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[GRAPHIC OMITTED] Smith Barney
Small Cap Blend
Fund, Inc.
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SEMI-ANNUAL REPORT
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June 30, 1999
[LOGO] Smith Barney
Mutual Funds
<PAGE>
Smith Barney Small Cap
Blend Fund, Inc.
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The Smith Barney Small Cap Blend Fund, Inc. ("Fund") seeks long-term capital
appreciation by investing primarily in the common stock of companies with
relatively small market capitalizations.
Smith Barney Small Cap Blend Fund, Inc.
Average Annual Total Returns
June 30, 1999
Without Sales Charges(1)
---------------------------------
Class A(2) Class B Class L
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Six Months+ 8.09% 7.72% 7.72%
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One-Year 1.33 0.57 0.64
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Five-Year 15.66 N/A N/A
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Since Inception++ 10.39 10.89 11.29
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With Sales Charges(3)
---------------------------------
Class A(2) Class B Class L
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Six Months+ 2.70% 2.72% 5.66%
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One-Year (3.74) (4.43) (1.35)
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Five-Year 14.48 N/A N/A
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Since Inception++ 9.79 9.54 10.75
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(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, 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. Prior to June
23, 1997, dividends were reinvested according to the Fund's reinvestment
plan, thereafter at net asset value.
(2) The Fund converted from a closed-end fund to an open-end fund on June 23,
1997. Prior to that date, its shares were traded on the American Stock
Exchange. As of June 23, 1997, all existing shares were converted to Class
A shares. The total returns noted for Class A shares may have been
different if the Fund had been an open-end fund from inception. Current
total return information for Class A shares through June 23, 1997 is based
on net asset value while it was a closed-end fund. Closed-end funds are
not subject to the same legal requirements as open-end funds, especially
with respect to liquidity requirements.
(3) Assumes reinvestment of all dividends and capital gain distributions, if
any. Prior to June 23, 1997 dividends were reinvested according to the
Fund's reinvestment plan, thereafter at net asset value. In addition,
Class A and L shares reflect the deduction of the current maximum initial
sales charge of 5.00% and 1.00%, respectively; and 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. In addition, Class L shares reflect the deduction of a
1.00% CDSC, which applies if shares are redeemed within the first year of
purchase. All figures represent past performance and are not a guarantee
of future results. Investment returns and principal value will fluctuate,
and redemption value may be more or less than the original cost.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception dates for Class A, B and L shares are January 23, 1990, June 25,
1997 and June 24, 1997, respectively. The Fund operated as a closed-end
fund until June 23, 1997.
<PAGE>
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FUND HIGHLIGHT
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We believe that our stock selection and risk control methods have performed well
over the last six months in the midst of increased volatility. We believe that
the key to the performance of the small cap sector in the coming months lies in
the direction of the economy. A strong economy improves the odds of an earnings
recovery which should bode well for small cap stocks. Aggressive Federal Reserve
Board tightening could, however, derail a small cap rally.
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WHAT'S INSIDE
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Shareholder Letter....................................................... 1
Historical Performance................................................... 3
Smith Barney Small Cap Blend Fund, Inc.
at a Glance.............................................................. 6
Schedule of Investments.................................................. 7
Statement of Assets and Liabilities...................................... 12
Statement of Operations.................................................. 13
Statements of Changes in Net Assets...................................... 14
Notes to Financial Statements............................................ 15
Financial Highlights..................................................... 19
Additional Shareholder Information....................................... 23
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Shareholder Letter
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[PHOTO OMITTED] [PHOTO OMITTED]
HEATH B. SANDIP A.
MCLENDON BHAGAT, CFA
Chairman Vice President
Dear Shareholder:
We are pleased to provide you with the semi-annual report for the Smith Barney
Small Cap Blend Fund. Inc. for the period ended June 30, 1999. We hope you find
this report to be useful and informative. In this letter, we comment on the
market during the first and second quarters of 1999 and briefly outline how the
Fund is managed. A detailed summary of performance and current holdings can be
found in the sections that follow.
A Style Pure Fund
The Smith Barney Small Cap Blend Fund is a Style Pure Fund. The mutual funds in
the Style Pure Series are Smith Barney Mutual Funds that are the basic building
blocks of asset allocation. Other than maintaining minimal cash or under
extraordinary market conditions, each Style Pure Series Fund is fully invested
100% of the time within designated asset classes and a designated investment
style.
Performance Update and Investment Strategy
For the six months ended June 30, 1999, the Fund's Class A shares returned 8.09%
without sales charges. In comparison, the Russell 2000 Index had a return of
9.28% during the same period. (The Russell 2000 Index is comprised of 2000 of
the smallest stocks in the Russell 3000 Index. Past performance is not
indicative of future results.)
Market Update
The U.S. stock market finished the first half of 1999 firmly in positive
territory despite a rise in interest rates. Evidence of stronger-than-expected
economic growth prompted hopes of a meaningful earnings recovery during the
quarter and, at the same time, triggered concerns about rising interest rates.
Both implications led to a rally in small cap and value stocks.
The rotation into small cap and value stocks began in the middle of April and
continued through May. This trend reversed in June, as investors became more
comfortable that a proactive Federal Reserve Board ("Fed") policy would pre-empt
inflation and keep interest rates in check.
Small cap stocks were well ahead of large cap stocks in the second quarter but
still finished the first half of 1999 with a small deficit. The Russell 2000
index return of 9.28% lagged the S&P 500 index of 12.38% by over 300 basis
points. Growth stocks performed better than value stocks in the small-cap
universe during the first six months.
Portfolio Highlights*
Our stock selection was most favorable in the technology and health care sectors
in the first quarter of 1999. Internet stocks such as Excite and Lycos and
telecommunications stocks such as Comverse Technology and Dycom Industries paid
off handsomely. Among the disappointing stocks were Keane Inc., which was hurt
by Y2K related concerns, and Safeskin, which was severely penalized for earnings
and revenue shortfall during the first quarter.
