<PAGE>
[ART]
Smith Barney
Large Capitalization
Growth Fund
SEMI-ANNUAL REPORT
May 31, 1998
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.-sm-
<PAGE>
SMITH BARNEY LARGE
CAPITALIZATION GROWTH FUND
- ----------------------
The SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND ("Fund") seeks long-term
growth of capital by investing at least 65% of its assets in equity securities
of companies with large market capitalizations.
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS ENDED
MAY 31, 1998
<TABLE>
<CAPTION>
Without Sales Charges*
------------------------------------------------
Class A Class B Class C
<S> <C> <C> <C> <C>
- ----------------------------------------------------
Six-Month+ 22.69% 22.23% 22.23%
- ----------------------------------------------------
Since Inception++ 26.82 26.14 26.14
- ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
With Sales Charges**
------------------------------------------------
Class A Class B Class C
<S> <C> <C> <C> <C>
- ----------------------------------------------------
Six-Month+ 16.52% 17.23% 21.23%
- ----------------------------------------------------
Since Inception++ 20.43 21.14 25.14
- ----------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* Assumes reinvestment of all dividends and capital gain
distributions, if any, at net asset value and does not
reflect the deduction of the applicable sales charges
with respect to Class A shares or the applicable
contingent deferred sales charges ("CDSC") with respect
to Class B and C shares.
** Assumes reinvestment of all dividends and capital gain
distributions, if any, at net asset value. In addition,
Class A shares reflect the deduction of the maximum
initial sales charge of 5.00%; and Class B shares
reflect the deduction of a 5.00% CDSC, which applies if
shares are redeemed within one year from initial
purchase. Thereafter, the CDSC declines 1.00% per year
until no CDSC is incurred. Class C 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 date for Class A, B and C shares is August 29,
1997.
</TABLE>
FUND HIGHLIGHT
- ------------------------------------------------
SINCE OUR LAST REPORT TO YOU, THE STOCK MARKET HAS EXPERIENCED CONTINUED
VOLATILITY AS MANY INVESTORS TRY TO COME TO GRIPS WITH THE ASIAN CRISIS,
NUMEROUS WORLD FLASHPOINTS (I.E., YUGOSLAVIA, INDIA, PAKISTAN AND THE MIDEAST),
ASSORTED SCANDALS, AND FINALLY, THE PROFIT PICTURE FOR U.S. COMPANIES.
ULTIMATELY, IT IS THE FINAL FACTOR-- PROFITS--WHICH WILL BE THE KEY ELEMENT IN
LIFTING THE PRICE OF LARGE CAPITALIZATION GROWTH STOCKS. WE HAVE MADE GREAT
EFFORTS TO ENSURE THAT THE COMPANIES WE BUY ARE POISED TO DELIVER CONSISTENT,
SUSTAINABLE EARNINGS GROWTH IN THIS DIFFICULT ENVIRONMENT.
NASDAQ SYMBOL
- ------------------------------------------------
<TABLE>
<S> <C>
CLASS A SBLCA
CLASS B SBLCB
CLASS C SBLCC
</TABLE>
WHAT'S INSIDE
- ------------------------------------------------
<TABLE>
<S> <C>
Shareholder Letter........................... 1
Historical Performance....................... 3
Smith Barney Large Capitalization Growth Fund
at a Glance.................................. 5
Schedule of Investments...................... 6
Statement of Assets and Liabilities.......... 8
Statement of Operations...................... 9
Statements of Changes in Net Assets.......... 10
Notes to Financial Statements................ 11
Financial Highlights......................... 14
Additional Shareholder Information........... 16
</TABLE>
<PAGE>
Shareholder Letter
- ------------------------------------------------
<TABLE>
<S> <C>
[PHOTO] [PHOTO]
HEATH B. ALAN
MCLENDON BLAKE
Chairman Vice President and
Investment Officer
</TABLE>
DEAR SHAREHOLDER:
We are pleased to provide the semi-annual report for the Smith Barney Large
Capitalization Growth Fund ("Fund") for the period ended May 31, 1998. In this
report, we have summarized the period's prevailing economic and market
conditions and outlined our portfolio strategy. A detailed summary of the Fund's
performance can be found in the appropriate sections that follow.
Performance Update and Strategy
For the six months ended May 31, 1998, the Class A, B and C shares of the Fund
generated total returns without sales charges of 22.69%, 22.23% and 22.23%,
respectively. In comparison, the Standard & Poor's 500 Composite Index ("S&P
500") had a total return of 14.17% over the same six-month period. (The S&P 500
Index is a market capitalization-weighted measure of 500 widely held common
stocks.)
The Fund emphasizes a core of large-capitalization growth stocks that share a
number of characteristics. Chief among them are strong financials (i.e.,
consistent and sustainable earnings growth, significant free cash flow and very
high returns on equity). The second key characteristic centers on the product or
service of a company. We are most interested in companies delivering world-class
products or services in the global marketplace. We are also looking for dominant
companies within growth industries where we perceive the barriers to entry to be
extremely high. Lastly, a third characteristic we look for is a strong
management team. Strong management is just as important as is a company's
financial condition or its products or services. We look for these
characteristics to identify companies that represent outstanding long-term
investment opportunities.
Market Overview
Since our last report to you, the stock market has experienced continued
volatility as many investors try to come to grips with the Asian crisis,
numerous world flashpoints (i.e., Yugoslavia, India, Pakistan and the Mideast),
assorted scandals, and finally, the profit picture for U.S. companies.
Ultimately, it is the final factor--profits--which will be the key element in
lifting the price of large capitalization growth stocks. We have made great
efforts to ensure that the companies we buy are poised to deliver consistent,
sustainable earnings growth in this difficult environment.
Market Outlook
In our view, the strong fundamentals being generated in our investment universe
look sustainable. Coupled with a relatively low degree of inflation and stable
to low interest rates, we believe there is additional upside potential in large
capitalization growth stocks. The holdings in the Fund continue to emphasize the
trio of thematic opportunities we identified at the time of the Fund's launch,
August 29, 1997,--namely, focusing on opportunities within the consumer,
financial and technology industries.
- - CONSUMER STOCKS such as Coca-Cola, Walt Disney, Eli Lilly, Gillette,
McDonald's and Wrigley are taking full advantage of the explosion in consumer
demand and growing capitalism that is emerging worldwide.
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 1
<PAGE>
- - FINANCIAL STOCKS such as Wells Fargo, AIG and Fannie Mae stand to benefit from
the trend toward greater deregulation in the financial services industry and
the emergence of worldwide capitalism.
- - TECHNOLOGY STOCKS that are poised to grow as the revolution in technology and
productivity continues. Whether through telecommunications (Lucent),
networking (Cisco), semiconductors (Intel), software (Microsoft), growth,
while volatile, has been explosive. We believe these world-class franchises
are well positioned to continue their above-average earnings growth in the
years to come.
We think that one of the best ways to participate in the stock market is by
owning great companies with strong managements and financials, and owning them
over time and over market fluctuations. We're not market timers or allocators.
Just as these companies will be compounding their earnings over time, we believe
in letting our investments compound their earnings over time. We think that is
one of the keys to successful portfolio management and successful investing.
In closing, thank you for investing in the Smith Barney Large Capitalization
Growth Fund. We look forward to continuing to help you pursue your financial
goals.
Sincerely,
<TABLE>
<S> <C>
[SIG] [SIG]
Heath B. McLendon Alan Blake
Chairman Vice President and
Investment Officer
JUNE 17, 1998
</TABLE>
Top Ten Holdings* As of May 31, 1998
- ------------------------------------------------
<TABLE>
<C> <S> <C>
1. Coca-Cola Co. 5.6%
----------------------------------------------------
2. The Walt Disney Co. 5.1
----------------------------------------------------
3. America Online, Inc. 4.7
----------------------------------------------------
4. Wells Fargo & Co. 4.7
----------------------------------------------------
5. Intel Corp. 4.7
----------------------------------------------------
6. Texas Instruments Inc. 4.2
----------------------------------------------------
7. Gillette Co. 3.9
----------------------------------------------------
8. Household International Inc. 3.8
----------------------------------------------------
9. Wm. Wrigley Jr. Co. 3.7
----------------------------------------------------
10. Merrill Lynch & Co., Inc. 3.6
----------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <S>
* As a percentage of total common stocks.
</TABLE>
- --------------------------------------------------------------------------------
2 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
[Letter to Come]
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 3
<PAGE>
[Letter to Come]
- --------------------------------------------------------------------------------
4 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
PERIOD ENDED OF PERIOD OF PERIOD DIVIDENDS DISTRIBUTIONS RETURNS(1)+
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
5/31/98 $12.28 $15.03 $0.02 $0.01 22.69%
- -------------------------------------------------------------------------------------------------------
Inception* -- 11/30/97 11.88 12.28 0.00 0.00 3.37%
- -------------------------------------------------------------------------------------------------------
TOTAL $0.02 $0.01
- -------------------------------------------------------------------------------------------------------
</TABLE>
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
-----------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
PERIOD ENDED OF PERIOD OF PERIOD DIVIDENDS DISTRIBUTIONS RETURNS(1)+
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
5/31/98 $12.26 $14.96 $0.01 $0.01 22.23%
- ---------------------------------------------------------------------------------------------------------
Inception* -- 11/30/97 11.88 12.26 0.00 0.00 3.20%
- ---------------------------------------------------------------------------------------------------------
TOTAL $0.01 $0.01
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
PERIOD ENDED OF PERIOD OF PERIOD DIVIDENDS DISTRIBUTIONS RETURNS(1)+
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
5/31/98 $12.26 $14.96 $0.01 $0.01 22.23%
- -----------------------------------------------------------------------------------------------------
Inception* -- 11/30/97 11.88 12.26 0.00 0.00 3.20%
- -----------------------------------------------------------------------------------------------------
TOTAL $0.01 $0.01
- -----------------------------------------------------------------------------------------------------
</TABLE>
Historical Performance -- Class Y Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
PERIOD ENDED OF PERIOD OF PERIOD DIVIDENDS DISTRIBUTIONS RETURNS(1)+
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
5/31/98 $12.29 $15.07 $0.02 $0.01 22.88%
- -----------------------------------------------------------------------------------------------------
Inception* -- 11/30/97 12.66 12.29 0.00 0.00 (2.92)%
- -----------------------------------------------------------------------------------------------------
TOTAL $0.02 $0.01
- -----------------------------------------------------------------------------------------------------
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS AND CAPITAL GAINS, IF ANY,
ANNUALLY.
