[GRAPHIC OMITTED]
Smith Barney Muni Funds
Georgia Portfolio
Pennsylvania
Portfolio
- --------------------------------------------------------------------------------
ANNUAL REPORT
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March 31, 1999
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(R)
<PAGE>
Smith Barney
Muni Funds
[PHOTO OMITTED] [PHOTO OMITTED]
Heath B. McLendon Peter M. Coffey
Chairman Vice President
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney Muni Funds -
Georgia and Pennsylvania Portfolios for the year ended March 31, 1999. We hope
you find this report to be useful and informative. For your convenience, we have
summarized the period's prevailing economic and market conditions below and
outlined the investment strategies employed by each Portfolio during the period.
A detailed summary of performance and current holdings for both Portfolios can
be found in the appropriate sections that follow.
Market and Economic Overview
During much of the past year, the municipal bond market was an oasis of
stability compared to the significant turmoil experienced by other fixed-income
markets. In the wake of Russia's loan default, growing numbers of creditors
became increasingly risk averse. In response, the Federal Reserve Board ("Fed")
lowered short-term interest rates by 0.75% in three separate actions over the
course of several weeks. These interest-rate cuts helped lift bond markets. In
the midst of the turmoil, many investors fled to the relative safe haven of U.S.
Treasury bonds, sparking a sharp rally and helped send long-term government
interest rates to their lowest level in more than thirty years. The 30-year U.S.
Treasury bond yield fluctuated approximately 1.36% from March 31, 1998 to March
31, 1999. In contrast, municipal bond yields (as measured by the Bond Buyers 25
Revenue Index) were far less volatile and remained confined to a much narrower
range of roughly 0.41% during the same period.
Despite jittery financial markets, the U.S. economy continued to expand
vigorously, defying the expectations of many economists. The domestic economy
grew at an annual rate of 3.5% in the first quarter of 1999, coming off the
heels of a brisk 6.0% annual growth rate for the fourth quarter of 1998. The
unemployment rate hovered just above 4.2% in March 1999, a 29-year low. Yet,
inflationary pressures have been well contained. The Consumer Price Index rose a
mere 0.2% in January 1999 and an even more modest 0.1% in February 1999.
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Smith Barney Muni Funds 1
<PAGE>
In our view, inflationary pressures have been held in check by a fortunate
combination of ongoing economic weakness abroad, added cost controls in health
care and the expanding role of technology. Economic recessions in many parts of
the world have helped keep import prices down, especially in key commodities
such as food and energy. In addition, the cost controls introduced by managed
health-care companies have begun to bring down medical costs and the growing use
of technology has not only boosted worker productivity, but has also made many
consumer goods companies much more cost competitive.
Municipal bonds, along with many other financial assets, have benefited from the
high-growth, low-inflation U.S. economy. Similar to other types of bonds,
municipal bond yields have declined but their real rate of return (i.e. the rate
of return after subtracting the effects of inflation) has remained historically
high. Moreover, long-term municipal bonds currently yield approximately 90% of
long-term U.S. Treasury bond yields. Typically, municipal bonds are considered a
good relative value when they yield approximately 85% of comparable-maturity
U.S. Treasury bonds.
A strong U.S. economy and low interest rates have encouraged many municipalities
to issue more bonds and refinance more expensive existing debt. We believe the
ability of the market to absorb the unusually heavy municipal bond issuance last
year is an indication of the health of the municipal bond market. This steady
equilibrium of supply and demand is one reason that municipal bond prices have
remained stable compared to other fixed-income assets.
Georgia Portfolio's Performance and Investment Strategy
For the year ended March 31, 1999, the Georgia Portfolio generated a total
return of 5.61% for Class A shares without sales charges and significantly
outperformed its Lipper Inc. peer group average of 4.99%. (Lipper Inc. is a
major fund tracking organization.)
In keeping with the Portfolio's objective, we have continued to emphasize high
current income in our bond selections. The Portfolio's credit quality remained
very strong during the fiscal year, with 98.1% of its bonds rated investment
grade or better. Moreover, 57.4% of the Portfolios holdings were rated AAA, the
highest bond rating. During the period, we have continued to lengthen the
Portfolio's maturity. As of March 31, 1999, the weighted average life of the
Portfolio was 15.3 years.
In addition, we maintained broad diversification over a range of different kinds
of bonds. We continue to focus on select hospital bonds because we believe that
these bonds offer slightly higher yields than similarly-rated bonds of other
categories. As of March 31, 1999, the Portfolio's assets were concentrated in
multi-housing bonds (13.2%), utility bonds (13.2%) and water & sewer bonds
(11.7%).
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2 1999 Annual Report to Shareholders
<PAGE>
Georgia Economic Highlights
In December 1998, the U.S. Census Bureau announced that, for the second year in
a row, Georgia is the fastest-growing state in the South and the third-fastest
growing state in the country. Georgia continues to experience strong population
growth and has been very successful in attracting new businesses. In fact,
revenue collections in Georgia were up roughly 5% last year.
Yet, despite Georgia's robust economy, the challenges brought about by growth
remain. Local governments in the Peachtree State are increasingly hard pressed
to meet the growing demands for more classrooms, better paid police officers and
cleaner water. While we are still positive about Georgia's long-term economic
prospects, we plan to closely monitor the State's growing infrastructural needs
in the coming months.
Pennsylvania Portfolio's Performance and Investment Strategy
For the year ended March 31, 1999, the Pennsylvania Portfolio generated a total
return of 5.61% for Class A shares without sales charges and significantly
outperformed its Lipper Inc. peer group average of 4.77%. (Lipper Inc. is a
major fund tracking organization.)
In keeping with the Portfolio's objective, we have continued to emphasize high
current income in our bond selections. The Portfolio's credit quality remained
very strong during the fiscal year, with 90.6% of its bonds rated investment
grade or better. Moreover, 50.8% of the Portfolios holdings were rated AAA, the
highest bond rating. During the period, we have continued to lengthen the
Portfolio's maturity. As of March 31, 1999, the weighted average life of the
Portfolio was 15.4 years.
In addition, we maintained broad diversification over a range of different kinds
of bonds. We continue to focus on select hospital bonds because we believe that
these bonds offer slightly higher yields than similarly-rated bonds of other
categories. As of March 31, 1999, the Portfolio's assets were concentrated in
hospital bonds (24.4%), general obligation bonds (12.2%) and transportation
bonds (11.1%).
Pennsylvania Economic Highlights
Pennsylvania's economy for the most part remains strong. In his 1999-2000 Budget
Presentation, Governor Tom Ridge proudly reported that the Commonwealth of
Pennsylvania ranked number one in many key environmental issues such as
recycling, conversion of abandoned railbeds into parks and cleaning up old
industrial sites. In the last four years, Pennsylvania has created more than a
quarter of a million new jobs.
Another big story in Pennsylvania municipal bonds during the reporting period
has been Allegheny Health, Education & Research Foundation (AHERF) filing for
bankruptcy-court protection for part of its operations. And while the
Pennsylvania Portfolio owns some hospital bonds, we avoided owning any
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Smith Barney Muni Funds 3
<PAGE>
AHERF issues. Moreover, even though the hospital bond sector in Pennsylvania may
be negatively impacted by AHERF's Chapter 11 filing, we strongly believe that
its impact on our hospital bond holdings will be minimal or nonexistent.
Municipal Bond Market Outlook
Over the near term, we remain largely positive on the prospects for municipal
bonds. In our judgement, Fed monetary policy will likely remain on hold until
signs of inflation surface. After a period of substantial volatility, we expect
that U.S. Treasury bonds will fluctuate within a fairly narrow trading range in
the coming months. As the global crisis continues to improve, demand for U.S.
Treasuries should weaken. Moreover, new municipal bond issuance volume for 1999
is down significantly from last year. If this pattern holds, it could set the
stage for a municipal bond rally later in the year.
In closing, thank you for investing in the Smith Barney Muni Funds. We encourage
you to visit our Website at www.smithbarney.com and we look forward to helping
you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman Vice President
April 28, 1999
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4 1999 Annual Report to Shareholders
<PAGE>
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Georgia Portfolio
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Historical Performance -- Class A Shares
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Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.43 $13.43 $0.65 $0.09 5.61%
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3/31/98 12.48 13.43 0.67 0.08 13.85
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3/31/97 12.50 12.48 0.67 0.08 5.95
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3/31/96 12.10 12.50 0.70 0.05 9.67
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Inception*-3/31/95 12.00 12.10 0.62 0.00 6.29+
================================================================================
Total $3.31 $0.30
================================================================================
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Historical Performance -- Class B Shares
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Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.43 $13.42 $0.58 $0.09 4.99%
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3/31/98 12.47 13.43 0.60 0.08 13.39
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3/31/97 12.50 12.47 0.61 0.08 5.33
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3/31/96 12.11 12.50 0.65 0.05 9.08
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Inception*-3/31/95 12.27 12.11 0.49 0.00 2.88+
================================================================================
Total $2.93 $0.30
================================================================================
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Historical Performance -- Class L Shares(2)
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Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.41 $13.41 $0.58 $0.09 5.01%
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3/31/98 12.46 13.41 0.59 0.08 13.23
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3/31/97 12.49 12.46 0.60 0.08 5.28
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3/31/96 12.09 12.49 0.64 0.05 9.12
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Inception*- 3/31/95 12.06 12.09 0.56 0.00 5.11+
================================================================================
Total $2.97 $0.30
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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Smith Barney Muni Funds 5
<PAGE>
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Georgia Portfolio
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Average Annual Total Return
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Without Sales Charge(1)
----------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 5.61% 4.99% 5.01%
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Inception* through 3/31/99 8.25 7.38 7.56
================================================================================
With Sales Charge(3)
----------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 1.39% 0.50% 2.94%
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Inception* through 3/31/99 7.36 7.22 7.34
================================================================================
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Cumulative Total Return
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Without Sales Charge(1)
================================================================================
Class A (Inception* through 3/31/99) 48.52%
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Class B (Inception* through 3/31/99) 40.71
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Class L (Inception* through 3/31/99)(2) 43.58
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) Assumes reinvestment of all dividends and capital gain distribu tions, if
any, at net asset value. In addi tion, Class A and L shares reflect the
deduction of the maximum sales charge of 4.00% and 1.00%, respectively;
Class B shares reflect the de duction of a 4.50% CDSC, which applies if
shares are redeemed within one year from initial purchase. This CDSC
declines by 0.50% the first year after purchase and thereafter by 1.00%
per year until no CDSC is incurred. Class L shares also reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within the
first year of purchase.
* Inception dates for Class A, B and L shares are April 4, 1994, June 15,
1994 and April 14, 1994, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
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6 1999 Annual Report to Shareholders
<PAGE>
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Historical Performance (unaudited)
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Growth of $10,000 Invested in Class A Shares of the
Georgia Portfolio vs. Lehman Brothers Municipal Bond Index
and Lehman Brothers Georgia Municipal Bond Index+
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April 1994 -- March 1999
[GRAPHIC OMITTED]
[The following table was depicted as a line graph in the printed material.]
Date Georgia Leh Bond Index Ga Muni Bond Index
4/4/94 9600 10000 10000
3/95 10193 10744 10795
3/96 11179 11645 11675
3/97 11844 12278 12289
3/98 13485 13594 13573
3/31/99 14242 14437 14362
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on April 4, 1994, assuming deduction of the maximum 4.00% sales
charge at the time of investment and reinvestment of dividends and capital
gains, if any, at net asset value through March 31, 1999. The Lehman
Brothers Georgia Municipal Bond Index (consisting of Georgia municipal
bonds) is a sub-index of the Lehman Brothers Municipal Bond Index, a
broad-based, total return index comprised of investment grade, fixed rate
municipal bonds selected from issues larger than $50 mil lion issued since
January 1991. Each index is unmanaged and is not subject to the same
management and trading expenses of a mutual fund. The performance of the
Portfolio's other classes may be greater or less than the Class A shares'
performance indicated on this chart, depending on whether greater or
lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
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Smith Barney Muni Funds 7
<PAGE>
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Pennsylvania Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.54 $13.44 $0.69 $0.15 5.61%
- --------------------------------------------------------------------------------
3/31/98 12.66 13.54 0.69 0.11 13.52
- --------------------------------------------------------------------------------
3/31/97 12.62 12.66 0.71 0.00 6.11
- --------------------------------------------------------------------------------
3/31/96 12.40 12.62 0.72 0.05 8.08
- --------------------------------------------------------------------------------
Inception*- 3/31/95 12.00 12.40 0.62 0.00 8.82+
================================================================================
Total $3.43 $0.31
================================================================================
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Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.52 $13.42 $0.62 $0.15 5.07%
- --------------------------------------------------------------------------------
3/31/98 12.64 13.52 0.62 0.11 12.97
- --------------------------------------------------------------------------------
3/31/97 12.61 12.64 0.65 0.00 5.56
- --------------------------------------------------------------------------------
3/31/96 12.39 12.61 0.66 0.05 7.61
- --------------------------------------------------------------------------------
Inception*- 3/31/95 12.35 12.39 0.48 0.00 4.48+
================================================================================
Total $3.03 $0.31
================================================================================
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Historical Performance -- Class L Shares(2)
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.51 $13.41 $0.61 $0.15 5.02%
- --------------------------------------------------------------------------------
3/31/98 12.64 13.51 0.62 0.11 12.84
- --------------------------------------------------------------------------------
3/31/97 12.61 12.64 0.65 0.00 5.51
- --------------------------------------------------------------------------------
3/31/96 12.39 12.61 0.66 0.05 7.56
- --------------------------------------------------------------------------------
Inception*- 3/31/95 12.00 12.39 0.56 0.00 8.14+
================================================================================
Total $3.10 $0.31
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Pennsylvania Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
----------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 5.61% 5.07% 5.02%
- --------------------------------------------------------------------------------
Inception* through 3/31/99 8.41 7.43 7.79
================================================================================
With Sales Charge(3)
----------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 1.42% 0.60% 2.96%
- --------------------------------------------------------------------------------
Inception* through 3/31/99 7.52 7.27 7.58
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
================================================================================
Class A (Inception* through 3/31/99) 49.62%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/99) 40.86
- --------------------------------------------------------------------------------
Class L (Inception* through 3/31/99)(2) 45.42
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) Assumes reinvestment of all dividends and capital gain distribu tions, if
any, at net asset value. In addi tion, Class A and L shares reflect the
deduction of the maximum sales charge of 4.00% and 1.00%, respectively;
Class B shares reflect the de duction of a 4.50% CDSC, which applies if
shares are redeemed within one year from initial purchase. This CDSC
declines by 0.50% the first year after purchase and thereafter by 1.00%
per year until no CDSC is incurred. Class L shares also reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within the
first year of purchase.
* Inception dates for Class A, B and L shares are April 4, 1994, June 20,
1994 and April 5, 1994, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the
Pennsylvania Portfolio vs. Lehman Brothers Municipal Bond Index
and Lehman Brothers Pennsylvania Municipal Bond Index+
- --------------------------------------------------------------------------------
April 1994 -- March 1999
[GRAPHIC OMITTED]
[The following table was depicted as a line graph in the printed material.]
Penn Muni Bond Index PA Muni Bond Index
4/4/94 9600 10000 10000
3/95 10447 10744 10765
3/96 11290 11645 11638
3/97 11980 12278 12282
3/98 13601 13594 13529
3/31/99 14364 14437 14341
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on April 4, 1994, assuming deduction of the maximum 4.00% sales
charge at the time of investment and reinvestment of dividends and capital
gains, if any, at net asset value through March 31, 1999. The Lehman
Brothers Pennsylvania Municipal Bond Index (consisting of Pennsylvania
municipal bonds) is a sub-index of the Lehman Brothers Municipal Bond
Index, a broad-based, total return index comprised of investment grade,
fixed rate municipal bonds selected from issues larger than $50 mil lion
issued since January 1991. Each index is unmanaged and is not subject to
the same management and trading expenses of a mutual fund. The performance
of the Portfolio's other classes may be greater or less than the Class A
shares' performance indicated on this chart, depending on whether greater
or lesser sales charges and fees were incurred by shareholders investing
in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments March 31, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Education -- 8.3%
$1,000,000 AAA Bibb County Development Authority Revenue,
(Wesleyan College Project) AMBAC-Insured,
5.000% due 10/1/18
$ 992,500
1,000,000 AA Fulton County School District, 5.375% due 1/1/18
1,062,500
500,000 AA- Forsyth County School District Refunding,
5.100% due 7/1/11
525,625
Private Colleges & Universities Authority Revenue:
1,000,000 Aa1* Emory University Project, Series A, 5.000% due
11/1/15 1,003,750
1,000,000 AAA Agnes Scott College Project, 4.750% due 6/1/28
943,750
- --------------------------------------------------------------------------------
- ---------------------------
4,528,125
- --------------------------------------------------------------------------------
- ---------------------------
Escrowed to Maturity (b) -- 7.6%
285,000 AAA Burke County Development Authority PCR,
(Oglethorpe Power Co. Vogtle Project),
MBIA-Insured, 7.500% due 1/1/03(c)
306,019
Cobb County Kennestone Hospital Authority Revenue,
MBIA-Insured:
135,000 AAA 10.250% due 2/1/02(c)
145,294
660,000 AAA Series 86A, 7.750% due 2/1/07
755,700
1,875,000 Aaa* Colquitt County Development Authority Revenue,
Sub-Series C, zero coupon due 12/1/21
525,000
290,000 AAA Fulton County Water & Sewer Revenue, FGIC-Insured,
6.375% due 1/1/14
338,575
485,000 AAA Puerto Rico Commonwealth Aqueduct & Sewer
Authority Revenue, 10.250% due 7/1/09(c)
652,325
145,000 Aaa* Richmond County Water and Sewer Revenue,
9.875% due 4/1/02
160,950
1,000,000 Aaa* Savannah EDA, zero coupon due 12/1/21
291,250
320,000 AAA Tri City Hospital Authority Revenue, South Fulton
Hospital,
FGIC-Insured, 10.250% due 7/1/06(c)
412,000
2,000,000 Aaa* Washington Wilkes Payroll Development Authority
Revenue,
zero coupon due 12/1/21
560,000
- --------------------------------------------------------------------------------
- ---------------------------
4,147,113
- --------------------------------------------------------------------------------
- ---------------------------
General Obligation -- 5.8%
500,000 AAA Atlanta Ad Valorem Property Tax Refunding, FGIC-
Insured,
5.000% due 12/1/20
495,625
500,000 AAA Georgia State Public Improvements, Series D,
5.250% due 10/1/14
533,125
2,290,000 AAA Puerto Rico Commonwealth, Public Improvement,
AMBAC-Insured, 4.500% due 7/1/23
2,126,838
- --------------------------------------------------------------------------------
- ---------------------------
3,155,588
- --------------------------------------------------------------------------------
- ---------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Government Facilities -- 2.0%
$1,000,000 A+ Columbia County Courthouse, (Detention Center
Projects),
5.625% due 2/1/17
$ 1,070,000
- --------------------------------------------------------------------------------
- ---------------------------
Hospitals -- 5.5%
1,000,000 AAA Fulco Hospital Authority Revenue, Catholic Health
East,
Series A, 4.875% due 11/15/15
987,500
Puerto Rico Industrial Tourist Educational, Medical
&
Environmental Control Facility Finance Authority:
500,000 BBB Ryder Memorial Hospital Project, Series A,
6.700% due 5/1/24
543,125
750,000 BBB- Mennonite General Hospital Project, Series A,
5.625% due 7/1/27
757,500
725,000 Aaa* Savannah Hospital Authority Revenue St.
Josephs/Candler
Health Systems, Series A, 5.250% due 7/1/14
747,655
- --------------------------------------------------------------------------------
- ---------------------------
3,035,780
- --------------------------------------------------------------------------------
- ---------------------------
Housing: Multi-Family -- 13.2%
500,000 AAA Acworth Housing Authority Revenue, (Wingate Falls
Apartments Project), 6.125% due 3/1/17(d)
533,125
Atlanta Urban Residential Finance Authority,
Multi-Family Housing Revenue:
1,180,000 A Cascade Pines Housing Project,
6.250% due 9/1/10(c)(d)
1,269,975
1,000,000 AAA New Community, GNMA Collateralized, Series A-1,
5.450% due 11/20/17(d)
1,030,000
500,000 AAA Shamrock Garden Apartments Project, Series A,
FNMA-Collateralized, 5.250% due 4/1/19(d)
500,625
240,000 A Cobb County Housing Authority Refunding, (Signature
Place
Project), Series A, 6.875% due 10/1/17
255,000
De Kalb County Housing Authority, Multi-Family
Housing
Revenue, Series A:
1,000,000 Aa2* Friendly Hills Apartments, FHA-Insured,
7.050% due 1/1/39(d)
1,128,750
300,000 AAA Valley Brook Apartments Project, Revenue
Refunding, MBIA-Insured, 7.750% due 1/1/26
319,158
1,000,000 A Fulton County Multi-Family Housing Authority
Revenue,
(Concorde Place Apartment Project),
6.300% due 7/1/16(d)
1,071,250
1,000,000 AAA Lawrenceville Housing Authority, Multi-Family
Revenue,
(Knollwood Park Apartments Project),
6.250% due 12/1/29(d)
1,087,500
- --------------------------------------------------------------------------------
- ---------------------------
7,195,383
- --------------------------------------------------------------------------------
- ---------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Housing: Single-Family -- 5.4%
$ 155,000 AAA Fulton County Housing Authority, Single-Family
Mortgage
Revenue, Series A, GNMA-Collateralized,
6.600% due 3/1/28(d)
$ 164,106
Georgia State HFA, Single-Family Mortgage Revenue:
350,000 AAA Series A, FHA-Insured, 6.600% due 12/1/23(d)
369,250
1,000,000 AAA Series A-1, 5.300% due 6/1/17
1,018,750
500,000 AAA Series A-2, FHA-Insured, 6.550% due 12/1/27(d)
531,250
285,000 AA+ Georgia State Residential Finance Authority, Home
Ownership Mortgage, Series A, FHA-Insured,
7.250% due 12/1/21(d)
303,169
330,000 AAA Puerto Rico Housing Bank and Finance Agency,
Single-Family Mortgage, Affordable Housing
Mortgage,
Portfolio I, GNMA/FNMA Collateralized,
6.250% due 4/1/29(d)
352,688
235,000 AAA Virgin Islands HFA, Single-Family Mortgage Revenue,
Series A, GNMA-Collateralized, 6.450% due
3/1/16(d) 248,806
- --------------------------------------------------------------------------------
- ---------------------------
2,988,019
- --------------------------------------------------------------------------------
- ---------------------------
Miscellaneous -- 6.4%
2,000,000 AAA Georgia Local Government, Public Improvement Grant,
Series A, MBIA-Insured, 4.750% due 6/1/28
1,915,000
500,000 BBB Puerto Rico Housing Bank and Finance Agency,
7.500% due 12/1/06(c)
585,000
1,000,000 BBB- Virgin Islands Public Financing Authority Revenue,
Sr. Lien, Series A, 5.500% due 10/1/18
1,008,750
- --------------------------------------------------------------------------------
- ---------------------------
3,508,750
- --------------------------------------------------------------------------------
- ---------------------------
Pollution Control -- 9.9%
200,000 BBB Camden County Joint Development Authority PCR,
Revenue Refunding, Union Carbide Corp. Project
5.000% due 1/1/12
198,250
1,000,000 Baa2* Effingham County Development Authority, Solid Waste
Disposal Revenue, (Fort James Project),
5.625% due 7/1/18(d)
1,013,750
500,000 A Monroe County Development Authority PCR,
(Oglethorpe Power Co. Scherer Project),
Series A, 6.800% due 1/1/12
586,875
2,000,000 A3* Richmond County Development Authority, Solid
Waste Disposal Revenue, International Paper
Project,
Series A, 5.400% due 2/1/33(d)
2,012,500
1,000,000 NR Rockdale County Development Authority, Solid Waste
Disposal Revenue, (Visy Paper Project),
7.500% due 1/1/26(d)
1,063,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Pollution Control -- 9.9% (continued)
$ 500,000 A1* Savannah EDA, PCR, (Union Camp Corp. Project),
6.150% due 3/1/17
$ 558,750
- --------------------------------------------------------------------------------
- ---------------------------
5,433,875
- --------------------------------------------------------------------------------
- ---------------------------
Pre-Refunded(e) -- 1.0%
500,000 Ba1* Savannah Hospital Authority Revenue Refunding &
Improvement, Candler Hospital, 7.000% due
1/1/11(c) 563,125
- --------------------------------------------------------------------------------
- ---------------------------
Public Facilities -- 2.8%
250,000 AAA Butts County COP, MBIA-Insured, 6.750% due 12/1/14
286,563
1,100,000 AAA Cobb-Marietta Counties Coliseum and Exhibit Hall
Authority Revenue, MBIA-Insured,
5.625% due 10/1/26
1,226,500
- --------------------------------------------------------------------------------
- ---------------------------
1,513,063
- --------------------------------------------------------------------------------
- ---------------------------
Short-Term(f) -- 0.2%
100,000 VMIG1* Puerto Rico Commonwealth Government Development
Bank,
Refunding Revenue, 2.750% due 12/1/15
100,000
- --------------------------------------------------------------------------------
- ---------------------------
Solid Waste -- 1.8%
1,000,000 AA Albany Dougherty Payroll Development Authority,
Solid Waste Disposal Revenue, Procter & Gamble
Paper Products, 5.200% due 5/15/28(d)
998,750
- --------------------------------------------------------------------------------
- ---------------------------
Transportation -- 5.2%
1,000,000 AAA Georgia State Tollway Authority Revenue Refunding,
(Georgia 400 Project), 5.000% due 7/1/10
1,055,000
250,000 AAA Metro Atlanta Rapid Transit Authority Revenue
Refunding,
Series P, AMBAC-Insured, 6.250% due 7/1/20
292,813
1,500,000 A Puerto Rico Commonwealth Highway & Transportation
Authority Revenue, Series Y, 5.000% due 7/1/36
1,483,125
- --------------------------------------------------------------------------------
- ---------------------------
2,830,938
- --------------------------------------------------------------------------------
- ---------------------------
Utilities -- 13.2%
Georgia Municipal Electric Authority Revenue:
1,080,000 AAA Project One, Series A, MBIA-Insured, 5.250% due
1/1/15 1,125,900
600,000 AAA Series EE, AMBAC-Insured, 7.250% due 1/1/24(c)
791,250
1,000,000 AAA Series Z, MBIA-Insured, 5.500% due 1/1/20
1,057,500
Georgia Municipal Gas Authority Revenue:
500,000 Aaa* Buford Project, FSA-Insured, 5.000% due 11/1/13
506,875
500,000 A- Southern Storage Gas Project, 6.300% due 7/1/09
545,000
1,000,000 AA Hogansville Combined Public Utility System,
Asset Guaranty, 5.850% due 10/1/15
1,100,000
2,200,000 AAA Puerto Rico Electric Power Authority Revenue
Refunding,
Series EE, MBIA-Insured, 4.500% due 7/1/18
2,084,500
- --------------------------------------------------------------------------------
- ---------------------------
7,211,025
- --------------------------------------------------------------------------------
- ---------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Water & Sewer -- 11.7%
$1,015,000 Aaa* Carroll County Water Authority, Water & Sewer
Revenue,
AMBAC-Insured, 5.250% due 7/1/18
$ 1,036,569
500,000 A+ Cartersville Development Authority Revenue
Refunding,
Sewer Facilities, Anheuser Busch, 6.125% due
5/1/27(d) 546,250
1,000,000 AA Clayton County Water Authority Revenue,
5.100% due 5/1/16
1,026,250
625,000 AAA Douglasville-Douglas County Water & Sewer Authority
Revenue, AMBAC-Insured, 5.625% due 6/1/15
683,593
Fulton County Water & Sewer Revenue, FGIC-Insured:
10,000 AAA 6.375% due 1/1/14
11,675
1,000,000 AAA 5.000% due 1/1/18
992,500
500,000 AA- Macon Water Authority, Water & Sewer Revenue,
5.250% due 10/1/15
516,250
500,000 AAA Milledgeville Water & Sewer Revenue, FSA-Insured,
6.000% due 12/1/21
571,250
1,000,000 AA Peachtree City Water & Sewer Authority, Sewer
System Revenue, Series A, 5.375% due 3/1/22
1,028,750
- --------------------------------------------------------------------------------
- ---------------------------
6,413,087
- --------------------------------------------------------------------------------
- ---------------------------
TOTAL INVESTMENT -- 100%
(Cost -- $52,273,597** )
$54,692,621
================================================================================
===========================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except those which
are identified by an asterisk (*) which are rated by Moody's Investors
Service, Inc. and those identified by a double dagger (++) which are rated
by Fitch Investor Services, Inc.
(b) Bond is escrowed to maturity with U.S. government securities and is
considered by the Manager to be triple-A rated even if the issuer has not
applied for new ratings.
(c) Security partially segregated by Custodian for open purchase commitments
and/or futures contracts commitments.
(d) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(e) Bond is escrowed with U.S. government securities and is considered by the
manager to be triple-A rated even if the issuer has not applied for new
ratings.
(f) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 21 and 22 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Education -- 7.9%
$ 700,000 BBB- Chester County Health & Education Facilities
Authority
College Revenue, Immaculata College,
5.600% due 10/15/18
$ 703,500
1,000,000 Aaa* Delaware County Authority University Revenue,
Villanova University, Series A, 5.000% due
12/1/18 991,250
1,000,000 AAA Erie School District, Capital Appreciation,
Refunding,
zero coupon to yield 5.250% due 9/1/14
471,250
1,250,000 NR Philadelphia, PA Hospitals & Higher Education
Facilities Authority Revenue, Chestnut Hill
College,
6.000% due 10/1/29
1,250,000
2,000,000 AAA Philadelphia, PA School District, Series A, MBIA-
Insured,
4.500% due 4/1/23
1,825,000
- --------------------------------------------------------------------------------
- ---------------------------
5,241,000
- --------------------------------------------------------------------------------
- ---------------------------
Escrowed to Maturity(b) -- 3.2%
310,000 NR Allegheny County, PA Hospital Development Authority
Revenue, Montefiore Hospital, 6.875% due 7/1/09
346,812
490,000 AAA Cambria County Hospital Development Authority,
Conemaugh Valley Memorial Hospital, 7.625% due
9/1/11 584,938
115,000 AAA Coatesville, PA Water Revenue, Government
Guaranteed,
6.250% due 10/15/13
128,225
435,000 AAA Lewisburg Area School District Building, AMBAC-
Insured,
9.750% due 2/15/04(c)
518,194
25,000 AAA Philadelphia, PA Hospitals & Higher Education
Facilities
Authority Revenue, Presbyterian Medical Center,
6.650% due 12/1/19
30,062
265,000 AAA Southeastern Greene School District, 9.375% due
7/1/03 299,119
185,000 AAA York County GO, Refunding, AMBAC-Insured,
8.875% due 6/1/06
220,612
- --------------------------------------------------------------------------------
- ---------------------------
2,127,962
- --------------------------------------------------------------------------------
- ---------------------------
General Obligation -- 12.2%
1,000,000 AA Delaware County GO, 5.125% due 10/1/14
1,033,750
4,185,000 AAA Erie County GO, Capital Appreciation, Series B,
zero coupon to yield 5.050% due 11/15/18
1,569,375
Lancaster County GO, Series A, FGIC-Insured:
850,000 AAA 5.250% due 5/1/15
875,500
1,500,000 AAA 4.500% due 5/1/28
1,353,750
Philadelphia GO:
1,000,000 AAA FSA-Insured, 5.250% due 3/15/15
1,033,750
1,500,000 AAA FGIC-Insured, 4.750% due 5/15/20
1,432,500
2,000,000 AAA Westmoreland County GO, FGIC-Insured,
zero coupon to yield 5.970% due 12/1/18
745,000
- --------------------------------------------------------------------------------
- ---------------------------
8,043,625
- --------------------------------------------------------------------------------
- ---------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Hospital -- 24.4%
$ 500,000 AAA Allegheny County Hospital Development Authority
Revenue,
General Hospital Project, Series A, MBIA-Insured,
6.250% due 9/1/20
$ 506,875
1,000,000 BBB Allentown Area Hospital Authority Revenue,
Sacred Heart Hospital, 6.750% due 11/15/14
1,083,750
1,000,000 AAA Delaware County, PA Health System Authority
Revenue,
Catholic Health East, Series A, AMBAC-Insured,
4.875% due 11/15/26
952,500
1,000,000 AA Geisinger County, PA Health System Authority,
Series A,
5.000% due 8/15/28
957,500
1,000,000 BBB+ Hazelton Health Services Authority Revenue, St.
Joseph's
Medical Center, 6.200% due 7/1/26
1,032,500
1,000,000 BBB Horizon Hospital System Authority Revenue, Horizon
Hospital Systems Inc., 6.350% due 5/15/26
1,068,750
2,000,000 AAA Pennsylvania State Higher Educational Facilities
Authority
Health Services Revenue, Allegheny, Delaware
Valley,
Series A, MBIA-Insured, 5.600% due 11/15/09
2,005,000
1,000,000 NR Philadelphia Authority for Industrial Development,
Health Care Facility Revenue, Baptist Home of
Philadelphia, Series A, 5.600% due 11/15/28
971,250
1,600,000 AAA Philadelphia Hospital & Higher Education Facilities
Authority,
Hospital Revenue, FHA-Insured, Series A,
5.300% due 1/1/18
1,604,000
1,000,000 AA Potter County Hospital Authority Revenue, Asset
Guaranteed,
6.050% due 8/1/24
1,073,750
500,000 BBB Puerto Rico Industrial, Tourist, Educational,
Medical &
Environmental Control Facilities, (Ryder Memorial
Hospital Project), Series A, 6.700% due 5/1/24
543,125
Scranton-Lackawanna Health & Welfare Authority
Revenue:
500,000 BBB-++ Allied Services Rehabilitation Hospitals,
(Project-A),
7.600% due 7/15/20
550,000
1,000,000 NR Lackawanna Junior College, 5.750% due 11/1/20
976,250
750,000 BBB- Moses Taylor Hospital Project, 6.250% due 7/1/20
781,875
500,000 AAA Sharon Regional Health System Authority Revenue,
5.000% due 12/1/18
492,500
St. Mary Hospital Authority, Bucks County, Catholic
Health Initiatives, Series A:
500,000 AA 5.375% due 12/1/13
516,875
1,000,000 AA 5.000% due 12/1/18
973,750
- --------------------------------------------------------------------------------
- ---------------------------
16,090,250
- --------------------------------------------------------------------------------
- ---------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Housing: Multi-Family -- 2.7%
$1,500,000 BBB+++ Montgomery County Redevelopment Authority, Multi-
Family
Housing Revenue, (KBF Associates L.P. Project),
Series A, 6.375% due 7/1/12
$ 1,567,500
205,000 AAA Pittsburgh Urban Redevelopment Authority, Mortgage
Revenue, FNMA/GNMA-Collateralized, Series B,
6.950% due 10/1/10(d)
214,225
- --------------------------------------------------------------------------------
- ---------------------------
1,781,725
- --------------------------------------------------------------------------------
- ---------------------------
Housing: Single-Family -- 3.0%
Allegheny County, Residential Mortgage Refunding,
Single-Family Housing, GNMA-Collateralized:
970,000 Aaa* 6.875% due 5/1/26(c)(d)
1,051,237
1,675,000 Aaa* Zero coupon to yield 7.500% due 5/1/27(d)
213,562
660,000 AAA Puerto Rico Single-Family Housing Mortgage Revenue,
GNMA/FNMA/FHLMC-Collateralized, 6.250% due
4/1/29(d) 705,375
- --------------------------------------------------------------------------------
- ---------------------------
1,970,174
- --------------------------------------------------------------------------------
- ---------------------------
Industrial Development -- 8.1%
1,000,000 BBB- Allegheny County IDA Refunding Environmental
Improvement, USX Corp., 6.700% due 12/1/20(c)
1,090,000
1,000,000 A3* Bradford County IDA Solid Waste, International
Paper Co.,
6.600% due 3/1/19(d)
1,095,000
1,000,000 A- Delaware County IDA Revenue, Resource Recovery
Facility,
Series A, 6.200% due 7/1/19
1,031,250
1,000,000 A3* Erie County IDA Environmental Improvement Revenue,
(International Paper Co. Project), Series A,
7.625% due 11/1/18(c)(d)
1,148,750
1,000,000 NR Pennsylvania Economic Development Finance Authority
Facilities Revenue, National Gypsum Co., Series
A,
6.250% due 11/1/27
1,000,000
- --------------------------------------------------------------------------------
- ---------------------------
5,365,000
- --------------------------------------------------------------------------------
- ---------------------------
Life-Care -- 5.4%
Montgomery County IDA, Retirement Community
Revenue:
1,000,000 A- 5.250% due 11/15/28
965,000
1,500,000 A- Series A, 5.875% due 11/15/22
1,558,125
1,000,000 A- Series B, 5.625% due 11/15/12
1,043,750
- --------------------------------------------------------------------------------
- ---------------------------
3,566,875
- --------------------------------------------------------------------------------
- ---------------------------
Miscellaneous -- 8.5%
Dauphin County General Authority:
1,000,000 NR Hotel & Conference Center, Hyatt Regency,
6.200% due 1/1/29
998,750
1,000,000 NR Office & Package, Riverfront Office, 6.000% due
1/1/25 1,000,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Miscellaneous -- 8.5% (continued)
$1,250,000 AAA Delaware Valley, PA Regional Financial Authority
Local
Government Revenue, Series A, AMBAC-Insured,
5.500% due 8/1/28
$ 1,342,188
1,000,000 BBB Puerto Rico Housing Bank & Finance Agency,
7.500% due 12/1/06
1,170,000
1,000,000 AAA York County Solid Waste & Refuse Authority, Waste
System Revenue, FGIC-Insured, 5.500% due 12/1/14
1,083,750
- --------------------------------------------------------------------------------
- ---------------------------
5,594,688
- --------------------------------------------------------------------------------
- ---------------------------
Pollution Control -- 2.5%
1,000,000 AAA Northhampton County IDA, Metropolitan Edison,
Series A,
MBIA-Insured, 6.100% due 7/15/21
1,098,750
500,000 BBB- Pennsylvania Economic Development Financing
Authority,
Resource Recovery Revenue, (Colver Project),
Series D,
7.150% due 12/1/18(d)
552,500
- --------------------------------------------------------------------------------
- ---------------------------
1,651,250
- --------------------------------------------------------------------------------
- ---------------------------
Pre-Refunded(f) -- 2.5%
1,200,000 Aaa* Philadelphia Hospital Revenue, (United Hospital
Inc. Project),
(Call 7/1/05 @ 100), 10.875% due 7/1/08(c)
1,624,500
- --------------------------------------------------------------------------------
- ---------------------------
Public Facilties -- 2.5%
Harrisburg, PA Redevelopment Authority, FSA-
Insured:
1,750,000 AAA Zero coupon to yield 5.100% due 5/1/17
702,188
2,750,000 AAA Zero coupon to yield 5.180% due 5/1/19
983,125
- --------------------------------------------------------------------------------
- ---------------------------
1,685,313
- --------------------------------------------------------------------------------
- ---------------------------
Solid Waste -- 3.2%
1,000,000 AAA Lancaster County, PA Solid Waste Management
Authority,
Series B, AMBAC-Insured, 5.375% due 12/15/15
1,045,000
1,000,000 A- New Morgan IDA Solid Waste Disposal, Browning
Ferris
Industries Inc., 6.500% due 4/1/19(d)
1,078,750
- --------------------------------------------------------------------------------
- ---------------------------
2,123,750
- --------------------------------------------------------------------------------
- ---------------------------
Transportation -- 11.1%
1,200,000 AAA Allegheny County Airport Revenue, Pittsburgh
International Airport, Series B, MBIA-Insured,
5.000% due 1/1/17
1,197,000
1,000,000 AAA Pennsylvania State Turnpike Common Oil Franchise,
Tax Revenue Subsidiary, Series B,
5.000% due 12/1/18
991,250
1,000,000 AAA Philadelphia Authority For Industrial Development,
Airport
Revenue, (Philadelphia Airport System Project),
Series A,
5.000% due 7/1/15
1,002,500
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
Transportation -- 11.1% (continued)
$1,825,000 A Puerto Rico Commonwealth Highway & Transportation
Authority, 5.000% due 7/1/36
$ 1,804,469
1,200,000 Baa2* Puerto Rico Port Authority Revenue, American
Airlines,
Series A, 6.250% due 6/1/26(d)
1,288,500
1,000,000 AAA Southeastern PA Transportation Authority, PA
Special
Revenue, Series A, FGIC-Insured, 5.250% due
3/1/17 1,025,000
- --------------------------------------------------------------------------------
- ---------------------------
7,308,719
- --------------------------------------------------------------------------------
- ---------------------------
Utilities -- 1.0%
400,000 BBB Guam Power Authority Revenue, Series A,
6.750% due 10/1/24
445,000
200,000 A-1+ Schuylkill County, PA IDA, Northeastern Power Co.,
Series A, 3.150% due 12/1/22(e)
200,000
- --------------------------------------------------------------------------------
- ---------------------------
645,000
- --------------------------------------------------------------------------------
- ---------------------------
Water and Sewer -- 1.8%
1,000,000 AAA Philadelphia Water & Wastewater Revenue, MBIA-
Insured,
6.250% due 8/1/12
1,167,500
- --------------------------------------------------------------------------------
- ---------------------------
TOTAL INVESTMENT -- 100%
(Cost -- $63,501,376**)
$65,987,331
================================================================================
===========================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except those
identified by an asterisk (*) which are rated by Moody's Investors
Service, Inc. and those identified by a double dagger (++) which are rated
by Fitch IBCA, Inc.
(b) Bond is escrowed to maturity with U.S. Government securities and is
considered by the Manager to be triple-A rated even if the issuer has not
applied for new ratings.
(c) Security segregated by Custodian for open purchase commitment.
(d) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax. (e) Variable rate obligation
payable at par on demand at any time on no more than seven days notice.
(f) Bond is escrowed with U.S. government securities and is considered by the
manager to be triple-A rated even if the issuer has not applied for new
ratings.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 21 and 22 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Rating Service ("Standard & Poor's") -- Ratings from "AA" to
"B" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issue only in a small
degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
BB -- Bonds rated "BB" and "B" are regarded, on balance, as predominantly
and B speculative with respect to the issuer's capacity to pay interest and
repay principal in accordance with the terms of the obligation. "BB"
indicates the lowest degree of speculation and "B" the highest degree
of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
Moody's Investors Service, Inc. ("Moody's") -- Numerical modifiers 1, 2, and 3
may be applied to each generic rating from "Aa" to "Ba", where 1 is the highest
and 3 the lowest rating within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities or
fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.
A -- Bonds rated "A" possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds rated "Baa" are considered to be medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes in this class.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited) (continued)
- --------------------------------------------------------------------------------
Fitch IBCA,Inc. ("Fitch") -- Ratings may be modified by the addition of a plus
(+) sign or minus (-) sign to show relative standings within the major rating
categories.
BBB -- Bonds rated "BBB" by Fitch currently have a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to impair this capacity. This
is the lowest investment grade category assigned by Fitch.
NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's or
Fitch.
- --------------------------------------------------------------------------------
Short-Term Security Ratings (unaudited)
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
VMIG 2 -- Moody's second highest rating for issues having a demand feature --
VRDO.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
CHFCLI -- California Health Facility Construction Loan Insurance
CONNIE
LEE -- College Construction Loan Insurance Association
COP -- Certificate of Participation
EDA -- Economic Development Authority
ETM -- Escrowed to Maturity
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FLAIRS -- Floating Adjustable Interest Rate Securities
FNMA -- Federal National Mortgage Association
FRTC -- Floating Rate Trust Certificates
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
SYCC -- Structured Yield Curve Certificate
TAN -- Tax Anticipation Notes
TECP -- Tax-Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation Notes
VA -- Veterans Administration
VRWE -- Variable Rate Wednesday Demand
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Georgia
Pennsylvania
Portfolio
Portfolio
================================================================================
==========
<S> <C>
<C>
ASSETS:
Investments, at value (Cost -- $52,273,597
and $63,501,376, respectively) $ 54,692,621 $
65,987,331
Cash 80,898
56,004
Interest receivable 832,304
1,020,543
Receivable for Fund shares sold 160,917
623,716
Receivable for securities sold 20,000
923,645
- --------------------------------------------------------------------------------
- ----------
Total Assets 55,786,740
68,611,239
- --------------------------------------------------------------------------------
- ----------
LIABILITIES:
Management fees payable 130,942
82,306
Distribution fees payable 6,234
6,755
Payable for Fund shares purchased --
30,508
Payable for securities purchased --
1,000,000
Accrued expenses 32,503
49,137
- --------------------------------------------------------------------------------
- ----------
Total Liabilities 169,679
1,168,706
- --------------------------------------------------------------------------------
- ----------
Total Net Assets $ 55,617,061 $
67,442,533
================================================================================
==========
NET ASSETS:
Par value of shares of beneficial interest $ 4,143 $
5,023
Capital paid in excess of par value 53,301,338
64,853,999
Undistributed (overdistributed) net
investment income (3,157)
3,903
Accumulated net realized gain (loss)
from security transactions (104,287)
93,653
Net unrealized appreciation of investments 2,419,024
2,485,955
- --------------------------------------------------------------------------------
- ----------
Total Net Assets $ 55,617,061 $
67,442,533
================================================================================
==========
Shares Outstanding:
Class A 2,582,858
2,360,035
----------------------------------------------------------------------------
- ----------
Class B 1,015,909
1,880,764
----------------------------------------------------------------------------
- ----------
Class L 544,712
782,313
----------------------------------------------------------------------------
- ----------
Net Asset Value:
Class A (and redemption price) $ 13.43 $
13.44
----------------------------------------------------------------------------
- ----------
Class B * $ 13.42 $
13.42
----------------------------------------------------------------------------
- ----------
Class L ** $ 13.41 $
13.41
----------------------------------------------------------------------------
- ----------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value) $ 13.99 $
14.00
----------------------------------------------------------------------------
- ----------
Class L (net asset value plus 1.01% of net asset value) $ 13.55 $
13.55
================================================================================
==========
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if
shares are redeemed within one year from initial purchase (See Note 4).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if
shares are redeemed within the first year of purchase (See Note 4).
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations For the Year Ended March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Georgia
Pennsylvania
Portfolio
Portfolio
================================================================================
==========
<S> <C>
<C>
INVESTMENT INCOME:
Interest $ 2,351,186 $
2,860,246
- --------------------------------------------------------------------------------
- ----------
EXPENSES:
Management fees (Note 4) 200,616
235,522
Distribution fees (Note 4) 159,556
239,798
Shareholder and system servicing fees 23,437
27,500
Audit and legal 15,463
15,000
Shareholder communications 11,056
12,000
Pricing service fees 6,728
6,500
Registration fees 3,606
12,000
Custody 2,643
3,000
Trustees' fees 1,602
3,000
Other 3,606
4,000
- --------------------------------------------------------------------------------
- ----------
Total Expenses 428,313
558,320
Less: Management fee waiver (Note 4) (48,063)
(129,973)
- --------------------------------------------------------------------------------
- ----------
Net Expenses 380,250
428,347
- --------------------------------------------------------------------------------
- ----------
Net Investment Income 1,970,936
2,431,899
- --------------------------------------------------------------------------------
- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURE CONTRACTS (NOTES 5 & 6):
Realized Gain (Loss) From:
Security Transactions (excluding short-term securities) 173,739
239,656
Future Contracts (50,144)
(32,412)
- --------------------------------------------------------------------------------
- ----------
Net Realized Gain 123,595
207,244
- --------------------------------------------------------------------------------
- ----------
Change in Net Unrealized Appreciation
of Investments:
Beginning of year 2,327,721
2,526,007
End of year 2,419,024
2,485,955
- --------------------------------------------------------------------------------
- ----------
Increase (Decrease) in Net Unrealized Appreciation 91,303
(40,052)
- --------------------------------------------------------------------------------
- ----------
Net Gain on Investments 214,898
167,192
- --------------------------------------------------------------------------------
- ----------
Increase in Net Assets From Operations $ 2,185,834 $
2,599,091
================================================================================
==========
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March
31,
Georgia Portfolio 1999 1998
================================================================================
===
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,970,936 $
1,427,411
Net realized gain 123,595
239,588
Increase in net unrealized appreciation 91,303
1,890,050
- --------------------------------------------------------------------------------
- ---
Increase in Net Assets From Operations 2,185,834
3,557,049
- --------------------------------------------------------------------------------
- ---
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (1,971,954)
(1,426,979)
In excess of net investment income (104,830)
- --
Net realized gains (290,345)
(176,258)
- --------------------------------------------------------------------------------
- ---
Decrease in Net Assets From
Distributions to Shareholders (2,367,129)
(1,603,237)
- --------------------------------------------------------------------------------
- ---
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 22,627,987
10,292,258
Net asset value of shares issued
for reinvestment of dividends 1,517,319
1,042,371
Cost of shares reacquired (4,201,549)
(2,503,707)
- --------------------------------------------------------------------------------
- ---
Increase in Net Assets From
Fund Share Transactions 19,943,757
8,830,922
- --------------------------------------------------------------------------------
- ---
Increase in Net Assets 19,762,462
10,784,734
NET ASSETS:
Beginning of year 35,854,599
25,069,865
- --------------------------------------------------------------------------------
- ---
End of year* $ 55,617,061 $
35,854,599
================================================================================
===
* Includes overdistributed net investment income of: $ (3,157) $
(2,139)
================================================================================
===
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended
March 31,
Pennsylvania Portfolio 1999
1998
================================================================================
====
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,431,899 $
2,045,063
Net realized gain 207,244
825,414
Increase (decrease) in net unrealized appreciation (40,052)
1,986,606
- --------------------------------------------------------------------------------
- ----
Increase in Net Assets From Operations 2,599,091
4,857,083
- --------------------------------------------------------------------------------
- ----
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (2,524,706)
(1,946,032)
Net realized gains (607,140)
(322,194)
- --------------------------------------------------------------------------------
- ----
Decrease in Net Assets From
Distributions to Shareholders (3,131,846)
(2,268,226)
- --------------------------------------------------------------------------------
- ----
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 42,109,612
8,372,759
Net asset value of shares issued
for reinvestment of dividends 2,087,057
1,490,181
Cost of shares reacquired (19,173,695)
(5,941,286)
- --------------------------------------------------------------------------------
- ----
Increase in Net Assets From
Fund Share Transactions 25,022,974
3,921,654
- --------------------------------------------------------------------------------
- ----
Increase in Net Assets 24,490,219
6,510,511
NET ASSETS:
Beginning of year 42,952,314
36,441,803
- --------------------------------------------------------------------------------
- ----
End of year* $ 67,422,533 $
42,952,314
================================================================================
====
* Includes undistributed net investment income of: $ 3,903 $
96,710
================================================================================
====
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
26 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Georgia and Pennsylvania Portfolios ("Portfolios") are separate investment
portfolios of the Smith Barney Muni Funds ("Fund"). The Fund, a Massachusetts
business trust, is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company and consists of these
Portfolios and six other separate investment portfolios: Florida, New York,
National, Limited Term, California Money Market and New York Money Market
portfolios. The financial statements and financial highlights for the other
portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolios
are:(a) security transactions are accounted for on trade date;(b) securities are
valued at the mean between the bid and ask prices provided by an independent
pricing service that are based on transactions in municipal obligations,
quotations from municipal bond dealers, market transactions in comparable
securities and various relationships between securities; (c) securities for
which market quotations are not available will be valued in good faith at fair
value by or under the direction of the Board of Trustees; (d) securities
maturing within 60 days are valued at cost plus accreted discount or minus
amortized premium, which approximates value; (e) gains or losses on the sale of
securities are calculated by using the specific identification method; (f)
interest income, adjusted for amortization of premium and original issue
discount, is recorded on an accrual basis; market discount is recognized upon
the disposition of the security; (g) dividends and distributions to shareholders
are recorded on the ex-dividend date; (h) direct expenses are charged to each
Portfolio and each class; management fees and general fund expenses are
allocated on the basis of relative net assets; (i) each Portfolio intends to
comply with the applicable provisions of the Internal Revenue Code of 1986, as
amended, pertaining to regulated investment companies and to make distributions
of taxable income sufficient to relieve it from substantially all Federal income
and excise taxes; (j) the character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Accordingly, a portion of Georgia
Portfolio's overdistributed net investment income amounting to $104,830 has been
reclassified to paid-in capital. Net investment income, net realized gains and
net assets were not affected by this adjustment; and (k) estimates and
assumptions are required to be made regarding assets, liabilities and changes in
net assets resulting from operations when financial statements are prepared.