Stock selection for the second quarter of 1999 was adverse in the technology and
consumer discretionary sectors and favorable in the health care sector. The
shortfall in relative performance in the technology sector came about late in
the quarter, as we were unable to shift into several growth stocks which rose
- ----------
* Please note the Fund's holdings are subject to change.
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Smith Barney Small Cap Blend Fund, Inc. 1
<PAGE>
in June. Internet stocks produced a high level of volatility after rising in
April and then retreating to prior quarter-end prices by the end of June.
In the consumer services sector, the price/earnings contraction experienced in
April and May for several growth stocks overwhelmed the rebound in those stocks
in June causing an adverse impact on performance. The health care sector
produced gains in relative performance from our bio-tech and drug holdings.
Market Outlook
We believe that the key to the performance of the small cap sector in the coming
months lies in the direction of the economy. A strong economy improves the odds
of an earnings recovery which should bode well for small cap stocks. Aggressive
Fed tightening could, however, derail a small cap rally.
In closing, thank you for investing in the Smith Barney Small Cap Blend Fund. We
look forward to helping you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Sandip A. Bhagat
Heath B. McLendon Sandip A. Bhagat, CFA
Chairman Vice President
August 2, 1999
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2 1999 Semi-Annual Report to Shareholders
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Historical Performance--Class A Shares(1)
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Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(2)
================================================================================
6/30/99 $13.35 $14.43 $0.00 $0.00 8.09%+
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12/31/98 13.68 13.35 0.00 0.16 (1.31)
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12/31/97 12.30 13.68 0.04 1.98 28.25
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12/31/96 12.15 12.30 0.04 2.00 20.56
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12/31/95 11.78 12.15 0.11 1.94 18.90
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12/31/94 12.50 11.78 0.05 0.09 (4.36)
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12/31/93 11.49 12.50 0.01 0.00 8.90
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12/31/92 10.34 11.49 0.05 0.00 11.71
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12/31/91 9.32 10.34 0.14 0.79 22.69
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Inception*--12/31/90 11.12 9.32 0.37 0.00 (12.66)+
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Total $0.81 $6.96
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Historical Performance--Class B Shares
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Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(2)
================================================================================
6/30/99 $13.09 $14.10 $0.00 $0.00 7.72%+
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12/31/98 13.52 13.09 0.00 0.16 (2.07)
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Inception*--12/31/97 13.34 13.52 0.01 1.98 16.73+
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Total $0.01 $2.14
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Historical Performance--Class L Shares
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Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(2)
================================================================================
6/30/99 $13.09 $14.10 $0.00 $0.00 7.72%+
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12/31/98 13.51 13.09 0.00 0.16 (1.99)
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Inception*--12/31/97 13.24 13.51 0.01 1.98 17.53+
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Total $0.01 $2.14
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Smith Barney Small Cap Blend Fund, Inc. 3
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Historical Performance--Class Y Shares
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Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Returns(2)
================================================================================
6/30/99 $13.34 $14.44 $0.00 $0.00 8.25%+
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12/31/98 13.63 13.34 0.03 0.16 (0.80)
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Inception*--12/31/97 13.87 13.63 0.04 0.00 (1.42)+
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Total $0.07 $0.16
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It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
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Average Annual Total Returns
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Without Sales Charges(2)
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Class A(1) Class B Class L Class Y
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Six Months Ended 6/30/99+ 8.09% 7.72% 7.72% 8.25%
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Year Ended 6/30/99 1.33 0.57 0.64 1.77
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Five Years Ended 6/30/99 15.66 N/A N/A N/A
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Inception* through 6/30/99 10.39 10.89 11.29 4.42
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With Sales Charges(3)
------------------------------------------
Class A(1) Class B Class L Class Y
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Six Months Ended 6/30/99+ 2.70% 2.72% 5.66% 8.25%
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Year Ended 6/30/99 (3.74) (4.43) (1.35) 1.77
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Five Years Ended 6/30/99 14.48 N/A N/A N/A
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Inception* through 6/30/99 9.79 9.54 10.75 4.42
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4 1999 Semi-Annual Report to Shareholders
<PAGE>
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Cumulative Total Returns
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Without Sales Charges(2)
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Class A (Inception* through 6/30/99) 154.28%
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Class B (Inception* through 6/30/99) 23.14
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Class L (Inception* through 6/30/99) 24.07
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Class Y (Inception* through 6/30/99) 7.64
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(1) The Fund converted from a closed-end fund to an open-end fund on June 23,
1997. Prior to that date, its shares were traded on the American Stock
Exchange. As of June 23, 1997, all existing shares were converted to a
Class A shares. The total returns noted for Class A shares may have been
different if the Fund had been an open-end fund from inception. All
historical performance information for Class A shares through June 23,
1997 is based on net asset value while it was a closed-end fund.
Closed-end funds are not subject to the same legal requirements as
open-end funds, especially to liquidity requirements.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, 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. Prior to June
23, 1997, dividends were reinvested according to the Fund's dividend
reinvestment plan, thereafter, at net asset value.
(3) Assumes reinvestment of all dividends and capital gain distributions, if
any. Prior to June 23, 1997, dividends were reinvested according to the
Fund's dividend reinvestment plan, thereafter at net asset value. In
addition, Class A and L shares reflect the deduction of the current
maximum 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 within 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, L and Y shares are January 23, 1990, June
25, 1997, June 24, 1997 and October 17, 1997, respectively.
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Smith Barney Small Cap Blend Fund, Inc. 5
<PAGE>
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Smith Barney Small Cap Blend Fund, Inc. at a Glance (unaudited)
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Growth of $10,000 Invested in Class A Shares of the
Smith Barney Small Cap Blend Fund, Inc. vs.
