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[LOGO]
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SMITH BARNEY
LARGE CAP BLEND
Fund
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STYLE PURE SERIES
ANNUAL REPORT
JANUARY 31, 2000
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[LOGO] Smith Barney
Mutual Funds
NOT FDIC INSURED O NOT BANK GUARANTEED O MAY LOSE VALUE
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<PAGE>
Smith Barney
Large Cap Blend Fund
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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
January 31, 2000
Without Sales Charge(1)
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Class A Class B Class L Class O
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One-Year 5.10% 4.55% 4.31% 4.55%
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Five-Year 18.51 17.90 N/A 17.90
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Since Inception+ 13.54 12.97 9.75 16.13
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With Sales Charge(2)
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Class A Class B Class L Class O
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One-Year (0.15)% 0.11% 2.39% 3.66%
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Five-Year 17.29 17.80 N/A 17.90
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Since Inception+ 12.74 12.97 9.08 16.13
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(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.
+ 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.
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FUND HIGHLIGHT
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While no guarantees can be made, we are confident that the Fund's holdings in
several companies, which should benefit from increased use of the Internet and
the worldwide economic recovery, have significant potential to offer long-term
capital growth in the new century. In addition, the Fund's diversification
strategy should also continue to positively contribute to its performance in the
future.
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NASDAQ SYMBOL
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Class A SGIAX
Class B SGIBX
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WHAT'S INSIDE
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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
Independent Auditors' Report................................................ 25
Tax Information............................................................. 26
Additional Shareholder Information.......................................... 26
<PAGE>
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Shareholder Letter
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[PHOTO]
HEATH B. MCLENDON
Chairman
[PHOTO]
R. JAY GERKEN, CFA
Vice President and Investment Officer
Dear Shareholder:
We are pleased to provide you with the annual report for the Smith Barney Large
Cap Blend Fund ("Fund") for the year ended January 31, 2000. In this letter, we
summarize the period's prevailing economic and market conditions and outline our
investment strategy. For your convenience, a detailed summary of the Fund, as
well as its current holdings, can be found in the appropriate sections that
follow. Any discussion of the Fund's holdings is as of January 31, 2000. Please
refer to pages eight through eleven for the Fund's holdings. We hope you find
this report to be useful and informative.
Performance Update
For the year ended January 31, 2000, the Fund's Class A shares, without sales
charges, returned 5.10%. In comparison, the Standard & Poor's 500 Index ("S&P
500") returned 10.34% for the same period. (The S&P 500 is a market
capitalization-weighted measure of 500 widely held common stocks.)
The Fund's underperformance relative to the S&P 500 was primarily due to the
Fund's holdings in value stocks, a segment of the market which was largely
out-of-favor with many investors during the reporting period. Technology was the
strongest performing sector last year. Although the Fund has some holdings in
technology, our technology companies tend to be more conservative than many of
the more speculative companies which had the greatest returns during this
period. Despite the Fund's underperformance, we are confident that our
investment approach should offer capital growth over the long term.
Market and Economic Overview
The stock market continued its record performance for most of the reporting
period, supported by strong earnings reports and the apparent economic recovery
overseas. However, this continued growth led to concerns that inflationary
pressures would surface. As an inflationary precaution, the Federal Reserve
Board ("Fed") raised interest rates three times in 1999, for a total of 75 basis
points, effectively "taking back" the interest rate cuts implemented in the fall
of 1998. (A basis point is .01%, or one one-hundredth of a percent.) This change
in monetary policy by the Fed negatively impacted the bond markets but did
little to suppress the strong performance of many stocks.
The performance of the stock markets during the period was largely attributed to
the performance of growth stocks. The value segment of the market has continued
to underperform growth. 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. Despite this, we believe the
performance of value stocks will improve, as many investors begin to seek
high-quality companies with favorable valuations.
During the period, technology stocks posted exceptional returns. The historic
57.24% return of the NASDAQ Composite Index for the 12-month period ended
January 31, 2000, in our view, is a clear illustration of investors' enthusiasm
for this sector of the market, as the NASDAQ is dominated by large
capitalization technology stocks. (The NASDAQ Composite Index is a market
value-weighted index that measures all domestic and non-U.S. based securities,
more than 4,700 companies, listed on the
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Smith Barney Large Cap Blend Fund 1
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NASDAQ stock market.) The strong performance of technology was spurred by rapid
sales growth to support the ever-increasing use and influence of the Internet by
both businesses and individuals.
Investment Philosophy
As befits its name, the Fund employs a "blend" stock selection philosophy. The
term "blend" refers to an investing approach that combines growth and value
investment styles. As blend investors, we attempt to pay as little as possible
for as much growth potential as possible. And we focus on large cap companies,
typically those with market capitalizations greater than $5 billion.
The blend moniker is appropriate for the Fund not only because of the blend of
growth and value style 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 equally important to the
success of an investment.
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.1 Taken together, these measures provide us with a
quantitative look at our universe of large-cap stocks. Moreover, they enable us
to estimate the growth and value characteristics of each stock, and to put
together what we believe is an optimal blend portfolio that balances these
characteristics.
In addition to quantitative measures, we focus on qualitative factors such as
management changes, corporate strategy and evolution of the competitive
landscape. As previously noted, we think these qualitative considerations are
important to making judgments about a company's future prospects.
Portfolio Update
During the last six months of the reporting period, we added several companies
in the technology sector to the Fund's portfolio with the objective of
strengthening and diversifying the portfolio's holdings in technology. Those
companies include:
o Compuware, a leading software and services provider;
o Siebel Systems, a company which designs, develops and sells marketing and
customer service software with a focus on e-business applications;
o Teradyne, a manufacturer of automatic test equipment and related software
for the electronics and communications industries; and
o Yahoo!, the leading global Internet media company, which offers a branded
network of comprehensive information, communication and shopping services
to millions of users daily.
Two utility companies, Enron and Texas Utilities Co., were also added to the
Fund's portfolio during the period. Enron, a natural gas utilities company, has
grown from a major gas pipeline system into a total energy management company.
Texas Utilities Co., a utilities holding company, has begun to expand
internationally. We believe that developments in these two companies are
significant and should provide long-term capital growth potential. We also added
several other stocks to the Fund across a range of industries.
During the period, we eliminated some of the Fund's holdings. Two of the
companies we sold were in the utility sector. We sold U.S. West to reduce the
Fund's exposure to the telecommunications industry and Niagara Mohawk was
eliminated due to the fact that the company's restructuring was taking longer
than originally anticipated. The Fund originally held
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1 A price-to-earnings ratio measures the price of a stock divided by its
earnings per share. This ratio, also known as the multiple, gives
investors an idea of how much they are paying for a company's earning
power. A price-to-book ratio is the price of a stock divided by its net
asset value. A price-to-sales ratio is the price of a stock divided by its
sales per share for the preceeding 12 months.
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2 2000 Annual Report Shareholders
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American Stores, which was merged into Albertson's. We eliminated the
Albertson's position due to the difficulties in merging the American Store
operations as well as the challenges presented by a very competitive
food-retailing environment.
During the period, the Fund had a number of holdings whose names and businesses
changed as a result of mergers. TCA Cable was purchased by Cox Communications on
May 12, 1999, reflecting the ongoing consolidation in the cable industry.
Honeywell and Allied Signal merged, with the newly combined company now known
simply as Honeywell. Gulfstream Aerospace became part of General Dynamics and
the merger of Exxon and Mobil resulted in Exxon Mobil, a dominant force in the
oil and gas industry. We anticipate that merger and acquisition activity should
continue for the near term, as witnessed by the pending mega-merger of America
Online and Time Warner.
Market Outlook
In 1999, U.S. stocks increased while bond prices declined. In our opinion, it is
unlikely that the same set of market conditions will occur in 2000. In our view,
the performance of the markets should be, in large part, determined by the
actions of the Fed. On February 2, 2000, the Fed, in fact, raised interest rates
0.25%, to 5.75%, which had a somewhat negative effect on the stock market.
However, we are confident that the Fed should limit future rate increases, as
inflation should remain low.2 Looking ahead, in our view, stocks should continue
to perform well, powered by strong earnings increases.
Thank you for your investment in the Smith Barney Large Cap Blend Fund. We look
forward to continuing to help you achieve your financial goals in the new
century.
Sincerely,
/s/ Heath B. McLendon /s/ R. Jay Gerken
Heath B. McLendon R. Jay Gerken
Chairman Vice President
and Investment Officer
February 24, 2000
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Smith Barney Large Cap Blend Fund 3
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Historical Performance -- Class A Shares
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Net Asset Value
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Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
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1/31/00 $17.88 $15.97 $0.01 $2.78 5.10%
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1/31/99 15.72 17.88 0.12 0.87 20.69
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1/31/98 14.30 15.72 0.19 0.70 16.30
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1/31/97 12.16 14.30 0.20 0.18 20.97
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1/31/96 9.62 12.16 0.20 0.20 30.97
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1/31/95 10.36 9.62 0.19 0.14 (3.93)
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1/31/94 9.58 10.36 0.23 0.00 10.70
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Inception* -- 1/31/93 9.50 9.58 0.00 0.00 0.84+
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Total $1.14 $4.87
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Historical Performance -- Class B Shares
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Net Asset Value
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Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
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1/31/00 $17.86 $15.87 $0.00 $2.78 4.55%
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1/31/99 15.72 17.86 0.06 0.87 20.13
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1/31/98 14.33 15.72 0.14 0.70 15.65
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1/31/97 12.19 14.33 0.15 0.18 20.43
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1/31/96 9.65 12.19 0.15 0.20 30.23
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1/31/95 10.38 9.65 0.14 0.14 (4.33)
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1/31/94 9.58 10.38 0.15 0.00 10.01
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Inception* -- 1/31/93 9.50 9.58 0.00 0.00 0.84+
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Total $0.79 $4.87
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Historical Performance -- Class L Shares
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Net Asset Value
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Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
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1/31/00 $17.87 $15.84 $0.00 $2.78 4.31%
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Inception* -- 1/31/99 16.89 17.87 0.01 0.87 11.57+
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Total $0.01 $3.65
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4 2000 Annual Report Shareholders
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Historical Performance -- Class O Shares
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Net Asset Value
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Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
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1/31/00 $17.86 $15.87 $0.00 $2.78 4.55%
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1/31/99 15.72 17.86 0.06 0.87 20.14
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1/31/98 14.33 15.72 0.14 0.70 15.65
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1/31/97 12.19 14.33 0.15 0.18 20.43
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1/31/96 9.65 12.19 0.15 0.20 30.23
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Inception* -- 1/31/95 9.91 9.65 0.06 0.14 (0.58)+
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Total $0.56 $4.87
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Historical Performance -- Class Y Shares
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Net Asset Value
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Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
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1/31/00 $17.93 $16.06 $0.05 $2.78 5.53%
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1/31/99 15.73 17.93 0.15 0.87 21.16
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1/31/98 14.34 15.73 0.28 0.70 16.76
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1/31/97 12.16 14.34 0.22 0.18 21.48
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Inception* -- 1/31/96 12.08 12.16 0.00 0.00 N/A**
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Total $0.70 $4.53
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It is the Fund's policy to distribute dividends quarterly and capital gains, if
any, annually.