Changes in the economic environment, financial markets and any other parameters
used in determining these estimates could cause actual results to differ.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Portfolio Concentration
Since the Georgia and Pennsylvania Portfolios invest primarily in obligations of
issuers within Georgia and Pennsylvania, respectively, each Portfolio is subject
to possible concentration risks associated with economic, political, or legal
developments or industrial or regional matters specifically affecting the
respective state in which it invests.
3. Exempt-Interest Dividends and Other Distributions
Each Portfolio intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from regular Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. Management Agreement and Other Transactions
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager to the Portfolios. The Portfolios pay SSBC a management fee calculated
at an annual rate of 0.45% of their respective average daily net assets. This
fee is calculated daily and paid monthly. SSBC waived management fees of $48,063
and $129,973 for the Georgia and Pennsylvania Portfolios, respectively, for the
year ended March 31, 1999.
On October 8, 1998, CFBDS, Inc. ("CFBDS") became the Fund's distributor. Prior
to that date Salomon Smith Barney Inc. ("SSB"), was the Fund's distributor. SSB,
as well as certain other broker-dealers, continues to sell Fund shares to the
public as a member of the selling group.
On June 12, 1998, the Fund's existing Class C shares were renamed Class L
shares. Effective June 15, 1998, Class L shares are being sold at net asset
value plus a maximum initial sales charge of 1.00%. Class L shares also have a
1.00% contingent deferred sales charge ("CDSC"), which applies if redemption
occurs within the first year of purchase.
There is also a CDSC of 4.50% on Class B shares, which applies if redemption
occurs less than one year from initial purchase. This CDSC declines by 0.50% the
first year after purchase and by 1.00% per year until no CDSC is incurred. In
certain cases, Class A shares have a 1.00% CDSC, which applies if redemption
occurs within the first year of purchase. This CDSC only applies to those
purchases of Class A shares, which, when combined with current holdings of Class
A shares, equal or exceed $500,000 in the aggregate. These purchases do not
incur an initial sales charge.
- --------------------------------------------------------------------------------
28 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
For the year ended March 31, 1999, CDSC's paid to SSB or CFBDS and sales charges
received by SSB or CFBDS were approximately:
CDSC's Sales Charges
------------------ ------------------
Portfolio Class A Class B Class A Class L
===============================================================================
Georgia -- $17,000 $168,000 $20,000
- -------------------------------------------------------------------------------
Pennsylvania $6,000 18,000 207,000 15,000
===============================================================================
Pursuant to a Distribution Plan, the Portfolios pay a service fee with respect
to Class A, B and L shares calculated at an annual rate of 0.15% of the average
daily net assets of each respective class. The Portfolios also pay a
distribution fee with respect to Class B and L shares calculated at an annual
rate of 0.50% and 0.55% of the average daily net assets of each class,
respectively.
For the year ended March 31, 1999, total Distribution Plan fees incurred were:
Portfolio Class A Class B Class L
===============================================================================
Georgia $39,910 $80,270 $39,376
- -------------------------------------------------------------------------------
Pennsylvania 31,495 144,134 64,169
===============================================================================
All officers and one Trustee of the Fund are employees of SSB.
5. Investments
During the year ended March 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
Georgia Pennsylvania
Portfolio Portfolio
================================================================================
Purchases $38,419,449 $47,947,592
- --------------------------------------------------------------------------------
Sales 20,980,309 25,319,592
================================================================================
At March 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
Georgia Pennsylvania
Portfolio Portfolio
================================================================================
Gross unrealized appreciation $2,454,259 $2,580,784
Gross unrealized depreciation (35,235) (94,829)
- --------------------------------------------------------------------------------
Net unrealized appreciation $2,419,024 $2,485,955
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 29
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking to market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are made or received and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Portfolio records a realized gain or
loss equal to the difference betweem the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract.
The Portfolio enters into such contracts to hedge a portion of its portfolio.
The Portfolio bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At March 31, 1999, the Portfolio had no open futures contracts.
7. Shares of Beneficial Interest
At March 31, 1999, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share. The Portfolios have
the ability to issue multiple classes of shares. Each share of a class
represents an identical interest in its respective Portfolio and has the same
rights, except that each class bears certain expenses specifically related to
the distribution of its shares. Effective June 12, 1998, the Fund adopted the
renaming of existing Class C shares as Class L shares.
At March 31, 1999, total paid-in capital amounted to the following for each
class and their respective Portfolio:
Portfolio Class A Class B Class L
================================================================================
Georgia $33,375,090 $12,931,328 $ 6,999,063
- --------------------------------------------------------------------------------
Pennsylvania 30,637,007 24,171,918 10,050,097
================================================================================
- --------------------------------------------------------------------------------
30 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year
Ended
March 31, 1999 March
31, 1998
-------------------------- --------------
- ------------
Georgia Portfolio Shares Amount Shares
Amount
================================================================================
============
<S> <C> <C> <C>
<C>
Class A
Shares sold 1,200,278 $ 16,271,337 428,273
$ 5,703,527
Shares issued on reinvestment 67,730 914,734 44,976
594,980
Shares reacquired (211,503) (2,869,561) (108,781)
(1,404,440)
- --------------------------------------------------------------------------------
- ------------
Net Increase 1,056,505 $ 14,316,510 364,468
$ 4,894,067
================================================================================
============
Class B
Shares sold 261,025 $ 3,530,318 244,140
$ 3,233,404
Shares issued on reinvestment 27,819 375,581 22,249
294,164
Shares reacquired (70,773) (957,095) (58,133)
(759,900)
- --------------------------------------------------------------------------------
- ------------
Net Increase 218,071 $ 2,948,804 208,256
$ 2,767,668
================================================================================
============
Class L*
Shares sold 209,651 $ 2,826,332 101,894
$ 1,355,327
Shares issued on reinvestment 16,827 227,004 11,606
153,227
Shares reacquired (27,773) (374,893) (26,031)
(339,367)
- --------------------------------------------------------------------------------
- ------------
Net Increase 198,705 $ 2,678,443 87,469
$ 1,169,187
================================================================================
============
Pennsylvania Portfolio
================================================================================
============
Class A
Shares sold 2,220,491 $ 30,095,215 192,029
$ 2,564,480
Shares issued on reinvestment 74,724 1,013,016 52,700
701,357
Shares reacquired (1,113,160) (15,119,889) (263,300)
(3,525,081)
- --------------------------------------------------------------------------------
- ------------
Net Increase (Decrease) 1,182,055 $ 15,988,342 (18,571)
$ (259,244)
================================================================================
============
Class B
Shares sold 619,028 $ 8,397,240 265,068
$ 3,525,937
Shares issued on reinvestment 55,942 756,780 42,873
570,003
Shares reacquired (219,380) (2,969,501) (113,579)
(1,504,701)
- --------------------------------------------------------------------------------
- ------------
Net Increase 455,590 $ 6,184,519 194,362
$ 2,591,239
================================================================================
============
Class L*
Shares sold 266,841 $ 3,617,157 171,289
$ 2,282,342
Shares issued on reinvestment 23,458 317,261 16,451
218,821
Shares reacquired (79,975) (1,084,305) (69,192)
(911,504)
- --------------------------------------------------------------------------------
- ------------
Net Increase 210,324 $ 2,850,113 118,548
$ 1,589,659
================================================================================
============
</TABLE>
* On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 31
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------
- -------------------
Georgia Portfolio 1999(1) 1998 1997
1996 1995(2)
================================================================================
===================
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $ 13.43 $ 12.48 $ 12.50 $
12.10 $ 12.00
- --------------------------------------------------------------------------------
- -------------------
Income From Operations:
Net investment income (3) 0.62 0.67 0.69
0.70 0.62
Net realized and unrealized gain 0.12 1.03 0.04
0.45 0.10*
- --------------------------------------------------------------------------------
- -------------------
Total Income From Operations 0.74 1.70 0.73
1.15 0.72
- --------------------------------------------------------------------------------
- -------------------
Less Distributions From:
Net investment income (0.62) (0.67) (0.67)
(0.70) (0.62)
In excess of net investment income (0.03) -- --
- -- --
Net realized gains (0.09) (0.08) (0.08)
(0.05) --
- --------------------------------------------------------------------------------
- -------------------
Total Distributions (0.74) (0.75) (0.75)
(0.75) (0.62)
- --------------------------------------------------------------------------------
- -------------------
Net Asset Value, End of Year $ 13.43 $ 13.43 $ 12.48 $
12.50 $ 12.10
- --------------------------------------------------------------------------------
- -------------------
Total Return 5.61% 13.85% 5.95%
9.67% 6.29%++
- --------------------------------------------------------------------------------
- -------------------
Net Assets, End of Year (000s) $34,680 $20,502 $14,495 $
9,744 $ 8,520
- --------------------------------------------------------------------------------
- -------------------
Ratios to Average Net Assets:
Expenses (3)(4) 0.64% 0.50% 0.48%
0.38% 0.28%+
Net investment income 4.63 5.10 5.49
5.57 5.43+
- --------------------------------------------------------------------------------
- -------------------
Portfolio Turnover Rate 48% 36% 81%
63% 34%
================================================================================
===================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from April 4, 1994 (inception date) to March 31, 1995.
(3) The Manager has waived all or part of its fees for the years ended March
31, 1999, 1998, 1997 and 1996 and the period ended March 31, 1995. In
addition, the Manager reimbursed expenses of $56,755 and $42,317 for the
year ended March 31, 1996 and the period ended March 31,1995,
respectively. If such fees were not waived and expenses not reimbursed,
the effect on net investment income and expense ratios would have been as
follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements(4)
--------------------------------- ---------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Class A $0.01 $0.04 $0.04 $0.11 $0.12 0.74% 0.83% 0.90% 1.23% 1.20%+
(4) As a result of voluntary expense limitations, expense ratios will not
exceed 0.80% for Class A shares.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
32 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class B Shares
------------------------------------
- ---------------------------
Georgia Portfolio 1999(1) 1998 1997
1996 1995(2)(3)
================================================================================
===========================
<S> <C> <C> <C>
<C> <C>
Net Asset Value, Beginning of Year $ 13.43 $ 12.47 $ 12.50
$ 12.11 $ 12.27
- --------------------------------------------------------------------------------
- ---------------------------
Income (Loss) From Operations:
Net investment income (4) 0.56 0.61 0.62
0.64 0.49
Net realized and unrealized gain (loss) 0.10 1.03 0.04
0.45 (0.16)*
- --------------------------------------------------------------------------------
- ---------------------------
Total Income From Operations 0.66 1.64 0.66
1.09 0.33
- --------------------------------------------------------------------------------
- ---------------------------
Less Distributions From:
Net investment income (0.55) (0.60) (0.61)
(0.65) (0.49)
In excess of net investment income (0.03) -- --
- -- --
Net realized gains (0.09) (0.08) (0.08)
(0.05) --
- --------------------------------------------------------------------------------
- ---------------------------
Total Distributions (0.67) (0.68) (0.69)
(0.70) (0.49)
- --------------------------------------------------------------------------------
- ---------------------------
Net Asset Value, End of Year $ 13.42 $ 13.43 $ 12.47
$ 12.50 $ 12.11
- --------------------------------------------------------------------------------
- ---------------------------
Total Return 4.99% 13.39% 5.33%
9.08% 2.88%++
- --------------------------------------------------------------------------------
- ---------------------------
Net Assets, End of Year (000s) $ 13,633 $ 10,712 $ 7,354
$ 5,461 $ 2,551
- --------------------------------------------------------------------------------
- ---------------------------
Ratios to Average Net Assets:
Expenses (4)(5) 1.15% 1.02% 1.00%
0.92% 0.85%+
Net investment income 4.12 4.58 4.97
5.20 5.37+
- --------------------------------------------------------------------------------
- ---------------------------
Portfolio Turnover Rate 48% 36% 81%
63% 34%
================================================================================
===========================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from June 15, 1994 (inception date) to March 31, 1995.
(3) On November 7, 1994, the former Class E shares were renamed Class B
shares.
(4) The Manager has waived all or part of its fees the years ended March 31,
1999, 1998, 1997 and 1996 and the period ended March 31, 1995. In
addition, the Manager reimbursed expenses of $56,755 and $42,317 for the
year ended March 31, 1996 and the period ended March 31,1995,
respectively. If such fees were not waived and expenses not reimbursed,
the effect on net investment income and expense ratios would have been as
follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements(5)
--------------------------------- ---------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Class B $0.02 $0.04 $0.05 $0.10 $0.11 1.26% 1.35% 1.42% 1.77% 1.82%+
(5) As a result of voluntary expense limitations, expense ratios will not
exceed 1.30% for Class B shares.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 33
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class L Shares(1)
-----------------------------------------
- -----------------
Georgia Portfolio 1999(2) 1998 1997
1996 1995(3)(4)
================================================================================
=================
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $ 13.41 $ 12.46 $ 12.49 $
12.09 $ 12.06
- --------------------------------------------------------------------------------
- -----------------
Income From Operations:
Net investment income (5) 0.55 0.60 0.62
0.63 0.55
Net realized and unrealized gain 0.12 1.02 0.03
0.46 0.04*
- --------------------------------------------------------------------------------
- -----------------
Total Income From Operations 0.67 1.62 0.65
1.09 0.59
- --------------------------------------------------------------------------------
- -----------------
Less Distributions From:
Net investment income (0.55) (0.59) (0.60)
(0.64) (0.56)
In excess of net investment income (0.03) -- --
- -- --
Net realized gains (0.09) (0.08) (0.08)
(0.05) --
- --------------------------------------------------------------------------------
- -----------------
Total Distributions (0.67) (0.67) (0.68)
(0.69) (0.56)
- --------------------------------------------------------------------------------
- -----------------
Net Asset Value, End of Year $ 13.41 $ 13.41 $ 12.46 $
12.49 $ 12.09
- --------------------------------------------------------------------------------
- -----------------
Total Return 5.01% 13.23% 5.28%
9.12% 5.11%++
- --------------------------------------------------------------------------------
- -----------------
Net Assets, End of Year (000s) $ 7,304 $ 4,641 $ 3,221 $
2,914 $ 1,295
- --------------------------------------------------------------------------------
- -----------------
Ratios to Average Net Assets:
Expenses (5)(6) 1.20% 1.06% 1.04%
0.97% 0.90%+
Net investment income 4.07 4.54 4.93
5.18 5.22+
- --------------------------------------------------------------------------------
- -----------------
Portfolio Turnover Rate 48% 36% 81%
63% 34%
================================================================================
=================
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from April 14, 1994 (inception date) to March 31, 1995.
(4) On November 7, 1994, the former Class B shares were renamed Class C
shares.
(5) The Manager has waived all or part of its fees for the years ended March
31, 1999, 1998, 1997 and 1996 and the period ended March 31, 1995. In
addition, the Manager reimbursed expenses of $56,755 and $42,317 for the
year ended March 31, 1996 and the period ended March 31, 1995,
respectively. If such fees were not waived and expenses not reimbursed,
the effect on net investment income and expense ratios would have been as
follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements(6)
--------------------------------- ---------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Class L $0.02 $0.04 $0.05 $0.10 $0.12 1.31% 1.39% 1.46% 1.82% 1.85%+
(6) As a result of voluntary expense limitations, expense ratios will not
exceed 1.35% for Class L shares.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
34 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------
- --------------------
Pennsylvania Portfolio 1999(1) 1998 1997
1996(1) 1995(2)(3)
================================================================================
====================
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $ 13.54 $ 12.66 $ 12.62 $
12.40 $ 12.00
- --------------------------------------------------------------------------------
- --------------------
Income From Operations:
Net investment income (4) 0.66 0.73 0.71
0.70 0.67
Net realized and unrealized gain 0.08 0.95 0.04
0.29 0.35*
- --------------------------------------------------------------------------------
- --------------------
Total Income From Operations 0.74 1.68 0.75
0.99 1.02
- --------------------------------------------------------------------------------
- --------------------
Less Distributions From:
Net investment income (0.69) (0.69) (0.71)
(0.72) (0.62)
Net realized gains (0.15) (0.11) --
(0.05) --
- --------------------------------------------------------------------------------
- --------------------
Total Distributions (0.84) (0.80) (0.71)
(0.77) (0.62)
- --------------------------------------------------------------------------------
- --------------------
Net Asset Value, End of Year $ 13.44 $ 13.54 $ 12.66 $
12.62 $ 12.40
- --------------------------------------------------------------------------------
- --------------------
Total Return 5.61% 13.52% 6.11%
8.08% 8.82%++
- --------------------------------------------------------------------------------
- --------------------
Net Assets, End of Year (000s) $ 31,718 $ 15,955 $ 15,152 $
11,847 $ 7,974
- --------------------------------------------------------------------------------
- --------------------
Ratios to Average Net Assets:
Expenses (4)(5) 0.50% 0.37% 0.37%
0.38% 0.29%+
Net investment income 4.94 5.46 5.66
5.57 5.76+
- --------------------------------------------------------------------------------
- --------------------
Portfolio Turnover Rate 49% 81% 122%
88% 38%
================================================================================
====================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(2) For the period from April 4, 1994 (inception date) to March 31, 1995.
(3) On October 10, 1994, the former Class C shares were exchanged into Class A
shares.
(4) The Manager has waived all or part of its fees for the years ended March
31, 1999, 1998, 1997 and 1996 and the period ended March 31, 1995. In
addition, the Manager reimbursed expenses of $23,433 and $32,063 for the
year ended March 31, 1996 and the period ended March 31,1995,
respectively. If such fees were not waived and expenses not reimbursed,
the effect on net investment income and expense ratios would have been as
follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements(5)
--------------------------------- ---------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Class A $0.03 $0.05 $0.06 $0.07 $0.09 0.75% 0.79% 0.82% 0.93% 1.03%+
(5) As a result of voluntary expense limitations, expense ratios will not
exceed 0.80% for Class A shares.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 35
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class B Shares
-------------------------------------------
- --------------------
Pennsylvania Portfolio 1999(1) 1998 1997
1996(1) 1995(2)(3)
================================================================================
====================
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $ 13.52 $ 12.64 $ 12.61 $
12.39 $ 12.35
- --------------------------------------------------------------------------------
- --------------------
Income From Operations:
Net investment income (4) 0.60 0.65 0.65
0.64 0.51
Net realized and unrealized gain 0.07 0.96 0.03
0.29 0.01*
- --------------------------------------------------------------------------------
- --------------------
Total Income From Operations 0.67 1.61 0.68
0.93 0.52
- --------------------------------------------------------------------------------
- --------------------
Less Distributions From:
Net investment income (0.62) (0.62) (0.65)
(0.66) (0.48)
Net realized gains (0.15) (0.11) --
(0.05) --
- --------------------------------------------------------------------------------
- --------------------
Total Distributions (0.77) (0.73) (0.65)
(0.71) (0.48)
- --------------------------------------------------------------------------------
- --------------------
Net Asset Value, End of Year $ 13.42 $ 13.52 $ 12.64 $
12.61 $ 12.39
- --------------------------------------------------------------------------------
- --------------------
Total Return 5.07% 12.97% 5.56%
7.61% 4.48%++
- --------------------------------------------------------------------------------
- --------------------
Net Assets, End of Year (000s) $ 25,234 $ 19,268 $ 15,559 $
13,131 $ 4,850
- --------------------------------------------------------------------------------
- --------------------
Ratios to Average Net Assets:
Expenses (4)(5) 1.01% 0.89% 0.88%
0.88% 0.82%+
Net investment income 4.45 4.94 5.15
5.07 5.31+
- --------------------------------------------------------------------------------
- --------------------
Portfolio Turnover Rate 49% 81% 122%
88% 38%
================================================================================
====================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(2) For the period from June 20, 1994 (inception date) to March 31, 1995.
(3) On November 7, 1994, the former Class E shares were renamed Class B
shares.
(4) The Manager has waived all or part of its fees for the years ended March
31, 1999, 1998, 1997 and 1996 and the period ended March 31, 1995. In
addition, the Manager reimbursed expenses of $23,433 and $32,063 for the
year ended March 31, 1996 and the period ended March 31,1995,
respectively. If such fees were not waived and expenses not reimbursed,
the effect on net investment income and expense ratios would have been as
follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements(5)
--------------------------------- ---------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Class B $0.03 $0.05 $0.06 $0.07 $0.08 1.26% 1.31% 1.33% 1.44% 1.58%+
(5) As a result of voluntary expense limitations, expense ratios will not
exceed 1.30% for Class B shares.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
36 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class L Shares(1)
-------------------------------------------
- --------------------
Pennsylvania Portfolio 1999(2) 1998 1997
1996(2) 1995(3)(4)
================================================================================
====================
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $ 13.51 $ 12.64 $ 12.61 $
12.39 $ 12.00
- --------------------------------------------------------------------------------
- --------------------
Income From Operations:
Net investment income (5) 0.60 0.64 0.64
0.64 0.59
Net realized and unrealized gain 0.06 0.96 0.04
0.29 0.36*
- --------------------------------------------------------------------------------
- --------------------
Total Income From Operations 0.66 1.60 0.68
0.93 0.95
- --------------------------------------------------------------------------------
- --------------------
Less Distributions From:
Net investment income (0.61) (0.62) (0.65)
(0.66) (0.56)
Net realized gains (0.15) (0.11) --
(0.05) --
- --------------------------------------------------------------------------------
- --------------------
Total Distributions (0.76) (0.73) (0.65)
(0.71) (0.56)
- --------------------------------------------------------------------------------
- --------------------
Net Asset Value, End of Year $ 13.41 $ 13.51 $ 12.64 $
12.61 $ 12.39
- --------------------------------------------------------------------------------
- --------------------
Total Return 5.02% 12.84% 5.51%
7.56% 8.14%++
- --------------------------------------------------------------------------------
- --------------------
Net Assets, End of Year (000s) $ 10,490 $ 7,729 $ 5,731 $
4,682 $ 3,337
- --------------------------------------------------------------------------------
- --------------------
Ratios to Average Net Assets:
Expenses (5)(6) 1.07% 0.94% 0.94%
0.94% 0.86%+
Net investment income 4.40 4.89 5.09
5.00 5.04+
- --------------------------------------------------------------------------------
- --------------------
Portfolio Turnover Rate 49% 81% 122%
88% 38%
================================================================================
====================
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) For the period from April 5, 1994 (inception date) to March 31, 1995.
(4) On November 7, 1994, the former Class B shares were renamed Class C
shares.
(5) The Manager has waived all or part of its fees for the years ended March
31, 1999, 1998, 1997 and 1996 and the period ended March 31, 1995. In
addition, the Manager reimbursed expenses of $23,433 and $32,063 for the
year ended March 31, 1996 and the period ended March 31,1995,
respectively. If such fees were not waived and expenses not reimbursed,
the effect on net investment income and expense ratios would have been as
follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements(6)
--------------------------------- ---------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Class L $0.03 $0.05 $0.06 $0.07 $0.09 1.32% 1.36% 1.39% 1.49% 1.56%+
(6) As a result of voluntary expense limitations, expense ratios will not
exceed 1.35% for Class L shares.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 37
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
of the Georgia and Pennsylvania Portfolios
of Smith Barney Muni Funds:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the Georgia and Pennsylvania Portfolios of
Smith Barney Muni Funds as of March 31, 1999, the related statements of
operations for the year then ended, the statements of 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 four-year period then ended and for the period from
April 4, 1994 (commencement of operations) to March 31, 1995. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the custodian. As to securities purchased or
sold but not yet received or delivered, we performed other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Georgia and Pennsylvania Portfolios of Smith Barney Muni Funds as of March 31,
1999, the results of their operations for the year then ended, the changes in
their net assets for each of the years in the two-year period then ended and
their financial highlights for each of the years in the four-year period then
ended and for the period from April 4, 1994 to March 31, 1995, in conformity
with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
May 12, 1999
- --------------------------------------------------------------------------------
38 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
March 31, 1999:
o Percentage of the dividends paid by the Fund from net investment
income as tax-exempt to regular Federal income tax purposes:
Georgia Portfolio ........................... 100%
Pennsylvania Portfolio ...................... 100%
o Total long-term capital gain distributions paid:
Georgia Portfolio ........................... $186,991
Pennsylvania Portfolio ...................... 300,607
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 39
<PAGE>
(This page intentionally left blank.)
<PAGE>
SALOMON SMITH BARNEY
---------------------------
A member of citigroup[LOGO]
Trustees
Donald R. Foley
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, Emeritus
Officers
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Manager
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder
Servicing Agent
First Data Investor Services
Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds -- Georgia and Pennsylvania Portfolios. It is not
authorized for distribution to prospective investors unless accompanied or
preceded by a current Prospectus for the Fund, which contains information
concerning the Fund's investment policies, fees and expenses as well as other
pertinent information.
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney Muni Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD0798 5/99
[PHOTO OMITTED]
Smith Barney Muni Funds
Florida
Portfolio
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
March 31, 1999
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(R)
<PAGE>
Smith Barney [PHOTO OMITTED] [PHOTO OMITTED]
Muni Funds
HEATH B. PETER M.
MCLENDON COFFEY
Chairman Vice President
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney Muni Funds --
Florida Portfolio ("Portfolio") for the year ended March 31, 1999. For your
convenience, we have summarized the period's prevailing economic and market
conditions below. A detailed summary of performance and current holdings for the
Portfolio can be found in the appropriate sections that follow. We hope you find
this report to be useful and informative.
Performance and Investment Strategy
For the year ended March 31, 1999, the Florida Portfolio returned 5.56% for
Class A shares without sales charges and outperformed its Lipper, Inc. peer
group average of 5.08% (Lipper is a major fund-tracking organization.) For
performance information on the Portfolio's other share classes, please refer to
pages 4 and 5.
In keeping with the Portfolio's objective, we have continued to emphasize high
current income in our bond selections. The Portfolio's credit quality remained
strong during its fiscal year, with 94.4% of its bonds rated investment grade or
better. Moreover, 62.1% of the Portfolio's holdings were rated AAA, the highest
bond rating. As of March 31, 1999, the weighted average life of the Portfolio
was 11.9 years.
In addition, we have maintained broad diversification over a range of different
kinds of bonds. We continue to focus on select hospital bonds because we believe
these bonds offer slightly higher yields than similarly-rated bonds of other
categories. As of March 31, 1999, the Portfolio's assets were concentrated in
housing bonds (16.5%), transportation bonds (15.3%) and hospital bonds (12.3%).
Market and Economic Overview
During much of the past year, the municipal bond market was an oasis of
stability compared to the significant turmoil experienced by other fixed-income
markets. In the wake of Russia's loan default, growing numbers of creditors
became increasingly risk averse. In response, the Federal Reserve ("Fed")
lowered short-term interest rates by 0.75% in three separate actions over the
course of several weeks. These interest-rate cuts helped lift bond markets. In
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
the midst of the turmoil, many investors fled to the relative safe haven of U.S.
Treasury bonds, sparking a sharp rally and helped send long-term government
interest rates to their lowest level in more than thirty years. The 30-year U.S.
Treasury bond yield fluctuated approximately 1.36% from March 31, 1998 to March
31, 1999. In contrast, municipal bond yields (as measured by the Bond Buyers 25
Revenue Index) were far less volatile and remained confined to a much narrower
range of roughly 0.41% during the same period.
Despite jittery financial markets, the U.S. economy continued to expand
vigorously, defying the expectations of many economists. The domestic economy
grew at an annual rate of 3.5% in the first quarter of 1999, coming off the
heels of a brisk 6% annual growth rate for the fourth quarter of 1998. The
unemployment rate hovered just above 4.2% in March 1999, a 29-year low. Yet,
inflationary pressures have been well contained. The Consumer Price Index
("CPI") rose a mere 0.2% in January 1999 and an even more modest 0.1% in
February 1999.
In our view, inflationary pressures have been held in check by a fortunate
combination of ongoing economic weakness abroad, added cost controls in health
care and the expanding role of technology. Economic recessions in many parts of
the world have helped keep import prices down, especially in key commodities
such as food and energy. In addition, the cost controls introduced by managed
health care companies have begun to bring down medical costs and the growing use
of technology has not only boosted worker productivity, but has also made many
consumer goods companies much more cost competitive.
Municipal bonds, along with many other financial assets, have benefited from the
high-growth, low-inflation U.S. economy. Similar to other types of bonds,
municipal bond yields have declined but their real rate of return (i.e. the rate
of return after subtracting the effects of inflation) has remained historically
high. Moreover, long-term municipal bonds currently yield approximately 90% of
long-term U.S. Treasury bond yields. Typically, municipal bonds are considered a
good relative value when they yield approximately 85% of comparable-maturity
U.S. Treasury bonds.
A strong U.S. economy and low interest rates have encouraged many municipalities
to issue more bonds and refinance more expensive existing debt. We believe the
ability of the market to absorb the unusually heavy municipal bond issuance last
year is an indication of the health of the municipal bond market. This steady
equilibrium of supply and demand is one reason that municipal bond prices have
remained stable compared to other fixed-income assets.
- --------------------------------------------------------------------------------
2 1999 Annual Report to Shareholders
<PAGE>
Florida Economic Highlights
According to Fitch IBCA, Inc., a major credit-reporting agency, "the state's
general obligation bonds are rated "AA," reflecting sustained rapid growth,
economic broadening and increasing diversification." Florida's economy has
continued to change from one based on agriculture and seasonal tourism to a
service and trade powerhouse with strong insurance, banking and export
industries. Yet, this growth has come with a price. Florida faces significant
infrastructural challenges, especially with respect to the need for new schools.
However, because of Florida's diversified and robust economy, we are sanguine
about the Sunshine State's long-term growth prospects.
Municipal Bond Market Outlook
Over the near term, we remain largely positive on the prospects for municipal
bonds. In our judgement, Fed monetary policy will likely remain on hold until
signs of inflation surface. After a period of substantial volatility, we expect
that U.S. Treasury bonds should fluctuate within a fairly narrow trading range
in the coming months. As the global crisis continues to improve, demand for U.S.
Treasurys should weaken. Moreover, new municipal bond issuance volume for 1999
is down significantly from last year. If this pattern holds, it could set the
stage for a municipal bond rally later in the year.
Thank you for investing in the Smith Barney Muni Funds -- Florida Portfolio. We
encourage you to visit our Web site at www.smithbarney.com. We look forward to
helping you pursue your goals.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman Vice President
April 19, 1999
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------------
Beginning End of
Income Capital Gain Total
Year Ended of Year Year
Dividends Distributions Returns(1)
================================================================================
======================================
<S> <C> <C> <C>
<C> <C>
3/31/99 $13.74 $13.70
$0.70 $0.09 5.56%
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/98 13.16 13.74
0.73 0.13 11.15
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/97 13.24 13.16
0.73 0.05 5.44
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/96 12.89 13.24
0.74 0.00 8.65
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/95 12.82 12.89
0.76 0.00 6.77
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/94 13.21 12.82
0.77 0.00 2.75
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/93 12.32 13.21
0.80 0.01 14.21
- --------------------------------------------------------------------------------
- --------------------------------------
Inception* - 3/31/92 12.00 12.32
0.70 0.00 8.70+
================================================================================
======================================
Total
$5.93 $0.28
================================================================================
======================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------------
Beginning End of
Income Capital Gain Total
Year Ended of Year Year
Dividends Distributions Returns(1)
================================================================================
======================================
<S> <C> <C> <C>
<C> <C>
3/31/99 $13.73 $13.69
$0.63 $0.09 5.01%
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/98 13.14 13.73
0.65 0.13 10.59
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/97 13.23 13.14
0.68 0.05 4.91
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/96 12.89 13.23
0.69 0.00 8.09
- --------------------------------------------------------------------------------
- --------------------------------------
Inception* - 3/31/95 11.91 12.89
0.29 0.00 10.77+
================================================================================
======================================
Total
$2.94 $0.27
================================================================================
======================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares(2)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------------
Beginning End of
Income Capital Gain Total
Year Ended of Year Year
Dividends Distributions Returns(1)
================================================================================
======================================
<S> <C> <C> <C>
<C> <C>
3/31/99 $13.74 $13.69
$0.62 $0.09 4.87%
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/98 13.14 13.74
0.63 0.13 10.51
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/97 13.22 13.14
0.67 0.05 4.94
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/96 12.89 13.22
0.68 0.00 7.96
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/95 12.81 12.89
0.67 0.00 6.12
- --------------------------------------------------------------------------------
- --------------------------------------
3/31/94 13.20 12.81
0.68 0.00 2.05
- --------------------------------------------------------------------------------
- --------------------------------------
Inception* - 3/31/93 12.86 13.20
0.18 0.00 4.05+
================================================================================
======================================
Total
$4.13 $0.27
================================================================================
======================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
-------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 5.56% 5.01% 4.87%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 7.49 N/A 6.86
- --------------------------------------------------------------------------------
Inception* through 3/31/99 7.85 9.02 6.48
================================================================================
With Sales Charges(3)
-------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 1.36% 0.53% 2.82%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 6.63 N/A 6.64
- --------------------------------------------------------------------------------
Inception* through 3/31/99 7.30 8.85 6.31
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 3/31/99) 83.05%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/99) 45.88
- --------------------------------------------------------------------------------
Class L (Inception* through 3/31/99)(2) 47.96
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 4.00% and 1.00%,
respectively; and Class B shares reflect the deduction of a 4.50% CDSC,
which applies if shares are redeemed within one year from purchase. This
CDSC declines by 0.50% the first year after purchase and thereafter by
1.00% per year until no CDSC is incurred. Class L shares also reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within the
first year of purchase.
* Inception dates for Class A, B and L shares are April 2, 1991, November
16, 1994 and January 5, 1993, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the Florida Portfolio vs.
Lehman Brothers Municipal Bond Index+
- --------------------------------------------------------------------------------
April 1991 -- March 1999
[The following table was depicted as a line chart in the printed material.]