Russell 2000 Index and Russell 2500 Index+
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January 1990 -- June 1999
[GRAPHIC OMITTED]
[INSERT PLOT POINTS]
+ Hypothetical illustration of $10,000 invested in the Fund at inception on
January 23, 1990, assuming reinvestment of dividends and capital gains, if
any, through June 30, 1999. As of June 23, 1997, all existing shares
became Class A shares. The Fund operated as a closed-end mutual fund until
June 23, 1997. Prior to that date, its shares were traded on the American
Stock Exchange, and dividends were eligible for reinvestment through the
Fund's dividend reinvestment plan; since that time, dividends have been
reinvested at net asset value. Current total return information is based
on net asset value while it was a closed-end fund. For purposes of this
illustration, the current maximum front-end sales charge for Class A
shares of 5.00% has been used to compute the initial account value at
inception. Closed-end funds are not subject to the same legal requirements
as open-end funds, especially with respect to liquidity requirements;
therefore, the performance indicated above may have been different had the
Fund been an open-end fund since inception. The Russell 2000 Index is
comprised of 2000 of the smallest stocks in the Russell 3000 Index. The
Russell 2500 Index is comprised of 2,500 of the smallest stocks in the
Russell 3000 Index. The Russell 3000 Index is composed of 3,000 of the
largest U.S. companies by market capitalization. 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 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.
++ It is the opinion of management that the Russell 2000 Index more
accurately reflects the current composition of the Smith Barney Small Cap
Blend Fund, Inc. than the Russell 2500 Index. In the future reporting, the
Russell 2000 Index will be used as a basis of comparison of total return
performance rather than the Russell 2500 Index.
Industry Diversification of Common Stock*
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[GRAPHIC OMITTED]
[The following table was depicted as a bar graph in the printed material]
Autos & Transportation 5.6%
Consumer Discretionary 19.5%
Consumer Staples 1.9%
Energy 2.3%
Financial Services 12.3%
Health Care 8.6%
Integrated Oil 0.6%
Materials & Processing 14.3%
Producer Durables 5.8%
Technology 22.3%
Utilities 6.8%
* As a percentage of total common stock.
Top Ten Holdings*
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1. E*Trade Group, Inc. 1.2%
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2. Network Appliance, Inc. 1.1
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3. NTL Incorporated 1.0
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4. SPX Corp. 1.0
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5. Comverse Technology, Inc. 0.9
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6. IDEC Pharmaceuticals Corp. 0.9
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7. CMGI Inc. 0.9
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8. Astec Industries, Inc. 0.9
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9. Abacus Direct Corp. 0.9
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10. Polycom, Inc. 0.9
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6 1999 Semi-Annual Report to Shareholders
<PAGE>
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Schedule of Investments (unaudited) June 30, 1999
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SHARES SECURITY VALUE
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COMMON STOCK -- 92.9%
Autos & Transportation -- 5.2%
55,200 Airborne Freight Corp. $ 1,528,350
36,000 Alaska Air Group, Inc. 1,503,000
62,700 Arvin Industries, Inc. 2,374,762
44,000 Avondale Industries, Inc. 1,716,000
32,200 Borg-Warner Automotive, Inc. 1,771,000
57,450 Motivepower Industries, Inc. 1,019,738
49,600 SkyWest, Inc. 1,236,900
34,200 SPX Corp. 2,855,700
51,800 USFreightways Corp. 2,398,988
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16,404,438
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Consumer Discretionary -- 18.1%
27,500 Abacus Direct Corp.*++ 2,516,250
57,800 Action Performance Companies, Inc.*+ 1,907,400
23,200 Adelphia Communications Corp.*+ 1,476,100
57,300 ADVO Inc. 1,188,975
47,900 AnnTaylor Stores Corp.*+ 2,155,500
136,600 Aztar Corporation* 1,255,012
74,300 Bob Evans Farms, Inc. 1,476,712
83,700 The Cato Corporation, Class A Shares 973,012
75,600 Chico's Fas, Inc. 1,776,600
23,800 CMGI Inc.+ 2,714,687
35,000 Coach USA, Inc.* 1,467,812
53,100 Complete Business Solutions, Inc.* 952,481
32,840 Consolidated Graphics, Inc.* 1,642,000
30,900 Cort Business Services Corp.* 739,669
45,800 Cost Plus, Inc.* 2,083,900
29,100 Cox Radio, Inc.* 1,578,675
54,500 Daisytek International Corp.* 889,031
58,900 Data Processing Resources Corp.* 1,391,512
60,600 Education Management Corp.* 1,257,450
89,800 Family Dollar Stores, Inc. 2,155,200
59,600 Florida Panthers Holdings, Inc., Class A Shares* 636,975
61,687 Foodmaker, Inc.* 1,750,369
45,200 Fossil, Inc.* 2,186,550
51,200 Guitar Center, Inc.* 534,400
49,800 Haverty Furniture Companies, Inc. 1,755,450
28,462 Jones Apparel Group, Inc.* 976,602
17,200 Lason, Inc.* 853,550
143,900 Lone Star Steakhouse & Saloon, Inc. 1,398,528
77,100 Mail-Well, Inc.* 1,248,056
51,600 The McClatchy Company, Class A Shares 1,709,250
51,080 The Men's Wearhouse, Inc.* 1,302,540
43,700 The Metzler Group, Inc.* 1,207,213
61,950 Pacific Sunwear of California, Inc.* 1,510,031
38,600 Snyder Communications, Inc.+ 1,264,150
65,350 Sonic Corp.* 2,132,044
65,900 Trans World Entertainment Corp.* 741,375
45,000 United Stationers, Inc. 990,000
See Notes to Financial Statements.
