<PAGE>
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SMITH BARNEY
MUNI FUNDS
LIMITED TERM PORTFOLIO
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STYLE PURE SERIES | SEMI-ANNUAL REPORT | SEPTEMBER 30, 2000
[LOGO OF SMITH BARNEY]
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NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
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<PAGE>
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A Message From the Chairman
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The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam. At SSB Citi Fund
Management LLC ("SSB Citi"), we have instituted many positive changes, with the
ultimate goal of offering our investors a well-rounded menu of stock and bond
funds that can be tailored to a wide range of investment objectives.
[PHOTO]
HEATH B.
MCLENDON
Chairman
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $395.5 billion in assets under management/1/,
we believe that SSB Citi offers choices and solutions, uniting the distinguished
history of Smith Barney with the unparalleled global reach of its parent,
Citigroup.
The Smith Barney family of funds represents a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney mutual funds and the investment professionals who manage them.
The Smith Barney Muni Funds -- Limited Term Portfolio ("Portfolio") seeks as
high a level of income exempt from federal income taxes/2/ as is consistent with
prudent investing. The Portfolio normally invests in securities that have
remaining maturities of 20 years or less and maintains an average effective
maturity of between 3 and 10 years. Peter Coffey and his investment team believe
intermediate-term municipal bonds currently offer attractive value for investors
seeking tax-exempt income because historically intermediate-term high quality
municipal bonds have offered higher yield potential than shorter-term bonds and
potentially less market volatility than longer-term maturity municipal bonds.
(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.)
-------------
1 As of September 30, 2000. This figure represents SSB Citi's assets under
management for retail, institutional, money and separate accounts.
2 Please note a portion of the income from the Portfolio may be subject to
the Alternative Minimum Tax ("AMT").
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Smith Barney Muni Funds 1
<PAGE>
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and the ultimate in
resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
October 17, 2000
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2 2000 Semi-Annual Report to Shareholders
<PAGE>
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Shareholder Letter
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Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney Muni
Funds-- Limited Term Portfolio ("Portfolio") for the period ended September 30,
2000. In this report we have summarized the period's prevailing economic and
market conditions and outlined our investment strategy. The information provided
in this letter represents the opinion of the manager and is not intended to be a
forecast of future events, a guarantee of future results nor investment advice.
[PHOTO]
PETER M.
COFFEY
Vice President
Further, there is no assurance that certain securities will remain in or out of
the Portfolio. Please refer to pages 10 through 20 for a list and percentage
breakdown of the Portfolio's holdings. Also, please note any discussion of the
Portfolio's holdings is as of September 30, 2000 and is subject to change. A
detailed summary of the Portfolio's performance can be found in the appropriate
sections that follow. We hope you find this report to be useful and informative.
Performance and Investment Strategy
For the six months ended September 30, 2000, the Portfolio's Class A shares,
without and with sales charges returned 2.76% and 0.71%, respectively. In
comparison, the Lehman Brothers Municipal Bond Index ("Lehman Index")/1/
returned 3.97%.
Because we think the bond markets are likely to remain volatile in the near
term, we continue to favor a gradual approach into the market. We tend to favor
longer and intermediate maturities, where we believe most of the benefits of the
steep positive slope of the municipal yield curve/2/ can be obtained.
During the reporting period, average credit quality remained relatively high in
the Portfolio. Although quality spreads during the period have widened due to
earnings pressure, especially in hospital- and healthcare-related sectors, the
difference in yield between the highest-quality issues and medium grade issues,
in our view, remained relatively modest. We think our proprietary research
enables us to invest in select medium-term credits for which perceived market
risk may be greater than our analysis otherwise indicates. Moreover, while no
guarantees can be made, we think our strategy may have the potential to increase
income over time.
--------------
1 The Lehman Index is a broad measure of the municipal bond market with
maturities of at least one year. Please note an investor cannot invest
directly in an index.
2 The yield curve is the graphical depiction of the relationship between the
yield on bonds of the same credit quality but different maturities.
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Smith Barney Muni Funds 3
<PAGE>
During the reporting period, we took advantage of rising interest rates to
generate additional yield in the Portfolio. We also looked to incorporate
additional call protection/3/ into the Portfolio by selling off some of our
higher coupon bonds with shorter calls/4/, and replacing them with bonds that
have a similar high coupon structure, but are not subject to early call.
One of the ways that we manage the Portfolio is to seek to create a built-in
income stream for the long term. To this end, we have generally focused on
investing in securities with high credit quality and good call protection, as we
believe these securities offer solid long-term values.
Moreover, we have a fairly long weighted-average life/5/ in the Portfolio
because we believe that the risk of higher inflation at the present time is
negligible. In addition, we think our greater emphasis on call protection may
provide our shareholders with consistent income if interest rates do in fact go
down.
Market Overview and Outlook
The municipal bond market continues to be dominated by supply and demand factors
such as lower new issue volume, strong retail demand and very limited
institutional demand. In addition, the U.S. Treasury market also appears to be
influenced from its own supply and demand factors and the market has become so
thin as a result of collapsing supply that a handful of seemingly minor factors
can have a dramatic impact on yields across the entire U.S. Treasury yield
curve.
In the overall bond market, yield spreads have narrowed and benchmark yield
levels have dropped by nearly a percentage point during the period in response
to evidence that underlying inflation risks have subsided and economic growth is
slowing down from the rapid 6% pace of the past year. We think there is a good
chance that the decline in yields has further to go. Yet, on the other hand, a
host of technical and other considerations may stall the market or cause yields
to rise temporarily, barring a dramatic new sign that the U.S. economic
expansion is slowing below an expected 3% to 4% annual pace.
We think conditions appear favorable for interest rates. First, on the
structural side, the massive federal surplus is fueling a collapse of U.S.
Treasury note and bond supply. On the cyclical side, potential sources of
inflation such as consumer growth being too strong and a tight labor market,
appear to be moderating. However, temporary concerns remain in the form of heavy
private sector issuance, soaring
------------
3 Call protection is the length of time during which a security cannot be
redeemed by the issuer.
4 Callable bonds are redeemable by the issuer before the scheduled maturity
under specific conditions and at a stated price, which usually begins at a
premium to par and declines annually. Bonds are usually "called" when
interest rates fall so significantly that the issuer can save money by
floating new bonds at lower rates
5 Average life is the length of time before the principal of debt issues is
scheduled to be repaid through amortization or sinking fund.
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4 2000 Semi-Annual Report to Shareholders
<PAGE>
energy costs and the upcoming Presidential and Congressional elections. On the
energy front, we believe that recent price rises may act more like a tax
increase rather than as a spur to higher prices throughout the economy. That is,
as consumers spend more on gasoline and heating oil, they may moderate their
spending on discretionary items. Under this scenario, the results may be a
gradual slowing of growth rather than a spike in underlying inflation.
The spectacular productivity gains of this year have kept underlying inflation
at extremely comfortable levels, with the "core consumption deflator," a
favorite measure of Federal Reserve Board ("Fed") Chairman Alan Greenspan,
running at a miniscule 0.8% annual rate for the past six months. A second key
point, related to the first, is we think the likelihood of significant
additional Fed tightening appears to be minimal.
New issue supply in the municipal bond market continues to trail far behind
levels reached in 1998 and 1999. Through mid-September 2000, volume was 21%
lower than 1999 levels, while full-year 1999 issuance had already declined 21%
from the 1998 peak. The main reason for the decline is the lack of refunding
volume. With interest rates still higher than they were during 1998 and the
first half of 1999, issuers have had little incentive to refund previous issues.
Individual investor demand for municipals has remained extremely strong, despite
the recent easing of yields from early 2000 levels. Given the small size of the
municipal bond market relative to the stock market, even a modest shift of
assets out of stocks and into municipals can create an enormous amount of new
demand for municipal bonds. In short, we think municipal bonds appear to be
attractively priced relative to underlying inflation rates in an environment of
very light supply and muted or near-dormant institutional demand.
Thank you for investing in the Smith Barney Muni Funds - Limited Term Portfolio.
We look forward to helping you pursue your financial goals in the future.
Sincerely,
/s/ Peter M. Coffey
Peter M. Coffey
Vice President
October 17, 2000
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Smith Barney Muni Funds 5
<PAGE>
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Historical Performance -- Class A Shares
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Net Asset Value
-----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns/(1)/
================================================================================
9/30/00 $ 6.36 $ 6.36 $ 0.17 2.76%+
--------------------------------------------------------------------------------
3/31/00 6.78 6.36 0.32 (1.46)
--------------------------------------------------------------------------------
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
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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
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3/31/92 6.38 6.45 0.42 7.99
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3/31/91 6.28 6.38 0.40 8.23
================================================================================
Total $ 3.82
================================================================================
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Historical Performance -- Class L Shares
--------------------------------------------------------------------------------
Net Asset Value
-----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns/(1)/
================================================================================
9/30/00 $ 6.37 $ 6.37 $ 0.17 2.65%+
--------------------------------------------------------------------------------
3/31/00 6.79 6.37 0.30 (1.69)
--------------------------------------------------------------------------------
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
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Inception* - 3/31/93 6.62 6.68 0.09 2.28+
================================================================================
Total $ 2.57
================================================================================
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6 2000 Semi-Annual Report to Shareholders
<PAGE>
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Historical Performance -- Class Y Shares
--------------------------------------------------------------------------------
Net Asset Value
-----------------------
Beginning End Income Total
Period Ended of Period of Period Dividends Returns/(1)/
================================================================================
9/30/00 $ 6.36 $ 6.36 $ 0.18 2.86%+
--------------------------------------------------------------------------------
3/31/00 6.78 6.36 0.33 (1.31)
--------------------------------------------------------------------------------
Inception* - 3/31/99 6.82 6.78 0.14 1.46+
================================================================================
Total $ 0.65
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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Average Annual Total Returns
-------------------------------------------------------------------------------
Without Sales Charges/(1)/
--------------------------------------------
Class A Class L Class Y
================================================================================
Six Months Ended 9/30/00+ 2.76% 2.65% 2.86%
--------------------------------------------------------------------------------
Year Ended 9/30/00 4.07 3.83 4.25
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 4.32 4.07 N/A
--------------------------------------------------------------------------------
Ten Years Ended 9/30/00 5.80 N/A N/A
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Inception* through 9/30/00 6.02 4.60 1.58
================================================================================
With Sales Charges/(2)/
--------------------------------------------
Class A Class L Class Y
================================================================================
Six Months Ended 9/30/00+ 0.71% 0.70% 2.86%
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Year Ended 9/30/00 2.01 1.74 4.25
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Five Years Ended 9/30/00 3.88 3.86 N/A
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Ten Years Ended 9/30/00 5.59 N/A N/A
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Inception* through 9/30/00 5.83 4.46 1.58
================================================================================
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Smith Barney Muni Funds 7
<PAGE>
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Cumulative Total Returns
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Without Sales Charges/(1)/
================================================================================
Class A (9/30/90 through 9/30/00) 75.76%
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Class L (Inception* through 9/30/00) 41.68
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Class Y (Inception* through 9/30/00) 2.99
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to Class
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 also 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.
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8 2000 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 1990 -- September 2000
[GRAPH]
LIMITED
TERM LEHMAN BROTHERS LEHMAN BROTHERS
DATE PORTFOLIO MUNICIPAL BOND INDEX 10-YEAR BOND INDEX
9/30/90 9,798 10,000 10,000
3/91 10,285 10,667 10,712
9/91 11,319 11,364
3/92 11,107 11,733 11,710
9/92 12,502 12,520
3/93 12,197 13,202 13,259
9/93 14,094 14,188
3/94 12,643 13,508 13,632
9/94 13,751 13,928
3/95 13,362 14,513 14,656
9/95 15,289 15,572
3/96 14,250 15,729 15,957
9/96 16,212 16,327
3/97 14,863 16,585 16,789
9/97 17,673 17,881
3/98 16,151 18,362 18,533
9/98 19,214 19,456
3/99 17,005 19,501 19,695
9/99 19,080 19,566
3/00 16,757 19,484 19,992
9/30/00 17,221 20,258 20,814
+ Hypothetical illustration of $10,000 invested in Class A shares on
September 30, 1990, 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,
2000. 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 9
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Education -- 10.6%
Arizona Education Loan Marketing Corp.,
Education Loan Revenue Bonds:
$ 2,825,000 Aa2* 7.000% due 3/1/02 (a) $ 2,892,094
1,000,000 Aa* 6.375% due 9/1/05 (a) 1,027,500
1,000,000 AAA Bastrop, TX ISD, Capital Appreciation,
PSFG, zero coupon due 2/15/22 287,500
2,495,000 AAA Carlsbad Unified School District, FGIC-Insured,
zero coupon due 11/1/19 854,537
1,655,000 A Connecticut State Health & Educational Facilities
Authority Revenue, Hartford University, Series D,
ACA-Insured, 6.750% due 7/1/12 1,723,269
1,000,000 AAA Franklin, TN Special School District, Capital Appreciation,
FSA-Insured, zero coupon due 6/1/18 362,500
1,940,000 AAA Granbury, TX GO, ISD, Refunding, Capital Appreciation,
PSFG, zero coupon due 8/18/18 693,550
1,000,000 AAA Harlandale, TX ISD, Refunding, PSFG, 6.000% due 8/15/16 1,042,500
1,000,000 A+ Illinois Student Assistance Commission, Student Loan
Revenue, Series M, 6.100% due 3/1/01 (a) 1,003,630
690,000 Aaa* Indiana State Educational Facilities Authority Revenue,
Rose Hulman Institute of Technology, MBIA-Insured,
5.000% due 6/1/17 638,250
1,000,000 Aaa* Kentucky Higher Education Student Loan Corp., Insured
Student Loan Revenue, Series B, 6.500% due 12/1/00 (a) 1,003,130
Lake County, IL Community Consolidated School District,
Capital Appreciation, Series B, FGIC-Insured:
1,650,000 AAA Zero coupon due 12/1/17 614,625
2,500,000 AAA Zero coupon due 12/1/18 875,000
3,075,000 AAA McKeesport, PA GO, Area School District,
Capital Appreciation, Series C, AMBAC-Insured,
zero coupon due 10/1/18 1,095,469
3,515,000 Aaa* Midlothian, TX ISD, Capital Appreciation, Refunding, PSFG,
zero coupon due 2/15/17 1,309,337
980,000 A* Montana State Higher Education Student Assistance Corp.,
Student Loan Revenue, Series B, 7.050% due 6/1/04 (a) 1,004,500
New York State Dormitory Authority Revenue:
1,780,000 AA Marymount Manhattan College, Asset Guaranteed,
6.375% due 7/1/14 1,917,950
1,715,000 AAA State University Educational Facilities, MBIA-Insured,
6.000% due 5/15/15 1,826,475
2,400,000 A* North Texas Higher Education Authority Inc., Student
Loan Revenue, Series D, 6.300% due 4/1/09 (a) 2,448,000
1,500,000 A* Rhode Island Student Loan Authority Revenue Refunding,
Series B, 6.750% due 12/1/01 (a) 1,528,125
</TABLE>
See Notes to Financial Statements.
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10 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Education -- 10.6% (continued)
$ 1,645,000 AAA Rowland CA, Unified School District, Capital Appreciation,
Series A, FSA-Insured, zero coupon due 9/1/18 $ 606,593
1,320,000 BBB- Savannah, GA EDA, Revenue, (College of Art & Design Inc.
Project), 6.200% due 10/1/09 1,364,550
1,500,000 AAA Schuylkill, PA Redevelopment Authority Revenue,
Commonwealth Lease Revenue Bonds, Series A,
FGIC-Insured, 6.850% due 6/1/03 1,551,330
-------------------------------------------------------------------------------------------------
27,670,414
-------------------------------------------------------------------------------------------------
Escrowed to Maturity (b) -- 8.9%
190,000 AAA Albuquerque, NM Hospital Revenue, 7.500% due 7/1/08 209,713
35,000 AAA Belleville, IL Hospital Facilities Revenue,
7.750% due 9/1/06 38,150
200,000 Aaa* Bolingbrook, IL Will & DuPage Counties, (Hinsdale &
Sanitarium Hospital Project), 7.250% due 8/1/08 219,000
1,800,000 AAA Boston, MA Water & Sewer Community Revenue,
10.875% due 1/1/09 2,272,500
120,000 Aaa* Camarillo, CA Hospital Revenue, Pleasant Valley Hospital
Building Corp., 9.700% due 12/15/07 142,050
495,000 AAA Cambria County, PA Hospital Development Authority,
Hospital Revenue, Conemaugh Valley Memorial
Hospital, 7.625% due 9/1/11 564,300
105,000 AAA Coatesville, PA Water Guaranteed Revenue,
6.250% due 10/15/13 111,956
500,000 AAA Cobb County, GA Kennestone Hospital Authority Revenue,
Series 86A, MBIA-Insured, 7.750% due 2/1/07 552,500
830,000 AAA Erie County, OH Hospital Improvement, Sandusky
Memorial Hospital, 8.750% due 1/1/06 920,263
65,000 AAA Farmington, NM Utilities Systems Revenue,
10.000% due 1/1/02 67,844
Franklin County, OH Hospital Revenue:
1,005,000 NR Children's Hospital Project, 10.375% due 6/1/13 1,330,369
60,000 AAA Grant Hospital Project, 10.000% due 12/1/01 62,325
1,045,000 AAA Illinois Educational Facilities Authority Revenue, Chicago
Osteopathic Medical, Series A, 8.750% due 7/1/05 1,146,887
85,000 A Illinois Health Facilities Authority Revenue,
Victory Memorial Hospital Association Project,
7.500% due 10/1/06 91,800
125,000 AAA Indiana Bond Bank, Special Program, Series A,
AMBAC-Insured, 9.750% due 8/1/09 154,063
295,000 NR Lafayette, LA Public Trust Financing Authority,
Single-Family Mortgage Revenue, FHA-Insured,
7.200% due 4/1/10 324,869
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Escrowed to Maturity (b) -- 8.9% (continued)
$ 120,000 AAA Lake County, OH Hospital Improvement Revenue, (Lake County
Memorial Hospitals Project), 8.675% due 11/1/09 $ 140,100
45,000 AAA Lee County, FL Southwest Florida Regional Airport Revenue,
MBIA-Insured, 8.675% due 10/1/09 52,762
205,000 NR Lehigh County, PA IDA, Industrial & Commercial Development
Revenue, (Strawbridge Project), 7.200% due 12/15/01 206,794
220,000 NR Los Angeles, CA COP, Hollywood Presbyterian Medical Center,
9.625% due 7/1/13 286,825
485,000 AAA Louisiana Public Facilities Hospital Authority Revenue
Refunding, (Southern Baptist Hospital Inc. Project),
AETNA-Insured, 8.000% due 5/15/12 564,418
130,000 AAA Maricopa County, AZ Hospital Revenue, Intercommunity
Healthcare, (Sun City Project), 8.675% due 1/1/10 152,750
1,250,000 AAA Mobile, AL GO, 10.875% due 11/1/08 1,589,062
75,000 AAA Montana State University Revenue, MBIA-Insured,
10.000% due 11/15/08 88,406
470,000 AAA Muscatine, IA Electric Revenue, 9.500% due 1/1/04 511,125
1,135,000 A3* New Haven, CT GO, Series B, 9.000% due 12/1/01 1,193,169
1,030,000 NR New Jersey EDA, Growth Bonds, Series A-2,
6.200% due 12/1/02 (a) 1,051,888
1,030,000 BBB++ New Jersey Healthcare Facilities Financing Authority Revenue
Pascack Valley Hospital Association, 6.500% due 7/1/01 1,045,522
250,000 AAA North Carolina Municipal Power Agency, No. 1 Catawba
Electric Revenue, 10.500% due 1/1/10 319,688
Ohio State Water Development Authority Revenue:
3,150,000 AAA 9.375% due 12/1/10 3,764,250
10,000 AAA Armco Steel Corp. Project, 7.875% due 11/1/00 10,024
1,800,000 AAA Safe Water, Series 3, 9.000% due 12/1/10 2,034,000
920,000 AAA Owensboro, KY Electric, Light & Power, 10.500% due 1/1/04 1,013,150
25,000 Aa2* Philadelphia, PA Hospitals and Higher Education Facilities
Authority Revenue, (St. Agnes Medical Center Project),
FHA-Insured, 6.750% due 8/15/01 25,232
170,000 AAA Pima County, AZ Hospital Revenue, Tucson Medical Center,
10.375% due 4/1/07 201,450
120,000 AAA Provo, UT Electric Revenue, 10.125% due 4/1/15 161,100
370,000 AAA Ringwood Boro, NJ Sewage Authority, 9.875% due 1/1/14 457,413
130,000 AAA Santa Rosa, CA Hospital Revenue, (Santa Rosa Hospital
Memorial Project), 10.300% due 3/1/11 169,650
120,000 AAA Tamarac, FL Water & Sewer Utilities Revenue, AMBAC-Insured,
9.250% due 10/1/10 145,650
135,000 AAA Wichita, KS Hospital Revenue, Wesley Medical Center,
MBIA-Insured, 10.000% due 4/1/02 141,917
-------------------------------------------------------------------------------------------------
23,534,934
-------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
12 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
General Obligation -- 3.4%
$ 1,500,000 AAA Chicago, IL GO, Series A, FGIC-Insured, 6.000% due 1/1/14 $ 1,580,625
1,000,000 AAA Cranston, RI GO, FGIC-Insured, 6.375% due 11/15/14 1,095,000
1,000,000 AAA Keller, TX GO, ISD Refunding, Capital Appreciation, Series A,
PSFG, zero coupon due 8/15/16 406,250
865,000 A3* New Haven, CT GO, Series B, 9.000% due 12/1/01 906,088
New York City GO:
2,500,000 A Series A, 6.250% due 8/1/08 2,696,875
2,000,000 A Series H, 5.900% due 8/1/09 2,120,000
140,000 Aa1* Texas State Veterans Housing Assistance Fund, GO,
FHA-Insured, 6.050% due 12/1/12 (a) 140,116
-------------------------------------------------------------------------------------------------
8,944,954
-------------------------------------------------------------------------------------------------
Hospitals -- 24.8%
225,000 A ABAG Finance Authority Nonprofit Corps, California Insured,
COP, (Rehabilitation Mental Health Services Inc. Project),
6.100% due 6/1/02 230,905
2,810,000 BBB+ Arizona Health Facilities Authority Revenue, Catholic
Healthcare West, Series A, 6.125% due 7/1/09 2,838,100
1,500,000 BBB- Arkansas State Development Financing Authority Hospital
Revenue, Washington Regional Medical Center,
7.000% due 2/1/15 1,477,500
1,000,000 AAA Calcasieu Parish, LA Memorial Hospital Services District
Revenue, (Lake Charles Memorial Hospital Project),
Series A, CONNIE LEE-Insured, 7.500% due 12/1/05 1,112,500
Colorado Health Facilities Authority Hospital Revenue Bonds:
National Benevolent:
1,035,000 Baa2* Series A, 6.125% due 9/1/16 922,447
600,000 Baa2* Series C, 7.000% due 3/1/19 602,250
2,510,000 Ba1* Rocky Mountain Adventist, 6.250% due 2/1/04 2,466,075
3,000,000 BBB Cuyahoga County, OH Hospital Facilities Revenue,
(Canton Inc. Project), 6.750% due 1/1/10 3,018,750
Harris County, TX Health Facilities Development Corp.:
2,135,000 NR Memorial Health System Project, 7.125% due 6/1/05 2,263,100
400,000 AA Texas Childrens Hospital Project, Series A,
5.375% due 10/1/16 385,000
2,000,000 AAA Harris County, TX Hospital District Revenue Refunding,
MBIA-Insured, 6.000% due 2/15/16 2,082,500
Illinois Health Facilities Authority Revenue:
2,455,000 A3* Condell Medical Center, 6.350% due 5/15/15 2,482,619
5,000,000 A OSF Healthcare System, 6.250% due 11/15/19 5,000,000
3,000,000 A1* Iowa Finance Authority Health Care Facilities Revenue,
Genesis Medical Center, 6.250% due 7/1/20 3,000,000
2,200,000 BBB- Maplewood, MN Healthcare Facilities Revenue,
(Health East Project), 5.950% due 11/15/06 2,051,500
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Hospitals -- 24.8% (continued)
$ 1,000,000 BBB+ Montgomery County, OH Hospital Revenue Facilities,
Kettering Medical Center, 6.750% due 4/1/18 $ 1,007,500
New Jersey Healthcare Facilities Financing Authority Revenue:
1,500,000 BBB- Capital Health System Inc., 5.125% due 7/1/12 1,245,000
2,000,000 BBB- Pascack Valley Hospital Association, 5.125% due 7/1/18 1,547,500
3,000,000 BBB- Trinitas Hospital Obligation Group, 7.375% due 7/1/15 3,090,000
Oklahoma Development Financing Authority Revenue
Refunding, Hillcrest Healthcare System, Series A:
1,500,000 BB+ 5.750% due 8/15/15 1,173,750
3,000,000 BB+ 5.625% due 8/15/19 2,223,750
4,450,000 AAA Pennsylvania State Higher Educational Facilities Authority,
Health Services Revenue, Allegheny Delaware Valley
Obligation, Series A, MBIA-Insured, 5.600% due 11/15/09 4,550,125
1,750,000 A Riverside, CA Asset Leasing Corp., Leasehold Revenue Bonds,
(Riverside Hospital Project), Series A, 6.000% due 6/1/04 1,802,500
205,000 AAA San Leandro, CA Hospital Revenue, Vesper Memorial
Hospital, 11.500% due 5/1/11 275,212
Scranton-Lackawanna, PA Health & Welfare
Authority Revenue:
3,000,000 BBB-++ Allied Services Rehabilitation Hospitals Project,
Series A, 7.125% due 7/15/05 3,048,750
1,000,000 BBB- Moses Taylor Hospital Project, 6.050% due 7/1/10 916,250
1,210,000 AAA St. Tammany Parish, LA Hospital Service District No. 2,
Hospital Revenue, CONNIE LEE-Insured,
6.250% due 10/1/14 1,259,913
Tarrant County, TX Health Facilities, Development Revenue:
2,000,000 A- 6.625% due 11/15/20 1,960,000
785,000 AAA Texas Health Resources, Series A, 5.750% due 2/15/12 819,342
4,650,000 Baa2* Tomball, TX Hospital Authority Revenue, Tomball Regional
Hospital, 5.500% due 7/1/09 4,260,562
Wisconsin State Health & Educational Facilities
Authority Revenue:
2,000,000 BBB+ Aurora Health Care, Series B, 5.625% due 2/15/20 1,705,000
3,955,000 A Kenosha Hospital & Medical Center Project,
5.500% due 5/15/15 3,668,262
-------------------------------------------------------------------------------------------------
64,486,662
-------------------------------------------------------------------------------------------------
Housing -- 11.5%
690,000 AAA Arkansas, State Development Finance Authority,
Single-Family Mortgage Revenue, Series A,
GNMA/FNMA-Collateralized, 6.200% due 7/1/15 715,875
3,000,000 NR Capital Projects Finance Authority, Student Housing Revenue,
Cafra Capital Corp., Series A, 7.750% due 8/15/20 2,955,000
1,255,000 AA Colorado Housing Finance Authority, Single-Family Mortgage
Program, Series D-2, Sr. Bonds, 6.900% due 4/1/29 (a) 1,364,812
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
14 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Housing -- 11.5% (continued)
$ 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
415,000 A3* El Paso County, TX Multi-Family Housing Revenue,
La Plaza Apartments, Series A, 6.700% due 7/1/20 418,631
285,000 AAA Fairfax County, VA Redevelopment & Housing Authority,
Multi-Family Refunding, Kingsley, Series A,
FHA-Insured, 6.500% due 11/1/01 288,483
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) 1,016,250
1,800,000 AA Louisiana Public Facilities Authority Revenue, Multi-Family
Housing, Oakleigh Apartments, Series A,
5.950% mandatory tender 3/15/05 1,843,776
1,095,000 NR Maricopa County, AZ IDA, Multi-Family Housing Revenue,
Stanford Court Apartments, Series B, 5.750% due 7/1/08 1,073,100
Massachusetts State HFA, Single-Family Housing Revenue:
3,070,000 Aa3* Series 38, 7.200% due 12/1/26 (a) 3,219,662
2,470,000 Aa3* Series 41, 6.300% due 12/1/14 2,593,500
1,355,000 AA+ Minnesota State HFA Revenue, Single-Family Mortgage,
Series H, 6.700% due 1/1/18 1,417,669
51,011 AAA Monroe-West Monroe, LA Public Trust Financing Authority,
Single-Family Revenue Refunding, Series A,
FHLMC-Collateralized, 8.500% due 5/20/02 51,840
1,000,000 BBB++ Montgomery County, PA Redevelopment Multi-Family Housing
Revenue, (KBF Association L.P. Project), Series A,
6.375% due 7/1/12 1,018,750
865,000 AAA Nevada Housing Division, Multi-Unit Housing, Saratoga Palms,
6.250% due 10/1/16 895,275
295,000 Ba2* Odessa, TX Housing Development Corp. #2, Multi-Family
Revenue Refunding, Chaparral Village, Series A,
6.375% due 12/1/03 299,425
710,000 AAA Onterie Center Housing Finance Corp., IL Mortgage Revenue
Refunding, (Onterie Center Project), MBIA-Insured,
6.500% due 7/1/02 726,862
1,160,000 Aa2* Oregon State Housing & Community Services Department,
Mortgage Revenue, Single-Family Mortgage Program,
Series B, 6.875% due 7/1/28 1,202,050
Radford Court Properties, Washington Student Housing
Revenue, MBIA-Insured:
1,000,000 AAA 5.375% due 6/1/00 961,250
1,695,000 AAA 6.000% due 6/1/17 1,754,325
30,000 AAA St. Louis County, MO Single-Family Mortgage Revenue,
MBIA-Insured, 6.125% due 4/1/03 31,012
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Housing -- 11.5% (continued)
$ 2,000,000 Aaa* Sevier County, TN Public Building Authority, Local
Government Improvement, Series A, FSA-Insured,
5.550% due 6/1/25 (a)(d) $ 2,000,000
200,000 AAA Texas State Department of Housing & Community Affairs,
GNMA/FNMA/FHLMC-Collateralized, Home Mortgage
Revenue Bonds, Series B-2, RIBS,
8.953% due 6/18/23 (a)(c)(d) 200,528
1,595,000 A+ Vermont HFA, Single-Family Revenue, Series 2,
6.875% due 5/1/25 1,634,875
-------------------------------------------------------------------------------------------------
30,006,075
-------------------------------------------------------------------------------------------------
Industrial Development -- 5.2%
2,750,000 BBB- Carbon County, PA IDA, Refunding, (Panther Creek Partners
Project), LOC- Paribas and Union Bank of CA,
6.650% due 5/1/10 (a) 2,808,438
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) 2,007,520
2,250,000 NR Massachusetts State Industrial Finance Agency Revenue
Refunding, (Chestnut Knoll Project), Series A,
5.500% due 2/15/18 1,797,188
3,500,000 NR Metropolitan Government Nashville & Davidson County,
TN IDB, Revenue Refunding & Improvement,
Osco Treatment Inc., 6.000% due 5/1/03 (a) 2,100,000
1,135,000 NR New York City, NY IDA, Civic Facilities Revenue Refunding,
Community Hospital, Brooklyn, 6.875% due 11/1/10 1,061,225
380,000 Aa2* New York City, NY IDA, Revenue Bond, Series G,
7.700% due 11/01/10 (a) 380,836
1,000,000 BBB Schuylkill County, PA IDA, Revenue, Pine Grove Landfill Inc.,
5.100% mandatory tender 4/1/09 (a) 881,250
2,350,000 AAA Sioux City, IA IDR, (Terra Centre Project), LOC, Rabobank
Nederland, 6.800% due 5/1/07 2,432,250
-------------------------------------------------------------------------------------------------
13,468,707
-------------------------------------------------------------------------------------------------
Life Care -- 1.7%
1,000,000 BBB- John Tolfree Health Systems Corp., Michigan Mortgage
Revenue Refunding, 5.850% due 9/15/13 868,750
1,570,000 AAA Massachusetts State Individual Finance Agency Revenue,
University Commons Nursing, Series A, FHA-Insured,
6.550% due 8/1/18 1,674,013
725,000 AA Orange County, FL Health Facilities Authority Revenue
Refunding, (Mayflower Retirement Project), Asset
Guaranteed, 5.125% due 6/1/14 705,062
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
16 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Life Care -- 1.7% (continued)
$ 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 $ 1,057,500
-------------------------------------------------------------------------------------------------
4,305,325
-------------------------------------------------------------------------------------------------
Miscellaneous -- 7.5%
3,000,000 NR Barona Band of Mission Indians, CA GO, 8.250% due 1/1/20 3,138,750
1,175,000 BBB- Clarksville, TN Natural Gas Acquisition Corp.,
Gas Revenue, Series A, 6.500% due 11/1/00 1,176,210
1,980,000 AAA East Point, GA Building Authority Revenue, FSA-Insured,
zero coupon due 2/1/20 633,600
2,750,000 A- Hoffman Estate, IL Tax Increment Junior Lien, Hoffman
Estate Development Project, 6.500% due 5/15/01 2,776,373
2,700,000 A Illinois Development Finance Authority Revenue, Debt
Restructure-- East St. Louis, 6.875% due 11/15/05 2,882,250
2,915,000 AAA Massachusetts State, Series C, MBIA-Insured,
zero coupon due 8/1/18 1,060,331
1,895,000 A Pendleton County, KY Multi-County Lease Revenue,
Association Counties Leasing Trust, Program A,
6.500% due 3/1/19 1,968,431
750,000 AAA SCA Tax Exempt Trust, Knox Health Educational & Housing,
FSA-Insured, 7.125% due 1/1/30 801,563
3,900,000 CCC Spokane, WA Downtown Foundation Parking Revenue,
(River Park Square Project), 5.000% due 8/1/08 3,315,000
1,000,000 A Territory of American Samoa Refunding, ACA-Insured,
6.000% due 9/1/08 1,032,500
825,000 AA Tucson, AZ COP, Asset Guaranty, 6.000% due 7/1/04 839,438
-------------------------------------------------------------------------------------------------
19,624,446
-------------------------------------------------------------------------------------------------
Pollution Control -- 1.3%
Detroit, MI Economic Development Corp.,
Facilities Recovery Revenue, FSA-Insured, Series A:
920,000 AAA 7.000% due 5/1/01 (a) 928,262
1,000,000 AAA 6.600% due 5/1/02 (a) 1,031,540
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) 1,504,605
-------------------------------------------------------------------------------------------------
3,464,407
-------------------------------------------------------------------------------------------------
Pre-Refunded (e) -- 3.5%
30,000 A* Austin, TX Water, Sewer & Electric Refunding Revenue,
(Various Call Dates @ 100), 14.000% due 11/15/01 31,763
1,655,000 NR Berks County, PA Municipal Authority Revenue Refunding,
(Phoebe Berks Village Inc. Project), (Call 5/15/06 @ 102),
7.500% due 5/15/13 1,857,738
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Pre-Refunded (e) -- 3.5% (continued)
$ 495,000 AAA Gila County, AZ IDA, PCR, (Call 2/15/01 @ 100),
11.250% due 4/1/01 $ 507,023
3,200,000 AAA Jefferson County, KY Hospital Revenue, Alliant Obligated
Group, MBIA-Insured, (Various Call Dates @ Various
Prices), 6.346% due 10/23/14 (c) 3,368,000
120,000 AAA Ohio State Building Authority, Toledo Government Office
Building, (Call 4/1/03 @ 100), 10.125% due 10/1/06 132,150
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 2,321,900
685,000 AAA* Philadelphia, PA Hospitals Authority Revenue,
(United Hospitals Inc. Project), (Call 7/1/05 @ 100),
10.875% due 7/1/08 815,150
-------------------------------------------------------------------------------------------------
9,033,724
-------------------------------------------------------------------------------------------------
Public Facilities -- 1.5%
2,500,000 AAA Las Vegas New Convention & Visitors Authority Revenue,
AMBAC-Insured, 6.000% due 7/1/14 2,646,875
1,140,000 BBB- Massachusetts Rail Connections Inc., Revenue, Route 128,
Parking Garage, Series A, 6.000% due 7/1/13 1,149,975
-------------------------------------------------------------------------------------------------
3,796,850
-------------------------------------------------------------------------------------------------
Solid Waste -- 1.2%
3,000,000 A2* Northeast Maryland Waste Disposal Authority,
Solid Waste Revenue, Montgomery County, Series A,
6.200% due 7/1/10 (a) 3,112,500
-------------------------------------------------------------------------------------------------
Tax Allocation -- 0.2%
1,150,000 AAA Pittsburg, CA Redevelopment Agency Tax Allocation,
(Los Medanos Community Development Project),
AMBAC-Insured, zero coupon due 8/1/19 395,313
-------------------------------------------------------------------------------------------------
Transportation -- 11.2%
2,000,000 A Connecticut State Special Obligation Package Revenue,
Bradley International Airport, Series A, ACA-Insured,
6.375% due 7/1/12 (a) 2,092,500
6,400,000 BBB- Connector 2000 Association Inc., SC Toll Road, Sr. Revenue
Bond, Capital Appreciation, Series B, zero coupon
due 1/1/16 2,080,000
3,000,000 Baa1* Dallas-Fort Worth International Airport Facility Improvement
Corp., Revenue Refunding, American Airlines, Series C,
6.150% due 5/1/29 (a) 3,018,750
Denver, CO City & County Airport Revenue:
1,000,000 A2* Series A, 7.200% due 11/15/02 (a) 1,046,250
1,590,000 A2* Series B, 7.000% due 11/15/01 (a) 1,627,763
1,000,000 A2* Series B, 7.000% due 11/15/02 (a) 1,042,500
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
18 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Transportation -- 11.2% (continued)
E-470 Public Highway Authority, CO Sr. Revenue Bonds,
Capital Appreciation, Series B, MBIA-Insured:
$ 5,000,000 AAA Zero coupon due 9/1/16 $ 2,018,750
10,000,000 AAA Zero coupon due 9/1/19 3,325,000
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) 2,917,500
1,000,000 AAA Memphis-Shelby County, TN Airport Authority, Airport
Revenue, Series D, AMBAC-Insured, 6.250% due 3/1/14 (a) 1,065,000
3,000,000 AA Ocean Highway and Port Authority, Nassau County, FL
Adjustable Demand Revenue Bonds, LOC ABN AMRO
Bank, NV, 6.250% mandatory tender 12/1/02 (a) 3,101,250
Pocahontas Parkway Association, VA Toll Road, Sr. Revenue
Bond, Capital Appreciation, Series B:
3,840,000 BBB- Zero coupon 5.500% due 8/15/12 1,699,200
10,000,000 BBB- Zero coupon 5.800% due 8/15/19 2,637,500
1,545,000 AAA Port of Portland, OR Airport Revenue, Portland International
Airport, Series B, AMBAC-Insured, 5.500% due 7/1/14 (a) 1,566,243
-------------------------------------------------------------------------------------------------
29,238,206
-------------------------------------------------------------------------------------------------
Utilities -- 6.5%
Austin, TX Water, Sewer & Electric Refunding Revenue:
305,000 A* Refunded -- 1998, 14.000% due 11/15/01 322,919
1,850,000 A* Unrefunded Balance -- 1998, 14.000% due 11/15/01 1,956,375
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) 1,526,340
10,000,000 AAA Columbia River Rock Capital Appreciation, Series A,
MBIA-Insured, zero coupon due 6/1/13 5,000,000
600,000 A- Georgia Municipal Gas Authority Revenue, (Southern
Storage Gas Project), 6.300% due 7/1/09 633,750
Grand Prairie, TX GO, Metropolitan Utility & Capital
Appreciation Refunding ACA-Insured:
440,000 A Zero coupon due 4/1/06 330,550
765,000 A Zero coupon due 4/1/07 543,150
3,390,000 AAA Long Island Power Authority, NY Electric System Revenue,
Capital Appreciation, zero coupon due 6/1/19 1,165,313
North Carolina, Eastern Municipal Power Agency, Power
System Revenue Refunding, Series B, ACA-Insured:
25,000 A 5.600% due 1/1/15 24,188
735,000 A 5.650% due 1/1/16 708,356
3,000,000 A North Carolina Municipal Power Agency, No. 1 Catawba
Electric Revenue, Series B, ACA-Insured,
6.375% due 1/1/13 3,183,750
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING+ SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Utilities -- 6.5% (continued)
$ 1,000,000 BB Sam Rayburn, TX Municipal Power Agency Revenue
Refunding, Series A, 6.200% due 10/1/01 $ 1,000,470
1,190,000 AAA Texas Municipal Power Agency Revenue Refunding, Capital
Appreciation, MBIA-Insured, zero coupon due 9/1/16 481,950
-------------------------------------------------------------------------------------------------
16,877,111
-------------------------------------------------------------------------------------------------
Water and Sewer -- 1.0%
1,000,000 AAA Houston, TX Water & Sewer System Revenue Refunding,
Jr. Lien, Series B, 5.750% due 12/1/15 1,033,750
1,500,000 NR New Jersey EDA, Water Facilities Revenue, (New Jersey
American Water Co. Project), 7.400% due 11/1/01 (a) 1,522,230
-------------------------------------------------------------------------------------------------
2,555,980
-------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $260,277,085**) $ 260,515,608
=================================================================================================
</TABLE>
+ All ratings are by Standard & Poor's Ratings Service except those
identified by an asterisk (*) which are rated by Moody's Investors Service
Inc. and those identified by a double dagger (++) 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 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) Residual interest bonds-coupon varies inversely with level of short-term
tax-exempt interest rates.
(d) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(e) Bonds 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 21 and 22 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
20 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Bond Ratings (unaudited)
--------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"CCC" 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 and -- Bonds rated "BB" and "CCC" are regarded, on balance, as predominantly
CCC 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 C 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 "Caa", where 1 is the highest and
3 the lowest ranking within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large in Aaa securities or
fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A -- Bonds rated "A" possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds rated "Baa" are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Bonds rated "Ba" are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and therefore
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
Caa -- Bonds that are rated "Caa" are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<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 iseither 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
ACA -- American Capital Access
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
VRDN -- Variable Rate Demand Note
VRWE -- Variable Rate Wednesday Demand
--------------------------------------------------------------------------------
22 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $260,277,085) $ 260,515,608
Cash 76,048
Interest receivable 4,215,353
Receivable for securities sold 2,392,438
Receivable for Fund shares sold 10,173
-------------------------------------------------------------------------------------
Total Assets 267,209,620
-------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 2,736,319
Dividends payable 1,199,063
Management fees payable 122,956
Distribution fees payable 9,095
Accrued expenses 67,727
-------------------------------------------------------------------------------------
Total Liabilities 4,135,160
-------------------------------------------------------------------------------------
Total Net Assets $ 263,074,460
=====================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 41,351
Capital paid in excess of par value 279,772,126
Undistributed net investment income 373,922
Accumulated net realized loss from security transactions (17,351,462)
Net unrealized appreciation of investments 238,523
-------------------------------------------------------------------------------------
Total Net Assets $ 263,074,460
=====================================================================================
Shares Outstanding:
Class A 34,619,815
---------------------------------------------------------------------------------
Class L 4,789,146
---------------------------------------------------------------------------------
Class Y 1,942,199
---------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $6.36
---------------------------------------------------------------------------------
Class L * $6.37
---------------------------------------------------------------------------------
Class Y (and redemption price) $6.36
---------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 2.04% of net asset value per share) $6.49
---------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $6.43
=====================================================================================
</TABLE>
* Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within one year from initial purchase.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited)
--------------------------------------------------------------------------------
For the Six Months Ended September 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 8,239,965
-------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 666,191
Distribution fees (Note 3) 221,555
Shareholder and system servicing fees 33,215
Registration fees 24,932
Shareholder communications 17,128
Pricing service fees 9,972
Audit and legal 7,979
Custody 6,662
Trustees' fees 2,992
Other 8,690
-------------------------------------------------------------------------------------------
Total Expenses 999,316
-------------------------------------------------------------------------------------------
Net Investment Income 7,240,649
-------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 96,459,310
Cost of securities sold 97,839,631
-------------------------------------------------------------------------------------------
Net Realized Loss (1,380,321)
-------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation) of Investments:
Beginning of period (1,151,555)
End of period 238,523
-------------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 1,390,078
-------------------------------------------------------------------------------------------
Net Gain on Investments 9,757
-------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 7,250,406
===========================================================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
24 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
For the Six Months Ended September 30, 2000 (unaudited)
and the Year Ended March 31, 2000
<TABLE>
<CAPTION>
September 30 March 31
=====================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 7,240,649 $ 17,327,021
Net realized loss (1,380,321) (13,803,881)
Increase (decrease) in net unrealized appreciation 1,390,078 (11,631,359)
-----------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations 7,250,406 (8,108,219)
-----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (7,220,522) (16,971,039)
-----------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders (7,220,522) (16,971,039)
-----------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 33,037,622 63,248,493
Net asset value of shares issued
for reinvestment of dividends 3,556,573 9,871,529
Cost of shares reacquired (55,110,210) (164,806,886)
-----------------------------------------------------------------------------------------------------
Decrease in Net Assets From Fund Share Transactions (18,516,015) (91,686,864)
-----------------------------------------------------------------------------------------------------
Decrease in Net Assets (18,486,131) (116,766,122)
NET ASSETS:
Beginning of period 281,560,591 398,326,713
-----------------------------------------------------------------------------------------------------
End of period* $ 263,074,460 $ 281,560,591
=====================================================================================================
* Includes undistributed net investment income of: $373,922 $353,795
=====================================================================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Limited Term Portfolio ("Portfolio") is a separate, diversified 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) 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; (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; and
(l) estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ.
--------------------------------------------------------------------------------
26 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
2. Exempt-Interest Dividends and Other Distributions
The Portfolio intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from regular Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Management Agreement and Transactions with Affiliated Persons
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment 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.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Fund's transfer agent and PFPC Global Fund Services ("PFPC") acts as the
Fund's sub-transfer agent. CFTC receives account fees and asset-based fees that
vary according to the size and type of account. PFPC is responsible for
shareholder recordkeeping and financial processing for all shareholder accounts
and is paid by CFTC. During the six months ended September 30, 2000, the
Portfolio paid transfer agent fees of $25,702 to CFTC.
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, became the Fund's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Fund's portfolio agency
transactions. Certain other broker-dealers continue to sell Portfolio shares to
the public as members of the selling group.