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Average Annual Total Return
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Without Sales Charge(1)
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Class A Class B Class L Class O Class Y
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Year Ended 1/31/00 5.10% 4.55% 4.31% 4.55% 5.53%
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Five Years Ended 1/31/00 18.51 17.90 N/A 17.90 N/A
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Inception* through 1/31/00 13.54 12.97 9.75 16.13 16.21
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With Sales Charge(2)
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Class A Class B Class L Class O Class Y
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Year Ended 1/31/00 (0.15)% 0.11% 2.39% 3.66% 5.53%
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Five Years Ended 1/31/00 17.29 17.80 N/A 17.90 N/A
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Inception* through 1/31/00 12.74 12.97 9.08 16.13 16.21
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Smith Barney Large Cap Blend Fund 5
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Cumulative Total Return
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Without Sales Charge(1)
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Class A (Inception* through 1/31/00) 150.67%
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Class B (Inception* through 1/31/00) 141.78
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Class L (Inception* through 1/31/00) 16.37
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Class O (Inception* through 1/31/00) 126.48
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Class Y (Inception* through 1/31/00) 82.56
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(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.
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6 2000 Annual Report Shareholders
<PAGE>
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Smith Barney Large Cap Blend Fund at a Glance (unaudited)
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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+
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November 1992-- January 2000
[The following table was depicted as a mountain chart in the printed material.]
SB G&I Class A SB G&I Class B S&P
Nov\1992 9500 10000 10000
Jan\1993 9580 9584 10554
Jan\1994 10605 10694 11910
Jan\1995 10188 10314 11973
Jan\1996 13344 13622 16596
Jan\1997 16142 16546 20965
Jan\1998 18773 19251 26606
Jan\1999 22658 23126 35253
Jan\2000 23814 24179 38663
+ 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 January 31, 2000. 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*
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[The following table was depicted as a bar chart in the printed material.]
19.1% Electronic Technology
14.6% Finance
10.9% Utilities
11.2% Healthcare
7.9% Technology Services
5.5% Retail Trade
5.7% Consumer Non-Durables
5.0% Consumer Services
3.8% Energy Minerals
3.6% Process Industries
12.7% Other
* As a percentage of total common stock.
Investment Breakdown**
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[The following table was depicted as a pie chart in the printed material.]
Cash Equivalent 0.3%
Common Stock 99.7%
** As a percentage of total investments.
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Smith Barney Large Cap Blend Fund 7
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Schedule of Investments January 31, 2000
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SHARES SECURITY VALUE
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COMMON STOCK--99.7%
Aerospace/Defense--0.7%
80,000 General Dynamics Corp. $3,770,000
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Commercial Services--0.6%
60,000 W.W. Grainger, Inc.(a) 2,876,250
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Consumer Durables--1.6%
100,000 Ford Motor Co. 4,975,000
45,000 General Motors Corp. 3,619,687
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8,594,687
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Consumer Non-Durables--5.7%
65,000 Anheuser-Busch Cos., Inc. 4,387,500
60,000 Coca-Cola Co. 3,446,250
25,000 Gillette Co. 940,625
80,000 Kimberly-Clark Corp. 4,955,000
125,000 PepsiCo Inc. 4,265,625
60,000 Philip Morris Cos., Inc. 1,256,250
70,000 Proctor & Gamble Co. 7,061,250
40,000 Quaker Oats Co. 2,375,000
55,000 V.F. Corp. 1,426,562
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30,114,062
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Consumer Services--5.0%
120,000 America Online, Inc.(b) 6,832,500
60,000 Comcast Corp., Class A Shares (a) 2,760,000
81,580 Cox Communications, Inc. (a)(b) 3,982,124
65,000 H&R Block, Inc. 2,803,125
45,000 McDonald's Corp. 1,673,437
95,000 Viacom Inc., Class B Shares (a) (b) 5,260,625
90,000 Walt Disney Co. 3,268,125
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26,579,936
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Electronic Technology--19.0%
145,000 Cisco Systems, Inc. (b) 15,877,500
170,000 Dell Computer Corp. (b) 6,534,375
80,000 Hewlett-Packard Co. (a) 8,660,000
85,000 Honeywell International Inc. (a) 4,080,000
190,000 Intel Corp. 18,798,125
95,000 International Business Machines Corp. 10,657,812
90,000 LM Ericsson Telephone Co. ADR (a) 6,710,625
115,000 Lucent Technologies, Inc. 6,353,750
55,000 Motorola, Inc. 7,521,250
60,000 SCI Systems, Inc. (b) 4,320,000
130,000 Seagate Technology, Inc.(b) 5,208,125
50,000 Teradyne, Inc.(b) 3,237,500
60,000 United Technologies Corp. 3,176,250
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101,135,312
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See Notes to Financial Statements.
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8 2000 Annual Report Shareholders
<PAGE>
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Schedule of Investments (continued) January 31, 2000
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SHARES SECURITY VALUE
================================================================================
Energy Minerals--3.8%
115,000 Conoco Inc., Class A Shares (a) $ 2,680,937
170,000 Exxon Mobil Corp. (a) 14,195,000
85,000 Phillips Petroleum Co. 3,474,375
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20,350,312
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Finance-- 4.7%
115,000 A.G. Edwards, Inc. 3,809,375
50,000 Allstate Corp. 1,159,375
45,000 American International Group, Inc. 4,685,625
115,000 AXA Financial, Inc. 3,744,688
115,000 Bank of America Corp. 5,570,313
85,000 Bear Stearns Cos., Inc. 3,506,250
80,000 Chase Manhattan Corp. 6,435,000
50,000 CIGNA Corp. 3,587,500
120,000 Conseco, Inc. 1,830,000
35,000 Fannie Mae 2,097,813
70,000 First Union Corp. 2,349,375
85,000 FleetBoston Financial Corp. 2,672,187
40,000 Goldman Sachs Group, Inc. (a) 3,665,000
125,000 GreenPoint Financial Corp. 2,476,563
70,000 Hartford Financial Services Group, Inc. 2,668,750
35,000 J.P. Morgan & Co., Inc. 4,298,438
115,000 KeyCorp 2,415,000
45,000 Mercury General Corp. 1,068,750
120,000 Morgan Stanley Dean Witter & Co. 7,950,000
75,000 PNC Bank Corp. 3,600,000
85,000 Starwood Hotels & Resorts Worldwide, Inc. 2,040,000
115,000 UnionBanCal Corp. 4,089,688
100,000 Washington Mutual, Inc. 2,537,500
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78,257,190
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Healthcare--11.1%
50,000 Abbott Laboratories 1,631,250
20,000 American Home Products Corp. 941,250
110,000 Amgen, Inc. (b) 7,005,625
20,000 Baxter International, Inc. 1,277,500
50,000 Biogen, Inc. (b) 4,312,500
80,000 Bristol-Myers Squibb Co. 5,280,000
115,000 Columbia / HCA Healthcare Corp. 3,140,937
65,000 Eli Lilly & Co. 4,346,875
70,000 Johnson & Johnson 6,024,375
115,000 Merck & Co., Inc. 9,063,437
123,000 Mylan Laboratories Inc. 3,274,875
145,000 Pfizer Inc. 5,274,375
25,000 Schering - Plough Corp. 1,100,000
85,000 Watson Pharmaceuticals, Inc. (a)(b) 3,426,562
45,000 Wellpoint Health Networks, Inc., Class
A Shares (b) 3,060,000
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59,159,561
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See Notes to Financial Statements.
