Photo
SMITH BARNEY MUNI FUNDS
FLORIDA
PORTFOLIO
SEMI-ANNUAL REPORT
September 30, 1999
LOGO: Smith Barney Mutual Funds
NOT FDIC INSURED O NOT BANK GUARANTEED O MAY LOSE VALUE
<PAGE>
Smith Barney
Muni Funds
PHOTO OF: HEATH B.MCLENDON
Chairman
PHOTO OF: PETER M.COFFEY
Vice President
DEAR SHAREHOLDER:
We are pleased to provide the semi-annual report for the Smith Barney Muni Funds
- - Florida Portfolio ("Portfolio") for the period ended September 30, 1999. We
hope that you find this report useful and informative. For your convenience, we
have summarized the period's prevailing economic and market conditions below and
outlined the various investment strategies employed by the Portfolio during the
period under review. A detailed summary of performance and current holdings for
the Portfolio can be found in the appropriate sections that follow.
FUND'S PERFORMANCE AND INVESTMENT STRATEGY
The Portfolio seeks as high a level of income exempt from federal income as is
consistent with prudent investing.*
For the six months ended September 30, 1999, the Portfolio generated a total
return of a negative 3.60% for Class A shares without sales charges as compared
to its Lipper Inc. peer group average of a negative 3.40% (Lipper Inc. is a
major fund-tracking organization.) For performance information on the
Portfolio's other share classes, please refer to page 4.
Given the present market conditions, we have continued to emphasize credit
quality and call protection in the Portfolio. As of the close of the reporting
period, 93% of the Portfolio's bond holdings were rated investment grade or
better and the Portfolio's average stated call protection was 8.7 years. The
Portfolio's largest holdings are concentrated among the following:
transportation bonds (16.4%), hospital bonds (16.1%), multi-family housing bonds
(9.9%), utilities bonds (8.3%) and single-family housing bonds (7.6%).
MARKET AND ECONOMIC OVERVIEW
Current market conditions can be characterized by a strong economy, with growth
of demand continuing to outpace supply, yet signs of inflation appear to be
virtually non-existent. Moreover, the unemployment rate is at a 30-year low, and
the yield curve has steepened. (The yield curve shows the difference between
short- and long-term rates.)
- --------------------------------------------------------------------------------
*Please note that a portion of the income from this Fund is subject to the
Alternative Minimum Tax ("AMT").
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
Despite the fact that the bond market has had numerous seemingly valid reasons
to trade lower lately, the bond market has resisted them. Instead, the yield for
the 30-year Treasury bond has stayed within a narrow 40 basis point trading
range since the beginning of June. (A basis point is 0.01%, or one one-hundredth
of a percent.)
One of the biggest challenges facing the bond markets recently have been the
decline of the U.S. dollar against the yen. Yet, because the dollar's weakness
has been limited to the yen, there has been little concern about possible
capital outflows from the U.S. or higher inflation. Similarly, the rise in oil
prices has not translated into higher bond yields because inflation in general
does not appear to be a factor. The same holds true for the recent surge in gold
prices, which we do not view as a sign of higher inflation or higher yields.
Fixed income prices have come under some pressure as a result of higher interest
rates. U.S. Treasuries have remained in a narrow trading range just above 6%,
while long-term municipal bonds are yielding approximately 90% of long-term U.S.
Treasury bonds. Under typical market conditions, municipal bonds yield roughly
85% of similar-maturity U.S. Treasury bonds.
One positive trend for the market has been the lowering of supply of new bonds.
The U.S. Treasury Department has been paying down the national debt, and the
latest figures from the Clinton Administration show an estimated budget surplus
of approximately $115 billion for the current fiscal year.
FLORIDA ECONOMIC HIGHLIGHTS
Florida's economy continues to grow with the main factor being the
diversification of its economic base. Rather than relying solely on tourism and
agriculture, Florida's economy has become more service oriented in recent years.
We think that the economic success of the Sunshine State, in part, can be
attributed to its positive business climate and the fact the state agencies
often act as partners in economic development. Moreover, the growing number of
residents and tourists, along with growth in domestic and international trade,
has resulted in Florida doing better than the U.S. economy in terms of total
income growth as well as job creation. Debt in Florida has remained stable even
though population growth has led to an increase in demand for municipal
spending.
The future of Florida remains bright, especially with the prospect of
increasingly open trade and commerce with the rest of the world. In a more open
trade environment, Florida should be able to take advantage of its unique
geographic location and its well-established ties with many regional economies
in Latin America.
MARKET OUTLOOK
The recent rise in interest rates has created buying opportunities and we
believe that we can seek to achieve a high level of tax-exempt income,
consistent with
- -------------------------------------------------------------------------------
2 1999 Semi-Annual Report To Shareholders
<PAGE>
prudent investing and close attention to credit quality. Yields on municipal
securities have risen quite substantially, and the long end of the yield curve
continues to favor municipal bonds.
Over the long term, we are bullish on municipal bonds. And while we continue
to identify many opportunities in the municipal bond market, we do anticipate
some price erosion in the near-term as a result of increasing interest rates.
However, we believe that the Federal Reserve Board's tightening of monetary
policy (25 basis points on June 30, 1999 and 25 basis points on August 24, 1999
and an indication to tighten announced on October 5, 1999), along with the
increase in bond yields, may moderate U.S. economic activity in 2000. Moreover,
if the U.S. stock market were to experience a correction, bond markets could
recover despite recent difficulties.
The supply of municipal bonds could become lower as January 1, 2000 approaches.
Amid heavy issuance recently, supply has become so great that many prices have
declined to their annual lows. These larger volumes have in turn resulted in
lower prices and higher yields. Yet, these conditions can change soon as the
market experiences its typical light winter issuance and investors keep out of
the markets amidst concerns regarding Year 2000 issues. New issue volume over
the past 15 years has fallen by an average of 33% in January and February from
November and December.
In our opinion, the bolstered yields resulting from Year 2000 concerns and
supply pressures is already reaching levels where investors should consider
beginning putting their cash to work. Against the current economic backdrop, we
believe that yields have peaked, and that the best opportunities may lie in
spread products such as municipal issues.
Looking ahead, we believe that the U.S. economy should remain strong in the
coming months with muted inflationary pressures. Recent economic conditions have
created opportunities for municipal securities to catch up with U.S. Treasuries,
and we continue to see good value at the long end of the market.
Thank you for investing in the Smith Barney Muni Funds - Florida Portfolio. 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
October 12, 1999
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
HISTORICAL PERFORMANCE -- Class A Shares
Net Asset Value
- --------------------------------------------------------------------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
- --------------------------------------------------------------------------------
9/30/99 $13.70 $12.87 $0.34 $0.00 (3.60)%+
- --------------------------------------------------------------------------------
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 $6.27 $0.28
================================================================================
HISTORICAL PERFORMANCE -- Class B Shares
Net Asset Value
--------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.69 $12.86 $0.31 $0.00 (3.86)%+
- --------------------------------------------------------------------------------
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 $3.25 $0.27
================================================================================
- -------------------------------------------------------------------------------
4 1999 Semi-Annual Report To Shareholders
<PAGE>
HISTORICAL PERFORMANCE -- Class L Shares
Net Asset Value
------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.69 $12.86 $0.30 $0.00 (3.89)%+
- --------------------------------------------------------------------------------
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 $4.43 $0.27
================================================================================
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
===============================================================================
Six Months Ended 9/30/99+ (3.60)% (3.86)% (3.89)%
- --------------------------------------------------------------------------------
Year Ended 9/30/99 (2.73) (3.23) (3.37)
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 6.39 N/A 5.78
- --------------------------------------------------------------------------------
Inception* through 9/30/99 6.91 7.19 5.36
================================================================================
With Sales Charges(2)
----------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/99+ (7.45)% (8.09)% (5.80)%
- --------------------------------------------------------------------------------
Year Ended 9/30/99 (6.59) (7.36) (5.23)
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 5.52 N/A 5.56
- --------------------------------------------------------------------------------
Inception* through 9/30/99 6.40 7.03 5.21
================================================================================
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
CUMULATIVE TOTAL RETURNS
Without Sales Charges(1)
================================================================================
Class A (Inception* through 9/30/99) 76.46%
- --------------------------------------------------------------------------------
Class B (Inception* through 9/30/99) 40.25
- --------------------------------------------------------------------------------
Class L (Inception* through 9/30/99) 42.20
================================================================================
(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) 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.
- -------------------------------------------------------------------------------
6 1999 Semi-Annual Report To Shareholders
<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 -- September 1999
LINE CHART:
Lehman Brothers Municipal Bond Index Florida Portfolio
4/2/91 10000 9600
3/92 10999 10410
3/93 12376 11859
3/94 12663 12158
3/95 14605 12963
3/96 14746 14084
3/97 15548 14850
3/98 17214 16507
3/99 18281 17425
9/30/99 17887 16797
+ 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 September
30, 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.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 1999
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
EDUCATION -- 2.8%
$ 1,000,000 AAA Dade County School Board, Series C, FSA-Insured,
5.000% due 8/1/17
$ 922,500
1,530,000 AAA Florida State Board Regent Housing Revenue,
University of Florida, MBIA-Insured,
4.500% due 7/1/19
1,279,462
1,020,000 AA Hillsborough County Educational Facilities Authority
Revenue, (University of Tampa Project),
5.000% due 12/1/18
920,550
Volusia County Educational Facilities Authority
Revenue,
Embry-Riddle Aeronautical University:
2,875,000 Baa2* Series A, 6.125% due 10/15/16
2,914,531
150,000 AAA Unrefunded Balance, CONNIE LEE-Insured,
6.500% due 10/15/15
160,313
- --------------------------------------------------------------------------------
- --------------------------
6,197,356
- --------------------------------------------------------------------------------
- --------------------------
ESCROWED TO MATURITY(B) -- 4.8%
210,000 AAA Altamonte Springs Health Facilities Authority
Hospital Revenue, Adventist Health System,
13.000% due 10/1/01
229,950
860,000 AAA Bradford County Health Facilities Authority Revenue,
(Santa Fe Health Care Facilities Project),
6.050% due 11/15/16
897,625
250,000 AAA Cape Coral Health Facilities Authority Hospital
Revenue,
(Cape Coral Medical Center Project),
8.125% due 11/1/08
275,937
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
1,016,250
2,015,000 AAA Gainesville Utility System Revenue, 8.125% due
10/1/14 2,420,519
365,000 AAA Lee County Justice Center Complex Inc., Improvement
Revenue, Series A, MBIA-Insured,
11.125% due 1/1/11
492,294
495,000 AAA Orange County Health Facility Authority Revenue,
Southern Adventist Hospital, 8.750% due 10/1/09
579,769
990,000 AAA Palm Beach County Health Facilities Authority
Revenue,
(John F. Kennedy Memorial Hospital Inc. Project),
Series C, 9.500% due 8/1/13
1,247,400
1,005,000 AAA Palm Beach County Solid Waste Authority Revenue,
MBIA-Insured, 10.000% due 12/1/04
1,159,519
2,000,000 AAA Port Everglades Authority Port Improvement,
7.125% due 11/1/16
2,330,000
- --------------------------------------------------------------------------------
- --------------------------
10,649,263
- --------------------------------------------------------------------------------
- --------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
8 1999 Semi-Annual Report To Shareholders
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
FINANCE -- 1.4%
$ 485,000 AA+ Florida State Board of Education Capital Outlay,
Unrefunded Balance, Series A, 7.250% due 6/1/23
$ 505,680
500,000 AAA Gulf Breeze Local Government Revenue, FGIC-Insured,
7.750% due 12/1/15
512,705
1,000,000 AA St. Lucie County Special Assessment, South
Hutchinson Island, Asset Guaranteed,
6.200% due 11/1/25
1,098,750
1,000,000 NR Virgin Island Public Finance Authority Revenue,
Series E, 5.750% due 10/1/13
976,250
- --------------------------------------------------------------------------------
- --------------------------
3,093,385
- --------------------------------------------------------------------------------
- --------------------------
GENERAL OBLIGATION -- 1.8%
500,000 NR Brevard County Tourist Development Tax Revenue,
4th Century Marlins Spring, 6.875% due 3/1/13
520,625
1,000,000 AA+ Florida State Broward County, 10.000% due 7/1/14
1,426,250
Puerto Rico Commonwealth, Public Improvement:
2,000,000 AAA AMBAC-Insured, 4.500% due 7/1/23
1,650,000
1,000,000 A Capital Appreciation, zero coupon due 7/1/14
441,250
- --------------------------------------------------------------------------------
- --------------------------
4,038,125
- --------------------------------------------------------------------------------
- --------------------------
HOSPITAL -- 16.1%
Escambia County Health Facilities Authority Revenue:
2,500,000 BBB-++ Azalea Trace Inc. Project, 6.100% due 1/1/19
2,456,250
310,000 BBB+ Unrefunded Balance, Baptist Hospital,
6.750% due 10/1/14
333,637
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
927,500
2,000,000 A- Highlands County Health Facilities Authority Revenue,
Adventist Health System, 5.250% due 11/15/20
1,787,500
Jacksonville Health Facilities Authority, Hospital
Revenue:
National Benevolent Association, IDR, Cypress Hill
Village Program:
750,000 Baa2* 6.400% due 12/1/16
771,563
1,000,000 Baa2* Series A, 6.250% due 12/1/26
1,018,750
2,000,000 AA+ St. Luke's Hospital Association Project,
7.125% due 11/15/20
2,125,000
260,000 AAA St. Vincent's Medical Center, 9.125% due 1/1/03
281,125
310,000 AAA University Medical Center Inc. Project, CONNIE
LEE-Insured, 6.600% due 2/1/21
325,500
Lee County Hospital Board of Directors, Hospital
Revenue,
MBIA-Insured, Regular Linked SAVRS & RIBS:
1,000,000 AAA 8.269% due 3/26/20 (c)
1,072,500
1,000,000 AAA 9.671% due 4/1/20 (c)
1,110,000
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
HOSPITAL -- 16.1% (CONTINUED)
Miami Beach Health Facilities Authority Hospital
Revenue:
$ 1,100,000 BBB Mt. Sinai Medical Center Project,
5.375% due 11/15/28
$ 950,125
2,000,000 A South Shore Hospital, Series A, ACA-Insured,
5.250% due 8/1/13
1,970,000
Orange County Health Facilities Authority,
Hospital Revenue Bonds:
Adventist Health Systems, FSA-Insured:
1,500,000 AAA FLAIRS, 6.600% due 11/15/07 (c)
1,567,500
1,000,000 AAA Sunbelt Inc. Project, Series B,
6.750% due 11/15/21
1,057,500
1,100,000 AA Mayflower Retirement Center Project, Asset
Guaranteed, 5.250% due 6/1/19
1,042,250
1,000,000 AAA MBIA-Insured, 8.746% due 10/29/21 (c)
1,128,750
2,000,000 A2* Orlando Regional Healthcare System, Series E,
6.000% due 10/1/26
1,972,500
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
622,388
6,745,000 AAA Sarasota County Public Hospital Board Revenue,
Sarasota Memorial Hospital, Series B, MBIA-
Insured,
5.250% due 7/1/24
6,298,144
2,000,000 A2* South Lake County Hospital District Revenue, South
Lake Hospital Inc., Orlando Regional Healthcare,
6.000% due 10/1/22
2,010,000
1,740,000 A Suwannee County Health Care Facilities Revenue,
Advent Christian Village Inc., ACA-Insured,
5.250% due 4/1/19
1,605,150
4,000,000 AAA Tampa Revenue Health Systems, Catholic Health,
Series A-1, 4.875% due 11/15/18
3,570,000
- --------------------------------------------------------------------------------
- --------------------------
36,003,632
- --------------------------------------------------------------------------------
- --------------------------
HOUSING: MULTI-FAMILY -- 9.9%
375,000 AAA Clearwater Multi-Family Housing Revenue, (Drew
Gardens
Project), Series A, FHA-Insured, 6.500% due
10/1/25 385,781
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 (d)
1,137,894
1,000,000 NR Golden Lakes Apartments Project,
6.050% due 11/1/39 (d)
1,002,500
1,500,000 AAA Mariner Club Apartments, Series K-1,
6.375% due 9/1/36 (d)
1,556,250
3,000,000 A Sr. Lien, Series I-1, 6.625% due 7/1/28 (d)
3,146,250
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
10 1999 Semi-Annual Report To Shareholders
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
HOUSING: MULTI-FAMILY -- 9.9% (CONTINUED)
$ 3,000,000 AAA Stoddert Arms Apartments, Series O,
AMBAC-Insured, 6.300% due 9/1/36 (d)
$ 3,097,500
1,000,000 AAA Turtle Creek Apartments, Series C-1, AMBAC-
Insured,
6.200% due 5/1/36 (d)
1,026,250
1,000,000 BBB+ The Vineyards Project, Series H, 6.500% due
11/1/25 1,027,500
2,355,000 AAA Dade County IDR, Susanna Wesley Health Center,
Series A, FHA-Insured, 6.625% due 7/1/30
2,472,750
Florida HFA:
1,000,000 AAA Crossings Indian Run Apartments, Series V,
AMBAC-Insured, 6.200% due 12/1/36 (d)
1,025,000
2,000,000 AAA Glen Oaks Apartment Projects, FNMA-Collateralized,
5.900% due 2/1/30 (d)
2,002,500
1,000,000 AAA Oceanside Housing Development Corp., Multi-Family
Mortgage Revenue, FHA-Insured, 6.875% due 2/1/20
1,030,000
1,000,000 A3* Orange County HFA, Multi-Family Revenue,
(Loma Vista Project), Series G, 5.500% due 3/1/32
(d) 923,750
1,300,000 A Pasco County HFA, Multi-Family Revenue, (Pasco Woods
Apartments Project), Series A, 5.700% due 8/1/19
(d) 1,262,625
1,095,000 AAA Southwest Housing Development Corp., Multi-Family
Housing Mortgage Revenue Refunding, FHA-Insured,
6.875% due 2/1/20
1,123,744
- --------------------------------------------------------------------------------
- --------------------------
22,220,294
- --------------------------------------------------------------------------------
- --------------------------
HOUSING: SINGLE-FAMILY -- 7.6%
Brevard County HFA, Single-Family Mortgage Revenue:
460,000 Aaa* GNMA-Collateralized, 6.600% due 9/1/16 (d)
474,375
900,000 Aaa* GNMA/FNMA-Collateralized, 6.400% due 9/1/23 (d)
923,625
Broward County HFA, Single-Family Mortgage Revenue:
400,000 Aa2* Capital Appreciation, zero coupon due 4/1/14
92,500
GNMA/FNMA-Collateralized:
610,000 Aaa* 6.650% due 8/1/21 (d)
631,350
750,000 Aaa* Series A, 6.200% due 4/1/30 (d)
762,187
Dade County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized:
1,500,000 AAA 6.700% due 4/1/28 (d)
1,554,375
305,000 Aaa* Series B, 7.250% due 9/1/23 (d)
315,294
30,000 Aaa* Series E, 7.000% due 3/1/24
30,975
Duval County HFA, Single-Family Mortgage Revenue,
GNMA-Collateralized:
75,000 AAA 8.000% due 6/1/00 (d)
75,519
580,000 Aaa* 6.700% due 10/1/26 (d)
602,475
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
HOUSING: SINGLE-FAMILY -- 7.6% (CONTINUED)
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 (d)
$ 1,415,750
130,000 Aaa* Series A, GNMA-Collateralized, 7.800% due 4/1/22
(d) 134,615
Florida HFA:
85,000 Aaa* Home Ownership Revenue, Series G-1, GNMA-
Collateralized, 7.800% due 9/1/10 (d)
87,720
420,000 AA Homeowner Mortgage, Series 2, 6.350% due 7/1/28
(d) 431,025
1,070,000 AAA Single-Family Mortgage, Series B, GNMA/FNMA-
Collateralized, 6.650% due 7/1/26 (d)
1,103,437
2,400,000 A Sunset Place, Series K-1, 6.000% due 10/1/19
2,394,000
1,000,000 AAA Hialeah Housing Authority Revenue, Affordable Housing
Program, GNMA-Collateralized, 5.300% due 12/20/18
957,500
310,000 Aa1* Hillsborough County HFA, Single-Family Mortgage
Revenue, Series A, GNMA-Collateralized,
7.700% due 4/1/23 (d)
320,462
615,000 AAA Leon County HFA, Single-Family Mortgage Revenue,
Multi-County Program, Series B, GNMA/FHLMC-
Collateralized, 7.300% due 1/1/28 (d)
667,275
Orange County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA Mortgage Backed Securities Program:
755,000 AAA 6.750% due 10/1/18 (d)
786,144
1,180,000 AAA Series A, 6.300% due 4/1/28 (d)
1,205,075
345,000 Aa1* Palm Beach HFA, Single-Family Mortgage Power
Revenue, Series A, GNMA-Collateralized,
7.875% due 4/1/23 (d)
346,725
1,310,000 Aaa* Pinnellas County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized, 6.550% due 8/1/27 (d)
1,347,663
380,000 AAA Virgin Islands HFA, Single-Family Mortgage Revenue,
Series A, GNMA-Collateralized, 6.500% due 3/1/25
(d) 391,875
- --------------------------------------------------------------------------------
- --------------------------
17,051,941
- --------------------------------------------------------------------------------
- --------------------------
INDUSTRIAL DEVELOPMENT -- 3.9%
1,775,000 NR Homestead IDR, Community Rehabilitation Providers
Program, Series A, 7.950% due 11/1/18
1,877,063
1,000,000 BBB- Lee County IDA Health Care Facilities Revenue,
(Shell Point Village Project), Series A,
5.500% due 11/15/21
892,500
1,500,000 BBB- Martin County IDA, Indiantown, (Cogeneration
Project),
7.875% due 12/15/25 (d)
1,537,500
500,000 NR Northern Palm Beach County Water Control District,
Unit Development No. 31, Program 1,
6.750% due 11/1/07
523,750
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
12 1999 Semi-Annual Report To Shareholders
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
INDUSTRIAL DEVELOPMENT -- 3.9% (CONTINUED)
Osceola County IDA Revenue, (Community Provider
Pooled Loan Program), Series A, FSA-Insured:
$ 400,000 AAA 7.500% due 7/1/02
$ 418,400
799,000 AAA 7.750% due 7/1/10
836,289
1,000,000 AAA St. Johns County IDA, IDR, Series A, 5.500% due
3/1/17 986,250
Tampa Sports Authority Revenue, (Tampa Bay Arena
Project), MBIA-Insured:
500,000 AAA 6.050% due 10/1/20
524,375
1,000,000 AAA 6.100% due 10/1/26
1,057,500
- --------------------------------------------------------------------------------
- --------------------------
8,653,627
- --------------------------------------------------------------------------------
- --------------------------
MISCELLANEOUS -- 8.1%
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
703,500
1,200,000 AAA Zero coupon due 3/1/27
447,000
1,000,000 AAA Dade County Aviation Facilities Revenue, Series B,
MBIA-Insured, 6.600% due 10/1/22 (d)
1,060,000
3,500,000 NR Dade County IDR, (Miami Cerebral Palsy Services
Project), 8.000% due 6/1/22
3,670,625
5,000,000 AAA Dade County Special Obligation, Series B,
AMBAC-Insured, Capital Appreciation,
zero coupon due 10/1/16
2,006,250
750,000 AAA Florida State Department of Corrections, COP,
Okeechobee Correctional, AMBAC-Insured,
6.250% due 3/1/15
798,750
2,700,000 AAA Gulf Breeze Capital Funding, Series B, MBIA-Insured,
4.500% due 10/1/27
2,166,750
500,000 BBB- Hillsborough County Aviation Authority, Special
Purpose,
(Delta Airlines Project), 6.800% due 1/1/24
518,125
1,200,000 AAA North Springs Improvement District, MBIA-Insured,
7.000% due 10/1/09
1,395,000
1,000,000 NR Orlando Special Assessment Revenue, (Conroy
Interchange Project), Series A, 5.500% due 5/1/10
973,750
2,500,000 AAA Port Palm Beach District Revenue, Series A,
MBIA-Insured, Capital Appreciation,
zero coupon due 9/1/21
696,875
1,200,000 BBB Puerto Rico Housing Bank & Finance Agency,
7.500% due 12/1/06
1,336,500
500,000 NR Tampa Revenue (Florida Aquarium Inc. Project),
7.750% due 5/1/27
550,625
1,000,000 AAA Village Center Community Development District No. 2,
Florida Special Assessment Revenue,
MBIA-Insured, 5.200% due 5/1/19
947,500
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
MISCELLANEOUS -- 8.1% (CONTINUED)
$ 1,000,000 BBB- Virgin Islands Public Finance Authority Revenue,
Sr. Lien, Series A, 5.500% due 10/1/18
$ 948,750
- --------------------------------------------------------------------------------
- --------------------------
18,220,000
- --------------------------------------------------------------------------------
- --------------------------
NURSING HOME -- 2.4%
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
1,060,000
3,500,000 A- Palm Beach County Health Facilities Authority
Revenue,
Retirement Community, 5.625% due 11/15/20
3,311,875
1,000,000 AA Volusia County Health Facilities Authority Revenue,
(John Knox Projects), Series A, Asset Guaranteed,
6.000% due 6/1/17
1,022,500
- --------------------------------------------------------------------------------
- --------------------------
5,394,375
- --------------------------------------------------------------------------------
- --------------------------
POLLUTION CONTROL -- 6.5%
2,190,000 A+ Broward County Resource Recovery Revenue,
Broward Waste Energy, 7.950% due 12/1/08
2,266,212
2,000,000 A+ Citrus County PCR, Florida Power Corp., (Crystal
River
Project), Series A, 6.625% due 1/1/27
2,107,500
Escambia County PCR, (Champion International
Corp. Project):
500,000 Baa1* 6.950% due 11/1/07
530,625
3,500,000 Baa1* 6.900% due 8/1/22 (d)
3,727,500
500,000 A+ Jacksonville Sewer & Solid Waste Disposal Facilities
Revenue, (Anheuser-Busch Project),
5.875% due 2/1/36 (d)
493,125
705,000 AAA Lee County Solid Waste Revenue, MBIA-Insured,
7.000% due 10/1/11 (d)
749,944
100,000 VMIG 1* Manatee County PCR, (Florida Power & Light Co.
Project), 3.350% due 9/1/24 (e)
100,000
400,000 VMIG 1* Martin County PCR, (Florida Power & Light Co.
Project),
3.350% due 9/1/24 (e)
400,000
1,000,000 Aa3* Pinellas County PCR, Florida Power Corp., (Anclot &
Bartlow Plants Project), 7.200% due 12/1/14
1,057,500
1,390,000 Baa2* Putnam County Development Authority PCR, Georgia
Pacific Corp. 1984, 7.000% due 12/1/05
1,485,563
1,500,000 AA- St. Lucie County Solid Waste Disposal Revenue,
(Florida Power & Light Co. Project),
7.150% due 2/1/23 (d)
1,576,875
- --------------------------------------------------------------------------------
- --------------------------
14,494,844
- --------------------------------------------------------------------------------
- --------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
14 1999 Semi-Annual Report To Shareholders
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
PRE-REFUNDED(F) -- 3.5%
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
$ 130,312
1,000,000 AAA 7.600% due 11/15/13
1,060,000
1,500,000 Aaa* Bay County Hospital Revenue, (Bay Medical Center
Project),
(Call 10/1/04 @ 102), 8.000% due 10/1/12
1,710,000
1,375,000 AAA Escambia County Health Facilities Authority, Baptist
Hospital, (Call 10/1/03 @ 102), 6.750% due 10/1/14
1,503,906
1,000,000 AAA Miami Sports & Exhibition Authority Special
Obligation
Refunding, FGIC-Insured, (Call 4/1/00 @ 102),
7.200% due 10/1/20
1,036,740
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
867,582
1,000,000 AAA South Broward, Hospital District Revenue
Bonds, Series 1991C, RIBS, AMBAC-Insured, (Call
5/1/01 @ 104),
9.247% due 5/13/21
1,113,750
350,000 AAA Volusia County Educational Facility Authority
Revenue,
Embry-Riddle Aeronautical University,
CONNIE LEE-Insured, (Call 10/15/02 @ 102),
6.500% due 10/15/15
378,875
- --------------------------------------------------------------------------------
- --------------------------
7,801,165
- --------------------------------------------------------------------------------
- --------------------------
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
1,016,250
1,185,000 A Puerto Rico Public Buildings Authority Revenue,
Series L, 5.500% due 7/1/21
1,159,819
- --------------------------------------------------------------------------------
- --------------------------
2,176,069
- --------------------------------------------------------------------------------
- --------------------------
TRANSPORTATION -- 16.4%
5,000,000 AAA Broward County Airport System Revenue Passenger
Facility, AMBAC-Insured, 4.750% due 10/1/23
4,250,000
2,000,000 AAA Dade County Aviation Revenue, Series C, MBIA-Insured,
5.250% due 10/1/17 (d)
1,887,500
Florida Ports Financing Community Revenue:
4,185,000 AAA 5.750% due 10/1/14 (d)
4,237,312
2,000,000 AAA FGIC-Insured, 5.500% due 10/1/29 (d)
1,895,000
2,895,000 AAA Florida State Mid-Bay Bridge Authority Revenue,
Series A, AMBAC-Insured, zero coupon due 10/1/19
911,925
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
TRANSPORTATION -- 16.4% (CONTINUED)
$ 2,000,000 AAA Florida State Turnpike Authority Revenue, Department
of Transportation, Series A, FGIC-Insured,
4.500% due 7/1/27
$ 1,605,000
Guam Airport Authority Revenue:
750,000 BBB Series A, 6.500% due 10/1/23
790,313
1,000,000 BBB Series B, 6.600% due 10/1/10 (d)
1,061,250
1,000,000 AAA Hillsborough County Aviation Authority Revenue, Tampa
International Airport, Series A, FGIC-Insured,
6.000% due 10/1/23 (d)
1,033,750
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 (d)
1,580,625
Puerto Rico Commonwealth Highway & Transportation
Authority Revenue:
6,000,000 A Series A, 4.750% due 7/1/38
4,920,000
2,000,000 A Series Y, 5.000% due 7/1/36
1,747,500
Sanford Airport Authority IDR, (Central Florida
Terminals Inc. Project):
Series A:
1,000,000 NR 7.500% due 5/1/15 (d)
1,065,000
2,000,000 NR 7.750% due 5/1/21 (d)
2,147,500
645,000 NR Series C, 7.500% due 5/1/21 (d)
686,119
Santa Rosa Bay Bridge Authority Revenue:
3,500,000 BBB- 6.250% due 7/1/28
3,587,500
5,000,000 BBB- Capital Appreciation, zero coupon due 7/1/17
1,725,000
1,355,000 AAA Volusia County Airport System Revenue, Daytona
Beach Regional Airport, MBIA-Insured,
7.000% due 10/1/21 (d)
1,412,520
- --------------------------------------------------------------------------------
- --------------------------
36,543,814
- --------------------------------------------------------------------------------
- --------------------------
UTILITIES -- 8.3%
3,905,000 Aaa* Escambia County Utilities Authority Sanitation System
Revenue Refunding & Improvement, FSA-Insured,
4.500% due 1/1/22
3,221,625
3,000,000 AAA Escambia County Utility System Authority Revenue
Bonds, Series B, FGIC-Insured, 6.250% due 1/1/15
3,273,750
2,000,000 Aaa* Fort Meyers Utility Revenue Refunding, Series A,
FGIC-Insured, 5.500% due 10/1/19
1,945,000
1,350,000 BBB Guam Power Authority Revenue, Series A,
6.750% due 10/1/24
1,512,000
930,000 A3* Hillsborough County Utilities Revenue Refunding &
Improvement, 7.000% due 8/1/14
975,337
1,000,000 AAA Lakeland Electric & Water Revenue Refunding,
Series B, FSA-Insured, 6.050% due 10/1/14
1,072,500
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
16 1999 Semi-Annual Report To Shareholders
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 1999
FACE
AMOUNT RATING(A) SECURITY
VALUE
================================================================================
==========================
<S> <C> <C>
<C>
UTILITIES -- 8.3% (CONTINUED)
$ 1,240,000 AAA Puerto Rico Electric Power Authority Revenue
Refunding,
Series EE, MBIA-Insured, 4.500% due 7/1/18
$ 1,060,200
3,000,000 AAA Sunrise Utility System Revenue Refunding,
AMBAC-Insured, 5.200% due 10/1/22
2,797,500
Tampa Bay Water Utility System Revenue, FGIC-Insured:
1,000,000 AAA 5.500% due 10/1/18
981,250
1,750,000 AAA 6.000% due 10/1/24
1,798,125
- --------------------------------------------------------------------------------
- --------------------------
18,637,287
- --------------------------------------------------------------------------------
- --------------------------
WATER & SEWER -- 5.5%
1,075,000 AAA Enterprise Commmunity Development District Water &
Sewer Revenue, MBIA-Insured, 5.750% due 5/1/17
1,089,781
3,000,000 AAA Lee County Water & Sewer Revenue, Series A,
AMBAC-Insured, 4.750% due 10/1/23
2,550,000
1,700,000 AAA Miami-Dade County Water & Sewer Revenue, Series A,
5.000% due 10/1/29
1,498,125
640,000 AAA Miramar Wastewater Improvement Authority,
FGIC-Insured, 6.750% due 10/1/16
711,200
2,000,000 AAA Seminole County Water & Sewer Refunding &
Improvement, MBIA-Insured, 6.000% due 10/1/12
2,152,500
1,295,000 AAA St. Lucie County Holiday Pines Water & Wastewater
System Revenue, MBIA-Insured, 5.125% due 10/1/21
1,202,731
3,400,000 AAA St. Lucie West Services District Special Assessment
Revenue, MBIA-Insured, Water Management Benefit,
Series A, 5.250% due 5/1/25
3,183,250
- --------------------------------------------------------------------------------
- --------------------------
12,387,587
- --------------------------------------------------------------------------------
- --------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $221,293,298**)
$223,562,764
================================================================================
==========================
(a) All ratings are by Standard & Poor's Ratings Service, except that those
which are identified by an asterisk (*) are rated by Moody's Investors
Service, Inc. and those identified by a double dagger (++) are rated by
Fitch IBCA, Inc.
(b) 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.
(c) Residual interest bond -- coupon varies inversely with level of short-term
tax-exempt interest rates.
(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 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 18 and 19 for definition of ratings and certain security descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<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 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.
- -------------------------------------------------------------------------------
18 1999 Semi-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 safely
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 19
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) SEPTEMBER 30, 1999
ASSETS:
Investments, at value (Cost-- $221,293,298) $223,562,764
Interest receivable 4,207,465
Receivable for Fund shares sold 199,932
Receivable for securities sold 7,190,945
Other receivables 7,000
- -------------------------------------------------------------------------------
TOTAL ASSETS 235,168,106
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 9,977,553
Payable to bank 3,072,120
Management fees payable 91,506
Payable for Fund shares purchased 60,215
Distribution fees payable 15,965
Accrued expenses 48,756
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 13,266,115
- -------------------------------------------------------------------------------
TOTAL NET ASSETS $221,901,991
===============================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 17,247
Capital paid in excess of par value 222,083,100
Undistributed net investment income 1,997
Accumulated net realized loss from security transactions (2,469,819)
Net unrealized appreciation of investments 2,269,466
- -------------------------------------------------------------------------------
TOTAL NET ASSETS $221,901,991
===============================================================================
SHARES OUTSTANDING:
Class A 11,521,064
- -------------------------------------------------------------------------------
Class B 4,772,925
- -------------------------------------------------------------------------------
Class L 952,816
- -------------------------------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $12.87
- -------------------------------------------------------------------------------
Class B * $12.86
- -------------------------------------------------------------------------------
Class L ** $12.86
- -------------------------------------------------------------------------------
MAXIMUM PUBLIC OFFERING PRICE PER SHARE:
Class A (net asset value plus 4.17% of net asset value per share) $13.41
- -------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $12.99
===============================================================================
* 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.
- -------------------------------------------------------------------------------
20 1999 Semi-Annual Report To Shareholders
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
INVESTMENT INCOME:
Interest $ 6,778,547
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 578,072
Distribution fees (Note 4) 367,509
Shareholder and system servicing fees 33,685
Registration fees 22,562
Shareholder communications 11,683
Audit and legal 11,533
Pricing service fees 9,274
Custody 5,415
Trustees' fees 2,106
Other 5,693
- -------------------------------------------------------------------------------
TOTAL EXPENSES 1,047,532
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME 5,731,015
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 5):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 63,945,393
Cost of securities sold 66,149,008
- -------------------------------------------------------------------------------
NET REALIZED LOSS (2,203,615)
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 14,421,377
End of period 2,269,466
- -------------------------------------------------------------------------------
DECREASE IN NET UNREALIZED APPRECIATION (12,151,911)
- -------------------------------------------------------------------------------
NET LOSS ON INVESTMENTS (14,355,526)
- -------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM OPERATIONS $ (8,624,511)
===============================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
AND THE YEAR ENDED MARCH 31, 1999
SEPTEMBER 30 MARCH 31
===============================================================================
OPERATIONS:
Net investment income $ 5,731,015 $ 10,708,737
Net realized gain (loss) (2,203,615) 38,595
Increase (decrease) in net
unrealized appreciation (12,151,911) 546,213
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS (8,624,511) 11,293,545
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (5,719,640) (10,846,361)
Net realized gain -- (1,399,430)
- -------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (5,719,640) (12,245,791)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 20,630,672 72,836,296
Net asset value of shares issued for
reinvestment of dividends 2,464,135 5,361,998
Cost of shares reacquired (24,560,447) (50,419,969)
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (1,465,640) 27,778,325
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS (15,809,791) 26,826,079
NET ASSETS:
Beginning of period 237,711,782 210,885,703
- -------------------------------------------------------------------------------
END OF PERIOD* $221,901,991 $237,711,782
===============================================================================
* Includes undistributed (overdistributed)
net investment income of: $1,997 $(9,378)
===============================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
- -------------------------------------------------------------------------------
22 1999 Semi-Annual Report To Shareholders
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Florida Portfolio ("Portfolio") is a separate investment portfolio of the
Smith Barney Muni Funds ("Funds"). 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 eight
other separate investment portfolios: Georgia, Limited Term, National, New York,
Pennsylvania, New York Money Market, California Money Market and Massachusetts
Money Market Portfolios. The financial statements and financial highlights for
the other portfolios are presented in separate shareholder 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 23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., 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.
CFBDS, Inc. acts as the Fund's distributor. Salomon Smith Barney Inc. ("SSB"),
as well as certain other broker-dealers, continues to sell Fund shares to the
public as a member of the selling group.
There is a contingent deferred sales charge ("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. Class L shares also have a 1.00% CDSC, which applies
if redemption occurs within the first year of purchase. 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 six months ended September 30, 1999, SSB received sales charges of
approximately $147,000 and $8,000 on sales of the Portfolios' Class A and Class
L shares, respectively. In addition, for the six months ended September 30,
1999, CDSCs paid to SSB or CFBDS were approximately:
CLASS A CLASS B CLASS L
===============================================================================
CDSCs $4,000 $31,000 $2,000
===============================================================================
- -------------------------------------------------------------------------------
24 1999 Semi-Annual Report To Shareholders
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 six months ended September 30, 1999, total Distribution Plan fees incurred
were:
CLASS A CLASS B CLASS L
===============================================================================
Distribution Plan Fees $116,129 $207,783 $43,597
===============================================================================
All officers and one Trustee of the Fund are employees of SSB.
5. INVESTMENTS
During the six months ended September 30, 1999, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
===============================================================================
Purchases $69,368,335
- -------------------------------------------------------------------------------
Sales 63,945,393
===============================================================================
At September 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
===============================================================================
Gross unrealized appreciation $ 7,232,372
Gross unrealized depreciation (4,962,906)
- -------------------------------------------------------------------------------
Net unrealized appreciation $ 2,269,466
===============================================================================
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 between the proceeds from (or cost of) the closing
transactions and the Portfolio's basis in the contract.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 September 30, 1999, the Portfolio had no open futures contracts.
7. SHARES OF BENEFICIAL INTEREST
At September 30, 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.
At September 30, 1999, total paid-in capital amounted to the following for each
class:
CLASS A CLASS B CLASS L
===============================================================================
Total Paid-in Capital $146,185,329 $62,984,594 $12,930,424
===============================================================================
Transactions in shares of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30,1999 MARCH 31, 1999
-----------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
===============================================================================
CLASS A
Shares sold 1,039,923 $ 13,870,761 3,713,071 $ 51,274,245
Shares issued on
reinvestment 125,039 1,653,584 257,237 3,548,355
Shares reacquired (1,282,074) (17,061,099) (2,712,400) (37,457,704)
- -------------------------------------------------------------------------------
Net Increase (Decrease) (117,112) $ (1,536,754) 1,257,908 $ 17,364,896
===============================================================================
CLASS B
Shares sold 380,945 $ 5,077,861 1,226,118 $ 16,937,395
Shares issued on
reinvestment 49,696 656,893 110,453 1,522,397
Shares reacquired (484,765) (6,455,680) (833,357) (11,511,522)
- -------------------------------------------------------------------------------
Net Increase (Decrease) (54,124) $ (720,926) 503,214 $ 6,948,270
===============================================================================
CLASS L*
Shares sold 125,830 $ 1,682,050 334,515 $ 4,624,656
Shares issued on
reinvestment 11,627 153,658 21,122 291,246
Shares reacquired (79,009) (1,043,668) (105,208) (1,450,743)
- -------------------------------------------------------------------------------
Net Increase 58,448 $ 792,040 250,429 $ 3,465,159
===============================================================================
* On June 12, 1998, Class C shares were renamed Class L shares.
- -------------------------------------------------------------------------------
26 1999 Semi-Annual Report To Shareholders
<PAGE>
FINANCIAL HIGHLIGHTS
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS A SHARES 1999(1)(2) 1999(2) 1998 1997 1996(2) 1995(3)
===============================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.70 $13.74 $13.16 $13.24 $12.89 $12.82
- -------------------------------------------------------------------------------
INCOME (LOSS) FROM
OPERATIONS:
Net investment income 0.34 0.69 0.72 0.73 0.74 0.75
Net realized and unrealized
gain (loss) (0.83) 0.06 0.72 (0.03) 0.35 0.08*
- -------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.49) 0.75 1.44 0.70 1.09 0.83
- -------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.34) (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 (0.34) (0.79) (0.86) (0.78) (0.74) (0.76)
- -------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.87 $13.70 $13.74 $13.16 $13.24 $12.89
- -------------------------------------------------------------------------------
TOTAL RETURN (3.60)%++ 5.56% 11.15% 5.44% 8.65% 6.77%
- -------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (MILLIONS) $148 $160 $143 $127 $117 $108
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(4) 0.73%+ 0.73% 0.76% 0.85% 0.70% 0.61%
Net investment income 5.13+ 4.99 5.28 5.56 5.62 5.97
- -------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 28% 43% 59% 62% 47% 43%
================================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On October 10, 1994 the former Class C shares were exchanged into Class
A Shares.
(4) 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.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS B SHARES 1999(1)(2) 1999(2) 1998 1997 1996(2) 1995(3)
===============================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.69 $13.73 $13.14 $13.23 $12.89 $11.91
- -------------------------------------------------------------------------------
INCOME (LOSS) FROM
OPERATIONS:
Net investment income 0.31 0.62 0.65 0.65 0.68 0.30
Net realized and unrealized
gain (loss) (0.83) 0.06 0.72 (0.01) 0.35 0.97*
- -------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.52) 0.68 1.37 0.64 1.03 1.27
- -------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.31) (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 (0.31) (0.72) (0.78) (0.73) (0.69) (0.29)
- -------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.86 $13.69 $13.73 $13.14 $13.23 $12.89
- -------------------------------------------------------------------------------
TOTAL RETURN (3.86)%++ 5.01% 10.59% 4.91% 8.09% 10.77%++
- -------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (MILLIONS) $62 $66 $59 $51 $46 $2
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(4) 1.24%+ 1.24% 1.28% 1.35% 1.20% 1.20%+
Net investment income 4.62+ 4.48 4.76 4.93 5.00 5.57+
- -------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 28% 43% 59% 62% 47% 43%
===============================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from November 16, 1994 (inception date) to March 31, 1995.
(4) 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.
- -------------------------------------------------------------------------------
28 1999 Semi-Annual Report To Shareholders
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS L SHARES 1999(1)(2) 1999(2)(3) 1998 1997 1996(2) 1995(4)
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.69 $13.74 $13.14 $13.22 $12.89 $12.81
- -------------------------------------------------------------------------------
INCOME (LOSS) FROM
OPERATIONS:
Net investment income 0.30 0.61 0.64 0.65 0.66 0.67
Net realized and unrealized
gain (loss) (0.83) 0.05 0.72 (0.01) 0.35 0.08*
- -------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.53) 0.66 1.36 0.64 1.01 0.75
- -------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.30) (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 (0.30) (0.71) (0.76) (0.72) (0.68) (0.67)
- -------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.86 $13.69 $13.74 $13.14 $13.22 $12.89
- -------------------------------------------------------------------------------
TOTAL RETURN (3.89)%++ 4.87% 10.51% 4.94% 7.96% 6.12%
- -------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (MILLIONS) $12 $12 $9 $7 $3 $3
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(5) 1.31%+ 1.31% 1.33% 1.40% 1.28% 1.25%
Net investment income 4.53+ 4.41 4.71 4.84 5.04 5.40
- -------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 28% 43% 59% 62% 47% 43%
===============================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(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 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.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- -------------------------------------------------------------------------------
Smith Barney Muni Funds 29
<PAGE>
ADDITIONAL SHAREHOLDER INFORMATION (UNAUDITED)
On April 19, 1999, a special meeting of shareholders of the Fund was held for
the purpose of electing Trustees to the Fund.