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Smith Barney Small Cap Blend Fund, Inc. 7
<PAGE>
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Schedule of Investments (unaudited) (continued) June 30, 1999
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SHARES SECURITY VALUE
================================================================================
Consumer Discretionary -- 18.1% (continued)
64,600 Vistana, Inc. * $ 1,017,450
53,900 Zale Corp.* 2,156,000
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56,968,511
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Consumer Staples -- 1.7%
27,900 Canandaigua Brands, Inc.* 1,463,006
48,400 Earthgrains Company 1,249,325
46,300 IBP Inc. 1,099,625
55,200 Pilgrim's Pride Corp. 1,656,000
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5,467,956
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Energy -- 2.2%
53,400 Barrett Resources Corp. * 2,049,225
62,400 Cal Dive International, Inc.* 1,864,200
103,000 Marine Drilling Companies, Inc.* 1,409,813
55,600 Newfield Exploration Co.* 1,581,125
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6,904,363
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Financial Services -- 11.5%
38,775 Associated Banc-Corp 1,609,162
23,000 Astoria Financial Corp. 1,010,562
73,821 Brenton Banks, Inc. 1,144,225
27,000 CCB Financial Corp. 1,427,625
24,700 Centura Banks, Inc. 1,392,462
36,900 City National Corp. 1,381,444
51,800 Dime Bancorp, Inc. 1,042,475
76,700 Doral Financial Corp. 1,323,075
70,200 Eaton Vance Corp. 2,417,512
64,200 Enhance Financial Services Group, Inc. 1,267,950
42,100 EVEREN Capital Corp. 1,255,106
35,200 Everest Reinsurance Holdings, Inc. 1,148,400
53,070 Fidelity National Financial, Inc. 1,114,470
27,500 Financial Security Assurance Holdings, Ltd. 1,430,000
62,200 First American Financial Corp. 1,111,825
57,400 Firstfed Financial Corp. 1,104,950
54,600 Flagstar Bancorp, Inc. 1,378,650
39,600 GBC Bancorp 801,900
47,400 HCC Insurance Holdings, Inc. 1,075,387
36,460 Medical Assurance, Inc. * 1,029,995
41,700 Mercantile Bankshares Corp. 1,475,138
87,400 National Commerce Bancorporation 1,911,875
77,500 Peoples Heritage Financial Group, Inc. 1,457,969
24,900 Radian Group Inc. 1,215,431
105,875 Republic Bancorp, Inc. 1,607,977
55,800 United Bankshares, Inc. 1,478,700
39,400 WestAmerica Bancorporation * 1,438,100
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36,052,365
- --------------------------------------------------------------------------------
Health Care -- 8.0%
33,800 Alpharma, Inc.+ 1,202,012
49,600 Bindley Western Industries, Inc. 1,143,900
See Notes to Financial Statements.
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8 1999 Semi-Annual Report to Shareholders
<PAGE>
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Schedule of Investments (unaudited) (continued) June 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Health Care -- 8.0% (continued)
37,700 CareMatrix Corp. * $ 468,894
48,800 CONMED Corp.* 1,494,500
53,100 Datascope Corp.* 1,705,837
63,100 Gliatech Inc. 1,609,050
35,600 IDEC Pharmaceuticals Corp.*+ 2,743,425
42,000 InfoCure Corporation 2,223,375
57,900 King Pharmaceuticals, Inc.* 1,498,163
42,450 Medicis Pharmaceutical Corp.* 1,077,169
24,999 Priority Healthcare Corp., Class B Shares* 862,466
63,800 Protein Design Labs, Inc.* 1,415,563
42,600 Renal Care Group, Inc.* 1,102,275
55,800 Res-Care, Inc.*+ 1,269,450
65,500 Roberts Pharmaceutical Corp. * 1,588,375
39,500 Trigon Healthcare, Inc.* 1,436,813
48,700 Xomed Surgical Products, Inc.* 2,371,081
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25,212,348
- --------------------------------------------------------------------------------
Integrated Oil -- 0.5%
33,400 Murphy Oil Corp. 1,630,337
- --------------------------------------------------------------------------------
Materials & Processing -- 13.3%
84,300 AK Steel Holding Corp. 1,896,750
54,700 AptarGroup, Inc. 1,641,000
38,800 Arden Realty, Inc. 955,450
46,524 Avalonbay Communities, Inc.+ 1,721,388
41,900 Centex Construction Products, Inc. 1,429,837
30,500 Cousins Properties, Inc. 1,031,281
61,700 Crompton & Knowles Corp. 1,207,006
40,500 The Dexter Corp. 1,652,906
48,200 EastGroup Properties, Inc. 967,012
100,700 Equity Inns Inc. 931,475
40,900 First Industrial Realty Trust, Inc. 1,122,194
51,500 General Growth Properties, Inc. 1,828,250
65,600 Glenborough Realty Trust Inc. 1,148,000
28,400 Health Care Property Investors, Inc. 820,050
66,600 Liberty Property Trust 1,656,675
37,300 Lone Star Industries, Inc.* 1,401,081
33,100 Mid-America Apartment Communities, Inc. 765,438
67,800 Nationwide Health Properties Inc. 1,292,438
43,400 NVR, Inc.++ 2,264,938
27,200 OM Group, Inc. 938,400
51,800 Parkway Properties, Inc. 1,715,875
44,800 Potlatch Corp. 1,968,400
81,000 Prime Retail, Inc. 703,688
71,730 Reckson Associates Realty Corp. 1,685,655
39,400 Regency Realty Corp. 864,338
40,700 Reliance Steel & Aluminum Co. 1,587,300
33,600 Simpson Manufacturing Co., Inc.* 1,596,000
47,200 Solutia Inc. 1,005,950
See Notes to Financial Statements.
