Diversification --
the Essence of the Concert Social Awareness Fund
[PHOTO OMITTED]
Concert Social
Awareness Fund
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[GRAPHIC OMITTED] SEMI - ANNUAL REPORT
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July 31, 1999
[LOGO] Smith Barney
Mutual Funds
<PAGE>
Concert Social
Awareness Fund
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The Concert Social Awareness Fund ("Fund") seeks high total return consisting of
capital appreciation and current income by investing in a combination of equity
and fixed-income securities of issuers who demonstrate a positive awareness of
their impact on society.
Concert Social Awareness Fund
Average Annual Total Returns
July 31, 1999
Without Sales Charge(1)
----------------------------------------------
Class A Class B Class L(2)
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Six Months+ 2.38% 1.99% 1.99%
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One-Year 18.19 17.29 17.34
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Five-Year 17.97 17.08 17.14
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Ten-Year N/A 12.87 N/A
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Since Inception++ 16.13 12.54 14.72
================================================================================
With Sales Charge(3)
----------------------------------------------
Class A Class B Class L(2)
================================================================================
Six Months+ (2.76)% (2.98)% 0.00%
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One-Year 12.31 12.29 15.18
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Five-Year 16.76 16.98 16.91
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Ten-Year N/A 12.87 N/A
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Since Inception++ 15.25 12.54 14.53
================================================================================
(1) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are re deemed less than one year from purchase and
declines 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.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception dates for Class A, B and L shares are November 6, 1992, February
2, 1987 and May 5, 1993, respectively.
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FUND HIGHLIGHT
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We cautioned in our last annual report letter that we thought that 1999 would
prove to be a satisfactory year from a performance standpoint, but that it was
unlikely to duplicate the very positive performance of 1998. So far our
expectations have turned out to be true. The upturn in interest rates has, for
now, taken the valuation issue out of the stock price equation. The burden in
determining value in today's stock market has fallen entirely on the earnings
side of the formula. In fact, in recent weeks, interest rates have actually
caused valuation contraction in the stocks of some of the best long-term growth
companies. We view these developments as interim in nature and therefore have
not materially altered our core stock investments. However, we do believe that a
valuation misalignment between stocks and bonds has developed, favoring bonds.
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NASDAQ SYMBOL
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Class A SSIAX
Class B SESIX
Class L SESLX
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WHAT'S INSIDE
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Shareholder Letter ........................................................ 1
Historical Performance .................................................... 7
Concert Social Awareness Fund
at a Glance ............................................................... 10
Schedule of Investments ................................................... 11
Statement of Assets and Liabilities ....................................... 16
Statement of Operations ................................................... 17
Statements of Changes in Net Assets ....................................... 18
Notes to Financial Statements ............................................. 19
Financial Highlights ...................................................... 24
Additional Shareholder Information ........................................ 27
<PAGE>
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Shareholder Letter
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[PHOTO OMITTED] [PHOTO OMITTED]
HEATH B. MCLENDON ELLEN S. CAMMER
Chairman Vice President and Investment Officer
[PHOTO OMITTED]
ROBERT J. BRADY, CFA
Vice President and Investment Officer
Dear Shareholder:
We are pleased to provide the semi-annual report for the Concert Social
Awareness Fund ("Fund") for the period ended July 31, 1999. We hope you find
this report to be useful and informative. In this report, we summarize the
period's prevailing economic and market conditions and outline our portfolio
strategy. A detailed summary of performance and current holdings can be found in
the appropriate sections that follow. Also, an article that provides more
details regarding the Fund's investment process entitled "Issues That Count"
appears on page five of this report.
Investment Objective and Performance Update
As previously noted, the Concert Social Awareness Fund seeks to provide high
total return made up of current income and capital appreciation, through a
carefully determined balance of stocks and bonds with an emphasis on issuers
who, in the opinion of the Fund's portfolio managers, demonstrate a positive
awareness of their impact on society. Under normal market conditions, the Fund
will have 75% of its assets invested in stocks and 25% in bonds. The Fund's
investment mix may vary from time to time (i.e., +/- 10 percentage points) to
reflect current market conditions.
The Concert Social Awareness Fund returned 2.38% for Class A shares without
sales charges for the six months ended July 31, 1999. In comparison, the S&P 500
Index* returned 4.50% and the Lehman Brothers Government/Corporate Bond Index**
returned a negative 3.24% over the same period. Moreover, the Fund
underperformed its Lipper Inc. peer group return of 2.66% for the same period.
(Lipper Inc. is a major fund-tracking organization.)
Stock Market Update and Portfolio Changes
The first half of the Fund's fiscal year saw higher stock market volatility with
the price change for the benchmark Standard & Poor 500 stock index averaging
plus or minus 3.5% to 4.0% per month. Unfortunately, those movements all but
washed themselves out, leaving the cumulative six-month price change at only
3.8%. (When dividends are included, the S&P 500's total return was about 4.4%.)
When you break down the S&P 500 Index into its growth vs. value components,
performance between the two investment styles diverged materially.
That difference reflected one of the most violent sector rotations during the
month of April that we can recall throughout our entire Wall Street careers. The
stocks of companies particularly sensitive to acceleration in economic activity
and/or an upturn in commodity prices came back into favor with a vengeance. Over
that reporting period for instance, while some well regarded growth stocks in
the healthcare and consumer products areas were declining 5% to 15% in price,
some leading heavy industry company stocks in
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* The S&P 500 Index is a capitalization-weighted measure of 500 widely held
common stocks.
** The Lehman Brothers Government/Corporate Bond Index is a combination of
publicly issued intermediate- and long-term U.S. government bonds and
corporate bonds.
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Concert Social Awareness Fund 1
<PAGE>
the aluminum, chemical, paper, steel and machinery areas were registering price
gains of about 30% to 50%. (Please note that in many of those latter cases there
has not been much follow through since April.) We suspect that as much as
anything else, these price moves can be attributable to diminishing investor
fears that less-developed countries were going to lead the global economy into a
deflationary spiral. Once those concerns lessened, then the outlook shifted back
towards economic growth and some commodity price rebounds.
We find some support for this view in the fact that a number of indicators of
foreign stock performance mimicked, with remarkable similarity, our domestic
cyclical stock performance during April. We were able to capture some of the
better performance from the cyclical side of the stock market, referenced
earlier, through a number of our stock positions, but our sector weightings were
still skewed in the opposite direction.
The largest positive contributions to our first half performance came from such
investments as International Business Machines, US Freightways Corp., Enron,
Phillips NV, Amgen, BP Amoco, Alcoa, Williams Cos., Dollar General and Tribune.
(Please note that all of the Fund's holdings are as of July 31, 1999 and are
subject to change.) And while we did not materially change the Fund's portfolio
emphasis during this time, we believe that our focus on a "best of class"
approach in our investment process allowed us to capture a share of the market
shift to more economically or commodity sensitive opportunities.
We cautioned in our last annual report letter that we thought that 1999 would
prove to be a satisfactory year from a performance standpoint, but that it was
unlikely to duplicate the very positive performance of 1998. So far our
expectations have turned out to be true. The upturn in interest rates has, for
now, taken the valuation issue out of the stock price equation. The burden in
determining value in today's stock market has fallen entirely on the earnings
side of the formula. In fact, in recent weeks, interest rates have actually
caused valuation contraction in the stocks of some of the best long-term growth
companies. We view these developments as interim in nature and therefore have
not materially altered our core stock investments. However, we do believe that a
valuation misalignment between stocks and bonds has developed, favoring bonds.
Accordingly, we have shifted some Fund assets from stocks to bonds, bringing our
stock allocation at the end of July 1999 to about 70%, below our normal 75%
guideline, which reflects our more defensive posture. We anticipate that we will
have the opportunity to reverse that decision over the next several quarters if
market conditions warrant.
Bond Market Update and Portfolio Changes
1999 so far has been a tough year for the bond market. The first three months
were spent reversing last year's flight to quality that had pushed U.S. Treasury
yields to historic lows last year as economic data continued to come in more
buoyant than previous expectations.
Federal Reserve Board ("Fed") focus centered on the continued strength of the
U.S. economy, an export led recovery in Asia and decade low unemployment and
whether these factors would cause fears of building inflationary imbalances to
rise. Since then, the markets began preparing for the Fed to raise interest
rates. And in fact, after a May announcement by the Fed that it was shifting to
a tightening bias, the quarter culminated with a 25 basis point rate hike by the
Federal Open Market Committee ("FOMC").
Many of our shareholders may now be asking, "Where are the signs of inflation?"
What frightened the bond market was a large increase in the April Consumer Price
Index ("CPI") reflecting the rise in oil prices. While the rise has not been
confirmed by the subsequent month's data, it was the first large reading in
years, causing investor fears that inflation was once again stirring.
The period covered by this report began with February, which in fact was the
worst month for U.S.Treasury market total return performance since the 1980s.
During the reporting period, long-term bond yields
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2 1999 Semi-Annual Report to Shareholders
<PAGE>
rose about 92 basis points, reversing the move of the prior six months. Almost
all of the major fixed income indexes posted negative returns. The total return
for the long end of the market as evidenced by the Lehman Brothers Long Treasury
Index was a negative 7.94%. (The Lehman Brothers Long Treasury Bond Index is a
weighted average of all Treasury securities with maturities of 10 years and
longer.) Intermediate bonds faired substantially better, with the Lehman
Intermediate Treasury Index++ down just under 1% to a negative 0.90%.
Early in the period, both mortgage-backed securities and corporate bonds
performed well. First, through most of the first half of 1999, mortgage-backed
securities were one of the best performing asset classes in the bond market
although recently these securities have also come under pressure. The mortgage
weighting began the period at a high of 22% of the fixed income holdings, and by
the end of July was reduced to 14%.
Our strategy involves looking for opportunities to add value through changing
sector weightings and this was a period where there were some meaningful shifts
in the Fund's fixed income weighting that we believe allowed us to navigate a
treacherous market with only minor negative consequences.
Shifts to our sector weighting were implemented through cash flow from both
changes in our stock/bond allocation that on the whole moved assets to the bond
side of the equation as well as through positive net cash flow from ongoing
investments. Deploying additional assets to the Fund's bond portion has not yet
added value, yet we are confident that it ultimately will, based on our analysis
of current market conditions. In our view, we have been fortunate to be able to
add bonds at levels we view as attractive over the coming period. In addition,
we still believe that the relative value relationships between the stock and
bond markets should support our recent portfolio decisions.
Moreover, we also looked for year-end conditions to be worsened by a memory
effect in the fixed income markets of last year's market meltdown compounded by
an anticipated increase in the supply of corporate bonds to pressure that
market. In our opinion, the surprise has not been so much that these events have
happened but that they happened somewhat earlier in the year than we had
expected.
We have certainly seen the markets pressured by a rush by corporate treasurers
to issue debt earlier in the year before Y2K approaches and in front of whatever
additional tightening by the Fed that may occur. Our corporate bond weighting
shrank from 35% to 30% over the period. Comfort in the bond market with dealers
and buyers alike (including us) has been with large, liquid issues that have
come to market mainly financing merger related activity. These mega deals have
held their value best in thinly traded markets.
Over the period, we sold Computer Associates, Qwest Communications, Pitney
Bowes, Norfolk and Southern to name a few, not because we did not favor the
names, but because they had performed well for the Fund and we looked to
re-deploy assets into U.S. Treasuries and shorter maturity corporate issues. At
the same time some new names were added, all in the three year and under
maturity arena, including names such as Bank One, Sun Microsystems, Wal-Mart,
and Cable and Wireless.+
U.S. Treasuries over the period increased from 39% to 50% of the holdings. We
continue to believe that they will be the best performing sector as we look out
at the second half of the year, as fears about Y2K make liquid U.S. Treasuries
more attractive.
The Concert Social Awareness Fund's bond portion closes out the period with an
ever so slight defensive duration posture. As noted, we had looked for a
positive year for bond investors as we began the year. The
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++ The Lehman Intermediate Treasury Index is a broad measure of performance
of intermediate (five to ten years) government and corporate fixed-rate
issues.
+ Securities held in the Fund as of July 31, 1999 are subject to change.
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Concert Social Awareness Fund 3
<PAGE>
surprise has not necessarily been that the economy has refused to moderate to
any great degree but how early the market became nervous and began to evaluate
all Fed comments and policy decisions to the downside. It seems that the only
debate left for the rest of 1999 is whether we see one or two more monetary
policy tightenings by the Fed.
Thank you for your continued support of our efforts on your behalf.
Sincerely,
/s/ Heath B. McLendon
------------------------------
Heath B. McLendon
Chairman
/s/ Ellen S. Cammer /s/ Robert J. Brady, CFA
- ---------------------------- ---------------------------------
Ellen S. Cammer Robert J. Brady, CFA
Vice President and Vice President and
Investment Officer Investment Officer
September 3, 1999
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Top Ten Holdings* As of July 31, 1999
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1. International Business Machines Corp. 4.0%
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2. Amgen, Inc. 3.3
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3. Lowe's Cos., Inc. 3.0
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4. EMC Corp. 2.7
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5. Chase Manhattan Corp. 2.7
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6. Home Depot, Inc. 2.6
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7. Cisco Systems, Inc. 2.5
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8. Schering-Plough Corp. 2.2
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9. Xerox Corp. 2.2
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10. Enron Corp. 2.2
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* As a percentage of total common stock.