Florida Lehman Bond Index
------- -----------------
4/2/91 9600 10000
3/92 10410 10999
3/93 11859 12376
3/94 12158 12663
3/95 12963 13605
3/96 14084 14746
3/97 14850 15548
3/98 16507 17214
3/31/99 17425 18281
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on April 2, 1991, assuming deduction of the maximum 4.00% sales
charge at the time of investment and reinvestment of dividends (after
deduction of applicable sales charges through November 6, 1994, and
thereafter at net asset value) and capital gains, if any, at net asset
value through March 31, 1999. The Lehman Brothers Municipal Bond Index is
a broad-based, total return index comprised of investment grade, fixed
rate municipal bonds selected from issues larger than $50 million issued
since January 1984. The index is unmanaged and is not subject to the same
management and trading expenses of a mutual fund.The performance of the
Portfolio's other classes may be greater or less than the Class A shares'
performance indicated on this chart, depending on whether greater or
lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
- --------------------------------------------------------------------------------
6 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Education -- 3.1%
$1,000,000 AAA Dade County School Board, Series C, FSA-Insured,
5.000% due 8/1/17
$ 1,001,250
1,530,000 AAA Florida State Board Regent Housing Revenue,
University of Florida, MBIA-Insured, 4.500% due 7/1/19
1,426,725
1,020,000 AA Hillsborough County Educational Facilities Authority
Revenue, (University of Tampa Project),
5.000% due 12/1/18
1,009,800
Volusia County Educational Facilities Authority Revenue,
Embry-Riddle Aeronautical University:
500,000 AAA CONNIE LEE-Insured, 6.500% due 10/15/15
548,750
2,875,000 Baa2* Series A, 6.125% due 10/15/16
3,112,188
- --------------------------------------------------------------------------------
- ---------------------
7,098,713
- --------------------------------------------------------------------------------
- ---------------------
Escrowed to Maturity(b) -- 4.7%
335,000 AAA Altamonte Springs Health Facilities Authority
Hospital Revenue, Adventist Health System,
13.000% due 10/1/01
379,806
860,000 AAA Bradford County Health Facilities Authority Revenue,
(Santa Fe Health Care Facilities Project),
6.050% due 11/15/16
963,200
250,000 AAA Cape Coral Health Facilities Authority Hospital Revenue,
(Cape Coral Medical Center Project),
8.125% due 11/1/08
289,375
3,000,000 AAA Escambia County HFA, Multi-Family Housing Revenue,
Genesis Healthcare, Principal Custodial Receipts,
Series A, FGIC-Insured, zero coupon due 10/15/18
1,091,250
2,015,000 AAA Gainesville Utility System Revenue,
8.125% due 10/1/14 (c)
2,584,237
225,000 AAA Lee County Justice Center Complex Inc., Improvement
Revenue, Series A, MBIA-Insured, 11.125% due 1/1/11
319,219
525,000 AAA Orange County Health Facility Authority Revenue,
Southern Adventist Hospital, 8.750% due 10/1/09
648,375
1,025,000 AAA Palm Beach County Health Facilities Authority Revenue,
(John F. Kennedy Memorial Hospital Inc. Project),
Series C, 9.500% due 8/1/13
1,365,813
730,000 AAA Palm Beach County Solid Waste Authority Revenue,
MBIA-Insured, 10.000% due 12/1/04
872,350
2,000,000 AAA Port Everglades Authority Port Improvement,
7.125% due 11/1/16 (c)
2,500,000
- --------------------------------------------------------------------------------
- ---------------------
11,013,625
- --------------------------------------------------------------------------------
- ---------------------
Finance -- 0.9%
485,000 AA+ Florida State Board of Education Capital Outlay,
Unrefunded Balance, Series A, 7.250% due 6/1/23 (c)
515,312
500,000 AAA Gulf Breeze Local Government Revenue, FGIC-Insured,
7.750% due 12/1/15
523,905
1,000,000 AA St. Lucie County Special Assessment, South Hutchinson
Island, Asset Guaranty, 6.200% due 11/1/25
1,140,000
- --------------------------------------------------------------------------------
- ---------------------
2,179,217
- --------------------------------------------------------------------------------
- ---------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
General Obligation -- 3.9%
$ 500,000 NR Brevard County Tourist Development Tax Revenue,
4th Century Marlins Spring, 6.875% due 3/1/13
$ 532,500
1,000,000 AA+ Florida State Broward County, 10.000% due 7/1/14 (c)
1,521,600
Puerto Rico Commonwealth, Public Improvement:
7,000,000 AAA AMBAC-Insured, 4.500% due 7/1/23
6,501,250
1,000,000 A Capital Appreciation, zero coupon due 7/1/14
478,750
- --------------------------------------------------------------------------------
- ---------------------
9,034,100
- --------------------------------------------------------------------------------
- ---------------------
Hospital -- 12.3%
3,000,000 AAA Dade County Public Facilities Revenue, Jackson
Memorial Hospital, FSA-Insured, 5.000% due 6/1/18
2,988,750
Escambia County Health Facilities Authority Revenue:
2,500,000 NR Azalea Trace Inc. Project, 6.100% due 1/1/19
2,593,750
375,000 BBB+ Unrefunded Balance, Baptist Hospital,
6.750% due 10/1/14
415,781
1,000,000 A Halifax Hospital Medical Center, Florida Health Care
Facilities Revenue, Halifax Management System,
Series A, ACA-Insured, 5.200% due 4/1/18
996,250
2,000,000 A- Highlands County Health Facilities Authority Revenue,
Adventist Health System, 5.250% due 11/15/20
1,960,000
Jacksonville Health Facilities Authority, Hospital
Revenue:
National Benevolent Association, IDR, Cypress Hill
Village Program:
750,000 Baa1* 6.400% due 12/1/16
807,188
1,000,000 Baa1* Series A, 6.250% due 12/1/26
1,075,000
2,000,000 AA+ St. Luke's Hospital Association Project,
7.125% due 11/15/20
2,177,500
260,000 AAA St. Vincent's Medical Center, 9.125% due 1/1/03
289,575
310,000 AAA University Medical Center Inc. Project, CONNIE LEE-
Insured, 6.600% due 2/1/21
335,188
Lee County Hospital Board of Directors, Hospital Revenue,
MBIA-Insured, Regular Linked SAVRS & RIBS:
1,000,000 AAA 8.887% due 3/26/20 (d)
1,172,500
1,000,000 AAA 9.468% due 4/1/20 (d)
1,155,000
Miami Beach Health Facilities Authority
Hospital Revenue:
1,100,000 BBB Mt. Sinai Medical Center Project, 5.375% due 11/15/28
1,064,250
2,000,000 A South Shore Hospital, Series A, ACA-Insured,
5.250% due 8/1/13
2,075,000
Orange County Health Facilities Authority, Hospital
Revenue Bonds:
Adventist Health Systems, FSA-Insured:
1,500,000 AAA FLAIRS, 6.700% due 11/15/07(d)
1,621,875
1,000,000 AAA Sunbelt Inc. Project, Series B, 6.750% due 11/15/21
1,086,250
1,000,000 AAA RIBS, MBIA-Insured, 9.263% due 10/29/21
1,180,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Hospital -- 12.3% (continued)
$ 605,000 BB+ Pinellas County Health Facilities Authority, Sun Coast
Health System Revenue, Sun Coast Hospital
Guaranteed, Series A, 8.500% due 3/1/20
$ 631,529
5,000,000 AAA Tampa Revenue Health Systems, Catholic Health,
Series A-1, 4.875% due 11/15/18
4,906,250
- --------------------------------------------------------------------------------
- ---------------------
28,531,636
- --------------------------------------------------------------------------------
- ---------------------
Housing: Multi-Family -- 9.4%
380,000 AAA Clearwater Multi-Family Housing Revenue, (Drew Gardens
Project), Series A, FHA-Insured, 6.500% due 10/1/25
400,900
Dade County HFA, Multi-Family Mortgage Revenue:
1,085,000 AAA Antigue Club Apartments, Series A-1, AMBAC-Insured,
6.750% due 8/1/14 (e)
1,173,156
1,000,000 NR Golden Lakes Apartments Project,
6.050% due 11/1/39 (e)
1,037,500
1,500,000 AAA Mariner Club Apartments, Series K-1,
6.375% due 9/1/36 (e)
1,620,000
3,000,000 A Sr. Lien, Series I-1, 6.625% due 7/1/28 (c)(e)
3,266,250
3,000,000 AAA Stoddert Arms Apartments, Series O, AMBAC-Insured,
6.300% due 9/1/36 (e)
3,221,250
1,000,000 AAA Turtle Creek Apartments, Series C-1, AMBAC-Insured,
6.200% due 5/1/36 (e)
1,067,500
1,000,000 BBB+ The Vineyards Project, Series H, 6.500% due 11/1/25
1,066,250
2,355,000 AAA Dade County IDR, Susanna Wesley Health Center,
Series A, FHA-Insured, 6.625% due 7/1/30 (c)
2,558,119
Florida Housing Finance Agency:
1,000,000 AAA Crossings Indian Run Apartments, Series V,
AMBAC-Insured, 6.200% due 12/1/36 (e)
1,067,500
2,000,000 AAA Glen Oaks Apartment Projects, FNMA-Collateralized,
5.900% due 2/1/30 (e)
2,092,500
1,000,000 AAA Oceanside Housing Development Corp., Multi-Family
Mortgage Revenue, FHA-Insured, 6.875% due 2/1/20
1,050,000
1,000,000 A3* Orange County Housing Financial Authority Multi-Family
Revenue, (Loma Vista Project), Series G,
5.500% due 3/1/32 (e)
1,000,000
1,095,000 AAA Southwest Housing Development Corp., Multi-Family
Housing Mortgage Revenue Refunding, FHA-Insured,
6.875% due 2/1/20
1,145,644
- --------------------------------------------------------------------------------
- ---------------------
21,766,569
- --------------------------------------------------------------------------------
- ---------------------
Housing: Single-Family -- 7.1%
Brevard County HFA, Single-Family Mortgage Revenue:
555,000 Aaa* GNMA-Collateralized, 6.600% due 9/1/16 (e)
586,912
900,000 Aaa* GNMA/FNMA-Collateralized, 6.400% due 9/1/23 (e)
949,500
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Housing: Single-Family -- 7.1% (continued)
Broward County HFA, Single-Family Mortgage Revenue:
$ 520,000 Aa2* Capital Appreciation, zero coupon due 4/1/14
$ 114,400
GNMA/FNMA-Collateralized:
610,000 Aaa* 6.650% due 8/1/21(e)
648,887
750,000 Aaa* Series A, 6.200% due 4/1/30 (e)
788,437
Dade County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized:
1,500,000 AAA 6.700% due 4/1/28 (c)(e)
1,593,750
330,000 Aaa* Series B, 7.250% due 9/1/23 (e)
345,262
35,000 Aaa* Series E, 7.000% due 3/1/24
36,619
Duval County HFA, Single-Family Mortgage Revenue,
GNMA-Collateralized:
90,000 AAA 8.000% due 6/1/00 (e)
91,575
660,000 Aaa* 6.700% due 10/1/26 (e)
703,725
Escambia County HFA, Single-Family Mortgage Revenue:
1,400,000 Aaa* Multi-County Program, Series A, GNMA/FNMA-
Collateralized, 6.100% due 4/1/30 (e)
1,470,000
155,000 Aaa* Series A, GNMA-Collateralized, 7.800% due 4/1/22 (e)
162,048
Florida Housing Finance Agency:
95,000 Aaa* Home Ownership Revenue, Series G-1,
GNMA-Collateralized, 7.800% due 9/1/10 (e)
99,275
435,000 AA Homeowner Mortgage, Series 2, 6.350% due 7/1/28 (e)
461,100
1,125,000 AAA Single-Family Mortgage, Series B, GNMA/FNMA-
Collateralized, 6.650% due 7/1/26 (e)
1,178,437
1,000,000 AAA Hialeah Housing Authority Revenue, Affordable Housing
Program, GNMA-Collateralized, 5.300% due 12/20/18
1,025,000
335,000 Aa1* Hillsborough County HFA, Single-Family Mortgage Revenue,
Series A, GNMA-Collateralized, 7.700% due 4/1/23 (e)
350,912
645,000 AAA Leon County HFA, Single-Family Mortgage Revenue, Multi-
County Program, Series B, GNMA/FHLMC-Collateralized,
7.300% due 1/1/28 (e)
734,494
970,000 AAA Miami-Dade County Housing Finance Authority, Single
Family Revenue Mortgage, Series A-2, GNMA/FNMA/
FHLMC-Collateralized, 5.200% due 6/1/16
977,275
Orange County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA Mortgage Backed Securities Program:
755,000 AAA 6.750% due 10/1/18 (e)
805,963
1,180,000 AAA Series A, 6.300% due 4/1/28 (e)
1,246,375
380,000 Aa1* Palm Beach HFA, Single-Family Mortgage Power
Revenue Bonds, Series A, GNMA-Collateralized,
7.875% due 4/1/23 (e)
385,700
1,310,000 Aaa* Pinnellas County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized, 6.550% due 8/1/27 (e)
1,378,775
430,000 AAA Virgin Islands HFA, Single-Family Mortgage Revenue,
Series A, GNMA-Collateralized, 6.500% due 3/1/25 (e)
455,263
- --------------------------------------------------------------------------------
- ---------------------
16,589,684
- --------------------------------------------------------------------------------
- ---------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Industrial Development -- 3.5%
$1,775,000 NR Homestead IDR, Community Rehabilitation Providers
Program, Series A, 7.950% due 11/1/18
$ 1,903,688
1,500,000 BBB- Martin County IDA, Indiantown, (Cogeneration Project),
7.875% due 12/15/25 (e)
1,567,500
500,000 NR Northern Palm Beach County Water Control District, Unit
Development No. 31, Program 1, 6.750% due 11/1/07
531,875
Osceola County IDA Revenue, (Community Provider Pooled
Loan Program), Series A, FSA-Insured:
400,000 AAA 7.500% due 7/1/02
427,000
799,000 AAA 7.750% due 7/1/10
854,930
1,000,000 AAA St. Johns County IDA, IDR, Series A, 5.500% due 3/1/17
1,051,250
Tampa Sports Authority Revenue, (Tampa Bay Arena
Project), MBIA-Insured:
500,000 AAA 6.050% due 10/1/20
572,500
1,000,000 AAA 6.100% due 10/1/26
1,166,250
- --------------------------------------------------------------------------------
- ---------------------
8,074,993
- --------------------------------------------------------------------------------
- ---------------------
Miscellaneous -- 13.2%
Boca Raton Community Redevelopment Agency Tax Increment
Revenue, Capital Appreciation, (Mizner Park Project),
FSA-Insured:
2,100,000 AAA Zero coupon due 12/1/18
782,250
1,200,000 AAA Zero coupon due 3/1/27
493,500
1,000,000 AAA Dade County Aviation Facilities Revenue, Series B,
MBIA-Insured, 6.600% due 10/1/22 (e)
1,095,000
3,700,000 NR Dade County IDR, (Miami Cerebral Palsy Services Project),
8.000% due 6/1/22
3,982,125
5,000,000 AAA Dade County Special Obligation, Series B, AMBAC-Insured,
Capital Appreciation, zero coupon due 10/1/16
2,081,250
750,000 AAA Florida State Department of Corrections, COP, Okeechobee
Correctional, AMBAC-Insured, 6.250% due 3/1/15
836,250
2,700,000 AAA Gulf Breeze Capital Funding, Series B, MBIA-Insured,
4.500% due 10/1/27
2,453,625
500,000 BBB- Hillsborough County Aviation Authority, Special Purpose,
(Delta Airlines Project), 6.800% due 1/1/24
538,125
1,000,000 AAA Miami Springs Utility System Revenue, Refunding &
Improvement, MBIA-Insured, 5.000% due 9/1/16
1,010,000
1,200,000 AAA North Springs Improvement District, MBIA-Insured,
7.000% due 10/1/09
1,468,500
1,000,000 NR Orlando Special Assessment Revenue, (Conroy
Interchange Project), Series A, 5.500% due 5/1/10
993,750
2,500,000 AAA Port Palm Beach District Revenue, Series A, MBIA-Insured,
Capital Appreciation, zero coupon due 9/1/21
725,000
5,000,000 AAA Port St. Lucie Special Assessment Revenue, Utility Service
Area No. 3 & 4-A, MBIA-Insured, 5.000% due 10/1/18
5,006,250
1,200,000 BBB Puerto Rico Housing Bank & Finance Agency,
7.500% due 12/1/06
1,404,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Miscellaneous -- 13.2% (continued)
$3,415,000 AAA Tampa Utility Tax, Capital Appreciation,
AMBAC-Insured, zero coupon due 10/1/15
$ 1,528,213
500,000 NR Tampa Revenue (Florida Aquarium Inc. Project),
7.750% due 5/1/27
566,250
Village Center Community Development District,
MBIA-Insured:
1,500,000 AAA Florida Recreational Revenue, Series A,
5.500% due 11/1/13
1,621,875
1,000,000 AAA No. 2, Florida Special Assessment Revenue,
5.200% due 5/1/19
1,013,750
2,000,000 AAA No. 3, Florida Special Assessment Revenue,
5.000% due 5/1/19
1,992,500
1,000,000 BBB- Virgin Islands Public Finance Authority Revenue,
Sr. Lien, Series A, 5.500% due 10/1/18
1,008,750
- --------------------------------------------------------------------------------
- ---------------------
30,600,963
- --------------------------------------------------------------------------------
- ---------------------
Nursing Home -- 2.5%
1,000,000 Aa3* Broward County Health Facilities Authority Revenue
Refunding, Broward County Nursing Home, LOC 91,
Allied Irish Banks Ltd., 7.500% due 8/15/20
1,082,500
3,500,000 A- Palm Beach County Health Facilities Authority Revenue,
Retirement Community, 5.625% due 11/15/20
3,618,125
1,000,000 AA Volusia County Health Facilities Authority Revenue,
(John Knox Projects), Series A, Asset Guaranteed,
6.000% due 6/1/17
1,100,000
- --------------------------------------------------------------------------------
- ---------------------
5,800,625
- --------------------------------------------------------------------------------
- ---------------------
Pollution Control -- 7.3%
2,190,000 A- Broward County Resource Recovery Revenue, Broward
Waste Energy, 7.950% due 12/1/08 (c)
2,309,486
2,000,000 A+ Citrus County PCR, Florida Power Corp., (Crystal River
Project), Series A, 6.625% due 1/1/27 (c)
2,155,000
Escambia County PCR, (Champion International
Corp. Project):
500,000 Baa1* 6.950% due 11/1/07
545,000
3,500,000 Baa1* 6.900% due 8/1/22 (e)
3,832,500
2,500,000 A+ Jacksonville Sewer & Solid Waste Disposal Facilities
Revenue, (Anheuser-Busch Project),
5.875% due 2/1/36 (e)
2,615,625
705,000 AAA Lee County Solid Waste Revenue, MBIA-Insured,
7.000% due 10/1/11(e)
766,688
400,000 VMIG 1* Manatee County Pollution Control Revenue,
(Florida Power & Light Co. Project),
3.100% due 9/1/24 (f)
400,000
1,000,000 Aa3* Pinellas County PCR, Florida Power Corp., (Anclot &
Bartlow Plants Project), 7.200% due 12/1/14
1,081,250
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Pollution Control -- 7.3% (continued)
$1,390,000 Baa2* Putnam County Development Authority PCR,
Georgia Pacific Corp. 1984, 7.000% due 12/1/05
$ 1,523,788
1,500,000 AA- St. Lucie County Solid Waste Disposal Revenue,
(Florida Power & Light Co. Project),
7.150% due 2/1/23 (e)
1,610,625
- --------------------------------------------------------------------------------
- ---------------------
16,839,962
- --------------------------------------------------------------------------------
- ---------------------
Pre-Refunded(g) -- 3.3%
Alachua County Health Facilities Authority Revenue,
(Santa Fe Healthcare Facilities Project),
(Call 11/15/00 @ 102):
125,000 AAA 6.875% due 11/15/02
130,781
1,000,000 AAA 7.600% due 11/15/13
1,083,750
1,500,000 Aaa* Bay County Hospital Revenue, (Bay Medical Center Project),
(Call 10/1/04 @ 102), 8.000% due 10/1/12 (c)
1,822,500
1,375,000 AAA Escambia County Health Facilities Authority, Baptist
Hospital, (Call 10/1/03 @ 102), 6.750% due 10/1/14
1,538,281
1,000,000 AAA Miami Sports & Exhibition Authority Special Obligation
Refunding, FGIC-Insured, (Call 4/1/00 @ 102),
7.200% due 10/1/20
1,058,410
835,000 AAA Pinellas County Health Facilities Authority, Sun Coast
Health System Revenue, Series A, Sun Coast Hospital
Guaranteed, (Call 3/1/00 @ 102), 8.500% due 3/1/20
890,645
1,000,000 AAA South Broward, Hospital District Revenue Bonds,
Series 1991C, RIBS, AMBAC-Insured,
(Call 5/1/01 @ 104), 9.277% due 5/13/21 (c)
1,163,750
- --------------------------------------------------------------------------------
- ---------------------
7,688,117
- --------------------------------------------------------------------------------
- ---------------------
Public Facilities -- 1.0%
1,000,000 BBB Miami Beach Redevelopment Agency Tax Increment
Revenue, City Center-Historic Convention, Series B,
6.350% due 12/1/22
1,082,500
1,185,000 A Puerto Rico Public Buildings Authority Revenue, Series L,
5.500% due 7/1/21
1,263,506
- --------------------------------------------------------------------------------
- ---------------------
2,346,006
- --------------------------------------------------------------------------------
- ---------------------
Transportation -- 15.3%
2,000,000 AAA Dade County Aviation Revenue, Series C,
MBIA-Insured, 5.250% due 10/1/17 (e)
2,030,000
2,895,000 AAA Florida State Mid-Bay Bridge Authority Revenue,
Series A, AMBAC-Insured, zero coupon due 10/1/19
1,016,869
2,000,000 AAA Florida State Turnpike Authority Revenue, Department
of Transportation, Series A, FGIC-Insured,
4.500% due 7/1/27
1,817,500
2,030,000 AAA Greater Orlando Aviation Authority, Florida Airport
Facilities, FGIC-Insured, 5.250% due 10/1/12 (e)
2,151,800
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Transportation -- 15.3% (continued)
Guam Airport Authority Revenue:
$ 750,000 BBB Series A, 6.500% due 10/1/23
$ 815,625
1,000,000 BBB Series B, 6.600% due 10/1/10 (e)
1,092,500
1,000,000 AAA Hillsborough County Aviation Authority Revenue,
Tampa International Airport, Series A,
FGIC-Insured, 6.000% due 10/1/23 (e)
1,098,750
1,500,000 AA Ocean Highway and Port Authority, Nassau County,
Adjustable Demand Revenue Bonds,
Series 1990, LOC ABN AMRO Bank NV,
6.250% mandatory tender 12/1/02 (e)
1,621,875
5,000,000 AAA Orlando & Orange County Expressway Authority,
Florida Expressway Revenue, Jr. Lien, FGIC-Insured,
5.000% due 7/1/16
5,050,000
Puerto Rico Commonwealth Highway & Transportation
Authority Revenue:
6,000,000 A Series A, 4.750% due 7/1/38
5,752,500
2,000,000 A Series Y, 5.000% due 7/1/36
1,977,500
Sanford Airport Authority IDR, (Central Florida
Terminals Inc. Project):
Series A:
1,000,000 NR 7.500% due 5/1/15 (e)
1,096,250
2,000,000 NR 7.750% due 5/1/21 (e)
2,207,500
645,000 NR Series C, 7.500% due 5/1/21 (e)
707,888
Santa Rosa Bay Bridge Authority Revenue:
3,500,000 BBB- 6.250% due 7/1/28
3,828,125
5,000,000 BBB- Capital Appreciation, zero coupon due 7/1/17
1,868,750
1,355,000 AAA Volusia County Airport System Revenue, Daytona Beach
Regional Airport, MBIA-Insured, 7.000% due 10/1/21 (e)
1,444,769
- --------------------------------------------------------------------------------
- ---------------------
35,578,201
- --------------------------------------------------------------------------------
- ---------------------
Utilities -- 8.1%
1,800,000 AAA Englewood Water District Utility System Revenue,
FSA-Insured, 5.000% due 10/1/18
1,802,250
3,905,000 Aaa* Escambia County Utilities Authority Sanitation System
Revenue Refunding & Improvement, FSA-Insured,
4.500% due 1/1/22
3,602,362
3,000,000 AAA Escambia County Utility System Authority Revenue
Bonds, Series B, FGIC-Insured, 6.250% due 1/1/15
3,483,750
1,350,000 BBB Guam Power Authority Revenue, Series A,
6.750% due 10/1/24
1,501,875
930,000 BBB+ Hillsborough County Utilities Revenue, Refunding &
Improvement, 7.000% due 8/1/14
998,587
1,000,000 AAA Jupiter Island Utility System, South Martin Regional
Utility,
MBIA-Insured, 5.000% due 10/1/18
1,001,250
1,000,000 AAA Lakeland Electric & Water Revenue, Jr. Sub. Lien,
FGIC-Insured, 6.000% due 10/1/14
1,153,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Utilities -- 8.1% (continued)
$1,000,000 Aaa* Martin County Utility System Revenue, FGIC-Insured,
5.000% due 10/1/18
$ 1,001,250
1,240,000 AAA Puerto Rico Electric Power Authority Revenue Refunding,
Series EE, MBIA-Insured, 4.500% due 7/1/18
1,174,900
3,000,000 AAA Sunrise Utility System Revenue Refunding,
AMBAC-Insured, 5.200% due 10/1/22
3,045,000
- --------------------------------------------------------------------------------
- ---------------------
18,764,974
- --------------------------------------------------------------------------------
- ---------------------
Water & Sewer -- 4.4%
1,085,000 AAA Hernando County Water & Sewer Revenue Refunding,
FGIC-Insured, 5.000% due 6/1/19
1,080,931
640,000 AAA Miramar Wastewater Improvement Authority,
FGIC-Insured, 6.750% due 10/1/16
733,600
1,915,000 AAA North Springs Improvement District Water & Sewer
Revenue, MBIA-Insured, 5.125% due 10/1/17
1,960,481
3,885,000 AAA Port Orange Water & Sewer Revenue,
AMBAC-Insured, 5.000% due 10/1/16
3,923,850
2,250,000 AAA Seminole County Water & Sewer Refunding &
Improvement, MBIA-Insured, 6.000% due 10/1/12
2,587,500
- --------------------------------------------------------------------------------
- ---------------------
10,286,362
- --------------------------------------------------------------------------------
- ---------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $217,772,370**)
$232,193,747
================================================================================
=====================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except that those
identified by an asterisk (*) are rated by Moody's Investors Service Inc.
(b) Bond is escrowed to maturity by U.S. goverment securities and is
considered by the manager to be triple-A rated even if issuer has not
applied for new ratings.
(c) Security is segregated by Custodian for open purchase commitment.
(d) Residual interest bond -- coupon varies inversely with level of short-term
tax-exempt interest rates.
(e) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(f) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(g) Bond is escrowed by U.S. government securities and is considered by the
manager to be triple-A rated even if issuer has not applied for new
ratings.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 16 and 17 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or a minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
bonds in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this
category than in higher rated categories.
BB -- Bonds rated "BB" have less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments.
Moody's Investors Service, Inc. ("Moody's") -- Numerical modifiers 1, 2, and 3
may be applied to each generic rating from "Aa" to "Baa", where 1 is the highest
and 3 the lowest rating within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in "Aaa" securities.
A -- Bonds rated "A" possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa -- Bonds rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited) (continued)
- --------------------------------------------------------------------------------
Fitch IBCA, Inc. ("Fitch") -- Ratings may be modified by the addition of a plus
(+) sign or minus (-) sign to show relative standings within the major ratings
categories.
AA -- Bonds rated "AA" are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest
and/or dividends and repay principal is very strong.
BBB -- Bonds rated "BBB" are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest
or dividends and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances, however,
are more likely to have adverse impact on these securities and,
therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for
securities with higher ratings.
NR -- Indicates that the bond is not rated by Standard & Poor's,
Moody's or Fitch.
- --------------------------------------------------------------------------------
Short-Term Security Ratings (unaudited)
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable rate
demand obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a (+) sign.
VMIG 1 -- Moody's highest rating for issues having demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
ACA -- American Capital Assurance
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
CGIC -- Capital Guaranty Insurance Company
CONNIE LEE -- College Construction Loan Insurance Association
COP -- Certificate of Participation
FLAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FLAIRS -- Floating Adjustable Interest Rate Securities
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GEMICO -- General Electric Mortgage Insurance Company
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Agency
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
PCFA -- Pollution Control Financing Authority
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
SAVRS -- Select Auction Variable Rate Securities
VRDD -- Variable Rate Demand Note
VRWE -- Variable Rate Wednesday Demand
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $217,772,370)
$232,193,747
Cash
10,639
Interest receivable
4,320,654
Receivable for Fund shares sold
1,243,807
Receivable for securities sold
135,091
- --------------------------------------------------------------------------------
- ----
Total Assets
237,903,938
- --------------------------------------------------------------------------------
- ----
LIABILITIES:
Management fees payable
106,513
Distribution fees payable
19,399
Payable for Fund shares purchased
200
Accrued expenses
66,044
- --------------------------------------------------------------------------------
- ----
Total Liabilities
192,156
- --------------------------------------------------------------------------------
- ----
Total Net Assets
$237,711,782
================================================================================
====
NET ASSETS:
Par value of shares of beneficial interest $
17,360
Capital paid in excess of par value
223,548,627
Overdistributed net investment income
(9,378)
Accumulated net realized loss from security transactions
and futures contracts
(266,204)
Net unrealized appreciation of investments
14,421,377
- --------------------------------------------------------------------------------
- ----
Total Net Assets
$237,711,782
================================================================================
====
Shares Outstanding:
Class A
11,638,176
-----------------------------------------------------------------------------
- ----
Class B
4,827,049
-----------------------------------------------------------------------------
- ----
Class L
894,368
-----------------------------------------------------------------------------
- ----
Net Asset Value:
Class A (and redemption price)
$13.70
-----------------------------------------------------------------------------
- ----
Class B *
$13.69
-----------------------------------------------------------------------------
- ----
Class L **
$13.69
-----------------------------------------------------------------------------
- ----
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share)
$14.27
-----------------------------------------------------------------------------
- ----
Class L (net asset value plus 1.01% of net asset value per share)
$13.83
================================================================================
====
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if
shares are redeemed within one year from initial purchase (See Note 4).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if
shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended March 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $12,714,158
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 1,109,500
Distribution fees (Note 4) 699,970
Shareholder and system servicing fees 64,745
Registration fees 45,001
Shareholder communications 23,302
Audit and legal 23,002
Pricing service fees 18,498
Custody 10,800
Trustees' fees 4,201
Other 6,402
- -------------------------------------------------------------------------------
Total Expenses 2,005,421
- -------------------------------------------------------------------------------
Net Investment Income 10,708,737
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 5 AND 6):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 134,195
Futures contracts (95,600)
- -------------------------------------------------------------------------------
Net Realized Gain 38,595
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 13,875,164
End of year 14,421,377
- -------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 546,213
- -------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 584,808
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations $11,293,545
===============================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999
1998
================================================================================
=====
<S> <C> <C>
OPERATIONS:
Net investment income $ 10,708,737 $
10,136,491
Net realized gain 38,595
3,275,071
Increase in net unrealized appreciation 546,213
6,856,322
- --------------------------------------------------------------------------------
- -----
Increase in Net Assets From Operations 11,293,545
20,267,884
- --------------------------------------------------------------------------------
- -----
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (10,710,549)
(10,138,329)
In excess of net investment income (130,174)
- --
Net realized gains (1,405,068)
(1,909,781)
- --------------------------------------------------------------------------------
- -----
Decrease in Net Assets From
Distributions to Shareholders (12,245,791)
(12,048,110)
- --------------------------------------------------------------------------------
- -----
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 72,836,296
43,905,998
Net asset value of shares issued for reinvestment
of dividends 5,361,998
5,171,877
Cost of shares reacquired (50,419,969)
(32,126,326)
- --------------------------------------------------------------------------------
- -----
Increase in Net Assets From
Fund Share Transactions 27,778,325
16,951,549
- --------------------------------------------------------------------------------
- -----
Increase in Net Assets 26,826,079
25,171,323
NET ASSETS:
Beginning of year 210,885,703
185,714,380
- --------------------------------------------------------------------------------
- -----
End of year* $237,711,782
$210,885,703
================================================================================
=====
* Includes overdistributed net investment income of: $(9,378)
$(7,566)
================================================================================
=====
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Florida Portfolio ("Portfolio") is a separate investment portfolio of the
Smith Barney Muni Funds ("Fund"). The Fund, a Massachusetts business trust, is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund consists of this Portfolio and seven
other separate investment port folios: Georgia, Limited Term, National, New
York, Pennsylvania, New York Money Market and California Money Market
Portfolios. The financial statements and financial highlights for the other
portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolio are:
(a) security transactions are accounted for on trade date; (b) securities are
valued at the mean between the quoted bid and ask prices provided by an
independent pricing service that are based on transactions in municipal
obligations, quotations from municipal bond dealers, market transactions in
comparable securities and various relationships between securities; (c)
securities for which market quotations are not available are valued in good
faith at fair market value by or under the direction of the Board of Trustees;
(d) securities maturing within 60 days are valued at cost plus accreted discount
or minus amortized premium, which approximates value; (e) gains or losses on the
sale of securities are calculated by using the specific identification method;
(f) interest income, adjusted for amortization of premium and accretion of
original issue discount, is recorded on an accrual basis; market discount is
recognized upon the disposition of the security; (g) direct expenses are charged
to each class; management fees and general fund expenses are allocated on the
basis of relative net assets; (h) dividends and distributions to shareholders
are recorded on the ex-dividend date; (i) the Portfolio intends to comply with
the applicable provisions of the Internal Revenue Code of 1986, as amended,
pertaining to regulated investment companies and to make distributions of
taxable income sufficient to relieve it from substantially all Federal income
and excise taxes; (j) the character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. At March 31, 1999, reclassifications
were made to the Portfolio's capital accounts to reflect permanent book/tax
differences and income and gains available for distributions under income tax
regulations. In addition, a portion of overdistributed net investment income
amounting to $130,174 was reclassified to paid-in capital. Net investment
income, net realized gains and net assets were not affected by this adjustment;
and (k) estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Portfolio Concentration
Since the Portfolio invests primarily in obligations of issuers within Florida,
it is subject to possible concentration risks associated with economic,
political, or legal developments or industrial or regional matters specifically
affecting Florida.
3. Exempt-Interest Dividends and Other Distributions
The Portfolio intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from regular Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. Management Agreement and Other Transactions
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager to the Fund. The Portfolio pays SSBCa management fee calculated at an
annual rate of 0.50% of its average daily net assets. This fee is calculated
daily and paid monthly.
On October 8, 1998, CFBDS, Inc. became the Fund's distributor. Prior to that
date, Salomon Smith Barney Inc. ("SSB") was the Fund's distributor. SSB, as well
as certain other broker-dealers, continues to sell Fund shares to the public as
a member of the selling group.
On June 12, 1998, the Fund's Class C shares were renamed Class L shares.
Effective June 15, 1998, Class L shares are being sold at net asset value plus
an initial sales charge of 1.00%. Class L shares also have a 1.00% contingent
deferred sales charge ("CDSC"), which applies if redemption occurs within the
first year of purchase.
There is a CDSC of 4.50% on Class B shares, which applies if redemption occurs
within one year from purchase. This CDSC declines by 0.50% the first year after
purchase and thereafter by 1.00% per year until no CDSC is incurred. In
addition, Class A shares also have a 1.00% CDSC, which applies if redemption
occurs within the first year of purchase. This CDSC only applies to those
purchases of Class A shares, which, when combined with current holdings of Class
A shares, equal or exceed $500,000 in the aggregate. These purchases do not
incur an initial sales charge.
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
For the year ended March 31, 1999, SSB received sales charges of approximately
$469,000 and $23,000 on sales of the Portfolio's Class A and Class L shares,
respectively. In addition, for the year ended March 31, 1999, CDSCs paid to SSB
or CFBDS were approximately:
Class A Class B Class L
================================================================================
CDSCs $22,000 $87,000 $1,000
================================================================================
Pursuant to a Distribution Plan, the Portfolio pays a service fee with respect
to Class A, B and L shares calculated at an annual rate of 0.15% of average
daily net assets for each respective class. The Portfolio pays a distribution
fee with respect to Class B and L shares calculated at the annual rates of 0.50%
and 0.55% of the average daily net assets of those classes, respectively. For
the year ended March 31, 1999, total Distribution Plan fees incurred were:
Class A Class B Class L
================================================================================
Distribution Plan Fees $224,280 $402,601 $73,089
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
5. Investments
During the year ended March 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $117,057,089
- --------------------------------------------------------------------------------
Sales 94,092,799
================================================================================
At March 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $14,520,119
Gross unrealized depreciation (98,742)
- --------------------------------------------------------------------------------
Net unrealized appreciation $14,421,377
================================================================================
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
payments are made or received and recognized as assets due from or liabilities
due to broker, depending upon whether unrealized gains or losses are incurred.
When the contract is closed, the Portfolio records a realized gain or loss equal
to the difference between the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract.
The Portfolio enters into such contracts to hedge a portion of its portfolio.
The Portfolio bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At March 31, 1999, the Portfolio had no open futures contracts.
7. Shares of Beneficial Interest
At March 31, 1999, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share. The Portfolio has the
ability to issue multiple classes of shares. Each share of a class represents an
identical interest in the Portfolio and has the same rights, except that each
class bears certain expenses related to the distribution of its shares.
Effective June 12, 1998, the Fund adopted the renaming of existing Class C
shares as Class L shares.
At March 31, 1999, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $147,722,083 $63,705,520 $12,138,384
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year
Ended
March 31, 1999 March
31, 1998
-------------------------- --------------
- ------------
Shares Amount Shares
Amount
================================================================================
============
<S> <C> <C> <C>
<C>
Class A
Shares sold 3,713,071 $ 51,274,245 2,168,321
$ 29,686,100
Shares issued on reinvestment 257,237 3,548,355 245,679
3,350,010
Shares reacquired (2,712,400) (37,457,704) (1,707,187)
(23,309,310)
- --------------------------------------------------------------------------------
- ------------
Net Increase 1,257,908 $ 17,364,896 706,813
$ 9,726,800
================================================================================
============
Class B
Shares sold 1,226,118 $ 16,937,395 865,155
$ 11,835,656
Shares issued on reinvestment 110,453 1,522,397 116,324
1,583,889
Shares reacquired (833,357) (11,511,522) (557,498)
(7,617,726)
- --------------------------------------------------------------------------------
- ------------
Net Increase 503,214 $ 6,948,270 423,981
$ 5,801,819
================================================================================
============
Class L*
Shares sold 334,515 $ 4,624,656 173,864
$ 2,384,242
Shares issued on reinvestment 21,122 291,246 17,468
237,978
Shares reacquired (105,208) (1,450,743) (88,301)
(1,199,290)
- --------------------------------------------------------------------------------
- ------------
Net Increase 250,429 $ 3,465,159 103,031
$ 1,422,930
================================================================================
============
</TABLE>
* On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class A Shares 1999(1) 1998 1997 1996(1)
1995(2)
================================================================================
========
<S> <C> <C> <C> <C>
<C>
Net Asset Value,
Beginning of Year $13.74 $13.16 $13.24 $12.89
$12.82
- --------------------------------------------------------------------------------
- --------
Income (Loss) From Operations:
Net investment income 0.69 0.72 0.73 0.74
0.75
Net realized and unrealized
gain (loss) 0.06 0.72 (0.03) 0.35
0.08*
- --------------------------------------------------------------------------------
- --------
Total Income From Operations 0.75 1.44 0.70 1.09
0.83
- --------------------------------------------------------------------------------
- --------
Less Distributions From:
Net investment income (0.69) (0.73) (0.73) (0.74)
(0.76)
In excess of net
investment income (0.01) -- -- --
- --
Net realized gains (0.09) (0.13) (0.05) --
- --
- --------------------------------------------------------------------------------
- --------
Total Distributions (0.79) (0.86) (0.78) (0.74)
(0.76)
- --------------------------------------------------------------------------------
- --------
Net Asset Value, End of Year $13.70 $13.74 $13.16 $13.24
$12.89
- --------------------------------------------------------------------------------
- --------
Total Return 5.56% 11.15% 5.44% 8.65%
6.77%
- --------------------------------------------------------------------------------
- --------
Net Assets,
End of Year (millions) $160 $143 $127 $117
$108
- --------------------------------------------------------------------------------
- --------
Ratios to Average Net Assets:
Expenses (3) 0.73% 0.76% 0.85% 0.70%
0.61%
Net investment income 4.99 5.28 5.56 5.62
5.97
- --------------------------------------------------------------------------------
- --------
Portfolio Turnover Rate 43% 59% 62% 47%
43%
================================================================================
========
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(2) On October 10, 1994 the former Class C shares were exchanged into Class A
Shares.
(3) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.85%.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class B Shares 1999(1) 1998 1997
1996(1) 1995(2)
================================================================================
==============
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $13.73 $13.14 $13.23
$12.89 $11.91
- --------------------------------------------------------------------------------
- --------------
Income (Loss) From Operations:
Net investment income 0.62 0.65 0.65
0.68 0.30
Net realized and unrealized gain (loss) 0.06 0.72 (0.01)
0.35 0.97*
- --------------------------------------------------------------------------------
- --------------
Total Income From Operations 0.68 1.37 0.64
1.03 1.27
- --------------------------------------------------------------------------------
- --------------
Less Distributions From:
Net investment income (0.62) (0.65) (0.68)
(0.69) (0.29)
In excess of net
investment income (0.01) -- --
- -- --
Net realized gains (0.09) (0.13) (0.05)
- -- --
- --------------------------------------------------------------------------------
- --------------
Total Distributions (0.72) (0.78) (0.73)
(0.69) (0.29)
- --------------------------------------------------------------------------------
- --------------
Net Asset Value, End of Year $13.69 $13.73 $13.14
$13.23 $12.89
- --------------------------------------------------------------------------------
- --------------
Total Return 5.01% 10.59% 4.91%
8.09% 10.77%++
- --------------------------------------------------------------------------------
- --------------
Net Assets, End of Year (millions) $66 $59 $51
$46 $2
- --------------------------------------------------------------------------------
- --------------
Ratios to Average Net Assets:
Expenses (3) 1.24% 1.28% 1.35%
1.20% 1.20%+
Net investment income 4.48 4.76 4.93
5.00 5.57+
- --------------------------------------------------------------------------------
- --------------
Portfolio Turnover Rate 43% 59% 62%
47% 43%
================================================================================
==============
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(2) For the period from November 16, 1994 (inception date) to March 31, 1995.
(3) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.35%.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
26 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class L Shares(1) 1999(2) 1998 1997 1996(2)
1995(3)
================================================================================
===
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $13.74 $13.14 $13.22 $12.89
$12.81
- --------------------------------------------------------------------------------
- ---
Income (Loss) From Operations:
Net investment income 0.61 0.64 0.65 0.66
0.67
Net realized and
unrealized gain (loss) 0.05 0.72 (0.01) 0.35
0.08*
- --------------------------------------------------------------------------------
- ---
Total Income From Operations 0.66 1.36 0.64 1.01
0.75
- --------------------------------------------------------------------------------
- ---
Less Distributions From:
Net investment income (0.61) (0.63) (0.67) (0.68)
(0.67)
In excess of net
investment income (0.01) -- -- --
- --
Net realized gains (0.09) (0.13) (0.05) --
- --
- --------------------------------------------------------------------------------
- ---
Total Distributions (0.71) (0.76) (0.72) (0.68)
(0.67)
- --------------------------------------------------------------------------------
- ---
Net Asset Value, End of Year $13.69 $13.74 $13.14 $13.22
$12.89
- --------------------------------------------------------------------------------
- ---
Total Return 4.87% 10.51% 4.94% 7.96%
6.12%
- --------------------------------------------------------------------------------
- ---
Net Assets,
End of Year (millions) $12 $9 $7 $3
$3
- --------------------------------------------------------------------------------
- ---
Ratios to Average Net Assets:
Expenses (4) 1.31% 1.33% 1.40% 1.28%
1.25%
Net investment income 4.41 4.71 4.84 5.04
5.40
- --------------------------------------------------------------------------------
- ---
Portfolio Turnover Rate 43% 59% 62% 47%
43%
================================================================================
===
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) On November 7, 1994 the former Class B shares were renamed Class C Shares.
(4) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.40%.
* Includes the per share effect of shareholder sale and redemption activity
during the period, most of which occurred at a net asset value less than
the net asset value at the beginning of the period.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
of the Florida Portfolio
of Smith Barney Muni Funds:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Florida Portfolio of Smith Barney Muni Funds
as of March 31, 1999, the related statement of operations for the year then
ended, the statements of 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. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the custodian. As to securities sold but not
yet delivered, we performed other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Florida Portfolio of Smith Barney Muni Funds as of March 31, 1999, the results
of its operations for the year then ended, the changes in its 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, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
May 12, 1999
- --------------------------------------------------------------------------------
28 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
March 31, 1999:
o 100% of the dividends paid by the Fund from net investment income as
tax exempt for regular Federal income tax purposes.
o long-term capital gain distributions paid of $301,463.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 29
<PAGE>
SALOMON SMITH BARNEY
--------------------
A member of citigroup[LOGO]
Trustees
Donald R. Foley
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, Emeritus
Officers
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Manager
Mutual Management Corp.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Transfer Agent
First Data Investor Services
Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds -- Florida Portfolio. It is not authorized for
distribution to prospective investors unless accompanied or preceded by a
current Prospectus for the Fund, which contains information concerning the
Fund's investment policies, fees and expenses as well as other pertinent
information.
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney Muni Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD2298 5/99
<PAGE>
[GRAPHIC]
Smith Barney Muni Funds
New York Money
Market Portfolio
New York Portfolio
------------------
ANNUAL REPORT
------------------
March 31, 1999
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(R)
<PAGE>
Smith Barney
Muni Funds
[PHOTO] [PHOTO]
HEATH B. JOSEPH P.
MCLENDON DEANE
Chairman Vice President
[PHOTO]
JOSEPH
BENEVENTO
Vice President
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney Muni Funds --
New York Money Market Portfolio and New York Portfolio for the period ended
March 31, 1999. We hope you find this report to be useful and informative. For
your convenience, we have summarized the period's prevailing economic and market
conditions below and outlined each Portfolio's investment strategy. A detailed
summary of performance can be found in the appropriate sections that follow.
Please note that on February 2, 1999, Joseph P. Deane assumed management
responsibilities for the New York Portfolio. Mr. Deane has more than 28 years of
investment experience and currently manages the Smith Barney Managed Municipals
Fund, among many others.
New York Portfolio's Performance and Investment Strategy
The New York Portfolio seeks to pay its shareholders as high a level of monthly
income exempt from federal income taxes and from New York State and City
personal income taxes as is consistent with prudent investing.
For the year ended March 31, 1999, the Class A shares of the New York Portfolio
generated a total return of 5.50% without sales charges which compares favorably
with its New York municipal bond fund peer group average total return of 5.40%
over the same period, according to Lipper Inc. (Lipper is an independent
fund-tracking organization.)
Based on its net asset value ("NAV") of $13.69 as of March 31, 1999 for Class A
shares and the current monthly income distribution of $0.056 per Class A, this
equates to an annualized distribution rate of 4.91%. For a New York resident in
the combined federal and state income tax bracket of 40.62%, the New York
Portfolio's tax-free yield of 4.91% is equivalent to a taxable yield of 8.27%.
(This figure assumes a federal income tax bracket of 36%.)
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
In the New York Portfolio, one of our short-term goals is to add to our holdings
in non-hospital bonds. The municipal bond supply in New York has been heavy in
the first quarter of 1999, but we think that should diminish substantially in
the second quarter of 1999, and in turn, enable New York issues to perform
better.
As of March 31, 1999, 95.4% of the Portfolio was rated investment grade or
better. Roughly 55.5% of the Portfolio was rated "Aaa", the highest rating by
Moody's Investors Service, Inc. ("Moody's"), or "AAA", "AA", "A" and "BBB" by
Standard & Poor's Ratings Service ("Standard & Poor's"), or have an equivalent
rating by any nationally recognized statistical rating organization, or
determined by the manager to be of equivalent quality. As of March 31, 1999, the
Portfolio's assets were concentrated in hospital bonds (16.3%), transportation
bonds (12.0%) and pre-refunded (11.8%).
Market and Economic Overview
With respect to bonds, 1999 has certainly gotten off to a more challenging start
than we had originally anticipated. The municipal bond market has been trading
in a very narrow range. We expect that the U.S. economy should slow down from
its growth rate in the fourth quarter of 1998, and with Federal Reserve Board
("Fed") monetary policy on hold, we could see some price appreciation over the
next few months.
We are more sanguine about the U.S. Treasury market that sets the tone for all
the other fixed-income markets. The levels that the U.S. Treasury market rose to
in early fall were based more on emotion than market fundamentals. In our view,
this was caused by hedge funds covering short positions.
We may now be returning to a more predictable environment. The early increase in
rates has put the U.S. Treasury market more in sync with economic fundamentals.
The U.S. economy remains strong and the Fed is on hold. This makes some sense
and provides investors with a more normal positively sloped yield curve. (The
yield curve shows the difference in yields between short- and long-term bonds.)
The current pattern of trading in municipal bonds should not change. In bond
market rallies, municipal bonds will underperform versus U.S. Treasuries. Yet
the direct opposite will hold true if we experience any upward pressures on
rates. We therefore expect some upside potential from municipal bonds in the
near term, but not too much. Over the longer term, we want a portfolio that
possesses liquidity, less risk and offers investors some downside protection.
- --------------------------------------------------------------------------------
2 1999 Annual Report to Shareholders
<PAGE>
New York Economic Highlights
As of early March 1999, Moody's assigned an "A2" rating to the general
obligation debt of New York State. This rating reflects, in their own words,
"the short-term strength of the state's credit as indicated by large surpluses,
but also the longer-term risks associated with a large debt burden, chronic
structural budget imbalance and a statewide economy that has underperformed the
U.S. through the national economic recovery."
Moody's outlook for New York State general obligations is stable. In their view,
large budget surpluses in the Empire State make their credit risks somewhat low.
However, according to Moody analysts, the long-term outlook for New York State
remains unclear due to projected budget caps and narrower cash margins going
forward.
New York Money Market Portfolio
The New York Money Market Portfolio seeks to provide investors with income
exempt from federal income tax (other than the alternative minimum tax) and New
York State and City personal income taxes by investing in a portfolio of high
quality, short-term New York municipal obligations selected for liquidity and
stability of principal.
As of March 31, 1999, the New York Money Market Portfolio's 7-day current yield
was 2.34%. The Portfolio's 7-day effective yield --which reflects compounding --
was 2.37%.
The New York Money Market Portfolio invests only in short-term securities that
carry minimal credit risk. All of the Portfolio's holdings are rated within the
top two short-term credit rating categories or are of comparable quality. At the
close of the reporting period, the Portfolio's average-weighted maturity was
approximately 37 days.
An investment in the New York Money Market Portfolio is not insured nor
guaranteed by the Federal Deposit Insurance Agency or by any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
In closing, thank you for investing in the Smith Barney Muni Funds -- New York
Money Market Portfolio and New York Portfolio. We encourage you to visit our Web
site at www.smithbarney.com for additional updates on each Portfolio. We look
forward to continuing to help you pursue your financial goals in the years to
come.
Sincerely,
/s/ Heath B. McLendon /s/ J P Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President
New York Portfolio
/s/ Joseph Benevento
Joseph Benevento
Vice President
New York Money Market Portfolio
April 30, 1999
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
New York Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.91 $13.69 $0.70 $0.27 5.50%
- --------------------------------------------------------------------------------
3/31/98 13.16 13.91 0.73 0.05 11.83
- --------------------------------------------------------------------------------
3/31/97 13.19 13.16 0.74 0.00 5.48
- --------------------------------------------------------------------------------
3/31/96 12.83 13.19 0.74 0.00 8.71
- --------------------------------------------------------------------------------
3/31/95 12.83 12.83 0.77 0.00 6.32
- --------------------------------------------------------------------------------
3/31/94 13.25 12.83 0.79 0.00 2.66
- --------------------------------------------------------------------------------
3/31/93 12.33 13.25 0.81 0.00 14.48
- --------------------------------------------------------------------------------
3/31/92 11.80 12.33 0.81 0.00 11.98
- --------------------------------------------------------------------------------
3/31/91 11.67 11.80 0.85 0.00 8.74
- --------------------------------------------------------------------------------
3/31/90 11.48 11.67 0.87 0.00 9.28
================================================================================
Total $7.81 $0.32
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.89 $13.68 $0.62 $0.27 5.02%
- --------------------------------------------------------------------------------
3/31/98 13.15 13.89 0.66 0.05 11.19
- --------------------------------------------------------------------------------
3/31/97 13.18 13.15 0.67 0.00 4.96
- --------------------------------------------------------------------------------
3/31/96 12.84 13.18 0.68 0.00 8.05
- --------------------------------------------------------------------------------
Inception* - 3/31/95 11.96 12.84 0.29 0.00 9.92+
================================================================================
Total $2.92 $0.32
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
- --------------------------------------------------------------------------------
New York Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares(2)
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $13.88 $13.67 $0.61 $0.27 4.95%
- --------------------------------------------------------------------------------
3/31/98 13.14 13.88 0.65 0.05 11.13
- --------------------------------------------------------------------------------
3/31/97 13.17 13.14 0.67 0.00 4.91
- --------------------------------------------------------------------------------
3/31/96 12.83 13.17 0.68 0.00 8.07
- --------------------------------------------------------------------------------
3/31/95 12.82 12.83 0.68 0.00 5.66
- --------------------------------------------------------------------------------
3/31/94 13.24 12.82 0.70 0.00 1.96
- --------------------------------------------------------------------------------
Inception* - 3/31/93 12.84 13.24 0.12 0.00 4.04+
================================================================================
Total $4.11 $0.32
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
-------------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 5.50% 5.02% 4.95%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 7.54 N/A 6.92
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/99 8.44 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/99 7.51 8.92 6.52
================================================================================
With Sales Charges(3)
-------------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 1.28% 0.59% 2.93%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 6.67 N/A 6.70
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/99 8.00 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/99 7.15 8.74 6.35
================================================================================
- --------------------------------------------------------------------------------
6 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
New York Portfolio
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (3/31/89 through 3/31/99) 124.93%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/99) 45.58
- --------------------------------------------------------------------------------
Class L (Inception* through 3/31/99)(2) 48.20
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 4.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 4.50% CDSC, which
applies if shares are redeemed within one year from purchase. This CDSC
declines by 0.50% the first year after purchase and thereafter by 1.00%
per year until no CDSC is incurred. Class L shares also reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within the
first year of purchase.
* Inception dates for Class A, B and L shares are January 16, 1987, November
11, 1994 and January 8, 1993, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the New York Portfolio vs.
Lehman Brothers Municipal Bond Index+
- --------------------------------------------------------------------------------
March 1989 -- March 1999
[GRAPHIC]
New York Lehman Brothers
Portfolio Municipal Bond Index
3/89 10,000 10,000
3/90 10,459 11,055
3/91 11,340 12,074
3/92 12,663 13,281
3/93 14,460 14,943
3/94 14,811 15,289
3/95 15,724 16,427
3/96 17,094 17,804
3/97 18,031 18,773
3/98 20,163 20,784
3/99 20,951 22,073
+ Hypothetical illustration of $10,000 invested in Class A shares on March
31, 1989, assuming deduction of the maximum 4.00% sales charge at the time
of investment and reinvestment of dividends (after deduction of applicable
sales charges through November 6, 1994 and thereafter at net asset value)
and capital gains, if any, at net asset value through March 31, 1999. The
Lehman Brothers Municipal Bond Index is a broad-based, total return index
comprised of investment grade, fixed rate municipal bonds selected from
issues larger than $50 million issued since January 1991. This index is
unmanaged and is not subject to the same management and trading expenses
of a mutual fund.The performance of the Portfolio's other classes may be
greater or less than the Class A shares' performance indicated on this
chart, depending on whether greater or lesser sales charges and fees were
incurred by shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Buffalo:
$ 2,350,000 SP-1+ BAN Series 99A 3.500% due 2/24/00 $ 2,361,300
8,000,000 SP-1+ RAN Series 98/99A 3.750% due 7/27/99 8,018,958
3,600,000 NR++ Chautauqua County IDA (Red Wing Co.
Inc. Project) 3.100%(c) 3,600,000
4,950,000 A-1 Columbia County IDA (Rural Manufacturing
Project) Series A 3.000%(b)(c) 4,950,000
10,000,000 NR+ Dansville CSD BAN Series 99 3.250%
due 3/16/00 10,013,866
5,000,000 MIG 1* Deer Park UFSD TAN 1998 4.000%
due 6/25/99 5,004,501
6,600,000 A-1+ Dutchess County IDA (Marist College)
Series 98A 3.000%(c) 6,600,000
8,600,000 MIG 1* East Meadow UFSD TAN 4.000% due 6/28/99 8,608,004
10,000,000 NR+ Eastern Suffolk BOCES RAN 4.000%
due 6/23/99 10,005,025
Erie County IDA:
3,980,000 A-1 Colad Group Inc. Project Series 96
3.000%(b)(c) 3,980,000
3,660,000 P-1* Rosina Food Products Inc. 3.000%(b)(c) 3,660,000
7,900,000 A-1 Franklin County Trudeau Institute
Series 98 2.900%(c) 7,900,000
2,240,000 A-1 Fulton County IDR (Fiber Conversion
Inc. Project) 3.000%(b)(c) 2,240,000
12,000,000 MIG 1* Half Hollow Hills CSD TAN 99 4.000%
due 6/25/99 12,011,043
1,520,000 A-1 Hudson County IDA (Emisig Manufacturing
Corp.) Series 98 3.000%(b)(c) 1,520,000
Jefferson County IDA IDR:
975,000 A-1 The Climax Manufacturing Co. Project
3.000%(b)(c) 975,000
2,300,000 A-1 Fisher Guage 3.000%(b)(c) 2,300,000
770,000 A-1 Lewis County IDA IDR (The Climax
Manufacturing Co. Project) 3.000%(c) 770,000
Long Island Power Authority:
35,600,000 A-1+ Series 1 2.900%(c) 35,600,000
9,200,000 A-1+ Series 2 2.800%(c) 9,200,000
25,000,000 A-1+ Series 3 1998 TECP 3.000% due 4/7/99 25,000,000
4,300,000 A-1+ Series 3 1998 TECP 3.000% due 4/8/99 4,300,000
9,000,000 A-1+ Series 3 1998 TECP 3.150% due 7/21/99 9,000,000
2,000,000 A-1+ Series 4 1998 TECP 2.950% due 4/6/99 2,000,000
3,000,000 A-1+ Series 4 1998 TECP 3.200% due 4/6/99 3,000,000
1,700,000 A-1+ Series 6 3.000%(c) 1,700,000
28,295,000 A-1+ Series A PART 3.130%(c) 28,295,000
8,500,000 NR+ Madison County BOCES Oneida Herkimer RAN
4.000% due 6/25/99 8,508,680
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Monroe County:
$ 6,200,000 A-1 JADA Precision Plastic IDA Series 97
3.000%(b)(c) $ 6,200,000
4,115,000 A-1 Granite Building IDA Series 1992
2.900%(c) 4,115,000
2,050,000 VMIG 1* IDR Collegiate Housing Foundation
Series A 3.050%(c) 2,050,000
Municipal Assistance Corp.:
14,800,000 A-1+ Series F AMBAC-Insured 2.900%(c) 14,800,000
5,000,000 NR+ Series L 5.000% due 7/1/99 5,015,979
Nassau County:
20,000,000 SP-1 BAN 3.500% due 8/17/99 20,023,827
9,350,000 A-1+ Hempstead IDA Nassau Energy 2.850%(b)(c) 9,350,000
17,000,000 NR+ Hempstead UFSD TAN Series 99
4.000% due 6/30/99 17,012,105
2,400,000 A-1+ IDA Cold Spring Harbor 2.950%(c) 2,400,000
New York City GO:
10,000,000 A-1+ PART AMBAC-Insured 3.000%(c) 10,000,000
5,500,000 A-1+ PART MBIA-Insured 3.090%(c) 5,500,000
4,200,000 A-1+ Series 92D FGIC-Insured 2.800%(c) 4,200,000
22,000,000 A-1+ Series 92D FGIC-Insured 2.850%(c) 22,000,000
4,500,000 A-1+ Series 92D FGIC-Insured 3.000%(c) 4,500,000
7,500,000 A-1+ Series 93E-5 3.250%(c) 7,500,000
2,300,000 A-1+ Series 94A 3.400%(c) 2,300,000
1,000,000 A-1+ Series 94B-4 3.150%(c) 1,000,000
1,000,000 A-1+ Series 94H-3 TECP FSA-Insured
2.800% due 4/1/99 1,000,000
12,000,000 A-1+ Series 95E-5 2.850%(c) 12,000,000
2,200,000 A-1+ Series 95F-2 2.750%(c) 2,200,000
8,400,000 A-1+ Series 95F-6 2.800%(c) 8,400,000
5,000,000 A-1+ Series 96E PART AMBAC-Insured
3.150% due 9/8/99(d) 5,000,000
11,200,000 A-1+ Series 96J-2 TECP 2.900% due 4/1/99 11,200,000
2,050,000 A-1+ Series A-4 3.100%(c) 2,050,000
3,900,000 A-1+ Series B FGIC-Insured 3.400%(c) 3,900,000
2,344,000 A-1+ Series B-2 Sub-Series B-5 MBIA-Insured
3.200%(c) 2,344,000
1,000,000 A-1+ Series B-3 3.400%(c) 1,000,000
1,200,000 A-1+ Series B-6 MBIA-Insured 3.200%(c) 1,200,000
1,000,000 A-1+ Series C 3.400%(c) 1,000,000
4,000,000 A-1+ Series F-3 2.800%(c) 4,000,000
9,700,000 A-1+ Series F PART 3.130%(c) 9,700,000
Series H Sub-Series H-3 TECP FSA-Insured:
1,800,000 A-1+ 2.800% due 4/1/99 1,800,000
6,800,000 A-1+ 3.200% due 4/12/99 6,800,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
$ 5,000,000 A-1+ Series H Sub-Series H-5 TECP MBIA-Insured
3.200% due 4/12/99 $ 5,000,000
2,500,000 A-1+ Series H-6 TECP MBIA-Insured 3.150%
due 8/17/99 2,500,000
5,434,000 A-1+ Sub-Series 94B-5 MBIA-Insured
3.200%(c) 5,434,000
16,100,000 A-1+ Sub-Series 95F-4 2.950%(c) 16,100,000
1,000,000 A-1+ Sub-Series 96J-3 TECP 2.800% due 4/1/99 1,000,000
5,650,000 A-1+ Sub-Series A-7 3.250%(c) 5,650,000
1,100,000 A-1+ Sub-Series B-2 3.400%(c) 1,100,000
1,000,000 A-1+ Sub-Series E-2 3.250%(c) 1,000,000
New York City IDA:
19,000,000 A-1 Air Express International Corp.