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 3
<PAGE>
Average Annual Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WITHOUT SALES CHARGE(1)
---------------------------------------
CLASS A CLASS B CLASS C CLASS Y
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Six Months Ended 5/31/98+ 22.69% 22.23% 22.23% 22.88%
- ----------------------------------------------------------------------------
Inception* through 5/31/98 26.82 26.14 26.14 19.29
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
WITH SALES CHARGE(2)
---------------------------------------
CLASS A CLASS B CLASS C CLASS Y
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Six Months Ended 5/31/98+ 16.52% 17.23% 21.23% 22.88%
- ----------------------------------------------------------------------------
Inception* through 5/31/98 20.43 21.14 25.14 19.29
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY, AT NET ASSET VALUE AND DOES NOT REFLECT
THE DEDUCTION OF THE APPLICABLE SALES CHARGES WITH RESPECT TO CLASS A SHARES OR THE APPLICABLE CONTINGENT DEFERRED
SALES CHARGES ("CDSC") WITH RESPECT TO CLASS B AND C SHARES.
(2) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY, AT NET ASSET VALUE. IN ADDITION, CLASS
A SHARES REFLECT THE DEDUCTION OF THE MAXIMUM INITIAL SALES CHARGE OF 5.00%; AND CLASS B SHARES REFLECT THE DEDUCTION
OF A 5.00% CDSC, WHICH APPLIES IF SHARES ARE REDEEMED WITHIN ONE YEAR FROM INITIAL PURCHASE. THEREAFTER, THE CDSC
DECLINES BY 1.00% PER YEAR UNTIL NO CDSC IS INCURRED. CLASS C SHARES REFLECT THE DEDUCTION OF A 1.00% CDSC, WHICH
APPLIES IF SHARES ARE REDEEMED WITHIN THE FIRST YEAR OF PURCHASE.
* INCEPTION DATE FOR CLASS A, B AND C SHARES IS AUGUST 29, 1997. INCEPTION DATE FOR CLASS Y SHARES IS OCTOBER 15, 1997.
+ TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR.
</TABLE>
- --------------------------------------------------------------------------------
4 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
Smith Barney Large Capitalization Growth Fund at a Glance (unaudited)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN CLASS A, B AND C SHARES OF THE
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND VS. STANDARD & POOR'S 500 INDEX+
- --------------------------------------------------------------------------------
AUGUST 1997 -- MAY 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Smith Barney Large Smith Barney Large Smith Barney Large
Capitalization Growth Fund-Class Capitalization Growth Fund-Class Capitalization Growth Fund-Class
A B C S&P 500 Index
<S> <C> <C> <C> <C>
8/29/97 $9,496 $10,000 $10,000 $10,000
9/97 $9,768 $9,786 $10,186 $10,547
10/97 $9,425 $9,420 $9,817 $10,195
11/97 $9,816 $9,820 $10,220 $10,667
12/97 $10,016 $10,014 $10,414 $10,850
1/98 $10,256 $10,259 $10,659 $10,970
2/98 $11,178 $11,228 $11,628 $11,760
3/98 $11,603 $11,667 $12,067 $12,363
4/98 $12,388 $12,485 $12,885 $12,489
5/31/98 $12,043 $12,114 $12,514 $12,274
</TABLE>
+ The above chart represents a hypothetical illustration of $10,000 invested in
Class A, B and C shares at inception on August 29, 1997, assuming deduction of
the maximum 5.00% sales charge at the time of investment for Class A shares,
the deduction of the maximum 5.00% CDSC for Class B shares and the deduction
of the 1.00% CDSC for Class C shares. 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 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 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 OF COMMON STOCK*
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
20.9% Financial Services
20.5% Technology
14.1% Healthcare
5.0% Capital Goods
9.9% Consumer Cyclicals
19.6% Consumer Staples
10.0% Computer Software
</TABLE>
* As a percentage of total common stock.
INVESTMENT BREAKDOWN
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash Equivalent 0.1%
Common Stock 99.9%
</TABLE>
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 5
<PAGE>
Schedule of Investments (unaudited) May 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
COMMON STOCK -- 99.9%
CAPITAL GOODS -- 5.0%
292,000 General Electric Co. $24,345,500
100,000 Lockheed Martin Corp. 11,225,000
- ------------------------------------------------------------------------------------------------------------
35,570,500
- ------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 10.0%
400,000 America Online, Inc. 33,325,000
245,000 Microsoft Corp.+ 20,779,062
660,000 Netscape Communications Corp.+ 16,170,000
- ------------------------------------------------------------------------------------------------------------
70,274,062
- ------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS -- 9.9%
275,000 Home Depot Inc. 21,604,687
187,000 McDonald's Corp. 12,271,875
315,000 The Walt Disney Co. 35,634,375
- ------------------------------------------------------------------------------------------------------------
69,510,937
- ------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES -- 19.6%
300,000 Avon Products Inc. 24,543,750
505,000 Coca-Cola Co. 39,579,375
238,000 Gillette Co. 27,875,750
325,000 PepsiCo Inc. 13,264,063
80,000 Procter & Gamble Corp. 6,715,000
270,000 Wm. Wrigley Jr. Co. 25,987,500
- ------------------------------------------------------------------------------------------------------------
137,965,438
- ------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES -- 20.9%
75,000 American International Group Inc. 9,285,938
75,000 Citicorp 11,184,375
255,000 Fannie Mae 15,268,125
200,000 Household International Inc. 27,062,500
285,000 Merrill Lynch & Co., Inc. 25,507,500
260,000 Morgan Stanley Dean Witter Discover 20,296,250
75,000 NationsBank Corp. 5,681,250
92,000 Wells Fargo & Co. 33,258,000
- ------------------------------------------------------------------------------------------------------------
147,543,938
- ------------------------------------------------------------------------------------------------------------
HEALTHCARE -- 14.0%
295,000 Amgen Inc.+ 17,847,500
330,000 Eli Lilly & Co. 20,274,375
110,000 Johnson & Johnson 7,596,875
100,000 Merck & Co., Inc. 11,706,250
205,000 Pfizer Inc. 21,486,563
315,000 Warner-Lambert Co. 20,100,938
- ------------------------------------------------------------------------------------------------------------
99,012,501
- ------------------------------------------------------------------------------------------------------------
TECHNOLOGY -- 20.5%
665,000 Compaq Computer Corp. 18,162,812
180,000 Cisco Systems Inc.+ 13,612,500
460,000 Intel Corp. 32,861,250
350,000 Lucent Technologies Inc. 24,828,125
225,000 Motorola Inc. 11,910,937
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TECHNOLOGY -- 20.5% (CONTINUED)
582,000 Texas Instruments Inc. $ 29,900,250
350,000 Xilinx Inc.+ 13,310,938
- ------------------------------------------------------------------------------------------------------------
144,586,812
- ------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $588,333,533) 704,464,188
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT SECURITY VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.1%
$640,000 Chase Manhattan Bank, 5.500% due 6/1/98;
Proceeds at maturity -- $640,293; (Fully collateralized
by U.S. Treasury Notes, 5.500% due 1/31/03;
Market value -- $652,801) (Cost -- $640,000) 640,000
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $588,973,533*) $ 705,104,188
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
+ NON-INCOME PRODUCING SECURITY.
* AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME.
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 7
<PAGE>
Statement of Assets and Liabilities (unaudited) May 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost --
$588,973,533) $705,104,188
Cash 1,019,279
Receivable for Fund shares sold 5,990,538
Dividends and interest
receivable 366,293
Other assets 92,506
- ------------------------------------------------------------
TOTAL ASSETS 712,572,804
- ------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 2,415,774
Management fees payable 435,583
Distribution fees payable 104,891
Payable for Fund shares
purchased 2,543
- ------------------------------------------------------------
TOTAL LIABILITIES 2,958,791
- ------------------------------------------------------------
TOTAL NET ASSETS $709,614,013
- ------------------------------------------------------------
NET ASSETS:
Par value of shares of
beneficial interest $ 47,323
Capital paid in excess of par
value 597,369,457
Accumulated net investment loss (1,750,654)
Accumulated net realized loss
from security transactions (2,182,768)
Net unrealized appreciation of
investments 116,130,655
- ------------------------------------------------------------
TOTAL NET ASSETS $709,614,013
- ------------------------------------------------------------
SHARES OUTSTANDING:
Class A 12,601,214
---------------------------------------------------------
Class B 22,930,823
---------------------------------------------------------
Class C 4,461,670
---------------------------------------------------------
Class Y 7,328,863
---------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $15.03
---------------------------------------------------------
Class B * $14.96
---------------------------------------------------------
Class C ** $14.96
---------------------------------------------------------
Class Y (and redemption price) $15.07
---------------------------------------------------------
CLASS A MAXIMUM PUBLIC OFFERING
PRICE PER SHARE
(net asset value plus 5.26% of
net asset value per share) $15.82
- ------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* REDEMPTION PRICE IS NAV OF CLASS B SHARES REDUCED BY A 5.00% CDSC IF SHARES ARE REDEEMED WITHIN ONE YEAR FROM INITIAL
PURCHASE (SEE NOTE 2).
** REDEMPTION PRICE IS NAV OF CLASS C SHARES REDUCED BY A 1.00% CDSC IF SHARES ARE REDEEMED WITHIN THE FIRST YEAR OF
PURCHASE.
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
Statement of Operations (unaudited) For the Six Months Ended May 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 2,191,593
Interest 72,192
- -----------------------------------------------------------------
TOTAL INVESTMENT INCOME 2,263,785
- -----------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 2,013,474
Distribution fees (Note 2) 1,648,294
Shareholder and system servicing fees 218,928
Registration fees 50,000
Shareholder communications 33,000
Trustees' fees 28,000
Audit and legal 13,000
Custody 9,000
Other 1,232
- -----------------------------------------------------------------
TOTAL EXPENSES 4,014,928
- -----------------------------------------------------------------
NET INVESTMENT LOSS (1,751,143)
- -----------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE 3):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 29,133,786
Cost of securities sold 31,319,771
- -----------------------------------------------------------------
NET REALIZED LOSS (2,185,985)
- -----------------------------------------------------------------
Change in Net Unrealized Appreciation of
Investments:
Beginning of period 9,970,587
End of period 116,130,655
- -----------------------------------------------------------------
INCREASE IN NET UNREALIZED APPRECIATION 106,160,068
- -----------------------------------------------------------------
NET GAIN ON INVESTMENTS 103,974,083
- -----------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $102,222,940
- -----------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 9
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)
AND THE PERIOD ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
1998 1997(A)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment loss $ (1,751,143) $ (36,371)
Net realized gain (loss) (2,185,985) 350,504
Increase in net unrealized appreciation 106,160,068 9,970,587
- -----------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS 102,222,940 10,284,720
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (501,086) --
Net realized gains (347,287) --
- -----------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (848,373) --
- -----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 227,544,722 407,040,618
Net asset value of shares issued for
reinvestment of dividends 634,589 --
Cost of shares reacquired (32,583,082) (4,682,121)
- -----------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM FUND SHARE
TRANSACTIONS 195,596,229 402,358,497
- -----------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 296,970,796 412,643,217
NET ASSETS:
Beginning of period 412,643,217 --
- -----------------------------------------------------------------------------------------
END OF PERIOD* $709,614,013 $412,643,217
- -----------------------------------------------------------------------------------------
* Includes undistributed net investment income/
(accumulated net investment loss) of: $(1,750,654) $501,575
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(a) FOR THE PERIOD FROM AUGUST 29, 1997 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1997.