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4 1999 Semi-Annual Report to Shareholders
<PAGE>
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ISSUES THAT COUNT
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Deriving potential long-term investment success from a "best of class" approach
Today we live in an investment climate where new technology, buzzwords and
dot.com mania are the norm. We are as guilty as the next practitioner of
fostering this trend of "new speak." For example, over the years we have asked
our shareholders to think in non-traditional out-of-the-box investment terms
such as "social awareness" and "best-of class." How do these and other issues
affect the way in which we manage assets?
In past reports, we presented our views regarding the growing body of evidence
suggesting that the social issues of the workplace, the environment and our
communities are becoming increasingly crucial to more and more companies today.
In our opinion, issues that were historically not included in traditional
investment analysis are becoming value-producing elements of successful
investing. To compete effectively in an interconnected global economy
experiencing with low inflation, business managers must meet the challenges
posed by operational issues relating to:
o workforce productivity/demographics (family benefits, flex-hours,
childcare, foreign worker outsourcings)
o climatic/environmental effects (i.e., natural resource usage,
process emissions, product recovery)
o community/consumer relations (i.e., image, siting, restructuring,
brand recognition).
We measure a particular company's "awareness" by its level of acknowledgement
and its ability to respond to the seemingly non-financial, cultural factors they
confront in a dynamic and fast-paced marketplace. Measuring this "awareness" is
clearly an imprecise exercise. In fact, meaningful analysis by asset managers is
still relatively new and evolving. We frame our efforts around a "best of class"
methodology.
We seek to identify companies with management teams that recognize and
constructively address the convergence between financial, social and
environmental issues. We believe our integrated approach to stock selection and
building portfolios enables us to identify top-quality corporate management
teams that we believe can create strong and competitive advantages for their
companies while remaining industry leaders. This unique approach takes into
account all the non-financial factors that significantly affect corporations
across their particular industries. In turn, that selectivity can, we believe,
aid us in achieving our long-term portfolio goals of providing competitive
risk-adjusted investment returns to our shareholders. (Of course, past
performance in not indicative of future results.)
We seek to evaluate the capacity of companies to manage the "non-financial"
drivers of performance by focusing on the following means:
o direct dialogue with corporate management
o independent social research
o publicly available information from industry/trade associations,
government agencies, public interest groups and others.
KEY ISSUES WE CONSIDER. . .
Environment, Health & Safety
o Risk Management -- the capacity to manage environmental risks as evidenced
by the company's corporate governance capability, EHS management system
strength and auditing capabilities, compliance and safety record, supply
chain management, occupational and product safety, and off-site impacts.
o Penetration -- the degree to which the company is strategically positioned
to anticipate and profit from consumer value shifts (i.e., product safety)
as well as from other environmentally driven opportunities, as evidenced
by how EHS issues are integrated across the functional areas of the
business.
o Efficiency -- the sensitivity of the company to the price and availability
of water, energy, raw materials, waste treatment and disposal, in addition
to output
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Concert Social Awareness Fund 5
<PAGE>
"life cycle" issues such as product durability and recyclability.
Workplace
o Diversity -- the ability to attract and retain a multicultural talent pool
as evidenced by the composition of the company's board and management
team, diversity policies, employee participation and compensation
practices, and recruitment, mentoring, and training programs.
o Employee Relations -- the capability to enhance productivity and reduce
turnover and other disruptions through programs relating to compensation,
benefits, wellness, alternative work arrangements, family leave, child
care, elder care, etc.
o Labor Relations -- the proficiency to minimize work stoppages and negative
media exposure arising from U.S. labor relationships as well as non-U.S.
labor issues from direct or supplier involvement with sweatshops, forced
labor, or child labor.
Community
o Transparency -- the ability to leverage relationships with customers,
consumers, and strategic opinion leaders during challenging periods as
evidenced by the nature and extent of engagement with such groups on
business-relevant public policy issues.
o Mission-consistent Giving -- the capacity to further the company's
mission, market access, and brands through philanthropic giving.
o Human Rights -- the proficiency to anticipate and manage human rights
issues arising from operations in repressive regimes or in countries that
lack public participation in decision making, as evidenced by the nature
and extent of its engagement in public policy dialogue surrounding human
rights.
We think that our investment strategy may differ from other more traditional
socially screened investment products in ways such as:
o We incorporate societal and environmental trends in top-down economic and
market analysis to identify preferred sectors for investment as well as
assess the long-term growth potential of particular stocks.
o Our investments are diversified to cover virtually all the major sectors
of the economy, rather than concentrating on the environmental technology
sector and other "green" companies.
o Our investment policy takes a proactive approach to stock selection,
rather than simply an exclusionary approach governed by ethical criteria.
o Our investment analysis not only considers a management team's proficiency
at controlling downside risks, but also uniquely examines management's
ability to derive and drive strategic value from the social and
environmental issues facing their particular industry.
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6 1999 Semi-Annual Report to Shareholders
<PAGE>
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Historical Performance -- Class A Shares
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Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
7/31/99 $25.94 $25.77 $0.13 $0.65 2.38%+
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1/31/99 20.57 25.94 0.26 0.53 30.47
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1/31/98 19.36 20.57 0.55 1.99 19.89
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1/31/97 19.00 19.36 0.60 1.32 12.41
- --------------------------------------------------------------------------------
1/31/96 15.91 19.00 0.52 0.52 26.47
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1/31/95 17.72 15.91 0.47 0.66 (3.82)
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1/31/94 16.85 17.72 0.56 1.46 17.80
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Inception* -- 1/31/93 16.80 16.85 0.11 0.85 6.12+
================================================================================
Total $3.20 $7.98
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Historical Performance -- Class B Shares
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Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
7/31/99 $25.96 $25.79 $0.03 $0.65 1.99%+
- --------------------------------------------------------------------------------
1/31/99 20.63 25.96 0.14 0.53 29.50
- --------------------------------------------------------------------------------
1/31/98 19.42 20.63 0.40 1.99 18.95
- --------------------------------------------------------------------------------
1/31/97 19.05 19.42 0.45 1.32 11.60
- --------------------------------------------------------------------------------
1/31/96 15.97 19.05 0.42 0.52 25.58
- --------------------------------------------------------------------------------
1/31/95 17.79 15.97 0.35 0.66 (4.54)
- --------------------------------------------------------------------------------
1/31/94 16.84 17.79 0.34 1.46 16.88
- --------------------------------------------------------------------------------
1/31/93 17.26 16.84 0.50 1.49 9.68
- --------------------------------------------------------------------------------
1/31/92 15.61 17.26 0.55 0.88 19.96
- --------------------------------------------------------------------------------
1/31/91 15.57 15.61 0.51 0.46 6.80
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1/31/90 15.03 15.57 0.71 0.38 10.76
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Total $4.40 $10.34
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Concert Social Awareness Fund 7
<PAGE>
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Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
7/31/99 $26.03 $25.86 $0.03 $0.65 1.99%+
- --------------------------------------------------------------------------------
1/31/99 20.68 26.03 0.14 0.53 29.53
- --------------------------------------------------------------------------------
1/31/98 19.46 20.68 0.40 1.99 18.97
- --------------------------------------------------------------------------------
1/31/97 19.08 19.46 0.45 1.32 11.65
- --------------------------------------------------------------------------------
1/31/96 15.97 19.08 0.42 0.52 25.77
- --------------------------------------------------------------------------------
1/31/95 17.79 15.97 0.35 0.66 (4.54)
- --------------------------------------------------------------------------------
Inception* -- 1/31/94 17.54 17.79 0.28 1.46 11.83+
================================================================================
Total $2.07 $7.13
================================================================================
It is the Fund's policy to distribute dividends quarterly and capital gains, if
any, annually.
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Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
---------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 7/31/99+ 2.38% 1.99% 1.99%
- --------------------------------------------------------------------------------
Year Ended 7/31/99 18.19 17.29 17.34
- --------------------------------------------------------------------------------
Five Years Ended 7/31/99 17.97 17.08 17.14
- --------------------------------------------------------------------------------
Ten Years Ended 7/31/99 N/A 12.87 N/A
- --------------------------------------------------------------------------------
Inception* through 7/31/99 16.13 12.54 14.72
================================================================================
With Sales Charges(2)
---------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 7/31/99+ (2.76)% (2.98)% 0.00%
- --------------------------------------------------------------------------------
Year Ended 7/31/99 12.31 12.29 15.18
- --------------------------------------------------------------------------------
Five Years Ended 7/31/99 16.76 16.98 16.91
- --------------------------------------------------------------------------------
Ten Years Ended 7/31/99 N/A 12.87 N/A
- --------------------------------------------------------------------------------
Inception* through 7/31/99 15.25 12.54 14.53
================================================================================
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8 1999 Semi-Annual Report to Shareholders
<PAGE>
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Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 7/31/99) 173.73%
- --------------------------------------------------------------------------------
Class B (7/31/89 through 7/31/99) 235.51
- --------------------------------------------------------------------------------
Class B (Inception* through 7/31/99) 337.56
- --------------------------------------------------------------------------------
Class L (Inception* through 7/31/99) 135.56
================================================================================
(1) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed less than one year from purchase and
declines thereafter by 1.00% per year until no CDSC is incurred. Class L
shares also reflect the deduction of a 1.00% CDSC, which applies if shares
are redeemed within the first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, B and L shares are November 6, 1992, February
2, 1987 and May 5, 1993, respectively.
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Concert Social Awareness Fund 9
<PAGE>
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Concert Social Awareness Fund at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class B Shares of the Concert Social Awareness
Fund vs. the Lehman Government/Corporate Bond Index, Lehman Government/Corporate
Long-Term Bond Index and Standard & Poor's 500 Index+
- --------------------------------------------------------------------------------
July 1989 -- July 1999
[GRAPHIC OMITTED]
+ Hypothetical illustration of $10,000 invested in Class B shares on July
31, 1989, assuming reinvestment of dividends and capital gains, if any, at
net asset value through July 31, 1999. The Lehman Government/Corporate
Bond Index is a combination of the Government and Corporate Bond indexes,
including U.S. Treasury and agency securities and yankee bonds. The Lehman
Government/Corporate Long-Term Bond Index is a combination of Government
and Corporate bonds with maturities of 10 years or more. The Standard &
Poor's 500 Index is composed of widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange and over-the-counter
market. Figures for the index include reinvestment of dividends. The
indexes are unmanaged and are not subject to the same management and
trading expenses as a mutual fund. The performance of the Fund's other
classes may be greater or less than the Class B shares' performance
indicated on this chart, depending on whether greater or lesser sales
charges and fees were incurred by shareholders investing in 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*
- --------------------------------------------------------------------------------
[THE FOLLOWING CHART WAS DEPICTED AS A BAR GRAPH IN THE PRINTED MATERIAL.]
Basic Materials 4.9%
Communication Services 4.6%
Consumer Cyclicals 20.5%
Consumer Staples 12.2%
Financial Services 17.4%
Health Care 8.5%
Publishing - Periodicals 2.5%
Technology 20.8%
Transportation 3.6%
Utilities 5.0%
* As a percentage of total common stock.
Investment Breakdown**
- --------------------------------------------------------------------------------
[THE FOLLOWING CHART WAS DEPICITED AS A PIE GRAPH IN THE PRINTED MATERIAL.]