Project 2.950%(b)(c) 19,000,000
5,150,000 A-1 Columbia Grammar School Project 2.950%(c) 5,150,000
6,400,000 A-1+ Gary Plastic Packaging Corp.
98 3.150%(b)(c) 6,400,000
12,000,000 A-1+ USA Waste Services 2.950%(b)(c) 12,000,000
New York City HDC Multi-Family Housing:
10,000,000 A-1 520 W 43rd Street Partners 2.800%(b)(c) 10,000,000
13,570,000 A-1+ Columbus Apartments Series A 2.700%(c) 13,570,000
New York City Health & Hospital Revenue:
4,400,000 A-1+ Series A 2.800%(c) 4,400,000
2,460,000 A-1+ Series C 2.800%(c) 2,460,000
New York City Metropolitan Transit Authority:
2,000,000 A-1+ Livingston Plaza Project (Pre-Refunded--
Escrowed with U.S. government
securities to 1/1/00 Call @ 102
7.500% due 1/1/20) 2,118,319
7,370,000 A-1+ PART AMBAC-Insured 3.050%(c) 7,370,000
10,000,000 A-1+ Series CP1 Sub-Series 98B TECP
2.800% due 4/14/99 10,000,000
13,000,000 A-1+ Series CP1 Sub-Series A TECP
3.100% due 8/10/99 13,000,000
10,000,000 A-1+ Series CP2 Sub-Series B TECP
2.900% due 4/8/99 10,000,000
2,720,000 A-1+ Series E PART AMBAC-Insured 3.050%(c) 2,720,000
7,000,000 A-1+ Sub-Series CP1 TECP 2.850% due 6/8/99 7,000,000
New York City Municipal Water & Finance
Authority:
1,500,000 A-1+ FGIC-Insured Series G 3.100%(c) 1,500,000
3,640,000 AAA Pre-Refunded--Escrowed with U.S. government
security to 6/15/99 (Call @ 101.5)
6.750% due 6/15/14 3,675,862
10,000,000 A-1+ Series 98-1 TECP 3.050% due 4/26/99 10,000,000
25,854,000 VMIG 1* Series 98-2 PART 3.160%(c) 25,854,000
9,700,000 A-1+ Series 98-3 TECP 3.100% due 4/19/99 9,700,000
5,000,000 A-1+ Series 98C PART FGIC-Insured 3.050%(c) 5,000,000
3,000,000 A-1+ Series A FGIC-Insured 3.350%(c) 3,000,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
New York City Transitional Finance
Authority:
$20,000,000 A-1+ Series 98B PART 3.050%(c) $ 20,000,000
25,000,000 VMIG 1* Series A-1 2.850%(c) 25,000,000
25,900,000 VMIG 1* Series A-2 2.850%(c) 25,900,000
4,200,000 VMIG 1* Sub-Series A-2 2.850%(c) 4,200,000
New York State Dormitory Authority:
8,625,000 A-1+ Colgate University PART FGIC-Insured
3.000%(c) 8,625,000
Memorial Sloan Kettering TECP:
5,100,000 A-1 Series 89A 2.900% due 4/9/99 5,100,000
1,000,000 A-1 Series 89B 2.900% due 4/9/99 1,000,000
12,525,000 A-1 Series 89C 2.950% due 4/6/99 12,525,000
2,200,000 A-1+ Series 96 2.900% due 4/9/99 2,200,000
2,000,000 A-1+ Series 1996 PART FGIC-Insured 3.150%(c) 2,000,000
5,220,000 A-1+ United Health Services PART AMBAC-
Insured 3.050%(c) 5,220,000
9,500,000 A-1+ Wagner College 2.800%(c) 9,500,000
New York State Electric & Gas Co.:
Niagara Mohawk:
7,000,000 A-1+ PART AMBAC-Insured 3.050%(c) 7,000,000
PCR:
7,800,000 A-1+ 3.350%(b)(c) 7,800,000
8,600,000 A-1+ Series B 3.350%(b)(c) 8,600,000
8,200,000 P-1* Series 85 3.200%(c) 8,200,000
3,200,000 P-1* Series 87A 2.950%(c) 3,200,000
14,300,000 A-1+ Series A 3.300%(c) 14,300,000
PCR:
17,000,000 VMIG 1* 3.200% due 10/15/99(d) 17,000,000
12,000,000 A-1+ 3.000% due 3/15/00(d) 12,000,000
Rochester Gas & Electric MBIA-Insured:
4,800,000 A-1+ Series 97A 2.750%(c) 4,800,000
18,000,000 A-1+ Series B 2.750%(c) 18,000,000
New York State Energy Research & Development
Authority Gas Facilities:
8,600,000 A-1+ Brooklyn Union Gas MBIA-Insured 2.950%(c) 8,600,000
5,245,000 A-1+ Con Edison PART MBIA-Insured 3.050%(c) 5,245,000
14,000,000 VMIG 1* New York State Energy Series A 2.850%(b)(c) 14,000,000
New York State Environmental Quality
Series TECP:
3,800,000 A-1+ Series 97A 2.900% due 4/6/99 3,800,000
2,500,000 A-1+ Series 97A 2.950% due 4/6/99 2,500,000
12,800,000 A-1+ Series 97A 2.750% due 4/8/99 12,800,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
New York State Housing Finance Authority:
$24,500,000 A-1+ 250 West 50th Street Series A
2.850%(b)(c) $ 24,500,000
11,000,000 VMIG 1* E84 Street Series A 2.800%(b)(c) 11,000,000
12,000,000 A-1+ Liberty View Apartment Series 97A
2.700%(b)(c) 12,000,000
6,500,000 A-1+ Normandie Court Project Series 91A
2.800%(c) 6,500,000
20,000,000 VMIG 1* Saxony Housing Series 97A 2.800%(b)(c) 20,000,000
New York State Local Government
Assistance Corp.:
10,000,000 A-1+ Series 93A 2.800%(c) 10,000,000
22,900,000 A-1+ Series 95B 2.750%(c) 22,900,000
9,500,000 A-1+ Series 95C 2.750%(c) 9,500,000
8,520,000 A-1+ Series 95C 2.850%(c) 8,520,000
2,000,000 A-1+ Series 95E 2.800%(c) 2,000,000
New York State Medical Care Facility
Finance Agency:
6,300,000 VMIG 1* Lenox Hill Hospital 2.950%(c) 6,300,000
12,125,000 VMIG 1* St. Lukes PART FHA-Insured 3.050%(c) 12,125,000
New York State Mortgage Agency Revenue PART:
2,220,000 VMIG 1* 3.100%(b)(c) 2,220,000
13,995,000 VMIG 1* 3.300% due 8/21/99(b)(d) 13,995,000
12,915,000 VMIG 1* Series 38 3.100%(b)(c) 12,915,000
2,595,000 VMIG 1* Series KK CAPMAC-Insured
3.397% due 4/8/99(b)(d) 2,595,000
23,600,000 A-1 New York State Power Authority TECP Series 2
2.950% due 5/10/99 23,600,000
23,095,000 A-1+ New York State Thruway PART Series 1997
3.000%(c) 23,095,000
14,595,000 A-1 New York State UDC 93A Refund PART
FSA-Insured 3.350% due 4/1/99(d) 14,595,000
Niagara County IDA (American Re-Fuel Co.):
8,000,000 A-1+ Series 96D 2.850%(b)(c) 8,000,000
12,800,000 A-1+ Series 97B 3.050%(b)(c) 12,800,000
3,760,000 NR+ North Tonawanda BAN 4.000% due 6/24/99 3,762,751
3,000,000 A-1 Oneida County IDR (Harden Furniture)
Series 98 3.000%(b)(c) 3,000,000
Onondaga County IDA Southern Container:
4,500,000 NR++ Series A 2.950%(b)(c) 4,500,000
1,500,000 NR++ Series B 2.950%(b)(c) 1,500,000
10,000,000 MIG 1* Patchogue-Medford UFSD TAN Series 98-99
4.000% due 6/29/99 10,009,453
Port Authority of NY/NJ:
7,745,000 A-1+ PART 3.700% due 6/10/99(d) 7,745,000
1,000,000 A-1+ Series 96-5 3.200%(c) 1,000,000
3,500,000 NR+ Series 98-1 3.150%(b)(c) 3,500,000
3,500,000 NR+ Series 98-2 3.050%(c) 3,500,000
22,000,000 SP-1+ Puerto Rico TRAN Series 99A
3.500% due 7/30/99 22,046,393
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
$ 990,000 NR++ Rensselaer County IDA (Millers
Supermarket Inc. Project)
3.500% due 3/1/00(b)(d) $ 990,000
6,215,000 NR++ Rochester Series A AMBAC-Insured
4.625% due 8/15/99 6,237,518
1,000,000 A-1 Rotterdam IDA IDR Rotterdam Park 2.900%(c) 1,000,000
Schenectady County IDA IDR:
6,325,000 A-1 Feuz Holding Co. Series 98A 3.000%(b)(c) 6,325,000
1,800,000 A-1 Scotia Industrial Park Project
Series 98A 2.900%(c) 1,800,000
6,900,000 A-1 Seneca County IDA (Chiropractic College)
2.900%(c) 6,900,000
3,800,000 A-1 St. Lawrence County IDA United Helpers
Living 3.000%(c) 3,800,000
Suffolk County:
3,000,000 MIG 1* Brentwood UFSD TAN 4.000% due 6/30/99 3,002,678
5,600,000 A-1+ IDR (JBC Realty/Wibar International)
3.000%(b)(c) 5,600,000
25,000,000 SP-1+ Series RA 1 TRAN 3.500% due 8/12/99 25,060,124
20,000,000 SP-1+ TAN 1998 Series 2 4.000% due 9/9/99 20,055,431
Triborough Bridge & Tunnel Authority PART:
5,049,000 VMIG 1* FGIC-Insured 3.150%(c) 5,049,000
22,905,000 A-1 MBIA-Insured 3.100% due 5/18/99(d) 22,905,000
2,650,000 A-1+ United Nations Development Corp.
PART 3.100%(c) 2,650,000
Westchester County:
5,000,000 NR+ BOCES RAN Series 1999 3.250% due 7/9/99 5,002,672
5,000,000 A-1+ IDA (Boys and Girls Club Project) 2.850%(c) 5,000,000
5,595,000 NR+ Series A 4.000% due 11/15/99 5,636,733
2,210,000 NR+ Series B 4.000% due 11/15/99 2,226,484
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $1,372,463,706**) $1,372,463,706
================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except that those
identified by an asterisk (*) are rated by Moody's Investors Service, Inc.
(b) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(d) Variable rate obligation payable at par on
demand on the date indicated.
++ Security has not been rated by either Moody's Investors Service, Inc. or
Standard & Poor's Ratings Service. However, the Board of Trustees has
determined this security to be considered a first tier quality issue due
to enhancement features; such as insurance and/or irrevocable letters of
credit.
+ Security has not been rated by either Moody's Investors Service, Inc. or
Standard & Poor's Ratings Service. However, the Board of Trustees has
determined that the security presents minimal credit risk.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 26 through 28 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Education -- 9.8%
$ 710,000 A- Hempstead Town, IDA, Civic Facilities
Revenue, Adelphi University,
5.250% due 2/1/14 $ 728,638
New York State Dormitory Authority
Revenue Bonds:
City University Systems:
Series A, FGIC-Insured:
5,000,000 AAA 5.000% due 7/1/16 5,025,000
5,825,000 AAA 5.625% due 7/1/16 6,407,500
7,000,000 AAA Series B, FSA-Insured, 6.000% due 7/1/14 8,067,500
2,500,000 BBB+ Series C, 7.500% due 7/1/10(b) 2,978,125
2,000,000 AAA Columbia University, 5.000% due 7/1/18 2,007,500
Cornell University, Series A:
2,000,000 AA 7.375% due 7/1/20 2,127,500
1,000,000 AA 7.375% due 7/1/30 1,063,750
200,000 Baa1* Department of Health, State of
New York Issue, 7.250% due 7/1/02 212,000
1,150,000 AAA Hamilton College, MBIA-Insured,
5.125% due 7/1/15 1,174,438
2,700,000 AA Manhattan College, Asset Guaranty,
6.500% due 7/1/19 2,929,500
New York Medical College:
1,050,000 AAA 7.250% due 10/1/03 1,061,812
220,000 AA Asset Guaranty, 6.700% due 7/1/01 234,575
School Program:
1,000,000 BBB+ 5.000% due 7/1/18 973,750
1,500,000 AAA Issue 2, Series F, AMBAC-Insured,
5.250% due 7/1/18 1,533,750
1,000,000 AAA Special Activity School District Program,
FSA-Insured, 5.250% due 7/1/13 1,051,250
3,400,000 AAA St. Johns University, MBIA-Insured,
5.250% due 7/1/18 3,468,000
4,475,000 Aaa* State University Athletic Facility,
MBIA-Insured, 4.500% due 7/1/21 4,139,375
State University Educational Facility:
12,110,000 AAA Series A, FSA-Insured, 5.875% due 5/15/17 13,608,613
Series B:
1,000,000 A- 7.500% due 5/15/11 1,233,750
5,000,000 AAA FGIC-Insured, 5.250% due 5/15/19 5,237,500
7,370,000 A+ University of Rochester, Series A,
6.500% due 7/1/19 8,143,850
285,000 BBB+ Upstate Community College, Series B,
7.100% due 7/1/01 305,306
- --------------------------------------------------------------------------------
73,712,982
- --------------------------------------------------------------------------------
Escrowed To Maturity(c) -- 0.8%
1,495,000 AAA Commonwealth of Puerto Rico, Aquaduct
& Sewer Authority Revenue Bonds,
10.250% due 7/1/09 2,010,775
3,150,000 AAA New York City GO, AMBAC-Insured, Series I,
7.250% due 8/15/14 3,231,711
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Escrowed To Maturity(c) -- 0.8% (continued)
$ 790,000 AAA New York State Power Authority Revenue
& General Purpose, 9.500% due 1/1/01 $ 834,437
- --------------------------------------------------------------------------------
6,076,923
- --------------------------------------------------------------------------------
Finance -- 6.3%
New York City Transitional Finance
Authority Revenue, Future Tax:
4,000,000 AAA Series A, FGIC-Insured, 5.000%
due 11/15/15 4,040,000
Series B:
6,000,000 AA 4.750% due 11/1/23 5,685,000
10,000,000 AA 4.500% due 11/15/27 9,050,000
15,000,000 AA Series C, 4.750% due 5/1/23 14,212,500
New York State Local Government
Assistance Corp.:
5,000,000 AAA Series B, MBIA-Insured, 4.875% due 4/1/20 4,862,500
6,450,000 AAA Series C, FGIC-Insured, 5.500% due 4/1/17 6,881,634
New York State Municipal Bond Bank Agency,
Special Revenue Program:
1,000,000 BBB+ City of Buffalo, 6.875% due 3/15/06 1,075,000
1,500,000 AAA City of Rochester, 6.750% due 3/15/11 1,636,875
- --------------------------------------------------------------------------------
47,443,509
- --------------------------------------------------------------------------------
General Obligation -- 6.4%
Buffalo, School District, Series B:
1,380,000 AAA 4.750% due 2/1/17 1,345,500
FSA-Insured:
1,540,000 AAA 4.750% due 2/1/16 1,511,125
500,000 AAA 4.750% due 2/1/18 484,375
575,000 AAA 4.750% due 2/1/19 554,875
Green Island:
100,000 Baa3* 9.375% due 11/1/01 111,875
125,000 Baa3* 9.375% due 11/1/02 144,531
New York City Refunding Bonds:
85,000 A- Series A, 7.750% due 8/15/16 93,075
Series C:
5,000,000 A- 6.660% due 8/1/09 5,275,000
5,875,000 A- 5.000% due 8/15/14 5,882,344
Series F:
1,000,000 A- 5.125% due 8/1/13 1,016,250
5,000,000 A- 5.250% due 8/1/16 5,056,250
Series H:
220,000 A- 7.000% due 2/1/21 238,700
10,000,000 A- 6.125% due 8/1/25 10,950,000
115,000 AAA Series I, 7.250% due 8/15/14 118,097
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
General Obligation -- 6.4% (continued)
New York State:
$ 1,000,000 A 12.000% due 11/15/03(b) $ 1,337,500
2,750,000 A 9.875% due 11/15/05(b) 3,647,187
1,500,000 Aaa* North Hempstead, Series B, FGIC-Insured,
4.750% due 3/1/18 1,453,125
3,210,000 Aa2* Orange County, 5.000% due 7/15/21 3,205,988
6,000,000 AAA Puerto Rico Commonwealth, Public
Improvement, AMBAC-Insured,
4.500% due 7/1/23 5,572,500
- --------------------------------------------------------------------------------
47,998,297
- --------------------------------------------------------------------------------
Government Facilities -- 4.7%
New York State Dormitory Authority
Lease Revenue, Capital Appreciation,
Court Facilities, AMBAC-Insured:
2,735,000 Aa1* Westchester County, 5.250% due 8/1/17 2,799,955
3,655,000 Aa1* Zero coupon due 8/1/19 1,311,231
5,895,000 Aa1* Zero coupon due 8/1/20 2,004,300
1,725,000 Aa1* Zero coupon due 8/1/21 556,312
1,600,000 Aa1* Zero coupon due 8/1/22 488,000
New York State Urban Development Corp. Revenue:
7,200,000 AAA Community Enhancement Facilities,
AMBAC-Insured, 5.125% due 4/1/16 7,317,000
Correctional Facilities Service Contract:
FSA-Insured:
7,500,000 AAA 5.000% due 1/1/19 7,453,125
5,000,000 AAA 5.000% due 1/1/20 4,962,500
6,000,000 AAA Series B, AMBAC-Insured,
4.750% due 1/1/28 5,685,000
3,000,000 BBB+ State Facilities, 5.700% due 4/1/20 3,240,000
- --------------------------------------------------------------------------------
35,817,423
- --------------------------------------------------------------------------------
Hospitals -- 16.3%
380,000 B2* Monroe County IDA Revenue, Civic Facilities,
Genesee Hospital, Series A,
6.500% due 11/1/99 383,568
3,000,000 AAA New York City Health & Hospital Corporate
Revenue, Health System, Series A,
5.000% due 2/15/20 2,958,750
New York State Dormitory Authority Lease
Revenue, Municipal Health Facilities
Improvement Program, Series 1:
18,000,000 AAA 4.750% due 1/15/29 16,897,500
4,685,000 AAA FSA-Insured, 5.000% due 1/15/17 4,661,575
New York State Dormitory Authority Revenue:
5,350,000 Aa3* Lutheran Center at Poughkeepsie,
LOC Key Bank, 6.050% due 7/1/26 5,684,375
5,000,000 AAA Memorial Sloan Kettering Cancer Center,
Series C, MBIA-Insured, 5.500% due 7/1/23 5,368,750
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Hospitals -- 16.3% (continued)
Mental Health Services Facilities:
Series B:
$ 2,500,000 A- 5.000% due 2/15/18 $ 2,443,750
7,000,000 A- 5.625% due 2/15/21 7,393,750
11,505,000 AAA Series D, MBIA-Insured, 5.000%
due 8/15/17 11,447,475
5,035,000 AAA Series F, AMBAC-Insured, 4.500%
due 8/15/28 4,575,556
15,000,000 AAA New York & Presbyterian Hospital,
FHA-Insured, 4.750% due 8/1/16 14,662,500
3,000,000 AA St. Luke's Home, Residential Health,
FHA-Insured, 6.375% due 8/1/35 3,247,500
2,450,000 AAA St. Vincent's Hospital & Medical Center,
FHA-Insured, 7.400% due 8/1/30 2,649,062
New York State Medical Care Facility Finance
Agency Revenue:
2,080,000 A- 8.875% due 8/15/07 2,126,384
550,000 A- 7.700% due 2/15/18 562,507
Hospital & Nursing Home Insured Mortgage,
FHA-Insured:
Series A:
45,000 AA 6.100% due 2/15/02 47,869
4,855,000 AA 6.200% due 2/15/21 5,188,781
4,035,000 AA 7.450% due 8/15/31 4,377,975
990,000 AA Series B, 7.000% due 8/15/32 1,106,325
2,385,000 AA Series C, 6.650% due 8/15/32 2,575,800
Series A:
2,500,000 BB Central Suffolk Hospital Mortgage
Project, 6.125% due 11/1/16 2,512,500
955,000 Aa2* Health Center Projects, Secured
Mortgage Program, 6.375% due 11/15/19 1,055,275
6,800,000 AA Methodist Hospital, FHA-Insured,
6.700% due 8/15/23 7,539,500
4,000,000 AA Mortgage Project, FHA-Insured,
6.375% due 8/15/24 4,535,000
Series B:
1,860,000 AAA Long Term Healthcare, FSA-Insured,
6.450% due 11/1/14 2,027,400
3,500,000 AA Mortgage Project, FHA-Insured,
6.100% due 2/15/15 3,753,750
Series F, Mental Health Services Facilities
Improvement:
710,000 A- 6.500% due 8/15/12 772,125
730,000 A- 6.500% due 2/15/19 788,400
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Hospitals -- 16.3% (continued)
$ 1,000,000 AAA Otsego County Industrial Development Agency,
Civic Facilities Revenue, Aurelia Osborn Fox
Memorial Hospital, Series A, FSA-Insured,
4.500% due 10/1/19 $ 923,750
700,000 A Valley Health Development Corp., Mortgage
Revenue Bonds, Mortgage Loan, FHA-Insured,
11.300% due 2/1/23 824,250
- --------------------------------------------------------------------------------
123,091,702
- --------------------------------------------------------------------------------
Housing: Multi-Family -- 5.5%
6,470,000 BBB Commonwealth of Puerto Rico, Urban
Renewal & Housing Corp. Revenue Bonds,
7.875% due 10/1/04 6,718,577
New York City Housing Development Corp.:
1,526,160 NR Cadman Project, 6.500% due 11/15/18 1,583,391
968,294 NR Heywood Towers Project, 6.500% due 10/15/17 1,009,446
1,231,949 NR Kelly Project, 6.500% due 2/15/18 1,282,767
1,028,481 AAA Pass Through Certificates, AMBAC-Insured,
6.500% due 12/20/01 1,081,191
1,587,931 NR Riverside Project, 6.500% due 11/15/18 1,670,249
Series A, FHA-Insured:
4,000,000 AAA 6.600% due 4/1/30 4,255,000
5,000,000 AAA Multi-Unit Mortgage Refunding, 7.350%
due 6/1/19 5,306,250
New York State Housing Finance Agency Revenue,
FHA-Insured:
2,000,000 Aa1* Secured Mortgage, Series A, 6.200%
due 8/15/15(d) 2,142,500
1,500,000 AAA Series C, 6.500% due 8/15/24 1,593,750
3,430,000 AAA Housing Project Mortgage, Series A,
FSA-Insured, 6.125% due 11/1/20 3,661,525
Secured Mortgage Project, SONYMA-Insured:
Series A:
500,000 Aa1* 7.000% due 8/15/12(d) 537,500
500,000 Aa1* 7.050% due 8/15/24(d) 533,750
6,870,000 Aa1* Series B, 6.250% due 8/15/29(d) 7,333,725
1,750,000 Aa1* Series C, 6.600% due 8/15/27 1,879,062
970,000 A1* Rensselaer Housing Authority, Multi-Family
Mortgage Revenue, Rensselaer Elderly
Apartments, Series A, 7.750% due 1/1/11 1,068,213
- --------------------------------------------------------------------------------
41,656,896
- --------------------------------------------------------------------------------
Housing: Single-Family -- 5.3%
New York State Mortgage Agency Revenue:
Homeowner Mortgage:
2,625,000 Aa2* Series 37-A, 6.375% due 10/1/14 2,795,625
4,000,000 Aa2* Series 42, FHA-Insured, 6.650%
due 4/1/26(d) 4,265,000
9,630,000 Aa2* Series 46, 6.650% due 10/1/25(d) 10,255,950
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Housing: Single-Family -- 5.3% (continued)
$ 4,400,000 Aa2* Series 65, 5.850% due 10/1/28(d) $ 4,537,500
5,000,000 Aa2* Series 67, 5.800% due 10/1/28(d) 5,143,750
6,500,000 Aa2* Series 71, 5.350% due 10/1/18 6,540,625
5,000,000 Aa2* Series 80, 5.100% due 10/1/17 5,025,000
1,000,000 Aaa* Series 41-A, 6.450% due 10/1/14 1,066,250
- --------------------------------------------------------------------------------
39,629,700
- --------------------------------------------------------------------------------
Industrial Development -- 8.7%
3,470,000 Aaa* Allegany County IDA, Civic Facilities
Revenue, (Alfred University Civic
Facilities), MBIA-Insured, 5.000%
due 8/1/18 3,430,963
2,250,000 A3* Essex County IDA Revenue, Solid Waste,
(International Paper Co. Project),
Series A, 6.150% due 4/1/21(d) 2,401,875
500,000 A+ Monroe County IDA, Public Improvement,
Canal Ponds Park, Series A, 7.000%
due 6/15/13 546,875
8,000,000 AAA Nassau County IDA, Civic Facilities
Revenue, (Hofstra University Project),
4.750% due 7/1/28 7,580,000
New York City IDA:
Civic Facilities Revenue:
3,695,000 AAA Horace Mann School Project, MBIA-Insured,
5.000% due 7/1/18 3,676,525
Lighthouse International Project,
MBIA-Insured:
1,710,000 AAA 4.500% due 7/1/23 1,571,063
4,000,000 AAA 4.500% due 7/1/33 3,615,000
The Lighthouse Project:
1,000,000 Aa2* 6.375% due 7/1/10 1,097,500
2,250,000 Aa2* 6.500% due 7/1/22 2,472,187
915,000 Aa2* Prime Laboratories Inc., Series C,
7.700% Mandatory Tender 11/1/00 918,477
8,000,000 AAA Onondaga County IDA, Sewer Facilities
Revenue, (Bristol-Meyers Squibb Co.
Project), 5.750% due 3/1/24(d) 8,750,000
1,600,000 AA Oswego County IDA, (Seneca Hill Project),
Series A, FHA-Insured, 5.650% due 8/1/37 1,638,000
Port Authority of New York & New Jersey:
8,000,000 BBB- Delta Airlines Inc. Project, Series 1R,
6.950% due 6/1/08 8,670,000
1 2,000,000 NR Special Project, 5th Installment,
6.750% due 10/1/19(d) 13,275,000
1,410,000 A+ Rensselaer County IDA, Albany International
Corp., 7.550% due 6/1/07(b)(d) 1,651,463
1,000,000 AAA St. Lawrence County IDA, Civic Facilities
Revenue, (St. Lawrence University Project),
Series A, MBIA-Insured, 5.375% due 7/1/18 1,032,500
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Industrial Development -- 8.7% (continued)
$ 1,250,000 AAA Syracuse GO, IDA, James Square Association,
FHA-Insured, 7.000% due 8/1/25(b) $ 1,334,375
2,090,000 B2* Warren & Washington Counties IDA, Resource
Recovery Revenue Bonds, Series A,
7.900% due 12/15/07 2,156,044
- --------------------------------------------------------------------------------
65,817,847
- --------------------------------------------------------------------------------
Life Care Systems -- 4.7%
7,450,000 AAA Castle Residential Health Care Facility
Mortgage Revenue, FHA-Insured,
5.750% due 8/1/37 7,692,125
New York State Dormitory Authority
Revenue Bonds:
3,520,000 Aa3* Carmel Richmond Nursing Home, 5.000%
due 7/1/15 3,498,000
1,100,000 Aa3* Chapel Oaks Inc., 5.375% due 7/1/17 1,108,250
FHA-Insured:
1,230,000 AAA Crouse Community Center, 7.500%
due 8/1/29 1,284,907
Genessee Valley:
1,000,000 AA Series A, 6.900% due 2/1/32 1,073,750
685,000 AA Series B, 6.850% due 8/1/16 737,231
3,815,000 AA Hebrew Nursing Home, 6.125% due 2/1/37 4,058,206
1,295,000 AAA Heritage House Nursing Center, 7.000%
due 8/1/31 1,385,650
2,450,000 AA- Iroquois Nursing Home, 7.050% due 2/1/31 2,600,063
2,100,000 AAA Jewish Geriatric Center, 7.150% due 8/1/14 2,380,875
1,500,000 AAA Menorah Campus, Nursing Home,
6.100% due 2/1/37 1,627,500
1,600,000 AA Niagara Frontier Home, Mortgage Revenue,
6.200% due 2/1/15 1,740,000
3,350,000 AA Wesley Garden Nursing Home, 6.125%
due 8/1/35 3,571,937
2,160,000 A Oneida Health Care Corp. Mortgage Revenue,
Series A, FHA-Insured, 7.200% due 8/1/31 2,284,200
750,000 A Onondaga County Industrial Development Agency,
Civic Facilities Revenue, (Syracuse Home
Assistance Project), 5.200% due 12/1/18 733,125
- --------------------------------------------------------------------------------
35,775,819
- --------------------------------------------------------------------------------
Pollution Control Revenue -- 2.2%
4,500,000 AAA Dutchess County Resource Recovery Agency Revenue
Bonds, Solid Waste Management, Series A,
FGIC-Insured, 7.500% due 1/1/09 4,727,250
New York State Energy, Research & Development
Authority:
1,100,000 AAA Central Hudson Gas & Electric, MBIA-
Insured, Series B, 7.375%
due 10/1/14(b) 1,152,855
3,000,000 A- LILCO Project, Series A, 5.150% due 3/1/16 3,007,500
New York State Environmental Facilities Corp.:
1,595,000 Baa1* Huntington Project, 7.375% due 10/1/99(d) 1,621,030
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Pollution Control Revenue -- 2.2% (continued)
State Water Revolving Fund, Series A:
$ 805,000 Aaa* 7.250% due 6/15/10 $ 876,444
1,950,000 Aa1* 7.500% due 6/15/12 2,074,313
1,000,000 AAA North Country Development Authority, Solid
Waste Management System Revenue Refunding,
FSA-Insured, 6.000% due 5/15/15 1,137,500
1,710,000 Aa3* Puerto Rico Industrial, Medical & Environmental
Facilities Finance Authority Revenue,
Series A, American Airlines Inc.,
6.450% due 12/1/25 1,861,763
- --------------------------------------------------------------------------------
16,458,655
- --------------------------------------------------------------------------------
Pre-Refunded(e) -- 11.8%
35,000 NR Battery Park City Authority Housing Revenue,
FHA-Insured, (Call 6/1/05 @ 100),
8.625% due 6/1/23 43,575
1,000,000 AAA Buffalo Municipal Water Finance Authority,
Water Systems Revenue, FGIC-Insured,
(Call 7/1/06 @ 102), 6.100% due 7/1/26 1,140,000
2,150,000 AAA Monroe County Water Authority Revenue,
AMBAC-Insured, (Call 8/1/04 @ 101),
7.000% due 8/1/19 2,480,563
New York City GO:
4,000,000 AAA Series B1, MBIA-Insured, (Call 8/15/04 @ 101),
6.950% due 8/15/12 4,610,000
2,155,000 A- Series H, (Call 2/1/02 @ 101.5), 7.000%
due 2/1/2 12,370,500
3,270,000 AAA New York City Municipal Water Finance
Authority, Water & Sewer System Revenue,
Series A, FSA-Insured, (Call 6/15/01 @ 101),
7.000% due 6/15/15 3,502,988
New York State Dormitory Authority Revenue:
5,000,000 Baa1* Department of Education, State of New York
Issue, (Call 7/1/01 @ 102), 7.750%
due 7/1/21(b) 5,531,250
990,000 NR United Health Services Inc., FHA-Insured
Mortgage, (Call 2/1/00 @ 102), 7.350%
due 8/1/29 1,042,609
New York State Energy, Research & Development
Authority, Electric Facilities Revenue:
2,935,000 A- Series A, (Call 6/15/02 @ 102),
7.150% due 12/1/20(d) 3,261,519
2,190,000 A- Series B, (Call 6/15/02 @ 102),
7.150% due 12/1/22(d) 2,439,113
New York State Medical Care Facilities
Finance Agency Revenue:
1,320,000 Aaa* Call 2/15/00 @ 102, 7.750% due 2/15/20 1,396,639
Hospital & Nursing Home, FHA-Insured:
6,950,000 AA Series A, (Call 2/15/04 @ 102),
6.200% due 2/15/21 7,775,312
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Pre-Refunded(e) -- 11.8% (continued)
$ 115,000 AA Series C, (Call 8/15/02 @ 102),
6.650% due 8/15/32 $ 127,219
MBIA-Insured:
830,000 AAA Call 2/15/00 @ 102, 7.750% due 2/15/20 878,190
135,000 AAA Partially Pre-Refunded, (Call
2/15/00 @ 102), 7.750% due 2/15/20 141,842
Mental Health Improvement, Series F,
(Call 8/15/02 @ 102):
4,010,000 A- 6.500% due 8/15/12 4,421,025
3,885,000 A- 6.500% due 2/15/19 4,283,212
515,000 A- Partially Pre-Refunded, (Call
2/15/00 @ 102), 7.750% due 2/15/20 540,153
Series A:
3,000,000 AAA Beth Israel Medical Center, MBIA-Insured,
(Call 11/1/00 @ 102), 7.500%
due 11/1/10 3,247,500
4,000,000 AAA Brookdale Hospital Medical Center,
(Call 2/15/05 @ 102), 6.800%
due 8/15/12 4,635,000
4,700,000 AAA New York Downtown Hospital,
(Call 2/15/05 @ 102), 6.800%
due 2/15/20 5,446,125
New York Hospital, Series A, FHA-Insured,
(Call 2/15/05 @ 102):
8,500,000 AAA 6.800% due 8/15/24(b) 9,849,375
7,600,000 AAA 6.500% due 8/15/29 8,692,500
2,500,000 AAA 6.900% due 8/15/34(b) 2,909,375
5,000,000 AAA Secured Hospital Revenue Bonds 1991,
(Call 8/15/01 @ 102), 7.400%
due 8/15/21 5,525,000
1,700,000 AAA St. Luke's Hospital, Series B,
FHA-Insured, (Call 2/15/00 @ 102),
7.450% due 2/15/29 1,794,435
1,000,000 A1* Orangetown Housing Authority, Housing Facility
Revenue, Orangetown Senior Housing Center,
(Call 10/1/00 @ 102), 7.600% due 4/1/30 1,080,000
- --------------------------------------------------------------------------------
89,165,019
- --------------------------------------------------------------------------------
Public Facilities -- 1.1%
1,000,000 A Albany Parking Authority Revenue Refunding,
(Green & Hudson Street Garage Project),
Series A, 7.150% due 9/15/16 1,061,250
915,000 BBB+ New York State COP, (Hanson Redevelopment
Project), 8.375% due 5/1/08 1,102,575
Triborough Bridge & Tunnel Authority:
1,500,000 BBB+ Convention Center Project, Series E,
7.250% due 1/1/10(b) 1,745,625
5,000,000 AAA Special Obligation, Series A, MBIA-Insured,
4.750% due 1/1/24 4,762,500
- --------------------------------------------------------------------------------
8,671,950
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Short-Term(f) -- 0.1%
$ 400,000 VMIG 1* New York GO, Subseries A-4, 3.100%
due 8/1/22 $ 400,000
- --------------------------------------------------------------------------------
Transportation -- 12.0%
Metropolitan Transportation Authority,
Transit Facilities Revenue:
10,000,000 AAA Series A, MBIA-Insured, 5.625% due 7/1/25 10,500,000
10,000,000 AAA Series B, 4.750% due 7/1/26 9,475,000
Series C, FSA-Insured:
5,000,000 AAA 5.125% due 7/1/14 5,175,000
2,000,000 AAA 4.750% due 7/1/16 1,955,000
5,000,000 BBB+ Series N, 7.125% due 7/1/09(g) 5,537,500
2,250,000 AAA Monroe County Airport Authority, Airport
Revenue, Greater Rochester International,
MBIA-Insured, 7.250% due 1/1/19(d) 2,345,873
4,230,000 AAA New York State Highway Authority, Emergency
Services, Construction & Reconstruction,
Series A, FSA-Insured, 6.600% due 3/1/01 4,462,650
New York State Thruway Authority, Local
Highway & Bridge Authority, FGIC-Insured:
9,010,000 AAA Series A, 5.000% due 4/1/19 8,953,687
5,000,000 AAA Series B, 5.250% due 4/1/14 5,206,250
3,000,000 AAA Series C, 5.250% due 4/1/15 3,105,000
1,000,000 AAA Niagara Falls Bridge Authority, Toll Revenue,
Series B, FGIC-Insured, 5.250% due 10/1/15 1,060,000
2,840,000 AAA Niagara Frontier Authority Airport Revenue,
Buffalo Niagara International Airport,
FGIC-Insured, 5.000% due 4/1/13(d) 2,864,850
1,500,000 AAA Port Authority, New York & New Jersey, Second
Installment, Series 117, FGIC-Insured,
5.125% due 11/15/15(d) 1,520,625
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Refunding,
Series Y:
10,000,000 A 5.000% due 7/1/36 9,887,500
17,000,000 A 5.500% due 7/1/36 18,211,250
- --------------------------------------------------------------------------------
90,260,185
- --------------------------------------------------------------------------------
Utilities -- 3.3%
Long Island Power Authority:
6,775,000 AAA Electric Systems Revenue, MBIA-Insured,
5.000% due 4/1/14 6,885,094
4,000,000 AAA Series A, FSA-Insured, 5.000% due 12/1/15 4,035,000
New York State Energy, Research & Development
Authority, Electric Facilities Revenue:
1,065,000 Aaa* Series A, 7.150% due 12/1/20(d) 1,176,825
810,000 A2* Series B, 7.150% due 2/1/22(d) 895,050
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Utilities -- 3.3% (continued)
New York State Energy, Research & Development
Authority, Facilities Revenue Bonds:
$3,000,000 A1* Brooklyn Union Gas Co. Project, Regular
RIBS, Series B, 10.284%
due 7/15/26(d)(h) $ 3,918,750
5,750,000 A+ Consolidated Edison Co. Inc. Project,
Series A, 7.125% due 12/1/29(b)(d) 6,519,062
1,500,000 Baa2* Corning National Gas Corp., Series A,
8.250% due 12/1/18(d) 1,554,195
- --------------------------------------------------------------------------------
24,983,976
- --------------------------------------------------------------------------------
Water & Sewer -- 1.0%
New York State Environmental Facilities Corp.,
Clean Water & Drinking Revolving Funds:
6,520,000 Aa1* Series C, 5.000% due 6/15/16 6,552,600
1,000,000 Aa1* Series F, 5.250% due 6/15/14 1,035,000
- --------------------------------------------------------------------------------
7,587,600
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $710,151,953**) $754,548,483
================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except that those
identified by an asterisk (*) are rated by Moody's Investors Service, Inc.
(b) Security segregated by Custodian for open purchase commitments.
(c) Bond is escrowed to maturity by U.S. government securities and is
considered by the Manager to be triple-A rated even if issuer has not
applied for new ratings.
(d) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(e) Bond is escrowed by U.S. government securities and is considered by the
Manager to be triple-A rated even if issuer has not applied for new
ratings.
(f) Variable rate municipal bonds and notes are payable upon not more than
seven business days' notice.
(g) Security is segregated by custodian for futures contracts.
(h) Residual interest bond -- coupon varies inversely with level of short-term
tax-exempt interest rates.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 26 through 28 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA --Bonds rated "AAA" have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA --Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issue only in a small
degree.
A --Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
BBB --Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
BB --Bonds rated "BB" have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties of
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments.
Moody's Investors Service, Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3
may be applied to each generic rating from "Aa" to "B", where 1 is the highest
and 3 the lowest ranking within its generic category.
Aaa --Bonds rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of these bonds.
Aa --Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities, or
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear
somewhat larger than in "Aaa" securities.
A --Bonds rated "A" possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the
future.
Baa --Bonds rated "Baa" are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payment and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Ba --Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B --Bonds rated "B" generally lack characteristics of the desirable
investments. Assurance of interest and principal payments or maintenance
of other terms of the contract over any long period of time may be
small.
NR --Indicates the bond is not rated by Standard & Poor's or Moody's.
- --------------------------------------------------------------------------------
26 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Short-Term Security Ratings (unaudited)
- --------------------------------------------------------------------------------
SP-1 --Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
sign.
A-1 --Standard & Poor's highest commercial paper and variable rate demand
obligation (VRDO) rating indicating that the degree of safety regarding
timely payment is either overwhelming or very strong; those issues
determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign.
P-1 --Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
VMIG 1--Moody's highest rating for issues having a demand feature -- VRDO.
MIG1 --Moody's highest rating for short-term municipal obligations.
MIG 2 --Moody's second highest rating for short-term municipal obligations.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
ABAG --Association of Bay Area Governments
AIG --American International Guaranty
AMBAC --AMBAC Indemnity Corporation
BAN --Bond Anticipation Notes
BIG --Bond Investors Guaranty
BOCES --Board of Cooperative Education Services
CGIC --Capital Guaranty Insurance Company
COP --Certificate of Participation
CSD --Central School District
ETM --Escrowed to Maturity
Fairs --Floating Adjustable Interest Rate Securities
FGIC --Financial Guaranty Insurance Company
FHA --Federal Housing Administration
FHLMC --Federal Home Loan Mortgage Corporation
FNMA --Federal National Mortgage Association
FRTC --Floating Rate Trust Certificates
FSA --Financial Security Assurance
GDB --Government Development Bank
GIC --Guaranteed Investment Contract
GNMA --Government National Mortgage Association
GO --General Obligation
HDC --Housing Development Corporation
HFA --Housing Finance Authority
IDA --Industrial Development Authority
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
- --------------------------------------------------------------------------------
Security Descriptions (unaudited) (continued)
- --------------------------------------------------------------------------------
IDB --Industrial Development Board
IDR --Industrial Development Revenue
INFLOS --Inverse Floaters
IRB --Industrial Revenue Bonds
LOC --Letter of Credit
MBIA --Municipal Bond Investors Assurance Corporation
MVRICS --Municipal Variable Rate Inverse Coupon Security
PART --Partnership Structure
PCFA --Pollution Control Financing Authority
PCR --Pollution Control Revenue
RAN --Revenue Anticipation Notes
RIBS --Residual Interest Bonds
SAVRS --Select Auction Variable Rate Securities
SONYMA --State of New York Mortgage Association
SWAP --SWAP Structure
TAN --Tax Anticipation Notes
TECP --Tax Exempt Commercial Paper
TOB --Tender Option Bond Structure
TRAN --Tax and Revenue Anticipation Notes
UFSD --Union Free School District
VRDD --Variable Rate Demand Note
VRWE --Variable Rate Wednesday Demand
- --------------------------------------------------------------------------------
28 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities March 31, 1999
- --------------------------------------------------------------------------------
New York Money New York
Market Portfolio Portfolio
================================================================================
ASSETS:
Investments, at value (Cost --
$1,372,463,706 and
$710,151,953, respectively) $1,372,463,706 $754,548,483
Cash 125,681 2,877
Interest receivable 9,207,659 11,128,741
Receivable for Fund shares sold -- 626,419
Receivable for securities sold -- 80,000
Other assets 295,640 864
- --------------------------------------------------------------------------------
Total Assets 1,382,092,686 766,387,384
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 1,524,942 --
Management fees payable 574,935 353,491
Distribution fees payable 51,762 62,151
Deferred compensation payable 8,560 10,076
Payable for Fund shares purchased -- 235,599
Accrued expenses 196,395 102,720
- --------------------------------------------------------------------------------
Total Liabilities 2,356,594 764,037
- --------------------------------------------------------------------------------
Total Net Assets $1,379,736,092 $765,623,347
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 1,379,830 $ 55,931
Capital paid in excess of par value 1,378,450,348 720,946,037
Overdistributed net investment income -- (7,407)
Accumulated net realized gain (loss)
from security transactions (94,086) 232,256
Net unrealized appreciation of investments -- 44,396,530
- --------------------------------------------------------------------------------
Total Net Assets $1,379,736,092 $765,623,347
================================================================================
Shares Outstanding:
Class A 1,379,830,178 40,591,507
- --------------------------------------------------------------------------------
Class B -- 14,006,486
- --------------------------------------------------------------------------------
Class L -- 1,333,068
- --------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $1.00 $13.69
- --------------------------------------------------------------------------------
Class B * -- $13.68
- --------------------------------------------------------------------------------
Class L ** -- $13.67
- --------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of
net asset value per share) -- $14.26
- --------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of
net asset value per share) -- $13.81
================================================================================
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if
shares are redeemed within one year from purchase (See Note 4).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if
shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 29
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations For the Year Ended March 31, 1999
- --------------------------------------------------------------------------------
New York Money New York
Market Portfolio Portfolio
================================================================================
INVESTMENT INCOME:
Interest $40,433,503 $43,044,305
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 6,110,859 3,811,463
Distribution fees (Note 4) 1,221,704 2,183,670
Shareholder and system servicing fees 310,284 295,001
Registration fees 107,500 15,001
Shareholder communications 102,829 50,100
Audit and legal 26,000 19,801
Pricing service fees -- 25,200
Custody 57,695 36,000
Trustees' fees 5,000 6,001
Other 46,576 8,701
- --------------------------------------------------------------------------------
Total Expenses 7,988,447 6,450,938
- --------------------------------------------------------------------------------
Net Investment Income 32,445,056 36,593,367
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES CONTRACTS (NOTES
5 AND 6):
Realized Gain (Loss) From:
Security transactions (excluding short-term
securities*) 110,729 5,622,518
Futures contracts -- (537,375)
- --------------------------------------------------------------------------------
Net Realized Gain 110,729 5,085,143
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of
Investments:
Beginning of year -- 46,069,781
End of year -- 44,396,530
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation -- (1,673,251)
- --------------------------------------------------------------------------------
Net Gain on Investments 110,729 3,411,892
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $32,555,785 $40,005,259
================================================================================
* Represents net realized gains only from the sale of short-term securities
for the New York Money Market Portfolio.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
30 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Years Ended March 31,
New York Money Market Portfolio 1999 1998
================================================================================
OPERATIONS:
Net investment income $ 32,445,056 $ 30,888,796
Net realized gain 110,729 55,246
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 32,555,785 30,944,042
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (32,445,466) (30,888,796)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (32,445,466) (30,888,796)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 4,688,765,979 4,017,556,068
Net asset value of shares issued
for reinvestment of dividends 31,572,842 29,748,114
Cost of shares reacquired (4,501,713,460) (3,823,473,761)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 218,625,361 223,830,421
- --------------------------------------------------------------------------------
Increase in Net Assets 218,735,680 223,885,667
NET ASSETS:
Beginning of year 1,161,000,412 937,114,745
- --------------------------------------------------------------------------------
End of year $1,379,736,092 $1,161,000,412
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 31
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Years Ended March 31,
New York Portfolio 1999 1998
================================================================================
OPERATIONS:
Net investment income $ 36,593,367 $ 38,359,402
Net realized gain 5,085,143 19,378,043
Increase (decrease) in net unrealized
appreciation (1,673,251) 23,850,130
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 40,005,259 81,587,575
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (36,595,900) (38,599,604)
Net realized gains (15,207,668) (2,539,192)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (51,803,568) (41,138,796)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 115,233,343 73,045,552
Net asset value of shares issued
for reinvestment of dividends 32,044,219 25,013,632
Cost of shares reacquired (129,108,886) (105,052,560)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 18,168,676 (6,993,376)
- --------------------------------------------------------------------------------
Increase in Net Assets 6,370,367 33,455,403
NET ASSETS:
Beginning of year 759,252,980 725,797,577
- --------------------------------------------------------------------------------
End of year* $765,623,347 $759,252,980
================================================================================
* Includes overdistributed net investment
income of: $(7,407) $(4,874)
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
32 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The New York Money Market and New York Portfolios ("Portfolios") are separate
investment portfolios of the Smith Barney Muni Funds ("Fund"). The Fund, a
Massachusetts business trust, is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company and consists of
these Portfolios and six other separate investment portfolios: Florida, Georgia,
Pennsylvania, Limited Term, National and California Money Market Portfolios. The
financial statements and financial highlights for the other portfolios are
presented in separate annual reports.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) with respect to
the New York Portfolio, securities are valued at the mean between the quoted bid
and ask prices provided by an independent pricing service that are based on
transactions in municipal obligations, quotations from municipal bond dealers,
market transactions in comparable securities and various relationships between
securities; the New York Money Market Portfolio uses the amortized cost method
for valuing investments; accordingly, the cost of securities plus accreted
discount, or minus amortized premium, approximates value; (c) securities
maturing within 60 days are valued at cost plus accreted discount or minus
amortized premium, which approximates value; (d) securities for which market
quotations are not available will be valued in good faith at fair value by or
under the directions of the Board of Trustees; (e) gains or losses on the sale
of securities are calculated by using the specific identification method; (f)
interest income, adjusted for amortization of premium and accretion of original
issue discount, is recorded on an accrual basis; market discount is recognized
upon the disposition of the security; (g) dividends and distributions to
shareholders are recorded on the ex-dividend date; (h) direct expenses are
charged to each portfolio and each class; management fees and general fund
expenses are allocated on the basis of relative net assets; (i) the Portfolios
intend to comply with the applicable provisions of the Internal Revenue Code of
1986, as amended, pertaining to regulated investment companies and to make
distributions of taxable income sufficient to relieve them from substantially
all Federal income and excise taxes; (j) the character of income and gains to be
distributed are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. At March 31, 1999,
reclassifications were made to the New York Money Market Portfolio's
overdistributed net investment income and accumulated net realized gains to
reflect permanent book/tax differences and income and gains available for
distributions under income tax regulations. Net investment income, net realized
gains and net assets were not affected by this change; and (k) estimates and
assumptions are required to be made regarding assets, liabilities and changes in
net assets resulting from operations when financial statements are prepared.