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Smith Barney Large Capitalization Growth Fund ("Fund") is a separate diversified
investment fund of the Smith Barney Investment Trust ("Trust"). The Trust, a
Massachusetts business trust, is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company and consists of
this Fund and four other separate investment funds: Smith Barney Intermediate
Maturity California Municipals Fund, Smith Barney Intermediate Maturity New York
Municipals Fund, Smith Barney Mid Cap Blend Fund and Smith Barney S&P 500 Index
Fund. The financial statements and financial highlights for the other funds are
presented in separate semi-annual reports with the exception of the Smith Barney
Mid Cap Blend Fund which began operation after May 31, 1998.
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 price on such markets;
securities for which no sales price was reported and U.S. government and agency
obligations are valued at the mean between bid and ask price; (c) securities
maturing within 60 days are valued at cost plus accreted discount, or minus
amortized premium, which approximates value; (d) dividend income is recorded on
the ex-dividend date; foreign dividends are recorded on the earlier of the
ex-dividend date or as soon as practical after the Fund determines the existence
of a dividend declaration after exercising reasonable due diligence; interest
income is recorded on the accrual basis; (e) realized gains or losses on the
sale of securities are calculated based on the specific identification method;
(f) direct expenses are charged to each class; management fees and general fund
expenses are allocated on the basis of relative net assets by class; (g)
dividends and distributions to shareholders are recorded by the Fund on the
ex-dividend date; (h) the accounting records of the Fund 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; (i) the character of income and
gains to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. At November 30,
1997, reclassifications were made to the Fund's capital accounts to reflect
permanent book/tax differences and income and gains available for distributions
under income tax regulations. Accordingly, a portion of net investment loss
amounting to $537,946 was reclassified to paid-in capital. Net investment
income, net realized gains and net assets were not affected by this change; (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; 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. Investment Advisory Agreement and Other Transactions
Mutual Management Corp. ("MMC"), a subsidiary of Salomon Smith Barney Holdings
Inc. ("SSBH"), acts as invesment manager to the Fund. The Fund pays MMC a
management fee calculated at an annual rate of 0.75% of the average daily net
assets. This fee is calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SSBH acts as distributor of Fund
shares. For the six months ended May 31, 1998, SB received brokerage commissions
of $15,480 and sales charges of approximately $1,224,000 on sales of the Fund's
Class A shares.
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 11
<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 initial purchase and
declines thereafter by 1.00% per year until no CDSC is incurred. Class C shares
have a 1.00% CDSC, which applies if redemption occurs within the first year of
purchase. For the six months ended May 31, 1998, CDSCs paid to SB were:
<TABLE>
<CAPTION>
Class Class
A Class B C
- ------------------------------------------
<S> <C> <C> <C>
CDSCs $15,000 $190,000 $18,000
- ------------------------------------------
</TABLE>
Pursuant to the Distribution Plan, the Fund pays a service fee with respect to
its Class A, B and C shares calculated at an annual rate of 0.25% of the average
daily net assets for each respective class. The Fund also pays a distribution
fee with respect to its Class B and C shares calculated at an annual rate of
0.75% of the average daily net assets of each class, respectively. For the six
months ended May 31, 1998, total Distribution Plan fees incurred were:
<TABLE>
<CAPTION>
Class A Class B Class C
- ----------------------------------------------------------
<S> <C> <C> <C>
Distribution Plan Fees $180,328 $1,221,039 $246,927
- ----------------------------------------------------------
</TABLE>
All officers and one Trustee of the Fund are employees of SB.
3. Investments
During the six months ended May 31, 1998, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<S> <C>
- ----------------------------------------
Purchases $221,049,392
- ----------------------------------------
Sales 29,133,786
- ----------------------------------------
</TABLE>
At May 31, 1998, the aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
<TABLE>
<S> <C>
- --------------------------------------------------
Gross unrealized appreciation $131,502,070
Gross unrealized depreciation (15,371,415)
- --------------------------------------------------
Net unrealized appreciation $116,130,655
- --------------------------------------------------
</TABLE>
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. Shares of Beneficial Interest
At May 31, 1998, the Fund 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
indentical 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 May 31, 1998, total paid-in capital amounted to the following for each class:
<TABLE>
<CAPTION>
Amount
- ---------------------------------------------
<S> <C>
Class A $158,745,052
- ---------------------------------------------
Class B 293,249,918
- ---------------------------------------------
Class C 56,520,828
- ---------------------------------------------
Class Y 88,900,982
- ---------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
12 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Period Ended
May 31, 1998 November 30, 1997(a)(b)
------------------------ ------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 4,777,959 $ 68,532,567 9,177,952 $109,524,318
Shares issued on reinvestment 21,312 266,403 -- --
Shares redeemed (1,239,205) (17,878,719) (136,804) (1,636,918)
- -----------------------------------------------------------------------------------------
Net Increase 3,560,066 $ 50,920,251 9,041,148 $107,887,400
- -----------------------------------------------------------------------------------------
CLASS B
Shares sold 9,023,864 $129,196,481 14,785,442 $176,582,697
Shares issued on reinvestment 24,425 304,576 -- --
Shares redeemed (765,524) (10,791,734) (137,384) (1,647,374)
- -----------------------------------------------------------------------------------------
Net Increase 8,282,765 $118,709,323 14,648,058 $174,935,323
- -----------------------------------------------------------------------------------------
CLASS C
Shares sold 1,702,936 $ 24,168,920 3,136,419 $ 37,509,061
Shares issued on reinvestment 5,101 63,610 -- --
Shares redeemed (282,353) (3,910,628) (100,433) (1,229,516)
- -----------------------------------------------------------------------------------------
Net Increase 1,425,684 $ 20,321,902 3,035,986 $ 36,279,545
- -----------------------------------------------------------------------------------------
CLASS Y
Shares sold 433,249 $ 5,646,754 6,909,847 $ 83,424,542
Shares issued on reinvestment -- -- -- --
Shares redeemed (136) (2,001) (14,097) (168,313)
- -----------------------------------------------------------------------------------------
Net Increase 433,113 $ 5,644,753 6,895,750 $ 83,256,229
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(a) FOR CLASS A, B AND C SHARES, TRANSACTIONS ARE FOR THE PERIOD FROM AUGUST 29, 1997 (INCEPTION DATE) TO NOVEMBER 30,
1997.
(b) FOR CLASS Y SHARES, TRANSACTIONS ARE FOR THE PERIOD FROM OCTOBER 15, 1997 (INCEPTION DATE) TO NOVEMBER 30, 1997.
</TABLE>
6. Subsequent Event
The Board of Trustees of the Fund approved the renaming of Class C shares to
Class L which became effective on June 12, 1998. In addition, effective June 15,
1998, Class L shares were to be sold at net asset value plus a maximum initial
sales charge of 1.00%. Class L shares also have a 1.00% CDSC if redemptions
occur within one year from initial purchase. Until June 25, 1999, purchases of
Class L shares by investors who were holders of Class C shares of the Fund on
June 12, 1998 will not be subject to the 1.00% front-end sales charge.
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 13
<PAGE>
(This page intentionally left blank.)
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD:
<TABLE>
<CAPTION>
Class A Class B
-------------------- --------------------
1998(1) 1997(2) 1998(1) 1997(2)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.28 $11.88 $12.26 $11.88
- -----------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
Net investment income (loss) (0.02) 0.01 (0.06) (0.01)
Net realized and unrealized gain 2.80 0.39 2.78 0.39
- -----------------------------------------------------------------------------------------------------------
Total Income From Operations 2.78 0.40 2.72 0.38
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.02) -- (0.01) --
Net realized gains (0.01) -- (0.01) --
- -----------------------------------------------------------------------------------------------------------
Total Distributions (0.03) -- (0.02) --
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $15.03 $12.28 $14.96 $12.26
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN++ 22.69% 3.37% 22.23% 3.20%
- -----------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000S) $ 189,417 $ 111,063 $ 343,008 $ 179,598
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS+:
Expenses 1.15% 1.15% 1.90% 1.90%
Net investment income (loss) (0.31) 0.38 (1.06) (0.37)
- -----------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 5% 1% 5% 1%
- -----------------------------------------------------------------------------------------------------------
AVERAGE COMMISSIONS PER SHARE
PAID ON EQUITY TRANSACTIONS $0.06 $0.06 $0.06 $0.06
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED).
(2) FOR THE PERIOD FROM AUGUST 29, 1997 (INCEPTION DATE) TO NOVEMBER 30, 1997.
++ TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR.
+ ANNUALIZED.
</TABLE>
- --------------------------------------------------------------------------------
14 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD:
<TABLE>
<CAPTION>
Class C Class Y
-------------------- --------------------
1998(1) 1997(2) 1998(1) 1997(3)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.26 $11.88 $12.29 $12.66
- ------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
Net investment income (loss) (0.06) (0.01) 0.01 0.01
Net realized and unrealized gain (loss) 2.78 0.39 2.80 (0.38)
- ------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 2.72 0.38 2.81 (0.37)
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.01) -- (0.02) --
Net realized gains (0.01) -- (0.01) --
- ------------------------------------------------------------------------------------------------------------
Total Distributions (0.02) -- (0.03) --
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $14.96 $12.26 $15.07 $12.29
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN++ 22.23% 3.20% 22.88% (2.92)%
- ------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000S) $ 66,739 $ 37,224 $ 110,450 $ 84,758
- ------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS+:
Expenses 1.90% 1.90% 0.80% 0.82%
Net investment income (loss) (1.06) (0.38) 0.05 0.54
- ------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 5% 1% 5% 1%
- ------------------------------------------------------------------------------------------------------------
AVERAGE COMMISSIONS PER SHARE
PAID ON EQUITY TRANSACTIONS $0.06 $0.06 $0.06 $0.06
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED).
(2) FOR THE PERIOD FROM AUGUST 29, 1997 (INCEPTION DATE) TO NOVEMBER 30, 1997.
(3) FOR THE PERIOD FROM OCTOBER 15, 1997 (INCEPTION DATE) TO NOVEMBER 30, 1997.
++ TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR.
+ ANNUALIZED.