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Smith Barney Large Cap Blend Fund 9
<PAGE>
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Schedule of Investments (continued) January 31, 2000
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SHARES SECURITY VALUE
================================================================================
Industrial Services--0.8%
105,000 Fluor Corp. (a) $ 4,193,438
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Non-Energy Minerals--3.4%
100,000 Air Products and Chemicals, Inc. 2,962,500
85,000 Alcoa, Inc. (a) 5,923,437
40,000 Dow Chemical Co. (a) 4,660,000
100,000 Rohm & Hass Co. 4,225,000
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17,770,937
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Process Industries--3.6%
145,000 General Electric Co. 19,339,375
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Producer Manufacturing--2.6%
80,000 Caterpillar Inc. 3,395,000
70,000 Ingersoll - Rand Co. 3,294,375
40,000 Johnson Controls, Inc. 2,210,000
50,000 Lexmark International Group, Inc.,
Class A Shares (a)(b) 4,712,500
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13,611,875
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Publishing--1.9%
50,000 Knight - Ridder, Inc. 2,665,625
85,000 New York Times Co., Class A Shares 3,883,438
100,000 Readers Digest Association, Inc. 3,775,000
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10,324,063
- --------------------------------------------------------------------------------
Retail Trade--5.5%
35,000 Best Buy Co., Inc. (b) 1,671,250
95,000 Federated Department Stores, Inc. (b) 3,954,375
80,000 The Gap, Inc. (a) 3,575,000
105,000 Home Depot, Inc. 5,945,625
100,000 The Limited, Inc. (a) 3,068,750
100,000 SUPERVALU Inc. 1,800,000
120,000 The TJX Cos., Inc. 1,957,512
135,000 Wal-Mart Stores, Inc. 7,391,250
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29,363,762
- --------------------------------------------------------------------------------
Technology Services--7.9%
90,000 Automatic Data Processing, Inc. 4,269,375
70,000 BMC Software, Inc. (b) 2,651,250
110,000 Compuware Corp. (a)(b) 2,330,625
90,000 Electronic Data Systems Corp. 6,086,250
175,000 Microsoft Corp. (b) 17,128,125
35,000 Siebel Systems, Inc. (b) 3,209,063
120,000 Unisys Corp. (a)(b) 3,825,000
8,000 Yahoo! Inc. (a)(b) 2,576,500
- --------------------------------------------------------------------------------
42,076,188
- --------------------------------------------------------------------------------
Transportation--0.9%
40,000 AMR Corp. 2,152,500
65,000 Knightsbridge Tankers Ltd. 853,125
120,000 Southwest Airlines Co. 1,912,500
- --------------------------------------------------------------------------------
4,918,125
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 2000 Annual Report Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) January 31, 2000
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Utilities--10.9%
130,000 AT&T Corp. (a) $ 6,857,500
15,000 Bell Atlantic Corp. 929,062
105,000 BellSouth Corp. 4,941,563
110,000 Coastal Corp. 4,056,250
60,000 DTE Energy Co. (a) 2,085,000
55,000 Duke Energy Corp. 3,176,250
95,000 Edison International 2,755,000
110,000 Enron Corp. 7,418,125
80,000 GTE Corp. 5,865,000
150,000 MCI WorldCom, Inc. (a)(b) 6,890,625
95,000 PECO Energy Co. 3,954,375
145,000 SBC Communications, Inc. 6,253,125
75,000 Texas Utilities Co. 2,653,125
- --------------------------------------------------------------------------------
57,835,000
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost--$397,118,565) 530,270,073
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
REPURCHASE AGREEMENT--0.3%
$1,492,000 Goldman, Sachs & Co., 5.70% due 2/1/00; Proceeds at
maturity--$1,492,236; (Fully collateralized by
U.S. Treasury Notes and Bonds, 4.875% to 10.375%
due 3/31/01 to 5/15/17; Market value--$1,521,840)
(Cost--$1,492,000) 1,492,000
================================================================================
TOTAL INVESTMENTS--100%
(Cost-- $398,610,565*) $531,762,073
================================================================================
(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 January 31, 2000
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost--$398,610,565) $531,762,073
Cash 987
Collateral for securities on loan (Note 8) 64,498,814
Receivable for securities sold 1,595,347
Receivable for Fund shares sold 624,752
Dividends and interest receivable 357,024
- --------------------------------------------------------------------------------
Total Assets 598,838,997
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities on loan (Note 8) 64,498,814
Payable for Fund shares purchased 1,427,958
Payable for securities purchased 1,154,405
Investment advisory fees payable 202,102
Administration fees payable 91,267
Distribution fees payable 10,981
Accrued expenses 215,980
- --------------------------------------------------------------------------------
Total Liabilities 67,601,507
- --------------------------------------------------------------------------------
Total Net Assets $531,237,490
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 33,260
Capital paid in excess of par value 388,305,411
Undistributed net investment income 402,716
Accumulated net realized gain from security transactions 9,344,754
Net unrealized appreciation of investments and
foreign currencies 133,151,349
- --------------------------------------------------------------------------------
Total Net Assets $531,237,490
================================================================================
Shares Outstanding:
Class A 11,148,013
-----------------------------------------------------------------------------
Class B 9,366,783
-----------------------------------------------------------------------------
Class L 403,416
-----------------------------------------------------------------------------
Class O 309,572
-----------------------------------------------------------------------------
Class Y 12,031,881
-----------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $15.97
-----------------------------------------------------------------------------
Class B* $15.87
-----------------------------------------------------------------------------
Class L** $15.84
-----------------------------------------------------------------------------
Class O** $15.87
-----------------------------------------------------------------------------
Class Y (and redemption price) $16.06
-----------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $16.81
-----------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $16.00
================================================================================
* 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 2000 Annual Report Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended January 31, 2000
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 232,030
Dividends 6,837,179
Less: Foreign withholding tax (5,592)
- --------------------------------------------------------------------------------
Total Investment Income 7,063,617
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 2,402,756
Distribution fees (Note 2) 1,713,423
Administration fees (Note 2) 1,067,892
Shareholder and system servicing fees 434,201
Registration fees 160,328
Shareholder communications 120,542
Audit and legal 62,256
Custody 24,067
Trustees' fees 15,084
Other 12,050
- --------------------------------------------------------------------------------
Total Expenses 6,012,599
- --------------------------------------------------------------------------------
Net Investment Income 1,051,018
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES (NOTE 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 294,675,138
Cost of securities sold 214,266,108
- --------------------------------------------------------------------------------
Net Realized Gain 80,409,030
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of
Investments and Foreign Currencies:
Beginning of year 188,018,469
End of year 133,151,349
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (54,867,120)
- --------------------------------------------------------------------------------
Net Gain on Investments and Foreign Currencies 25,541,910
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 26,592,928
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 13
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended January 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
=======================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,051,018 $ 3,374,821
Net realized gain 80,409,030 27,308,881
Increase (decrease) in net unrealized appreciation (54,867,120) 58,611,216
- ---------------------------------------------------------------------------------------
Increase in Net Assets From Operations 26,592,928 89,294,918
- ---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (646,267) (3,147,777)
Net realized gains (82,901,133) (24,580,392)
- ---------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (83,547,400) (27,728,169)
- ---------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 83,963,088 85,496,495
Net asset value of shares issued for
reinvestment of dividends 49,389,118 17,167,175
Cost of shares reacquired (70,965,654) (68,037,009)
- ---------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 62,386,552 34,626,661
- ---------------------------------------------------------------------------------------
Increase in Net Assets 5,432,080 96,193,410
NET ASSETS:
Beginning of year 525,805,410 429,612,000
- ---------------------------------------------------------------------------------------
End of year* $ 531,237,490 $ 525,805,410
=======================================================================================
* Includes undistributed net investment income of: $ 402,716 $ 1,800
=======================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 2000 Annual Report Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 shareholder 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, 2000, 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
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), which, in
turn, is a subsidiary of Citigroup Inc. ("Citigroup"), 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.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Effective October 1999, Smith Barney Private Trust Company ("Private Trust"),
another subsidiary of Citigroup, became the Fund's transfer agent and PFPC
Global Fund Services ("PFPC") became the sub-transfer agent. Private Trust
receives account fees and asset-based fees that vary according to the size and
type of account. PFPC is responsible for shareholder recordkeeping and financial
processing for all shareholder accounts and is paid by Private Trust. During the
period October 1, 1999 through January 1, 2000, the Fund paid transfer agent
fees of $103,661 to Private Trust.
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.
SSB acts as the primary broker for its portfolio agency transactions. For the
year ended January 31, 2000, SSB received total brokerage commissions of $6,002.
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 year ended January 31, 2000 CFBDS and SSB received sales charges of
$99,000 and $49,000 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 $130,000 $ 6,000
================================================================================
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 year ended January 31, 2000, total Distribution Plan fees incurred were:
Distribution
Plan Fees
================================================================================
Class A $ 451,087
- --------------------------------------------------------------------------------
Class B 1,177,668
- --------------------------------------------------------------------------------
Class L 44,251
- --------------------------------------------------------------------------------
Class O 40,417
================================================================================
All officers and one Trustee of the Trust are employees of SSB.
3. Investments
During the year ended January 31, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $276,692,180
- --------------------------------------------------------------------------------
Sales 294,675,138
================================================================================
At January 31, 2000, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $ 162,997,206
Gross unrealized depreciation (29,845,698)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 133,151,508
================================================================================
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.
- --------------------------------------------------------------------------------
16 2000 Annual Report Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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.
At January 31, 2000, 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 January 31, 2000, 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 January 31, 2000, 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 purchases upon exercise. When written index options are
exercised, settlement is made in cash.
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 17
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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 year ended January 31, 2000, the Fund did not write any options.
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 January 31, 2000, the Fund had loaned common stocks having a value of
$63,608,501 and holds the following collateral for loaned securities:
Security Description Value
================================================================================
Time Deposits:
Chase Bank, 5.88% due 2/1/00 $ 8,208,090
Certificates of Deposit:
Bank of Montreal, 5.88% due 2/2/00 2,735,537
Commercial Paper:
American Home Products, 5.90% due 3/3/00 3,736,755
American Home Products, 5.48% due 4/20/00 31,332
Corp. Receivable, 6.13% due 2/2/00 1,997,711
CC USA, 5.93% due 2/22/00 8,034,884
CC USA, 5.94% due 2/22/00 3,219,543
CC USA, 6.00% due 3/20/00 2,024,823
CC USA, 5.90% due 2/14/00 89,239
Moriarty LLC, 5.91% due 2/1/00 106,048
Sigma Finance Corp., 5.93% due 3/6/00 2,757,035
Floating Rate Notes:
Goldman Sachs & Co., 5.28% due 8/23/00 58,083
Sigma Finance Corp., 5.64% due 1/22/01 1,298,377
Repurchase Agreements:
J.P. Morgan Securities, 5.80% due 2/1/00 8,748,073
Morgan Stanley, 5.81% due 2/1/00 21,453,284
- --------------------------------------------------------------------------------
Total $64,498,814
================================================================================
Income earned by the Fund from securities loaned for the year ended January 31,
2000 was $64,138.