There are maximum initial sales charges of 2.00% and 1.00% for Class A and L
shares, respectively. 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.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
For the six months ended September 30, 2000, SSB and CFBDS received sales
charges of approximately $94,000 and $8,000 on sales of the Portfolio's Class A
and Class L shares, respectively. In addition, for the six months ended
September 30, 2000, CDSCs paid to SSB were approximately:
Class A Class L
================================================================================
CDSCs $8,000 $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 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, 2000, total Distribution Plan fees
incurred were:
Class A Class L
================================================================================
Distribution Plan Fees $167,244 $54,311
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
4. Investments
During the six months ended September 30, 2000, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $73,495,844
--------------------------------------------------------------------------------
Sales 96,459,310
================================================================================
At September 30, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 4,954,166
Gross unrealized depreciation (4,715,643)
--------------------------------------------------------------------------------
Net unrealized appreciation $ 238,523
================================================================================
--------------------------------------------------------------------------------
28 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
5. Capital Loss Carryforward
At March 31, 2000, the Portfolio had, for Federal income tax purposes,
approximately $11,508,000 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 probable 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 2008
================================================================================
Carryforward Amounts $273,000 $1,740,000 $9,495,000
================================================================================
6. Shares of Beneficial Interest
At September 30, 2000, 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, 2000, total paid-in capital amounted to the following for each
class:
Class A Class L Class Y
================================================================================
Total Paid-in Capital $231,676,731 $33,133,519 $15,003,227
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 2000 March 31, 2000
--------------------------- ----------------------------
Shares Amount Shares Amount
=====================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 5,053,699 $ 31,669,195 8,454,416 $ 55,324,785
Shares issued on reinvestment 476,191 3,001,617 1,279,885 8,257,254
Shares reacquired (7,975,139) (50,091,263) (18,524,812) (119,106,571)
-----------------------------------------------------------------------------------------------------
Net Decrease (2,445,249) $ (15,420,451) (8,790,511) $ (55,524,532)
=====================================================================================================
Class L
Shares sold 215,731 $ 1,368,427 1,045,498 $ 6,895,708
Shares issued on reinvestment 68,251 430,819 182,565 1,179,244
Shares reacquired (696,680) (4,397,875) (2,186,785) (14,093,158)
-----------------------------------------------------------------------------------------------------
Net Decrease (412,698) $ (2,598,629) (958,722) $ (6,018,206)
=====================================================================================================
Class Y
Shares sold -- $ -- 153,008 $ 1,028,000
Shares issued on reinvestment 19,692 124,137 67,343 435,031
Shares reacquired (98,307) (621,072) (4,895,234) (31,607,157)
-----------------------------------------------------------------------------------------------------
Net Decrease (78,615) $ (496,935) (4,674,883) $ (30,144,126)
=====================================================================================================
</TABLE>
--------------------------------------------------------------------------------
Smith Barney Muni Funds 29
<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 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $6.36 $6.78 $6.76 $6.54 $6.61 $6.54
--------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.17 0.32 0.32 0.34 0.34 0.36
Net realized and
unrealized gain (loss) 0.00* (0.42) 0.03 0.22 (0.06) 0.07
--------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.17 (0.10) 0.35 0.56 0.28 0.43
--------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.17) (0.32) (0.33) (0.34) (0.35) (0.36)
Excess of net investment income -- -- (0.00)* -- -- --
--------------------------------------------------------------------------------------------------------
Total Distributions (0.17) (0.32) (0.33) (0.34) (0.35) (0.36)
--------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $6.36 $6.36 $6.78 $6.76 $6.54 $6.61
--------------------------------------------------------------------------------------------------------
Total Return 2.76%++ (1.46)% 5.29% 8.66% 4.30% 6.65%
--------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $220 $236 $311 $257 $260 $278
--------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(3) 0.74%+ 0.75% 0.72% 0.74% 0.75% 0.75%
Net investment income 5.47+ 4.97 4.72 5.14 5.16 5.43
--------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 28% 108% 52% 58% 46% 26%
========================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets will not exceed 0.85%.
* Amount represents less than $0.01.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
30 2000 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 L Shares 2000(1)(2) 2000(2) 1999(2)(3) 1998 1997 1996
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $6.37 $6.79 $6.76 $6.54 $6.61 $6.54
--------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.17 0.31 0.31 0.33 0.33 0.35
Net realized and unrealized
gain (loss) 0.00* (0.43) 0.03 0.21 (0.06) 0.06
--------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.17 (0.12) 0.34 0.54 0.27 0.41
--------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.17) (0.30) (0.31) (0.32) (0.34) (0.34)
Excess of net investment income -- -- (0.00)* -- -- --
--------------------------------------------------------------------------------------------------------------------
Total Distributions (0.17) (0.30) (0.31) (0.32) (0.34) (0.34)
--------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $6.37 $6.37 $6.79 $6.76 $6.54 $6.61
--------------------------------------------------------------------------------------------------------------------
Total Return 2.65%++ (1.69) 5.04% 8.36% 4.10% 6.45%
--------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $31,506 $33,113 $41,844 $31,133 $28,325 $28,824
--------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 0.95%+ 0.98% 0.94% 0.99% 0.97% 0.96%
Net investment income 5.25+ 4.74 4.50 4.89 4.94 5.22
--------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 28% 108% 52% 58% 46% 26%
====================================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (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) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets will not exceed 1.05%.
* 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 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 Y Shares 2000(1)(2) 2000(2) 1999(2)(3)
======================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $6.36 $6.78 $6.82
--------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.18 0.33 0.12
Net realized and unrealized gain (loss) 0.00* (0.42) (0.02)
--------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.18 (0.09) 0.10
--------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.18) (0.33) (0.14)
Excess of net investment income -- -- (0.00)*
--------------------------------------------------------------------------------------
Total Distributions (0.18) (0.33) (0.14)
--------------------------------------------------------------------------------------
Net Asset Value, End of Period $6.36 $6.36 $6.78
--------------------------------------------------------------------------------------
Total Return 2.86%++ (1.31) 1.46%++
--------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $12,351 $12,843 $45,408
--------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 0.55%+ 0.55% 0.53%+
Net investment income 5.65+ 5.09 4.65+
--------------------------------------------------------------------------------------
Portfolio Turnover Rate 28% 108% 52%
======================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (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.
--------------------------------------------------------------------------------
32 2000 Semi-Annual Report to Shareholders
<PAGE>
[LOGO OF SALOMON SMITH BARNEY]
Trustees Custodian
Lee Abraham PFPC Trust Company
Allan J. Bloostein
Jane F. Dasher Transfer Agent
Donald R. Foley Citi Fiduciary Trust Company
Richard E. Hanson, Jr. 125 Broad Street, 11th Floor
Paul Hardin New York, New York 10004
Heath B. McLendon, Chairman
Roderick C. Rasmussen Sub-Transfer Agent
John P. Toolan PFPC Global Fund Services
P.O. Box 9699
Joseph H. Fleiss, Emeritus Providence, Rhode Island 02940-9699
Officers This report is submitted for the general
Heath B. McLendon information of the shareholders of Smith
President and Barney Muni Funds -- Limited Term
Chief Executive Officer Portfolio, but it may also be used as
sales literature when preceded or
Lewis E. Daidone accompanied by the current Prospectus
Senior Vice President which gives details about changes,
and Treasurer expenses, investment objectives and
operating policies of the Portfolio. If
Peter M. Coffey used as sales material after December
Vice President 31, 2000, this report must be
accompanied by performance information
Anthony Pace for the most recently completed calendar
Controller quarter.
Christina T. Sydor
Secretary Salomon Smith Barney is a service mark
of Salomon Smith Barney Inc.
Investment Manager
SSB Citi Fund Management LLC
Smith Barney Muni Funds
Distributor 388 Greenwich Street, MF-2
Salomon Smith Barney Inc. New York, New York 10013
www.smithbarney.com/mutualfunds
FD0804 11/00
<PAGE>
SMITH BARNEY
MUNI FUNDS
NATIONAL PORTFOLIO
CLASSIC SERIES | SEMI-ANNUAL REPORT | SEPTEMBER 30, 2000
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
<PAGE>
[PHOTO OF PETER M. COFFEY]
----------------
PETER M. COFFEY
----------------
PORTFOLIO MANAGER
[GRAPHIC] Classic Series
Semi-Annual Report . September 30, 2000
SMITH BARNEY
NATIONAL PORTFOLIO
Peter M. Coffey has more than 31 years of securities business experience and
assumed management of the Portfolio on February 3, 1999.
----------------
FUND OBJECTIVE
----------------
The Portfolio seeks as high a level of income exempt from federal income taxes
as is consistent with prudent investing. The Portfolio invests at least 80% of
its net assets in "municipal securities," which are debt obligations issued by
any of the 50 states and their political subdivisions, agencies and public
authorities.
----------------
FUND FACTS
----------------
FUND INCEPTION
August 20, 1986
MANAGER TENURE
13 Years
MANAGER INVESTMENT
INDUSTRY EXPERIENCE
31 Years
CLASS ACLASS BCLASS L
NASDAQ SBBNX SBNBX SBNLX
INCEPTION 8/20/8611/7/941/5/93
Average Annual Total Returns as of September 30, 2000
Without Sales Charges(1)
Class A Class B Class L
----------------------------------------------------
Six-Month+ 3.67% 3.50% 3.42%
----------------------------------------------------
One-Year 5.27 4.74 4.68
----------------------------------------------------
Five-Year 5.41 4.86 4.77
----------------------------------------------------
Ten-Year 7.34 N/A N/A
----------------------------------------------------
Since Inception++ 7.24 6.70 5.32
----------------------------------------------------
With Sales Charges(2)
Class A Class B Class L
----------------------------------------------------
Six-Month+ (0.49)% (1.00)% 1.39%
----------------------------------------------------
One-Year 1.04 0.27 2.67
----------------------------------------------------
Five-Year 4.55 4.70 4.56
----------------------------------------------------
Ten-Year 6.90 N/A N/A
----------------------------------------------------
Since Inception++ 6.93 6.70 5.18
----------------------------------------------------
/(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.
++Inception dates for Class A, B and L shares are August 20, 1986, November
7, 1994 and January 5, 1993, respectively.
+Total return is not annualized, as it may not be representative of the
total return for the year.
--------------------------------------------------------------------------------
What's Inside
A Message from the Chairman . . . . . . . . . . . . . . . . . . . . . . . .1
Letter from the Portfolio Manager . . . . . . . . . . . . . . . . . . . .. .2
Historical Performance . . . . . . . . . . . . . . . . . . . . . . . . . .. .4
Smith Barney Muni Funds-- National Portfolio at a Glance . . . . . . . . . 6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .7
Bond Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .16
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . .18
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . .19
Statements of Changes in Net Assets . . . . . . . . . . . . . . . . . .20
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .21
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .24
[LOGO OF SMITH BARNEY MUTUAL FUNDS]
Investment Products: Not FDIC Insured . Not Bank Guaranteed . May Lose Value
<PAGE>
A MESSAGE FROM THE CHAIRMAN
[PHOTO OF HEATH B. MCLENDON]
HEATH B. MCLENDON
CHAIRMAN
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam. At SSB Citi Fund
Management LLC ("SSB Citi"), we have instituted many positive changes, with the
ultimate goal of offering our investors a well-rounded menu of stock and bond
funds that can be tailored to a wide range of investment objectives.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $395.5 billion in assets under management,1
we believe SSB Citi offers choices and solutions, uniting the distinguished
history of Smith Barney with the unparalleled global reach of its parent,
Citigroup.
The Smith Barney family of funds represents a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney Mutual Funds and the investment professionals who manage them.
The Smith Barney Muni Funds -- National Portfolio ("Portfolio") seeks as high a
level of income exempt from federal income taxes2 as is consistent with prudent
investing. Experienced manager Peter Coffey and his team seek to create a
built-in income stream for the long-term. Coffey and his team believe municipal
bonds are attractively priced relative to underlying inflation rates in an
environment of light supply and muted institutional demand.
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and the ultimate in
resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
October 16, 2000
----------
1 As of September 30, 2000. This figure represents SSB Citi's assets under
management for retail, institutional, money and separate accounts.
----------
2 Please note a portion of the income from the Portfolio may be subject to the
Alternative Minimum Tax ("AMT").
1 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
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, 2000. In
this report we have summarized the period's prevailing economic and market
conditions and outlined our investment strategy. The information provided in
this letter represents the opinion of the manager and is not intended to be a
forecast of future events, a guarantee of future results nor investment advice.
Further, there is no assurance that certain securities will remain in or out of
the Portfolio. Please refer to pages 7 through 15 for a list and percentage
breakdown of the Portfolio's holdings. Also, please note any discussion of the
Portfolio's holdings is as of September 30, 2000 and is subject to change. A
detailed summary of the Portfolio's performance can be found in the appropriate
sections that follow. We hope you find this report to be useful and informative.
Performance Update
For the six months ended September 30, 2000, the Portfolio's Class A shares,
without and with sales charges, returned 3.67% and a negative 0.49%,
respectively. In comparison, the Lehman Brothers Municipal Bond Index ("Lehman
Index")/1/ returned 3.97%.
Investment Strategy
Because we think the bond markets are likely to remain volatile in the near
term, we continue to favor a gradual approach into the market. We tend to favor
longer and intermediate maturities, where most of the benefits of the steep
positive slope of the municipal yield curve/2/ can be obtained.
During the period, average credit quality remained relatively high in the
Portfolio. Although quality spreads during the period have widened due to
earnings pressure, especially in hospital -- and health care-related sectors,
the difference in yield between the highest-quality issues and medium grade
issues, in our view, remained relatively modest. We think our proprietary
research enables us to invest in select medium-term credits for which perceived
market risk may be greater than our analysis otherwise indicates. Moreover,
while no guarantees can be made, we think our strategy may have the potential to
increase income over time.
During the period, we took advantage of rising interest rates to generate
additional yield in the Portfolio. We also looked to incorporate additional call
protection/3/ into the Portfolio by selling off some of our higher coupon bonds
with shorter calls,/4/ and replacing them with bonds that have a similar high
coupon structure, but are not subject to early call.
One of the ways that we manage the Portfolio is to seek to create a built-in
income stream for the long-term. To this end, we have generally focused on
investing in securities with high credit quality and good call protection, as we
believe these securities offer solid long-term values. Moreover, we have a
fairly long weighted-average life/5/ in the Portfolio because we believe that
the risk of higher inflation at the present time is negligible. In addition, we
think our greater emphasis on call protection may provide our shareholders with
consistent income if interest rates do in fact go down.
----------
/1/ The Lehman Index is a broad measure of the municipal bond market with
maturities of at least one year. Please note an investor cannot invest
directly in an index.
/2/ The yield curve is the graphical depiction of the relationship between the
yield on bonds of the same credit quality but different maturities.
/3/ Call protection is the length of time during which a security cannot be
redeemed by the issuer.
/4/ Callable bonds are redeemable by the issuer before the scheduled maturity
under specific conditions and at a stated price, which usually begins at a
premium to par and declines annually. Bonds are usually "called" when
interest rates fall so significantly that the issuer can save money by
floating new bonds at lower rates.
/5/ Average life is the length of time before the principal of debt issues is
scheduled to be repaid through amortization or sinking fund.
2 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
Market Overview and Outlook
The municipal bond market continues to be dominated by supply and demand factors
such as lower new issue volume, strong retail demand and very limited
institutional demand. In addition, the U.S. Treasury market also appears to be
influenced from its own supply and demand factors and the market has gotten so
thin as a result of collapsing supply that a handful of seemingly minor factors
can have a dramatic impact on yields across the entire U.S. Treasury yield
curve.
In the overall bond market, yield spreads have narrowed and benchmark yield
levels have dropped by nearly a percentage point during the period in response
to evidence that underlying inflation risks have subsided and economic growth is
slowing down from the rapid 6% pace of the past year. We think there is a good
chance that the decline in yields has further to go. Yet, on the other hand,
host of technical and other considerations may stall the market or cause yields
to rise temporarily, barring a dramatic new sign that the U.S. economic
expansion is slowing below an expected 3% to 4% annual pace.
We think conditions appear favorable for interest rates. First, on the
structural side, the massive federal surplus is fueling a collapse of U.S.
Treasury note and bond supply. On the cyclical side, potential sources of
inflation such as too strong consumer growth and a tight labor market, appear to
be moderating. However, temporary concerns remain in the form of heavy private
sector issuance, soaring energy costs and the upcoming Presidential and
Congressional elections.
On the energy front, we believe that the recent price rises may act more like a
tax increase rather than as a spur to higher prices throughout the economy. That
is, as consumers spend more on gasoline and heating oil, they may moderate their
spending on discretionary items. Under this scenario, the results may be a
gradual slowing of growth rather than a spike in underlying inflation.
The spectacular productivity gains of this year have kept underlying inflation
at extremely comfortable levels, with the "core consumption deflator," a
favorite measure of Federal Reserve Board ("Fed") Chairman Alan Greenspan,
running at a minis-cule 0.8% annual rate for the past six months. A second key
point, related to the first, is we think the likelihood of significant
additional Fed tightening appears to be minimal.
New issue supply in the municipal bond market continues to trail far behind
levels reached in 1998 and 1999. Through mid-September 2000, volume was 21%
lower than 1999 levels, while full-year 1999 issuance had already declined 21%
from the 1998 peak. The main reason for the decline is the lack of refunding
volume. With interest rates still higher than they were during 1998 and the
first half of 1999, issuers have had little incentive to refund previous issues.
Individual investor demand for municipals has remained extremely strong, despite
the recent easing of yields from early 2000 levels. Given the small size of the
municipal bond market relative to the stock market, even a modest shift of
assets out of stocks into municipals can create an enormous amount of new demand
for municipal bonds. In short, we think municipal bonds appear to be
attractively priced relative to underlying inflation rates in an environment of
very light supply and muted or near-dormant institutional demand.
Thank you for investing in the Smith Barney Muni Funds -- National Portfolio. We
look forward to helping you pursue your financial goals in the future.
/s/ Peter M. Coffey
Peter M. Coffey
Vice President
October 12, 2000
3 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<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> <C>
9/30/00 $ 12.94 $ 13.03 $ 0.38 $ 0.00 3.67%+
-------------------------------------------------------------------------------------------------------------------------
3/31/00 13.97 12.94 0.73 0.01 (2.03)
-------------------------------------------------------------------------------------------------------------------------
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
=========================================================================================================================
Total $ 8.58 $ 0.44
=========================================================================================================================
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Historical Performance -- Class B Shares
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<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>
9/30/00 $ 12.93 $ 13.03 $ 0.35 $ 0.00 3.50%+
-------------------------------------------------------------------------------------------------------------------------
3/31/00 13.96 12.93 0.66 0.01 (2.56)
-------------------------------------------------------------------------------------------------------------------------
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 $ 4.20 $ 0.38
=========================================================================================================================
<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>
9/30/00 $ 12.95 $ 13.05 $ 0.34 $ 0.00 3.42%+
-------------------------------------------------------------------------------------------------------------------------
3/31/00 13.97 12.95 0.65 0.01 (2.57)
-------------------------------------------------------------------------------------------------------------------------
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 $ 5.50 $ 0.44
=========================================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
4 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns
-------------------------------------------------------------------------------------------------------------------------
Without Sales Charges(1)
------------------------------------------------------------------
Class A Class B Class L
<S> <C> <C> <C>
Six Months Ended 9/30/00+ 3.67% 3.50% 3.42%
-------------------------------------------------------------------------------------------------------------------------
Year Ended 9/30/00 5.27 4.74 4.68
-------------------------------------------------------------------------------------------------------------------------
Five Years Ended 9/30/00 5.41 4.86 4.77
-------------------------------------------------------------------------------------------------------------------------
Ten Years Ended 9/30/00 7.34 N/A N/A
-------------------------------------------------------------------------------------------------------------------------
Inception* through 9/30/00 7.24 6.70 5.32
=========================================================================================================================
<CAPTION>
With Sales Charges(2)
------------------------------------------------------------------
Class A Class B Class L
<S> <C> <C> <C>
Six Months Ended 9/30/00+ (0.49)% (1.00)% 1.39%
-------------------------------------------------------------------------------------------------------------------------
Year Ended 9/30/00 1.04 0.27 2.67
-------------------------------------------------------------------------------------------------------------------------
Five Years Ended 9/30/00 4.55 4.70 4.56
-------------------------------------------------------------------------------------------------------------------------
Ten Years Ended 9/30/00 6.90 N/A N/A
-------------------------------------------------------------------------------------------------------------------------
Inception* through 9/30/00 6.93 6.70 5.18
=========================================================================================================================
-------------------------------------------------------------------------------------------------------------------------
Cumulative Total Returns
-------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Without Sales Charges(1)
------------------------
<S> <C>
Class A (9/30/90 through 9/30/00) 103.10%
-------------------------------------------------------------------------------------------------------------------------
Class B (Inception* through 9/30/00) 46.66
-------------------------------------------------------------------------------------------------------------------------
Class L (Inception* through 9/30/00) 49.36
=========================================================================================================================
</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.
* Inception dates for Class A, B and L shares are August 20, 1986, November
7, 1994 and January 5, 1993, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
5 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<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+
September 1990 -- September 2000
[GRAPH]
Lehman
Brothers
Municipal
Date National Bond Index
-------------------------------------------------------
9/90 9,597 10,000
3/91 10,214 10,667
3/92 11,326 11,733
3/93 12,873 13,202
3/94 13,247 13,508
3/95 14,071 14,513
3/96 15,314 15,729
3/97 16,143 16,585
3/98 17,994 18,362
3/99 18,822 19,501
3/00 18,439 19,484
9/30/00 19,116 20,258
+ Hypothetical illustration of $10,000 invested in Class A shares on
September 30, 1990, 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,
2000. 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. An investor may not invest directly in
an index. 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*
---------------------------------
Education 9.0%
Hospital 19.0%
Housing: Multi-Family 6.6%
Housing: Single-Family 5.1%
Miscellaneous 8.1%
Pollution Control 7.7%
Transportation 13.2%
Utility 6.1%
Water & Sewer 5.3%
Other 19.9%
*As a percentage of total investments.
Summary of Investments by Combined Ratings
------------------------------------------
Standard Percentage
Moody's & Poor's of Total Investments
----------------------------------------------------------
Aaa AAA 36.1%
Aa AA 13.1
A A 20.5**
Baa BBB 18.7
Ba BB 1.3
B B 0.8
VMIG 1/P-1 A-1 0.4
NR NR 9.1
--------
100.0%
--------
** 0.3% was rated by Fitch IBCA, Inc.
6 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Schedule of Investments (unaudited) September 30, 2000
------------------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
==============================================================================================================================
Education -- 9.0%
<S> <C> <C>
$ 1,250,000 A3* Brookhaven, NY IDA Civic Facility Revenue, St. Joseph's College, 6.000% due $ 1,267,188
12/1/20
3,000,000 NR Capital Projects Finance Authority Student Housing Revenue, CAFRA Capital
Corp.,
Florida Universities, Series A, 7.850% due 8/15/31 2,940,000
Chicago, IL Board of Education, School Reform, FGIC-Insured:
7,300,000 AAA Series A, zero coupon bond to yield 5.300% due 12/1/31 1,113,250
Series B-1:
28,530,000 AAA Zero coupon bond to yield 5.220% due 12/1/30 4,564,800
41,000,000 AAA Zero coupon bond to yield 5.220% due 12/1/31 6,252,500
3,000,000 AAA Donna, TX ISD, PSFG, School Building, 5.250% due 2/15/25 2,801,250
2,000,000 AAA Granbury, TX ISD, PSFG, zero coupon bond to yield 5.544% due 8/1/19 670,000
3,000,000 AAA Massachusetts State Health & Educational Facilities Authority Revenue, Series G-4,
INFLOS, 7.437% due 7/1/25 (b) 3,026,250
2,880,000 Aaa* Midlothian, TX ISD, PSFG, zero coupon bond to yield 6.271% due 2/15/20 853,200
1,455,000 Baa3* Monroe County, NY IDA Revenue, Student Housing, Series A, 5.250% due 4/1/19 1,325,869
1,000,000 BBB- New Hampshire Health & Education Facilities Authority Revenue, New Hampshire College,
7.500% due 1/1/31 1,027,500
1,500,000 Baa3* New Hampshire Higher Education & Health, Brewster Academy, 6.750% due 6/1/25 1,533,750
1,500,000 A New York State Dormitory Authority Revenue, State University Educational Facilities,
Series B, 7.500% due 5/15/11 1,743,750
1,000,000 Baa3* Pennsylvania State Higher Educational Facilities Authority, Student Housing
Revenue,
(Student Association Inc. Project), Series A, 6.750% due 9/1/32 962,500
1,000,000 AAA Philadelphia, PA School District, Series A, MBIA-Insured, 4.500% due 4/1/23 835,000
1,500,000 Aaa* Plain, Ohio Local School District, Capital Appreciation, FGIC-Insured,
zero coupon bond to yield 6.400% due 12/1/27 307,500
Private Colleges & Universities Authority:
595,000 A3* Georgia Revenue, (Mercer University Project), Series A, 5.250% due 10/1/20 554,838
925,000 A Georgia Student Housing Revenue, (Mercer Housing Corp. Project), Series A, ACA-Insured,
5.375% due 6/1/17 886,844
100,000 AA Richland County, SC Educational Facilities Revenue, (Benedict College Project), Asset
Guaranteed,
5.750% due 7/1/19 100,000
1,205,000 Aaa* Sanger, TX ISD, PSFG, zero coupon bond to yield 6.120% due 2/15/27 254,556
1,000,000 BBB- Savannah, GA EDA Revenue, (College of Art & Design Inc. Project), 6.900% due 10/1/29 1,031,250
Southern Illinois University Revenue, Housing & Auxiliary, Capital
Appreciation,
Series A, MBIA-Insured:
4,950,000 AAA Zero coupon bond to yield 5.510% due 4/1/21 1,472,625
3,000,000 AAA Zero coupon bond to yield 5.530% due 4/1/23 787,500
3,000,000 AAA Zero coupon bond to yield 5.540% due 4/1/25 697,500
Texas State Higher Education Coordinating Board, College Student Loan Revenue:
870,000 A* 7.450% due 10/1/06 (c) 895,404
120,000 A* 7.700% due 10/1/25 (c) 123,300
1,500,000 Aaa* Weatherford, TX ISD, PSFG, Capital Appreciation, zero coupon bond to yield 6.730% due 406,875
2/15/21
------------------------------------------------------------------------------------------------------------------------------
38,434,999
------------------------------------------------------------------------------------------------------------------------------
Escrowed to Maturity (d) -- 3.3%
460,000 AAA Boston, MA Water & Sewer Revenue, Series A, 10.875% due 1/1/09 580,750
950,000 NR Douglas County, NE Hospital Authority No. 2, Bergan Mercy, 9.500% due 7/1/10 1,154,250
1,515,000 AAA Fairmont, WV Water & Sewer Revenue, AMBAC-Insured, 9.250% due 11/1/11 1,861,556
5,010,000 AAA Indiana Bond Bank, AMBAC-Insured, 9.750% due 8/1/09 6,174,825
1,805,000 AAA Ohio State Water Development Authority Revenue, Safe Water, Series 2, 9.375% due 12/1/10 2,156,975
</TABLE>
See Notes to Financial Statements.
7 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 2000
-----------------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
=============================================================================================================================
<S> <C> <C> <C>
Escrowed to Maturity (d) -- 3.3% (continued)
$ 1,025,000 AAA Philadelphia Hospitals & Higher Education Facilities Authority, Hospital
Revenue,
Presbyterian Medical Center, 6.650% due 12/1/19 $ 1,150,563
815,000 AAA Weber County, UT Hospital Revenue, St. Benedict's Hospital, 10.000% due 3/1/10 1,003,469
14,082,388
General Obligation -- 4.0%
5,000,000 NR Barona Band of Mission Indians, CA GO, 8.250% due 1/1/20 5,231,250
2,640,000 AAA Bastrop, TX GO, ISD, PSFG, zero coupon bond to yield 5.629% due 2/15/19 907,500
2,000,000 AAA Berks County, PA GO, MVRICS, FGIC-Insured, 8.082% due 11/10/20 (c) 2,147,500
5,000,000 AAA Center Unified School District, CA GO, Series C, MBIA-Insured, zero coupon bond
to yield 5.838% due 9/1/20 1,618,750
1,075,000 Aaa* Lago Vista, TX GO, ISD, PSFG, zero coupon bond to yield 5.700% due 8/15/22 299,656
1,875,000 AAA McKeesport, PA GO, Area School District, MBIA-Insured, zero coupon bond to yield
5.680% due 10/1/23 487,500
10,000 A New York City, NY GO, Series D, 7.500% due 2/1/16 10,475
100,000 A Puerto Rico Commonwealth, Public Improvement, 4.500% due 7/1/23 84,125
1,000,000 Aa1* Texas State GO, Veterans Housing Assistance, Series D, 6.450% due 12/1/20 (c) 1,038,750
5,000,000 AAA Washoe County, NV GO, Reno-Sparks Convention, Series A, FSA-Insured, 6.400%
due 7/1/29 5,287,500
-----------------------------------------------------------------------------------------------------------------------------
17,113,006
-----------------------------------------------------------------------------------------------------------------------------
Hospital -- 19.0%
3,000,000 BBB+ Arizona Health Facilities Authority Revenue, Catholic Healthcare West, Series A,
6.625% due 7/1/20 3,026,250
3,000,000 BBB- Arkansas State Development Finance Authority Hospital Revenue, Washington Regional
Medical Center, 7.375% due 2/1/29 2,958,750
1,000,000 A Colorado Health Facilities Authority Revenue Bonds, Vail Valley Medical Center,
Series A, 6.500% due 1/15/13 1,035,000
3,000,000 BBB Cuyahoga County, OH Hospital Facilities Revenue, (Canton Inc. Project),
7.500% due 1/1/30 3,120,000
725,000 A1* Elkhart County, IN Hospital Authority Revenue, Elkhart General Hospital Inc.,
7.000% due 7/1/12 754,000
350,000 BB- Green Springs, OH Health Care Facilities Revenue, (St. Francis Health Care
Center Project), Series A, 7.125% due 5/15/25 322,438
1,500,000 AA Harris County, TX Health Facilities Development Corp., Hospital Revenue,
(Texas Children's Hospital Project), Series A, 5.250% due 10/1/29 1,329,375
1,900,000 A Harrison County, TX Health Facilities Development Corp. Revenue, (Marshall
Regional Medical Center Project), ACA-Insured, 5.500% due 1/1/18 1,726,625
Hawaii State Department Budget & Finance, Special Purpose Revenue,
(Wilcox Memorial Hospital Project):
1,000,000 BBB+ 5.350% due 7/1/18 840,000
1,750,000 BBB+ 5.500% due 7/1/28 1,417,500
3,000,000 BBB+ Henderson, NV Health Care Facility Revenue, Catholic Healthcare West, Series A,
6.750% due 7/1/20 2,992,500
5,000,000 A- Illinois Development Finance Authority Hospital Revenue, Adventist Health System,
Sunbelt Obligation, 5.500% due 11/15/29 4,062,500
Illinois Health Facilities Authority Revenue:
2,600,000 AAA Alexian Brothers Health System, 5.125% due 1/1/28 2,343,250
1,000,000 A- Centegra Health System, 5.250% due 9/1/18 847,500
937,000 AAA Community Provider Pooled Loan Program, FSA-Insured, 7.350% due 8/15/10 974,930
3,500,000 B+ Mercy Hospital & Medical Center, 7.000% due 1/1/07 3,325,000
1,000,000 AAA Methodist Health System, Series B, AMBAC-Insured, RIBS, 9.142% due 5/18/21 (b) 1,067,060
3,000,000 A OSF Healthcare Systems, 6.250% due 11/15/29 2,940,000
4,000,000 AAA Rush-Presbyterian St. Luke's Medical Center, INFLOS, MBIA-Insured,
9.013% due 10/1/24 (b) 4,340,840
</TABLE>
See Notes to Financial Statements.
8 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------------------------------
Hospital -- 19.0% (continued)
<S> <C> <C> <C>
$ 3,000,000 A1* Iowa Finance Authority Health Care Facilities Revenue, Genesis Medical Center,
6.250% due 7/1/25 $ 2,962,500
3,000,000 AA- Iowa Finance Authority Revenue, Catholic Health Initiatives, Series A, 6.000% due 12/1/18 3,022,500
8,000,000 AAA Kentucky Economic Development Finance Authority Health System Revenue, Norton
Healthcare Inc., Series B, MBIA-Insured, zero coupon bond to yield 6.180% due 10/1/22 2,120,000
900,000 BBB+ Klamath Falls, OR Inter-Community Hospital Merle West, 7.100% due 9/1/24 914,625
4,000,000 BBB- Louisiana Public Facilities Authority Revenue, (General Health Systems
Project), 6.800% due 11/1/16 3,985,000
1,000,000 BBB+ Maricopa County, AZ IDA Health Facilities Revenue, (Catholic Healthcare West Project),
Series A, 5.000% due 7/1/16 848,750
1,000,000 AAA Massachusetts State Health & Educational Facilities Authority Revenue, St. Elizabeth
Hospital, LEVRRS, Series E, FSA-Insured, 8.920% due 8/12/21 (b) 1,067,180
New Jersey Health Care Facilities Financing Authority Revenue:
1,000,000 BBB- St. Elizabeth Hospital Obligation Group, 6.000% due 7/1/27 826,250
2,000,000 BBB- Trinitas Hospital Obligation Group, 7.400% due 7/1/20 2,057,500
450,000 A New York State Medical Care Facilities Financing Agency, Long Term Health
Care, Medical Health Services, Series D, 7.400% due 2/15/18 472,500
5,000,000 BB+ Oklahoma Development Finance Authority Refunding Revenue, Hillcrest Healthcare System,
Series A, 5.625% due 8/15/29 3,475,000
120,000 A Oregon State Health, Housing, Educational & Cultural Facilities Authority, Western State
Chiropractic, Series A, ACA-Insured, 6.350% due 12/1/20 123,300
3,900,000 Aa3* Rhode Island State Health & Educational Building Corp. Refunding Revenue, Health
Facilities, St. Antoine Residence, Series A, 6.125% due 11/15/18 3,875,625
2,500,000 A- Tarrant County, TX Health Facilities Development Corp. Hospital Revenue,
6.700% due 11/15/30 2,434,375
2,000,000 Baa2* Tomball, TX Hospital Authority Revenue, Tomball Regional Hospital, 6.000% due 7/1/19 1,702,500
Vermont Educational & Health Building Finance Agency:
2,375,000 AA- H. Porter, FHA-Insured, 7.100% due 2/1/31 2,441,951
1,500,000 AA Middlebury College Project, 5.000% due 11/1/38 1,308,750
Wisconsin State Health & Educational Facilities Authority Revenue:
5,000,000 BBB+ Aurora Health Care Inc., Series A, 5.600% due 2/15/29 4,050,000
2,100,000 A Kenosha Hospital & Medical Center Project, 5.700% due 5/15/20 1,929,375
2,500,000 A3* Monroe Clinic Inc., 5.375% due 2/15/22 2,143,750
------------------------------------------------------------------------------------------------------------------------------------
81,184,949
------------------------------------------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 6.6%
2,535,000 Aaa* Chicago, IL Multi-Family Housing Revenue, GNMA-Collateralized, Hearts United Apartments,
Series A, 5.600% due 1/1/41 (c) 2,341,706
250,000 Aaa* Cuyahoga County, OH Multi-Family Housing, Dalebridge Apartments, GNMA-Collateralized,
FHA-Insured, 6.500% due 10/20/20 (c) 259,687
El Paso County, TX Housing Finance Corp., Multi-Family Housing Revenue,
Series A:
2,390,000 A3* La Plaza Apartments, 6.750% due 7/1/30 2,375,063
1,000,000 A3* Las Lomas Apartments, 6.375% due 12/1/29 996,250
1,500,000 A+ Illinois Housing Development Authority, Multi-Family Housing Revenue, Series
1991A,
8.125% due 7/1/10 1,556,505
1,500,000 AA- Indiana State HFA, Multi-Family Housing Mortgage Revenue, Hunters Run, FHA-Insured,
7.250% due 5/1/18 (c) 1,569,375
5,000,000 Aa2* Iowa Finance Authority, Multi-Family Housing Revenue, (Prestwick Apartments Project),
FHA-Insured, 7.500% due 12/1/36 (c) 6,100,000
1,000,000 A+ King County, WA Housing Authority Revenue Refunding, Sr. Bonds, Series A, 6.800% due 3/1/26 1,032,500
2,000,000 AAA Maricopa County, AZ IDA, Multi-Family Housing Revenue, (National Health Facilities II
Project), Series A, FSA-Insured, 5.500% due 1/1/18 1,967,500
</TABLE>
See Notes to Financial Statements.
9 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
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Schedule of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
Housing: Multi-Family -- 6.6% (continued)
<S> <C> <C> <C>
$ 1,915,000 AAA Mohave County, AZ IDA, Multi-Family Housing, (Copper Ridge Apartments), FHA-Insured,
7.375% due 4/1/32 (c) $ 2,020,325
1,150,000 Aa3* Nevada Housing Division, Multi-Unit Housing, Campaige, Series A, 5.450% due 10/1/18 (c) 1,108,312
500,000 Aa3* Portland, OR Multi-Family Housing, LOC U.S. National Bank of OR, 6.250% due 5/1/12 (c) 513,750
1,000,000 BBB Roanoke, VA Redevelopment & Housing Authority, Multi-Family Housing Revenue Refunding,
United Dominion-Laurel Ridge, 6.625% due 5/1/23 (c) 1,025,000
1,000,000 AAA Rogers County, OK HFA, Multi-Family Revenue Refunding, Series A, FNMA-Collateralized,
FHA-Insured, 7.750% due 8/1/23 1,020,300
2,347,000 AAA Seattle Housing Authority, WA Low Income Housing Revenue, GNMA-Collateralized,
7.400% due 11/20/36 2,619,839
1,875,000 AAA Yuma, AZ IDA, Multi-Family Mortgage Revenue Refunding, Series A, GMNA-Collateralized,
6.100% due 9/20/34 (c) 1,931,250
------------------------------------------------------------------------------------------------------------------------------------
28,437,362
------------------------------------------------------------------------------------------------------------------------------------
Housing: Single-Family -- 5.1%
435,000 AAA Arkansas Housing Development, Single-Family Mortgage Revenue, Series A,
GNMA-Collateralized, 7.400% due 9/1/23 (c) 447,280
75,000 Aaa* Aurora Kane & Dupage, IL Single-Family Mortgage Revenue, Series A,
GNMA/FHLMC-Collateralized, 7.950% due 10/1/25 (c) 81,938
Chicago, IL Single-Family Mortgage Revenue:
2,000,000 Aaa* Series A, FNMA/GNMA-Collateralized, 6.350% due 10/1/30 (c) 2,077,500
1,000,000 AAA Series C, FNMA/FHLMC/GNMA-Collateralized, 7.000% due 3/1/32 1,092,500
280,000 Aa2* Colorado HFA, Single-Family Program Refunding, Sr. Bonds, Series 94 D-1, 8.000%
due 12/1/24 297,850
2,260,000 AAA Cowley & Shawnee Counties, KS Mortgage Revenue, Series B, AMBAC-Insured,
GNMA-Collateralized, zero coupon bond to yield 7.868% due 6/1/22 (c) 423,750
680,000 AAA District of Columbia HFA, Collateralized Revenue, Single-Family, Series A,
GNMA-Collateralized, FHA/VA-Insured, 8.100% due 12/1/23 (c) 694,817
380,000 AAA Fort Worth, TX Housing Finance Corp., Single-Family Mortgage Revenue, Capital
Appreciation, Series A, GNMA-Collateralized, zero coupon bond to yield 8.500%
due 6/1/21 (c) 71,725
1,000,000 Aaa* Franklin County, OH Mortgage Revenue, Villas at St. Therese, Series E,
GNMA-Collateralized, 5.900% due 6/20/39 1,005,000
395,000 AA Idaho Housing Agency, Single-Family Mortgage, Series C-2, FHA-Insured,
7.900% due 1/1/22 (c) 400,230
275,000 Aa2* Labette County, KS Single-Family Mortgage Revenue Refunding, Series A, 8.400%
due 12/1/11 286,344
1,835,000 Aa3* Massachusetts State Housing Finance Agency, Housing Revenue, Single-Family Mortgage,
Series 38, 7.200% due 12/1/26 (c) 1,924,456
Missouri State Housing Development Community Mortgage Revenue, Series C:
405,000 AAA Capital Appreciation, GNMA-Collateralized, zero coupon bond to yield 7.350% due 7/1/23 76,950
655,000 AAA GNMA/FNMA-Collateralized, 7.450% due 9/1/27 (c) 716,406
Nebraska Investments Finance Authority, GNMA-Collateralized, RIBS:
300,000 AAA Series B, 9.305% due 10/17/23 (b)(c) 317,853
100,000 AAA Single-Family Mortgage Revenue, Series 2, 10.669% due 9/10/30 (b)(c) 104,375
1,085,000 Aa3* New Hampshire State HFA, Single-Family Residential Mortgage, Series D, LOC Landesbank
Hessen, 7.250% due 7/1/15 (c) 1,133,825
210,000 AAA Ohio Housing Finance Agency Residential Mortgage, Series A-2,
GNMA-Collateralized, 6.625% due 3/1/26 (c) 216,563
85,000 BBB- Panhandle, TX Regional Housing Finance Corp., Single-Family Mortgage Revenue,
10.375% due 3/1/09 85,636
1,000,000 AA+ Pennsylvania State HFA, Single-Family Mortgage Revenue,
Series 39B, 6.875% due 10/1/24 (c) 1,040,000
1,425,000 AAA Pima County, AZ Single-Family Mortgage Revenue, Series A,
GNMA/FNMA/FHLMC-Collateralized, step bond to yield 7.100% due 11/1/29 (c) 1,474,875
</TABLE>
See Notes to Financial Statements.
10 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
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Schedule of Investments (unaudited) (continued) September 30, 2000
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
Housing: Single-Family -- 5.1% (continued)
<S> <C> <C> <C>
$ 280,000 AAA Prince Georges County, MD Housing Authority, Single-Family Mortgage
Revenue Refunding, Series A, GNMA-Collateralized, 8.000% due 1/1/17 $ 296,100
675,000 AAA Reno County, KS Single-Family Mortgage Revenue, Series A, AMBAC-Insured,
zero coupon bond to yield 11.704% due 12/1/14 138,375
1,500,000 AA+ Rhode Island Housing & Mortgage Financing Corp., Home Ownership Opportunity Bonds,
INFLOS, 9.455% due 4/1/24 (b)(c) 1,560,000
2,490,000 Aaa* Sedgwick & Shawnee Counties, KS Single-Family Mortgage Revenue, Series A-1,
GNMA-Collateralized, 6.875% due 12/1/26 (c) 2,676,750
213,092 A1* St. Bernard Parish, LA Home Mortgage Authority, Single-Family Mortgage Revenue
Refunding, Series A, 8.000% due 3/25/12 217,554
300,000 AAA Travis County, TX Housing Finance Corp., Single-Family Mortgage Revenue,
Series B, GNMA/FNMA-Collateralized, 7.100% due 10/1/27 (c) 313,875
215,000 AAA Utah HFA, Single-Family Mortgage Revenue, FHA-Insured, Sr. Bond, 7.300% due 7/1/16 221,897
2,375,000 AA+ Virginia State Housing Development Authority, Commonwealth Mortgage, Series A,
7.150% due 1/1/33 2,455,156
135,000 AA Wyoming Community Development Authority, Series B, FHA-Insured, 8.125% due 6/1/21 (c) 137,944
------------------------------------------------------------------------------------------------------------------------------------
21,987,524
------------------------------------------------------------------------------------------------------------------------------------
Industrial Development -- 2.9%
1,050,000 A+++ Brookhaven, NY IDA Revenue, TDS Realty/Island ADC Income Facility, LOC Fleet
Bank, 6.550% due 12/1/19 (c) 1,084,125
2,000,000 NR Hillsborough County, FL IDA Exempt Facilities Revenue, National Gypsum,
Series A, 7.125% due 4/1/30 (c) 1,997,500
1,150,000 NR Lancaster, PA IDA Revenue, (Garden Spot Village Project), Series A, 7.625% due 5/1/31 1,158,625
1,640,000 AA- Oklahoma City, OK Industrial & Culture Facilities, Trigen Energy Corp.,
6.750% due 9/15/17 (c) 1,645,560
1,000,000 A+ Rensselaer County, NY IDA, Albany International Corp., LOC Fleet Bank,
7.550% due 6/15/07 (c) 1,103,750
2,500,000 NR Suffolk County, NY IDA Revenue, Nissequogue Cogen Partners Facility,
5.500% due 1/1/23 (c) 2,228,125
1,000,000 BBB- Tucson, AZ Airport Authority Inc., Special Facilities Revenue Bonds,
Lockheed Aeromod Center Inc., 8.700% due 9/1/19 (c) 1,025,000
2,000,000 A+ West Chicago, IL IDR, (Leggett & Platt Inc. Project), 6.900% due 9/1/24 (c) 2,087,500
------------------------------------------------------------------------------------------------------------------------------------
12,330,185
------------------------------------------------------------------------------------------------------------------------------------
Life Care -- 2.8%
2,925,000 Aa* Hamilton County, OH Mortgage Revenue, Judson Care Center, Series A,
FHA-Insured, 6.500% due 8/1/26 3,031,031
2,500,000 BBB Illinois Development Finance Authority Health Facilities, Community Living,
7.125% due 3/1/10 2,487,500
1,000,000 Baa2* Indianapolis, IN Industrial EDR Refunding & Improvement, 7.625% due 10/1/22 1,035,000
1,000,000 BBB- John Tolfree Health System Corp., MI Mortgage Revenue, 6.000% due 9/15/23 827,500
Massachusetts State Industrial Finance Agency Revenue Refunding, Series A:
1,000,000 AAA Chelsea Jewish, FHA-Insured, 6.500% due 8/1/37 1,037,500
2,000,000 NR Chestnut Knoll Project, 5.625% due 2/15/25 1,545,000
1,000,000 NR Montgomery County, PA Higher Education & Health Authority Revenue, Temple Continuing
Care Center, 6.750% due 7/1/29 883,750
1,150,000 A- Montgomery County, PA IDA, Retirement Community Revenue, Life Communities
Inc., 5.250% due 11/15/28 955,938
------------------------------------------------------------------------------------------------------------------------------------
11,803,219
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous -- 8.1%
1,885,000 AA Bernalillo County, NM Gross Receipts Tax Revenue Refunding, 5.200% due 4/1/21 1,797,819
2,000,000 A+++ Chautauqua, NY Tobacco Asset, Securitization Corp., 6.750% due 7/1/40 1,997,500
</TABLE>
See Notes to Financial Statements.
11 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 2000
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Miscellaneous -- 8.1% (continued)
Dauphin County, PA General Authority:
$ 4,000,000 NR Hyatt Regency, 6.200% due 1/1/29 $ 3,650,000
1,000,000 NR Riverfront Office, 6.000% due 1/1/25 922,500
1,000,000 Baa3* Edmond, OK EDA, Collegiate Housing Foundation, Series A, 5.375% due 12/1/19 928,750
2,000,000 Ba3* Galveston, TX Special Contract Revenue Refunding, (Farmland Industries Inc.
Project), 5.500% due 5/1/15 1,840,000
3,000,000 AAA Georgia Local Government COP, Series A, MBIA-Insured, 4.750% due 6/1/28 2,535,000
2,000,000 A Houston, TX Participation Interest, 6.400% due 6/1/27 1,957,500
2,000,000 A Illinois Development Finance Authority Revenue, City of East St. Louis,
7.250% due 11/15/09 2,157,500
1,500,000 AAA Indiana Bond Bank Guaranty State Revolving Fund, Series A, 6.875% due 2/1/12 1,631,250
510,000 AAA Indiana Bond Bank Special Program, Series A2, MBIA-Insured, 6.750% due 1/1/06 516,375
250,000 AAA Lancaster County, PA Vo-Tech School Authority Lease Revenue Guaranteed, FGIC-Insured,
6.500% due 2/15/07 264,687
2,375,000 NR Maryland State Economic Development Corp. Revenue, Health & Mental Hygiene Program,
Series A, 7.750% due 3/1/25 2,386,875
1,720,000 AA Massachusetts State Development Finance Agency Revenue, May Institute Issue,
Asset Guaranteed, 5.750% due 9/1/29 1,685,600
35,000 A2* Oregon State Bond Bank Revenue, Series 1, 6.700% due 1/1/15 36,575
2,865,000 A3* Port Longview, WA Revenue Refunding, Series A, 6.250% due 12/1/18 (c) 2,950,950
3,000,000 AA Rhode Island State Economic Development Corp. Revenue, Providence Plaza Mall,
Asset Guaranteed, Sr. Note, 6.125% due 7/1/20 3,045,000
1,330,000 NR Seward, AK Revenue, (Sealife Center Project), 7.650% due 10/1/16 1,349,950
2,500,000 BBB+ Summit County, CO Sports Facilities Refunding Revenue, (Keystone Resorts
Management Inc. Project), Ralston Purina Co. Guaranteed, 7.750% due 9/1/06 2,787,500
215,000 AAA Utah State Municipal Finance Cooperative Local Government Revenue, Pooled
Capital Improvement Program, FSA-Insured, 6.900% due 3/1/02 217,124
------------------------------------------------------------------------------------------------------------------------------------
34,658,455
------------------------------------------------------------------------------------------------------------------------------------
Pollution Control -- 7.7%
1,700,000 BBB+ Adams County, MS Environmental Improvement Revenue Refunding, (International Paper Co.