The results were as follows:
SHARES PERCENTAGE SHARES PERCENTAGE
VOTED OF SHARES VOTED OF SHARES
NAME OF TRUSTEES FOR VOTED AGAINST VOTED
===============================================================================
Lee Abraham 1,350,265,160.850 97.943% 28,359,584.139 2.057%
Allan J. Bloostein 1,351,356,664.226 98.022 27,268,080.763 1.978
Jane F. Dasher 1,352,390,291.715 98.097 26,234,453.274 1.903
Donald R. Foley 1,350,867,506.020 97.987 27,757,238.969 2.013
Richard E. Hanson, Jr. 1,351,302,644.963 98.018 27,322,100.026 1.982
Paul Hardin 1,352,452,572.699 98.102 26,172,172.290 1.898
Heath B. McLendon 1,352,481,643.116 98.104 26,143,101.873 1.896
Roderick C. Rasmussen 1,351,438,798.818 98.028 27,185,946.171 1.972
John P. Toolan 1,352,497,455.395 98.105 26,127,289.594 1.895
===============================================================================
- -------------------------------------------------------------------------------
30 1999 Semi-Annual Report To Shareholders
<PAGE>
LOGO: SALOMON SMITH BARNEY
A MEMBER OF CITIGROUP
TRUSTEES
Lee Abraham
Allan J. Bloostein
Jane F. Dasher
Donald R. Foley
Richard E. Hanson, Jr.
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
Anthony Pace
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
SSB Citi Fund Management LLC
DISTRIBUTOR
CFBDS, Inc.
CUSTODIAN
PNC Bank, N.A.
SHAREHOLDER SERVICING AGENT
Smith Barney Private Trust
388 Greenwich Street, 22nd Floor
New York, New York 10013
SUB-SHAREHOLDER
SERVICING AGENT
First Data Investor Services Group, Inc.
P.O. Box 9699
Providence, Rhode Island 02940-9699
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 100013
WWW.SMITH BARNEY.COM/MUTUALFUNDS
FD0787 11/99
<PAGE>
[GRAPHIC]
Smith Barney Muni Funds
New York Money
Market Portfolio
New York Portfolio
- ----------------------------------
SEMI - ANNUAL REPORT
- ----------------------------------
September 30, 1999
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
<PAGE>
Smith Barney Muni Funds
[PHOTO OF HEATH B. MCLENDON]
[Chairman]
[PHOTO OF JOSEPH P. DEANE]
[Vice President]
Dear Shareholder:
We are pleased to provide you with the semi-annual report for the Smith
Barney Chairman Muni Funds - New York Money Market Portfolio and New York
Portfolio for the period ended September 30, 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.
[PHOTO OF JOSEPH BENEVENTO]
[Vice President]
New York Portfolio's Performance Update 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./1/
For the six months ended September 30, 1999, the Class A shares of the New York
Portfolio generated a total return of a negative 3.65%, without sales charges,
outperforming its New York municipal bond fund peer group average total return
of negative 3.83% for the same time period, according to Lipper Inc. (Lipper
Inc. is an independent fund-tracking organization.)
Based on its net asset value ("NAV") of $12.86 as of September 30, 1999 for
Class A shares and the current monthly income distribution rate of $0.056 per
Class A, this equates to an annualized distribution rate of 5.23%.
Given present market conditions, we have continued to emphasize credit quality
and call protection in the Portfolio. We extended the Portfolio's average
maturity to 18.5 years as of September 30, 1999. In addition, 95.8% of the
- --------------
/1/ A portion of the Portfolio's income may be subject to the Alternative
Minimum Tax ("AMT").
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
Portfolio's bond holdings were rated investment grade or better as of the close
of the reporting period by major credit reporting agencies. The Portfolio's
holdings were concentrated among the following industries: hospital bonds
(16.1%), education bonds (11.8%), pre-refunded bonds (11.7%), transportation
bonds (11.6%) and industrial development bonds (7.5%).
Market and Economic Overview
We think that the municipal bond market may be approaching a temporary bottom.
The Federal Reserve Board ("Fed") has implemented two monetary policy
adjustments so far in 1999 -- a 25 basis point increase on June 30, 1999 and a
25 basis point increase on August 30, 1999. /2/ Fixed income prices have come
under some pressure as a result of increasing interest rates, a strong U.S.
economy and improving market and economic conditions overseas. Additionally,
broad-based inflationary pressures have been absent. In our opinion, long U.S.
Treasury yields are competitive. The yield on the 30-year Treasury bond has
stayed within a narrow 40 basis point trading range since the beginning of June,
currently trading just above 6%, while long-term municipal bonds are yielding
approximately 95% of long-term U.S. Treasury bonds. Under typical market
conditions, municipal bonds yield roughly 85% of similar-maturity U.S. Treasury
bonds.
The financial crisis and ensuing global credit crunch that occurred in 1998
caused spreads to widen substantially between municipal securities and U.S.
Treasuries. The recent upward pressure on municipal yields appears to result
largely from two factors: 1) the lack of demand for municipal bonds by the
traditional institutional sectors that have supported the municipal market; and
2) additional pressures resulting from the pre-Y2K avalanche of issues in the
taxable market, which has attracted institutional investors who would otherwise
buy municipals.
New York Economic Highlights
We continue to be somewhat optimistic on New York's financial future. The
outlook for New York State municipal securities is stable. In our opinion, the
large surpluses that New York achieved in recent years make near-term credit
risks very low. Yet, over the longer-term the Empire State's budgetary and
financing decisions that phase-in over the next few years may increase credit
risk as the state again confronts budget gaps and narrower cash margins.
- ---------------
/2/ On Tuesday, November 16, 1999, the Fed raised short-term rates by 25 basis
points after this letter was written.
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
Increased cash balances, largely generated by the extraordinary profitability of
the financial services sector, provide a near-term buffer against the historic
volatility of stock market driven revenue growth. However, while the broader
economy is also growing, so is New York's debt load, and funding for multi-year
tax reductions and expenditure commitments are based on continued economic
growth. Yet going forward, we are optimistic about the attractiveness of the
tax-exempt bond market in New York State.
Outlook
We think that the recent actions of the Fed were preemptively conservative.
Inflation should remain subdued, at least in the near-term. Also, a possible
easing of economic activity as a result of Y2K concerns could prove positive for
bond markets.
Looking ahead, we believe that the U.S. economy should remain strong in the
coming months with muted inflationary pressures. Recent U.S. economic conditions
have created opportunities for municipal securities to catch up with Treasuries,
and we continue to see good value at the long end of the market.
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.
Please note that your investment in the New York Money Market Portfolio is
neither insured, nor guaranteed, by the Federal Deposit Insurance Corporation or
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 Portfolio.
As of September 30, 1999, the New York Money Market Portfolio's 7-day current
yield was 2.96%. The Portfolio's 7-day effective yield - which reflects
compounding - was 3.00%.
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.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
For most state and local governments, June marks the end of the current fiscal
year and the pricing of a large portion of their annual note financing.
Traditionally, this is the largest note issuance period in the municipal market.
In our view, while navigating through this period, there were two major factors
facing investors during this period: Fed interest rate policy and Y2K liquidity
concerns.
This year's note issuance period coincided with two consecutive 25 basis point
(a percentage point equals 100 basis points) increases in the short-term
interest rates on June 30, 1999 and August 24, 1999. As a result, the short-term
municipal yield curve began to steepen. (A yield curve is the graphical
depiction of the relationship between the yield on bonds of the same credit
quality but different maturities.) Over this period, one-year municipal note
yields increased by roughly 50 to 60 basis points. In the VRDO (Variable Rate
Demand Obligation) market, which represents the shorter end of the yield curve,
rates declined as investors sought the safety of daily and weekly liquidity.
VRDOs 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.
Along with the rise in one-year municipal note yields the market also
experienced an increase in the premium paid for the most liquid, high quality
note issues. Part of this premium can be explained by the anxiety surrounding
Y2K. While there is no historical data to predict what may occur in the
financial markets due to Y2K concerns, we do believe that during uncertain times
investors tend to opt for liquidity and safety of principal. Given these
factors, we do expect the liquidity premium to increase over the fourth quarter
1999.
Our approach to this market has been to target an average maturity of 50-55
days while maintaining a higher variable rate position. Our focus in the
municipal note market has been on the high quality, liquid sector of the market.
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
In closing, thank you for investing in the Smith Barney Muni Funds - New York
Money Market Portfolio and New York Portfolio. We look forward to continuing to
help you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph 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
October 15, 1999
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
- --------------------------------------------------------------------------------
New York Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.69 $12.86 $0.34 $0.00 (3.65)%+
- --------------------------------------------------------------------------------
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 $8.15 $0.32
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
------------------------
Beginning End Income Capital
Gain Total
Period Ended of Period of Period Dividends
Distributions Returns(1)
================================================================================
=================
<S> <C> <C> <C> <C>
<C>
9/30/99 $13.68 $12.85 $0.30 $0.00
(3.92)%+
- --------------------------------------------------------------------------------
- -----------------
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 $3.22 $0.32
================================================================================
=================
</TABLE>
- --------------------------------------------------------------------------------
6 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
New York Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-----------------------
Beginning End Income Capital
Gain Total
Period Ended of Period of Period Dividends
Distributions Returns(1)
================================================================================
=================
<S> <C> <C> <C> <C>
<C>
9/30/99 $13.67 $12.84 $0.30 $0.00
(3.95)%+
- --------------------------------------------------------------------------------
- -----------------
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 $4.41 $0.32
================================================================================
=================
</TABLE>
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
================================================================================
Six Months Ended 9/30/99+ (3.65)% (3.92)% (3.95)%
- --------------------------------------------------------------------------------
Year Ended 9/30/99 (2.98) (3.50) (3.49)
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 6.45 N/A 5.85
- --------------------------------------------------------------------------------
Ten Years Ended 9/30/99 7.41 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 9/30/99 6.89 7.09 5.39
================================================================================
Without Sales Charges(1)
-----------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/99+ (7.50)% (8.15)% (5.85)%
- --------------------------------------------------------------------------------
Year Ended 9/30/99 (6.85) (7.58) (5.33)
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 5.58 N/A 5.63
- --------------------------------------------------------------------------------
Ten Years Ended 9/30/99 6.97 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 9/30/99 6.55 6.93 5.23
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
- --------------------------------------------------------------------------------
New York Portfolio
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (9/30/89 through 9/30/99) 104.36%
- --------------------------------------------------------------------------------
Class B (Inception* through 9/30/99) 39.87
- --------------------------------------------------------------------------------
Class L(Inception* through 9/30/99) 42.35
================================================================================
(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) 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.
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the New York Portfolio vs.
Lehman Brothers Municipal Bond Index+
- --------------------------------------------------------------------------------
September 1989 - September 1999
[LINE GRAPH]
New York Portfolio Lehman Brothers Municipal Bond Index
Sep-89 9,599 10,000
Mar-90 9,878 10,430
Mar-91 10,710 11,392
Mar-92 11,959 12,530
Mar-93 13,656 14,098
Mar-94 13,987 14,425
Mar-95 14,850 15,498
Mar-96 16,144 16,798
Mar-97 17,028 17,712
Mar-98 19,042 19,610
Mar-99 19,786 20,825
Sep-99 19,064 20,376
+ Hypothetical illustration of $10,000 invested in Class A shares on
September 30, 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
September 30, 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.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
$12,775,000 VMIG 1* Albany NY IDR United Cerebral Palsy Series B
3.750%(c)
$12,775,000
2,350,000 SP-1+ Buffalo NY BAN Series 99A 3.500% due
2/24/00
2,355,015
3,600,000 NR++ Chautauqua County IDA (Red Wing Co.
Project) 3.800%(c)
3,600,000
4,900,000 A-1 Columbia County IDR (Rural Manufacturing
Project) 3.900%(b)(c)
4,900,000
10,230,000 NR+ Commack UFSD BAN Series 99 3.750% due
6/23/00
10,255,124
10,000,000 NR+ Dansville CSD BAN Series 99 3.250% due 3/16/00
10,006,616
Dutchess County NY IDA:
6,600,000 A-1+ Marist College Series 98A 3.700%(c)
6,600,000
4,500,000 A-1+ St. Francis Hospital Series B 3.700%(c)
4,500,000
10,000,000 NR+ East Greenbush CSD BAN Series 99
3.750% due 6/28/00
10,024,987
16,000,000 NR+ Eastern Suffolk BOCES RAN 3.750% due 6/28/00
16,036,607
Erie County IDA:
3,980,000 A-1 Colad Group Inc. Project Series 96 3.900%(b)(c)
3,980,000
3,325,000 P-1* Rosina Food Products Inc. 3.900%(b)(c)
3,325,000
7,900,000 A-1 Franklin County Trudeau Institute Series 98 3.800%(c)
7,900,000
1,920,000 A-1 Fulton County IDR (Fiber Conversion Inc.
Project) 3.900%(b)(c)
1,920,000
9,350,000 A-1+ Hempstead IDA Nassau Energy 3.700%(b)(c)
9,350,000
1,520,000 A-1 Hudson County IDA (Emisig Manufacturing
Corp.) Series 98 3.900%(b)(c)
1,520,000
Jefferson County IDA:
975,000 A-1 The Climax Manufacturing Co. Project 3.900%(b)(c)
975,000
2,145,000 A-1 Fisher Guage 3.900%(b)(c)
2,145,000
770,000 A-1 Lewis County IDA IDR (The Climax
Manufacturing Co. Project) 3.900%(b)(c)
770,000
Long Island Power Authority:
29,100,000 A-1+ Series 1 1998 3.650% due 5/1/33(c)
29,100,000
10,800,000 A-1+ Series 2 1998 3.750% due 5/1/33(c)
10,800,000
12,500,000 A-1+ Series 3 1998 TECP 3.500% due 3/9/00
12,500,000
Series 4 1998 TECP:
5,000,000 A-1+ 3.250% due 10/14/99
5,000,000
3,500,000 A-1+ 3.350% due 11/9/99
3,500,000
7,000,000 A-1+ 3.450% due 11/9/99
7,000,000
8,500,000 A-1+ Series 6 3.750%(c)
8,500,000
9,100,000 A-1+ Series 7 3.800%(c)
9,100,000
15,800,000 A-1+ Series A PART 3.920%(c)
15,800,000
Madison County BOCES:
3,250,000 NR+ Monroe Orleans RAN 3.750% due 6/30/00
3,256,320
7,500,000 NR+ Onondaga Cortland 3.750% due 6/23/00
7,515,785
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========
<S> <C> <C>
<C>
Monroe County:
$ 4,115,000 A-1 Granite Building IDA Series 1992 3.800%(c) $
4,115,000
3,650,000 A-1 IDR Collegiate Housing Foundation
Series A 3.600%(c)
3,650,000
6,200,000 A-1 JADA Precision Plastic IDA Series 97
3.900%(b)(c)
6,200,000
10,000,000 VMIG 1* MTA FSA-Insured 3.300%
10,000,000
Nassau County:
3,730,000 A-1+ Rubies Costume Project IDA
3.900% due 6/1/19(b)(c)
3,730,000
4,000,000 NR++ Series A RAN 3.750% due 3/15/00
4,027,185
20,000,000 NR++ Series B RAN 3.750% due 4/19/00
20,149,718
New York City GO:
23,690,000 A-1+ PART AMBAC-Insured 3.780%(c)
23,690,000
5,500,000 A-1+ PART MBIA-Insured 3.850%(c)
5,500,000
19,900,000 A-1+ Series 92D FGIC-Insured 3.700%(c)
19,900,000
4,500,000 A-1+ Series 92D FGIC-Insured 3.800%(c)
4,500,000
1,100,000 A-1+ Series 93E-3 3.800%(c)
1,100,000
1,000,000 A-1+ Series 93E-4 3.800%(c)
1,000,000
4,125,000 A-1+ Series 94B FGIC-Insured 3.950%(c)
4,125,000
15,995,000 A-1+ Series 94B-8 3.650%(c)
15,995,000
4,500,000 A-1+ Series 94H-3 FSA-Insured 3.500%(c)
4,500,000
12,000,000 A-1+ Series 95E-5 3.650%(c)
12,000,000
9,415,000 NR++ Series 96A Pre-Refunded 7.500% due 3/15/00
9,721,631
5,000,000 A-1+ Series 96E 3.600%(c)
5,000,000
2,880,000 A-1+ Series B-2 Sub-Series B-5 MBIA-Insured
3.750%(c)
2,880,000
5,600,000 A-1+ Series H Sub-Series H-3 FSA-Insured 3.350%(c)
5,600,000
10,000,000 A-1+ Series J-2 3.650%
10,000,000
12,900,000 A-1+ Series J-2 Sub-Series J-3 3.650%
12,900,000
19,245,000 A-1+ Sub-Series 95F-4 7.500%(c)
19,245,000
4,350,000 A-1+ Sub-Series A-7 3.800%(c)
4,350,000
12,800,000 A-1+ Sub-Series B-2 3.650%(c)
12,800,000
New York City HDC Multi-Family Housing:
5,000,000 A-1+ Brittany Dev Series A 3.800%(b)(c)
5,000,000
24,500,000 A-1+ Columbus Apartments Series A 3.800%(c)
24,500,000
New York City Health & Hospital Revenue:
31,500,000 A-1+ Series A 3.700%(c)
31,500,000
2,460,000 A-1+ Series C 3.700%(c)
2,460,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========
<S> <C> <C>
<C>
New York City IDA:
$19,000,000 A-1+ Air Express International Corp. Project
$19,000,000
3.800%(b)(c)
3,900,000 A-1+ Childrens Oncology Society 3.650%(c)
3,900,000
4,950,000 A-1+ Columbia Grammar School Project 3.700%(c)
4,950,000
6,100,000 A-1+ Gary Plastic Packaging Corp. 98 3.800%(b)(c)
6,100,000
3,500,000 A-1+ Linear Lighting Corp. 3.800%(b)(c)
3,500,000
1,000,000 A-1+ National Audobon Society 3.850%(b)(c)
1,000,000
12,000,000 A-1+ USA Waste Services 3.750%(b)(c)
12,000,000
New York City Metropolitan Transit Authority:
Series CP1 Sub-Series 98B TECP:
10,000,000 A-1+ 3.500% due 2/18/00
10,000,000
7,000,000 A-1+ 3.550% due 3/10/00
7,000,000
Series CP1 Sub-Series A TECP:
19,800,000 A-1+ 3.350% due 11/10/99
19,800,000
11,500,000 A-1+ 3.450% due 12/9/99
11,500,000
5,000,000 A-1+ 3.550% due 2/18/00
5,000,000
Sub-Series CP1 TECP:
9,000,000 A-1+ 3.350% due 12/10/99
9,000,000
16,300,000 A-1+ 3.300% due 12/14/99
16,300,000
7,000,000 A-1+ 3.500% due 3/7/00
7,000,000
New York City Municipal Water Financial
Authority:
Series 4 TECP:
16,000,000 A-1+ 3.400% due 12/23/99
16,000,000
2,000,000 A-1+ 3.500% due 12/23/99
2,000,000
1,000,000 A-1+ 3.550% due 12/23/99
1,000,000
25,854,000 VMIG 1* Series 98-2 PART 3.880%(c)
25,854,000
5,000,000 A-1+ Series 98C PART FGIC-Insured 3.820%(c)
5,000,000
1,675,000 A-1+ Series A 3.420%(c)
1,704,657
6,900,000 A-1+ Series G FGIC-Insured 3.750%(c)
6,900,000
New York City Transitional Financial
Authority:
20,000,000 A-1+ Series 98B PART 3.820%(c)
20,000,000
17,900,000 VMIG 1* Series A-2 3.750%(c)
17,900,000
2,100,000 VMIG 1* Series C 3.700%(c)
2,100,000
15,500,000 A-1+ New York State BAN 3.300% due 10/12/99
15,500,000
New York State Dormitory Authority:
8,625,000 A-1+ Colgate University PART FGIC-Insured
8,625,000
3.780%(c)
5,000,000 A-1 Memorial Sloan Kettering Series 89A
3.900% due 7/1/19
5,000,000
8,000,000 A-1+ Public Library Series 99A 3.600% due
8,000,000
7/1/28(c)
12,235,000 NR+ Revenue City University Series C Pre-Refunded
3.550% due 7/1/00
12,453,499
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
===========================
<S> <C> <C>
<C>
$ 5,220,000 A-1+ United Health Services PART
AMBAC-Insured 3.820%(c)
$ 5,220,000
9,500,000 A-1+ Wagner College 3.650%(c)
9,500,000
New York State Energy Research & Development
Authority:
11,600,000 A-1+ Brooklyn Union Gas MBIA-Insured 3.700%(c)
11,600,000
Con Edison:
23,800,000 A-1+ Sub-Series A-2 3.700%(c)
23,800,000
15,000,000 A-1+ Sub-Series A-3 3.700%(c)
15,000,000
14,000,000 VMIG 1* LILCO Series A 3.700%(b)(c)
14,000,000
New York State Electric & Gas:
12,000,000 A-1+ 3.000% due 10/15/99(b)(c)
12,000,000
17,000,000 VMIG 1* 3.200% due 10/15/99(d)
17,000,000
1,600,000 VMIG 1* Series C 3.700%(b)
1,600,000
1,100,000 VMIG 1* Series D 3.850%(b)
1,100,000
Niagara Mohawk:
7,000,000 A-1+ PART AMBAC-Insured 3.820%(c)
7,000,000
4,000,000 A-1+ Series A 4.200%(c)
4,000,000
960,000 A-1+ Series B 4.250%(b)(c)
960,000
Rochester Gas & Electric MBIA-Insured:
4,800,000 A-1+ Series 97A 3.600%(c)
4,800,000
8,000,000 A-1+ Series B 3.750%(c)
8,000,000
New York State Environmental Quality TECP:
9,995,000 A-1+ PART MBIA-Insured 3.820%(c)
9,995,000
5,000,000 A-1+ Series 97A 3.250% due 10/14/99
5,000,000
New York State Housing Finance Authority:
37,500,000 A-1+ 250 West 50th Street Series A 3.650%(b)(c)
37,500,000
17,100,000 VMIG 1* E84th Street Series A 3.700%(b)(c)
17,100,000
16,400,000 A-1+ Liberty View Apartment Series 97A
16,400,000
3.600%(b)(c)
10,400,000 VMIG 1* Normandie Court Project Series 91A 3.700%(c)
10,400,000
7,000,000 A-1+ Normandie Court Project Series A 3.750%(b)(c)
7,000,000
24,000,000 VMIG 1* Saxony Housing Series 97A 3.750%(b)(c)
24,000,000
4,600,000 VMIG 1* SVC Contract Obligation Series A 3.550%(c)
4,600,000
8,500,000 VMIG 1* Talleyrand Crescent Housing Series 99A
3.750%(b)(c)
8,500,000
8,800,000 VMIG 1* Tribeca Park Housing Series A 3.700%(b)(c)
8,800,000
New York State Local Government Assistance Corp.:
22,485,000 A-1+ Series 93A 3.650%(c)
22,485,000
10,000,000 A-1+ Series 95B 3.700%(c)
10,000,000
9,350,000 A-1+ Series 95C 3.700%(c)
9,350,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
====================
<S> <C> <C>
<C>
New York State Medicare Facilities Finance Agency:
$ 6,300,000 VMIG 1* Lenox Hill Hospital 3.600%(c)
$ 6,300,000
12,125,000 VMIG 1* St. Lukes PART FHA-Insured 3.820%(c)
12,125,000
New York State Mortgage Agency Revenue PART:
13,995,000 VMIG 1* 3.700%(b)(c)
13,995,000
320,000 VMIG 1* 3.870%(b)(c)
320,000
12,755,000 VMIG 1* Series 38 3.870%(b)(c)
12,755,000
375,000 VMIG 1* Series KK 3.300%(b)(c)
375,000
New York State Thruway:
5,000,000 NR++ Highway & Bridge AMBAC-Insured Series B
5.000% due 4/1/00
5,046,376
23,095,000 A-1+ Series 1997 PART 3.780%(c)
23,095,000
14,595,000 A-1 New York State UDC 93A PART FSA-Insured
3.350% due 11/5/99(c)
14,595,000
Niagara County IDA
(American Re-Fuel Co.):
13,505,000 A-1+ Series 94C 3.750%(b)(c)
13,505,000
8,000,000 A-1+ Series 96D 3.750%(b)(c)
8,000,000
12,800,000 A-1+ Series 97B 3.850%(b)(c)
12,800,000
3,000,000 A-1 Oneida County IDR (Harden Furniture)
Series 98 3.900%(b)(c)
3,000,000
Onondaga County IDA Southern Container:
3,930,000 NR++ Series A 3.800%(b)(c)
3,930,000
1,500,000 NR++ Series B 3.800%(b)(c)
1,500,000
Port Authority of New York & New Jersey:
3,500,000 NR+ Series 98-1 3.800%(b)(c)
3,500,000
3,500,000 NR+ Series 98-2 3.700%(c)
3,500,000
990,000 NR++ Rensselaer County IDA (Millers
Supermarket Inc. Project) 3.500% due 3/1/00(b)(d)
990,000
1,000,000 A-1 Rotterdam IDA IDR Rotterdam Park 3.800%(c)
1,000,000
Schenectady County IDR:
6,265,000 A-1 Feuz Holding Co. Series 98A 3.900%(b)(c)
6,265,000
1,700,000 A-1 Scotia Industrial Park Project Series 98A
1,700,000
3.800%(c)
20,550,000 A-1 Seneca County IDA (Chiropractic College)
20,550,000
3.800%(c)
5,875,600 NR++ Sharon Springs CSD BAN 99 3.750%
5,875,600
3,800,000 A-1 St. Lawrence County IDA United Helpers
Living 3.800%(c)
3,800,000
Suffolk County:
5,460,000 A-1+ JBC Realty/Wibar International IDR
5,460,000
3.900%(b)(c)
10,000,000 VMIG 1* Series A 38 3.850%(c)
10,000,000
22,905,000 VMIG 1* Triborough Bridge & Tunnel Authority
FGIC-Insured PART 3.150%(b)
22,905,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============
<S> <C> <C> <C>
Westchester County:
$ 2,800,000 A-1+ BAN 3.700% due 12/28/99 $
2,800,000
5,000,000 A-1+ Boys and Girls Club Project IDA 3.700%(c)
5,000,000
5,595,000 NR+ Series A 4.000% due 11/15/99
5,603,237
10,710,000 NR+ Series B 4.000% due 11/15/99
10,720,129
- --------------------------------------------------------------------------------
- ------------
TOTAL INVESTMENTS -- 100%
(Cost -- $1,366,956,486**)
$1,366,956,486
================================================================================
============
</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) 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 28 through 30 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=================
<S> <C> <C>
<C>
Education -- 11.8%
$ 710,000 A- Hempstead Town, IDA, Civic Facilities Revenue,
Adelphi University, 5.250% due 2/1/14
$ 686,037
3,000,000 Baa2* New Rochelle, IDA, Civic Facility Revenue,
College of New Rochelle Project, 5.500% due 7/1/19
2,823,750
New York State Dormitory Authority Revenue Bonds:
City University Systems:
Series A, FGIC-Insured:
5,000,000 AAA 5.000% due 7/1/16
4,637,500
5,825,000 AAA 5.625% due 7/1/16
5,934,219
7,000,000 AAA Series B, FSA-Insured, 6.000% due 7/1/14
7,437,500
2,500,000 BBB+ Series C, 7.500% due 7/1/10
2,853,125
2,000,000 AAA Columbia University, 5.000% due 7/1/18
1,835,000
Cornell University, Series A:
2,000,000 AA 7.375% due 7/1/20
2,081,480
1,000,000 AA 7.375% due 7/1/30
1,040,740
200,000 Baa1* Department of Health, State of New York Issue,
7.250% due 7/1/02
208,044
1,150,000 AAA Hamilton College, MBIA-Insured, 5.125% due 7/1/15
1,093,937
2,700,000 AA Manhattan College, Asset Guaranty, 6.500% due
7/1/19 2,841,750
New York Medical College:
1,015,000 AAA 7.250% due 10/1/03
1,028,134
220,000 AA Asset Guaranty, 6.700% due 7/1/01
229,350
School Program:
1,000,000 BBB+ 5.000% due 7/1/18
902,500
1,500,000 AAA Issue 2, Series F, AMBAC-Insured, 5.250% due
7/1/18 1,428,750
1,000,000 AAA Special Activity School District Program,
FSA-Insured, 5.250% due 7/1/13
985,000
4,475,000 AAA State University Athletic Facility, MBIA-Insured,
4.500% due 7/1/21
3,686,281
State University Educational Facility:
12,110,000 AAA Series A, FSA-Insured, 5.875% due 5/15/17
12,624,675
Series B:
1,000,000 A 7.500% due 5/15/11
1,156,250
5,000,000 AAA FGIC-Insured, 5.250% due 5/15/19
4,818,750
7,370,000 A+ University of Rochester, Series A, 6.500% due
7/1/19 7,867,475
285,000 BBB+ Upstate Community College,
Series B, 7.100% due 7/1/01
298,181
Rensselaer County, IDA, Civic Facilities Revenue
Bonds,
Polytechnic Institute Dormitory Project:
5,430,000 A+ Series A, 5.125% due 8/1/29
4,819,125
5,820,000 A+ Series B, 5.125% due 8/1/27
5,187,075
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============
<S> <C> <C>
<C>
Education -- 11.8% (continued)
Schenectady, IDA, Civic Facilities Revenue Bonds,
Union College, Series A, AMBAC-Insured:
$ 2,000,000 Aaa* 5.375% due 12/1/19
$ 1,942,500
3,000,000 Aaa* 5.450% due 12/1/29
2,827,500
- --------------------------------------------------------------------------------
- ------------
83,274,628
- --------------------------------------------------------------------------------
- ------------
Escrowed To Maturity(b) -- 0.8%
1,495,000 AAA Commonwealth of Puerto Rico, Aqueduct & Sewer
Authority Revenue Bonds, 10.250% due 7/1/09
1,919,206
3,150,000 AAA New York City GO, Series I, AMBAC-Insured,
7.250% due 8/15/14
3,227,332
790,000 AAA New York State Power Authority Revenue & General
Purpose, 9.500% due 1/1/01
814,688
- --------------------------------------------------------------------------------
- ------------
5,961,226
- --------------------------------------------------------------------------------
- ------------
Finance -- 5.7%
4,500,000 AAA New York City Municipal Water Finance Authority,
Water & Sewer Systems Revenue Bonds,
Series A, FGIC-Insured, 4.750% due 6/15/31
3,735,000
New York City Transitional Finance Authority
Revenue, Future Tax:
6,000,000 AA Series B, 4.750% due 11/1/23
5,085,000
Series C:
5,625,000 AA 5.000% due 5/1/17
5,132,812
15,000,000 AA 4.750% due 5/1/23
12,731,250
New York State Local Government Assistance Corp.:
5,000,000 AAA Series B, MBIA-Insured, 4.875% due 4/1/20
4,418,750
6,450,000 AAA Series C, FGIC-Insured, 5.500% due 4/1/17
6,369,375
New York State Municipal Bond Bank Agency,
Special Revenue Program:
1,000,000 BBB+ City of Buffalo, 6.875% due 3/15/06
1,052,500
1,500,000 AAA City of Rochester, 6.750% due 3/15/11
1,601,250
- --------------------------------------------------------------------------------
- ------------
40,125,937
- --------------------------------------------------------------------------------
- ------------
General Obligation -- 5.3%
Buffalo, School District, Series B:
1,380,000 AAA 4.750% due 2/1/17
1,233,375
FSA-Insured:
1,540,000 AAA 4.750% due 2/1/16
1,391,775
500,000 AAA 4.750% due 2/1/18
443,750
575,000 AAA 4.750% due 2/1/19
507,437
Green Island:
100,000 Baa3* 9.375% due 11/1/01
109,000
125,000 Baa3* 9.375% due 11/1/02
140,469
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
General Obligation -- 5.3% (continued)
New York City Refunding Bonds:
$ 5,000,000 A- Series C, 6.660% due 8/1/09
$ 5,143,750
1,000,000 A- Series F, 5.125% due 8/1/13
960,000
10,000,000 A- Series H, 6.125% due 8/1/25
10,137,500
New York State:
1,000,000 A 12.000% due 11/15/03
1,276,250
2,750,000 A 9.875% due 11/15/05
3,485,625
North Hempstead, FGIC-Insured:
4,505,000 Aaa* Series A, 5.000% due 9/1/22
4,065,763
1,500,000 Aaa* Series B, 4.750% due 3/1/18
1,331,250
3,210,000 Aa2* Orange County, 5.000% due 7/15/21
2,909,063
Yonkers, Series C, FGIC-Insured State Aid Withholding:
2,050,000 AAA 5.000% due 6/1/15
1,919,313
1,605,000 AAA 5.000% due 6/1/16
1,490,644
1,000,000 AAA 5.000% due 6/1/19
906,250
- --------------------------------------------------------------------------------
- ------------
37,451,214
- --------------------------------------------------------------------------------
- ------------
Government Facilities -- 5.3%
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
2,608,506
3,655,000 Aa1* Zero coupon due 8/1/19
1,178,737
5,895,000 Aa1* Zero coupon due 8/1/20
1,783,237
1,725,000 Aa1* Zero coupon due 8/1/21
489,469
1,600,000 Aa1* Zero coupon due 8/1/22
428,000
Office Facilities - Audit & Control, MBIA-Insured:
835,000 AAA 4.875% due 4/1/16
753,587
1,755,000 AAA 4.900% due 4/1/17
1,572,919
1,500,000 AAA 5.500% due 4/1/23
1,449,375
New York State Urban Development Corp. Revenue:
7,200,000 AAA Community Enhancement Facilities, AMBAC-Insured,
5.125% due 4/1/16
6,768,000
Correctional Facilities Service Contract, FSA-
Insured:
7,500,000 AAA 5.000% due 1/1/19
6,825,000
5,000,000 AAA 5.000% due 1/1/20
4,518,750
3,000,000 BBB+ State Facilities, 5.700% due 4/1/20
2,977,500
Suffolk County Judicial Facilities Agency Service
Agreement Revenue Bonds, John P. Cohalan Complex,
AMBAC-Insured:
3,350,000 AAA 5.250% due 10/15/15
3,224,375
2,720,000 AAA 5.000% due 4/15/16
2,519,400
- --------------------------------------------------------------------------------
- ------------
37,096,855
- --------------------------------------------------------------------------------
- ------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C>
<C>
Hospitals -- 16.1%
$ 380,000 B2* Monroe County IDA Revenue, Civic Facilities,
Genesee Hospital, Series A, 6.500% due 11/1/99
$ 380,281
Nassau Health Care Corp., Health System Revenue
Bonds, Nassau County Guaranteed, FSA-Insured:
5,000,000 AAA 5.500% due 8/1/19
4,856,250
7,000,000 AAA 5.750% due 8/1/29
6,860,000
3,000,000 AAA New York City Health & Hospital Corporate Revenue,
Health System, Series A, 5.000% due 2/15/20
2,696,250
4,685,000 AAA New York State Dormitory Authority Lease Revenue,
Municipal Health Facilities Improvement Program,
Series 1, FSA-Insured, 5.000% due 1/15/17
4,280,919
New York State Dormitory Authority Revenue:
5,350,000 Aa3* Lutheran Center at Poughkeepsie, LOC Key Bank,
6.050% due 7/1/26
5,403,500
Mental Health Services Facilities:
Series B:
2,500,000 A- 5.000% due 2/15/18
2,259,375
7,000,000 A- 5.625% due 2/15/21
6,790,000
11,505,000 AAA Series D, MBIA-Insured, 5.000% due 8/15/17
10,483,931
5,035,000 AAA Series F, AMBAC-Insured, 4.500% due 8/15/28
3,990,237
15,000,000 AAA New York & Presbyterian Hospital, FHA-Insured,
4.750% due 8/1/16
13,293,750
5,000,000 AAA New York University, Series A, MBIA-Insured,
5.750% due 7/1/27
5,062,500
3,000,000 AA St. Luke's Home, Residential Health, FHA-Insured,
6.375% due 8/1/35
3,127,500
2,450,000 AAA St. Vincent's Hospital & Medical Center, FHA-
Insured,
7.400% due 8/1/30
2,587,812
2,000,000 AAA Victory Memorial Hospital, MBIA-Insured,
5.375% due 8/1/25
1,880,000
New York State Medical Care Facility Finance
Agency Revenue:
2,080,000 A- 8.875% due 8/15/07
2,092,792
545,000 A- 7.700% due 2/15/18
551,006
Hospital & Nursing Home Insured Mortgage,
FHA-Insured:
Series A:
25,000 AA 6.100% due 2/15/02
25,875
4,855,000 AA 6.200% due 2/15/21
5,006,719
4,005,000 AA 7.450% due 8/15/31
4,245,300
990,000 AA Series B, 7.000% due 8/15/32
1,080,338
2,385,000 AA Series C, 6.650% due 8/15/32
2,513,194
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
Hospitals -- 16.1% (continued)
Series A:
$ 2,500,000 BB Central Suffolk Hospital Mortgage Project,
6.125% due 11/1/16
$ 2,359,375
955,000 Aa1* Health Center Projects, Secured Mortgage
Program, 6.375% due 11/15/19
1,015,881
6,800,000 AA Methodist Hospital, FHA-Insured,
6.700% due 8/15/23
7,361,000
4,000,000 AA Mortgage Project, FHA-Insured,
6.375% due 8/15/24
4,395,000
Series B:
1,860,000 AAA Long Term Healthcare, FSA-Insured,
6.450% due 11/1/14
1,966,950
3,500,000 AA Mortgage Project, FHA-Insured,
6.100% due 2/15/15
3,618,125
Series F, Mental Health Services Facilities
Improvement:
710,000 A- 6.500% due 8/15/12
749,938
730,000 A- 6.500% due 2/15/19
763,763
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
832,500
695,000 A Valley Health Development Corp., Mortgage Revenue
Bonds, Mortgage Loan, FHA-Insured,
11.300% due 2/1/23
794,455
- --------------------------------------------------------------------------------
- ------------
113,324,516
- --------------------------------------------------------------------------------
- ------------
Housing: Multi-Family -- 5.7%
6,470,000 BBB Commonwealth of Puerto Rico, Urban Renewal &
Housing Corp. Revenue Bonds, 7.875% due 10/1/04
6,615,575
New York City Housing Development Corp.:
1,508,293 NR Cadman Project, 6.500% due 11/15/18
1,481,898
956,679 NR Heywood Towers Project, 6.500% due 10/15/17
947,113
1,217,921 NR Kelly Project, 6.500% due 2/15/18
1,202,697
860,880 AAA Pass Through Certificates, AMBAC-Insured,
6.500% due 12/20/01
905,000
1,560,451 NR Riverside Project, 6.500% due 11/15/18
1,639,019
Series A, FHA-Insured:
4,000,000 AAA 6.600% due 4/1/30
4,145,000
5,000,000 AAA Multi-Unit Mortgage Refunding, 7.350% due 6/1/19
5,218,750
New York State Housing Finance Agency Revenue,
.