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Smith Barney Small Cap Blend Fund, Inc. 9
<PAGE>
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Schedule of Investments (unaudited) (continued) June 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Materials & Processing -- 13.3% (continued)
27,800 Spieker Properties, Inc. $ 1,080,725
77,700 Tower Automotive, Inc.* 1,976,494
45,700 Tredegar Industries, Inc. 993,975
- --------------------------------------------------------------------------------
41,849,969
- --------------------------------------------------------------------------------
Producer Durables -- 5.4%
63,800 Astec Industries, Inc.*++ 2,599,850
1,500 The B.F. Goodrich Co.+ 63,750
29,400 Briggs & Stratton Corp.+ 1,697,850
60,600 C&D Technologies, Inc. 1,855,875
37,500 Centex Corp. 1,408,594
40,000 Cordant Technologies, Inc. 1,807,500
80,600 D.R. Horton, Inc. 1,339,975
47,100 Jacobs Engineering Group, Inc. 1,789,800
66,500 Lennar Corp. 1,596,000
69,300 Mettler-Toledo International Inc.* 1,719,506
53,500 Primex Technologies, Inc. 1,153,594
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17,032,294
- --------------------------------------------------------------------------------
Technology -- 20.7%
49,900 AVT Corporation* 1,889,962
56,700 Brooks Automation, Inc. 1,534,444
34,300 Comsat Corp. 1,114,750
36,750 Comverse Technology, Inc.*+++ 2,774,625
54,400 CSG Systems International, Inc.* 1,424,600
65,500 The DII Group, Inc.* 2,443,969
25,300 DoubleClick Inc.*+ 2,321,275
59,000 DSP Communications, Inc.* 1,703,625
29,000 Dycom Industries, Inc.* 1,624,000
89,400 E*TRADE Group, Inc.*+ 3,570,412
57,300 Esterline Technologies 823,687
73,200 Genesys Telecommunications Laboratories, Inc. 1,830,000
27,900 Infoseek Corporation* 1,337,456
48,300 International Network Services* 1,950,113
42,960 Legato Systems, Inc.* 2,480,940
14,400 Lycos, Inc.* 1,323,000
59,100 Mastech Corp.* 1,100,738
129,500 Mentor Graphics Corp. 1,659,219
60,300 Mercury Interactive Corp.* 2,133,113
49,200 National Computer Systems, Inc. 1,660,500
58,100 Network Appliance, Inc.*++ 3,246,338
29,900 New Era of Networks, Inc.*+ 1,313,731
48,200 Orckit Communications Ltd.* 1,192,950
69,200 Park Electrochemical Corp. 1,989,500
64,000 Polycom, Inc.* 2,496,000
18,700 Priceline.com Inc.+ 2,161,019
57,100 Progress Software Corp.* 1,613,075
15,900 SEI Investments Company 1,403,175
39,300 Semtech Corp.* 2,048,513
194,500 Sybase, Inc.* 2,139,500
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Technology -- 20.7% (continued)
57,900 Unitrode Corp. $ 1,661,006
52,300 USWeb Corp.* 1,160,406
83,100 VoiceStream Wireless Corp.*+ 2,363,156
53,400 Xircom, Inc.* 1,605,338
39,900 Xoom.com, Inc.* 2,094,750
- --------------------------------------------------------------------------------
65,188,885
- --------------------------------------------------------------------------------
Utilities -- 6.3%
35,440 Calpine Corp.* 1,913,760
39,300 Commonwealth Telephone Enterprises, Inc. 1,589,194
40,700 Connecticut Energy Corp. 1,569,494
175,880 El Paso Electric Co. 1,571,927
64,200 MDU Resources Group, Inc. 1,464,563
33,100 New Jersey Resources Corp. 1,239,181
64,600 NorthWestern Corp. 1,562,513
33,300 NTL Incorporated*+ 2,870,044
71,100 SkyTel Communications, Inc.*+ 1,488,656
44,700 Southwest Gas Corp. 1,279,538
54,300 UGI Corp. 1,096,181
83,100 Western Wireless Corp., Class A Shares 2,243,700
- --------------------------------------------------------------------------------
19,888,751
================================================================================
TOTAL COMMON STOCK
(Cost-- $270,882,827) 292,600,217
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
U.S. TREASURY BILLS -- 0.2%
$ 800,000 U.S. Treasury Bills, due 9/16/99++
(Cost-- $792,317) 792,317
================================================================================
REPURCHASE AGREEMENT -- 6.9%
21,682,000 Morgan Stanley, Dean Witter & Co., 4.800%
due 7/1/99; Proceeds at maturity -- $21,684,891;
(Fully collaterlized by U.S. Treasury Notes,
Bonds and Bills, 5.875% to 7.750% due 7/31/99
to 11/15/27; Market Value -- $22,284,480)
(Cost-- $21,682,000) 21,682,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost-- $293,357,144**) $315,074,534
================================================================================
* Non-income producing security.
+ A portion of the security is on loan (See Note 7).