Project), Series A, 6.800% due 8/1/24 (c) 1,748,875
5,000,000 Aa3* Brazos River, TX Navigation District, (BASF Corp. Project), 6.750% due 2/1/10 5,506,250
3,600,000 A1* La Crosse, WI Resource Recovery Revenue Refunding, (Northern States Power Co. Project),
6.000% due 11/1/21 (c) 3,654,000
5,000,000 A Los Angeles Local Government Environment Facilities Community Development Authority
Revenue, (Capital Projects & Equipment Acquisition Program), ACA-Insured,
6.550% due 9/1/25 5,162,500
3,000,000 A Lowndes County, MS Solid Waste Disposal & PCR Refunding, (Weyerhaeuser Co. Project),
Series A, 6.800% due 4/1/22 3,255,000
100,000 VMIG 1* Manatee County, FL PCR, (Florida Power & Light Co. Project), variable coupon due 9/1/24 100,000
100,000 VMIG 1* Maricopa County, AZ PCR, Southern California Edison Co., Series A, variable coupon due
6/1/35 100,000
1,000,000 BBB+ Mobile, AL Industrial Development Board, Environmental Improvement Revenue,
(International Paper Co. Project), Series B, 6.450% due 5/15/19 (c) 1,021,250
830,000 NR New Jersey EDA Revenue, (Atlantic City Sewer Project), 7.250% due 12/1/11 (c) 865,275
500,000 NR Ohio State Solid Waste Revenue, Republic Engineered Steels Inc., 9.000% due 6/1/21 (c) 182,500
1,000,000 BBB+ Rapides, LA Finance Authority, Environmental Improvement Revenue,
(International Paper Co. Project), Series A, 6.550% due 11/15/23 (c) 1,006,250
1,850,000 BBB+ Richland, SC Solid Waste Facility, (Union Camp Project), Series B, 7.125% due 9/1/21 (c) 1,891,625
3,000,000 NR Rockdale County, GA Solid Waste Authority Revenue, (Visy Paper Inc. Project),
7.500% due 1/1/26 (c) 3,097,500
1,945,000 BBB Saint Charles Parish, LA PCR, (Union Carbide Project), 7.350% due 11/1/22 (c) 2,017,937
</TABLE>
See Notes to Financial Statements.
12 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
=================================================================================================================================
Pollution Control -- 7.7% (continued)
<S> <C>
$ 1,130,000 A Southwestern Illinois Development Authority, Solid Waste Disposal Revenue,
(Laclede Steel Co. Project), 8.500% due 8/1/20 (c) $ 1,159,663
2,200,000 Baa2* Sweetwater County, WY Solid Waste Disposal Revenue, (FMC Corp. Project), Series A,
7.000% due 6/1/24 (c) 2,238,500
---------------------------------------------------------------------------------------------------------------------------------
33,007,125
---------------------------------------------------------------------------------------------------------------------------------
Pre-Refunded (e) -- 2.1%
1,500,000 AAA Chattanooga-Hamilton County, TN Hospital Authority Revenue, Erlanger Medical Center,
Series B, RIBS, FSA-Insured, (Call 5/1/01 @ 104), 9.165% due 5/25/21 (b) 1,600,725
40,000 AAA Cleveland, OH Public Power System Revenue, Series B, (Call 11/15/01 @ 102)
MBIA-Insured, 7.000% due 11/15/17 41,900
915,000 A Denver, CO City & County Airport Revenue, Series A, (Call 11/15/00 @ 102),
8.500% due 11/15/23 (c) 937,088
2,000,000 Aaa* Fairfax County, VA IDA, (Call 8/28/01 @ 104), 9.027% due 8/29/23 (b) 2,149,260
500,000 NR Illinois Health Facility Authority Revenue, United Medical Center, (Call 7/1/03 @ 100),
8.375% due 7/1/12 546,875
150,000 Aaa* New York City, NY GO, Series D, (Call 2/1/02 @ 101.5), 7.500% 2/1/16 158,063
North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding,
(Call 1/1/22 @ 100), Series A:
1,000,000 AAA 4.500% due 1/1/24 875,000
1,310,000 Aaa* 6.000% due 1/1/26 1,393,512
1,095,000 NR Portland, TX Community Center Sales Tax Gross Revenue, (Call 2/15/04 @ 102),
7.000% due 2/15/25 1,192,181
---------------------------------------------------------------------------------------------------------------------------------
8,894,604
---------------------------------------------------------------------------------------------------------------------------------
Public Facilities -- 3.9%
2,500,000 AAA Chicago, IL Lakefront Millennium Parking Facilities, MBIA-Insured, step bond to yield
5.750% due 1/1/29 1,731,250
2,500,000 A- Dekalb County, IN Redevelopment, (Mini-Mill Local Public Improvement Project), Series
A, 6.500% due 1/15/14 2,643,750
2,750,000 AAA Harrisburg, PA Redevelopment Authority, FSA-Insured, zero coupon bond to yield
5.220% due 5/1/21 852,500
3,685,000 AA Indianapolis, IN Local Public Improvement Bond Bank, Series D, 6.750% due 2/1/14 4,145,625
1,250,000 NR Port Authority, NY & NJ Special Obligation Revenue, (5th Installment Special Project),
Series 4, 6.750% due 10/1/19 (c) 1,281,250
Sevier County, TN Public Building Authority, Local Government Public Improvement:
1,100,000 VMIG 1* Series IV-A-2, FSA-Insured, variable coupon due 6/1/25 1,100,000
600,000 VMIG 1* Series IV-D-1, AMBAC-Insured, variable coupon due 6/1/20 600,000
3,960,000 A Tulsa, OK Public Facilities Authority, Lease Payment Revenue Refunding, Assembly Center,
6.600% due 7/1/14 4,435,200
---------------------------------------------------------------------------------------------------------------------------------
16,789,575
---------------------------------------------------------------------------------------------------------------------------------
Solid Waste -- 0.4%
2,000,000 Baa1* Courtland, AL Industrial Development Board, Solid Waste Disposal Revenue Refunding,
(Champion International Corp. Project), 6.000% due 8/1/29 (c) 1,862,500
---------------------------------------------------------------------------------------------------------------------------------
Tax Allocation -- 0.5%
2,695,000 AAA Pittsburg, CA Redevelopment Agency, Tax Allocation, (Los Medanos Community Development
Project), AMBAC-Insured, zero coupon bond to yield 6.200% due 8/1/28 535,631
1,000,000 BBB- Providence, RI Special Obligation, Tax Increment, Series D, 6.650% due 6/1/16 1,036,250
2,650,000 AAA San Francisco, CA Redevelopment Financing Authority, Tax Allocation, Capital
Appreciation, (City & County Redevelopment Project), Series D, MBIA-Insured,
zero coupon bond to yield 5.200% due 8/1/24 669,125
---------------------------------------------------------------------------------------------------------------------------------
2,241,006
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
13 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
Transportation -- 13.2%
<S> <C> <C>
$ 3,000,000 Baa1* Alliance Airport Authority Inc., Texas Special Facilities Revenue, (American Airlines Inc.
Project),
7.500% due 12/1/29 (c) $ 3,070,260
3,000,000 AAA Chicago, IL Skyway Toll Bridge Revenue, AMBAC-Insured, 5.500% due 1/1/31 2,880,000
2,010,000 NR Connecticut Development Authority, Airport Facilities Revenue, (Signature Flight Co.
Project),
Series A, 6.625% due 12/1/14 (c) 2,065,275
Connector 2000 Association Inc., SC Toll Road Revenue, Capital Appreciation, Series B, Sr.
Bonds:
20,000,000 BBB- Zero coupon bond to yield 5.850% due 1/1/37 1,325,000
19,000,000 BBB- Zero coupon bond to yield 5.850% due 1/1/38 1,163,750
3,500,000 Baa1* Dallas-Fort Worth, TX International Airport Revenue, Facility Improvement Corp. Revenue,
American Airlines Inc., 6.375% due 5/1/35 (c) 3,381,875
3,000,000 AAA Delaware Valley, PA Regional Finance Authority, Local Government Revenue, Series A,
AMBAC-Insured, 5.500% due 8/1/28 2,951,250
3,130,000 A Denver, CO City & County Airport Revenue, Series B, 7.250% due 11/15/07 (c) 3,325,625
E-470 Public Highway Authority, CO Revenue Bonds, Capital Appreciation,
Series B,
MBIA-Insured, Sr. Bonds:
18,200,000 AAA Zero coupon bond to yield 5.520% due 9/1/25 4,163,250
15,000,000 AAA Zero coupon bond to yield 6.320% due 9/1/30 2,531,250
17,700,000 AAA Zero coupon bond to yield 6.350% due 9/1/33 2,478,000
2,000,000 NR Kenton County, KY Airport Board, Special Facilities Revenue, (Mesaba Aviation Inc. Project),
Series A, 6.700% due 7/1/29 (c) 1,925,000
Massachusetts Bay Transportation Authority:
1,000,000 AAA General Transportation System, Series A, MBIA-Insured, 4.500% due 3/1/26 812,500
2,000,000 AAA Massachusetts Revenue Assessment, Series A, 5.250% due 7/1/30 1,862,500
Massachusetts State Turnpike Authority, Highway System Revenue, Capital Appreciation,
MBIA-Insured:
5,000,000 AAA Series A:
AMBAC-Insured, 5.000% due 1/1/39 4,356,250
10,500,000 AAA Zero coupon bond to yield 5.650% due 1/1/28 2,139,375
2,470,000 AAA Series C, Zero coupon bond to yield 5.545% due 1/1/21 768,787
New Hampshire State Turnpike Systems Revenue Refunding, FGIC-Insured:
2,500,000 AAA Series A, 6.750% due 11/1/11 2,765,625
1,000,000 AAA Series C, RIBS, 8.968% due 11/1/17 (b) 1,177,500
Pocahontas Parkway Association, VA Toll Road Revenue, Capital Appreciation, Series B, Sr.
Bonds:
25,000,000 BBB- Zero coupon bond to yield 5.950% due 8/15/34 2,218,750
35,000,000 BBB- Zero coupon bond to yield 5.950% due 8/15/35 2,931,250
1,045,000 AAA Regional Transit Authority, IL, Series C, FGIC-Insured, 7.750% due 6/1/20 1,273,594
San Joaquin Hills, CA Transportation Corridor Agency, Toll Road Revenue, Capital
Appreciation, Series A, MBIA-Insured:
4,000,000 AAA Zero coupon bond to yield 5.670% due 1/15/30 730,000
5,500,000 AAA Zero coupon bond to yield 5.670% due 1/15/32 886,875
8,135,000 AAA Zero coupon bond to yield 5.670% due 1/15/34 1,169,406
2,000,000 A Triborough Bridge & Tunnel Authority, NY Revenues, (Convention Center Project), Series E,
7.250% due 1/1/10 2,242,500
------------------------------------------------------------------------------------------------------------------------------------
56,595,447
------------------------------------------------------------------------------------------------------------------------------------
Utility -- 6.1%
1,640,000 AAA Alaska Energy Authority Power Revenue Refunding, Bradley Lake, Series 5, FSA-Insured,
5.000% due 7/1/21 1,494,450
4,000,000 BBB- Clarksville, TN Natural Gas Acquisition Corp., Series A, 7.500% due 11/1/04 4,085,040
155,000 AAA Cleveland, OH Public Power System Revenue, Series B, MBIA-Insured, Unrefunded Balance,
7.000% due 11/15/17 161,975
</TABLE>
See Notes to Financial Statements.
14 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
Utility -- 6.1% (continued)
<S> <C> <C>
$ 2,500,000 A Georgia Municipal Electric Authority Power Revenue, Series X, 6.500% due 1/1/12 $ 2,771,875
1,250,000 AAA Hawaii State Department Budget & Finance, Hawaiian Electric Co., Inc., Series A,
MBIA-Insured,
5.650% due 10/1/27 (c) 1,209,375
6,540,000 AAA Long Island Power Authority, NY Electric System Revenue, Capital Appreciation,
FSA-Insured,
zero coupon bond to yield 5.950% due 6/1/29 1,234,425
5,000,000 AAA Matagorda County, TX Navigational District No. 1 Revenue Refunding, Houston Lighting,
AMBAC-Insured, 5.125% due 11/1/28 (c) 4,537,500
2,500,000 NR Michigan State Strategic Fund, Resource Recovery, Limited Obligation Revenue,
Central Wayne Energy Recovery, Series A, 7.000% due 7/1/27 (c) 2,265,625
1,000,000 A+ New York State Energy Research & Development, (Con Edison Project), Series A,
7.125% due 12/1/29 (c) 1,086,250
North Carolina Eastern Municipal Power Agency, Power System Revenue
Refunding:
Series B:
1,775,000 BBB 6.000% due 1/1/22 1,701,781
1,700,000 A ACA-Insured, 5.750% due 1/1/24 1,585,250
2,500,000 BBB Series D, 6.700% due 1/1/19 2,581,250
1,235,000 AAA Piedmont, SC Municipal Power Agency, Electric Revenue Refunding, FGIC-Insured,
6.750% due 1/1/20 1,417,162
------------------------------------------------------------------------------------------------------------------------------------
26,131,958
------------------------------------------------------------------------------------------------------------------------------------
Water & Sewer -- 5.3%
5,000,000 AAA Atlanta, GA Water & Waste Water Revenue, Series A, FGIC-Insured, 5.000% due 11/1/38 4,393,750
2,400,000 A Dauphin County, PA IDA, General Water Works Corp., 6.900% due 6/1/24 (c) 2,700,000
Houston, TX Water & Sewer System Revenue, Capital Appreciation, Series A, FSA-Insured:
2,000,000 AAA Zero coupon bond to yield 5.490% due 12/1/22 547,500
25,000,000 AAA Zero coupon bond to yield 5.500% due 12/1/28 4,750,000
2,000,000 A Idaho State Water Resources Board, Water Revenue, Resource Development,
(Boise Water Corp. Project), 7.250% due 12/1/21 (c) 2,075,000
50,000 A- Ohio Water Development Authority, (Broken Hill Project), 6.450% due 9/1/20 (c) 51,312
1,625,000 Aaa* Paris, TX Water & Sewer Revenue, FGIC-Insured, 5.375% due 6/15/20 1,586,406
3,400,000 Aa2* Port of Umatilla, OR Water Revenue, LOC ABN AMRO Bank, 6.650% due 8/1/22 (c) 3,506,250
2,750,000 A Trumbull County, OH Sewer Disposal Revenue, (General Motors Corp. Project),
6.750% due 7/1/14 (c) 2,970,000
------------------------------------------------------------------------------------------------------------------------------------
22,580,218
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost--$419,166,411**) $428,134,520
====================================================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except for those
identified by an asterisk (*) which are rated by Moody's Investors Service,
Inc. and those identified by a double dagger (++) which are rated by Fitch
IBCA, Inc.
(b) Residual interest bond-coupon varies inversely with level of short-term
tax-exempt interest rates.
(c) Income from this issue is considered a preference item for purpose of
calculating the alternative minimum tax.
(d) 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.
(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 16 and 17 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
15 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Bond Ratings (unaudited)
--------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings 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 some-
what 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 "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 posi-
tion 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 ele-
ments 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 pro-
tected 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 charac-
terizes bonds in this class.
16 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Bond Ratings (unaudited) (continued)
--------------------------------------------------------------------------------
Fitch IBCA, Inc. ("Fitch") -- Rating may be modified by the addition of a plus
(+) or minus (-) sign to show relative standings with the major ratings
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 debt
securities with higher ratings.
NR -- Indicates that the bond is not rated by Standard
& Poor's, Moody's or Fitch.
--------------------------------------------------------------------------------
Short-Term 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)
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
ABAG -- Association of Bay Area Governors HDC -- Housing Development Corporation
ACA -- American Capital Assurance HFA -- Housing Finance Authority
AIG -- American International Guaranty IDA -- Industrial Development Authority
AMBAC -- American Municipal Bond Assurance IDB -- Industrial Development Board
Corporation IDR -- Industrial Development Revenue
BAN -- Bond Anticipation Notes INFLOS -- Inverse Floaters
BIG -- Bond Investors Guaranty ISD -- Independent School District
CGIC -- Capital Guaranty Insurance Company LEVRRS -- Leveraged Reverse Rate Securities
CHFCLI -- California Health Facility Construction LOC -- Letter of Credit
Loan Insurance MBIA -- Municipal Bond Investors Assurance
Corporation
CONNIE LEE -- College Construction Loan Association MVRICS -- Municipal Variable Rate Inverse
COP -- Certificate of Participation Coupon Security
EDA -- Economic Development Authority PCR -- Pollution Control Revenue
EDR -- Economic Development Revenue PSFG -- Permanent School Fund Guaranty
ETM -- Escrowed To Maturity RAN -- Revenue Anticipation Notes
FGIC -- Financial Guaranty Insurance Company RIBS -- Residual Interest Bonds
FHA -- Federal Housing Administration RITES -- Residual Interest Tax-Exempt Securities
FHLMC -- Federal Home Loan Mortgage Corporation SYCC -- Structured Yield Curve Certificate
FLAIRS -- Floating Adjustable Interest Rate Securities TAN -- Tax Anticipation Notes
FNMA -- Federal National Mortgage Association TECP -- Tax Exempt Commercial Paper
FRTC -- Floating Rate Trust Certificates TOB -- Tender Option Bonds
FSA -- Financial Security Assurance TRAN -- Tax and Revenue Anticipation Notes
GIC -- Guaranteed Investment Contract VA -- Veterans Administration
GNMA -- Government National Mortgage Association VRDD -- Variable Rate Daily Demand
</TABLE>
17 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) September 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (Cost -- $419,166,411) $ 428,134,520
Cash 81,716
Interest receivable 6,288,034
Receivable for securities sold 3,609,519
Receivable for Fund shares sold 474,033
Other assets 1,388
----------------------------------------------------------------------------------------------------------------------
Total Assets 438,589,210
======================================================================================================================
LIABILITIES:
Payable for securities purchased 10,048,658
Dividends payable 2,048,780
Management fees payable 163,316
Distribution fees payable 15,832
Accrued expenses 25,781
----------------------------------------------------------------------------------------------------------------------
Total Liabilities 12,302,367
----------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 426,286,843
========================================================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 32,705
Capital paid in excess of par value 427,489,781
Undistributed net investment income 335,347
Accumulated net realized loss on security transactions (10,539,099)
Net unrealized appreciation on investments 8,968,109
------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 426,286,843
========================================================================================================================
Shares Outstanding:
Class A 27,979,702
----------------------------------------------------------------------------------------------------------------------
Class B 3,221,821
----------------------------------------------------------------------------------------------------------------------
Class L 1,503,523
----------------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 13.03
----------------------------------------------------------------------------------------------------------------------
Class B * $ 13.03
----------------------------------------------------------------------------------------------------------------------
Class L ** $ 13.05
----------------------------------------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share) $ 13.57
----------------------------------------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $ 13.18
======================================================================================================================
</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.
18 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended September 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 13,894,059
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 957,841
Distribution fees (Note 3) 475,349
Shareholder and system servicing fees 55,348
Registration fees 42,384
Shareholder communications 23,760
Pricing service fees 17,352
Audit and legal 11,868
Custody 10,771
Trustees' fees 1,995
Other 5,735
-----------------------------------------------------------------------------
Total Expenses 1,602,403
-----------------------------------------------------------------------------
Net Investment Income 12,291,656
-----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 139,505,545
Cost of securities sold 140,623,403
-----------------------------------------------------------------------------
Net Realized Loss (1,117,858)
-----------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 4,936,859
End of period 8,968,109
-----------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 4,031,250
-----------------------------------------------------------------------------
Net Gain on Investments 2,913,392
-----------------------------------------------------------------------------
Increase in Net Assets From Operations $ 15,205,048
=============================================================================
See Notes to Financial Statements.
19 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes In Net Assets
--------------------------------------------------------------------------------
For the Six Months Ended September 30, 2000 (unaudited)
and the Year Ended March 31, 2000
<TABLE>
<CAPTION>
September 30 March 31
==============================================================================================================
OPERATIONS:
<S> <C> <C>
Net investment income $ 12,291,656 $ 24,340,711
Net realized loss (1,117,858) (9,278,871)
Increase (decrease) in net unrealized appreciation 4,031,250 (25,555,727)
--------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations 15,205,048 (10,493,887)
--------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (12,246,308) (24,043,941)
Net realized gains -- (242,860)
--------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders (12,246,308) (24,286,801)
--------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 34,923,397 137,891,715
Net asset value of shares issued for reinvestment of dividends 5,272,575 12,615,893
Cost of shares reacquired (42,985,611) (149,086,200)
--------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Fund Share Transactions (2,789,639) 1,421,408
--------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 169,101 (33,359,280)
--------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 426,117,742 459,477,022
--------------------------------------------------------------------------------------------------------------
End of period* $ 426,286,843 $ 426,117,742
==============================================================================================================
* Includes undistributed net investment income of: $ 335,347 $ 289,999
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
20 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The National Portfolio ("Portfolio") is a separate diversified 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"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment manager to the Portfolio. 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.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Portfolio's transfer agent and PFPC Global Fund Services ("PFPC") acts as
the Portfolio's sub-transfer agent. CFTC receives account fees and asset-based
fees that vary according to the account size and type of account. PFPC is
responsible for shareholder recordkeeping and financial processing for all
shareholder accounts and is paid by CFTC. For the six months ended September 30,
2000, the Portfolio paid transfer agent fees of $45,475 to CFTC.
21 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, acts as the Portfolio's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Portfolio's agency
transactions. Certain other broker-dealers, continue to sell Portfolio shares to
the public as members of the selling group.
There are maximum initial sales charges of 4.00% and 1.00% for Class A and L
shares, respectively. 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, 2000, SSB and CFBDS received sales
charges of $4,302,000 and $1,250,000 on sales of the Portfolio's Class A and L
shares, respectively. In addition, CDSCs paid to SSB were approximately:
Class A Class B Class L
==================================================================
CDSCs $4,000 $226,000 $26,000
==================================================================
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, 2000, total Distribution
Plan fees incurred were:
Class A Class B Class L
==================================================================
Distribution Plan Fees $273,874 $135,468 $66,007
==================================================================
All officers and one Trustee of the Fund are employees of SSB.
4. Investments
During the six months ended September 30, 2000, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
==================================================================
Purchases $137,258,606
------------------------------------------------------------------
Sales 139,505,545
==================================================================
At September 30, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
==================================================================
Gross unrealized appreciation $15,914,439
Gross unrealized depreciation (6,946,330)
------------------------------------------------------------------
Net unrealized appreciation $8,968,109
==================================================================
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
unre-
22 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
alized 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, 2000, the Portfolio had no open futures contracts.
6. Capital Loss Carryforward
At March 31, 2000, the Portfolio had, for Federal income tax purposes,
approximately $4,176,000, respectively, of unused capital loss carryforwards
available to offset future capital gains expiring March 31, 2008. 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.
7. Shares of Beneficial Interest
At September 30, 2000, 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, 2000, 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 $362,349,003 $43,999,813 $21,173,670
==============================================================================================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 2000 March 31, 2000
--------------------------- ---------------------------
Shares Amount Shares Amount
===================================================================================================================================
Class A
<S> <C> <C> <C> <C>
Shares sold 2,195,638 $ 28,530,311 7,907,403 $ 103,472,952
Shares issued on reinvestment 349,679 4,506,286 833,099 10,908,420
Shares reacquired (2,688,904) (34,711,532) (9,573,264) (124,636,681)
-----------------------------------------------------------------------------------------------------------------------------------
Net Decrease (143,587) $ (1,674,935) (832,762) $ (10,255,309)
===================================================================================================================================
Class B
Shares sold 353,380 $ 4,595,180 1,886,113 $ 24,554,298
Shares issued on reinvestment 38,079 490,320 82,080 1,069,880
Shares reacquired (484,910) (6,258,427) (1,264,157) (16,286,306)
-----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (93,451) $ (1,172,927) 704,036 $ 9,337,872
===================================================================================================================================
Class L
Shares sold 137,425 $ 1,797,906 758,614 $ 9,864,465
Shares issued on reinvestment 21,392 275,969 48,787 637,593
Shares reacquired (156,250) (2,015,652) (632,320) (8,163,213)
-----------------------------------------------------------------------------------------------------------------------------------
Net Increase 2,567 $ 58,223 175,081 $ 2,338,845
===================================================================================================================================
</TABLE>
23 Smith Barney Muni Funds | 2000 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 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.94 $13.97 $14.16 $13.60 $13.67 $13.32
--------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.38 0.74 0.74 0.79 0.81 0.81
Net realized and unrealized gain (loss) 0.09 (1.03) 0.03 0.73 (0.09) 0.35
--------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.47 (0.29) 0.77 1.52 0.72 1.16
--------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.38) (0.73) (0.75) (0.80) (0.79) (0.81)
Net realized gains -- (0.01) (0.21) (0.16) -- --
--------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.38) (0.74) (0.96) (0.96) (0.79) (0.81)
--------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.03 $12.94 $13.97 $14.16 $13.60 $13.67
--------------------------------------------------------------------------------------------------------------------------------
Total Return 3.67%++ (2.03)% 5.50% 11.47% 5.41% 8.83%
--------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $364,692 $363,812 $404,498 $370,891 $351,395 $378,421
--------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.68%+ 0.68% 0.66% 0.66% 0.70% 0.70%
Net investment income 5.84+ 5.59 5.21 5.61 5.92 5.88
--------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 32% 68% 61% 87% 31% 27%
================================================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
24 Smith Barney Muni Funds | 2000 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 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 12.93 $ 13.96 $ 14.16 $ 13.61 $ 13.67 $ 13.33
------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.35 0.67 0.67 0.70 0.74 0.73
Net realized and unrealized gain (loss) 0.10 (1.03) 0.02 0.74 (0.08) 0.35
------------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.45 (0.36) 0.69 1.44 0.66 1.08
------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.35) (0.66) (0.68) (0.73) (0.72) (0.74)
Net realized gains -- (0.01) (0.21) (0.16) -- --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.67) (0.89) (0.89) (0.72) (0.74)
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 13.03 $ 12.93 $ 13.96 $ 14.16 $ 13.61 $ 13.67
------------------------------------------------------------------------------------------------------------------------------------
Total Return 3.50%++ (2.56)% 4.92% 10.80% 4.95% 8.26%
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $ 41,975 $ 42,872 $ 36,451 $ 20,313 $ 12,691 $ 11,605
------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.18%+ 1.18% 1.16% 1.29% 1.20% 1.19%
Net investment income 5.38+ 5.11 4.71 4.95 5.42 5.37
------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 32% 68% 61% 87% 31% 27%
====================================================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
25 Smith Barney Muni Funds | 2000 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 L Shares 2000(1)(2) 2000(2) 1999(2)(3) 1998 1997 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 12.95 $ 13.97 $ 14.16 $ 13.59 $ 13.65 $ 13.32
------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.34 0.66 0.65 0.69 0.73 0.73
Net realized and unrealized gain (loss) 0.10 (1.02) 0.02 0.74 (0.08) 0.34
------------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.44 (0.36) 0.67 1.43 0.65 1.07
------------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.34) (0.65) (0.65) (0.70) (0.71) (0.74)
Net realized gains -- (0.01) (0.21) (0.16) -- --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.34) (0.66) (0.86) (0.86) (0.71) (0.74)
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 13.05 $ 12.95 $ 13.97 $ 14.16 $ 13.59 $ 13.65
------------------------------------------------------------------------------------------------------------------------------------
Total Return 3.42%++ (2.57)% 4.79% 10.71% 4.90% 8.13%
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $ 19,620 $ 19,434 $ 18,528 $ 15,926 $ 14,901 $ 16,563
------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.26%+ 1.26% 1.24% 1.35% 1.27% 1.27%
Net investment income 5.30+ 5.03 4.63 4.91 5.35 5.31
------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 32% 68% 61% 87% 31% 27%
====================================================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (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.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
26 Smith Barney Muni Funds | 2000 Semi-Annual Report to Shareholders
<PAGE>
(This page intentionally left blank.)
<PAGE>
(This page intentionally left blank.)
<PAGE>
--------------------------------------------------------------------------------
SMITH BARNEY
MUNI FUNDS
--------------------------------------------------------------------------------
TRUSTEES INVESTMENT ADVISOR
Lee Abraham SSB Citi Fund Management LLC
Allan J. Bloostein
Jane F. Dasher DISTRIBUTOR
Donald R. Foley Salomon Smith Barney Inc.
Richard E. Hanson, Jr.
Paul Hardin CUSTODIAN
Heath B. McLendon, Chairman PFPC Trust Company
Roderick C. Rasmussen
John P. Toolan TRANSFER AGENT
Joseph H. Fleiss, Emeritus Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
OFFICERS New York, New York 10004
Heath B. McLendon
President and SUB-TRANSFER AGENT
Chief Executive Officer PFPC Global Fund Services
P.O. Box 9699
Lewis E. Daidone Providence, Rhode Island
Senior Vice President 02940-9699
and Treasurer
Peter M. Coffey
Vice President
Anthony Pace
Controller
Christina T. Sydor
Secretary
<PAGE>
--------------------------------------------------------------------------------
Smith Barney Muni Funds
--------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds -- National Portfolio, but it may also be used as
sales literature when proceeded or accompanied by the current Prospectus,
which gives details about charges, expenses, investment objectives and
operating policies of the Fund. If used as sales material after December 31,
2000, this report must be accompanied by performance information for the
most recently completed calendar quarter.
SMITH BARNEY MUNI FUNDS
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
For complete information on any of the Smith Barney Mutual Funds, including
management fees and expenses, call or write your financial professional for a
free prospectus. Read it carefully before you invest or send money.
www.smithbarney.com/mutualfunds
[LOGO OF SALOMON SMITH BARNEY]
Salomon Smith Barney is a service mark of Salomon
Smith Barney Inc.
FD0806 11/00
<PAGE>
SMITH BARNEY
MUNI FUNDS
NEW YORK MONEY MARKET PORTFOLIO
NEW YORK PORTFOLIO
SEMI-ANNUAL REPORT | SEPTEMBER 30, 2000
[LOGO OF SMITH BARNEY MUNI FUNDS]
Your Serious Money. Professionally Managed.(SM)
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
<PAGE>
--------------------------------------------------------------------------------
A Message from the Chairman
--------------------------------------------------------------------------------
[PICTURE OF HEATH B. MCLENDON]
Heath B. McLendon
Chairman
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam. At SSB Citi Fund
Management LLC ("SSB Citi"), we have instituted many positive changes, with the
ultimate goal of offering our investors a well-rounded menu of stock and bond
funds that can be tailored to a wide range of investment objectives.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $395.5 billion in assets under management,1
we believe SSB Citi offers choices and solutions, uniting the distinguished
history of Smith Barney with the unparalleled global reach of its parent,
Citigroup.
The Smith Barney family of funds represent a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney mutual funds and the investment professionals who manage them.
For those of you who are new shareholders, I would like to extend a warm welcome
to you on behalf of everyone here at SSB Citi. The Smith Barney Muni Funds --
New York Money Market Portfolio and New York Portfolio ("Portfolios") seek to
provide New York investors with as high a level of tax-exempt income2 consistent
with prudent investment management and the preservation of capital. Portfolio
managers Joseph Deane and Joseph Benevento use a system of fundamental credit
analysis to seek the best opportunities for yields in the municipal bond market,
primarily among bonds issued within the state of New York.
----------
1 As of September 30, 2000. This figure represents SSB Citi's assets under
management for retail, institutional, money and separate accounts.
2 Please note a portion of the income from the Portfolios may be subject to
the Alternative Minimum Tax ("AMT").
--------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/S/Heath B. McLendon
Heath B. McLendon
Chairman
October 11, 2000
2 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Shareholder Letter
--------------------------------------------------------------------------------
Dear Shareholder:
[PHOTO OF JOSEPH P. DEANE] [PHOTO OF JOSEPH BENEVENTO]
Joseph P. Deane Joseph Benevento
Vice President Vice President
We are pleased to provide the semi-annual report for the Smith Barney Muni
Funds -- New York Money Market Portfolio and New York Portfolio ("Portfolio(s)")
for the period ended September 30, 2000. In this report we have summarized the
period's prevailing economic and market conditions and outlined our investment
strategy. The information provided in this letter represents the opinion of the
managers and is not intended to be a forecast of future events, a guarantee of
future results nor investment advice.
Further, there is no assurance that certain securities will remain in or out of
the Portfolios. Please refer to pages 12 through 27 for a list and percentage
breakdown of the Portfolios' holdings. Also, please note any discussion of the
Portfolios' holdings is as of September 30, 2000 and is subject to change. A
detailed summary of the Portfolios' performance can be found in the appropriate
sections that follow. We hope you find this report to be useful and informative.
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, 2000, the Portfolio's Class A shares,
without and with sales charges returned 3.31% and a negative 0.81%,
respectively. In comparison, the Lehman Brothers Municipal Bond Index ("Lehman
Index")2 returned 3.97%.
As of September 30, 2000, the Portfolio's holdings were concentrated among
education bonds (16.8%), pre-refunded bonds (15.1%) and hospital bonds (9.6%).
---------------
1 Please note a portion of the income from the Portfolio may be subject to
the Alternative Minimum Tax ("AMT").
2 The Lehman Index is a broad measure of the municipal bond market with
maturities of at least one year. Please note an investor cannot invest
directly in an index.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
Municipal Market and Economic Overview
Municipal bonds have been a very simple story throughout 2000. They started at
relatively inexpensive valuations and then rallied. In our opinion, stable
interest rates and an economy with few excesses are painting a bullish picture
for bonds in general, while declining new issue supply may be further bolstering
the municipal bond market. In addition, the national economy has produced large
cash surpluses in many states and municipalities, causing general improvement in
the credit quality of municipal securities and credit worthiness of their
securities.
With most states and local governments enjoying balanced budgets or surpluses,
we think borrowing is likely to total no more than $150 billion to $180 billion
over the next two years. As new issuance remains low, we also believe municipal
securities may start to trade away from taxable bonds. Many municipal bonds are
now yielding almost 95% of comparable-maturity U.S. Treasuries, but we expect
that percentage to return to historical average spreads, in the range of 80% to
85%.
From our point of view, the past few months have been a positive period for the
municipal market. As the stock market endured its correction in March and April
2000, municipal bonds forged ahead slowly but relentlessly. In our view, the
municipal markets are in a state of flux that may lead to greater opportunities.
The federal government conducted a buy back of long-term government bonds early
in 2000, which drove down yields.
Under Federal Reserve Board ("Fed") Chairman Alan Greenspan, the Fed has raised
interest rates incrementally several times in order to cool a robust U.S.
economy. We do not see the Fed raising interest rates again for the foreseeable
future, at least until after Election Day. In an attempt to be apolitical, the
Fed's Board of Governors tends to shy away from such dramatic moves in an
election year, to avoid charges of influencing an election.
We are carefully monitoring a number of factors in the municipal market. We are
looking to see who wins not just the Presidential, but also Congressional
elections, since the House of Representatives is where all spending bills
originate. We also closely watch the price of oil, but disagree with those who
see it as a harbinger of doom for the economy.
The market had little reaction to the Fed's decision to keep interest rates
steady or to the Fed's view that risk in the economy is weighted toward
inflation. The bond market is still pricing in another possible Fed tightening
by the end of the year. We expect Fed policy to remain steady throughout 2000,
and we would not be surprised if the Fed were to shift to a more neutral
position before the end of the year. A critical point, which is often overlooked
by many investors, is
--------------------------------------------------------------------------------
4 2000 Semi-Annual Report to Shareholders
<PAGE>
that Fed monetary policy adjustments take time to be absorbed into the general
economy. The Fed has tightened 175 basis points/3/ from the bottom, and the
recent rallies we have seen are a result of changes enacted six- to twelve-
months ago.
Municipal bond prices, in general, have been very firm lately: since late May, a
triple 'A' 10 year municipal index has experienced price improvement (a yield
decline) of 50 basis points or more. Demand in the municipal market has been
steady to increasing as recent volatility in the stock market will undoubtedly
lead some investors to rethink their portfolio mix, and to establish or augment
bond positions in their portfolios.
New York Economic Highlights/4/
New York State is the 10th largest economy in the world and its Gross State
Product of $593 billion accounts for roughly eight percent of U.S. Gross
Domestic Product ("GDP")./5/ New York has a broad and diverse economy with a
concentration of employment in financial services, information and media
services, fashion, transportation equipment and distribution industries.
Over the past few years, the Empire State has moved aggressively to create a
top-notch business climate, and its efforts have clearly had a positive impact
on the state's economy. In our opinion, the turnaround may be a direct result of
changes in the state's economic policy over the last three years. Lower taxes,
the elimination of red tape and other bureaucratic obstacles to growth, prudent
fiscal practices and a business friendly pro-jobs climate have improved New
York's economic competitiveness.
In our opinion, New York State's financial future remains bright. While the
Empire State's debt structure is complex, the burden on resources remains
moderate. Going forward, we are optimistic about the attractiveness of select
New York municipal securities.
New York Money Market Portfolio's Performance Update
and Investment Strategy
The New York Money Market Portfolio seeks to provide investors with income
exempt from federal income tax and New York State and City personal income
taxes/6/ by investing in a portfolio of high quality, short-term New York
municipal obligations selected for liquidity and stability of principal.
-----------------
3 A basis point is 0.01% or one one-hundredth of a percent.
4 Sources: Fitch IBCA, Inc., Duff & Phelps.
5 GDP is the market value of the goods and services produced by labor and
property in the U.S. GDP is comprised of consumer and government purchases,
private domestic investments and net exports of goods and services.
6 Please note a portion of the income from the Portfolio may be subject to
the Alternative Minimum Tax ("AMT").
--------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
The Portfolio invests only in short-term securities that we believe 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.
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.
As of September 30, 2000, the Portfolio's 7-day current yield was 4.02%. The
Portfolio's 7-day effective yield/7/ -- which reflects compounding -- was 4.10%.
During the period, we increased the Portfolio's average maturity/8/ target to a
65- to 70- day range. We have extended the Portfolio's average maturity by
buying what we deem to be high quality liquid municipal notes.
The Portfolio's increased average maturity reflects:
. A slowdown in economic activity over the near-term; and
. Less supply of high quality short-term municipal paper.
The record expansion of the U.S. economy has produced budget surpluses for many
state and local governments, which in turn has decreased the need for short-term
cash flow financing.
Municipal Money Market Overview
On May 16, 2000, the Fed increased the federal funds rate ("fed funds rate")/9/
by 50 basis points, however, the supply and demand imbalance in the short-term
municipal market put pressures on both the municipal note and the Variable Rate
Demand Obligation ("VRDO")/10/ markets and at times, defied rising rates.
-----------------
7 The seven-day effective yield is calculated similarly to the seven-day
yield but, when annualized, the income earned by an investment in the
Portfolio or the class is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of
the assumed reinvestment.
8 Average maturity refers to the average date on which the principal is
required to be paid on the bond.
9 The fed funds rate is the interest rate that banks with excess reserves at
a Federal Reserve district bank charge other banks that need overnight
loans. The fed funds rate often points to the direction of U.S. interest
rates.
10 VRDOs are demand instruments that usually have an indicated maturity of
more than one year, but contain a demand feature that enables the holder to
redeem the investment on no more than 30 days notice. 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.
--------------------------------------------------------------------------------
6 2000 Semi-Annual Report to Shareholders
<PAGE>
During the period, the Bond Buyer One Year Municipal Note Index11 increased by
approximately 60 basis points to a high of 4.64% in early May of 2000. The
market then looked to June, which is the fiscal year end for most state and
local governments, however less issuance was announced for fiscal year 2001 and
as a result the Bond Buyer One Year Municipal Note Index reacted by falling to a
4.20% by late September.
In the VRDO market, which represents the shorter end of the municipal money
market yield curve, supply and demand imbalances have led to increased
volatility during periods of cyclical cash flows. Over the normal course of the
year, tax-exempt money funds tend to experience large cyclical cash flows. For
example, during the month of April, yields for VRDOs in New York surged as
tax-exempt money funds experienced large redemptions relating to income tax
payments. During the month of July, when tax-exempt money funds experience large
inflows from bond coupon collections and bond calls, yields quickly retreated to
levels more expensive than their taxable equivalents.
Going forward, we believe there may be a greater amount of supply of short-term
municipal securities in New York that become available from decade old municipal
bond issuance. The older issuances are now eligible either by pre-refunding12 or
by maturing in 13 months or less.
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 in the future.
Sincerely,
/s/Joseph P. Deane /s/Joseph Benevento
Joseph P. Deane Joseph Benevento
Vice President Vice President
New York Portfolio New York Money Market Portfolio
October 11, 2000
---------------------
11 The Bond Buyer One Year Municipal Note Index is comprised of ten large
municipal note issues rated MIG 1 by Moody's Investors Service, Inc. or SP
+/SP-1 by Standard and Poor's Ratings Service, representing a cross section
of the municipal note market. Please note an investor cannot invest
directly in an index.
12 Pre-refunding occurs when an issuer refinances debt through the issuance of
a new bond deal. The proceeds from the new bond sale are placed in an
escrow account and are used to retire the debt to the earliest call date.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<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)
================================================================================
9/30/00 $12.78 $12.86 $0.34 $0.00 3.31%+
--------------------------------------------------------------------------------
3/31/00 13.69 12.78 0.67 0.01 (1.61)
--------------------------------------------------------------------------------
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
================================================================================
Total $7.95 $0.33
================================================================================
--------------------------------------------------------------------------------
Historical Performance -- Class B Shares
--------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
9/30/00 $12.78 $12.85 $0.30 $0.00 2.93%+
--------------------------------------------------------------------------------
3/31/00 13.68 12.78 0.60 0.01 (2.09)
--------------------------------------------------------------------------------
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 $3.82 $0.33
================================================================================
--------------------------------------------------------------------------------
8 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
New York Portfolio
--------------------------------------------------------------------------------
Historical Performance -- Class L Shares
--------------------------------------------------------------------------------
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
9/30/00 $12.77 $12.84 $0.30 $0.00 2.91%+
--------------------------------------------------------------------------------
3/31/00 13.67 12.77 0.59 0.01 (2.14)
--------------------------------------------------------------------------------
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 $5.00 $0.33
================================================================================
It is the Portfolio'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 9/30/00+ 3.31% 2.93% 2.91%
--------------------------------------------------------------------------------
Year Ended 9/30/00 5.50 4.90 4.84
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 5.55 4.97 4.94
--------------------------------------------------------------------------------
Ten Years Ended 9/30/00 7.46 N/A N/A
--------------------------------------------------------------------------------
Inception* through 9/30/00 6.79 6.71 5.31
================================================================================
Without Sales Charges(2)
---------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/00+ (0.81)% (1.57)% 0.88%
--------------------------------------------------------------------------------
Year Ended 9/30/00 1.25 0.40 2.80
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 4.68 4.81 4.73
--------------------------------------------------------------------------------
Ten Years Ended 9/30/00 7.02 N/A N/A
--------------------------------------------------------------------------------
Inception* through 9/30/00 6.47 6.71 5.18
================================================================================
--------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<PAGE>
--------------------------------------------------------------------------------
New York Portfolio
--------------------------------------------------------------------------------
Cumulative Total Returns
--------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (9/30/90 through 9/30/00) 105.27%
--------------------------------------------------------------------------------
Class B (Inception* through 9/30/00) 46.72
--------------------------------------------------------------------------------
Class L (Inception* through 9/30/00) 49.24
================================================================================
(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.
--------------------------------------------------------------------------------
10 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Historical Performance (unaudited)
--------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the New York Portfolio vs.
the Lehman Brothers Municipal Bond Index+
--------------------------------------------------------------------------------
September 1990 -- September 2000
[GRAPH]
Lehman Brothers
New York Municipal Bond Index
9/90 $ 9,598 $10,000
3/91 10,225 10,667
3/92 11,418 11,733
3/93 13,038 13,202
3/94 13,354 13,508
3/95 14,178 14,513
3/96 15,413 15,729
3/97 16,258 16,585
3/98 18,180 18,362
3/99 18,891 19,501
3/00 18,587 19,484
9/00 $19,202 $20,258
+ Hypothetical illustration of $10,000 invested in Class A shares on
September 30, 1990, 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, 2000. 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 11
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
$12,350,000 VMIG 1* Albany NY IDR United Cerebral Palsy
Series B 5.450% VRDO $12,350,000
15,000,000 MIG 1* Broome County NY BAN 4.750% due 4/3/01 15,036,046
3,600,000 A-1 Chautauqua County IDA (Red Wing Co.
Project) 4.400% VRDO 3,600,000
3,420,000 NR++ Chenango County NY IDR 5.700% VRDO 3,420,000
4,835,000 P-1* Columbia County IDR (Rural Manufacturing
Project) 5.500% VRDO AMT 4,835,000
9,500,000 NR Deer Park NY UFSD 5.000% due 6/26/01 9,539,900
Dutchess County IDA:
6,160,000 A-1+ Marist College Series 98A
5.400% VRDO 6,160,000
4,500,000 A-1+ St. Francis Hospital Series B
5.400% VRDO 4,500,000
Erie County IDA:
Colad Group Inc.:
1,950,000 A-1 Series A 5.500% VRDO AMT 1,950,000
1,600,000 A-1 Series B 5.500% VRDO AMT 1,600,000
2,990,000 P-1* Rosina Food Products Inc.
5.550% VRDO AMT 2,990,000
7,620,000 A-1 Franklin County Trudeau Institute
Series 98 5.350% VRDO 7,620,000
1,600,000 P-1* Fulton County IDR (Fiber Conversion
Inc. Project) 5.500% VRDO AMT 1,600,000
3,000,000 A-1 Genesee County NY IDR
5.500% VRDO 3,000,000
9,350,000 A-1+ Hempstead IDA Nassau Energy
5.550% VRDO AMT 9,350,000
1,410,000 P-1* Hudson County IDA (Emsig
Manufacturing Corp.)
Series 98 5.550% VRDO AMT 1,410,000
5,745,953 NR Ithaca NY BAN 5.000% due 8/10/01 5,774,617
2,080,000 P-1* Jefferson County IDA Fisher Guage
5.500% VRDO AMT 2,080,000
Long Island Power Authority:
1,400,000 VMIG 1* Series 98-4 TECP 3.900% due 10/5/00 1,400,000
7,495,000 A-1+ Series 386 PART 4.350% due 12/7/00 7,495,000
3,195,000 A-1+ Series 565 PART 5.590% MBIA-Insured
VRDO 3,195,000
5,495,000 A-1+ Series 686 PART 5.720% VRDO 5,495,000
38,195,000 A-1+ Series A PART 5.650% VRDO 38,195,000
10,000,000 A-1+ Series A PART MBIA-Insured 5.720%
VRDO 10,000,000
10,200,000 VMIG 1* Series TECP 4.300% due 11/8/00 10,200,000
Monroe County:
8,315,000 VMIG 1* Collegiate Housing Foundation IDR
Series A 5.600% VRDO 8,315,000
5,790,000 P-1* JADA Precision Plastic IDA Series 97
5.500% VRDO AMT 5,790,000
St. Anns Nursing IDA:
8,000,000 VMIG 1* 4.050% VRDO 8,000,000
16,000,000 VMIG 1* 5.400% VRDO 16,000,000
See Notes to Financial Statements.