FHA-Insured:
2,000,000 Aa1* Secured Mortgage, Series A,
6.200% due 8/15/15(c)
2,067,500
1,500,000 AAA Series C, 6.500% due 8/15/24
1,561,875
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
Housing: Multi-Family -- 5.7% (continued)
$ 3,430,000 AAA Housing Project Mortgage, Series A, FSA-Insured,
6.125% due 11/1/20
$ 3,524,325
Secured Mortgage Project, SONYMA-Insured:
Series A:
500,000 Aa1* 7.000% due 8/15/12(c)
526,875
500,000 Aa1* 7.050% due 8/15/24(c)
523,750
6,870,000 Aa1* Series B, 6.250% due 8/15/29(c)
7,050,338
1,750,000 Aa1* Series C, 6.600% due 8/15/27
1,828,750
950,000 A1* Rensselaer Housing Authority, Multi-Family Mortgage
Revenue, Rensselaer Elderly Apartments, Series A,
7.750% due 1/1/11
1,022,438
- --------------------------------------------------------------------------------
- ------------
40,260,903
- --------------------------------------------------------------------------------
- ------------
Housing: Single-Family -- 5.4%
New York State Mortgage Agency Revenue:
Homeowner Mortgage:
2,625,000 Aa2* Series 37-A, 6.375% due 10/1/14
2,723,438
4,000,000 Aa2* Series 42, FHA-Insured, 6.650% due 4/1/26(c)
4,150,000
9,515,000 Aa2* Series 46, 6.650% due 10/1/25(c)
9,871,813
4,400,000 Aa2* Series 65, 5.850% due 10/1/28(c)
4,345,000
4,995,000 Aa2* Series 67, 5.800% due 10/1/28(c)
4,895,100
6,500,000 Aa2* Series 71, 5.350% due 10/1/18
6,166,875
5,000,000 Aa2* Series 80, 5.100% due 10/1/17
4,737,500
1,000,000 Aaa* Series 41-A, 6.450% due 10/1/14
1,038,750
- --------------------------------------------------------------------------------
- ------------
37,928,476
- --------------------------------------------------------------------------------
- ------------
Industrial Development -- 7.5%
3,470,000 Aaa* Allegany County IDA, Civic Facilities Revenue,
(Alfred University Civic Facilities), MBIA-Insured,
5.000% due 8/1/18
3,157,700
2,250,000 A3* Essex County IDA Revenue, Solid Waste, (International
Paper Co. Project), Series A, 6.150% due 4/1/21(c)
2,258,437
500,000 A+ Monroe County IDA, Public Improvement,
Canal Ponds Park, Series A, 7.000% due 6/15/13
532,500
3,000,000 AAA Nassau County IDA, Civic Facilities Revenue,
(Hofstra University Project), 4.750% due 7/1/28
2,493,750
New York City IDA:
Civic Facilities Revenue:
3,695,000 AAA Horace Mann School Project, MBIA-Insured,
5.000% due 7/1/18
3,362,450
1,710,000 AAA Lighthouse International Project, MBIA-Insured,
4.500% due 7/1/23
1,397,925
The Lighthouse Project:
1,000,000 NR 6.375% due 7/1/10
1,070,000
2,250,000 NR 6.500% due 7/1/22
2,415,937
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
Industrial Development -- 7.5% (continued)
$ 915,000 Aa2* Prime Laboratories Inc., Series C,
7.700% Mandatory Tender 11/1/00
$ 917,891
8,000,000 AAA Onondaga County IDA, Sewer Facilities Revenue,
(Bristol-Myers Squibb Co. Project),
5.750% due 3/1/24(c)
8,030,000
Port Authority of New York & New Jersey:
8,000,000 BBB- Delta Airlines Inc. Project, Series 1R,
6.950% due 6/1/08
8,500,000
12,000,000 NR Special Project, 5th Installment,
6.750% due 10/1/19(c)
12,570,000
1,410,000 A+ Rensselaer County IDA, Albany International Corp.,
7.550% due 6/1/07(c)
1,586,250
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
970,000
1,250,000 AAA Syracuse GO, IDA, James Square Association,
FHA-Insured, 7.000% due 8/1/25
1,307,813
2,090,000 B2* Warren & Washington Counties IDA, Resource
Recovery Revenue Bonds, Series A, 7.900% due
12/15/07
2,126,575
- --------------------------------------------------------------------------------
- ------------
52,697,228
- --------------------------------------------------------------------------------
- ------------
Life Care Systems -- 3.3%
New York State Dormitory Authority Revenue Bonds:
1,100,000 Aa3* Chapel Oaks Inc., 5.375% due 7/1/17
1,045,000
FHA-Insured:
1,230,000 AAA Crouse Community Center, 7.500% due 8/1/29
1,263,862
Genessee Valley:
1,000,000 AA Series A, 6.900% due 2/1/32
1,050,000
685,000 AA Series B, 6.850% due 8/1/16
720,962
3,815,000 AA Hebrew Nursing Home, 6.125% due 2/1/37
3,862,687
1,290,000 AAA Heritage House Nursing Center, 7.000% due 8/1/31
1,352,887
2,450,000 AA- Iroquois Nursing Home, 7.050% due 2/1/31
2,587,812
2,050,000 AAA Jewish Geriatric Center, 7.150% due 8/1/14
2,249,875
1,500,000 AAA Menorah Campus, Nursing Home,
6.100% due 2/1/37
1,516,875
1,600,000 AA Niagara Frontier Home, Mortgage Revenue,
6.200% due 2/1/15
1,682,000
3,350,000 AA Wesley Garden Nursing Home, 6.125% due 8/1/35
3,379,312
2,160,000 A Oneida Health Care Corp. Mortgage Revenue, Series A,
FHA-Insured, 7.200% due 8/1/31
2,241,000
750,000 A Onondaga County Industrial Development Agency,
Civic Facilities Revenue, (Syracuse Home Assistance
Project), 5.200% due 12/1/18
684,375
- --------------------------------------------------------------------------------
- ------------
23,636,647
- --------------------------------------------------------------------------------
- ------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
Miscellaneous -- 0.2%
$ 1,655,000 AAA New York City Trust Cultural Resource Revenue Bonds,
Series A, American Museum of Natural History,
AMBAC-Insured, 5.250% due 7/1/17
$ 1,586,731
- --------------------------------------------------------------------------------
- ------------
Pollution Control Revenue -- 3.1%
4,500,000 AAA Dutchess County Resource Recovery Agency Revenue
Bonds, Solid Waste Management, Series A,
FGIC-Insured, 7.500% due 1/1/09
4,629,285
3,000,000 A- New York State Energy, Research & Development
Authority, LILCO Project, Series A, 5.150% due
3/1/16
2,748,750
New York State Environmental Facilities Corp.:
1,595,000 Baa1* Huntington Project, 7.375% due 10/1/99(c)
1,595,000
State Clean Water & Drinking Revolving Fund,
Series B:
1,260,000 AAA 5.250% due 4/15/17
1,209,600
2,490,000 AAA 5.250% due 10/15/17
2,390,400
1,740,000 AAA 5.250% due 4/15/18
1,663,875
1,880,000 AAA 5.250% due 10/15/18
1,797,750
State Water Revolving Fund, Series A:
805,000 Aaa* 7.250% due 6/15/10
857,325
1,950,000 Aa1* 7.500% due 6/15/12
2,030,204
1,000,000 AAA North Country Development Authority, Solid Waste
Management System Revenue Refunding,
FSA-Insured, 6.000% due 5/15/15
1,057,500
1,710,000 Aa3* Puerto Rico Industrial, Medical & Environmental
Facilities Finance Authority Revenue, Series A,
American Airlines Inc., 6.450% due 12/1/25
1,780,538
- --------------------------------------------------------------------------------
- ------------
21,760,227
- --------------------------------------------------------------------------------
- ------------
Pre-Refunded(d) -- 11.7%
35,000 NR Battery Park City Authority Housing Revenue,
FHA-Insured, (Call 6/1/05 @ 100), 8.625% due 6/1/23
41,869
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
1,096,250
2,150,000 AAA Monroe County Water Authority Revenue,
AMBAC-Insured, (Call 8/1/04 @ 101),
7.000% due 8/1/19
2,402,625
New York City GO:
85,000 AAA Series A, (Call 8/15/01 @ 101.5), 7.750% due
8/15/16 91,694
4,000,000 AAA Series B1, MBIA-Insured, (Call 8/15/04 @ 101),
6.950% due 8/15/12
4,465,000
2,375,000 A- Series H, (Call 2/1/02 @ 101.5), 7.000% due 2/1/21
2,547,187
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
Pre-Refunded(d) -- 11.7% (continued)
$ 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
$ 3,429,412
5,000,000 Baa1* New York State Dormitory Authority Revenue,
Department of Education, State of New York Issue,
(Call 7/1/01 @ 102), 7.750% due 7/1/21
5,393,750
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(c)
3,180,806
2,190,000 A- Series B, (Call 6/15/02 @ 102),
7.150% due 12/1/22(c)
2,378,888
New York State Medical Care Facilities Finance
Agency Revenue:
Hospital & Nursing Home, FHA-Insured:
6,950,000 AA Series A, (Call 2/15/04 @ 102),
6.200% due 2/15/21
7,540,750
115,000 AA Series C, (Call 8/15/02 @ 102),
6.650% due 8/15/32
124,488
MBIA-Insured:
190,000 AAA Call 2/15/00 @ 102, 7.750% due 2/15/20
196,487
135,000 AAA Partially Pre-Refunded, (Call 2/15/00 @ 102),
7.750% due 2/15/20
139,393
Mental Health Improvement, Series F,
(Call 8/15/02 @ 102):
4,010,000 A- 6.500% due 8/15/12
4,315,763
3,885,000 A- 6.500% due 2/15/19
4,181,231
515,000 A- Partially Pre-Refunded, (Call 2/15/00 @ 102),
7.750% due 2/15/20
530,100
Series A:
3,000,000 AAA Beth Israel Medical Center, MBIA-Insured,
(Call 11/1/00 @ 102), 7.500% due 11/1/10
3,177,300
4,000,000 AAA Brookdale Hospital Medical Center,
(Call 2/15/05 @ 102), 6.800% due 8/15/12
4,480,000
4,700,000 AAA New York Downtown Hospital,
(Call 2/15/05 @ 102), 6.800% due 2/15/20
5,264,000
New York Hospital, Series A, FHA-Insured,
(Call 2/15/05 @ 102):
8,500,000 AAA 6.800% due 8/15/24
9,520,000
7,600,000 AAA 6.500% due 8/15/29
8,407,500
2,500,000 AAA 6.900% due 8/15/34
2,812,500
5,000,000 AAA Secured Hospital Revenue Bonds 1991,
(Call 8/15/01 @ 102), 7.400% due 8/15/21
5,387,500
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
Pre-Refunded(d) -- 11.7% (continued)
$ 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
$ 1,056,610
- --------------------------------------------------------------------------------
- ------------
82,161,103
- --------------------------------------------------------------------------------
- ------------
Public Facilities -- 2.5%
1,000,000 A Albany Parking Authority Revenue Refunding,
(Green & Hudson Street Garage Project), Series A,
7.150% due 9/15/16
1,042,500
915,000 BBB+ New York State COP, (Hanson Redevelopment Project),
8.375% due 5/1/08
1,047,675
Triborough Bridge & Tunnel Authority:
1,500,000 BBB+ Convention Center Project, Series E,
7.250% due 1/1/10
1,689,375
10,125,000 Aa3* General Purpose Revenue Bonds, Series B,
GO, 5.500% due 1/1/30
9,606,094
5,000,000 AAA Special Obligation, Series A, MBIA-Insured,
4.750% due 1/1/24
4,231,250
- --------------------------------------------------------------------------------
- ------------
17,616,894
- --------------------------------------------------------------------------------
- ------------
Short-Term(e) -- 0.2%
1,600,000 VMIG 1* New York GO, Series B2, Sub-Series B5,
MBIA-Insured, 3.000% due 8/15/11
1,600,000
- --------------------------------------------------------------------------------
- ------------
Transportation -- 11.6%
Metropolitan Transportation Authority:
5,000,000 AAA Commuter Facilities Revenue, Series D, MBIA-
Insured,
5.000% due 7/1/16
4,625,000
2,290,000 AAA Dedicated Tax Fund, Series A, FSA-Insured,
5.125% due 4/1/19
2,109,662
Transit Facilities Revenue:
10,000,000 AAA Series A, MBIA-Insured, 5.625% due 7/1/25
9,750,000
10,000,000 AAA Series B, 4.750% due 7/1/26
8,362,500
2,000,000 AAA Series C, FSA-Insured, 4.750% due 7/1/16
1,777,500
5,000,000 BBB+ Series N, 7.125% due 7/1/09
5,400,000
2,250,000 AAA Monroe County Airport Authority, Airport Revenue,
Greater Rochester International, MBIA-Insured,
7.250% due 1/1/19(c)
2,310,975
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
=============
<S> <C> <C>
<C>
Transportation -- 11.6% (continued)
$ 4,230,000 AAA New York State Highway Authority, Emergency Services,
Construction & Reconstruction, Series A,
FSA-Insured, 6.600% due 3/1/01
$ 4,372,763
New York State Thruway Authority, General Revenue
Bonds, Series E, GO:
1,545,000 AA- 5.000% due 1/16/16
1,423,331
5,000,000 AA- 5.000% due 1/1/25
4,393,750
New York State Thruway Authority, Local Highway &
Bridge Authority, FGIC-Insured:
7,010,000 AAA Series A, 5.000% due 4/1/19
6,361,575
15,000,000 AAA Series B, 5.000% due 4/1/19
13,612,500
1,000,000 AAA Niagara Falls Bridge Authority, Toll Revenue, Series
B,
FGIC-Insured, 5.250% due 10/1/15
980,000
17,000,000 A Puerto Rico Commonwealth Highway & Transportation
Authority Revenue Refunding, Series Y,
5.500% due 7/1/36
16,256,250
- --------------------------------------------------------------------------------
- ------------
81,735,806
- --------------------------------------------------------------------------------
- ------------
Utilities -- 2.8%
7,000,000 AAA Long Island Power Authority, Series A,
FSA-Insured, 5.000% due 12/1/15
6,510,000
New York State Energy, Research & Development
Authority, Electric Facilities Revenue:
1,065,000 Aaa* Series A, 7.150% due 12/1/20(c)
1,135,556
810,000 A2* Series B, 7.150% due 2/1/22(c)
863,663
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(c)(f)
3,420,000
5,750,000 A+ Consolidated Edison Co. Inc. Project, Series A,
7.125% due 12/1/29(c)
6,296,250
1,500,000 Baa2* Corning National Gas Corp., Series A,
8.250% due 12/1/18(c)
1,545,270
- --------------------------------------------------------------------------------
- ------------
19,770,739
- --------------------------------------------------------------------------------
- ------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
26 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY
VALUE
================================================================================
============
<S> <C> <C>
<C>
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
$ 5,998,400
1,000,000 Aa1* Series F, 5.250% due 6/15/14
976,250
- --------------------------------------------------------------------------------
- ------------
6,974,650
- --------------------------------------------------------------------------------
- ------------
TOTAL INVESTMENTS -- 100%
(Cost -- $703,179,525**)
$704,963,780
================================================================================
============
(a) All ratings are by Standard & Poor's Ratings Service, except those
identified by an asterisk (*) are rated by Moody's Investors Service, Inc.
(b) 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.
(c) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(d) 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.
(e) Variable rate municipal bonds and notes are payable upon not more than
seven business days' notice.
(f) 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 28 through 30 for definitions of ratings and certain security
descriptions.
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<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.
- --------------------------------------------------------------------------------
28 1999 Semi-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 29
<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
- --------------------------------------------------------------------------------
30 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Money
New York
Market Portfolio
Portfolio
- --------------------------------------------------------------------------------
- ------------
<S> <C>
<C>
ASSETS:
Investments, at value (Cost -- $1,366,956,486 and
$703,179,525, respectively) $1,366,956,486
$704,963,780
Cash 257,458
21,435
Interest receivable 7,817,007
11,367,809
Receivable for securities sold --
1,148,000
Receivable for Fund shares sold --
167,154
Other assets 239,542
864
- --------------------------------------------------------------------------------
- ------------
Total Assets 1,375,270,493
717,669,042
- --------------------------------------------------------------------------------
- ------------
LIABILITIES:
Payable for securities purchased 5,001,521
11,721,924
Dividends payable 1,905,108
- --
Management fees payable 556,891
299,547
Distribution fees payable 47,580
50,368
Deferred compensation payable 8,560
10,076
Payable for Fund shares purchased --
3,701
Accrued expenses 150,000
64,680
- --------------------------------------------------------------------------------
- ------------
Total Liabilities 7,669,660
12,150,296
- --------------------------------------------------------------------------------
- ------------
Total Net Assets $1,367,600,833
$705,518,746
- --------------------------------------------------------------------------------
- ------------
NET ASSETS:
Par value of shares of beneficial interest $ 1,367,774
$ 54,888
Capital paid in excess of par value 1,366,406,572
707,230,210
Undistributed net investment income --
79,862
Accumulated net realized loss
from security transactions (173,513)
(3,630,469)
Net unrealized appreciation of investments --
1,784,255
- --------------------------------------------------------------------------------
- ------------
Total Net Assets $1,367,600,833
$705,518,746
- --------------------------------------------------------------------------------
- ------------
Shares Outstanding:
Class A 1,367,774,346
40,104,760
-----------------------------------------------------------------------------
- ------------
Class B --
13,304,681
-----------------------------------------------------------------------------
- ------------
Class L --
1,478,575
-----------------------------------------------------------------------------
- ------------
Net Asset Value:
Class A (and redemption price) $1.00
$12.86
-----------------------------------------------------------------------------
- ------------
Class B * --
$12.85
-----------------------------------------------------------------------------
- ------------
Class L ** --
$12.84
-----------------------------------------------------------------------------
- ------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value) --
$13.40
-----------------------------------------------------------------------------
- ------------
Class L (net asset value plus 1.01% of net asset value) --
$12.97
================================================================================
============
</TABLE>
* 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% CDSCif shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 31
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended September 30, 1999
<TABLE>
<CAPTION>
New York Money
New York
Market Portfolio
Portfolio
- --------------------------------------------------------------------------------
- ------------
<S> <C>
<C>
INVESTMENT INCOME:
Interest $ 22,542,828
$ 21,316,818
- --------------------------------------------------------------------------------
- ------------
EXPENSES:
Management fees (Note 4) 3,526,988
1,852,312
Distribution fees (Note 4) 705,398
1,062,928
Shareholder and system servicing fees 280,539
143,478
Registration fees 53,135
7,521
Shareholder communications 30,750
25,119
Custody 16,109
18,049
Audit and legal 13,359
9,928
Trustees' fees 3,477
3,009
Pricing service fees --
12,634
Other 7,444
8,145
- --------------------------------------------------------------------------------
- ------------
Total Expenses 4,637,199
3,143,123
- --------------------------------------------------------------------------------
- ------------
Net Investment Income 17,905,629
18,173,695
- --------------------------------------------------------------------------------
- ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 5):
Realized Loss From Security Transactions
(excluding short-term securities*):
Proceeds from sales 2,095,124,753
143,278,724
Cost of securities sold 2,095,204,180
147,141,449
- --------------------------------------------------------------------------------
- ------------
Net Realized Loss (79,427)
(3,862,725)
- --------------------------------------------------------------------------------
- ------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period --
44,396,530
End of period --
1,784,255
- --------------------------------------------------------------------------------
- ------------
Decrease in Net Unrealized Appreciation --
(42,612,275)
- --------------------------------------------------------------------------------
- ------------
Net Loss on Investments (79,427)
(46,475,000)
- --------------------------------------------------------------------------------
- ------------
Increase (Decrease) in Net Assets From Operations $ 17,826,202
$(28,301,305)
- --------------------------------------------------------------------------------
- ------------
</TABLE>
* Represents net realized gains only from the sale of short-term securities
for the New York Money Market Portfolio.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
32 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended September 30, 1999 (unaudited)
and the Year Ended March 31, 1999
<TABLE>
<CAPTION>
New York Money Market Portfolio September 30
March 31
- --------------------------------------------------------------------------------
- ------------
<S> <C>
<C>
OPERATIONS:
Net investment income $ 17,905,629
$ 32,445,056
Net realized gain (loss) (79,427)
110,729
- --------------------------------------------------------------------------------
- ------------
Increase in Net Assets From Operations 17,826,202
32,555,785
- --------------------------------------------------------------------------------
- ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (17,905,629)
(32,445,466)
- --------------------------------------------------------------------------------
- ------------
Decrease in Net Assets From
Distributions to Shareholders (17,905,629)
(32,445,466)
- --------------------------------------------------------------------------------
- ------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 2,663,479,845
4,688,765,979
Net asset value of shares issued
for reinvestment of dividends 17,105,931
31,572,842
Cost of shares reacquired (2,692,641,608)
(4,501,713,460)
- --------------------------------------------------------------------------------
- ------------
Increase (Decrease) in Net Assets From
Fund Share Transactions (12,055,832)
218,625,361
- --------------------------------------------------------------------------------
- ------------
Increase (Decrease) in Net Assets (12,135,259)
218,735,680
NET ASSETS:
Beginning of period 1,379,736,092
1,161,000,412
- --------------------------------------------------------------------------------
- ------------
End of period $1,367,600,833
$1,379,736,092
================================================================================
============
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 33
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Six Months Ended September 30, 1999 (unaudited)
and the Year Ended March 31, 1999
<TABLE>
<CAPTION>
New York Portfolio September 30
March 31
- --------------------------------------------------------------------------------
- ------------
<S> <C>
<C>
OPERATIONS:
Net investment income $ 18,173,695
$ 36,593,367
Net realized gain (loss) (3,862,725)
5,085,143
Decrease in net unrealized appreciation (42,612,275)
(1,673,251)
- --------------------------------------------------------------------------------
- ------------
Increase (Decrease) in Net Assets From Operations (28,301,305)
40,005,259
- --------------------------------------------------------------------------------
- ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (18,086,426)
(36,595,900)
Net realized gains --
(15,207,668)
- --------------------------------------------------------------------------------
- ------------
Decrease in Net Assets From
Distributions to Shareholders (18,086,426)
(51,803,568)
- --------------------------------------------------------------------------------
- ------------
FUND SHARE TRANSACTIONS (NOTE 8):
Proceeds from sale of shares 37,922,435
115,233,343
Net asset value of shares issued
for reinvestment of dividends 10,683,175
32,044,219
Cost of shares reacquired (62,322,480)
(129,108,886)
- --------------------------------------------------------------------------------
- ------------
Increase (Decrease) in Net Assets From
Fund Share Transactions (13,716,870)
18,168,676
- --------------------------------------------------------------------------------
- ------------
Increase (Decrease) in Net Assets (60,104,601)
6,370,367
NET ASSETS:
Beginning of period 765,623,347
759,252,980
- --------------------------------------------------------------------------------
- ------------
End of period* $705,518,746
$765,623,347
================================================================================
============
* Includes undistributed (overdistributed)
net investment income of: $79,862
$(7,407)
================================================================================
============
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
34 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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 seven other separate investment portfolios: Florida,
Georgia, Pennsylvania, Limited Term, National, Massachusetts Money Market and
California Money Market Portfolios. The financial statements and financial
highlights for the other portfolios are presented in separate shareholder
reports.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) 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 35
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
2. Portfolio Concentration
Since the Portfolios invest 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
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., 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.
CFBDS, Inc. acts as the Fund's distributor. Salomon Smith Barney Inc. ("SSB"),
another subsidiary of SSBH, as well as certain other broker-dealers, continues
to sell Fund shares to the public as a member of the selling group.
There is also a contingent deferred sales charge ("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% per year until no CDSC is incurred. Class L shares also
have a 1.00% CDSC, which applies if redemption occurs within the first year of
purchase.
- --------------------------------------------------------------------------------
36 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
For the six months ended September 30, 1999, SSB received sales charges of
approximately $234,000 and $29,000 on sales of the New York Portfolio's Class A
and L shares, respectively. In addition, for the six months ended September 30,
1999, CDSCs paid to SSB or CFBDS were approximately:
Class B Class L
- --------------------------------------------------------------------------------
New York Portfolio $72,000 $4,000
- --------------------------------------------------------------------------------
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 six months ended September 30, 1999, total Distribution Plan fees
incurred were:
Portfolio Class A Class B Class L
- --------------------------------------------------------------------------------
New York Money Market $705,398 -- --
- --------------------------------------------------------------------------------
New York 404,933 $592,225 $65,770
- --------------------------------------------------------------------------------
All officers and one Trustee of the Fund are employees of SSB.
5. Investments
During the six months ended September 30, 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 -- $139,074,042
- --------------------------------------------------------------------------------
Sales -- 143,278,724
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 37
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
At September 30, 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 -- $22,313,743
Gross unrealized depreciation -- (20,529,488)
- --------------------------------------------------------------------------------
Net unrealized appreciation -- $ 1,784,255
- --------------------------------------------------------------------------------
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 September 30, 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.
- --------------------------------------------------------------------------------
38 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
8. Shares of Beneficial Interest
At September 30, 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.
At September 30, 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 $1,367,774,346 -- --
- -------------------------------------------------------------------------------
New York 504,259,241 $182,980,282 $20,045,575
- -------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended
Year Ended
September 30, 1999
March 31, 1999
New York --------------------------------------
- --------------------------------------
Money Market Portfolio Shares Amount
Shares Amount
================================================================================
===============================================
<S> <C> <C>
<C> <C>
Class A
Shares sold 2,663,479,845 $ 2,663,479,845
4,688,765,979 $ 4,688,765,979
Shares issued on reinvestment 17,105,931 17,105,931
31,572,842 31,572,842
Shares reacquired (2,692,641,608) (2,692,641,608)
(4,501,713,460) (4,501,713,460)
- --------------------------------------------------------------------------------
- -----------------------------------------------
Net Increase (Decrease) (12,055,832) $ (12,055,832)
218,625,361 $ 218,625,361
================================================================================
===============================================
New York Portfolio
================================================================================
===============================================
Class A
Shares sold 2,086,973 $ 27,799,768
6,136,857 $ 85,359,204
Shares issued on reinvestment 605,582 8,005,617
1,709,746 23,667,296
Shares reacquired (3,179,302) (42,142,362)
(7,094,852) (98,680,940)
- --------------------------------------------------------------------------------
- -----------------------------------------------
Net Increase (Decrease) (486,747) $ (6,336,977)
751,751 $ 10,345,560
================================================================================
===============================================
Class B
Shares sold 482,934 $ 6,408,592
1,502,683 $ 20,871,651
Shares issued on reinvestment 181,252 2,394,955
558,853 7,727,572
Shares reacquired (1,365,991) (18,120,003)
(2,064,796) (28,667,854)
- --------------------------------------------------------------------------------
- -----------------------------------------------
Net Decrease (701,805) $ (9,316,456)
(3,260) $ (68,631)
================================================================================
===============================================
Class L*
Shares sold 278,108 $ 3,714,075
648,457 $ 9,002,488
Shares issued on reinvestment 21,419 282,603
47,032 649,351
Shares reacquired (154,020) (2,060,115)
(127,053) (1,760,092)
- --------------------------------------------------------------------------------
- -----------------------------------------------
Net Increase 145,507 $ 1,936,563
568,436 $ 7,891,747
================================================================================
===============================================
</TABLE>
* On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 39
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout each year ended March
31, except where noted:
<TABLE>
<CAPTION>
New York Money Market
Portfolio
-----------------------------------------
- --------------------
Class A Shares 1999(1) 1999 1998 1997
1996 1995
================================================================================
====================
<S> <C> <C> <C> <C>
<C> <C>
Net Asset Value,
Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00 $ 1.00
- --------------------------------------------------------------------------------
- --------------------
Net investment income 0.013 0.027 0.030 0.028
0.038 0.025
Dividends from net
investment income (0.013) (0.027) (0.030) (0.028)
(0.038) (0.025)
- --------------------------------------------------------------------------------
- --------------------
Net Asset Value,
End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00 $ 1.00
- --------------------------------------------------------------------------------
- --------------------
Total Return 1.28%++ 2.72% 3.04% 2.85%
3.17% 2.49%
- --------------------------------------------------------------------------------
- --------------------
Net Assets,
End of Period (millions) $1,368 $1,380 $1,161 $ 937
$ 882 $ 708
- --------------------------------------------------------------------------------
- --------------------
Ratios to Average Net Assets:
Expenses(2) 0.67%+ 0.65% 0.65% 0.67%
0.67% 0.68%
Net investment income 2.54+ 2.65 2.99 2.80
3.11 2.94
================================================================================
====================
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) As a result of voluntary expense limitations, the expense ratio will not
exceed 0.80% for Class A shares.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
40 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout each year ended March
31, except where noted:
<TABLE>
<CAPTION>
New York
Portfolio
----------------------------------------------
- -------------------------------------------
Class A Shares 1999(1)(2) 1999(2) 1998
1997 1996 1995(3)
================================================================================
===========================================
<S> <C> <C> <C>
<C> <C> <C>
Net Asset Value,
Beginning of Period $13.69 $13.91 $13.16
$13.19 $12.83 $12.83
- --------------------------------------------------------------------------------
- -------------------------------------------
Income (Loss) From
Operations:
Net investment income 0.34 0.68 0.72
0.74 0.75 0.76
Net realized and
unrealized gain (loss) (0.83) 0.07 0.81
(0.03) 0.35 0.01*
- --------------------------------------------------------------------------------
- -------------------------------------------
Total Income (Loss)
From Operations (0.49) 0.75 1.53
0.71 1.10 0.77
- --------------------------------------------------------------------------------
- -------------------------------------------
Less Distributions From:
Net investment income (0.34) (0.70) (0.73)
(0.74) (0.74) (0.77)
Net realized gains -- (0.27) (0.05)
- -- -- --
- --------------------------------------------------------------------------------
- -------------------------------------------
Total Distributions (0.34) (0.97) (0.78)
(0.74) (0.74) (0.77)
- --------------------------------------------------------------------------------
- -------------------------------------------
Net Asset Value,
End of Period $12.86 $13.69 $13.91
$13.16 $13.19 $12.83
- --------------------------------------------------------------------------------
- -------------------------------------------
Total Return (3.65)%++ 5.50% 11.83%
5.48% 8.71% 6.32%
- --------------------------------------------------------------------------------
- -------------------------------------------
Net Assets,
End of Period (millions) $ 516 $ 556 $ 554
$ 531 $ 558 $ 83
- --------------------------------------------------------------------------------
- -------------------------------------------
Ratios to Average
Net Assets:
Expenses(4) 0.71%+ 0.70% 0.71%
0.75% 0.72% 0.63%
Net investment income 5.06+ 4.94 5.28
5.58 5.84 6.00
- --------------------------------------------------------------------------------
- -------------------------------------------
Portfolio Turnover Rate 19% 60% 71%
53% 36% 30%
================================================================================
===========================================
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On October 10, 1994, the former Class C shares were exchanged into Class A
shares.
(4) 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.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 41
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout each year ended March
31, except where noted:
<TABLE>
<CAPTION>
New York Portfolio
----------------------------------------------
- ---------------------------
Class B Shares 1999(1)(2) 1999(2) 1998 1997
1996 1995(3)
================================================================================
===========================
<S> <C> <C> <C> <C>
<C> <C>
Net Asset Value,
Beginning of Period $13.68 $13.89 $13.15
$13.18 $12.84 $11.96
- --------------------------------------------------------------------------------
- ---------------------------
Income (Loss)
From Operations:
Net investment income 0.30 0.61 0.65
0.67 0.67 0.31
Net realized and
unrealized gain (loss) (0.83) 0.07 0.80
(0.03) 0.35 0.86*
- --------------------------------------------------------------------------------
- ---------------------------
Total Income (Loss)
From Operations (0.53) 0.68 1.45
0.64 1.02 1.17
- --------------------------------------------------------------------------------
- ---------------------------
Less Distributions From:
Net investment income (0.30) (0.62) (0.66)
(0.67) (0.68) (0.29)
Net realized gains -- (0.27) (0.05) -
- - -- --
- --------------------------------------------------------------------------------
- ---------------------------
Total Distributions (0.30) (0.89) (0.71)
(0.67) (0.68) (0.29)
- --------------------------------------------------------------------------------
- ---------------------------
Net Asset Value,
End of Period $12.85 $13.68 $13.89
$13.15 $13.18 $12.84
- --------------------------------------------------------------------------------
- ---------------------------
Total Return (3.92)%++ 5.02% 11.19%
4.96% 8.05% 9.92%++
- --------------------------------------------------------------------------------
- ---------------------------
Net Assets,
End of Period (millions) $ 171 $ 192 $ 195 $
185 $ 181 $ 4
- --------------------------------------------------------------------------------
- ---------------------------
Ratios to Average
Net Assets:
Expenses(4) 1.23%+ 1.23% 1.23%
1.27% 1.25% 1.27%+
Net investment income 4.54+ 4.42 4.76
5.06 5.45 5.76+
- --------------------------------------------------------------------------------
- ---------------------------
Portfolio Turnover Rate 19% 60% 71%
53% 36% 30%
================================================================================
===========================
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from November 11, 1994 (inception date) to March 31, 1995.
(4) 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.
- --------------------------------------------------------------------------------
42 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout each year ended March
31, except where noted:
<TABLE>
<CAPTION>
New York
Portfolio
---------------------------------------------
- -------------------------------
Class L Shares 1999(1)(2) 1999(2)(3) 1998
1997 1996 1995(4)
================================================================================
===============================
<S> <C> <C> <C>
<C> <C> <C>
Net Asset Value,
Beginning of Period $ 13.67 $ 13.88 $ 13.14 $
13.17 $12.83 $12.82
- --------------------------------------------------------------------------------
- -------------------------------
Income (Loss)
From Operations:
Net investment income 0.30 0.60 0.64
0.66 0.66 0.68
Net realized and
unrealized gain (loss) (0.83) 0.07 0.80
(0.02) 0.36 0.01*
- --------------------------------------------------------------------------------
- -------------------------------
Total Income (Loss)
From Operations (0.53) 0.67 1.44
0.64 1.02 0.69
- --------------------------------------------------------------------------------
- -------------------------------
Less Distributions From:
Net investment income (0.30) (0.61) (0.65)
(0.67) (0.68) (0.68)
Net realized gains -- (0.27) (0.05)
- -- -- --
- --------------------------------------------------------------------------------
- -------------------------------
Total Distributions (0.30) (0.88) (0.70)
(0.67) (0.68) (0.68)
- --------------------------------------------------------------------------------
- -------------------------------
Net Asset Value,
End of Period $ 12.84 $ 13.67 $ 13.88 $
13.14 $13.17 $12.83
- --------------------------------------------------------------------------------
- -------------------------------
Total Return (3.95)%++ 4.95% 11.13%
4.91% 8.07% 5.66%
- --------------------------------------------------------------------------------
- -------------------------------
Net Assets,
End of Period (000s) $18,980 $18,221 $10,611
$10,055 $8,931 $5,896
- --------------------------------------------------------------------------------
- -------------------------------
Ratios to Average
Net Assets:
Expenses(5) 1.27%+ 1.27% 1.28%
1.32% 1.28% 1.28%
Net investment income 4.51+ 4.37 4.71
5.01 5.02 5.38
- --------------------------------------------------------------------------------
- -------------------------------
Portfolio Turnover Rate 19% 60% 71%
53% 36% 30%
================================================================================
===============================
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(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 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.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 43
<PAGE>
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On April 19, 1999, a special meeting of shareholders of the Fund was held for
the purpose of electing Trustees to the Fund.
The results were as follows:
<TABLE>
<CAPTION>
Shares Percentage Shares
Percentage
Voted of Shares Voted of
Shares
Name of Trustees For Voted Against
Voted
- --------------------------------------------------------------------------------
- -------
<S> <C> <C> <C> <C>
Lee Abraham 1,350,265,160.850 97.943% 28,359,584.139
2.057%
Allan J. Bloostein 1,351,356,664.226 98.022 27,268,080.763
1.978
Jane F. Dasher 1,352,390,291.715 98.097 26,234,453.274
1.903
Donald R. Foley 1,350,867,506.020 97.987 27,757,238.969
2.013
Richard E. Hanson, Jr. 1,351,302,644.963 98.018 27,322,100.026
1.982
Paul Hardin 1,352,452,572.699 98.102 26,172,172.290
1.898
Heath B. McLendon 1,352,481,643.116 98.104 26,143,101.873
1.896
Roderick C. Rasmussen 1,351,438,798.818 98.028 27,185,946.171
1.972
John P. Toolan 1,352,497,455.395 98.105 26,127,289.594
1.895
- --------------------------------------------------------------------------------
- -------
</TABLE>
- --------------------------------------------------------------------------------
44 1999 Semi-Annual Report to Shareholders
<PAGE>
SALOMON SMITH BARNEY
---------------------------------
A member of citigroup
Trustees Custodian
Lee Abraham PNC Bank, N.A.
Allan J. Bloostein
Jane F. Dasher Shareholder
Donald R. Foley Servicing Agent
Richard E. Hanson, Jr. Smith Barney Private Trust
Paul Hardin 388 Greenwich Street, 22nd Floor
Heath B. McLendon, Chairman New York, New York 10013
Roderick C. Rasmussen
John P. Toolan Sub-Shareholder
Servicing Agent
Joseph H. Fleiss, Emeritus First Data Investor Services Group, Inc.
P.O. Box 9699
Officers Providence, Rhode Island 02940-9699
Heath B. McLendon
President and This report is submitted for the
Chief Executive Officer general information of the
shareholders of Smith Barney
Lewis E. Daidone Muni Funds -- New York Money
Senior Vice President Market and New York Portfolios.
and Treasurer It is not authorized for
distribution to prospective
Joseph P. Deane investors unless accompanied or
Vice President preceded by a current Prospectus
for the Portfolios, which
Joseph Benevento contains information concerning
Vice President the Portfolios' investment
policies and expenses as well as
Irving P. David other pertinent information.
Controller -- New York
Money Market Portfolio Salomon Smith Barney is a service mark of
Salomon Smith Barney Inc.
Anthony Pace
Controller -- New York Portfolio Smith Barney Muni Funds
388 Greenwich Street, MF-2
Christina T. Sydor New York, New York 10013
Secretary
www.smithbarney.com/mutualfunds
Investment Manager
SSB Citi Fund Management LLC FD0807 11/99
Distributor
CFBDS, Inc.
<PAGE>
[GRAPHIC]
[GRAPHIC] Smith Barney Muni Funds
National
Portfolio
------------------
SEMI-ANNUAL REPORT
------------------
September 30, 1999
Smith Barney
Mutual Funds
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
<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. (Please note that a portion of the income
from this Fund may be subject to the Alternative Minimum Tax.)
Smith Barney Muni Funds -- National Portfolio Average Annual Total Returns
September 30, 1999
Without Sales Charges/(1)/
- --------------------------------------------------------------------------------
Class A Class B Class L
- --------------------------------------------------------------------------------
Six-Month+ (3.53)% (3.71)% (3.75)%
One-Year (2.98) (3.41) (3.49)
Five-Year 6.48 N/A 5.85
Ten-Year 7.53 N/A N/A
Since Inception++ 7.39 7.12 5.42
- --------------------------------------------------------------------------------
With Sales Charges/(2)/
- --------------------------------------------------------------------------------
Class A Class B Class L
- --------------------------------------------------------------------------------
Six-Month+ (7.37)% (7.94)% (5.64)%
One-Year (6.85) (7.50) (5.38)
Five-Year 5.61 N/A 5.64
Ten-Year 7.09 N/A N/A
Since Inception++ 7.06 6.96 5.26
- --------------------------------------------------------------------------------
(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) 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.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception dates for Class A, B and L shares are August 20, 1986, November
7, 1994 and January 5, 1993, respectively. We are seeking to attain what we
think is an optimal balance between our high and low coupon structures in
the National Portfolio.
- --------------------------------------------------------------------------------
FUND HIGHLIGHT
- --------------------------------------------------------------------------------
We are seeking to incorporate additional call protection into the Portfolio by
selling off some of our older higher coupon bonds with shorter calls, replacing
them with bonds that have similar high coupon structure but are not subject to
early call.
- --------------------------------------------------------------------------------
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...........................20
Statement of Operations.......................................21
Statements of Changes in Net Assets...........................22
Notes to Financial Statements.................................23
Financial Highlights..........................................26
Additional Shareholder Information............................28
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Letter
- --------------------------------------------------------------------------------
[PHOTO] [PHOTO]
HEATH B. PETER M.
MCLENDON COFFEY
Chairman Vice President
Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney Muni Funds
- -- National Portfolio ("Portfolio") for the period ended September 30, 1999. We
hope you find this report to be useful and informative. 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 six months ended September 30, 1999, the Class A, B and L shares of the
Portfolio returned negative total returns of 3.53%, 3.71% and 3.75% without
sales charges, respectively. In comparison, the average total return for general
municipal bond funds for the same period was a negative 3.63%, according to
Lipper, Inc., an independent fund-tracking organization.
Smith Barney Muni Funds -- National Portfolio
Cumulative Total Returns -- Without Sales Charges/1/
Your Portfolio continues to be a consistent performer among its Lipper peers./2/
Lipper Peer
Class A Shares Group Average
-------------- -------------
One-Year (2.98)% (3.07)%
Five-Year 36.92 32.52
Ten-Year 106.62 91.91
Based on its net asset value ("NAV") of $13.12 as of September 30, 1999 for
Class A shares and the current monthly income distribution rate of $0.061 per
Class A share, this equates to an annualized distribution rate of 5.58%.
Market and Economic Overview
Current market conditions can be characterized by a strong economy, with growth
of demand continuing to outpace supply, but with signs of inflation to be
virtually non-existent. Moreover, the unemployment rate is at a 30-year low, and
the yield curve has steepened. (The yield curve shows the difference between
short- and long-term rates.)
Despite the fact that the bond market has had numerous seemingly valid reasons
to trade lower lately, the bond market has resisted them. Instead, the yield for
the 30-year Treasury bond has stayed within a narrow 40 basis point trading
range since the beginning of June. (A basis point is 0.01%, or one one-hundredth
of a percent.)
One of the biggest challenges facing the bond markets recently has been the
decline of the U.S. dollar against the yen. Yet, because the dollar's weakness
has been limited to the yen, there has been little concern about possible
capital outflows from the U.S. or higher inflation. Similarly, the rise in oil
prices
- ---------------
/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 shares.
- ---------------
/2/ Lipper compares a fund's returns to the average of its peer group. The
Fund's Lipper peer group is made up of 258 general municipal debt funds.
Past performance is not a guarantee of future results. An Investors' shares
when redeemed may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
has not translated into higher bond yields because inflation in general
does not appear to be a factor. The same holds true for the recent surge in gold
prices, which we do not view as a harbinger of higher inflation or higher
yields.
Fixed income prices have come under some pressure as a result of higher interest
rates, a strong U.S. economy and improving market conditions overseas. U.S.
Treasuries have remained in a narrow trading range just above 6%, while
long-term municipal bonds are yielding approximately 95% of long-term U.S.
Treasury bonds. Under typical market conditions, municipal bonds yield roughly
85% of similar-maturity U.S. Treasury bonds.
One positive trend for the market has been the lower of supply of new bonds. The
U.S. Treasury Department has been paying down the national debt, and the latest
figures from the Clinton Administration show an estimated budget surplus of
about $115 billion for the current fiscal year.
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 prudent investing./3/ During the period, the
Portfolio continued to maintain its bias towards good quality, higher-coupon
bonds.
We are seeking to attain what we think is an optimal balance between our high
and low coupon structures in the National Portfolio. We are also seeking to
incorporate additional call protection into the Portfolio by selling off some of
our higher coupon bonds with shorter calls, and replacing them with bonds that
have similar high coupon structure, but are not subject to an early call.
Yet our bias lately has been toward higher coupons, as we believe they currently
offer excellent relative value. Our objective is to create a built-in income
stream for a long-term time horizon when interest rates rise. To this end, we
have focused on securities with high credit quality and good call protection, as
we believe they offer good long-term value.
Moreover, we have a fairly long weighted average life in the Portfolio because
we believe that the risk of higher inflation at the present time is negligible.
As of September 30, 1999, the weighted average life of the Portfolio was 15.1
years. In addition, we have placed a greater emphasis on call protection that
should provide our shareholders with more consistent income if interest rates go
down.
During the period, the Portfolio was primarily made up of high-quality,
high-coupon bonds. As of September 30, 1999, 94.6% of the Portfolio was rated
investment grade or better with roughly 45.7% was rated AAA by Standard & Poor's
Rating Service, the highest rating. (Standard & Poor's Ratings Service is a
major credit reporting and bond-rating agency.)
During the past six months, the Portfolio was broadly diversified over a range
of different kinds of bonds. In particular, we have emphasized hospital bonds
because we believe that these bonds offer slightly higher yield potential than
other types of municipal securities. As of September 30, 1999, the Portfolio's
assets were concentrated in hospital bonds (15.8%), housing bonds (14.6%) and
education bonds (11.2%).
Municipal Bond Market Outlook
With the stock markets trading at their current valuations, many investors may
be looking to reallocate their existing portfolios and move into bonds. In our
opinion, this may be a timely opportunity for many of these investors,
especially those in higher income tax brackets, to consider further diversifying
their portfolios with municipal bonds.
- ---------------
/3/ A portion of the Portfolio's income may be subject to the Alternative
Minimum Tax ("AMT").
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
The recent rise in interest rates has created buying opportunities and we remain
confident that we can achieve a high level of tax-exempt income, consistent with
prudent investing and close attention to credit quality. Yields on municipal
securities have risen quite substantially, and the long end of the yield curve
continues to favor municipal bonds.
Over the long term, we are bullish on municipal bonds. And while we continue to
identify many opportunities in the municipal bond market, we do anticipate some
price erosion in the near-term as a result of increasing interest rates.
However, we believe that the Federal Reserve Board's tightening of monetary
policy (25 basis points on June 30, 1999 and 25 basis points on August 24,
1999),/4/ along with the increase in bond yields, may moderate U.S. economic
activity in 2000. Moreover, if the U.S. stock market were to experience a
correction, bond markets could recover despite recent difficulties.
The supply of municipal bonds could become lower as January 1, 2000 approaches.
Amid heavy issuance recently, supply has become so great that many prices have
declined to their annual lows. These larger volumes have in turn resulted in
lower prices and higher yields. Yet, these conditions can change soon as the
market experiences its typical light winter issuance and investors keep out of
the markets amidst concerns regarding Year 2000 issues.
In our opinion, the bolstered yields resulting from Year 2000 concerns and
supply pressures is already reaching levels where investors should consider
begin putting their cash to work. Against the current economic backdrop, we
believe that yields have peaked, and that the best opportunities may lie in
spread products such as municipal issues.
Looking ahead, we believe that the U.S. economy should remain strong in the
coming months with muted inflationary pressures. Recent economic conditions have
created opportunities for municipal securities to catch up with U.S. Treasuries,
and we continue to see good value at the long end of the market.
In closing, we would like to thank you for investing in Smith Barney Muni Funds
- -- National Portfolio. 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
November 7, 1999
- ---------------
/4/ On Tuesday, November 16, 1999, the Federal Reserve Board raised short-term
rates by 25 basis points after this letter was written.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ------------------------------
Historical Performance--Class A Shares
- --------------------------------------------------------------------------------
- ------------------------------
Net Asset Value
-----------------------------
Beginning End Income
Capital Gain Total
Period Ended of Period of Period Dividends
Distributions Returns/(1)/
- --------------------------------------------------------------------------------
- ------------------------------
<S> <C> <C> <C>
<C> <C>
9/30/99 $13.97 $13.12 $0.36
$0.00 (3.53)%+
- --------------------------------------------------------------------------------
- ------------------------------
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 $8.81
$0.43
- --------------------------------------------------------------------------------
- ------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
- ------------------------------
Net Asset Value
-----------------------------
Beginning End Income
Capital Gain Total
Period Ended of Period of Period Dividends
Distributions Returns/(1)/
- --------------------------------------------------------------------------------
- -------------------------------------
<S> <C> <C> <C>
<C> <C>
9/30/99 $13.96 $13.12 $0.33
$0.00 (3.71)%+
- --------------------------------------------------------------------------------
- -------------------------------------
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 $3.52
$0.37
- --------------------------------------------------------------------------------
- -------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- -------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
- -------------------------------------
Net Asset Value
-----------------------------
Beginning End Income
Capital Gain Total
Period Ended of Period of Period Dividends
Distributions Returns/(1)/
<S> <C> <C> <C>
<C> <C>
- --------------------------------------------------------------------------------
- -------------------------------------
9/30/99 $13.97 $13.13 $0.32
$0.00 (3.75)%+
- --------------------------------------------------------------------------------
- -------------------------------------
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 $4.83
$0.43
- --------------------------------------------------------------------------------
- -------------------------------------
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
Average Annual Total Returns
<TABLE>
<CAPTION>
Without Sales
Charges/(1)/
-----------------------------------
- ---------------
Class A Class B
Class L
- --------------------------------------------------------------------------------
- ---------------
<S> <C> <C>
<C>
Six Months Ended 9/30/99+ (3.53)% (3.71)%
(3.75)%
- --------------------------------------------------------------------------------
- ---------------
Year Ended 9/30/99 (2.98) (3.41)
(3.49)
Five Years Ended 9/30/99 6.48 N/A
5.85
Ten Years Ended 9/30/99 7.53 N/A
N/A
Inception* through 9/30/99 7.39 7.12
5.42
- --------------------------------------------------------------------------------
- ---------------
With Sales
Charges/(2)/
-----------------------------------
- ----------------
Class A Class B
Class L
- --------------------------------------------------------------------------------
- ----------------
Six Months Ended 9/30/99+ (7.37)% (7.94)%
(5.64)%
- --------------------------------------------------------------------------------
- ----------------
Year Ended 9/30/99 (6.85) (7.50)
(5.38)
Five Years Ended 9/30/99 5.61 N/A
5.64
Ten Years Ended 9/30/99 7.09 N/A
N/A
Inception* through 9/30/99 7.06 6.96
5.26
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
- --------------
Without Sales
Charges/(1)/
------------------------
- --
<S> <C>
Class A (9/30/89 through 9/30/99) 106.62%
- --------------------------------------------------------------------------------
- --------------
Class B (Inception* through 9/30/99) 40.03
Class L (Inception* through 9/30/99) 42.68
- --------------------------------------------------------------------------------
- --------------
</TABLE>
(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.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* 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+
- --------------------------------------------------------------------------------
[LINEGRAPH]
National Lehman Brothers Municipal Bond Index
Sep-89 9,600 10,000
Mar-90 10,023 10,430
Mar-91 10,909 11,392
Mar-92 12,097 12,530
Mar-93 13,749 14,098
Mar-94 14,149 14,425
Mar-95 15,029 15,498
Mar-96 16,357 16,798
Mar-97 17,242 17,712
Mar-98 19,219 19,610
Mar-99 20,104 20,825
9/30/99 19,394 20,376
September 1989 -- September 1999
National Lehman Brothers
Portfolio Municipal Bond Index
--------- --------------------
1989 $10,000 $19,394
1999 $10,000 $20,376
+ Hypothetical illustration of $10,000 invested in Class A shares on
September 30, 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 September 30,
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*
- --------------------------------------------------------------------------------
[BARGRAPH]
Education 11.2
Escrowed to Maturity 4.2
Hospital 15.8
Housing 14.6
Industrial Development 3
Pollution Control 6.7
Public Facilities 4.2
Transportation 9.2
Utility 9.5
Water & Sewer 5.8
Other 15.8
Summary of Investments by Combined Ratings
- --------------------------------------------------------------------------------
Standard Percentage
Moody's & Poor's of Total Investments
- --------------------------------------------------------------------------------
Aaa AAA 45.7%
Aa AA 19.6
A A 16.8
Baa BBB 12.5
Ba BB 0.1
VMIG 1/P-1 A-1 0.1
NR NR 5.2
------
100.0%
======
*As a percentage of total investments.