++ Security is segregated by the custodian for futures contracts commitments.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited) June 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost--$293,357,144) $315,074,534
Collateral for securities loaned (Note 7) 34,539,250
Cash 936
Receivable for securities sold 2,648,531
Receivable for Fund shares sold 591,341
Dividends and interest receivable 292,384
Receivable from broker - variation margin 138,000
Other assets 34,580
- --------------------------------------------------------------------------------
Total Assets 353,319,556
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities loaned (Note 7) 34,539,250
Payable for securities purchased 4,285,058
Investment advisory fees payable 175,531
Administration fees payable 27,394
Distribution fees payable 10,322
Accrued expenses 32,213
- --------------------------------------------------------------------------------
Total Liabilities 39,069,768
- --------------------------------------------------------------------------------
Total Net Assets $314,249,788
================================================================================
NET ASSETS:
Par value of capital shares $ 21,823
Capital paid in excess of par value 279,745,522
Undistributed net investment income 435,900
Accumulated net realized loss on security transactions
and futures contracts 11,912,813
Net unrealized appreciation of investments and
futures contracts 22,133,730
- --------------------------------------------------------------------------------
Total Net Assets $314,249,788
================================================================================
Shares Outstanding:
Class A 2,993,314
-----------------------------------------------------------------------------
Class B 1,797,503
-----------------------------------------------------------------------------
Class L 761,653
-----------------------------------------------------------------------------
Class Y 16,270,810
-----------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $14.43
-----------------------------------------------------------------------------
Class B* $14.10
-----------------------------------------------------------------------------
Class L** $14.10
-----------------------------------------------------------------------------
Class Y (and redemption price) $14.44
-----------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $15.19
-----------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $14.24
================================================================================
* 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.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended June 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 1,485,973
Interest 360,046
Less: Foreign withholding tax (1,038)
- --------------------------------------------------------------------------------
Total Investment Income 1,844,981
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 909,441
Distribution fees (Note 2) 204,121
Administration fees (Note 2) 139,914
Registration fees 63,314
Shareholder and system servicing fees 35,894
Custody 17,490
Shareholder communications 16,246
Audit and legal 14,779
Directors' fees 1,482
Other 4,317
- --------------------------------------------------------------------------------
Total Expenses 1,406,998
- --------------------------------------------------------------------------------
Net Investment Income 437,983
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 3 AND 5):
Realized Gain From:
Security transactions (excluding short-term securities): 23,773,207
Futures contracts 1,186,927
- --------------------------------------------------------------------------------
Net Realized Gain 24,960,134
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments and
Futures Contracts:
Beginning of period 23,494,039
End of period 22,133,730
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (1,360,309)
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 23,599,825
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 24,037,808
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 1999 (unaudited)
and the Year Ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
====================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 437,983 $ 443,794
Net realized gain (loss) 24,960,134 (12,983,874)
Increase (decrease) in net unrealized appreciation (1,360,309) 13,907,428
- ----------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 24,037,808 1,367,348
- ----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (441,036)
Net realized gains -- (2,410,101)
- ----------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to Shareholders -- (2,851,137)
- ----------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 75,348,177 181,707,409
Net asset value of shares issued for reinvestment of dividends -- 557,713
Cost of shares reacquired (66,048,222) (66,067,232)
- ----------------------------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 9,299,955 116,197,890
- ----------------------------------------------------------------------------------------------------
Increase in Net Assets 33,337,763 114,714,101
NET ASSETS:
Beginning of period 280,912,025 166,197,924
- ----------------------------------------------------------------------------------------------------
End of period* $ 314,249,788 $ 280,912,025
====================================================================================================
* Includes undistributed (overdistributed) net investment income of: $435,900 $(2,083)
====================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Small Cap Blend Fund, Inc. ("Fund"), a Maryland corporation, is
registered under the In vestment Company Act of 1940, as amended. On June 23,
1997, the Fund became a diversified, open-end management investment company.
Prior to that date the Fund was a non-diversified, closed-end management
investment company and its shares were traded on the American Stock Exchange.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities traded on
a national securities exchange or on the Nasdaq National Market System are
valued at closing prices on such exchange or market; securities for which no
sales prices are reported are valued at the mean between the most recently
quoted bid and ask 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 Directors; (d) securities maturing within 60 days or less are
valued at cost plus accreted discount, or minus amortized premium, which
approximates value; (e) dividend in come is recorded on the ex-dividend date and
interest in come is recorded on the accrual basis; (f) dividends and
distributions to shareholders are recorded on the ex-dividend date; (g) gains or
losses on the sale of securities are calculated by using the specific
identification method; (h) direct expenses are charged to each class; management
fees and general fund expenses are allocated on the basis of relative net
assets; (i) 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; (j) the character of
income and gains distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
At December 31, 1998, 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 (k) estimates and
assumptions are required to be made regarding assets, liabilities and changes in
net assets resulting from operations when financial statements are prepared.
Changes in the economic environment, financial markets and any other parameters
used in determining these estimates could cause actual results to differ.
2. Management Agreement and Transactions with Affiliated Persons
Travelers Investment Management Company ("TIMCO"), a subsidiary of Salomon Smith
Barney Holdings Inc. ("SSBH"), acts as investment manager to the Fund. The Fund
pays TIMCO a fee calculated at the annual rate of 0.65% of the Fund's average
daily net assets. Prior to June 23, 1997, the investment management fee paid was
0.75%. This fee is calculated daily and paid monthly.
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp.,
another subsidiary of SSBH, acts as the Fund's administrator. As compensation
for its services, the Fund pays SSBC a fee calculated at the annual rate of
0.10% of the Fund's average daily net assets. Prior to June 23, 1997, the Fund
paid an administration fee of 0.25%. This fee is calculated daily and paid
monthly.
For the six months ended June 30, 1999, Salomon Smith Barney Inc. ("SSB"),
another subsidiary of SSBH, was paid brokerage commissions of $29,477.
CFBDS, Inc., ("CFBDS") acts as the Fund's distributor. SSB, as well as certain
other broker-dealers, continues to sell Fund shares to the public as a member of
the selling group.
- --------------------------------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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 shares
are being sold at net asset value plus a maximum initial sales charge of 1.00%.
Class L shares also have a 1.00% CDSC, which applies if redemption occurs within
the first year of purchase. In certain cases, Class A shares also have a 1.00%
CDSC, which applies if redemption occurs within the first year of purchase. This
CDSC only applies to those purchases of Class A shares, which, when combined
with current holdings of Class A shares, equal or exceed $500,000 in the
aggregate. These purchases do not incur an initial sales charge.