Mortgage-Backed Securities 4.3%
Repurchase Agreement 0.3%
Corporate Bonds and Notes 8.7%
Asset-Backed Securities 1.6%
Common Stock 69.5%
U.S. Government Agencies & Obligations 15.6%
** As a percentage of total investments.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) July 31, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
COMMON STOCK -- 70.5%
Basic Materials -- 3.5%
110,000 Alcoa, Inc. $ 6,586,250
56,386 BP Amoco PLC 6,533,728
50,000 Nucor Corp. 2,425,000
80,000 Praxair, Inc. 3,690,000
- --------------------------------------------------------------------------------
19,234,978
- --------------------------------------------------------------------------------
Communication Services -- 3.2%
33,750 AT&T Corp. 1,752,891
140,000 Anixter International, Inc. 2,765,000
80,000 Bell Atlantic Corp. 5,100,000
90,931 MCI Worldcom, Inc. 7,501,807
20,000 Time Warner Telecom, Inc.+ 622,500
- --------------------------------------------------------------------------------
17,742,198
- --------------------------------------------------------------------------------
Consumer Cyclicals -- 14.5%
108,000 Black & Decker Corp.* 6,237,000
43,500 Caliber Learning Network, Inc. 212,062
100,000 Deere & Co. 3,825,000
254,687 Dollar General Corp. 6,733,288
34,000 eToys, Inc.+ 1,357,875
160,000 Home Depot, Inc.* 10,210,000
242,500 Interface, Inc. 2,167,344
143,400 Kaufman & Broad Home Corp. 2,984,512
52,256 Koninklijke Philips 5,284,388
74,700 Liz Clairborne, Inc. 2,899,294
220,000 Lowe's Cos., Inc. 11,605,000
149,250 May Department Stores Co. 5,774,109
175,000 Office Depot, Inc.+ 3,281,250
110,000 Rite Aid Corp.* 2,330,625
219,450 Staples Inc. 6,336,619
202,000 Wal-Mart Corp. 8,534,500
- --------------------------------------------------------------------------------
79,772,866
- --------------------------------------------------------------------------------
Consumer Staples -- 8.6%
122,220 Albertsons, Inc. 6,072,806
150,100 Brinker International, Inc. 4,184,037
214,800 Kroger Co.+ 5,651,925
139,800 Newell Co.* 6,046,350
167,000 Pepsi Bottling Group, Inc. 3,945,375
248,000 Sysco Corp. 8,106,500
26,000 Tricon Global Restaurants, Inc. 1,057,875
98,214 Unilever NV 6,862,703
187,000 Wendy's International, Inc. 5,434,688
- --------------------------------------------------------------------------------
47,362,259
- --------------------------------------------------------------------------------
Financial Services -- 12.3%
135,000 Ace Ltd. 3,138,750
51,705 Ageon N.V. American 3,936,043
91,094 Allstate Corp. 3,233,837
55,000 American Express Co. 7,246,250
41,400 American International Group, Inc. 4,807,575
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) July 31, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Financial Services -- 12.3% (continued)
132,000 Associates First Capital Corp. $ 5,057,250
82,941 BankAmerica Corp. 5,505,209
70,000 Bank of Boston Corp. 3,285,625
136,576 Chase Manhattan Corp. 10,499,280
4,750 Donaldson, Lufkin & Jenrette, Inc. - DLJdirect+ 102,422
75,200 Freddie Mac 4,314,600
100,000 Hartford Financial Services, Inc. 5,400,000
75,000 IndyMac Mortage Holdings, Inc. 1,185,937
96,400 Lincoln National Corp. 4,820,000
70,800 St. Paul Cos., Inc. 2,203,650
56,210 UnumProvident Corp. 2,908,868
- --------------------------------------------------------------------------------
67,645,296
- --------------------------------------------------------------------------------
Health Care -- 6.0%
166,000 Amgen, Inc. 12,761,250
42,800 C.R. Bard, Inc. 2,081,150
100,000 HealthSouth Corp.+ 1,225,000
68,000 Johnson & Johnson 6,264,500
24,600 Merck & Co, Inc. 1,665,112
146,000 Schering-Plough Corp. 7,154,000
110,500 Tenet Healthcare Corp. 1,982,094
- --------------------------------------------------------------------------------
33,133,106
- --------------------------------------------------------------------------------
Publishing - Periodicals -- 1.7%
100,000 Readers Digest Association 3,481,250
69,800 Tribune Co. 6,146,763
- --------------------------------------------------------------------------------
9,628,013
- --------------------------------------------------------------------------------
Technology -- 14.7%
132,000 Automatic Data Processing 5,288,250
156,900 Cisco Systems, Inc. 9,747,412
120,000 Compaq Computer Corp. 2,880,000
70,000 Electronic Data Systems Corp. 4,221,875
174,000 EMC Corp.+ 10,537,875
71,000 Intel Corp. 4,899,000
124,800 International Business Machine Corp. 15,685,800
4,000 Juniper Networks, Inc.+ 649,750
127,852 Lucent Technologies, Inc. 8,318,371
66,000 Pitney Bowes, Inc. 4,199,250
85,200 Sun Microsystems, Inc. 5,782,950
176,000 Xerox Corp. 8,580,000
- --------------------------------------------------------------------------------
80,790,533
- --------------------------------------------------------------------------------
Transportation -- 2.5%
132,000 Norfolk Southern Corp. 3,861,000
156,375 Southwest Airlines Co.* 2,892,938
145,000 US Freightways Corp. 7,159,375
- --------------------------------------------------------------------------------
13,913,313
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) July 31, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Utilities -- 3.5%
44,000 AES Corp. $ 2,640,000
102,100 Enron Corp. 8,697,644
190,000 Williams Cos., Inc. 7,991,875
- --------------------------------------------------------------------------------
19,329,519
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $212,333,152) 388,552,081
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
U.S. GOVERNMENT OBLIGATIONS -- 13.1%
U.S. Treasury Notes:
$ 1,000,000 5.625% due 10/31/99 $ 1,001,230
750,000 7.125% due 2/29/00 758,422
4,400,000 6.250% due 8/31/00 4,435,684
1,000,000 5.375% due 2/15/01 997,860
5,000,000 5.750% due 6/30/01 5,009,500
2,000,000 6.250% due 10/31/01 2,023,900
3,000,000 5.875% due 11/30/01 3,012,930
2,978,000 6.375% due 8/15/02 3,025,767
1,000,000 5.750% due 8/15/03 995,360
9,000,000 5.250% due 5/15/04 8,798,490
3,000,000 5.875% due 11/15/05 2,978,730
5,000,000 6.500% due 10/15/06 5,117,500
5,000,000 5.500% due 5/15/09 4,848,800
U.S. Treasury Bonds:
6,500,000 7.250% due 5/15/16 7,083,570
3,000,000 7.125% due 2/15/23 3,285,840
11,800,000 6.000% due 2/15/26 11,360,686
7,000,000 5.250% due 2/15/29 6,181,070
5,000,000 U.S. Treasury Strip, 0.000% due 11/15/21 1,222,850
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost -- $72,507,659) 72,138,189
================================================================================
CORPORATE BONDS AND NOTES -- 10.1%
Financial Services -- 4.6%
3,000,000 Associates Corp. of North America, Sr. Notes,
5.750% due 11/1/03 2,876,250
2,000,000 BankAmerica, Sub. Debenture Note, 7.750%
due 7/15/02 2,052,500
2,000,000 Bank One Corp., Notes, 6.400% due 8/1/02 1,992,500
2,000,000 Countrywide Home Loan, Medium Term Notes,
6.380% due 10/8/02 1,980,000
Fannie Mae:
4,000,000 5.875% due 4/23/04 3,870,840
3,000,000 6.500% due 4/29/09 2,850,300
1,000,000 First USA Bank, Notes, 6.375% due 10/23/00 1,006,250
2,000,000 Lehman Brothers Holdings, Medium Term Notes,
6.050% due 4/28/00 2,000,480
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) July 31, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT SECURITY VALUE
================================================================================
Financial Services -- 4.6% (continued)
Merrill Lynch & Co. Inc., Notes:
$ 1,000,000 6.000% due 1/15/01 $ 997,500
2,000,000 6.875% due 11/15/18 1,855,000
2,000,000 Morgan Stanley Dean Witter & Co., Notes,
6.875% due 3/1/07 1,965,000
2,000,000 Norwest Corp. Notes, 6.875% due 8/8/00 1,977,500
- --------------------------------------------------------------------------------
25,424,120
- --------------------------------------------------------------------------------
Industrial -- 4.6%
4,000,000 Cable & Wireless Co., Yankee Issue,
6.375% due 3/6/03 3,925,000
2,000,000 IBM Corp., Notes, 5.375% due 2/1/09 1,805,000
2,500,000 Lucent Technologies, Inc., Notes,
7.250% due 7/15/06 2,565,625
2,000,000 Norfolk Southern Corp., Debentures
6.700% due 5/1/00 2,012,500
2,000,000 Fred Meyer Inc., Notes, 7.375% due 3/1/05 2,005,000
317,255 Southwest Airlines Co., Series 1994-A3,
8.700% due 7/1/11 342,537
3,000,000 Staples Inc., Sr. Notes 7.125% due 8/15/07 2,966,250
2,000,000 Tenet Healthcare Corp., Sr. Notes,
8.625% due 12/1/03 1,992,500
Time Warner Inc., Notes:
1,500,000 7.950% due 2/1/00 1,511,250
2,000,000 6.950% due 1/15/28 1,815,000
2,375,000 Tricon Global Restaurant, Sr. Notes,
7.450% due 5/15/05 2,351,250
2,000,000 Xerox Corp., Notes, 5.250% due 12/15/03 1,905,000
- --------------------------------------------------------------------------------
25,196,912
- --------------------------------------------------------------------------------
Utilities -- 0.9%
2,200,000 Enron Corp., Notes, 6.950% due 7/15/28 1,977,250
3,000,000 MCI Worldcom Inc., Notes, 7.750% due 4/01/07 3,120,000
- --------------------------------------------------------------------------------
5,097,250
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS AND NOTES
(Cost -- $57,946,542) 55,718,282
================================================================================
ASSET-BACKED SECURITIES -- 1.6%
3,000,000 Chase Credit Card Master Trust, Series 1997-2,
6.300% due 4/15/03 3,014,100
2,000,000 Discover Card Master, Series 1993-B,
6.750% due 2/16/02 2,006,340
267,957 Equity Credit Corp., Home Equity Loan Trust,
Series 1993-3, 5.150% due 9/15/08 260,023
2,000,000 MBNA Master Credit Trust, Series 1995-f,
6.600% due 1/15/03 2,014,160
1,500,000 Sears Credit Accout Master Trust, Series 95-4,
8.100% due 6/15/04 1,526,460
- --------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost -- $8,825,430) 8,821,083
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) July 31, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT SECURITY VALUE
================================================================================
MORTGAGE-BACKED SECURITIES -- 4.4%
Federal Home Loan Mortgage Association (FHLMA):
$ 4,970 6.250% due 7/1/02 $ 4,712
9,354 8.500% due 12/1/02 9,823
1,875,767 Federal Home Loan Mortgage Corporation (FHLMC),
7.000% due 2/1/29 1,835,306
Federal National Mortgage Association (FNMA):
2,000,000 6.375% due 6/15/09 1,949,180
1,245,315 6.000% due 2/1/11 1,191,991
1,929,192 6.000% due 12/1/13 1,846,584
3,994,390 7.000% due 1/1/13 3,980,649
2,725,047 6.000% due 6/1/13 2,608,361
2,419,119 6.000% due 2/1/14 2,315,532
64,261 8.000% due 7/1/24 65,647
2,539,678 6.500% due 11/1/27 2,419,044
978,756 6.500% due 3/1/29 932,265
992,467 6.500% due 4/1/29 945,325
2,000,000 7.000% due 7/1/29 1,955,620
2,000,161 Government National Mortgage Association (GNMA),
6.500% due 7/15/29 1,899,513
- --------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost -- $24,709,985) 23,959,552
================================================================================
REPURCHASE AGREEMENT -- 0.3%
1,714,000 J.P. Morgan Securities, 5.050% due 8/02/99;
Proceeds at maturity -- $1,714,721; (Fully
collateralized by U.S. Treasury Notes, 3.625%
due 1/15/08; Market Value -- $1,748,283)
(Cost -- $1,714,000) 1,714,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $378,036,768**) $550,903,187
================================================================================
+ Non-income producing security.
* A portion of security is on loan (Note 7).