- --------------------------------------------------------------------------------
6 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Schedule of Investments (unaudited)
September 30, 1999
- --------------------------------------------------------------------------------
- ----------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C>
Education -- 11.2%
$ 2,355,000 AAA Alta Loma, CA School District, Series A, FGIC-
Insured,
zero coupon bond to yield 5.629% due 8/1/18
$ 788,925
1,000,000 A2* Arizona Student Loan Acquisition Authority,
Student Loan Revenue,
Series B1, 6.150% due 5/1/29(b)
993,750
Boerne, TX ISD PSFG:
3,285,000 Aaa* Zero coupon bond to yield 5.140% due 2/1/17
1,207,237
3,285,000 Aaa* Zero coupon bond to yield 5.220% due 2/1/19
1,059,413
Chicago, IL Board of Education:
5,000,000 AAA Lease Certificates, Series A, Refunding,
MBIA-Insured,
6.000% due 1/1/20
5,162,500
6,500,000 AAA School Reform, FGIC-Insured:
Series A, zero coupon bond to yield 5.300%
due 12/1/31 910,000
3,400,000 AAA Series B-1, zero coupon bond to yield
5.100% due 12/1/16 1,241,000
Dexter, MI Community Schools, FGIC-Insured:
2,500,000 AAA 5.000% due 5/1/23
2,262,500
1,000,000 AAA 5.100% due 5/1/28
912,500
1,845,000 AAA Franklin, TN Special School District, FSA-
Insured,
zero coupon bond to yield 5.750% due 6/1/17
661,894
1,000,000 AA Fulton County, GA School District, 5.375% due
1/1/18 980,000
Granbury, TX ISD, PSFG:
2,000,000 AAA Zero coupon bond to yield 5.517% due 8/1/18
667,500
2,000,000 AAA Zero coupon bond to yield 5.544% due 8/1/19
625,000
Grapevine-Colleyville, TX ISD, PSFG:
4,025,000 AAA Zero coupon bond to yield 5.050% due 8/15/16
1,534,531
2,250,000 AAA Zero coupon bond to yield 5.100% due 8/15/17
801,562
5,000,000 AAA Metro Government, TN Health & Education,
Meharry Medical College,
AMBAC-Insured, 6.000% due 12/1/19
5,181,250
3,510,000 Aaa* Midlothian, TX ISD, PSFG, zero coupon bond to
yield 6.271% due 2/15/20 995,963
1,155,000 AA Missouri State Health & Educational Facilities
Authority,
Rockhurst University, 5.500% due 10/1/25
1,108,800
1,705,000 Baa3* Monroe County, NY IDA Revenue, Student Housing,
Series A,
5.250% due 4/1/19
1,543,025
2,000,000 Aaa* Nebhelp Inc., Nebraska Revenue, Series A-5A,
MBIA-Insured,
6.200% due 6/1/13(b)
2,015,000
1,500,000 Baa3* New Hampshire Higher Education & Health,
Brewster Academy,
6.750% due 6/1/25
1,522,500
1,500,000 A New York State Dormitory Authority Revenue,
State University
Educational Facilities, Series B, 7.500% due
5/15/11 1,734,375
1,000,000 AAA Philadelphia, PA School District, Series A,
MBIA-Insured,
4.500% due 4/1/23
817,500
Private Colleges & Universities Authority:
1,500,000 A3* Georgia Revenue, (Mercer University Project),
Series A,
5.250% due 10/1/20
1,378,125
1,480,000 A Georgia Student Housing Revenue, (Mercer
Housing Corp. Project),
Series A, ACA-Insured, 5.375% due 6/1/17
1,407,850
2,500,000 AAA Redford, MI ISD, AMBAC-Insured, 5.000% due
5/1/22 2,271,875
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
2,074,531
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Schedule of Investments (unaudited) (continued)
September 30, 1999
- --------------------------------------------------------------------------------
- ----------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C>
Education -- 11.2% (continued)
$ 1,190,000 AA Richland County, SC Educational Facilities
Revenue,
(Benedict College Project), Asset Guaranteed,
5.750% due 7/1/19 $ 1,169,175
Southern Illinios University Revenue, Housing &
Auxiliary,
Series A, MBIA-Insured:
4,950,000 AAA Zero coupon bond to yield 5.510% due
4/1/21 1,379,813
3,000,000 AAA Zero coupon bond to yield 5.530% due
4/1/23 738,750
3,000,000 AAA Zero coupon bond to yield 5.540% due
4/1/25 652,500
1,000,000 AAA St. John's, MI Public Schools, FGIC-Insured,
5.000% due 5/1/21 912,500
Texas State Higher Education Coordinating
Board,
College Student Loan Revenue:
1,415,000 A* 7.450% due 10/1/06(b)
1,468,063
200,000 A* 7.700% due 10/1/25(b)
206,250
1,000,000 AAA Utah Student Loan Revenue, Series 1991F, AMBAC-
Insured,
7.450% due 11/1/08(b)
1,046,110
- --------------------------------------------------------------------------------
- ----------------------------------------------------
49,432,267
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Escrowed To Maturity(c) -- 4.2%
905,000 AAA Boston, MA Water & Sewer Revenue, Series A,
10.875% due 1/1/09 1,174,237
1,005,000 AAA Douglas County, NE Hospital Authority No. 2,
Bergan Mercy,
9.500% due 7/1/10
1,226,100
1,575,000 AAA Fairmont, WV Water & Sewer Revenue, AMBAC-
Insured,
9.250% due 11/1/11
1,939,219
5,010,000 AAA Indiana Bond Bank, AMBAC-Insured, 9.750% due
8/1/09 6,268,763
1,770,000 AAA Ohio State Water Development Authority Revenue,
Safe Water,
Series 2, 9.375% due 12/1/10
2,139,487
1,000,000 AAA Philadelphia Hospitals & Higher Education
Facilities Authority,
Hospital Revenue, Presbyterian Medical
Center, 6.650% due 12/1/19 1,120,000
3,000,000 AAA Port Everglades Authority, FL Port Revenue,
7.125% due 11/1/16 3,495,000
825,000 AAA Weber County, UT Hospital Revenue, St.
Benedict's Hospital,
10.000% due 3/1/10
1,023,000
- --------------------------------------------------------------------------------
- ----------------------------------------------------
18,385,806
- --------------------------------------------------------------------------------
- ----------------------------------------------------
General Obligation -- 3.0%
2,855,000 AAA Bastrop, TX GO, ISD, PSFG, zero coupon bond to
yield
5.629% due 2/15/19
917,169
2,000,000 AAA Berks County, PA GO, MVRICS, FGIC-Insured,
8.517% due 11/10/20(d) 2,180,000
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
1,487,500
2,000,000 AA Central Falls, RI GO, Asset Guaranteed, 6.250%
due 5/15/20 2,082,500
5,000,000 AAA District of Columbia, Series A, MBIA-Insured,
5.000% due 6/1/18 4,493,750
1,075,000 Aaa* Lago Vista, TX GO, ISD, PSFG, zero coupon bond
to yield
5.689% due 8/15/22
276,813
1,875,000 AAA McKeesport, PA GO, Area School District, MBIA-
Insured,
zero coupon bond to yield 5.662% due 10/1/23
459,375
10,000 A- New York City, NY GO, Series D, 7.500% due
2/1/16 10,700
100,000 A Puerto Rico Commonwealth, Public Improvement,
4.500% due 7/1/23 81,625
1,000,000 AA Texas State GO, Veterans Housing Assistance,
6.450% due 12/1/20(b) 1,042,500
- --------------------------------------------------------------------------------
- ----------------------------------------------------
13,031,932
- --------------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Schedule of Investments (unaudited) (continued)
September 30, 1999
- --------------------------------------------------------------------------------
- ----------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C>
Hospital -- 15.8%
$ 1,000,000 AAA Boston, MA IDA Financing (Alzheimer's Center
Project), FHA-Insured,
6.000% due 2/1/37
$ 993,750
1,000,000 BBB Colorado Health Facilities Authority Hospital
Revenue Bonds,
Vail Valley Medical Center, 6.500% due
1/15/13 1,047,500
350,000 BB- Green Springs, OH Health Care Facilities
Revenue,
(St. Francis Health Care Center Project),
Series A, 7.125% due 5/15/25 362,688
Harris County, TX Health Facilities Development
Corp., Hospital Revenue:
2,000,000 NR 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
2,147,500
1,500,000 AA Texas Children's Hospital Project, Series A,
5.250% due 10/1/29 1,348,125
2,200,000 A Harrison County, TX Health Facilities
Development Corp. Revenue,
(Marshall Regional Medical Center Project),
5.500% due 1/1/18 2,109,250
Hawaii State Department Budget & Finance,
Special Purpose Revenue,
(Wilcox Memorial Hospital Project):
1,000,000 BBB+ 5.350% due 7/1/18
891,250
1,750,000 BBB+ 5.500% due 7/1/28
1,542,187
3,000,000 A- Illinois Development Finance Authority Hospital
Revenue,
Adventist Health System, Sunbelt Obligation,
5.500% due 11/15/29 2,666,250
Illinois Health Facilities Authority Revenue:
3,000,000 A- Alexian Brothers Health System, FSA-Insured,
5.000% due 1/1/19 2,677,500
1,000,000 A- Centegra Health System, 5.250% due 9/1/18
888,750
3,000,000 AAA Children's Memorial Hospital, Series A,
AMBAC-Insured,
5.625% due 8/15/19
2,910,000
937,000 AAA Community Provider Pooled Loan Program, FSA-
Insured,
7.350% due 8/15/10
994,391
3,500,000 BBB Mercy Hospital and Medical Center, 7.000% due
1/1/07 3,666,250
1,000,000 AAA Methodist Health System, Series B, AMBAC-
Insured,
RIBS Variable Rate, 9.882% due 5/1/21(d)
1,118,750
4,000,000 AAA Rush-Presbyterian St. Luke's Medical Center,
INFLOS, MBIA-Insured,
Variable Rate, 9.767% due 10/1/24(d)
4,545,000
900,000 BBB+ Klamath Falls, OR Inter-Community Hospital
Merle West,
7.100% due 9/1/24
949,500
2,000,000 AAA Lorain County, OH Health Facilities Revenue,
Catholic Healthcare Partners,
Series A, 5.500% due 9/1/19
1,945,000
4,855,000 BBB- Louisiana Public Facilities Authority Revenue,
(General Health
Systems Project), 6.800% due 11/1/16
5,122,025
1,000,000 BBB+ Maricopa County, AZ IDA Health Facilities
Revenue, (Catholic
Healthcare West Project), Series A, 5.000%
due 7/1/16 847,500
1,000,000 AAA Massachusetts State Health & Educational
Facilities Authority Revenue,
St. Elizabeth Hospital, LEVRRS, FSA-Insured,
9.820% due 8/15/21(d) 1,090,000
2,000,000 AAA Mesa, AZ IDA Revenue, Discovery Health System,
Series A,
5.625 % due 1/1/19
1,965,000
500,000 BBB Miami County, OH Hospital Facilities Refunding
& Improvement,
Upper Valley Medical Center, Series A, 6.375%
due 5/15/26 507,500
4,835,000 AA Missouri State Health & Educational Facilities
Authority,
BJC Health Systems, 6.750% due 5/15/13
5,445,419
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
480,938
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Schedule of Investments (unaudited) (continued)
September 30, 1999
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Face
Amount RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C>
Hospital -- 15.8% (continued)
$ 5,000,000 AAA North Carolina Medical Care Community Hospital
Revenue,
Pitt County Memorial Hospital, Series A,
4.750% due 12/1/28 $ 4,118,750
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
995,000
1,000,000 Aaa* Randolph County, WV Community Health System
Revenue,
Davis Health System, Series A, FSA-Insured,
5.200% due 11/1/21 921,250
3,900,000 Aa3* Rhode Island State Health & Educational
Building Corp. Revenue,
Health Facilities, St. Antoine Residence,
Series A, 6.125% due 11/15/18 3,895,125
2,000,000 Baa2* Tomball, TX Hospital Authority Revenue, Tomball
Regional Hospital,
6.000% due 7/1/19
1,930,000
2,375,000 AA- Vermont Educational & Health Building Finance
Agency, H. Porter,
FHA-Insured, 7.100% due 2/1/31
2,470,000
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
1,563,750
1,300,000 AAA Washington State Health, Sisters of Providence,
FGIC-Insured,
6.375% due 10/1/09
1,425,125
Wisconsin State Health & Educational Facilities
Authority Revenue:
2,100,000 A Kenosha Hospital & Medical Center Project,
5.700% due 5/15/20 1,960,875
2,500,000 A3* Monroe Clinic Inc., 5.375% due 2/15/22
2,234,375
- --------------------------------------------------------------------------------
- ----------------------------------------------------
69,776,273
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Housing: Multi-Family -- 8.8%
995,000 AAA Boston, MA IDA Financing Revenue, North End
Community, Series A,
FHA-Insured, 6.450% due 8/1/37
1,038,531
2,535,000 AAA Chicago, IL Multi-Family Housing, Hearts United
Apartments, Series A,
GNMA-Collateralized, 5.600% due 1/1/41(b)
2,433,600
250,000 Aaa* Cuyahoga County, OH Multi-Family Housing,
Dalebridge Apartments,
GNMA-Collateralized, FHA-Insured, 6.500% due
10/20/20(b) 257,813
1,500,000 A+ Illinois Housing Development Authority
Refunding, Multi-Family Housing,
Series 91A, 8.125% due 7/1/10
1,593,750
1,500,000 AA- Indiana State HFA, Multi-Family Housing
Mortgage Revenue, Hunters Run,
FHA-Insured, 7.250% due 5/1/18(b)
1,582,500
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) 4,381,162
5,000,000 Aa2* Iowa Finance Authority, Prestwick Apartments,
FHA-Insured,
7.500% due 12/1/36(b)
6,112,500
300,000 NR Kent, OH Multi-Family Housing, GNMA-
Collateralized, FHA-Insured
7.150% due 12/20/26(b)
321,750
1,000,000 A King County, WA Housing Authority Revenue,
Series A, 6.800% due 3/1/26 1,026,250
Maricopa County, AZ IDA, Multi-Family Housing
Revenue, (National Health
Facilities II Project), FSA-Insured:
3,480,000 AAA 5.500% due 1/1/24
3,332,100
2,770,000 AAA Series A, 5.500% due 1/1/18
2,693,825
1,935,000 AAA Mohave County, AZ IDA, Multi-Family Housing,
Copper Ridge Apartments,
FHA-Insured, 7.375% due 4/1/32(b)
2,063,194
Nevada Housing Division, Multi-Unit Housing:
1,250,000 Aa3* Campaige, Series A, 5.450% due 10/1/18(b)
1,173,437
1,000,000 AAA Diamond Creek, Series A, FNMA-Collateralized,
5.900% due 10/1/18(b) 1,001,250
1,250,000 AAA Saratoga Palms, FNMA-Collateralized, 6.350%
due 10/1/28(b) 1,282,812
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Schedule of Investments (unaudited) (continued)
September 30, 1999
- --------------------------------------------------------------------------------
- ----------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C>
Housing: Multi-Family -- 8.8% (continued)
$ 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) $ 973,875
500,000 Aa3* Portland, OR Multi-Family Housing, 6.250%, due
5/1/12(b) 511,250
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)
1,030,000
1,000,000 AAA Rogers County, OK HFA, Multi-Family Revenue,
FNMA-Collateralized,
Series A, FHA-Insured, 7.750% due 8/1/23
1,048,750
2,347,000 AAA Seattle Housing Authority, WA Low Income
Housing Revenue,
GNMA-Collateralized, 7.400% due 11/20/36
2,628,640
2,550,000 A Suffolk, VA Redevelopment & Housing Authority,
Multi-Family Housing
Revenue, Residential Rental, Brooke Ridge,
5.250% due 10/1/18 2,412,937
- --------------------------------------------------------------------------------
- ----------------------------------------------------
38,899,926
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Housing: Single-Family -- 5.8%
490,000 AAA Arkansas Housing Development, Single-Family
Mortgage Revenue,
Series A, GNMA-Collateralized, 7.400% due
9/1/23(b) 507,762
275,000 Aaa* Aurora Kane & Dupage, IL Single-Family Mortgage
Revenue,
Series A, GNMA/FHLMC-Collateralized, 7.950%
due 10/1/25(b) 298,719
2,000,000 Aaa* Chicago, IL Single-Family Mortgage Revenue,
Series A,
FNMA/GNMA-Collateralized, 6.350% due
10/1/30(b) 2,117,500
350,000 Aa2* Colorado HFA, Single-Family Program Refunding,
Sr. Bonds,
Series 94 D-1, 8.000% due 12/1/24(b)
369,250
2,965,000 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)
515,169
770,000 AAA District of Columbia HFA, Collateralized
Revenue, Single-Family, Series 90A,
GNMA/FNMA/FHLMC-Collateralized, 8.100% due
12/1/23(b) 795,987
425,000 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
74,375
465,000 AA Idaho Housing Agency, Single-Family Mortgage,
Series C-2, FHA-Insured,
7.900% due 1/1/22(b)
475,611
585,000 Aa1* Illinois Housing Development Authority,
Residential Mortgage Revenue,
Series 89A, 7.400% due 2/1/20(b)
595,237
360,000 Aa2* Labette County, KS Single-Family Mortgage
Revenue Refunding, Series A,
8.400% due 12/1/11
374,850
1,730,000 Aa2* Maryland State Community Development
Administration, Single-Family
Mortgage Revenue, FHA-Insured, 7.450% due
4/1/32(b) 1,781,900
1,920,000 Aa3* Massachusetts State Housing Finance Agency,
Housing Revenue,
Single-Family Mortgage, Series 38, 7.200% due
12/1/26(b) 1,960,800
Missouri State Housing Development Community
Mortgage Revenue:
485,000 AAA GNMA-Collateralized, Series A, zero coupon to
yield 7.337% due 7/1/23 86,087
775,000 AAA GNMA/FNMA-Collateralized, Series C, 7.450%
due 9/1/27(b) 854,438
Nebraska Investments Finance Authority:
400,000 AAA GNMA-Collateralized, RIBS Variable Rate,
9.508% due 9/15/23(b)(d) 431,500
200,000 AAA Single-Family Mortgage Revenue, 1990 Series
3, GNMA-Collateralized,
RIBS Variable Rate, 11.183% due
9/10/30(b)(d) 212,852
249,875 AA Nevada Housing Development Single-Family
Mortgage Revenue,
Series 1983 B, FHA-Insured, zero coupon bond
to yield
10.245% due 4/1/15
51,849
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C>
Housing: Single-Family -- 5.8% (continued)
$ 1,245,000 A+ New Hampshire State HFA, Single-Family
Residential Mortgage,
7.250% due 7/1/15(b)
$ 1,290,131
1,000,000 AAA New Mexico Mortgage Finance Authority, Single-
Family Mortgage,
Series E3, GNMA/FNMA/FHLMC-Collateralized,
5.875% due 3/1/27 997,500
225,000 AAA Ohio Housing Finance Agency Residential
Mortgage, Series A-2,
GNMA-Collateralized, 6.625% due 3/1/26(b)
232,594
285,000 Aa2* Oregon State Housing & Community Services
Department,
Mortgage Revenue, Single-Family Mortgage
Program, Series D,
6.500% due 7/1/24(b)
292,838
100,000 BBB- Panhandle, TX Regional Housing Finance Corp.,
Single-Family Mortgage
Revenue, 10.375% due 3/1/09
100,406
1,000,000 AA+ Pennsylvania State HFA, Single-Family Mortgage
Revenue, Series 39B,
6.875% due 10/1/24(b)
1,043,750
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)
1,465,969
395,000 AAA Prince Georges County, MD Housing Authority,
Single-Family Mortgage
Revenue Refunding, Series A, GNMA-
Collateralized, 8.000% due 1/1/17 417,219
1,175,000 AAA Reno County, KS Single-Family Mortgage Revenue,
Series A, AMBAC-Insured,
zero coupon bond to yield 11.039% due 12/1/14
215,906
Rhode Island Housing & Mortgage Financing
Corp., Home Ownership:
1,500,000 AA+ Opportunity Bonds, Series 8, INFLOS Variable
Rate,
10.215% due 4/1/24(b)(d)
1,590,000
105,000 AA+ Series 88-ID, 7.875% due 10/1/21(b)
107,231
2,500,000 Aaa* Sedgwick & Shawnee Counties, KS Single-Family
Revenue,
Mortgage Backed Securities, Series A1, GNMA-
Collateralized,
step bond to yield 4.931% due 12/1/26(b)
2,668,750
321,245 A1* St. Bernard Parish, LA Home Mortgage Authority,
Single-Family Mortgage
Revenue Refunding, Series A, 8.000% due
3/25/12 337,307
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) 340,438
255,000 AAA Utah HFA, Single-Family Mortgage Revenue, FHA-
Insured,
7.300% due 7/1/16
263,288
2,375,000 AA+ Virginia State Housing Development Authority,
Commonwealth Mortgage,
Series A, 7.150% due 1/1/33
2,461,094
175,000 AA Wyoming Community Development Authority, FHA-
Insured,
8.125% due 6/1/21(b)
179,923
- --------------------------------------------------------------------------------
- ----------------------------------------------------
25,508,230
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Industrial Development -- 3.0%
2,650,000 A+ Iowa Finance Authority, (Governor Square
Project), 7.250% due 4/1/14 2,706,604
1,640,000 AA- Oklahoma City, OK Industrial & Culture
Facilities, 6.750% due 9/15/17(b) 1,643,280
5,000,000 AA- Oklahoma Development Finance Authority Revenue,
Hillcrest Healthcare
System, Series A, 5.625% due 8/15/19
4,600,000
1,000,000 A+ Rensselaer County, NY IDA, Albany International
Corp.,
7.550% due 6/1/07(b)
1,125,000
1,000,000 BBB Tucson, AZ Airport Authority Inc., Special
Facilities Revenue Bonds,
Lockheed Aeromod Center Inc., Series 1990,
8.700% due 9/1/19(b) 1,055,200
2,000,000 A+ West Chicago, IL IDR, (Leggett & Platt Inc.
Project), 6.900% due 9/1/24(b) 2,132,500
- --------------------------------------------------------------------------------
- ----------------------------------------------------
13,262,584
- --------------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Life Care -- 2.7%
<S> <C> <C>
<C>
$ 2,000,000 Aa* Hamilton County, OH Mortgage Revenue, Judson
Care Center, Series A,
FHA-Insured, 6.500% due 8/1/26
$ 2,080,000
2,500,000 BBB Illinois Development Finance Authority Health
Facilities, Community Living,
7.125% due 3/1/10
2,593,750
1,000,000 Baa2* Indianapolis, IN Industrial EDR, 7.625% due
10/1/22 1,071,250
1,000,000 BBB- John Tolfree Health System Corp., MI Mortgage
Revenue,
6.000% due 9/15/23
948,750
Massachusetts State Industrial Finance Agency
Revenue:
1,400,000 AAA Briscoe House Assisted Living, FHA-Insured,
7.125% due 2/1/36(b) 1,534,750
1,940,000 AAA Chelsea Jewish, Series A, FHA-Insured, 6.500%
due 8/1/37 2,039,425
1,000,000 A- Montgomery County, PA IDA, Retirement Community
Revenue,
Life Communities Inc., 5.250% due 11/15/28
870,000
1,000,000 Aaa* Reynoldsburg, OH Health Care Facilities
Revenue, (Wesley Ridge Project),
GNMA-Collateralized, 6.150% due 10/20/38
1,005,000
- --------------------------------------------------------------------------------
- ----------------------------------------------------
12,142,925
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Miscellaneous -- 5.9%
1,885,000 AA Bernalillo County, NM Gross Receipts Tax
Revenue, 5.200% due 4/1/21 1,776,612
Dauphin County, PA General Authority:
4,000,000 NR Hyatt Regency, 6.200% due 1/1/29
3,770,000
1,000,000 NR Riverfront Office, 6.000% due 1/1/25
933,750
1,000,000 Baa3 Edmond, OK EDA, Collegiate Housing Foundation,
Series A,
5.375% due 12/1/19
920,000
2,000,000 Baa2* Galveston, TX Special Contract Revenue,
(Farmland Industries Inc. Project),
5.500% due 5/1/15
1,872,500
3,000,000 AAA Georgia Local Government COP, Series A, MBIA-
Insured, 4.750% due 6/1/28 2,565,000
2,000,000 Aa1* Harris County, TX Permanent Improvement, 5.625%
due 10/1/20 1,962,500
2,000,000 A Illinois Development Finance Authority Revenue
Refunding,
City of East St. Louis, 7.250% due 11/15/09
2,152,500
1,500,000 AAA Indiana Bond Bank Guaranty State Revolving
Fund, Series B,
6.875% due 2/1/12
1,655,625
1,000,000 A Quinault Indian Nation, WA Refunding &
Improvement, Quinault Beach,
Series A, ACA-Insured, 5.800% due 12/1/15
980,000
1,330,000 NR Seward, AK (Sealife Center Project), 7.650% due
10/1/16 1,374,887
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
2,856,250
3,550,000 AAA Wisconsin Center District, WI Tax Revenue, FSA-
Insured,
5.250% due 12/15/23
3,345,875
- --------------------------------------------------------------------------------
- ----------------------------------------------------
26,165,499
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Pollution Control -- 6.7%
5,000,000 Aa3* Brazos River, TX Navigation District, (BASF
Corp. Project),
6.750% due 2/1/10
5,606,250
1,500,000 A3* De Soto Parish, LA Environmental Improvement
Revenue, (International
Paper Co. Project), Series A, 5.600% due
11/1/22(b) 1,400,625
3,600,000 AA- La Crosse, WI Resource Recovery Revenue,
(Northern States Power Co.
Project), 6.000% due 11/1/21(b)
3,667,500
3,000,000 A Lowndes County, MS Solid Waste Disposal &
Pollution Control Revenue,
(Weyerhaeuser Company Project), Series A,
6.800% due 4/1/22 3,330,000
1,000,000 AAA Massachusetts State Water Pollution Abatement
Trust, Pool Program,
Series 5, 5.375% due 8/1/27
940,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Pollution Control -- 6.7% (continued)
<S> <C> <C>
<C>
$ 1,500,000 AAA Monroe County, MI, (Detroit Edison Co.
Project), 7.650% due 9/1/20(b) $ 1,566,075
855,000 NR New Jersey EDA Revenue, (Atlantic City Sewer
Project),
7.250% due 12/1/11(b)
909,506
500,000 NR Ohio State Solid Waste Revenue, Republic
Engineered Steels Inc.,
9.000% due 6/1/21(b)
538,125
1,850,000 A3* Richland, SC Solid Waste Facility, (Union Camp
Project),
7.125% due 9/1/21(b)
1,935,562
3,000,000 NR Rockdale County, GA Solid Waste Authority
Revenue, 7.500% due 1/1/26(b) 3,108,750
1,945,000 BBB Saint Charles Parish, LA Union Carbide, 7.350%
due 11/1/22(b) 2,068,994
1,130,000 A Southwestern Illinois 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)
3,376,000
- --------------------------------------------------------------------------------
- ----------------------------------------------------
29,599,987
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Pre-Refunded(e) -- 3.0%
1,500,000 AAA Chattanooga-Hamilton County, TN Hospital
Authority Revenue, FSA-Insured,
(Call 5/1/01 @ 104), 9.672% due 5/25/21(d)
1,680,000
1,000,000 AAA Delaware County, PA Authority Revenue, (Elwyn
Inc. Project),
(Call 6/1/00 @ 102), 8.350% due 6/1/15
1,048,480
85,000 AAA Denver, CO City & County Airport Revenue,
Series A,
(Call 11/15/00 @ 102), 8.500% due 11/15/23(b)
90,844
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 3,701,250
2,000,000 AAA Fairfax County, VA IDA, Series A, (Call 8/28/01
@ 104),
7.699% due 8/29/23(d)
2,262,500
500,000 AAA Illinois Health Facility Authority Revenue,
United Medical Center,
(Call 7/1/03 @ 100), 8.375% due 7/1/12
566,875
150,000 AAA New York City, NY GO, Series D, (Call 2/1/02 @
101.5), 7.500% due 2/1/16 162,750
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
855,000
1,310,000 AAA 6.000% due 1/1/26
1,385,325
200,000 AAA Ohio State Building Authority, Juvenile
Correction Facility, Series A,
AMBAC-Insured, (Call 10/1/04 @ 102), 6.600%
due 10/1/14 221,750
35,000 AAA Oregon State Bond Bank Revenue, Series 1, (Call
1/1/03 @ 102),
6.700% due 1/1/15
37,581
1,095,000 AAA Portland, TX Community Center Sales Tax Gross
Revenue,
(Call 2/15/04 @ 102), 7.000% due 2/15/25
1,215,450
- --------------------------------------------------------------------------------
- ----------------------------------------------------
13,227,805
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Public Facilities -- 4.2%
2,500,000 AAA Chicago, IL Lakefront Millennium Parking
Facilities, MBIA-Insured,
zero coupon bond to yield 5.750% due 1/1/29
1,596,875
2,500,000 A- Dekalb County, IN Redevelopment, (Mini-Mill
Local Public Improvement
Project), 6.500% due 1/15/14
2,640,625
2,750,000 AAA Harrisburg, PA Redevelopment Authority, FSA-
Insured, zero coupon bond to
yield 5.220% due 5/1/21
776,875
Indianapolis, IN Local Public Improvement Bond
Bank:
3,685,000 AA Series 1992 D, 6.750% due 2/1/14
4,164,050
3,000,000 AA Series B, 6.000% due 1/10/13
3,183,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Public Facilities -- 4.2% (continued)
<S> <C> <C>
<C>
$ 1,700,000 AAA Metropolitan Pier & Exposition Authority,
Illinois Dedicated State Tax,
(McCormick Place Exposition Project), FGIC-
Insured,
5.500% due 12/15/24
$ 1,619,250
3,960,000 A Tulsa, OK Public Facilities Authority, Lease
Payment Revenue Refunding,
Assembly Center, 6.600% due 7/1/14
4,415,400
- --------------------------------------------------------------------------------
- ----------------------------------------------------
18,396,825
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Solid Waste -- 0.2%
1,000,000 Baa1* Courtland, AL Industrial Development Board,
Solid Waste Disposal Revenue,
(Champion International Corp. Project),
6.000% due 8/1/29(b) 953,750
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Tax Allocation -- 1.0%
2,000,000 AAA Illinois State Sales Tax Revenue, Series P,
6.500% due 6/15/13 2,207,500
1,000,000 AAA La Quinta, CA Redevelopment Agency, MBIA-
Insured, 7.300% due 9/1/12 1,202,500
1,000,000 BBB- Providence, RI Special Obligation, Tax
Increment, Series D,
6.650% due 6/1/16
1,033,750
- --------------------------------------------------------------------------------
- ----------------------------------------------------
4,443,750
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Transportation -- 9.2%
3,000,000 Baa1* Alliance Airport Authority Inc., Texas Special
Facilities Revenue,
(American Airlines Inc. Project), 7.500% due
12/1/29(b) 3,142,500
2,010,000 NR Connecticut Development Authority, Airport
Facilities Revenue,
6.625% due 12/1/14(b)
2,110,500
15,000,000 BBB- Connector 2000 Association Inc., SC Toll Road
Revenue, Series B,
zero coupon bond to yield 5.850% due 1/1/38
1,068,750
3,000,000 AAA Delaware Valley, PA Regional Finance Authority,
Local Government Revenue,
Series A, AMBAC-Insured, 5.500% due 8/1/28
2,910,000
Denver, CO City & County Airport Revenue:
915,000 Baa1* Series A, 8.500% due 11/15/23(b)
968,756
3,130,000 Baa1* Series B, 7.250% due 11/15/07(b)
3,364,750
2,000,000 NR Kenton County, KY Airport Board, Special
Facilities Revenue,
(Mesaba Aviation Inc. Project), Series A,
6.700% due 7/1/29(b) 1,985,000
2,605,000 AAA Massachusetts Bay Transportation Authority,
General Transportation System,
Series A, MBIA-Insured, 4.500% due 3/1/26
2,064,463
2,470,000 Aaa* Massachusetts State Turnpike Authority, Highway
Systems Revenue,
MBIA-Insured, Series C, zero coupon bond to
yield 5.545% due 1/1/21 707,037
New Hampshire State Turnpike Systems Revenue
Refunding, FGIC-Insured:
2,500,000 AAA 6.750% due 11/1/11
2,790,625
1,000,000 AAA RIBS, Series C, 9.475% due 11/1/17(d)
1,185,000
1,000,000 AAA New Jersey EDA Revenue, (Transportation
Project), Series A, FSA-Insured,
5.000% due 5/1/18
923,750
2,000,000 Aa2* New Jersey State Transportation Authority,
Transportation System, Series A,
5.750% due 6/15/20
2,022,500
2,000,000 BBB- Pocahontas Parkway Association, Virginia Toll
Road Revenue, Series A,
5.500% due 8/15/28
1,792,500
500,000 AAA Port Portland, OR Airport Revenue, Portland
International Airport, Series A,
AMBAC-Insured, 5.500% due 7/1/24
484,375
Puerto Rico Commonwealth Highway &
Transportation Authority:
Highway Revenue, Series Y:
3,000,000 A 5.000% due 7/1/36
2,621,250
1,000,000 A 5.500% due 7/1/36
956,250
1,000,000 A Transportation Revenue, Series A, 4.750% due
7/1/38 820,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Transportation -- 9.2% (continued)
<S> <C> <C>
<C>
Regional Transit Authority, Illinois:
$ 2,000,000 AAA Series A, AMBAC-Insured, 6.400% due 6/1/12
$ 2,197,500
1,045,000 AAA Series C, FGIC-Insured, 7.750% due 6/1/20
1,272,287
Triborough Bridge & Tunnel Authority, NY
Revenue:
2,000,000 BBB+ Convention Center Project, Series E, 7.250%
due 1/1/10 2,252,500
2,900,000 Aa3* General Purpose, Series B, 5.375% due 1/1/19
2,769,500
- --------------------------------------------------------------------------------
- ----------------------------------------------------
40,409,793
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Utility -- 9.5%
2,120,000 AAA Alaska Energy Authority Power Revenue, Bradley
Lake, Series 5,
FSA-Insured, 5.000% due 7/1/21
1,868,250
3,000,000 AAA Brownsville, TX Utility System Revenue Priority
Refunding, MBIA-Insured,
6.250% due 9/1/14
3,243,750
3,000,000 AAA Clark County, NV IDR, (Nevada Power Co.
Project), FGIC-Insured,
7.800% due 6/1/20(b)
3,110,310
4,000,000 BBB- Clarksville, TN Natural Gas Acquisition Corp.,
Series A,
7.500% due 11/1/04
4,117,400
195,000 AAA Cleveland, OH Public Power System, MBIA-
Insured, Series B,
7.000% due 11/15/17
207,431
3,000,000 AAA Georgia Municipal Electric Authority, Project
One, Series A, MBIA-Insured,
5.250% due 1/1/14
2,932,500
Georgia Municipal Electric Authority Power
Revenue:
1,500,000 AAA Series EE, AMBAC-Insured, 7.250% due 1/1/24
1,805,625
2,500,000 A Series X, 6.500% due 1/1/12
2,737,500
1,000,000 AAA Series Z, MBIA-Insured, 5.500% due 1/1/20
987,500
1,250,000 AAA Hawaii State Department Budget & Finance,
Hawaiian Electric Co., Inc.,
Series A, MBIA-Insured, 5.650% due 10/1/27(b)
1,221,875
2,000,000 AAA Lower Colorado River Authority, TX Revenue,
Series A, 5.500% due 5/15/21 1,925,000
5,000,000 AAA Matagorda County, TX Navigational District No.
1 Revenue,
Houston Lighting, AMBAC-Insured, 5.125% due
11/1/28(b) 4,468,750
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)
2,393,750
1,000,000 A+ New York State Energy Research & Development,
(Con Edison Project A),
7.125% due 12/1/29(b)
1,095,000
North Carolina Eastern Municipal Power Agency,
Power System Revenue,
Series B:
1,775,000 BBB 6.000% due 1/1/22
1,708,438
1,700,000 A ACA-Insured, 5.750% due 1/1/24
1,627,750
Piedmont, SC Municipal Power Agency, Electric
Revenue Refunding:
1,235,000 AAA FGIC-Insured, 6.750% due 1/1/20
1,390,919
400,000 VMIG1* Series C, 3.800% due 1/1/19(f)
400,000
1,875,000 Aa1* San Antonio, TX Electric & Gas, Series A,
4.500% due 2/1/21 1,532,813
3,500,000 Aa1* Washington State Public Power Supply System
Revenue,
(Nuclear Project No. 3), Series A, 5.125% due
7/1/18 3,167,500
- --------------------------------------------------------------------------------
- ----------------------------------------------------
41,942,061
- --------------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Water & Sewer -- 5.8%
<S> <C> <C>
<C>
$ 1,000,000 AAA Atlanta, GA Water & Wastewater Revenue, Series
A, FGIC-Insured,
5.500% due 11/1/19
$ 992,500
2,400,000 A Dauphin County, PA IDA, General Water Works
Corp.,
6.900% due 6/1/24(b)
2,721,000
Honolulu, HI City & County Wastewater System
Revenue,
Second Bond Resolution, Jr. Series, FGIC-
Insured:
4,000,000 AAA 4.500% due 7/1/28
3,200,000
2,750,000 Aaa* Zero coupon bond to yield 5.050% due
7/1/16 1,055,313
Houston, TX Water & Sewer System Revenue,
Series A, FSA-Insured:
10,000,000 AAA Zero coupon bond to yield 5.490% due 12/1/22
2,575,000
10,000,000 AAA Zero coupon bond to yield 5.500% due 12/1/23
2,425,000
2,000,000 A Idaho State Water Resources Board, Water
Revenue, Resource
Development, Borse Water Corp., 7.250% due
12/1/21(b) 2,102,500
4,000,000 AA+ Michigan Municipal Board Authority Revenue,
Clean Water Revolving Fund,
5.500% due 10/1/21
3,865,000
400,000 A2* Ohio Water Development Authority, (Broken Hill
Project),
6.450% due 9/1/20(b)
415,000
3,400,000 NR Port of Umatilla, OR Water Project Revenue,
Series 1994,
LOC ABN AMRO Bank, 6.650% due 8/1/22(b)
3,523,250
2,750,000 A Trumbull County, OH Sewer Disposal Revenue,
(General Motors Corp.
Project), 6.750% due 7/1/14(b)
3,055,937
- --------------------------------------------------------------------------------
- ----------------------------------------------------
25,930,500
- --------------------------------------------------------------------------------
- ----------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $435,691,831**)
$441,509,913
- --------------------------------------------------------------------------------
- ----------------------------------------------------
</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.
(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) Residual interest bond-coupon varies inversely with level of short-term
tax-exempt interest rates.
(e) 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.
(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 18 and 19 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<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.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<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
ACA -- American Capital Assurance
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
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S>
<C>
Investments, at value (Cost -- $435,691,831)
$441,509,913
Cash
73,763
Interest receivable
7,179,936
Receivable for securities sold
3,083,244
Receivable for Fund shares sold
339,627
Other assets
15,024
- --------------------------------------------------------------------------------
- ---------------
Total Assets
452,201,507
- --------------------------------------------------------------------------------
- ---------------
LIABILITIES:
Payable for securities purchased
13,777,537
Management fees payable
171,375
Accrued expenses
6,377
- --------------------------------------------------------------------------------
- ---------------
Total Liabilities
13,955,289
- --------------------------------------------------------------------------------
- ---------------
Total Net Assets
$438,246,218
================================================================================
===============
NET ASSETS:
Par value of shares of beneficial interest
$ 33,394
Capital paid in excess of par value
435,374,618
Undistributed net investment income
150,948
Accumulated net realized loss on security transactions
(3,130,824)
Net unrealized appreciation on investments
5,818,082
- --------------------------------------------------------------------------------
- ---------------
Total Net Assets
$438,246,218
================================================================================
===============
Shares Outstanding:
Class A
28,987,167
---------------------------------------------------------------------------
- ---------------
Class B
2,928,214
---------------------------------------------------------------------------
- ---------------
Class L
1,478,650
---------------------------------------------------------------------------
- ---------------
Net Asset Value:
Class A
$13.12
---------------------------------------------------------------------------
- ---------------
Class B*
$13.12
---------------------------------------------------------------------------
- ---------------
Class L**
$13.13
---------------------------------------------------------------------------
- ---------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share)
$13.67
---------------------------------------------------------------------------
- ---------------
Class L (net asset value plus 1.01% of net asset value per share)
$13.26
================================================================================
===============
</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 one year from purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S>
<C>
Interest
$ 13,580,457
- --------------------------------------------------------------------------------
- ---------------
EXPENSES:
Management fees (Note 3)
1,008,358
Distribution fees (Note 3)
479,185
Shareholder and system servicing fees
56,956
Registration fees
25,069
Shareholder communications
20,807
Pricing service fees
14,038
Custody
11,204
Audit and legal
9,026
Trustees' fees
3,008
Other
6,903
- --------------------------------------------------------------------------------
- ---------------
Total Expenses
1,634,554
- --------------------------------------------------------------------------------
- ---------------
Net Investment Income
11,945,903
- --------------------------------------------------------------------------------
- ---------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales
126,906,033
Cost of securities sold
130,137,347
- --------------------------------------------------------------------------------
- ---------------
Net Realized Loss
(3,231,314)
- --------------------------------------------------------------------------------
- ---------------
Decrease in Net Unrealized Appreciation of Investments:
Beginning of period
30,492,586
End of period
5,818,082
- --------------------------------------------------------------------------------
- ---------------
Decrease in Net Unrealized Appreciation
(24,674,504)
- --------------------------------------------------------------------------------
- ---------------
Net Loss on Investments
(27,905,818)
- --------------------------------------------------------------------------------
- ---------------
Decrease in Net Assets From Operations
$ (15,959,915)
- --------------------------------------------------------------------------------
- ---------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended September 30, 1999 (unaudited)
and the Year Ended March 31, 1999
<TABLE>
<CAPTION>
September 30 March 31
- --------------------------------------------------------------------------------
- -------------------------------------
OPERATIONS:
<S>
<C> <C>
Net investment income $
11,945,903 $ 22,652,846
Net realized gain (loss)
(3,231,314) 2,183,730
Decrease in net unrealized appreciation
(24,674,504) (2,091,457)
- --------------------------------------------------------------------------------
- -------------------------------------
Increase (Decrease) in Net Assets From Operations
(15,959,915) 22,745,119
- --------------------------------------------------------------------------------
- -------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income
(11,788,184) (22,962,050)
Net realized gains
- -- (6,368,394)
- --------------------------------------------------------------------------------
- -------------------------------------
Decrease in Net Assets From Distributions to Shareholders
(11,788,184) (29,330,444)
- --------------------------------------------------------------------------------
- -------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares
50,114,183 109,110,684
Net asset value of shares issued for reinvestment of dividends
5,913,456 15,859,957
Cost of shares reacquired
(49,510,344) (66,059,971)
- --------------------------------------------------------------------------------
- -------------------------------------
Increase in Net Assets From Fund Share Transactions
6,517,295 58,910,670
- --------------------------------------------------------------------------------
- -------------------------------------
Increase (Decrease) in Net Assets
(21,230,804) 52,325,345
NET ASSETS:
Beginning of period
459,477,022 407,151,677
- --------------------------------------------------------------------------------
- -------------------------------------
End of period*
$438,246,218 $459,477,022
================================================================================
=====================================
* Includes undistributed (overdistributed) net investment income of:
$150,948 $(6,771)
================================================================================
=====================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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 eight other
separate investment portfolios: Florida, Georgia, Limited Term, New York,
Pennsylvania, California Money Market, Massachusetts Money Market and New York
Money Market Portfolios. The financial statements and financial highlights for
the other portfolios are presented in separate shareholder reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) 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
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., 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.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
CFBDS, Inc. ("CFBDS") acts as the Fund's distributor. Salomon Smith Barney Inc.