Changes in the economic environment, financial markets and any other parameters
used in determining these estimates could cause actual results to differ.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 33
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Portfolio Concentration
Since each Portfolio invests primarily in obligations of issuers within New
York, it is subject to possible concentration risks associated with economic,
political, or legal developments or industrial or regional matters specifically
affecting New York.
3. Exempt-Interest Dividends and Other Distributions
The New York Money Market Portfolio declares and records a dividend of
substantially all of its net investment income on each business day. Such
dividends are paid or reinvested monthly in Portfolio shares on the payable
date. Furthermore, each Portfolio intends to satisfy conditions that will enable
interest from municipal securities, which is exempt from Federal income tax and
from designated state income taxes, to retain such tax-exempt status when
distributed to the shareholders of the Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. Management Agreement and Other Transactions
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager to the Fund. The New York Money Market Portfolio pays SSBC a management
fee calculated at an annual rate of 0.50% on the first $2.5 billion of average
daily net assets; 0.475% on the next $2.5 billion and 0.45% on the average daily
net assets in excess of $5 billion. The New York Portfolio pays SSBC a
management fee calculated at the annual rate of 0.50% of its average daily net
assets. These fees are calculated daily and paid monthly.
On October 8, 1998, CFBDS, Inc. became the Fund's distributor. Prior to that
date, Salomon Smith Barney Inc. ("SSB") was the Fund's distributor. SSB, as well
as certain other broker-dealers, continues to sell Fund shares to the public as
a member of the selling group.
On June 12, 1998, the Fund's Class C shares were renamed Class L shares.
Effective June 15, 1998, Class L shares of the New York Portfolio are being sold
at net asset value plus a maximum initial sales charge of 1.00%. Class L shares
also have a 1.00% contingent deferred sales charge ("CDSC"), which applies if
redemption occurs within the first year of purchase.
There is also a CDSC of 4.50% on Class B shares of the New York Portfolio, which
applies if redemption occurs within one year from purchase. This CDSC declines
by 0.50% the first year after purchase and thereafter by 1.00%
- --------------------------------------------------------------------------------
34 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
per year until no CDSC is incurred. In addition, Class A shares of the New York
Portfolio also have a 1.00% CDSC, which applies if redemption occurs within the
first year of purchase. This CDSC only applies to those purchases of Class A
shares, which, when combined with current holdings of Class A shares, equal or
exceed $500,000 in the aggregate. These purchases do not incur an initial sales
charge.
For the year ended March 31, 1999, SSB received sales charges of approximately
$618,000 and $65,000 on sales of the New York Portfolio's Class A and L shares,
respectively. In addition, for the year ended March 31, 1999, CDSCs paid to SSB
or CFBDS were approximately:
Class A Class B Class L
================================================================================
New York Portfolio $11,000 $128,000 $2,000
================================================================================
Pursuant to a Distribution Plan, the New York Money Market Portfolio pays a
distribution fee calculated at the annual rate of 0.10% of the average daily net
assets of its Class A shares. The New York Portfolio pays a service fee with
respect to Class A, B and L shares calculated at the annual rate of 0.15% of the
average daily net assets of each respective class. In addition, the New York
Portfolio pays a distribution fee with respect to Class B and L shares
calculated at the annual rates of 0.50% and 0.55% of the average daily net
assets of each class, respectively.
For the year ended March 31, 1999, total Distribution Plan fees incurred were:
Portfolio Class A Class B Class L
================================================================================
New York Money Market $1,221,704 -- --
- --------------------------------------------------------------------------------
New York 833,391 $1,255,953 $94,326
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
5. Investments
During the year ended March 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
New York Money New York
Market Portfolio Portfolio
================================================================================
Purchases -- $452,398,591
- --------------------------------------------------------------------------------
Sales -- 462,747,009
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 35
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At March 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
New York Money New York
Market Portfolio Portfolio
================================================================================
Gross unrealized appreciation -- $45,040,779
Gross unrealized depreciation -- (644,249)
- --------------------------------------------------------------------------------
Net unrealized appreciation -- $44,396,530
================================================================================
6. Futures Contracts
The New York Portfolio may from time to time enter into futures contracts.
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by marking to market on a daily basis to reflect the
market value of the contract at the end of each day's trading. Variation margin
payments are received or made and recognized as assets due from or liabilities
due to broker, depending upon whether unrealized gains or losses are incurred.
When the contract is closed, the Portfolio records a realized gain or loss equal
to the difference between the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract.
The Portfolio enters into such contracts to hedge a portion of its portfolio.
The Portfolio bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At March 31, 1999, the Portfolio had no open futures contracts.
7. Capital Loss Carryforward
At March 31, 1999, the New York Money Market Portfolio had, for Federal income
tax purposes, approximately $96,000 of capital loss carryforwards expiring March
31, 2000 which are available to offset future capital gains. To the extent that
these carryforward losses are used to offset capital gains, it is probable that
the gains so offset will not be distributed.
- --------------------------------------------------------------------------------
36 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
8. Shares of Beneficial Interest
At March 31, 1999, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share. The Portfolios have
the ability to issue multiple classes of shares. Each share of a class
represents an identical interest in its respective Portfolio and has the same
rights, except that each class bears certain expenses specifically related to
the distribution of its shares. Effective June 12, 1998, the Fund adopted the
renaming of existing Class C shares as Class L shares.
At March 31, 1999, total paid-in capital amounted to the following for each
class and their respective Portfolio:
Portfolio Class A Class B Class L
================================================================================
New York Money Market $1,379,830,178 -- --
- --------------------------------------------------------------------------------
New York 510,596,218 $192,296,738 $18,109,012
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended
Year Ended
March 31, 1999 March
31, 1998
New York -------------------------------- ---------------
- ------------------
Money Market Portfolio Shares Amount Shares
Amount
================================================================================
==================
<S> <C> <C> <C>
<C>
Class A
Shares sold 4,688,765,979 $ 4,688,765,979 4,017,556,068
$ 4,017,556,068
Shares issued on
reinvestment 31,572,842 31,572,842 29,748,114
29,748,114
Shares reacquired (4,501,713,460) (4,501,713,460) (3,823,473,761)
(3,823,473,761)
- --------------------------------------------------------------------------------
- ------------------
Net Increase 218,625,361 $ 218,625,361 223,830,421
$ 223,830,421
================================================================================
==================
New York Portfolio
================================================================================
==================
Class A
Shares sold 6,136,857 $ 85,359,204 3,850,913
$ 53,040,777
Shares issued on
reinvestment 1,709,746 23,667,296 1,362,472
18,669,863
Shares reacquired (7,094,852) (98,680,940) (5,700,162)
(78,035,339)
- --------------------------------------------------------------------------------
- ------------------
Net Increase (Decrease) 751,751 $ 10,345,560 (486,777)
$ (6,324,699)
================================================================================
==================
Class B
Shares sold 1,502,683 $ 20,871,651 1,316,193
$ 18,054,603
Shares issued on
reinvestment 558,853 7,727,572 436,910
5,982,453
Shares reacquired (2,064,796) (28,667,854) (1,800,898)
(24,706,176)
- --------------------------------------------------------------------------------
- ------------------
Net Decrease (3,260) $ (68,631) (47,795)
$ (669,120)
================================================================================
==================
Class L*
Shares sold 648,457 $ 9,002,488 143,210
$ 1,950,172
Shares issued on
reinvestment 47,032 649,351 26,418
361,316
Shares reacquired (127,053) (1,760,092) (170,356)
(2,311,045)
- --------------------------------------------------------------------------------
- ------------------
Net Increase (Decrease) 568,436 $ 7,891,747 (728)
$ 443
================================================================================
==================
</TABLE>
* On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 37
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout each year ended March
31:
<TABLE>
<CAPTION>
New York Money Market
Portfolio
---------------------------------------
- ----------------
Class A Shares 1999 1998 1997
1996 1995
================================================================================
================
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
- --------------------------------------------------------------------------------
- ----------------
Net investment income 0.027 0.030 0.028
0.038 0.025
Dividends from net investment income (0.027) (0.030) (0.028)
(0.038) (0.025)
- --------------------------------------------------------------------------------
- ----------------
Net Asset Value, End of Year $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
- --------------------------------------------------------------------------------
- ----------------
Total Return 2.72% 3.04% 2.85%
3.17% 2.49%
- --------------------------------------------------------------------------------
- ----------------
Net Assets, End of Year (millions) $ 1,380 $ 1,161 $ 937 $
882 $ 708
- --------------------------------------------------------------------------------
- ----------------
Ratios to Average Net Assets:
Expenses(1) 0.65% 0.65% 0.67%
0.67% 0.68%
Net investment income 2.65 2.99 2.80
3.11 2.94
================================================================================
================
</TABLE>
(1) As a result of voluntary expense limitations, the expense ratio will not
exceed 0.80% for Class A shares.
- --------------------------------------------------------------------------------
38 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout each year ended March
31:
<TABLE>
<CAPTION>
New York Portfolio
-------------------------------------------
- ------------
Class A Shares 1999(1) 1998 1997 1996
1995(2)
================================================================================
============
<S> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $ 13.91 $ 13.16 $ 13.19 $ 12.83
$ 12.83
- --------------------------------------------------------------------------------
- ------------
Income (Loss) From Operations:
Net investment income 0.68 0.72 0.74 0.75
0.76
Net realized and unrealized
gain (loss) 0.07 0.81 (0.03) 0.35
0.01*
- --------------------------------------------------------------------------------
- ------------
Total Income From Operations 0.75 1.53 0.71 1.10
0.77
- --------------------------------------------------------------------------------
- ------------
Less Distributions From:
Net investment income (0.70) (0.73) (0.74)
(0.74) (0.77)
Net realized gains (0.27) (0.05) -- --
- --
- --------------------------------------------------------------------------------
- ------------
Total Distributions (0.97) (0.78) (0.74)
(0.74) (0.77)
- --------------------------------------------------------------------------------
- ------------
Net Asset Value, End of Year $ 13.69 $ 13.91 $ 13.16 $ 13.19
$ 12.83
- --------------------------------------------------------------------------------
- ------------
Total Return 5.50% 11.83% 5.48%
8.71% 6.32%
- --------------------------------------------------------------------------------
- ------------
Net Assets, End of Year (millions) $ 556 $ 554 $ 531 $ 558
$ 83
- --------------------------------------------------------------------------------
- ------------
Ratios to Average Net Assets:
Expenses(3) 0.70% 0.71% 0.75%
0.72% 0.63%
Net investment income 4.94 5.28 5.58 5.84
6.00
- --------------------------------------------------------------------------------
- ------------
Portfolio Turnover Rate 60% 71% 53%
36% 30%
================================================================================
============
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) On October 10, 1994, the former Class C shares were exchanged into Class
A shares.
(3) As a result of voluntary expense limitations, the expense ratio will not
exceed 0.85% for Class A shares.
* Includes the per share effect of shareholder sale and redemption activity
during the year, most of which occurred at a net asset value less than
the net asset value at the beginning of the year.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 39
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout each year ended March
31:
<TABLE>
<CAPTION>
New York Portfolio
------------------------------------------------
- ----------
Class B Shares 1999(1) 1998 1997 1996
1995(2)
================================================================================
==========
<S> <C> <C> <C> <C>
<C>
Net Asset Value,
Beginning of Year $ 13.89 $ 13.15 $ 13.18 $ 12.84
$ 11.96
- --------------------------------------------------------------------------------
- ----------
Income From Operations:
Net investment income 0.61 0.65 0.67 0.67
0.31
Net realized and
unrealized gain (loss) 0.07 0.80 (0.03) 0.35
0.86*
- --------------------------------------------------------------------------------
- ----------
Total Income From Operations 0.68 1.45 0.64 1.02
1.17
- --------------------------------------------------------------------------------
- ------------
Less Distributions From:
Net investment income (0.62) (0.66) (0.67) (0.68)
(0.29)
Net realized gains (0.27) (0.05) -- --
- --
- --------------------------------------------------------------------------------
- ----------
Total Distributions (0.89) (0.71) (0.67) (0.68)
(0.29)
- --------------------------------------------------------------------------------
- ----------
Net Asset Value, End of Year $ 13.68 $ 13.89 $ 13.15 $ 13.18
$ 12.84
- --------------------------------------------------------------------------------
- ----------
Total Return 5.02% 11.19% 4.96% 8.05%
9.92%++
- --------------------------------------------------------------------------------
- ------------
Net Assets,
End of Year (millions) $ 192 $ 195 $ 185 $ 181
$ 4
- --------------------------------------------------------------------------------
- ----------
Ratios to Average Net Assets:
Expenses(3) 1.23% 1.23% 1.27% 1.25%
1.27%+
Net investment income 4.42 4.76 5.06 5.45
5.76+
- --------------------------------------------------------------------------------
- ----------
Portfolio Turnover Rate 60% 71% 53% 36%
30%
================================================================================
==========
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from November 11, 1994 (inception date) to March 31, 1995.
(3) As a result of voluntary expense limitations, the expense ratio will not
exceed 1.35% for Class B shares.
* Includes the per share effect of shareholder sale and redemption activity
during the year, most of which occurred at a net asset value less than
the net asset value at the beginning of the year.
++ Total return is not annualized, as the result may not be representative
of the total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
40 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout each year ended March
31:
<TABLE>
<CAPTION>
New York Portfolio
-----------------------------------------------
- -------
Class L Shares(1) 1999(2) 1998 1997 1996
1995(3)
================================================================================
=======
<S> <C> <C> <C> <C>
<C>
Net Asset Value,
Beginning of Year $ 13.88 $ 13.14 $ 13.17 $12.83
$12.82
- --------------------------------------------------------------------------------
- -------
Income From Operations:
Net investment income 0.60 0.64 0.66 0.66
0.68
Net realized and unrealized
gain (loss) 0.07 0.80 (0.02) 0.36
0.01*
- --------------------------------------------------------------------------------
- -------
Total Income From Operations 0.67 1.44 0.64 1.02
0.69
- --------------------------------------------------------------------------------
- -------
Less Distributions From:
Net investment income (0.61) (0.65) (0.67) (0.68)
(0.68)
Net realized gains (0.27) (0.05) -- --
- --
- --------------------------------------------------------------------------------
- -------
Total Distributions (0.88) (0.70) (0.67) (0.68)
(0.68)
- --------------------------------------------------------------------------------
- -------
Net Asset Value, End of Year $ 13.67 $ 13.88 $ 13.14 $13.17
$12.83
- --------------------------------------------------------------------------------
- -------
Total Return 4.95% 11.13% 4.91% 8.07%
5.66%
- --------------------------------------------------------------------------------
- -------
Net Assets, End of Year (000s) $18,221 $10,611 $10,055 $8,931
$5,896
- --------------------------------------------------------------------------------
- -------
Ratios to Average Net Assets:
Expenses(4) 1.27% 1.28% 1.32% 1.28%
1.28%
Net investment income 4.37 4.71 5.01 5.02
5.38
- --------------------------------------------------------------------------------
- -------
Portfolio Turnover Rate 60% 71% 53% 36%
30%
================================================================================
=======
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On November 7, 1994, the former Class B shares were renamed Class C
shares.
(4) As a result of voluntary expense limitations, the expense ratio will not
exceed 1.40% for Class L shares.
* Includes the per share effect of shareholder sale and redemption activity
during the year, most of which occurred at a net asset value less than
the net asset value at the beginning of the year.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 41
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
of the New York Money Market and New York Portfolios
of Smith Barney Muni Funds:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the New York Money Market and New York
Portfolios of Smith Barney Muni Funds as of March 31, 1999, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended and the
financial highlights for each of the years in the five-year period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the custodian. As to securities sold but not
yet delivered, we performed other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of the
New York Money Market and New York Portfolios of Smith Barney Muni Funds as of
March 31, 1999, the results of their operations for the year then ended, the
changes in their net assets for each of the years in the two-year period then
ended and their financial highlights for each of the years in the five-year
period then ended, in conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
May 12, 1999
- --------------------------------------------------------------------------------
42 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
March 31, 1999:
o Percentages of dividends paid by the Fund from net investment
income as tax-exempt for regular Federal income tax purposes:
New York Money Market Portfolio 100%
New York Portfolio 100%
o Total long-term capital gain distributions paid:
New York Portfolio $12,343,056
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 43
<PAGE>
[This page intentionally left blank]
<PAGE>
SALOMONSMITHBARNEY
---------------------------
A member of citigroup[LOGO]
Trustees
Donald R. Foley
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, Emeritus
Officers
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Joseph P. Deane
Vice President
Joseph Benevento
Vice President
Irving P. David
Controller -- New York
Money Market Portfolio
Paul A. Brook
Controller -- New York Portfolio
Christina T. Sydor
Secretary
Investment Manager
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder
Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds--New York Money Market and New York Portfolios. It is
not authorized for distribution to prospective investors unless accompanied or
preceded by a current Prospectus for the Portfolios, which contains information
concerning the Portfolios' investment policies and expenses as well as other
pertinent information.
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney Muni Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD2397 5/99
<PAGE>
[GRAPHIC]
Smith Barney Muni Funds
National
Portfolio
ANNUAL REPORT
March 31, 1999
[LOGO] Smith Barney Muni Funds
Investing for your future.
Every day.(R)
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Smith Barney Muni Funds -- National Portfolio seeks to pay its shareholders
as high a level of monthly income exempt from federal income taxes as is
consistent with prudent investing.
Smith Barney Muni Funds -- National Portfolio
Average Annual Total Returns
March 31, 1999
Without Sales Charges(1)
---------------------------------
Class A Class B Class L(2)
================================================================================
One-Year 5.50% 4.92% 4.79%
- --------------------------------------------------------------------------------
Five-Year 7.49 N/A 6.84
- --------------------------------------------------------------------------------
Ten-Year 8.42 N/A N/A
- --------------------------------------------------------------------------------
Since Inception+ 8.00 8.89 6.52
================================================================================
With Sales Charges(3)
---------------------------------
Class A Class B Class L(2)
================================================================================
One-Year 1.28% 0.48% 2.78%
- --------------------------------------------------------------------------------
Five-Year 6.61 N/A 6.63
- --------------------------------------------------------------------------------
Ten-Year 7.98 N/A N/A
- --------------------------------------------------------------------------------
Since Inception+ 7.65 8.72 6.34
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 4.00% and 1.00%,
respectively. Class B shares reflect the deduction of a 4.50% CDSC, which
applies if shares are redeemed within one year from purchase. This CDSC
declines by 0.50% the first year after purchase and thereafter by 1.00%
per year until no CDSC is incurred. Class L shares also reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed also
within the first year of purchase.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Inception dates for Class A, B and L shares are August 20, 1986, November
7, 1994 and January 5, 1993, respectively.
* Lipper is a major fund-tracking organization. Lipper rankings show a
fund's one-, five- and ten-year annualized returns (at NAV) as of a
particular reporting period. Lipper also compares a fund's returns to the
average of its peer group. The rankings are subject to change every month.
Past performance is not a guarantee of future results. For the 1-, 5- and
10-year periods, ended March 31, 1999, there were 252, 146 and 75 funds,
respectively, in the Lipper peer group category.
- --------------------------------------------------------------------------------
FUND HIGHLIGHT
- --------------------------------------------------------------------------------
Your Portfolio continues to be a consistent performer among its Lipper peers.
The Portfolio has ranked in the first quartile of general municipal bond funds
in the Lipper Survey for the 1-, 5- and 10-year periods ended March 31, 1999.*
- --------------------------------------------------------------------------------
NASDAQ SYMBOL
- --------------------------------------------------------------------------------
Class A SBBNX
Class B SBNBX
Class L SBNLX
- --------------------------------------------------------------------------------
WHAT'S INSIDE
- --------------------------------------------------------------------------------
Shareholder Letter ........................................................... 1
Historical Performance ....................................................... 4
Smith Barney Muni Funds -- National Portfolio at a Glance .................... 6
Schedule of Investments ...................................................... 7
Statement of Assets and Liabilities ......................................... 19
Statement of Operations ..................................................... 20
Statements of Changes in Net Assets ......................................... 21
Notes to Financial Statements ............................................... 22
Financial Highlights ........................................................ 25
Tax Information ............................................................. 27
Independent Auditors' Report ................................................ 28
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Letter
- --------------------------------------------------------------------------------
[GRAPHIC] [GRAPHIC]
Heath B. Peter M.
McLendon Coffey
Chairman Vice President
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney Muni Funds --
National Portfolio ("Portfolio") for the year ended March 31, 1999. In this
report, we summarize the period's prevailing economic and market conditions and
outline our portfolio strategy. A detailed summary of the Portfolio's
performance can be found in the appropriate sections that follow.
Performance Update
For the year ended March 31, 1999, the Class A shares of the National Portfolio
generated a total return of 5.50% without sales charges, significantly
outperforming the average total return of 4.87% for general municipal bond funds
for the same period, according to Lipper Inc., an independent fund-tracking
organization. Performance information on other share classes of the Portfolio
appears on pages four and five.
Smith Barney Muni Funds - National Portfolio Average Annual Total Returns -
Without Sales Charges+
Your Portfolio continues to be a consistent performer among its Lipper peers.
The Portfolio has ranked in the first quartile of general municipal bond funds
in the Lipper Survey for the 1-, 5- and 10-year periods ended March 31, 1999.++
Lipper Peer
Class A Shares Group Average
-------------- -------------
One-Year 5.50% 4.87%
Five-Year 7.49 6.81
Ten-Year 8.42 7.67
We are proud to report that your Portfolio continues to earn high marks from
Morningstar, Inc.*
3 5 10
Overall Years Years Years
------- ----- ----- -----
Class A **** **** **** ****
Class B *** *** n/a n/a
Class L **** **** **** ****
Based on its net asset value ("NAV") of $13.97 as of March 31, 1999 for Class A
shares and the current monthly income distribution rate of $0.06 per Class A
share, this equates to an annualized distribution rate of 5.15%. For an
individual in the federal income tax bracket of 36%, the Portfolio's tax free
yield of 5.15% is equivalent to a taxable yield of 8.05%.
- ----------
+ Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A shares.
++ Lipper rankings show a fund's one-, five- and ten-year annualized returns
(at NAV) as of a particular reporting period. Lipper also compares a
fund's returns to the average of its peer group. The rankings are subject
to change every month. Past performance is not a guarantee of future
results. For the 1-, 5- and 10-year periods ended March 31, 1999, there
were 252, 146 and 75 funds, respectively, in the Lipper peer group
category.
* Morningstar, Inc. proprietary ratings reflect historical risk-adjusted
performance through 3/31/99. Ratings are load-adjusted, updated ddd
monthly and subject to change. Morningstar, Inc. ratings are calculated
from the Portfolio's 3-, 5- and 10-year returns (with fee adjustments) in
excess of 90-day T-bill returns with appropriate fee adjustment and a risk
factor that reflects performance below 90-day T-bill returns. Other share
classes may vary. The highest Morningstar rating is 5 stars; the lowest is
1 star. The top 10% of the funds in a category receive 5 stars, the next
22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5%
receive 2 stars and the next 10% receive 1 star. Different classes within
a Fund share a common portfolio of securities. The Fund was rated among
1,578 municipal bond funds for the 3-year period, 1,131 municipal bond
funds for the 5-year period and 368 municipal bond funds for the ten-year
period.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
Market and Economic Overview
During much of the past year, the municipal bond market was an oasis of
stability compared to the significant turmoil experienced by other fixed-income
markets. In the wake of Russia's loan default, growing numbers of creditors
became increasingly risk averse. In response, the Federal Reserve Board ("Fed")
lowered short-term interest rates by 0.75% in three separate actions over the
course of several weeks. These interest-rate cuts helped lift bond markets. In
the midst of the turmoil, many investors fled to the relative safe haven of U.S.
Treasury bonds, sparking a sharp rally which helped send long-term government
interest rates to their lowest level in more than thirty years. The 30-year U.S.
Treasury bond yield fluctuated approximately 1.36% from March 31, 1998 to March
31, 1999. In contrast, municipal bond yields (as measured by the Bond Buyers 25
Revenue Index) were far less volatile and remained confined to a much narrower
range of roughly 0.41% during the same period.
Despite jittery financial markets, the U.S. economy continued to expand
vigorously, defying the expectations of many economists. The domestic economy
grew at an annual rate of 3.5% in the first quarter of 1999, coming off the
heels of a brisk 6% annual growth rate for the fourth quarter of 1998. The
unemployment rate hovered just above 4.2% in March 1999, a 29-year low. Yet,
inflationary pressures have been well contained. The Consumer Price Index
("CPI") rose a mere 0.2% in January 1999 and an even more modest 0.1% in
February 1999.
In our view, inflationary pressures have been held in check by a fortunate
combination of ongoing economic weakness abroad, added cost controls in health
care and the expanding role of technology. Economic recessions in many parts of
the world have helped keep import prices down, especially in key commodities
such as food and energy. In addition, the cost controls introduced by managed
health-care companies have begun to bring down medical costs and the growing use
of technology has not only boosted worker productivity, but has also made many
consumer goods companies much more cost competitive.
Municipal bonds, along with many other financial assets, have benefited from the
high-growth, low-inflation U.S. economy. Similar to other types of bonds,
municipal bond yields have declined but their real rate of return (i.e., the
rate of return after subtracting the effects of inflation) has remained
historically high. Moreover, long-term municipal bonds currently yield
approximately 90% of long-term U.S. Treasury bond yields. Typically, municipal
bonds are considered a good relative value when they yield approximately 85% of
comparable-maturity U.S. Treasury bonds.
A strong U.S. economy and low interest rates have encouraged many municipalities
to issue more bonds and refinance more expensive existing debt. We believe the
ability of the market to absorb the unusually heavy municipal bond issuance last
year is an indication of the health of the municipal bond market. This steady
equilibrium of supply and demand is one reason that municipal bond prices have
remained stable compared to other fixed-income assets.
Investment Strategy
As previously noted, the Smith Barney Muni Funds -- National Portfolio seeks to
provide investors with as high a level of current income exempt from federal
income taxes as is consistent with a prudent investment approach. The Portfolio
has a bias towards good quality, higher-coupon bonds.
In keeping with the Portfolio's objective, we have continued to emphasize high
current income in our bond selections. The Portfolio's credit quality remained
very strong during the fiscal year, with 94.8% of its bonds rated investment
grade or better. Moreover, 50.9% of the Portfolio's holdings were rated "AAA",
the highest bond rating. During the period, we have continued to lengthen the
Portfolio's maturity structure. As of March 31, 1999, the weighted average life
of the Portfolio was 13.7 years compared to 10.18 years on March 31, 1998.
- --------------------------------------------------------------------------------
2 1999 Annual Report to Shareholders
<PAGE>
In addition, we have maintained broad diversification over a range of different
kinds of bonds. We continue to emphasize select hospital bonds because we
believe that these bonds offer slightly higher yields than similarly-rated bonds
of other categories. As of March 31, 1999, the Portfolio's assets were
concentrated in hospital bonds (15.7%), housing bonds (14.8%), education bonds
(10.6%) and transportation bonds (9.4%).
Municipal Bond Market Outlook
Over the near term, we remain largely positive on the prospects for municipal
bonds. In our judgement, Fed monetary policy will likely remain on hold until
signs of inflation surface. After a period of substantial volatility, we expect
that U.S. Treasury bonds will fluctuate within a fairly narrow trading range in
the coming months. As the global crisis continues to improve, demand for U.S.
Treasurys should weaken. Moreover, new municipal bond issuance volume for 1999
is down significantly from the last year. If this pattern holds, it could set
the stage for a municipal bond rally later in the year.
In closing, we would like to thank you for investing in Smith Barney Muni Funds
- -- National Portfolio. We encourage you to visit our Web site at
www.smithbarney.com. We look forward to continuing to help you pursue your
financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman Vice President
April 19, 1999
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $14.16 $13.97 $0.75 $0.21 5.50%
- --------------------------------------------------------------------------------
3/31/98 13.60 14.16 0.80 0.16 11.47
- --------------------------------------------------------------------------------
3/31/97 13.67 13.60 0.79 0.00 5.41
- --------------------------------------------------------------------------------
3/31/96 13.32 13.67 0.81 0.00 8.83
- --------------------------------------------------------------------------------
3/31/95 13.35 13.32 0.84 0.00 6.38
- --------------------------------------------------------------------------------
3/31/94 13.81 13.35 0.86 0.06 3.17
- --------------------------------------------------------------------------------
3/31/93 12.95 13.81 0.89 0.00 13.96
- --------------------------------------------------------------------------------
3/31/92 12.49 12.95 0.90 0.00 11.21
- --------------------------------------------------------------------------------
3/31/91 12.24 12.49 0.83 0.00 9.13
- --------------------------------------------------------------------------------
3/31/90 12.11 12.24 0.98 0.00 9.60
================================================================================
Total $8.45 $0.43
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $14.16 $13.96 $0.68 $0.21 4.92%
- --------------------------------------------------------------------------------
3/31/98 13.61 14.16 0.73 0.16 10.80
- --------------------------------------------------------------------------------
3/31/97 13.67 13.61 0.72 0.00 4.95
- --------------------------------------------------------------------------------
3/31/96 13.33 13.67 0.74 0.00 8.26
- --------------------------------------------------------------------------------
Inception* -- 3/31/95 12.41 13.33 0.32 0.00 10.11+
================================================================================
Total $3.19 $0.37
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
3/31/99 $14.16 $13.97 $0.65 $0.21 4.79%
- --------------------------------------------------------------------------------
3/31/98 13.59 14.16 0.70 0.16 10.71
- --------------------------------------------------------------------------------
3/31/97 13.65 13.59 0.71 0.00 4.90
- --------------------------------------------------------------------------------
3/31/96 13.32 13.65 0.74 0.00 8.13
- --------------------------------------------------------------------------------
3/31/95 13.33 13.32 0.74 0.00 5.80
- --------------------------------------------------------------------------------
3/31/94 13.80 13.33 0.77 0.06 2.40
- --------------------------------------------------------------------------------
Inception* -- 3/31/93 13.47 13.80 0.20 0.00 3.98+
================================================================================
Total $4.51 $0.43
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
-------------------------------------
Class A Class B Class L
================================================================================
Year Ended 3/31/99 5.50% 4.92% 4.79%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 7.49 N/A 6.84
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/99 8.42 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/99 8.00 8.89 6.52
================================================================================
With Sales Charges(2)
-------------------------------------
Class A Class B Class L
================================================================================
Year Ended 3/31/99 1.28% 0.48% 2.78%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 6.61 N/A 6.63
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/99 7.98 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/99 7.65 8.72 6.34
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (3/31/89 through 3/31/99) 163.04%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/99) 45.43
- --------------------------------------------------------------------------------
Class L (Inception* through 3/31/99) 48.24
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions at
net asset value and does not reflect the deduction of the applicable sales
charges with respect to Class A and L shares or the applicable contingent
deferred sales charges ("CDSC") with respect to Class B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at
net asset value. In addition, Class A and L shares reflect the deduction
of the maximum initial sales charge of 4.00% and 1.00%, respectively.
Class B shares reflect the deduction of a 4.50% CDSC, which applies if
shares are redeemed within one year from purchase. This CDSC declines by
0.50% the first year after purchase and thereafter by 1.00% per year until
no CDSC is incurred. Class L shares also reflect the deduction of a 1.00%
CDSC, which applies if shares are redeemed within the first year of
purchase.
* Inception dates for Class A, B and L shares are August 20, 1986, November
7, 1994 and January 5, 1993, respectively.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
- --------------------------------------------------------------------------------
Smith Barney Muni Funds -- National Portfolio at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the National Portfolio vs.
Lehman Brothers Municipal Bond Index+
- --------------------------------------------------------------------------------
March 1989 -- March 1999
[GRAPHIC]
12558 S/B Muni Funds National
LINE CHART
National Lehman Brothers Municipal Bond Index
3/89 10,000 10,000
3/90 10,490 11,055
3/91 11,418 12,074
3/92 12,662 13,281
3/93 14,391 14,943
3/94 14,809 15,289
3/95 15,730 16,427
3/96 17,120 17,804
3/97 18,046 18,773
3/98 20,116 20,784
3/99 21,041 21,094
+ Hypothetical illustration of $10,000 invested in Class A shares on March
31, 1989, assuming deduction of the maximum 4.00% sales charge at the time
of investment and reinvestment of dividends (after deduction of applicable
sales charges through November 6, 1994, and thereafter at net asset value)
and capital gains (at net asset value) through March 31, 1999. The Lehman
Brothers Municipal Bond Index is a broad-based, total return index
comprised of investment grade, fixed rate municipal bonds selected from
issues larger than $50 million issued since January 1984. This index is
unmanaged and is not subject to the same management and trading expenses
as a mutual fund. The performance of the Portfolio's other classes may be
greater or less than the Class A shares' performance indicated on this
chart, depending on whether greater or lesser sales charges and fees were
incurred by shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
Industry Diversification*
- --------------------------------------------------------------------------------
[GRAPHIC]
12558 S/B Muni Funds National
BAR CHART
Education 10.6
Escrowed to Maturity 4.3
Hospital 15.7
Housing 14.8
Industrial Development 3.3
Pollution Control 6.9
Public Facilities 5.1
Transportation 9.4
Utility 8.4
Water & Sewer 5.4
Other 16.1
Summary of Investments by Combined Ratings
- --------------------------------------------------------------------------------
Standard Percentage
Moody's & Poor's of Total Investments
- --------------------------------------------------------------------------------
Aaa AAA 50.9%
Aa AA 16.7
A A 15.0
Baa BBB 12.2
Ba BB 0.1
VMIG 1/P-1 A-1 0.4
NR NR 4.7
-----
100.0%
=====
* As a percentage of total investments.
- --------------------------------------------------------------------------------
6 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Education -- 10.6%
Boerne, TX ISD, PSFG:
$ 3,285,000 Aaa* Zero coupon bond to yield 5.140% due 2/1/17
$ 1,322,213
3,285,000 Aaa* Zero coupon bond to yield 5.220% due 2/1/19
1,178,494
Chicago, IL Board of Education:
5,000,000 AAA Lease Certificates, Series A, Refunding, MBIA-
Insured,
6.000% due 1/1/20
5,625,000
School Reform, Series B-1, FGIC-Insured:
3,400,000 AAA Zero coupon bond to yield 5.100% due 12/1/16
1,377,000
5,000,000 AAA Zero coupon bond to yield 5.220% due 12/1/26
1,162,500
2,000,000 AAA Detroit, MI City School District, Series B, FGIC-
Insured,
5.000% due 5/1/17
1,995,000
Dexter, MI Community Schools, FGIC-Insured:
2,500,000 AAA 5.000% due 5/1/23
2,512,500
1,000,000 AAA 5.100% due 5/1/28
1,020,000
Grapevine-Colleyville, TX ISD, PSFG:
4,025,000 AAA Zero coupon bond to yield 5.050% due 8/15/16
1,675,406
2,250,000 AAA Zero coupon bond to yield 5.100% due 8/15/17
880,312
2,000,000 Aaa* Indiana State Educational Facilities Authority
Revenue, MBIA-Insured,
Rose-Hulman Institute of Technology, 5.000% due
6/1/17 2,002,500
3,000,000 AAA Lake Superior, State University Michigan Revenue,
MBIA-Insured,
5.125% due 11/15/19
2,988,750
5,000,000 AAA Metro Government, TN Health & Education, Meharry
Medical College,
AMBAC-Insured, 6.000% due 12/1/19
5,625,000
2,355,000 AAA Mission, TX ISD, PSFG, 5.000% due 2/15/15
2,375,606
1,155,000 AA Missouri State Health & Educational Facilities
Authority,
Rockhurst University, 5.500% due 10/1/25
1,218,525
2,000,000 Aa* Nebraska Higher Education Loan Program Inc., Sub-
Series A-5A,
6.200% due 6/1/13(b)
2,115,000
1,500,000 Baa3* New Hampshire Higher Education & Health, Brewster
Academy,
6.750% due 6/1/25
1,606,875
1,500,000 A- New York State Dormitory Authority Revenue, State
University
Educational Facilities, Series B, 7.500% due 5/15/11
1,850,625
1,000,000 AAA Philadelphia, PA School District, Series A, MBIA-
Insured,
4.500% due 4/1/23
912,500
2,000,000 AAA Redford, MI ISD, AMBAC-Insured, 5.000% due 5/1/22
2,017,500
2,125,000 AAA Rhode Island State Health & Educational Building Corp.
Revenue,
Higher Education Facility, Johnson & Wales
University,
MBIA-Insured, 5.500% due 4/1/19
2,252,500
1,000,000 AAA St. John's, MI Public Schools, FGIC-Insured, 5.000%
due 5/1/21 1,008,750
Texas State Higher Education Coordinating Board,
College Student Loan Revenue:
1,665,000 A* 7.450% due 10/1/06(b)
1,756,575
235,000 A* 7.700% due 10/1/25(b)
247,044
1,000,000 AAA Utah Student Loan Revenue, Series 1991F, AMBAC-
Insured,
7.450% due 11/1/08(b)
1,066,250
1,000,000 A+ Wayne Township, IN Marion County School Building
Corp.,
5.500% due 1/15/22
1,017,500
- --------------------------------------------------------------------------------
- ----------------------------
48,809,925
- --------------------------------------------------------------------------------
- ----------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Escrowed To Maturity(c) -- 4.3%
$ 1,020,000 AAA Boston, MA Water & Sewer Revenue, Series A, 10.875%
due 1/1/09
$ 1,384,650
1,050,000 AAA Douglas County, NE Hospital Authority No. 2, Bergan
Mercy, 9.500% due 7/1/10
1,347,938
1,575,000 AAA Fairmont, WV Water & Sewer Revenue, AMBAC-Insured,
9.250% due 11/1/11
2,043,563
5,000,000 AAA Indiana Bond Bank, AMBAC-Insured, 9.750% due 8/1/09(d)
6,600,000
1,930,000 AAA Ohio State Water Development Authority Revenue, Safe
Water, Series 2, 9.375% due 12/1/10(d)
2,436,625
1,000,000 AAA Philadelphia Hospitals & Higher Education Facilities
Authority, Hospital Revenue, Presbyterian Medical
Center, 6.650% due 12/1/19
1,202,500
3,000,000 AAA Port Everglades Authority, FL Port Revenue, 7.125%
due 11/1/16
3,750,000
825,000 AAA Weber County, UT Hospital Revenue, St. Benedict's
Hospital, 10.000% due 3/1/10
1,075,594
- --------------------------------------------------------------------------------
- ----------------------------
19,840,870
- --------------------------------------------------------------------------------
- ----------------------------
General Obligation -- 2.8%
2,855,000 AAA Bastrop, TX GO, ISD, PSFG, zero coupon bond to yield
5.629% due 2/15/19
1,020,663
2,000,000 AAA Berks County, PA GO, MVRICS, FGIC-Insured, 9.210%
due 11/10/20(e)
2,372,500
5,000,000 AAA Center Unified School District, CA GO, Series C, MBIA-
Insured, zero coupon bond to yield 5.838% due 9/1/20
1,675,000
5,000,000 AAA District of Columbia, Series A, MBIA-Insured, 5.000%
due 6/1/18
4,843,750
1,075,000 Aaa* Lago Vista, TX GO, ISD, PSFG, zero coupon bond to
yield
5.689% due 8/15/22
319,813
1,875,000 AAA McKeesport, PA GO, Area School District, MBIA-Insured,
zero coupon bond to yield 5.662% due 10/1/23
536,719
30,000 A- New York City, NY GO, Series D, 7.500% due 2/1/16
33,000
1,000,000 AAA Providence, RI GO, Series A, FSA-Insured, 5.700%
due 7/15/19
1,073,750
100,000 A Puerto Rico Commonwealth, Public Improvement, 4.500%
due 7/1/23
92,250
1,000,000 AA Texas State GO, Veterans Housing Assistance, 6.450%
due 12/1/20(b)
1,073,750
- --------------------------------------------------------------------------------
- ----------------------------
13,041,195
- --------------------------------------------------------------------------------
- ----------------------------
Hospital -- 15.7%
1,000,000 AAA Boston, MA IDA Financing (Alzheimer's Center Project),
FHA-Insured, 6.000% due 2/1/37
1,058,750
1,000,000 AAA Charleston County, SC Revenue, Care Alliance Health
Services, Series A, FSA-Insured, 5.000% due 8/15/19
985,000
1,000,000 BBB Colorado Health Facilities Authority Hospital Revenue
Bonds, Vail Valley Medical Center, 6.500% due
1/15/13 1,083,750
350,000 BB- Green Springs, OH Health Care Facilities Revenue, (St.
Francis Health Care Center Project), Series A,
7.125%
due 5/15/25
373,188
2,000,000 NR Harris County, TX Health Facilities Development Corp.
Memorial Hospital Systems Project, (Partially Pre-
Refunded
-- Escrowed with U.S. government securities to
6/1/02
Call @ 102), 7.125% due 6/1/15
2,205,000
2,200,000 A Harrison County, TX Health Facilities Development
Corp.
Revenue, (Marshall Regional Medical Center Project),
5.500% due 1/1/18
2,263,250
Hawaii State Department Budget & Finance, Special
Purpose
Revenue, (Wilcox Memorial Hospital Project):
1,000,000 BBB+ 5.350% due 7/1/18
967,500
1,750,000 BBB+ 5.500% due 7/1/28
1,706,250
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Hospital -- 15.7% (continued)
$ 3,500,000 A- Illinois Development Finance Authority Hospital
Revenue,
Adventist Health System, Sunbelt Obligation, 5.500%
due 11/15/29
$ 3,390,625
Illinois Health Facilities Authority Revenue:
3,000,000 AAA Alexian Brothers Health System, FSA-Insured, 5.000%
due 1/1/19
2,928,750
1,000,000 A- Centegra Health System, 5.250% due 9/1/18
968,750
937,000 AAA Community Provider Pooled Loan Program, FSA-Insured,
7.350% due 8/15/10
1,017,816
3,500,000 BBB Mercy Hospital and Medical Center, 7.000% due 1/1/07
3,762,500
1,000,000 AAA Methodist Health System, Series B, AMBAC-Insured,
RIBS Variable Rate, 10.277% due 5/1/21(e)
1,167,500
4,000,000 AAA Rush-Presbyterian St. Luke's Medical Center, INFLOS,
MBIA-Insured, Variable Rate, 10.375% due
10/1/24(e) 4,750,000
900,000 BBB+ Klamath Falls, OR Inter-Community Hospital Merle West,
7.100% due 9/1/24
985,500
4,855,000 BBB Louisiana Public Facilities Authority Revenue,
(General
Health Systems Project), 6.800% due 11/1/16
5,370,844
2,000,000 A Maricopa County, AZ IDA Health Facilities Revenue,
(Catholic Healthcare West Project), Series A, 5.000%
due 7/1/16
1,977,500
1,000,000 AAA Massachusetts State Health & Educational Facilities
Authority Revenue, St. Elizabeth Hospital, LEVRRS,
FSA-Insured, 10.520% due 8/15/21(e)
1,162,500
1,595,000 AAA Massachusetts State Industrial Finance Agency Revenue,
University Commons Nursing, Series A, FHA-Insured,
6.550% due 8/1/18
1,768,456
500,000 BBB Miami County, OH Hospital Facilities Refunding &
Improvement,
Upper Valley Medical Center, Series A, 6.375% due
5/15/26 535,625
4,835,000 AA Missouri State Health & Educational Facilities
Authority,
BJC Health Systems, 6.750% due 5/15/13
5,856,394
450,000 A- New York State Medical Care Facilities Financing
Agency,
Long Term Health Care, Medical Health Services,
Series 91B, 7.400% due 2/15/18
494,437
5,000,000 AA- North Carolina Medical Care Community Hospital
Revenue,
Pitt County Memorial Hospital, Series A, 4.750%
due 12/1/28
4,637,500
2,000,000 Aa2* Peninsula Ports Authority, VA Health System Revenue,
(Riverside Health System Project), 5.000% due 7/1/18
1,972,500
1,000,000 AAA Pennsylvania State Higher Educational Facilities
Authority,
Health Services Revenue, Allegheny Delaware Valley,
Series A, MBIA-Insured, 5.600% due 11/15/09
1,002,500
1,500,000 Aaa* Randolph County, WV Community Health System Revenue,
Davis Health System, Series A, FSA-Insured, 5.200%
due 11/1/21
1,500,000
5,000,000 AAA Shelby County, TN Health Educational & Housing
Facility
Board, Hospital Revenue, Methodist Healthcare,
MBIA-Insured, 5.000% due 4/1/18
4,931,250
3,000,000 AAA University of Illinois, Health Services Facilities,
Series A, AMBAC-Insured, 5.875% due 10/1/26
3,266,250
2,375,000 AA- Vermont Educational & Health Building Finance Agency,
H. Porter, FHA-Insured, 7.100% due 2/1/31
2,514,531
1,500,000 A Washington Health Care Facilities Authority Refunding
1990,
Our Lady of Lourdes Health Center, Pasco, LOC AIB
Group,
7.875% due 12/1/09(d)
1,591,875
1,300,000 AAA Washington State Health, Sisters of Providence,
FGIC-Insured, 6.375% due 10/1/09
1,506,375
2,500,000 A3* Wisconsin State Health & Educational Facilities
Authority
Revenue, Monroe Clinic Inc., 5.375% due 2/15/22
2,462,500
- --------------------------------------------------------------------------------
- ----------------------------
72,165,166
- --------------------------------------------------------------------------------
- ----------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Housing: Multi-Family -- 8.9%
$ 1,000,000 AAA Boston, MA IDA Financing Revenue, North End Community,
Series A, FHA-Insured, 6.450% due 8/1/37
$ 1,098,750
2,535,000 Aaa* Chicago, IL Multi-Family Housing, Hearts United
Apartments,
Series A, GNMA-Collateralized, 5.600% due 1/1/41(b)
2,576,194
250,000 Aaa* Cuyahoga County, OH Multi-Family Housing, Dalebridge
Apartments, GNMA-Collateralized, FHA-Insured,
6.500% due 10/20/20(b)
267,500
1,500,000 A+ Illinois Housing Development Authority Refunding,
Multi-Family Housing, Series 91A, 8.125% due 7/1/10
1,627,500
1,500,000 AA- Indiana State HFA, Multi-Family Housing Mortgage
Revenue, Hunters Run, FHA-Insured, 7.250% due
5/1/18(b) 1,612,500
4,290,000 Aa2* Indianapolis, IN EDA, Multi-Family Housing Mortgage
Revenue,
(Castle Dore Apartments Project), FHA-Insured,
6.100%
due 12/1/37(b)
4,622,475
5,000,000 Aa2* Iowa Finance Authority, Prestwick Apartments, FHA-
Insured,
7.500% due 12/1/36(b)(d)
6,275,000
300,000 Aaa* Kent, OH Multi-Family Housing, GNMA-Collateralized,
FHA-Insured, 7.150% due 12/20/26(b)
335,625
1,000,000 A King County, WA Housing Authority Revenue, Series A,
6.800% due 3/1/26
1,055,000
3,480,000 AAA Maricopa County, AZ IDA, Multi-Family Housing Revenue,
(National Health Facilities II Project), FSA-
Insured,
5.500% due 1/1/24
3,627,900
2,000,000 A+ Massachusetts State HFA, Multi-Family Residential
Housing,
Series A, FHA-Insured, 7.800% due 8/1/22(b)
2,063,840
1,935,000 AAA Mohave County, AZ IDA, Multi-Family Housing, Copper
Ridge
Apartments, FHA-Insured, 7.375% due 4/1/32(b)
2,116,406
Nevada Housing Division, Multi-Unit Housing:
1,250,000 Aa3* Campaige, Series A, 5.450% due 10/1/18(b)
1,239,062
1,250,000 AAA Saratoga Palms, FNMA-Collateralized, 6.350% due
10/1/28(b) 1,332,813
1,050,000 AAA New Mexico Mortgage Finance Authority, Multi-Family
Housing Revenue, Bluffs at Tierra Contenta, Series
A,
FSA-Insured, 5.200% due 1/1/19(b)
1,038,188
500,000 A1* Portland, OR Multi-Family Housing, 6.250% due
5/1/12(b) 526,250
1,000,000 BBB Roanoke, VA Redevelopment & Housing Authority, Multi-
Family
Housing Revenue Refunding, United Dominion-Laurel
Ridge,
6.625% due 5/1/23(b)
1,048,750
1,000,000 AAA Rogers County, OK HFA, Multi-Family Revenue,
FNMA-Collateralized, Series A, FHA-Insured, 7.750%
due 8/1/23
1,073,750
2,347,000 AAA Seattle Housing Authority, WA Low Income Housing
Revenue,
GNMA-Collateralized, 7.400% due 11/20/36
2,716,653
2,550,000 A Suffolk, VA Redevelopment & Housing Authority, Multi-
Family
Housing Residential Rental, Brooke Ridge, 5.250%
due 10/1/18
2,562,750
Texas State Department of Housing & Community Affairs:
1,000,000 AAA Multi-Family Revenue, (Volente Project),
FNMA-Collateralized, 5.550% due 1/1/18(b)
1,021,250
1,000,000 AAA Residential Mortgage Revenue, Series A, GNMA/
FNMA-Collateralized, 5.250% due 7/1/18(b)
1,003,750
- --------------------------------------------------------------------------------
- ----------------------------
40,841,906
- --------------------------------------------------------------------------------
- ----------------------------
Housing: Single-Family -- 5.9%
520,000 AAA Arkansas Housing Development, Single-Family Mortgage
Revenue, Series A, GNMA-Collateralized, 7.400%
due 9/1/23(b)
546,000
395,000 Aaa* Aurora Kane & Dupage, IL Single-Family Mortgage
Revenue,
Series A, GNMA/FHLMC-Collateralized, 7.950% due
10/1/25(b)
448,819
495,000 Aa2* Colorado HFA, Single-Family Program Refunding, Sr.