--------------------------------------------------------------------------------
12 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
$10,000,000 VMIG 1* MTA Munitop Series 99-2 FSA-Insured
5.590% VRDO $10,000,000
22,905,000 A-1 Municipal Securities Trust Series 1999-72
3.250% VRDO 22,905,000
3,545,000 A-1 Nassau County Rubies Costume Project IDA
5.500% VRDO AMT 3,545,000
New York City GO:
2,000,000 VMIG 1* 1994 H-H 4.250% due 11/8/00 2,000,000
3,500,000 VMIG 1* 1994 H-H 4.200% due 12/8/00 3,500,000
13,690,000 A-1 PART AMBAC-Insured 5.650% VRDO 13,690,000
4,300,000 VMIG 1* Series 94 H-3 4.100% due 10/11/00 4,300,000
2,000,000 VMIG 1* Series 95 E-5 5.500% VRDO 2,000,000
5,295,000 VMIG 1* Series 95 F-5 5.500% VRDO 5,295,000
14,200,000 VMIG 1* Series 95 F-6 5.500% VRDO 14,200,000
11,000,000 NR++ Series A 5.620% due 8/1/01 11,113,300
4,950,000 VMIG 1* Series A-4 5.450% VRDO 4,950,000
2,400,000 VMIG 1* Series B-6 MBIA-Insured 5.500% VRDO 2,400,000
6,400,000 VMIG 1* Series C 5.500% VRDO 6,400,000
2,000,000 VMIG 1* Series E-5 5.500% VRDO 2,000,000
2,600,000 VMIG 1* Series H-6 4.300% due 11/7/00 2,600,000
2,500,000 VMIG 1* Sub-Series A-7 5.500% VRDO 2,500,000
1,900,000 VMIG 1* Sub-Series B-2 5.500% VRDO 1,900,000
New York City HDC Multi-Family Housing:
40,100,000 A-1+ 1 Columbus Place Series A 5.550% VRDO 40,100,000
10,000,000 A-1+ Brittany Development Series A
5.550% VRDO AMT 10,000,000
2,400,000 A-1+ Multi-Family 5.550% VRDO 2,400,000
34,500,000 A-1 Multi-Family Related Series A 5.500% VRDO 34,500,000
4,000,000 A-1+ Parkgate Development Series A 5.500% VRDO 4,000,000
6,000,000 A-1 Spring Creek Series A 5.550% VRDO 6,000,000
New York City IDA:
10,000,000 A-1 Air Express International Corp. Project
5.400% VRDO AMT 10,000,000
3,700,000 A-1+ Children's Oncology Society 5.500% VRDO 3,700,000
4,750,000 A-1+ Columbia Grammar School Project
5.400% VRDO 4,750,000
6,100,000 SP-1+ Gary Plastic Packaging Corp. 98
5.600% VRDO AMT 6,100,000
6,515,000 A-1+ Linear Lighting Corp. 5.600% VRDO AMT 6,515,000
12,000,000 A-1 USA Waste Services 5.350% VRDO AMT 12,000,000
New York City Metropolitan Transit
Authority TECP:
9,440,000 A-1+ PART 395 4.320% due 12/7/00 9,440,000
Series CP-1 BAN:
15,000,000 P-1* 4.200% due 10/5/00 15,000,000
3,000,000 P-1* 3.950% due 10/6/00 3,000,000
6,500,000 P-1* 4.100% due 10/19/00 6,500,000
10,000,000 P-1* 4.200% due 11/8/00 10,000,000
7,200,000 P-1* 4.150% due 12/11/00 7,200,000
5,000,000 P-1* 4.200% due 12/14/00 5,000,000
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
New York City Municipal Water Financial Authority:
$ 6,660,000 A-1+ PART 1032 4.000% due 2/13/01 $ 6,660,000
11,230,000 NR++ Pre-Refunded Series A 6.250% due 6/15/01 11,387,300
20,000,000 P-1* Series 1 TECP 4.200% due 10/3/00 20,000,000
8,600,000 P-1* Series 3 TECP 4.250% due 10/11/00 8,600,000
20,000,000 P-1* Series 5 4.200% due 10/12/00 20,000,000
7,000,000 P-1* Series 5 TECP 3.950% due 10/10/00 7,000,000
5,000,000 VMIG 1* Series A FGIC-Insured 5.500% VRDO 5,000,000
12,000,000 VMIG 1* Series D Merlot 5.450% VRDO 12,000,000
New York City Transitional Financial Authority:
Future Tax Secured:
19,040,000 VMIG 1* Series A-1 5.350% VRDO 19,040,000
13,300,000 VMIG 1* Series A-2 5.500% VRDO 13,300,000
600,000 VMIG 1* Series B-2 5.550% VRDO 600,000
3,930,000 VMIG 1* Sub-Series B-3 5.350% VRDO 3,930,000
4,900,000 VMIG 1* Series A-2 5.500% VRDO 4,900,000
New York State Dormitory Authority:
8,625,000 A-1+ Colgate University PART FGIC-Insured
5.650% VRDO 8,625,000
Cornell University:
12,550,000 A-1+ Series A 5.250% VRDO 12,550,000
21,530,000 VMIG 1* Series B 5.250% VRDO 21,530,000
9,300,000 P-1* TECP 4.400% due 10/20/00 9,300,000
Memorial Sloan Kettering Series 89A:
4,195,000 A-1 5.250% VRDO 4,195,000
8,945,000 A-1+ 5.600% VRDO 8,945,000
3,500,000 VMIG 1* Public Library Series 99B 5.250% VRDO 3,500,000
7,370,000 A-1+ United Health Services PART AMBAC-Insured
5.540% VRDO 7,370,000
Wagner College:
9,500,000 A-1+ 5.500% VRDO 9,500,000
9,000,000 A-1+ PART 419 5.540% VRDO 9,000,000
New York State Energy Research & Development
Authority:
Con Edison:
30,500,000 A-1 Sub-Series A-2 5.300% VRDO 30,500,000
5,000,000 A-1 Sub-Series A-3 5.600% VRDO 5,000,000
18,000,000 VMIG 1* LILCO Series A 5.550% VRDO AMT 18,000,000
New York State Electric & Gas:
12,500,000 VMIG 1* 3.700% due 10/15/00 12,500,000
7,000,000 A-1 3.900% due 12/1/00 AMT 7,000,000
Niagara Mohawk:
10,200,000 P-1* Series A 5.450% VRDO 10,200,000
19,600,000 A-1+ Series A 5.500% VRDO 19,600,000
1,850,000 P-1* Series B 5.450% VRDO 1,850,000
4,575,000 A-1+ Series B 5.550% VRDO AMT 4,575,000
See Notes to Financial Statements.
--------------------------------------------------------------------------------
14 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
$ 9,000,000 P-1* Series C 5.450% VRDO $ 9,000,000
1,800,000 A-1+ Series C 5.550% VRDO 1,800,000
New York State Environmental Quality
Series TECP:
5,000,000 P-1* 4.200% due 10/6/00 5,000,000
3,850,000 VMIG 1* 4.200% due 11/8/00 3,850,000
9,995,000 A-1 PART MBIA-Insured 5.540% VRDO 9,995,000
13,370,000 NR++ Water Revenue 6.500% due 6/15/14 13,818,101
New York State GO:
2,000,000 NR++ 7.500% due 11/15/00 2,006,651
13,200,000 A-1+ Municipal Securities Trust SGB3
5.650% VRDO 13,200,000
26,400,000 VMIG 1* Series A 4.400% due 2/8/01 26,400,000
3,380,000 NR+ Series B 4.500% due 3/1/01 3,384,062
20,000,000 VMIG 1* Series B 4.050% due 8/8/01 20,000,000
4,280,000 NR++ Series D 5.250% due 7/15/01 4,307,612
3,900,000 VMIG 1* Sub-Series B2-B9 5.600% VRDO 3,900,000
1,145,000 NR+ Unrefunded Series L 5.000% due 8/1/01 1,150,752
New York State HFA:
58,000,000 VMIG 1* 250 West 50th Street Series A
5.250% VRDO AMT 58,000,000
10,750,000 VMIG 1* 363 West 30th Street Series A
5.550% VRDO 10,750,000
5,200,000 VMIG 1* Contract Obligation Revenue Series A
5.450% VRDO 5,200,000
2,600,000 VMIG 1* E39th Street Series A 5.550% VRDO 2,600,000
37,200,000 VMIG 1* E84th Street Series A 5.300% VRDO AMT 37,200,000
24,000,000 VMIG 1* Saxony Housing Series 97A 5.550% VRDO AMT 24,000,000
8,500,000 VMIG 1* Talleyrand Crescent Housing Series 99A
5.350% VRDO AMT 8,500,000
3,100,000 VMIG 1* Theatre Row Series A 5.550% VRDO 3,100,000
40,700,000 VMIG 1* Tribeca Park Housing Series A
5.250% VRDO AMT 40,700,000
12,050,000 NR++ New York State Local Government Assistance
Corp. Series C 6.500% due 4/1/01 12,331,040
New York State Medicare Facilities Finance
Agency:
5,000,000 VMIG 1* Pre-Refunded 7.500% due 2/15/21 5,121,983
12,125,000 VMIG 1* St. Lukes PART FHA-Insured 5.540% VRDO 12,125,000
New York State Mortgage Agency Revenue PART:
13,995,000 VMIG 1* 5.580% VRDO AMT 13,995,000
12,300,000 VMIG 1* SONYMA-Insured Series 38 4.200% VRDO AMT 12,300,000
New York State Power Authority:
12,000,000 VMIG 1* Series 1 5.300% VRDO 12,000,000
TECP:
5,400,000 P-1* 4.200% due 10/11/00 5,400,000
8,000,000 P-1* Series 1 4.150% due 10/10/00 8,000,000
28,600,000 P-1* Series 2 4.150% due 12/1/00 28,600,000
3,000,000 P-1* Series 4 3.950% due 10/6/00 3,000,000
11,200,000 P-1* Series 4 4.400% due 10/6/00 11,200,000
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
New York State Thruway:
$16,500,000 A-1+ PART Series 1997 5.650% VRDO $16,500,000
50,000,000 P-1* TECP 4.150% due 12/11/00 50,000,000
New York State Urban Development Corp.:
17,525,000 A-1 7.500% due 4/1/01 18,144,458
8,000,000 VMIG 1* PART Series N AMBAC-Insured 5.450% VRDO 8,000,000
9,000,000 A-1 New York Trust for Cultural Research
Manhattan School of Music 5.400% VRDO 9,000,000
Niagara County IDA (American Re-Fuel Co.):
13,505,000 P-1* Series 94C 5.550% VRDO AMT 13,505,000
8,000,000 P-1* Series 96D 5.550% VRDO AMT 8,000,000
12,800,000 P-1* Series 97B 5.500% VRDO AMT 12,800,000
9,000,000 NR North Babylon NY UFSD 5.000% due 6/28/01 9,022,148
3,000,000 P-1* Oneida County IDR (Harden Furniture) Series 98
5.500% VRDO AMT 3,000,000
Onondaga County IDA Southern Container:
3,460,000 NR++ Series A 5.550% VRDO AMT 3,460,000
1,300,000 NR++ Series B 5.550% VRDO AMT 1,300,000
6,110,000 A-1 Syracuse Research Corp. 5.400% VRDO 6,110,000
Port Authority of New York & New Jersey:
5,000,000 A-1+ Series 95 5.650% VRDO 5,000,000
3,500,000 NR++ Series 98-1 5.650% VRDO 3,500,000
3,500,000 NR++ Series 98-2 5.650% VRDO 3,500,000
7,320,000 A-1 Puerto Rico Commonwealth PART 650
5.220% VRDO 7,320,000
Rochester BAN:
10,000,000 NR+ 4.750% due 3/7/01 10,022,114
26,702,000 NR+ Series II 4.500% due 10/26/00 26,714,459
900,000 P-1* Rotterdam IDA IDR Rotterdam Park
5.350% VRDO 900,000
1,600,000 P-1* Schenectady County IDR Scotia Industrial
Park Project Series 98A 5.350% VRDO 1,600,000
20,150,000 P-1* Seneca County IDA (Chiropractic College)
5.350% VRDO 20,150,000
St. Lawrence County IDA:
6,700,000 VMIG 1* Reynolds Metals 5.400% VRDO 6,700,000
3,800,000 P-1* United Helpers Living 3.850% VRDO 3,800,000
Suffolk County:
4,950,000 NR++ Series C FGIC-Insured 5.100% due 11/1/00 4,954,306
30,000,000 MIG 1* TAN 4.750% due 9/10/01 30,132,259
Syracuse NY:
5,180,000 A-1+ IDR (JBC Realty/Wibar International)
5.500% VRDO 5,180,000
10,000,000 NR++ Series B 5.000% due 6/29/01 10,042,722
10,000,000 A-1 Series C 5.000% due 6/29/01 10,042,722
See Notes to Financial Statements.
--------------------------------------------------------------------------------
16 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Triborough Bridge & Tunnel Authority:
$50,000,000 MIG 1* 4.250% due 10/25/00 $ 50,000,000
5,200,000 VMIG 1* Merlot Series S 5.450% VRDO 5,200,000
10,000,000 VMIG 1* Series C 5.300% VRDO 10,000,000
5,000,000 A-1+ Westchester County Boys & Girls Club
Project IDA 5.400% VRDO 5,000,000
2,820,000 A-1 Yates NY IDR Coach & Equipment Manufacturing
5.500% VRDO 2,820,000
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $1,671,916,552**) $1,671,916,552
================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except for those
which are identified by an asterisk (*), are rated by Moody's Investors
Service, Inc.
++ 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 17
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------
Education -- 16.8%
<S> <C> <C> <C>
$ 710,000 A- Hempstead Town IDA, Civic Facilities Revenue,
Adelphi University, 5.250% due 2/1/14 $ 694,913
New York State Dormitory Authority Revenue Bonds:
City University Systems:
Series A:
16,000,000 AAA 5.000% due 7/1/16 15,220,000
5,825,000 AAA FGIC-Insured, 5.625% due 7/1/16 6,028,875
7,000,000 AAA Series B, FSA-Insured, 6.000% due 7/1/14 7,525,000
2,500,000 Baa1* Series C, 7.500% due 7/1/10 2,871,875
2,000,000 AAA Columbia University, 5.000% due 7/1/18 1,880,000
200,000 A Department of Health, State of New York
Issue, 7.250% due 7/1/02 204,250
2,700,000 AA Manhattan College, Asset Guaranty,
6.500% due 7/1/19 2,801,250
1,010,000 AAA New York Medical College,
7.250% due 10/1/03 1,022,261
10,260,000 AAA Rockefeller University, 5.000% due 7/1/28 9,182,700
1,000,000 A School Program, 5.000% due 7/1/18 910,000
4,475,000 AAA State University Athletic Facility,
MBIA-Insured, 4.500% due 7/1/21 3,770,188
State University Educational Facility:
Series A:
12,110,000 AAA FSA-Insured, 5.875% due 5/15/17 12,806,325
7,030,000 AAA MBIA-Insured, 5.000% due 5/15/16 6,687,287
Series B:
1,000,000 A 7.500% due 5/15/11 1,162,500
5,000,000 AAA FGIC-Insured, 5.250% due 5/15/19 4,887,500
5,000,000 AAA FSA-Insured, 5.500% due 5/15/30 4,831,250
University of Rochester, Series A:
7,370,000 A+ 6.500% due 7/1/19 7,812,200
3,915,000 AAA MBIA-Insured, 5.000% due 7/1/16 3,724,144
285,000 A Upstate Community College, Series B,
7.100% due 7/1/01 290,358
Rensselaer County IDA, Civic Facilities Revenue Bonds,
Polytechnic Institute Dormitory Project:
5,430,000 A+ Series A, 5.125% due 8/1/29 4,853,063
5,820,000 A+ Series B, 5.125% due 8/1/27 5,216,175
Schenectady IDA, Civic Facilities, Revenue Bonds,
Union College Project, Series A, AMBAC-Insured:
2,000,000 Aaa* 5.375% due 12/1/19 1,945,000
3,000,000 Aaa* 5.450% due 12/1/29 2,876,250
------------------------------------------------------------------------------------------------
109,203,364
------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
=============================================================================================
<S> <C> <C> <C>
Escrowed to Maturity (b) -- 0.8%
$1,385,000 AAA Commonwealth of Puerto Rico, Aqueduct & Sewer
Authority Revenue Bonds, 10.250% due 7/1/09 $ 1,757,219
3,150,000 AAA New York City GO, Series I, AMBAC-Insured,
7.250% due 8/15/14 3,199,235
220,000 AA New York State Dormitory Authority Revenue Bonds,
New York Medical College, Asset Guaranty,
6.700% due 7/1/01 223,795
90,000 AAA New York State Power Authority Revenue &
General Purpose Bonds, Series C, 9.500%
due 1/1/01 91,090
---------------------------------------------------------------------------------------------
5,271,339
---------------------------------------------------------------------------------------------
Finance -- 3.6%
New York City Transitional Finance Authority
Revenue, Future Tax Secured:
6,000,000 AA Series B, 4.750% due 11/1/23 5,167,500
15,000,000 AA Series C, 4.750% due 5/1/23 12,975,000
5,000,000 AAA New York State Local Government Assistance
Corp., Series B, MBIA-Insured, 4.875% due 4/1/20 4,481,250
1,000,000 BBB+ New York State Municipal Bond Bank Agency,
Special Revenue Program, City of Buffalo,
6.875% due 3/15/06 1,034,860
---------------------------------------------------------------------------------------------
23,658,610
---------------------------------------------------------------------------------------------
General Obligation -- 3.4%
Buffalo School District, Series B, FSA-Insured,
State Aid Withholding:
1,380,000 AAA 4.750% due 2/1/17 1,235,100
500,000 AAA 4.750% due 2/1/18 442,500
575,000 AAA 4.750% due 2/1/19 506,000
Green Island:
100,000 Baa3* 9.375% due 11/1/01 104,506
125,000 Baa3* 9.375% due 11/1/02 135,156
New York City Bonds:
1,300,000 AAA Series B, 5.000% due 8/15/05 (c) 1,300,000
5,000,000 A Series C, 6.600% due 8/1/09 5,206,250
New York State:
1,000,000 A+ 12.000% due 11/15/03 1,210,000
2,750,000 A+ 9.875% due 11/15/05 3,379,062
North Hempstead, FGIC-Insured:
4,505,000 Aaa* Series A, 5.000% due 9/1/22 4,054,500
1,500,000 Aaa* Series B, 4.750% due 3/1/18 1,355,625
Yonkers, Series C, FGIC-Insured,
State Aid Withholding:
2,050,000 AAA 5.000% due 6/1/15 1,924,438
1,000,000 AAA 5.000% due 6/1/19 905,000
---------------------------------------------------------------------------------------------
21,758,137
---------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Government Facilities -- 1.1%
New York State Dormitory Authority Lease Revenue,
Capital Appreciation, Court Facilities, AMBAC-Insured:
$ 3,255,000 Aa1* Zero coupon due 8/1/19 $ 1,106,700
5,895,000 Aa1* Zero coupon due 8/1/20 1,893,769
1,725,000 Aa1* Zero coupon due 8/1/21 519,656
1,600,000 Aa1* Zero coupon due 8/1/22 452,000
3,000,000 A New York State Urban Development Corp. Revenue,
State Facilities, 5.700% due 4/1/20 3,041,250
------------------------------------------------------------------------------------------------------
7,013,375
------------------------------------------------------------------------------------------------------
Hospitals -- 9.6%
5,000,000 AAA Nassau Health Care Corp., Health System Revenue
Bonds, Nassau County Guaranteed, FSA-Insured,
5.500% due 8/1/19 4,881,250
3,000,000 AAA New York City Health & Hospital Corporate
Revenue, Health System, Series A, 5.000% due 2/15/20 2,711,250
New York State Dormitory Authority Revenue:
5,350,000 Aa3* Lutheran Center at Poughkeepsie,
LOC-Keybank N.A., 6.050% due 7/1/26 5,356,687
90,000 AA+ Memorial Sloan Kettering Cancer Center,
Series B, LOC-Chase Manhattan Bank,
5.200% due 7/1/19 (c) 90,000
Mental Health Services Facilities, Series B:
2,500,000 A 5.000% due 2/15/18 2,306,250
7,000,000 A 5.625% due 2/15/21 6,921,250
15,000,000 AAA New York & Presbyterian Hospital,
AMBAC/FHA-Insured, 4.750% due 8/1/16 13,518,750
3,000,000 AA St. Luke's Home, Residential Health,
FHA-Insured, 6.375% due 8/1/35 3,108,750
2,450,000 AAA St. Vincent's Hospital & Medical Center,
FHA-Insured, 7.400% due 8/1/30 2,539,474
2,000,000 AAA Victory Memorial Hospital, MBIA-Insured,
5.375% due 8/1/25 1,885,000
New York State Medical Care Facility Finance
Agency Revenue:
1,380,000 A- 8.875% due 8/15/07 1,384,844
465,000 A- 7.700% due 2/15/18 469,483
370,000 A 7.750% due 2/15/20 377,215
Hospital & Nursing Home Insured Mortgage,
FHA-Insured:
990,000 AA Series B, 7.000% due 8/15/32 1,038,262
2,385,000 AA Series C, 6.650% due 8/15/32 2,477,419
90,000 A MBIA-Insured, 7.750% due 2/15/20 91,967
Series A:
2,830,000 AA 7.450% due 8/15/31 2,960,378
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
20 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Hospitals -- 9.6% (continued)
$ 2,500,000 B Central Suffolk Hospital Mortgage Project,
6.125% due 11/1/16 $ 2,221,875
955,000 Aa1* Health Center Projects, Secured Mortgage
Program SONYMA-Insured,
6.375% due 11/15/19 1,002,750
Series B:
1,860,000 AAA Long Term Healthcare, FSA-Insured,
6.450% due 11/1/14 1,929,750
3,500,000 AA Mortgage Project, FHA-Insured,
6.100% due 2/15/15 3,583,125
Series F, Mental Health Services Facilities
Improvement:
710,000 A 6.500% due 8/15/12 743,725
730,000 A 6.500% due 2/15/19 757,375
---------------------------------------------------------------------------------------------------
62,356,829
---------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 5.5%
6,470,000 BBB Commonwealth of Puerto Rico, Urban Renewal &
Housing Corp. Revenue Bonds, 7.875% due 10/1/04 6,557,863
New York City HDC:
1,470,561 NR Cadman Project, 6.500% due 11/15/18 1,404,386
931,991 NR Heywood Towers Project, 6.500% due 10/15/17 897,041
1,188,101 NR Kelly Project, 6.500% due 2/15/18 1,140,577
505,472 AAA Pass Through Certificates, Series A,
AMBAC/FHA-Insured, 6.500% due 12/20/01 531,378
1,521,415 NR Riverbend Project, 6.500% due 11/15/18 1,598,109
Series A, FHA-Insured:
5,000,000 AAA 7.350% due 6/1/19 5,141,800
4,000,000 AAA 6.600% due 4/1/30 4,130,000
New York State Housing Finance Agency Revenue:
Secured Mortgage Program, SONYMA-Insured: Series A:
500,000 Aa1* 7.000% due 8/15/12 (d) 522,500
2,000,000 Aa1* 6.200% due 8/15/15 (d) 2,082,500
500,000 Aa1* 7.050% due 8/15/24 (d) 520,000
6,870,000 Aa1* Series B, 6.250% due 8/15/29 (d) 7,067,513
1,750,000 Aa1* Series C, 6.600% due 8/15/27 1,824,375
1,500,000 AAA Series C, FHA-Insured, 6.500% due 8/15/24 1,550,625
905,000 A1* Rensselaer Housing Authority, Rensselaer Elderly
Apartments, Series A, 7.750% due 1/1/11 964,956
---------------------------------------------------------------------------------------------------
35,933,623
---------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 21
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===========================================================================================
<S> <C> <C>
Housing: Single-Family -- 5.0%
New York State Mortgage Agency Revenue,
Homeowner Mortgage:
$2,625,000 Aa1* Series 37-A, 6.375% due 10/1/14 $ 2,752,969
1,000,000 Aa1* Series 41-A, 6.450% due 10/1/14 1,051,250
4,000,000 Aa1* Series 42, FHA-Insured, 6.650% due 4/1/26 (d) 4,130,000
9,030,000 Aa1* Series 46, 6.650% due 10/1/25 (d) 9,346,050
4,380,000 Aa1* Series 65, 5.850% due 10/1/28 (d) 4,297,875
4,990,000 Aa1* Series 67, 5.800% due 10/1/28 (d) 4,877,725
6,000,000 Aa1* Series 71, 5.350% due 10/1/18 (d) 5,797,500
-------------------------------------------------------------------------------------------
32,253,369
-------------------------------------------------------------------------------------------
Industrial Development -- 4.3%
2,250,000 BBB+ Essex County IDA Revenue, Solid Waste,
(International Paper Co. Project),
Series A, 6.150% due 4/1/21 (d) 2,205,000
500,000 A+ Monroe County IDA Revenue, Public Improvement,
Canal Ponds Park, Series A, 7.000% due 6/15/13 523,750
New York City IDA:
1,710,000 AAA Civic Facilities Revenue, Lighthouse
International Project, MBIA-Insured,
4.500% due 7/1/23 1,423,575
900,000 Aa2* Prime Laboratories Inc., LOC-ABN AMRO Bank,
Series C, 7.700% Mandatory Tender 11/1/00 901,980
Onondaga County IDA:
750,000 AA- Civic Facilities Revenue, (Syracuse Home
Association Project), LOC-HSBC Bank USA,
5.200% due 12/1/18 690,938
8,000,000 AAA Sewer Facilities Revenue, (Bristol-Myers
Squibb Co. Project), 5.750% due 3/1/24 (d) 7,970,000
1,000,000 AAA Otsego County, Civic Facilities Revenue,
Aurelia Osborn Fox Memorial Hospital,
Series A, FSA-Insured, 4.500% due 10/1/19 856,250
8,000,000 BBB- Port Authority of New York & New Jersey,
(Delta Airlines Inc. Project), Series 1R,
6.950% due 6/1/08 8,350,000
1,410,000 A+ Rensselaer County IDA, Albany International
Corp., 7.550% due 6/1/07 (d) 1,556,288
1,250,000 AAA Syracuse IDA Revenue, James Square Association,
FHA-Insured, 7.000% due 8/1/25 1,288,388
1,945,000 B2* Warren & Washington Counties IDA,
Resource Recovery Revenue Bonds,
Series A, 7.900% due 12/15/07 1,957,156
-------------------------------------------------------------------------------------------
27,723,325
-------------------------------------------------------------------------------------------
Life Care Systems -- 3.1%
New York State Dormitory Authority Revenue Bonds:
1,100,000 Aa3* Chapel Oaks Inc., LOC-Allied Irish Bank PLC,
5.375% due 7/1/17 1,035,375
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
22 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
Life Care Systems -- 3.1% (continued)
FHA-Insured:
$1,230,000 AAA Crouse Community Center, 7.500% due 8/1/29 $ 1,253,481
Genessee Valley:
1,000,000 AA Series A, 6.900% due 2/1/32 1,033,750
685,000 AA Series B, 6.850% due 8/1/16 711,544
3,815,000 AA Hebrew Nursing Home, 6.125% due 2/1/37 3,857,919
1,275,000 AAA Heritage House Nursing Center, 7.000%
due 8/1/31 1,314,155
1,945,000 AAA Jewish Geriatric Center, 7.150% due 8/1/14 2,100,600
1,500,000 AAA Menorah Campus, Nursing Home, 6.100%
due 2/1/37 1,515,000
1,600,000 AA Niagara Frontier Home, Mortgage Revenue,
6.200% due 2/1/15 1,666,000
3,350,000 AA Wesley Garden, Nursing Home, 6.125%
due 8/1/35 3,370,937
2,160,000 A Oneida Health Care Corp. Mortgage Revenue,
Series A, FHA-Insured, 7.200% due 8/1/31 2,211,300
------------------------------------------------------------------------------------------------
20,070,061
------------------------------------------------------------------------------------------------
Miscellaneous -- 3.2%
4,250,000 AA New York City Transitional Finance Authority Revenue,
Future Tax Secured, Series B, 4.750% due 11/1/19 3,750,625
1,655,000 AAA New York City Trust Cultural Resource
Revenue, American Museum of Natural History,
Series A, 5.250% due 7/1/17 1,605,350
New York State Dormitory Authority Lease Revenue:
Court Facilities, City of New York Issue:
5,000,000 A 6.000% due 5/15/39 5,112,500
3,000,000 AAA AMBAC-Insured, 5.750% due 5/15/30 3,026,250
835,000 AAA Office Facilities - Audit & Control,
4.875% due 4/1/16 772,375
6,600,000 AAA New York State Urban Development Corp. Revenue,
Correctional Facilities Service
Contract, Series C, 6.000% due 1/1/29 6,806,250
------------------------------------------------------------------------------------------------
21,073,350
------------------------------------------------------------------------------------------------
Pollution Control Revenue -- 0.9%
300,000 Aa2* New York State Energy, Research &
Development Authority, (Niagara Mohawk
Power Co. Project), Series A, LOC-Toronto
Dominion Bank, 5.000% due 12/1/26 (c) 300,000
New York State Environmental Facilities Corp.,
State Water Revolving Fund, Series A:
805,000 AAA 7.250% due 6/15/10 837,039
1,950,000 AAA 7.500% due 6/15/12 1,995,045
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Pollution Control Revenue -- 0.9% (continued)
$ 1,000,000 AAA North Country Development Authority, Solid Waste
Management System Revenue Refunding,
FSA-Insured, 6.000% due 5/15/15 $ 1,076,250
1,710,000 A3* Puerto Rico Industrial, Medical &
Environmental Facilities, Finance Authority
Revenue, American Airlines Inc.,
Series A, 6.450% due 12/1/25 1,748,475
---------------------------------------------------------------------------------------------------
5,956,809
---------------------------------------------------------------------------------------------------
Pre-Refunded (e) -- 15.1%
35,000 NR Battery Park City Authority Housing
Revenue, FHA-Insured, (Call 6/1/05 @ 100),
8.625% due 6/1/23 40,819
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 1,091,250
2,150,000 AAA Monroe County Water Authority Revenue,
AMBAC-Insured, (Call 8/1/04 @ 101), 7.000% due 8/1/19 2,356,937
New York City GO:
85,000 AAA Series A, (Call 8/15/01 @ 101.5), 7.750% due 8/15/16 88,720
4,000,000 AAA Series B1, MBIA-Insured, (Call 8/15/04 @ 101),
6.950% due 8/15/12 4,380,000
2,375,000 A Series H, (Call 2/1/02 @ 101.5),
7.000% due 2/1/21 2,487,812
1,000,000 NR New York City IDA, Civic Facilities Revenue,
The Lighthouse Project, LOC-Chase Manhattan
Bank, (Call 7/1/02 @ 102), 6.375% due 7/1/10 1,051,250
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 3,356,884
New York State Dormitory Authority Revenue:
5,000,000 Baa1* Department of Education, State of
New York Issue, (Call 7/1/01 @ 102),
7.750% due 7/1/21 5,221,000
2,450,000 AA- Iroquois Nursing Home, FHA-Insured,
(Call 2/1/01 @ 102), 7.050% due 2/1/31 2,519,506
New York State Energy, Research & Development
Authority, Electric Facilities Revenue:
2,935,000 A- Series A, (Call 6/15/02 @ 102), 7.150% due 12/1/20 (d) 3,107,431
2,190,000 A- Series B, (Call 6/15/02 @ 102), 7.150% due 12/1/22 (d) 2,318,662
New York State Medical Care Facilities Finance
Agency Revenue:
6,950,000 AA Hospital & Nursing Home, FHA-Insured,
Series A, (Call 2/15/04 @ 102), 6.200% due 2/15/21 7,375,687
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
24 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
Pre-Refunded (e) -- 15.1% (continued)
Mental Health Improvement, Series F,
(Call 8/15/02 @ 102):
$4,010,000 A 6.500% due 8/15/12 $ 4,230,550
3,885,000 A 6.500% due 2/15/19 4,093,819
Series A:
3,000,000 AAA Beth Israel Medical Center, MBIA-Insured,
(Call 11/1/00 @ 102), 7.500% due 11/1/10 3,066,780
4,000,000 AAA Brookdale Hospital Medical Center,
(Call 2/15/05 @ 102), 6.800% due 8/15/12 4,425,000
1,110,000 AA FHA-Insured, (Call 8/15/01 @ 102),
7.450% due 8/15/31 1,161,138
6,800,000 AA Methodist Hospital, FHA-Insured,
(Call 8/15/02 @ 102), 6.700% due 8/15/23 7,199,500
4,000,000 AA Mortgage Project, FHA-Insured,
(Call 8/15/04 @ 102), 6.375% due 8/15/24 4,335,000
4,700,000 AAA New York Downtown Hospital,
(Call 2/15/05 @ 102),
6.800% due 2/15/20 5,199,375
New York Hospital, AMBAC/FHA-Insured,
(Call 2/15/05 @ 102):
8,500,000 AAA 6.800% due 8/15/24 9,403,125
7,600,000 AAA 6.500% due 8/15/29 8,312,500
2,500,000 AAA 6.900% due 8/15/34 2,775,000
5,000,000 AAA Secured Hospital Revenue Bonds 1991,
(Call 8/15/01 @ 102), 7.400% due 8/15/21 5,228,250
1,500,000 AAA New York State Municipal Bond Bank Agency,
Special Revenue Program, City of Rochester,
Series A, (Call 9/15/01 @ 102), 6.750% due 3/15/11 1,563,240
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 1,020,000
685,000 A Valley Health Development Corp., Mortgage
Revenue Bonds, Mortgage Loan, FHA-Insured,
(Call 2/1/01 @ 110), 11.300% due 2/1/23 764,323
-------------------------------------------------------------------------------------------------
98,173,558
-------------------------------------------------------------------------------------------------
Public Facilities -- 1.8%
1,000,000 A Albany Parking Authority Revenue Refunding,
(Green & Hudson Street Garage Project),
Series A, 7.150% due 9/15/16 1,030,890
10,000,000 AA New York City Transitional Finance
Authority Revenue, Future Tax Secured,
Series C, 5.500% due 11/1/29 9,662,500
915,000 A New York State COP, (Hanson Redevelopment
Project), 8.375% due 5/1/08 1,044,244
-------------------------------------------------------------------------------------------------
11,737,634
-------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 25
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===============================================================================================
<S> <C> <C> <C>
Transportation -- 14.1%
Metropolitan Transportation Authority:
$ 2,290,000 AAA Dedicated Tax Fund, Series A, FSA-Insured,
5.125% due 4/1/19 $ 2,141,150
Transit Facilities Revenue:
Series A:
5,000,000 BBB+ 6.000% due 7/1/19 5,137,500
10,000,000 AAA MBIA-Insured, 5.625% due 7/1/25 9,937,500
5,000,000 AAA Series B, FGIC-Insured, 4.750% due 7/1/26 4,287,500
5,000,000 A Series N, 7.125% due 7/1/09 5,300,000
2,595,000 AAA Triborough Bridge COP, AMBAC-Insured,
5.875% due 1/1/30 2,640,412
4,230,000 AAA New York State Highway Authority,
Emergency Services, Construction &
Reconstruction, Series A, FSA-Insured,
6.600% due 3/1/01 4,270,523
New York State Thruway Authority:
5,000,000 AA- General Revenue GO, Series E,
5.000% due 1/1/25 4,450,000
4,000,000 AAA Highway & Bridge Toll Revenue Fund,
Series B-1, FGIC-Insured, 5.500%
due 4/1/18 3,965,000
15,000,000 AAA Local Highway & Bridge Authority,
Series B, FGIC-Insured, 5.000%
due 4/1/19 13,818,750
1,000,000 AAA Niagara Falls Bridge Commission, Toll
Revenue, Series B, FGIC-Insured, 5.250%
due 10/1/15 1,001,250
12,000,000 NR Port Authority of New York & New Jersey,
Special Project, 5th Installment, 6.750%
due 10/1/19 (d) 12,300,000
Triborough Bridge & Tunnel Authority:
1,500,000 A Convention Center Project, Series E,
7.250% due 1/1/10 1,681,875
General Purpose Revenue Bonds GO, Series B:
4,200,000 Aa3* 5.375% due 1/1/19 4,095,000
10,125,000 Aa3* 5.500% due 1/1/30 9,783,281
8,100,000 AAA Special Obligation, Series A, MBIA-Insured,
4.750% due 1/1/24 6,996,375
-----------------------------------------------------------------------------------------------
91,806,116
-----------------------------------------------------------------------------------------------
Utilities -- 4.6%
10,000,000 AAA Long Island Power Authority, Electric
Facilities Revenue, Series A, MBIA-Insured,
5.250% due 12/1/26 9,350,000
New York State Energy, Research & Development
Authority:
Electric Facilities Revenue:
1,065,000 A- Series A, 7.150% due 12/1/20 (d) 1,104,938
810,000 A2* Series B, 7.150% due 2/1/22 (d) 840,375
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
26 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedules of Investments (unaudited)(continued) September 30, 2000
--------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===============================================================================================
<S> <C> <C> <C>
Utilities -- 4.6% (continued)
Gas Facilities Revenue:
$3,000,000 A1* Brooklyn Union Gas Co. Project, Regular
RIBS, Series B, 6.952% due 7/1/26 (d)(f) $ 3,472,500
5,750,000 A+ Consolidated Edison Co., Inc. Project,
Series A, 7.125% due 12/1/29 (d) 6,245,938
1,500,000 Baa2* Corning National Gas Corp., Series A,
8.250% due 12/1/18 (d) 1,537,635
7,500,000 AAA Puerto Rico Electric Power Authority,
Power Revenue, Series HH, FSA-Insured,
5.250% due 7/1/29 7,153,125
-----------------------------------------------------------------------------------------------
29,704,511
-----------------------------------------------------------------------------------------------
Water & Sewer -- 7.1%
New York City Municipal Water Finance Authority,
Water & Sewer Systems Revenue Bonds:
25,050,000 AAA Series A, 4.750% due 6/15/31 21,135,938
Series B:
2,750,000 AAA 5.000% due 6/15/29 2,461,250
5,205,000 AAA 5.125% due 6/15/30 4,743,056
2,555,000 AA 6.000% due 6/15/33 2,625,262
2,375,000 AAA Series D, MBIA-Insured, 5.000% due 6/15/15 2,259,218
New York State Environmental Facilities Corp.,
Clean Water & Drinking Revolving Funds:
Series B:
1,260,000 AAA 5.250% due 4/15/17 1,228,500
2,490,000 AAA 5.250% due 10/15/17 2,427,750
1,740,000 AAA 5.250% due 4/15/18 1,683,450
1,880,000 AAA 5.250% due 10/15/18 1,818,900
6,040,000 Aa1* Series C, 5.000% due 6/15/16 5,730,450
-----------------------------------------------------------------------------------------------
46,113,774
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $636,302,145**) $649,807,784
===============================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except for those
which are 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) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(d) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(e) Bond is escrowed by U.S. government securities and is considered by the
Manager to be triple-A rated even if issuer has not applied for new
ratings.
(f) 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.
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
"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 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
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 "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 2000 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.
MIG 1 -- 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
AMT -- Alternative Minimum Tax
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
VRDO -- Variable Rate Demand Obligation
VRWE -- Variable Rate Wednesday Demand
--------------------------------------------------------------------------------
30 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) September 30, 2000
--------------------------------------------------------------------------------
New York Money New York
Market Portfolio Portfolio
================================================================================
ASSETS:
Investments, at value (Cost -- $1,671,916,552 and
$636,302,145, respectively) $1,671,916,552 $649,807,784
Cash 152,968 --
Interest receivable 13,768,545 10,443,842
Receivable for Fund shares sold -- 850,653
--------------------------------------------------------------------------------
Total Assets 1,685,838,065 661,102,279
--------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 16,113,300 4,946,622
Dividends payable 3,527,757 2,763,871
Management fees payable 700,422 269,770
Distribution fees payable 60,568 49,412
Deferred compensation payable 8,190 17,822
Payable to bank -- 137,086
Payable for Fund shares purchased -- 15,943
Accrued expenses 172,914 100,867
--------------------------------------------------------------------------------
Total Liabilities 20,583,151 8,301,393
--------------------------------------------------------------------------------
Total Net Assets $1,665,254,914 $652,800,886
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 1,665,346 $ 50,780
Capital paid in excess of par value 1,663,585,431 655,435,564
Undistributed net investment income 5,424 405,668
Accumulated net realized loss
from security transactions (1,287) (16,596,765)
Net unrealized appreciation of investments -- 13,505,639
--------------------------------------------------------------------------------
Total Net Assets $1,665,254,914 $652,800,886
================================================================================
Shares Outstanding:
Class A 1,665,346,437 37,524,715
--------------------------------------------------------------------------------
Class B -- 11,752,511
--------------------------------------------------------------------------------
Class L -- 1,502,399
--------------------------------------------------------------------------------
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
================================================================================
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed within one year from purchase (See Note 4).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 31
<PAGE>
--------------------------------------------------------------------------------
Statements of Operations (unaudited)
--------------------------------------------------------------------------------
For the Six Months Ended September 30, 2000
New York Money New York
Market Portfolio Portfolio
================================================================================
INVESTMENT INCOME:
Interest $ 33,802,478 $ 19,339,487
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 4,066,531 1,614,939
Distribution fees (Note 4) 813,306 913,267
Shareholder and system servicing fees 283,437 102,349
Registration fees 77,697 13,255
Shareholder communications 26,260 16,294
Audit and legal 12,619 16,048
Trustees' fees 3,496 1,896
Custody 450 8,337
Pricing service fees -- 14,335
Other 29,440 4,993
--------------------------------------------------------------------------------
Total Expenses 5,313,236 2,705,713
--------------------------------------------------------------------------------
Net Investment Income 28,489,242 16,633,774
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 5):
Realized Gain (Loss) From Security Transactions
(excluding short-term securities*):
Proceeds from sales 2,236,704,905 44,802,592
Cost of securities sold 2,236,678,480 46,022,084
--------------------------------------------------------------------------------
Net Realized Gain (Loss) 26,425 (1,219,492)
--------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period -- 8,826,113
End of period -- 13,505,639
--------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation -- 4,679,526
--------------------------------------------------------------------------------
Net Gain on Investments 26,425 3,460,034
--------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 28,515,667 $20,093,808
================================================================================
* 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 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
For the Six Months Ended September 30, 2000 (unaudited)
and the Year Ended March 31, 2000
New York Money Market Portfolio September 30 March 31
================================================================================
OPERATIONS:
Net investment income $ 28,489,242 $ 39,028,944
Net realized gain (loss) 26,425 (29,286)
--------------------------------------------------------------------------------
Increase in Net Assets From Operations 28,515,667 38,999,658
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 3):
Net investment income (28,483,818) (39,028,944)
--------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (28,483,818) (39,028,944)
--------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 3,698,525,789 5,872,896,953
Net asset value of shares issued
for reinvestment of dividends 26,683,921 37,246,509
Cost of shares reacquired (3,632,575,326) (5,717,261,587)
--------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 92,634,384 192,881,875
--------------------------------------------------------------------------------
Increase in Net Assets 92,666,233 192,852,589
NET ASSETS:
Beginning of period 1,572,588,681 1,379,736,092
--------------------------------------------------------------------------------
End of period* $ 1,665,254,914 $ 1,572,588,681
================================================================================
* Includes undistributed investment income of: $5,424 --
================================================================================
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, 2000 (unaudited)
and the Year Ended March 31, 2000
New York Portfolio September 30 March 31
================================================================================
OPERATIONS:
Net investment income $ 16,633,774 $ 35,678,855
Net realized loss (1,219,492) (15,214,643)
Increase (decrease) in net unrealized appreciation 4,679,526 (35,570,417)
--------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations 20,093,808 (15,106,205)
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 3):
================================================================================
Net investment income (16,544,044) (35,355,510)
Net realized gains -- (394,886)
--------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (16,544,044) (35,750,396)
--------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 45,831,063 79,456,295
Net asset value of shares issued
for reinvestment of dividends 7,966,349 21,054,255
Cost of shares reacquired (60,343,280) (159,480,306)
--------------------------------------------------------------------------------
Decrease in Net Assets From
Fund Share Transactions (6,545,868) (58,969,756)
--------------------------------------------------------------------------------
Decrease in Net Assets (2,996,104) (109,826,357)
NET ASSETS:
Beginning of period 655,796,990 765,623,347
--------------------------------------------------------------------------------
End of period* $652,800,886 $655,796,990
================================================================================
* Includes undistributed investment income of: $405,668 $315,938
================================================================================
See Notes to Financial Statements.
--------------------------------------------------------------------------------
34 2000 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 New York Portfolio is an open-end
non-diversified investment portfolio of this Fund. 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, 2000,
reclassifications were made to the New York Money Market Portfolio's capital
accounts to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations. Accordingly, for the
New York Money Market Portfolio a portion of accumulated net realized loss
amounting to $95,660 was reclassified to paid-in capital. Net investment income,
--------------------------------------------------------------------------------
Smith Barney Muni Funds 35
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
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.
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"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment manager to the Portfolios. 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.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Portfolios' transfer agent and PFPC Global Fund Services ("PFPC") acts as
the Portfolios' sub-transfer agent. CFTC receives account fees and asset-based
fees that vary according to the size and type of account. PFPC is responsible
for shareholder recordkeeping and financial processing for all shareholder
accounts and is paid by CFTC. For the six months ended September 30, 2000, the
Portfolios paid transfer agent fees of $290,122 to CFTC.
--------------------------------------------------------------------------------
36 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subisdiary of
SSBH, became the Portfolios' distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Portfolios' agency
transactions. Certain other broker-dealers, continue to sell Portfolio shares to
the public as members of the selling group.
For the New York Portfolio, there are maximum initial sales charges of 4.00% and
1.00% for Class A and L shares, respectively. 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. 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, 2000, SSB and CFBDS received sales
charges of approximately $463,000 and $37,000 on sales of the New York
Portfolio's Class A and L shares, respectively. In addition, for the six months
ended September 30, 2000, CDSCs paid to SSB were approximately:
Class A Class B Class L
================================================================================
New York Portfolio $1,000 $35,000 $2,000
================================================================================
Pursuant to a Distribution Plan, the New York Money Market Portfolio pays a
distribution fee calculated at the annual rate of 0.10% of the average daily net
assets of its Class A shares. The New York Portfolio pays a service fee with
respect to Class A, B and L shares calculated at the annual rate of 0.15% of the
average daily net assets of each respective class. In addition, the New York
Portfolio pays a distribution fee with respect to Class B and L shares
calculated at the annual rates of 0.50% and 0.55% of the average daily net
assets of each class, respectively.
For the six months ended September 30, 2000, total Distribution Plan fees
incurred were:
Portfolio Class A Class B Class L
================================================================================
New York Money Market $813,306 -- --
--------------------------------------------------------------------------------
New York 357,198 $492,990 $63,079
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 37
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
5. Investments
During the six months ended September 30, 2000, 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 -- $40,306,135
--------------------------------------------------------------------------------
Sales -- 44,802,592
================================================================================
At September 30, 2000, 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 -- $22,943,927
Gross unrealized depreciation -- (9,438,288)
--------------------------------------------------------------------------------
Net unrealized appreciation -- $13,505,639
================================================================================
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, 2000, the Portfolio had no open futures contracts.
--------------------------------------------------------------------------------
38 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
7. Capital Loss Carryforward
At March 31, 2000, the New York Money Market Portfolio and the New York
Portfolio had, for Federal income tax purposes, approximately $29,300 and
$9,400,000, respectively, of unused capital loss carryforwards available to
offset future capital gains expiring March 31, 2008. 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.