("SSB"), another subsidiary of SSBH, as well as certain other broker-dealers,
continues to sell Fund shares to the public as a member of the selling group.
There is a contingent deferred sales charge ("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. Class L shares also have a 1.00% CDSC, which applies
if redemption occurs within the first year of purchase.
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.
For the six months ended September 30, 1999, CFBDS and SSB received sales
charges of $265,000 and $11,000 on sales of the Fund's Class A and L shares,
respectively. In addition, CDSCs paid to SSB were approximately:
Class A Class B Class L
- --------------------------------------------------------------------------------
CDSCs $7,000 $38,000 $2,000
- --------------------------------------------------------------------------------
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 six months ended September 30, 1999, total Distribution
Plan fees incurred were:
Class A Class B Class L
- --------------------------------------------------------------------------------
Distribution Plan Fees $294,570 $120,650 $63,965
- --------------------------------------------------------------------------------
All officers and one Trustee of the Fund are employees of SSB.
4. Investments
During the six months ended September 30, 1999, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
- --------------------------------------------------------------------------------
Purchases $138,739,890
- --------------------------------------------------------------------------------
Sales 126,906,033
- --------------------------------------------------------------------------------
At September 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
- --------------------------------------------------------------------------------
Gross unrealized appreciation $ 16,881,795
Gross unrealized depreciation (11,063,713)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 5,818,082
- --------------------------------------------------------------------------------
5. 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
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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 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 September 30, 1999, the Portfolios had no open futures contracts.
6. Shares of Beneficial Interest
At September 30, 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.
At September 30, 1999, total paid-in capital amounted to the following for each
class:
<TABLE>
<CAPTION>
Class A Class B
Class L
<S> <C> <C>
<C>
- --------------------------------------------------------------------------------
- ------------
Total Paid-in Capital $374,516,910 $40,097,884
$20,793,218
- --------------------------------------------------------------------------------
- ------------
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended
Year Ended
September 30, 1999
March 31, 1999
------------------------------
- ------------------------------
Shares Amount
Shares Amount
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Class A
<S> <C> <C>
<C> <C>
Shares sold 2,979,633 $
40,142,561 5,972,128 $84,705,473
Shares issued on reinvestment 385,091
5,193,410 999,932 14,128,508
Shares reacquired (3,333,608)
(45,098,308) (4,199,657) (59,498,849)
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Increase 31,116 $
237,663 2,772,403 $ 39,335,132
================================================================================
====================================================
Class B
Shares sold 511,143 $
6,887,668 1,355,808 $ 19,259,918
Shares issued on reinvestment 32,738
440,945 72,634 1,024,830
Shares reacquired (226,903)
(3,065,597) (251,968) (3,557,223)
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Increase 316,978 $
4,263,016 1,176,474 $ 16,727,525
================================================================================
====================================================
Class L+
Shares sold 230,696 $
3,083,954 361,021 $ 5,145,293
Shares issued on reinvestment 20,693
279,101 50,013 706,619
Shares reacquired (98,614)
(1,346,439) (211,749) (3,003,899)
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Increase 152,775 $
2,016,616 199,285 $ 2,848,013
================================================================================
====================================================
</TABLE>
+ On June 12, 1998 Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares 1999/(1)(2)/ 1999/(2)/
1998 1997 1996 1995/(3)/
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.97 $14.16
$13.60 $13.67 $13.32 $13.35
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.37 0.74
0.79 0.81 0.81 0.82
Net realized and unrealized gain (loss) (0.86) 0.03
0.73 (0.09) 0.35 (0.01)
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Income (Loss) From Operations (0.49) 0.77
1.52 0.72 1.16 0.81
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Less Distributions From:
Net investment income (0.36) (0.75)
(0.80) (0.79) (0.81) (0.84)
Net realized gains -- (0.21)
(0.16) -- -- --
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Distributions (0.36) (0.96)
(0.96) (0.79) (0.81) (0.84)
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Asset Value, End of Period $13.12 $13.97
$14.16 $13.60 $13.67 $ 13.32
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Return (3.53)%++ 5.50%
11.47% 5.41% 8.83% 6.38%
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Assets, End of Period (000s) $380,424 $404,498
$370,891 $351,395 $378,421 $ 401,364
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.66%+ 0.66%
0.66% 0.70% 0.70% 0.60%
Net investment income 5.40+ 5.21
5.61 5.92 5.88 6.30
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Portfolio Turnover Rate 28% 61%
87% 31% 27% 54%
- --------------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On October 10, 1994, the former Class C shares were exchanged into Class A
shares.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
26 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares 1999/(1)(2)/ 1999/(2)/
1998 1997 1996 1995/(3)/
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.96 $14.16
$13.61 $13.67 $13.33 $12.41
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.33 0.67
0.70 0.74 0.73 0.33
Net realized and unrealized gain (loss) (0.84) 0.02
0.74 (0.08) 0.35 0.91
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Income (Loss) From Operations (0.51) 0.69
1.44 0.66 1.08 1.24
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Less Distributions From:
Net investment income (0.33) (0.68)
(0.73) (0.72) (0.74) (0.32)
Net realized gains -- (0.21)
(0.16) -- -- --
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Distributions (0.33) (0.89)
(0.89) (0.72) (0.74) (0.32)
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Asset Value, End of Period $13.12 $13.96
$14.16 $13.61 $13.67 $13.33
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Return (3.71)%++ 4.92%
10.80% 4.95% 8.26% 10.11%++
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Assets, End of Period (000s) $38,407 $36,451
$20,313 $12,691 $11,605 $6,905
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.16%+ 1.16%
1.29% 1.20% 1.19% 1.19%+
Net investment income 4.91+ 4.71
4.95 5.42 5.37 5.75+
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Portfolio Turnover Rate 28% 61%
87% 31% 27% 54%
- --------------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) 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.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares 1999/(1)(2)/ 1999/(2)(3)/
1998 1997 1996 1995/(4)/
- --------------------------------------------------------------------------------
- ----------------------------------------------------
<S> <C> <C>
<C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.97 $14.16
$13.59 $13.65 $13.32 $ 13.33
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.33 0.65
0.69 0.73 0.73 0.74
Net realized and unrealized gain (loss) (0.85) 0.02
0.74 (0.08) 0.34 (0.01)
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Income From Operations (0.52) 0.67
1.43 0.65 1.07 0.73
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Less Distributions From:
Net investment income (0.32) (0.65)
(0.70) (0.71) (0.74) (0.74)
Net realized gains -- (0.21)
(0.16) -- -- --
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Distributions (0.32) (0.86)
(0.86) (0.71) (0.74) (0.74)
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Asset Value, End of Period $13.13 $13.97
$14.16 $13.59 $13.65 $ 13.32
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Total Return (3.75)%++ 4.79%
10.71% 4.90% 8.13% 5.80%
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Net Assets, End of Period (000s) $19,416 $18,528
$15,926 $14,901 $16,563 $ 18,599
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.24%+ 1.24%
1.35% 1.27% 1.27% 1.23%
Net investment income 4.80+ 4.63
4.91 5.35 5.31 5.69
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Portfolio Turnover Rate 28% 61%
87% 31% 27% 54%
- --------------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(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.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On April 19, 1999, a special meeting of shareholders of the Trust was held for
the purpose of electing Trustees to the Trust.
The results were as follows:
<TABLE>
<CAPTION>
Percentage
Percentage
Shares Voted of Shares
Shares Voted of Shares
Name of Trustees For Voted
Against Voted
<S> <C> <C>
<C> <C>
- --------------------------------------------------------------------------------
- ------------------------------------------------
Lee Abraham 1,350,265,160.850 97.943%
28,359,584.139 2.057%
Allan J. Bloostein 1,351,356,664.226 98.022
27,268,080,763 1.978
Jane F. Dasher 1,352,390,291.715 98.097
26,234,453.274 1.903
Donald R. Foley 1,350,867,506.020 97.987
27,757,238.969 2.013
Richard E. Hanson, Jr. 1,351,302,644.963 98.018
27,322,100.026 1.982
Paul Hardin 1,352,452,572.699 98.102
26,172,172.290 1.898
Heath B. McLendon 1,352,481,643.116 98.104
26,143,101.873 1.896
Roderick C. Rasmussen 1,351,438,798.818 98.028
27,185,946.171 1.972
John P. Toolan 1,352,497,455.395 98.105
26,127,289.594 1.895
- --------------------------------------------------------------------------------
- ------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
28 1999 Semi-Annual Report to Shareholders
<PAGE>
Smith Barney
Muni Funds
Trustees
Lee Abraham
Allan J. Bloostein
Jane F. Dasher
Donald R. Foley
Richard E. Hanson, Jr.
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
Anthony Pace
Controller
Christina T. Sydor
Secretary
Investment Manager
SSB Citi Fund Management LLC
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Servicing Agent
Smith Barney Private Trust
388 Greenwich Street, 22nd Floor
New York, NY 10013
Sub-Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9699
Providence, RI 02940-9699
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.
[LOGO]
Smith Barney Muni Funds
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com/mutualfunds
SMITH BARNEY MUNI FUNDS
GEORGIA PORTFOLIO
PENNSYLVANIA PORTFOLIO
- -----------------------
SEMI-ANNUAL REPORT
- -----------------------
SEPTEMBER 30, 1999
LOGO: SMITH BARNEY MUTUAL FUNDS
NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
<PAGE>
PICTURES OF
HEATH B. MCLENDON
CHAIRMAN
PETER M. COFFEY
VICE PRESIDENT
SMITH BARNEY
MUNI FUNDS
DEAR SHAREHOLDER:
We are pleased to provide the semi-annual report for the Smith Barney Muni Funds
- - Georgia and Pennsylvania Portfolios ("Portfolios") for the period ended
September 30, 1999. We hope you find this report 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
Current market conditions can be characterized by a strong economy, with growth
of demand continuing to outpace supply, yet signs of inflation appear to be
virtually non-existent. Moreover, the unemployment rate is at a 30-year low, and
the yield curve has steepened. (The yield curve shows the difference between
short- and long-term rates.)
Despite the fact that the bond market has had numerous seemingly valid reasons
to trade lower lately, the bond market has resisted them. Instead, the yield for
the 30-year Treasury bond has stayed within a narrow 40 basis point trading
range since the beginning of June. (A basis point is 0.01%, or one one-hundredth
of a percent.)
One of the biggest challenges facing the bond markets recently have been the
decline of the U.S. dollar against the yen. Yet, because the dollar's weakness
has been limited to the yen, there has been little concern about possible
capital outflows from the U.S. or higher inflation. Similarly, the rise in oil
prices has not translated into higher bond yields because inflation in general
does not appear to be a factor. The same holds true for the recent surge in gold
prices, which we do not view as a sign of higher inflation or higher yields.
Fixed income prices have come under some pressure as a result of higher interest
rates. U.S. Treasuries have remained in a narrow trading range just above 6%,
while long-term municipal bonds are yielding approximately 95% of long-term
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
U.S. Treasury bonds. Under typical market conditions, municipal bonds yield
roughly 85% of similar-maturity U.S. Treasury bonds.
One positive trend for the market has been the lower of supply of new bonds. The
U.S. Treasury Department has been paying down the national debt, and the latest
figures from the Clinton Administration show an estimated budget surplus of
about $115 billion for the current fiscal year.
GEORGIA PORTFOLIO'S PERFORMANCE AND INVESTMENT STRATEGY
The Portfolio seeks as high a level of income exempt from federal income taxes
and Georgia personal income taxes as is consistent with prudent investing.(1)
For the period ended September 30, 1999, the Portfolio generated a total return
of negative 4.72% for Class A shares without sales charges compared to its
Lipper, Inc. peer group average of negative 3.56%. (Lipper is a major fund
tracking organization.) For performance information on the Portfolio's other
share classes, please refer to page five.
As of September 30, 1999, 56.5% of the Portfolio had a triple-A rating, the
highest credit rating. The Portfolio's largest holdings are concentrated among
the following industries: multi-family housing bonds (14.3%), utility bonds
(12.0%) and education bonds (10.4%).
GEORGIA ECONOMIC HIGHLIGHTS
Georgia's economy continues to be one of the nation's most prosperous, due in
large part to its conservative financial operations and superior debt policies.
As a result, Georgia's general obligation bonds continue to be assigned high
marks from the major credit agencies. Revenues for 1999-2000 are expected to
increase 5.9%, income taxes 7.8% and sales taxes 4.5%. In recent years Georgia
has become one of the nation's hottest markets for both job and population
growth.
In 1997 and 1998, the Peachtree State's population increased by 2.1% and 2.0%,
respectively. Also, while population growth for 1999 is expected to drop
slightly to 1.9%, it remains about twice the national rate. Nearly two thirds of
the projected population growth for 1999 will come from immigration.
Unemployment rates remain low at 4.2%, while national rates are 4.5%.
In our opinion, Georgia should remain a powerful force in the U.S. economy. Its
trade, service, and transportation-oriented diversified economy should continue
to generate superior revenue growth, and that in turn should enable it to meet
the needs of its growing population.
- --------------
(1) A portion of the Portfolio's income may be subject to the Alternative
Minimum Tax ("AMT").
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
PENNSYLVANIA PORTFOLIO'S PERFORMANCE AND INVESTMENT STRATEGY
The Portfolio seeks as high a level of income exempt from federal income taxes
and Pennsylvania personal income taxes as is consistent with prudent investing.1
For the period ended September 30, 1999, the Portfolio posted a total return of
negative 4.44% for Class A shares without sales charges compared to its Lipper,
Inc. peer group average of negative 3.49%. For performance information on the
Portfolio's other classes, please refer to page eight.
As of September 30, 1999, roughly 90% of the Portfolio was rated investment
grade. In addition, approximately 49% of the Portfolio had a triple-A rating,
the highest credit rating. The Portfolio's largest holdings were concentrated
among the following industries: hospital bonds (23.9%), education bonds (13.4%)
and industrial development bonds (8.4%).
PENNSYLVANIA ECONOMIC HIGHLIGHTS
Pennsylvania has made strides in the transformation of its economy and has
overcome its recent history of below-average growth in population, employment
and personal income. Historically Pennsylvania has been known as the leader of
the Industrial Era; however the state is now positioning itself to become a
driving force in the New Internet Economy.
Some of the largest concentrations of technology firms and high-tech employees
are now located in Pennsylvania. The Commonwealth's technological successes so
far should not be to surprising since it already had some of the crucial
ingredients to become a successful technology center such as an established
history, outstanding educational facilities, a highly-skilled workforce and a
positive business climate.
Moreover our economic outlook for Pennsylvania is favorable because of its
conservative budgeting practices and effective debt management. In our opinion,
Pennsylvania is moving in the right direction and may very well regain its
position as a leader in the U.S. economy in the years ahead.
MARKET OUTLOOK
The recent rise in interest rates has created buying opportunities. We remain
confident that we can achieve a high level of tax-exempt income, consistent with
prudent investing and close attention to credit quality. Yields on municipal
securities have risen quite substantially, and the long end of the yield curve
continues to favor municipal bonds.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
Over the long term, we are bullish on municipal bonds. And while we continue to
identify many opportunities in the municipal bond market, we do anticipate some
price erosion in the near-term as a result of increasing interest rates.
However, we believe that the Federal Reserve Board's tightening of monetary
policy (25 basis points on June 30, 1999 and 25 basis points on August 24,
1999),2 along with the increase in bond yields, may moderate U.S. economic
activity in 2000. Moreover, if the U.S. stock market were to experience a
correction, bond markets could recover despite recent difficulties.
The supply of municipal bonds could become lower as January 1, 2000 approaches.
Amid heavy issuance recently, supply has become so great that many prices have
declined to their annual lows. These larger volumes have in turn resulted in
lower prices and higher yields. Yet, these conditions can change soon as the
market experiences its typical light winter issuance and investors keep out of
the markets amidst concerns regarding Year 2000 issues.
In our opinion, the bolstered yields resulting from year 2000 concerns and
supply pressures is already reaching levels where investors should consider
begin putting their cash to work. Against the current economic backdrop, we
believe that yields have peaked, and that the best opportunities may lie in
spread products such as municipal issues.
Looking ahead, we believe that the U.S. economy should remain strong in the
coming months with muted inflationary pressures. Recent economic conditions have
created opportunities for municipal securities to catch up with U.S. Treasuries,
and we continue to see good value at the long end of the market.
In closing, thank you for investing in the Smith Barney Muni Funds -- Georgia
and Pennsylvania Portfolios. 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
October 12, 1999
- ----------
2 On Tuesday, November 16, 1999, the Federal Reserve Board raised short-term
rates by 25 basis points after this letter was written.
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
GEORGIA PORTFOLIO
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS A SHARES
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.43 $12.49 $0.31 $0.00 (4.72)%+
- --------------------------------------------------------------------------------
3/31/99 13.43 13.43 0.65 0.09 5.61
- --------------------------------------------------------------------------------
3/31/98 12.48 13.43 0.67 0.08 13.85
- --------------------------------------------------------------------------------
3/31/97 12.50 12.48 0.67 0.08 5.95
- --------------------------------------------------------------------------------
3/31/96 12.10 12.50 0.70 0.05 9.67
- --------------------------------------------------------------------------------
Inception* - 3/31/95 12.00 12.10 0.62 0.00 6.29+
================================================================================
Total $3.62 $0.30
================================================================================
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS B SHARES
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.42 $12.48 $0.28 $0.00 (4.99)%+
- --------------------------------------------------------------------------------
3/31/99 13.43 13.42 0.58 0.09 4.99
- --------------------------------------------------------------------------------
3/31/98 12.47 13.43 0.60 0.08 13.39
- --------------------------------------------------------------------------------
3/31/97 12.50 12.47 0.61 0.08 5.33
- --------------------------------------------------------------------------------
3/31/96 12.11 12.50 0.65 0.05 9.08
- --------------------------------------------------------------------------------
Inception* - 3/31/95 12.27 12.11 0.49 0.00 2.88+
================================================================================
Total $3.21 $0.30
================================================================================
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS L SHARES
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.41 $12.47 $0.27 $0.00 (5.03)%+
- --------------------------------------------------------------------------------
3/31/99 13.41 13.41 0.58 0.09 5.01
- --------------------------------------------------------------------------------
3/31/98 12.46 13.41 0.59 0.08 13.23
- --------------------------------------------------------------------------------
3/31/97 12.49 12.46 0.60 0.08 5.28
- --------------------------------------------------------------------------------
3/31/96 12.09 12.49 0.64 0.05 9.12
- --------------------------------------------------------------------------------
Inception* - 3/31/95 12.06 12.09 0.56 0.00 5.11+
================================================================================
Total $3.24 $0.30
================================================================================
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
GEORGIA PORTFOLIO
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
================================================================================
Without Sales Charges(1)
-------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/99+ (4.72)% (4.99)% (5.03)%
- --------------------------------------------------------------------------------
Year Ended 9/30/99 (4.36) (4.88) (4.94)
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 7.03 6.47 6.43
- --------------------------------------------------------------------------------
Inception* through 9/30/99 6.52 5.64 5.84
================================================================================
With Sales Charges(2)
-------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/99+ (8.54)% (9.18)% (6.93)%
- --------------------------------------------------------------------------------
Year Ended 9/30/99 (8.16) (8.95) (6.79)
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 6.17 6.32 6.22
- --------------------------------------------------------------------------------
Inception* through 9/30/99 5.73 5.64 5.65
================================================================================
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS
==============================================================================
Without Sales Charges(1)
================================================================================
Class A (inception* through 9/30/99) 41.50%
- --------------------------------------------------------------------------------
Class B (inception* through 9/30/99) 33.69
- --------------------------------------------------------------------------------
Class L (inception* through 9/30/99) 36.36
================================================================================
(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)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 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 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.
- --------------------------------------------------------------------------------
6 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE (uaudited)
- --------------------------------------------------------------------------------
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+
- --------------------------------------------------------------------------------
April 1994 -- September 1999
CHART
Lehman Brothers Georgia Muni, Bond Index
4/4/94 10000 10000 9600
3/95 10795 10744 10193
3/96 11675 11645 11179
3/97 12289 12278 11844
3/98 13573 13594 13485
3/99 14362 14437 14242
09/30/99 14039 14125 13569
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on April 4, 1994, assuming a 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 September 30, 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 million 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.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
PENNSYLVANIA PORTFOLIO
- -------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS A SHARES
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.44 $12.52 $0.33 $0.00 (4.44)%+
- --------------------------------------------------------------------------------
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 $3.76 $0.31
================================================================================
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS B SHARES
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.42 $12.50 $0.29 $0.00 (4.72)%+
- --------------------------------------------------------------------------------
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 $3.32 $0.31
================================================================================
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS L SHARES
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
================================================================================
9/30/99 $13.41 $12.49 $0.29 $0.00 (4.74)%+
- --------------------------------------------------------------------------------
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 $3.39 $0.31
- --------------------------------------------------------------------------------
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
PENNSYLVANIA PORTFOLIO
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETUNS
- --------------------------------------------------------------------------------
Without Sales Charges(1)
---------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/99+ (4.44)% (4.72)% (4.74)%
- --------------------------------------------------------------------------------
Year Ended 9/30/99 (3.73) (4.26) (4.31)
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 6.87 6.34 6.28
- --------------------------------------------------------------------------------
Inception* through 9/30/99 6.72 5.73 6.12
================================================================================
With Sales Charges(2)
---------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/99+ (8.27)% (8.91)% (6.65)%
- --------------------------------------------------------------------------------
Year Ended 9/30/99 (7.61) (8.33) (6.16)
- --------------------------------------------------------------------------------
Five Years Ended 9/30/99 6.00 6.19 6.07
- --------------------------------------------------------------------------------
Inception* through 9/30/99 6.72 5.73 5.92
================================================================================
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (inception* through 9/30/99) 42.98%
- --------------------------------------------------------------------------------
Class B (inception* through 9/30/99) 34.22
- --------------------------------------------------------------------------------
Class L (inception* through 9/30/99) 38.53
================================================================================
(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)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 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 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 -- September 1999
Lehman Brothers Penn. Muni, Bond Index
4/4/94 10000 10000 9600
3/95 10795 10744 10447
3/96 11638 11645 11290
3/97 12282 12278 11980
3/98 13529 13594 13601
3/99 14341 14437 14364
09/30/99 14040 14125 13726
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on April 4, 1994, assuming a 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 September 30, 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 million 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 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
EDUCATION -- 10.4%
$1,000,000 Aa2* Cherokee County GA School System, 5.000%
due 2/1/14 $ 950,000
Private Colleges & Universities Authority Revenue:
1,000,000 AAA Agnes Scott College Project, 4.750% due 6/1/28 832,500
1,000,000 Aa1* Emory University Project, Series A, 5.500%
due 11/1/31 953,750
Mercer Housing Corp. Project, Series A:
1,000,000 A ACA-Insured, 5.375% due 6/1/17 951,250
1,000,000 A3* 5.250% due 10/1/20 918,750
750,000 BBB Puerto Rico Industrial Tourist Educational, Medical &
Environmental Control Facilities Finance Authority,
Ana G. Mendez University System Project,
5.375% due 2/1/19 701,250
- --------------------------------------------------------------------------------
5,307,500
- --------------------------------------------------------------------------------
ESCROWED TO MATURITY(B) -- 8.4%
285,000 AAA Burke County Development Authority PCR, (Oglethorpe
Power Co. Vogtle Project), MBIA-Insured,
7.500% due 1/1/03 298,181
Cobb County Kennestone Hospital Authority Revenue,
MBIA-Insured:
135,000 AAA 10.250% due 2/1/02 141,750
730,000 AAA Series 86A, 7.750% due 2/1/07 803,000
1,875,000 Aaa* Colquitt County Development Authority Revenue,
Sub-Series C, zero coupon due 12/1/21 445,313
290,000 AAA Fulton County Water & Sewer Revenue, FGIC-Insured,
6.375% due 1/1/14 316,825
485,000 AAA Puerto Rico Commonwealth Aqueduct & Sewer Authority
Revenue, 10.250% due 7/1/09 622,619
145,000 Aaa* Richmond County Water and Sewer Revenue,
9.875% due 4/1/02 156,237
1,000,000 Aaa* Savannah EDA, zero coupon due 12/1/21 237,500
640,000 AAA Tri City Hospital Authority Revenue,
South Fulton Hospital, FGIC-Insured,
10.250% due 7/1/06 789,600
2,000,000 Aaa* Washington Wilkes Payroll Development
Authority Revenue, zero coupon due 12/1/21 475,000
- --------------------------------------------------------------------------------
4,286,025
- --------------------------------------------------------------------------------
GENERAL OBLIGATION -- 5.7%
1,000,000 AAA Georgia State, Series B, 5.750% due 8/1/17 1,031,250
2,290,000 AAA Puerto Rico Commonwealth, Public Improvement,
AMBAC-Insured, 4.500% due 7/1/23 1,889,250
- --------------------------------------------------------------------------------
2,920,500
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
HOSPITALS -- 4.7%
$1,000,000 AAA Fulco Hospital Authority Revenue, Catholic Health
East, Series A, 4.875% due 11/15/15 $ 902,500
1,000,000 AAA Gainsville & Hall County Hospital Authority
Revenue, (Northeast GA Health System Inc.
Project), 5.500% due 5/15/19 967,500
500,000 BBB- Puerto Rico Industrial Tourist Educational,
Medical & Environmental Control Facilities
Finance Authority, (Ryder Memorial Hospital
Project), Series A, 6.700% due 5/1/24 523,125
- --------------------------------------------------------------------------------
2,393,125
- --------------------------------------------------------------------------------
HOUSING: MULTI-FAMILY -- 14.3%
500,000 AAA Acworth Housing Authority Revenue, (Wingate Falls
Apartments Project), 6.125% due 3/1/17(c) 511,250
Atlanta Urban Residential Finance Authority, Multi-Family
Housing Revenue:
1,115,000 B Cascade Pines Housing Project, 6.250%
due 9/1/10(c) 1,156,813
1,000,000 AAA New Community, Series A-1, GNMA-Collateralized,
5.450% due 11/20/17(c) 976,250
1,025,000 AAA Shamrock Garden Apartments Project, Series A,
FNMA-Collateralized, 5.250% due 4/1/19(c) 966,063
1,000,000 Baa1* Clayton County Housing Authority, Multi-Family Housing
Revenue, (Magnolia Park Apartments Project), Series A,
6.125% due 6/1/18 970,000
240,000 A Cobb County Housing Authority Refunding, (Signature Place
Project), Series A, 6.875% due 10/1/17 249,900
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(c) 1,082,500
300,000 AAA Valley Brook Apartments Project, Revenue Refunding,
MBIA-Insured, 7.750% due 1/1/26 313,953
1,000,000 AAA Lawrenceville Housing Authority, Multi-Family Revenue,
(Knollwood Park Apartments Project), 6.250% mandatory
tender 6/1/15(c) 1,038,750
- --------------------------------------------------------------------------------
7,265,479
- --------------------------------------------------------------------------------
HOUSING: SINGLE-FAMILY -- 7.7%
155,000 AAA Fulton County Housing Authority, Single-Family Mortgage
Revenue, Series A, GNMA-Collateralized,
6.600% due 3/1/28(c) 159,844
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
HOUSING: SINGLE-FAMILY -- 7.7% (CONTINUED)
Georgia State HFA, Single-Family Mortgage Revenue:
$ 350,000 AAA Series A, FHA-Insured, 6.600% due 12/1/23(c) $ 360,500
2,500,000 AAA Series A-2, FHA-Insured, 6.550% due 12/1/27(c) 2,584,375
255,000 AA+ Georgia State Residential Finance Authority, Home
Ownership Mortgage, Series A, FHA-Insured,
7.250% due 12/1/21(c) 266,156
320,000 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(c) 330,000
210,000 AAA Virgin Islands HFA, Single-Family Mortgage Revenue,
Series A, GNMA-Collateralized, 6.450% due
3/1/16(c) 216,562
- --------------------------------------------------------------------------------
3,917,437
- --------------------------------------------------------------------------------
LIFE-CARE -- 2.6%
660,000 BBB+ Fulton County Residential Care Facilities, (Canterbury
Court Project), 6.300% due 10/1/24 655,875
660,000 NR Savannah EDA, First Mortgage, Senior Care Group Inc.,
Shadowmoss, Series A, 6.750% due 7/1/10 640,200
- --------------------------------------------------------------------------------
1,296,075
- --------------------------------------------------------------------------------
MISCELLANEOUS -- 6.3%
2,000,000 AAA Georgia Local Government, Public Improvement Grant,
Series A, MBIA-Insured, 4.750% due 6/1/28 1,710,000
500,000 BBB Puerto Rico Housing Bank and Finance Agency,
7.500% due 12/1/06 556,875
1,000,000 BBB Puerto Rico Industrial Tourist Educational, Medical &
Environmental Control Facilities Finance Authority,
(San Lucas & Cristo Project), Series A,
5.750% due 6/1/19 948,750
- --------------------------------------------------------------------------------
3,215,625
- --------------------------------------------------------------------------------
POLLUTION CONTROL -- 10.0%
200,000 BBB Camden County Joint Development Authority PCR,
Revenue Refunding, (Union Carbide Corp. Project),
5.000% due 1/1/12 187,500
1,000,000 Baa2* Effingham County Development Authority, Solid Waste
Disposal Revenue, (Fort James Project),
5.625% due 7/1/18(c) 962,500
500,000 A- Monroe County Development Authority PCR, (Oglethorpe
Power Co. Scherer Project), Series A,
6.800% due 1/1/12 555,000
2,000,000 A3* Richmond County Development Authority, Solid Waste
Disposal Revenue, (International Paper Project),
Series A, 5.400% due 2/1/33(c) 1,840,000
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
POLLUTION CONTROL -- 10.0% (CONTINUED)
$1,000,000 NR Rockdale County Development Authority, Solid Waste
Disposal Revenue, (Visy Paper Project),
7.500% due 1/1/26(c) $1,036,250
500,000 A3* Savannah EDA, PCR, (Union Camp Corp. Project),
6.150% due 3/1/17 514,375
- -------------------------------------------------------------------------------
5,095,625
- -------------------------------------------------------------------------------
PRE-REFUNDED(D) -- 3.2%
1,000,000 AAA Fulton County Multi-Family Housing Authority Revenue,
(Concorde Place Apartment Project),
6.300% due 7/1/16 1,085,000
500,000 Ba1* Savannah Hospital Authority Revenue Refunding &
Improvement, Candler Hospital,
7.000% due 1/1/11 545,625
- --------------------------------------------------------------------------------
1,630,625
- --------------------------------------------------------------------------------
PUBLIC FACILITIES -- 2.7%
250,000 AAA Butts County COP, MBIA-Insured, 6.750% due 12/1/14 273,750
1,100,000 AAA Cobb-Marietta Counties Coliseum and Exhibit Hall
Authority Revenue, MBIA-Insured,
5.625% due 10/1/26 1,095,875
- --------------------------------------------------------------------------------
1,369,625
- --------------------------------------------------------------------------------
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(c) 915,000
- --------------------------------------------------------------------------------
TRANSPORTATION -- 3.1%
250,000 AAA Metro Atlanta Rapid Transit Authority Revenue Refunding,
Series P, AMBAC-Insured, 6.250% due 7/1/20 269,062
1,500,000 A Puerto Rico Commonwealth Highway & Transportation
Authority Revenue, Series Y, 5.000% due 7/1/36 1,310,625
- --------------------------------------------------------------------------------
1,579,687
- --------------------------------------------------------------------------------
UTILITIES -- 12.0%
Georgia Municipal Electric Authority Revenue:
2,000,000 AAA Project One, Series A, MBIA-Insured,
5.250% due 1/1/14 1,955,000
600,000 AAA Series EE, AMBAC-Insured, 7.250% due 1/1/24 722,250
500,000 A- Georgia Municipal Gas Authority Revenue, (Southern
Storage Gas Project), 6.300% due 7/1/09 526,250
1,000,000 AA Hogansville Combined Public Utility System, Asset
Guaranteed, 5.850% due 10/1/15 1,022,500
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
UTILITIES -- 12.0% (CONTINUED)
$2,200,000 AAA Puerto Rico Electric Power Authority Revenue Refunding,
Series EE, MBIA-Insured, 4.500% due 7/1/18 $ 1,881,000
- --------------------------------------------------------------------------------
6,107,000
- --------------------------------------------------------------------------------
WATER & SEWER -- 7.1%
500,000 A+ Cartersville Development Authority Revenue Refunding,
Sewer Facilities, Anheuser Busch, 6.125%
due 5/1/27(c) 507,500
1,000,000 AA Clayton County Water Authority Revenue,
5.100% due 5/1/16 950,000
625,000 AAA Douglasville-Douglas County Water & Sewer Authority
Revenue, AMBAC-Insured, 5.625% due 6/1/15 632,031
10,000 AAA Fulton County Water & Sewer Revenue, FGIC-Insured,
6.375% due 1/1/14 10,950
500,000 AAA Milledgeville Water & Sewer Revenue, FSA-Insured,
6.000% due 12/1/21 524,375
1,000,000 AA Peachtree City Water & Sewer Authority, Sewer System
Revenue, Series A, 5.375% due 3/1/22 962,500
- --------------------------------------------------------------------------------
3,587,356
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $51,585,071**) $50,886,684
================================================================================
(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 IBCA, Inc.
(b)Bonds are escrowed to maturity with U.S. government securities and are
considered by the Manager to be triple-A rated even if the issuer has not
applied for new ratings.
(c)Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax. (d) Bonds are escrowed with U.S
government securities and are considered by the Manager to be
triple-A rated even if the issuer had not applied for new ratings.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 22 and 23 for definitions of ratings and certain security
descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
EDUCATION -- 13.4%
$1,400,000 AAA Cambria School District, Capital Appreciation,
FGIC-Insured, zero coupon to yield
5.728% due 8/15/23 $ 344,750
700,000 BBB- Chester County Health & Education Facilities Authority
College Revenue, Immaculata College,
5.600% due 10/15/18 648,375
1,615,000 AAA Erie School District, Capital Appreciation,
Refunding, FSA-Insured, zero coupon to yield
5.350% due 9/1/18 541,025
1,000,000 AAA Pennsylvania State Higher Educational Assistance Agency,
Student Loan Revenue, Series D, AMBAC-Insured,
6.050% due 1/1/19(b) 1,006,250
Pennsylvania State Higher Educational Facilities
Authority Revenue:
1,000,000 A- Drexel University, 6.000% due 5/1/29 986,250
1,500,000 AAA Thomas Jefferson University, AMBAC-Insured,
5.000% due 7/1/19 1,357,500
1,250,000 NR Philadelphia, PA Hospitals & Higher Education Facilities
Authority Revenue, Chestnut Hill College,
6.000% due 10/1/29 1,170,313
2,000,000 AAA Philadelphia, PA School District, Series A,
MBIA-Insured, 4.500% due 4/1/23 1,635,000
1,000,000 BBB Puerto Rico Industrial, Tourist, Educational, Medical &
Environmental Control Facilities, Ana G. Mendez
University, 5.375% due 2/1/29 913,750
1,250,000 Aaa* Upper Darby School District, AMBAC-Insured,
5.000% due 5/1/19 1,132,813
- --------------------------------------------------------------------------------
9,736,026
- --------------------------------------------------------------------------------
ESCROWED TO MATURITY(C) -- 5.7%
295,000 AAA Berks County, PA Municipal Hospital Authority Revenue,
(General Hospital Project), 9.500% due 7/1/05 338,144
2,130,000 AAA Cambria County Hospital Development Authority,
Conemaugh Valley Memorial Hospital,
7.625% due 9/1/11 2,412,225
115,000 AAA Coatesville, PA Water Revenue, Government Guaranteed,
6.250% due 10/15/13 120,894
435,000 AAA Lewisburg Area School District Building, AMBAC-Insured,
9.750% due 2/15/04 500,250
85,000 AAA Pennsylvania State Educational Facilities Authority
College & University Revenue, Temple University,
MBIA-Insured, 9.375% due 6/15/03 85,927
25,000 AAA Philadelphia, PA Hospitals & Higher Education Facilities
Authority Revenue, Presbyterian Medical Center,
6.650% due 12/1/19 28,000
245,000 AAA Southeastern Greene School District,
9.375% due 7/1/03 267,969
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
ESCROWED TO MATURITY(C) -- 5.7% (CONTINUED)
$ 185,000 AAA York County GO, Refunding, AMBAC-Insured,
8.875% due 6/1/06 $ 211,825
40,000 AAA Scranton-Lackawanna Health & Welfare Authority Revenue,
Scranton University Project, AMBAC-Insured,
10.000% due 10/1/03 44,400
80,000 AAA West Chester, PA Sewer Revenue, 9.750% due 5/1/07 95,700
- --------------------------------------------------------------------------------
4,105,334
- --------------------------------------------------------------------------------
GENERAL OBLIGATION -- 8.2%
1,000,000 AAA Cambria County GO, FGIC-Insured, 5.500% due
8/15/16 983,750
Erie County GO, Capital Appreciation, Series B:
1,000,000 AAA FSA-Insured, zero coupon to yield 4.950%
due 11/15/15402,500
4,185,000 AAA Zero coupon to yield 5.050% due 11/15/18 1,386,280
1,500,000 AAA Lancaster County GO, Series A, FGIC-Insured,
4.500% due 5/1/28 1,198,125
1,500,000 AAA Philadelphia GO, FGIC-Insured, 4.750%
due 5/15/20 1,290,000
2,000,000 AAA Westmoreland County GO, FGIC-Insured, zero coupon to
yield 5.970% due 12/1/18 662,500
- --------------------------------------------------------------------------------
5,923,155
- --------------------------------------------------------------------------------
HOSPITAL -- 23.9%
500,000 AAA Allegheny County Hospital Development Authority Revenue,
(General Hospital Project), Series A, MBIA-Insured,
6.250% due 9/1/20 491,875
1,000,000 BBB Allentown Area Hospital Authority Revenue, Sacred Heart
Hospital, 6.750% due 11/15/14 1,048,750
1,000,000 NR Chartiers Valley, PA Industrial and Commercial Development
Authority, Mortgage Revenue, Asbury Health Center,
6.375%, due 12/1/19 972,500
1,000,000 AAA Delaware County, PA Health System Authority Revenue,
Catholic Health East, Series A, AMBAC-Insured,
4.875% due 11/15/26 847,500
1,260,000 AA Erie County, PA Hospital Authority Health Facilities
Revenue, (St. Marys Home Project), Asset Guaranty,
6.000% due 8/15/23 1,244,250
1,000,000 AA Geisinger County, PA Health System Authority, Series A,
5.000% due 8/15/28 853,750
1,000,000 BBB+ Hazelton Health Services Authority Revenue, St. Joseph's
Medical Center, 6.200% due 7/1/26 967,500
1,000,000 BBB Horizon Hospital System Authority Revenue, Horizon
Hospital Systems Inc., 6.350% due 5/15/26 1,016,250
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
HOSPITAL -- 23.9% (CONTINUED)
$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 $1,990,000
1,000,000 NR Philadelphia Authority for Industrial Development, Health
Care Facility Revenue, Baptist Home of Philadelphia,
Series A, 5.600% due 11/15/28 892,500
1,600,000 AAA Philadelphia Hospital & Higher Education Facilities
Authority, Hospital Revenue, Series A, FHA-Insured,
5.300% due 1/1/18 1,494,000
1,000,000 AA Potter County Hospital Authority Revenue, Asset
Guaranteed, 6.050% due 8/1/24 1,018,750
500,000 BBB- Ryder Memorial Hospital Project, Series A,
6.700% due 5/1/24 523,125
Scranton-Lackawanna Health & Welfare Authority Revenue:
500,000 BBB-++ Allied Services Rehabilitation Hospitals, (Project-A),
7.600% due 7/15/20 536,250
1,000,000 NR Lackawanna Junior College, 5.750% due 11/1/20 908,750
750,000 BBB- Moses Taylor Hospital Project, 6.250% due 7/1/20 717,188
500,000 AAA Sharon Regional Health System Authority Revenue,
5.000% due 12/1/18 452,500
St. Mary Hospital Authority, Bucks County, Catholic Health
Initiatives, Series A:
500,000 AA 5.375% due 12/1/13 487,500
1,000,000 AA 5.000% due 12/1/18 892,500
- --------------------------------------------------------------------------------
17,355,438
- --------------------------------------------------------------------------------
HOUSING: MULTI-FAMILY -- 2.4%
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 1,522,500
205,000 AAA Pittsburgh Urban Redevelopment Authority, Mortgage
Revenue, Series B, FNMA/GNMA-Collateralized,
6.950% due 10/1/10(b) 209,869
- --------------------------------------------------------------------------------
1,732,369
- --------------------------------------------------------------------------------
HOUSING: SINGLE-FAMILY -- 5.3%
Allegheny County, Residential Mortgage Refunding,
Single-Family Housing, GNMA-Collateralized:
970,000 Aaa* 6.875% due 5/1/26(b) 1,022,138
1,000,000 Aaa* Series FF-2, 6.000% due 11/1/31(b) 993,750
1,675,000 Aaa* Zero coupon to yield 7.500% due 5/1/27(b) 219,844
1,000,000 AA+ Pennsylvania Housing Finance Agency, Single-Family
Housing Mortgage Revenue, Series 67A,
5.850% due 10/1/18(b) 995,000
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
HOUSING: SINGLE-FAMILY -- 5.3% (CONTINUED)
$ 640,000 AAA Puerto Rico Single-Family Housing Mortgage Revenue,
GNMA/FNMA/FHLMC-Collateralized,
6.250% due 4/1/29(b) $ 660,000
- --------------------------------------------------------------------------------
3,890,732
- --------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT -- 8.4%
1,000,000 BBB- Allegheny County IDA Refunding Environmental
Improvement, USX Corp., 6.700% due 12/1/20 1,051,250
1,000,000 BBB+ Bradford County IDA Solid Waste, International Paper Co.,
6.600% due 3/1/19(b) 1,046,250
1,000,000 BB- Delaware County IDA Revenue, Resource Recovery Facility,
Series A, 6.200% due 7/1/19 966,250
1,000,000 BBB+ Erie County IDA Environmental Improvement Revenue,
(International Paper Co. Project), Series A,
7.625% due 11/1/18(b) 1,111,250
1,000,000 NR Pennsylvania Economic Development Finance Authority
Facilities Revenue, National Gypsum Co., Series A,
6.250% due 11/1/27 967,500
1,000,000 BBB Schuykill County, PA IDA, Pine Grove Landfill Inc.,
5.100% mandatory tender 4/1/09(b) 950,000
- --------------------------------------------------------------------------------
6,092,500
- --------------------------------------------------------------------------------
LIFE-CARE -- 5.2%
Montgomery County IDA, Retirement Community Revenue:
1,500,000 A- 5.250% due 11/15/28 1,305,000
1,500,000 A- Series A, 5.875% due 11/15/22 1,455,000
1,000,000 A- Series B, 5.625% due 11/15/12 980,000
- --------------------------------------------------------------------------------
3,740,000
- --------------------------------------------------------------------------------
MISCELLANEOUS -- 10.6%
Dauphin County General Authority:
1,255,000 NR Hotel & Conference Center, Hyatt Regency,
6.200% due 1/1/29 1,182,836
1,000,000 NR Office & Package, Riverfront Office,
6.000% due 1/1/25 933,750
1,250,000 AAA Delaware Valley, PA Regional Financial Authority Local
Government Revenue, Series A, AMBAC-Insured,
5.500% due 8/1/28 1,212,500
1,500,000 AAA Pittsburgh & Allegheny County, PA Public Auditorium
Hotel Room, AMBAC-Insured, 5.000% due 2/1/17 1,376,250
1,000,000 BBB Puerto Rico Housing Bank & Finance Agency,
7.500% due 12/1/06 1,113,750
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
MISCELLANEOUS -- 10.6% (CONTINUED)
$1,000,000 BBB Puerto Rico Industrial, Tourist, Educational, Medical &
Environmental Control Facilities, San Lucas & Cristo
Project, Series A, 5.750% due 6/1/19 $ 948,750
1,000,000 BBB- Virgin Islands, Public Financial Authority Revenue
Refunding, Senior Lien, Series A,
5.500% due 10/1/18 948,750
- --------------------------------------------------------------------------------
7,716,586
- --------------------------------------------------------------------------------
POLLUTION CONTROL -- 2.2%
1,000,000 AAA Northhampton County IDA, Metropolitan Edison, Series A,
MBIA-Insured, 6.100% due 7/15/21 1,023,750
500,000 BBB- Pennsylvania Economic Development Financing Authority,
Resource Recovery Revenue, (Colver Project),
Series D, 7.150% due 12/1/18(b) 543,125
- --------------------------------------------------------------------------------
1,566,875
- --------------------------------------------------------------------------------
PRE-REFUNDED(D) -- 2.0%
1,125,000 Aaa* Philadelphia Hospital Revenue, (United Hospital Inc.
