 16 to the Registration
Statement.*
(b) Form of Management Agreement between Florida Portfolio
(or Limited Term Portfolio or New York Portfolio, as the
case may be) and Smith Barney Mutual Funds Management Inc. is
incorporated by reference to Exhibit 5(t) to Post-Effective
Amendment No. 36 to the Registration Statement.*
(7) Distribution Agreement between Smith Barney Muni Funds and
Smith Barney, Harris Upham & Co. Incorporated is incorporated by
reference to Exhibit 6 to Post-Effective Amendment No. 7 to the
Registration Statement.*
(8) Not Applicable
(9) Custodian Agreement between Smith Barney Muni Funds and
Provident National Bank is incorporated by reference to Exhibit 8
to Pre-Effective Amendment No. 1 to the Registration Statement.*
(10) Rule 12b-1 Plan*
(11) (a) Opinion and consent of Sullivan & Cromwell with respect
to validity of shares.**
(11) (b) Opinion and consent of Goodwin, Procter & Hoar.,
special Massachusetts counsel with respect to Certain matters
under Massachusetts law**
(12) Opinion and consent of Sullivan & Cromwell with respect to
tax matters.**
(13) Not Applicable
(14) Consent of KPMG Peat Marwick L.L.P.**
(15) Not Applicable.
(16) Not Applicable.
(17)(a) Form of Proxy Card.(filed herewith)
(17) (b) Registrant's Declaration pursuant to Rule 24f-2 is
incorporated by reference to its initial Registration
Statement.
* Incorporated herein by reference to Registrant's Registration Statement of
Smith Barney Muni Funds on Form N-1A (the "Registration
Statement") as filed with the Securities and Exchange Commission
on File Nos. 2-99861 and 811-3275.
**To be filed by amendment
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2)The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the securities at that
time shall be deemed to be the initial bona fide offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, SMITH BARNEY MUNI FUNDS,
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, State of
New York on the 24th day of September, 1996
SMITH BARNEY MUNI FUNDS
By: \s\ Heath B. McLendon
Heath B. McLendon
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Heath B. McLendon, Christina T. Sydor and
Robert M. Nelson ,
and each and any one of them, his true and lawful attorneys-in-fact and
agents, with fullpower of substitution and resubstitutiond, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be
done about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
\s\ Heath B. McLendon Chairman of the Board, September 24, 1996
Heath B. McLendon Chief Executive Officer
\s\ Jessica Bibliowicz President and Trustee September 24, 1996
Jessica Bibliowicz
\s\ Lewis E. Daidone Senior Vice President and September 24, 1996
Lewis E. Daidone Treasurer (Chief Financial
and Accounting Officer)
/s/Donald R. Foley Trustee September 24, 1996
Donald R. Foley
/s/Paul Hardin Trustee September 24, 1996
Paul Hardin
/s/Francis P. Martin Trustee September 24, 1996
Francis P. Martin
/s/Roderick C. Rasmussen Trustee September 24, 1996
Roderick C. Rasmussen
/s/John P. Toolan Trustee September 24, 1996
John P. Toolan
/s/C. Richard Youngdahl Trusteer September 24, 1996
C. Richard Youngdahl
FORM OF PROXY CARD
VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
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SMITH BARNEY MUNI FUNDS - FLORIDA LIMITED TERM PORTFOLIO
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned holder of shares of Smith Barney Muni Funds -
Florida Limited Term Portfolio (the "Florida Limited Term Portfolio") ,
hereby appoints Heath B. McLendon,
Lewis E. Daidone and Christina T. Sydor, attorneys and proxies for the
undersigned with full powers of substitution and revocation, to represent
the undersigned and to vote on
behalf of the undersigned all shares of the Florida Limited Term Portfolio
that the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Florida Limited Term Portfolio to be held at the offices
of the Florida Limited Term Portfolio,
388 Greenwich Street, New York, New York on January 10, 1997 at 10:00 a.m.
New York City time and any adjournment or adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting
and Prospectus /Proxy Statement dated [ ] , 1996 and hereby
instructs said attorneys and proxies to vote said shares as indicated
herein. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Special Meeting. A majority
of the proxies present and acting at the Special Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have
and may exercise all of the power and authority of said
proxies hereunder. The undersigned hereby revokes any proxy previously given.
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE
Note: Please sign exactly as your name appears on this Proxy. If
joint owners, EITHER may sign this Proxy. When signing as
attorney, executor, administrator, trustee, guardian or corporate
officer, please give your full title.
Date:
Signature(s) (Title(s), if
applicable)
VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
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Please indicate your vote by an "X" in the appropriate box below. This proxy,
if properly
executed, will be voted in the manner directed by the undersigned
shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL.
1. To approve the Plan of Reorganization FOR AGAINST ABSTAIN
dated as of [ ] , 1996 providing for:(i) the acquisition of all or
substantially all of the assets of Smith Barney Muni Funds -Florida Limited
Term Portfolio (the "Florida Limited Term Portfolio") by Smith Barney Muni
Funds - Florida Portfolio (the "Florida Portfolio") in exchange for
Class A, Class C and Class Y shares of the Florida Portfolio and the
assumption by the Florida Portfolio of certain scheduled liabilities of the
Florida Limited Term Portfolio; (ii) the
distribution of such shares of the Florida Portfolio to shareholders of the
Florida Limited Term Portfolio in liquidation of the Florida Limited Term
Portfolio; and (iii) the subsequent termination of the Florida Limited Term
Portfolio.