</TABLE>
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 15
<PAGE>
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On February 20, 1998, a special meeting of shareholders of the Trust was held
for the purpose of voting on the following matters:
1. To elect Trustees of the Trust;
2. To approve or disapprove the reclassification, modification and/or
elimination of certain fundamental investment policies.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
Shares Voted Percentage of Shares Voted Percentage of
Name of Trustees For Shares Voted Against Shares Voted
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Herbert Barg 22,978,059.782 97.961% 478,327.074 2.039%
Alfred J. Bianchetti 22,968,583.475 97.920 487,803.381 2.080
Martin Brody 22,972,548.241 97.937 483,838.615 2.063
Dwight B. Crane 23,013,405.483 98.111 442,981.373 1.889
Burt N. Dorsett 23,007,677.873 98.087 448,708.983 1.913
Elliot S. Jaffe 22,981,247.160 97.974 475,139.696 2.026
Stephen E. Kaufman 22,999,681.445 98.053 456,705.411 1.947
Joseph J. McCann 23,011,195.450 98.102 445,191.406 1.898
Heath B. McLendon 23,010,138.021 98.098 446,248.835 1.902
Cornelius C. Rose, Jr. 23,006,201.971 98.081 450,184.885 1.919
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Proposal 2 requested that shareholders approve certain changes to the
fundamental policies of the Fund in order to modernize them in view of certain
regulatory, business or industry developments that have occurred since original
adoption of these policies by the Fund. The following chart demonstrates that
all proposals were approved by shareholders for the Fund.
Please note that "M" indicates a modification of the policy; "E" indicates the
elimination of the policy; and "R" indicates the reclassification of the policy
from fundamental (which would require shareholder approval to change) to
non-fundamental (which can be changed by a vote of the Board of Trustees).
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------
"M" Diversification Approved
- -----------------------------------------------------------------------------
"M" Industry Concentration Approved
- -----------------------------------------------------------------------------
"M" Borrowing Approved
- -----------------------------------------------------------------------------
"E" Ability to Pledge Assets Approved
- -----------------------------------------------------------------------------
"M" Lending Approved
- -----------------------------------------------------------------------------
"M" Underwriting of Securities Approved
- -----------------------------------------------------------------------------
"R" Margin and Short-Sales Approved
- -----------------------------------------------------------------------------
"M" Real Estate Approved
- -----------------------------------------------------------------------------
"E" Certain Securities Approved
- -----------------------------------------------------------------------------
"R" Investments in Oil, Gas and Mineral Exploration Approved
- -----------------------------------------------------------------------------
"R" Options Approved
- -----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
16 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
Additional Shareholder Information (unaudited) (continued)
- --------------------------------------------------------------------------------
The information below reports the lowest percentage of shares voting for the
proposals and the highest percentage of shares voting against and abstaining by
shareholders of the Fund on all of the items in Proposal 2.
<TABLE>
<CAPTION>
Percentage Percentage Percentage
Shares Voted of Shares Shares Voted of Shares Shares of Shares
For Voted Against Voted Abstaining Abstained
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
16,966,910.092 91.537% 294,785.761 1.590% 1,273,879.996 6.873%
- --------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 17
<PAGE>
SMITH BARNEY
LARGE CAPITALIZATION
GROWTH FUND
Trustees
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliot S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon, CHAIRMAN
Cornelius C. Rose, Jr.
James J. Crisona, EMERITUS
Officers
Heath B. McLendon
CHIEF EXECUTIVE OFFICER
Lewis E. Daidone
SENIOR VICE PRESIDENT
AND TREASURER
Alan Blake
VICE PRESIDENT AND
INVESTMENT OFFICER
Thomas M. Reynolds
CONTROLLER
Christina T. Sydor
SECRETARY
Investment Adviser and Administrator
Mutual Management Corp.
Distributor
Smith Barney 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 for the information of shareholders of Smith Barney Investment
Trust--Smith Barney Large Capitalization Growth Fund. 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.
[LOGO]
Smith Barney
Large Capitalization
Growth Fund
Smith Barney Mutual Funds
388 Greenwich Street
New York, New York 10013
www.smithbarney.com
FD01520 7/98
<PAGE>
[LOGO]
Smith Barney
Intermediate
Maturity New York
Municipals Fund
------------------
SEMI-ANNUAL REPORT
------------------
May 31, 1998
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(SM)
<PAGE>
Smith Barney [PHOTO] [PHOTO]
Intermediate
Maturity New York HEATH B. PETER M.
Municipals Fund MCLENDON COFFEY
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney
Intermediate Maturity New York Municipals Fund ("Fund") for the period ended May
31, 1998. In this report, we summarize the period's prevailing economic and
market conditions and outline the Fund's investment strategy. A detailed summary
of the Fund's performance and current holdings can be found in the appropriate
sections that follow.
Fund's Performance and Investment Strategy
For the six months ended May 31, 1998, the Class A shares of the Fund generated
a total return of 3.29% and outperformed its Lipper Analytical Services Inc.
intermediate-term New York municipals peer group average total return of 3.06%
for the same period. (Lipper is an independent fund-tracking organization.)
In addition, the Fund paid income dividends totaling $0.20 per Class A share
during the reporting period. Based on a net asset value ("NAV") of $8.65 and at
a current monthly income dividend of $0.0341 per Class A share, this equates to
an annualized distribution rate of 4.73%. For a New York resident in the
combined state and federal income tax bracket of 40.6%, the Fund's tax-free
yield of 4.73% is equivalent to a taxable yield of 7.96%. (This figure assumes
an investor is in the federal income tax bracket of 36%.) For performance
information on the Fund's Class C shares, please turn to page 5.
In addition to providing current income, the Fund seeks to preserve investment
principal. During the reporting period, the average NAV for Class A shares was
$8.65. The NAV high was $8.79 and the low was $8.53, which means the NAV
fluctuated no more than 1.6% from the average NAV for the period.
We have also maintained our emphasis on higher-quality municipal bonds because
we believe lower-rated issues offer little advantage for the extra risks taken.
As of May 31, 1998, roughly 96% of the Fund's holdings were rated investment
grade with nearly 48% of these investments rated triple-A, the
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 1
<PAGE>
highest rating. (Investment-grade bonds are those rated in one of the four
highest ratings categories by any nationally recognized statistical rating
organization, or determined by the manager to be of equivalent quality.)
As an intermediate-term municipal bond fund, the weighted average maturity of
the Fund's securities will normally not exceed ten years. During the reporting
period, we have maintained a weighted average maturity on the longer end of that
scale at approximately 8.9 years because we expect that higher inflationary
pressures should not emerge in the near term. Moreover, because real yields
(i.e., the yield after subtracting the effects of inflation) on municipal bonds
are historically high, we believe extending the Fund's weighted average maturity
should help sustain its income stream.
We continue to follow an investment strategy that emphasizes high-quality
issues, good call protection and broad sector diversification. Generally, we
focus on the coupon, maturity and call features of the Fund's holdings rather
than the specific purpose for which the bond is being issued. As of May 31,
1998, the Fund's assets were diversified over a variety of sectors including the
following: education bonds (16.1%), general obligation bonds (15.0%) and
hospital bonds (14.5%).
New York Economic Highlights
New York has finally begun to reap the benefits of the nation's ongoing economic
expansion. In 1997, new job creation increased by roughly 1.2%. However, the
Empire State still substantially lags the rest of the U.S. in job growth. Like
many other regions, New York's economy continues to evolve from one dominated by
manufacturing to a more services-oriented economy. In particular, the Empire
State has benefited immensely from Wall Street's spectacular success in recent
years. Strong stock market volume, high levels of merger and acquisition
activity and a large volume of corporate underwriting has led to equally
outstanding profit growth for many financial services firms. Wall Street's
success has enabled New York City officials to project budget surpluses for the
first time in years.
Market Update and Outlook
During the six months, covered by this report, domestic bond market performance
was influenced primarily by a healthy economy with low inflation and the
uncertainties that continue to cloud many of the world's major stock markets.
Despite robust consumer demand and labor shortages in many areas, consumer
prices remained fairly stable while wholesale prices for many key commodities,
particularly oil, actually fell.
Just fifteen months ago, Federal Reserve Board Chairman Alan Greenspan warned
against what he viewed as "irrational exuberance" in financial markets. Since
that time, the economy has continued to expand, the stock market has soared to
even
- --------------------------------------------------------------------------------
2 1998 Semi-Annual Report to Shareholders
<PAGE>
greater heights and the unemployment rate touched historic lows. Yet, inflation
has remained subdued. In a widely expected action, Federal Reserve ("Fed")
policymakers emerged from their meeting on May 31, 1998 with no decision and let
stand the 5.5% federal-funds rate, which has remained unchanged since March
1997. (The federal-funds rate is the interest rate banks charge each other for
overnight loans and a closely watched indicator of the direction of interest
rates.) While the Fed's motivation for its decision is not yet known, persistent
weakness in Asian economies has undoubtedly made the Fed more cautious in its
monetary policy.
Since the Asia crisis first began last summer, many investors began to shift
their attention towards "safe haven" investments such as U.S. Treasury
securities. This renewed demand helped push the yield on the bellwether 30-year
U.S. Treasury bond, which moves in the opposite direction of its price, to a
record low of 5.70% on January 12, 1998.
Foreign investors, who do not benefit from the tax advantages of municipal
bonds, have been substantial buyers of U.S. Treasury notes and bonds. So far,
municipal bonds have not fully participated in this market rally and,
consequently, the yield spread between U.S. Treasury securities and municipal
bonds has narrowed.
For example, the yield for 30-year U.S. Treasury bonds fell from 6.15% to 5.81%
during the reporting period. Similarly, municipal bond yields have also
declined, but not as sharply. According to the Bond Buyer 25-Bond Revenue Index,
municipal bond yields have fallen from approximately 5.48% on December 4, 1997
to 5.39% on May 28, 1998.
One result of these historically low interest rates has been a record volume of
municipal bond issuance. In the first quarter of 1998 alone, more than $68
billion of bonds were sold, representing an increase of roughly 70% from the
same period last year. Many municipalities took advantage of the low interest
rates by refinancing older, higher-coupon bonds. Moreover, the strength of the
economy has filled state coffers and increased their debt capacity while the
economic expansion has accelerated demand for more infrastructure improvements,
many of which have been on hold in an era of fiscal conservatism.
While municipal bonds have tended to lag other bond markets, we believe this has
created investment opportunities in the tax-exempt bond market. The massive
issuance volume that we have witnessed recently has helped keep municipal bond
yields from falling as much as their taxable counterparts. As noted above, this
yield differential has widened in recent weeks and as of May 31, 1998, long-term
municipal bonds yielded as much as roughly 92% of 30-year U.S. Treasury bonds.
This means that many municipal issues currently offer a relatively competitive
yield advantage over many other taxable fixed-income investments, especially for
investors in the higher tax brackets.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 3
<PAGE>
Municipal Bond Market Outlook
We remain optimistic on the prospects for the municipal bond market in the
coming months. We believe our positive outlook is supported by the following
factors:
o The full impact of the Asian crisis on the U.S. economy has yet to be
realized. As Asian companies attempt to recover, domestic companies
will face fierce competition and that will tend to hold prices down
and help to contain any emerging inflationary pressures. Moreover,
there exists a significant possibility that the Asian economic and
financial recovery will take longer than many investment professionals
currently anticipate, therefore extending the disinflationary
influence on the U.S. economy.
o The rate of inflation remains historically low.
o The reduction of the federal budget, which should also reduce the need
for federal borrowing.