- --------------------------------------------------------------------------------
18 2000 Annual Report Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
9. Shares of Beneficial Interest
At January 31, 2000, 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 January 31, 2000, 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 $121,456,808 $ 79,626,363 $ 6,904,832 $ 4,108,887 $176,241,781
================================================================================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
January 31, 2000 January 31, 1999
------------------------- -------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 1,360,850 $ 23,899,206 1,569,148 $ 26,492,698
Shares issued on reinvestment 1,626,185 26,270,970 558,601 9,218,773
Shares reacquired (1,842,142) (32,124,158) (1,777,302) (29,455,721)
- --------------------------------------------------------------------------------------------
Net Increase 1,144,893 $ 18,046,018 350,447 $ 6,255,750
============================================================================================
Class B
Shares sold 1,027,511 $ 17,976,862 1,056,092 $ 17,599,116
Shares issued on reinvestment 1,339,694 21,539,615 462,610 7,622,062
Shares reacquired (2,061,578) (35,652,392) (2,233,185) (37,011,623)
- --------------------------------------------------------------------------------------------
Net Increase (Decrease) 305,627 $ 3,864,085 (714,483) $(11,790,445)
============================================================================================
Class L*
Shares sold 324,282 $ 5,673,659 115,141 $ 1,880,488
Shares issued on reinvestment 52,571 841,736 2,240 36,677
Shares reacquired (83,802) (1,421,571) (7,016) (106,157)
- --------------------------------------------------------------------------------------------
Net Increase 293,051 $ 5,093,824 110,365 $ 1,811,008
============================================================================================
Class O**
Shares sold 24,210 $ 420,416 75,695 $ 1,278,352
Shares issued on reinvestment 45,814 736,797 17,564 289,663
Shares reacquired (81,611) (1,422,533) (90,556) (1,463,508)
- --------------------------------------------------------------------------------------------
Net Increase (Decrease) (11,587) $ (265,320) 2,703 $ 104,507
============================================================================================
Class Y
Shares sold 2,153,895 $ 35,992,945 2,312,952 $ 38,245,841
Shares issued on reinvestment -- -- -- --
Shares reacquired (18,760) (345,000) -- --
- --------------------------------------------------------------------------------------------
Net Increase 2,135,135 $ 35,647,945 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 2000(1) 1999(1) 1998 1997 1996(1)
================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $17.88 $15.72 $14.30 $12.16 $9.62
- ----------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.04 0.13 0.21 0.19 0.20
Net realized and unrealized gain 0.84 3.02 2.10 2.33 2.74
- ----------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.88 3.15 2.31 2.52 2.94
- ----------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.01) (0.12) (0.19) (0.20) (0.20)
Net realized gains (2.78) (0.87) (0.70) (0.18) (0.20)
- ----------------------------------------------------------------------------------------------------------------
Total Distributions (2.79) (0.99) (0.89) (0.38) (0.40)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $15.97 $17.88 $15.72 $14.30 $12.16
- ----------------------------------------------------------------------------------------------------------------
Total Return 5.10% 20.69% 16.30% 20.97% 30.97%
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $178,039 $178,847 $151,696 $133,272 $110,089
- ----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.11% 1.09% 1.09% 1.12% 1.16%
Net investment income 0.22 0.77 1.35 1.48 1.77
- ----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 53% 29% 17% 9% 15%
================================================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
- --------------------------------------------------------------------------------
20 2000 Annual Report 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 2000(1) 1999(1) 1998 1997 1996(1)
================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $17.86 $15.72 $14.33 $12.19 $9.65
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.05) 0.05 0.13 0.13 0.14
Net realized and unrealized gain 0.84 3.02 2.10 2.34 2.75
- ----------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.79 3.07 2.23 2.47 2.89
- ----------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.06) (0.14) (0.15) (0.15)
Net realized gains (2.78) (0.87) (0.70) (0.18) (0.20)
- ----------------------------------------------------------------------------------------------------------------
Total Distributions (2.78) (0.93) (0.84) (0.33) (0.35)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $15.87 $17.86 $15.72 $14.33 $12.19
- ----------------------------------------------------------------------------------------------------------------
Total Return 4.55% 20.13% 15.65% 20.43% 30.23%
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $148,664 $161,801 $153,651 $137,187 $112,891
- ----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.61% 1.59% 1.59% 1.62% 1.65%
Net investment income (loss) (0.29) 0.29 0.86 0.98 1.27
- ----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 53% 29% 17% 9% 15%
================================================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
- --------------------------------------------------------------------------------
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 2000(1) 1999(1)(2)
================================================================================
Net Asset Value, Beginning of Year $17.87 $16.89
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.10) (0.04)
Net realized and unrealized gain 0.85 1.90
- --------------------------------------------------------------------------------
Total Income From Operations 0.75 1.86
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.01)
Net realized gains (2.78) (0.87)
- --------------------------------------------------------------------------------
Total Distributions (2.78) (0.88)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $15.84 $17.87
- --------------------------------------------------------------------------------
Total Return 4.31% 11.57%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $6,390 $1,972
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.92% 1.85%+
Net investment loss (0.62) (0.37)+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 53% 29%
================================================================================
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) 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 2000 Annual Report 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 2000(1) 1999(1)(2) 1998 1997 1996(1)
======================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $17.86 $15.72 $14.33 $12.19 $9.65
- ------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.05) 0.05 0.13 0.14 0.13
Net realized and unrealized gain 0.84 3.02 2.10 2.33 2.76
- ------------------------------------------------------------------------------------------------------
Total Income From Operations 0.79 3.07 2.23 2.47 2.89
- ------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.06) (0.14) (0.15) (0.15)
Net realized gains (2.78) (0.87) (0.70) (0.18) (0.20)
- ------------------------------------------------------------------------------------------------------
Total Distributions (2.78) (0.93) (0.84) (0.33) (0.35)
- ------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $15.87 $17.86 $15.72 $14.33 $12.19
- ------------------------------------------------------------------------------------------------------
Total Return 4.55% 20.14% 15.65% 20.43% 30.23%
- ------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $4,914 $5,736 $5,007 $2,958 $961
- ------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.63% 1.59% 1.57% 1.61% 1.62%
Net investment income (loss) (0.30) 0.28 0.86 0.94 1.11
- ------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 53% 29% 17% 9% 15%
======================================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) On June 12, 1998, Class C shares were renamed Class O shares.
- --------------------------------------------------------------------------------
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 2000(1) 1999(1) 1998 1997 1996(1)(2)
================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $17.93 $15.73 $14.34 $12.16 $12.08
- ----------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.10 0.19 0.27 0.22 --
Net realized and unrealized gain 0.86 3.03 2.10 2.36 0.08
- ----------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.96 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 (2.78) (0.87) (0.70) (0.18) --
- ----------------------------------------------------------------------------------------------------------------
Total Distributions (2.83) (1.02) (0.98) (0.40) --
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $16.06 $17.93 $15.73 $14.34 $12.16
- ----------------------------------------------------------------------------------------------------------------
Total Return 5.53% 21.16% 16.76% 21.48% N/A*
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $193,230 $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 53% 29% 17% 9% 15%
================================================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) Inception date is January 31, 1996.
* Information is not meaningful since the class was only open for one day.
- --------------------------------------------------------------------------------
24 2000 Annual Report Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees of
the Smith Barney Equity Funds:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Smith Barney Large Cap Blend Fund of
Smith Barney Equity Funds as of January 31, 2000, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
January 31, 2000, by correspondence with the custodian. As to securities
purchased or sold but not yet received or delivered, we performed other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Smith Barney Large Cap Blend Fund of Smith Barney Equity Funds as of January 31,
2000, the results of its operations for the year then ended, the changes in its
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended,
in conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
March 8, 2000
- --------------------------------------------------------------------------------
Smith Barney Large Cap Blend Fund 25
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
January 31, 2000:
o A corporate dividends received deduction of 96.43%.
o Total long-term capital gain distributions paid of $79,053,012.
- --------------------------------------------------------------------------------
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:
Shares Voted Percentage Shares Voted Percentage
Name of Directors For Shares Voted Against Shares Voted
================================================================================
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
================================================================================
- --------------------------------------------------------------------------------
26 2000 Annual Report Shareholders
<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
SSB Citi Fund Management LLC
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Serving Agent
Smith Barney Private Trust Company
388 Greenwich Street
22nd Floor
New York, New York 10013
Sub-Shareholder Servicing Agent
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
This report is submitted for the general information of shareholders of Smith
Barney Equity Funds -- Smith Barney Large Cap Blend Fund, but it may also be
used as sales literature when preceded or accompanied by a current Prospectus,
which gives details about charges, expenses, investment objectives and operating
policies of the Fund. If used as sales material after March 31, 2000, this
report must be accompanied by performance information for the most recently
completed calendar quarter.
SALOMON SMITH BARNEY
---------------------------
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/mutualfunds
FD0425 3/00
<PAGE>
SB [LOGO]
MF
[GRAPHIC OMITTED]
Diversification-
the Essence of the Concert Social Awareness Fund
CONCERT SOCIAL
AWARENESS
Fund
SPECIAL DISCIPLINE SERIES
ANNUAL REPORT
JANUARY 31, 2000
SB Smith Barney [LOGO]
MF Mutual Funds [LOGO]
NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
<PAGE>
Concert Social
Awareness Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
January 31, 2000
Without Sales Charge(1)
----------------------------------
Class A Class B Class L
================================================================================
One-Year 4.93% 4.13% 4.13%
- --------------------------------------------------------------------------------
Five-Year 18.47 17.59 17.64
- --------------------------------------------------------------------------------
Ten-Year N/A 13.42 N/A
- --------------------------------------------------------------------------------
Since Inception+ 15.32 12.20 13.89
================================================================================
Without Sales Charge(2)
----------------------------------
Class A Class B Class L
================================================================================
One-Year (0.34)% (0.84)% 2.11%
- --------------------------------------------------------------------------------
Five-Year 17.25 17.48 17.40
- --------------------------------------------------------------------------------
Ten-Year N/A 13.42 N/A
- --------------------------------------------------------------------------------
Since Inception+ 14.51 12.20 13.72
================================================================================
(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.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Inception dates for Class A, B and L shares are November 6, 1992, February
2, 1987 and May 5, 1993, respectively.
- --------------------------------------------------------------------------------
FUND HIGHLIGHT
- --------------------------------------------------------------------------------
Throughout the reporting period, the influence of our underlying, risk-sensitive
investment discipline caused us to become a bit more defensive. During the
period, the Fund was underrepresented in stocks relative to its normal target.
In addition, the Concert Social Awareness Fund's stock portfolio has become a
bit less growth-company focused, with a corresponding shift of assets toward
more value-oriented cyclical or commodity type companies. Nonetheless, we
maintain our preference to own high-quality, strategically expanding firms. On
the bond side of the Fund, we remain positive on the spread sector (corporate
bonds, mortgage-backed securities, agency notes) and on the U.S. Treasury long
bond sector.
- --------------------------------------------------------------------------------
NASDAQ SYMBOL
- --------------------------------------------------------------------------------
Class A SSIAX
Class B SESIX
Class L SESLX
- --------------------------------------------------------------------------------
WHAT'S INSIDE
- --------------------------------------------------------------------------------
Shareholder Letter ......................................................... 1
Historical Performance ..................................................... 6
Concert Social Awareness Fund
at a Glance ................................................................ 9
Schedule of Investments .................................................... 10
Statement of Assets and Liabilities ........................................ 15
Statement of Operations .................................................... 16
Statements of Changes in Net Assets ........................................ 17
Notes to Financial Statements .............................................. 18
Financial Highlights ....................................................... 23
Additional Shareholder Information ......................................... 24
Tax Information ............................................................ 24
Independent Auditors' Report ............................................... 25
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Letter
- --------------------------------------------------------------------------------
[PHOTO OMITTED] [PHOTO OMITTED]
HEATH B. ELLEN S.
MCLENDON 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 annual report for the Concert Social Awareness
Fund ("Fund") for the period ended January 31, 2000. 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.
Any discussion of the Fund's holdings is as of January 31, 2000. Please refer to
pages 10 through 14 for a list of the Fund's holdings. A detailed summary of
performance and current holdings can be found in the appropriate sections that
follow.
Investment Objective and Performance Update
As previously noted, the 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.
Class A shares of the Fund, without sales charges, returned 4.93% for the year
ended January 31, 2000. In comparison, the Standard & Poor's 500 Index ("S&P
500")(1) returned 10.34% and the Lehman Brothers Government/Corporate Bond
Index(2) returned a negative 2.87% over the same period. The Fund underpeformed
its Lipper Inc. flexible portfolio fund peer group return of 7.22% for the same
period. (Lipper Inc. is a major fund-tracking organization.)