8. Shares of Beneficial Interest
At September 30, 2000, 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, 2000, total paid-in capital amounted to the following for each
Portfolio and their respective classes:
Portfolio Class A Class B Class L
================================================================================
New York Money Market $1,665,250,777 -- --
--------------------------------------------------------------------------------
New York 471,753,213 $163,370,179 $20,362,952
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 2000 March 31, 2000
New York --------------------------------- --------------------------------
Money Market Portfolio Shares Amount Shares Amount
=====================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 3,698,525,789 $3,698,525,789 5,872,896,953 $5,872,896,953
Shares issued on reinvestment 26,683,921 26,683,921 37,246,509 37,246,509
Shares reacquired (3,632,575,326) (3,632,575,326) (5,717,261,587) (5,717,261,587)
-----------------------------------------------------------------------------------------------------
Net Increase 92,634,384 $ 92,634,384 192,881,875 $ 192,881,875
=====================================================================================================
</TABLE>
--------------------------------------------------------------------------------
Smith Barney Muni Funds 39
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 2000 March 31, 2000
---------------------------- ----------------------------
New York Portfolio Shares Amount Shares Amount
=================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 2,929,487 $ 37,407,788 4,382,172 $ 56,724,394
Shares issued on reinvestment 475,432 6,047,380 1,227,851 15,835,149
Shares reacquired (3,575,376) (45,482,986) (8,506,358) (109,374,730)
-------------------------------------------------------------------------------------------------
Net Decrease (170,457) $ (2,027,818) (2,896,335) $ (36,815,187)
=================================================================================================
Class B
Shares sold 458,435 $ 5,856,460 1,310,330 $ 16,759,165
Shares issued on reinvestment 132,675 1,686,744 355,205 4,648,373
Shares reacquired (1,069,178) (13,599,572) (3,441,442) (44,277,729)
-------------------------------------------------------------------------------------------------
Net Decrease (478,068) $ (6,056,368) (1,775,907) $ (22,870,191)
=================================================================================================
Class L
Shares sold 201,592 $ 2,566,815 457,526 $ 5,972,736
Shares issued on reinvestment 18,285 232,225 44,348 570,733
Shares reacquired (98,551) (1,260,722) (453,869) (5,827,847)
-------------------------------------------------------------------------------------------------
Net Increase 121,326 $ 1,538,318 48,005 $ 715,622
=================================================================================================
</TABLE>
--------------------------------------------------------------------------------
40 2000 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>
New York Money Market Portfolio
--------------------------------------------------------------------
Class A Shares 2000(1) 2000 1999 1998 1997 1996
=============================================================================================================
<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 0.018 0.027 0.027 0.030 0.028 0.038
Dividends from net
investment income (0.018) (0.027) (0.027) (0.030) (0.028) (0.038)
------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------------------------------------------------
Total Return 1.77%++ 2.76% 2.72% 3.04% 2.85% 3.17%
------------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $ 1,665 $ 1,573 $ 1,380 $ 1,161 $ 937 $ 882
------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.65%+ 0.67% 0.65% 0.65% 0.67% 0.67%
Net investment income 3.50+ 2.73 2.65 2.99 2.80 3.11
============================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) As a result of voluntary expense limitations, the expense ratio will not
exceed 0.80%.
++ 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 each class of beneficial interest outstanding throughout each
year ended March 31, except where noted:
<TABLE>
<CAPTION>
New York Portfolio
----------------------------------------------------------------------
Class A Shares 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 12.78 $ 13.69 $ 13.91 $ 13.16 $ 13.19 $ 12.83
--------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.34 0.68 0.68 0.72 0.74 0.75
Net realized and unrealized
gain (loss) 0.08 (0.91) 0.07 0.81 (0.03) 0.35
--------------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.42 (0.23) 0.75 1.53 0.71 1.10
--------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.34) (0.67) (0.70) (0.73) (0.74) (0.74)
Net realized gains -- (0.01) (0.27) (0.05) -- --
--------------------------------------------------------------------------------------------------------------
Total Distributions (0.34) (0.68) (0.97) (0.78) (0.74) (0.74)
--------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 12.86 $ 12.78 $ 13.69 $ 13.91 $ 13.16 $ 13.19
--------------------------------------------------------------------------------------------------------------
Total Return 3.31%++ (1.61)% 5.50% 11.83% 5.48% 8.71%
--------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $ 482 $ 482 $ 556 $ 554 $ 531 $ 558
--------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(3) 0.70%+ 0.71% 0.70% 0.71% 0.75% 0.72%
Net investment income 5.29+ 5.20 4.94 5.28 5.58 5.84
--------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 33% 60% 71% 53% 36%
==============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 12.78 $ 13.68 $ 13.89 $ 13.15 $ 13.18 $ 12.84
--------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.30 0.61 0.61 0.65 0.67 0.67
Net realized and unrealized
gain (loss) 0.07 (0.90) 0.07 0.80 (0.03) 0.35
--------------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.37 (0.29) 0.68 1.45 0.64 1.02
--------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.30) (0.60) (0.62) (0.66) (0.67) (0.68)
Net realized gains -- (0.01) (0.27) (0.05) -- --
--------------------------------------------------------------------------------------------------------------
Total Distributions (0.30) (0.61) (0.89) (0.71) (0.67) (0.68)
--------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 12.85 $ 12.78 $ 13.68 $ 13.89 $ 13.15 $ 13.18
--------------------------------------------------------------------------------------------------------------
Total Return 2.93%++ (2.09)% 5.02% 11.19% 4.96% 8.05%
--------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $ 151 $ 156 $ 192 $ 195 $ 185 $ 181
Ratios to Average Net Assets:
Expenses(4) 1.22%+ 1.23% 1.23% 1.23% 1.27% 1.25%
Net investment income 4.77+ 4.67 4.42 4.76 5.06 5.45
--------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 33% 60% 71% 53% 36%
==============================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) As a result of voluntary expense limitations, the expense ratio will not
exceed 0.85% for Class A shares.
(4) As a result of voluntary expense limitations, the expense ratio will not
exceed 1.35% for Class B shares.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
42 2000 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>
New York Portfolio
-------------------------------------------------------------------------------------
Class L Shares 2000(1)(2) 2000(2) 1999(2)(3) 1998 1997 1996
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 12.77 $ 13.67 $ 13.88 $ 13.14 $ 13.17 $ 12.83
-------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.29 0.60 0.60 0.64 0.66 0.66
Net realized and unrealized
gain (loss) 0.08 (0.90) 0.07 0.80 (0.02) 0.36
-------------------------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.37 (0.30) 0.67 1.44 0.64 1.02
-------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.30) (0.59) (0.61) (0.65) (0.67) (0.68)
Net realized gains -- (0.01) (0.27) (0.05) -- --
-------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.30) (0.60) (0.88) (0.70) (0.67) (0.68)
-------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 12.84 $ 12.77 $ 13.67 $ 13.88 $ 13.14 $ 13.17
-------------------------------------------------------------------------------------------------------------------------
Total Return 2.91%++ (2.14)% 4.95% 11.13% 4.91% 8.07%
-------------------------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (000s) $ 19,287 $ 17,633 $ 18,221 $ 10,611 $ 10,055 $ 8,931
-------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 1.36%+ 1.27% 1.27% 1.28% 1.32% 1.28%
Net investment income 4.63+ 4.64 4.37 4.71 5.01 5.02
-------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 33% 60% 71% 53% 36%
=========================================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (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) As a result of voluntary expense limitations, the expense ratio will not
exceed 1.40% for Class L shares.
++ 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>
[This page intentionally left blank]
<PAGE>
[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 P. Deane
Vice President
Joseph Benevento
Vice President
Irving P. David
Controller -- New York
Money Market Portfolio
Paul A. Brook
Controller -- New York Portfolio
Christina T. Sydor
Secretary
Investment Manager
SSB Citi Fund Management LLC
Distributor
Salomon Smith Barney Inc.
Custodian
PFPC Trust Company
Transfer Agent
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
Sub-Transfer Agent
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
This report is submitted for the general information of shareholders of Smith
Barney Muni Funds -- New York Money Market and New York Portfolios, but it may
also be used as sales literature when proceeded or accompanied by the current
Prospectus, which gives details about charges, expenses, investment objectives
and operating policies of the Portfolios. If used as sales material after
December 31, 2000, this report must be accompanied by performance information
for the most recently completed calender quarter.
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
FD0807 11/00
<PAGE>
SMITH BARNEY
MUNI FUNDS
MASSACHUSETTS
MONEY MARKET PORTFOLIO
SEMI-ANNUAL REPORT | SEPTEMBER 30, 2000
[LOGO]SMITH BARNEY
MUTUAL FUNDS
YOUR SERIOUS MONEY. PROFESSIONALLY MANAGED.-SM-
NOT FDIC INSURED - NOT BANK GUARANTEED - MAY LOSE VALUE
A MESSAGE FROM THE CHAIRMAN
[PHOTO] HEATH B. MCLENDON CHAIRMAN
For years, individuals and businesses have looked to the investment
professionals of SSB Citi Fund Management LLC ("SSB Citi") for thoughtful
insights and advice. For some, the solution has been an investment strategy,
incorporating multiple stock, bond and money market mutual funds. Others have
invested with specific portfolio managers who are recognized for their insights
and record. Since the introduction of the first money fund in 1972, the
explosive growth of money funds has gone hand in hand with the growth of the
entire mutual fund industry. Over the last 28 years, millions of investors
worldwide have made money market funds a key part of their investment
portfolios. While all investments involve some degree of risk, money market
funds provide investors with an opportunity to earn current short-term interest
rates with a higher degree of liquidity than most other types of mutual funds.
For those of you who are new shareholders, I would like to extend a warm welcome
to you on behalf of everyone here at SSB Citi. The Smith Barney Muni
Funds--Massachusetts Money Market Portfolio ("Portfolio") seeks to provide
tax-exempt income(1) from both federal income taxes and Massachusetts personal
income taxes by seeking to invest in a portfolio of high quality short-term
municipal obligations selected for liquidity and stability of principal.
Portfolio managers, Joseph P. Deane and Joseph Benevento, use a system of
fundamental credit analysis to build the Portfolio's holdings. They only select
securities of issuers that they believe present minimal credit risk.
When you invest with SSB Citi, you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial future. Thank you for
investing with us.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
OCTOBER 23, 2000
--------------
(1) PLEASE NOTE A PORTION OF THE INCOME FROM THE PORTFOLIO IS SUBJECT TO THE
ALTERNATIVE MINIMUM TAX ("AMT").
-------------------------------------------------------------------------------
SMITH BARNEY MUNI FUNDS 1
<PAGE>
SHAREHOLDER LETTER
[PHOTO] JOSEPH P. DEANE VICE PRESIDENT
[PHOTO] JOSEPH BENEVENTO VICE PRESIDENT
DEAR SHAREHOLDER:
We are pleased to provide the semi-annual report for the Smith Barney Muni
Funds--Massachusetts Money Market Portfolio ("Portfolio") for the period ended
September 30, 2000. In this report we have summarized the period's prevailing
economic and market conditions and outlined our investment strategy. The
information provided in this letter represents the opinion of the managers and
is not intended to be a forecast of future events, a guarantee of future results
nor investment advice.
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(1)
Massachusetts' economy remains healthy, with continued growth of a more diverse,
vibrant, and broadened economic base led by high-tech, health care, higher
education and business service industries. The evolution of the state's economy
has resulted in strong job growth in generally higher paying industries, greater
mobility for skilled workers and an improved overall level of competitiveness.
Massachusetts has demonstrated strong fiscal discipline and management evidenced
by nine consecutive annual operating surpluses through fiscal year 2000.
Moreover, the state anticipates another operating surplus in fiscal 2001. In our
opinion, the outlook for Massachusetts remains favorable. Going forward, we
think the biggest challenges facing the state is balancing tax cuts and capital
and debt plans while maintaining its strong financial position.
--------------
(1) SOURCES: FITCH IBCA, INC., DUFF & PHELPS, SECURITIES LLC.
-------------------------------------------------------------------------------
2 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
INVESTMENT STRATEGY AND PERFORMANCE UPDATE
As previously noted, the Portfolio seeks to provide investors with income exempt
from federal income and Massachusetts state personal income taxes(2) by
investing in high-quality, short-term Massachusetts municipal obligations
selected for liquidity and stability of principal.
As of September 30, 2000, the Portfolio's seven-day current yield was 4.00%. The
Portfolio's seven-day effective yield(3) -- which reflects compounding -- was
4.08%.
During the six months ended September 30, 2000, we increased the Portfolio's
average maturity(4) target to a 65- to 70-day range. We have extended the
Portfolio's average maturity by buying what we deem to be high-quality liquid
municipal notes.
The Portfolio's increased average maturity during the period reflects:
- A slowdown in economic activity over the near-term; and
- Less supply of high-quality short-term municipal paper.
The record expansion of the U.S. economy has produced budget surpluses for many
state and local governments, which has decreased the need for short-term cash
flow financing.
ECONOMIC & MARKET OVERVIEW
Municipal bonds have been a very simple story throughout 2000. They started at
relatively inexpensive valuations and then rallied. Stable interest rates and a
robust economy with few excesses are painting a bullish picture for bonds in
general, while declining new issue supply may be further bolstering the
municipal bond market. In addition, a vibrant national economy has produced
large cash surpluses in many states and municipalities, causing general
improvement in the credit quality of municipal securities and giving some
comfort to many investors regarding the credit worthiness of their securities.
From our point of view, recent months have been good for the municipal market.
As the stock market endured its correction in March and April 2000, municipal
bonds forged ahead slowly but relentlessly. In our view, the municipal markets
are in a state of flux that may lead to greater opportunities. The federal
government conducted a buy back of long-term government bonds early in 2000,
which drove down yields.
--------------
(2) PLEASE NOTE A PORTION OF THE INCOME FROM THE PORTFOLIO MAY BE SUBJECT TO THE
ALTERNATIVE MINIMUM TAX ("AMT").
(3) THE SEVEN-DAY EFFECTIVE YIELD IS CALCULATED SIMILARLY TO THE SEVEN-DAY YIELD
BUT, WHEN ANNUALIZED, THE INCOME EARNED BY AN INVESTMENT IN THE PORTFOLIO OR
THE CLASS IS ASSUMED TO BE REINVESTED. THE EFFECTIVE YIELD WILL BE SLIGHTLY
HIGHER THAN THE YIELD BECAUSE OF THE COMPOUNDING EFFECT OF THE ASSUMED
REINVESTMENT.
(4) AVERAGE MATURITY REFERS TO THE AVERAGE DATE ON WHICH THE PRINCIPAL IS
REQUIRED TO BE PAID ON THE BOND.
-------------------------------------------------------------------------------
SMITH BARNEY MUNI FUNDS 3
<PAGE>
On May 16, 2000, the Federal Reserve Board ("Fed") increased the federal funds
rate ("fed funds rate")(5) by 50 basis points(6), however, the supply and demand
imbalance in the short-term municipal market put pressures on both the municipal
note and the Variable Rate Demand Obligation ("VRDO")(7) markets and at times,
defied rising rates.
During the six months ended September 30, 2000, the Bond Buyer One-Year
Municipal Note Index(8) increased by approximately 60 basis points to a high of
4.64% in early May of 2000. The market then looked to June, which is the fiscal
year end for most state and local governments, however less issuance was
announced for fiscal year 2001 and as a result the Bond Buyer One-Year Municipal
Note Index reacted by falling to a 4.20% by late September.
In the VRDO market, which represents the shorter end of the municipal money
market yield curve, supply and demand imbalances have led to increased
volatility during periods of cyclical cash flows. Over the normal course of the
year, tax-exempt money funds tend to experience large cyclical cash flows. For
example, during the month of April, yields for VRDOs in Massachusetts surged as
tax-exempt money funds experienced large redemptions relating to income tax
payments. During the month of July, when tax-exempt money funds experience large
inflows from bond coupon collections and bond calls, yields quickly retreated to
levels more expensive than their taxable equivalents.
Going forward, we believe there may be a greater amount of supply of short-term
municipal securities in Massachusetts that become available from decade old
municipal bond issuance. The older issuance are now eligible either by
pre-refunding(9) or by maturing in 13 months or less.
--------------
(5) FED FUNDS RATE IS THE INTEREST RATE THAT BANKS WITH EXCESS RESERVES AT A
FEDERAL RESERVE DISTRICT BANK CHARGE OTHER BANKS THAT NEED OVERNIGHT LOANS.
THE FED FUNDS RATE OFTEN POINTS TO THE DIRECTION OF U.S. INTEREST RATES.
(6) A BASIS POINT IS 0.01% OR ONE ONE-HUNDREDTH OF A PERCENT.
(7) 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.
(8) THE BOND BUYER ONE-YEAR MUNICIPAL NOTE INDEX IS COMPRISED OF TEN LARGE
MUNICIPAL NOTE ISSUES RATED MIG 1 BY MOODY'S INVESTORS SERVICE, INC. OR
SP+/SP-1 BY STANDARD & POOR'S RATINGS SERVICE, REPRESENTING A CROSS SECTION
OF THE MUNICIPAL NOTE MARKET. PLEASE NOTE AN INVESTOR CANNOT INVEST
DIRECTLY IN AN INDEX
(9) PRE-REFUNDING OCCURS WHEN AN ISSUER REFINANCES DEBT THROUGH THE ISSUANCE OF
A NEW BOND DEAL. THE PROCEEDS FROM THE NEW BOND SALE ARE PLACED IN AN
ESCROW ACCOUNT AND ARE USED TO RETIRE THE DEBT TO THE EARLIEST CALL DATE.
-------------------------------------------------------------------------------
4 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
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 in the future.
Sincerely,
/s/ Joseph P. Deane /s/ Joseph Benevento
Joseph P. Deane Joseph Benevento
Vice President Vice President
OCTOBER 23, 2000
-------------------------------------------------------------------------------
SMITH BARNEY MUNI FUNDS 5
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 5,221,000 NR# Barnstable BAN 5.00%due 6/28/01 $ 5,243,502
10,000,000 NR# Bellingham BAN 4.75% due 3/27/01 10,023,736
2,000,000 A-1 Boston IDR (Boston Home Inc.) 5.60% VRDO 2,000,000
Boston Water Sewer Series A:
500,000 A-1+ 4.50% due 11/1/00 500,118
950,000 A-1+ 5.20% VRDO 950,000
2,205,000 NR# Brookline 5.75% due 4/1/01 2,220,874
Clipper Tax-Exempt Trust PART
AMBAC-Insured VRDO:
6,469,000 VMIG 1* Series 98-4 4.49% 6,469,000
6,205,000 VMIG 1* Series 98-8 5.62% 6,205,000
3,753,034 MIG 1* Cohasset 5.25% due 1/30/01 3,760,182
1,735,000 NR# Falmouth 5.00% due 6/15/01 1,738,477
1,305,000 NR# Foxbrough 5.00% due 6/1/01 1,309,573
10,000,000 SP-1+ Hopkinton BAN 4.75% due 12/21/00 10,012,271
5,000,000 MIG 1* Lawrence BAN 5.25% due 2/8/01 5,012,785
5,000,000 A-1 Massachusetts Bay Transportation Authority
Series A (Pre-Refunded-- Escrowed in
U.S. government securities) 7.00% due 3/1/01 5,153,418
Massachusetts Development Finance Agency Revenue
VRDO:
3,700,000 A-1 Cider Mill Farms Series 99 5.60% AMT 3,700,000
1,000,000 VMIG 1* Dean College 5.45% 1,000,000
7,800,000 A-1+ Draper Laboratory Issue 5.45% 7,800,000
3,620,000 NR++ Hatfield Inc. Project 5.50% AMT 3,620,000
2,000,000 A-1 Leaktite Corp. 5.60% 2,000,000
2,000,000 A-1 Metalcrafters Series 99 5.60% 2,000,000
11,850,000 VMIG 1* Notre Dame Health Care 5.45% 11,850,000
9,900,000 A-1 Riverwalk Senior Living 5.45% 9,900,000
Massachusetts HEFA:
2,720,000 A-1+ Berklee College of Music Series D MBIA-Insured
5.40% VRDO 2,720,000
4,905,000 VMIG 1* Berklee College Series 385 MBIA-Insured 5.62% VRDO 4,905,000
5,410,000 VMIG 1* Brigham & Women's Hospital 5.45% VRDO 5,410,000
100,000 VMIG 1* Capital Asset Program Series E 5.50% VRDO 100,000
3,400,000 VMIG 1* Corporate Independent Living Series 99
5.50% VRDO 3,400,000
1,885,000 AAA Fallon Health Systems FSA-Insured 6.75% due 6/1/01 1,950,722
1,455,000 A-1 Hallmark Health Series B FSA-Insured 5.65% VRDO 1,455,000
Harvard University:
5,000,000 A-1+ 5.45% VRDO 5,000,000
2,300,000 A-1+ 5.50% VRDO 2,300,000
1,000,000 AAA 6.10% due 12/1/01 1,002,881
7,600,000 A-1+ Massachusetts University Series A 3.85% VRDO 7,600,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
-------------------------------------------------------------------------------
6 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,500,000 AAA Newton Wellesley Hospital MBIA-Insured
7.00% due 7/1/01 $ 1,557,393
8,575,000 A-1+ Partners Healthcare System FSA-Insured
3.85% VRDO 8,575,000
5,000,000 VMIG 1* Simmons College Merlot Series D 5.45% VRDO 5,000,000
1,960,000 A-1+ Williams College PART Series SGA 65 5.60% VRDO 1,960,000
Massachusetts HFA Series A VRDO:
800,000 A-1+ 5.30% 800,000
1,100,000 VMIG 1* Multi-Family Housing Princeton 5.60% 1,100,000
4,850,000 A-1+ Massachusetts IDR (U.S. Tsubaki Project)
5.67% VRDO AMT 4,850,000
Massachusetts Industrial Finance Agency:
1,580,000 A-1 420 Newburyport Turnpike Series 98
5.60% VRDO AMT 1,580,000
4,750,000 A-1 Cape Cod (Escrowed in U.S. government securities)
8.50% due 11/15/00 4,868,075
500,000 A-1+ Gordon College 5.40% VRDO 500,000
900,000 NR# Peterson American Corp. 5.75% VRDO AMT 900,000
2,900,000 VMIG 1* Whitehead Institutional of Biomed 5.40% VRDO 2,900,000
Massachusetts Municipal Wholesale Electric Co.:
5,000,000 A-1+ 4.20% due 10/2/00 5,000,000
3,000,000 A-1+ 4.25% due 12/14/00 3,000,000
2,100,000 A-1+ MBIA-Insured 5.50% VRDO 2,100,000
10,000,000 MIG 1* Massachusetts State BAN Series A 5.00% due 9/6/01 10,062,305
Massachusetts State GO Series A:
3,320,000 AAA Escrowed in U.S. government securities
7.50% due 12/1/00 3,403,114
625,000 A-1 Lexington 4.75% due 2/15/00 626,237
Lowell (Escrowed in U.S. government securities):
2,500,000 A-1 7.62% due 2/15/01 2,604,840
1,635,000 A-1 8.30% due 2/15/01 1,706,363
300,000 A-1 Lynn Massachusetts 4.50% due 2/15/01 300,320
9,300,000 VMIG 1* Massachusetts State Port Authority Merlot 5.50% VRDO 9,300,000
Massachusetts Water Resource Authority:
4,000,000 VMIG 1* 4.10% due 12/8/00 4,000,000
2,635,000 NR# Abatement Floating Trust 182 5.52% VRDO 2,635,000
8,065,000 VMIG 1* FSA-Insured 5.72% VRDO 8,065,000
4,200,000 A-1+ Series B 5.50% VRDO 4,200,000
6,600,000 A-1+ Series D 5.50% VRDO 6,600,000
1,210,000 MIG 1* Sandwich 5.50% due 8/15/01 1,217,125
5,444,000 MIG 1* South Hadley BAN 4.25% due 8/10/01 5,472,978
6,600,000 NR# Springfield BAN 4.75% DUE 1/12/01 6,612,672
5,500,000 MIG 1* Sudbury BAN 4.75% due 12/29/00 5,507,433
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
SMITH BARNEY MUNI FUNDS 7
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$10,000,000 MIG 1* Whitman Hanson Regional School District
4.75% due 12/22/00 $ 10,010,400
1,000,000 NR++ Worchester Series G MBIA-Insured
6.00% due 7/1/01 1,011,671
---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $266,338,465**) $266,338,465
=============================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's"),
except those identified by an asterisk (*), which are rated by Moody's
Investors Service, Inc. ("Moody's").
# 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.
++ 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.
** Aggregate cost for Federal income tax purposes is substantially the same.
See page 9 for definition of ratings and certain security descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
8 2000 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.
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.
MIG 1 -- Moody's highest rate for short-term municipal obligations.
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
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 LEE -- College Construction Loan 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 InterestRate 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 -- Heath & 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
VRDO -- Variable Rate Demand Obligation
VRWE -- Variable Rate Wednesday Demand
--------------------------------------------------------------------------------
SMITH BARNEY MUNI FUNDS 9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) SEPTEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at amortized cost $266,338,465
Cash 35,457
Interest receivable 1,794,760
------------------------------------------------------------------------------
TOTAL ASSETS 268,168,682
------------------------------------------------------------------------------
LIABILITIES:
Payables for securities purchased 10,010,400
Dividends payable 566,719
Management fees payable 110,520
Distribution fees payable 5,794
Accrued expenses 32,378
------------------------------------------------------------------------------
TOTAL LIABILITIES 10,725,811
------------------------------------------------------------------------------
TOTAL NET ASSETS $257,442,871
==============================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 257,443
Capital paid in excess of par value 257,185,428
------------------------------------------------------------------------------
TOTAL NET ASSETS $257,442,871
==============================================================================
SHARES OUTSTANDING 257,442,871
------------------------------------------------------------------------------
NET ASSET VALUE, PER SHARE $1.00
------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
10 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $5,224,880
------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 618,839
Distribution fees (Note 4) 123,758
Shareholder and system servicing fees 24,866
Registration fees 19,472
Audit and legal 8,364
Shareholder communications 6,150
Custody 4,551
Trustees' fees 2,952
Other 5,691
------------------------------------------------------------------------------
TOTAL EXPENSES 814,643
Less: Management fee waiver (Note 4) (9,988)
------------------------------------------------------------------------------
NET EXPENSES 804,655
------------------------------------------------------------------------------
NET INVESTMENT INCOME $4,420,225
==============================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
SMITH BARNEY MUNI FUNDS 11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE PERIOD ENDED MARCH 31, 2000(a)
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
-------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,420,225 $ 2,778,747
------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS 4,420,225 2,778,747
------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 3):
Net investment income (4,420,225) (2,778,747)
------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (4,420,225) (2,778,747)
------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 580,400,831 684,430,653
Net asset value of shares issued for
reinvestment of dividends 4,187,715 2,338,475
Cost of shares reacquired (586,740,064) (427,174,739)
------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (2,151,518) 259,594,389
------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS (2,151,518) 259,594,389
NET ASSETS:
Beginning of period 259,594,389 --
------------------------------------------------------------------------------
END OF PERIOD $ 257,442,871 $ 259,594,389
==============================================================================
</TABLE>
(a) For the period from September 14, 1999 (commencement of operations) to
March 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
12 2000 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 13
<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"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment manager to the Portfolio. 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. For the six months ended September 30, 2000, SSBC waived
a portion of their management fee amounting to $9,988.
Citi Fiduciary Trust Comany ("CFTC"), formerly known as Smith Barney Private
Trust Company, another subsidiary of Citigroup, acts as the Portfolio's
transfer agent and PFPC Global Fund Services ("PFPC") acts as the Portfolio's
sub-transfer agent. CFTC receives account fees and asset-based fees that vary
according to the size and type of account. PFPC is responsible for
shareholder recordkeeping and financial processing for all shareholder
accounts and is paid by CFTC. For the six months ended September 30, 2000,
the Portfolio paid transfer agent fees of $15,388 to CFTC.
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, became the Portfolio's distributor replacing CFBDS, Inc. In addition,
SSB acts as the primary broker for the Portfolio's agency transactions. Certain
other broker-dealers, continue to sell Portfolio shares to the public as a
members 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.
--------------------------------------------------------------------------------
14 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. SHARES OF BENEFICIAL INTEREST
At September 30, 2000, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share.
Transactions in shares of the Portfolio were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000*
-------------------------------------------------------------------------------
<S> <C> <C>
CLASS A
Shares sold 580,400,831 684,430,653
Shares issued on reinvestment 4,187,715 2,338,475
Shares reacquired (586,740,064) (427,174,739)
-------------------------------------------------------------------------------
Net Increase (Decrease) (2,151,518) 259,594,389
-------------------------------------------------------------------------------
</TABLE>
* For the period from September 14, 1999 (commencement of operations) to
March 31, 2000.
-------------------------------------------------------------------------------
SMITH BARNEY MUNI FUNDS 15
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH YEAR ENDED
MARCH 31, EXCEPT WHERE NOTED:
<TABLE>
<CAPTION>
CLASS A SHARES 2000(1) 2000(2)
-------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
-------------------------------------------------------------------------------
Net investment income(3) 0.018 0.016
Dividends from net investment income (0.018) (0.016)
-------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
-------------------------------------------------------------------------------
TOTAL RETURN++ 1.81% 1.66%
-------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (MILLIONS) $257 $260
-------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS+:
Expenses(3)(4) 0.65% 0.65%
Net investment income 3.57 3.05
===============================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) For the period from September 14, 1999 (commencement of operations) to
March 31, 2000.
(3) The manager waived a portion of its fees for the six months ended
September 30, 2000 and the period ended March 31, 2000. If such fees were
not waived, the per share decreases to net investment income and the actual
expense ratios would have been as follows:
<TABLE>
<CAPTION>
Per Share Decreases Expense Ratios
to Net Investment Income Without Waiver+
------------------------ ---------------
<S> <C> <C>
2000(1) $0.000* 0.66%
2000(2) 0.001 0.76
</TABLE>
(4) As a result of voluntary expense limitations, the expense ratio will not
exceed 0.65%.
* Amount represents less than $0.001 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
16 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
SALOMON SMITH BARNEY
--------------------
A member of CITIGROUP [LOGO OF UMBRELLA]
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
Salomon Smith Barney Inc.
CUSTODIAN
PFPC Trust Company
TRANSFER AGENT
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
SUB-TRANSFER AGENT
PFPC Global Fund Services
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 - Massachusetts Money Market Portfolio, but it may also
be used as sales literature when preceded or accompanied by the current
Prospectus, which gives details about charges, expenses, investment objectives
and operating policies of the Fund. If used as sales material after December 31,
2000, this report must be accompanied by performance information for the most
recently completed calendar quarter.
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
<PAGE>
SMITH BARNEY MUNI FUNDS
FLORIDA PORTFOLIO
CLASSIC SERIES | SEMI-ANNUAL REPORT | SEPTEMBER 30, 2000
LOGO: Smith Barney Mutual Funds
Your Serious Money. Professionally Managed.(SM)
NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
<PAGE>
PHOTO OF: HEATH B. MCLENDON
Chairman
A MESSAGE FROM THE CHAIRMAN
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam. At SSB Citi Fund
Management LLC ("SSB Citi"), we have instituted many positive changes, with the
ultimate goal of offering our investors a well-rounded menu of stock and bond
funds that can be tailored to a wide range of investment objectives.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $395.5 billion in assets under management,1
we believe that SSB Citi offers choices and solutions, uniting the distinguished
history of Smith Barney with the unparalleled global reach of its parent,
Citigroup.
The Smith Barney family of funds represents a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney mutual funds and the investment professionals who manage them.
The Smith Barney Muni Funds - Florida Portfolio ("Portfolio") seeks as high a
level of income exempt from federal income taxes(2) as is consistent with
prudent investing. The Portfolio generally favors municipal securities that
enable its shares to be exempt from the Florida intangibles tax. Experienced
manager Peter Coffey and his team seek to create a built-in income stream for
the long-term. Coffey and his team believe the municipal bonds appear to be
attractively priced relative to underlying inflation rates in an environment of
light supply and muted institutional demand.
When you invest with SSB Citi, you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial success.
-----------
1 As of September 30, 2000. This figure represents SSB Citi's assets under
management for retail, institutional, money and separate accounts.
2 Please note a portion of the income from the Portfolio may be subject to the
ALTERNATIVE MINIMUM TAX ("AMT").
--------------------------------------------------------------------------------
Smith Barney Muni Funds 1
<PAGE>
Thank you for your confidence in our investment management approach.
Sincerely,
/S/ Heath B. McLendon
Heath B. McLendon
Chairman
October 12, 2000
--------------------------------------------------------------------------------
2 2000 Semi-Annual Report to Shareholders
<PAGE>
PHOTO OF: PETER M. COFFEY
SHAREHOLDER LETTER
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, 2000. In
this report we have summarized the period's prevailing economic and market
conditions and outlined our investment strategy. The information provided in
this letter represents the opinion of the manager and is not intended to be a
forecast of future events, a guarantee of future results nor investment advice.
Further, there is no assurance that certain securities will remain in or out of
the Portfolio. Please refer to pages 11 through 19 for a list and percentage
breakdown of the Portfolio's holdings. Also, please note any discussion of the
Portfolio's holdings is as of September 30, 2000 and is subject to change. A
detailed summary of the Portfolio's performance can be found in the appropriate
sections that follow. We hope you find this report to be useful and informative.
PERFORMANCE AND INVESTMENT STRATEGY
For the six months ended September 30, 2000, the Portfolio's Class A shares,
without and with sales charges returned 4.06% and a negative 0.11%,
respectively. In comparison, the Lehman Brothers Municipal Bond Index ("Lehman
Index")(1) returned 3.97% for the same period.
Because we think the bond markets are likely to remain volatile in the near
term, we continue to favor a gradual approach into the market. We tend to favor
longer and intermediate maturities, where most of the benefits of the steep
positive slope of the municipal yield curve(2) can be obtained.
During the reporting period, average credit quality remained relatively high in
the Portfolio. Although quality spreads during the period have widened due to
earnings pressure, especially in hospital- and healthcare-related sectors, the
difference in yield between the highest quality issues and medium grade issues,
in our view, remained relatively modest. We think our proprietary research
enables us to invest in select medium-term credits for which perceived market
risk may be greater than our analysis otherwise indicates. Moreover, while no
guarantees can be made, we think our strategy may have the potential to increase
income over time.
-----------
1 The Lehman Index is a broad measure of the municipal bond market with
maturities of at least one year. Please note an investor cannot invest
directly in an index.
2 The yield curve is the graphical depiction of the relationship between the
yield on bonds of the same credit quality but different maturities.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 3
<PAGE>
During the past six months, we took advantage of rising interest rates to
generate additional yield in-the Portfolio. We also looked to incorporate
additional call protection(3) into the Portfolio by selling off some of our
higher coupon bonds with shorter calls,(4) and replacing them with bonds that
have similar high coupon structure, but are not subject to early call.
One of the ways that we manage the Portfolio is that we seek to create a
built-in income stream for the long-term. To this end, we have generally focused
on investing in securities with high credit quality and good call protection, as
we believe these securities offer solid long-term values. Moreover, we have a
fairly long weighted average life(5) in the portfolio because we believe that
the risk of higher inflation at the present time is negligible. In addition, we
think our greater emphasis on call protection may provide our shareholders with
more consistent income if interest rates do in fact go down.
MARKET OVERVIEW AND OUTLOOK
The municipal bond market continues to be dominated by supply and demand factors
such as lower new issue volume, strong retail demand and very limited
institutional demand. In addition, the U.S. Treasury market also appears to be
influenced from its own supply and demand factors. The market has gotten so thin
as a result of collapsing supply that a handful of seemingly minor factors can
have a dramatic impact on yields across the entire U.S. Treasury yield curve.
In the overall bond market, yield spreads have narrowed and benchmark yield
levels have dropped by nearly a percentage point during the period in response
to evidence that underlying inflation risks have subsided and economic growth is
slowing down from the rapid 6% annual pace of the past year. We think there is a
good chance that the decline in yields has further to go. Yet, a host of
technical and other considerations may stall the market or cause yields to rise
temporarily, barring a dramatic new sign that the U.S. economic expansion is
slowing below an expected 3% to 4% annual pace.
We think conditions appear favorable for interest rates. First, on the
structural side, the massive federal surplus is fueling a collapse of U.S.
Treasury note and bond supply. On the cyclical side, potential sources of
inflation such as too strong consumer growth and a tight labor market, appear to
be moderating. However, temporary concerns remain in the form of heavy private
sector issuance, soaring energy costs and the upcoming Presidential and
Congressional elections.
-----------
3 Call protection is the length of time during which a security cannot be
redeemed by the issuer.
4 Callable bonds are redeemable by the issuer before the scheduled maturity
under specific conditions and at a stated price, which usually begins at a
premium to par and declines annually. Bonds are usually "called" when
interest rates fall so significantly that the issuer can save money by
floating new bonds at lower rates
5 Average life is the length of time before the principal of debt issues is
scheduled to be repaid through amortization or sinking fund.
--------------------------------------------------------------------------------
4 2000 Semi-Annual Report to Shareholders
<PAGE>
On the energy front, we believe that the recent price rises may act more like a
tax increase rather than as a spur to higher prices throughout the economy. That
is, as consumers spend more on gasoline and heating oil, they may moderate their
spending on discretionary items. Under this scenario, the results may be a
gradual slowing of growth rather than a spike in underlying inflation.
The spectacular productivity gains of this year have kept underlying inflation
at extremely comfortable levels, with the "core consumption deflator," a
favorite measure of Federal Reserve Board ("Fed") Chairman Alan Greenspan,
running at a miniscule 0.8% annual rate for the past six months. A second key
point, related to the first, is that we think the likelihood of significant
additional Fed tightening appears to be minimal.
New issue supply in the municipal bond market continues to trail far behind
levels reached in 1998 and 1999. Through mid-September 2000, volume was 21%
lower than 1999 levels, while full-year 1999 issuance had already declined 21%
from the 1998 peak. The main reason for the decline is the lack of refunding
volume. With interest rates still higher than they were during 1998 and the
first half of 1999, issuers have had little incentive to refund previous issues.
Individual investor demand for municipals has remained extremely strong, despite
the recent easing of yields from early 2000 levels. Given the small size of the
municipal bond market relative to the stock market, even a modest shift of
assets out of stocks into municipals can create an enormous amount of new demand
for municipal bonds. In short, we think municipal bonds seem to be attractively
priced relative to underlying inflation rates, in an environment of light supply
and muted or near-dormant institutional demand.
FLORIDA ECONOMIC HIGHLIGHTS(6)
Over the past few years, Florida's economy has grown and has become more
diversified. Florida's economy has gone from one that was once dominated by
farming and seasonal tourism to a service and trade economy with sustainable
insurance, banking and export industries, as well as becoming a greater
year-round attraction. Moreover, the economic success of the Sunshine State, in
part, can also be attributed to its positive business climate.
Florida's economic expansion has brought about the need for more infrastructure,
educational facilities, and other needs in order to meet growth in a state that
is currently the fourth largest in the U.S. However, despite these pressures and
considerable planned capital spending, debt has remained moderate at $1,013 per
capita and 3.7% of personal income. In our opinion, the
-----------
6 Sources: Fitch IBCA, Inc., Duff & Phelps.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 5
<PAGE>
outlook for Florida remains bright. And while no guarantees can be made, we
believe the state's financial operations may continue to reflect the
better-than-expected trend of the past few years.
Thank you for investing in the Smith Barney Muni Funds -- Florida Portfolio. We
look forward to helping you pursue your financial goals in the future.
Sincerely,
/S/ Peter M. Coffey
Peter M. Coffey
Vice President
October 12, 2000
--------------------------------------------------------------------------------
6 2000 Semi-Annual Report to Shareholders
<PAGE>
HISTORICAL PERFORMANCE -- CLASS A SHARES
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
============================================================================================
<S> <C> <C> <C> <C> <C>
9/30/00 $12.70 $12.86 $0.35 $0.00 4.06%+
--------------------------------------------------------------------------------------------
3/31/00 13.70 12.70 0.68 0.00 (2.25)
--------------------------------------------------------------------------------------------
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 $6.96 $0.28
============================================================================================
</TABLE>
HISTORICAL PERFORMANCE -- CLASS B SHARES
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
============================================================================================
<S> <C> <C> <C> <C> <C>
9/30/00 $12.70 $12.85 $0.32 $0.00 3.73%+
--------------------------------------------------------------------------------------------
3/31/00 13.69 12.70 0.61 0.00 (2.70)
--------------------------------------------------------------------------------------------
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 $3.87 $0.27
============================================================================================
</TABLE>
--------------------------------------------------------------------------------
Smith Barney Muni Funds 7
<PAGE>
HISTORICAL PERFORMANCE -- CLASS L SHARES
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
============================================================================================
<S> <C> <C> <C> <C> <C>
9/30/00 $12.70 $12.86 $0.31 $0.00 3.78%+
--------------------------------------------------------------------------------------------
3/31/00 13.69 12.70 0.60 0.00 (2.78)
--------------------------------------------------------------------------------------------
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 $5.04 $0.27
============================================================================================
</TABLE>
IT IS THE PORTFOLIO'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS,
IF ANY, ANNUALLY.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Without Sales Charges(1)
--------------------------------
Class A Class B Class L
============================================================================================
<S> <C> <C> <C>
Six Months Ended 9/30/00+ 4.06% 3.73% 3.78%
--------------------------------------------------------------------------------------------
Year Ended 9/30/00 5.52 4.97 4.99
--------------------------------------------------------------------------------------------
Five Years Ended 9/30/00 5.38 4.85 4.77
--------------------------------------------------------------------------------------------
Inception* through 9/30/00 6.76 6.80 5.31
============================================================================================
With Sales Charges(2)
------------------------------
Class A Class B Class L
=================================================================
Six Months Ended 9/30/00+ (0.11)% (0.77)% 1.73%
--------------------------------------------------------------------------------------------
Year Ended 9/30/00 1.27 0.48 2.95
--------------------------------------------------------------------------------------------
Five Years Ended 9/30/00 4.52 4.69 4.57
--------------------------------------------------------------------------------------------
Inception* through 9/30/00 6.30 6.80 5.18
============================================================================================
</TABLE>
--------------------------------------------------------------------------------
8 2000 Semi-Annual Report to Shareholders
<PAGE>
CUMULATIVE TOTAL RETURNS
Without Sales Charges(1)
======================================================================
Class A (Inception* through 9/30/00) 86.19%
----------------------------------------------------------------------
Class B (Inception* through 9/30/00) 47.22
----------------------------------------------------------------------
Class L (Inception* through 9/30/00) 49.29
======================================================================
(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.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 9
<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 2000
LINE CHART:
Lehman Brothers
Municipal Bond Index Florida Portfolio
4/2/91 10000 9600
3/92 10999 10410
3/93 12376 11856
3/94 12663 12168
3/95 13606 12963
3/96 14746 14084
3/97 15548 14850
3/98 17214 16507
3/99 18281 17425
3/00 18266 17032
9/30/00 18991 17874
+ 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, 2000. 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.