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $378,036,768) $550,903,187
Cash 176
Collateral for securities on loan (Note 7) 45,161,062
Receivable for securities sold 8,646,750
Interest receivable 2,540,538
Receivable for Fund shares sold 240,469
Dividends receivable 229,383
- -----------------------------------------------------------------------------------
Total Assets 607,721,565
- -----------------------------------------------------------------------------------
LIABILITIES:
Payable for securities on loan (Note 7) 45,161,062
Dividends payable 13,899,685
Investment advisory fees payable 258,881
Distribution fees payable 103,762
Administration fees payable 94,022
Payable for Fund shares purchased 830
Accrued expenses 87,605
- -----------------------------------------------------------------------------------
Total Liabilities 59,605,847
- -----------------------------------------------------------------------------------
Total Net Assets $548,115,718
===================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 21,261
Capital paid in excess of par value 354,479,462
Undistributed net investment income 1,066,090
Accumulated net realized gain from security transactions 19,682,486
Net unrealized appreciation of investments 172,866,419
- -----------------------------------------------------------------------------------
Total Net Assets $548,115,718
===================================================================================
Shares Outstanding:
Class A 11,767,308
--------------------------------------------------------------------------------
Class B 8,606,970
--------------------------------------------------------------------------------
Class L 886,753
--------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 25.77
--------------------------------------------------------------------------------
Class B * $ 25.79
--------------------------------------------------------------------------------
Class L ** $ 25.86
--------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $ 27.13
--------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $ 26.12
===================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if
shares are redeemed within one year from purchase (See Note 2).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if
shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 4,343,712
Dividends 2,731,986
Less: Foreign withholding tax (221,411)
- -----------------------------------------------------------------------------------
Total Investment Income 6,854,287
- -----------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 2) 1,541,533
Investment advisory fees (Note 2) 1,464,025
Administration fees (Note 2) 532,373
Shareholder and system servicing fees 296,418
Shareholder communications 63,473
Registration fees 50,303
Audit and legal 24,080
Trustees' fees 10,550
Custody 9,178
Other 6,140
- -----------------------------------------------------------------------------------
Total Expenses 3,998,073
- -----------------------------------------------------------------------------------
Net Investment Income 2,856,214
- -----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 83,986,929
Cost of securities sold 64,290,706
- -----------------------------------------------------------------------------------
Net Realized Gain 19,696,223
- -----------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 184,034,044
End of period 172,866,419
- -----------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (11,167,625)
- -----------------------------------------------------------------------------------
Net Gain on Investments 8,528,598
- -----------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 11,384,812
===================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 17
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended July 31, 1999 (unaudited)
and the Year Ended January 31, 1999
<TABLE>
<CAPTION>
July 31 January 31
======================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,856,214 $ 3,884,886
Net realized gain 19,696,223 20,369,855
Increase (decrease) in net unrealized appreciation (11,167,625) 89,166,525
- --------------------------------------------------------------------------------------
Increase in Net Assets From Operations 11,384,812 113,421,266
- --------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,790,124) (3,895,688)
Net realized gains (13,899,685) (9,770,057)
- --------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (15,689,809) (13,665,745)
- --------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 104,495,968 107,012,876
Net asset value of shares issued for
reinvestment of dividends 1,688,614 12,933,222
Cost of shares reacquired (49,457,623) (105,542,323)
- --------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 56,726,959 14,403,775
- --------------------------------------------------------------------------------------
Increase in Net Assets 52,421,962 114,159,296
NET ASSETS:
Beginning of period 495,693,756 381,534,460
- --------------------------------------------------------------------------------------
End of period* $ 548,115,718 $ 495,693,756
======================================================================================
* Includes undistributed net investment income of: $ 1,066,090 --
======================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Concert Social Awareness Fund ("Fund"), a separate investment fund of Smith
Barney Equity Funds ("Trust"), a Massachusetts business trust, is registered
under the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The Trust consists of this Fund and one
other separate investment fund, the Smith Barney Large Cap Blend Fund. The
financial statements and financial highlights for the other fund are presented
in a separate shareholder report.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities traded in
national securities markets are valued at the closing prices in the primary
exchange on which they are traded or, if there were no sales during the day, at
current quoted bid price; securities primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, except that when a significant occurrence subsequent to
the time a value was so established is likely to have significantly changed the
value, then the fair value of those securities will be determined by
consideration of other factors by or under the direction of the Board of
Trustees or its delegates; over-the-counter securities and U.S. government
agency and obligations are valued at the mean between the bid and asked prices;
(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) dividend income is
recorded on the ex-dividend date; foreign dividends are recorded on the
ex-dividend date or as soon as practical after the Fund determines the existence
of a dividend declaration after exercising reasonable due diligence; (f)
interest income is recorded on an accrual basis including the amortization of
premium and the accretion of discount, where applicable; (g) gains and losses on
the sale of securities are calculated by using the specific identification
method; (h) dividends and distributions to shareholders are recorded on the
ex-dividend date; (i) the accounting records are maintained in U.S. dollars. All
assets and liabilities denominated in foreign currencies are translated into
U.S. dollars based on the rate of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, and income
and expenses are translated at the rate of exchange quoted on the respective
date that such transactions are recorded. Differences between income or expense
amounts recorded and collected or paid are adjusted when reported by the
custodian bank; (j) direct expenses are charged to each class; management fees
and general fund expenses are allocated on the basis of relative net assets; (k)
the Fund intends to comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, pertaining to regulated investment companies
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes; (l) 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
January 31, 1999, reclassifications were made to the Fund's capital accounts to
reflect permanent book/tax differences and income and gains available for
distribution under income tax regulations. Net investment income, net realized
gains and net assets were not affected by this change; and (m) 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.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
2. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
adviser to the Fund. The Fund pays SSBC an investment advisory fee calculated
at an annual rate of 0.55% of the average daily net assets. This fee is
calculated daily and paid monthly.
SSBC also acts as the Trust's administrator for which the Fund pays a fee
calculated at an annual rate of 0.20% of the average daily net assets. This fee
is calculated daily and paid monthly.
CFBDS, Inc. ("CFBDS") acts as the Fund's distributor. Salomon Smith Barney Inc.
("SSB"), another subsidiary of SSBH, as well as certain other broker-dealers,
continues to sell Fund shares to the public as a member of the selling group.
For the six months ended July 31, 1999, SSB did not receive any brokerage
commissions.
There is a contingent deferred sales charge ("CDSC") of 5.00% on Class B shares,
which applies if redemption occurs within one year from purchase. This CDSC
declines by 1.00% the first year after purchase and thereafter by 1.00% per year
until no CDSC is incurred. Class L shares are being sold at net asset value plus
a maximum sales charge of 1.00%. Class L shares also have a 1.00% CDSC, which
applies if redemption occurs within the first year of purchase.
For the six months ended July 31, 1999, CFBDS and SSB received sales charges of
$198,000 and $77,000 on sales of the Fund's Class A and Class L shares,
respectively.
In addition, CDSCs paid to CFBDS and SSB were:
Class B Class L
================================================================================
CDSC $58,000 $3,000
================================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to
Class A, B and L shares calculated at an annual rate of 0.25% of the average
daily net assets of each respective class. The Fund also pays a distribution fee
with respect to Class B and L shares calculated at an annual rate of 0.75% of
the average daily net assets for each class, respectively. For the six months
ended July 31, 1999, total Distribution Plan fees incurred were:
Class A Class B Class L
================================================================================
Distribution Plan Fees $373,444 $1,068,805 $99,284
================================================================================
All officers and one Trustee of the Trust are employees of SSB.
3. Investments
During the six months ended July 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $137,287,769
- --------------------------------------------------------------------------------
Sales 83,986,929
================================================================================
At July 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $180,507,804
Gross unrealized depreciation (7,641,385)
- --------------------------------------------------------------------------------
Net unrealized appreciation $172,866,419
================================================================================
4. Repurchase Agreements
The Fund purchases (and its custodian takes possession of) U.S. government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day),
at an agreed-upon higher repurchase price. The Fund requires continual
maintenance of the market value of the collateral in amounts at least equal to
the repurchase price.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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 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 Fund records a
realized gain or loss equal to the difference between the proceeds from (or cost
of) the closing transactions and the Fund's basis in the contract.
The Fund enters into such contracts to hedge a portion of its portfolio. The
Fund bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At July 31, 1999, the Fund had no open futures contracts.
6. Option Contracts
Premiums paid when put or call options are purchased by the Fund represent
investments, which are marked-to-market daily. When a purchased option expires,
the Fund will realize a loss in the amount of the premium paid. When the Fund
enters into a closing sales transaction, the Fund will realize a gain or loss
depending on whether the sales proceeds from the closing sales transaction are
greater or less than the premium paid for the option. When the Fund exercises a
put option, it will realize a gain or loss from the sale of the underlying
security and the proceeds from such sale will be decreased by the premium
originally paid. When the Fund exercises a call option, the cost of the security
which the Fund purchases upon exercise will be increased by the premium
originally paid.
At July 31, 1999, the Fund had no open purchased call or put options.
When a Fund writes a covered call or put option, an amount equal to the premium
received by the Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Fund realizes a gain
equal to the amount of the premium received. When the Fund enters into a closing
purchase transaction, the Fund realizes a gain or loss depending upon whether
the cost of the closing trans action is greater or less than the premium
originally received, without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a written call option is exercised, the cost of the security sold will be
decreased by the premium originally received. When a written put option is
exercised, the amount of the premium originally received will reduce the cost of
the security which the Fund purchased upon exercise. When a written index option
is exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Fund enters into options for hedging purposes. The risk in writing a
covered call option is that the Fund gives up the opportunity to participate in
any increase in the price of the underlying security beyond the exercise price.
The risk in writing a put option is that the Fund is exposed to the risk of a
loss if the market price of the underlying security declines.
During the six months ended July 31, 1999, the Fund did not write any call or
put options.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
7. Lending of Portfolio Securities
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations, and receives a lenders fee. Fees earned by the Fund on securities
lending are recorded in interest income. Loans of securities by the Fund are
collateralized by cash, U.S. Government securities or high quality money market
instruments that are maintained at all times in an amount at least equal to the
current market value of the loaned securities, plus a margin which may vary
depending on the type of securities loaned. The custodian establishes and
maintains the collateral in a segregated account. The Fund maintains exposure
for the risk of any losses in the investment of amounts received as collateral.
At July 31, 1999, the Fund had loaned common stocks having a value of
$43,527,764 and holds the following collateral for loaned securities:
Security Description Value
================================================================================
Commercial Paper:
Corporate Receivables, 5.136% due 5/24/99 $ 1,684,895
Certificate of Deposit:
Svenska Handelsbanken, 4.930% due 10/25/99 2,692,942
Time Deposits:
Bank Brussels Lambert, 5.156% due 8/2/99 8,775,678
Bank of Montreal, 5.125% due 8/2/99 5,781,628
Barclays Bank PLC, 5.125% due 8/2/99 5,667,465
Chase Manhattan Bank, 5.125% due 8/2/99 14,890,988
Toronto Dominion Bank, 5.125% due 8/2/99 5,667,466
- --------------------------------------------------------------------------------
Total $45,161,062
================================================================================
Income earned by the Fund from securities loaned for the six months ended July
31, 1999 was $27,751.
8. Shares of Beneficial Interest
At July 31, 1999, the Trust had an unlimited number of shares of beneficial
interest authorized with a par value of $0.001 per share. The Fund has the
ability to issue multiple classes of shares. Each share of a class represents an
identical interest and has the same rights, except that each class bears certain
direct expenses, including those specifically related to the distribution of its
shares.
At July 31, 1999, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $210,040,393 $124,282,906 $20,177,424
================================================================================
- --------------------------------------------------------------------------------
22 1999 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
July 31, 1999 January 31, 1999
------------------------- --------------------------
Shares Amount Shares Amount
=================================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 1,700,400 $ 44,584,691 2,805,213 $ 64,000,378
Shares issued on reinvestment 54,023 1,413,532 345,011 7,960,380
Shares reaquired (860,522) (22,624,871) (2,099,048) (47,939,818)
- -----------------------------------------------------------------------------------------------------------------
Net Increase 893,901 $ 23,373,352 1,051,176 $ 24,020,940
=================================================================================================================
Class B
Shares sold 1,944,869 $ 51,124,010 1,490,823 $ 34,432,215
Shares issued on reinvestment 9,530 249,870 201,924 4,688,797
Shares reaquired (981,692) (25,737,885) (2,401,577) (54,426,551)
- -----------------------------------------------------------------------------------------------------------------
Net Decrease (972,707) $(25,635,995) (708,830) $(15,305,539)
=================================================================================================================
Class L+
Shares sold 333,263 $ 8,787,267 364,743 $ 8,580,283
Shares issued on reinvestment 959 25,212 12,059 280,988
Shares reaquired (41,182) (1,094,867) (129,984) (2,962,207)
- -----------------------------------------------------------------------------------------------------------------
Net Increase 293,040 $ 7,717,612 246,818 $ 5,899,064
=================================================================================================================
Class Y++
Shares sold -- -- -- $ --
Shares issued on reinvestment -- -- 131 3,057
Shares reaquired -- -- (10,819) (213,747)
- -----------------------------------------------------------------------------------------------------------------
Net Decrease -- -- (10,688) $ (210,690)
=================================================================================================================
</TABLE>
+ On June 12, 1998, Class C shares were renamed Class L shares.
++ As of January 31, 1999, all Class Y shares were fully redeemed.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 23
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares 1999(1)(2) 1999(2) 1998 1997 1996 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $25.94 $20.57 $19.36 $19.00 $15.91 $17.72
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.18 0.29 0.48 0.57 0.61 0.57
Net realized and unrealized gain (loss) 0.43 5.87 3.27 1.71 3.52 (1.25)
- ---------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.61 6.16 3.75 2.28 4.13 (0.68)
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.13) (0.26) (0.55) (0.60) (0.52) (0.47)
Net realized gains (0.65) (0.53) (1.99) (1.32) (0.52) (0.66)
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.78) (0.79) (2.54) (1.92) (1.04) (1.13)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $25.77 $25.94 $20.57 $19.36 $19.00 $15.91
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 2.38%++ 30.47% 19.89% 12.41% 26.47% (3.82)%
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $303,226 $282,060 $202,026 $178,072 $175,007 $159,247
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.16%+ 1.19% 1.19% 1.28% 1.21% 1.33%
Net investment income 1.40+ 1.23 2.34 2.98 3.10 2.89
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 16% 36% 62% 68% 81% 103%
===========================================================================================================================
</TABLE>
(1) For the six months ended July 31, 1999 (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 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares 1999(1)(2) 1999(2) 1998 1997 1996 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $25.96 $20.63 $19.42 $19.05 $15.97 $17.79
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.08 0.11 0.33 0.43 0.49 0.39
Net realized and unrealized gain (loss) 0.43 5.89 3.27 1.71 3.53 (1.20)
- ---------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.51 6.00 3.60 2.14 4.02 (0.81)
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.03) (0.14) (0.40) (0.45) (0.42) (0.35)
Net realized gains (0.65) (0.53) (1.99) (1.32) (0.52) (0.66)
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.68) (0.67) (2.39) (1.77) (0.94) (1.01)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $25.79 $25.96 $20.63 $19.42 $19.05 $15.97
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 1.99%++ 29.50% 18.95% 11.60% 25.58% (4.54)%
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $221,960 $198,181 $172,115 $202,597 $226,360 $216,035
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.91%+ 1.94% 1.95% 2.03% 1.94% 2.00%
Net investment income 0.65+ 0.49 1.62 2.23 2.37 2.21
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 16% 36% 62% 68% 81% 103%
===========================================================================================================================
</TABLE>
(1) For the six months ended July 31, 1999 (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.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 25
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31, except where noted:
<TABLE>
<CAPTION>
Class L Shares 1999(1)(2) 1999(2)(3) 1998 1997 1996 1995(4)
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $26.03 $20.68 $19.46 $19.08 $15.97 $17.79
- ----------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.09 0.11 0.34 0.44 0.45 0.38
Net realized and unrealized gain (loss) 0.42 5.91 3.27 1.71 3.60 (1.19)
- ----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.51 6.02 3.61 2.15 4.05 (0.81)
- ----------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.03) (0.14) (0.40) (0.45) (0.42) (0.35)
Net realized gains (0.65) (0.53) (1.99) (1.32) (0.52) (0.66)
- ----------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.68) (0.67) (2.39) (1.77) (0.94) (1.01)
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $25.86 $26.03 $20.68 $19.46 $19.08 $15.97
- ----------------------------------------------------------------------------------------------------------------------------
Total Return 1.99%++ 29.53% 18.97% 11.65% 25.77% (4.54)%
- ----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $22,930 $15,453 $7,173 $4,000 $3,396 $1,972
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.90%+ 1.92% 1.93% 2.01% 1.94% 1.98%
Net investment income 0.66+ 0.46 1.54 2.25 2.31 2.24
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 16% 36% 62% 68% 81% 103%
============================================================================================================================
</TABLE>
(1) For the six months ended July 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) On November 7, 1994, the former Class D shares were renamed Class C
shares.