Stock Market Update and Portfolio Changes
An annual report is ideally a platform for both thoughtful review and careful
reflection. When confronted with today's dynamic and record-setting economic and
financial market conditions, this can be a challenging task. Overall, we believe
that the performance of the Fund's stock portfolio last year was fairly
consistent with what might be expected from our established investment
discipline.
On the surface, it appeared as if gains in profits acted as the market's
catalyst to move higher, more than offsetting the constraint of a strong rise in
interest rates. (The yield on a 10-year Treasury bond, for instance, started at
4.66% and ended at 6.66% as of January 31, 2000.) But upon further
investigation, we discover a strikingly different story. Most stocks in the S&P
500 did not do that well. Approximately three-quarters of the total gains were
generated by only one-quarter of the stocks. Technology was the major
contributor to overall stock market performance in the new economy. Removing the
technology sector from the S&P 500, and equally weighing the remaining 85% of
the stocks, resulted in a negative average total return.
- ----------
(1) The S&P 500 Index is a capitalization-weighted measure of 500 widely held
common stocks.
(2) The Lehman Brothers Government/Corporate Bond Index is a combination of
publicly issued intermediate- and long-term U.S. government bonds and
corporate bonds.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 1
<PAGE>
Although the Concert Social Awareness Fund entered the year modestly
underexposed to the primary technology sector, we were able to outperform this
strong area through good stock selection. (3) Furthermore, when we look at the
90% of our stocks that did not represent either our best five performers or our
worst five performers, our experience was positive. In our view, what really
constrained our overall stock performance were three specific stocks -- Compaq
Computer, Rite Aid and Xerox. Each company was well recognized and established
in its industry, but all ran into very difficult operating experiences in their
goal to either transform their business models or accelerate growth to contend
with intense competitive pressures. In a momentum-driven stock market, as we
have been experiencing, there is virtually no tolerance for disappointments. But
in each instance, decisions were not quick enough to contain our losses. In
combination, those three stocks alone made the difference between outperforming
the S&P 500 and falling short.
On January 31, 2000, the Fund's stock portfolio consisted of 76 individual
positions, with the median size holding approximating 1.1% of the total equity
values in the portfolio. Our investments were well diversified and balanced
across various sectors.
Throughout the reporting period, the influence of our underlying, risk-sensitive
investment discipline caused actions to make our portfolio become a bit more
defensive in nature. First, we underrepresented stocks as an asset class
relative to our full cycle target of 75%. And, secondly, the Fund's stock
portfolio has become a bit less growth company focused, with a corresponding
shift of funds towards more value oriented cyclical or commodity type companies.
Consequently, we are even more underexposed to the technology sector than we
were last year, and overexposed to some consumer and globally sensitive
industrial companies. Investors have not yet adopted this drift toward
discernible value in general, as the market has basically held to its previous
course, with the strong getting stronger.
Clearly, we still retain a prominent growth company bias in our stock selection
because over the long term, we would prefer to own what we believe are
high-quality, strategically expanding firms. But, on the margin, we attempt to
move across investment styles and market sectors in search of the better current
values, periodically overweighting or underweighting our long-term favorites in
the process. That active compositional tilt holds true whether it relates to
stocks versus bonds, or simply stock versus stock.
When looking forward, we seek to avoid the high-pitched emotion that currently
surrounds the stock market. In our opinion, our new technology culture era has
provided access to information, ease of execution and enough instant
gratification to engender a "bandwagon" mentality. Yet too often, especially in
the new company domain, investment analysis extends more to the virtual world
than to the concrete one. In our technology-driven world we are told that name
matters over substance, vision overrides economic models, revenue mass replaces
earnings production, return supplants risk and price does not matter.
The counterbalance view is that many more traditionalist investors see the
present investment scene as bordering on the dysfunctional. They ask: "How can
you justify paying so much more for so much less?" The caution is that any way
you measure the growth side of the stock market, be it relative to interest
rates, earnings, dividends, book value, etc., the market seems overvalued.
Meanwhile, many of these more traditional investors point out that perfectly
fine companies see their stocks selling at relatively inexpensive prices, but
nobody seems to want them.
Our goal is to walk a fine line between these two extremes. Inside the
large-company universe, we think the marketplace, in its infinite wisdom, has
actually functioned in a fairly rational manner. Our view is that different
valuation levels have been assigned to different sectors of the market in
recognition of future certainty. As the global economy moves through this
incredible technology revolution, firms will need to
- ----------
(3) Please note that past performance is not indicative of future results.
- --------------------------------------------------------------------------------
2 2000 Annual Report to Shareholders
<PAGE>
change from using technology simply to improve the profitability of existing
operating models to a phase of actually redesigning operating models. In many
business sectors that transition may prove to be difficult, even treacherous.
Therefore, while long-term growth expectations have been raised for many
industries, an argument can be made at the same time that the confidence of
actually achieving those same expectations has weakened for some. Rational
investors react to that prospect by their willingness to pay different prices
for the future prospects -- pay up where the future growth is most visible, and
pay less for uncertain areas. That sort of valuation differentiation seems to be
what has occurred over the last several years, with the notion that companies
directly associated with offering the technology platforms have a much more
likely prospect of delivering on improved growth expectations.
With that premise, we think the challenge for many managers in constructing a
portfolio becomes one of determining if the rational reaction has gone too far
in one direction or another. Has the market overpriced the clear vision
companies, while under pricing the less certain ones? Or does the answer lie on
the flip side? Our recent emphasis on applicators, as opposed to the suppliers,
of technology indicates that for now we believe that the adjustment has been
overdone.
Bond Market Update and Portfolio Changes
The second half of 1999 ended with the U.S. economy continuing to grow at a
rapid pace. Interest rates had closed the year poised at their highs, with only
mild trepidation concerning the new millennium. Against this backdrop a
difficult year in the bond markets came to a close. One of the oldest
fixed-income benchmarks, the Lehman Aggregate Index,(4) ended the year with the
second lowest return since its inception in 1976. In our view, the main culprits
for the rise in interest rates were the robust U.S. economy and a Federal
Reserve Board ("Fed") that took back all three of its interest rate cuts of the
prior year.
For the Fund's full fiscal year, we estimated that the bond component of the
Fund outperformed its benchmark, the Lehman Brothers Government/Corporate Index
by 63 basis points (-2.24% vs. -2.87%). (A basis point is .01% or one
one-hundredth of a percent.) For the six-month period since our semi-annual
report, the Fund's fixed-income portion outperformed by an estimated 17 basis
points. (+0.54% vs +0.37%).
To appreciate how difficult a year it was for the bond market it is important to
note that on a total return basis, the five-year U.S. Treasury note was down
3.60%, the ten-year U.S. Treasury note was down 9.72% and the thirty year long
bond was down 14.95% for the 12 months ended January 31, 2000. The only positive
performance came at the very front end of the yield curve where coupon income
outweighed the negative price performance. (The yield curve is a graphical
depiction of the relationship between the yield on bonds of the same credit
quality but different maturities.)
The spread markets (i.e., corporate bonds, mortgage-backed securities and
agencies) performed well during the last five months. We believe the partial
catalyst for this better performance was the additional liquidity pumped into
the market by the Fed to calm year-end Y2K fears. Spreads also narrowed versus
U.S. Treasuries due to brightening global economic prospects and rising stock
indexes, coupled with a year-end new issue slowdown and a seasonal tendency to
own spread product going into the first quarter of 2000.
After the 1998 Asian meltdown, corporate bonds went through a difficult process
of repairing confidence and liquidity in 1999. The growing economy certainly has
helped, but the damage in terms of market liquidity has been and continues to be
a slow recovery. Robust new issue activity through the first eight months of
- ----------
(4) The Lehman Brothers Aggregate Bond Index is a broad measure of the
performance of taxable bonds in the U.S. market, with maturities of at
least one year. The Index is comprised of U.S. Treasury bonds, government
agency bonds, mortgage-backed securities and corporate bonds.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 3
<PAGE>
1999 weighed on the market as well as a lack of capital commitment from dealers
who continued to remain risk averse. Spreads struggled throughout the year and
are only slightly better than year-end 1998.
We remain positive on the spread sector going into the first quarter and
recently purchased some issues to enhance the yield on the portfolio. Over the
period, we purchased the credits of U.S. West, AT&T, ABN-Amro Bank and AES Corp.
Higher coupon mortgage-backed securities that were attractive versus the current
coupons on a yield basis were also added to the Fund's bond holdings.
Mortgage-backed securities have seen a large drop-off of issuance due to the
rise in mortgage rates and coupon and price distributions show an asset class
with more resistance to the volatility of interest rates.
We have also focused our attention on the Treasury long bond sector,
specifically U.S. Treasuries that mature in 2016 to 2026. This is a sector of
the U.S. Treasury market that we feel will be the target of the debt buyback
program that the U.S. government is contemplating with the budget surplus. If
they do decide to buy this sector, the bonds in this maturity range should
perform well.
While the three interest-rate hikes in the second half of 1999 should put in
place the groundwork for slower growth by the middle of next year, the Fed did
not appear confident that these hikes alone were enough to slow down the
economy. The possibility is thoroughly priced into the bond market that the Fed
will opt for a little more insurance and raise the federal funds rate again.
(The federal funds rate is the interest rate that banks with excess reserves at
a Federal Reserve district bank charge other banks that need overnight loans.
The Fed Funds rate, as it is called, often points to the direction of U.S.
interest rates.) At the close of the reporting period, the Fund's bond assets
were made up of 42% governments, 36% corporate bonds, 13% mortgage-backed
securities and 9% asset-backed securities with duration of 4.75 years. (Duration
is a common gauge of the price sensitivity of a fixed income asset or portfolio
to a change in interest rates.)
Looking forward, the themes we will be watching include the stock market (as we
think the stock market is what is causing Fed Chairman Alan Greenspan so much
concern, more than potential inflationary pressures), oil prices, and the
Presidential election (as it condenses the time period for Fed action as the
preference is to be out of the market by the summer).
Our focus will be squarely on the Fed, trying to determine how fast is too fast
on the economic growth side and how low is too low on the employment rate side
to glean how high the Fed will need to move rates.
We look for 2000 to be a better year for the bond market although that may not
become apparent until the second half of the year. It is important to remember
that historically, diversification has been a good risk dampener. (Of course,
past performance is not indicative of future results.) We also begin the year
with more of a cushion than last year as we set out with interest rates at a
higher level than the historically low levels at the end of 1998. Lastly, as the
year progresses, we expect to see the economy slow to a more sustainable growth
rate from the sizzling pace of the moment, which should allow the Fed to relax
and for rates to moderate.
- --------------------------------------------------------------------------------
4 2000 Annual Report to Shareholders
<PAGE>
Thank you for your continued support of our efforts on your behalf and for
investing in the Concert Social Awareness Fund.