In closing, thank you for your investment in the Smith Barney Intermediate
Maturity New York Municipals Fund. We look forward to continuing to help you
pursue your financial goals.
Sincerely,
/s/ Heath B. Mclendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman Vice President and
Investment Officer
June 22, 1998
- --------------------------------------------------------------------------------
4 1998 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================
Historical Performance -- Class A Shares
======================================================================================================
Net Asset Value
------------------------
Capital
Beginning End Income Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
======================================================================================================
<S> <C> <C> <C> <C> <C>
5/31/98 $8.57 $8.65 $0.20 $0.00 3.29%+
- ------------------------------------------------------------------------------------------------------
11/30/97 8.47 8.57 0.41 0.00 6.23
- ------------------------------------------------------------------------------------------------------
11/30/96 8.48 8.47 0.41 0.00 4.85
- ------------------------------------------------------------------------------------------------------
11/30/95 7.80 8.48 0.41 0.00 14.31
- ------------------------------------------------------------------------------------------------------
11/30/94 8.54 7.80 0.40 0.02 (3.97)
- ------------------------------------------------------------------------------------------------------
11/30/93 8.18 8.54 0.40 0.02 9.76
- ------------------------------------------------------------------------------------------------------
Inception* - 11/30/92 7.90 8.18 0.38 0.00 8.59+
======================================================================================================
Total $2.61 $0.04
======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
======================================================================================================
Historical Performance -- Class C Shares
======================================================================================================
Net Asset Value
------------------------
Capital
Beginning End Income Gain Total
Period Ended of Period of Period Dividends Distributions Returns(1)
======================================================================================================
<S> <C> <C> <C> <C> <C>
5/31/98 $8.57 $8.65 $0.19 $0.00 3.18%+
- ------------------------------------------------------------------------------------------------------
11/30/97 8.47 8.57 0.39 0.00 6.00
- ------------------------------------------------------------------------------------------------------
11/30/96 8.48 8.47 0.39 0.00 4.64
- ------------------------------------------------------------------------------------------------------
Inception* - 11/30/95 7.87 8.48 0.38 0.00 13.01+
======================================================================================================
Total $1.35 $0.00
======================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
<TABLE>
<CAPTION>
======================================================================================================
Average Annual Total Return
======================================================================================================
Without Sales Charge(1)
-----------------------
Class A Class C
======================================================================================================
<S> <C> <C>
Six Months Ended 5/31/98+ 3.29% 3.18%
- ------------------------------------------------------------------------------------------------------
Year Ended 5/31/98 8.05 7.82
- ------------------------------------------------------------------------------------------------------
Five Years Ended 5/31/98 5.50 N/A
- ------------------------------------------------------------------------------------------------------
Inception* through 5/31/98 6.58 7.64
======================================================================================================
<CAPTION>
======================================================================================================
With Sales Charge(2)
-----------------------
Class A Class C
======================================================================================================
<S> <C> <C>
Six Months Ended 5/31/98+ 1.28% 2.18%
- ------------------------------------------------------------------------------------------------------
Year Ended 5/31/98 5.91 6.82
- ------------------------------------------------------------------------------------------------------
Five Years Ended 5/31/98 5.08 N/A
- ------------------------------------------------------------------------------------------------------
Inception* through 5/31/98 6.25 7.64
======================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 5
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================
Cumulative Total Return
======================================================================================================
Without Sales Charge(1)
======================================================================================================
<S> <C>
Class A (Inception* through 11/30/97) 50.52%
- ------------------------------------------------------------------------------------------------------
Class C (Inception* through 11/30/97) 29.34
======================================================================================================
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A shares reflect the deduction
of the maximum initial sales charge of 2.00% and Class C shares reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within one
year from initial purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A and C shares are December 31, 1991 and December
5, 1994, respectively.
- --------------------------------------------------------------------------------
6 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Historical Performance (unaudited)
================================================================================
Growth of $10,000 Invested in Class A Shares of the
Smith Barney Intermediate Maturity New York Municipals Fund
vs. Lehman Brothers 10 Year Municipal Bond Index
and Lipper Analytical Services, Inc. Peer Group Average+
- --------------------------------------------------------------------------------
December 1991 -- May 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
Smith Barney
Intermediate Lehman Brothers
Maturity 10 Year
New York Municipal Bond Lipper Peer
Municipals Fund Index Group Average
------------ --------------- -------------
<S> <C> <C> <C>
12/31/91 $ 9,802 $10,000 $10,000
11/92 $10,644 $10,767 $10,685
11/93 $11,683 $12,028 $11,625
11/94 $11,219 $11,491 $11,230
11/95 $12,824 $13,623 $12,796
11/96 $13,447 $14,394 $13,383
11/97 $14,284 $15,410 $14,134
5/31/98 $14,754 $15,996 $14,567
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on December 31, 1991, assuming deduction of the maximum 2.00%
sales charge at the time of investment and reinvestment of dividends and
capital gains, if any, at net asset value through May 31, 1998. The Lehman
Brothers 10 Year Municipal Bond Index is a broad-based index comprised of
approximately 5,200 bonds totaling approximately $63 billion in market
capitalization. The bonds are all municipal bonds with an average maturity
of 9.8 years, an average yield of 4.93% and a duration of 7.08 years. The
index is unmanaged and is not subject to the same management and trading
expenses of a mutual fund. The Lipper Analytical Services, Inc. ("Lipper")
Peer Group Average is an average of the Fund's peer group of mutual funds
(24 funds as of May 31, 1998) investing in intermediate maturity New York
tax-exempt bonds. 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.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 7
<PAGE>
================================================================================
Portfolio Highlights (unaudited) May 31, 1998
================================================================================
Industry Breakdown
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<S> <C>
Education 16.1%
General Obligation 15.0%
Government Facilities 5.3%
Hospitals 14.5%
Industrial Development 8.1%
Other 13.9%
Pollution Control 3.3%
Transportation 13.4%
Finance 5.4%
Water & Sewer 5.0%
</TABLE>
Summary of Investments by Combined Ratings
<TABLE>
<CAPTION>
Standard & Percentage of
Moody's and/or Poor's Total Investments*
- --------------------------------------------------------------------------------
<S> <C> <C>
Aaa AAA 47.7%
Aa AA 11.7
A A 24.7
Baa BBB 11.7
B B 0.1
NR NR 4.1
-----
100.0%
=====
</TABLE>
* 16.0% of total investments were rated by Fitch Investor Services Inc.:
13.9% were A rated and 2.1% were BBB rated.
- --------------------------------------------------------------------------------
8 1998 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
================================================================================================
Schedule of Investments (unaudited) May 31, 1998
================================================================================================
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
Education -- 16.1%
$ 400,000 AAA Albany City School District, Series B, MBIA-Insured,
6.000% due 12/15/00 $ 420,500
200,000 AAA Canandaigua City School District, AMBAC-Insured,
6.400% due 6/1/99(a) 205,382
200,000 AAA Central Square Central School District, FGIC-Insured,
6.500% due 6/15/99 205,622
1,000,000 A++ City University of New York COP, John Jay College,
6.000% due 8/15/06 1,095,000
860,000 Aaa* Huntington Union Free School District, FGIC-Insured,
5.500% due 7/15/11 924,500
2,000,000 AAA New York Educational Construction Fund, Series A,
MBIA-Insured, 6.500% due 4/1/04(a) 2,230,000
New York State Dormitory Authority, Revenue Bonds:
500,000 AAA College and University Educational Loan, MBIA-Insured,
6.200% due 7/1/01(b) 530,625
940,000 Aaa* New York Law School, AMBAC-Insured,
5.200% due 7/1/08 991,700
630,000 Aaa* Nyack Union Free School District, FGIC-Insured,
5.250% due 12/15/15 653,625
1,000,000 A- State University Educational Facilities, 5.000%
due 5/15/10 1,015,000
100,000 AAA Wappingers Central School District, AMBAC-Insured,
6.250% due 12/1/99 103,750
- ------------------------------------------------------------------------------------------------
8,375,704
- ------------------------------------------------------------------------------------------------
Finance -- 5.4%
City of Troy, Municipal Assistance Corp., MBIA-Insured:
1,080,000 AAA Series A, 5.000% due 1/15/08 1,119,150
1,990,000 AAA Series B, zero coupon bond to yield 5.945% due 1/15/19 696,500
1,000,000 AAA New York State Local Government Assistance Corp.,
Series B, MBIA-Insured, 5.000% due 4/1/18 992,500
- ------------------------------------------------------------------------------------------------
2,808,150
- ------------------------------------------------------------------------------------------------
General Obligation -- 15.0%
Buffalo GO:
100,000 AAA FGIC-Insured, 5.800% due 2/1/00 103,125
205,000 AAA Series A, MBIA-Insured, 5.900% due 4/1/01 214,737
385,000 AAA Series B, MBIA-Insured, 5.900% due 4/1/01 403,288
250,000 AAA Erie County Public Improvement Project, GO,
FGIC-Insured, 5.500% due 1/15/00 256,563
495,000 Baa* Jamestown GO, Series A, 7.000% due 3/15/00 517,275
1,000,000 AA Monroe County Public Improvement Project GO,
Series A, 6.000% due 3/1/18 1,132,500
1,000,000 AAA Nassau County GO, Combined Sewer District,
Series E, MBIA-Insured, 5.400% due 5/1/10 1,067,500
New York City GO:
2,000,000 A++ Series A, 7.000% due 8/1/04(a) 2,272,500
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipal Fund 9
<PAGE>
<TABLE>
<CAPTION>
================================================================================================
Schedule of Investments (unaudited)(continued) May 31, 1998
================================================================================================
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
General Obligation -- 15.0% (continued)
$ 455,000 A3* Series B, 6.250% due 10/1/01 $ 483,437
45,000 AAA Series B, (Escrowed to maturity with U.S. government
securities), 6.250% due 10/1/01(c) 48,038
240,000 A3* Series D, 7.700% due 2/1/11 268,800
435,000 AAA Niagara County GO, Environmental Infrastructure,
Series A, MBIA-Insured, 5.250% due 8/15/13 451,856
Oyster Bay GO:
425,000 Aa3* 5.000% due 2/1/14 429,781
150,000 AAA FGIC-Insured, Series C, 6.300% due 10/1/99 154,688
- ------------------------------------------------------------------------------------------------
7,804,088
- ------------------------------------------------------------------------------------------------
Government Facilities -- 5.3%
New York State Urban Development, Correctional Facilities:
595,000 A++ Series 3, 6.800% due 1/1/00 619,544
1,900,000 A++ Series A, 6.500% due 1/1/09 2,158,875
- ------------------------------------------------------------------------------------------------
2,778,419
- ------------------------------------------------------------------------------------------------
Hospitals -- 14.5%
70,000 B1* Monroe County IDA, Genesee Hospital,
Series A, 6.500% due 11/1/99 71,312
New York State Dormitory Authority, Revenue Bonds:
215,000 AA Genessee Valley, Series B, FHA-Insured, 6.300% due 8/1/02 233,275
500,000 AA Good Samaritan Hospital, 5.500% due 7/1/10 530,625
890,000 AAA Long Beach Medical Center, MBIA/FHA-Insured,
5.550% due 8/1/15 922,262
1,000,000 A++ Mental Health Services, 6.000% due 2/15/12 1,102,500
500,000 BBB++ Nyack Hospital, Series A, 6.250% due 7/1/13 540,625
Presbyterian Hospital, AMBAC/FHA-Insured:
1,000,000 AAA 4.750% due 8/1/16 953,750
1,000,000 AAA Series A, 5.500% due 2/15/07 1,073,750
New York State Medical Care Facilities, Revenue Bonds:
725,000 A- Health Services Facility, 6.100% due 2/15/02 769,406
Methodist Hospital, FHA-Insured:
455,000 AA Series A, 6.000% due 8/15/02 484,575
320,000 AA Series C, 5.900% due 8/15/02 336,400
500,000 BBB Port Jervis, IDA, Franciscan Health Partnership,
5.200% due 11/1/08 505,625
- ------------------------------------------------------------------------------------------------
7,524,105
- ------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 3.0%
1,000,000 AA New York State Housing Corp., (Battery Park City Project),
6.000% due 11/1/03 1,077,500
425,000 Aa* North Tonawanda Housing Development Corp.,
Mortgage Revenue, Bishop Gibbons, Series B,
FHA-Insured, 6.350% due 12/15/02 453,156
- ------------------------------------------------------------------------------------------------
1,530,656
- ------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1998 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
================================================================================================
Schedule of Investments (unaudited)(continued) May 31, 1998
================================================================================================
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
Industrial Development -- 8.1%
$ 535,000 A Amherst Industrial Development Agency, Lease Revenue,
Multi-Surface Rink Complex, Series A, LOC Keybank,
5.050% due 10/1/05 $ 541,018
500,000 BBB++ New York City IDA, Civil Facilities Revenue,
(YMCA Greater NY Project), 6.000% due 8/1/07 541,250
1,000,000 A Syracuse Industrial Development Agency, Civic Facilities
Revenue, (Crouse Health Inc. Project), 5.000% due 1/1/10 993,750
Westchester County IDA:
1,000,000 AAA Resource Recovery Revenue, (Westchester Resco Co.