Project), (Call 7/1/05 @ 100),10.875% due 7/1/081,445,625
- --------------------------------------------------------------------------------
PUBLIC FACILITIES -- 2.1%
Harrisburg, PA Redevelopment Authority, FSA-Insured:
1,750,000 AAA Zero coupon to yield 5.100% due 5/1/17 636,564
2,750,000 AAA Zero coupon to yield 5.180% due 5/1/19 883,438
- --------------------------------------------------------------------------------
1,520,002
- --------------------------------------------------------------------------------
SOLID WASTE -- 1.4%
1,000,000 BB- New Morgan IDA Solid Waste Disposal, Browning Ferris
Industries Inc., 6.500% due 4/1/19(b) 1,041,250
- --------------------------------------------------------------------------------
TRANSPORTATION -- 6.4%
1,000,000 AAA Pennsylvania State Turnpike Common Oil Franchise, Tax
Revenue Subsidiary, Series B,
5.000% due 12/1/18 910,000
1,000,000 AAA Philadelphia Authority For Industrial Development, Airport
Revenue, (Philadelphia Airport System Project),
Series A, 5.000% due 7/1/15 917,500
1,825,000 A Puerto Rico Commonwealth Highway & Transportation
Authority, 5.000% due 7/1/36 1,594,592
1,200,000 BBB- Puerto Rico Port Authority Revenue, American Airlines,
Series A, 6.250% due 6/1/26(b) 1,212,000
- --------------------------------------------------------------------------------
4,634,092
- --------------------------------------------------------------------------------
UTILITIES -- 1.3%
400,000 AAA Guam Power Authority Revenue, Series A,
6.750% due 10/1/24 448,000
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (unaudited) (continued) SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
UTILITIES -- 1.3% (CONTINUED)
$ 500,000 A-1+ Schuykill County, PA IDA, Northeastern Power Co.,
Series A, 3.150% due 12/1/22(e) $ 500,000
- --------------------------------------------------------------------------------
948,000
- --------------------------------------------------------------------------------
Water and Sewer -- 1.5%
1,000,000 AAA Philadelphia Water & Wastewater Revenue, MBIA-Insured,
6.250% due 8/1/12 1,090,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost-- $74,479,684)** $72,537,984
================================================================================
(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)Income from this issue is considered a preference item for purposes 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 the issuer has not
applied for new ratings.
(d)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.
(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 22 and 23 for definitions of ratings and certain security
descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<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. 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" 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 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 thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes in this class.
- --------------------------------------------------------------------------------
22 1999 Semi-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.
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 (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 safely
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a (+) 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 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
ACA -- American Capital Assurance
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 -- College Construction Loan
LEE 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 Agency
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
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
GEORGIA PENNSYLVANIA
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $51,585,071 and
$74,479,684, respectively) $50,886,684 $72,537,984
Cash -- 56,502
Interest receivable 833,379 1,252,771
Receivable for Fund shares sold -- 1,244,640
Receivable for securities sold 10,000 35,000
- --------------------------------------------------------------------------------
Total Assets 51,730,063 75,126,897
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 659,353 2,237,260
Management fees payable 127,513 32,294
Payable to bank 36,937 --
Distribution fees payable 6,195 7,158
Accrued expenses 10,186 106,734
- --------------------------------------------------------------------------------
Total Liabilities 840,184 2,383,446
- --------------------------------------------------------------------------------
Total Net Assets $50,889,879 $72,743,451
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 4,077 $ 5,815
Capital paid in excess of par value 52,462,919 75,220,161
Overdistributed net investment income (2,038) (21,198)
Accumulated net realized loss from
security transactions (876,692) (519,627)
Net unrealized depreciation of investments (698,387) (1,941,700)
- --------------------------------------------------------------------------------
Total Net Assets $50,889,879 $72,743,451
================================================================================
Shares Outstanding:
Class A 2,544,123 2,864,033
- --------------------------------------------------------------------------------
Class B 980,658 2,135,563
- --------------------------------------------------------------------------------
Class L 552,131 815,525
- --------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $12.49 $12.52
- --------------------------------------------------------------------------------
Class B * $12.48 $12.50
- --------------------------------------------------------------------------------
Class L ** $12.47 $12.49
- --------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17%
of net asset value per share) $13.01 $13.04
- --------------------------------------------------------------------------------
Class L (net asset value plus 1.01%
of net asset value per share) $12.60 $12.62
================================================================================
* 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.
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
GEORGIA PENNSYLVANIA
PORTFOLIO PORTFOLIO
================================================================================
INVESTMENT INCOME:
Interest $1,485,555 $2,003,031
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 120,967 160,068
Distribution fees (Note 4) 93,168 149,837
Shareholder and system servicing fees 14,612 16,800
Audit and legal 9,677 8,000
Shareholder communications 6,919 5,000
Pricing service fees 4,211 4,600
Registration fees 2,256 7,500
Custody 1,654 1,600
Trustees' fees 1,003 1,500
Other 4,007 4,500
- --------------------------------------------------------------------------------
TOTAL EXPENSES 258,474 359,405
Less: Management fee waiver (Note 4) -- (37,094)
- --------------------------------------------------------------------------------
NET EXPENSES 258,474 322,311
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,227,081 1,680,720
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (NOTE 5):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 17,871,397 15,439,909
Cost of securities sold 18,643,802 16,053,189
- --------------------------------------------------------------------------------
NET REALIZED LOSS (772,405) (613,280)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
(Depreciation) of Investments:
Beginning of period 2,419,024 2,485,955
End of period (698,387) (1,941,700)
- --------------------------------------------------------------------------------
INCREASE IN NET UNREALIZED DEPRECIATION (3,117,411) (4,427,655)
- --------------------------------------------------------------------------------
NET LOSS ON INVESTMENTS (3,889,816) (5,040,935)
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM OPERATIONS $(2,662,735) $(3,360,215)
================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
AND THE YEAR ENDED MARCH 31, 1999
GEORGIA PORTFOLIO SEPTEMBER 30 MARCH 31
================================================================================
OPERATIONS:
Net investment income $ 1,227,081 $ 1,970,936
Net realized gain (loss) (772,405) 123,595
(Increase) decrease in net
unrealized depreciation (3,117,411) 91,303
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS (2,662,735) 2,185,834
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (1,225,962) (1,971,954)
In excess of net investment income -- (104,830)
Net realized gains -- (290,345)
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (1,225,962) (2,367,129)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 4,622,173 22,627,987
Net asset value of shares issued
for reinvestment of dividends 719,001 1,517,319
Cost of shares reacquired (6,179,659) (4,201,549)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (838,485) 19,943,757
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS (4,727,182) 19,762,462
NET ASSETS:
Beginning of period 55,617,061 35,854,599
- --------------------------------------------------------------------------------
END OF PERIOD* $50,889,879 $55,617,061
================================================================================
* Includes overdistributed net
investment income of: $(2,038) $(3,157)
================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
26 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
AND THE YEAR ENDED MARCH 31, 1999
PENNSYLVANIA PORTFOLIO SEPTEMBER 30 MARCH 31
================================================================================
OPERATIONS:
Net investment income $ 1,680,720 $ 2,431,899
Net realized gain (loss) (613,280) 207,244
Increase in net unrealized depreciation (4,427,655) (40,052)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS (3,360,215) 2,599,091
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (1,705,821) (2,524,706)
Net realized gain -- (607,140
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (1,705,821) (3,131,846)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 14,502,905 42,109,612
Net asset value of shares issued
for reinvestment of dividends 1,004,697 2,087,057
Cost of shares reacquired (5,140,648) (19,173,695)
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 10,366,954 25,022,974
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS 5,300,918 24,490,219
NET ASSETS:
Beginning of period 67,442,533 42,952,314
- --------------------------------------------------------------------------------
END OF PERIOD* $72,743,451 $67,442,533
- --------------------------------------------------------------------------------
* Includes overdistributed (undistributed)
net investment income of: $(21,198) $3,903
================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
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 seven other separate investment portfolios: Florida, New York,
National, Limited Term, California Money Market, Massachusetts Money Market and
New York Money Market portfolios. The financial statements and financial
highlights for the other portfolios are presented in separate shareholder
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 identifications 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. At March 31, 1999, reclassifications
were made to the Fund's capital accounts to reflect permanent book/tax
differences and income and gains available for distributions under income tax
regulations. Accordingly, a portion of 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.
- --------------------------------------------------------------------------------
28 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
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 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
SSB Citi Fund Management LLC("SSBC"), formerly known as SSBC Fund Management
Inc., 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 $37,094 for the Pennsylvania Portfolio, for the six months ended
September 30, 1999.
CFBDS, Inc. ("CFBDS") acts as the Fund's distributor. Salomon Smith Barney Inc.
("SSB"), as well as certain other broker-dealers, continues to sell Fund shares
to the public as a member of the selling group.
There is a contingent deferred sales charge ("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. Class L shares also have a 1.00% CDSC, which applies
if redemption occurs within the first year of purchase. 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.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 29
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
For the six months ended September 30, 1999, CDSC's paid to SSB and sales
charges received by CFBDS and SSB were approximately:
CDSC's Sales Charges
---------------------------- -----------------
Portfolio Class A Class B Class L Class A Class L
================================================================================
Georgia $15,000 $27,000 $1,000 $40,000 $ 5,000
- --------------------------------------------------------------------------------
Pennsylvania -- 18,000 2,000 41,000 13,000
================================================================================
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 six months ended September 30, 1999, total Distribution Plan fees
incurred were:
PORTFOLIO CLASS A CLASS B CLASS L
================================================================================
Georgia $25,008 $43,009 $25,151
- --------------------------------------------------------------------------------
Pennsylvania 25,211 87,344 37,282
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
5. INVESTMENTS
During the six months ended September 30, 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 $18,050,682 $26,637,003
- --------------------------------------------------------------------------------
Sales 17,871,397 15,439,909
================================================================================
At September 30, 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 $ 832,066 $ 835,421
Gross unrealized depreciation (1,530,453) (2,777,121)
- --------------------------------------------------------------------------------
Net unrealized depreciation $ (698,387) $(1,941,700)
================================================================================
- --------------------------------------------------------------------------------
30 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (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 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 September 30, 1999, the Portfolio had no open futures contracts.
7. SHARES OF BENEFICIAL INTEREST
At September 30, 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
remaining of existing Class C shares as Class L shares.
At September 30, 1999, total paid-in capital amounted to the following for each
class and their respective Portfolio:
PORTFOLIO CLASS A CLASS B CLASS L
================================================================================
Georgia $32,878,341 $12,491,177 $ 7,097,478
- --------------------------------------------------------------------------------
Pennsylvania 37,169,694 27,550,850 10,505,432
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 31
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30,1999 MARCH 31, 1999
- --------------------------------------------------------------------------------
GEORGIA PORTFOLIO SHARES AMOUNT SHARES AMOUNT
================================================================================
CLASS A
Shares sold 243,394 $3,170,991 1,200,278 $16,271,337
Shares issued on
reinvestment 34,413 443,863 67,730 914,734
Shares reacquired (316,542) (4,108,629) (211,503) (2,869,561)
- --------------------------------------------------------------------------------
Net Increase (Decrease) (38,735) $ (493,775) 1,056,505 $14,316,510
================================================================================
CLASS B
Shares sold 58,679 $ 773,626 261,025 $ 3,530,318
Shares issued on
reinvestment 11,717 151,032 27,819 375,581
Shares reacquired (105,647) (1,368,272) (70,773) (957,095)
- --------------------------------------------------------------------------------
Net Increase (Decrease) (35,251) $ (443,614) 218,071 $ 2,948,804
================================================================================
CLASS L*
Shares sold 51,992 $ 677,556 209,651 $ 2,826,332
Shares issued on
reinvestment 9,641 124,106 16,827 227,004
Shares reacquired (54,214) (702,758) (27,773) (374,893)
- --------------------------------------------------------------------------------
Net Increase 7,419 $ 98,904 198,705 $ 2,678,443
================================================================================
PENNSYLVANIA PORTFOLIO
================================================================================
CLASS A
Shares sold 625,891 $8,110,899 2,220,491 $30,095,215
Shares issued on
reinvestment 41,453 535,604 74,724 1,013,016
Shares reacquired (163,346) (2,113,816) (1,113,160) (15,119,889)
- --------------------------------------------------------------------------------
Net Increase 503,998 $6,532,687 1,182,055 $15,988,342
================================================================================
CLASS B
Shares sold 348,468 $4,582,544 619,028 $ 8,397,240
Shares issued on
reinvestment 26,049 336,335 55,942 756,780
Shares reacquired (119,718) (1,539,947) (219,380) (2,969,501)
- --------------------------------------------------------------------------------
Net Increase 254,799 $3,378,932 455,590 $ 6,184,519
================================================================================
CLASS L*
Shares sold 137,395 $1,809,462 266,841 $ 3,617,157
Shares issued on
reinvestment 10,280 132,758 23,458 317,261
Shares reacquired (114,463) (1,486,885) (79,975) (1,084,305)
- --------------------------------------------------------------------------------
Net Increase 33,212 $ 455,335 210,324 $ 2,850,113
================================================================================
*On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
32 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS A SHARES
----------------------------------------------------
GEORGIA PORTFOLIO 1999(1)(2) 1999(2) 1998 1997 1996 1995(3)
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.43 $13.43 $12.48 $12.50 $12.10 $12.00
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net Investment income(4) 0.31 0.62 0.67 0.69 0.70 0.62
Net realized and unrealized
gain (loss) (0.94) 0.12 1.03 0.04 0.45 0.10*
- --------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.63) 0.74 1.70 0.73 1.15 0.72
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.31) (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 (0.31) (0.74) (0.75) (0.75) (0.75) (0.62)
- --------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.49 $13.43 $13.43 $12.48 $12.50 $12.10
- --------------------------------------------------------------------------------
Total Return (4.72)%++ 5.61% 13.85% 5.95% 9.67% 6.29%++
- --------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $31,765 $34,680 $20,502 $14,495 $9,744 $8,520
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(4)(5) 0.75%+ 0.64% 0.50% 0.48% 0.38% 0.28%+
Net investment income 4.78+ 4.63 5.10 5.49 5.57 5.43+
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 33% 48% 36% 81% 63% 34%
================================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from April 4, 1994 (inception date) to March 31, 1995.
(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 $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%+
(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 33
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS B SHARES
----------------------------------------------------
GEORGIA PORTFOLIO 1999(1)(2) 1999(2) 1998 1997 1996 1995(3)(4)
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.42 $13.43 $12.47 $12.50 $12.11 $12.27
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net Investment income(5) 0.28 0.56 0.61 0.62 0.64 0.49
Net realized and
unrealized gain (loss) (0.94) 0.10 1.03 0.04 0.45 (0.16)*
- --------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.66) 0.66 1.64 0.66 1.09 0.33
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.28) (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 (0.28) (0.67) (0.68) (0.69) (0.70) (0.49)
- --------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.48 $13.42 $13.43 $12.47 $12.50 $12.11
- --------------------------------------------------------------------------------
TOTAL RETURN (4.99)%++ 4.99% 13.89% 5.33% 9.08% 2.88%++
- --------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000s) $12,239 $13,633 $10,712 $7,354 $5,461 $2,551
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(5)(6) 1.29%+ 1.15% 1.02% 1.00% 0.92% 0.85%+
Net investment income 4.23+ 4.12 4.58 4.97 5.20 5.37+
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 33% 48% 36% 81% 63% 34%
================================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from June 15, 1994 (inception date) to March 31, 1995.
(4) On November 7, 1994, the former Class E shares were renamed Class B 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 B $0.02 $0.04 $0.05 $0.10 $0.11 1.26% 1.35% 1.42% 1.77% 1.82%+
(6) 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
the during the period, most of which occurred at a net asset value less
than 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 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS L SHARES
----------------------------------------------------
GEORGIA PORTFOLIO 1999(1)(2) 1999(2)(3) 1998 1997 19961995(4)(5)
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.41 $13.41 $12.46 $12.49 $12.09 $12.06
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net Investment income(6) 0.27 0.55 0.60 0.62 0.63 0.55
Net realized and
unrealized gain (loss) (0.94) 0.12 1.02 0.03 0.46 0.04*
- --------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.67) 0.67 1.62 0.65 1.09 0.59
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.27) (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 (0.27) (0.67) (0.67) (0.68) (0.69) (0.56)
- --------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.47 $13.41 $13.41 $12.46 $12.49 $12.09
- --------------------------------------------------------------------------------
TOTAL RETURN (5.03)%++ 5.01% 13.23% 5.28% 9.12% 5.11%++
- --------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $6,886 $7,304 $4,641 $3,221 $2,914 $1,295
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(6)(7) 1.33%+ 1.20% 1.06% 1.04% 0.97% 0.90%+
Net investment income 4.18+ 4.07 4.54 4.93 5.18 5.22+
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 33% 48% 36% 81% 63% 34%
================================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) For the period from April 14, 1994 (inception date) to March 31, 1995.
(5) On November 7, 1994, the former Class B shares were renamed Class C shares.
(6 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(7)
------------------------------- --------------------------------
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%+
(7) 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 35
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS A SHARES
----------------------------------------------------
PENNSYLVANIA PORTFOLIO 1999(1)(2) 1999(2) 1998 1997 1996(2) 1995(3)(4)
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.44 $13.54 $12.66 $12.62 $12.40 $12.00
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net Investment income(5) 0.33 0.66 0.73 0.71 0.70 0.67
Net realized and
unrealized gain (loss) (0.92) 0.08 0.95 0.04 0.29 0.35*
- --------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.59) 0.74 1.68 0.75 0.99 1.02
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.33) (0.69) (0.69) (0.71) (0.72 (0.62)
Net realized gains -- (0.15) (0.11) -- (0.05) --
- --------------------------------------------------------------------------------
Total Distributions (0.33) (0.84) (0.80) (0.71) (0.77) (0.62)
- --------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.52 $13.44 $13.54 $12.66 $12.62 $12.40
- --------------------------------------------------------------------------------
Total Return (4.44)%++ 5.61% 13.52% 6.11% 8.08 8.82%++
- --------------------------------------------------------------------------------
Net Assets,
End of Period (000s) $35,859 $31,718 $15,955 $15,152 $11,847 $7,974
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(5)(6) 0.63%+ 0.50% 0.37% 0.37% 0.38% 0.29%+
Net investment income 5.00+ 4.94 5.46 5.66 5.57 5.76+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 22% 49% 81% 122% 88% 38%
================================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from April 4, 1994 (inception date) to March 31,
1995.
(4) On October 10, 1994, the former Class C shares were exchanged into
Class A shares.
(5) The Manager has waived all or part of its fees for the six months ended
September 30, 1999 and 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(1)1999 1998 1997 1996 1995 1999(1)1999 1998 1997 1996 1995
------ ----- ----- ---------- -----------------------------------------
Class A $0.01$0.03 $0.05 $0.06 $0.07$0.09 0.73% 0.75% 0.79% 0.82% 0.93% 1.03%+
(6) 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.
- --------------------------------------------------------------------------------
36 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS B SHARES
----------------------------------------------------
PENNSYLVANIA PORTFOLIO 1999(1)(2) 1999(2) 1998 1997
1996(2)1995(3)(4)
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.42 $13.52 $12.64 $12.61 $12.39 $12.35
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net Investment income(5) 0.29 0.60 0.65 0.65 0.64 0.51
Net realized and unrealized
gain (loss) (0.92) 0.07 0.96 0.03 0.29 0.01*
- --------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.63) 0.67 1.61 0.68 0.93 0.52
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.29) (0.62) (0.62) (0.65) (0.66) (0.48)
Net realized gains -- (0.15) (0.11) -- (0.05) --
- --------------------------------------------------------------------------------
Total Distributions (0.29) (0.77) (0.73) (0.65) (0.71) (0.48)
- --------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.50 $13.42 $13.52 $12.64 $12.61 $12.39
- -------------------------------------------------------------------------------
TOTAL RETURN (4.72)%++ 5.07% 12.97% 5.56% 7.61% 4.48%++
- --------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $26,696 $25,234 $19,268 $15,559 $13,131 $4,850
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(5)(6) 1.14%+ 1.01% 0.89% 0.88% 0.88% 0.82%+
Net investment income 4.49+ 4.45 4.94 5.15 5.07 5.31+
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 22% 49% 81% 122% 88% 38%
================================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from June 20, 1994 (inception date) to March 31,
1995.
(4) On November 7, 1994, the former Class E shares were renamed Class B
shares.
(5) The Manager has waived all or part of its fees for the six months ended
September 30, 1999 and 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(1)1999 1998 1997 1996 1995 1999(1)1999 1998 1997 1996 1995
------ ----- ----- ---------- -----------------------------------------
Class B $0.01$0.03 $0.05 $0.06 $0.07$0.08 1.24% 1.26% 1.31% 1.33% 1.44% 1.58%+
(6) 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 37
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
CLASS A SHARES
CLASS L SHARES
----------------------------------------------------
PENNSYLVANIA PORTFOLIO 1999(1)(2) 1999(2)(3) 1998 1997 1996(3)1995(4)(5)
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $13.41 $13.51 $12.64 $12.61 $12.39 $12.00
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net Investment income(6) 0.29 0.60 0.64 0.64 0.64 0.59
Net realized and unrealized
gain (loss) (0.92) 0.06 0.96 0.04 0.29 0.36*
- --------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.63) 0.66 1.60 0.68 0.93 0.95
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.29) (0.61) (0.62) (0.65) (0.66) (0.56)
Net realized gains -- (0.15) (0.11) -- (0.05) --
- --------------------------------------------------------------------------------
Total Distributions (0.29) (0.76) (0.73) (0.65) (0.71) (0.56)
- --------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.49 $13.41 $13.51 $12.64 $12.61 $12.39
- --------------------------------------------------------------------------------
Total Return (4.74)%++ 5.02% 12.84% 5.51% 7.56% 8.14%++
- --------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $10,188 $10,490 $7,729 $5,731 $4,682 $3,337
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(6)(7) 1.19%+ 1.07% 0.94% 0.94% 0.94% 0.86%+
Net investment income 4.40+ 4.40 4.89 5.09 5.00 5.04+
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 22% 49% 81% 122% 88% 38%
================================================================================
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) For the period from April 5, 1994 (inception date) to March 31, 1995.
(5) On November 7, 1994, the former Class B shares were renamed Class C shares.
(6) The Manager has waived all or part of its fees for the six months ended
September 30, 1999 and 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:
<TABLE>
<CAPTION>
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements(7)
---------------------------------------------------------------------------
- ----------
1999(1) 1999 1998 1997 1996 1995 1999(1) 1999 1998 1997
1996 1995
---------------------------------------------------------------------------
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Class L $0.01 $0.03 $0.05 $0.06 $0.07 $0.09 1.30% 1.32% 1.36% 1.39%
1.49% 1.56%+
</TABLE>
(7) 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.
- --------------------------------------------------------------------------------
38 1999 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
ADDITIONAL SHAREHOLDER INFORMATION (unaudited)
- --------------------------------------------------------------------------------
On April 19, 1999, a special meeting of shareholders of the Trust was held for
the purpose of electing Trustees to the Trust.
The results were as follows:
SHARES PERCENTAGE SHARES PERCENTAGE
VOTED OF SHARES VOTED OF SHARES
NAME OF TRUSTEES FOR VOTED AGAINST VOTED
================================================================================
Lee Abraham 1,350,265,160.850 97.943% 28,359,584.139 2.057%
Allan J. Bloostein 1,351,356,664.226 98.022 27,268,080.763 1.978
Jane F. Dasher 1,352,390,291.715 98.097 26,234,453.274 1.903
Donald R. Foley 1,350,867,506.020 97.987 27,757,238.969 2.013
Richard E. Hanson, Jr. 1,351,302,644.963 98.018 27,322,100.026 1.982
Paul Hardin 1,352,452,572.699 98.102 26,172,172.290 1.898
Heath B. McLendon 1,352,481,643.116 98.104 26,143,101.873 1.896
Roderick C. Rasmussen 1,351,438,798.818 98.028 27,185,946.171 1.972
John P. Toolan 1,352,497,455.395 98.105 26,127,289.594 1.895
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 39
<PAGE>
LOGO:
SALOMON SMITH BARNEY
A MEMBER OF CIIGROUP
TRUSTEES
Lee Abraham
Allan J. Bloostein
Jane F. Dasher
Donald R. Foley
Richard E. Hanson, Jr.
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
Anthony Pace
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
SSB CitiFund Management LLC
Distributor
CFBDS, Inc.
CUSTODIAN
PNC Bank, N.A.
SHAREHOLDER SERVICING AGENT
Smith Barney Private Trust
388 Greenwich Street
22nd Floor
New York, NY 10013
SUB SHAREHOLDER
SERVICING AGENT
First Data Investor Services
Group, Inc.
P.O. Box 9699
Providence, RI 02940-9699
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/mutualfunds
FD01563 11/99
Smith Barney Muni Funds
Massachusetts
Money Market
Portfolio
- -----------------------------------
S E M I - A N N U A L R E P O R T
- -----------------------------------
September 30, 1999
[Smith Smith Barney
Barney Mutual Funds
Logo]
NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
<PAGE>
Smith Barney
Muni Funds
[photograph of Heath B. McLendon]
HEATH B.
MCLENDON
Chairman
[photograph of Joseph P. Deane]
JOSEPH P.
DEANE
Vice President
[photograph of Joseph Benevento]
JOSEPH
BENEVENTO
Vice President
Dear Shareholder:
We are pleased to provide the first shareholder report for the Smith Barney Muni
Funds - Massachusetts Money Market Portfolio ("Portfolio") for the period ended
September 30, 1999. This new mutual fund offers investors in Massachusetts the
opportunity to participate in money market securities that are exempt from both
federal income taxes and Massachusetts personal income taxes.* Please note that
the Portfolio began trading on Tuesday, September 14, 1999.
For your convenience, we have summarized the period's prevailing economic and
market conditions below and outlined the Portfolio's investment strategy. A
detailed summary of performance can be found in the appropriate sections that
follow.
Please note that your investment in the Portfolio is neither insured, nor
guaranteed, by the Federal Deposit Insurance Corporation 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.
Massachusetts Economic Highlights
Massachusetts' economy continues to be one of the nation's most prosperous, due
in a large part to its fiscal stability, diversified economy, balanced budgets
and an improving business climate. The Bay State's economy has evolved from one
that was once dominated by defense and computer hardware to more knowledge-
intensive services. The transformation has resulted in strong job growth in high
paying industries, more mobility for skilled workers and greater
competitiveness. Massachusetts' current 3.3% unemployment rate is lower than the
national average and lowest among industrial states. Also, the Bay State has the
third highest level of personal income per-capita, which is 23% higher than the
U.S. average.
- -----------------
*A portion of the Portfolio's income may be subject to the Alternative Minimum
Tax ("AMT").
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
We believe that the Commonwealth's economy is very healthy and in a strong
position to excel in the 21st century. As a result, Massachusetts' general
obligation debt has received high ratings from the major credit agencies.
Investment Strategy and Performance Update
As previously noted, the Portfolio seeks to provide investors with income exempt
from federal income tax (other than the alternative minimum tax) and
Massachusetts State personal income taxes by investing in a portfolio of high
quality, short-term Massachusetts municipal obligations selected for liquidity
and stability of principal.
As of September 30, 1999, the Portfolio's 7-day current yield was 3.11%. The
Portfolio's 7-day effective yield -- which reflects compounding -- was 3.15%.
Our approach to the market has been to target the Portfolio's average maturity
in a range of 55 to 60 days. To achieve this target we have structured the
Portfolio with a mix of approximately 65% variable rate demand obligations and
35% in a fixed rate laddered portfolio comprised of tax-exempt commercial paper,
municipal notes and municipal bonds with maturities of less than 13 months.
Currently, the Portfolio has purchased only first tier securities, defined as
securities that have received the highest short-term rating by a nationally
recognized statistical rating organization (such as Standard and Poor's Ratings
Service or Moody's Investors Service, Inc.), or deemed by the managers to be
equivalent.
In closing, thank you for investing in the Smith Barney Muni Funds -
Massachusetts Money Market Portfolio. We look forward to continuing to help you
pursue your financial goals.
Sincerely,
/s/ Heath McLendon
Heath B. McLendon
Chairman
/s/ Joseph Benevento
Joseph Benevento
Vice President
/s/ Joseph P. Deane
Joseph P. Deane
Vice President
October 15, 1999
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- -----------------------
<S> <C> <C>
<C>
$ 5,000,000 NR[dagger] Barnstable Massachusetts BAN 4.00% due 2/24/00
$ 5,007,399
1,000,000 A-1 Boston IDR (Boston Home Inc.) 3.90% (b)
1,000,000
1,000,000 A-1+ Boston Massachusetts Water Sewer Series A 3.60% (b)
1,000,000
Clipper Massachusetts Tax-Exempt Trust PART
AMBAC-Insured:
2,000,000 VMIG 1* Series 96B AMT 3.98% (b)
2,000,000
2,000,000 VMIG 1* Series 98-8 3.87% (b)
2,000,000
2,835,000 A-1+ Dudley Charlton Regional School District PART 3.75%
(b) 2,835,000
5,000,000 MIG 1* Holden Massachusetts BAN 4.00% due 3/15/00
5,000,000
5,000,000 NR[dagger] Holliston Massachusetts BAN Series 99
3.75% due 12/15/99
5,000,568
Massachusetts Bay Transportation Authority:
3,450,000 A-1+ General Transportation System 3.85% (b)
3,450,000
2,000,000 AAA Series A FSA-Insured 7.65% due 8/1/00
2,100,867
Massachusetts Development Finance Agency Revenue:
1,000,000 A-1 Cider Mill Farms Series 99 AMT 4.00% (b)
1,000,000
4,000,000 NR[dbldagger]Hatfield Inc. Project AMT 3.85% (b)
4,000,000
3,700,000 A-1 Leaktite Corp. 4.00% (b)
3,700,000
500,000 A-1 New Bedford Whaling Museum 3.70% (b)
500,000
3,250,000 VMIG 1* Notre Dame Health Care 3.80% (b)
3,250,000
Massachusetts HEFA:
3,700,000 A-1+ Berklee College of Music Series D MBIA-Insured
3.70% (b)
3,700,000
3,100,000 VMIG 1* Brigham & Womens Hospital 3.70% (b)
3,100,000
Capital Asset Program:
1,500,000 VMIG 1* Series A 3.60% (b)
1,500,000
2,000,000 VMIG 1* Series E 3.70% (b)
2,000,000
1,750,000 VMIG 1* Corporate Independent Living Series 99 3.70% (b)
1,750,000
1,455,000 A-1 Hallmark Health Series B FSA-Insured 3.80% (b)
1,455,000
Harvard University:
1,000,000 A-1+ Series L 3.50% due 11/1/99
1,000,000
1,700,000 A-1+ Series Q-1 3.60% (b)
1,700,000
Partners Healthcare FSA-Insured:
2,000,000 A-1+ Series P-1 3.70% (b)
2,000,000
900,000 VMIG 1* Series P-2 3.70% (b)
900,000
2,600,000 A-1+ Williams College PART Series SGA 65 3.90% (b)
2,600,000
Massachusetts HFA:
1,500,000 A-1+ Multi-Family Housing Project A 3.75% (b)
1,500,000
1,000,000 A-1+ Series PT 271 PART MBIA-Insured 3.75% (b)
1,000,000
1,000,000 VMIG 1* Single-Family Housing AMBAC/MBIA-Insured 3.90% (b)
1,000,000
Massachusetts IDR:
3,000,000 A-1+ KMS Companies Series 96 AMT 3.80% (b)
3,000,000
4,850,000 A-1+ US Tsubaki Project 3.84% AMT (b)
4,850,000
Massachusetts Industrial Finance Agency:
1,840,000 A-1 420 Newburyport Turnpike Series 98 AMT 4.00% (b)
1,840,000
2,400,000 A-1+ Gordon College 3.65% (b)
2,400,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------------------------------------------------------------------------
- ---------------------
<S> <C> <C>
<C>
$ 1,000,000 NR[dbldagger]Peterson American Corp. AMT 4.00% (b)
$ 1,000,000
960,000 VMIG 1* Quamco Inc. Series B 3.85% (b)
960,000
1,500,000 VMIG 1* Whitehead Institution of Biomed 3.70% (b)
1,500,000
3,000,000 A-1+ Massachusetts Muni Wholesale Electric Co.
MBIA-Insured 3.70% (b)
3,000,000
Massachusetts PCR:
607,000 A-1+ Holyoke Water Power Series 92A 3.60% (b)
607,000
New England Power Series 93A:
1,000,000 A-1 3.50% due 11/8/99
1,000,000
650,000 A-1 3.50% due 11/17/99
650,000
Massachusetts State GO:
Series A:
2,675,000 NR[dagger] 5.50% due 7/1/00
2,709,204
1,500,000 NR[dagger] 5.00% due 8/1/00
1,515,785
1,000,000 A-1+ Series B 3.75% (b)
1,000,000
4,500,000 A-1+ Massachusetts State Turnpike Authority AMBAC-Insured
3.75% (b)
4,500,000
Massachusetts Water Resource Authority:
550,000 A-1 General Series B 3.75% (b)
550,000
3,700,000 AAA Series 1990A 6.00% due 4/1/00
3,742,632
1,000,000 A-1+ Series D 3.70% (b)
1,000,000
5,000,000 MIG 1* Narragansett Massachusetts School District BAN
4.25% due 6/9/00
5,014,449
1,000,000 A-1+ Puerto Rico Highway Transit Authority Series A
AMBAC-Insured 3.45% (b)
1,000,000
2,000,000 MIG 1* South Hadley Massachusetts BAN 4.25% due 8/11/00
2,000,000
-------------------------------------------------------------------------------
- ---------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $110,887,904**)
$110,887,904
------------------------------------------------------------------------------
- ---------------------
</TABLE>
(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) Variable rate obligation payable at par on demand at any time on no
more than seven days notice.
[dbldagger] 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.
[dagger] 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 5 for definition of ratings and certain security descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below.
<TABLE>
<S> <C>
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
</TABLE>
- --------------------------------------------------------------------------------
Short-Term Securities Ratings (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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.
</TABLE>
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ABAG -- Association of Bay Area
Governments
AIG -- American International Guaranty
AMBAC -- American Municipal Bond
Assurance Corporation
AMT -- Alternative Minimum Tax
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
HEFA -- Health & Educational Facilities Authority
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
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Muni Funds
5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at amortized cost $110,887,904
Cash 33,471
Interest receivable 570,474
- ------------------------------------------------------------
Total Assets 111,491,849
- ------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 7,000,000
Dividends payable 102,423
Management fees payable 15,930
Distribution fees payable 3,152
Accrued expenses 1,628
- ------------------------------------------------------------
Total Liabilities 7,123,133
- ------------------------------------------------------------
Total Net Assets $104,368,716
============================================================
NET ASSETS:
Par value of shares of beneficial interest $ 104,369
Capital paid in excess of par value 104,264,347
- ------------------------------------------------------------
Total Net Assets $104,368,716
============================================================
Shares Outstanding 104,368,716
- ------------------------------------------------------------
Net Asset Value, Per Share $1.00
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Period Ended September 30, 1999(a)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $123,384
- ----------------------------------------------------------
EXPENSES:
Management fees 15,930
Distribution fees 3,152
Other 1,631
- ----------------------------------------------------------
Total Expenses 20,713
- ----------------------------------------------------------
Net Investment Income $102,671
===========================================================
</TABLE>
(a) For the period from September 14, 1999 (commencement of operations) to
September 30, 1999.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds
7
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (unaudited)
- --------------------------------------------------------------------------------
For the Period Ended September 30, 1999(a)
<TABLE>
<S> <C>
========================================================
OPERATIONS:
Net investment income $ 102,671
- --------------------------------------------------------
Increase in Net Assets From Operations 102,671
- --------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (102,671)
- --------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (102,671)
- --------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 141,599,841
Net asset value of shares issued
for reinvestment of dividends --
Cost of shares reacquired (37,231,125)
- --------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 104,368,716
- --------------------------------------------------------
Increase in Net Assets 104,368,716
NET ASSETS:
Beginning of period --
- --------------------------------------------------------
End of period $104,368,716
========================================================
</TABLE>
(a) For the period from September 14, 1999 (commencement of operations) to
September 30, 1999.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Massachusetts 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 eight other separate investment portfolios: Florida, Georgia,
Limited Term, New York, National, Pennsylvania, California Money Market and New
York Money Market Portfolios. The financial statements and financial highlights
for the other portfolios are presented in separate shareholder reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) 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
Massachusetts, it is subject to possible concentration risks associated with
economic, political, or legal developments or industrial or regional matters
specifically affecting Massachusetts.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds
9
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (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
SSB Citi Fund Management LLC ("SSBC"), 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.
CFBDS, Inc. acts as the Fund's distributor. Salomon Smith Barney Inc. ("SSB"),
another subsidiary of SSBH, 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. Shares of Beneficial Interest
At September 30, 1999, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share.
<TABLE>
<CAPTION>
Transactions in shares of the Portfolio were as follows:
Period Ended
September 30, 1999*
- --------------------------------------------------------------------------------
<S> <C>
Class A
Shares sold 141,599,841
Shares issued on reinvestment --
Shares reacquired (37,231,125)
- --------------------------------------------------------------------------------
Net Increase 104,368,716
- --------------------------------------------------------------------------------
</TABLE>
* For the period from September 14, 1999 (commencement of operations) to
September 30, 1999.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout the period:
<TABLE>
<CAPTION>
Class A Shares 1999(1)
- ----------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $1.00
- ----------------------------------------------------
Net investment income 0.001
Dividends from net investment income (0.001)
- ----------------------------------------------------
Net Asset Value, End of Period $1.00
- ----------------------------------------------------
Total Return++ 0.14%
- ----------------------------------------------------
Net Assets, End of Period (millions) $104
- ----------------------------------------------------
Ratios to Average Net Assets+:
Expenses(2) 0.60%
Net investment income 3.04
- ----------------------------------------------------
</TABLE>
(1) For the period from September 14, 1999 to September 30, 1999 (unaudited).
(2) As a result of voluntary expense limitations, the expense ratio will not
exceed 0.80% for Class A shares.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds
11
<PAGE>
[This page intentionally left blank]
<PAGE>
SALOMON SMITH BARNEY
- ---------------------
A member of citigroup
Trustees
Lee Abraham
Allan J. Bloostein
Jane F. Dasher
Donald R. Foley
Richard E. Hanson, Jr.
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
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
SSB Citi Fund Management LLC
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Servicing Agent
Smith Barney Private Trust
388 Greenwich Street, 22nd Floor
New York, New York 10013
Sub-Shareholder
Servicing Agent
First Data Investors Services
Group, Inc.
P.O. Box 9699
Providence, RI 02940-9699
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds - Massachusetts 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/mutualfunds
FD01736 11/99
<PAGE>
[GRAPHIC OF CALENDAR]
Smith Barney Muni Funds
Limited Term Portfolio
------------------
SEMI-ANNUAL REPORT
------------------
September 30, 1999
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
<PAGE>
Smith Barney
Muni Funds
[PHOTO] [PHOTO]
HEATH B. PETER M.
MCLENDON COFFEY
Chairman Vice President
Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney Muni Funds
- - Limited Term Portfolio ("Fund") for the period ended September 30, 1999. We
hope you find this report to be useful and informative. In this report, we
summarize the period's prevailing economic and market conditions and outline our
portfolio strategy. A detailed summary of the Fund's performance can be found in
the appropriate sections that follow.
Performance Update
For the six months ended September 30, 1999, Class A and L shares of the Fund
had negative total returns of 2.69% and 2.81%, without sales charges,
respectively. In comparison, the Lipper Inc. peer group average returned a
negative 1.72% for the same period. (Lipper is a major fund-tracking
organization.)
Over the six months covered by the report, the Fund distributed income dividends
totaling $0.16 per Class A share; based on its net asset value ("NAV") of $6.44
as of September 30, 1999, this equates to an annualized distribution rate of
4.94% for Class A shares. (Please note a portion of the income from this fund
may be subject to the Alternative Minimum Tax).
Market and Economic Overview
The current market environment is one of a robust U.S. economy, with growth of
demand continuing to outpace supply, while inflation remains virtually
non-existent. Also, the unemployment rate is at a 30-year low, and the yield
curve has steepened. (The yield curve shows the difference between short- and
long-term rates).
The bond market has had plenty of seemingly good reasons to trade lower lately,
but has resisted them. Instead, the yield for the 30-year Treasury bond has
stayed within a narrow 40 basis point trading range since the beginning of June.
(One basis point is 0.01%, or one one-hundredth of a percent.)
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
One of the biggest negatives for the bond markets during the period under review
has been the decline of the U.S. dollar against the Japanese yen. Even so,
because the U.S. dollar's weakness has been limited to the yen, there has been
little concern about possible capital outflows from the U.S. or an increase in
domestic inflation. Similarly, the rise in oil prices has not translated into
higher bond yields because inflation in general appears to be well contained.
The same holds true for the recent surge in gold prices, which we do not view as
a sign of either higher inflation or higher yields.
Fixed income prices have come under some pressure as a result of higher interest
rates, a strong U.S. economy and improving market and economic conditions
overseas. Additionally, broad-based inflationary pressures have been absent.
U.S. Treasuries have remained in a narrow trading range just above 6%, while
long-term municipal bonds are yielding approximately 95% of long-term U.S.
Treasury bonds. Under typical market conditions, municipal bonds yield roughly
85% of similar-maturity U.S. Treasury bonds.
On an optimistic note, the lack of supply in the market has been a positive
factor for bonds. As the U.S. Treasury Department continues to pay down the
national debt, the latest figures from the Clinton Administration show an
estimated budget surplus of roughly $115 billion for the current fiscal year.
Investment Strategy
The Fund is an intermediate-term municipal bond fund that seeks to provide
investors with as high a level of current income exempt from Federal taxes as is
consistent with a prudent investment approach.
The Fund invests primarily in high-grade municipal securities with effective
maturities of less than ten years. Because we think further rate cuts may take
place in the coming months, we have maintained a 9 1/2-year to 10-year average
weighted maturity during the reporting period. One of our goals in the Limited
Portfolio is to deliver the performance of a longer-maturity fund with less
market volatility. And while no guarantees can be given, we believe the
combination of intermediate-term securities and the Fund's high-quality
orientation should help to reduce credit risk and NAV price volatility, while
still maintaining a competitive dividend yield for our shareholders.
As of September 30, 1999, the Fund's average weighted maturity was 9.7 years.
The Fund's largest holdings were concentrated in hospital bonds (17.5%),
education bonds (14.4%) and general obligation bonds (10.3%).
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
As previously noted, the Fund's high credit quality orientation during the
reporting period remained unchanged. At the close of the period, approximately
94.7% of its holdings were rated investment grade (BBB/Baa and higher) by either
Standard & Poor's Corporation or Moody's Investors Service Inc. at the end of
September. (Standard & Poor's Corporation and Moody's Investors Service Inc. are
two major credit reporting and bond-rating agencies.)
We seek to attain an optimal balance between our high and low coupon structures
in the Fund. We are seeking to incorporate additional call protection into the
Fund by selling off some of our older higher coupon bonds with shorter calls,
and replacing them with bonds that have similar coupon structure, but are
subject to early call.
Our bias has been toward higher coupons, as we believe they currently offer
excellent relative value. Our objective is to create a built-in income stream
for a long-term time frame if interest rates were to rise. To that end, we have
focused on securities with good credit quality and solid call protection, as we
believe they offer good long-term value versus many types of municipal
securities.
Municipal Bond Market Outlook
In our opinion, the recent rise in interest rates has created some buying
opportunities. We believe that we can maintain a competitive level of tax-exempt
income consistent with prudent investing and careful assessment of credit
quality. Yields on municipal securities have risen quite substantially, and the
long end of the yield curve continues to favor municipal bonds. And we feel that
current market conditions should be supportive for municipal bonds for the
remainder of 1999.
Our long-term outlook on municipal bonds is positive as well. We see many
opportunities currently available in the municipal bond market but expect some
price erosion in the near-term as a result of higher interest rates. However, we
think that the U.S. Federal Reserve Board's tightening of monetary policy (25
basis points on June 30, 1999, 25 basis points on August 24, 1999 and an
indication of a bias to tighten on October 5, 1999), along with the backup in
bond yields, may cause the pace of the U.S. economic activity to slow down in
2000. And if the U.S. stock market experiences a sell off, bond markets could
recover despite recent difficulties.
Municipal bonds could become a scarce commodity as the calendar nears January 1,
2000. Amid heavy issuance recently, municipal securities have become so
plentiful that many prices have declined to year lows. These larger volumes have
resulted in lower prices and loftier yields.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
This scenario could very well be expected to change soon as the market
experiences its typical light winter issuance and market participants shy away
from markets amid concerns regarding Year 2000 issues. Over the past 15 years,
new issue volume has fallen by an average of 33% in January and February from
November and December.