Sincerely,
/s/ Heath B. McLendon /s/ Ellen S. Cammer
Heath B. McLendon Ellen S. Cammer
Chairman Vice President and
Investment Officer
/s/ Robert J. Brady
Robert J. Brady, CFA
Vice President and
Investment Officer
February 18, 2000
- --------------------------------------------------------------------------------
Top Ten Holdings* As of January 31, 2000
- --------------------------------------------------------------------------------
1. International Business Machines Corp. 3.4%
- --------------------------------------------------------------------------------
2. EMC Corp. 3.4
- --------------------------------------------------------------------------------
3. The Home Depot, Inc. 3.3
- --------------------------------------------------------------------------------
4. The AES Corp. 2.9
- --------------------------------------------------------------------------------
5. Amgen Inc. 2.8
- --------------------------------------------------------------------------------
6. Cisco Systems, Inc. 2.7
- --------------------------------------------------------------------------------
7. Enron Corp. 2.7
- --------------------------------------------------------------------------------
8. Wal-Mart Stores, Inc. 2.7
- --------------------------------------------------------------------------------
9. The Chase Manhattan Corp. 2.7
- --------------------------------------------------------------------------------
10. Alcoa Inc. 2.6
- --------------------------------------------------------------------------------
* As a percentage of total common stock.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 5
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
1/31/00 $ 25.94 $ 25.79 $ 0.32 $ 1.09 4.93%
- --------------------------------------------------------------------------------
1/31/99 20.57 25.94 0.26 0.53 30.47
- --------------------------------------------------------------------------------
1/31/98 19.36 20.57 0.55 1.99 19.89
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
1/31/95 17.72 15.91 0.47 0.66 (3.82)
- --------------------------------------------------------------------------------
1/31/94 16.85 17.72 0.56 1.46 17.80
- --------------------------------------------------------------------------------
Inception*-- 1/31/93 16.80 16.85 0.11 0.85 6.12+
================================================================================
Total $ 3.39 $ 8.42
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
1/31/00 $ 25.96 $ 25.81 $ 0.12 $ 1.09 4.13%
- --------------------------------------------------------------------------------
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
================================================================================
Total $ 3.78 $10.40
================================================================================
- --------------------------------------------------------------------------------
6 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
1/31/00 $26.03 $ 25.88 $ 0.12 $ 1.09 4.13%
- --------------------------------------------------------------------------------
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 $ 2.16 $ 7.57
================================================================================
It is the Fund's policy to distribute dividends quarterly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
----------------------------------
Class A Class B Class L
================================================================================
Year Ended 1/31/00 4.93% 4.13% 4.13%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/00 18.47 17.59 17.64
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/00 N/A 13.42 N/A
- --------------------------------------------------------------------------------
Inception* through 1/31/00 15.32 12.20 13.89
================================================================================
Without Sales Charges(2)
----------------------------------
Class A Class B Class L
================================================================================
Year Ended 1/31/00 (0.34)% (0.84)% 2.11%
- --------------------------------------------------------------------------------
Five Years Ended 1/31/00 17.25 17.48 17.40
- --------------------------------------------------------------------------------
Ten Years Ended 1/31/00 N/A 13.42 N/A
- --------------------------------------------------------------------------------
Inception* through 1/31/00 14.51 12.20 13.72
================================================================================
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 7
<PAGE>
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 1/31/00) 180.55%
- --------------------------------------------------------------------------------
Class B (1/31/90 through 1/31/00) 252.41
- --------------------------------------------------------------------------------
Class L (Inception* through 1/31/00) 140.50
================================================================================
(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.
- --------------------------------------------------------------------------------
8 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
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+
January 1990 -- January 2000
soc Leh gov corp bond leh c.b. long-term s&p
January\r1990 10000 10000 10000 10000
January\r1991 10180 11103 11114 10840
January\r1992 12411 12560 12749 13299
January\r1993 14430 14014 14609 14707
January\r1994 16322 15458 16922 16602
January\r1995 15676 14977 15743 16689
January\r1996 19686 17632 19955 23139
January\r1997 21969 18052 19860 29231
January\r1998 26133 20069 23253 37095
January\r1999 33843 21820 26036 49152
January\r2000 35241 21193 23979 54234
PLOT POINTS TO COME
+ Hypothetical illustration of $10,000 invested in Class B shares on January
31, 1990, assuming reinvestment of dividends and capital gains, if any, at
net asset value through January 31, 2000. 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. An investor may not invest directly in
an index. 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*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
6.8% Basic Materials
4.8% Communication Services
14.1% Consumer Cyclicals
4.3% Consumer Staples
10.4% Financial Services
5.6% Health Care
2.7% Publishing - Periodicals
14.5% Technology
1.7% Transportation
5.2% Utilities
* As a percentage of total common stock.
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material.]
Investment Breakdown**
- --------------------------------------------------------------------------------
3.8% Mortgage-Backed Securities
13.2% Corporate Bonds and Notes
2.6% Asset-Backed Securities
70.1% Common Stock
10.3% U.S. Government Obligations and Repurchase Agreement
** As a percentage of total investments.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments January 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
======================================================================================
COMMON STOCK -- 70.1%
<S> <C> <C>
Basic Materials -- 6.8%
150,000 Alcoa Inc. (a) $ 10,453,125
192,772 BP Amoco PLC (a) 10,361,495
50,000 Engelhard Corp. 796,875
150,000 Nucor Corp. 7,462,500
120,000 Praxair, Inc. 4,867,500
100,000 Royal Dutch Petroleum Co. 5,506,250
- --------------------------------------------------------------------------------------
39,447,745
- --------------------------------------------------------------------------------------
Communication Services -- 3.8%
140,000 Anixter International Inc. (a)(b) 2,756,250
33,750 AT&T Corp. (a) 1,780,313
162,500 Bell Atlantic Corp. 10,064,844
136,396 MCI WorldCom, Inc. (a)(b) 6,265,691
20,000 Time Warner Telecom Inc. (b) 1,215,000
- --------------------------------------------------------------------------------------
22,082,098
- --------------------------------------------------------------------------------------
Consumer Cyclicals -- 14.1%
113,000 The Black & Decker Corp. 4,527,063
150,000 Deere & Co. (a) 6,553,125
129,687 Dollar General Corp. (a) 2,755,849
59,000 eToys Inc. (a)(b) 862,875
240,000 The Home Depot, Inc. 13,590,000
175,700 Interface, Inc. 856,538
168,400 Kaufman & Broad Home Corp. (a) 3,652,175
125,000 Kimberly-Clark Corp. 7,742,188
52,256 Koninklijke Philips Electronics NV 7,720,824
124,700 Liz Clairborne, Inc. 4,216,419
170,000 Lowe's Cos., Inc. (a) 7,586,250
149,250 The May Department Stores Co. 4,645,406
259,450 Staples, Inc. (a)(b) 6,178,153
202,000 Wal-Mart Stores, Inc. 11,059,500
- --------------------------------------------------------------------------------------
81,946,365
- --------------------------------------------------------------------------------------
Consumer Staples -- 4.3%
47,220 Albertson's, Inc. 1,446,113
150,100 Brinker International, Inc. (a)(b) 3,790,025
214,800 The Kroger Co. (b) 3,732,150
200,000 Sysco Corp. 7,112,500
26,000 Tricon Global Restaurants, Inc. (b) 744,250
98,214 Unilever NV 4,542,398
187,000 Wendy's International, Inc. (a) 3,517,930
- --------------------------------------------------------------------------------------
24,885,366
- --------------------------------------------------------------------------------------
Financial Services -- 10.4%
135,000 ACE Ltd. 2,387,813
77,016 Ageon NV 5,602,914
91,094 The Allstate Corp. 2,112,242
55,000 American Express Co. 9,064,688
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) January 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
======================================================================================
<S> <C> <C>
Financial Services -- 10.4% (continued)
51,750 American International Group, Inc. (a) $ 5,388,469
132,000 Associates First Capital Corp. 2,640,000
82,941 BankAmerica Corp. 4,017,455
136,576 The Chase Manhattan Corp. 10,985,832
4,750 Donaldson, Lufkin & Jenrette, Inc. (b) 51,953
75,200 Freddie Mac 3,774,100
50,000 The Hartford Financial Services Group, Inc. 1,906,250
96,400 Lincoln National Corp. 3,560,775
35,000 Marsh & McLennan Cos., Inc. 3,290,000
75,000 PNC Bank Corp. 3,600,000
70,800 The St. Paul Cos., Inc. 2,137,275
- --------------------------------------------------------------------------------------
60,519,766
- --------------------------------------------------------------------------------------
Health Care -- 6.0%
182,000 Amgen Inc. (b) 11,591,125
42,800 C.R. Bard, Inc. 1,915,300
76,300 Johnson & Johnson 6,566,569
45,000 Medtronic Inc. 2,058,750
24,600 Merck & Co., Inc. 1,938,788
156,000 Schering-Plough Corp. 6,864,000
170,500 Tenet Healthcare Corp. (b) 3,878,875
- --------------------------------------------------------------------------------------
34,813,407
- --------------------------------------------------------------------------------------
Publishing - Periodicals -- 2.7%
55,000 Harcourt General, Inc. 2,200,000
200,000 The Reader's Digest Association, Inc. 7,550,000
139,600 Tribune Co. 5,889,375
- --------------------------------------------------------------------------------------
15,639,375
- --------------------------------------------------------------------------------------
Technology -- 15.1%
106,000 America Online, Inc. (b) 6,035,375
132,000 Automatic Data Processing, Inc. (a) 6,261,750
101,900 Cisco Systems, Inc. (a)(b) 11,158,050
95,000 Electronic Data Systems Corp. 6,424,375
129,000 EMC Corp. (a)(b) 13,738,500
71,000 Intel Corp. 7,024,563
124,800 International Business Machine Corp. (a) 14,001,000
77,852 Lucent Technologies Inc. 4,301,323
55,000 N2H2, Inc. (b) 880,000
100,000 Oracle Corp. (a)(b) 4,995,313
66,000 Pitney Bowes, Inc. 3,234,000
79,400 Sun Microsystems, Inc. (b) 6,237,863
176,000 Xerox Corp. 3,674,000
- --------------------------------------------------------------------------------------
87,966,112
- --------------------------------------------------------------------------------------
Transportation -- 1.7%
156,375 Southwest Airlines Co. 2,492,227
19,300 United Parcel Service, Inc. 1,148,350
175,000 US Freightways Corp. 6,365,625
- --------------------------------------------------------------------------------------
10,006,202
- --------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) January 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
======================================================================================