--------------------------------------------------------------------------------
10 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
=============================================================================================================
<S> <C> <C> <C>
EDUCATION -- 4.6%
$ 3,000,000 NR Capital Projects Finance Authority Student Housing
Revenue, Cafra Capital Corp., Capital Projects Loan
Program, Series A, 7. 850% due 8/15/31 $ 2,940,000
1,260,000 AAA Florida State Board Regent Housing Revenue,
University of Florida, MBIA-Insured,
4.500% due 7/1/19 1,082,025
2,790,000 A Virgin Islands University Refunding & Improvement,
Series A, ACA-Insured, 6.250% due 12/1/29 2,870,213
Volusia County Educational Facilities Authority Revenue,
Embry-Riddle Aeronautical University:
2,875,000 Baa2* Series A, 6.125% due 10/15/16 2,932,500
150,000 AAA Unrefunded Balance, CONNIE LEE-Insured,
6.500% due 10/15/15 157,500
-------------------------------------------------------------------------------------------------------------
9,982,238
-------------------------------------------------------------------------------------------------------------
ESCROWED TO MATURITY (B) -- 4.3%
60,000 AAA Altamonte Springs Health Facilities Authority Hospital
Revenue, Adventist Health System,
13.000% due 10/1/01 62,968
860,000 AAA Bradford County Health Facilities Authority Revenue,
(Santa Fe Health Care Facilities Project),
6.050% due 11/15/16 914,825
240,000 AAA Cape Coral Health Facilities Authority Hospital Revenue,
(Cape Coral Medical Center Project),
8.125% due 11/1/08 271,200
230,000 AAA Dunedin Health Facilities Authority Revenue, Mease
Hospital Inc., 7.600% due 10/1/08 258,463
3,000,000 AAA Escambia County HFA, Multi-Family Housing Revenue,
Genesis Healthcare, Principal Custodial Receipts, Series
A, FGIC-Insured, zero coupon due 10/15/181,038,750
2,015,000 AAA Gainesville Utility System Revenue, 8.125% due 10/1/14 2,498,600
700,000 AAA Lee County Justice Center Complex Inc., Improvement
Revenue, Series A, MBIA-Insured, 11.125% due 1/1/11 945,875
200,000 AAA Lee County Southwest Regional Airport Revenue,
MBIA-Insured, 8.625% due 10/1/09 234,500
465,000 AAA Orange County Health Facility Authority Revenue,
Southern Adventist Hospital, 8.750% due 10/1/09 548,119
955,000 AAA Palm Beach County Health Facilities Authority Revenue,
(John F. Kennedy Memorial Hospital Inc. Project),
Series C, 9.500% due 8/1/13 1,211,656
1,220,000 AAA Palm Beach County Solid Waste Authority Revenue,
MBIA-Insured, 10.000% due 12/1/04 1,364,875
-------------------------------------------------------------------------------------------------------------
9,349,831
-------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 11
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
=========================================================================================================
<S> <C> <C> <C>
FINANCE -- 2.2%
Virgin Islands Public Finance Authority Revenue:
$2,000,000 A Series A, ACA-Insured, 5.500% due 10/1/18 $ 1,900,000
Series E:
1,000,000 NR 5.750% due 10/1/13 955,000
2,000,000 NR 6.000% due 10/1/22 1,892,500
---------------------------------------------------------------------------------------------------------
4,747,500
---------------------------------------------------------------------------------------------------------
GENERAL OBLIGATION -- 0.9%
500,000 NR Brevard County Tourist Development Tax Revenue,
4th Century Marlins Spring, 6.875% due 3/1/13 512,500
1,000,000 AA+ Florida State Broward County, 10.000% due 7/1/14 1,418,750
---------------------------------------------------------------------------------------------------------
1,931,250
---------------------------------------------------------------------------------------------------------
HOSPITAL -- 19.3%
Escambia County Health Facilities Authority Revenue:
2,500,000 BBB-++ Azalea Trace Inc. Project, 6. 100% due 1/1/19 2,287,500
2,000,000 Aaa* Florida Health Care Facility Loan, VHA Program,
AMBAC-Insured, 5.950% due 7/1/20 2,057,500
240,000 BBB+ Unrefunded Balance, Baptist Hospital,
6.750% due 10/1/14 243,600
750,000 A Halifax Hospital Medical Center, Florida Health Care
Facilities Revenue, Halifax Management System,
Series A, ACA-Insured, 5.200% due 4/1/18 675,938
2,000,000 A- Highlands County Health Facilities Authority Revenue,
Adventist Health System, 5.250% due 11/15/20 1,700,000
Jacksonville Health Facilities Authority, Hospital Revenue:
National Benevolent Association, IDR, Cypress Hill
Village Program:
750,000 Baa2* 6.400% due 12/1/16 733,125
1,000,000 Baa2* Series A, 6.250% due 12/1/26 915,000
1,175,000 Baa2* Series A, 7.100% due 3/1/30 1,160,313
2,000,000 AA+ St. Luke's Hospital Association Project,
7.125% due 11/15/20 2,085,000
205,000 AAA St. Vincent's Medical Center, 9.125% due 1/1/03 217,044
310,000 AAA University Medical Center Inc. Project, CONNIE
LEE-Insured, 6.600% due 2/1/21 321,238
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) 1,052,500
1,000,000 AAA 9.671% due 4/1/20 (c) 1,056,350
Miami Beach Health Facilities Authority Hospital Revenue:
1,100,000 BBB- Mt. Sinai Medical Center Project, 5.375% due 11/15/28 844,250
1,000,000 A South Shore Hospital, Series A, ACA-Insured,
5.250% due 8/1/13 955,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
12 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
=================================================================================================
<S> <C> <C> <C>
HOSPITAL -- 19.3% (CONTINUED)
Orange County Health Facilities Authority, Hospital
Revenue Bonds:
Adventist Health Systems:
$3,000,000 A- 6.500% due 11/15/30 $ 2,940,000
1,500,000 AAA FSA-Insured, 6.050% due 11/15/07 1,560,000
1,000,000 AAA Sunbelt Inc. Project, Series B, 6.750% due 11/15/21 1,036,250
1,100,000 AA Mayflower Retirement Center Project, Asset
Guaranteed, 5.250% due 6/1/19 1,017,500
1,000,000 AAA MBIA-Insured, 8.746% due 10/29/21 (c) 1,082,500
1,000,000 A- Orlando Regional Healthcare System, Series E,
6.000% due 10/1/26 976,250
460,000 BB+ Pinellas County Health Facilities Authority, Sun Coast
Health System Revenue, Sun Coast Hospital
Guaranteed, Series A, 8.500% due 3/1/20 468,050
Sarasota County Public Hospital Board Revenue,
Sarasota Memorial Hospital, Series B, MBIA-Insured:
6,745,000 AAA 5.250% due 7/1/24 6,365,594
3,485,000 AAA 5.500% due 7/1/28 3,432,725
2,000,000 A- South Lake County Hospital District Revenue, South Lake
Hospital Inc., Orlando Regional Healthcare,
6.000% due 10/1/22 1,947,500
1,740,000 A Suwannee County Health Care Facilities Revenue, Advent
Christian Village Inc., ACA-Insured, 5.250% due 4/1/19 1,557,300
3,275,000 AAA Tampa Revenue Health Systems, Catholic Health,
Series A-1, 4.875% due 11/15/18 2,967,969
-------------------------------------------------------------------------------------------------
41,655,996
-------------------------------------------------------------------------------------------------
HOUSING: MULTI-FAMILY -- 8.3%
370,000 AAA Clearwater Multi-Family Housing Revenue, (Drew Gardens
Project), Series A, FHA-Insured, 6.500% due 10/1/25 379,250
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) 1,147,388
1,000,000 A++ Golden Lakes Apartments Project,
6.050% due 11/1/39 (d) 980,000
2,900,000 A Sr. Lien, Series I-1, 6.625% due 7/1/28 (d) 3,037,750
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 2,452,144
1,500,000 AAA Lee County HFA, Multi-Family Revenue, (Brittany Phase II
Project), Series A, FNMA-Collateralized,
6.100% due 12/1/32 (d) 1,522,500
1,000,000 AAA Oceanside Housing Development Corp., Multi-Family
Mortgage Revenue, FHA -Insured, 6.875% due 2/1/20 1,017,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 13
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
=======================================================================================================
<S> <C> <C> <C>
HOUSING: MULTI-FAMILY -- 8.3% (CONTINUED)
Orange County HFA, Multi-Family Revenue:
Loma Vista Project, Series G:
$1,000,000 A3* 5.450% due 9/1/24 (d) $ 910,000
1,000,000 A3* 5.500% due 3/1/32 (d) 930,000
2,065,000 Aaa* RHA/Affordable Housing III, Series A, MBIA-Insured,
6.200% due 7/1/20 2,150,181
1,300,000 A Pasco County HFA, Multi-Family Revenue, (Pasco Woods
Apartments Project), Series A, 5.700% due 8/1/19 (d) 1,282,125
1,095,000 AAA Southwest Housing Development Corp., Multi-Family
Housing Mortgage Revenue Refunding, FHA-Insured,
6.875% due 2/1/20 1,111,425
-------------------------------------------------------------------------------------------------------
17,947,763
-------------------------------------------------------------------------------------------------------
HOUSING: SINGLE-FAMILY -- 5.9%
Brevard County HFA, Single-Family Mortgage Revenue:
295,000 Aaa* GNMA-Collateralized, 6.600% due 9/1/16 (d) 306,063
900,000 Aaa* GNMA/FNMA-Collateralized, 6.400% due 9/1/23 (d) 920,250
Broward County HFA, Single-Family Mortgage Revenue:
140,000 BBB Capital Appreciation, zero coupon due 4/1/14 35,700
610,000 Aaa* GNMA/FNMA-Collateralized, 6.650% due 8/1/21 (d) 632,875
1,370,000 Aaa* Dade County HFA, Home Ownership Mortgage Revenue,
Series A, GNMA/FNMA-Collateralized,
6.375% due 4/1/33 (d) 1,405,963
Dade County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized:
1,500,000 AAA 6.700% due 4/1/28 (d) 1,567,500
260,000 Aaa* Series B, 7.250% due 9/1/23 (d) 266,458
30,000 Aaa* Series E, 7.000% due 3/1/24 30,728
535,000 Aaa* Duval County HFA, Single-Family Mortgage Revenue,
GNMA-Collateralized, 6.700% due 10/1/26 (d) 553,056
Florida HFA:
955,000 AAA Single-Family Mortgage, Series B,
GNMA/FNMA-Collateralized, 6.650% due 7/1/26 (d) 983,650
2,400,000 A Sunset Place, Series K-1, 6.000% due 10/1/19 2,412,000
265,000 Aa1* Hillsborough County HFA, Single-Family Mortgage
Revenue, Series A, GNMA-Collateralized,
7.700% due 4/1/23 (d) 271,633
580,000 AAA Leon County HFA, Single-Family Mortgage Revenue,
Multi-County Program, Series B,
GNMA/FHLMC-Collateralized, 7.300% due 1/1/28 (d) 632,925
625,000 AAA Orange County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA Mortgage Backed Securities Program,
6.750% due 10/1/18 (d) 656,250
315,000 Aa1* Palm Beach HFA, Single-Family Mortgage Power Revenue,
Series A, GNMA-Collateralized, 7.875% due 4/1/23 (d) 320,906
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
14 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
=======================================================================================================
<S> <C> <C> <C>
HOUSING: SINGLE-FAMILY -- 5.9% (CONTINUED)
$1,310,000 Aaa* Pinnellas County HFA, Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized, 6.550% due 8/1/27 (d) $ 1,341,113
380,000 AAA Virgin Islands HFA, Single-Family Mortgage Revenue,
Series A, GNMA-Collateralized, 6.500% due 3/1/25 (d) 390,450
-------------------------------------------------------------------------------------------------------
12,727,520
-------------------------------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT -- 5.1%
4,000,000 NR Hillsborough County Florida IDA Exempt Facility Revenue,
National Gypsum, Convertible 10/2/00, Series A,
7.125% due 4/1/30 3,995,000
1,775,000 NR Homestead IDR, Community Rehabilitation Providers
Program, Series A, 7.950% due 11/1/18 1,848,219
1,000,000 BBB- Lee County IDA, Health Care Facilities Revenue,
(Shell Point Village Project), Series A,
5.500% due 11/15/21 858,750
1,500,000 BBB- Martin County IDA, Indiantown, (Cogeneration Project),
7.875% due 12/15/25 (d) 1,526,250
500,000 NR Northern Palm Beach County Water Control District, Unit
Development No. 31, Program 1, 6.750% due 11/1/07 515,625
706,000 AAA Osceola County IDA, Revenue, (Community Provider
Pooled Loan Program), Series A, FSA -Insured,
7.750% due 7/1/10 725,337
Tampa Sports Authority Revenue, (Tampa Bay Arena
Project), MBIA-Insured:
500,000 AAA 6.050% due 10/1/20 534,375
1,000,000 AAA 6.100% due 10/1/26 1,076,250
-------------------------------------------------------------------------------------------------------
11,079,806
-------------------------------------------------------------------------------------------------------
MISCELLANEOUS -- 9.2%
Boca Raton Community Redevelopment Agency Tax Increment
Revenue, Capital Appreciation, (Mizner Park Project),
FSA-Insured:
2,100,000 AAA Zero coupon due 12/1/18 745,500
1,200,000 AAA Zero coupon due 3/1/27 475,500
1,000,000 AAA Dade County Aviation Facilities Revenue, Series B,
MBIA-Insured, 6.600% due 10/1/22 (d) 1,038,750
3,400,000 NR Dade County IDR, (Miami Cerebral Palsy Services Project),
8.000% due 6/1/22 3,425,500
3,000,000 AAA Florida Municipal Loan Council Revenue, MBIA-Insured,
5.000% due 4/1/29 2,696,250
750,000 AAA Florida State Department of Corrections, COP, Okeechobee
Correctional, AMBAC-Insured, 6.250% due 3/1/15 790,313
2,700,000 AAA Gulf Breeze Capital Funding, Series B, MBIA-Insured,
4.500% due 10/1/27 2,200,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 15
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
=======================================================================================================
<S> <C> <C> <C>
MISCELLANEOUS -- 9.2% (CONTINUED)
$ 500,000 BBB- Hillsborough County Aviation Authority, Special Purpose,
(Delta Airlines Project), 6. 800% due 1/1/24 $ 505,000
Miami-Dade County Special Obligation, Series B,
MBIA-Insured:
9,025,000 AAA Zero coupon due 10/1/31 1,398,875
10,410,000 AAA Zero coupon due 10/1/32 1,496,438
1,200,000 AAA North Springs Improvement District, MBIA -Insured,
7.000% due 10/1/09 1,384,500
1,000,000 NR Orlando Special Assessment Revenue, (Conroy
Interchange Project), Series A, 5.500% due 5/1/10 968,750
2,500,000 AAA Port Palm Beach District Revenue, Series A,
Capital Appreciation, MBIA-Insured,
zero coupon due 9/1/21 721,875
1,200,000 BBB Puerto Rico Housing Bank & Finance Agency,
7.500% due 12/1/06 1,332,000
500,000 NR Tampa Revenue, (Florida Aquarium Inc. Project),
7.750% due 5/1/27 533,750
-------------------------------------------------------------------------------------------------------
19,713,501
-------------------------------------------------------------------------------------------------------
NURSING HOME -- 2.1%
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 1,046,050
3,750,000 A- Palm Beach County Health Facilities Authority Revenue,
Retirement Community, 5 .625% due 11/15/20 3,393,750
-------------------------------------------------------------------------------------------------------
4,439,800
-------------------------------------------------------------------------------------------------------
POLLUTION CONTROL -- 5.8%
2,060,000 A+ Broward County Resource Recovery Revenue,
Broward Waste Energy, 7.950% due 12/1/08 2,112,200
2,000,000 A+ Citrus County PCR, Florida Power Corp., (Crystal River
Project), Series A, 6.625% due 1/1/27 2,042,500
Escambia County PCR, (Champion International
Corp. Project):
500,000 Baa1* 6.950% due 11/1/07 521,875
3,500,000 Baa1* 6.900% due 8/1/22 (d) 3,600,625
705,000 AAA Lee County Solid Waste Revenue, MBIA-Insured,
7.000% due 10/1/11 (d) 734,335
1,000,000 A+ Pinellas County PCR, Florida Power Corp.,
(Anclot & Bartlow Plants Project), 7.200% due 12/1/14 1,034,470
1,000,000 BBB Puerto Rico Industrial, Medical & Environmental Control
Facilities, (Ana G. Mendez University System Project),
5.375% due 2/1/29 920,000
1,390,000 Baa2* Putnam County Development Authority, PCR, Georgia
Pacific Corp. 1984, 7.000% due 12/1/05 1,452,550
-------------------------------------------------------------------------------------------------------
12,418,555
-------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
16 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
============================================================================================================
<S> <C> <C> <C>
PRE-REFUNDED (E) -- 2.6%
Alachua County Health Facilities Authority Revenue, (Santa
Fe Healthcare Facilities Project), (Call 11/15/00 @ 102):
$ 95,000 AAA 6.875% due 11/15/02 $ 97,055
1,000,000 AAA 7.600% due 11/15/13 1,023,380
1,430,000 Aaa* Bay County Hospital Revenue, (Bay Medical Center
Project), (Call 10/1/04 @ 102), 8.000% due 10/1/12 1,599,813
1,375,000 AAA Escambia County Health Facilities Authority, Baptist
Hospital, (Call 10/1/03 @ 102), 6.750% due 10/1/14 1,483,281
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 (c) 1,066,220
350,000 AAA Volusia County Educational Facility Authority Revenue,
Embry-Riddle Aeronautical University,
CONNIE LEE-Insured, (Call 10/15/02 @ 102),
6.500% due 10/15/15 370,563
------------------------------------------------------------------------------------------------------------
5,640,312
------------------------------------------------------------------------------------------------------------
PUBLIC FACILITIES -- 0.5%
1,000,000 BBB Miami Beach Redevelopment Agency Tax Increment
Revenue, City Center Historic Convention, Series B,
6.350% due 12/1/22 1,018,750
------------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 14.0%
5,000,000 AAA Broward County Airport System Revenue, Passenger
Facility, AMBAC-Insured, 4.750% due 10/1/23 4,312,500
2,895,000 AAA Florida State Mid-Bay Bridge Authority Revenue, Series A,
AMBAC-Insured, zero coupon due 10/1/19 940,875
2,000,000 AAA Florida State Turnpike Authority Revenue, Department of
Transportation, Series A, FGIC-Insured,
4.500% due 7/1/27 1,632,500
Guam Airport Authority Revenue:
750,000 BBB Series A, 6.500% due 10/1/23 789,375
1,000,000 BBB Series B, 6.600% due 10/1/10 (d) 1,060,000
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) 1,550,625
1,000,000 AAA Orlando & Orange County Expressway Authority Florida
Expressway Revenue, Junior Lien, FGIC -Insured,
5.000% due 7/1/28 902,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 17
<PAGE>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
========================================================================================================
<S> <C> <C> <C>
TRANSPORTATION -- 14.0% (CONTINUED)
Puerto Rico Commonwealth Highway & Transportation
Authority Revenue, MBIA-Insured:
$9,000,000 AAA Series A, 4.750% due 7/1/38 $ 7,751,250
Series Y:
1,500,000 AAA 5.000% due 7/1/36 1,368,750
1,000,000 AAA 5.500% due 7/1/36 993,750
Sanford Airport Authority IDR, (Central Florida
Terminals Inc. Project):
Series A:
1,000,000 NR 7.500% due 5/1/15 (d) 1,043,750
2,000,000 NR 7.750% due 5/1/21 (d) 2,097,500
645,000 NR Series C, 7.500% due 5/1/21 (d) 666,769
Santa Rosa Bay Bridge Authority Revenue:
3,500,000 Baa3* 6.250% due 7/1/28 3,320,625
5,000,000 BB+ Capital Appreciation, zero coupon due 7/1/17 1,631,250
--------------------------------------------------------------------------------------------------------
30,062,019
--------------------------------------------------------------------------------------------------------
UTILITIES -- 11.7%
3,905,000 Aaa* Escambia County Utilities Authority Sanitation System
Revenue Refunding & Improvement, FSA-Insured,
4.500% due 1/1/22 3,265,556
3,000,000 AAA Escambia County Utility System Authority Revenue Bonds,
Series B, FGIC-Insured, 6.250% due 1/1/15 3,300,000
4,350,000 Aaa* Florida State Golden Gate Governmental Utility System
Revenue, AMBAC-Insured, 5.000% due 7/1/29 3,876,938
Guam Power Authority Revenue, Series A:
1,350,000 AAA 6.750% due 10/1/24 1,493,438
2,975,000 AAA MBIA-Insured, 5.250% due 10/1/34 2,811,375
930,000 A3* Hillsborough County Utilities Revenue Refunding &
Improvement, 7.000% due 8/1/14 963,620
5,300,000 AAA Lakeland Electric & Water Revenue Refunding, Series A,
MBIA-Insured, 5.000% due 10/1/28 4,743,500
1,000,000 Aaa* St. Petersburg Public Utilities Revenue, Series A,
FSA-Insured, 5.000% due 10/1/28 901,250
3,000,000 AAA Sunrise Utility System Revenue Refunding,
AMBAC-Insured, 5.200% due 10/1/22 2,842,500
1,220,000 Aaa* Village Center Community Development, Utility District
Revenue Refunding Bonds, Series A, MBIA-Insured,
5.000% due 10/1/23 1,107,150
--------------------------------------------------------------------------------------------------------
25,305,327
--------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
18 2000 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
FACE
AMOUNT RATING(A) SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
WATER & SEWER -- 3.5%
$2,675,000 AAA Lee County Water & Sewer Revenue, Series A,
AMBAC -Insured, 4.750% due 10/1/23 $ 2,310,531
5,000,000 AAA Miami-Dade County Water & Sewer Revenue, Series A,
5.000% due 10/1/29 4,493,750
640,000 AAA Miramar Wastewater Improvement Authority,
FGIC- Insured, 6.750% due 10/1/16 696,800
----------------------------------------------------------------------------------------------
7,501,081
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $212,540,350**) $ 215,521,249
==============================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except for 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) Bonds are escrowed to maturity by 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) Residual interest bonds-- coupon varies inversely with level of short-term
tax-exempt interest rates.
(d) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(e) Bonds are escrowed by 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 20 and 21 for definitions of ratings and certain
security descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 19
<PAGE>
BOND RATINGS (UNAUDITED)
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's) -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated 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.
--------------------------------------------------------------------------------
20 2000 Semi-Annual Report to Shareholders
<PAGE>
BOND RATINGS (UNAUDITED) (CONTINUED)
Fitch IBCA, Inc. ("Fitch") -- Ratings from "AA" to "BBB" 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.
A -- Bonds and preferred stock 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 debt or
preferred 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 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
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
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 21
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) SEPTEMBER 30, 2000
ASSETS:
Investments, at value (Cost-- $212,540,350) $215,521,249
Interest receivable 4,368,210
Receivable for Fund shares sold 2,144,983
Receivable for securities sold 134,698
------------------------------------------------------------------------------
TOTAL ASSETS 222,169,140
------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 4,000,000
Dividends payable 951,480
Management fees payable 87,608
Payable to bank 45,385
Payable for Fund shares purchased 30,185
Distribution fees payable 18,237
Accrued expenses 40,499
------------------------------------------------------------------------------
TOTAL LIABILITIES 5,173,394
------------------------------------------------------------------------------
TOTAL NET ASSETS $216,995,746
==============================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 16,872
Capital paid in excess of par value 217,592,113
Undistributed net investment income 47,285
Accumulated net realized loss from security transactions (3,641,423)
Net unrealized appreciation of investments 2,980,899
------------------------------------------------------------------------------
TOTAL NET ASSETS $216,995,746
==============================================================================
SHARES OUTSTANDING:
Class A 11,496,640
----------------------------------------------------------------------------
Class B 4,433,907
----------------------------------------------------------------------------
Class L 941,873
----------------------------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $ 12.86
----------------------------------------------------------------------------
Class B * $ 12.85
----------------------------------------------------------------------------
Class L ** $ 12.86
----------------------------------------------------------------------------
MAXIMUM PUBLIC OFFERING PRICE PER SHARE:
Class A (net asset value plus 4.17% of net asset value per
share) $ 13.40
----------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
22 2000 Semi-Annual Report to Shareholders
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
INVESTMENT INCOME:
Interest $ 6,719,469
---------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 545,212
Distribution fees (Note 4) 341,840
Shareholder and system servicing fees 30,017
Registration fees 19,945
Shareholder communications 11,568
Pricing service fees 11,370
Audit and legal 10,971
Custody 5,385
Trustees' fees 1,496
Other 4,987
---------------------------------------------------------------------
TOTAL EXPENSES 982,791
---------------------------------------------------------------------
NET INVESTMENT INCOME 5,736,678
---------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 31,724,221
Cost of securities sold 31,440,705
---------------------------------------------------------------------
NET REALIZED GAIN 283,516
---------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 615,636
End of period 2,980,899
---------------------------------------------------------------------
INCREASE IN NET UNREALIZED APPRECIATION 2,365,263
---------------------------------------------------------------------
NET GAIN ON INVESTMENTS 2,648,779
---------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $ 8,385,457
=====================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
====================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 5,736,678 $ 11,619,136
Net realized gain (loss) 283,516 (3,658,735)
Increase (decrease) in net
unrealized appreciation 2,365,263 (13,805,741)
------------------------------------------------------------------------------------
INCREASE (DECREASE)IN NET ASSETS FROM OPERATIONS 8,385,457 (5,845,340)
------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (5,774,534) (11,524,617)
------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (5,774,534) (11,524,617)
------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 10,586,509 69,567,854
Net asset value of shares issued for
reinvestment of dividends 2,692,088 5,134,686
Cost of shares reacquired (22,122,246) (71,815,893)
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (8,843,649) 2,886,647
------------------------------------------------------------------------------------
DECREASE IN NET ASSETS (6,232,726) (14,483,310)
NET ASSETS:
Beginning of period 223,228,472 237,711,782
------------------------------------------------------------------------------------
END OF PERIOD* $216,995,746 $ 223,228,472
====================================================================================
* Includes undistributed net investment income of: $ 47,285 $ 85,141
====================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
24 2000 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,
non-diversified 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 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 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; 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 25
<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"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment manager to the Portfolio. 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.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Portfolio's transfer agent and PFPC Global Fund Services ("PFPC") acts as
the Portfolio's sub-transfer agent. CFTC receives account fees and asset-based
fees that vary according to the size and type of account. PFPC is responsible
for shareholder recordkeeping and financial processing for all shareholder
accounts and is paid by CFTC. For the six months ended September 30, 2000, the
Portfolio paid transfer agent fees of $21,185 to CFTC.
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB") another subsidiary of
SSBH, became the Portfolio's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Portfolio's agency
transactions. Certain other broker-dealers, continue to sell Portfolio shares to
the public as members of the selling group.
There are maximum initial sales charges of 4.00% and 1.00% for Class A and L
shares, respectively. 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
--------------------------------------------------------------------------------
26 2000 Semi-Annual Report to Shareholders
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
purchase. In addition, class A shares also have a 1.00% CDSC, which applies if
redemption occurs within the first year of purchase. this CDSC only applies to
those purchases of Class A shares, which, when combined with current holdings of
Class A shares, equal or exceed $500,000 in the aggregate. These purchases do
not incur an initial sales charge.
For the six months ended September 30, 2000, SSB and CFBDS received sales
charges of approximately $88,000 and $4,000 on sales of the Portfolio's Class A
and L shares, respectively. In addition, for the six months ended September 30,
2000, CDSCs paid to SSB were approximately:
CLASS B CLASS L
===============================================================================
CDSCs $64,000 $2,000
===============================================================================
Pursuant to a Distribution Plan, the Portfolio pays a service fee with respect
to Class A, B and L shares calculated at 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, 2000, total Distribution Plan fees incurred
were:
Class A Class B Class L
===============================================================================
Distribution Plan Fees $110,992 $188,344 $42,504
===============================================================================
All officers and one Trustee of the Fund are employees of SSB.
5. INVESTMENTS
During the six months ended September 30, 2000, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
===============================================================================
Purchases $23,045,094
-------------------------------------------------------------------------------
Sales 31,724,221
===============================================================================
At September 30, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
===============================================================================
Gross unrealized appreciation $6,623,309
Gross unrealized depreciation (3,642,410)
-------------------------------------------------------------------------------
Net unrealized appreciation $2,980,899
===============================================================================
--------------------------------------------------------------------------------
Smith Barney Muni Funds 27
<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, 2000, the Portfolio had no open futures contracts.
7. CAPITAL LOSS CARRYFORWARD
At March 31, 2000, the Portfolio had, for Federal income tax purposes,
approximately $2,430,000 of unused capital loss carryforwards available to
offset future capital gains expiring March 31, 2008. 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.
8. SHARES OF BENEFICIAL INTEREST
At September 30, 2000, 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, 2000, total paid-in capital amounted to the following for each
class:
CLASS A CLASS B CLASS L
===============================================================================
Total Paid-in Capital $146,069,880 $58,756,378 $12,782,727
===============================================================================
--------------------------------------------------------------------------------
28 2000 Semi-Annual Report to Shareholders
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
=========================================================================================================
<S> <C> <C> <C> <C>
CLASS A
Shares sold 546,835 $ 6,989,028 3,691,646 $ 47,345,497
Shares issued
on reinvestment 143,094 1,816,398 267,199 3,436,536
Shares reacquired (1,074,626) (13,599,070) (3,715,684) (47,640,592)
---------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (384,697) $ (4,793,644) 243,161 $ 3,141,441
=========================================================================================================
CLASS B
Shares sold 227,443 $ 2,904,213 1,371,065 $ 17,567,901
Shares issued
on reinvestment 54,902 696,431 106,687 1,371,213
Shares reacquired (537,065) (6,834,223) (1,616,174) (20,654,677)
---------------------------------------------------------------------------------------------------------
Net Decrease (254,720) $ (3,233,579) (138,422) $ (1,715,563)
=========================================================================================================
CLASS L
Shares sold 53,917 $ 693,268 361,575 $ 4,654,456
Shares issued
on reinvestment 14,128 179,259 25,444 326,937
Shares reacquired (132,168) (1,688,953) (275,391) (3,520,624)
---------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (64,123) $ (816,426) 111,628 $ 1,460,769
=========================================================================================================
---------------------------------------------------------------------------------------------------------
Smith Barney Muni Funds 29
</TABLE>
<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 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996(2)
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.70 $ 13.70 $ 13.74 $ 13.16 $ 13.24 $ 12.89
-------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
OPERATIONS:
Net investment income 0.35 0.69 0.69 0.72 0.73 0.74
Net realized and unrealized
gain (loss) 0.16 (1.01) 0.06 0.72 (0.03) 0.35
-------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.51 (0.32) 0.75 1.44 0.70 1.09
-------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.35) (0.68) (0.69) (0.73) (0.73) (0.74)
In excess of net
investment income -- -- (0.01) -- -- --
Net realized gains -- -- (0.09) (0.13) (0.05) --
-------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.68) (0.79) (0.86) (0.78) (0.74)
-------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $ 12.86 $ 12.70 $ 13.70 $ 13.74 $ 13.16 $ 13.24
-------------------------------------------------------------------------------------------------------
TOTAL RETURN 4.06%++ (2.25)% 5.56% 11.15% 5.44% 8.65%
-------------------------------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (MILLIONS) $ 148 $ 151 $ 160 $ 143 $ 127 $ 117
-------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE
NET ASSETS:
Expenses(3) 0.73%+ 0.74% 0.73% 0.76% 0.85% 0.70%
Net investment income 5.44+ 5.32 4.99 5.28 5.56 5.62
-------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 11% 56% 43% 50% 62% 47%
=======================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) As a result of voluntary expense limitations, the expense ratio will not
exceed 0.85%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
30 2000 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 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996(2)
============================================================================================
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $12.70 $13.69 $13.73 $13.14 $13.23 $12.89
--------------------------------------------------------------------------------------------
INCOME (LOSS)
FROM OPERATIONS:
Net investment income 0.31 0.62 0.62 0.65 0.65 0.68
Net realized and
unrealized gain (loss) 0.16 (1.00) 0.06 0.72 (0.01) 0.35
--------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.47 (0.38) 0.68 1.37 0.64 1.03
--------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.32) (0.61) (0.62) (0.65) (0.68) (0.69)
In excess of net
investment income -- -- (0.01) -- -- --
Net realized gains -- -- (0.09) (0.13) (0.05) --
--------------------------------------------------------------------------------------------
Total Distributions (0.32) (0.61) (0.72) (0.78) (0.73) (0.69)
--------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.85 $12.70 $13.69 $13.73 $13.14 $13.23
--------------------------------------------------------------------------------------------
TOTAL RETURN 3.73%++ (2.70)% 5.01% 10.59% 4.91% 8.09%
--------------------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (MILLIONS) $ 57 $ 59 $ 66 $ 59 $ 51 $ 46
--------------------------------------------------------------------------------------------
RATIOS TO AVERAGE
NET ASSETS:
Expenses(3) 1.25%+ 1.26% 1.24% 1.28% 1.35% 1.20%
Net investment income 4.93 + 4.80 4.48 4.76 4.93 5.00
--------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 11% 56% 43% 59% 62% 47%
============================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) As a result of voluntary expense limitations, the expense ratio will not
exceed 1.35%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
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 2000(1)(2) 2000(2) 1999(2)(3) 1998 1997 1996(2)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $12.70 $13.69 $13.74 $13.14 $13.22 $12.89
---------------------------------------------------------------------------------------
INCOME (LOSS)
FROM OPERATIONS:
Net investment income 0.31 0.61 0.61 0.64 0.65 0.66
Net realized and
unrealized gain (loss) 0.16 (1.00) 0.05 0.72 (0.01) 0.35
---------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.47 (0.39) 0.66 1.36 0.64 1.01
---------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.31) (0.60) (0.61) (0.63) (0.67) (0.68)
In excess of net
investment income -- -- (0.01) -- -- --
Net realized gains -- -- (0.09) (0.13) (0.05) --
---------------------------------------------------------------------------------------
Total Distributions (0.31) (0.60) (0.71) (0.76) (0.72) (0.68)
---------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.86 $12.70 $13.69 $13.74 $13.14 $13.22
---------------------------------------------------------------------------------------
TOTAL RETURN 3.78%++ (2.78)% 4.87% 10.51% 4.94% 7.96%
---------------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (MILLIONS) $ 12 $ 13 $ 12 $ 9 $ 7 $ 3
---------------------------------------------------------------------------------------
RATIOS TO AVERAGE
NET ASSETS:
Expenses(4) 1.31%+ 1.32% 1.31% 1.33% 1.40% 1.28%
Net investment income 4.87 + 4.74 4.41 4.71 4.84 5.04
---------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 11% 56% 43% 59% 62% 47%
=======================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (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) As a result of voluntary expense limitations, the expense ratio will not
exceed 1.40%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
32 2000 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
Salomon Smith Barney Inc.
CUSTODIAN
PFPC Trust Company
TRANSFER AGENT
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
SUB-TRANSFER AGENT
PFPC Global Fund Services
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, but it may also be used as sales
literature when proceeded or accompanied by the current Prospectus, which gives
details about charges, expenses, investment objectives and operating policies of
the Portfolio. If used as sales material after December 31, 2000, this report
must be accompanied by performance information for the most recently completed
calendar quarter.
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.smithbarney.com/mutualfunds
FD0787 11/00
<PAGE>
SMITH BARNEY
MUNI FUNDS
GEORGIA PORTFOLIO
PENNSYLVANIA PORTFOLIO
CLASSIC SERIES | SEMI-ANNUAL REPORT | SEPTEMBER 30, 2000
Logo: Smith Barney Mutual Funds
Your Serious Money. Professionally Managed.(SM)
NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
<PAGE>
A MESSAGE FROM THE CHAIRMAN
Photo: Heath B. McLendon Chairman
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam. At SSB Citi Fund
Management LLC ("SSB Citi"), we have instituted many positive changes, with the
ultimate goal of offering our investors a well-rounded menu of stock and bond
funds that can be tailored to a wide range of investment objectives.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $395.5 billion in assets under management(1),
SSB Citi offers choices and solutions, uniting the distinguished history of
Smith Barney with the unparalleled global reach of its parent, Citigroup.
The Smith Barney family of funds represents a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney mutual funds and the investment professionals who manage them.
For those of you who are new shareholders, I would like to extend a warm welcome
to you on behalf of everyone here at SSB Citi. Both the Smith Barney Muni Funds
-- Georgia and Pennsylvania Portfolios seek as high a level of income exempt
from federal income taxes(2) as is consistent with prudent investing.
Experienced manager Peter Coffey and his team seek to create a built-in income
stream for the long-term. Coffey and his team believe municipal bonds appear to
be attractively priced relative to underlying inflation rates in an environment
of light supply and muted institutional demand.
-----------
1 As of September 30, 2000. This figure represents SSB Citi's assets under
management for retail, institutional, money and separate accounts.
2 Please note a portion of the income from the Portfolios may be subject to
the ALTERNATIVE MINIMUM TAX ("AMT").
--------------------------------------------------------------------------------
1 2000 Semi-Annual Report to Shareholders
<PAGE>
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/s/Heath B. McLendon
Heath B. McLendon
Chairman
October 11, 2000
--------------------------------------------------------------------------------
Smith Barney Muni Funds 2
<PAGE>
SHAREHOLDER LETTER
Photo: Peter M. Coffey Vice President
DEAR SHAREHOLDER:
We are pleased to provide the semi-annual report for the Smith Barney Muni Funds
Georgia and Pennsylvania Portfolios ("Portfolio(s)") for the period ended
September 30, 2000. In this report we have summarized the period's prevailing
economic and market conditions and outlined our investment strategy. The
information provided in this letter represents the opinion of the manager and is
not intended to be a forecast of future events, a guarantee of future results
nor investment advice.
Further, there is no assurance that certain securities will remain in or out of
the Portfolios. Please refer to pages 13 through 22 for a list and percentage
breakdown of the Portfolios' holdings. Also, please note that any discussion of
the Portfolios' holdings is as of September 30, 2000 and is subject to change. A
detailed summary of the Portfolios' performance can be found in the appropriate
sections that follow. We hope you find this report to be useful and informative.
MARKET AND ECONOMIC OVERVIEW
The municipal bond market continues to be dominated by supply and demand factors
such as lower new issue volume, strong retail demand and very limited
institutional demand. In addition, the U.S. Treasury market also appears to be
influenced from its own supply and demand factors. The market has gotten so thin
as a result of collapsing supply that a handful of seemingly minor factors can
have a dramatic impact on yields across the entire U.S. Treasury yield curve.(1)
In the overall bond market, yield spreads have narrowed and benchmark yield
levels have dropped by nearly a percentage point during the period in response
to evidence that underlying inflation risks have subsided and economic growth is
slowing down from the rapid 6% annual pace of the past year. We think there is a
good chance that the decline in yields has further to go. Yet, a host of
technical and other considerations may stall the market or cause yields to rise
temporarily, barring a dramatic new sign that the U.S. economic expansion is
slowing below an expected 3% to 4% annual pace.
We think conditions appear favorable for interest rates. First, on the
structural side, the massive federal surplus is fueling a collapse of U.S.
Treasury supply.
-----------
1 The yield curve is a graphical depiction of the relationship between the
yield on bonds of the same credit quality but different maturities.
--------------------------------------------------------------------------------
3 2000 Semi-Annual Report to Shareholders
<PAGE>
On the cyclical side, potential sources of inflation such as strong consumer
growth and a tight labor market, appear to be moderating. However, there are
temporary concerns, in the form of heavy private sector issuance, soaring energy
costs and the upcoming Presidential and Congressional elections.
On the energy front, we believe that the recent price rises in this single
sector may act more like a tax increase rather than as a spur to high prices
throughout the economy. That is, as consumers spend more on gasoline and heating
oil, they may moderate their spending on discretionary items. The spectacular
productivity gains that have shown up this year have kept underlying inflation
at extremely comfortable levels, with the "core consumption deflator," a
favorite measure of Federal Reserve Board ("Fed") Chairman Alan Greenspan,
running at a miniscule 0.8% annual rate for the past six months. A second key
point, related to the first, is that we think the likelihood of significant
additional Fed tightening appears to be minimal.
New issue supply continues to trail far behind levels reached in 1998 and 1999.
Through mid-September 2000, volume was 21% lower than 1999 levels, whereas
full-year 1999 issuance has already declined 21% from the 1998 peak. The main
reason for the decline is the lack of refunding volume. With interest rates
still higher than they were during 1998 and the first half of 1999, issuers have
had little incentive to refund previous issues.
Individual investor demand for municipals has remained extremely strong, despite
the recent easing of yields from early 2000 levels. Given the small size of the
municipal bond market relative to the stock market, even a modest shift of
assets out of stocks into municipals can create an enormous amount of new demand
for municipal bonds. In short, we think municipal bonds appear to be
attractively priced relative to underlying inflation rates, in an environment of
very light supply and muted or near-dormant institutional demand.
GEORGIA PORTFOLIO'S PERFORMANCE AND INVESTMENT STRATEGY
The Georgia Portfolio seeks as high a level of current income exempt from
federal income taxes and Georgia personal income taxes as is consistent with
prudent investing.(2)
For the six months ended September 30, 2000, the Portfolio's Class A shares,
without and with sales charges, returned 4.04% and a negative 0.14%,
respectively. In comparison, the Lehman Brothers Municipal Bond Index ("Lehman
Index")(3) returned 3.97% for the same period.
-----------
2 Please note a portion of the income from the Portfolio may be subject to
the ALTERNATIVE MINIMUM TAX ("AMT").
3 The Lehman Index is a broad measure of the municipal bond market with
maturities of at least one year. Please note an investor cannot invest
directly in an index.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 4
<PAGE>
At the end of the period the Portfolio's largest holdings were concentrated in
education bonds (16.9%), water and sewer bonds (14.0%) and escrowed to maturity
bonds (10.1%).
GEORGIA ECONOMIC HIGHLIGHTS(4)
Georgia's economy continues to be one of the nation's most prosperous, due in
large part to its conservative financial operations, superior debt management
policies as well as the state's growing leadership in technology, communication
and commerce. The Peachtree State's economic progress, which includes steady
improvement in the state's economic diversification and income levels, are the
main reasons why Georgia has an excellent credit standing.
Over the past few years, Georgia's economy has grown considerably. Most notably
was this past year, with revenues for 1999-2000 increasing approximately 8% from
the previous year, as compared to the budgeted amount, which was a little less
than the collection in 1998-1999.
Georgia's economic outlook, in our opinion, remains extremely favorable.
Georgia's trade, service, and transportation-oriented diversified economy should
continue to generate superior revenue growth, and, that in turn should enable
the state to meet its growing infrastructure needs.
PENNSYLVANIA PORTFOLIO'S PERFORMANCE AND INVESTMENT STRATEGY
The Pennsylvania Portfolio seeks as high a level of income exempt from federal
income taxes and Pennsylvania personal income taxes as is consistent with
prudent investing.(5)
For the six months ended September 30, 2000, the Portfolio's Class A shares,
without and with sales charges, returned 4.52% and 0.32%, respectively. In
comparison, the Lehman Index returned 3.97% for the same period.
At the end of the period the Portfolio's largest holdings were concentrated in
hospital bonds (22.3%), education bonds (12.8%) and industrial development bonds
(10.7%).
PENNSYLVANIA ECONOMIC HIGHLIGHTS(6)
Pennsylvania's economy has changed over the past decade and has made tremendous
strides in the transformation of its economy. Pennsylvania combines the
characteristics of both a northeastern and midwestern state. In recent years,
the importance of the state's manufacturing sector has sharply declined as
-----------
4 Source: Fitch IBCA, Duff & Phelps.
5 Please note a portion of the income from this Portfolio may be subject to
the ALTERNATIVE MINIMUM TAX ("AMT").
6 Sources: Fitch IBCA, Duff & Phelps
--------------------------------------------------------------------------------
5 2000 Semi-Annual Report to Shareholders
<PAGE>
service industries continue to grow. While manufacturing remains more
significant for Pennsylvania than the rest of the nation, the Commonwealth has
been making a concerted effort to evolve from a "lumbering industrial-age giant"
to a bona fide high-tech leader.
Pennsylvania's economy strengthened during the period and the state's debt
position has improved consistently over the past few years. The state has
completed eight years with surplus operations, and in the past five years,
revenue has been well above estimates. We anticipate that this trend should
continue for the remainder of 2000.
In our opinion, the economic outlook for Pennsylvania is positive because the
state has targeted various areas of economic development, building reserves that
have enabled the state to enjoy operating stability and further diversify its
economy, with employment growth in all sectors. This, together with investment
in infrastructure, in our opinion, may continue to improve Pennsylvania's future
prospects.
In closing, thank you for investing in the Smith Barney Muni Funds -- Georgia
and Pennsylvania Portfolios.
Sincerely,
/s/Peter M. Coffey
Peter M. Coffey
Vice President
October 11, 2000
--------------------------------------------------------------------------------
Smith Barney Muni Funds 6
<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)
================================================================================
9/30/00 $12.40 $12.57 $0.32 $0.00 4.04%+
--------------------------------------------------------------------------------
3/31/00 13.43 12.40 0.62 0.00 (2.97)
--------------------------------------------------------------------------------
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 $4.25 $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)
================================================================================
9/30/00 $12.40 $12.56 $0.29 $0.00 3.70%+
--------------------------------------------------------------------------------
3/31/00 13.42 12.40 0.55 0.00 (3.45)
--------------------------------------------------------------------------------
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 $3.77 $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)
================================================================================
9/30/00 $12.39 $12.55 $0.29 $0.00 3.68%+
--------------------------------------------------------------------------------
3/31/00 13.41 12.39 0.54 0.00 (3.51)
--------------------------------------------------------------------------------
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 $3.80 $0.30
================================================================================
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
--------------------------------------------------------------------------------
7 2000 Semi-Annual Report to Shareholders
<PAGE>
GEORGIA PORTFOLIO
AVERAGE ANNUAL TOTAL RETURNS
Without Sales Charges(1)
---------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/00+ 4.04% 3.70% 3.68%
--------------------------------------------------------------------------------
Year Ended 9/30/00 5.97 5.39 5.34
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 5.93 5.38 5.32
--------------------------------------------------------------------------------
Inception* through 9/30/00 6.43 5.59 5.76
================================================================================
With Sales Charges(2)
---------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 9/30/00+ (0.14)% (0.80)% 1.60%
--------------------------------------------------------------------------------
Year Ended 9/30/00 1.73 0.89 3.25
--------------------------------------------------------------------------------
Five Years Ended 9/30/00 5.07 5.21 5.10
--------------------------------------------------------------------------------
Inception* through 9/30/00 5.77 5.59 5.60
================================================================================
CUMULATIVE TOTAL RETURNS
Without Sales Charges(1)
---------------------------------
Class A (Inception* through 9/30/00) 49.94%
--------------------------------------------------------------------------------
Class B (Inception* through 9/30/00) 40.90
--------------------------------------------------------------------------------
Class L (Inception* through 9/30/00) 43.63
================================================================================
(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.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 8
<PAGE>
HISTORICAL PERFORMANCE (UNAUDITED)
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 2000
Line chart:
Lehman Brothers Georgia Lehman Brothers
Municipal Bond Index Municipal Bond Index Georgia Portfolio
4/4/94 10000 10000 9600
3/95 10795 10744 10204
3/96 11675 11645 11191
3/97 12289 12278 11857
3/98 13573 13594 13500
3/99 14362 14437 14257
3/00 14365 14424 13835
9/30/00 14963 14997 14394
+ 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, 2000. 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.
--------------------------------------------------------------------------------
9 2000 Semi-Annual Report to Shareholders
<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)
==============================================================================
9/30/00 $12.18 $12.38 $0.34 $0.00 4.52%+
------------------------------------------------------------------------------
3/31/00 13.44 12.18 0.66 0.02 (4.31)
------------------------------------------------------------------------------
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 $4.43 $0.33
==============================================================================
HISTORICAL PERFORMANCE -- CLASS B SHARES
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
=============================================================================
9/30/00 $12.17 $12.36 $0.31 $0.00 4.19%+
-----------------------------------------------------------------------------
3/31/00 13.42 12.17 0.59 0.02 (4.78)
-----------------------------------------------------------------------------
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 $3.93 $0.33
=============================================================================
HISTORICAL PERFORMANCE -- CLASS L SHARES
Net Asset Value
-------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns(1)
==============================================================================
9/30/00 $12.16 $12.35 $0.31 $0.00 4.15%+
------------------------------------------------------------------------------
3/31/00 13.41 12.16 0.58 0.02 (4.83)
------------------------------------------------------------------------------
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 $3.99 $0.33
==============================================================================
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 10
<PAGE>
PENNSYLVANIA PORTFOLIO
AVERAGE ANNUAL TOTAL RETURNS
Without Sales Charges(1)
--------------------------------
Class A Class B Class L
===============================================================================
Six Months Ended 9/30/00+ 4.52% 4.19% 4.15%
-------------------------------------------------------------------------------
Year Ended 9/30/00 4.67 4.11 4.05
-------------------------------------------------------------------------------
Five Years Ended 9/30/00 5.53 4.99 4.93
-------------------------------------------------------------------------------
Inception* through 9/30/00 6.40 5.47 5.79
===============================================================================
With Sales Charges(2)
--------------------------------
Class A Class B Class L
===============================================================================
Six Months Ended 9/30/00+ 0.32% (0.31)% 2.14%
-------------------------------------------------------------------------------
Year Ended 9/30/00 0.50 (0.34) 2.00
-------------------------------------------------------------------------------
Five Years Ended 9/30/00 4.67 4.83 4.71
-------------------------------------------------------------------------------
Inception* through 9/30/00 5.74 5.47 5.63
===============================================================================
CUMULATIVE TOTAL RETURNS
Without Sales Charges(1)
===============================================================================
Class A (Inception* through 9/30/00) 49.66%
-------------------------------------------------------------------------------
Class B (Inception* through 9/30/00) 39.74
-------------------------------------------------------------------------------
Class L (Inception* through 9/30/00) 44.14
===============================================================================
(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.