Project), AMBAC-Insured, 6.000% due 7/1/09(b) 1,102,500
985,000 NR Revenue Bonds, (AGR Realty Company Project),
5.750% due 1/1/02 1,018,244
- ------------------------------------------------------------------------------------------------
4,196,762
- ------------------------------------------------------------------------------------------------
Life Care Systems -- 2.7%
750,000 AA New York State Dormitory Authority Revenue, Hebrew
Home for the Aged, FHA-Insured, 5.625% due 2/1/17 796,875
610,000 AA Oswego County, Industrial Development Agency, Civic
Facility Revenue, (Seneca Hill Project), Series A,
FHA-Insured, 5.550% due 8/1/22 626,013
- ------------------------------------------------------------------------------------------------
1,422,888
- ------------------------------------------------------------------------------------------------
Miscellaneous -- 5.9%
500,000 A Capital District Youth Center Lease Revenue,
LOC Key Bank, 6.000% due 2/1/17 525,000
New York State Municipal Bond Bank Agency,
Special Program Revenue:
925,000 BBB+ Buffalo, Series A, 6.500% due 3/15/00 957,375
250,000 A+ Rochester, Series A, 6.300% due 3/15/00 258,125
1,440,000 AAA Puerto Rico, Electric Power Authority Revenue,
Series EE, MBIA-Insured, 4.500% due 7/1/18 1,342,800
- ------------------------------------------------------------------------------------------------
3,083,300
- ------------------------------------------------------------------------------------------------
Pollution Control -- 3.3%
New York State Environmental Facilities Corp., PCR:
105,000 Baa1* Resource Recovery Revenue, (Huntington Project),
7.375% due 10/1/99(b) 108,675
500,000 AAA Series A, 5.950% due 3/15/02 532,500
245,000 Baa* North Country Development Authority, Solid Waste
Management Systems Revenue, Series A, 6.500% due 7/1/01 256,562
800,000 Baa* Oneida-Herkimer Solid Waste Management Authority,
6.300% due 4/1/01 829,000
- ------------------------------------------------------------------------------------------------
1,726,737
- ------------------------------------------------------------------------------------------------
Pre-Refunded -- 0.6%
295,000 AAA North Country Development Authority, Solid Waste
Management Systems Revenue, Series A,
(Call 7/1/99 @ 102), 6.500% due 7/1/01(c) 309,083
- ------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipal Fund 11
<PAGE>
<TABLE>
<CAPTION>
================================================================================================
Schedule of Investments (unaudited)(continued) May 31, 1998
================================================================================================
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
Public Facilities -- 1.2%
$ 600,000 AAA Puerto Rico Public Buildings Authority, Public Education
and Health Facilities Refunding, Series K, FGIC-Insured,
6.000% due 7/1/01 $ 635,250
- ------------------------------------------------------------------------------------------------
Transportation -- 13.4%
560,000 BBB Guam Transportation Authority Revenue, Series A,
5.700% due 10/1/01 582,400
200,000 BBB+ Metropolitan Transportation Authority, New York Service
Contract, Transit Facilities, Series 5, 6.250% due 7/1/99 204,586
1,000,000 BBB+ New York State Thruway Authority, Service Contract,
Local Highway and Bridges, 6.000% due 4/1/02 1,061,250
600,000 AAA Niagara Falls Bridge Commission Toll Revenue, Series B,
FGIC-Insured, 5.250% due 10/1/15 629,250
2,000,000 AAA Niagara Frontier Transportation Authority, Greater Buffalo
International Airport, Series B, AMBAC-Insured,
5.750% due 4/1/04(b) 2,152,500
1,000,000 NR Port Authority of New York & New Jersey, Revenue Bonds,
6.750% due 10/1/11(b) 1,118,750
670,000 A Syracuse COP, Hancock International Airport,
6.300% due 1/1/02(b) 716,900
500,000 AAA Triborough Bridge & Tunnel Authority, Special Obligation
Refunding, Series A, MBIA-Insured, 6.100% due 1/1/00 516,875
- ------------------------------------------------------------------------------------------------
6,982,511
- ------------------------------------------------------------------------------------------------
Utilities -- 0.5%
250,000 AAA New York State Power Authority Revenue & General
Purpose, Series Z, (Escrowed to maturity with
U.S. government securities), 5.850% due 1/1/00(c) 257,188
- ------------------------------------------------------------------------------------------------
Water & Sewer -- 5.0%
1,390,000 AAA Suffolk County Southwest Sewer District GO,
MBIA-Insured, 6.000% due 2/1/07 1,534,212
1,000,000 AAA Suffolk County Water Authority, Waterworks Revenue,
MBIA-Insured, 5.100% due 6/1/09 1,046,250
- ------------------------------------------------------------------------------------------------
2,580,462
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $49,348,177**) $52,015,303
================================================================================================
</TABLE>
(a) Security segregated by Custodian for open purchase commitment.
(b) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Pre-refunded bonds escrowed with U.S. government securities and bonds
escrowed to maturity with U.S. government securities are considered by the
investment adviser to be triple-A rated even if the issuer has not applied
for new ratings.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 13 and 14 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Bond Ratings (unaudited)
================================================================================
All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's"),
except those identified by an asterisk (*) are rated by Moody's Investors
Service Inc. ("Moody's") and those identified by a double dagger (++) are rated
by Fitch Investor Services, Inc. ("Fitch"). The definitions of the applicable
rating symbols are set forth below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issue only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "B," where 1 is the highest and 3 the lowest ranking within its
generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Bonds that are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B -- Bonds that are rated "B" generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 13
<PAGE>
================================================================================
Bond Ratings (unaudited)(continued)
================================================================================
Fitch -- Ratings may be modified by the addition of a plus (+) or minus (-) sign
to show relative standings within the major ratings categories.
A -- Bonds which are rated "A" are considered to be investment grade and
of high quality. The obligor's ability to pay interest and/or
dividends and repay principal is considered to be strong, but may be
more vulnerable to adverse changes in economic conditions and
circumstances than debt or preferred securities with higher ratings.
BBB -- Bonds which are rated "BBB" are considered to be investment grade
and of satisfactory credit quality. The obligor's ability to pay
interest or dividends and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these securities
and, therefore, impair timely payment. The likelihood that the ratings
of these bonds or preferred will fall below investment grade is higher
than for securities with higher ratings.
NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's or
Fitch.