Bonds,
Series 94 D-1, 8.000% due 12/1/24
536,456
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Housing: Single-Family -- 5.9% (continued)
$ 3,260,000 AAA Cowley & Shawnee Counties, KS Mortgage Revenue, Series
B,
AMBAC-Insured, GNMA-Collateralized, zero coupon bond
to yield 7.868% due 6/1/22(b)
$ 546,050
770,000 AAA District of Columbia HFA, Collateralized Revenue,
Single-Family, Series 90A, GNMA/FHLMC/
FNMA-Collateralized, 8.100% due 12/1/23(b)
806,575
475,000 AAA Fort Worth, TX Housing Finance Corp., Single-Family
Mortgage Revenue, Series A, GNMA-Collateralized,
zero coupon bond to yield 7.997% due 6/1/21
80,156
2,000,000 AAA Georgia State Housing & Finance Authority Revenue,
Single-Family Mortgage, Sub-Series A-2, FHA-Insured,
6.550% due 12/1/27(b)
2,125,000
700,000 AA Idaho Housing Agency, Single-Family Mortgage, Series
C-2,
FHA-Insured, 7.900% due 1/1/22(b)
722,589
670,000 Aa1* Illinois Housing Development Authority, Residential
Mortgage Revenue, Series 89A, 7.400% due 2/1/20(b)
685,939
405,000 Aa2* Labette County, KS Single-Family Mortgage Revenue
Refunding, Series A, 8.400% due 12/1/11
431,831
1,840,000 Aa2* Maryland State Community Development Administration,
Single-Family Mortgage Revenue, FHA-Insured, 7.450%
due 4/1/32(b)
1,920,500
Missouri State Housing Development Community Mortgage
Revenue:
545,000 AAA GNMA-Collateralized, Series A, zero coupon bond to
yield 7.337% due 7/1/23
93,331
875,000 AAA GNMA/FNMA-Collateralized, Series C, 7.450% due
9/1/27(b) 992,031
Nebraska Investments Finance Authority:
400,000 AAA GNMA-Collateralized, RIBS Variable Rate, 10.521%
due 10/17/23(b)(e)
444,500
200,000 AAA Single-Family Mortgage Revenue, GNMA-Collateralized,
1990 Series 3,
RIBS Variable Rate, 11.814% due 9/10/30(b)(e)
219,250
259,875 AA Nevada Housing Development Single-Family Mortgage
Revenue,
Series 1983 B, FHA-Insured, zero coupon bond to
yield
10.245% due 4/1/15
51,325
1,335,000 Aa3* New Hampshire State HFA, Single-Family Residential
Mortgage, 7.250% due 7/1/15(b)
1,405,087
New Mexico Mortgage Finance Authority,
FNMA/GNMA/FHLMC-Collateralized:
1,000,000 AAA Single-Family Mortgage, Series B-3, 5.400% due
7/1/18 1,016,250
1,000,000 AAA Single-Family Mortgage Program, Series D-3, 5.250%
due 7/1/17
1,011,250
Ohio Housing Finance Agency Residential Mortgage,
GNMA-Collateralized:
250,000 AAA Series A-1, 6.100% due 9/1/14
263,437
Series A-2:
160,000 AAA 6.125% due 9/1/24(b)
164,400
230,000 AAA 6.625% due 3/1/26(b)
242,937
470,000 Aa2* Oregon State Housing & Community Services Department,
Mortgage Revenue, Single-Family Mortgage Program,
Series D, 6.500% due 7/1/24(b)
495,262
125,000 BBB- Panhandle, TX Regional Housing Finance Corp., Single-
Family
Mortgage Revenue, 10.375% due 3/1/09
126,562
1,000,000 AA+ Pennsylvania State HFA, Single-Family Mortgage
Revenue,
Series 39B, 6.875% due 10/1/24(b)
1,068,750
1,425,000 AAA Pima County, AZ Single-Family Mortgage Revenue, Series
A,
GNMA/FNMA/FHLMC-Collateralized, step bond to yield
6.250%
due 11/1/29(b)
1,512,281
445,000 AAA Prince Georges County, MD Housing Authority, Single-
Family
Mortgage Revenue Refunding, Series A, GNMA-
Collateralized,
8.000% due 1/1/17
486,162
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Housing: Single-Family -- 5.9% (continued)
$ 1,600,000 AAA Reno County, KS Single-Family Mortgage Revenue, Series
A,
AMBAC-Insured, zero coupon bond to yield 11.039%
due 12/1/14
$ 278,000
Rhode Island Housing & Mortgage Financing Corp., Home
Ownership:
1,500,000 AA+ Opportunity Bonds, Series 8, INFLOS Variable Rate,
10.833% due 4/1/24(b)(e)
1,646,250
720,000 AA+ Series 88-ID, 7.875% due 10/1/21(b)
739,181
1,900,000 AAA South Dakota Housing Development Authority, Home
Ownership
Mortgage Board, Series C, 7.300% due 5/1/24(b)
1,983,125
405,156 A1* St. Bernard Parish, LA Home Mortgage Authority,
Single-Family
Mortgage Revenue Refunding, Series A, 8.000% due
3/25/12 434,529
325,000 AAA Travis County, TX Housing Finance Corp., Single-Family
Mortgage Revenue, Series B, GNMA/FNMA-
Collateralized,
7.100% due 10/1/27(b)
348,562
375,000 AAA Utah HFA, Single-Family Mortgage Revenue, FHA-Insured,
7.300% due 7/1/16
392,812
2,375,000 AA+ Virginia State Housing Development Authority,
Commonwealth
Mortgage, Series A, 7.150% due 1/1/33
2,499,688
310,000 AA Wyoming Community Development Authority, FHA-Insured,
8.125% due 6/1/21(b)
322,012
- --------------------------------------------------------------------------------
- ----------------------------
27,086,889
- --------------------------------------------------------------------------------
- ----------------------------
Industrial Development -- 3.3%
1,100,000 A-1+ California State EDA Financing Revenue, (California
Independent System Project), Series B, 3.000%
due 4/1/08(f)
1,100,000
2,650,000 A Iowa Finance Authority, (Governor Square Project),
7.250%
due 4/1/14 2,740,524 1,640,000 AA Oklahoma City, OK
Industrial & Culture Facilities, 6.750% due
9/15/17(b) 1,655,941
5,000,000 BBB+ Oklahoma Development Finance Authority Revenue,
Hillcrest Healthcare System, Series A, 5.625% due
8/15/19
5,000,000
1,000,000 A+ Rensselaer County, NY IDA, Albany International Corp.,
7.550% due 6/1/07(b)
1,171,250
1,000,000 A3* Tucson, AZ Airport Authority Inc., Special Facilities
Revenue Bonds, Lockheed Aeromod Center Inc., Series
1990, 8.700% due 9/1/19(b)
1,082,500
2,000,000 A+ West Chicago, IL IDR, (Leggett & Platt Inc. Project),
6.900% due 9/1/24(b)
2,207,500
- --------------------------------------------------------------------------------
- ----------------------------
14,957,715
- --------------------------------------------------------------------------------
- ----------------------------
Life Care -- 2.6%
3,225,000 Aa* Hamilton County, OH Mortgage Revenue, Judson Care
Center,
Series A, FHA-Insured, 6.500% due 8/1/26
3,483,000
2,500,000 BBB Illinois Development Finance Authority Health
Facilities,
Community Living, 7.125% due 3/1/10
2,668,750
1,000,000 Baa1* Indianapolis, IN Industrial EDR, 7.625% due 10/1/22
1,103,750
Massachusetts State Industrial Finance Agency Revenue:
1,400,000 AAA Briscoe House Assisted Living, FHA-Insured, 7.125%
due
2/1/36(b)
1,606,500
1,940,000 AAA Chelsea Jewish, Series A, FHA-Insured, 6.500% due
8/1/37 2,160,675
1,000,000 Aaa* Reynoldsburg, OH Health Care Facilities Revenue,
(Wesley
Ridge Project), GNMA-Collateralized, 6.150% due
10/20/38 1,058,750
- --------------------------------------------------------------------------------
- ----------------------------
12,081,425
- --------------------------------------------------------------------------------
- ----------------------------
Miscellaneous -- 6.5%
1,050,000 AA Bernalillo County, NM Gross Receipts, Tax Revenue,
5.125% due 4/1/17
1,073,625
Dauphin County, PA General Authority:
4,000,000 NR Hyatt Regency, 6.200% due 1/1/29
3,995,000
1,000,000 NR Riverfront Office, 6.000% due 1/1/25
1,000,000
1,000,000 Baa3* Edmond, OK EDA, Collegiate Housing Foundation, Series
A,
5.375% due 12/1/19
980,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Miscellaneous -- 6.5% (continued)
$ 2,000,000 Baa2* Galveston, TX Special Contract Revenue, (Farmland
Industries Inc. Project), 5.500% due 5/1/15
$ 2,005,000
3,000,000 AAA Georgia Local Government COP, Series A, MBIA-Insured,
4.750% due 6/1/28
2,872,500
2,000,000 A Illinois Development Finance Authority Revenue
Refunding, City of East St. Louis, 7.250% due
11/15/09 2,230,000
1,500,000 AAA Indiana Bond Bank Guaranty State Revolving Fund,
Series B,
6.875% due 2/1/12
1,711,875
2,500,000 AAA Louisiana Local Government Environmental Facilities,
Community Development Authority Revenue, Capital
Projects & Equipment Acquisition, AMBAC-Insured,
5.250% due 12/1/18
2,559,375
3,000,000 AAA Maine Municipal Bond Bank, Series C, FSA-Insured,
5.350%
due 11/1/18
3,063,750
35,000 A2* Oregon State Bond Bank, Economic Development
Department,
Series 1, 6.700% due 1/1/15
39,200
1,330,000 NR Seward, AK, (Sealife Center Project), 7.650% due
10/1/16 1,423,100
2,500,000 A- Summit County, CO Sports Facilities Refunding Revenue,
(Keystone Resorts Management Inc. Project), Ralston
Purina Co. Guaranteed, 7.750% due 9/1/06
2,978,125
3,550,000 AAA Wisconsin Center District, WI Tax Revenue, FSA-
Insured,
5.250% due 12/15/23
3,669,813
- --------------------------------------------------------------------------------
- ----------------------------
29,601,363
- --------------------------------------------------------------------------------
- ----------------------------
Pollution Control -- 6.9%
5,000,000 Aa3* Brazos River, TX Navigation District, (BASF Corp.
Project),
6.750% due 2/1/10(d)
5,900,000
1,500,000 A3* De Soto Parish, LA Environmental Improvement Revenue,
(International Paper Co. Project), Series A, 5.600%
due 11/1/22(b)
1,515,000
1,000,000 VMIG 1* Hillsborough County, FL IDA PCR, (Tampa Electric Co.
Project),
3.150% due 9/1/25(f)
1,000,000
3,600,000 AA- La Crosse, WI Resource Recovery Revenue, (Northern
States
Power Co. Project), 6.000% due 11/1/21(b)
4,009,500
2,000,000 AAA Matagorda County, TX Navigational District No. 2,
Houston
Power & Light, Series D, FGIC-Insured, 7.600% due
10/1/19(b) 2,078,100
2,000,000 BBB- Mississippi Business Finance Corp., MS, (System Energy
Resolution Inc. Project), 5.875% due 4/1/22
1,992,500
1,500,000 AAA Monroe County, MI, (Detroit Edison Co. Project),
7.650%
due 9/1/20(b)
1,603,125
855,000 NR New Jersey EDA Revenue, (Atlantic City Sewer Project),
7.250% due 12/1/11(b)
930,881
500,000 NR Ohio State Solid Waste Revenue, Republic Engineered
Steels
Inc., 9.000% due 6/1/21(b)
554,375
1,850,000 A2* Richland, SC Solid Waste Facility, (Union Camp
Project),
7.125% due 9/1/21(b)
1,988,750
3,000,000 NR Rockdale County, GA Solid Waste Authority Revenue,
7.500%
due 1/1/26(b)
3,191,250
1,945,000 BBB Saint Charles Parish, LA, Union Carbide, 7.350% due
11/1/22(b) 2,124,913
1,130,000 A Southwestern IL Development Authority, Solid Waste
Disposal Revenue, (Laclede Steel Co. Project),
8.500%
due 8/1/20(b)
1,152,600
3,200,000 Baa2* Sweetwater County, WY Solid Waste Disposal Revenue,
(FMC Corp. Project), 7.000% due 6/1/24(b)
3,500,000
- --------------------------------------------------------------------------------
- ----------------------------
31,540,994
- --------------------------------------------------------------------------------
- ----------------------------
Pre-Refunded(g) -- 3.2%
1,500,000 AAA Chattanooga-Hamilton County, TN Hospital Authority
Revenue,
FSA-Insured, (Call 5/1/01 @ 104), 10.483% due
5/25/21(e) 1,751,250
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Pre-Refunded(g) -- 3.2% (continued)
$ 1,000,000 AAA Delaware County, PA Authority Revenue, (Elwyn Inc.
Project),
(Call 6/1/00 @ 102), 8.350% due 6/1/15
$ 1,075,000
85,000 AAA Denver, CO City & County Airport Revenue, Series A,
(Call
11/15/00 @ 102), 8.500% due 11/15/23(b)
93,181
3,500,000 AAA Elkhart County, IN Hospital Authority Revenue, Elkhart
General Hospital Insured, (Call 7/1/02 @ 102),
7.000%
due 7/1/12
3,806,250
2,000,000 AAA Fairfax County, VA IDA, Series A, (Call 8/28/01 @
104),
10.177% due 8/29/23(e)
2,365,000
500,000 AAA Illinois Health Facility Authority Revenue, United
Medical
Center, (Call 7/1/03 @ 100), 8.375% due 7/1/12
587,500
130,000 AAA New York City, NY GO, Series D, (Call 2/1/02 @
101.5), 7.500% due 2/1/16
144,787
North Carolina Eastern Municipal Power Agency, Power
System Revenue Refunding, (Call 1/1/22 @ 100):
1,000,000 AAA 4.500% due 1/1/24
942,500
1,310,000 AAA 6.000% due 1/1/26
1,501,588
200,000 AAA Ohio State Building Authority, Juvenile Correction
Facility,
Series A, AMBAC-Insured, (Call 10/1/04 @ 102),
6.600%
due 10/1/14
229,250
365,000 AAA Oregon State Bond Bank Revenue, Series 1, (Call 1/1/03
@ 102),
6.700% due 1/1/15
406,975
1,095,000 AAA Portland, TX Community Center Sales Tax Gross Revenue,
(Call 2/15/04 @ 102), 7.000% due 2/15/25
1,257,881
300,000 AAA Summit County, OH Addiction & Mental Health
Facilities,
AMBAC-Insured, (Call 12/1/04 @ 102), 6.400% due
12/1/14 342,750
- --------------------------------------------------------------------------------
- ----------------------------
14,503,912
- --------------------------------------------------------------------------------
- ----------------------------
Public Facilities -- 5.1%
5,000,000 AAA Chicago, IL Lakefront Millennium Parking Facilities,
MBIA-Insured, 5.000% due 1/1/18
4,931,250
2,500,000 A- Dekalb County, IN Redevelopment, (Mini-Mill Local
Public
Improvement Project), 6.500% due 1/15/14
2,746,875
2,750,000 AAA Harrisburg, PA Redevelopment Authority, FSA-Insured,
zero
coupon bond to yield 5.220% due 5/1/21
883,438
Indianapolis, IN Local Public Improvement Bond Bank:
3,685,000 AA Series 1992 D, 6.750% due 2/1/14
4,436,777
3,000,000 AA Series B, 6.000% due 1/10/13
3,379,110
2,000,000 BBB+ Triborough Bridge & Tunnel Authority, NY, (Convention
Center Project), Series E, 7.250% due 1/1/10
2,327,500
3,960,000 A Tulsa, OK Public Facilities Authority, Lease Payment
Revenue Refunding, Assembly Center, 6.600% due
7/1/14 4,732,200
- --------------------------------------------------------------------------------
- ----------------------------
23,437,150
- --------------------------------------------------------------------------------
- ----------------------------
Tax Allocation -- 1.0%
2,000,000 AAA Illinois State Sales Tax Revenue, Series P, 6.500%
due 6/15/13
2,337,500
1,000,000 AAA La Quinta, CA Redevelopment Agency, MBIA-Insured,
7.300%
due 9/1/12
1,283,750
1,000,000 BBB- Providence, RI Special Obligation, Tax Increment,
Series D,
6.650% due 6/1/16
1,085,000
- --------------------------------------------------------------------------------
- ----------------------------
4,706,250
- --------------------------------------------------------------------------------
- ----------------------------
Transportation -- 9.4%
3,000,000 Baa1* Alliance Airport Authority Inc., TX Special Facilities
Revenue, (American Airlines Inc. Project), 7.500%
due
12/1/29(b)(d)
3,198,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Transportation -- 9.4% (continued)
$ 2,000,000 Baa1* Chicago, IL O'Hare International Airport, Special
Facility Revenue, International Terminal, Series
1985A,
(American Airlines Inc. Project), 7.875% due
11/1/25(b)(d)
$ 2,142,500
5,000,000 AAA Clark County, NV Passenger Facility Charge Revenue,
Las
Vegas McCarran International Airport, MBIA-Insured,
5.000% due 7/1/18
4,925,000
2,010,000 NR Connecticut Development Authority, Airport Facilities
Revenue, 6.625% due 12/1/14(b)
2,173,313
4,000,000 AAA Delaware Valley, PA Regional Finance Authority, Local
Government Revenue, Series A, AMBAC-Insured, 5.500%
due 8/1/28
4,295,000
Denver, CO City & County Airport Revenue:
915,000 BBB+ Series A, 8.500% due 11/15/23(b)
987,056
3,130,000 BBB+ Series B, 7.250% due 11/15/07(b)
3,443,000
4,000,000 AAA Massachusetts Bay Transportation Authority, General
Transportation System, Series A, MBIA-Insured,
4.500% due 3/1/26
3,630,000
2,470,000 Aaa* Massachusetts State Turnpike Authority, Highway
Systems
Revenue, MBIA-Insured, Series C, zero coupon bond to
yield 5.545% due 1/1/21
815,100
New Hampshire State Turnpike Systems Revenue
Refunding,
FGIC-Insured:
2,500,000 AAA 6.750% due 11/1/11
2,896,875
1,000,000 AAA RIBS, Series C, 10.083% due 11/1/17(e)
1,342,500
Puerto Rico Commonwealth Highway & Transportation
Authority:
Highway Revenue, Series Y:
3,000,000 A 5.000% due 7/1/36
2,966,250
1,000,000 A 5.500% due 7/1/36
1,071,250
1,000,000 A Transportation Revenue, Series A, 4.750% due 7/1/38
958,750
Regional Transit Authority, IL:
2,000,000 AAA Series A, AMBAC-Insured, 6.400% due 6/1/12
2,335,000
1,045,000 AAA Series C, FGIC-Insured, 7.750% due 6/1/20
1,370,256
5,000,000 AAA San Francisco, CA City & County Airport, International
Airport Revenue, Second Series 15B, MBIA-Insured,
4.500% due 5/1/28
4,568,750
- --------------------------------------------------------------------------------
- ----------------------------
43,119,350
- --------------------------------------------------------------------------------
- ----------------------------
Utility -- 8.4%
2,120,000 AAA Alaska Energy Authority Power Revenue, Bradley Lake,
Series 5, FSA-Insured, 5.000% due 7/1/21
2,043,150
3,000,000 AAA Brownsville, TX Utility System Revenue Priority
Refunding,
MBIA-Insured, 6.250% due 9/1/14
3,487,500
3,000,000 AAA Clark County, NV IDR, (Nevada Power Co. Project),
FGIC-Insured, 7.800% due 6/1/20(b)
3,176,250
4,000,000 BBB- Clarksville, TN Natural Gas Acquisition Corp., Series
A,
7.500% due 11/1/04
4,173,840
195,000 AAA Cleveland, OH Public Power System, MBIA-Insured,
Series B,
7.000% due 11/15/17
213,525
Georgia Municipal Electric Authority Power Revenue:
1,500,000 AAA Series EE, AMBAC-Insured, 7.250% due 1/1/24
1,978,125
2,500,000 A Series X, 6.500% due 1/1/12
2,896,875
1,250,000 AAA Hawaii State Department Budget & Finance, Hawaiian
Electric Co., Inc., Series A, MBIA-Insured, 5.650%
due 10/1/27(b)
1,328,125
5,000,000 AAA Matagorda County, TX Navigational District No. 1
Revenue,
Houston Lighting, AMBAC-Insured, 5.125% due
11/1/28(b) 5,012,500
2,500,000 NR Michigan State Strategic Fund, Resource Recovery,
Limited
Obligation Revenue, Central Wayne Energy Recovery,
Series A, 7.000% due 7/1/27(b)
2,528,125
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============================
<S> <C> <C>
<C>
Utility -- 8.4% (continued)
$ 1,000,000 A+ New York State Energy Research & Development, (Con
Edison Project A), 7.125% due 12/1/29(b)
$ 1,133,750
1,775,000 Baa1* North Carolina Eastern Municipal Power Agency System
Revenue, Series B, 6.000% due 1/1/22
1,919,219
1,235,000 AAA Piedmont, SC Municipal Power Agency, Electric Revenue
Refunding, FGIC-Insured, 6.750% due 1/1/20
1,508,244
San Antonio, TX Electric & Gas, Series A:
2,000,000 Aa1* 5.250% due 2/1/16
2,052,500
1,625,000 Aa1* 4.500% due 2/1/21
1,507,188
3,500,000 Aa1* Washington State Public Power Supply System Revenue,
(Nuclear Project No. 3), Series A, 5.125% due 7/1/18
3,443,125
- --------------------------------------------------------------------------------
- ----------------------------
38,402,041
- --------------------------------------------------------------------------------
- ----------------------------
Water & Sewer -- 5.4%
2,400,000 A Dauphin County, PA IDA, General Water Works Corp.,
6.900% due 6/1/24(b)
2,952,000
Honolulu, HI City & County Wastewater System Revenue,
Second Bond Resolution, Jr. Series, FGIC-Insured:
4,000,000 AAA 4.500% due 7/1/28
3,625,000
2,750,000 Aaa* Zero coupon bond to yield 5.050% due 7/1/16
1,144,688
10,000,000 AAA Houston, TX Water & Sewer System Revenue, Series A,
FSA-Insured, zero coupon bond to yield 5.500% due
12/1/23 2,775,000
2,000,000 A Idaho State Water Resources Board, Water Revenue,
Resource
Development, Borse Water Corp., 7.250% due
12/1/21(b) 2,152,500
2,000,000 AAA Jefferson County, AL Sewer Revenue, Series D, FGIC-
Insured,
5.750% due 2/1/27
2,157,500
2,750,000 AAA Massachusetts State Water Resource Authority, Series
A,
FSA-Insured, 4.750% due 8/1/37
2,536,875
400,000 A2* Ohio Water Development Authority, (Broken Hill
Project),
6.450% due 9/1/20(b)
434,000
3,400,000 NR Port of Umatilla, OR Water Project Revenue, Series
1994,
LOC ABN AMRO Bank, 6.650% due 8/1/22(b)
3,633,750
2,750,000 A Trumbull County, OH Sewer Disposal Revenue, (General
Motors Corp. Project), 6.750% due 7/1/14(b)
3,251,875
- --------------------------------------------------------------------------------
- ----------------------------
24,663,188
- --------------------------------------------------------------------------------
- ----------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $428,306,753**)
$458,799,339
================================================================================
============================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except for those
identified by an asterisk (*) which are rated by Moody's Investors
Service, Inc.
(b) Income from this issue is considered a preference item for purpose of
calculating the alternative minimum tax.
(c) Bonds are escrowed to maturity with U.S. government securities and are
considered by the Manager to be triple-A rated even if issuer has not
applied for new ratings.
(d) Security segregated by Custodian for open purchase commitments.
(e) Residual interest bond-coupon varies inversely with level of short-term
tax-exempt interest rates.
(f) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(g) Bonds are escrowed with U.S. government securities and are considered by
the Manager to be triple-A rated even if issuer has not applied for new
ratings.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 17 and 18 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"B" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in
a small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this
category than for bonds in higher rated categories.
BB and B -- Bonds rated "BB" and "B" are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal in accordance with the terms
of the obligation. "BB" indicates the lowest degree of
speculation and B the highest degree of speculation. While such
bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
Moody's Investors Service, Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3
may be applied to each generic rating from "Aa" to "Baa," where 1 is the highest
and 3 the lowest ranking within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
in "Aaa" securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in "Aaa"
securities.
A -- Bonds rated "A" possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa -- Bonds rated "Baa" are considered to be medium grade obligations,
i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
NR -- Indicates that the bond is not rated by either Standard & Poor's
or Moody's.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
Short-Term Securities Ratings (unaudited)
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined
to possess overwhelming safety characteristics are denoted with a
plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate
demand obligation (VRDO) rating indicating that the degree of
safety regarding timely payment is either overwhelming or very
strong; those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature --
VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governors
AIG -- American International Guaranty
AMBAC -- American Municipal Bond Assurance Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
CHFCLI -- California Health Facility Construction Loan Insurance
CONNIE
LEE -- College Construction Loan Association
COP -- Certificate of Participation
EDA -- Economic Development Authority
EDR -- Economic Development Revenue
ETM -- Escrowed To Maturity
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FLAIRS -- Floating Adjustable Interest Rate Securities
FNMA -- Federal National Mortgage Association
FRTC -- Floating Rate Trust Certificates
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
ISD -- Independent School District
LEVRRS -- Leveraged Reverse Rate Securities
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
PSFG -- Permanent School Fund Guaranty
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
SYCC -- Structured Yield Curve Certificate
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation Notes
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $428,306,753) $
458,799,339
Cash
18,227
Interest receivable
7,296,037
Receivable for Fund shares sold
783,485
Receivable for securities sold
616,116
Other assets
15,024
- --------------------------------------------------------------------------------
- -----
Total Assets
467,528,228
- --------------------------------------------------------------------------------
- -----
LIABILITIES:
Payable for securities purchased
7,754,101
Management fees payable
196,231
Payable for Fund shares purchased
37,562
Distribution fees payable
18,797
Accrued expenses
44,515
- --------------------------------------------------------------------------------
- -----
Total Liabilities
8,051,206
- --------------------------------------------------------------------------------
- -----
Total Net Assets $
459,477,022
================================================================================
=====
NET ASSETS:
Par value of shares of beneficial interest $
32,893
Capital paid in excess of par value
428,857,824
Overdistributed net investment income
(6,771)
Accumulated net realized gain from security
transactions and futures contracts
100,490
Net unrealized appreciation on investments
30,492,586
- --------------------------------------------------------------------------------
- -----
Total Net Assets $
459,477,022
================================================================================
=====
Shares Outstanding:
Class A
28,956,051
------------------------------------------------------------------------------
- -----
Class B
2,611,236
------------------------------------------------------------------------------
- -----
Class L
1,325,875
------------------------------------------------------------------------------
- -----
Net Asset Value:
Class A (and redemption price)
$13.97
------------------------------------------------------------------------------
- -----
Class B *
$13.96
------------------------------------------------------------------------------
- -----
Class L **
$13.97
------------------------------------------------------------------------------
- -----
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share)
$14.55
------------------------------------------------------------------------------
- -----
Class L (net asset value plus 1.01% of net asset value per share)
$14.11
================================================================================
=====
</TABLE>
* Redemption price is NAV of Class B reduced by a 4.50% CDSC if shares are
redeemed within one year from purchase (See Note 3).
** Redemption price is NAV of Class L reduced by a 1.00% CDSC if shares are
redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended March 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 25,814,539
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 1,976,562
Distribution fees (Note 3) 897,871
Shareholder and system servicing fees 111,793
Registration fees 50,001
Shareholder communications 41,501
Pricing service fees 27,999
Custody 21,962
Audit and legal 18,002
Trustees' fees 6,001
Other 10,001
- --------------------------------------------------------------------------------
Total Expenses 3,161,693
- --------------------------------------------------------------------------------
Net Investment Income 22,652,846
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 4 AND 6):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 2,469,442
Futures contracts (285,712)
- --------------------------------------------------------------------------------
Net Realized Gain 2,183,730
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 32,584,043
End of year 30,492,586
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (2,091,457)
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 92,273
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 22,745,119
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
- ---------------------
<S> <C>
<C>
OPERATIONS:
Net investment income $
22,652,846 $ 21,651,710
Net realized gain
2,183,730 10,254,014
Increase (decrease) in net unrealized appreciation
(2,091,457) 9,944,057
- --------------------------------------------------------------------------------
- ---------------------
Increase in Net Assets From Operations
22,745,119 41,849,781
- --------------------------------------------------------------------------------
- ---------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income
(22,962,050) (22,052,414)
Net realized gains
(6,368,394) (4,341,908)
- --------------------------------------------------------------------------------
- ---------------------
Decrease in Net Assets From Distributions to Shareholders
(29,330,444) (26,394,322)
- --------------------------------------------------------------------------------
- ---------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares
109,110,684 67,394,715
Net asset value of shares issued in connection with
the transfer of the Smith Barney Muni Funds --
Ohio Portfolio's net assets (Note 5)
- -- 7,122,331
Net asset value of shares issued for reinvestment of dividends
15,859,957 14,164,394
Cost of shares reacquired
(66,059,971) (75,971,741)
- --------------------------------------------------------------------------------
- ---------------------
Increase in Net Assets From Fund Share Transactions
58,910,670 12,709,699
- --------------------------------------------------------------------------------
- ---------------------
Increase in Net Assets
52,325,345 28,165,158
NET ASSETS:
Beginning of year
407,151,677 378,986,519
- --------------------------------------------------------------------------------
- ---------------------
End of year* $
459,477,022 $ 407,151,677
================================================================================
=====================
* Includes undistributed (overdistributed) net investment income of: $
(6,771) $ 302,433
================================================================================
=====================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The National Portfolio ("Portfolio") is a separate investment portfolio of the
Smith Barney Muni Funds ("Fund"). The Fund, a Massachusetts business trust, is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company and consists of this Portfolio and seven other
separate investment portfolios: Florida, Georgia, Limited Term, New York,
Pennsylvania, California Money Market and New York Money Market Portfolios. The
financial statements and financial highlights for the other portfolios are
presented in separate annual reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities are valued
at the mean between the bid and ask prices provided by an independent pricing
service which are based on transactions in municipal obligations, quotations
from municipal bond dealers, market transactions in comparable securities and
various relationships between securities; (c) securities for which market
quotations are not available will be valued in good faith at fair value by or
under the direction of the Board of Trustees; (d) securities maturing within 60
days are valued at cost plus accreted discount or minus amortized premium, if
any, which approximates value; (e) gains or losses on the sale of securities are
calculated by using the specific identification method; (f) interest income,
adjusted for amortization of premium and accretion of original issue discount,
is recorded on an accrual basis; market discount is recognized upon the
disposition of the security; (g) dividends and distributions to shareholders are
recorded on the ex-dividend date; (h) direct expenses are charged to each
Portfolio and each class; management fees and general fund expenses are
allocated on the basis of relative net assets by class; (i) the character of
income and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles; (j)
the Portfolio intends to comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, pertaining to regulated investment companies
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes; and (k) estimates and
assumptions are required to be made regarding assets, liabilities and changes in
net assets resulting from operations when financial statements are prepared.
Changes in the economic environment, financial markets and any other parameters
used in determining these estimates could cause actual results to differ.
2. Exempt-Interest Dividends and Other Distributions
The Portfolio intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from regular Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Portfolio.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Management Agreement and Other Transactions
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager to the Fund. The Portfolio pays SSBC a management fee calculated at the
annual rate of 0.45% of the average daily net assets. This fee is calculated
daily and paid monthly.
On October 8, 1998, CFBDS, Inc. became the Fund's distributor. Prior to that
date, Salomon Smith Barney Inc. ("SSB"), another subsidary of SSBH, was the
Fund's distributor. SSB, as well as certain other broker-dealers, continues to
sell Fund shares to the public as a member of the selling group.
On June 12, 1998, the Fund's existing Class C shares were renamed Class L
shares. Effective June 15, 1998,
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Class L shares are being sold at net asset value plus a maximum initial sales
charge of 1.00%. Class L shares also have a 1.00% contingent deferred sales
charge ("CDSC"), which applies if redemption occurs within the first year of
purchase.
There is also a CDSC of 4.50% on Class B shares, which applies if redemption
occurs within one year from purchase. This CDSC declines by 0.50% the first year
after purchase and thereafter by 1.00% per year until no CDSC is incurred. For
the year ended March 31, 1999, SSB received sales charges of $691,000 and
$24,000 on sales of the Fund's Class A and L shares, respectively. In addition,
CDSCs paid to SSB and CFBDS were approximately $33,000 for Class B and $9,000
for Class L shares.
Pursuant to a Distribution Plan, the Portfolio pays a service fee with respect
to Class A, B and L shares calculated at the annual rate of 0.15% of the average
daily net assets of each respective class. In addition, the Portfolio pays a
distribution fee with respect to Class B and L shares calculated at the annual
rates of 0.50% and 0.55% of the average daily net assets of each class,
respectively. For the year ended March 31, 1999, total Distribution Plan fees
incurred were:
Class A Class B Class L
================================================================================
Distribution Plan Fees $589,735 $187,451 $120,685
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
4. Investments
During the year ended March 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $311,813,384
- --------------------------------------------------------------------------------
Sales 266,265,966
================================================================================
At March 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $31,158,345
Gross unrealized depreciation (665,759)
- --------------------------------------------------------------------------------
Net unrealized appreciation $30,492,586
================================================================================
5. Transfer of Net Assets
On December 5, 1997, the National Portfolio acquired the assets and certain
liabilities of the Smith Barney Muni Funds -- Ohio Portfolio ("Ohio Portfolio")
pursuant to a plan of reorganization approved by Ohio Portfolio shareholders on
November 21, 1997. Total shares issued by the National Portfolio and the total
net assets of the Ohio Portfolio and the National Portfolio on the date of the
transfer were as follows:
Shares Total Total
Issued by Net Assets Net Assets of
the National of the Ohio the National
Acquired Portfolio Portfolio Portfolio Portfolio
================================================================================
Ohio Portfolio 503,302 $ 7,122,331 $387,765,783
================================================================================
The total net assets of the Ohio Portfolio before acquisition included
unrealized appreciation of $525,586. Total net assets of the National Portfolio
immediately after the transfer were $394,888,114. The transaction was structured
to qualify as a tax-free reorganization under the Internal Revenue Code of 1986,
as amended.
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contract. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are made or
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
received and recognized as assets due from or liabilities due to broker,
depending upon whether unrealized gains or losses are incurred. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transactions and
the Portfolio's basis in the contract. The Portfolio enters into such contracts
to hedge a portion of its portfolio. The Portfolio bears the market risk that
arises from changes in the value of the financial instruments and securities
indices (futures contracts). At March 31, 1999, the Portfolios had no open
futures contracts.
7. Shares of Beneficial Interest
At March 31, 1999, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share. The Portfolio has the
ability to issue multiple classes of shares. Each share of a class represents an
identical interest in the Portfolio and has the same rights, except that each
class bears certain expenses specifically related to the distribution of its
shares. Effective June 12, 1998, the Fund adopted the renaming of existing Class
C shares as Class L shares.
At March 31, 1999, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $374,279,247 $ 35,834,868 $ 18,776,602
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended March 31, 1999 Year
Ended March 31, 1998
------------------------- ----
- ---------------------
Shares Amount
Shares Amount
================================================================================
=====================
<S> <C> <C> <C>
<C>
Class A
Shares sold 5,972,128 $ 84,705,473
4,278,086 $ 60,139,642
Net asset value of shares issued in
connection with the transfer of the
Smith Barney Muni Funds --
Ohio Portfolio's net assets (Note 5) -- --
216,152 3,061,450
Shares issued on reinvestment 999,932 14,128,508
919,860 12,952,448
Shares reacquired (4,199,657) (59,498,849)
(5,066,000) (70,997,885)
- --------------------------------------------------------------------------------
- ---------------------
Net Increase 2,772,403 $ 39,335,132
348,098 $ 5,155,655
================================================================================
=====================
Class B
Shares sold 1,355,808 $ 19,259,918
435,980 $ 6,185,158
Net asset value of shares issued in
connection with the transfer of the
Smith Barney Muni Funds --
Ohio Portfolio's net assets (Note 5) -- --
226,974 3,210,679
Shares issued on reinvestment 72,634 1,024,830
43,558 613,782
Shares reacquired (251,968) (3,557,223)
(204,149) (2,891,933)
- --------------------------------------------------------------------------------
- ---------------------
Net Increase 1,176,474 $ 16,727,525
502,363 $ 7,117,686
================================================================================
=====================
Class L+
Shares sold 361,021 $ 5,145,293
75,660 $ 1,069,915
Net asset value of shares issued in
connection with the transfer of the
Smith Barney Muni Funds --
Ohio Portfolio's net assets (Note 5) -- --
60,176 850,202
Shares issued on reinvestment 50,013 706,619
42,562 598,164
Shares reacquired (211,749) (3,003,899)
(148,687) (2,081,923)
- --------------------------------------------------------------------------------
- ---------------------
Net Increase 199,285 $ 2,848,013
29,711 $ 436,358
================================================================================
=====================
</TABLE>
+ On June 12, 1998 Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class A Shares 1999(1) 1998
1997 1996 1995(2)
================================================================================
=======================================
<S> <C> <C>
<C> <C> <C>
Net Asset Value, Beginning of Year $14.16 $13.60
$13.67 $13.32 $13.35
- --------------------------------------------------------------------------------
- ---------------------------------------
Income (Loss) From Operations:
Net investment income 0.74 0.79
0.81 0.81 0.82
Net realized and unrealized gain (loss) 0.03 0.73
(0.09) 0.35 (0.01)
- --------------------------------------------------------------------------------
- ---------------------------------------
Total Income From Operations 0.77 1.52
0.72 1.16 0.81
- --------------------------------------------------------------------------------
- ---------------------------------------
Less Distributions From:
Net investment income (0.75) (0.80)
(0.79) (0.81) (0.84)
Net realized gains (0.21) (0.16)
- -- -- --
- --------------------------------------------------------------------------------
- ---------------------------------------
Total Distributions (0.96) (0.96)
(0.79) (0.81) (0.84)
- --------------------------------------------------------------------------------
- ---------------------------------------
Net Asset Value, End of Year $13.97 $14.16
$13.60 $13.67 $13.32
- --------------------------------------------------------------------------------
- ---------------------------------------
Total Return 5.50% 11.47%
5.41% 8.83% 6.38%
- --------------------------------------------------------------------------------
- ---------------------------------------
Net Assets, End of Year (000s) $404,498 $370,891
$351,395 $378,421 $401,364
- --------------------------------------------------------------------------------
- ---------------------------------------
Ratios to Average Net Assets:
Expenses 0.66% 0.66%
0.70% 0.70% 0.60%
Net investment income 5.21 5.61
5.92 5.88 6.30
- --------------------------------------------------------------------------------
- ---------------------------------------
Portfolio Turnover Rate 61% 87%
31% 27% 54%
================================================================================
=======================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) On October 10, 1994, the former Class C shares were exchanged into Class A
shares.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class B Shares 1999(1) 1998
1997 1996 1995(2)
================================================================================
==================================
<S> <C> <C>
<C> <C> <C>
Net Asset Value, Beginning of Year $14.16 $13.61
$13.67 $13.33 $12.41
- --------------------------------------------------------------------------------
- ----------------------------------
Income (Loss) From Operations:
Net investment income 0.67 0.70
0.74 0.73 0.33
Net realized and unrealized gain (loss) 0.02 0.74
(0.08) 0.35 0.91
- --------------------------------------------------------------------------------
- ----------------------------------
Total Income From Operations 0.69 1.44
0.66 1.08 1.24
- --------------------------------------------------------------------------------
- ----------------------------------
Less Distributions From:
Net investment income (0.68) (0.73)
(0.72) (0.74) (0.32)
Net realized gains (0.21) (0.16)
- -- -- --
- --------------------------------------------------------------------------------
- ----------------------------------
Total Distributions (0.89) (0.89)
(0.72) (0.74) (0.32)
- --------------------------------------------------------------------------------
- ----------------------------------
Net Asset Value, End of Year $13.96 $14.16
$13.61 $13.67 $13.33
- --------------------------------------------------------------------------------
- ----------------------------------
Total Return 4.92% 10.80%
4.95% 8.26% 10.11%++
- --------------------------------------------------------------------------------
- ----------------------------------
Net Assets, End of Year (000s) $36,451 $20,313
$12,691 $11,605 $6,905
- --------------------------------------------------------------------------------
- ----------------------------------
Ratios to Average Net Assets:
Expenses 1.16% 1.29%
1.20% 1.19% 1.19%+
Net investment income 4.71 4.95
5.42 5.37 5.75+
- --------------------------------------------------------------------------------
- ----------------------------------
Portfolio Turnover Rate 61% 87%
31% 27% 54%
================================================================================
==================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from November 7, 1994 (inception date) to March 31, 1995.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
26 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class L Shares(1) 1999(2) 1998
1997 1996 1995(3)
================================================================================
==================================
<S> <C> <C> <C> <C>
<C> <C>
Net Asset Value, Beginning of Year $14.16 $13.59
$13.65 $13.32 $13.33
- --------------------------------------------------------------------------------
- ----------------------------------
Income (Loss) From Operations:
Net investment income 0.65 0.69
0.73 0.73 0.74
Net realized and unrealized gain (loss) 0.02 0.74
(0.08) 0.34 (0.01)
- --------------------------------------------------------------------------------
- ----------------------------------
Total Income From Operations 0.67 1.43
0.65 1.07 0.73
- --------------------------------------------------------------------------------
- ----------------------------------
Less Distributions From:
Net investment income (0.65) (0.70)
(0.71) (0.74) (0.74)
Net realized gains (0.21) (0.16)
- -- -- --
- --------------------------------------------------------------------------------
- ----------------------------------
Total Distributions (0.86) (0.86)
(0.71) (0.74) (0.74)
- --------------------------------------------------------------------------------
- ----------------------------------
Net Asset Value, End of Year $13.97 $14.16
$13.59 $13.65 $13.32
- --------------------------------------------------------------------------------
- ----------------------------------
Total Return 4.79% 10.71%
4.90% 8.13% 5.80%
- --------------------------------------------------------------------------------
- ----------------------------------
Net Assets, End of Year (000s) $18,528 $15,926
$14,901 $16,563 $18,599
- --------------------------------------------------------------------------------
- ----------------------------------
Ratios to Average Net Assets:
Expenses 1.24% 1.35%
1.27% 1.27% 1.23%
Net investment income 4.63 4.91
5.35 5.31 5.69
- --------------------------------------------------------------------------------
- ----------------------------------
Portfolio Turnover Rate 61% 87%
31% 27% 54%
================================================================================
==================================
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On November 7, 1994, the former Class B shares were renamed Class C
shares.
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
March 31, 1999:
o 100% of the dividends paid by the Fund from net investment income as
tax exempt for regular Federal income tax purposes.
o Long-term capital gain distributions paid of $3,480,451.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
the National Portfolio of Smith Barney Muni Funds:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the National Portfolio of Smith Barney Muni
Funds as of March, 31, 1999, the related statement of operations for the year
then ended, the statements of 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. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the custodian. As to securities purchased or
sold but not yet received or delivered, we performed other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
National Portfolio of Smith Barney Muni Funds as of March 31, 1999, the results
of its operations for the year then ended, the changes in its 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, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
May 12, 1999
- --------------------------------------------------------------------------------
28 1999 Annual Report to Shareholders
<PAGE>
Smith Barney
Muni Funds
Trustees
Donald R. Foley
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, Emeritus
Officers
Heath B. McLendon
President and Chief Executive Officer
Lewis E. Daidone
Senior Vice President and Treasurer
Peter M. Coffey
Vice President
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Manager
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for general information of the shareholders of Smith
Barney Muni Funds -- National Portfolio. It is not authorized for distribution
to prospective investors unless accompanied or preceded by a current Prospectus
for the Portfolio, which contains information concerning the Portfolio's
investment policies and expenses as well as other pertinent information.
SALOMON SMITH BARNEY
- ----------------------------------
A member of citigroup[LOGO]
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney Muni Funds
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD2304 5/99
[Logo]
Smith Barney Muni Funds
California
Money Market
Portfolio
ANNUAL REPORT
March 31, 1999
[Logo]
Smith Barney Mutual Funds
Investing for your future.
Everyday.(R)
<PAGE>
Smith Barney
Muni Funds
Dear Shareholder:
We are pleased to provide you with the annual report for the Smith Barney Muni
Funds --California Money Market Portfolio ("Portfolio") for the year ended March
31, 1999. In this report, we summarize the period's prevailing economic and
market conditions and outline our portfolio strategy. A detailed summary of the
Portfolio's performance can be found in the appropriate sections that follow. We
hope you find this report to be useful and informative.
Performance Update
As of March 31, 1999, the Portfolio's 7-day current yield was 2.32%. The
Portfolio's 7-day effective yield, which reflects compounding, was 2.34%. This
means that investors in the combined Federal and California state income tax
bracket of 41.95% would have to earn 4.03% to match the tax-free income
provided by the Portfolio.
Please note that an investment in the California Money Market Portfolio is not
insured nor guaranteed by the Federal Deposit Insurance Agency or any other
government agency. Although the Portfolio seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Portfolio.
Market Overview and Outlook
During the reporting period, two factors have set the stage for decreased
supply in the municipal money market. Strong state finances -- as a result of
increased income tax collections from strong economic growth -- have brought
added liquidity to state and local government general funds. This in turn has
decreased the need for short-term municipal issuance. Secondly, in the variable
rate demand obligation market, supply has decreased as a result of many issuers
extending out to the longer end of the municipal bond yield curve in order to
lock in historically low borrowing rates.
[Picture Graphic]
HEATH B. MCLENDON
Chairman
[Picture Graphic]
JOSEPH P. DEANE
Vice President
[Picture Graphic]
JOSEPH BENEVENTO
Vice President
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
Variable rate demand obligations are demand instruments that usually have an
indicated maturity of more than one year, but they contain a demand feature
that enables the holder to redeem the investment on no more than 30 days
notice. These instruments provide for automatic adjustment of new rates on set
dates and are generally supported by letters of credit issued by domestic or
foreign banks.
As a result of decreased supply, coupled with strong demand from many municipal
money market funds, rates have become historically rich versus our taxable
counterparts. Currently, the short end of the municipal market has already
geared up for seasonal redemptions relating to individual and corporate income
tax payments. As money is moved out of the market, we expect to see some relief
and variable rate demand obligations should then represent better investment
opportunities.
For most state and local governments, June signals the end of the current
fiscal year and the pricing of a large portion of their annual note financings.
With California's strong finances, we do not expect an increase in annual cash
flow borrowing. However, we do anticipate an increase in California
infrastructure financing projects in the form of bond anticipation notes (BANs)
and that could help to ease supply concerns.
Investment Strategy
The Portfolio seeks to provide investors with income exempt from federal income
taxes and California personal taxes by investing in a portfolio of
high-quality, short-term, municipal obligations selected for liquidity and
stability of principal. At the present time, we have shortened our target
average maturity to a 40-45 day range. This shortening of the Portfolio's
average maturity should position it for seasonal redemptions relating to
individual and corporate tax payments. Over the coming months as we enter the
note financing season, we will look to extend the Portfolio's average maturity.
California Economic Highlights
California's economy continues to expand from the recession of the early 1990s
with solid employment gains and personal income growth. However, as Asia's
recession continues, economic growth in the Golden State should be more
moderate than previously experienced. As mentioned in our last letter,
California's diverse economy base should enable economic expansion to continue
well into the new millennium.
California's recent economic growth has been marked by strong growth in high
technology business services including computer software and electronic
manufacturing companies -- leading to higher financial stability and increased
liquidity in the state. California's improved financial condition is also
partly due to prudent budgeting by the state legislature. The rebuilding of
cash and budget reserves should help California to sufficiently weather any
mild national recession
- --------------------------------------------------------------------------------
2 1999 Annual Report to Shareholders
<PAGE>
without much stress. In fact, the Golden State's unemployment dropped to 5.6%
in February down from a revised 5.8% in January. This is the lowest
unemployment rate in California since July of 1990 but still exceeds the
national level. As we approach 2000, California's state debt levels are
expected to increase as California begins to address its infrastructure needs.
Yet, debt levels should remain within cap recommendations made by the State
Treasurer.
In closing, thank you for investing in the California Money Market Portfolio.
We look forward to continuing to help you pursue your financial goals.