For the six months ended June 30, 1999, SSB received sales charges of
approximately $59,000 and $43,000 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 $45,000 4,000
================================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A, B and L shares calculated at the annual rate of 0.25% of the average
daily net assets of each respective class. In addition, the Fund also pays a
distribution fee with respect to Class B and L shares calculated at the annual
rate of 0.75% of the average daily net assets of each class. For the six months
ended June 30, 1999, total Distribution Plan fees were as follows:
Class A Class B Class L
================================================================================
Distribution Plan Fees $49,202 $112,950 $41,969
================================================================================
All officers and one director of the Fund are employees of SSB.
3. Investments
For the six months ended June 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $141,724,865
- --------------------------------------------------------------------------------
Sales 137,055,903
================================================================================
At June 30, 1999, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $40,887,199
Gross unrealized depreciation (19,169,809)
- --------------------------------------------------------------------------------
Net unrealized appreciation $21,717,390
================================================================================
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 daily 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 contract. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking to market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are received or made and recognized as assets due from or
liabilities due to the 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
transaction and the Fund's basis in the contract. The Fund enters into such
contracts to hedge a portion of its portfolio.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
The Fund bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At June 30, 1999, the Fund had the following open futures contracts:
# of Basis Market Unrealized
Purchased Contracts Contracts Expiration Value Value Gain
================================================================================
Russell 2000 60 9/99 $13,443,660 $13,860,000 $416,340
================================================================================
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 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 June 30, 1999, the Fund had no open purchased call or put option contracts.
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 securities loaned, 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 June 30, 1999, the Fund loaned common stocks having a value of $34,197,769
and holds the following collateral for loaned securities:
Security Description Value
================================================================================
Time Deposits:
Banco Bilbao Vizcaya, 5.875% due 7/1/99 $10,042,857
Banque Paribas, 5.875% due 7/1/99 10,596,388
Bank of Montreal, 5.937% due 7/1/99 1,324,602
Bank of Montreal, 5.250% due 7/1/99 6,986,335
Barclays Bank PLC, 5.750% due 7/1/99 5,589,068
- --------------------------------------------------------------------------------
Total $34,539,250
================================================================================
For the six months ended June 30, 1999, income earned by the Portfolio from
securities lending was $61,579.
- --------------------------------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 17
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
8. Capital Shares
At June 30, 1999, the Fund had 400 million shares of capital stock 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 in the
Fund and has the same rights, except that each class bears certain expenses
specifically related to the distribution of its shares. Effective June 12, 1998,
the Fund adopted the renaming of existing Class C shares as Class L shares.
At June 30, 1999, total paid-in capital amounted to the following for each
class:
Class A Class B Class L Class Y
================================================================================
Total Paid-in Capital $31,401,614 $25,130,462 $10,043,556 $213,191,713
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
-------------------------- ---------------------------
Shares Amount Shares Amount
======================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 3,957,570 $ 53,344,927 4,335,738 $ 55,812,933
Shares issued on reinvestment -- -- 18,612 260,568
Shares reacquired (4,166,763) (56,086,616) (4,518,280) (57,908,518)
- --------------------------------------------------------------------------------------
Net Decrease (209,193) $ (2,741,689) (163,930) $ (1,835,017)
======================================================================================
Class B
Shares sold 426,061 $ 5,538,355 1,356,775 $ 18,169,322
Shares issued on reinvestment -- -- 17,912 246,833
Shares reacquired (427,045) (5,483,247) (514,811) (6,660,668)
- --------------------------------------------------------------------------------------
Net Increase (Decrease) (984) $ 55,108 859,876 $ 11,755,487
======================================================================================
Class L*
Shares sold 561,637 $ 7,303,738 439,129 $ 5,656,882
Shares issued on reinvestment -- -- 3,651 50,312
Shares reacquired (342,609) (4,478,359) (120,337) (1,498,046)
- --------------------------------------------------------------------------------------
Net Increase 219,028 $ 2,825,379 322,443 $ 4,209,148
======================================================================================
Class Y
Shares sold 709,670 $ 9,161,157 7,895,273 $ 102,068,272
Shares issued on reinvestment -- -- -- --
Shares reacquired -- -- -- --
- --------------------------------------------------------------------------------------
Net Increase 709,670 $ 9,161,157 7,895,273 $ 102,068,272
======================================================================================
</TABLE>
* On June 12, 1998, Class C shares were renamed Class L shares.
9. Capital Loss Carryforward
At December 31, 1998 the Fund had, for Federal income tax purposes, a capital
loss carryforward of approximately $11,580,000, available to offset future
capital gains through December 31, 2006. To the extent that these carryforward
losses are used to offset capital gains, it is probable that the gains so offset
will not be distributed.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended December 31, except where noted:
<TABLE>
<CAPTION>
Class A Shares(1) 1999(2)(3) 1998(3) 1997 1996 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $13.35 $13.68 $12.30 $12.15 $11.78 $12.50
- ---------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.01 0.00* 0.04 0.05 0.11 0.05
Net realized and unrealized gain (loss) 1.07 (0.17)** 3.23 2.14 2.31 (0.63)
- ---------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.08 (0.17) 3.27 2.19 2.42 (0.58)
- ---------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- (0.04) (0.04) (0.11) (0.05)
Net realized gains -- (0.16) (1.98) (2.00) (1.94) (0.09)
- ---------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.16) (2.02) (2.04) (2.05) (0.14)
- ---------------------------------------------------------------------------------------------------------------
Redemption Fee(4) -- -- 0.13 -- -- --
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $14.43 $13.35 $13.68 $12.30 $12.15 $11.78
- ---------------------------------------------------------------------------------------------------------------
Total Return 8.09%++ (1.31)% 28.25% 20.56% 18.90% (4.36)%
- ---------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $43,191 $42,747 $46,036 $52,911 $52,546 $51,641
- ---------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.20%+ 1.33% 1.21% 1.21% 1.22% 1.22%
Net investment income 0.11+ 0.03 0.24 0.43 0.84 0.43
- ---------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 50% 129% 140% 151% 177% 45%
===============================================================================================================
</TABLE>
(1) The Fund operated as a closed-end investment company until June 23, 1997.