================================================================================
Security Descriptions (unaudited)
================================================================================
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- American Municipal Bond Assurance Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
EDA -- Economic Development Authority
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FLAIRS -- Floating Adjustable Interest Rate Securities
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
- --------------------------------------------------------------------------------
14 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Statement of Assets and Liabilities (unaudited) May 31, 1998
================================================================================
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $49,348,177) $52,015,303
Interest receivable 812,464
Receivable from investment advisor 22,318
Receivable for Fund shares sold 2,000
- --------------------------------------------------------------------------------
Total Assets 52,852,085
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 206,694
Payable to the bank 61,844
Investment advisory fees payable 5,925
Administrative fees payable 3,950
Distribution fees payable 1,171
Accrued expenses 48,594
- --------------------------------------------------------------------------------
Total Liabilities 328,178
- --------------------------------------------------------------------------------
Total Net Assets $52,523,907
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 6,072
Capital paid in excess of par value 51,231,281
Overdistributed net investment income (14,378)
Accumulated net realized loss from security transactions (1,366,194)
Net unrealized appreciation of investments 2,667,126
- --------------------------------------------------------------------------------
Total Net Assets $52,523,907
================================================================================
Shares Outstanding:
Class A 5,810,963
------------------------------------------------------------------------------
Class C 260,746
------------------------------------------------------------------------------
Net Asset Value:
Class A $8.65
------------------------------------------------------------------------------
Class C $8.65
------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 2.04% of net asset value per share) $8.83
================================================================================
</TABLE>
* Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 15
<PAGE>
================================================================================
Statement of Operations (unaudited)
================================================================================
For the Six Months Ended May 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 1,379,083
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 77,834
Administration fees (Note 2) 51,889
Distribution fees (Note 2) 41,189
Trustees' fees 16,307
Registration fees 15,596
Shareholder and system servicing fees 15,348
Shareholder communications 14,961
Audit and legal 12,467
Pricing service fees 4,787
Custody 1,574
Other 1,838
- --------------------------------------------------------------------------------
Total Expenses 253,790
Less: Investment advisory and administration fee waiver (Note 2) (70,051)
- --------------------------------------------------------------------------------
Net Expenses 183,739
- --------------------------------------------------------------------------------
Net Investment Income 1,195,344
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 23,901,546
Cost of securities sold 23,773,549
- --------------------------------------------------------------------------------
Net Realized Gain 127,997
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 2,317,680
End of period 2,667,126
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 349,446
- --------------------------------------------------------------------------------
Net Gain on Investments 477,443
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 1,672,787
================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Statements of Changes in Net Assets
================================================================================
For the Six Months Ended May 31, 1998 (unaudited)
and the Year Ended November 30, 1997
<TABLE>
<CAPTION>
1998 1997
=========================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,195,344 $ 2,420,302
Net realized gain 127,997 368,879
Increase in net unrealized appreciation 349,446 246,219
- -----------------------------------------------------------------------------------------
Increase in Net Assets From Operations 1,672,787 3,035,400
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (1,196,150) (2,440,417)
- -----------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (1,196,150) (2,440,417)
- -----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 3,497,761 6,793,709
Net asset value of shares issued
for reinvestment of dividends 678,906 1,673,162
Cost of shares reacquired (3,171,045) (8,566,882)
- -----------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 1,005,622 (100,011)
- -----------------------------------------------------------------------------------------
Increase in Net Assets 1,482,259 494,972
NET ASSETS:
Beginning of period 51,041,648 50,546,676
- -----------------------------------------------------------------------------------------
End of period* $52,523,907 $51,041,648
=========================================================================================
* Includes overdistributed net investment income of: $(14,378) $(13,572)
=========================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 17
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)
================================================================================
1. Significant Accounting Policies
Smith Barney Intermediate Maturity New York Municipals Fund ("Fund") is a
separate non-diversified investment fund of the Smith Barney Investment Trust
("Trust"). The Trust, a Massachusetts business trust, is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company and consists of this Fund and four other separate investment funds:
Smith Barney Intermediate Maturity California Municipals Fund, Smith Barney
Large Capitalization Growth Fund, Smith Barney S&P 500 Index Fund and Smith
Barney Mid Cap Blend Fund. The financial statements and financial highlights for
the other funds are presented in separate semi-annual reports with the exception
of the Smith Barney Mid Cap Blend Fund which began operation after May 31, 1998.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on the trade date; (b) securities are
valued at the mean between the quoted bid and ask prices provided by an
independent pricing service that are based on transactions in municipal
obligations, quotations from municipal bond dealers, market transactions in
comparable securities and various relationships between securities; (c)
securities maturing within 60 days are valued at cost plus accreted discount, or
minus amortized premium, which approximates value; (d) gains or losses on the
sale of securities are calculated by using the specific identification method;
(e) interest income, adjusted for amortization of premium and accretion of
original issue discount, is recorded on the accrual basis; market discount is
recognized upon the disposition of the security; (f) direct expenses are charged
to the Fund and each class; investment advisory fees and general fund expenses
are allocated on the basis of relative net assets by class; (g) dividends and
distributions to shareholders are recorded on the ex-dividend date; (h) 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; and (i) estimates and assumptions are required
to be made regarding assets, liabilities and changes in net assets resulting
from operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ.
- --------------------------------------------------------------------------------
18 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)(continued)
================================================================================
2. Investment Advisory Agreement, Administration Agreement and Other
Transactions
Mutual Management Corp. ("MMC"), a subsidiary of Salomon Smith Barney Holdings
Inc. ("SSBH"), acts as investment adviser to the Fund. The Fund pays MMC an
advisory fee calculated at an annual rate of 0.30% of the average daily net
assets. This fee is calculated daily and paid monthly. For the six months ended
May 31, 1998, MMC waived $42,031 of its investment advisory fee.
MMC also acts as the Fund's administrator for which the Fund pays a fee
calculated at the annual rate of 0.20% of the average daily net assets. This fee
is calculated daily and paid monthly. For the six months ended May 31, 1998, MMC
waived $28,020 of its administration fee.
Smith Barney Inc. ("SB"), another subsidiary of SSBH, acts as distributor of
Fund shares. For the six months ended May 31, 1998, SB received sales charges of
approximately $31,000 on purchases of the Fund's Class A shares.
There is a contingent deferred sales charge ("CDSC") of 1.00% on Class C shares,
which applies if redemption occurs within one year from initial purchase. For
the six months ended May 31, 1998, CDSCs paid to SB were approximately:
<TABLE>
<CAPTION>
Class A Class C
================================================================================
<S> <C> <C>
CDSCs $3,000 $4,000
================================================================================
</TABLE>
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A and C shares, calculated at the annual rate of 0.15% of the average
daily net assets for each respective class. In addition, the Fund pays a
distribution fee with respect to its Class C shares calculated at the annual
rate of 0.20% of the average daily net assets. For the six months ended May 31,
1998, total Distribution Plan fees incurred were:
<TABLE>
<CAPTION>
Class A Class C
================================================================================
<S> <C> <C>
Distribution Plan Fees $37,213 $3,976
================================================================================
</TABLE>
All officers and one Trustee of the Fund are employees of SB.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 19
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)(continued)
================================================================================
3. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from municipal
securities, which is exempt from regular Federal income tax and from designated
state income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. Fund Concentration
Since the Fund invests primarily in obligations of issuers within New York, it
is subject to possible concentration risk, associated with economic, political
or legal developments or industrial or regional matters specifically affecting
New York.
5. Investments
For the six months ended May 31, 1998, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
================================================================================
<S> <C>
Purchases $24,919,222
- --------------------------------------------------------------------------------
Sales 23,901,546
================================================================================
</TABLE>
At May 31, 1998, the aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $ 2,667,235
Gross unrealized depreciation (109)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 2,667,126
================================================================================
</TABLE>
6. Capital Loss Carryforward
At November 30, 1997, the Fund had, for Federal income tax purposes,
approximately $1,492,000 of loss carryforwards available to offset any future
capital gains. To the extent that these carryforward losses are used to offset
capital gains, it is probable that the gains so offset will not be distributed.
The amount and year of the expiration for each carryforward loss is indicated
below:
<TABLE>
<CAPTION>
2002 2003 2004
================================================================================
<S> <C> <C> <C>
Carryforward Amounts $1,079,000 $337,000 $76,000
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
20 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)(continued)
================================================================================
7. Shares of Beneficial Interest
As of May 31, 1998, the Fund 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 May 31, 1998, total paid-in capital amounted to the following for each class:
<TABLE>
<CAPTION>
Class A Class C
================================================================================
<S> <C> <C>
Total Paid-in Capital $49,039,021 $2,198,332
================================================================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 1998 November 30, 1997
---------------------- ------------------------
Shares Amount Shares Amount
=========================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 356,340 $ 3,070,972 643,354 $ 5,438,395
Shares issued on reinvestment 74,510 644,618 190,347 1,608,270
Shares redeemed (307,804) (2,661,694) (973,016) (8,214,846)
- -----------------------------------------------------------------------------------------
Net Increase (Decrease) 123,046 $ 1,053,896 (139,315) $(1,168,181)
=========================================================================================
Class C
Shares sold 49,288 $ 426,789 159,656 $ 1,355,314
Shares issued on reinvestment 3,963 34,288 7,671 64,892
Shares redeemed (58,818) (509,351) (41,737) (352,036)
- -----------------------------------------------------------------------------------------
Net Increase (Decrease) (5,567) $ (48,274) 125,590 $ 1,068,170
=========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 21
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
For a share of each class of beneficial interest outstanding throughout each
period:
<TABLE>
<CAPTION>
Class A Shares 1998(1) 1997 1996 1995 1994 1993
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $8.57 $8.47 $8.48 $7.80 $8.54 $8.18
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (2) 0.20 0.41 0.41 0.41 0.40 0.40
Net realized and
unrealized gain (loss) 0.08 0.10 (0.01) 0.68 (0.72) 0.38
- ---------------------------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.28 0.51 0.40 1.09 (0.32) 0.78
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.20) (0.41) (0.41) (0.41) (0.40) (0.40)
Net realized gains -- -- -- -- (0.02) (0.02)
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.20) (0.41) (0.41) (0.41) (0.42) (0.42)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.65 $8.57 $8.47 $8.48 $7.80 $8.54
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 3.29%++ 6.23% 4.85% 14.31% (3.97)% 9.76%
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $50,269 $48,759 $49,355 $52,568 $62,090 $67,230
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (2) 0.71%+ 0.67% 0.66% 0.65% 0.65% 0.65%
Net investment income 4.67+ 4.83 4.86 5.01 4.77 4.59
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 45% 52% 67% -- 68% 22%
===========================================================================================================================
</TABLE>
(1) For the six months ended May 31, 1998 (unaudited).
(2) The investment adviser has waived all or part of its fees for the five
years ended November 30, 1997. If such fees were not waived, the per share
effect on net investment income and the expense ratios would have been as
follows:
<TABLE>
<CAPTION>
Per Share Decreases to Expense Ratios
Net Investment Income Without Fee Waivers
--------------------------------------- ---------------------------------------
1998 1997 1996 1995 1994 1993 1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $0.01 $0.03 $0.04 $0.03 $0.03 $0.04 0.97+ 0.98% 1.08% 0.97% 0.98% 1.10%
</TABLE>
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
22 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
For a share of each class of beneficial interest outstanding throughout each
period:
<TABLE>
<CAPTION>
Class C Shares 1998(1) 1997 1996 1995(2)
===================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $8.57 $8.47 $8.48 $7.87
- ---------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income(3) 0.19 0.39 0.39 0.38
Net realized and unrealized gain (loss) 0.08 0.10 (0.01) 0.61
- ---------------------------------------------------------------------------------------------------
Total Income From Operations 0.27 0.49 0.38 0.99
- ---------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.19) (0.39) (0.39) (0.38)
- ---------------------------------------------------------------------------------------------------
Total Distributions (0.19) (0.39) (0.39) (0.38)
- ---------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.65 $8.57 $8.47 $8.48
- ---------------------------------------------------------------------------------------------------
Total Return 3.18%++ 6.00% 4.64% 13.01%++
- ---------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $2,255 $2,283 $1,192 $393
- ---------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(3) 0.92%+ 0.89% 0.88% 0.86%+
Net investment income 4.45+ 4.61 4.64 4.74+
- ---------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 45% 52% 67% --
===================================================================================================
</TABLE>
(1) For the six months ended May 31, 1998 (unaudited).
(2) For the period from December 5, 1994 (inception date) to November 30, 1995.
(3) The investment adviser has waived all or part of its fees for the two years
ended November 30, 1997 and the period ended November 30, 1995. If such
fees were not waived, the per share effect on net investment income and
expense ratios would have been as follows:
<TABLE>
<CAPTION>
Per Share Decreases to Expense Ratios
Net Investment Income Without Fee Waivers
---------------------------- -----------------------------
1998 1997 1996 1995 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class C $0.01 $0.03 $0.02 $0.03 1.20%+ 1.20% 1.30% 1.19%+
</TABLE>
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 23
<PAGE>
================================================================================
Additional Shareholder Information (unaudited)
================================================================================
On February 6, 1998 a special meeting of shareholders of the Trust was held
for the purpose of voting on the following matters:
1. To elect Trustees of the Trust; and
2. To approve or disapprove the reclassification, modification and/or
elimination of certain fundamental investment policies.