In our opinion, the bolstered yields resulting from Year 2000 concerns and
supply pressures are already reaching levels where investors should think about
putting cash to work. Against the current economic backdrop, we believe that
yields have peaked, and that the best opportunities may lie in spread products,
such as municipal issues.
Looking ahead, we think that the U.S. economy should remain strong in the coming
months with muted inflationary pressures. Recent economic conditions have
created opportunities for municipal securities to catch up with U.S. Treasuries,
and we continue to see good value at the long end of the market.
In closing, thank you for investing in the Smith Barney Muni Fund - Limited Term
Portfolio. We look forward to continuing to help you pursue your financial goals
in the years to come.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman Vice President
October 7, 1999
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
9/30/99 $ 6.78 $ 6.44 $ 0.16 (2.69)%+
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 $ 3.95
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
9/30/99 $ 6.79 $ 6.45 $ 0.15 (2.81)%+
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 $ 2.25
- --------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
- --------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns(1)
9/30/99 $ 6.78 $ 6.44 $ 0.16 (2.62)%+
Inception* - 3/31/99 6.82 6.78 0.14 1.46+
Total $ 0.30
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
-------------------------------
Class A Class L Class Y
Six Months Ended 9/30/99+ (2.69)% (2.81)% (2.62)%
Year Ended 9/30/99 (1.93) (2.21) N/A
Five Years Ended 9/30/99 5.09 4.88 N/A
Ten Years Ended 9/30/99 6.18 N/A N/A
Inception* through 9/30/99 6.20 4.72 (1.20)
With Sales Charge(2)
-------------------------------
Class A Class L Class Y
Six Months Ended 9/30/99+ (4.66)% (4.74)% (2.62)%
Year Ended 9/30/99 (3.88) (4.11) N/A
Five Years Ended 9/30/99 4.68 4.66 N/A
Ten Years Ended 9/30/99 5.96 N/A N/A
Inception* through 9/30/99 6.00 4.56 (1.20)
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge/(1)/
Class A (9/30/89 through 9/30/99) 82.15%
Class L (Inception* through 9/30/99) 36.45
Class Y (Inception* through 9/30/99) (1.20)
(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
L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 2.00% and 1.00%,
respectively, 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.
- --------------------------------------------------------------------------------
6 1999 Semi-Annual Report to Shareholders
<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+
September 1989 -- September 1999
Limited Term Portfolio Lehman Brothers
Municipal Bond
Index Lehman
Brothers
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
September 30, 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 September 30,
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.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ----
Schedule of Investments (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
- ----
FACE
AMOUNT RATING+ SECURITY
VALUE
<S> <C> <C> <C>
Education -- 14.4%
$ 2,130,000 AAA Alta Loma, CA School District, Capital
Appreciation, Series A, FGIC-Insured, zero
coupon to yield 5.470% due 8/1/13 $
993,113
2,825,000 Aa2* Arizona Education Loan Marketing Corp.,
Education Loan Revenue Bonds, 7.000% due
3/1/02(a)
2,945,062
1,500,000 Aaa* Arizona Student Loan Acquisition Authority,
Student Loan Revenue Refunding, Series A-1,
5.750% due 5/1/15(a)
1,501,875
1,570,000 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)(b)
1,585,700
940,000 Aa* Brazos, TX Higher Education Authority,
Series C-1, 6.000% due 11/1/99(a)
941,128
Coppell, TX ISD, Capital Appreciation Refunding, PSFG:
4,655,000 AAA Zero coupon to yield 5.150% due 8/15/08
2,967,562
4,225,000 AAA Zero coupon to yield 5.250% due 8/15/09
2,545,562
5,185,000 AAA Zero coupon to yield 5.350% due 8/15/10
2,903,600
2,000,000 AAA Detroit, MI City School District, Series B,
FGIC-Insured, 5.375% due 5/1/14
1,970,000
District of Columbia Revenue, (Catholic University of
America Project), AMBAC-Insured:
1,180,000 AAA 5.500% due 10/1/08
1,213,925
1,000,000 AAA 5.250% due 10/1/10
998,750
1,000,000 AAA Erie, PA School District, Capital
Appreciation Refunding, FSA-Insured,
zero coupon to yield 5.250% due 9/1/14
433,750
1,150,000 AA Fairfield County, SC School District,
COP, 5.500% due 3/1/07
1,171,563
1,000,000 AAA Franklin, TN Special School District,
Capital Appreciation, FSA-Insured, zero
coupon to yield 5.770% due 6/1/18
336,250
1,725,000 A Haubstadt, Owensville, IN, ISD, Refunding,
5.600% due 7/1/08
1,759,500
1,000,000 A+ Illinois Student Assistance Commission,
Student Loan Revenue, Series H, 6.100%
due 3/1/01(a)
1,012,500
2,000,000 Aaa* Indiana State Educational Facilities
Authority Revenue, Rose Hulman Institute
of Technology, MBIA-Insured, 5.000%
due 6/1/17
1,830,000
1,000,000 Aaa* Kentucky Higher Education Student Loan
Corp., Insured Student Loan Revenue,
Series 91B, 6.500% due 12/1/00(a)
1,026,250
205,000 AAA Louisiana Public Facilities Authority
Revenue, Supplemental Student Loan,
Series C, AMBAC-Insured, 8.125% due
12/1/99
206,101
1,325,000 AAA Madison, MI Public Schools District,
Refunding, FGIC-Insured, 5.375% due
5/1/11
1,334,938
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY
VALUE
- --------------------------------------------------------------------------------
- ------------
<S> <C> <C>
<C>
Education -- 14.4% (continued)
$ 950,000 Baa3* Maryland State Economic Development
Corp., Student Housing Revenue,
Salisbury Collegiate Housing
Foundation, Series A, 5.600% due
6/1/10
$ 925,063
3,515,000 Aaa* Midlothian, TX ISD, Capital
Appreciation Refunding, PSFG, zero
coupon to yield 6.200% due 2/15/17
1,221,462
1,255,000 AA Monroe County, NY IDA, Civic
Facilities Revenue, (St. John Fisher
College Project), Asset Guaranteed,
5.500% due 6/1/10
1,275,394
1,035,000 A* Montana State Higher Education Student
Assistance Corp., Student Loan Revenue,
Series 92B, 7.050% due 6/1/04(a)
1,067,344
2,100,000 A* New Mexico Education Assistance
Foundation, Student Loan Revenue,
Sub-Series A-2, 5.950% due 11/1/07(a)
2,110,500
New York State Dormitory Authority Revenue,
Long Island University, Asset Guaranteed:
1,075,000 AA 5.000% due 9/1/13
1,009,156
1,025,000 AA 5.000% due 9/1/14
950,688
North Texas Higher Education Authority Inc.,
Student Loan Revenue:
1,475,000 AAA AMBAC-Insured, 7.000% due 4/1/01(a)
1,520,828
2,400,000 A* Series D, 6.300% due 4/1/09(a)
2,409,000
2,000,000 AAA Pennsylvania State Higher Education
Assistance Agency, Student Loan
Revenue Refunding, Series A,
FGIC-Insured, 6.800% due 12/1/00
2,060,000
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
1,980,000
1,500,000 A* Rhode Island Student Loan Authority
Revenue Refunding, Series 92B, 6.750%
due 12/1/01(a)
1,556,250
1,500,000 AAA Schuylkill, PA Redevelopment Authority
Revenue, Commonwealth Lease Revenue
Bonds, Series A, FGIC-Insured, 6.850%
due 6/1/03
1,586,250
3,300,000 AAA Wayne State University, MI University
Revenue, FGIC-Insured, 5.375% due
11/15/13
3,271,125
- --------------------------------------------------------------------------------
- ------------
52,620,189
- --------------------------------------------------------------------------------
- ------------
Escrowed to Maturity(b) -- 7.5%
130,000 AAA Adams County, CO Commercial Development
Revenue, PMC Building Corp., (Medical
Office Project), 10.875% due 12/1/02
148,850
205,000 AAA Albuquerque, NM Hospital Revenue,
7.500% due 7/1/08
226,269
425,000 AAA Allegheny County, PA Hospital
Development Authority Revenue, 6.875%
due 7/1/09
451,562
240,000 AAA Anderson County, SC Hospital
Facilities Revenue, 7.125% due
8/1/07
260,700
40,000 AAA Belleville, IL Hospital Facilities
Revenue, 7.750% due 9/1/06
43,650
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
- --
<S> <C> <C> <C>
Escrowed to Maturity(b) -- 7.5% (continued)
$ 215,000 AAA Bolingbrook, IL Will & DuPage Counties,
(Hinsdale & Sanitarium Hospital
Project), 7.250% due 8/1/08 $
235,963
1,895,000 AAA Boston, MA Water & Sewer Community
Revenue, 10.875% due 1/1/09
2,458,762
80,000 AAA Camarillo, CA Hospital Revenue,
Pleasant Valley Hospital Building
Corp., 9.700% due 12/15/07
96,200
1,030,000 AAA Columbus, GA Medical Center Hospital
Authority Revenue, COP, 7.750% due
7/1/10
1,252,737
270,000 AAA Delaware County, PA Development
Authority Revenue,(Elwyn Inc.
Project), 7.750% due 6/1/00
276,785
220,000 AAA Dunedin, FL Health Facilities
Authority Revenue, Mease Hospital
Inc., 7.600% due 10/1/08
242,000
945,000 AAA Erie County, OH Hospital Improvement,
Sandusky Memorial Hospital, 8.750%
due 1/1/06
1,060,763
45,000 AAA Farmington, NM Utilities Systems
Revenue, 10.000% due 1/1/02
48,094
Franklin County, OH Hospital Revenue:
470,000 AAA Children's Hospital Project, 10.375%
due 6/1/13
603,363
85,000 AAA Grant Hospital Project, 10.000% due
12/1/01
90,206
535,000 AAA Granite City, IL Hospital Facilities
Revenue, 7.000% due 1/1/08
576,462
935,000 AAA Houston, TX Airport Systems Revenue,
5.500% due 7/1/12
922,144
1,175,000 AAA Illinois Educational Facilities
Authority Revenue, Chicago Osteopathic
Medical, Series A, 8.750% due 7/1/05
1,320,406
Illinois Health Facilities Authority Revenue:
620,000 AAA Ravenswood Hospital Medical Center
Project, 7.250% due 8/1/06
668,825
95,000 AAA Victory Memorial Hospital Association
Project, 7.500% due 10/1/06
103,194
95,000 AAA Indiana Bond Bank, Special Program,
Series A, AMBAC-Insured, 9.750%
due 8/1/09
118,869
1,150,000 AAA Indianapolis, IN Utilities District,
7.000% due 6/1/08
1,311,000
685,000 AAA Kalamazoo, MI Hospital Finance
Authority, 6.750% due 4/1/03
714,112
120,000 AAA Lake County, OH Hospital Improvement
Revenue, (Lake County Memorial
Hospitals Project), 8.675% due
11/1/09
140,850
240,000 AAA Lee County, FL Southwest Florida
Regional Airport Revenue, MBIA-
Insured, 8.675% due 10/1/09
280,200
295,000 AAA Lehigh County, PA IDA, Industrial &
Commercial Development Revenue,
(Strawbridge Project), 7.200% due
12/15/01
301,269
590,000 AAA Lima, OH Hospital Revenue, 7.500%
due 11/1/06
640,887
170,000 AAA Louisiana Public Facilities Hospital
Authority Revenue Refunding,
(Southern Baptist Hospital Inc.
Project), AETNA-Insured, 8.000% due
5/15/12
196,563
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
- --
<S> <C> <C> <C>
Escrowed to Maturity(b) -- 7.5% (continued)
$ 135,000 AAA Maricopa County, AZ Hospital Revenue,
Intercommunity Healthcare, (Sun City
Project), 8.675% due 1/1/10 $
159,469
215,000 AAA Marshfield, WI Hospital Facilities
Revenue, 6.625% due 4/1/06
224,944
70,000 AAA Montana State University Revenue,
MBIA-Insured, 10.000% due 11/15/08
82,600
475,000 AAA Muscatine, IA Electric Revenue,
9.500% due 1/1/04
524,281
1,135,000 AAA New Haven, CT GO, Series B, 9.000%
due 12/1/01
1,247,081
1,000,000 AAA Northglenn, CO GO, 6.800% due 12/1/08
1,078,750
Ohio State Water Development Authority Revenue:
30,000 AAA Armco Steel Corp. Project, 7.875%
due 11/1/00
30,646
305,000 AAA Recycle Energy, (Akron Ohio Project),
8.000% due 12/1/04
329,019
1,490,000 AAA Safe Water, Series 3, 9.000% due
12/1/10
1,683,700
2,650,000 AAA 9.375% due 12/1/10
3,203,187
320,000 AAA Ouachita Parish, LA Hospital Services
District #1, Hospital Revenue Bonds,
Glenwood Regional Medical Center,
Series 1991, 7.250% due 7/1/00
327,776
1,335,000 AAA Owensboro, KY Electric, Light &
Power, 10.500% due 1/1/04
1,513,556
90,000 AAA Philadelphia, PA Hospitals and Higher
Education Facilities Authority Revenue,
(St. Agnes Medical Center Project),
FHA-Insured, 6750% due 8/15/01
91,575
50,000 AAA Pima County, AZ Hospital Revenue,
Tuscon Medical Center, 10.375% due
4/1/07
60,437
255,000 AAA Portage County, OH Hospital Revenue,
6.700% due 12/1/07
269,344
125,000 AAA Santa Rosa, CA Hospital Revenue,
(Santa Rosa Hospital Memorial Project),
10.300% due 3/1/11
164,219
505,000 AAA Sikeston, MO Electric Revenue, 6.250%
due 6/1/08
534,037
65,000 AAA Tamarac, FL Water & Sewer Utilities
Revenue, AMBAC-Insured, 9.250% due
10/1/10
79,381
735,000 AAA Tom Green County, TX Hospital
Authority, 7.875% due 2/1/06
796,556
210,000 AAA Wichita, KS Hospital Revenue, Wesley
Medical Center, MBIA-Insured, 10.000%
due 4/1/02
227,063
- --------------------------------------------------------------------------------
- --
27,418,306
- --------------------------------------------------------------------------------
- --
General Obligation -- 10.3%
1,000,000 AAA Arizona COP, Refunding, GO, FSA-
Insured, 6.500% due 3/1/08
1,065,000
500,000 AAA Anchorage, AL Refunding, GO, FGIC-
Insured, 6.000% due 10/1/14
528,750
1,000,000 AA Central Falls, RI GO, Asset
Guaranteed, 5.875% due 5/15/15
1,013,750
2,000,000 AAA Chicago, IL Board of Education, GO,
Chicago School Reform, AMBAC-Insured,
5.800% due 12/1/13
2,040,000
2,500,000 AAA District of Columbia, GO, Series A,
FSA-Insured, 5.500% due 6/1/11
2,531,250
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
- --
<S> <C> <C> <C>
General Obligation -- 10.3% (continued)
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 $
531,250
1,250,000 AAA Zero coupon to yield 5.250% due
8/15/13
579,688
7,000,000 AAA Kenosha, WI Capital Appreciation, GO,
Series B, FSA-Insured, zero coupon
to yield 4.430% due 10/15/08(a)
4,427,500
6,705,000 AA- Massachusetts State GO, Series C,
zero coupon to yield 5.020% due
8/1/18
2,254,556
865,000 A3* New Haven, CT GO, Series B, 9.000%
due 12/1/01
947,175
New York City GO:
2,500,000 A- Series A, 6.250% due 8/1/08
2,693,750
200,000 VMIG1* Series B2, Sub-Series B5, MBIA-Insured,
3.800% due 8/15/09(c)
200,000
130,000 A- Series D, 7.200% due 2/1/00
131,357
6,640,000 A- Series F, zero coupon to yield 5.050%
due 8/1/08
4,249,600
2,000,000 A- Series H, 5.900% due 8/1/09
2,105,000
6,500,000 A- Series L, 5.625% due 8/1/07
6,776,250
3,000,000 VMIG1* Sub-Series E5, LOC-Morgan Guaranty
Trust, 3.800% due 8/1/17(c)
3,000,000
1,075,000 AAA Oneida County, NY Refunding, GO,
FGIC-Insured, 5.250% due 3/15/10
1,091,125
1,500,000 AA+ Shelby County, TN GO, zero coupon to
yield 5.350% due 8/1/14
658,125
140,000 Aa1* Texas State Veterans Housing
Assistance Fund, GO, FHA-Insured,
6.050% due 12/1/12(a)
140,722
1,000,000 Aa3* Washington Multnomah & Yamhill
Counties, GO, Oregon School District
No. 1J, Refunding, 5.000% due 11/1/14
946,250
- --------------------------------------------------------------------------------
- --
37,911,098
- --------------------------------------------------------------------------------
- --
Hospitals -- 17.5%
330,000 AA- ABAG Finance Authority Nonprofit
Corps, California Insured, COP,
(Rehabilitation Mental Health Services
Inc. Project), 6.100% due 6/1/02
345,263
1,000,000 Aaa* Amarillo, TX Health Facilities Corp.,
St. Anthony's Baptist Hospital,
FSA-Insured, 5.500% due 1/1/11
1,012,500
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
1,140,000
Clackamas County, OR Hospital Facilities
Authority Revenue: Kaiser Permanente,
1,000,000 A Series A, 5.375%
due 4/1/14
965,000
Legacy Health Systems:
2,000,000 AA 5.000% due 2/15/15
1,880,000
1,000,000 AA 5.000% due 2/15/16
931,250
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
- -----------
<S> <C> <C>
<C>
Hospitals -- 17.5% (continued)
Colorado Health Facilities Authority Hospital
Revenue Bonds:
$ 3,010,000 Baa3 Series 1993, Rocky Mountain Adventist
Health Guaranteed, 6.250% due 2/1/04
$2,953,562
1,035,000 Baa2* National Benevolent, Series A, 6.125%
due 9/1/16
1,022,062
Harris County, TX Health Facilities Development
Corp.:
2,135,000 NR Memorial Health System Guaranteed,
7.125% due 6/1/05
2,321,813
Texas Childrens Hospital Project, Series A:
1,515,000 AA 5.375% due 10/1/11
1,503,637
2,000,000 AA 5.375% due 10/1/16
1,915,000
1,355,000 BBB Illinois Development Financing
Authority, Health Facilities Revenue,
Community Living Options, 6.375% due
3/1/00
1,362,032
Illinois Health Facilities Authority Revenue,
Children's Memorial Hospital, Series A,
AMBAC-Insured:
1,580,000 AAA 5.500% due 8/15/07
1,631,350
2,070,000 AAA 5.750% due 8/15/13
2,095,875
1,000,000 BBB+ Refunding, Trinity Medical Center,
6.500% due 7/1/00
1,014,290
Lorain County, OH Health Facilities Revenue,
Catholic Healthcare Partners, Series A:
1,400,000 AAA 5.250% due 9/1/11
1,405,250
1,500,000 AAA 5.375% due 9/1/14
1,470,000
2,200,000 BBB- Maplewood, MN Healthcare Facilities
Revenue,(Health East Project), 5.950%
due 11/15/06
2,158,750
2,220,000 A Massachusetts State Health &
Educational Facilities Authority
Revenue, South Shore Hospital,
Series F 5.500% due 7/1/12
2,167,275
3,000,000 AAA Mesa, AZ IDA, Revenue, Discovery
Health Systems, Series A, 5.875% due
1/1/14
3,071,250
New Jersey Healthcare Facilities Financing
Authority Revenue:
1,030,000 BBB++ Pascack Valley Hospital, Series 91,
6.500% due 7/1/01
1,068,625
2,000,000 BBB Pascack Valley Hospital Association,
5.125% due 7/1/18
1,767,500
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
1,736,125
3,000,000 AAA New York State Dormitory Authority
Revenue, Mental Health Services
Facilities, FSA-Insured, 5.750%
due 8/15/12
3,056,250
1,000,000 AA- North Carolina Medical Care Common
Hospital Revenue, Pitt County Memorial
Hospital, Series A, 5.000% due 12/1/18
900,000
1,500,000 BBB+ Oklahoma Development Financing
Authority Revenue Refunding, Hillcrest
Healthcare System, Series A, 5.750%
due 8/15/15
1,436,250
3,000,000 AAA Orange County, FL Health Facilities
Authority Revenue, Regional Healthcare
Systems, Series D, MBIA-Insured,
5.250% due 10/1/14
2,913,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
Hospitals -- 17.5% (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 $ 1,833,125
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 2,913,663
1,540,000 A- Scotts Bluff County, NE Hospital
Authority No. 1, Hospital Revenue,
6.450% due 12/15/04 1,624,700
Scranton-Lackawanna, PA Health & Welfare
Authority Revenue:
3,000,000 BBB++ Allied Services Rehabilitation
Hospitals, 7.125% due 7/15/05 3,172,500
1,000,000 BBB- Moses Taylor Hospital Project,
6.050% due 7/1/10 968,750
4,650,000 Baa2* Tomball, TX Hospital Authority
Revenue, Tomball Regional Hospital,
5.500% due 7/1/09 4,498,875
3,955,000 A Wisconsin State Health & Educational
Facilities Authority Revenue,
(Kenosha Hospital & Medical Center
Project), 5.500% due 5/15/15 3,727,588
- --------------------------------------------------------------------------------
63,983,860
- --------------------------------------------------------------------------------
Housing -- 5.0%
2,250,000 AAA Dekalb County, GA HFA, Multi-Family
Housing Revenue, (Chimney Trace
Project), FNMA-Collateralized,
5.625% mandatory tender 5/1/05 2,323,125
455,000 AAA Fairfax County, VA Redevelopment &
Housing Authority, Multi-Family
Refunding, Kingsley 91A, FHA-Insured,
6.500% due 11/1/01 466,944
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) 1,022,500
1,800,000 AA- Louisiana Public Facilities Authority
Revenue, Multi-Family Housing,
Oakleigh Apartments, Series A, 5.950%
mandatory tender 3/15/05 1,863,000
1,200,000 NR Maricopa County, AZ IDA, Multi-Family
Housing Revenue, Stanford Court
Apartments, Series B, 5.750% due
7/1/08 1,189,500
3,205,000 Aa3* Massachusetts State HFA, Single-
Family Housing Revenue, Series 38,
7.200% due 12/1/26(a) 3,273,106
184,178 AAA Monroe-West Monroe, LA Public Trust
Financing Authority, FHLMC-
Collateralized, 8.500% due 5/20/02 188,782
355,000 Ba2* Odessa, TX Housing Development Corp.
#2, Multi-Family Revenue Refunding,
Chaparral Village, Series A,
6.375% due 12/1/03 362,544
1,035,000 AAA Onterie Center Housing Finance Corp.,
Illinois Mortgage Revenue Refunding,
(Onterie Center Project), Series A,
MBIA-Insured, 6.500% due 7/1/02 1,073,812
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
Housing -- 5.0% (continued)
Pennsylvania HFA, Single-Family
Mortgage, Series 67A:
$ 1,725,000 AA+ 5.150% due 10/1/07(a) $ 1,727,156
2,000,000 AA+ 5.500% due 10/1/11(a) 2,000,000
75,000 AAA St. Louis County, MO Single-Family
Mortgage Revenue, MBIA-Insured,
6.125% due 4/1/03 76,125
2,500,000 A3* Stamford, CT Housing Authority,
Multi-Family Revenue Refunding,
(Fairfield Apartments Project),
4.750% due 12/1/28(a) 2,368,750
500,000 AAA Texas State Department of Housing &
Community Affairs, GNMA/FNMA/FHLMC-
Collateralized, Home Mortgage
Revenue Bonds, Series B-2, RIBS
Variable Rate, 9.612% due 6/18/23(a)(d) 519,225
- --------------------------------------------------------------------------------
18,454,569
- --------------------------------------------------------------------------------
Industrial Development -- 7.4%
1,500,000 A Bel Air, MD Revenue Refunding, (May
Department Stores Co. Project),
6.375% due 10/1/99 1,500,000
1,000,000 A+ Belmont County, OH IDR Refunding,
(May Department Stores Co. Project),
Series 91, 6.500% due 1/1/00 1,005,540
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) 2,062,500
5,000,000 BBB- Greenville, SC Connector 2000
Association Inc., South Carolina
Toll Road Revenue, Capital Appreciation,
Series B, zero coupon to yield
5.700% due 1/1/15 1,800,000
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 3,037,500
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 2,042,720
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 3,048,750
1,300,000 AA Massachusetts State Development
Finance Agency Revenue, Worcester
Redevelopment Authority Issue,
Asset Guaranteed, 6.000% due 6/1/24 1,316,250
3,500,000 NR Metropolitan Government Nashville &
Davidson County, TN IDB, Revenue
Refunding & Improvement, Osco
Treatment Inc. Guaranteed, 6.000%
due 5/1/03(a) 3,561,250
1,000,000 NR Minneapolis, MN Commercial Development
Revenue, (Holiday Inn Metrodome
Project), 6.000% due 12/1/01 1,002,500
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
Industrial Development -- 7.4% (continued)
$ 1,335,000 Aa3* New Jersey EDA, Growth Bonds, LOC,
Banque Nationale de Paris, 6.200%
due 12/1/02(a) $ 1,376,719
New York City IDA:
1,135,000 NR Community Hospital, Brooklyn, 6.875%
due 11/1/10 1,116,556
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) 556,554
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) 416,054
1,000,000 BBB Schuylkill County, PA IDA, Revenue,
Pine Grove Landfill Inc., 5.100%
mandatory tender 4/1/09(a) 950,000
2,350,000 AAA Sioux City, IA IDR, (Terra Centre
Project), LOC, Rabobank Nederland,
6.800% due 5/1/07 2,461,625
- --------------------------------------------------------------------------------
27,254,518
- --------------------------------------------------------------------------------
Life Care -- 0.8%
1,000,000 BBB- John Tolfree Health Systems Corp.,
Michigan Mortgage Revenue Refunding,
5.850% due 9/15/13 966,250
1,000,000 AA Orange County, FL Health Facilities
Authority Revenue Refunding,
(Mayflower Retirement Project),
Asset Guaranteed, 5.125% due 6/1/14 956,250
1,000,000 AAA Rio Grande Valley, TX Health
Facilities, (Valley Baptist Medical
Center Project), Short RITES, MBIA-
Insured, Coupon varies weekly till
8/1/02 then converts to 6.250%,
7.920% due 8/1/06 1,088,750
- --------------------------------------------------------------------------------
3,011,250
- --------------------------------------------------------------------------------
Miscellaneous -- 7.1%
2,595,000 BBB- Clarksville, TN Natural Gas
Acquisition Corp., Gas Revenue,
Series A, 6.500% due 11/1/00 2,648,353
1,000,000 A+ Columbia County, GA (Courthouse &
Detention Center Projects), 5.675%
due 2/1/17 990,000
1,000,000 AAA Delaware Valley, PA Regional Finance
Authority, Local Government Revenue,
Series A, AMBAC-Insured, 5.500% due
8/1/28 970,000
2,750,000 A- Hoffman Estate, IL Tax Increment
Junior Lien, Hoffman Estate
Development, Series 91, 6.500% due
5/15/01 2,822,188
2,700,000 A Illinois Development Finance
Authority Revenue, Debt Restructure
-- East St. Louis, 6.875% due 11/15/05 2,892,375
1,000,000 AAA Indiana Bond Bank, Common School
Federal Advisory Purchase Funding,
Series A, AMBAC-Insured, 5.000% due
2/1/14 962,500
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
Miscellaneous -- 7.1% (continued)
$ 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 $ 2,375,000
6,815,000 Aa3* Massachusetts State Grant, Series B,
zero coupon to yield 4.800% due
6/15/12 3,492,687
100,000 VMIG 1* Massachusetts State Health &
Educational Facilities Authority
Revenue, (Capital Asset Program),
Series B, 3.850% due 7/1/05(c) 100,000
2,000,000 AAA Metropolitan Football Stadium,
Colorado District Sales Tax Revenue,
Capital Appreciation, Series A,
MBIA-Insured, zero coupon to yield
5.300% due 1/1/12 1,032,500
2,950,000 BBB+ New York State Urban Development Corp.
Revenue, Correctional Capital
Facilities, Series 6, 5.500% due
1/1/13 2,957,375
3,900,000 BBB- Spokane, WA Downtown Foundation
Parking Revenue, (River Park Square
Project), 5.000% due 8/1/08 3,714,750
1,000,000 AA Tuscon, AZ COP, Asset Guaranty,
6.000% due 7/1/04 1,052,500
- --------------------------------------------------------------------------------
26,010,228
- --------------------------------------------------------------------------------
Pollution Control -- 4.0%
860,000 AAA Burke County, GA Development Authority,
PCR, Refunding, Ogelthorpe Power Co.,
MBIA-Insured, 7.500% due 1/1/03 899,775
Connecticut State Resource Recovery
Authority Revenue, (Bridgeport Resco Co.
Project), MBIA-Insured:
2,895,000 AAA 5.000% due 1/1/07 2,902,237
1,700,000 AAA 5.500% due 1/1/08 1,755,250
Detroit, MI Economic Development Corp.,
Facilities Recovery Revenue, FSA-Insured:
1,770,000 AAA Series A, 7.000% due 5/1/01(a) 1,816,463
1,000,000 AAA Series 91A, 6.600% due 5/1/02(a) 1,052,500
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) 1,533,750
500,000 VMIG 1* Martin County, FL Pollution Control
Revenue Refunding, (Florida Power &
Lighting Co. Project), 3.800% due
9/1/24(c) 500,000
1,000,000 BBB Massachusetts State IDB, Finance
Agency, PCR, (Eastern Edison Co.
Project), 5.875% due 8/1/08 1,002,500
1,500,000 AAA Montgomery, AL IDB, PCR, (General
Electric Co. Project), 7.000%
mandatory tender, 9/15/00(a) 1,536,765
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
Pollution Control -- 4.0% (continued)
$ 600,000 Baa1* Onondaga County, NY Resource Recovery
Agency Project Revenue Bonds, Series
1992, 6.625% due 5/1/00(a) $ 608,184
1,000,000 AAA York County, PA Solid Waste & Refuse
Authority, Solid Waste, Systems
Revenue Refunding, FGIC-Insured,
5.500% due 12/1/14 1,005,000
- --------------------------------------------------------------------------------
14,612,424
- --------------------------------------------------------------------------------
Pre-Refunded(e) -- 3.0%
Austin, TX Water, Sewer & Electric
Refunding Revenue:
15,000 AAA Call 5/15/99 @ 100, 14.000% due
11/15/01 15,000
55,000 AAA Various Call Dates @ 100, 14.000%
due 11/15/01 60,706
1,730,000 AAA Berks County, PA Municipal Authority
Refunding, (Phoebe Berks Village Inc.
Project), (Call 5/15/06 @ 102),
7.500% due 5/15/13 1,961,388
495,000 AAA Gila County, AZ IDA PCR, (Call
2/15/01 @ 101), 11.250% due 4/1/01 538,313
3,200,000 AAA Jefferson County, KY Hospital Revenue,
MBIA-Insured, (Various Call Dates @
Various Prices), 6.346% due 10/23/14 3,436,000
235,000 AAA Massachusetts State Port Authority
Revenue, FGIC-Insured, Series A,
(Call 7/1/00 @ 102), 7.200% due
7/1/03(a) 245,284
630,000 AAA New Jersey Healthcare Facilities
Financing Authority Revenue, Wayne
General Hospital, Series B, FHA-Insured,
(Call 8/1/04 @ 102), 5.750% due 8/1/11 673,312
135,000 AAA Ohio State Building Authority, Toledo
Government Office Building, (Call
4/1/03 @ 100), 10.125% due 10/1/06 153,225
2,170,000 AAA Palm Beach County, FL Health Facilities
Authority Revenue, Good Samaritan
Health System Guaranteed, (Call
10/1/05 @ 100), 6.150% due 10/1/06 2,349,025
180,000 AAA Philadelphia, PA Hospitals Authority
Revenue, (United Hospitals Inc.
Project), (Call 7/1/05 @ 100),
10.875% due 7/1/08 231,300
70,000 AAA San Leandro, CA Redevelopment Agency,
Residential Mortgage Revenue, Private
Mortgages Guaranty, (Call 10/1/04 @
100), 11.250% due 4/1/13 88,113
1,235,000 AAA West Jefferson Amusement & Public
Park Authority Revenue, (Visionland
Alabama Project), (Call 12/1/06 @
102), 7.500% due 12/1/08 1,401,725
- --------------------------------------------------------------------------------
11,153,391
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
Public Facilities -- 2.0%
$ 4,000,000 Aa* Mt. Sterling, KY Lease Revenue, Kentucky
League of Cities 1993A, Transamerica Life
Guaranteed, 5.625% due 3/1/03 $4,125,000
1,140,000 BBB- Massachusetts Rail Connections Inc., Revenue,
Route 128, Parking Garage, Series A, 6.000%
due 7/1/13 1,152,825
2,000,000 AAA Metropolitan Pier & Exposition Authority,
Illinois Dedicated State Tax, (McCormick
Place Exposition Project), FGIC-Insured,
5.700% due 12/15/13 2,027,500
- --------------------------------------------------------------------------------
7,305,325
- --------------------------------------------------------------------------------
Solid Waste -- 0.9%
3,000,000 A2* Northeast Maryland Waste Disposal Authority,
Solid Waste Revenue, Montgomery County, 6.200%
due 7/1/10(a) 3,138,750
- --------------------------------------------------------------------------------
Tax Allocation -- 0.3%
1,250,000 AA Bernalillo County, NM Gross Receipts, Tax
Revenue Refunding, 5.125% due 4/1/16 1,192,188
- --------------------------------------------------------------------------------
Transportation -- 8.4%
2,800,000 AAA Chicago, IL Midway Airport Revenue, Series C,
MBIA-Insured, 5.500% due 1/1/16 2,775,500
Denver, CO City & County Airport Revenue:
1,510,000 AAA Series B, MBIA-Insured, 6.250% due 11/15/06(a) 1,634,575
1,590,000 BBB+ Series 1992B, 7.000% due 11/15/01(a) 1,653,600
1,000,000 BBB+ Series 1992B, 7.000% due 11/15/02(a) 1,057,500
1,000,000 BBB+ Series 1994A, 7.200% due 11/15/02(a) 1,062,500
E-470 Public Highway Authority, Colorado Sr.
Revenue Bonds, MBIA-Insured:
8,000,000 AAA Zero coupon to yield 5.350% due 9/1/14 3,500,000
5,000,000 AAA Zero coupon to yield 5.430% due 9/1/16 1,906,250
5,000,000 AAA Zero coupon to yield 5.450% due 9/1/17 1,793,750
1,250,000 A+ Indiana Transportation Finance Authority,
Airport Facilities Lease Revenue, Series A,
United Air, 6.125% due 11/1/02 1,304,687
3,000,000 NR Kenton County, KY Airport Board, Special
Facilities Revenue, (Mesaba Aviation Inc.
Project), Series A, 6.675% due 7/1/19(a) 2,985,000
765,000 AAA Massachusetts State Port Authority Revenue,
Series A, FGIC-Insured, 7.200% due 7/1/03(a) 794,177
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 3,555,000
2,000,000 Aa2* New Jersey State Transportation Trust Fund
Authority, Transportation Systems, Series A,
5.625% due 6/15/14 2,045,000
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
- --------------------------------------------------------------------------------
Schedule Of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
Transportation -- 8.4% (continued)
$ 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) $ 3,161,250
1,570,000 AAA Port of Portland, OR Airport Revenue, Portland
International Airport, Series B, AMBAC-Insured,
5.500% due 7/1/14(a) 1,548,412
- --------------------------------------------------------------------------------
30,777,201
- --------------------------------------------------------------------------------
Utilities -- 8.0%
5,000,000 AAA Alaska Energy Authority, Power Revenue
Refunding, FSA-Insured, 3rd Series, 6.000%
due 7/1/17 5,231,250
Austin, TX Water, Sewer & Electric Refunding
Revenue:
335,000 AAA Refunded -- 1998, 14.000% due 11/15/01 368,919
3,180,000 A* Unrefunded Balance -- 1998, 14.000% due
11/15/01 3,533,775
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) 1,565,625
14,485,000 AAA Columbia River Rock Capital Appreciation,
MBIA-Insured, zero coupon to yield 6.999%
due 6/1/13 6,789,844
1,080,000 AAA Georgia Municipal Electric Authority, (Project
One), Sub-Series A, MBIA-Insured, 5.250%
due 1/1/15 1,050,300
600,000 A- Georgia Municipal Gas Authority Revenue,
(Southern Storage Gas Project), 6.300% due
7/1/09 631,500
3,715,000 AAA Long Island Power Authority, New York Electric
System Revenue, Capital Appreciation, Series
A, FSA-Insured, zero coupon to yield 5.280%
due 12/1/17 1,323,469
2,500,000 AAA Lower Colorado River Authority, Texas Revenue
Refunding, Series B, FSA-Insured, 6.000% due
5/15/13 2,606,250
North Carolina, Eastern Municipal Power Agency,
Power Systems Revenue Refunding, Series B:
1,000,000 BBB 5.600% due 1/1/15 936,250
1,000,000 BBB 5.650% due 1/1/16 935,000
770,000 BBB Philadelphia, PA Gas Works Revenue Bonds, 13th
Series, 7.400% due 6/15/00 786,724
1,000,000 BB Sam Rayburn, TX Municipal Power Supply System,
Revenue Refunding, Series A, 6.200% due
10/1/01 1,006,250
2,520,000 AAA Union County, NJ Utilities Authority, Series A,
AMBAC-Insured, 5.000% due 6/1/14(a) 2,359,350
- --------------------------------------------------------------------------------
29,124,506
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING+ SECURITY VALUE
- --------------------------------------------------------------------------------
Water and Sewer -- 3.4%
$ 1,015,000 Aaa* Carroll County, GA Water Authority, Water &
Sewer Revenue, AMBAC-Insured, 5.250% due
7/1/18 $ 961,713
3,500,000 AAA Detroit, MI Water Supply System, FGIC-Insured,
6.500% due 7/1/15 3,871,875
1,000,000 AA- Macon, GA Water Authority, Water & Sewer
Revenue, 4.500% due 10/1/08 841,250
1,000,000 AAA Massachusetts State Water Pollution Abatement
Trust, Pool Program, Series 5, 5.750% due
8/1/16 1,016,250
4,000,000 AA+ Michigan Municipal Bond Authority Revenue,
Clean Water Revolving Fund, 5.750% due 10/1/14 4,080,000
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) 1,550,625
- --------------------------------------------------------------------------------
12,321,713
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $367,301,658**) $366,289,516
================================================================================
(+) 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) 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.
(c) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(d) Residual interest bonds-coupon varies inversely with level of short-term
tax-exempt interest rates.
(e) 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 22 and 23 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<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
safe-guarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
- --------------------------------------------------------------------------------
22 1999 Semi-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 23
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $367,301,658) $366,289,516
Interest receivable 5,180,326
Receivable for Fund shares sold 1,414,267
Receivable for securities sold 178,752
Prepaid expenses 63,418
- --------------------------------------------------------------------------------
Total Assets 373,126,279
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 6,922,420
Payable to bank 443,768
Management fees payable 168,810
Payable for Fund shares purchased 14,000
Accrued expenses 44,603
- --------------------------------------------------------------------------------
Total Liabilities 7,593,601
- --------------------------------------------------------------------------------
Total Net Assets $365,532,678
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 56,720
Capital paid in excess of par value 377,050,358
Overdistributed net investment income (49,622)
Accumulated net realized loss from security transactions (10,512,636)
Net unrealized depreciation of investments (1,012,142)
- --------------------------------------------------------------------------------
Total Net Assets $365,532,678
================================================================================
Shares Outstanding:
Class A 45,331,382
------------------------------------------------------------------------------
Class L 6,205,049
------------------------------------------------------------------------------
Class Y 5,183,593
------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $6.44
------------------------------------------------------------------------------
Class L * $6.45
------------------------------------------------------------------------------
Class Y (and redemption price) $6.44
------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 2.04% of net asset value
per share) $6.57
------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value
per share) $6.52
================================================================================
* 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.
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended September 30, 1999
INVESTMENT INCOME:
Interest $ 10,540,160
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 963,557
Distribution fees (Note 3) 300,795
Shareholder and system servicing fees 43,213
Registration fees 25,069
Shareholder communications 17,222
Pricing service fees 10,027
Custody fees 9,636
Audit and legal 8,023
Trustees' fees 3,009
Other 7,752
- --------------------------------------------------------------------------------
Total Expenses 1,388,303
- --------------------------------------------------------------------------------
Net Investment Income 9,151,857
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 269,666,829
Cost of securities sold 278,012,205
- --------------------------------------------------------------------------------
Net Realized Loss (8,345,376)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation)
of Investments:
Beginning of period 10,479,804
End of period (1,012,142)
- --------------------------------------------------------------------------------
Increase in Net Unrealized Depreciation (11,491,946)
- --------------------------------------------------------------------------------
Net Loss on Investments (19,837,322)
- --------------------------------------------------------------------------------
Decrease in Net Assets From Operations $(10,685,465)
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended September 30, 1999 (unaudited)
and the Year Ended March 31, 1999
September 30 March 31
================================================================================
OPERATIONS:
Net investment income $ 9,151,857 $ 15,293,295
Net realized gain (loss) (8,345,376) 1,463,568
Increase in net unrealized
depreciation (11,491,946) (986,611)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net
Assets From Operations (10,685,465) 15,770,252
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (9,199,292) (15,675,859)
In excess of net investment income -- (157,571)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (9,199,292) (15,833,430)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 41,419,436 166,645,885
Net asset value of shares issued
for reinvestment of dividends 5,262,488 9,197,538
Cost of shares reacquired (59,591,202) (65,668,310)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Fund Share Transactions (12,909,278) 110,175,113
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (32,794,035) 110,111,935
NET ASSETS:
Beginning of period 398,326,713 288,214,778
- --------------------------------------------------------------------------------
End of period* $365,532,678 $398,326,713
================================================================================
* Includes overdistributed
net investment income of: $(49,622) $(2,187)
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
26 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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 eight
other separate investment portfolios: Florida, Georgia, New York, Pennsylvania,
National, California Money Market, New York Money Market and Massachusetts Money
Market Portfolios. The financial statements and financial highlights for the
other portfolios are presented in separate shareholder reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) 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
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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 gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Management Agreement and Transactions with Affiliated Persons
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., 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.
CFBDS, Inc. ("CFBDS") acts as the Fund's distributor. Salomon Smith Barney Inc.
("SSB"), another subsidiary of SSBH as well as certain other broker-dealers,
continues to sell Fund shares to the public as a member of the selling group.
There is a contingent deferred sales charge ("CDSC") of 1.00% on Class A shares,
which applies if redemption occurs within one year from 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. Class L shares also have a 1.00%
CDSC, which applies if redemption occurs within the first year of purchase.
For the six months ended September 30, 1999, SSB and CFBDS received sales
charges of approximately $206,000 and $35,000 on sales of the Portfolio's Class
A and Class L shares, respectively. In addition, for the six months ended
September 30, 1999, CDSCs paid to SSB were approximately:
Class A Class L
================================================================================
CDSCs $54,000 $8,000
================================================================================
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
- --------------------------------------------------------------------------------
28 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
respect to Class L shares calculated at an annual rate of 0.20% of the average
daily net assets.
For the six months ended September 30, 1999, total Distribution Plan fees
incurred were:
Class A Class L
================================================================================
Distribution Plan Fees $228,549 $72,246
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
4. Investments
During the six months ended September 30, 1999, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $252,358,829
- --------------------------------------------------------------------------------
Sales 269,666,829
================================================================================
At September 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 4,437,140
Gross unrealized depreciation (5,449,282)
- --------------------------------------------------------------------------------
Net unrealized depreciation $(1,012,142)
================================================================================
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
================================================================================
6. Shares of Beneficial Interest
At September 30, 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
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 29
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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.
At September 30, 1999, total paid-in capital amounted to the following for each
class:
Class A Class L Class Y
================================================================================
Total Paid-in Capital $299,427,153 $42,069,399 $35,610,526
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended
Year Ended
September 30, 1999 March
31, 1999++
------------------ -----
- -----------
Shares Amount Shares
Amount
================================================================================
=================
<S> <C> <C> <C>
<C>
Class A
Shares sold 5,281,273 $ 35,204,572 14,845,279
$ 101,467,691
Shares issued on reinvestment 669,590 4,402,425 1,146,421
7,802,565
Shares reacquired (6,475,056) (42,801,558) (8,138,352)
(55,401,082)
- --------------------------------------------------------------------------------
- -----------------
Net Increase (Decrease) (524,193) $ (3,194,561) 7,853,348
$ 53,869,174
================================================================================
=================
Class L++
Shares sold 777,801 $ 5,186,864 2,424,398
$ 16,578,194
Shares issued on reinvestment 93,586 616,343 152,139
1,036,463
Shares reacquired (826,904) (5,484,162) (1,020,319)
(6,958,879)
- --------------------------------------------------------------------------------
- -----------------
Net Increase 44,483 $ 319,045 1,556,218
$ 10,655,778
================================================================================
=================
Class Y
Shares sold 153,007 $ 1,028,000 7,128,561
$ 48,600,000
Shares issued on reinvestment 37,059 243,720 52,583
358,510
Shares reacquired (1,702,170) (11,305,482) (485,447)
(3,308,349)
- --------------------------------------------------------------------------------
- -----------------
Net Increase (Decrease) (1,512,104) $ (10,033,762) 6,695,697
$ 45,650,161
================================================================================
=================
</TABLE>
+ On June 12,1998, Class C shares were renamed as Class L shares.