<S> <C> <C>
Utilities -- 5.2%
149,000 The AES Corp. (a)(b) $ 11,938,625
164,200 Enron Corp. 11,073,208
190,000 The Williams Cos., Inc. 7,362,500
- --------------------------------------------------------------------------------------
30,374,333
- --------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $241,592,701) 407,680,769
======================================================================================
<CAPTION>
FACE
AMOUNT SECURITY VALUE
======================================================================================
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 10.2%
U.S. Treasury Notes:
$ 4,400,000 6.250% due 8/31/00 4,405,368
1,000,000 5.375% due 2/15/01 990,020
3,000,000 5.500% due 7/31/01 2,954,910
2,000,000 6.250% due 10/31/01 1,988,380
3,000,000 5.875% due 11/30/01 (a) 2,961,270
5,978,000 6.375% due 8/15/02 5,938,545
12,000,000 6.000% due 8/15/04 (a) 11,661,840
2,000,000 6.000% due 8/15/09 (a) 1,906,460
U.S. Treasury Bonds:
6,500,000 7.250% due 5/15/16 6,830,330
3,000,000 7.125% due 2/15/23 3,163,020
6,000,000 6.250% due 8/15/23 5,723,100
8,800,000 6.000% due 2/15/26 (a) 8,147,128
3,000,000 6.125% due 8/15/29 (a) 2,856,750
- --------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost -- $60,993,965) 59,527,121
======================================================================================
CORPORATE BONDS AND NOTES -- 13.2%
Financial Services -- 7.6%
3,000,000 ABN AMRO Global, Bank Guaranteed, 7.250% due 5/31/05 2,951,250
2,000,000 AES Corp, Sr. Sub. Notes, 10.250% due 7/15/06 2,015,000
3,000,000 Associates Corp. of North America, Sr. Notes, 5.750%
due 11/1/03 2,835,000
2,000,000 AT&T Corp., Notes, 6.500% due 3/15/29 1,697,500
2,000,000 Australia & NZ Banking Group, Sub. Notes, 6.250%
due 2/1/04 1,895,000
2,000,000 Bank One Corp., Notes, 6.400% due 8/1/02 1,950,000
2,000,000 BankAmerica, Sub. Notes, 7.750% due 7/15/02 2,012,500
2,000,000 Countrywide Home Loan, Medium Term Notes, 6.380%
due 10/8/02 1,937,500
Fannie Mae:
4,000,000 5.875% due 4/23/04 3,800,840
3,000,000 6.500% due 4/29/09 2,775,720
1,000,000 First USA Bank, Deposit Notes, 6.375% due 10/23/00 998,750
7,000,000 Freddie Mac, Notes, 6.875% due 1/15/05 6,906,200
2,000,000 Inter-American, Bonds, 7.375% due 1/15/10 1,992,500
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) January 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
======================================================================================
<S> <C> <C>
Financial Services -- 7.6% (continued)
$ 2,000,000 Lehman Brothers Holdings, Medium Term Notes, 6.050%
due 4/28/00 $ 1,995,820
Merrill Lynch & Co. Inc., Notes:
1,000,000 6.000% due 1/15/01 993,750
2,000,000 6.875% due 11/15/18 1,787,500
Morgan Stanley Dean Witter & Co., Notes:
2,000,000 7.125% due 1/15/03 1,985,000
2,000,000 6.875% due 3/1/07 1,917,500
2,000,000 Norwest Corp., Notes, 6.875% due 8/8/06 1,907,500
- --------------------------------------------------------------------------------------
44,354,830
- --------------------------------------------------------------------------------------
Industrial -- 4.7%
4,000,000 Cable & Wireless Co., Yankee Issue, 6.375% due 3/6/03 3,925,000
2,000,000 Fred Meyer Inc., Notes, 7.375% due 3/1/05 1,940,000
2,000,000 International Business Machine Corp., Notes, 5.400%
due 1/26/09 1,732,500
2,500,000 Lucent Technologies, Inc., Notes, 7.250% due 7/15/06 2,478,125
3,000,000 Norfolk Southern Corp., Notes, 6.700% due 5/1/00 3,000,000
313,709 Southwest Airlines Co., Series 1994-A3, 8.700%
due 7/1/11 320,624
3,000,000 Staples Inc., Sr. Notes, 7.125% due 8/15/07 2,838,750
1,000,000 Sun Microsystems, Sr. Notes, 7.000% due 8/15/02 988,750
Time Warner Inc., Notes:
1,500,000 7.950% due 2/1/00 1,500,000
2,000,000 6.950% due 1/15/28 1,790,000
2,375,000 Tricon Global Restaurant, Sr. Notes, 7.450% due 5/15/05 2,241,406
3,000,000 US West Cap Funding Inc., Company Guaranteed, 5.650%
due 8/15/01 2,973,750
2,000,000 Xerox Corp., Notes, 5.250% due 12/15/03 1,835,000
- --------------------------------------------------------------------------------------
27,563,905
- --------------------------------------------------------------------------------------
Utilities -- 0.9%
2,200,000 Enron Corp., Notes, 6.950% due 7/15/28 1,930,500
3,000,000 MCI Worldcom Inc., Notes, 7.750% due 4/1/07 3,022,500
- --------------------------------------------------------------------------------------
4,953,000
- --------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS AND NOTES
(Cost -- $80,334,233) 76,871,735
======================================================================================
ASSET-BACKED SECURITIES -- 2.6%
3,000,000 Chase Credit Card Master Trust, Series 1997-2, 6.300%
due 4/15/03 2,998,290
2,000,000 Discover Card Master, Series 1993-B, 6.750% due 2/16/02 1,994,700
225,292 Equity Credit Corp., Home Equity Loan Trust, Series
1993-3, 5.150% due 9/15/08 214,863
8,765,000 MBNA Master Credit Trust, Series 1995-f, 6.600%
due 1/15/03 8,773,853
999,999 Sears Credit Account Master Trust, Series 95-2A,
8.100% due 6/15/04 1,007,960
- --------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost -- $15,066,387) 14,989,666
======================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) January 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
======================================================================================
<S> <C> <C>
MORTGAGE-BACKED SECURITIES -- 3.8%
Federal Home Loan Mortgage Corporation (FHLMC):
$ 3,550 6.250% due 7/1/02 $ 3,300
6,749 8.500% due 12/1/02 6,949
1,765,795 7.000% due 2/1/29 1,684,675
Federal National Mortgage Association (FNMA):
1,126,121 6.000% due 2/1/11 1,051,865
3,300,735 7.000% due 1/1/13 3,223,367
63,820 8.000% due 7/1/24 63,680
944,932 6.500% due 3/1/29 877,303
955,196 6.500% due 4/1/29 886,833
1,976,467 7.000% due 7/1/29 1,884,423
2,000,000 8.000% due 1/1/30 1,995,620
Government National Mortgage Association (GNMA):
1,988,975 6.500% due 7/15/29 1,837,932
2,995,033 7.000% due 8/15/29 2,850,882
4,943,006 7.000% due 9/15/29 4,705,099
1,000,000 7.500% due 1/15/30 975,310
- --------------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost -- $22,934,110) 22,047,238
- --------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.1%
466,000 Goldman Sachs & Co., 5.700% due 2/1/00;
Proceeds at maturity -- $466,074; (Fully
collateralized by U.S. Treasury Notes and
Bonds, 4.875% to 10.375% due 3/31/01 to
5/15/17; Market value -- $475,202)
(Cost -- $466,000) 466,000
======================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $421,387,396**) $581,582,529
======================================================================================
</TABLE>
(a) All or a portion of security is on loan (Note 7).
(b) Non-income producing security.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities January 31, 2000
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $421,387,396) $581,582,529
Cash 378
Collateral for securities on loan (Note 7) 105,852,495
Receivable for securities sold 1,520,262
Interest receivable 3,104,502
Receivable for Fund shares sold 640,845
Dividends receivable 215,765
- --------------------------------------------------------------------------------
Total Assets 692,916,776
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities on loan (Note 7) 105,852,495
Payable for securities purchased 1,002,937
Payable for Fund shares purchased 729,386
Investment advisory fees payable 279,097
Administration fees payable 101,373
Distribution fees payable 53,722
Accrued expenses 167,120
- --------------------------------------------------------------------------------
Total Liabilities 108,186,130
- --------------------------------------------------------------------------------
Total Net Assets $584,730,646
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 22,662
------------
Capital paid in excess of par value 390,460,045
Undistributed net investment income 1,358,118
Accumulated net realized gain from security transactions 32,694,688
Net unrealized appreciation of investments 160,195,133
- --------------------------------------------------------------------------------
Total Net Assets $584,730,646
================================================================================
Shares Outstanding:
Class A 13,050,652
----------------------------------------------------------------------------
Class B 8,562,024
----------------------------------------------------------------------------
Class L 1,048,832
----------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 25.79
----------------------------------------------------------------------------
Class B * $ 25.81
----------------------------------------------------------------------------
Class L ** $ 25.88
----------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value
per share) $ 27.15
----------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value
per share) $ 26.14
================================================================================
* 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.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended January 31, 2000
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 10,253,548
Dividends 4,589,813
Less: Foreign withholding tax (161,317)
- --------------------------------------------------------------------------------
Total Investment Income 14,682,044
- --------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 2) 3,218,728
Investment advisory fees (Note 2) 3,065,311
Administration fees (Note 2) 1,114,659
Shareholder and system servicing fees 634,648
Registration fees 101,435
Shareholder communications 63,542
Audit and legal 48,558
Trustees' fees 21,275
Custody 18,508
Other 62,794
- --------------------------------------------------------------------------------
Total Expenses 8,349,458
- --------------------------------------------------------------------------------
Net Investment Income 6,332,586
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 233,557,127
Cost of securities sold 191,125,674
- --------------------------------------------------------------------------------
Net Realized Gain 42,431,453
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 184,034,044
End of year 160,195,133
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (23,838,911)
- --------------------------------------------------------------------------------
Net Gain on Investments 18,592,542
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 24,925,128
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended January 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
======================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,332,586 $ 3,884,886
Net realized gain 42,431,453 20,369,855
Increase (decrease) in net unrealized appreciation (23,838,911) 89,166,525
- --------------------------------------------------------------------------------------
Increase in Net Assets From Operations 24,925,128 113,421,266
- --------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (4,981,131) (3,895,688)
Net realized gains (23,616,050) (9,770,057)
- --------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (28,597,181) (13,665,745)
- --------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 185,704,680 107,012,876
Net asset value of shares issued for
reinvestment of dividends 27,161,910 12,933,222
Cost of shares reacquired (120,157,647) (105,542,323)
- --------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 92,708,943 14,403,775
- --------------------------------------------------------------------------------------
Increase in Net Assets 89,036,890 114,159,296
NET ASSETS:
Beginning of year 495,693,756 381,534,460
- --------------------------------------------------------------------------------------
End of year* $ 584,730,646 $ 495,693,756
======================================================================================
* Includes undistributed net investment income of: $ 1,358,118 --
======================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 17
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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, 2000, 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.