--------------------------------------------------------------------------------
11 2000 Semi-Annual Report to Shareholders
<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 2000
Line chart:
Lehman Brothers Penn. Lehman Brothers
Muni Bond Index Muni Bond Index Pennsyvania Portfolio
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
3/00 14297 14424 13745
9/30/00 14933 14997 14367
+ 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, 2000. The Lehman
Brothers Pennsylvania Municipal Bond Index (consisting of Pennsylvania
municipal bonds) is a sub-index of the Lehman Brothers Municipal Bond
Index, a broad-based, total return index comprised of investment grade,
fixed rate municipal bonds selected from issues larger than $50 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 12
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
=============================================================================================
<S> <C> <C> <C>
EDUCATION -- 16.9%
$1,000,000 AA Fulton County School District, 5.375% due 1/1/18 $ 995,000
Private Colleges & Universities Authority Revenue:
1,000,000 AAA Agnes Scott College Project, MBIA-Insured,
4.750% due 6/1/28 845,000
Emory University Project, Series A:
1,000,000 Aa1* 5.500% due 11/1/24 982,500
2,000,000 Aa1* 5.500% due 11/1/31 1,942,500
1,000,000 A Mercer Housing Corp. Project, Series A, ASA-Insured,
5.375% due 6/1/17 958,750
750,000 BBB Puerto Rico Industrial Tourist Educational, Medical &
Environmental Control Facilities Finance Authority,
(Ana G. Mendez University System Project),
5.375% due 2/1/19 702,187
250,000 A1* Rockdale County School District, 6.000% due 1/1/04 260,000
1,000,000 BBB- Savannah EDA, (College of Art & Design Inc. Project),
6.800% due 10/1/19 1,032,500
1,000,000 A Savannah EDA, Student Housing Revenue, (University
Finding Foundation Project), Series A, ASA-Insured,
6.750% due 11/15/20 1,043,750
1,000,000 A Virgin Islands University, Refunding and Improvement,
Series A, ACA-Insured, 6.000% due 12/1/24 1,007,500
---------------------------------------------------------------------------------------------
9,769,687
---------------------------------------------------------------------------------------------
ESCROWED TO MATURITY (B) -- 10.1%
140,000 AAA* Athens Water & Sewer Revenue, 10.000% due 7/1/01 145,620
885,000 AAA Burke County Development Authority, PCR, (Oglethorpe
Power Co. Vogtle Project), MBIA-Insured,
7.500% due 1/1/03 918,188
Cobb County Kennestone Hospital Authority Revenue,
MBIA-Insured:
75,000 AAA 10.250% due 2/1/02 78,375
305,000 AAA Series 86A, 7.750% due 2/1/07 337,025
1,875,000 Aaa* Colquitt County Development Authority Revenue,
Southern Care Corp., Sub-Series C,
zero coupon due 12/1/21 473,438
1,175,000 AAA Columbus Medical Center Hospital Authority Revenue,
Anticipation Certificates, 7.750% due 7/1/10 1,371,813
290,000 AAA Fulton County Water & Sewer Revenue, FGIC-Insured,
6.375% due 1/1/14 321,538
470,000 AAA Puerto Rico Commonwealth Aqueduct & Sewer Authority
Revenue, 10.250% due 7/1/09 596,313
100,000 Aaa* Richmond County Water and Sewer Revenue,
9.875% due 4/1/02 104,750
1,000,000 Aaa* Savannah EDA, Southern Care Corp., Series A,
zero coupon due 12/1/21 246,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
13 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
=============================================================================================
<S> <C> <C> <C>
ESCROWED TO MATURITY (B) -- 10.1% (CONTINUED)
$ 640,000 AAA Tri City Hospital Authority Revenue,
South Fulton Hospital,
FGIC-Insured, 10.250% due 7/1/06 $ 757,600
2,000,000 Aaa* Washington Wilkes Payroll Development Authority Revenue,
Southern Care Corp., Series C, zero
coupon due 12/1/21 512,500
---------------------------------------------------------------------------------------------
5,863,410
---------------------------------------------------------------------------------------------
GENERAL OBLIGATION -- 4.7%
1,000,000 AAA Georgia State, Series B, 5.750% due 8/1/17 1,040,000
500,000 AA Jefferson, 5.900% due 2/1/25 508,750
300,000 AA- Marietta, 9.300% due 1/1/01 303,453
1,000,000 AAA Puerto Rico Commonwealth, Public Improvement,
AMBAC-Insured, 4.500% due 7/1/23 857,500
---------------------------------------------------------------------------------------------
2,709,703
---------------------------------------------------------------------------------------------
HOSPITALS -- 2.6%
1,000,000 Aaa* Newton County Hospital Authority Revenue, (Newton
Health System Project), AMBAC-Insured,
6.100% due 2/1/24 1,026,250
500,000 BBB- Puerto Rico Industrial Tourist Educational, Medical &
Environmental Control Facilities Finance
Authority, (Ryder Memorial Hospital Project),
Series A, 6.700% due 5/1/24 484,375
---------------------------------------------------------------------------------------------
1,510,625
---------------------------------------------------------------------------------------------
HOUSING: MULTI-FAMILY -- 9.0%
500,000 AAA Acworth Housing Authority Revenue, (Wingate Falls
Apartments Project), FSA-Insured,
6.125% due 3/1/17 (c) 513,750
1,040,000 B Atlanta Urban Residential Finance Authority, Multi-Family
Housing Revenue, Cascade Pines Housing Project,
6.250% due 9/1/10 (c) 1,081,600
1,000,000 Baa1* Clayton County Housing Authority, Multi-Family Housing
Revenue, (Magnolia Park Apartments Project),
Series A, 6.125% due 6/1/24 932,500
230,000 A Cobb County Housing Authority Refunding, (Signature
Place Project), Series A, 6.875% due 10/1/17 238,050
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) 1,088,750
300,000 AAA Valley Brook Apartments Project, MBIA/FHA-Insured,
7.750% due 1/1/26 309,710
1,000,000 AAA Lawrenceville Housing Authority, Multi-Family
Revenue, (Knollwood Park Apartments Project),
FNMA-Collateralized, 6.250% mandatory tender
6/1/29 (c) 1,036,250
---------------------------------------------------------------------------------------------
5,200,610
---------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 14
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
=============================================================================================
<S> <C> <C> <C>
HOUSING: SINGLE-FAMILY -- 5.6%
$2,000,000 Aaa* East Point Building Authority Revenue, FSA-Insured,
zero coupon due 2/1/20 $ 640,000
115,000 AAA Fulton County Housing Authority, Single-Family Mortgage
Revenue, Series A, GNMA-Collateralized,
6.600% due 3/1/28 (c) 118,162
1,700,000 AAA Georgia State HFA, Single-Family Mortgage Revenue,
Series A-2, FHA/VA-Insured, 6.550%
due 12/1/27 (c) 1,748,875
210,000 AA+ Georgia State Residential Finance Authority, Home
Ownership Mortgage, Series A, FHA/VA-Insured,
7.250% due 12/1/21 (c) 218,663
310,000 AAA Puerto Rico Housing Bank & Finance Agency,
Single-Family Mortgage, Affordable Housing Mortgage,
Portfolio I, GNMA/FHLMC-Collateralized,
6.250% due 4/1/29 (c) 318,913
210,000 AAA Virgin Islands HFA Refunding, Single-Family Mortgage
Revenue, Series A, GNMA-Collateralized,
6.450% due 3/1/16 (c) 217,875
---------------------------------------------------------------------------------------------
3,262,488
---------------------------------------------------------------------------------------------
LIFE-CARE -- 2.0%
660,000 BBB+ Fulton County Residential Care Facilities, (Canterbury
Court Project), 6.300% due 10/1/24 579,975
615,000 NR Savannah EDA, First Mortgage, Senior Care Group Inc.,
Shadowmoss, Series A, 6.750% due 7/1/10 586,555
---------------------------------------------------------------------------------------------
1,166,530
---------------------------------------------------------------------------------------------
MISCELLANEOUS -- 12.6%
1,000,000 Aaa* Albany Dougherty Inner City Authority, (Public Purpose
Project), AMBAC-Insured, 5.625% due 1/1/16 1,012,500
1,000,000 AAA Association County Commoners, Leasing Program,
(Rockdale County Public Purpose Project),
AMBAC-Insured, 5.625% due 7/1/20 1,000,000
1,000,000 AAA Fulton County Facilities Corp., (Fulton County Public
Purpose Project), 5.500% due 11/1/18 993,750
2,000,000 AAA Georgia Local Government, Public Improvement Grant,
Series A, MBIA-Insured, 4.750% due 6/1/28 1,690,000
500,000 BBB Puerto Rico Housing Bank & Finance Agency,
7.500% due 12/1/06 555,000
1,000,000 BBB Puerto Rico Industrial Tourist Educational, Medical &
Environmental Control Facilities Finance Authority,
(San Lucas & Cristo Project), Series A,
5.750% due 6/1/19 873,750
200,000 Baa2* Puerto Rico Port Authority Revenue, (Special Facilities
American Airlines), Series A, 6.250% due
6/1/26 (c) 202,000
1,000,000 NR Virgin Islands Public Finance Authority Revenue,
Series E, 6.000% due 10/1/22 946,250
---------------------------------------------------------------------------------------------
7,273,250
---------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
15 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
==========================================================================================
<S> <C> <C> <C>
POLLUTION CONTROL -- 8.3%
$1,000,000 Baa2* Effingham County Development Authority, Solid Waste
Disposal Revenue, (Fort James Project),
5.625% due 7/1/18 (c) $ 923,750
500,000 A Monroe County Development Authority PCR, (Oglethorpe
Power Co. Scherer Project), Series A,
6.800% due 1/1/12 545,625
2,000,000 BBB+ Richmond County Development Authority, Solid Waste
Disposal Revenue, (International Paper Project),
Series A, 5.400% due 2/1/23 (c) 1,785,000
1,000,000 NR Rockdale County Development Authority, Solid Waste
Disposal Revenue, (Visy Paper Project),
7.500% due 1/1/26 (c) 1,032,500
500,000 Baa1* Savannah EDA, Refunding, PCR, (Union Camp Corp.
Project), 6.150% due 3/1/17 502,500
------------------------------------------------------------------------------------------
4,789,375
------------------------------------------------------------------------------------------
PRE-REFUNDED (D) -- 2.8%
1,000,000 AAA Fulton County Multi-Family Housing
Authority Revenue, (Concorde Place
Apartment Project), Series A, (Call
7/1/06 @ 102), 6.300% due 7/1/16 (c) 1,088,750
500,000 Ba1* Savannah Hospital Authority Revenue Refunding &
Improvement, Candler Hospital, (Call 1/1/03 @ 100),
7.000% due 1/1/11 534,375
------------------------------------------------------------------------------------------
1,623,125
------------------------------------------------------------------------------------------
PUBLIC FACILITIES -- 2.2%
250,000 AAA Butts County COP, MBIA-Insured, 6.750% due 12/1/14 270,000
1,000,000 AAA Cobb-Marietta Counties Coliseum & Exhibit Hall Authority
Revenue, MBIA-Insured, 5.625% due 10/1/26 1,001,250
------------------------------------------------------------------------------------------
1,271,250
------------------------------------------------------------------------------------------
SOLID WASTE -- 1.5%
1,000,000 AA Albany Dougherty Payroll Development Authority, Solid
Waste Disposal Revenue, Procter & Gamble Paper
Products, 5.200% due 5/15/28 (c) 902,500
------------------------------------------------------------------------------------------
TRANSPORTATION -- 4.1%
1,000,000 AAA Atlanta Airport Refunding Revenue,
Series A, FGIC-Insured,
5.500% due 1/1/26 975,000
250,000 AAA Metropolitan Atlanta Rapid Transit Authority Revenue
Refunding, Series P, AMBAC-Insured, 6.250%
due 7/1/20 270,312
1,250,000 AAA Puerto Rico Commonwealth Highway & Transportation
Authority Highway Revenue, Series Y, MBIA-Insured,
5.000% due 7/1/36 1,140,625
------------------------------------------------------------------------------------------
2,385,937
------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 16
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
==========================================================================================
<S> <C> <C> <C>
UTILITIES -- 3.6%
$ 500,000 AAA Georgia Municipal Electric Authority Power Revenue,
Series EE, AMBAC-Insured, 7.250% due 1/1/24 $ 602,500
500,000 A- Georgia Municipal Gas Authority Revenue, (Southern
Storage Gas Project), 6.300% due 7/1/09 528,125
1,000,000 AAA Guam Power Authority Revenue, Series A, MBIA-Insured,
5.250% due 10/1/34 945,000
------------------------------------------------------------------------------------------
2,075,625
------------------------------------------------------------------------------------------
WATER AND SEWER -- 14.0%
Atlanta Water & Wastewater Revenue, Series A,
FGIC-Insured:
1,000,000 AAA 5.500% due 11/1/19 1,005,000
2,000,000 AAA 5.000% due 11/1/38 1,757,500
1,000,000 AAA Augusta Water & Sewer Revenue, FSA-Insured,
5.250% due 10/1/30 941,250
500,000 A+ Cartersville Development Authority Revenue Refunding,
Sewer Facilities, Anheuser Busch, 6.125% due
5/1/27 (c) 504,375
1,000,000 AAA Columbia County Water & Sewer Revenue, FGIC-Insured,
5.500% due 6/1/25 978,750
1,000,000 AA De Kalb County Water & Sewer Revenue,
5.000% due 10/1/28 901,250
10,000 AAA Fulton County Water & Sewer Revenue, FGIC-Insured,
6.375% due 1/1/14 10,987
500,000 AAA Milledgeville Water & Sewer Revenue, FSA-Insured,
6.000% due 12/1/21 527,500
1,500,000 AAA Rockdale County Water & Sewer Authority Revenue,
Series A, MBIA-Insured, 5.500% due 7/1/25 1,468,125
------------------------------------------------------------------------------------------
8,094,737
------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $57,219,505**) $57,898,852
==========================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except those which
are identified by an asterisk (*) which are rated by Moody's Investors
Service Inc.
(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 has not applied for new
ratings.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 23 and 24 for definitions of ratings and certain
security definitions.
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
17 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
==========================================================================================
EDUCATION -- 12.8%
<S> <C> <C> <C>
$1,615,000 AAA Erie School District, Capital Appreciation, Refunding,
FSA-Insured, zero coupon due 9/1/18 $ 579,381
4,000,000 AAA Erie School District, Capital Appreciation, AMBAC-Insured,
zero coupon due 9/1/30 690,000
Mckeesport Area School District, Capital Appreciation,
Series C, AMBAC-Insured:
1,310,000 AAA Zero coupon due 10/1/17 499,438
3,000,000 AAA Zero coupon due 10/1/20 941,250
2,340,000 AAA Zero coupon due 10/1/28 450,450
1,400,000 AAA Pennsylvania Cambria School District, Capital Appreciation,
FGIC-Insured, zero coupon due 8/15/23 367,500
Pennsylvania State Higher Education Facilities
Authority Revenue:
1,000,000 A- Drexel University, 6.000% due 5/1/29 1,003,750
640,000 AAA Thomas Jefferson University, AMBAC-Insured,
5.000% due 7/1/19 596,000
1,250,000 NR Philadelphia Hospitals & Higher Education Facilities
Authority Revenue, Chestnut Hill College,
6.000% due 10/1/29 1,095,313
2,000,000 AAA Philadelphia School District, Series A, MBIA-Insured,
4.500% due 4/1/23 1,670,000
------------------------------------------------------------------------------------------
7,893,082
------------------------------------------------------------------------------------------
ESCROWED TO MATURITY (B) -- 7.5%
390,000 NR Allegheny County Hospital Development Authority Revenue,
Montefiore Hospital Association Western Pennsylvania,
6.875% due 7/1/09 422,175
325,000 AAA Berks County Municipal Hospital Authority Revenue,
(General Hospital Project), 9.500% due 7/1/05 363,593
1,525,000 AAA Cambria County Hospital Development Authority,
Conemaugh Valley Memorial Hospital,
7.625% due 9/1/11 1,738,500
1,000,000 Aaa* Erie Sewer Authority Revenue, MBIA-Insured,
6.000% due 6/1/21 1,031,250
365,000 AAA Lewisburg Area School District Building, AMBAC-Insured,
9.750% due 2/15/04 401,500
65,000 AAA Pennsylvania State Educational Facilities Authority,
College & University Revenue, Temple University,
MBIA-Insured, 9.375% due 6/15/03 65,206
150,000 AAA Scranton-Lackawanna Health & Welfare Authority Revenue,
(Scranton University Project), AMBAC-Insured,
10.000% due 10/1/03 162,938
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 18
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
==========================================================================================
ESCROWED TO MATURITY (B) -- 7.5% (CONTINUED)
<S> <C> <C> <C>
$ 190,000 AAA Southeastern Greene School District, 9.375%
due 7/1/03 $ 202,825
70,000 AAA West Chester Sewer Revenue, 9.750% due 5/1/07 82,425
165,000 AAA York County GO, Refunding, AMBAC-Insured,
8.875% due 6/1/06 186,038
------------------------------------------------------------------------------------------
4,656,450
------------------------------------------------------------------------------------------
FINANCE -- 1.7%
1,000,000 BBB- Virgin Islands Public Finance Authority Revenue, Gross
Receipts Taxes, Series A, 6.500% due 10/1/24 1,030,000
------------------------------------------------------------------------------------------
GENERAL OBLIGATION -- 8.4%
4,185,000 AAA Erie County GO, Capital Appreciation, Series B,
zero coupon due 11/15/18 1,480,443
1,500,000 AAA Lancaster County GO, Series A, FGIC-Insured,
4.500% due 5/1/28 1,218,750
1,000,000 AAA Philadelphia GO, 5.000% due 3/15/28 890,000
970,000 AAA Philadelphia GO, Refunding, FGIC-Insured,
4.750% due 5/15/20 853,600
2,000,000 AAA Westmoreland County GO, Capital Appreciation,
FGIC-Insured, zero coupon due 12/1/18 707,500
------------------------------------------------------------------------------------------
5,150,293
------------------------------------------------------------------------------------------
HOSPITAL -- 22.3%
500,000 AAA Allegheny County Hospital Development Authority Revenue,
(General Hospital Project), Series A, MBIA-Insured,
6.250% due 9/1/20 541,875
180,000 AAA Allegheny County Hospital Development Authority
Revenue, Magee Womans Hospital,
10.125% due 10/1/02 190,800
1,000,000 BBB Allentown Area Hospital Authority Revenue, Sacred Heart
Hospital, Series A, 6.750% due 11/15/14 988,750
1,000,000 NR Chartiers Valley Industrial & Commercial Development
Authority Refunding, Mortgage Revenue, Asbury Health
Center, 6.375% due 12/1/19 875,000
1,000,000 AAA Delaware County Health System Authority Revenue,
Catholic Health East, Series A, AMBAC-Insured,
4.875% due 11/15/26 858,750
1,260,000 AA Erie County Hospital Authority Health Facilities Revenue,
(St. Marys Home Project), Asset Guaranteed,
6.000% due 8/15/23 1,267,875
1,000,000 AA Geisinger County Health System Authority, Series A,
5.000% due 8/15/28 848,750
1,000,000 BBB+ Hazelton Health Services Authority Revenue, St. Joseph's
Medical Center, 6.200% due 7/1/26 887,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
19 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
==========================================================================================
<S> <C> <C> <C>
HOSPITAL -- 22.3% (CONTINUED)
$1,000,000 BBB Horizon Hospital System Authority Revenue, Horizon
Hospital Systems Inc., 6.350% due 5/15/26 $ 911,250
1,000,000 AAA Lehigh County General Purpose Authority Revenues,
Hospital-Lehigh Valley Health Network, Series A,
MBIA-Insured, 5.250% due 7/1/29 908,750
500,000 NR Montgomery County Higher Education & Health
Authority Revenue, Temple Continuing Care Center,
6.750% due 7/1/29 441,875
1,000,000 NR Philadelphia Authority for Industrial Development, Health
Care Facility Revenue, Baptist Home of Philadelphia,
Series A, 5.600% due 11/15/28 785,000
295,000 AAA Philadelphia Hospital & Higher Education Facilities
Authority, Hospital Revenue, Series A, FHA-Insured,
5.300% due 1/1/18 275,087
525,000 AA Potter County Hospital Authority Revenue, Asset Guaranty,
6.050% due 8/1/24 535,500
500,000 BBB- Ryder Memorial Hospital Project, Series A,
6.700% due 5/1/24 484,375
Scranton-Lackawanna Health & Welfare Authority Revenue:
500,000 BBB- Allied Services Rehabilitation Hospitals, (Project-A),
7.600% due 7/15/20 520,625
1,000,000 NR Lackawanna Junior College, 5.750% due 11/1/20 870,000
750,000 BBB- Moses Taylor Hospital Project, 6.250% due 7/1/20 648,750
1,000,000 AA- St. Mary Hospital Authority, Bucks County, Catholic
Health Initiatives, Series A, 5.000% due 12/1/18 896,250
------------------------------------------------------------------------------------------
13,736,762
------------------------------------------------------------------------------------------
HOUSING: MULTI-FAMILY -- 0.3%
205,000 AAA Pittsburgh Urban Redevelopment Authority, Mortgage
Revenue, Series B, FNMA/GNMA-Collateralized,
6.950% due 10/1/10 (c) 212,688
------------------------------------------------------------------------------------------
HOUSING: SINGLE-FAMILY -- 8.8%
Allegheny County Residential Mortgage Refunding,
Single-Family Housing, GNMA-Collateralized:
1,000,000 Aaa* Series FF-2, 6.000% due 11/1/31 (c) 1,001,250
1,000,000 Aaa* Series II-2, 5.900% due 11/1/32 (c) 982,500
970,000 Aaa* Series Z, 6.875% due 5/1/26 (c) 1,019,712
1,445,000 Aaa* Series Z, zero coupon due 5/1/27 (c) 204,106
1,500,000 AA+ Pennsylvania HFA, Single-Family Housing Mortgage
Revenue, Series 40, 6.900% due 4/1/25 (c) 1,560,000
635,000 AAA Puerto Rico Single-Family Housing Mortgage Revenue,
GNMA/FNMA/FHLMC-Collateralized,
6.250% due 4/1/29 (c) 653,256
------------------------------------------------------------------------------------------
5,420,824
------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 20
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
==========================================================================================
<S> <C> <C> <C>
INDUSTRIAL DEVELOPMENT -- 10.7%
$1,000,000 Baa1* Allegheny County IDA, Refunding, Environmental
Improvement, USX Corp., Series A, 6.700%
due 12/1/20 $1,016,250
1,000,000 BBB+ Bradford County IDA, Solid Waste,
International Paper Co.,
Series A, 6.600% due 3/1/19 (c) 1,018,750
1,000,000 BB- Delaware County IDA, Revenue, Resource Recovery Facility,
Series A, 6.200% due 7/1/19 897,500
1,000,000 BBB+ Erie County IDA, Environmental Improvement Revenue,
(International Paper Co. Project), Series A,
7.625% due 11/1/18 (c) 1,073,750
1,650,000 NR Lancaster IDA, Revenue, Garden Spot Village Project,
Series A, 7.625% due 5/1/31 1,662,375
1,000,000 NR Pennsylvania Economic Development Finance Authority
Facilities Revenue, National Gypsum Co., Series A,
6.250% due 11/1/27 (c) 912,500
------------------------------------------------------------------------------------------
6,581,125
------------------------------------------------------------------------------------------
LIFE-CARE -- 6.7%
Montgomery County IDA, Retirement Community Revenue:
1,500,000 A- 5.250% due 11/15/28 1,246,875
1,500,000 A- Series A, 5.875% due 11/15/22 1,391,250
1,000,000 A- Series B, 5.625% due 11/15/12 956,250
610,000 AA Schuykill County IDA, Revenue, Charity Obligation Group,
Series A, 5.000% due 11/1/28 517,738
------------------------------------------------------------------------------------------
4,112,113
------------------------------------------------------------------------------------------
MISCELLANEOUS -- 9.4%
Dauphin County General Authority:
1,255,000 NR Hotel & Conference Center, Hyatt Regency,
6.200% due 1/1/29 1,145,188
1,000,000 NR Office & Package, Riverfront Office, 6.000%
due 1/1/25 922,500
2,000,000 AAA Delaware Valley Regional Finance Authority, Local
Government Revenue, Series A, AMBAC-Insured,
5.500% due 8/1/28 1,967,500
1,000,000 AAA Pittsburgh & Allegheny County Public Auditorium,
Regional Asset District Sales Tax, AMBAC-Insured,
5.000% due 2/1/24 908,750
1,000,000 BBB Puerto Rico Industrial, Tourist, Educational, Medical &
Environmental Control Facilities, (San Lucas & Cristo
Project), Series A, 5.750% due 6/1/19 873,750
------------------------------------------------------------------------------------------
5,817,688
------------------------------------------------------------------------------------------
POLLUTION CONTROL -- 0.8%
500,000 BBB- Pennsylvania EDA, Resource Recovery Revenue,
(Colver Project), Series D, 7.150%
due 12/1/18 (c) 515,625
------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
21 2000 Semi-Annual Report to Shareholders
<PAGE>
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING(A) SECURITY VALUE
==========================================================================================
<S> <C> <C> <C>
PRE-REFUNDED (E) -- 0.2%
$ 100,000 Aaa* Philadelphia Hospital Revenue, (United Hospital Inc.
Project), (Call 7/1/05 @ 100), 10.875%
due 7/1/08 $ 119,000
------------------------------------------------------------------------------------------
PUBLIC FACILITIES -- 3.6%
500,000 A- Allegheny County Redevelopment Authority Tax
Increment Revenue, Waterfront Project, Series A,
6.300% due 12/15/18 505,000
Harrisburg Redevelopment Authority, FSA-Insured:
1,750,000 AAA Zero coupon due 5/1/17 708,750
2,750,000 AAA Zero coupon due 5/1/19 979,687
------------------------------------------------------------------------------------------
2,193,437
------------------------------------------------------------------------------------------
SOLID WASTE -- 1.5%
1,000,000 BB- New Morgan IDA, Solid Waste Disposal, Browning Ferris
Industries Inc., 6.500% due 4/1/19 (c) 923,750
------------------------------------------------------------------------------------------
TRANSPORTATION -- 3.2%
920,000 AAA Delaware River Port Authority, (Port District Project),
Series B, MBIA-Insured, 5.000% due 1/1/26 836,050
1,250,000 AAA Puerto Rico Commonwealth Highway & Transportation
Authority Revenue, Series Y, MBIA-Insured,
5.000% due 7/1/36 1,140,625
------------------------------------------------------------------------------------------
1,976,675
------------------------------------------------------------------------------------------
UTILITIES -- 2.1%
400,000 AAA Guam Power Authority Revenue, Series A,
6.750% due 10/1/24 (d) 442,500
1,000,000 AAA Philadelphia Gas Works Revenue, Second Series,
FSA-Insured, 5.000% due 7/1/29 892,500
------------------------------------------------------------------------------------------
1,335,000
------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $63,388,400**) $61,674,512
==========================================================================================
</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) 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) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(e) Bonds are escrowed 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.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 23 and 24 for definitions of ratings and certain
security definitions.
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 22
<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.
--------------------------------------------------------------------------------
23 2000 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 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.
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 LEE -- College Construction Loan Insurance Association
COP -- Certificate of Participation
EDA -- Economic Development Authority
ETM -- Escrowed to Maturity
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FLAIRS -- Floating Adjustable Interest Rate Securities
FNMA -- Federal National Mortgage Association
FRTC -- Floating Rate Trust Certificates
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development 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 24
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) SEPTEMBER 30, 2000
GEORGIA PENNSYLVANIA
PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $57,219,505 and
$63,388,400, respectively) $ 57,898,852 $ 61,674,512
Interest receivable 1,017,701 1,103,440
Receivable for securities sold 224,270 120,000
Receivable for Fund shares sold 4,893 161,413
--------------------------------------------------------------------------------
TOTAL ASSETS 59,145,716 63,059,365
--------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 244,464 278,277
Management fees payable 47,613 30,749
Payable to bank 42,472 19,799
Distribution fees payable 3,898 4,855
Accrued expenses 32,856 135,203
--------------------------------------------------------------------------------
TOTAL LIABILITIES 371,303 468,883
--------------------------------------------------------------------------------
TOTAL NET ASSETS $ 58,774,413 $ 62,590,482
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 4,676 $ 5,061
Capital paid in excess of par value 59,950,696 66,152,203
Undistributed net investment income 22,398 49,736
Accumulated net realized loss from security
transactions (1,882,704) (1,902,630)
Net unrealized appreciation (depreciation) of
investments 679,347 (1,713,888)
--------------------------------------------------------------------------------
TOTAL NET ASSETS $ 58,774,413 $ 62,590,482
================================================================================
SHARES OUTSTANDING:
Class A 3,326,630 2,137,471
--------------------------------------------------------------------------------
Class B 873,450 2,189,787
--------------------------------------------------------------------------------
Class L 475,898 733,609
--------------------------------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $ 12.57 $ 12.38
--------------------------------------------------------------------------------
Class B * $ 12.56 $ 12.36
--------------------------------------------------------------------------------
Class L ** $ 12.55 $ 12.35
--------------------------------------------------------------------------------
MAXIMUM PUBLIC OFFERING PRICE PER SHARE:
Class A (net asset value plus 4.17% of net
asset value) $ 13.09 $ 12.90
--------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net
asset value) $ 12.68 $ 12.47
================================================================================
* 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.
--------------------------------------------------------------------------------
25 2000 Semi-Annual Report to Shareholders
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
GEORGIA PENNSYLVANIA
PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 1,761,301 $ 1,903,276
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 132,699 138,061
Distribution fees (Note 4) 88,017 136,484
Shareholder and system servicing fees 13,612 16,454
Shareholder communications 9,475 11,719
Audit and legal 7,979 7,480
Pricing service fees 6,483 5,485
Registration fees 4,987 3,989
Custody 1,198 1,995
Trustees' fees 997 1,496
Other 3,990 4,240
--------------------------------------------------------------------------------
TOTAL EXPENSES 269,437 327,403
Less: Management fee waiver (Note 4) -- (61,360)
--------------------------------------------------------------------------------
NET EXPENSES 269,437 266,043
--------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,491,864 1,637,233
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 5):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 11,251,139 11,772,955
Cost of securities sold 11,322,707 12,078,093
--------------------------------------------------------------------------------
NET REALIZED LOSS (71,568) (305,138)
--------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation)
of Investments:
Beginning of period (225,301) (2,958,996)
End of period 679,347 (1,713,888)
--------------------------------------------------------------------------------
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 904,648 1,245,108
--------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 833,080 939,970
--------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $ 2,324,944 $ 2,577,203
================================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 26
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO SEPTEMBER 30 MARCH 31
====================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,491,864 $ 2,663,201
Net realized loss (71,568) (1,674,905)
Increase (decrease) in net unrealized appreciation 904,648 (2,644,325)
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS 2,324,944 (1,656,029)
------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 3):
Net investment income (1,491,003) (2,638,507)
------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (1,491,003) (2,638,507)
------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 2,027,240 9,525,730
Net asset value of shares issued in connection
with the transfer of the Alterman Investment
Fund's net assets (Note 7) -- 21,598,463
Net asset value of shares issued
for reinvestment of dividends 383,362 1,367,928
Cost of shares reacquired (4,964,776) (23,320,000)
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (2,554,174) 9,172,121
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS (1,720,233) 4,877,585
------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 60,494,646 55,617,061
------------------------------------------------------------------------------------
END OF PERIOD* $58,774,413 $60,494,646
====================================================================================
* Includes undistributed net investment income of: $ 22,398 $ 21,537
====================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
27 2000 Semi-Annual Report to Shareholders
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO SEPTEMBER 30 MARCH 31
=====================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,637,233 $ 3,446,581
Net realized loss (305,138) (1,576,690)
(Increase) decrease in net unrealized
depreciation 1,245,108 (5,444,951)
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS 2,577,203 (3,575,060)
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 3):
Net investment income (1,628,377) (3,409,604)
Net realized gains -- (114,455)
-------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (1,628,377) (3,524,059
-------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Proceeds from sale of shares 4,541,541 26,277,685
Net asset value of shares issued
for reinvestment of dividends 799,453 2,075,666
Cost of shares reacquired (6,608,189) (25,787,914)
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (1,267,195) 2,565,437
-------------------------------------------------------------------------------------
DECREASE IN NET ASSETS (318,369) (4,533,682)
NET ASSETS:
Beginning of period 62,908,851 67,442,533
-------------------------------------------------------------------------------------
END OF PERIOD* $ 62,590,482 $ 62,908,851
=====================================================================================
* Includes undistributed net investment income of: $ 49,736 $ 40,880
=====================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 28
<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 non-diversified 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 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 that are based on transactions in municipal obligations, quotations from
municipal bond dealers, market transactions in comparable securities and various
relationships between securities; (c) securities for which market quotations are
not available will be valued in good faith at fair value by or under the
direction of the Board of Trustees; (d) securities maturing within 60 days are
valued at cost plus accreted discount or minus amortized premium, which
approximates value; (e) gains or losses on the sale of securities are calculated
by using the specific identification method; (f) interest income, adjusted for
amortization of premium and original issue discount, is recorded on an accrual
basis; market discount is recognized upon the disposition of the security; (g)
dividends and distributions to shareholders are recorded on the ex-dividend
date; (h) direct expenses are charged to each Portfolio and each class;
management fees and general fund expenses are allocated on the basis of relative
net assets; (i) each Portfolio intends to comply with the applicable provisions
of the Internal Revenue Code of 1986, as amended, pertaining to regulated
investment companies and to make distributions of taxable income sufficient to
relieve it from substantially all Federal income and excise taxes; (j) the
character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. At March 31, 2000, reclassifications were made to the capital
accounts of Georgia Portfolio and Pennsylvania Portfolio to reflect permanent
book/tax differences and income and gains available for distributions under
income tax regulations. Accordingly, for the Georgia Portfolio, a portion of
accumulated net realized loss amounting to $31,944 was reclassified to paid-in
capital. Net investment income, net realized gains and net assets were not
affected by these changes; and (k) estimates and assumptions are required to be
made regarding assets, liabilities and changes in net assets resulting from
operations when
--------------------------------------------------------------------------------
29 2000 Semi-Annual Report to Shareholders
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 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"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment manager to the Fund. 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. For the six
months ended September 30, 2000, SSBC waived management fees of $61,360 for the
Pennsylvania Portfolio.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Fund's transfer agent and PFPC Global Fund Services ("PFPC") acts as the
Fund's sub-transfer agent. CFTC receives account fees and asset-based fees that
vary according to account size and type of account. PFPC is responsible for
shareholder recordkeeping and financial processing for all shareholder accounts
and is paid by CFTC. During the six months ended September 30, 2000, the
Portfolios paid transfer agent fees totaling $14,866 to CFTC.
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, became the Fund's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSBacts as the primary broker for the Fund's portfolio agency
transactions. Certain other broker-dealers continue to sell Portfolio shares to
the public as members of the selling group.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 30
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
There are maximum initial sales charges of 4.00% and 1.00% for Class A and L
shares, respectively. 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.
For the six months ended September 30, 2000, CDSCs paid to SSB and sales charges
received by SSB and CFBDS were approximately:
CDSCS SALES CHARGES
----------------- -----------------
PORTFOLIO CLASS B CLASS L CLASS A CLASS L
================================================================================
Georgia $15,000 $1,000 $ 8,000 $4,000
--------------------------------------------------------------------------------
Pennsylvania 14,000 -- 18,000 4,000
================================================================================
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, 2000, total Distribution Plan fees
incurred were:
PORTFOLIO CLASS A CLASS B CLASS L
================================================================================
Georgia $31,539 $35,886 $20,592
--------------------------------------------------------------------------------
Pennsylvania 19,543 86,037 30,904
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
5. INVESTMENTS
During the six months ended September 30, 2000, 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 $ 8,688,973 $10,134,658
--------------------------------------------------------------------------------
Sales 11,251,139 11,772,955
================================================================================
--------------------------------------------------------------------------------
31 2000 Semi-Annual Report to Shareholders
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
At September 30, 2000, 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 $ 1,749,196 $ 1,042,111
Gross unrealized depreciation (1,069,849) (2,755,999)
--------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) $ 679,347 $(1,713,888)
================================================================================
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, 2000, the Portfolios had no open futures contracts.
7. TRANSFER OF NET ASSETS
On December 10, 1999, the Georgia Portfolio acquired the assets and certain
liabilities of the Alterman Investment Fund, Inc. ("Alterman Fund") pursuant to
a plan of reorganization approved by Alterman Fund shareholders on December 7,
1999. Total Class A shares issued by the Georgia Portfolio and the total net
assets of the Alterman Fund and the Georgia Portfolio on the date of the
transfer were as follows:
CLASS A SHARES TOTAL NET TOTAL NET
ISSUED BY THE ASSETS OF THE ASSETS OF THE
ACQUIRED PORTFOLIO GEORGIA PORTFOLIO ALTERMAN FUND GEORGIA PORTFOLIO
================================================================================
Alterman Fund 1,756,148 $21,598,463 $46,533,613
================================================================================
--------------------------------------------------------------------------------
Smith Barney Muni Funds 32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The total net assets of the Alterman Fund before acquisition included unrealized
appreciation of $5,627. Total net assets of the Georgia Portfolio immediately
after the transfer were $68,132,076. The transaction was structured to qualify
as a tax-free reorganization under the Internal Revenue Code of 1986, as
amended.
8. CAPITAL LOSS CARRYFORWARDS
At March 31, 2000, the Georgia Portfolio and Pennsylvania had, for Federal
income tax purposes, approximately $1,015,300 and $668,000, respectively, of
unused capital loss carryforwards available to offset future capital gains. To
the extent that these capital carryforward losses are used to offset capital
gains, it is probable 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:
2007 2008 TOTAL
================================================================================
Georgia Portfolio $32,000 $983,300 $1,015,300
--------------------------------------------------------------------------------
Pennsylvania Portfolio -- 668,000 668,000
================================================================================
9. SHARES OF BENEFICIAL INTEREST
At September 30, 2000, 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, 2000, total paid-in capital amounted to the following for each
class and their respective Portfolio:
PORTFOLIO CLASS A CLASS B CLASS L
================================================================================
Georgia $42,593,034 $11,175,591 $6,186,747
--------------------------------------------------------------------------------
Pennsylvania 28,415,825 28,231,786 9,509,653
================================================================================
--------------------------------------------------------------------------------
33 2000 Semi-Annual Report to Shareholders
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Transactions in shares of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
------------------------ -------------------------
------------------------------
GEORGIA PORTFOLIO SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------
CLASS A
Shares sold 62,795 $ 787,444 433,730 $ 5,489,120
Net asset value of shares
issued in connection with
the transfer of the
Alterman Investment
Fund, Inc.'s net assets
(Note 7) -- -- 1,756,148 21,598,463
Shares issued
on reinvestment 16,596 204,560 66,344 833,376
Shares reacquired (229,999) (2,858,100) (1,361,842) (16,857,809)
--------------------------------------------------------------------------------
Net Increase (Decrease) (150,608) $(1,866,096) 894,380 $ 11,063,150
================================================================================
CLASS B
Shares sold 44,093 $ 546,991 165,268 $ 2,079,687
Shares issued
on reinvestment 7,260 89,274 23,121 290,041
Shares reacquired (106,625) (1,324,804) (275,576) (3,444,014)
--------------------------------------------------------------------------------
Net Decrease (55,272) $ (688,539) (87,187) $ (1,074,286)
================================================================================
CLASS L
Shares sold 55,414 $ 692,805 156,250 $ 1,956,923
Shares issued
on reinvestment 7,234 89,528 19,527 244,511
Shares reacquired (62,862) (781,872) (244,377) (3,018,177)
--------------------------------------------------------------------------------
Net Increase (Decrease) (214) $ 461 (68,600) $ (816,743)
================================================================================
PENNSYLVANIA PORTFOLIO
================================================================================
CLASS A
Shares sold 122,653 $ 1,501,188 1,221,597 $ 15,315,858
Shares issued on
reinvestment 33,846 412,289 88,369 1,101,770
Shares reacquired (315,392) (3,806,819) (1,373,637) (16,745,468)
--------------------------------------------------------------------------------
Net Decrease (158,893) $(1,893,342) (63,671) $ (327,840)
================================================================================
CLASS B
Shares sold 199,677 $ 2,439,090 657,252 $ 8,326,581
Shares issued on
reinvestment 23,290 283,299 57,077 709,871
Shares reacquired (194,046) (2,373,207) (434,227) (5,325,766)
--------------------------------------------------------------------------------
Net Increase 28,921 $ 349,182 280,102 $ 3,710,686
================================================================================
CLASS L
Shares sold 49,842 $ 601,263 205,594 $ 2,635,246
Shares issued
on reinvestment 8,541 103,865 21,188 264,025
Shares reacquired (34,845) (428,163) (299,024) (3,716,680)
--------------------------------------------------------------------------------
Net Increase (Decrease) 23,538 $ 276,965 (72,242) $ (817,409)
================================================================================
--------------------------------------------------------------------------------
Smith Barney Muni Funds 34
<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
----------------------------------------------------
GEORGIA PORTFOLIO 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
================================================================================
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.40 $ 13.43 $ 13.43 $ 12.48 $ 12.50 $12.10
--------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(3) 0.32 0.65 0.62 0.67 0.69 0.70
Net realized and unrealized
gain (loss) 0.17 (1.06) 0.12 1.03 0.04 0.45
--------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.49 (0.41) 0.74 1.70 0.73 1.15
--------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.32) (0.62) (0.62) (0.67) (0.67) (0.70)
In excess of net
investment income -- -- (0.03) -- -- --
Net realized gains -- -- (0.09) (0.08) (0.08) (0.05)
--------------------------------------------------------------------------------
Total Distributions (0.32) (0.62) (0.74) (0.75) (0.75) (0.75)
--------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $ 12.57 $ 12.40 $ 13.43 $ 13.43 $ 12.48 $12.50
--------------------------------------------------------------------------------
TOTAL RETURN 4.04%++ (2.97)% 5.61% 13.85% 5.95% 9.67%
--------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $41,828 $43,100 $34,680 $20,502 $14,495 $9,744
--------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3)(4) 0.74%+ 0.68% 0.64% 0.50% 0.48% 0.38%
Net investment income 5.20+ 4.74 4.63 5.10 5.49 5.57
--------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 98% 98% 48% 36% 81% 63%
================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) The Manager has waived all or part of its fees for the years ended March
31, 1999, 1998, 1997 and 1996. In addition, the Manager reimbursed expenses
of $56,755 for the year ended March 31, 1996. 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
------------------------------- --------------------------------
1999 1998 1997 1996 1999 1998 1997 1996
----- ----- ----- ----- ----- ----- ----- -----
Class A $0.01 $0.04 $0.04 $0.11 0.74% 0.83% 0.90% 1.23%
(4) As a result of voluntary expense limitations, expense ratios will not
exceed 0.80%.
++ Total return is not annualized, as it may not be representative of total
return for the year.
+ Annualized.
--------------------------------------------------------------------------------
35 2000 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
-----------------------------------------------------
GEORGIA PORTFOLIO 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
===============================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $12.40 $13.42 $13.43 $12.47 $12.50 $12.11
-------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(3) 0.29 0.56 0.56 0.61 0.62 0.64
Net realized and unrealized
gain (loss) 0.16 (1.03) 0.10 1.03 0.04 0.45
-------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.45 (0.47) 0.66 1.64 0.66 1.09
-------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.29) (0.55) (0.55) (0.60) (0.61) (0.65)
In excess of net
investment income -- -- (0.03) -- -- --
Net realized gains -- -- (0.09) (0.08) (0.08) (0.05)
-------------------------------------------------------------------------------
Total Distributions (0.29) (0.55) (0.67) (0.68) (0.69) (0.70)
-------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.56 $12.40 $13.42 $13.43 $12.47 $12.50
-------------------------------------------------------------------------------
TOTAL RETURN 3.70%++ (3.45)% 4.99% 13.39% 5.33% 9.08%
-------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $10,972 $11,503 $13,633 $10,712 $7,354 $5,461
-------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3)(4) 1.30%+ 1.30% 1.15% 1.02% 1.00% 0.92%
Net investment income 4.69+ 4.47 4.12 4.58 4.97 5.20
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 98% 98% 48% 36% 81% 63%
===============================================================================
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) The Manager has waived all or part of its fees for the years ended March
31, 1999, 1998, 1997 and 1996. In addition, the Manager reimbursed expenses
of $56,755 for the year ended March 31, 1996. 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
------------------------------- --------------------------------
1999 1998 1997 1996 1999 1998 1997 1996
----- ----- ----- ----- ----- ----- ----- -----
Class B $0.02 $0.04 $0.05 $0.10 1.26% 1.35% 1.42% 1.77%
(4) As a result of voluntary expense limitations, expense ratios will not
exceed 1.30%.
++ Total return is not annualized, as it may not be representative of total
return for the year.
+ Annualized.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 36
<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 2000(1)(2) 2000(2)1999(2)(3) 1998 1997 1996
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $12.39 $13.41 $13.41 $12.46 $12.49 $12.09
--------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(4) 0.29 0.56 0.55 0.60 0.62 0.63
Net realized and unrealized
gain (loss) 0.16 (1.04) 0.12 1.02 0.03 0.46
--------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.45 (0.48) 0.67 1.62 0.65 1.09
--------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.29) (0.54) (0.55) (0.59) (0.60) (0.64)
In excess of net
investment income -- -- (0.03) -- -- --
Net realized gains -- -- (0.09) (0.08) (0.08) (0.05)
--------------------------------------------------------------------------------
Total Distributions (0.29) (0.54) (0.67) (0.67) (0.68) (0.69)
--------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.55 $12.39 $13.41 $13.41 $12.46 $12.49
--------------------------------------------------------------------------------
TOTAL RETURN 3.68%++ (3.51)% 5.01% 13.23% 5.28% 9.12%
--------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $5,974 $5,893 $7,304 $4,641 $3,221 $2,914
--------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(4)(5) 1.35%+ 1.33% 1.20% 1.06% 1.04% 0.97%
Net investment income 4.64+ 4.44 4.07 4.54 4.93 5.18
--------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 98% 98% 48% 36% 81% 63%
================================================================================
(1) For the six months ended September 30, 2000 (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) The Manager has waived all or part of its fees for the years ended March
31, 1999, 1998, 1997 and 1996. In addition, the Manager reimbursed expenses
of $56,755 for the year ended March 31, 1996. 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
------------------------------- --------------------------------
1999 1998 1997 1996 1999 1998 1997 1996
----- ----- ----- ----- ----- ----- ----- -----
Class L $0.02 $0.04 $0.05 $0.10 1.31% 1.39% 1.46% 1.82%
(5) As a result of voluntary expense limitations, expense ratios will not
exceed 1.35%.
++ Total return is not annualized, as it may not be representative of total
return for the year.
+ Annualized.
--------------------------------------------------------------------------------
37 2000 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 A SHARES
----------------------------------------------------
PENNSYLVANIA PORTFOLIO 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $12.18 $13.44 $13.54 $12.66 $12.62 $12.40
--------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(3) 0.34 0.67 0.66 0.73 0.71 0.70
Net realized and unrealized
gain (loss) 0.20 (1.25) 0.08 0.95 0.04 0.29
--------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.54 (0.58) 0.74 1.68 0.75 0.99
--------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.34) (0.66) (0.69) (0.69) (0.71) (0.72)
Net realized gains -- (0.02) (0.15) (0.11) -- (0.05)
--------------------------------------------------------------------------------
Total Distributions (0.34) (0.68) (0.84) (0.80) (0.71) (0.77)
--------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.38 $12.18 $13.44 $13.54 $12.66 $12.62
--------------------------------------------------------------------------------
TOTAL RETURN 4.52%++ (4.31)% 5.61% 13.52% 6.11% 8.08%
--------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $26,460 $27,978 $31,718 $15,955 $15,152 $11,847
--------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3)(4) 0.55%+ 0.63% 0.50% 0.37% 0.37% 0.38%
Net investment income 5.65+ 5.29 4.94 5.46 5.66 5.57
--------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 17% 54% 49% 81% 122% 88%
================================================================================
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) The Manager has waived all or part of its fees for the six months ended
September 30, 2000 and for the years ended March 31, 2000, 1999, 1998, 1997
and 1996. In addition, the Manager reimbursed expenses of $23,433 for the
year ended March 31, 1996. If such fees were not waived and expenses not
reimbursed, the effect on net investment income and expense ratios for
Class A shares would have been as follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements
------------------------------------ ------------------------------------
2000(1)2000 1999 1998 1997 1996 2000(1) 2000 1999 1998 1997 1996
------ ---- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
$0.01 $0.01 $0.03 $0.05 $0.06 $0.07 0.75%+ 0.75% 0.75% 0.79% 0.82% 0.93%
(4) As a result of voluntary expense limitations, expense ratios will not
exceed 0.80%
++ Total return is not annualized, as it may not be representative of total
return for the year.
+ Annualized.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 38
<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 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $12.17 $13.42 $13.52 $12.64 $12.61 $12.39
--------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(3) 0.31 0.60 0.60 0.65 0.65 0.64
Net realized and unrealized
gain (loss) 0.19 (1.24) 0.07 0.96 0.03 0.29
--------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.50 (0.64) 0.67 1.61 0.68 0.93
--------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.31) (0.59) (0.62) (0.62) (0.65) (0.66)
Net realized gains -- (0.02) (0.15) (0.11) -- (0.05)
--------------------------------------------------------------------------------
Total Distributions (0.31) (0.61) (0.77) (0.73) (0.65) (0.71)
--------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.36 $12.17 $13.42 $13.52 $12.64 $12.61
--------------------------------------------------------------------------------
TOTAL RETURN 4.19%++ (4.78)% 5.07% 12.97% 5.56% 7.61%
--------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $27,068 $26,296 $25,234 $19,268 $15,559 $13,131
--------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3)(4) 1.08%+ 1.15% 1.01% 0.89% 0.88% 0.88%
Net investment income 5.12+ 4.79 4.45 4.94 5.15 5.07
--------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 17% 54% 49% 81% 122% 88%
================================================================================
(1) For the six months ended September 30, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) The Manager has waived all or part of its fees for the six months ended
September 30, 2000 and for the years ended March 31, 2000, 1999, 1998, 1997
and 1996. In addition, the Manager reimbursed expenses of $23,433 for the
year ended March 31, 1996. If such fees were not waived and expenses not
reimbursed, the effect on net investment income and expense ratios for
Class B shares would have been as follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements
------------------------------------ -----------------------------------
2000(1) 2000 1999 1998 1997 1996 2000(1) 2000 1999 1998 1997 1996
------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
$0.01 $0.01 $0.03 $0.05 $0.06 $0.07 1.29%+ 1.26% 1.26% 1.31% 1.33% 1.44%
(4) As a result of voluntary expense limitations, expense ratios will not
exceed 1.30%.
++ Total return is not annualized, as it may not be representative of total
return for the year.
+ Annualized.