++ For Class Y shares, transactions are for the period from November 12, 1998
(inception date) to March 31, 1999.
- --------------------------------------------------------------------------------
30 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares 1999(1)(2) 1999(2) 1998 1997 1996
1995(3)
================================================================================
=======
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value,
Beginning of Period $ 6.78 $ 6.76 $ 6.54 $ 6.61 $ 6.54
$ 6.55
- --------------------------------------------------------------------------------
- -------
Income (Loss) From
Operations:
Net investment income 0.16 0.32 0.34 0.34 0.36
0.36
Net realized and
unrealized gain (loss) (0.34) 0.03 0.22 (0.06) 0.07
- --
- --------------------------------------------------------------------------------
- -------
Total Income (Loss)
From Operations (0.18) 0.35 0.56 0.28 0.43
0.36
- --------------------------------------------------------------------------------
- -------
Less Distributions From:
Net investment income (0.16) (0.33) (0.34) (0.35) (0.36)
(0.37)
Excess of net
investment income -- (0.00) -- -- --
- --
- --------------------------------------------------------------------------------
- -------
Total Distributions (0.16) (0.33) (0.34) (0.35) (0.36)
(0.37)
- --------------------------------------------------------------------------------
- -------
Net Asset Value, End of
Period $ 6.44 $ 6.78 $ 6.76 $ 6.54 $ 6.61
$ 6.54
- --------------------------------------------------------------------------------
- -------
Total Return (2.69)%++ 5.29% 8.66% 4.30% 6.65%
5.69%
- --------------------------------------------------------------------------------
- -------
Net Assets,
End of Period (millions) $ 292 $ 311 $ 257 $ 260 $ 278
$ 245
- --------------------------------------------------------------------------------
- -------
Ratios to Average Net
Assets:
Expenses(4) 0.72%+ 0.72% 0.74% 0.75% 0.75%
0.61%
Net investment income 4.76+ 4.72 5.14 5.16 5.43
5.61
- --------------------------------------------------------------------------------
- -------
Portfolio Turnover Rate 66% 52% 58% 46% 26%
22%
================================================================================
=======
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On October 10, 1994, the former Class C shares were exchanged into Class A
shares.
(4) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets will not exceed 0.85%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
* Amount represents less than $0.01.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 31
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares 1999(1)(2) 1999(2)(3) 1998 1997 1996
1995(4)
================================================================================
============
<S> <C> <C> <C> <C> <C>
<C>
Net Asset Value,
Beginning of Period $ 6.79 $ 6.76 $ 6.54 $ 6.61 $ 6.54
$ 6.54
- --------------------------------------------------------------------------------
- ------------
Income (Loss) From
Operations:
Net investment income 0.15 0.31 0.33 0.33 0.35
0.35
Net realized and
unrealized gain (loss) (0.34) 0.03 0.21 (0.06) 0.06
- --
- --------------------------------------------------------------------------------
- ------------
Total Income (Loss)
From Operations (0.19) 0.34 0.54 0.27 0.41
0.35
- --------------------------------------------------------------------------------
- ------------
Less Distributions From:
Net investment income (0.15) (0.31) (0.32) (0.34) (0.34)
(0.35)
Excess of net
investment income -- (0.00)* -- -- --
- --
- --------------------------------------------------------------------------------
- ------------
Total Distributions (0.15) (0.31) (0.32) (0.34) (0.34)
(0.35)
- --------------------------------------------------------------------------------
- ------------
Net Asset Value, End
of Period $ 6.45 $ 6.79 $ 6.76 $ 6.54 $ 6.61
$ 6.54
- --------------------------------------------------------------------------------
- ------------
Total Return (2.81)%++ 5.04% 8.36% 4.10% 6.45%
5.51%
- --------------------------------------------------------------------------------
- ------------
Net Assets,
End of Period (000s) $40,038 $41,844 $31,133 $28,325 $28,824
$26,622
- --------------------------------------------------------------------------------
- ------------
Ratios to Average Net
Assets:
Expenses(5) 0.93%+ 0.94% 0.99% 0.97% 0.96%
0.89%
Net investment income 4.54+ 4.50 4.89 4.94 5.22
5.34
- --------------------------------------------------------------------------------
- ------------
Portfolio Turnover Rate 66% 52% 58% 46% 26%
22%
================================================================================
============
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(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 a voluntary expenselimitation, the ratio of expenses to
average net assets will not exceed 1.05%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
* Amount represents less than $0.01.
- --------------------------------------------------------------------------------
32 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
<TABLE>
<CAPTION>
Class Y Shares 1999(1)(2) 1999(2)(3)
================================================================================
<S> <C> <C>
Net Asset Value, Beginning of Period $ 6.78 $ 6.82
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.16 0.12
Net realized and unrealized loss (0.34) (0.02)
- --------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.18) 0.10
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.16) (0.14)
Excess of net investment income -- (0.00)*
- --------------------------------------------------------------------------------
Total Distributions (0.16) (0.14)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $ 6.44 $ 6.78
- --------------------------------------------------------------------------------
Total Return (2.62)%++
1.46%++
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $33,397 $45,408
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 0.53%+ 0.53%+
Net investment income 4.91+ 4.65+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 66% 52%
================================================================================
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period November 12, 1998 (inception date) to March 31, 1999.
(4) As a result of voluntary expense limitation, 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.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 33
<PAGE>
- --------------------------------------------------------------------------------
Additional Shareholder Information (Unaudited)
- --------------------------------------------------------------------------------
On April 19, 1999, a special meeting of shareholders of the Trust was held for
the purpose of electing Trustees to the Trust.
The results were as follows:
Shares Percentage Shares Percentage
Voted Of Shares Voted of Shares
Name of Trustees For Voted Against Voted
- --------------------------------------------------------------------------------
Lee Abraham 1,350,265,160.850 97.943 28,359,584.139 2.057%
Allan J. Bloostein 1,351,356,664.226 98.022 27,268,080.763 1.978
Jane F. Dasher 1,352,390,291.715 98.097 26,234,456.274 1.903
Donald R. Foley 1,350,867,506.020 97.987 27,757,238.969 2.013
Richard E. Hanson, Jr 1,351,302,644.963 98.018 27,322,100.026 6.982
Paul Hardin 1,352,452,572.699 98.102 26,172,172.290 1.898
Heath B. McLendon 1,352,481,643.116 98.104 26,143,101.873 1.896
Roderick C. Rasmussen 1,351,438,798.818 98.028 27,185,946.171 1.972
John P. Toolan 1,352,497,455.396 98.105 26,127,289.594 1.895
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
34 1999 Semi-Annual Report to Shareholders
<PAGE>
[This page intentionally left blank]
<PAGE>
[This page intentionally left blank]
<PAGE>
[LOGO OF SALOMON SMITH BARNEY]
------------------------------
A member of citigroup
Trustees Custodian
Lee Abraham PNC Bank, N.A.
Allan J. Bloostein
Jane F. Dasher Shareholder
Donald R. Foley Servicing Agent
Richard E. Hanson, Jr. Smith Barney Private Trust
Paul Hardin 388 Greenwich Street, 22nd Floor
Heath B. McLendon, Chairman New York, New York 10013
Roderick C. Rasmussen
John P. Toolan Sub-Shareholder
Servicing Agent
Joseph H. Fleiss, Emeritus First Data Investor Services Group, Inc.
P.O. Box 9699
Providence, Rhode Island 02940-9699
Officers
Heath B. McLendon
President and This report is submitted for the general
Chief Executive Officer information of the shareholders of Smith
Barney Muni Funds -- Limited Term
Lewis E. Daidone Portfolio. It is not authorized for
Senior Vice President distribution to prospective investors
and Treasurer unless accompanied by a current
Prospectus for the Portfolio, which
Peter M. Coffey contains information concerning the
Vice President Portfolios' investment policies and
expenses as well as other pertinent
Anthony Pace information.
Controller
Christina T. Sydor Salomon Smith Barney is a service mark
Secretary of Salomon Smith Barney Inc.
Investment Manager Smith Barney Muni Funds
SSB Citi Fund Management LLC 388 Greenwich Street, MF-2
New York, New York 10013
Distributor
CFBDS, Inc. www.smithbarney.com/mutual funds
FD0804 11/99
[front cover]
Smith Barney Muni Funds
California
Money Market
Portfolio
- ------------------
SEMI-ANNUAL REPORT
- ------------------
September 30, 1999
[Smith Barney Mutual Funds logo]
NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
<PAGE>
Smith Barney
Muni Funds
[Photos of Heath B. McLendon, Joseph P. Deane and Joseph Benevento]
Dear Shareholder:
We are pleased to provide you with the semi-annual report for the Smith Barney
Muni Funds -- California Money Market Portfolio ("Fund") for the period ended
September 30, 1999. We hope you find this report useful and informative. 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
The Fund 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.1
As of September 30, 1999, the Fund's 7-day current yield was 2.71%. The Fund's
7-day effective yield -- which reflects compounding -- was 2.75%.
Please note that your investment in the Fund is neither insured, nor
guaranteed, by the Federal Deposit Insurance Corporation or 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.
California Economic Highlights
California is currently experiencing a meaningful economic resurgence, as it
enjoys the best financial position it has been in many years. Prior to 1990,
the structural underpinnings of California's economy were supported by its
strong economic growth due in large part to its aerospace and defense
industries and a continually appreciating real estate market. However, during
the past several years, the Golden State's economic recovery has been mainly
driven by the growth of new, more diversified industries, which has effectively
provided a broader economic base.
- ----------
1 A portion of the Portfolio's income may be subjected to the Alternative
Minimum Tax.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds
1
<PAGE>
The nation's largest state economy, and the seventh largest economy in the
world, now appears to be running on all cylinders as real estate prices
throughout the state have shown marked improvements. Building activity posted
impressive gains in June. Total building value was up 18.4% from June 1998,
primarily from an almost 27% growth in the value of residential permits.
Existing home sales in California through June have increased roughly 9.5%,
while the median price of a home in California has increased approximately 8.2%
over June 1998. Furthermore, California's office vacancy rate is among the
lowest in the U.S.
We think these gains, coupled with California's lowest unemployment levels in
eight years and an annual state GDP of more than $1 trillion, should allow
California to remain a competitive economic force for many years to come.
Market Overview and Outlook
For the state of California and most of its localities, June marks the end of
the current fiscal year and the pricing of a large portion of their annual note
financing. Traditionally, this is the largest note issuance period in the
municipal market. In our opinion, there were two major factors investors
grappled with during this period: Federal Reserve Board interest rate policy
and Y2K liquidity concerns.
This year's note issuance period coincided with two consecutive 25 basis point
increases in the short-term interest rates on June 30, 1999 and August 30,
1999.2 As a result, the short-term municipal yield curve began to steepen. Over
this period, one-year municipal note yields increased by roughly 50 to 60 basis
points. In the VRDO (Variable Rate Demand Obligation) market, which represents
the shorter end of the yield curve, rates declined as investors sought the
safety of daily and weekly liquidity. 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.
Along with the rise in one-year municipal note yields the market also
experienced an increase in the premium paid for the most liquid, high quality
note issues. Part of this premium can be explained by the anxiety surrounding
Y2K. While there is no historical data to predict what will occur in the
financial markets due to Y2K concerns we do believe that during uncertain times
investors tend to opt for
- ----------
2 On Tuesday, November 16, 1999, the Fed raised short-term rates by 25 basis
points after this letter was written.
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
liquidity and safety of principal. Given these factors, we do expect the
liquidity premium to increase for the remainder of the fourth quarter 1999.
Investment Strategy
At the present time, we have targeted the Fund's average maturity of 65 to 70
day range while maintaining a higher variable rate position.
Our focus in the municipal note market has been on the high quality liquid
sector of the market. One of the portfolios largest positions, California State
Revenue Anticipation Notes is an example3. The California RAN position is part
of a $1.0 billion issue which was given the highest short term ratings by both
Moody's Investor Services and Standard & Poor's Corporation. (Moody's Investor
Services and Standard & Poor's Corporation are two major credit rating
agencies.) Due to size, and broad appeal, it is considered one of the most
liquid note deals in the market.
Thank you for investing in the Smith Barney Muni Funds -- California Money
Market Portfolio. We look forward to continuing to help you pursue your
financial goals.
Sincerely,
[Signature of Heath B. McLendon] [Signature of Joseph P. Deane]
Heath B. McLendon Joseph P. Deane
Chairman Vice President
[Signature of Joseph Benevento]
Joseph Benevento
Vice President
October 15, 1999
- ----------
3 Please note that the Fund's holdings are subject to change.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
Schedule of Investments (unaudited) September 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- -------------- ----------- -----------------------------------------------------
- ------ -------------
<S> <C> <C>
<C>
$ 5,875,000 A-1+ ABAG Finance Luile Packard Childrens Hospital
Series 93 3.40% (b)
$ 5,875,000
Alameda Contra Costa Schools Financing
Authority Project:
1,625,000 A-1+ Series A 3.55% (b)
1,625,000
10,090,000 A-1+ Series B 3.55% (b)
10,090,000
3,700,000 A-1+ Series C 3.55% (b)
3,700,000
4,900,000 A-1+ Series F 3.55% (b)
4,900,000
21,700,000 A-1+ Series G 3.50% (b)
21,700,000
12,565,000 A-1+ Series H 3.50% (b)
12,565,000
Alameda County:
1,250,000 SP-1+ IDR Design Workshop 3.60% (b)(c)
1,250,000
7,740,000 A-1+ Transportation Authority MBIA-Insured 3.65% (b)
7,740,000
20,000,000 SP-1+ 1999 TRAN 4.00% due 7/7/00
20,100,647
5,300,000 VMIG 1* Anaheim UHSD FSA-Insured 3.50% (b)
5,300,000
3,500,000 A-1 Auburn USD COP Capital Improvement Financing Project
3.30% (b)
3,500,000
4,650,000 VMIG 1* Barstow MFH Rimrock Village 3.45% (b)(c)
4,650,000
4,685,000 A-1 Berkeley Revenue Bonds YMCA Series 93 3.45% (b)
4,685,000
4,600,000 VMIG 1* California Alternative Energy Rock Creek Project
Series 86 3.30% (b)(c)
4,600,000
California EDA Financial Authority:
4,000,000 A-1+ ISO Corp. Project Series B 3.50% (b)
4,000,000
200,000 A-1+ ISO Corp. Project Series C 4.00% (b)
200,000
1,400,000 A-1+ Roller Bearing Co. of America 3.60% (b)(c)
1,400,000
980,000 A-1 Serra Mission Series A 3.95% (b)(c)
980,000
125,000 A-1 Serra Microchassis 3.95% (b)(c)
125,000
5,675,000 A-1+ California Educational Facility Stanford University
3.75% (b)
5,675,000
California Health Facility Authority:
10,000,000 A-1+ Memorial Health Services 3.45% (b)
10,000,000
30,000,000 A-1+ Presbyterian Homes MBIA-Insured 3.45% (b)
30,000,000
Scripps Hospital MBIA-Insured:
6,000,000 A-1+ Series 85 B 3.10% (b)
6,000,000
3,500,000 A-1+ Series 91 B 3.10% (b)
3,500,000
2,100,000 A-1+ Series 98 A 3.10% (b)
2,100,000
15,200,000 A-1+ Series 98 B 3.10% (b)
15,200,000
2,300,000 A-1+ Sutter Series B 3.10% (b)
2,300,000
California HFA Revenue Home Mortgage Revenue:
12,120,000 VMIG 1* PART FHA-Insured 3.57% (b)(c)
12,120,000
2,870,000 A-1+ PART MBIA-Insured Series M 3.57% (b)(c)
2,870,000
10,000,000 A-1+ Series 1 3.10% (b)
10,000,000
California Pollution Control Finance Authority:
8,600,000 VMIG 1* Acro Environmental Improvement Bonds 3.40% (b)(c)
8,600,000
5,500,000 NR++ Athens Series A 3.55% (b)
5,500,000
5,000,000 NR++ Bay Leasing Series A 3.55% (b)
5,000,000
2,000,000 NR++ BLT Enterprises Series 99A 3.55% (b)(c)
2,000,000
See Notes to Financial Statements.
</TABLE>
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
Schedule of Investments (unaudited) (continued) September 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- -------------- ----------- -----------------------------------------------------
- ----------- -------------
<S> <C> <C>
<C>
$ 5,000,000 NR++ Blue Line Transfer 3.55% (b)(c)
$ 5,000,000
2,000,000 A-1 Edison Series 85D 3.30% due 3/7/00
2,000,000
2,290,000 NR++ California County Sanitary Series 99A 3.55% (b)(c)
2,290,000
Pacific Gas & Electric:
40,800,000 A-1+ Series 96 B 3.35% (b)(c)
40,800,000
22,150,000 A-1+ Series 96 C 3.75% (b)
22,150,000
7,650,000 A-1+ Series 96 G 3.75% (b)
7,650,000
2,250,000 A-1+ Series 97 B 3.75% (b)(c)
2,250,000
7,700,000 A-1+ Series E 4.00% (b)
7,700,000
1,900,000 A-1 Series F 3.70% (b)
1,900,000
11,850,000 A-1+ San Diego Gas & Electric PART 3.00% due 2/10/00 (d)
11,850,000
Shell Oil:
100,000 A-1+ 96A 3.50% (b)(c)
100,000
7,000,000 A-1+ 96B 3.75% (b)(c)
7,000,000
8,675,000 P-1* Sierra Pacific Project 3.50% (b)(c)
8,675,000
5,695,000 A-1+ Southdown Series 83A 3.30% (b)
5,695,000
6,700,000 A-1+ Southdown Series 83B 3.30% (b)
6,700,000
17,500,000 A-1+ California School Financing Corp. Project 3.45% (b)
17,500,000
23,500,000 VMIG 1* California Public Capital Improvement Financing
Authority
Series C 3.35% due 12/15/99 (d)
23,500,000
8,750,000 A-1+ California Rancho Water District Finance Authority
FGIC-Insured PART 3.52% (b)
8,750,000
2,400,000 A-1 California Redwood City Hall Project PART 3.40%
(b)(c) 2,400,000
50,000,000 SP-1+ California School Cash Reserve Program Authority
Series
99A 4.00% due 7/3/00
50,280,030
3,090,000 SP-1+ California Single Family Mortgage Series 99 B
3.00% due 2/1/00 (c)(d)
3,090,000
California State GO PART:
5,000,000 A-1+ 3.52% (b)
5,000,000
10,840,000 A-1+ 3.00% due 2/10/00 (d)
10,840,000
California State GO TECP:
32,100,000 A-1 3.00% due 10/5/99
32,100,000
12,000,000 A-1 3.20% due 10/8/99
12,000,000
5,000,000 A-1 3.10% due 10/8/99
5,000,000
10,100,000 A-1 3.10% due 10/13/99
10,100,000
5,000,000 A-1 3.05% due 10/14/99
5,000,000
5,000,000 A-1 3.10% due 10/14/99
5,000,000
20,000,000 A-1 3.00% due 10/14/99
20,000,000
10,000,000 A-1 3.10% due 10/22/99
10,000,000
10,000,000 A-1 3.20% due 11/9/99
10,000,000
66,000,000 SP-1+ California State RAN Series A 4.00% due 6/30/00
66,336,600
California Statewide Development Authority:
2,000,000 A-1+ American Zettler Inc. 3.75% (b)(c)
2,000,000
17,000,000 A-1+ Canyon Creek Apartments 3.40% (b)(c)
17,000,000
2,170,000 A-1+ Charles Loralie 3.75% (b)(c)
2,170,000
2,150,000 A-1 Foxwood Apartments Series J 3.50% (b)
2,150,000
8,400,000 VMIG 1* Northern California Retired Officers 3.80% (b)
8,400,000
See Notes to Financial Statements.
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
Schedule of Investments (unaudited) (continued) September 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------- ----------- ----------------------------------------------------
- ------ --------------
<S> <C> <C>
<C>
$10,000,000 A-1+ One Park Place 3.35% (b)(c)
$10,000,000
7,500,000 NR++ Parkway Apartments Series 98 Z 4.10% (b)(c)
7,500,000
10,000,000 SP-1+ Series A-1 4.00% due 6/30/00 (b)
10,059,237
3,200,000 A-1+ Sunclipse Inc. 3.75% (b)(c)
3,200,000
2,600,000 NR++ Supreme Truck Bodies 3.75% (b)(c)
2,600,000
24,400,000 A-1+ California Transit Finance Authority Series 97
FSA-Insured 3.60% (b)
24,400,000
16,555,000 A-1 California Veterans Affairs Series 98 AMBAC-Insured
PART 3.08% due 9/14/99 (b)(c)
16,555,000
Chula Vista IDR San Diego Gas & Electric:
26,500,000 A-1 Series 92B 3.40% (b)(c)
26,500,000
1,700,000 A-1 Series 97A 3.60% (b)(c)
1,700,000
Clipper California Tax-Exempt Trust Part:
20,730,000 VMIG 1* Series 96-1 MBIA-Insured 3.78% (b)
20,730,000
6,045,000 VMIG 1* Series 96-6B MBIA-Insured 3.88% (b)(c)
6,045,000
5,920,000 VMIG 1* Series 96-7A 3.78% (b)(c)
5,920,000
16,850,000 VMIG 1* Series 98-99 AMBAC-Insured 3.77% (b)(c)
16,850,000
31,000,000 NR Clovis USD TRAN 3.45% due 6/30/00
31,078,370
25,400,000 A-1+ Contra Costa County MFH Revenue
Series A 3.35 (b)(c)
25,400,000
Contra Costa County TRAN:
10,900,000 A-1+ PART 3.35% due 10/1/99 (b)
10,900,000
3,000,000 SP-1+ Series A 4.00% due 9/29/00
3,017,823
25,000,000 A-1+ 5.00% due 10/1/99
25,000,000
3,000,000 VMIG 1* Contra Costa Water Revenue PART 3.50% due 4/26/00
3,000,000
2,600,000 A-1+ Corona MFH (Country Hills Project) 3.55% (b)
2,600,000
11,000,000 A-1+ East Bay Municipal Utility District TECP 3.20%
due 10/13/99
11,000,000
2,000,000 A-1+ Fairfield IDA (R. Dakin & Co. Project) 3.30% (b)
2,000,000
5,000,000 SP-1+ Fairfield Suisun USD TRAN 3.50% due 6/30/00
5,013,725
4,000,000 A-1 Fremont COP Project A 3.55% (c)
4,000,000
5,800,000 A-1+ Fremont Treetops Apartments Series A 3.40% (b)(c)
5,800,000
7,150,000 A-1+ Garden Grove MFH Apartment Series A 3.40% (b)(c)
7,150,000
6,050,000 A-1+ Hemet HFA Mercury S&L Sunwest Resort Project
3.30% (b)
6,050,000
7,000,000 A-1+ Huntington Beach Series 96A 3.30% (b)
7,000,000
Irvine Public Facilities Capital Improvement:
22,230,000 VMIG 1* Series 85 3.30% (b)
22,230,000
9,826,000 VMIG 1* Series 97-17 3.50% (b)
9,826,000
2,700,000 A-1+ Series 87-8 3.50% (b)
2,700,000
Irvine Ranch Water Districts:
5,200,000 A-1+ Series A 4.00% (b)
5,200,000
1,200,000 A-1 Series 91 3.50% (b)
1,200,000
200,000 A-1 + 4.00% (b)
200,000
21,000,000 SP-1+ Kern County California TRAN 3.30% due 6/30/00
21,093,318
3,650,000 A-1 Lancaster MFA (Willows Project) Series A 3.70% (b)
3,650,000
8,000,000 A-1+ Lodi IDA (Dart Container) 3.30%(b)
8,000,000
See Notes to Financial Statements.
</TABLE>
- --------------------------------------------------------------------------------
6 1999 Semi-Annual Report to Shareholders
<PAGE>
Schedule of Investments (unaudited) (continued) September 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------- ----------- ----------------------------------------------------
- ---- --------------
<S> <C> <C>
<C>
$36,450,000 A-1+ Long Beach California Health Facility Revenue
(Memorial
Health Services) Series 1991 3.50% (b)
$36,450,000
300,000 VMIG 1* Los Angeles Apartment Improvement Revenue 3.80% (b)
300,000
9,735,000 AAA Los Angeles COP Correct Facility Pre-Refunded--
Escrowed with U.S. government securities to 9/1/00
Call @ 100, 6.50% due 9/1/13
10,188,412
3,000,000 NR+ Los Angeles County GO Series B 6.00% due 9/1/00
3,067,040
48,700,000 SP-1+ Los Angeles County TRAN Series A 4.00% due 6/30/00
48,940,278
3,150,000 A-1+ Los Angeles FGIC-Insured 3.52% (b)
3,150,000
Los Angeles Wastewater TECP:
16,000,000 VMIG 1* PART FGIC-Insured 3.18% due 3/1/00 (d)
16,000,000
10,000,000 A-1+ 3.15% due 11/12/99
10,000,000
3,000,000 A-1+ 3.25% due 3/9/00
3,000,000
Los Angeles MFH:
10,000,000 A-1+ Baldwin Hills 3.65% (b)
10,000,000
2,400,000 A-1+ Fountain Park 3.35% (b)
2,400,000
3,650,000 A-1+ Malibu Meadows Project Series A 3.30% (b)
3,650,000
8,750,000 A-1+ Los Angeles Sanitation District PART 3.52% (b)
8,750,000
10,000,000 VMIG 1* Los Angeles CA USD Series A19 3.70% (b)
10,000,000
5,500,000 VMIG 1* Modesto MFH Shadowbrook Project Series A 3.55% (b)
5,500,000
MSR Public Power Agency San Juan Project:
12,700,000 A-1+ MBIA-Insured Series E 3.30% (b)
12,700,000
200,000 A-1+ MBIA-Insured Series 98F 3.60% (b)
200,000
3,350,000 VMIG 1* Monterey MFH Slautterback Project 3.45% (b)(c)
3,350,000
3,000,000 SP-1+ Moreland California School District TRAN
3.50% due 6/30/00
3,008,235
4,600,000 SP-1+ New Haven TRAN 3.50% due 6/30/00
4,612,627
23,700,000 A-1+ Oakland Joint Power Finance Authority Lease Bonds
FSA-Insured Series 98 A 13.30% (b)
23,700,000
Orange County Apartment Housing Development:
5,275,000 VMIG 1* Alicia Series A 3.75% (b)
5,275,000
10,300,000 VMIG 1* Foothill Oaks 3.40% (b)(c)
10,300,000
10,000,000 A-1+ Oasis Martinique Project 3.45% (b)
10,000,000
13,200,000 A-1+ Park Ridge Series 98 I 3.30% (b)
13,200,000
2,670,000 A-1+ Trabuco Woods Series 98J 3.30% (b)
2,670,000
9,500,000 A-1+ Vintage Woods Series 98H 3.30% (b)
9,500,000
7,000,000 A-1+ WLCO Series 98G1 3.55% (b)
7,000,000
1,700,000 A-1+ Wood Canyon Villas 3.55% (b)(c)
1,700,000
Orange County California Sanitation Districts:
6,050,000 A-1+ Series 90 FGIC-Insured 3.60% (b)
6,050,000
15,000,000 A-1+ Series 92 AMBAC-Insured 3.40% (b)
15,000,000
1,100,000 A-1+ Series 93 AMBAC-Insured 3.50% (b)
1,100,000
12,470,000 A-1+ Palo Alto USD Series R PART 3.80% (b)
12,470,000
Pasadena COP Rose Bowl Improvement Project:
6,600,000 VMIG 1* Series 91 3.10% (b)
6,600,000
4,720,000 VMIG 1* Series 96 3.10% (b)
4,720,000
See Notes to Financial Statements.
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
Schedule of Investments (unaudited) (continued) September 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- -------------- ----------- -----------------------------------------------------
- ---------- -------------
<S> <C> <C>
<C>
$ 8,875,111 Aaa* Pitney Bowes California LeaseTopps Series 99-1
3.80% due 7/12/00 (d)
$ 8,875,111
5,000,000 SP-1+ Pleasanton TRAN 3.50% due 6/30/00
5,013,725
6,700,000 A-1+ Ponoma Redevelopment Agency MFH Park and Plaza
Apartment Series A 3.30% (b)
6,700,000
Puerto Rico Governmental Development Bond Bank TECP:
1,500,000 A-1+ Bond Bank MBIA-Insured 3.10% (b)
1,500,000
17,000,000 A-1+ 3.10% due 10/7/99
17,000,000
6,000,000 A-1+ 3.10% due 10/12/99
6,000,000
11,350,000 A-1+ 3.35% due 10/15/99
11,350,000
13,500,000 A-1+ 3.30% due 12/10/99
13,500,000
4,900,000 A-1+ 3.20% due 12/14/99
4,900,000
23,143,000 A-1+ 3.25% due 2/23/00
23,143,000
11,747,000 A-1+ 3.35% due 2/24/00
11,747,000
11,512,000 A-1+ 3.35% due 2/24/00
11,512,000
13,882,000 A-1+ 3.30% due 2/24/00
13,882,000
2,500,000 A-1+ 5.50% due 7/1/00
2,535,634
4,900,000 A-1+ Puerto Rico Highway Transportation Authority Series A
AMBAC-Insured 3.45% (b)
4,900,000
5,150,000 A-1 Puerto Rico Public Finance Corp. PART AMBAC-Insured
3.52% (b)
5,150,000
5,860,000 A-1+ Puerto Rico Infrastructure AMBAC-Insured 3.52% (b)
5,860,000
10,200,000 A-1+ Puerto Rico Electric Power PART MBIA-Insured
3.45% (b)
10,200,000
33,630,000 AAA Puerto Rico Independent Medical and Environmental
PCR Abbot Laboratories 2.90% due 3/1/00 (d)
33,630,000
14,005,000 A-1 Regents University of California Series E PART
MBIA-Insured 3.45% due 10/1/02
14,005,000
1,900,000 VMIG 1* Riverside County IDA Rockwin Corp. Series II
3.55% (b)(c)
1,900,000
Riverside Country MFH:
10,600,000 VMIG 1* Amanda Park Project Series A 3.40% (b)(c)
10,600,000
2,500,000 A-1 MFH Countrywood Apartments Series D 3.40% (b)
2,500,000
15,567,000 SP-1+ Riverside Teeter Obligation TECP Series B 3.25%
due 2/15/00
15,567,000
21,500,000 A-1+ Riverside School Finance Authority 98-99 PART
3.45% due 10/1/99
21,500,000
6,500,000 VMIG 1* Sacramento Airport PART FGIC-Insured 3.57% (b)(c)
6,500,000
50,000,000 A-1 Sacramento County TRAN 99 Series 3.70% (b)
50,000,000
6,000,000 SP-1+ San Bernadino TRANS 3.75% due 9/29/00
6,021,424
68,300,000 A-1+ San Bernardo County COP Medical Center Project
3.10% (b)
68,300,000
San Bernadino County MFH:
1,800,000 VMIG* Series A-2 3.20% due 6/1/00
1,834,091
2,850,000 NR++ Sycmore Terr 3.30% (b)
2,850,000
17,000,000 SP-1+ San Diego TAN Series A 4.25% due 9/29/00
17,135,188
See Notes to Financial Statements.
</TABLE>
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
Schedule of Investments (unaudited) (continued) September 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY
VALUE
- --------------- ----------- ----------------------------------------------------
- ------------ --------------
<S> <C> <C>
<C>
$ 10,005,000 VMIG* San Diego TRAN 5.00% due 9/29/00
$10,160,071
10,000,000 SP-1+ San Diego Government Pool TRAN Series A 4.00%
due 9/29/00
10,061,406
5,508,000 A-1+ San Diego Housing Authority (Carman Del Mar
(Apartments) Project) 3.30% (b)
5,508,000
15,000,000 A-1 San Diego USD TRAN 3.30% due 2/1/00
15,000,000
10,000,000 VMIG 1* San Diego Water Project PART FGIC-Insured 3.57% (b)
10,000,000
3,000,000 NR++ San Dimas California Redevelopment Agency
(San Dimas Community Center) 3.25% (b)
3,000,000
San Francisco MFH:
33,600,000 VMIG 1* Bayside Village Series 85A 3.35% (b)
33,600,000
25,000,000 A-1+ Bayside Village Series 85B 3.35% (b)
25,000,000
23,800,000 A-1+ Fillmore Center 3.10% (b)
23,800,000
8,000,000 VMIG 1* Series C 3.45% (b)(c)
8,000,000
30,730,000 VMIG 1* St. Francis Housing Series 89A 3.60% (b)
30,730,000
16,800,000 A-1+ San Francisco MFH City Heights Apartments Project
Series 97 A 3.40% (b)(c)
16,800,000
3,000,000 VMIG 1* San Jose MFH Almanden Lake Village Apartment
Project 3.45% (b)(c)
3,000,000
6,690,000 A-1+ San Jose - Santa Clara California Water Authority
PART
FGIC-Insured 3.52% (b)
6,690,000
1,000,000 P-1* Santa Ana IDA Newport Electronics Project 3.60% (b)
1,000,000
5,900,000 A-1+ Santa Clara County MFH (Benton Park Apartments
Project) 3.30% (b)
5,900,000
10,000,000 SP-1+ Santa Cruz County TRAN 4.50% due 10/6/00
10,097,140
Simi Valley MFH:
5,745,000 VMIG 1* Creekside Village Apartments Series A 3.30% (b)
5,745,000
26,500,000 A-1 Lincoln Wood Ranch 3.55% (b)
26,500,000
10,000,000 MIG 1* Solano California County TRAN Series 98
4.50% due 10/6/00
10,010,973
South East Recovery Facilities Authority:
59,579,000 A-1+ Series A 3.30% (b)
59,579,000
7,000,000 A-1+ Series B 3.35% (b)
7,000,000
4,750,000 A-1+ Southern California Metropolitan Water District
3.52% (b) 4,750,000
62,800,000 A-1+ Southern California Public Power Authority Project
South
Transmission FSA-Insured 3.30% (b)
62,800,000
10,000,000 SP-1+ Stainslaus County TRAN 4.00% due 8/1/00
10,048,138
1,900,000 A-1+ Stockton MFH Mariners 3.35% (b)
1,900,000
6,000,000 A-1+ Union City MFH 3.30% (b)
6,000,000
7,000,000 A-1+ Upland California Mountain Springs Series 98A
3.30% (b)
7,000,000
9,600,000 A-1+ Vacaville Apartments Series 99 3.30% (b)
9,600,000
5,000,000 SP-1+ Vacaville USD TRAN 3.50% due 6/30/00
5,013,724
7,000,000 A-1+ West Basin Muni Water District 3.40% (b)
7,000,000
See Notes to Financial Statements.
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
Schedule of Investments (unaudited) (continued) September 30, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
- --------------- ----------- --------------------------------- -----------------
<S> <C> <C> <C>
$ 9,465,000 A-1+ Westminster Redevelopment Agency
AMBAC-Insured 3.40% (b) $ 9,465,000
------------ --------------------------------- --------------
TOTAL INVESTMENTS -- 100%
(Cost -- $2,266,816,965**) $2,266,816,965
------------ --------------------------------- --------------
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service with the exception of
those identified by an asterisk (*) which are rated by Moody's Investors
Service, Inc.
(b) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(c) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(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.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Semi-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.
Aaa -- Bonds rated "Aaa" by Moody's 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.
- --------------------------------------------------------------------------------
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.
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 (unaudited) September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at amortized cost $2,266,816,965
Cash 61,625
Interest receivable 10,746,323
Other assets 340,191
- ------------------------------------------------------------ --------------
Total Assets 2,277,965,104
- ------------------------------------------------------------ --------------
LIABILITIES:
Payables for securities purchased 68,362,830
Dividends payable 2,770,369
Management fees payable 938,472
Distribution fees payable 62,119
Deferred compensation payable 8,680
Accrued expenses 125,000
- ------------------------------------------------------------ --------------
Total Liabilities 72,267,470
- ------------------------------------------------------------ --------------
Total Net Assets $2,205,697,634
- ------------------------------------------------------------ --------------
NET ASSETS:
Par value of shares of beneficial interest $ 2,205,829
Capital paid in excess of par value 2,203,529,960
Accumulated net realized loss from security transactions (38,155)
- ------------------------------------------------------------ --------------
Total Net Assets $2,205,697,634
- ------------------------------------------------------------ --------------
Shares Outstanding:
Class A 2,205,826,504
- ------------------------------------------------------------ --------------
Class Y 2,466
- ------------------------------------------------------------ --------------
Net Asset Value, Per Share $ 1.00
- ------------------------------------------------------------ --------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended September 30, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 33,156,172
- ---------------------------------------------- ------------
EXPENSES:
Management fees (Note 4) 5,415,521
Distribution fees (Note 4) 1,083,103
Shareholder and system servicing fees 372,919
Registration fees 154,533
Shareholder communications 64,294
Audit and legal 24,046
Custody 15,722
Trustees' fees 8,995
Other 22,625
- ---------------------------------------------- ------------
Total Expenses 7,161,758
- ---------------------------------------------- ------------
Net Investment Income 25,994,414
- ---------------------------------------------- ------------
Net Realized Loss From Security Transactions (37,149)
- ---------------------------------------------- ------------
Increase in Net Assets From Operations $ 25,957,265
- ---------------------------------------------- ------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended September 30, 1999 (unaudited)
and the Year Ended March 31, 1999
<TABLE>
<CAPTION>
September 30 March
31
------------------- -------------
- ------
<S> <C> <C>
OPERATIONS:
Net investment income $ 25,994,414 $
49,115,513
Net realized gain (loss) (37,149)
153,566
- ------------------------------------------ -------------- -------------
- -
Increase in Net Assets From Operations 25,957,265
49,269,079
- ------------------------------------------ -------------- -------------
- -
DISTRIBUTION TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (25,994,414)
(49,115,513)
- ------------------------------------------ -------------- -------------
- -
Decrease in Net Assets From
Distributions To Shareholders (25,994,414)
(49,115,513)
- ------------------------------------------ -------------- -------------
- -
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 5,098,565,890
8,107,812,026
Net asset value of shares issued
for reinvestment of dividends 24,823,895
47,695,059
Cost of shares reacquired (5,054,153,497)
(7,811,903,718)
- ------------------------------------------ -------------- -------------
- -
Increase in Net Assets From
Fund Share Transactions 69,236,288
343,603,367
- ------------------------------------------ -------------- -------------
- -
Increase in Net Assets 69,199,139
343,756,933
NET ASSETS:
Beginning of period 2,136,498,495
1,792,741,562
- ------------------------------------------ -------------- -------------
- -
End of period $2,205,697,634
$2,136,498,495
- ------------------------------------------ -------------- -------------
- -
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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 eight other separate investment portfolios: Florida, Georgia,
Limited Term, New York, National, Pennsylvania, Massachusetts Money Market and
New York Money Market Portfolios. The financial statements and financial
highlights for the other portfolios are presented in separate shareholder
reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) 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 (unaudited) (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
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., 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.
CFBDS, Inc. ("CFBDS") acts as the Fund's distributor. Salomon Smith Barney Inc.
("SSB"), another subsidiary of SSHB 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 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
6. Shares of Beneficial Interest
At September 30, 1999, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share.
At September 30, 1999, total paid-in capital amounted to the following for each
class:
<TABLE>
<CAPTION>
Class A Class Y
- --------------------------------------------------------------------------------
<S> <C> <C>
Total Paid-in Capital $2,205,733,323 $2,466
- --------------------------------------------------------------------------------
Transactions in shares of the Portfolio were as follows:
Six Months Ended Year Ended
September 30, 1999 March 31, 1999
- --------------------------------------------------------------------------------
Class A
Shares sold 5,098,565,890 8,107,803,549
Shares issued on reinvestment 24,823,865 47,691,799
Shares reacquired (5,054,153,497) (7,808,481,271)
- --------------------------------------------------------------------------------
Net Increase 69,236,258 347,014,077
- --------------------------------------------------------------------------------
Class Y
Shares sold -- 8,477
Shares issued on reinvestment 30 3,260
Shares reacquired -- (3,422,447)
- --------------------------------------------------------------------------------
Net Increase (Decrease) 30 (3,410,710)
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares 1999(1) 1999 1998
1997 1996 1995
- --------------------------------------------------------------------------------
- ---------------------------------------------
<S> <C> <C> <C>
<C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00
$ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
- ---------------------------------------------
Net investment income (2) 0.012 0.026 0.029
0.028 0.032 0.026
Dividends from
net investment income (0.012) (0.026)
(0.029) (0.028) (0.032) (0.026)
- --------------------------------------------------------------------------------
- ---------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00
$ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
- ---------------------------------------------
Total Return 1.21%++ 2.61%
2.98% 2.79% 3.22% 2.66%
- --------------------------------------------------------------------------------
- ---------------------------------------------
Net Assets, End of Period (millions) $ 2,206 $ 2,136 $ 1,789
$ 1,400 $ 1,346 $ 953
- --------------------------------------------------------------------------------
- ---------------------------------------------
Ratios to Average Net Assets:
Expenses (2)(3) 0.66%+ 0.64%
0.63% 0.67% 0.64% 0.61%
Net investment income 2.40+ 2.55 2.92
2.75 3.15 3.02
- --------------------------------------------------------------------------------
- ---------------------------------------------
Class Y Shares 1999(1) 1999 1998
1997(4)
- --------------------------------------------------------------------------------
- ---------------------------------------------
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00
$ 1.00
- --------------------------------------------------------------------------------
- ---------------------------------------------
Net investment income 0.014 0.026 0.031
0.020
Dividends from
net investment income (0.014) (0.026)
(0.031) (0.020)
- --------------------------------------------------------------------------------
- ---------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00
$ 1.00
- --------------------------------------------------------------------------------
- ---------------------------------------------
Total Return 1.38%++ 2.60%
3.09% 2.04%++
- --------------------------------------------------------------------------------
- ---------------------------------------------
Net Assets, End of Period (000's) $ 2 $ 2 $ 3,413
$ 7,405
- --------------------------------------------------------------------------------
- ---------------------------------------------
Ratios to Average Net Assets:
Expenses (5) 0.56%+ 0.51%
0.54% 0.56%+
Net investment income 2.48+ 2.68 3.01
2.77+
- --------------------------------------------------------------------------------
- ---------------------------------------------
</TABLE>
(1) For the six months ended September 30, 1999 (unaudited).
(2) 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:
<TABLE>
<CAPTION>
Per Share Decreases Expense Ratios
to Net Investment Income Without Fee Waivers
------------------------ ---------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----
Class A $0.000* $0.002 0.65% 0.63%
</TABLE>
(3) 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.
(4) For the period July 19, 1996 (inception date) to March 31, 1997.
(5) 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.
++ Total return is not annualized, as the result may not be representative of
the total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On April 19, 1999, a special meeting of shareholders of the Trust was held for
the purpose of electing Trustees to the Trust.
The results were as follows:
<TABLE>
<CAPTION>
Shares Percentage Shares
Percentage
Voted of Shares Voted
of Shares
Name of Trustees For Voted Against
Voted
- --------------------------------------------------------------------------------
- --------------
<S> <C> <C> <C>
<C>
Lee Abraham 1,350,265,160.850 97.943% 28,359,584.139
2.057%
Allan J. Bloostein 1,351,356,664.226 98.022 27,268,080.763
1.978
Jane F. Dasher 1,352,390,291.715 98.097 26,234,453.274
1.903
Donald R. Foley 1,350,867,506.020 97.987 27,757,238.969
2.013
Richard E. Hanson, Jr. 1,351,302,644.963 98.018 27,322,100.026
1.982
Paul Hardin 1,352,452,572.699 98.102 26,172,172.290
1.898
Heath B. McLendon 1,352,481,043.116 98.104 26,143,101.873
1.896
Roderick C. Rasmussen 1,351,438,708.918 98.028 27,185,946.171
1.972
John P. Toolan 1,352,497,455.395 98.105 26,127,289.594
1.895
- --------------------------------------------------------------------------------
- ------------
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
(This page intentionally left blank)
<PAGE>
[back cover]
[Salomon Smith Barney Logo]
TRUSTEES
Lee Abraham
Allan J. Bloostein
Jane F. Dasher
Donald R. Foley
Richard E. Hanson, Jr.
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
SSB Citi Fund Management LLC
DISTRIBUTOR
CFBDS, Inc.
CUSTODIAN
PNC Bank, N.A.
TRANSFER AGENT
Smith Barney Private Trust
388 Greenwich Street, 22nd Floor
New York, New York 10013
SUB-TRANSFER AGENT
First Data Investors Services
Group, Inc.
P.O. Box 9699
Providence, Rhode Island 02940-9699
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/mutualfunds
FD0805 11/99