Sincerely,
[Signature Graphic]
Heath B. McLendon
Chairman
[Signature Graphic]
Joseph P. Deane
Vice President
[Signature Graphic]
Joseph Benevento
Vice President
April 30, 1999
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
Schedule of Investments March 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ---------------------
$ 6,000,000 A-1+ ABAG Finance Luile Packard Child Hospital Series 93
AMBAC-Insured 2.70% (c)
$ 6,000,000
Alameda Contra Costa Schools Financing
Authority Project:
8,410,000 A-1+ Series A 2.55% (c)
8,410,000
5,000,000 A-1+ Series F 2.60% (c)
5,000,000
Alameda County:
11,000,000 SP-1+ 1999 TRAN 4.50% due 7/7/99
11,025,385
19,843,000 SP-1+ Board of Education TRAN 6.00% due 6/30/99
19,955,598
13,750,000 A-1+ Anaheim Electric RAN TECP 2.85% due 6/8/99
13,750,000
4,500,000 NR+ Antioch USD TRAN 3.70% due 9/15/99
4,500,000
10,000,000 A-1 Auburn USD COP Capital Improvement Financing
Project 2.70% (c)
10,000,000
4,755,000 A-1 Berkeley Revenue Bonds YMCA Series 93 2.75% (c)
4,755,000
4,600,000 VMIG 1* California Alternative Energy Rock Creek Project
Series 86 3.10% (b)(c)
4,600,000
California EDA Financial Authority:
2,800,000 A-1+ ISO Corporation Project Series B 3.00% (c)
2,800,000
2,000,000 NR++ River Ranch Foods 2.95% (b)(c)
2,000,000
2,000,000 VMIG 1* California Educational Facility Pepperdine
University
2.75% (c)
2,000,000
California Health Facility Authority:
10,000,000 A-1+ Memorial Health Services 2.85% (c)
10,000,000
30,000,000 A-1+ Presbyterian Homes MBIA-Insured 2.80% (c)
30,000,000
Scripps Hospital MBIA-Insured:
6,000,000 A-1+ Series 85B 2.70% (c)
6,000,000
2,400,000 A-1+ Series 91B 2.75% (c)
2,400,000
5,000,000 A-1+ Series 98A 2.75% (c)
5,000,000
15,200,000 A-1+ Series 98B 2.75% (c)
15,200,000
California HFA Revenue:
12,120,000 VMIG 1* Home Mortgage Revenue PART 2.95% (b)(c)
12,120,000
3,065,000 A-1+ PART 68 Series M 2.90% (b)(c)
3,065,000
11,850,000 A-1+ California PCR San Diego Gas & Electric
PART 3.00% due 2/10/00 (d)
11,850,000
California Pollution Control Finance Authority:
8,600,000 A-1 Arco Environmental Improvement Bonds 2.90% (b)(c)
8,600,000
Pacific Gas & Electric:
25,800,000 A-1+ Series 96B 2.75% (b)(c)
25,800,000
1,700,000 A-1+ Series 96C 3.05% (c)
1,700,000
5,300,000 A-1+ Series 96C 3.15% (c)
5,300,000
31,700,000 A-1+ Series 96D 3.15% (c)
31,700,000
1,300,000 A-1+ Series 96G 3.20% (c)
1,300,000
20,450,000 A-1+ Series 97B 3.20% (b)(c)
20,450,000
11,100,000 A-1+ Series E 3.25% (c)
11,100,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
</TABLE>
<PAGE>
Schedule of Investments (continued) March 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------
Shell Oil:
$ 4,700,000 A-1+ Series 94B 3.20% (b)(c)
$ 4,700,000
10,200,000 A-1+ Series 96A 3.00% (b)(c)
10,200,000
7,300,000 A-1+ Series 96B 3.20% (b)(c)
7,300,000
Sierra Pacific Project:
8,675,000 P-1* 2.85% (b)(c)
8,675,000
7,000,000 P-1* Series 93 2.75% (b)(c)
7,000,000
5,695,000 A-1+ Southdown Series 83A 3.00% (c)
5,695,000
6,700,000 A-1+ Southdown Series 83B 3.00% (c)
6,700,000
California Public Capital Improvement Financing
Authority Series C:
8,000,000 A-1+ California School Financing Corp. Project 2.75% (c)
8,000,000
20,000,000 VMIG 1* Pooled Project 2.95% due 6/15/99 (d)
20,000,000
8,750,000 A-1+ California Rancho Water District Finance Authority
FGIC-Insured PART 2.85% (c)
8,750,000
2,400,000 A-1+ California Redwood City Hall Project PART 2.85%
(b)(c) 2,400,000
56,000,000 SP-1+ California School Cash Reserve Program Authority
Series 98A 4.50% due 7/2/99
56,107,325
6,800,000 VMIG 1* California School Facility Improvement Project
Series A 2.75% (c)
6,800,000
6,865,000 SP-1+ California Single Family Mortgage Series 99B
3.00% due 2/1/00 (b)(d)
6,865,000
10,840,000 A-1+ California State GO PART 3.00% due 2/10/00 (d)
10,840,000
42,900,000 SP-1+ California State RAN Series 1998-99 4.00% due 6/30/99
42,987,724
California Statewide Development Authority:
2,060,000 A-1+ American Zettler Incorporated 2.85% (b)(c)
2,060,000
15,000,000 A-1+ Canyon Creek Apartments 2.90% (b)(c)
15,000,000
2,310,000 A-1+ Charles Loralie 2.85% (b)(c)
2,310,000
1,000,000 A-1+ Nichols Pistachio Series C 2.85% (b)(c)
1,000,000
11,750,000 VMIG 1* Northern California Retired Officers 3.00% (c)
11,750,000
7,500,000 NR++ Parkway Apartments Series 98Z 3.30% (b)(c)
7,500,000
2,800,000 NR++ Supreme Truck Bodies 2.90% (b)(c)
2,800,000
38,300,000 A-1+ TRAN PART 2.90% (c)
38,300,000
12,300,000 A-1+ California Transit Finance Authority Series 97
FSA-Insured 2.85% (c)
12,300,000
17,540,000 A-1 California Veterans Affairs Series 98 AMBAC-Insured
PART 3.08% due 9/14/99 (b)(d)
17,540,000
26,500,000 A-1 Chula Vista IDR San Diego Gas & Electric
Series 92B 2.80% (b)(c)
26,500,000
Clipper California Tax-Exempt Trust PART:
20,730,000 VMIG 1* Series 96-1 MBIA-Insured 3.01% (c)
20,730,000
6,255,000 VMIG 1* Series 96-6B MBIA-Insured 3.11% (b)(c)
6,255,000
7,550,000 VMIG 1* Series 96-7A 3.01% (b)(c)
7,550,000
18,445,000 VMIG 1* Series 98-9 AMBAC-Insured 3.01% (b)(c)
18,445,000
12,000,000 A-1+ Contra Costa County California Water District Series
A
TECP 2.70% due 6/4/99
12,000,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
</TABLE>
<PAGE>
Schedule of Investments (continued) March 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ---------------
$ 25,400,000 A-1+ Contra Costa County MFH Revenue
Series A 2.75% (b)(c)
$25,400,000
Contra Costa County PART TRAN:
25,000,000 A-1 3.25% due 7/1/99 (d)
25,000,000
10,900,000 A-1+ 2.90% due 10/1/99 (c)
10,900,000
2,600,000 A-1+ Corona MFH (Country Hills Project) 2.60% (c)
2,600,000
11,000,000 A-1+ East Bay Municipal Utility District TECP
3.05% due 7/19/99
11,000,000
2,000,000 A-1+ Fairfield IDA (R. Dakin & Company Project) 3.05% (c)
2,000,000
5,000,000 SP-1+ Fairfield Suisun USD TRAN 4.00% due 6/30/99
5,003,560
5,800,000 A-1+ Fremont Treetops Apartments Series A 3.00% (b)(c)
5,800,000
30,000,000 SP-1+ Fresno County TRAN 4.00% due 7/1/99
30,042,742
6,050,000 A-1+ Hemet HFA Mercury S&L Sunwest Resort
Project 2.90% (c)
6,050,000
Irvine Public Facilities Capital Improvement:
13,500,000 VMIG 1* Series 85 2.55% (c)
13,500,000
6,900,000 A-1+ Series 87-8 3.00% (c)
6,900,000
5,400,000 A-1+ Series 94-13 3.00% (c)
5,400,000
10,400,000 VMIG 1* Series 97-17 3.00% (c)
10,400,000
Irvine Ranch Water Districts:
1,800,000 A-1+ Series 85 3.00% (c)
1,800,000
6,000,000 A-1+ Series 85B 3.00% (c)
6,000,000
1,700,000 A-1+ Series 88A 3.00% (c)
1,700,000
11,700,000 A-1+ Series 93B 3.00% (c)
11,700,000
6,600,000 A-1+ Series 95 3.00% (c)
6,600,000
3,650,000 A-1 Lancaster MFH (Willows Project) Series A 2.90% (c)
3,650,000
8,000,000 A-1+ Lodi IDA (Dart Container) 2.85% (c)
8,000,000
41,450,000 A-1+ Long Beach California Health Facility Revenue
(Memorial Health Services) Series 1991 2.85% (c)
41,450,000
2,000,000 A-1+ Los Angeles County Capital Asset Leasing Corp.
TECP 2.90% due 6/7/99
2,000,000
10,840,000 A-1 Los Angeles County GO PART FGIC-Insured 3.06% (c)
10,840,000
15,000,000 SP-1+ Los Angeles County TRAN 4.00% due 6/30/99
15,015,535
37,850,000 SP-1+ Los Angeles County TRAN Series A 4.50% due 6/30/99
37,934,005
1,700,000 A-1 Los Angeles Metropolitan Transportation Authority
TECP 2.90% due 8/5/99
1,700,000
3,650,000 A-1+ Los Angeles MFH (Malibu Meadows Project)
Series A 2.80% (c)
3,650,000
8,750,000 A-1+ Los Angeles Sanitation District PART 2.85% (c)
8,750,000
Los Angeles Wastewater:
8,765,000 A-1+ PART FGIC-Insured 2.85% (c)
8,765,000
14,000,000 VMIG 1* PART FGIC-Insured 3.10% due 6/2/99 (d)
14,000,000
10,000,000 A-1+ TECP 2.40% due 5/19/99
10,000,000
7,700,000 A-1+ TECP 2.40% due 5/20/99
7,700,000
3,500,000 A-1+ TECP 2.90% due 8/5/99
3,500,000
2,500,000 SP-1+ Milpitas CA USD TRAN 4.00% due 6/30/99
2,501,780
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6 1999 Annual Report to Shareholders
</TABLE>
<PAGE>
Schedule of Investments (continued) March 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- --------------
$ 5,500,000 VMIG 1* Modesto MFH Irrigation District Finance Authority
Shadowbrook Project Series A 3.00% (c)
$ 5,500,000
4,975,000 A-1+ Modesto MFH Live Oak Apartments 2.70% (b)(c)
4,975,000
10,000,000 A-1+ MSR Public Power Agency San Juan Project
MBIA-Insured Series E 2.70% (c)
10,000,000
700,000 A-1 Oakland Children's Hospital Medical Center
Series 1994B 2.80% (c)
700,000
Oakland Joint Power Finance Authority Lease Bonds
FSA-Insured:
22,600,000 A-1+ Series 98A1 2.70% (c)
22,600,000
7,600,000 A-1+ Series 98A2 2.60% (c)
7,600,000
Orange County Apartment Housing Development:
5,275,000 VMIG 1* Alicia Series A 2.85% (c)
5,275,000
6,900,000 VMIG 1* Foothill Oaks 3.00% (b)(c)
6,900,000
10,000,000 A-1+ Oasis Martinique Project 2.80% (b)(c)
10,000,000
13,200,000 A-1+ Park Ridge Series 98I 2.80% (c)
13,200,000
2,670,000 A-1+ Trabuco Woods Series 98J 2.80% (c)
2,670,000
9,500,000 A-1+ Vintage Woods Series 98H 2.80% (c)
9,500,000
7,000,000 A-1+ WLCO Series 98G1 2.80% (c)
7,000,000
1,700,000 A-1+ Wood Canyon Villas 2.85% (b)(c)
1,700,000
Orange County California Sanitation Districts:
10,600,000 A-1+ Series 92 AMBAC-Insured 2.70% (c)
10,600,000
4,500,000 A-1+ Series 93 AMBAC-Insured 3.00% (c)
4,500,000
1,000,000 A-1+ Orange County Improvement Assessment 3.00% (c)
1,000,000
2,300,000 VMIG 1* Otay Water District COP 2.70% (c)
2,300,000
12,470,000 A-1+ Palo Alto USD Series R PART 3.10% (c)
12,470,000
Pasadena COP Rose Bowl Improvement Project:
6,600,000 VMIG 1* Series 91 2.75% (c)
6,600,000
4,720,000 VMIG 1* Series 96 2.75% (c)
4,720,000
3,200,000 SP-1+ Petaluma County USD TRAN 4.25% due 6/30/99
3,204,178
5,000,000 A-1+ Ponoma Redevelopment Agency MFH Park and
Plaza Apartment Series A 2.80% (c)
5,000,000
32,120,000 A-1+ Puerto Rico Commonwealth Governmental Development
Bond MBIA-Insured 2.75% (c)
32,120,000
Puerto Rico Governmental Development Bond TECP:
9,761,000 A-1+ 2.85% due 4/1/99
9,761,000
9,624,000 A-1+ 2.90% due 4/1/99
9,624,000
8,780,000 A-1+ 2.90% due 4/6/99
8,780,000
7,375,000 A-1+ 2.70% due 6/4/99
7,375,000
5,000,000 A-1+ 2.90% due 6/8/99
5,000,000
10,105,000 A-1+ 2.90% due 7/20/99
10,105,000
5,600,000 A-1+ 2.90% due 9/7/99
5,600,000
5,900,000 A-1+ Puerto Rico Highway Transportation Authority Series A
AMBAC-Insured 2.65% (c)
5,900,000
7,700,000 AAA Puerto Rico Improvement Series Pre-Refunded
to 7/1/99 Call @ 101.50 7.75% due 7/1/17
7,971,424
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
</TABLE>
<PAGE>
Schedule of Investments (continued) March 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- --------------------
$ 33,630,000 AAA Puerto Rico Independent Medical and Environmental
PCR Abbot Laboratories 2.90% due 3/1/00 (d)
$33,630,000
24,570,000 A-1 Puerto Rico Public Finance Corp. PART
AMBAC-Insured 3.06% (c)
24,570,000
1,000,000 SP-1+ Puerto Rico TRAN Series 99A 3.50% due 7/30/99
1,002,109
31,240,000 A-1+ Putable Tax-Exempt Receipts PART 3.08% (c)
31,240,000
7,200,000 A-1+ Regents of University of California Series A TECP
3.00% due 4/6/99
7,200,000
1,900,000 VMIG 1* Riverside County IDA Rockwin Corp. Series II
2.80% (b)(c)
1,900,000
Riverside County MFH:
10,600,000 VMIG 1* Amanda Park Project Series A 2.90% (b)(c)
10,600,000
2,500,000 A-1 MFH Countrywood Apartments Series D 2.80% (c)
2,500,000
6,500,000 A-1+ Riverside School Finance Authority 98-99 PART
2.90% (c)
6,500,000
7,600,000 SP-1+ TRAN Series 99 4.50% due 9/30/99
7,648,624
2,660,000 SP-1+ Rosemead California Elementary School District
TRAN 4.25% due 6/30/99
2,663,473
6,500,000 VMIG 1* Sacramento Airport PART FGIC-Insured 2.90% (c)
6,500,000
6,340,000 A-1+ Sacramento California Financing Authority
PART AMBAC-Insured 3.20% (c)
6,340,000
25,000,000 A-1 Sacramento County TRAN PART 3.00% due 6/1/99 (d)
25,000,000
14,640,000 A-1+ Sacramento Municipal Utility District
PART AMBAC-Insured 3.20% (c)
14,640,000
53,300,000 A-1+ San Bernardino County COP Medical Center Project
2.75% (c)
53,300,000
San Bernardino County MFH:
14,500,000 NR++ Nova Meadowlands 3.30% (b)(c)
14,500,000
5,294,000 NR++ Village Green Apartments 3.30% (b)(c)
5,294,000
18,500,000 SP-1+ San Diego County TRAN 4.50% due 9/30/99
18,617,566
5,508,000 A-1+ San Diego Housing Authority (Carman Del Mar
Apartments) Project 2.80% (c)
5,508,000
10,000,000 VMIG 1* San Diego Water Project PART FGIC-Insured 2.88% (c)
10,000,000
3,000,000 NR++ San Dimas California Redevelopment Agency (San Dimas
Community Center) 2.85% (c)
3,000,000
San Francisco Airport TECP:
15,880,000 A-1+ Series A 2.95% due 4/7/99 (b)
15,880,000
12,435,000 A-1+ Series A 2.70% due 4/8/99 (b)
12,435,000
7,915,000 A-1+ Series B 2.85% due 4/13/99
7,915,000
10,295,000 A-1+ Series B 2.95% due 4/14/99
10,295,000
11,400,000 A-1+ San Francisco Bay Area Transit Series 98A TECP
2.85% due 4/6/99
11,400,000
3,545,000 A-1+ San Francisco Building Authority PART
AMBAC-Insured 2.85% (c)
3,545,000
San Francisco MFH:
23,500,000 VMIG 1* Bayside Village Series 85A 2.85% (c)
23,500,000
11,900,000 A-1+ Bayside Village Series 85B 2.85% (c)
11,900,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
</TABLE>
<PAGE>
Schedule of Investments (continued) March 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- --------------
$ 8,100,000 A-1+ Fillmore Center 2.75% (c)
$ 8,100,000
30,730,000 VMIG 1* St. Francis Housing Series 89A 2.85% (c)
30,730,000
16,800,000 A-1+ San Francisco MFH City Heights Apartments Project
Series 97A 2.90% (b)(c)
16,800,000
11,000,000 SP-1+ San Francisco USD 98 4.50% due 9/22/99
11,056,124
2,000,000 A-1+ San Joaquin County TRAN 2.70% due 4/8/99
2,000,000
San Jose MFH:
3,000,000 VMIG 1* Almaden Lake Village Apartment Project 2.95% (b)(c)
3,000,000
4,200,000 VMIG 1* Somerset Park 2.80% (b)(c)
4,200,000
6,690,000 A-1+ San Jose - Santa Clara California Water Authority
PART FGIC-Insured 2.85% (c)
6,690,000
2,500,000 SP-1+ San Lorenzo TRAN 4.00% due 6/30/99
2,501,780
24,912,000 SP-1+ San Luis Obispo County California Board of Education
TRAN 4.00% due 6/30/99
24,930,910
1,000,000 P-1* Santa Ana IDA Newport Electronics Project 3.25% (c)
1,000,000
4,000,000 MIG 1* Santa Barbara County School Financing TRAN
4.50% due 6/30/99
4,007,892
5,900,000 A-1+ Santa Clara County MFH (Benton Park Apartments
Project) 2.80% (c)
5,900,000
15,000,000 SP-1+ Santa Clara County TRAN 4.50% due 10/1/99
15,103,186
7,000,000 VMIG 1* Santa Clara County Transportation District
AMBAC-Insured 3.72% (c)
7,000,000
Santa Cruz County TRAN:
5,000,000 SP-1+ Board of Education 4.00% due 6/30/99
5,003,795
7,350,000 SP-1+ Teeter Plan 4.00% due 5/26/99
7,352,987
Simi Valley MFH:
5,345,000 VMIG 1* Creekside Village Apartments Series A 2.80% (c)
5,345,000
26,500,000 A-1 Lincoln Wood Ranch 2.65% (c)
26,500,000
10,800,000 A-1 Mayer Indian Oak Series 85A 2.75% (c)
10,800,000
10,000,000 MIG 1* Solano California County TRAN Series 98
3.50% due 12/15/99
10,037,746
25,400,000 A-1+ South East Recovery Facilities Authority
Series A 2.65% (c)
25,400,000
Southern California Metropolitan Water District:
27,500,000 A-1+ Series 97B 2.65% (c)
27,500,000
5,000,000 A-1+ Series 97C 2.60% (c)
5,000,000
44,600,000 A-1+ Southern California Public Power Authority Project
South Transmission FSA-Insured 2.65% (c)
44,600,000
3,000,000 A-1+ Tustin California Improvement Bond 3.00% (c)
3,000,000
7,000,000 A-1+ Upland California Mountain Springs
Series 98A 2.80% (c)
7,000,000
4,920,000 SP-1+ Vacaville USD TRAN 4.00% due 6/30/99
4,923,151
8,000,000 SP-1+ Vallejo California USD TRAN 4.00% due 9/30/99
8,030,920
39,070,000 A-1+ Ventra County TRAN PART 2.90% (c)
39,070,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
</TABLE>
<PAGE>
Schedule of Investments (continued) March 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
<C>
FACE
AMOUNT RATING(a) SECURITY VALUE
- -----------------------------------------------------------------------------
$ 9,655,000 A-1+ Westminster Redevelopment Agency
AMBAC-Insured 2.85% (c) $ 9,655,000
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $2,110,206,519**) $2,110,206,519
- -----------------------------------------------------------------------------
(a) All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's"),
except that those identified by an asterisk (*) are rated by Moody's
Investors Service, Inc. ("Moody's").
(b) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(d) Variable rate obligation payable at par on demand on the date indicated.
++ Security has not been rated by either Moody's or Standard & Poor's.
However, the Board of Trustees has determined this security to be
considered a first tier quality issue due to enhancement features; such as
insurance and/or irrevocable letters of credit.
+ Security has not been rated by either Moody's or Standard & Poor's.
However, the Board of Trustees has determined that the security presents
minimal credit risk.
** Aggregate cost for Federal income tax purposes is substantially the same.
See page 11 for definition of ratings and certain security descriptions.
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
Bond Ratings (unaudited)
The definitions of the applicable rating symbols are set forth below.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to
pay interest and repay principal is extremely strong.
Short-Term Securities Ratings (unaudited)
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal
and interest; those issues determined to possess overwhelming
safety characteristics are
denoted with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation
(VRDO) rating indicating that the degree of safety regarding timely
payment is either
overwhelming or very strong; those issues determined to possess
overwhelming safety
characteristics are denoted with a plus (+) sign.
A-2 -- Standard & Poor's second highest commercial paper and VRDO rating
indicating that the
degree of safety regarding timely payment is either overwhelming or
very strong; those issues
determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
MIG 1 -- Moody's highest rate for short-term municipal obligations.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the
VMIG 1 rating.
NR -- Indicates that the bond is not rated by either Standard & Poor's or
Moody's.
Security Descriptions (unaudited)
ABAG -- Association of Bay Area
Governments
AIG -- American International Guaranty
AMBAC -- American Municipal Bond
Assurance Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance
Company
CHFCLI -- California Health Facility
Construction Loan Insurance
CONNIE -- College Construction Loan
LEE Insurance Association
COP -- Certificate of Participation
CSD -- Central School District
EDA -- Economic Development Authority
ETM -- Escrowed To Maturity
FGIC -- Financial Guaranty Insurance
Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage
Corporation
FLAIRS -- Floating Adjustable Interest
Rate Securities
FNMA -- Federal National Mortgage
Association
FRTC -- Floating Rate Trust Certificates
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National
Mortgage Association
GO -- General Obligation
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors
Assurance Corporation
MFH -- Multi-Family Housing
MUD -- Municipal Utilities District
MVRICS -- Municipal Variable Rate
Inverse Coupon Security
PART -- Partnership Structure
PCR -- Pollution Control Revenue
RAN -- Revenue Anticipation Notes
RAW -- Revenue Anticipation Warrants
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt
Securities
SWAP -- Swap Structure
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bond Structure
TRAN -- Tax and Revenue Anticipation Notes
UFSD -- Unified Free School District
UHSD -- Unified High School District
USD -- Unified School District
VA -- Veterans Administration
VRWE -- Variable Rate Wednesday Demand
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
Statement of Assets and Liabilities March 31, 1999
ASSETS:
Investments, at amortized cost $2,110,206,519
Cash 3,760
Interest receivable 19,761,319
Receivable for securities sold 9,627,242
Other assets 380,611
- -----------------------------------------------------------------------------
Total Assets 2,139,979,451
- -----------------------------------------------------------------------------
LIABILITIES:
Dividends payable 2,334,294
Management fees payable 886,236
Distribution fees payable 82,810
Deferred compensation payable 8,680
Accrued expenses 168,936
- -----------------------------------------------------------------------------
Total Liabilities 3,480,956
- -----------------------------------------------------------------------------
Total Net Assets $2,136,498,495
- -----------------------------------------------------------------------------
NET ASSETS:
Par value of shares of beneficial interest $ 2,136,593
Capital paid in excess of par value 2,134,362,908
Accumulated net realized loss from security transactions (1,006)
- -----------------------------------------------------------------------------
Total Net Assets $2,136,498,495
- -----------------------------------------------------------------------------
Shares Outstanding:
Class A 2,136,590,246
- -----------------------------------------------------------------------------
Class Y 2,436
- -----------------------------------------------------------------------------
Net Asset Value, Per Share $ 1.00
- -----------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
Statement of Operations For the Year Ended March 31, 1999
INVESTMENT INCOME:
Interest $61,440,871
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 9,619,316
Distribution fees (Note 4) 1,923,054
Shareholder and system servicing fees 457,870
Registration fees 150,685
Shareholder communications 93,826
Audit and legal 32,176
Custody 7,511
Trustees' fees 6,176
Other 34,744
- -------------------------------------------------------------------------------
Total Expenses 12,325,358
- -------------------------------------------------------------------------------
Net Investment Income 49,115,513
- -------------------------------------------------------------------------------
Net Realized Gain From Security Transactions 153,566
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations $49,269,079
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
Statements of Changes in Net Assets For the Years Ended March 31,
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 49,115,513 $ 45,839,164
Net realized gain 153,566 31,993
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 49,269,079 45,871,157
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (49,115,513)
(45,839,164)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (49,115,513)
(45,839,164)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 8,107,812,026 6,873,046,899
Net asset value of shares issued
for reinvestment of dividends 47,695,059 44,089,569
Cost of shares reacquired (7,811,903,718)
(6,531,979,185)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 343,603,367 385,157,283
- --------------------------------------------------------------------------------
Increase in Net Assets 343,756,933 385,189,276
NET ASSETS:
Beginning of year 1,792,741,562 1,407,552,286
- --------------------------------------------------------------------------------
End of year $2,136,498,495 $1,792,741,562
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
The California Money Market Portfolio ("Portfolio") is a separate investment
portfolio of the Smith Barney Muni Funds ("Fund"). The Fund, a Massachusetts
business trust, is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company and consists of this
Portfolio and seven other separate investment portfolios: Florida, Georgia,
Limited Term, New York, National, Pennsylvania and New York Money Market
Portfolios. The financial statements and financial highlights for the other
portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) the Portfolio uses
the amortized cost method for valuing investments; accordingly, the cost of
securities plus accreted discount, or minus amortized premium, approximates
value; (c) gains or losses on the sale of securities are calculated by using
the specific identification method; (d) interest income, adjusted for
amortization of premium and accretion of original issue discount, is recorded
on accrual basis; market discount is recognized upon the disposition of the
security; (e) dividends and distributions to shareholders are recorded on the
ex-dividend date; (f) direct expenses are charged to each portfolio and each
class; management fees and general fund expenses are allocated on the basis of
relative net assets; (g) the character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles; (h) the Portfolio intends to comply
with the applicable provisions of the Internal Revenue Code of 1986, as
amended, pertaining to regulated investment companies and to make distributions
of taxable income sufficient to relieve it from substantially all Federal
income and excise taxes; and (i) estimates and assumptions are required to be
made regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ.
2. Portfolio Concentration
Since the Portfolio invests primarily in obligations of issuers within
California, it is subject to possible concentration risks associated with
economic, political, or legal developments or industrial or regional matters
specifically affecting California.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
Notes to Financial Statements (continued)
3. Exempt-Interest Dividends and Other Distributions
The Portfolio declares and records a dividend of substantially all its net
investment income on each business day. Such dividends are paid or reinvested
monthly in fund shares on the payable date. Furthermore, the Portfolio intends
to satisfy conditions that will enable interest from municipal securities,
which is exempt from regular Federal income tax and from designated state
income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. Management Agreement and Other Transactions
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp.,
a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager to the Fund. The Portfolio pays SSBC a management fee calculated at an
annual rate of 0.50% on the first $2.5 billion of average daily net assets;
0.475% on the next $2.5 billion and 0.45% on the average daily net assets in
excess of $5 billion. This fee is calculated daily and paid monthly.
On October 8, 1998, CFBDS, Inc. became the Fund's distributor. Prior to that
date Salomon Smith Barney Inc. ("SSB") was the Fund's distributor. SSB, as well
as certain other broker-dealers, continues to sell Fund shares to the public as
a member of the selling group.
Pursuant to a Distribution Plan, the Portfolio pays a distribution fee with
respect to Class A shares calculated at the annual rate of 0.10% of the average
daily net assets of that class.
All officers and one Trustee of the Fund are employees of SSB.
5. Capital Loss Carryforwards
At March 31, 1999, the Portfolio had, for Federal income tax purposes, a
capital loss carryforward of approximately $1,000 available to offset future
capital gains, expiring March 31, 2006. To the extent that these carryforward
losses are used to offset capital gains, it is probable that any gains so
offset will not be distributed.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
Notes to Financial Statements (continued)
6. Shares of Beneficial Interest
At March 31, 1999, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share.
At March 31, 1999, total paid-in capital amounted to the following for each
class:
Class A Class Y
- -------------------------------------------------------------------------------
Total Paid-in Capital $2,136,497,065 $2,436
- -------------------------------------------------------------------------------
Transactions in shares of the Portfolio were as follows:
Year Ended Year Ended
March 31, 1999 March 31, 1998
- -------------------------------------------------------------------------------
Class A
Shares sold 8,107,803,549 6,844,922,856
Shares issued on reinvestment 47,691,799 44,035,066
Shares reacquired (7,808,481,271) (6,499,808,823)
- -------------------------------------------------------------------------------
Net Increase 347,014,077 389,149,099
- -------------------------------------------------------------------------------
Class Y
Shares sold 8,477 28,124,043
Shares issued on reinvestment 3,260 54,503
Shares reacquired (3,422,447) (32,170,362)
- -------------------------------------------------------------------------------
Net Decrease (3,410,710) (3,991,816)
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
Financial Highlights
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
Class A Shares 1999 1998
1997 1996 1995
- --------------------------------------------------------------------------------
- ---------------------------
Net Asset Value, Beginning of Year $1.00 $ 1.00
$1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
- ---------------------------
Net investment income (1) 0.026 0.029
0.028 0.032 0.026
Dividends from
net investment income (0.026) (0.029)
(0.028) (0.032) (0.026)
- --------------------------------------------------------------------------------
- ---------------------------
Net Asset Value, End of Year $1.00 $1.00
$1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
- ---------------------------
Total Return 2.61% 2.98%
2.79% 3.22% 2.66%
- --------------------------------------------------------------------------------
- ---------------------------
Net Assets, End of Year (millions) $2,136 $1,789
$1,400 $1,346 $953
- --------------------------------------------------------------------------------
- ---------------------------
Ratios to Average Net Assets:
Expenses (1)(2) 0.64% 0.63%
0.67% 0.64% 0.61%
Net investment income 2.55 2.92
2.75 3.15 3.02
- --------------------------------------------------------------------------------
- ---------------------------
Class Y Shares 1999 1998
1997(3)
- --------------------------------------------------------------------------------
- ---------------------------
Net Asset Value, Beginning of Year $1.00 $1.00
$1.00
- --------------------------------------------------------------------------------
- ---------------------------
Net investment income 0.026 0.031
0.020
Dividends from
net investment income 0.026) (0.031)
0.020)
- --------------------------------------------------------------------------------
- ---------------------------
Net Asset Value, End of Year $1.00 $1.00
$1.00
- --------------------------------------------------------------------------------
- ---------------------------
Total Return 2.60% 3.09%
2.04%++
- --------------------------------------------------------------------------------
- ---------------------------
Net Assets, End of Year (000's) $2 $3,413
$7,405
- --------------------------------------------------------------------------------
- ---------------------------
Ratios to Average Net Assets:
Expenses (4) 0.51% 0.54%
0.56%+
Net investment income 2.68 3.01
2.77+
- --------------------------------------------------------------------------------
- ---------------------------
(1) The manager waived all or part of its fees for the years ended March 31,
1996 and March 31, 1995. If such fees were not waived, the effect on net
investment income and expense ratios would have been as follows:
Per Share Decreases Expense Ratios
to Net Investment Income Without Fee Waivers
------------------------ ---------------------
1996 1995 1996 1995
---- ---- ---- ----
Class A $0.000* $0.002 0.65% 0.63%
(2) As a result of the 0.80% voluntary expense limitation for the ratio of
expenses to average net assets, the investment manager will reimburse fees
for the amount that exceeds the limitation.
(3) For the period July 19, 1996 (inception date) to March 31, 1997.
(4) As a result of the 0.70% voluntary expense limitation for the ratio of
expenses to average net assets, the investment manager will reimburse fees
for the amount that exceeds the limitation.
* Amount represents less than $0.001 per share.
++ Total return is not annualized, as the result may not be representative of
the total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
Independent Auditors' Report
To the Shareholders and Board of Trustees
of the California Money Market Portfolio
of Smith Barney Muni Funds:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the California Money Market Portfolio of Smith
Barney Muni Funds as of March 31, 1999, the related statement of operations for
the year then ended, the statements of 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. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1999, by correspondence with the custodian. As to securities sold but
not yet delivered, we performed other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
California Money Market Portfolio of Smith Barney Muni Funds as of March 31,
1999, the results of operations for the year then ended, the changes in its 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, in
conformity with generally accepted accounting principles.
[KPMG LLP Signature]
New York, New York
May 12, 1999
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
Tax Information (unaudited)
For Federal tax purposes the Fund hereby designates for the fiscal year ended
March 31, 1999:
o 100.00% of the dividends paid by the fund from net investment income as
tax-exempt for regular Federal income tax purposes.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
Trustees
Donald R. Foley
Paul Hardin
Heath B. McLendon, CHAIRMAN
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, EMERITUS
Officers
Heath B. McLendon
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Lewis E. Daidone
SENIOR VICE PRESIDENT
AND TREASURER
Joseph Benevento
VICE PRESIDENT
Joseph P. Deane
VICE PRESIDENT
Irving P. David
CONTROLLER
Christina T. Sydor
SECRETARY
Investment Manager
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Transfer Agent
First Data Investors Services
Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds - California Money Market Portfolio. It is not
authorized for distribution to prospective investors unless accompanied or
preceded by a current Prospectus for the Portfolio, which contains
information concerning the Portfolio's investment policies and expenses as
well as other pertinent information.
SALOMON SMITH BARNEY IS A SERVICE MARK OF SALOMON SMITH BARNEY INC.
Smith Barney Muni Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD2309 5/99
<PAGE>
[GRAPHIC]
Smith Barney Muni Funds
Limited Term
Portfolio
-------------
ANNUAL REPORT
-------------
March 31, 1999
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(R)
<PAGE>
Smith Barney
Muni Funds
[PHOTO] [PHOTO]
HEATH B. PETER M.
MCLENDON COFFEY
Chairman Vice President
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney Muni Funds --
Limited Term Portfolio ("Portfolio") for the year ended March 31, 1999. We are
pleased to announce that Peter M. Coffey assumed management responsibility for
the Portfolio on February 2, 1999. Mr. Coffey has over 30 years of investment
experience and currently manages the Smith Barney Muni Funds -- National
Portfolio, among many others.
In this report, we summarize the period's prevailing economic and market
conditions and outline our portfolio strategy. A detailed summary of the
Portfolio's performance can be found in the appropriate sections that follow. We
hope you find this report to be useful and informative.
Performance Update
For the year ended March 31, 1999, Class A and L shares of the Smith Barney
Limited Term Portfolio returned 5.29% and 5.04%, respectively without sales
charges. In comparison, the Lipper Inc. peer group average returned 4.97% for
the same period. (Lipper Inc. is an independent fund-tracking organization.)
Based on the Portfolio's Class A share net asset value ("NAV") of $6.78 and a
current monthly income distribution rate of $0.0265 as of March 31, 1999, this
equates to an annualized yield of 4.69%. For an individual in the federal income
tax bracket of 36%, the Portfolio's tax-free yield of 4.69% is equivalent to a
taxable yield of 7.33%.
Market and Economic Overview
During much of the past year, the municipal bond market was an oasis of
stability compared to the significant turmoil experienced by other fixed-income
markets. In the wake of Russia's loan default, growing numbers of creditors
became increasingly risk averse. In response, the Federal Reserve Board ("Fed")
lowered short-term interest rates by 0.75% in three separate actions over the
course of several weeks. These interest-rate cuts helped lift bond markets. In
the midst of the turmoil, many investors fled to the relative safe
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
haven of U.S. Treasury bonds, sparking a sharp rally and helped send long-term
government interest rates to their lowest level in more than thirty years. The
30-year U.S. Treasury bond yield fluctuated approximately 1.36% from March 31,
1998 to March 31, 1999. In contrast, municipal bond yields (as measured by the
Bond Buyers 25 Revenue Index) were far less volatile and remained confined to a
much narrower range of roughly 0.41% during the same period.
Despite jittery financial markets, the U.S. economy continued to expand
vigorously, defying the expectations of many economists. The domestic economy
grew at an annual rate of 3.5% in the first quarter of 1999, coming off the
heels of a brisk 6% annual growth rate for the fourth quarter of 1998. The
unemployment rate hovered just above 4.2% in March 1999, a 29-year low. Yet,
inflationary pressures have been well contained. The Consumer Price Index rose a
mere 0.2% in January 1999 and an even more modest 0.1% in February 1999.
In our view, inflationary pressures have been held in check by a fortunate
combination of ongoing economic weakness abroad, added cost controls in health
care and the expanding role of technology. Economic recessions in many parts of
the world have helped keep import prices down, especially in key commodities
such as food and energy. In addition, the cost controls introduced by managed
health-care companies have begun to bring down medical costs and the growing use
of technology has not only boosted worker productivity, but has also made many
consumer goods companies much more cost competitive.
Municipal bonds, along with many other financial assets, have benefited from the
high-growth, low-inflation U.S. economy. Similar to other types of bonds,
municipal bond yields have declined but their real rate of return (i.e. the rate
of return after subtracting the effects of inflation) has remained historically
high. Moreover, long-term municipal bonds currently yield approximately 90% of
long-term U.S. Treasury bond yields. Typically, municipal bonds are considered a
good relative value when they yield approximately 85% of comparable-maturity
U.S. Treasury bonds.
A strong U.S. economy and low interest rates have encouraged many municipalities
to issue more bonds and refinance more expensive existing debt. We believe the
ability of the market to absorb the unusually heavy municipal bond issuance last
year is an indication of the health of the municipal bond market. This steady
equilibrium of supply and demand is one reason that municipal bond prices have
remained stable compared to other fixed-income assets.
Investment Strategy
The Smith Barney Muni Funds -- Limited Portfolio is an intermediate-term
municipal bond fund that seeks to provide investors with as high a level of
- --------------------------------------------------------------------------------
2 1999 Annual Report to Shareholders
<PAGE>
current income exempt from federal taxes as is consistent with a prudent
investment approach.
As a limited-term municipal bond fund, the Portfolio's average weighted maturity
will normally not exceed 10 years. During the Portfolio's fiscal year, we
continued to eliminate longer-term bonds without call protection because we
believe that those issues do not offer sufficient reward for their potential
risk. We have generally committed new Portfolio assets to bonds with maturities
that are close to their call date while maintaining a well-laddered structure in
the Portfolio.
As of March 31, 1999, the Portfolio's average weighted maturity was 9.8 years,
compared to 9.9 years as of March 31, 1998. The Portfolio's largest holdings
were concentrated in general obligation bonds (17.8%), hospital bonds (15.8%)
and education bonds (11.1%). In addition, we have maintained the Portfolio's
high credity quality orientation. Approximately 97% of its holdings were rated
investment grade or higher with roughly 56% rated AAA, the highest rating.
At the present time, we believe that limited-term municipal bonds offer very
attractive returns. Limited-term municipal bonds may offer investors 90% of the
return of longer-maturity bonds with significantly less volatility.
Municipal Bond Market Outlook
Over the near term, we remain largely positive on the prospects for municipal
bonds. In our judgement, Fed monetary policy will likely remain on hold until
signs of inflation surface. After a period of substantial volatility, we expect
that U.S. Treasury bonds will fluctuate within a fairly narrow trading range in
the coming months. As the global crisis continues to improve, demand for U.S.
Treasurys should weaken. Moreover, new municipal bond issuance volume for 1999
is down significantly from last year. If this pattern holds, it could set the
stage for a municipal bond rally later in the year.
We encourage you to visit our Web site at www.smithbarney.com and we look
forward to continuing to help you pursue your investment goals. Thank you for
investing in the Smith Barney Muni Funds -- Limited Term Portfolio.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman Vice President
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
---------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns(1)
================================================================================
3/31/99 $6.76 $6.78 $0.33 5.29%
- --------------------------------------------------------------------------------
3/31/98 6.54 6.76 0.34 8.66
- --------------------------------------------------------------------------------
3/31/97 6.61 6.54 0.35 4.30
- --------------------------------------------------------------------------------
3/31/96 6.54 6.61 0.36 6.65
- --------------------------------------------------------------------------------
3/31/95 6.55 6.54 0.37 5.69
- --------------------------------------------------------------------------------
3/31/94 6.68 6.55 0.37 3.65
- --------------------------------------------------------------------------------
3/31/93 6.45 6.68 0.39 9.82
- --------------------------------------------------------------------------------
3/31/92 6.38 6.45 0.42 7.99
- --------------------------------------------------------------------------------
3/31/91 6.28 6.38 0.40 8.23
- --------------------------------------------------------------------------------
3/31/90 6.20 6.28 0.46 9.07
================================================================================
Total $3.79
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares(2)
- --------------------------------------------------------------------------------
Net Asset Value
---------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns(1)
================================================================================
3/31/99 $6.76 $6.79 $0.31 5.04%
- --------------------------------------------------------------------------------
3/31/98 6.54 6.76 0.32 8.36
- --------------------------------------------------------------------------------
3/31/97 6.61 6.54 0.34 4.10
- --------------------------------------------------------------------------------
3/31/96 6.54 6.61 0.34 6.45
- --------------------------------------------------------------------------------
3/31/95 6.54 6.54 0.35 5.51
- --------------------------------------------------------------------------------
3/31/94 6.68 6.54 0.35 3.15
- --------------------------------------------------------------------------------
Inception* - 3/31/93 6.62 6.68 0.09 2.28+
================================================================================
Total $2.10
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
- --------------------------------------------------------------------------------
Net Asset Value
---------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns(1)
================================================================================
Inception* - 3/31/99 $6.82 $6.78 $0.14 1.46%+
================================================================================
It is the Fund's policy to distribute dividends monthly and
capital gains, if any, annually.
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
------------------------------
Class A Class L(2) Class Y
================================================================================
Year Ended 3/31/99 5.29% 5.04% N/A
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 6.11 5.88 N/A
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/99 6.92 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/99 6.79 5.59 1.46%+
================================================================================
With Sales Charge(3)
------------------------------
Class A Class L(2) Class Y
================================================================================
Year Ended 3/31/99 3.16% 2.97% N/A
- --------------------------------------------------------------------------------
Five Years Ended 3/31/99 5.69 5.66 N/A
- --------------------------------------------------------------------------------
Ten Years Ended 3/31/99 6.69 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/99 6.58 5.41 1.46%+
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
================================================================================
Class A (Inception* through 3/31/99) 97.30%
- --------------------------------------------------------------------------------
Class L (Inception* through 3/31/99)(2) 40.39
- --------------------------------------------------------------------------------
Class Y (Inception* through 3/31/99) 1.46
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class L shares.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 2.00% and Class L shares
reflect the deduction of a 1.00% CDSC, which applies if shares are
redeemed within one year from initial purchases.
* Inception dates for Class A, L and Y shares are November 28, 1988, January
5, 1993 and November 12, 1998, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the Limited Term Portfolio vs.
Lehman Brothers Municipal Bond Index
and Lehman Brothers Municipal 10-Year Bond Index+
- --------------------------------------------------------------------------------
March 1989 -- March 1999
26547 S/B Muni Funds Limited
Line Chart
[GRAPHIC]
Limited Term Lehman Brothers Lehman Brothers
Portfolio Municipal Bond Index 10-Year Bond Index
3/89 9795 10000 10000
3/90 10667 11055 10998
3/91 11530 12074 12063
3/92 12435 13281 13187
3/93 13640 14943 14931
3/94 14122 15289 15351
3/95 14909 16427 16505
3/96 15900 17804 17969
3/97 16583 18773 18907
3/98 18020 20784 20871
3/99 18974 22073 22179
+ Hypothetical illustration of $10,000 invested in Class A shares on March
31, 1989, assuming deduction of the maximum 2.00% sales charge at the time
of investment and reinvestment of dividends (after deduction of applicable
sales charge through November 6, 1994, afterwards at net asset value) and
capital gains, if any, at net asset value through March 31, 1999. The
Lehman Brothers Municipal 10-Year Bond Index (consisting of maturities of
10 years) is a sub-index of the Lehman Brothers Municipal Bond Index, a
broad-based, total return index comprised of investment grade, fixed rate
municipal bonds selected from issues larger than $50 million issued since
January 1984. Each index is unmanaged and is not subject to the same
management and trading expenses of a mutual fund. The performance of the
Portfolio's other classes may be greater or less than the Class A shares'
performance indicated on this chart, depending on whether greater or
lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
- --------------------------------------------------------------------------------
6 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Education -- 11.1%
$ 2,825,000 Aa2* Arizona Education Loan Marketing Corp., Education
Loan Revenue Bonds, 7.000% due 3/1/02(a)(b)
$3,012,156
1,710,000 A* Arkansas State Student Loan Authority Revenue,
Sub-Series A-2, (Partially Pre-Refunded -- Escrowed
with U.S. government securities to 12/1/97,
Call @ 100), 6.125% due 12/1/00(a)(c)
1,750,612
1,610,000 Aaa* Blue Mountain Community College, OR District of
Umatillia County, AMBAC-Insured,
5.250% due 6/15/13
1,692,512
3,030,000 AAA Boonville, IN High School - Castle Junior High School
Building Corp., MBIA-Insured, 5.000% due 1/15/13
3,064,087
940,000 Aa* Brazos, TX Higher Education Authority, Series C-1,
6.000% due 11/1/99(a)
952,041
1,000,000 AA- Cherokee County, GA School System, 5.000% due 2/1/14
1,025,000
3,900,000 AAA Chicago, IL Board of Education, Capital Appreciation,
School Reform, Series B-1, FGIC-Insured,
zero coupon to yield 4.850% due 12/1/12
1,998,750
2,500,000 AAA El Paso County, CO School District No. 49, Series A,
FSA-Insured, 5.500% due 12/1/13
2,731,250
1,150,000 AA Fairfield County, SC School District, COP,
5.500% due 3/1/07
1,220,437
Houston, TX School District, Capital Appreciation
Refunding, Series A:
3,510,000 AAA Zero coupon to yield 4.450% due 2/15/08
2,364,862
1,000,000 AAA Zero coupon to yield 4.550% due 2/15/09
640,000
1,000,000 A+ Illinois Student Assistance Commission, Student Loan
Revenue, Series H, 6.100% due 3/1/01(a)
1,027,500
1,500,000 A1* Indiana State Educational Facilities Authority Revenue,
Depauw University Project, 5.300% due 7/1/16
1,520,625
2,000,000 AAA Jefferson Parish, LA School Board, Sales and Use
Tax Revenue, FSA-Insured, zero coupon to
yield 5.000% due 9/1/09
1,237,500
4,575,000 AAA Keller, TX ISD, Capital Appreciation, PSFG,
zero coupon to yield 4.930% due 8/15/12
2,407,594
1,000,000 Aaa* Kentucky Higher Education Student Loan Corp.,
Insured Student Loan Revenue, Series 91B,
6.500% due 12/1/00(a)
1,042,500
205,000 AAA Louisiana Public Facilities Authority Revenue,
Supplemental Student Loan, Series C,
AMBAC-Insured, 8.125% due 12/1/99
210,445
1,070,000 A* Montana State Higher Education Student Assistance
Corp., Student Loan Revenue, Series 92B,
7.050% due 6/1/04(a)
1,130,187
1,000,000 AAA New Jersey EDA Revenue, Educational Testing
Service, Series A, MBIA-Insured, 6.000% due 5/15/25
1,123,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Education -- 11.1% (continued)
$ 1,450,000 AAA New York State Dormitory Authority Revenue,
Upstate Community Colleges, Series A,
AMBAC-Insured, 5.000% due 7/1/16
$ 1,457,250
North Texas Higher Education Authority Inc.,
Student Loan Revenue:
1,475,000 AAA AMBAC-Insured, 7.000% due 4/1/01(a)
1,543,086
2,400,000 A* Series D, 6.300% due 4/1/09(a)
2,478,000
2,000,000 AAA Pennsylvania State Higher Education Assistance Agency,
Student Loan Revenue Refunding, Series A,
FGIC-Insured, 6.800% due 12/1/00
2,095,000
2,000,000 AAA Rhode Island State Health & Educational Building Corp.