++ Total return is not annualized as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
26 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On April 19, 1999, a special meeting of shareholders of the Trust was held for
the purpose of electing Trustees for the Fund.
The results of the vote were as follows:
<TABLE>
<CAPTION>
Shares Voted Percentage Shares Voted Percentage
Name of Trustees For Shares Voted Against Shares Voted
==========================================================================================================
<S> <C> <C> <C> <C>
Lee Abraham 28,169,081.410 98.099% 545,771.835 1.901%
Allan J. Bloostein 28,181,393.982 98.142 533,459.263 1.858
Jane F. Dasher 28,171,508.847 98.108 543,344.398 1.892
Donald R. Foley 28,141,523.891 98.003 573,329.354 1.997
Richard E. Hanson, Jr. 28,182,408.558 98.146 532,444.687 1.854
Paul Hardin 28,187,430.410 98.163 527,422.835 1.837
Heath B. McLendon 28,187,190.089 98.162 527,663.156 1.838
Roderick C. Rasmussen 28,179,477.573 98.136 535,375.672 1.864
John P. Toolan 28,186,096.598 98.159 528,756.647 1.841
==========================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 27
<PAGE>
Concert Social
Awareness Fund
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
Robert J. Brady, CFA
Vice President and Investment Officer
Ellen S. Cammer
Vice President and Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Adviser
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9699
Providence, RI 02940-9699
This report is submitted for the general information of shareholders of Concert
Social Awareness Fund. It is not authorized for distribution to prospective
investors unless accompanied or preceded by a current Prospectus for the Fund,
which contains information concerning the Fund's investment policies and
expenses as well as other pertinent information.
SALOMON SMITH BARNEY
- ---------------------------
A member of citigroup[LOGO]
Salomon Smith Barney is a Service mark of Salomon Smith Barney Inc.
Concert Social Awareness Fund
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
[UNION LABEL] 341
[RECYCLE LOGO] Because we care about the environment, this annual report has
been printed with soy-based inks on 20% post-consumer recycled
paper, deinked using a non-chlorine bleach process.
FD0423 9/99
[PHOTO OMITTED]
[GRAPHIC OMITTED] Smith Barney
Large Cap
Blend Fund
------------------
SEMI-ANNUAL REPORT
------------------
July 31, 1999
[LOGO] Smith Barney
Mutual Funds
<PAGE>
Smith Barney
Large Cap Blend Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Smith Barney Large Cap Blend Fund ("Fund") seeks long-term capital growth by
investing primarily in common stocks and other equity securities of U.S.
companies with market capitalizations in excess of $5 billion at time of
investment.
Smith Barney Large Cap Blend Fund
Average Annual Total Returns
July 31, 1999
Without Sales Charge(1)
-----------------------------------------------------
Class A Class B Class L Class O
================================================================================
Six Months+ 1.99% 1.69% 1.63% 1.74%
- --------------------------------------------------------------------------------
One-Year 13.73 13.10 12.89 13.10
- --------------------------------------------------------------------------------
Five-Year 17.86 17.27 N/A N/A
- --------------------------------------------------------------------------------
Since Inception++ 14.11 13.54 11.80 17.27
================================================================================
With Sales Charge(2)
-----------------------------------------------------
Class A Class B Class L Class O
================================================================================
Six Months+ (3.10)% (3.28)% (0.37)% 0.75%
- --------------------------------------------------------------------------------
One-Year 8.06 8.10 10.75 12.10
- --------------------------------------------------------------------------------
Five-Year 16.65 17.17 N/A N/A
- --------------------------------------------------------------------------------
Since Inception++ 13.25 13.54 10.81 17.27
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B, L and O shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase and declines
thereafter by 1.00% per year until no CDSC is incurred. Class L and O
shares also reflect the deduction of a 1.00% CDSC, which applies if shares
are redeemed within the first year of purchase.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception dates for Class A, B, L and O shares are November 6, 1992,
November 6, 1992, June 15, 1998 and August 15, 1994, respectively.
- --------------------------------------------------------------------------------
FUND HIGHLIGHT
- --------------------------------------------------------------------------------
We noted in our last shareholder letter our intention to restructure the Fund by
constraining its "bets" versus the overall stock market. We implemented these
changes in the first quarter of this year. Now the Fund has limited bets on both
a sector and individual stock basis, aligning the Fund much closer to the
broader market.
- --------------------------------------------------------------------------------
NASDAQ SYMBOL
- --------------------------------------------------------------------------------
Class A SGIAX
Class B SGIBX
- --------------------------------------------------------------------------------
WHAT'S INSIDE
- --------------------------------------------------------------------------------
Shareholder Letter.............................................1
Historical Performance.........................................4
Smith Barney Large Cap Blend Fund
at a Glance....................................................7
Schedule of Investments........................................8
Statement of Assets and Liabilities...........................12
Statement of Operations.......................................13
Statements of Changes in Net Assets...........................14
Notes to Financial Statements.................................15
Financial Highlights..........................................20
Additional Shareholder Information............................25
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Letter
- --------------------------------------------------------------------------------
[PHOTO OMITTED] [PHOTO OMITTED]
HEATH B. MCLENDON R. JAY GERKEN, CFA
Chairman Vice President and Investment Officer
Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney Large Cap
Blend Fund ("Fund") for the period ended July 31, 1999. We hope you find this
report to be useful and informative.
For your convenience, we have outlined the investment strategy of the Fund and
its current portfolio strategy. A detailed summary of performance and current
holdings of the Fund can be found in the appropriate sections that follow.
Performance Update
Performance of the Fund was a positive 1.99% over the last six months for its
Class A shares without sales charges. The Fund's Class A shares lagged the
Standard & Poor's 500 Index ("S&P 500") return of 4.5% over the same period.
(The S&P 500 Index is composed of widely held common stocks listed on the New
York Stock Exchange, American Stock Exchange and over-the-counter market.)
In our view, some of the Fund's underperformance was due to the one-time costs
of the transition discussed in greater detail in the "Recent Portfolio Changes"
section, when the Fund changed to a portfolio much more closely aligned to the
overall market.
Market and Economic Overview
The stock market set record highs during the six months ended July 31, 1999.
These new market highs were supported by strong corporate earnings reports, and
renewed confidence that worldwide growth was turning upwards. Bond investors
were not as fortunate. For the stronger economy stirred fears of inflation, as
well as the reality of the Federal Reserve Board ("Fed") boosting interest rates
by 0.25% in late June.
Climbing stock prices were, in some sense, a continuation of the strong stock
markets of the last several years. As before, the major U.S. stock indices hit
new highs. But in other ways, the last six months have been different. Over the
past several years large-sized company stocks have outperformed small ones, and
growth stocks have outperformed value. But in the last six months small stocks
and value stocks have improved their relative price performance. And we think it
likely that this change will persist for a significant time period, as relative
performance often rotates between asset classes.
Investment Philosophy
As befits its name, the Fund employs a "blend" stock selection philosophy. The
term "blend" refers to an approach that combines growth and value investment
styles. Growth investors look for companies that they believe are going to grow
earnings quickly; value investors look for stocks that are priced at less than
their intrinsic value. As blend investors, we try to pay as little as possible
for as much growth as possible. And we focus on large cap companies, typically
those with market capitalizations greater than $5 billion.
The blend moniker is appropriate for this Fund not only because of the blend of
growth and value characteristics, but also because of its blend of quantitative
and qualitative approaches to portfolio management. There are a number of
quantitative measures we look at to judge growth and value. And there are
qualitative measures that we also believe are important to the success of an
investment.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 1
<PAGE>
Quantitative growth measures that we examine include historical earnings
progression, forecasted earnings growth, earnings revisions, and corporate
profitability. Value measures include price-to-earnings, price-to-book and
price-to-sales ratios. Taken together, these measures provide a quantitative
look at our universe of large-cap stocks. They allow us to estimate the growth
and value characteristics of each stock, and to put together an optimal blend
portfolio that balances these characteristics.
In addition to quantitative measures, we believe that qualitative factors are
also a critical aspect of our investment decision-making. Issues such as
management changes, corporate strategy and evolution of the competitive
landscape are important to reaching judgments about a company's future
prospects.
Recent Portfolio Changes
We noted in our last shareholder letter our intention to restructure the Fund by
constraining its "bets" versus the overall stock market. We implemented these
changes in the first quarter of 1999. Now the Fund has limited bets on both a
sector and individual stock basis, aligning the Fund much closer to the broader
market. These changes have resulted in a number of trades, affecting
approximately one-half of the Fund's portfolio. As a result, there were a
particularly large number of trades over the last six months. Some of the more
important changes are described below, with a focus on the top ten Fund
holdings.
The top holdings in the Fund now more closely track the overall market.
Companies like General Electric, Microsoft, Intel, IBM, Cisco Systems, Merck and
MCI WorldCom* are among the top ten positions in the Fund and among the ten
highest in market capitalization as well. All seven of these companies, except
IBM, were in the Fund six months ago. IBM brings to the portfolio superb
technology businesses. The company has a dominant mainframe computer line and is
rapidly increasing its information services product offerings. IBM has also
profited from the Internet by selling combinations of hardware, software and
services to its e-business customers.
The remaining three names in the Fund's top ten are Ameritech, Hewlett-Packard,
and Mobil. Although large companies in their own right, they are not among the
very largest in the stock market. Each of these companies was also in the Fund
at the beginning of the year. Ameritech, one of the regional Bell operating
companies, is in the process of merging with SBC Communications. H-P has seen
its fortunes revive based upon stronger printer and personal computer sales. And
Mobil is in the process of merging with Exxon. If successful, the resulting
merged entity will be the world's largest oil company.
The Fund is now more diversified than has been the case in the past. Securities
held in the portfolio have risen from 76 issues six months ago to 119 today. We
continue to manage the Fund as a fully invested equity portfolio. As a result,
cash (or short-term investments) is only 0.7% of total investments as of July
31, 1999. Under most market conditions we intend to continue our substantial
commitment to stocks.
Market Outlook
We expect strong underlying fundamentals to the market and the economy over the
next year. Nonetheless, stock prices may well continue to be volatile -- as we
have seen recently. As always, there are a number of uncertainties in the
markets. One that looms large today is the question of whether or not the Fed
will continue to raise interest rates. Many investors anticipate one additional
increase by the Fed. A series of rate increases, however, would likely trigger a
market decline.
Although we acknowledge the market's jitters and uncertainties, we think it
unlikely that the Fed will follow such a course, as we believe that inflation
will continue to remain low. We believe that with high worldwide industrial
capacity and rapidly dropping prices for information technologies, surging
inflation is a distant threat.
- ----------
* Please note the Fund's holdings are subject to change.
- --------------------------------------------------------------------------------
2 1999 Semi-Annual Report to Shareholders
<PAGE>
Thank you for your investment in the Smith Barney Large Cap Blend Fund. We look
forward to continuing to help you pursue your long-term financial goals in the
years ahead.