- --------------------------------------------------------------------------------
18 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH") which, in
turn, is a subsidiary of Citigroup Inc. ("Citigroup"), 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.
Effective October 1999, Smith Barney Private Trust Company ("Private Trust"),
another subsidiary of Citigroup, became the Trust's transfer agent and PFPC
Global Fund Services ("PFPC") became the sub-transfer agent. Private Tust
receives account fees that vary according to the account size and type of
account. PFPC is responsible for shareholder recordkeeping and financial
processing for all shareholder accounts. During the period October 1, 1999
through January 31, 2000, the Fund paid transfer agent fees of $151,554 to
Private Trust.
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 year ended January 31, 2000, SSB received brokerage commissions of
$3,000.
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 year ended January 31, 2000, CFBDS and SSB received sales charges of
$374,000 and $120,000 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 $152,000 $ 8,000
================================================================================
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 year ended
January 31, 2000, total Distribution Plan fees incurred were:
Class A Class B Class L
================================================================================
Distribution Plan Fees $ 784,855 $2,205,443 $ 228,430
================================================================================
All officers and one Trustee of the Trust are employees of SSB.
3. Investments
During the year ended January 31, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $310,732,772
- --------------------------------------------------------------------------------
Sales 233,557,127
================================================================================
At January 31, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
===============================================================================
Gross unrealized appreciation $173,078,335
Gross unrealized depreciation (12,883,202)
- -------------------------------------------------------------------------------
Net unrealized appreciation $160,195,133
===============================================================================
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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. 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 January 31, 2000, 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 January 31, 2000, 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 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 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 year ended January 31, 2000, the Fund did not write any call or put
options.
- --------------------------------------------------------------------------------
20 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (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 January 31, 2000, the Fund had loaned common stocks and bonds having a value
of $103,756,551 and holds the following collateral for loaned securities:
Security Description Value
===============================================================================
Certificate of Deposit:
Bank of Montreal, 5.880% due 2/2/00 $ 5,220,803
Commercial Paper:
American Home, 5.482% due 4/20/00 4,657,721)
CC USA Disc., 5.936% due 2/22/00 1,214,013
CC USA Disc., 5.930% due 2/22/00 2,080,201
Corp. Receivables, 6.055% due 2/100 6,687,691)
Corp. Receivables, 6.125% due 2/2/00 2,601,186
Moriarity Disc., 5.949% due 2/18/00 1,942,739
Moriarity Disc., 5.979% due 2/14/00 4,607,353
Sigma Finance, 5.966% due 3/10/00 643,110
Floating Rate Notes:
Goldman Sachs, 5.280% due 8/23/00 10,728,463
Goldman Sachs, 5.280% due 8/23/00 1,186,342
Sigma Finance, 6.234% due 4/4/00 1,648,231
Sigma Finance, 5.640% due 1/22/01 2,645,996
Time Deposit:
Chase Bank, 5.875% due 2/1/00 12,447,665
Chase Bank, 5.920% due 3/7/00 500,885
Tri-Party Repurchase Agreements:
J.P. Morgan, 5.800% due 2/1/00 12,373,681
J.P. Morgan, 5.800% due 2/1/00 6,115
J.P. Morgan, 5.800% due 2/1/00 158,861
J.P. Morgan, 5.800% due 2/1/00 161,197
J.P. Morgan, 5.800% due 2/1/00 329,109
J.P. Morgan, 5.800% due 2/1/00 396,679
J.P. Morgan, 5.800% due 2/1/00 23,814
J.P. Morgan, 5.800% due 2/1/00 10,937
J.P. Morgan, 5.800% due 2/1/00 20,987
J.P. Morgan, 5.800% due 2/1/00 719,537
J.P. Morgan, 5.800% due 2/1/00 63,658
J.P. Morgan, 5.800% due 2/1/00 14,799
J.P. Morgan, 5.800% due 2/1/00 5,890
J.P. Morgan, 5.800% due 2/1/00 146,447
J.P. Morgan, 5.800% due 2/1/00 74,227
Morgan Stanley, 5.800% due 2/1/00 30,436,082
Morgan Stanley, 5.810% due 2/1/00 2,098,076
- -------------------------------------------------------------------------------
Total $105,852,495
===============================================================================
Income earned by the Fund from securities loaned for the year ended January 31,
2000 was $99,698.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
8. Shares of Beneficial Interest
At January 31, 2000, 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 January 31, 2000, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $243,023,751 $123,118,611 $24,340,345
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
January 31, 2000 January 31, 1999
-------------------------- -------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 3,479,437 $ 90,293,494 2,805,213 $(64,000,378
Shares issued on reinvestment 624,601 16,162,588 345,011 7,960,380
Shares reaquired (1,926,793) (50,099,372) (2,099,048) (47,939,818)
- --------------------------------------------------------------------------------------------
Net Increase 2,177,245 $ 56,356,710 1,051,176 $(24,020,940
============================================================================================
Class B
Shares sold 3,118,093 $ 81,272,290 1,490,823 $(34,432,215
Shares issued on reinvestment 382,627 9,901,915 201,924 4,688,797
Shares reaquired (2,572,959) (66,702,505) (2,401,577) (54,426,551)
- --------------------------------------------------------------------------------------------
Net Increase (Decrease) 927,761 $ 24,471,700 (708,830) $(15,305,539)
============================================================================================
Class L
Shares sold 540,901 $ 14,138,896 364,743 $ (8,580,283
Shares issued on reinvestment 42,281 1,097,407 12,059 280,988
Shares reaquired (128,063) (3,355,770) (129,984) (2,962,207)
- --------------------------------------------------------------------------------------------
Net Increase 455,119 $ 11,880,533 246,818 $ (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>
+ As of January 31, 1999, all Class Y shares were fully redeemed.
- --------------------------------------------------------------------------------
22 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31:
<TABLE>
<CAPTION>
Class A Shares 2000(1) 1999(1) 1998 1997 1996
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 25.94 $ 20.57 $ 19.36 $ 19.00 $ 15.91
- ----------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.38 0.29 0.48 0.57 0.61
Net realized and unrealized gain 0.88 5.87 3.27 1.71 3.52
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.26 6.16 3.75 2.28 4.13
Less Distributions From:
Net investment income (0.32) (0.26) (0.55) (0.60) (0.52)
Net realized gains (1.09) (0.53) (1.99) (1.32) (0.52)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.41) (0.79) (2.54) (1.92) (1.04)
Net Asset Value, End of Year $ 25.79 $ 25.94 $ 20.57 $ 19.36 $ 19.00
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return 4.93% 30.47% 19.89% 12.41% 26.47%
Net Assets, End of Year (000s) $ 336,595 $ 282,060 $ 202,026 $ 178,072 $ 175,007
Ratios to Average Net Assets:
Expenses 1.17% 1.19% 1.19% 1.28% 1.21%
Net investment income 1.47 1.23 2.34 2.98 3.10
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43% 36% 62% 68% 81%
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares 2000(1) 1999(1) 1998 1997 1996
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 25.96 $ 20.63 $ 19.42 $ 19.05 $ 15.97
- ----------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.19 0.11 0.33 0.43 0.49
Net realized and unrealized gain 0.87 5.89 3.27 1.71 3.53
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.06 6.00 3.60 2.14 4.02
Less Distributions From:
Net investment income (0.12) (0.14) (0.40) (0.45) (0.42)
Net realized gains (1.09) (0.53) (1.99) (1.32) (0.52)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.21) (0.67) (2.39) (1.77) (0.94)
Net Asset Value, End of Year $ 25.81 $ 25.96 $ 20.63 $ 19.42 $ 19.05
Total Return 4.13% 29.50% 18.95% 11.60% 25.58%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $ 220,989 $ 198,181 $ 172,115 $ 202,597 $ 226,360
Ratios to Average Net Assets:
Expenses 1.93% 1.94% 1.95% 2.03% 1.94%
Net investment income 0.71 0.49 1.62 2.23 2.37
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43% 36% 62% 68% 81%
==================================================================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 23
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended January 31:
<TABLE>
<CAPTION>
Class L Shares 2000(1) 1999(1) 1998(2) 1997 1996
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 26.03 $ 20.68 $ 19.46 $ 19.08 $ 15.97
- ----------------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.19 0.11 0.34 0.44 0.45
Net realized and unrealized gain 0.87 5.91 3.27 1.71 3.60
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 1.06 6.02 3.61 2.15 4.05
Less Distributions From:
Net investment income (0.12) (0.14) (0.40) (0.45) (0.42)
Net realized gains (1.09) (0.53) (1.99) (1.32) (0.52)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.21) (0.67) (2.39) (1.77) (0.94)
Net Asset Value, End of Year $ 25.88 $ 26.03 $ 20.68 $ 19.46 $ 19.08
Total Return 4.13% 29.53% 18.97% 11.65% 25.77%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $ 27,147 $ 15,453 $ 7,173 $ 4,000 $ 3,396
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.92% 1.92% 1.93% 2.01% 1.94%
Net investment income 0.73 0.46 1.54 2.25 2.31
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43% 36% 62% 68% 81%
==================================================================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
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>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
January 31, 2000:
o A corporate dividends received deduction of 55.39%.
o Total long-term capital gain distributions paid of $23,616,050.
A total of 26.22% of the ordinary dividends paid by the Fund from net investment
income are derived from Federal obligations and may be exempt from taxation at
the state level.
- --------------------------------------------------------------------------------
24 2000 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees of
Smith Barney Equity Funds:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Concert Social Awareness Fund of Smith Barney
Equity Funds as of January 31, 2000, the related statement of operations for the
year then ended, the statements of changes in net assets for each of the years
in the two-year period then ended and the financial highlights for each of the
years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
January 31, 2000, by correspondence with the custodian. As to securities
purchased or sold but not yet received or delivered, we performed other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Concert Social Awareness Fund of Smith Barney Equity Funds as of January 31,
2000, the results of its operations for the year then ended, the changes in its
net assets for each of the years in the two-year period then ended and the
financial highlights for each of the years in the five-year period then ended in
the conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
March 8, 2000
- --------------------------------------------------------------------------------
Concert Social Awareness Fund 25
<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 Citi Fund Management LLC
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Transfer Agent
Smith Barney Private Trust Company
388 Greenwich Street, 22nd Floor
New York, New York 10013
Sub-Transfer Agent
PFPC Global Fund Services
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.
FD0912 3/00