Revenue, Higher Education Facility, Johnson & Wales,
MBIA-Insured, 5.500% due 4/1/16
2,135,000
1,500,000 A* Rhode Island Student Loan Authority Revenue Refunding,
Series 92B, 6.750% due 12/1/01(a)
1,582,500
1,500,000 AAA Schuylkill, PA Redevelopment Authority Revenue,
Commonwealth Lease Revenue Bonds, Series A,
FGIC-Insured, 6.850% due 6/1/03
1,621,875
1,625,000 AAA West Baton Rouge Parish, LA School District No. 3,
Refunding, FSA-Insured, 5.000% due 3/1/10
1,702,187
- --------------------------------------------------------------------------------
- ---------------------
44,766,706
- --------------------------------------------------------------------------------
- ---------------------
Escrowed to Maturity(c) -- 2.8%
115,000 NR Allegheny County, PA Hospital Development Authority
Revenue, 6.875% due 7/1/09
128,656
505,000 Baa3* Delaware County, PA Development Authority Revenue,
(Elwyn Inc. Project), 7.750% due 6/1/00
529,619
945,000 AAA Erie County, OH Hospital Improvement, Sandusky
Memorial Hospital, 8.750% due 1/1/06
1,102,106
1,050,000 AAA Illinois Educational Facilities Authority Revenue,
Chicago
Osteopathic Medical, Series A, 8.750% due 7/1/05
1,236,375
685,000 AAA Kalamazoo, MI Hospital Finance Authority,
6.750% due 4/1/03
726,956
295,000 NR Lehigh County, PA IDA, Industrial & Commercial
Development Revenue, (Strawbridge Project),
7.200% due 12/15/01
307,169
435,000 AAA Lima, OH Hospital Revenue, 7.500% due 11/1/06
492,094
1,135,000 Baa1* New Haven, CT GO, Series B, 9.000% due 12/1/01
1,288,225
1,335,000 AAA Ohio State Water Development Authority Revenue,
9.375% due 12/1/10
1,685,437
320,000 A Ouachita Parish, LA Hospital Services District #1,
Hospital Revenue Bonds, Glenwood Regional
Medical Center, Series 1991, 7.250% due 7/1/00
334,400
1,290,000 AAA Owensboro, KY Electric, Light & Power,
10.500% due 1/1/04(b)
1,510,912
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Escrowed to Maturity(c) -- 2.8% (continued)
$ 125,000 Aa* Philadelphia, PA Hospitals and Higher Education
Facilities
Authority Revenue, (St. Agnes Medical Center
Project),
FHA-Insured, 6.750% due 8/15/01
$ 129,531
240,000 AAA San Francisco, CA Airport Improvement Corp.,
Lease Revenue, United Airlines, 7.875% due 7/1/99
241,481
455,000 AAA Sikeston, MO Electric Revenue, 6.250% due 6/1/08
496,519
335,000 NR Sullivan County, TN Health & Educational Facilities,
Holston Valley Community Hospital,
7.000% due 9/1/99
338,501
735,000 NR Tom Green County, TX Hospital Authority,
7.875% due 2/1/06
825,956
- --------------------------------------------------------------------------------
- ---------------------
11,373,937
- --------------------------------------------------------------------------------
- ---------------------
General Obligation -- 17.8%
2,365,000 AAA Anchorage, Alaska Refunding, Series A, FGIC-Insured,
5.000% due 4/1/11
2,430,037
1,000,000 AAA Arizona COP Refunding GO, FSA-Insured,
6.500% due 3/1/08
1,088,750
Baltimore, MD GO, Capital Appreciation, Consumer
Public Improvement, Series C, FGIC-Insured:
4,020,000 AAA Zero coupon to yield 4.750% due 10/15/07
2,803,950
4,000,000 AAA Zero coupon to yield 4.750% due 10/15/08
2,660,000
4,600,000 AAA Zero coupon to yield 4.800% due 10/15/09
2,903,750
3,000,000 AAA Zero coupon to yield 4.950% due 10/15/11
1,687,500
2,000,000 AAA Chicago, IL Board of Education GO, Chicago School
Reform, AMBAC-Insured, 5.800% due 12/1/13
2,197,500
3,310,000 AAA Chicago, IL Project & Refunding, Series A,
FGIC-Insured, 4.900% due 1/1/14
3,310,000
3,000,000 AAA Georgia State Refunding, Series E, 5.250% due 2/1/09
3,228,750
795,000 BBB Government of Guam GO, Series A, 5.750% due 8/15/99
800,962
Harris County, TX Refunding Toll Road Authority GO
Unlimited, MBIA-Insured:
1,000,000 AAA Zero coupon to yield 5.150% due 8/15/11
558,750
1,000,000 AAA Zero coupon to yield 5.200% due 8/15/12
526,250
1,250,000 AAA Zero coupon to yield 5.250% due 8/15/13
618,750
11,000,000 AAA Kenosha, WI Capital Appreciation, Series B, FSA-
Insured,
zero coupon to yield 4.430% due 10/15/08
7,260,000
Massachusetts State GO, Series C:
2,500,000 AA- 5.250% due 8/1/16
2,578,125
6,705,000 AA- Zero coupon to yield 5.020% due 8/1/18
2,531,137
1,000,000 AA+ New Hampshire State, Refunding, Series A,
5.250% due 10/1/11
1,062,500
865,000 Baa1* New Haven, CT GO, Series B, 9.000% due 12/1/01
969,881
2,500,000 AA- New Jersey State GO, COP Equipment, Series A,
6.400% due 4/1/05
2,681,250
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
General Obligation -- 17.8% (continued)
New York City GO:
$ 2,500,000 A- Series A, 6.250% due 8/1/08
$ 2,821,875
130,000 A- Series D, 7.200% due 2/1/00
134,111
6,640,000 A- Series F, zero coupon to yield 5.050% due 8/1/08
4,365,800
2,000,000 A- Series H, 5.900% due 8/1/09
2,210,000
New York, NY GO, Capital Appreciation, Series G,
MBIA-Insured:
4,000,000 AAA Zero coupon to yield 4.650% due 8/1/07
2,795,000
4,190,000 AAA Zero coupon to yield 4.750% due 8/1/08
2,791,587
1,500,000 AAA Philadelphia, PA Refunding, FGIC-Insured,
5.125% due 5/15/09
1,588,125
5,000,000 AA+ Phoenix, AZ Refunding, Series A, 5.000% due 7/1/08
5,281,250
1,500,000 A Puerto Rico Commonwealth, Public Improvement,
5.250% due 7/1/16
1,576,875
12,410,000 AAA Puerto Rico Commonwealth GO, Capital Appreciation,
Public Improvement, zero coupon to yield
4.950% due 7/1/15
5,739,625
1,500,000 AA+ Shelby County, TN GO, zero coupon to yield
5.350% due 8/1/14
721,875
200,000 AA Texas State Veterans Housing Assistance Fund GO,
FHA-Insured, 6.050% due 12/1/12(a)
203,750
- --------------------------------------------------------------------------------
- ---------------------
72,127,715
- --------------------------------------------------------------------------------
- ---------------------
Hospitals -- 15.8%
425,000 A+ ABAG Finance Authority Nonprofit Corps, CA Insured
COP, (Rehabilitation Mental Health Services Inc.
Project), 6.100% due 6/1/02
454,219
1,000,000 AAA Calcasieu Parish, LA Memorial Hospital Services
District Revenue, Lake Charles Memorial Hospital,
Series A, CONNIE LEE-Insured, 7.500% due 12/1/05
1,186,250
3,010,000 BBB Colorado Health Facilities Authority Hospital Revenue
Bonds, Series 1993, Rocky Mountain Adventist
Health Guaranteed, 6.250% due 2/1/04
3,104,062
300,000 VMIG1* Georgia State Hospital Financing Authority Revenue,
GA Pooled Hospital Lien Program, 2.850% due 3/1/01(e)
300,000
2,135,000 NR Harris County, TX Health Facilities Development Corp.,
Memorial Health System Guaranteed,
7.125% due 6/1/05
2,385,862
1,355,000 BBB Illinois Development Financing Authority, Health
Facilities
Revenue, Community Living Options,
6.375% due 3/1/00
1,377,994
1,000,000 BBB Illinois Health Facilities Authority Revenue Refunding,
Trinity Medical Center, 6.500% due 7/1/00
1,028,750
1,800,000 AAA Jefferson County, KY Hospital Revenue, MBIA-Insured,
6.436% due 10/23/14(d)
1,962,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Hospitals -- 15.8% (continued)
$ 500,000 Ba3* Langhorne Manor Higher Education & Health Authority,
Bucks County, PA Lower Bucks Hospital,
6.375% due 7/1/99
$ 501,090
2,200,000 BBB Maplewood, MN Healthcare Facilities Revenue,
(Health East Project), 5.950% due 11/15/06
2,219,250
2,500,000 A Maricopa County, AZ IDA, Health Facilities Revenue,
Catholic Healthcare, (West Project), Series A,
5.250% due 7/1/06
2,634,375
New Jersey Healthcare Facilities Financing
Authority Revenue:
3,225,000 AAA Cathedral Health Services, MBIA/FHA-Insured,
5.200% due 8/1/15
3,301,594
1,000,000 Baa1* Elizabeth General Medical Center, Series C,
7.100% due 7/1/99
1,008,520
2,750,000 AAA Newark Beth Israel Medical Center, FSA-Insured,
6.000% due 7/1/24
3,069,687
1,030,000 BBB++ Pascack Valley Hospital, Series 91,
6.500% due 7/1/01
1,093,087
2,000,000 BBB Pascack Valley Hospital Association,
5.125% due 7/1/18
1,932,500
640,000 AAA Wayne General Hospital, Series B, FHA-Insured,
5.750% due 8/1/11
707,200
3,000,000 AAA New York City, NY Health & Hospital Corp. Revenue,
Health System, Series A, 5.125% due 2/15/14
3,075,000
1,900,000 AAA New York State Dormitory Authority Lease Revenue,
Municipal Health Facilities, (Import Project), Series
1,
FSA-Insured, 5.000% due 1/15/17
1,890,500
New York State Dormitory Authority Revenue:
3,000,000 A- Mental Health Services Facilities, Series B,
5.750% due 8/15/12
3,255,000
8,675,000 AAA New York & Presbyterian Hospital, AMBAC/FHA-Insured,
4.750% due 8/1/14
8,577,406
1,150,000 AAA St. Barnabas Hospital, AMBAC/FHA-Insured,
5.350% due 8/1/17
1,180,188
1,000,000 AA- North Carolina Medical Care Common Hospital Revenue,
Pitt County Memorial Hospital, Series A,
5.000% due 12/1/18
980,000
1,500,000 BBB+ Oklahoma Development Financing Authority Revenue
Refunding, Hillcrest Healthcare System,
Series A, 5.750% due 8/15/15
1,530,000
2,170,000 NR Palm Beach County, FL Health Facilities Authority
Revenue, Good Samaritan Health System Guaranteed,
6.150% due 10/1/06
2,435,825
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Hospitals -- 15.8% (continued)
$ 1,750,000 A Riverside, CA Asset Leasing Corp. Leasehold Revenue
Bonds, 1993 Series A, (Riverside Hospital Project),
6.000% due 6/1/04
$ 1,903,125
4,690,000 AA Royal Oak, MI Hospital Financing Authority Revenue,
William Beaumont Hospital, Series K,
zero coupon to yield 5.150% due 11/15/08
3,060,225
1,540,000 A- Scotts Bluff County, NE Hospital Authority No. 1,
Hospital Revenue, 6.450% due 12/15/04
1,674,750
Scranton-Lackawanna, PA Health & Welfare
Authority Revenue:
3,000,000 BBB-++ Allied Services Rehabilitation Hospitals,
7.125% due 7/15/05
3,270,000
1,000,000 BBB- Moses Taylor Hospital Project, 6.050% due 7/1/10
1,061,250
357,000 BBB-++ Valley Health System, CA COP Refunding Project,
6.250% due 5/15/99
357,689
1,500,000 Aaa* Washington State Healthcare Facilities Authority
Revenue,
Childrens Hospital & Regional Medical Center,
FSA-Insured, 5.250% due 10/1/14
1,554,375
- --------------------------------------------------------------------------------
- ---------------------
64,071,773
- --------------------------------------------------------------------------------
- ---------------------
Housing -- 4.9%
2,500,000 BBB California Statewide Community Development Authority
Revenue, Irvine Apartment Communities,
Series A-4, 5.250% due 5/15/25
2,556,250
2,250,000 AAA Dekalb County, GA HFA, Multi-Family Housing Revenue,
(Chimney Trace Project), FNMA-Collateralized,
5.625% mandatory tender 5/1/05
2,390,625
455,000 AAA Fairfax County, VA Redevelopment & Housing Authority,
Multi-Family Refunding, Kingsley 91A,
FHA-Insured, 6.500% due 11/1/01
475,475
1,000,000 AAA Harrisonburg, VA Redevelopment & Housing Authority,
Multi-Family Housing Revenue, (Greens of Salem
Run Project), FSA-Insured, 6.000% due 4/1/12(a)
1,067,500
1,800,000 AA- Louisiana Public Facilities Authority Revenue,
Multi-Family Housing, Oakleigh Apartments,
Series A, 5.950% mandatory tender 3/15/05
1,890,000
1,200,000 NR Maricopa County, AZ IDA, Multi-Family Housing
Revenue, Stanford Court Apartments,
Series B, 5.750% due 7/1/08
1,221,000
1,000,000 Aaa* Mississippi Home Corp., Single Family Mortgage
Revenue, Class 4, Series C, 4.900% due 6/1/17
997,500
2,500,000 AAA Missouri State Housing Development, Community
Mortgage Revenue, Single Family, Series E-1,
6.450% due 9/1/29
2,753,125
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Housing -- 4.9% (continued)
$ 260,687 AAA Monroe-West Monroe, LA Public Trust Financing
Authority, FHLMC-Collateralized, 8.500% due 5/20/02
$ 270,788
815,000 Aaa* Nevada Housing Single-Family Mortgage, Series E,
FHA-Insured, 5.350% due 10/1/27(a)
834,356
385,000 Ba2* Odessa, TX Housing Development Corp. #2,
Multi-Family Revenue Refunding, Chaparral Village,
Series A, 6.375% due 12/1/03
401,363
1,190,000 AAA Onterie Center Housing Finance Corp., IL Mortgage
Revenue Refunding, (Onterie Center Project),
Series A, MBIA-Insured, 6.500% due 7/1/02
1,262,888
75,000 AAA St. Louis County, MO Single-Family Mortgage Revenue,
MBIA-Insured, 6.125% due 4/1/03
77,531
2,500,000 A3* Stamford, CT Housing Authority, Multi-Family
Revenue Refunding, (Fairfield Apartments Project),
4.750% due 12/1/28
2,475,000
850,000 AAA Texas State Department of Housing & Community Affairs,
GNMA/FNMA/FHLMC-Collaterized Home Mortgage
Revenue Bonds, Series B-2, RIBS Variable Rate,
10.000% due 6/18/23(a)(d)
912,688
35,000 AAA Texas State Housing Agency Mortgage Revenue
Single-Family, 1987D, GNMA-Collaterized,
7.750% due 7/1/99(a)
35,162
410,000 AA Wyoming Community Development Authority,
Single-Family Mortgage, Series 1988C,
7.800% due 6/1/99(a)
411,177
- --------------------------------------------------------------------------------
- ---------------------
20,032,428
- --------------------------------------------------------------------------------
- ---------------------
Industrial Development -- 6.4%
1,500,000 A Bel Air, MD Revenue Refunding, (May Department
Stores Co. Project), 6.375% due 10/1/99
1,521,315
1,000,000 A Belmont County, OH IDR Refunding, (May Department
Stores Co. Project), Series 91, 6.500% due 1/1/00
1,021,690
2,000,000 AAA Clarion County, PA IDA Energy Development Revenue,
(Piney Creek Project), LOC Swiss Bank,
7.250% mandatory tender 12/1/00(a)
2,105,000
200,000 VMIG1* Dade County, FL IDA Exempt Facilities Revenue
Refunding, FL Power & Light Co., 2.900% due 6/1/21(e)
200,000
5,000,000 BBB- Greenville, SC Connector 2000 Association Inc.,
SC Toll Road Revenue, Capital Appreciation,
Series B, zero coupon to yield 5.700% due 1/1/15
2,018,750
3,000,000 Ba1* Griffin-Spalding County, GA Development Authority
Revenue Refunding, Inc. (Borden Inc. Project,)
Borden Inc. Guaranteed, 7.200% due 6/1/00
3,090,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Industrial Development -- 6.4% (continued)
$ 2,000,000 A Iowa Finance Authority, (Governors Square Project),
Policy of Indemnity Commercial Union
Assurance Co. PLC, Reinsured by
Trygg-Hansa Insurance Co. of Sweden,
7.250% mandatory tender 4/1/02
$ 2,068,320
3,000,000 A+ Marion, IA Commercial Development Revenue,
(Collins Road Project), Policy of Indemnity
Aetna Casualty & Surety Co., Reinsured by
Trygg-Hansa Insurance Co. of Sweden,
7.250% mandatory tender 7/1/02
3,075,180
3,500,000 BBB+ Metropolitan Government Nashville & Davidson County,
TN IDB Revenue Refunding & Improvement, Osco
Treatment Inc. Guaranteed, 6.000% due 5/1/03(a)
3,648,750
1,000,000 NR Minneapolis, MN Commercial Development Revenue,
(Holiday Inn Metrodome Project), 6.000% due 12/1/01
1,011,250
1,335,000 Aa3* New Jersey EDA, Growth Bonds, LOC Banque
Nationale de Paris, 6.200% due 12/1/02(a)
1,408,425
New York City IDA:
1,135,000 NR Community Hospital, Brooklyn, 6.875% due 11/1/10
1,140,675
555,000 Aa2* IDR Oakdale Knitting Mills Inc., Composite Offering
XXX 1990, Series G, LOC ABN AMRO Bank, NV,
7.700% mandatory tender 11/1/00(a)
557,109
415,000 Aa2* SuperFlex, Ltd. Project, Composite Offering XVIII
1989,
Series A, LOC ABN AMRO Bank, NV,
7.750% optional tender 11/1/99(a)
416,303
2,350,000 AAA Sioux City, IA IDR, (Terra Centre Project),
LOC Rabobank Nederland, 6.800% due 5/1/07
2,508,625
- --------------------------------------------------------------------------------
- ---------------------
25,791,392
- --------------------------------------------------------------------------------
- ---------------------
Life Care -- 0.3%
1,000,000 AAA Rio Grande Valley, TX Health Facilities, (Valley
Baptist
Medical Center Project), Short RITES, MBIA-Insured,
Coupon varies weekly until 8/1/02 then converts to
6.250%, 7.920% due 8/1/06
1,130,000
- --------------------------------------------------------------------------------
- ---------------------
Miscellaneous -- 11.6%
1,500,000 AAA Central Puget Sound, WA Regional Transit Authority
Sales Tax, FGIC-Insured, 5.250% due 2/1/15
1,575,000
2,595,000 BBB- Clarksville, TN Natural Gas Acquisition Corp.,
Gas Revenue, Series A, 6.500% due 11/1/00
2,676,094
2,750,000 A2* Hoffman Estate, IL Tax Increment Junior Lien,
Hoffman Estate Development, Series 91,
6.500% due 5/15/01
2,877,188
2,700,000 A Illinois Development Finance Authority Revenue,
Debt Restructure - East St. Louis,
6.875% due 11/15/05
3,003,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Miscellaneous -- 11.6% (continued)
Indiana Bond Bank, Common School Federal Advisory
Purchase Funding, Series A, AMBAC-Insured:
$ 1,540,000 AAA 5.000% due 2/1/12
$ 1,580,425
1,000,000 AAA 5.000% due 2/1/14
1,018,750
595,000 AAA Kansas State Development Financing Authority Revenue,
Refunding, Department of Corrections
(Ellsworth Project), Series A-2, MBIA-Insured,
5.000% due 10/1/07
623,263
6,815,000 Aa3* Massachusetts State Grant, Series B,
zero coupon to yield 4.800% due 6/15/12
3,663,063
Massachusetts State Health & Educational Facilities
Authority Revenue, (Capital Asset Program):
100,000 VMIG1* Series B, 2.750% due 7/1/05(e)
100,000
1,300,000 VMIG1* Series E, 2.950% due 1/1/35(e)
1,300,000
New York City, NY Municipal Assistance Corp.:
2,580,000 AA Series N, 5.250% due 7/1/08
2,763,825
5,000,000 AA Series O, 5.250% due 7/1/08
5,356,250
New York City, NY Transitional Financing
Authority Revenue, Series B:
2,290,000 AA 5.125% due 11/1/12
2,378,738
2,000,000 AA 5.125% due 11/1/15
2,042,500
1,500,000 A New York State Job Development Authority,
Special Purpose, Series A, 5.250% due 3/1/10
1,560,000
2,950,000 BBB+ New York State Urban Development Corp. Revenue,
Correctional Capital Facilities, Series 6,
5.500% due 1/1/13
3,152,813
5,000,000 AAA Oregon State Department of Administrative Services,
Lottery Revenue, Series A, FSA-Insured,
5.250% due 4/1/12
5,275,000
700,000 VMIG1* Phoenix, AZ Series 95-2, 2.950% due 6/1/20(e)
700,000
500,000 VMIG1* Puerto Rico Commonwealth Government Development
Bank, Refunding, MBIA-Insured, 2.750% due 12/1/15(e)
500,000
3,900,000 BBB- Spokane, WA Downtown Foundation Parking Revenue,
(River Park Square Project), 5.000% due 8/1/08
3,895,125
1,000,000 AA Tuscon, AZ COP, Asset Guaranty, 6.000% due 7/1/04
1,085,000
- --------------------------------------------------------------------------------
- ---------------------
47,126,784
- --------------------------------------------------------------------------------
- ---------------------
Pollution Control -- 2.7%
200,000 VMIG1* Brazos River, TX Pollution Control Authority Revenue,
TX Utilities Electric Co., Series A, 3.100% due
4/1/30(e) 200,000
860,000 AAA Burke County, GA Development Authority PCR,
Refunding, Ogelthorpe Power Co., MBIA-Insured,
7.500% due 1/1/03
923,425
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Pollution Control -- 2.7% (continued)
Detroit, MI Economic Development Corp.,
Facilities Recovery Revenue, FSA-Insured:
$ 2,540,000 AAA Series A, 7.000% due 5/1/01(a)
$ 2,657,475
1,000,000 AAA Series 91A, 6.600% due 5/1/02(a)
1,072,500
800,000 P-1* Jackson County, MS Pollution Control Revenue Refunding,
(Chevron USA Inc. Project), 2.950% due 6/1/23(e)
800,000
1,500,000 BBB+ Illinois Development Financing Authority, Solid Waste
Disposal Revenue Bonds, (Waste Management
Inc. Project), Series 1990, 7.125% due 1/1/01(a)
1,563,750
100,000 VMIG1* Manatee County, FL Pollution Control Revenue Refunding,
(Florida Power & Light Co. Project),
3.000% due 9/1/24(e)
100,000
1,000,000 BBB Massachusetts State IDB Finance Agency, PCR,
(Eastern Edison Co. Project), 5.875% due 8/1/08
1,035,000
1,500,000 AAA Montgomery, AL IDB, PCR, (General Electric Co.
Project),
7.000% mandatory tender, 9/15/00(a)
1,569,375
950,000 Baa1* Onondaga County, NY Resource Recovery Agency
Project Revenue Bonds, Series 1992,
6.625% due 5/1/00(a)
975,213
- --------------------------------------------------------------------------------
- ---------------------
10,896,738
- --------------------------------------------------------------------------------
- ---------------------
Pre-Refunded(c) -- 2.0%
Austin, TX Water, Sewer & Electric Refunding Revenue:
30,000 A* Call 5/15/99 @ 100,14.000% due 11/15/01
30,713
60,000 A* Various Call Dates @ 100, 14.000% due 11/15/01
65,550
1,795,000 NR Berks County, PA Municipal Authority Refunding,
(Phoebe Berks Village Inc. Project),
(Escrowed to Maturity with U.S. government
securities,
Call 5/15/06 @ 102), 7.500% due 5/15/13
2,095,663
495,000 AAA Gila County, AZ IDA PCR, (Call 2/15/01 @ 101),
11.250% due 4/1/01
558,113
3,200,000 AAA Jefferson County, KY Hospital Revenue, MBIA-Insured,
(Escrowed to Maturity with State and Local
government series, Various Call Dates @
Various Prices), 6.436% due 10/23/14(d)
3,544,000
235,000 AAA Massachusetts State Port Authority Revenue,
FGIC-Insured, Series A, (Escrowed to Maturity with
State and Local government securities, 7/1/03(a)
Call 7/1/00 @ 102), 7.200% due 7/1/03(a)
249,981
1,190,000 AAA West Jefferson Amusement & Public Park Authority
Revenue, (Visionland Alabama Project),
(Escrowed to Maturity with U.S. Treasury Obligations,
Call 12/1/06 @ 102), 7.500% due 12/1/08
1,378,913
- --------------------------------------------------------------------------------
- ---------------------
7,922,933
- --------------------------------------------------------------------------------
- ---------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Public Facilities -- 2.2%
$ 4,000,000 Aa* Mt. Sterling, KY Lease Revenue, Kentucky League of
Cities 1993A, Transamerica Life Guaranteed,
5.625% due 3/1/03(b)
$ 4,225,000
4,550,000 Aa1* New York State Dormitory Authority Lease Revenue,
Court Facilities, Westchester County,
AMBAC-Insured, 5.000% due 8/1/07
4,800,250
- --------------------------------------------------------------------------------
- ---------------------
9,025,250
- --------------------------------------------------------------------------------
- ---------------------
Solid Waste -- 0.8%
3,000,000 A2* Northeast Maryland Waste Disposal Authority,
Solid Waste Revenue, Montgomery County,
6.200% due 7/1/10(a)
3,240,000
- --------------------------------------------------------------------------------
- ---------------------
Transportation -- 7.5%
Denver, CO City & County Airport Revenue:
1,590,000 BBB+ Series 1992B, 7.000% due 11/15/01(a)
1,699,313
1,000,000 BBB+ Series 1992B, 7.000% due 11/15/02(a)
1,088,750
1,000,000 BBB+ Series 1994A, 7.200% due 11/15/02(a)
1,096,250
1,510,000 AAA Series B, MBIA-Insured, 6.250% due 11/15/06(a)
1,698,750
E-470 Public Highway Authority, CO Sr. Revenue Bonds,
MBIA-Insured:
5,000,000 AAA Zero coupon to yield 5.430% due 9/1/16
2,087,500
5,000,000 AAA Zero coupon to yield 5.450% due 9/1/17
1,975,000
2,445,000 AAA Hawaii Airport System Revenue, Second Series of 91,
MBIA-Insured, 6.100% due 7/1/99(a)
2,461,626
4,500,000 AAA Illinois State Toll Highway Authority, Toll Highway
Priority Revenue Refunding, Series A, FSA-Insured,
5.500% due 1/1/13
4,871,250
1,250,000 A1* Indiana Transportation Finance Authority,
Airport Facilities Lease Revenue, Series A,
United Air, 6.125% due 11/1/02
1,342,188
765,000 AAA Massachusetts State Port Authority Revenue,
FGIC-Insured, Series A,
7.200% due 7/1/03(a)
808,988
9,000,000 Aaa* Massachusetts State Turnpike Authority,
Metropolitan Highway System Revenue,
Series C, MBIA-Insured, zero coupon to
yield 5.400% due 1/1/16
3,948,750
3,000,000 AA Ocean Highway and Port Authority, Nassau County,
FL Adjustable Demand Revenue Bonds,
Series 1990, LOC ABN AMRO Bank, NV,
6.250% mandatory tender 12/1/02(a)
3,243,750
2,500,000 A Rhode Island State Turnpike & Bridge Authority Revenue,
5.350% due 12/1/17
2,515,625
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Transportation -- 7.5% (continued)
$ 1,340,000 AAA Triborough Bridge & Tunnel Authority,
NY Special Obligation, Series A, FGIC-Insured,
5.000% due 1/1/16
$ 1,346,700
- --------------------------------------------------------------------------------
- ---------------------
30,184,440
- --------------------------------------------------------------------------------
- ---------------------
Utilities -- 10.5%
5,000,000 AAA Alaska Energy Authority, Power Revenue Refunding,
FSA-Insured, 3rd Series, 6.000% due 7/1/17
5,575,000
5,595,000 AAA Austin, TX Revenue, MBIA-Insured, zero coupon to
yield 4.750% due 5/15/15
2,503,763
Austin, TX Water, Sewer & Electric Refunding Revenue:
30,000 NR Refunded-1998, 14.000% due 11/15/01
34,200
3,985,000 A* Unrefunded Balance-1998, 14.000% due 11/15/01
4,527,956
Chelan County, WA Public Utility District #1:
1,500,000 AA Chelan Hydro Consolidated System Revenue Bonds,
7.000% mandatory tender 7/1/01(a)
1,601,250
22,485,000 AAA Columbia River Rock Capital Appreciation, MBIA-
Insured,
zero coupon to yield 6.999% due 6/1/13(b)
11,270,606
5,000,000 AAA Georgia Municipal Electric Authority, (Project One),
Sub-Series A, MBIA-Insured, 5.250% due 1/1/14
5,243,750
600,000 A- Georgia Muni Gas Authority Revenue, (Southern Storage
Gas Project), 6.300% due 7/1/09
654,000
Long Island Power Authority, NY Electric System
Revenue:
3,715,000 AAA Capital Appreciation, Series A, FSA-Insured,
zero coupon to yield 5.280% due 12/1/17
1,453,494
5,000,000 AAA Sub-Series 8 - 8F, MBIA-Insured, 5.000% due 4/1/11
5,206,250
770,000 BBB Philadelphia, PA Gas Works Revenue Bonds, 13th Series,
7.400% due 6/15/00
800,800
1,000,000 BB Sam Rayburn, TX Municipal Power Supply System
Revenue Refunding, Series A, 6.200% due 10/1/01
1,021,250
2,520,000 AAA Union County, NJ Utilities Authority, Series A,
AMBAC-Insured, 5.000% due 6/1/14(a)
2,532,600
- --------------------------------------------------------------------------------
- ---------------------
42,424,919
- --------------------------------------------------------------------------------
- ---------------------
Water & Sewer -- 3.6%
3,500,000 AAA Detroit, MI Water Supply System, FGIC-Insured,
6.500% due 7/1/15
4,160,625
1,000,000 AA- Macon, GA Water Authority, Water & Sewer Revenue,
4.500% due 10/1/08
933,750
1,500,000 NR New Jersey EDA Water Facilities Revenue, Series
1991, (New Jersey American Water Co. Inc.
Project), Private Placement, 7.400% due 11/1/01(a)
1,580,625
4,000,000 AAA Philadelphia, PA Water & Waste Water Revenue,
Refunding, AMBAC-Insured, 5.250% due 12/15/12
4,230,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating+ SECURITY
VALUE
================================================================================
=====================
<S> <C> <C>
<C>
Water & Sewer -- 3.6% (continued)
$ 2,500,000 AA Somerset Raritan Valley, NJ Sewer, Series G,
6.750% due 7/1/10
$ 2,646,875
820,000 A Texas Water Resource Finance Authority Revenue,
Series 89, 7.400% due 8/15/00
831,570
350,000 Aaa* Washington Township, NJ Municipal Utilities Authority
Revenue, Capital Appreciation, Series A, FGIC-
Insured,
zero coupon to yield 4.400% due 12/15/08
228,813
- --------------------------------------------------------------------------------
- ---------------------
14,612,258
- --------------------------------------------------------------------------------
- ---------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $394,247,469**)
$404,727,273
================================================================================
=====================
</TABLE>
+ All ratings are by Standard & Poor's Ratings Service except those
identified by an asterisk (*) which are rated by Moody's Investors Service
Inc., and those identified by a double dagger (++) which are rated by
Fitch IBCA, Inc.
(a) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Security segregated by Custodian for open market purchase commitments.
(c) Bonds escrowed to maturity by U.S. government securities and Pre-Refunded
bonds escrowed with U.S. government securities are considered by the
manager to be triple-A rated even if issuer has not applied new ratings.
(d) Residual interest bonds-coupon varies invesely with level of short-term
tax-exempt interest rates.
(e) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 20 and 21 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issue only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
bonds in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this
category than in higher rated categories.
BB -- Bonds rated "BB" have less near-term vulnerability to default
than other speculative issues. However, they face major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments.
Moody's Investor's Services Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3
may be applied to each generic rating from "Aa" to "Ba", where 1 is the highest
and 3 the lowest ranking within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds rated "A" possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa -- Bonds rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Bonds rated "Ba" are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and therefore
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited) (continued)
- --------------------------------------------------------------------------------
Fitch IBCA, Inc. ("Fitch") -- Ratings may be modified by the addition of a plus
(+) or minus (-) sign to show relative standings within the major rating
categories.
A -- Bonds rated "A" are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and/or
dividends and repay principal is considered to be strong, but may be
more vulnerable to adverse changes in economic conditions and
circumstances than securities with higher ratings.
BBB -- Bonds rated "BBB" are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest
or dividends and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances, however,
are more likely to have adverse impact on these securities and,
therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for
securities with higher ratings.
NR -- Indicates that the bond is not rated by Standard & Poor's,
Moody's or Fitch.
- --------------------------------------------------------------------------------
Short-Term Security Ratings (unaudited)
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable rate
demand obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature --
VRDO.
MIG 1 -- Moody's highest rating for short-term municipal obligations.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
CONNIE LEE -- College Construction Loan Insurance Association
COP -- Certificate of Participation
EDA -- Economic Development Authority
FLAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
ISD -- Independent School District
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCFA -- Pollution Control Financing Authority
PCR -- Pollution Control Revenue
PSFG -- Permanent School Fund Guaranty
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
VA -- Veterans Administration
VRDD -- Variable Rate Demand Note
VRWE -- Variable Rate Wednesday Demand
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost-- $394,247,469)
$404,727,273
Cash
85,201
Interest receivable
4,852,940
Receivable for Fund shares sold
1,349,355
Receivable for securities sold
260,000
- --------------------------------------------------------------------------------
- ---
Total Assets
411,274,769
- --------------------------------------------------------------------------------
- ---
LIABILITIES:
Payable for securities purchased
11,781,296
Payable for Fund shares purchased
904,840
Management fees payable
197,204
Distribution fees payable
14,682
Accrued expenses
50,034
- --------------------------------------------------------------------------------
- ---
Total Liabilities
12,948,056
- --------------------------------------------------------------------------------
- ---
Total Net Assets
$398,326,713
================================================================================
===
NET ASSETS:
Par value of shares of beneficial interest
$58,712
Capital paid in excess of par value
389,957,644
Overdistributed net investment income
(2,187)
Accumulated net realized loss from security transactions
(2,167,260)
Net unrealized appreciation of investments
10,479,804
- --------------------------------------------------------------------------------
- ---
Total Net Assets
$398,326,713
================================================================================
===
Shares Outstanding:
Class A
45,855,575
------------------------------------------------------------------------------
- ---
Class L
6,160,566
------------------------------------------------------------------------------
- ---
Class Y
6,695,697
------------------------------------------------------------------------------
- ---
Net Asset Value:
Class A (and redemption price)
$6.78
------------------------------------------------------------------------------
- ---
Class L *
$6.79
------------------------------------------------------------------------------
- ---
Class Y (and redemption price)
$6.78
------------------------------------------------------------------------------
- ---
Maximum Public Offering Price Per Share:
Class A (net asset value plus 2.04% of net asset value per share)
$6.92
------------------------------------------------------------------------------
- ---
Class L (net asset value plus 1.01% of net asset value per share)
$6.86
================================================================================
===
</TABLE>
* Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if
shares are redeemed within one year from initial purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended March 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $17,690,647
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 1,625,157
Distribution fees (Note 3) 539,746
Shareholder and system servicing fees 78,845
Registration fees 50,001
Shareholder communications 34,350
Pricing service fees 19,998
Custody fees 16,252
Audit and legal 16,001
Trustees' fees 6,001
Other 11,001
- -------------------------------------------------------------------------------
Total Expenses 2,397,352
- -------------------------------------------------------------------------------
Net Investment Income 15,293,295
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 4):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 169,628,573
Cost of securities sold 168,165,005
- -------------------------------------------------------------------------------
Net Realized Gain 1,463,568
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 11,466,415
End of year 10,479,804
- -------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (986,611)
- -------------------------------------------------------------------------------
Net Gain on Investments 476,957
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations $15,770,252
===============================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999
1998
================================================================================
=====
<S> <C> <C>
OPERATIONS:
Net investment income $ 15,293,295 $
14,476,709
Net realized gain 1,463,568
1,823,647
Increase (decrease) in net unrealized appreciation (986,611)
7,111,367
- --------------------------------------------------------------------------------
- -----
Increase in Net Assets From Operations 15,770,252
23,411,723
================================================================================
=====
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (15,675,859)
(14,092,042)
In excess of net investment income (157,571)
- --
- --------------------------------------------------------------------------------
- -----
Decrease in Net Assets From
Distributions to Shareholders (15,833,430)
(14,092,042)
- --------------------------------------------------------------------------------
- -----
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 166,645,885
43,773,091
Net asset value of shares issued
for reinvestment of dividends 9,197,538
7,991,624
Cost of shares reacquired (65,668,310)
(60,889,261)
- --------------------------------------------------------------------------------
- -----
Increase (Decrease) in Net Assets From
Fund Share Transactions 110,175,113
(9,124,546)
- --------------------------------------------------------------------------------
- -----
Increase in Net Assets 110,111,935
195,135
NET ASSETS:
Beginning of year 288,214,778
288,019,643
- --------------------------------------------------------------------------------
- -----
End of year* $398,326,713
$288,214,778
================================================================================
=====
* Includes undistributed (overdistributed)
net investment income of: $(2,187)
$380,377
================================================================================
=====
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Limited Term Portfolio ("Portfolio") is a separate investment portfolio of
the Smith Barney Muni Funds ("Fund"). The Fund, a Massachusetts business trust,
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company and consists of this Portfolio and seven
other separate investment portfolios: Florida, Georgia, New York, Pennsylvania,
National, California Money Market and New York Money Market Portfolios. The
financial statements and financial highlights for the other portfolios are
presented in separate annual reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities are valued
at the mean between the quoted bid and ask prices provided by an independent
pricing service that are based on transactions in municipal obligations,
quotations from municipal bond dealers, market transactions in comparable
securities and various relationships between securities; (c) securities for
which market quotations are not available will be valued in good faith at fair
value by or under the direction of the Board of Trustees; (d) securities for
which market quotations are not available will be valued in good faith at fair
market value by or under the direction of the Board of Trustees; (e) securities
maturing within 60 days are valued at cost plus accreted discount or minus
amortized premium, which approximates value; (f) gains or losses on the sale of
securities are calculated by using the specific identification method; (g)
interest income, adjusted for amortization of premium and accretion of original
issue discount, is recorded on an accrual basis; market discount is recognized
upon the disposition of the security; (h) dividends and distributions to
shareholders are recorded on the ex-dividend date; (i) direct expenses are
charged to each Portfolio and each class; management fees and general fund
expenses are allocated on the basis of relative net assets by class; (j) the
Portfolio intends to comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, pertaining to regulated investment companies
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes; (k) the character of income
and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
Accordingly, a portion of overdistributed net investment income amounting to
$157,571 has been reclassified to paid-in capital. Net investment income, net
realized gains and net assets were not affected by this adjustment; and (l)
estimates and assumptions are required to be made regarding assets, liabilities
and changes in net assets resulting from operations when financial statements
are prepared. Changes in the economic environment, financial markets and any
other parameters used in determining these estimates could cause actual results
to differ.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Exempt-Interest Dividends and Other Distributions
The Portfolio intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from regular Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Management Agreement and Transactions with Affiliated Persons
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager to the Fund. The Portfolio pays SSBC a management fee calculated at an
annual rate of 0.50% of its average daily net assets. This fee is calculated
daily and paid monthly.
On October 8, 1998, CFBDS, Inc. became the Fund's distributor. Prior to that
date Salomon Smith Barney Inc. ("SSB"), was the Fund's distributor. SSB, as well
as certain other broker-dealers, continues to sell Fund shares to the public as
members of the selling group.
On June 12, 1998, the Fund's Class C shares were renamed Class L shares.
Effective June 15, 1998, Class L shares are being sold at net asset value plus a
maximum initial sales charge of 1.00%. Class L shares also have a 1.00%
contingent deferred sales charge ("CDSC"), which applies if redemption occurs
within the first year of purchase.
There is also a CDSC of 1.00% on Class A shares, which applies if redemption
occurs within the first year of purchase. This CDSC only applies to those
purchases of Class A shares, which, when combined with current holdings of Class
A shares, equal or exceed $500,000 in the aggregate. These purchases do not
incur an initial sales charge.
For the year ended March 31, 1999, SSB received sales charges of approximately
$867,000 and $117,000 on sales of the Portfolios' Class A and Class L shares,
respectively. In addition, for the year ended March 31, 1999, CDSCs paid to SSB
were approximately:
Class A Class L
================================================================================
CDSCs $73,000 $11,000
================================================================================
- --------------------------------------------------------------------------------
26 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Pursuant to a Distribution Plan, the Portfolio pays a service fee with respect
to Class A and L shares calculated at an annual rate of 0.15% of the average
daily net assets of each class. In addition, the Portfolio pays a distribution
fee with respect to Class L shares calculated at an annual rate of 0.20% of the
average daily net assets.
For the year ended March 31, 1999, total Distribution Plan fees incurred were:
Class A Class L
================================================================================
Distribution Plan Fees $416,073 $123,673
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
4. Investments
During the year ended March 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $271,994,724
- --------------------------------------------------------------------------------
Sales 169,628,573
================================================================================
At March 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $11,528,157
Gross unrealized depreciation (1,048,353)
- --------------------------------------------------------------------------------
Net unrealized appreciation $10,479,804
================================================================================
5. Capital Loss Carryforward
At March 31, 1999, the Portfolio had, for Federal income tax purposes,
approximately $2,013,000 of capital loss carryforwards available to offset
future capital gains. To the extent that these carryforward losses are used to
offset capital gains, it is possible that the gains so offset will not be
distributed. The amount and expiration of the carryforwards are indicated below.
Expiration occurs on March 31, of the year indicated:
2003 2004
================================================================================
Carryforward Amounts $273,000 $1,740,000
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
6. Shares of Beneficial Interest
At March 31, 1999, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share. The Portfolio has the
ability to issue multiple classes of shares. Each share of a class represents an
identical interest in the Portfolio and has the same rights, except that each
class bears certain expenses specifically related to the distribution of its
shares. Effective June 12, 1998, the Fund adopted the renaming of existing Class
C shares as Class L shares.
At March 31, 1999, total paid-in capital amounted to the following for each
class:
Class A Class L Class Y
================================================================================
Total Paid-in Capital $302,621,714 $41,750,354 $45,644,288
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended
Year Ended
March 31, 1999 March
31, 1998
--------------------------- -----------
- ----------------
Shares Amount Shares
Amount
================================================================================
================
<S> <C> <C> <C>
<C>
Class A
Shares sold 14,845,279 $ 101,467,691 5,614,217
$ 37,885,348
Shares issued on reinvestment 1,146,421 7,802,565 1,047,721
7,028,557
Shares reacquired (8,138,352) (55,401,082) (8,343,657)
(55,870,050)
- --------------------------------------------------------------------------------
- ----------------
Net Increase (Decrease) 7,853,348 $ 53,869,174 (1,681,719)
$ (10,956,145)
================================================================================
================
Class L*
Shares sold 2,424,398 $ 16,578,194 875,665
$ 5,887,743
Shares issued on reinvestment 152,139 1,036,463 143,726
963,067
Shares reacquired (1,020,319) (6,958,879) (746,719)
(5,019,211)
- --------------------------------------------------------------------------------
- ----------------
Net Increase 1,556,218 $ 10,655,778 272,672
$ 1,831,599
================================================================================
================
Class Y+
Shares sold 7,128,561 $ 48,600,000 --
- --
Shares issued on reinvestment 52,583 358,510 --
- --
Shares reacquired (485,447) (3,308,349) --
- --
- --------------------------------------------------------------------------------
- ----------------
Net Increase 6,695,697 $ 45,650,161 --
- --
================================================================================
================
</TABLE>
* On June 12,1998, Class C shares were renamed as Class L shares
+ For the period from November 12, 1998 (commencement of operations) to
March 31, 1999.
- --------------------------------------------------------------------------------
28 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class A Shares 1999(1) 1998 1997
1996 1995(2)
================================================================================
===========================
<S> <C> <C> <C>
<C> <C>
Net Asset Value, Beginning of Year $6.76 $6.54
$6.61 $6.54 $6.55
- --------------------------------------------------------------------------------
- ---------------------------
Income (Loss) From Operations:
Net investment income 0.32 0.34
0.34 0.36 0.36
Net realized and unrealized gain (loss) 0.03 0.22
(0.06) 0.07 --
- --------------------------------------------------------------------------------
- ---------------------------
Total Income From Operations 0.35 0.56
0.28 0.43 0.36
- --------------------------------------------------------------------------------
- ---------------------------
Less Distributions From:
Net investment income (0.33) (0.34)
(0.35) (0.36) (0.37)
In excess of net invesment income (0.00)* -- -
- - -- --
- --------------------------------------------------------------------------------
- ---------------------------
Total Distributions (0.33) (0.34)
(0.35) (0.36) (0.37)
- --------------------------------------------------------------------------------
- ---------------------------
Net Asset Value, End of Year $6.78 $6.76
$6.54 $6.61 $6.54
- --------------------------------------------------------------------------------
- ---------------------------
Total Return 5.29% 8.66%
4.30% 6.65% 5.69%
- --------------------------------------------------------------------------------
- ---------------------------
Net Assets, End of Year (millions) $311 $257
$260 $278 $245
- --------------------------------------------------------------------------------
- ---------------------------
Ratios to Average Net Assets:
Expenses(5) 0.72% 0.74%
0.75% 0.75% 0.61%
Net investment income 4.72 5.14
5.16 5.43 5.61
- --------------------------------------------------------------------------------
- ---------------------------
Portfolio Turnover Rate 52% 58%
46% 26% 22%
================================================================================
===========================
<CAPTION>
Class L Shares(3) 1999(1) 1998 1997
1996 1995(4)
================================================================================
===========================
<S> <C> <C> <C>
<C> <C>
Net Asset Value, Beginning of Year $6.76 $6.54
$6.61 $6.54 $6.54
- --------------------------------------------------------------------------------
- ---------------------------
Income (Loss) From Operations:
Net investment income 0.31 0.33
0.33 0.35 0.35
Net realized and unrealized gain (loss) 0.03 0.21
(0.06) 0.06 --
- --------------------------------------------------------------------------------
- ---------------------------
Total Income From Operations 0.34 0.54
0.27 0.41 0.35
- --------------------------------------------------------------------------------
- ---------------------------
Less Distributions From:
Net investment income (0.31) (0.32)
(0.34) (0.34) (0.35)
In excess of net investment income (0.00)* -- -
- - -- --
- --------------------------------------------------------------------------------
- ---------------------------
Total Distributions (0.31) (0.32)
(0.34) (0.34) (0.35)
- --------------------------------------------------------------------------------
- ---------------------------
Net Asset Value, End of Year $6.79 $6.76
$6.54 $6.61 $6.54
- --------------------------------------------------------------------------------
- ---------------------------
Total Return 5.04% 8.36%
4.10% 6.45% 5.51%
- --------------------------------------------------------------------------------
- ---------------------------
Net Assets, End of Year (000s) $41,844 $31,133
$28,325 $28,824 $26,622
- --------------------------------------------------------------------------------
- ---------------------------
Ratios to Average Net Assets:
Expenses(5) 0.94% 0.99%
0.97% 0.96% 0.89%
Net investment income 4.50 4.89
4.94 5.22 5.34
- --------------------------------------------------------------------------------
- ---------------------------
Portfolio Turnover Rate 52% 58%
46% 26% 22%
================================================================================
===========================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) On October 10, 1994, the former Class C shares were exchanged into Class A
shares.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) On November 7, 1994, the former Class B shares were renamed Class C
shares.
(5) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.85% for class A and 1.05% for class
L.
* Amount represents less than $0.01.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 29
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout the
period ended March 31:
Class Y Shares 1999(1)(2)
===============================================================================
Net Asset Value, Beginning of Period $6.82
- -------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.12
Net realized and unrealized loss (0.02)
- -------------------------------------------------------------------------------
Total Income From Operations 0.10
- -------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.14)
In excess of net investment income (0.00)*
- -------------------------------------------------------------------------------
Total Distributions (0.14)
- -------------------------------------------------------------------------------
Net Asset Value, End of Period $6.78
- -------------------------------------------------------------------------------
Total Return 1.46%++
- -------------------------------------------------------------------------------
Net Assets, End of Period (000s) $45,408
- -------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(3) 0.53%+
Net investment income 4.65+
- -------------------------------------------------------------------------------
Portfolio Turnover Rate 52%
===============================================================================
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period November 12, 1998 (inception date) to March 31, 1999.
(3) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.70%.
* Amount represents less than $0.01.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
30 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of the
Limited Term Portfolio of Smith Barney Muni Funds:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Limited Term Portfolio of Smith Barney Muni
Funds as of March 31, 1999, the related statement of operations for the year
then ended, the statements of changes in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the years in
the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the custodian. As to securities purchased or
sold but not yet received or delivered, we performed other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Limited Term Portfolio of Smith Barney Muni Funds as of March 31, 1999, the
results of its operations for the year then ended, the changes in its net assets
for each of the years in the two-year period then ended and the financial
highlights for each of the years in the five-year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
May 12, 1999
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 31
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
March 31, 1999:
-- 100% of the dividends paid by the Fund from net investment income as
tax exempt for regular Federal income tax purposes.
- --------------------------------------------------------------------------------
32 1999 Annual Report to Shareholders
<PAGE>
SALOMON SMITH BARNEY
---------------------------
A member of citigroup[LOGO]
Trustees
Donald R. Foley
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, Emeritus
Officers
Heath B. McLendon
President and Chief Executive Officer
Lewis E. Daidone
Senior Vice President and Treasurer
Peter M. Coffey
Vice President
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Manager
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder
Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds - Limited Term Portfolio. It is not authorized for
distribution to prospective investors unless accompanied by a current Prospectus
for the Portfolio, which contains information concerning the Portfolios'
investment policies and expenses as well as other pertinent information.
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney Muni Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD2305 5/99