Sincerely,
/s/ Heath B. McLendon /s/ R. Jay Gerken
Heath B. McLendon R. Jay Gerken
Chairman Vice President
and Investment Officer
August 23, 1999
- --------------------------------------------------------------------------------
Top Ten Holdings* As of July 31, 1999
- --------------------------------------------------------------------------------
1. General Electric Co. 3.1%
- --------------------------------------------------------------------------------
2. Microsoft Corp. 2.9
- --------------------------------------------------------------------------------
3. Intel Corp. 2.7
- --------------------------------------------------------------------------------
4. International Business Machines Corp. 2.4
- --------------------------------------------------------------------------------
5. Ameritech Corp. 2.3
- --------------------------------------------------------------------------------
6. Cisco Systems, Inc. 1.8
- --------------------------------------------------------------------------------
7. Hewlett-Packard Co. 1.7
- --------------------------------------------------------------------------------
8. MCI WorldCom, Inc. 1.6
- --------------------------------------------------------------------------------
9. Mobil Corp. 1.5
- --------------------------------------------------------------------------------
10. Merck & Co., Inc. 1.5
- --------------------------------------------------------------------------------
* As a percentage of total common stock.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 3
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
7/31/99 $17.88 $17.82 $0.01 $0.40 1.99%+
- --------------------------------------------------------------------------------
1/31/99 15.72 17.88 0.12 0.87 20.69
- --------------------------------------------------------------------------------
1/31/98 14.30 15.72 0.19 0.70 16.30
- --------------------------------------------------------------------------------
1/31/97 12.16 14.30 0.20 0.18 20.97
- --------------------------------------------------------------------------------
1/31/96 9.62 12.16 0.20 0.20 30.97
- --------------------------------------------------------------------------------
1/31/95 10.36 9.62 0.19 0.14 (3.93)
- --------------------------------------------------------------------------------
1/31/94 9.58 10.36 0.23 0.00 10.70
- --------------------------------------------------------------------------------
Inception* -- 1/31/93 9.50 9.58 0.00 0.00 0.84+
================================================================================
Total $1.14 $2.49
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
7/31/99 $17.86 $17.76 $0.00 $0.40 1.69%+
- --------------------------------------------------------------------------------
1/31/99 15.72 17.86 0.06 0.87 20.13
- --------------------------------------------------------------------------------
1/31/98 14.33 15.72 0.14 0.70 15.65
- --------------------------------------------------------------------------------
1/31/97 12.19 14.33 0.15 0.18 20.43
- --------------------------------------------------------------------------------
1/31/96 9.65 12.19 0.15 0.20 30.23
- --------------------------------------------------------------------------------
1/31/95 10.38 9.65 0.14 0.14 (4.33)
- --------------------------------------------------------------------------------
1/31/94 9.58 10.38 0.15 0.00 10.01
- --------------------------------------------------------------------------------
Inception* -- 1/31/93 9.50 9.58 0.00 0.00 0.84+
================================================================================
Total $0.79 $2.49
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
7/31/99 $17.87 $17.76 $0.00 $0.40 1.63%+
- --------------------------------------------------------------------------------
Inception* -- 1/31/99 16.89 17.87 0.01 0.87 11.57+
================================================================================
Total $0.01 $1.27
================================================================================
- --------------------------------------------------------------------------------
4 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance -- Class O Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
7/31/99 $17.86 $17.77 $0.00 $0.40 1.74%+
- --------------------------------------------------------------------------------
1/31/99 15.72 17.86 0.06 0.87 20.14
- --------------------------------------------------------------------------------
1/31/98 14.33 15.72 0.14 0.70 15.65
- --------------------------------------------------------------------------------
1/31/97 12.19 14.33 0.15 0.18 20.43
- --------------------------------------------------------------------------------
1/31/96 9.65 12.19 0.15 0.20 30.23
- --------------------------------------------------------------------------------
Inception* -- 1/31/95 9.91 9.65 0.06 0.14 (0.58)+
================================================================================
Total $0.56 $2.49
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
================================================================================
7/31/99 $17.93 $17.87 $0.05 $0.40 2.19%+
- --------------------------------------------------------------------------------
1/31/99 15.73 17.93 0.15 0.87 21.16
- --------------------------------------------------------------------------------
1/31/98 14.34 15.73 0.28 0.70 16.76
- --------------------------------------------------------------------------------
1/31/97 12.16 14.34 0.22 0.18 21.48
- --------------------------------------------------------------------------------
Inception* -- 1/31/96 12.08 12.16 0.00 0.00 N/A**
================================================================================
Total $0.70 $2.15
================================================================================
It is the Fund's policy to distribute dividends quarterly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
----------------------------------------------
Class A Class B Class L Class O Class Y
================================================================================
Six Months Ended 7/31/99+ 1.99% 1.69% 1.63% 1.74% 2.19%
- --------------------------------------------------------------------------------
Year Ended 7/31/99 13.73 13.10 12.89 13.10 14.13
- --------------------------------------------------------------------------------
Five Years Ended 7/31/99 17.86 17.27 N/A N/A N/A
- --------------------------------------------------------------------------------
Inception* through 7/31/99 14.11 13.54 11.80 17.27 17.67
================================================================================
With Sales Charge(2)
----------------------------------------------
Class A Class B Class L Class O Class Y
================================================================================
Six Months Ended 7/31/99+ (3.10)% (3.28)% (0.37)% 0.75% 2.19%
- --------------------------------------------------------------------------------
Year Ended 7/31/99 8.06 8.10 10.75 12.10 14.13
- --------------------------------------------------------------------------------
Five Years Ended 7/31/99 16.65 17.17 N/A N/A N/A
- --------------------------------------------------------------------------------
Inception* through 7/31/99 13.25 13.54 10.81 17.27 17.67
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 5
<PAGE>
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
================================================================================
Class A (Inception* through 7/31/99) 143.26%
- --------------------------------------------------------------------------------
Class B (Inception* through 7/31/99) 135.17
- --------------------------------------------------------------------------------
Class L (Inception* through 7/31/99) 13.38
- --------------------------------------------------------------------------------
Class O (Inception* through 7/31/99) 120.40
- --------------------------------------------------------------------------------
Class Y (Inception* through 7/31/99) 76.78
================================================================================
(1) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B, L and O shares.
(2) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase and declines
thereafter by 1.00% per year until no CDSC occurs. Class L and O shares
also reflect the deduction of a 1.00% CDSC, which applies if shares are
redeemed within the first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, B, L, O and Y shares are November 6, 1992,
November 6, 1992, June 15, 1998, August 15, 1994 and January 31, 1996,
respectively.
** Information is not meaningful since the class was only open for one day.
- --------------------------------------------------------------------------------
6 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A and B Shares of the
Smith Barney Large Cap Blend Fund vs. Standard &Poor's 500 Index+
- --------------------------------------------------------------------------------
November 1992 -- July 1999
[LINE GRAPH]
+ Hypothetical illustration of $10,000 invested in Class A and B shares at
inception on November 6, 1992, assuming deduction of the maximum 5.00%
sales charge at the time of investment for Class A shares and the
deduction of the maximum 5.00% CDSC for Class B shares. It also assumes
reinvestment of dividends and capital gains, if any, at net asset value
through July 31, 1999. The Standard & Poor's 500 Index is composed of 500
widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and over-the-counter market. The index is unmanaged and is
not subject to the same management and trading expenses as a mutual fund.
The performance of the Fund's other classes may be greater or less than
the Class A and B shares' performance indicated on this chart, depending
on whether greater or lesser sales charges and fees were incurred by
shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
Industry Diversification*
- --------------------------------------------------------------------------------
[THE FOLLOWING INFORMATION WAS DEPICTED AS A BAR CHART
IN THE PRINTED MATERIALS.]
17.3% Electronic Technology
17.1% Finance
12.3% Utilities
10.2% Healthcare
6.6% Technology Services
6.6% Retail Trade
5.8% Consumer Non-Durables
4.6% Consumer Services
4.2% Energy Minerals
3.4% Non-Energy Minerals
11.9% Other
* As a percentage of total common stock.
Investment Breakdown
- --------------------------------------------------------------------------------
[THE FOLLOWING INFORMATION WAS DEPICTED AS A PIE CHART
IN THE PRINTED MATERIALS.]
0.7% Cash Equivalent
99.3% Common Stock
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) July 31, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
COMMON STOCK -- 99.3%
Commercial Services -- 0.5%
60,000 W.W. Grainger, Inc. $ 2,835,000
- --------------------------------------------------------------------------------
Consumer Durables -- 1.6%
105,000 Ford Motor Co. 5,105,625
45,000 General Motors Corp.(a) 2,742,188
31,600 Shaw Industries, Inc. 665,575
- --------------------------------------------------------------------------------
8,513,388
- --------------------------------------------------------------------------------
Consumer Non-Durables -- 5.8%
65,000 Anheuser-Busch Cos., Inc. 5,130,937
65,000 Coca-Cola Co. 3,920,313
25,000 Gillette Co. 1,095,313
80,000 Kimberly-Clark Corp. 4,880,000
130,000 PepsiCo Inc. 5,086,250
60,000 Philip Morris Cos., Inc. 2,235,000
70,000 Procter & Gamble Co. 6,335,000
55,000 V.F. Corp. 2,172,500
- --------------------------------------------------------------------------------
30,855,313
- --------------------------------------------------------------------------------
Consumer Services -- 4.6%
50,000 America Online, Inc. (b) 4,756,250
60,000 Comcast Corp., Class A Shares (b) 2,310,000
40,000 Cox Communications, Inc. (a) (b) 1,497,500
65,000 H&R Block, Inc. 3,550,625
45,000 McDonald's Corp. 1,875,938
90,000 TCA Cable Television, Inc. 5,276,250
100,000 Viacom Inc., Class B Shares (b) 4,193,750
45,000 Walt Disney Co. 1,243,125
- --------------------------------------------------------------------------------
24,703,438
- --------------------------------------------------------------------------------
Electronic Technology -- 17.3%
85,000 AlliedSignal, Inc. 5,498,438
150,000 Cisco Systems, Inc. (b) 9,318,750
175,000 Dell Computer Corp. (b) 7,153,125
80,000 Gulfstream Aerospace Corp. (b) 5,320,000
85,000 Hewlett-Packard Co. 8,898,438
100,000 International Business Machines Corp. 12,568,750
210,000 Intel Corp. 14,490,000
95,000 LM Ericsson Telephone Co. ADR 3,045,938
120,000 Lucent Technologies, Inc. 7,807,500
55,000 Motorola, Inc. 5,018,750
100,000 SCI Systems, Inc. (b) 5,275,000
135,000 Seagate Technology, Inc. (a) (b) 3,628,125
60,000 United Technologies Corp. 4,001,250
- --------------------------------------------------------------------------------
92,024,064
- --------------------------------------------------------------------------------
Energy Minerals -- 4.2%
120,000 Conoco Inc., Class A Shares(a) 3,127,500
85,000 Exxon Corp. 6,746,875
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) July 31, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Energy Minerals -- 4.2% (continued)
80,000 Mobil Corp. $ 8,180,000
85,000 Phillips Petroleum Co. 4,361,562
- --------------------------------------------------------------------------------
22,415,937
- --------------------------------------------------------------------------------
Finance -- 16.9%
120,000 A.G. Edwards, Inc. 3,315,000
55,000 American International Group, Inc. 6,386,875
120,000 BankAmerica Corp. 7,965,000
85,000 Bear Stearns Cos., Inc. 3,596,563
80,000 Chase Manhattan Corp. 6,150,000
50,000 CIGNA Corp. 4,409,375
125,000 Conseco, Inc. 3,601,562
60,000 Equitable Companies, Inc 3,855,000
35,000 Fannie Mae 2,415,000
50,000 First Union Corp. 2,300,000
90,000 Fleet Financial Group, Inc. 3,645,000
28,000 Goldman Sach Group, Inc.(a) 1,800,750
130,000 GreenPoint Financial Corp. 4,208,750
70,000 Hartford Financial Services Group, Inc. 3,780,000
35,000 J.P. Morgan & Co., Inc. 4,475,625
120,000 KeyCorp 3,780,000
120,000 Mercury General Corp. 4,117,500
65,000 Morgan Stanley Dean Witter & Co. 5,858,125
75,000 PNC Bank Corp. 3,965,625
90,000 Starwood Hotels & Resorts Worldwide, Inc. (a) 2,430,000
115,000 UnionBanCal Corp. 4,140,000
15,700 UnumProvident Corp. 812,475
105,000 Washington Mutual, Inc. 3,602,812
- --------------------------------------------------------------------------------
90,611,037
- --------------------------------------------------------------------------------
Healthcare -- 10.2%
50,000 Abbott Laboratories 2,146,875
20,000 American Home Products Corp. 1,020,000
55,000 Amgen, Inc. (b) 4,228,125
20,000 Baxter International, Inc. 1,373,750
50,000 Biogen, Inc. (b) 3,440,625
80,000 Bristol - Myers Squibb Co. 5,320,000
70,000 Eli Lilly & Co. 4,593,750
70,000 Johnson & Johnson 6,448,750
55,000 McKesson HBOC, Inc. 1,708,438
120,000 Merk & Co., Inc. 8,122,500
128,000 Mylan Laboratories Inc. 2,912,000
150,000 Pfizer Inc. 5,090,625
25,000 Schering - Plough Corp. 1,225,000
90,000 Watson Pharmaceuticals, Inc. (a)(b) 3,099,375
45,000 Wellpoint Health Networks, Inc.,
Class A Shares (b) 3,695,625
- --------------------------------------------------------------------------------
54,425,438
- --------------------------------------------------------------------------------
Industrial Services -- 0.8%
110,000 Fluor Corp. 4,406,875
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) July 31, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Non-Energy Minerals -- 3.4%
105,000 Air Products and Chemicals, Inc. $ 3,510,937
85,000 Alcoa, Inc. 5,089,375
40,000 Dow Chemical Co. 4,960,000
105,000 Rohm & Hass Co. 4,475,625
- --------------------------------------------------------------------------------
18,035,937
- --------------------------------------------------------------------------------
Process Industries -- 3.1%
150,000 General Electric Co. 16,350,000
- --------------------------------------------------------------------------------
Producer Manufacturing -- 2.9%
80,000 Caterpillar Inc.(a) 4,690,000
31,451 Delphi Automotive Systems Corp. 566,118
70,000 Ingersoll - Rand Co. 4,501,875
40,000 Johnson Controls, Inc. 2,742,500
50,000 Lexmark International Group, Inc.,
Class A Shares (b) 3,150,000
- --------------------------------------------------------------------------------
15,650,493
- --------------------------------------------------------------------------------
Publishing -- 1.6%
50,000 Knight - Ridder, Inc.(a) 2,681,250
85,000 New York Times Co., Class A Shares (a) 3,341,562
80,000 Readers Digest Association, Inc. 2,785,000
- --------------------------------------------------------------------------------
8,807,812
- --------------------------------------------------------------------------------
Retail Trade -- 6.5%
72,450 Albertson's, Inc. 3,599,859
35,000 Best Buy Co., Inc. (b) 2,611,875
82,500 The Gap, Inc.(a) 3,856,875
70,000 The Home Depot, Inc. 4,466,875
100,000 The Limited, Inc. 4,568,750
97,500 May Department Stores Co. 3,772,031
100,000 SUPERVALU Inc. 2,275,000
120,000 The TJX Companies, Inc. 3,967,500
140,000 Wal-Mart Stores, Inc. 5,915,000
- --------------------------------------------------------------------------------
35,033,765
- --------------------------------------------------------------------------------
Technology Services -- 6.5%
95,000 Automatic Data Processing, Inc. 3,805,938
95,000 BMC Software, Inc. (b) 5,118,125
95,000 Electronic Data Systems Corp. 5,729,687
180,000 Microsoft Corp. (b) 15,446,250
120,000 Unisys Corp. (b) 4,897,500
- --------------------------------------------------------------------------------
34,997,500
- --------------------------------------------------------------------------------
Transportation -- 1.2%
45,000 AMR Corp. (b) 2,919,375
65,000 Knightsbridge Tankers Ltd. 1,157,812
120,000 Southwest Airlines Co. 2,220,000
- --------------------------------------------------------------------------------
6,297,187
- --------------------------------------------------------------------------------
Utilities -- 12.2%
170,000 Ameritech Corp. 12,452,500
135,000 AT&T Corp. 7,011,563
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) July 31, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Utilities -- 12.2% (continued)
15,000 Bell Atlantic Corp. $ 956,250
110,000 BellSouth Corp. 5,280,000
115,000 Coastal Corp. 4,549,687
60,000 DTE Energy Co. (a) 2,347,500
55,000 Duke Energy Corp. 2,911,563
100,000 Edison International 2,531,250
85,000 GTE Corp. 6,263,437
105,000 MCI WorldCom, Inc. (b) 8,662,500
265,000 Niagara Mohawk Power Corp. (b) 4,173,750
100,000 PECO Energy Co. 4,237,500
25,000 SBC Communications, Inc. 1,429,688
45,000 US West, Inc. 2,579,062
- --------------------------------------------------------------------------------
65,386,250
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost-- $404,151,835) 531,349,434
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
REPURCHASE AGREEMENT -- 0.7%
$3,975,000 J.P. Morgan & Co., 5.050% due 8/2/99; Proceeds at
maturity -- $3,976,673; (Fully collateralized by
U.S. Treasury Notes, 3.625% due 1/15/08;
Market value -- $4,054,508)(Cost -- $3,975,000) 3,975,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $408,126,835*) $535,324,434
================================================================================
(a) All or a portion of this security is on loan (See Note 8).