--------------------------------------------------------------------------------
39 2000 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
----------------------------------------------------
PENNSYLVANIA PORTFOLIO 2000(1)(2) 2000(2)1999(2)(3) 1998 1997 1996(2)
================================================================================
NET ASSET VALUE,
BEGINNING OF PERIOD $12.16 $13.41 $ 13.51 $12.64 $12.61 $12.39
--------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(4) 0.31 0.59 0.60 0.64 0.64 0.64
Net realized and unrealized
gain (loss) 0.19 (1.24) 0.06 0.96 0.04 0.29
--------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.50 (0.65) 0.66 1.60 0.68 0.93
--------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.31) (0.58) (0.61) (0.62) (0.65) (0.66)
Net realized gains -- (0.02) (0.15) (0.11) -- (0.05)
--------------------------------------------------------------------------------
Total Distributions (0.31) (0.60) (0.76) (0.73) (0.65) (0.71)
--------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.35 $12.16 $ 13.41 $13.51 $12.64 $12.61
--------------------------------------------------------------------------------
TOTAL RETURN 4.15%++ (4.83)% 5.02% 12.84% 5.51% 7.56%
--------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000S) $9,062 $8,635 $10,490 $7,729 $5,731 $4,682
--------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(4)(5) 1.15%+ 1.20% 1.07% 0.94% 0.94% 0.94%
Net investment income 5.05+ 4.70 4.40 4.89 5.09 5.00
--------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 17% 54% 49% 81% 122% 88%
================================================================================
(1) For the six months ended September 30, 2000 (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) The Manager has waived all or part of its fees for the six months ended
September 30, 2000 and for the years ended March 31, 2000, 1999, 1998, 1997
and 1996. In addition, the Manager reimbursed expenses of $23,433 for the
year ended March 31, 1996. If such fees were not waived and expenses not
reimbursed, the effect on net investment income and expense ratios for
Class L shares would have been as follows:
Expense Ratios
Net Investment Income Without Fee Waivers and/or
Per Share Decreases Expense Reimbursements(4)
------------------------------------ ------------------------------------
2000(1) 2000 1999 1998 1997 1996 2000(1) 2000 1999 1998 1997 1996
------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
$0.01 $0.01 $0.03 $0.05 $0.06 $0.07 1.35%+ 1.32% 1.32% 1.36% 1.39% 1.49%
(5) As a result of voluntary expense limitations, expense ratios will not
exceed 1.35%.
++ Total return is not annualized, as it may not be representative of total
return for the year.
+ Annualized.
--------------------------------------------------------------------------------
Smith Barney Muni Funds 40
<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
Salomon Smith Barney Inc.
CUSTODIAN
PFPC Trust Company
TRANSFER AGENT
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
SUB-TRANSFER AGENT
PFPCGlobal Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
This report is submitted for the general information of shareholders of Smith
Barney Muni Funds -- Georgia and Pennsylvania Portfolios, but it may also be
used as sales literature when proceeded or accompanied by the current
Prospectus, which gives details about charges, expenses, investment objectives
and operating policies of the Portfolios. If used as sales material after
December 31, 2000, this report must be accompanied by performance information
for the most recently completed calendar quarter.
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 11/00
<PAGE>
--------------------------------------------------------------------------------
SMITH BARNEY
MUNI FUNDS
CALIFORNIA MONEY MARKET
PORTFOLIO
--------------------------------------------------------------------------------
SEMI-ANNUAL REPORT | SEPTEMBER 30, 2000
[LOGO] SMITH BARNEY
MUTUAL FUNDS
YOUR SERIOUS MONEY. PROFESSIONALLY MANAGED.-SM-
-------------------------------------------------------
NOT FDIC INSURED - NOT BANK GUARANTEED - MAY LOSE VALUE
-------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
A MESSAGE FROM THE CHAIRMAN
--------------------------------------------------------------------------------
[PHOTO OF HEATH B. MCLENDON]
HEATH B. MCLENDON
CHAIRMAN
For years, individuals and businesses have looked to the investment
professionals of SSB Citi Fund Management LLC ("SSB Citi") for thoughtful
insights and advice. For some, the solution has been an investment strategy
incorporating multiple stock, bond and money market mutual funds. Others have
invested with specific portfolio managers who are recognized for their insights
and record.
Since the introduction of the first money fund in 1972, the explosive growth of
money funds has gone hand in hand with the growth of the entire mutual fund
industry. Over the last 28 years, millions of investors worldwide have made
money market funds a key part of their investment portfolios. While all
investments involve some degree of risk, money market funds provide investors
with an opportunity to earn current short-term interest rates with a higher
degree of liquidity than most other types of mutual funds.(1)
For those of you who are new shareholders, I would like to extend a warm welcome
to you on behalf of everyone here at SSB Citi. The Smith Barney Muni Funds
California Money Market Portfolio ("Portfolio") seeks to provide tax-exempt
income(2) from both federal income taxes and California personal taxes by
seeking to invest in a portfolio of high quality short-term municipal
obligations selected for liquidity and stability of principal. Portfolio
managers Joseph Deane and Joseph Benevento use a system of fundamental credit
analysis to identify what they deem to be undervalued sectors and individual
securities. They only select securities of issuers that they believe present
minimal credit risk.
-------------
1 PLEASE NOTE THAT AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED NOR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN A MONEY MARKET FUND.
2 PLEASE NOTE THAT A PORTION OF THE INCOME FROM THE PORTFOLIO MAY BE SUBJECT TO
THE ALTERNATIVE MINIMUM TAX ("AMT").
SMITH BARNEY MUNI FUNDS 1
<PAGE>
When you invest with SSB Citi, you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial future. Thank you for
investing with us.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
October 20, 2000
2 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
[PHOTO OF JOSEPH P. DEANE] [PHOTO OF JOSEPH BENEVENTO]
JOSEPH P. DEANE JOSEPH BENEVENTO
VICE PRESIDENT VICE PRESIDENT
We are pleased to provide the semi-annual report for the Smith Barney Muni
Funds-California Money Market Portfolio ("Portfolio") for the period ended
September 30, 2000. In this report we have summarized the period's prevailing
economic and market conditions and outlined our investment strategy. The
information provided in this letter represents the opinion of the managers and
is not intended to be a forecast of future events, a guarantee of future results
nor investment advice.
Further, there is no assurance that certain securities will remain in or out of
the Portfolio. Please refer to pages 7 through 15 for a list and percentage
breakdown of the Portfolio's holdings. Also, please note any discussion of the
Portfolio's holdings is as of September 30, 2000 and is subject to change. A
detailed summary of the Portfolio's performance can be found in the appropriate
sections that follow. We hope you find this report to be useful and informative.
PERFORMANCE UPDATE
The Portfolio seeks to provide investors with income exempt from federal income
taxes and California personal taxes(1) by investing in a portfolio of high-
quality, short-term, municipal obligations selected for liquidity and stability
of principal.
As of September 30, 2000, the Portfolio's seven-day current yield was 3.28%. The
Portfolio's seven-day effective yield(2) - which reflects compounding - was
3.33%.
Please note that your investment in the Portfolio is neither insured, nor
guaranteed, by the Federal Deposit Insurance Corporation or any other
----
1 PLEASE NOTE A PORTION OF THE INCOME FROM THE PORTFOLIO MAY BE SUBJECT TO THE
ALTERNATIVE MINIMUM TAX ("AMT").
2 THE SEVEN-DAY EFFECTIVE YIELD IS CALCULATED SIMILARLY TO THE SEVEN-DAY YIELD
BUT, WHEN ANNUALIZED, THE INCOME EARNED BY AN INVESTMENT IN THE PORTFOLIO OR
THE CLASS IS ASSUMED TO BE REINVESTED. THE EFFECTIVE YIELD WILL BE SLIGHTLY
HIGHER THAN THE YIELD BECAUSE OF THE COMPOUNDING EFFECT OF THE ASSUMED
REINVESTMENT.
SMITH BARNEY MUNI FUNDS 3
<PAGE>
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.
CALIFORNIA ECONOMIC HIGHLIGHTS(3)
California has experienced a remarkable turnaround since the early 1990's when
it was experiencing its worst economic downturn since the Great Depression.
California has been able to recreate its economy to meet the challenges of the
New Economy.
California's high-tech manufacturing industry continues to set records in sales,
profits, exports, and new venture capital financing and higher high-tech job
employment. In our opinion, California's job growth is a good measure of
economic growth and is expected to rise roughly 4% this year, the highest pace
in 16 years.
We think California's economic resurgence may continue to effectively put
California on a more solid financial footing. We also believe that California
should remain a competitive economic force for many years to come due in large
part to its strong employment growth, rising real estate values and an annual
state Gross Domestic Product ("GDP")(4) of more than $1 trillion.
MARKET OVERVIEW AND OUTLOOK
Municipal bonds have been a very simple story throughout 2000. They started at
relatively inexpensive valuations and then rallied. Stable interest rates and a
robust economy with few excesses have helped to paint a bullish picture for
bonds in general, while declining new issue supply may be further bolstering the
municipal bond market. In addition, a vibrant national economy has produced
large cash surpluses in many states and municipalities, causing general
improvement in the credit quality of municipal securities and giving comfort to
many investors regarding the credit worthiness of their securities.
From our point of view, recent months have been a positive period for the
municipal bond market. As the stock market declined in March and April 2000,
municipal bonds forged ahead slowly but relentlessly. In our view, the municipal
bond market is in a state of flux that may lead to greater opportunities. The
federal government conducted a buy back of long-term government bonds early in
2000, which drove down yields.
-----------
3 SOURCES: FITCH IBCA, DUFF & PHELPS.
4 GDP IS THE MARKET VALUE OF THE GOODS AND SERVICES PRODUCED BY LABOR AND
PROPERTY IN THE U.S. GDP IS COMPRISED OF CONSUMER AND GOVERNMENT PURCHASES,
PRIVATE DOMESTIC INVESTMENTS AND NET EXPORTS OF GOODS AND SERVICES.
4 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
On May 16, 2000, the Federal Reserve Board ("Fed") increased the federal funds
rate ("fed funds rate")(5) by 50 basis points, however, the supply and demand
imbalance in the short-term municipal market put pressures on both the municipal
note and the Variable Rate Demand Obligation ("VRDO")(6) markets and at times,
defied rising rates.
During the period, the Bond Buyer One Year Municipal Note Index(7) increased by
approximately 60 basis points to a high of 4.64% in early May of 2000. The
market then looked to June, which is the fiscal year end for most state and
local governments, however less issuance was announced for fiscal year 2001 and
as a result the Bond Buyer 1 Year Note Index reacted by falling to a 4.20% by
late September.
In the VRDO market, which represents the shorter end of the municipal money
market yield curve, supply and demand imbalances have led to increased
volatility during periods of cyclical cash flows. Over the normal course of the
year, tax-exempt money funds tend to experience large cyclical cash flows. For
example, during the month of April, yields for VRDOs in California surged as
tax-exempt money funds experienced large redemptions relating to income tax
payments. During the month of July, when tax-exempt money funds experience large
inflows from bond coupon collections and bond calls, yields quickly retreated to
levels more expensive than their taxable equivalents.
Going forward, we believe there may be a greater amount of supply of short-term
municipal securities in California that become available from decade old
municipal bond issuance. The older issuance are now eligible either by pre-
refunding(8) or by maturing in 13 months or less.
---------
5 FED FUNDS RATE IS THE INTEREST RATE THAT BANKS WITH EXCESS RESERVES AT A
FEDERAL RESERVE DISTRICT BANK CHARGE OTHER BANKS THAT NEED OVERNIGHT LOANS.
THE FED FUNDS RATE OFTEN POINTS TO THE DIRECTION OF U.S. INTEREST RATES.
6 VRDO'S ARE DEMAND INSTRUMENTS THAT USUALLY HAVE AN INDICATED MATURITY OF MORE
THAN ONE YEAR, BUT CONTAIN A DEMAND FEATURE THAT ENABLES THE HOLDER TO REDEEM
THE INVESTMENT ON NO MORE THAN 30 DAYS NOTICE. 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.
7 THE BOND BUYER ONE YEAR NOTE INDEX IS COMPRISED OF TEN LARGE MUNICIPAL NOTE
ISSUES RATED MIG 1 BY MOODY'S INVESTOR SERVICES OR SP +/SP 1 BY STANDARD AND
POOR'S RATING SERVICE, REPRESENTING A CROSS SECTION OF THE MUNICIPAL NOTE
MARKET. PLEASE NOTE AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX.
8 PRE-REFUNDING OCCURS WHEN AN ISSUER REFINANCES DEBT THROUGH THE ISSUANCE OF A
NEW BOND DEAL. THE PROCEEDS FROM THE NEW BOND SALE ARE PLACED IN AN ESCROW
ACCOUNT AND ARE USED TO RETIRE THE DEBT TO THE EARLIEST CALL DATE.
SMITH BARNEY MUNI FUNDS 5
<PAGE>
INVESTMENT STRATEGY
During the period, we increased the Portfolio's average maturity(9) target to a
65- to 70-day range. We have extended the Portfolio's average maturity by buying
what we deem to be high quality liquid municipal notes.
The Portfolio's increased average maturity reflects:
- A slowdown in economic activity over the near-term; and
- Less supply of high quality short-term municipal paper.
The record expansion of the U.S. economy has produced budget surpluses for many
state and local governments, which in turn, has decreased the need for
short-term cash flow financing.
Thank you for investment in the Smith Barney Muni Funds - California Money
Market Portfolio. We look forward to continuing to help you pursue your
financial goals in the future.
Sincerely,
/s/ Joseph P. Deane /s/ Joseph Benevento
Joseph P. Deane Joseph Benevento
Vice President Vice President
October 20, 2000
------------
9 AVERAGE MATURITY REFERS TO THE AVERAGE DATE ON WHICH THE PRINCIPAL IS REQUIRED
TO BE PAID ON THE BOND.
6 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
INVESTMENT STRATEGY
During the period, we increased the Portfolio's average maturity(9) target to a
65- to 70-day range. We have extended the Portfolio's average maturity by buying
what we deem to be high quality liquid municipal notes.
The Portfolio's increased average maturity reflects:
- A slowdown in economic activity over the near-term; and
- Less supply of high quality short-term municipal paper.
The record expansion of the U.S. economy has produced budget surpluses for many
state and local governments, which in turn, has decreased the need for
short-term cash flow financing.
Thank you for investment in the Smith Barney Muni Funds - California Money
Market Portfolio. We look forward to continuing to help you pursue your
financial goals in the future.
Sincerely,
/s/ Joseph P. Deane /s/ Joseph Benevento
Joseph P. Deane Joseph Benevento
Vice President Vice President
October 20, 2000
___________
9 AVERAGE MATURITY REFERS TO THE AVERAGE DATE ON WHICH THE PRINCIPAL IS REQUIRED
TO BE PAID ON THE BOND.
6 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
<TABLE>
<CAPTION>
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SCHEDULE OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alameda Contra Costa Schools Financing
Authority Project VRDO:
$ 12,630,000 A-1 Series B 2.55% $ 12,630,000
4,400,000 A-1 Series F 2.55% 4,400,000
8,935,000 A-1+ Series G 2.50% 8,935,000
Alameda County:
5,000,000 SP-1+ 1997 TRAN 5.00% due 7/2/01 5,025,069
1,200,000 SP-1+ IDR Design Workshops 3.70% VRDO AMT 1,200,000
4,000,000 A-1+ IDR Plastikon Industries 4.60% VRDO 4,000,000
3,850,000 A-1+ IDR Spectrum Label Corp. 4.60% VRDO AMT 3,850,000
Alameda County Coliseum Project VRDO:
15,600,000 A-1+ Series C-1 2.55% AMT 15,600,000
35,800,000 A-1+ Series C-2 4.40% 35,800,000
6,300,000 A-1+ Anaheim MFH Sea Wind Apartments Series C
4.50% VRDO AMT 6,300,000
8,160,000 A-1+ Anaheim Public Finance PART Series 641A 4.52% VRDO 8,160,000
8,600,000 A-1+ Anaheim TECP 3.95% due 12/8/00 8,600,000
5,300,000 VMIG 1* Anaheim UHSD FSA-Insured 4.50% VRDO 5,300,000
5,700,000 A-1 Auburn USD COP Capital Improvement Financing
Project 4.40% VRDO 5,700,000
4,550,000 VMIG 1* Barstow MFH Rimrock Village 4.38% VRDO AMT 4,550,000
13,170,000 SP-1+ Berkeley TRAN 4.75% due 9/20/01 13,280,350
4,500,000 VMIG 1* California Alternative Energy Rock Creek Project
Series 86 4.25% VRDO AMT 4,500,000
California Department of Water:
5,244,000 A-1+ Series I TECP 3.75% due 12/11/00 5,244,000
530,000 A-1 Series J-3 5.40% due 12/1/00 531,439
California EDA Financial Authority VRDO:
7,500,000 A-1+ ISO Corporation Project Series A 4.40% 7,500,000
41,300,000 A-1+ ISO Corporation Project Series C 4.40% 41,300,000
1,400,000 A-1 Roller Bearing Co. Of America 4.95% AMT 1,400,000
California Health Facility Authority:
4,300,000 A-1+ Adventist Health Series A 5.25% VRDO 4,300,000
21,000,000 A-1+ Catholic Health Series B 4.50% VRDO 21,000,000
6,365,000 A-1+ Cedars-Sinai PART 5.02% VRDO 6,365,000
29,600,000 A-1+ Presbyterian Homes MBIA-Insured 4.40% VRDO 29,600,000
200,000 VMIG 1* Scripps Hospital MBIA-Insured Series 98B
4.25% VRDO 200,000
California HFA Revenue Home Mortgage Revenue:
8,715,000 A-1+ MBIA-Insured Series J2 4.45% VRDO 8,715,000
2,510,000 A-1+ PART MBIA-Insured Series M 4.60% VRDO AMT 2,510,000
14,600,000 A-1+ Series C 2.60% VRDO 14,600,000
17,000,000 A-1+ Series I 4.05% due 6/1/01 AMT 17,000,000
20,000,000 A-1+ Series J 4.45% VRDO AMT 20,000,000
5,200,000 A-1+ Series L 4.15% VRDO 5,200,000
20,000,000 A-1+ Series Q 2.60% VRDO AMT 20,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
SMITH BARNEY MUNI FUNDS 7
<PAGE>
<TABLE>
<CAPTION>
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SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 4,120,000 A-1+ California State GO Series SG 91 4.52% $ 4,120,000
4,800,000 A-1+ California Statewide CDA Series PT 1163 4.77% 4,800,000
3,000,000 A-1+ California Statewide CDA Series PT 1202 4.77% 3,000,000
5,370,000 A-1+ Series PA 315 4.52% 5,370,000
3,500,000 VMIG 1* Series PA 464 4.52% 3,500,000
California Statewide Development Authority:
17,000,000 A-1+ Canyon Creek Apartments 4.95% VRDO AMT 17,000,000
1,500,000 P-1* Chevron 4.65% VRDO AMT 1,500,000
2,150,000 A-1 Foxwood Apartments Series J 3.75% VRDO 2,150,000
2,800,000 VMIG 1* Memorial Health Services 4.60% VRDO 2,800,000
5,000,000 VMIG 1* Merlot Series E FSA-Insured 4.75% VRDO 5,000,000
2,900,000 NR++ Mesa Farms Project 4.40% VRDO AMT 2,900,000
1,780,000 VMIG 1* Non Profits Insurance Alliance 4.40% VRDO 1,780,000
10,000,000 A-1+ One Park Place 4.45% VRDO AMT 10,000,000
18,800,000 SP-1+ TRAN 5.25% due 6/29/01 18,930,647
79,200,000 A-1+ California Transit Finance Authority Series 97
FSA-Insured 2.50% VRDO 79,200,000
20,370,000 VMIG 1* California Veterans Affairs Home Purchase Revenue
Series 4.00% due 8/31/01 20,370,000
23,300,000 A-1+ California Wateruse Revenue FSA-Insured 2.50% VRDO 23,300,000
Chula Vista IDR San Diego Gas & Electric:
26,500,000 A-1 Series 92B 4.60% VRDO AMT 26,500,000
10,000,000 A-1 Series 92C 3.75% due 11/7/00 10,000,000
21,000,000 A-1 Series 92C 3.90% due 10/12/00 21,000,000
10,571,000 VMIG 1* Clipper California Tax-Exempt Trust Part
Series 98-99 AMBAC-Insured 5.01% VRDO AMT 10,571,000
19,400,000 A-1+ Contra Costa MFH Regency Park Apartment Series A
4.55% VRDO AMT 19,400,000
3,000,000 VMIG 1* Contra Costa Water Revenue PART FGIC-Insured 3.75%
due 11/1/00 3,000,000
Corona MFH:
2,600,000 A-1+ Country Hills Project 2.55% VRDO 2,600,000
11,000,000 A-1+ Household Bank Proj. Series B 2.60% VRDO 11,000,000
14,500,000 VMIG 1* Dublin San Ramon Services District COP 4.60% VRDO 14,500,000
6,500,000 VMIG 1* East Bay Municipal Utility District PART MBIA-Insured
Series 179 4.82% VRDO 6,500,000
East Bay Municipal Utility District TECP:
24,700,000 A-1+ 4.00% due 10/5/00 24,700,000
11,000,000 A-1+ 4.15% due 11/9/00 11,000,000
9,800,000 VMIG 1* Elsinore Valley Muni Water FGIC-Insured 4.50% VRDO 9,800,000
3,600,000 VMIG 1* Escondido COP Escondido Promenade Series 86 4.40%
VRDO AMT 3,600,000
3,900,000 A-1 Fremont COP Family Resource Center Financing
Project A 2.55% VRDO 3,900,000
6,800,000 A-1+ Fremont Treetops Apartments Series A 4.45% VRDO AMT 6,800,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
SMITH BARNEY MUNI FUNDS 9
<PAGE>
<TABLE>
<CAPTION>
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SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 19,900,000 A-1+ Fresno California Sewer Revenue FGIC-Insured
4.40% VRDO $ 19,900,000
9,000,000 MIG 1* Fresno California TRAN Series 2000 4.20% due 7/2/01 9,049,072
21,130,000 VMIG 1* Irvine Public Facilities Capital Improvement Series 85
4.40% VRDO 21,130,000
27,200,000 SP-1+ Kern County California TRAN 5.00% due 7/3/01 27,344,733
3,650,000 A-1 Lancaster MFA (Willows Project) Series A 4.40% VRDO 3,650,000
6,950,000 A-1+ Livermore Diablo Vista Apartments 4.85% VRDO 6,950,000
5,400,000 VMIG 1* Livermore Portola Meadows Apartments 4.40%
VRDO AMT 5,400,000
14,000,000 A-1+ Long Beach California Health Facility Revenue
(Memorial Health Services) Series 1991 4.50% VRDO 14,000,000
Los Angeles California USD TRAN PART:
49,995,000 A-1 4.03% due 6/29/01 49,995,000
9,635,000 A-1+ MBIA-Insured 4.20% due 8/16/01 9,635,000
Los Angeles Capital Asset Leasing Corp.:
11,000,000 A-1+ 3.90% due 10/5/00 11,000,000
8,440,000 A-1+ 4.00% due 11/8/00 8,440,000
1,900,000 NR++ Los Angeles County IDA Tulip Corp Series A 4.45%
VRDO AMT 1,900,000
9,995,000 VMIG 1* Los Angeles County Metropolitan Transportation
Authority AMBAC-Insured 5.02% VRDO 9,995,000
10,700,000 A-1+ Los Angeles County MFH Crescent Gardens 4.50% VRDO 10,700,000
Los Angeles County TRANS:
27,535,000 SP-1+ Series A 5.00% due 6/29/01 27,701,194
2,270,000 NR++ Series B 4.00% due 9/1/01 2,294,975
Los Angeles Department of Water and Power:
5,000,000 VMIG 1* 3.70% due 10/11/00 5,000,000
2,000,000 A-1+ 3.85% due 10/12/00 2,000,000
20,000,000 A-1+ 3.75% due 12/19/00 20,000,000
7,500,000 VMIG 1* Series 276 5.02% VRDO 7,500,000
20,000,000 VMIG 1* Series 370 5.02% VRDO 20,000,000
21,500,000 VMIG 1* Series A 4.20% VRDO 21,500,000
50,500,000 VMIG 1* Series B 4.45% VRDO 50,500,000
8,400,000 VMIG 1* Series C 4.45% VRDO 8,400,000
11,700,000 VMIG 1* Series D 4.45% VRDO 11,700,000
60,000,000 VMIG 1* Series E 4.45% VRDO 60,000,000
10,000,000 VMIG 1* Series F 4.45% VRDO 10,000,000
Los Angeles Metropolitan Transit Authority:
33,900,000 A-1+ 3.60% due 10/6/00 33,900,000
38,600,000 A-1+ 3.70% due 11/7/00 38,600,000
Los Angeles MFH VRDO:
10,000,000 A-1+ Baldwin Hills 4.25% 10,000,000
2,400,000 A-1+ Fountain Park 4.45% AMT 2,400,000
9,500,000 A-1+ Grand Promenade 4.30% 9,500,000
3,650,000 A-1+ Malibu Meadows Project Series A 4.30% 3,650,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
<TABLE>
<CAPTION>
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SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 6,310,000 A-1+ Los Angeles PART FGIC-Insured 4.52% VRDO $ 6,310,000
8,750,000 A-1+ Los Angeles Sanitation District PART 4.52% VRDO 8,750,000
9,997,500 VMIG 1* Los Angeles Wastewater PART FGIC-Insured Series 318
5.02% VRDO 9,997,500
Los Angeles Wastewater TECP:
7,750,000 A-1+ 3.90% due 12/7/00 7,750,000
7,400,000 A-1+ 3.90% due 12/8/00 7,400,000
32,400,000 A-1+ 3.90% due 12/8/00 32,400,000
Modesto Irrigation Series 96:
3,000,000 A-1 3.70% due 10/10/00 3,000,000
1,000,000 A-1 3.75% due 11/7/00 1,000,000
7,800,000 A-1 3.90% due 11/10/00 7,800,000
5,500,000 VMIG 1* Modesto MFH Shadowbrook Project Series A
4.45% VRDO 5,500,000
3,350,000 NR++ Monterey MFH Slautterback Project 4.45% VRDO AMT 3,350,000
16,500,000 A-1+ Mountain View MFH Mariposa Village FGIC-Insured
4.40% VRDO 16,500,000
14,780,000 A-1+ Oakland COP Capital Equipment Project J 4.40% VRDO 14,780,000
13,200,000 A-1+ Oakland Joint Power Finance Authority Lease Bonds
FSA-Insured Series 98 A 1 4.35% VRDO 13,200,000
3,000,000 VMIG 1* Oakland Merlot PART Series M AMBAC-Insured
4.75% VRDO 3,000,000
Orange County Apartment Development Revenue:
5,275,000 VMIG 1* Alicia Series A 4.60% VRDO AMT 5,275,000
10,300,000 VMIG 1* Foothill Oaks 4.45% VRDO AMT 10,300,000
9,900,000 VMIG 1* Hidden Hills Series C 4.00% VRDO 9,900,000
20,000,000 A-1+ Lake Joint Venture Series 4.30% VRDO 20,000,000
2,000,000 A-1+ Lantern Pines 4.30% VRDO 2,000,000
10,000,000 A-1+ Oasis Martinique Project 4.35% VRDO 10,000,000
10,000,000 VMIG 1* Riverbend Series 4.30% VRDO 10,000,000
2,670,000 A-1+ Trabuco Woods Series 98J 4.30% 2,670,000
7,000,000 A-1+ WLCO Series 98G1 4.30% 7,000,000
1,700,000 A-1+ Wood Canyon Villas 4.55% VRDO AMT 1,700,000
4,000,000 A-1 Orange County California Improvement Board
Assessment District 5.25% VRDO 4,000,000
Orange County California Sanitation Districts:
100,000 A-1+ Series 90-92A 4.75% VRDO 100,000
7,450,000 A-1+ Series 90-92C FGIC-Insured 5.55% VRDO 7,450,000
26,000,000 A-1+ Orange County Local Transportation Authority TECP
3.65% due 11/8/00 26,000,000
12,470,000 VMIG 1* Palo Alto USD Series R PART 4.75% VRDO 12,470,000
4,500,000 VMIG 1* Pasadena COP Rose Bowl Improvement Project
Series 96 4.25% AMT 4,500,000
19,675,000 VMIG 1* Port of Oakland Munitop 2000-5 PART FGIC-Insured
4.00% due 10/26/00 19,675,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
SMITH BARNEY MUNI FUNDS 11
<PAGE>
<TABLE>
<CAPTION>
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SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 6,000,000 A-1+ Port of Oakland Robin Class C PART FGIC-Insured
Series 5 5.12% VRDO AMT $ 6,000,000
25,450,000 A-1+ Port of Oakland TECP 4.00% due 12/8/00 AMT 25,450,000
Puerto Rico Commonwealth Governmental Bond
PART VRDO:
4,655,000 A-1+ 4.57% FSA-Insured 4,655,000
4,000,000 A-1+ 4.57% MBIA-Insured 4,000,000
15,610,000 VMIG 1* 4.75% MBIA-Insued 15,610,000
11,095,000 VMIG 1* 4.82% FSA-Insured 11,095,000
6,540,000 VMIG 1* 4.82% MBIA-Insured 6,540,000
2,625,000 VMIG 1* 5.02% MBIA-Insured 2,625,000
12,495,000 A-1 Puerto Rico Electric Revenue Municipal Securities Trust
PART 4.00% due 9/11/01 12,495,000
Puerto Rico Governmental Development Bond Bank TECP:
10,000,000 A-1+ 3.80% due 10/13/00 10,000,000
9,600,000 A-1+ 3.80% due 10/17/00 9,600,000
3,719,000 A-1+ 3.95% due 12/14/00 3,719,000
11,997,000 A-1+ 3.95% due 1/19/01 11,997,000
1,073,000 A-1+ 3.95% due 1/22/01 1,073,000
20,000,000 A-1+ 4.00% due 1/31/01 20,000,000
20,000,000 A-1+ 3.75% due 2/28/01 20,000,000
1,038,000 A-1+ 3.85% due 2/28/01 1,038,000
8,050,000 A-1+ 4.35% VRDO 8,050,000
Puerto Rico Highway Transportation Authority VRDO:
11,595,000 A-1+ 3.90% PART MBIA-Insured 11,595,000
600,000 A-1+ 4.50% AMBAC-Insured 600,000
3,500,000 VMIG 1* 4.75% PART AMBAC-Insued 3,500,000
33,630,000 AAA Puerto Rico Independent Medical and Environmental
PCR Abbot Laboratories 4.00% due 3/1/01 33,630,000
10,685,000 VMIG 1* Puerto Rico Infrastructure 4.50% due 10/1/01 10,763,642
5,860,000 A-1+ Puerto Rico Infrastructure PART AMBAC-Insured
4.57% VRDO 5,860,000
Puerto Rico Public Finance Corp. PART AMBAC-Insured:
7,300,000 A-1 4.57% VRDO 7,300,000
11,945,000 VMIG 1* 5.22% VRDO 11,945,000
Puerto Rico Public Muni Finance Agency PART
FSA-Insured:
4,850,000 A-1+ 4.57% VRDO 4,850,000
3,335,000 VMIG 1* 4.82% VRDO 3,335,000
8,750,000 A-1+ Rancho Water District PART 4.52% VRDO 8,750,000
2,400,000 A-1 Redwood City Hall 4.40% VRDO 2,400,000
Regents University of California Series A TECP:
1,000,000 A-1+ 3.70% due 10/12/00 1,000,000
8,000,000 A-1+ 3.80% due 12/11/00 8,000,000
Riverside County IDA:
3,900,000 A-1+ Aluminium Body Corp. Project 4.40% VRDO AMT 3,900,000
1,900,000 VMIG 1* Rockwin Corp. Series II 4.70% VRDO AMT 1,900,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
<TABLE>
<CAPTION>
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SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Riverside Country MFH VRDO:
$ 5,600,000 VMIG 1* Amanda Park Project Series A 4.95% AMT $ 5,600,000
2,500,000 A-1 Countrywood Apartments Series D 4.36% 2,500,000
8,940,000 A-1+ Woodcreek - Series D 4.85% 8,940,000
4,300,000 A-1+ Rohnert Crossbrook Apartments 4.85% VRDO 4,300,000
6,500,000 VMIG 1* Sacramento Airport PART FGIC-Insured 5.13% VRDO 6,500,000
6,800,000 A-1+ Sacramento Ashford 4.30% VRDO 6,800,000
5,000,000 A-1 Sacramento Cheasapeake 4.34% VRDO AMT 5,000,000
2,000,000 A-1 Sacramento County TRAN 99 Series 5.25% due 10/4/01 2,029,162
5,000,000 A-1+ Sacramento Sanitation 4.50% VRDO 5,000,000
63,800,000 A-1+ San Bernardino County COP Medical Center Project
4.35% VRDO 63,800,000
16,475,000 A-1+ San Bernardino County MBIA-Insured 4.60% VRDO 16,475,000
San Bernardino County MFH VRDO:
3,300,000 A-1+ Parkview Series A 4.30% 3,300,000
5,700,000 NR++ Sycamore Terrace 4.30% 5,700,000
45,000,000 SP-1+ San Bernardino TRANS 5.50% due 9/28/01 45,680,371
San Diego IDR Gas and Electric TECP:
3,400,000 A-1 Series A 3.70% due 10/11/00 3,400,000
5,000,000 A-1 Series A 3.85% due 11/10/00 5,000,000
10,200,000 A-1 Series A 4.00% due 12/8/00 10,200,000
San Diego School District TRAN:
54,380,000 SP-1+ Series B 5.50% due 8/3/01 54,900,309
24,845,000 SP-1+ Series B 6.00% due 10/4/01 25,312,883
37,475,000 SP-1+ San Diego TAN Series A 5.25% due 10/4/00 37,950,648
San Diego Transportation:
10,200,000 VMIG 1* 3.60% due 10/11/00 10,200,000
7,500,000 A-1+ Series B 3.85% due 10/11/00 7,500,000
San Diego Unified Port District TECP:
8,965,000 A-1+ 3.70% due 10/2/00 8,965,000
4,000,000 A-1+ 3.85% due 10/5/00 4,000,000
5,650,000 A-1+ 3.80% due 11/8/00 5,650,000
4,820,000 A-1+ 3.90% due 11/20/00 4,820,000
10,000,000 VMIG 1* San Diego Water Project PART FGIC-Insured
5.13% VRDO 10,000,000
San Dimas California Redevelopment Agency:
1,300,000 A-1+ Diversified Shopping Center 4.30% VRDO 1,300,000
3,000,000 NR++ San Dimas Community Center 4.15% VRDO 3,000,000
San Francisco Airport TECP:
41,340,000 VMIG 1* 4.15% due 10/17/00 41,340,000
12,500,000 A-1+ 3.65% due 11/7/00 12,500,000
2,630,000 A-1+ 3.80% due 11/15/00 2,630,000
9,065,000 A-1+ 4.00% due 11/15/00 9,065,000
4,500,000 VMIG 1* San Francisco Bay Area Rapid Transportation TECP
3.65% due 11/7/00 4,500,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
SMITH BARNEY MUNI FUNDS 13
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
San Francisco MFH VRDO:
$ 3,000,000 VMIG 1* 3rd & Mission Series C 4.85% AMT $ 3,000,000
25,000,000 A-1+ Bayside Village Series 85B 3.45% 25,000,000
16,800,000 A-1+ City Heights 4.95% 16,800,000
17,000,000 A-1+ Post Street Towers 4.85% 17,000,000
10,000,000 VMIG 1* St. Francis Housing Series 89A 3.35% 10,000,000
4,722,500 VMIG 1* San Francisco Sewer Revenue FGIC-Insured 4.82% VRDO 4,722,500
San Joaquin TRAN TECP:
13,700,000 A-1+ 3.75% due 12/18/00 13,700,000
57,585,000 MIG 1* 4.75% due 10/1/01 58,167,183
2,532,418 A-1+ San Jose Airport TECP 3.75% due 12/13/00 2,532,418
San Jose MFH:
3,000,000 VMIG 1* Almaden Lake Village Apartment Project 4.38%
VRDO AMT 3,000,000
2,000,000 VMIG 1* Somerset Park 3.55% VRDO AMT 2,000,000
San Jose - Santa Clara California Water Authority:
6,690,000 A-1+ PART FGIC-Insured 4.52% VRDO 6,690,000
5,900,000 A-1+ Santa Clara County MFH Benton Park Apartments
4.30% VRDO 5,900,000
24,000,000 SP-1+ San Jose USD 4.25% due 10/26/00 24,013,240
7,900,000 A-1+ Santa Clara County MFH Gove Gardens 4.30% VRDO 7,900,000
10,000,000 SP-1+ Santa Cruz County TRAN 4.50% due 10/6/00 10,001,047
12,870,000 A-1+ Santa Margarita PART MBIA-Insured 4.52% VRDO 12,870,000
Simi Valley MFH VRDO:
6,245,000 VMIG 1* Creekside Village Apartments Series A 4.30% 6,245,000
10,000,000 A-1 Lincoln Wood Ranch 2.55% 10,000,000
7,800,000 VMIG 1* Shadowridge 4.95% 7,800,000
South East Recovery Facilities Authority VRDO:
23,979,000 A-1+ Series A 4.50% 23,979,000
7,300,000 A-1+ Series B 4.55% AMT 7,300,000
Southern California Metropolitan Water District VRDO:
4,750,000 A-1+ PART 4.52% 4,750,000
7,100,000 A-1+ Series A 4.40% 7,100,000
7,500,000 A-1+ Series B 4.00% 7,500,000
9,500,000 A-1+ Series C 5.15% 9,500,000
Southern California Metropolitan Water District
Series B TECP:
5,000,000 A-1+ 3.70% due 12/7/00 5,000,000
17,800,000 A-1+ 4.00% due 12/7/00 17,800,000
8,000,000 A-1+ 4.05% due 12/7/00 8,000,000
27,900,000 A-1+ 3.70% due 12/14/00 27,900,000
7,800,000 A-1+ 3.75% due 12/14/00 7,800,000
2,000,000 A-1+ 3.95% due 12/14/00 2,000,000
7,000,000 A-1+ 4.00% due 12/14/00 7,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Southern California Public Power Authority Project:
$ 3,000,000 AAA FSA-Insured 5.00% due 7/1/01 $ 3,023,889
32,800,000 A-1+ South Transmission FSA-Insured 4.40% VRDO 32,800,000
5,800,000 A-1+ Torrence Little Co. of Mary Hospital 4.40% VRDO 5,800,000
6,000,000 A-1+ Union City MFH 4.30% VRDO 6,000,000
3,175,000 AA University California Series L 6.00% due 9/1/01 3,234,167
6,000,000 A-1+ Upland California Mountain Springs Series 98A
4.30% VRDO 6,000,000
2,950,000 A-1+ Upland California MFH Northwoods Project A
4.45% VRDO 2,950,000
3,900,000 A-1+ Vacaville Apartments Series 99 4.30% VRDO AMT 3,900,000
5,150,000 A-1+ Vallejo MFH Hillside Terrace Apartments 4.45%
VRDO AMT 5,150,000
Vallejo USD TRAN:
10,000,000 SP-1+ 4.00% due 10/13/00 10,001,890
2,710,000 VMIG 1* 4.30% VRDO 2,710,000
15,500,000 A-1+ Ventura County TECP 3.85% due 10/6/00 15,500,000
14,230,000 A-1 Veteran Affairs Municipal Securities Trust Series 1999-73
PART AMBAC-Insured 4.10% due 10/13/00 14,230,000
4,300,000 NR++ Walnut Creekside 3.45% VRDO 4,300,000
10,000,000 A-1+ West Basin Muni Water District 4.25% VRDO 10,000,000
9,275,000 A-1+ Westminster Redevelopment Agency
AMBAC-Insured 4.40% VRDO 9,275,000
-----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $3,242,215,353**) $3,242,215,353
===========================================================================================================
</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.
++ 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.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 16 and 17 for definitions of ratings and certain security
descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
SMITH BARNEY MUNI FUNDS 15
<PAGE>
--------------------------------------------------------------------------------
BOND RATINGS (UNAUDITED)
--------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below.
STANDARD & POOR'S RATINGS SERVICE ("STANDARD & POOR'S") -- "AA" ratings 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.
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") -- Numerical modifiers 1, 2, and 3
may be applied to each "Aa" rating, where 1 is the highest and 3 the lowest
rating within its generic category.
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.
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.
--------------------------------------------------------------------------------
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.
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.
NR -- Indicates that the bond is not rated by either Standard & Poor's or
Moody's.
16 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
--------------------------------------------------------------------------------
SECURITY DESCRIPTIONS (UNAUDITED)
--------------------------------------------------------------------------------
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
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
VRDO -- Variable Rate Demand Obligation
VRWE -- Variable Rate Wednesday Demand
SMITH BARNEY MUNI FUNDS 17
<PAGE>
------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) SEPTEMBER 30, 2000
------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost $ 3,242,215,353
Cash 91,224
Interest receivable 19,927,363
------------------------------------------------------------------------------
TOTAL ASSETS 3,262,233,940
------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 82,317,793
Dividends payable 5,697,352
Management fees payable 1,413,543
Distribution fees payable 98,291
Deferred compensation payable 8,062
Accrued expenses 220,735
------------------------------------------------------------------------------
TOTAL LIABILITIES 89,755,776
------------------------------------------------------------------------------
TOTAL NET ASSETS $ 3,172,478,164
------------------------------------------------------------------------------
NET ASSETS:
Par value of shares of beneficial interest $ 3,172,637
Capital paid in excess of par value 3,169,371,177
Accumulated net realized loss from security transactions (65,650)
------------------------------------------------------------------------------
TOTAL NET ASSETS $ 3,172,478,164
------------------------------------------------------------------------------
SHARES OUTSTANDING:
Class A 3,172,634,457
------------------------------------------------------------------------------
Class Y 2,538
------------------------------------------------------------------------------
NET ASSET VALUE, PER SHARE:
Class A $1.00
------------------------------------------------------------------------------
Class Y $1.00
------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
18 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
INVESTMENT INCOME:
Interest $56,624,460
------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 7,516,071
Distribution fees (Note 4) 1,503,213
Shareholder and system servicing fees 264,668
Registration fees 168,600
Custody 67,018
Audit and legal 19,320
Shareholder communications 18,700
Trustees' fees 6,072
Other 23,551
------------------------------------------------------------------------------
TOTAL EXPENSES 9,587,213
------------------------------------------------------------------------------
NET INVESTMENT INCOME 47,037,247
------------------------------------------------------------------------------
NET REALIZED LOSS FROM SECURITY TRANSACTIONS (14,692)
------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $47,022,555
==============================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
SMITH BARNEY MUNI FUNDS 19
<PAGE>
------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND THE YEAR ENDED MARCH 31, 2000
SEPTEMBER 30 MARCH 31
------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 47,037,247 $ 57,238,402
Net realized loss (14,692) (49,952)
------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS 47,022,555 57,188,450
------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM (NOTE 3):
Net investment income (47,037,247) (57,238,402)
------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (47,037,247) (57,238,402)
------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 7,163,265,028 11,645,496,175
Net asset value of shares issued for
reinvestment of dividends 43,883,130 54,034,083
Cost of shares reacquired (7,129,974,019) (10,740,660,084)
------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 77,174,139 958,870,174
------------------------------------------------------------------------------
INCREASE IN NET ASSETS 77,159,447 958,820,222
NET ASSETS:
Beginning of period 3,095,318,717 2,136,498,495
------------------------------------------------------------------------------
END OF PERIOD $ 3,172,478,164 $ 3,095,318,717
------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
20 2000 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 21
<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") which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), 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.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Fund's transfer agent and PFPC Global Fund Services ("PFPC") became the
Fund's sub-transfer agent. CFTC receives account fees and asset-based fees that
vary according to the size and type of account. PFPC is responsible for
shareholder recordkeeping and financial processing for all shareholder accounts
and is paid by CFTC. During the six months ended September 30, 2000, the
Portfolio paid transfer agent fees of $223,267 to CFTC.
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, became the Fund's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Fund's portfolio agency
transactions. Certain other broker-dealers continue to sell Portfolio shares to
the public as members 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.
22 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
5. CAPITAL LOSS CARRYFORWARDS
At March 31, 2000, the Portfolio had, for Federal income tax purposes, a capital
loss carryforward of approximately $50,600 available to offset future capital
gains. 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. The
amount and expiration of the carryforwards are indicated below. Expiration
occurs on March 31, of the year indicated:
2004 2008
================================================================================
Carryforward Amounts $1,000 $49,600
================================================================================
6. SHARES OF BENEFICIAL INTEREST
At September 30, 2000, the Fund had an unlimited amount of shares of beneficial
interest authorized with a par value of $0.001 per share.
At September 30, 2000, total paid-in capital amounted to the following for each
class:
CLASS A CLASS Y
================================================================================
Total Paid-in Capital $3,172,541,276 $2,538
================================================================================
Transactions in shares of the Portfolio were as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
================================================================================
CLASS A
Shares sold 7,163,265,028 11,645,496,175
Shares issued on reinvestment 43,883,090 54,034,021
Shares reacquired (7,129,974,019) (10,740,660,084)
--------------------------------------------------------------------------------
Net Increase 77,174,099 958,870,112
================================================================================
CLASS Y
Shares sold -- --
Shares issued on reinvestment 40 62
Shares reacquired -- --
--------------------------------------------------------------------------------
Net Increase 40 62
================================================================================
SMITH BARNEY MUNI FUNDS 23
<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 2000(1) 2000 1999 1998 1997 1996
===============================================================================================================
<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) 0.016 0.025 0.026 0.029 0.028 0.032
Dividends from
net investment income (0.016) (0.025) (0.026) (0.029) (0.028) (0.032)
---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
---------------------------------------------------------------------------------------------------------------
TOTAL RETURN 1.59%++ 2.49% 2.61% 2.98% 2.79% 3.22%
---------------------------------------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (MILLIONS) $3,172 $3,095 $2,136 $1,789 $1,400 $1,346
---------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (2)(3) 0.66%+ 0.66% 0.64% 0.63% 0.67% 0.64%
Net investment income 3.13+ 2.46 2.55 2.92 2.75 3.15
===============================================================================================================
<CAPTION>
CLASS Y SHARES 2000(1) 2000 1999 1998 1997(4)
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
---------------------------------------------------------------------------------------------------------------
Net investment income 0.016 0.025 0.026 0.031 0.020
Dividends from
net investment income (0.016) (0.025) (0.026) (0.031) (0.020)
---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
---------------------------------------------------------------------------------------------------------------
TOTAL RETURN 1.63%++ 2.57% 2.60% 3.09% 2.04%++
---------------------------------------------------------------------------------------------------------------
NET ASSETS,
END OF PERIOD (000'S) $3 $2 $2 $3,413 $7,405
---------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (5) 0.55%+ 0.55% 0.51% 0.54% 0.56%+
Net investment income 3.22+ 2.58 2.68 3.01 2.77+
===============================================================================================================
</TABLE>
(1) For the six months ended September 30, 2000 (unaudited).
(2) The manager waived a portion of its fees for the year ended March 31, 1996.
If such fees were not waived, the effect on net investment income and
expense ratios would have been as follows:
Per Share Decreases Expense Ratios
to Net Investment Income Without Fee Waivers
------------------------ -------------------
1996 1996
---- ----
Class A $0.000* 0.65%
(3) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets will not exceed 0.80% for Class A shares.
(4) For the period July 19, 1996 (inception date) to March 31, 1997.
(5) As a result of a voluntary expense limitation, the ratio of expenses to
average net assets will not exceed 0.70% for Class Y shares.
* 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.
24 2000 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
[LOGO] SALOMON SMITH BARNEY
---------------------
A member of citigroup[ICON]
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
Salomon Smith Barney Inc.
CUSTODIAN
PFPC Trust Company
TRANSFER AGENT
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
SUB-TRANSFER AGENT
PFPC Global Fund Services
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, but it may also be
used as sales literature when preceded or accompanied by the current Prospectus,
which gives details about charges, expenses, investment objectives and operating
policies of the Portfolio. If used as sales material after December 31, 2000,
this report must be accompanied by performance information for the most recently
completed calendar quarter.
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
FD 0805 11/00