As of that date all existing shares were converted to Class A shares.
Closed-end funds are not subject to the same legal requirements as
open-end funds, especially with respect to liquidity requirements. The
total returns noted for each year may have been different if the Fund had
been an open-end fund from inception. The Fund's total returns while it
was a closed-end fund are based on net asset value.
(2) For the six months ended June 30, 1999 (unaudited).
(3) Per share amounts have been calculated using the monthly average shares
method.
(4) Amount relates to a redemption fee which was in effect through December
31, 1997.
* Amount represents less than $0.01 per share.
** The amount shown may not be consistent with the change in aggregate gains
and losses of portfolio securities due to the timing of sales and
redemptions of Fund shares throughout the year.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended December 31, except where noted:
Class B Shares 1999(1)(2) 1998(2) 1997(3)
================================================================================
Net Asset Value, Beginning of Period $13.09 $13.52 $13.34
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.04) (0.09) (0.01)
Net realized and unrealized gain (loss) 1.05 (0.18)* 2.18
- --------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.01 (0.27) 2.17
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- (0.01)
Net realized gains -- (0.16) (1.98)
- --------------------------------------------------------------------------------
Total Distributions -- (0.16) (1.99)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $14.10 $13.09 $13.52
- --------------------------------------------------------------------------------
Total Return 7.72%++ (2.07)% 16.73%++
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $25,346 $23,551 $12,685
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.97%+ 2.10% 1.99%+
Net investment loss (0.66)+ (0.72) (0.26)+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 50% 129% 140%
================================================================================
(1) For the six months ended June 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from June 25, 1997 (inception date) to December 31, 1997.
* The amount shown may not be consistent with the change in aggregate gains
and losses of portfolio securities due to the timing of sales and
redemptions of Fund shares throughout the year.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended December 31, except where noted:
Class L Shares 1999(1)(2) 1998(2)(3) 1997(4)
================================================================================
Net Asset Value, Beginning of Period $13.09 $13.51 $13.24
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.04) (0.10) (0.01)
Net realized and unrealized gain (loss) 1.05 (0.16)* 2.27
- --------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.01 (0.26) 2.26
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- -- (0.01)
Net realized gains -- (0.16) (1.98)
- --------------------------------------------------------------------------------
Total Distributions -- (0.16) (1.99)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $14.10 $13.09 $13.51
- --------------------------------------------------------------------------------
Total Return 7.72%++ (1.99)% 17.53%++
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $10,736 $7,101 $2,974
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.93%+ 2.13% 2.00%+
Net investment loss (0.59)+ (0.74) (0.26)+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 50% 129% 140%
================================================================================
(1) For the six months ended June 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) For the period from June 24, 1997 (inception date) to December 31, 1997.
* The amount shown may not be consistent with the change in aggregate gains
and losses of portfolio securities due to the timing of sales and
redemptions of Fund shares throughout the year.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 21
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended December 31, except where noted:
Class Y Shares 1999(1)(2) 1998(2) 1997(3)
================================================================================
Net Asset Value, Beginning of Period $13.34 $13.63 $13.87
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.03 0.06 0.01
Net realized and unrealized gain (loss) 1.07 (0.16)* (2.21)
- --------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.10 (0.10) (0.20)
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- (0.03) (0.04)
Net realized gains -- (0.16) --
- --------------------------------------------------------------------------------
Total Distributions -- (0.19) (0.04)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $14.44 $13.34 $13.63
- --------------------------------------------------------------------------------
Total Return 8.25%++ (0.80)% (1.42)%++
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $234,977 $207,513 $104,503
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.83%+ 0.94% 1.11%+
Net investment income 0.49+ 0.44 0.58+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 50% 129% 140%
================================================================================
(1) For the six months ended June 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from October 17, 1997 (inception date) to December 31,
1997.
* The amount shown may not be consistent with the change in aggregate gains
and losses of portfolio securities due to the timing of sales and
redemptions of Fund shares throughout the year.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
22 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On May 12, 1999, a special meeting of shareholders of the Fund was held for the
purpose of electing Directors to the Fund.
The results of the vote were as follows:
<TABLE>
<CAPTION>
Shares Voted Percentage Shares Voted Percentage
Name of Directors For Shares Voted Against Shares Voted
=====================================================================================
<S> <C> <C> <C> <C>
Lee Abraham 17,321,090.654 99.707% 50,948.817 0.293%
Allan J. Bloostein 17,322,107.821 99.713 49,931.650 0.287
Jane F. Dasher 17,321,560.400 99.709 50,479.071 0.291
Donald R. Foley 17,316,786.788 99.682 55,252.683 0.318
Richard E. Hanson, Jr. 17,318,414.792 99.691 53,624.679 0.309
Paul Hardin 17,319,908.687 99.700 52,130.784 0.300
Heath B. McLendon 17,322,492.607 99.715 49,546.864 0.285
Roderick C. Rasmussen 17,321,090.654 99.707 50,948.817 0.293
John P. Toolan 17,322,492.607 99.715 49,546.864 0.285
=====================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 23
<PAGE>
[This page intentionally left blank]
<PAGE>
Smith Barney
Small Cap Blend
Fund, Inc.
Directors
Lee Abraham
Allan J. Bloostein
Jane F. Dasher
Donald R. Foley
Richard E. Hanson, Jr.
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, Emeritus
Officers
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Sandip A. Bhagat, CFA
Vice President
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Manager
Travelers Investment Management Company
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of shareholders of Smith
Barney Small Cap Blend Fund, Inc. It is not authorized for distribution to
prospective investors unless accompanied 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[GRAPHIC OMITTED]
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney
Small Cap Blend Fund, Inc.
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD01319 8/99