(b) Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) July 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $408,126,835) $535,324,434
Cash 592,151
Collateral for securities on loan (Note 8) 32,973,600
Receivable for securities sold 2,621,446
Dividends and interest receivable 480,146
Receivable for Fund shares sold 303,865
- --------------------------------------------------------------------------------
Total Assets 572,295,642
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities on loan (Note 8) 32,973,600
Dividend payable 11,836,193
Payable for securities purchased 1,953,375
Investment advisory fees payable 200,108
Administration fees payable 88,937
Distribution fees payable 42,733
Payable for Fund shares purchased 407
Accrued expenses 107,689
- --------------------------------------------------------------------------------
Total Liabilities 47,203,042
- --------------------------------------------------------------------------------
Total Net Assets $525,092,600
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 29,477
Capital paid in excess of par value 327,429,383
Overdistributed net investment income (156,550)
Accumulated net realized gain from securities transactions 70,592,691
Net unrealized appreciation of investments 127,197,599
- --------------------------------------------------------------------------------
Total Net Assets $525,092,600
================================================================================
Shares Outstanding:
Class A 9,870,653
- --------------------------------------------------------------------------------
Class B 8,712,314
- --------------------------------------------------------------------------------
Class L 253,424
- --------------------------------------------------------------------------------
Class O 297,924
- --------------------------------------------------------------------------------
Class Y 10,342,700
- --------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $17.82
- --------------------------------------------------------------------------------
Class B* $17.76
- --------------------------------------------------------------------------------
Class L** $17.76
- --------------------------------------------------------------------------------
Class O** $17.77
- --------------------------------------------------------------------------------
Class Y (and redemption price) $17.87
- --------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $18.76
- --------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $17.94
================================================================================
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if
shares are redeemed within one year from purchase (See Note 2).
** Redemption price is NAV of Class L and O shares reduced by a 1.00% CDSC if
shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended July 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 3,439,229
Interest 86,096
Less: Foreign withholding tax (5,592)
- --------------------------------------------------------------------------------
Total Investment Income 3,519,733
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 1,189,445
Distribution fees (Note 2) 855,592
Administration fees (Note 2) 528,642
Shareholder and system servicing fees 216,130
Shareholder communications 88,710
Registration fees 87,863
Audit and legal 38,687
Custody 11,780
Trustees' fees 7,480
Other 7,488
- --------------------------------------------------------------------------------
Total Expenses 3,031,817
- --------------------------------------------------------------------------------
Net Investment Income 487,916
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (note 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 242,959,718
Cost of securities sold 172,363,856
- --------------------------------------------------------------------------------
Net Realized Gain 70,595,862
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 188,018,469
End of period 127,197,599
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (60,820,870)
- --------------------------------------------------------------------------------
Net Gain on Investments 9,774,992
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 10,262,908
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 13
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended July 31, 1999 (unaudited)
and the Year Ended January 31, 1999
<TABLE>
<CAPTION>
July 31 January 31
=======================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 487,916 $ 3,374,821
Net realized gain 70,595,862 27,308,881
Increase (decrease) in net unrealized appreciation (60,820,870) 58,611,216
- -------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 10,262,908 89,294,918
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (646,266) (3,147,777)
Net realized gains (11,836,193) (24,580,392)
- -------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (12,482,459) (27,728,169)
- -------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 33,533,751 85,496,495
Net asset value of shares issued for
reinvestment of dividends 135,504 17,167,175
Cost of shares reacquired (32,162,514) (68,037,009)
- -------------------------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 1,506,741 34,626,661
- -------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (712,810) 96,193,410
NET ASSETS:
Beginning of period 525,805,410 429,612,000
- -------------------------------------------------------------------------------------------------------
End of period* $ 525,092,600 $ 525,805,410
=======================================================================================================
* Includes undistributed (overdistributed) net investment income of: $ (156,550) $ 1,800
=======================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Large Cap Blend Fund ("Fund"), a separate investment fund of
the Smith Barney Equity Funds ("Trust"), a Massachusetts business trust, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Trust consists of this
Fund and one other separate investment fund, Concert Social Awareness Fund. The
financial statements and financial highlights for the other fund are presented
in a separate semi-annual report.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities traded on
national securities markets are valued at the closing prices on such markets;
securities for which no sales price were reported and U.S. government agencies
and obligations are valued at current quoted bid prices; (c) securities that
have a maturity of more than 60 days are valued at prices based on market
quotations for securities of similar type, yield and maturity; (d) securities
maturing within 60 days are valued at cost plus accreted discount, or minus
amortized premium, which approximates value; (e) dividend income is recorded on
the ex-dividend date and interest income is recorded on an accrual basis; (f)
gains or losses on the sale of securities are calculated by using the specific
identification method; (g) dividends and distributions to shareholders are
recorded on the ex-dividend date; (h) the accounting records are maintained in
U.S. dollars. All assets and liabilities denominated in foreign currencies are
translated into U.S. dollars based on the rate of exchange of such currencies
against U.S. dollars on the date of valuation. Purchases and sales of
securities, and income and expenses are translated at the rate of exchange
quoted on the respective date that such transactions are recorded. Differences
between income or expense amounts recorded and collected or paid are adjusted
when reported by the custodian bank; (i) direct expenses are charged to each
class; management fees and general fund expenses are allocated on the basis of
relative net assets; (j) the Fund intends to comply with the applicable
provisions of the Internal Revenue Code of 1986, as amended, pertaining to
regulated investment companies and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes;
(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. At January 31, 1999, reclassifications were made to the
Fund's capital accounts to reflect permanent book/tax differences and income and
gains available for distributions under income tax regulations. Net investment
income, net realized gains and net assets were not affected by this change; 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.
2. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSBC Fund Management Inc. ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), acts as investment advisor to the Trust. The Fund pays
SSBC an advisory fee calculated at an annual rate of 0.45% of the average daily
net assets. This fee is calculated daily and paid monthly.
SSBC also acts as the Fund's administrator for which it receives a fee
calculated at an annual rate of 0.20% of the average daily net assets. This fee
is calculated daily and paid monthly.
CFBDS, Inc. ("CFBDS") acts as the Fund's distributor. Salomon Smith Barney Inc.
("SSB"), another sub-
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
sidiary of SSBH, as well as certain other broker-dealers, continues to sell Fund
shares to the public as a member of the selling group.
SSB acts as the primary broker for its portfolio agency transactions. For the
six months ended July 31, 1999, SSB received total brokerage commissions of
$2,700.
There is a contingent deferred sales charge ("CDSC") of 5.00% on Class B shares,
which applies if redemption occurs within one year from purchase and declines
thereafter by 1.00% per year until no CDSC is incurred. Class L and O shares
also have a 1.00% CDSC, which applies if redemption occurs within the first year
of purchase.
For the six months ended July 31, 1999, CFBDS and SSB received sales charges of
$56,000 and $27,000 on sales of the Fund's Class A and Class L shares,
respectively. In addition, CDSCs paid to SSB were approximately:
Class B Class L
================================================================================
CDSCs $64,000 $4,000
================================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to
Class A, B, L and O shares calculated at the annual rate of 0.25% of the average
daily net assets for each respective class. In addition, the Fund pays a
distribution fee with respect to Class B, L and O shares calculated at the
annual rate of 0.50%, 0.75% and 0.45% of the average daily net assets for each
class, respectively.
For the six months ended July 31, 1999, total Distribution Plan fees incurred
were:
Distribution
Plan Fees
================================================================================
Class A $223,556
- --------------------------------------------------------------------------------
Class B 594,919
- --------------------------------------------------------------------------------
Class L 16,179
- --------------------------------------------------------------------------------
Class O 20,938
================================================================================
All officers and one Trustee of the Trust are employees of SSB.
3. Investments
During the six months ended July 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $241,822,936
- --------------------------------------------------------------------------------
Sales 242,959,718
================================================================================
At July 31, 1999, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $145,803,734
Gross unrealized depreciation (18,606,135)
- --------------------------------------------------------------------------------
Net unrealized appreciation $127,197,599
================================================================================
4. Repurchase Agreements
The Fund purchases (and its custodian takes possession of) U.S. government
securities from banks and securities dealers subject to agreements to resell the
securities to the sellers at a future date (generally, the next business day) at
an agreed-upon higher repurchase price. The Fund requires continual maintenance
of the market value of the collateral in amounts at least equal to the
repurchase price.
5. Reverse Repurchase Agreement
The Fund may enter into reverse repurchase agreement transactions for leveraging
purposes. A reverse repurchase agreement involves a sale by the Fund of
securities that it holds with an agreement by the Fund to repurchase the same
securities at an agreed upon price and date. A reverse repurchase agreement
involves the risk that the market value of the securities sold by the Fund may
decline below the repurchase price of the securities. The Fund will establish a
segregated account with its custodian, in which the Fund will maintain cash,
U.S. government securities or other liquid high grade debt obligations equal in
value to its obligations with respect to reverse repurchase agreements.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
At July 31, 1999, the Fund had no reverse repurchase agreements.
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 Fund records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transactions and the Fund's basis in the contract.
The Fund enters into such contracts to hedge a portion of its portfolio. The
Fund bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At July 31, 1999, the Fund had no open futures contracts.
7. Option Contracts
Premiums paid when put or call options are purchased by the Fund represent
investments which are marked-to-market daily. When a purchase option expires,
the Fund will realize a loss in the amount of the premium paid. When the fund
enters into a closing sales transaction, the Fund will realize a gain or loss
depending on whether the proceeds from the closing sales transaction are greater
or less than the premium paid for the option. When the Fund exercises a put
option, it will realize a gain or loss from the sale of the underlying security
and the proceeds from such sale will be decreased by the premium originally
paid. When the Fund exercises a call option, the cost of the security which the
Fund purchases upon exercise will be increased by the premium originally paid.
At July 31, 1999, the Fund had no open purchased call or put option contracts.
When a Fund writes a covered call or put option, an amount equal to the premium
received by the Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Fund realizes a gain
equal to the amount of the premium received. When the Fund enters into a closing
purchase transaction, the Fund realizes a gain or loss depending upon whether
the cost of the closing transaction is greater or less than the premium
originally received without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a written call option is exercised, the cost of the security sold will be
decreased by the premium originally received. When a put option is exercised,
the amount of the premium originally received will reduce the cost of the
security which the Fund purchased upon exercise. When written index options are
exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Fund enters into options for hedging purposes. The risk in writing a
covered call option is that the Fund gives up the opportunity to participate in
any increase in the price of the underlying security beyond the exercise price.
The risk in writing a put option is that the Fund is exposed to the risk of a
loss if the market price of the underlying security declines.
During the six months ended July 31, 1999, the Fund did not write any options.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 17
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
8. Lending of Portfolio Securities
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations. Fees earned by the Fund on securities lending are recorded as
interest income. Loans of securities by the Fund are collateralized by cash,
U.S. Government securities or high quality money market instruments that are
maintained at all times in an amount at least equal to the current market value
of the loaned securities, plus a margin which may vary depending on the type of
securities loaned. The custodian establishes and maintains the collateral in a
segregated account. The Fund maintains exposure for the risk of any losses in
the investment of amounts received as collateral.
At July 31, 1999, the Fund had loaned common stocks having a value of
$31,738,138 and holds the following collateral for loaned securities:
Security Description Value
================================================================================
Time Deposit:
Barclays Bank, 5.125% due 8/2/99 $ 3,759,900
Bank Brussels Lambert, 5.156% due 8/2/99 5,870,200
Chase, 5.125% due 8/2/99 6,119,053
Chase Manhattan Bank, 5.125% due 8/2/99 3,759,900
Bank of Montreal, 5.125% due 8/2/99 3,904,428
Toronto Dominion Bank, 5.125% due 8/2/99 3,759,900
Commercial Paper:
Moriarty LLC, 5.123% due 8/16/99 2,164,746
Certificate of Deposit:
Svenska Handelsbanken, 4.930% due 10/25/99 3,635,473
- --------------------------------------------------------------------------------
Total $32,973,600
================================================================================
Income earned by the Fund from securities loaned for the six months ended July
31, 1999 was $25,274.
9. Shares of Beneficial Interest
At July 31, 1999, the Trust had an unlimited number of shares of beneficial
interest authorized with a par value of $0.001 per share. The Fund has the
ability to issue multiple classes of shares. Each share of a class represents an
identical interest and has the same rights, except that each class bears certain
direct expenses, including those specifically related to the distribution of its
shares.
At July 31, 1999, total paid-in capital amounted to the following for each
class:
<TABLE>
<CAPTION>
Class A Class B Class L Class O Class Y
========================================================================================
<S> <C> <C> <C> <C> <C>
Total Paid-in Capital $100,978,361 $69,571,340 $4,388,921 $3,950,908 $148,569,330
========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
18 1999 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
July 31, 1999 January 31, 1998
------------------------------- -------------------------------
Shares Amount Shares Amount
============================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 614,895 $ 11,047,491 1,569,148 $ 26,492,698
Shares issued on reinvestment 7,787 135,504 558,601 9,218,773
Shares reacquired (755,149) (13,615,424) (1,777,302) (29,455,721)
- ------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (132,467) $ (2,432,429) 350,447 $ 6,255,750
============================================================================================================
Class B
Shares sold 596,052 $ 10,717,736 1,056,092 $ 17,599,116
Shares issued on reinvestment -- -- 462,610 7,622,062
Shares reacquired (944,894) (16,908,674) (2,233,185) (37,011,623)
- ------------------------------------------------------------------------------------------------------------
Net Decrease (348,842) $ (6,190,938) (714,483) $(11,790,445)
============================================================================================================
Class L*
Shares sold 177,697 $ 3,190,209 115,141 $ 1,880,488
Shares issued on reinvestment -- -- 2,240 36,677
Shares reacquired (34,638) (612,296) (7,016) (106,157)
- ------------------------------------------------------------------------------------------------------------
Net Increase 143,059 $ 2,577,913 110,365 $ 1,811,008
============================================================================================================
Class O**
Shares sold 14,572 $ 257,821 75,695 $ 1,278,352
Shares issued on reinvestment -- -- 17,564 289,663
Shares reacquired (37,807) (681,120) (90,556) (1,463,508)
- ------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (23,235) $ (423,299) 2,703 $ 104,507
============================================================================================================
Class Y
Shares sold 464,714 $ 8,320,494 2,312,952 $ 38,245,841
Shares reacquired (18,760) (345,000) -- --
- ------------------------------------------------------------------------------------------------------------
Net Increase 445,954 $ 7,975,494 2,312,952 $ 38,245,841
============================================================================================================
</TABLE>
* For Class L shares, transactions are for the period from June 15, 1998
(inception date) to January 31, 1999.
** On June 12, 1998, Class C shares were renamed Class O shares.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 19
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares 1999(1)(2) 1999(2) 1998 1997 1996(2) 1995
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.88 $15.72 $14.30 $12.16 $9.62 $10.36
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.02 0.13 0.21 0.19 0.20 0.20
Net realized and unrealized gain (loss) 0.33 3.02 2.10 2.33 2.74 (0.61)
- ----------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.35 3.15 2.31 2.52 2.94 (0.41)
- ----------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.01) (0.12) (0.19) (0.20) (0.20) (0.19)
Net realized gains (0.40) (0.87) (0.70) (0.18) (0.20) (0.14)
- ----------------------------------------------------------------------------------------------------------------
Total Distributions (0.41) (0.99) (0.89) (0.38) (0.40) (0.33)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.82 $17.88 $15.72 $14.30 $12.16 $9.62
- ----------------------------------------------------------------------------------------------------------------
Total Return 1.99%++ 20.69% 16.30% 20.97% 30.97% (3.93)%
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $175,811 $178,847 $151,696 $133,272 $110,089 $95,054
- ----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.13%+ 1.09% 1.09% 1.12% 1.16% 1.41%
Net investment income 0.20+ 0.77 1.35 1.48 1.77 1.86
- ----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 46% 29% 17% 9% 15% 127%
================================================================================================================
</TABLE>
(1) For the six months ended July 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may be representative of the total
return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31, except where noted:
<TABLE>
<CAPTION>
Class B Shares 1999(1)(2) 1999(2) 1998 1997 1996(2) 1995
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.86 $15.72 $14.33 $12.19 $9.65 $10.38
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.03) 0.05 0.13 0.13 0.14 0.17
Net realized and unrealized gain (loss) 0.33 3.02 2.10 2.34 2.75 (0.62)
- ----------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.30 3.07 2.23 2.47 2.89 (0.45)
- ----------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.06) (0.14) (0.15) (0.15) (0.14)
Net realized gains (0.40) (0.87) (0.70) (0.18) (0.20) (0.14)
- ----------------------------------------------------------------------------------------------------------------
Total Distributions (0.40) (0.93) (0.84) (0.33) (0.35) (0.28)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.76 $17.86 $15.72 $14.33 $12.19 $9.65
- ----------------------------------------------------------------------------------------------------------------
Total Return 1.69%++ 20.13% 15.65% 20.43% 30.23% (4.33)%
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $154,716 $161,801 $153,651 $137,187 $112,891 $92,153
- ----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.63%+ 1.59% 1.59% 1.62% 1.65% 1.90%
Net investment income (loss) (0.30)+ 0.29 0.86 0.98 1.27 1.38
- ----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 46% 29% 17% 9% 15% 127%
================================================================================================================
</TABLE>
(1) For the six months ended July 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may be representative of the total
return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 21
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout the
period ended January 31, except where noted:
Class L Shares 1999(1)(2) 1999(2)(3)
============================================================================
Net Asset Value, Beginning of Period $17.87 $16.89
- ----------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.06) (0.04)
Net realized and unrealized gain 0.35 1.90
- ----------------------------------------------------------------------------
Total Income From Operations 0.29 1.86
- ----------------------------------------------------------------------------
Less Distributions From:
- ----------------------------------------------------------------------------
Net investment income -- (0.01)
Net realized gains (0.40) (0.87)
- ----------------------------------------------------------------------------
Total Distributions (0.40) (0.88)
- ----------------------------------------------------------------------------
Net Asset Value, End of Period $17.76 $17.87
- ----------------------------------------------------------------------------
Total Return++ 1.63% 11.57%
- ----------------------------------------------------------------------------
Net Assets, End of Period (000s) $4,498 $1,972
- ----------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 2.00% 1.85%
Net investment loss (0.70) (0.37)
- ----------------------------------------------------------------------------
Portfolio Turnover Rate 46% 29%
============================================================================
(1) For the six months ended July 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from June 15, 1998 (inception date) to January 31, 1999.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
22 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31, except where noted:
<TABLE>
<CAPTION>
Class O Shares 1999(1)(2) 1999(2)(3) 1998 1997 1996(2) 1995(4)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.86 $15.72 $14.33 $12.19 $9.65 $9.91
- -------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.03) 0.05 0.13 0.14 0.13 0.07
Net realized and unrealized gain (loss) 0.34 3.02 2.10 2.33 2.76 (0.13)
- -------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.31 3.07 2.23 2.47 2.89 (0.06)
- -------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.06) (0.14) (0.15) (0.15) (0.06)
Net realized gains (0.40) (0.87) (0.70) (0.18) (0.20) (0.14)
- -------------------------------------------------------------------------------------------------------
Total Distributions (0.40) (0.93) (0.84) (0.33) (0.35) (0.20)
- -------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.77 $17.86 $15.72 $14.33 $12.19 $9.65
- -------------------------------------------------------------------------------------------------------
Total Return 1.74%++ 20.14% 15.65% 20.43% 30.23% (0.58)%++
- -------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $5,292 $5,736 $5,007 $2,958 $961 $85
- -------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.65%+ 1.59% 1.57% 1.61% 1.62% 1.83%+
Net investment income (loss) (0.31)+ 0.28 0.86 0.94 1.11 1.44+
- -------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 46% 29% 17% 9% 15% 127%
=======================================================================================================
</TABLE>
(1) For the six months ended July 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed Class O shares.
(4) For the period from August 15, 1994 (inception date) to January 31, 1995.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 23
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31, except where noted:
<TABLE>
<CAPTION>
Class Y Shares 1999(1)(2) 1999(2) 1998 1997 1996(2)(3)
==============================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.93 $15.73 $14.34 $12.16 $12.08
- ----------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.06 0.19 0.27 0.22 --
Net realized and unrealized gain 0.33 3.03 2.10 2.36 0.08
- ----------------------------------------------------------------------------------------------
Total Income From Operations 0.39 3.22 2.37 2.58 0.08
- ----------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.05) (0.15) (0.28) (0.22) --
Net realized gains (0.40) (0.87) (0.70) (0.18) --
- ----------------------------------------------------------------------------------------------
Total Distributions (0.45) (1.02) (0.98) (0.40) --
- ----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.87 $17.93 $15.73 $14.34 $12.16
- ----------------------------------------------------------------------------------------------
Total Return 2.19%++ 21.16% 16.76% 21.48% N/A*
- ----------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $184,776 $177,449 $119,258 $78,192 $5
- ----------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.71%+ 0.69% 0.69% 0.73% N/A*
Net investment income 0.62+ 1.14 1.73 1.73 N/A*
- ----------------------------------------------------------------------------------------------
Portfolio Turnover Rate 46% 29% 17% 9% 15%
==============================================================================================
</TABLE>
(1) For the six months ended July 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) Inception date is January 31, 1996.
* Information is not meaningful since the class was only open for one day.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On May 12, 1999, a special meeting of shareholders of the Trust was held for the
purpose of electing Trustees of the Fund.
The results of the vote were as follows:
<TABLE>
<CAPTION>
Shares Voted Percentage Shares Voted Percentage
Name of Directors For Shares Voted Against Shares Voted
====================================================================================
<S> <C> <C> <C> <C>
Lee Abraham 62,342,951.572 98.630% 865,940.611 1.370%
Allan J. Bloostein 62,384,540.377 98.696 824,351.806 1.304
Jane F. Dasher 62,392,002.787 98.708 816,889,396 1.292
Donald R. Foley 62,322,262.500 98.595 886,629.683 1.403
Richard E. Hanson, Jr. 62,380,877.618 98.690 828,014.565 1.310
Paul Hardin 62,379,975.324 98.689 828,916.859 1.311
Heath B. McLendon 62,370,291.215 98.673 838,630.968 1.327
Roderick C. Rasmussen 62,346,471.848 98.636 862,420.335 1.364
John P. Toolan 62,396,377.832 98.715 812,514.351 1.285
====================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 25
<PAGE>
Smith Barney
Large Cap
Blend Fund
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
R. Jay Gerken
Vice President and Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Advisor
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9699
Providence, RI 02940-9699
This report is submitted for the general information of shareholders of Smith
Barney Equity Funds -- Smith Barney Large Cap Blend Fund. It is not authorized
for distribution to prospective investors unless accompanied or preceded by a
current Prospectus for the Fund, which contains information concerning the
Fund's investment policies and expenses as well as other pertinent information.
SALOMONSMITHBARNEY
------------------
A member of citigroup[LOGO]
Salomon Smith Barney is a Service mark of Salomon Smith Barney Inc.
Smith Barney Large Cap Blend Fund
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD0425 9/99
[RECYCLE LOGO]