The results of the vote on Proposal 1 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>
Herbert Barg 22,978,059.782 97.961% 478,327.074 2.039%
Alfred J. Bianchetti 22,968,583.475 97.920 487,803.381 2.080
Martin Brody 22,972,548.241 97.937 483,838.615 2.063
Dwight B. Crane 23,013,405.483 98.111 442,981.373 1.889
Burt N. Dorsett 23,007,677.873 98.087 448,708.983 1.913
Elliot S. Jaffe 22,981,247.160 97.974 475,139.696 2.026
Stephen E. Kaufman 22,999,681.445 98.053 456,705.411 1.947
Joseph J. McCann 23,011,195.450 98.102 445,191.406 1.898
Heath B. McLendon 23,010,138.021 98.098 446,248.835 1.902
Cornelius C. Rose, Jr. 23,006,201.971 98.081 450,184.885 1.919
===================================================================================
</TABLE>
Proposal 2 requested that shareholders approve certain changes to the
fundamental policies of the Fund in order to modernize them in view of certain
regulatory, business or industry developments that have occurred since original
adoption of these policies by the Fund. The following chart demonstrates that
all proposals were approved by shareholders.
Please note that "M" indicates a modification of the policy; "E" indicates the
elimination of the policy; and "R" indicates the reclassification of the policy
from fundamental (which would require shareholder approval to change) to non-
fundamental (which can be changed by a vote of the Board of Trustees).
<TABLE>
================================================================================
<S> <C> <C>
M Industry Concentration Approved
- --------------------------------------------------------------------------------
M Borrowing Approved
- --------------------------------------------------------------------------------
E Ability to Pledge Assets Approved
- --------------------------------------------------------------------------------
M Lending by the Fund Approved
- --------------------------------------------------------------------------------
M Underwriting of Securities Approved
- --------------------------------------------------------------------------------
R Margin and the Short Sales of Securities Approved
- --------------------------------------------------------------------------------
M Real Estate Approved
- --------------------------------------------------------------------------------
R Investments in Oil, Gas and Mineral Exploration Approved
- --------------------------------------------------------------------------------
E Limiting Investments to Certain Enumerated Instruments Approved
- --------------------------------------------------------------------------------
R Purchase or Sale of Puts, Calls, and Combinations Thereof Approved
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
24 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Additional Shareholder Information (unaudited)(continued)
================================================================================
The information below reports the lowest percentage of shares voting for
the proposals, the highest percentage of shares voting against and abstaining by
shareholders of the Trust on all proposals.
<TABLE>
<CAPTION>
Percentage Percentage Percentage
Shares Voted of Shares Shares Voted of Shares Shares of Shares
For Voted Against Voted Abstaining Abstained
=======================================================================================================
<S> <C> <C> <C> <C> <C>
2,701,751.905 87.002% 52,776.990 1.700% 350,854.417 11.298%
=======================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 25
<PAGE>
Smith Barney SMITH BARNEY
Intermediate ------------
Maturity New York
Municipals Fund A Member of TravelersGroup [LOGO]
Trustees Investment Adviser and Administrator
Herbert Barg Mutual Management Corp.
Alfred J. Bianchetti
Martin Brody Distributor
Dwight B. Crane Smith Barney Inc.
Burt N. Dorsett
Elliot S. Jaffe Custodian
Stephen E. Kaufman PNC Bank, N.A.
Joseph J. McCann
Heath B. McLendon, Chairman Shareholder
Cornelius C. Rose, Jr. Servicing Agent
First Data Investor Services Group, Inc.
James J. Crisona, Emeritus P.O. Box 9134
Boston, MA 02205-9134
Officers
Heath B. McLendon This report is submitted for the general
Chief Executive Officer information of the shareholders of Smith
Barney Intermediate Maturity New York
Lewis E. Daidone Municipals Fund. It is not authorized
Senior Vice President for distribution to prospective
and Treasurer investors unless accompanied or preceded
by a current Prospectus for the Fund,
Peter M. Coffey which contains information concerning
Vice President and the Fund's investment policies and
Investment Officer expenses as well as other pertinent
information.
Thomas M. Reynolds
Controller Smith Barney
Intermediate Maturity
Christina T. Sydor New York
Secretary Municipals Fund
388 Greenwich Street
New York, New York 10013
www.smithbarney.com
FD2401 7/98
<PAGE>
[LOGO]
Smith Barney
Intermediate
Maturity
California
Municipals Fund
------------------
SEMI-ANNUAL REPORT
------------------
May 31, 1998
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(SM)
<PAGE>
Smith Barney [PHOTO] [PHOTO]
Intermediate
Maturity
California Heath B. Joseph P.
Municipals Fund McLendon Deane
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney
Intermediate Maturity California Municipals Fund ("Fund") for the period ended
May 31, 1998. In this report, we summarize the period's prevailing economic and
market conditions and outline the Fund's investment strategy. A detailed summary
of the Fund's performance and current holdings can be found in the appropriate
sections that follow.
Fund's Performance Update
For the six-months ended May 31, 1998, the Class A shares of the Fund generated
a total return of 2.82% which was roughly in line with the Fund's Lipper
Analytical Services Inc. California intermediate-term municipals peer group
average total return of 2.87% for the same period. (Lipper is a major
independent fund-tracking organization.)
In addition, the Fund paid income dividends totaling $0.19 per Class A share
during the reporting period. Based on a net asset value ("NAV") of $8.71 as of
May 31, 1998, and a current monthly income dividend rate of approximately
$0.0338 per Class A share, this equates to an annualized distribution rate of
4.66%. For a California resident in the combined effective state and federal
income tax bracket of 41.95%, the Fund's tax-free yield of 4.66% is equivalent
to a taxable yield of 8.03%. (This figure assumes an investor is in the federal
income tax bracket of 36%.)
Market Update and Portfolio Strategy
The year under review has seen a clear dichotomy develop between domestic and
international pressures on the bond markets. Recently, the weakness in Southeast
Asia has kept inflationary pressures low and has provided a soft economic
backdrop, which in turn has helped to support bond prices. With respect to the
U.S. economy, the data has been quite different and indicates continued economic
growth, tight labor markets and some signs of higher inflationary pressures.
These conditions would normally point to a Federal
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 1
<PAGE>
Reserve Board ("Fed") tightening of short-term interest rates and weakening bond
prices. However, Asia's problems have put Fed monetary policy temporarily on
hold and have created a classic standoff between the bulls and the bears. Some
investors may perceive this standoff as relative calm in a market that is
actually more turbulent than it may appear. While the market may seem calm on
the surface, pressures from both viewpoints are building. We expect that one
side will ultimately prevail and become dominant, probably before the end of the
year. In our opinion, current domestic concerns should outweigh foreign
considerations among Fed policy-makers.
California Economic Highlights
Despite growing problems in Southeast Asia, California's economy has continued
to gain momentum. Although almost half of all goods manufactured in California
find their way to Southeast Asia, sales to that region have been quite stable.
Furthermore, exports from California to other areas, particularly Mexico and
Canada, have experienced solid gains. Low unemployment and higher personal
income levels have also helped increase State budget coffers. In fact, the
Golden State is currently enjoying a $1.6 billion budget surplus.
Fund's Investment Strategy
The yield curve has become extremely flat in the last few months. (The yield
curve shows the difference between short- and long-term yields.) That means
there is little extra yield being offered by owning longer maturity bonds and
taking on the added risks of higher interest rate volatility.
We have maintained our seven-year average maturity in the Fund while remaining
as fully invested as possible. This strategy should allow us to limit our
interest rate exposure while helping to protect our dividend income. This is a
conservative investment strategy and because of currently low interest rates, we
believe that it is a prudent course of action.
During the past year, the Fund focused on transportation bonds (16.0%), housing
bonds (15.4%) and hospital bonds (13.3%) because we believed they offered good
relative values. In addition, as of May 31, 1998, approximately 98% of the
Fund's holdings were rated investment grade by either Standard & Poor's Ratings
Group or Moody's Investors Services Inc., with about 56% of the Fund's holdings
invested in AAA bonds, the highest possible rating. (Investment-grade bonds are
those rated in one of the four highest ratings categories by nationally
recognized statistical rating organization, or determined by the manager to be
of equivalent quality.)
- --------------------------------------------------------------------------------
2 1998 Semi-Annual Report to Shareholders
<PAGE>
Municipal Bond Market Outlook
Municipal bonds today trade at approximately 90% of 30-year U.S. Treasury bonds,
which is an extremely attractive after-tax spread. U.S. Treasury bond rates have
been pushed down by several forces, but most recently by foreign capital exiting
Asia in a "flight to quality." Because these foreign investors do not gain any
benefit from tax-exempt income, municipal bonds have not appreciated as much as
U.S. Treasurys of late. It also means that when the tide turns, the Fund's lower
key and more defensive investment strategy should hold us in good stead in any
future market sell-off.
We have also seen a significant increase in the volume of new issues in the
municipal bond market taking advantage of historically low interest rates. We
believe the municipal market is comparatively inexpensive and provides us with a
broad spectrum of securities to choose from. For us, that means the issues we
will consider will probably remain high in credit quality and somewhat shorter
in maturity than in past market cycles.
In closing, thank you for your investment in the Smith Barney Intermediate
Maturity California Municipals Fund. We look forward to continuing to help you
achieve your financial goals.
Sincerely,
/s/ HEATH B. MCLENDON /s/ JOSEPH P. DEANE
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
June 22, 1998
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 3
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================
Historical Performance -- Class A Shares
======================================================================================================
Net Asset Value
------------------------
Beginning End Income Capital Total
Period Ended of Period of Period Dividends Gains Returns(1)
======================================================================================================
<S> <C> <C> <C> <C> <C>
5/31/98 $8.66 $8.71 $0.19 $0.00 2.82%+
- ------------------------------------------------------------------------------------------------------
11/30/97 8.55 8.66 0.40 0.00 6.13
- ------------------------------------------------------------------------------------------------------
11/30/96 8.53 8.55 0.40 0.00 5.05
- ------------------------------------------------------------------------------------------------------
11/30/95 7.80 8.53 0.40 0.00 14.84
- ------------------------------------------------------------------------------------------------------
11/30/94 8.50 7.80 0.39 0.01 (3.65)
- ------------------------------------------------------------------------------------------------------
11/30/93 8.04 8.50 0.39 0.00 10.70
- ------------------------------------------------------------------------------------------------------
Inception*-11/30/92 7.90 8.04 0.35 0.00 6.33+
======================================================================================================
Total $2.52 $0.01
======================================================================================================
<CAPTION>
======================================================================================================
Historical Performance -- Class C Shares
======================================================================================================
Net Asset Value
------------------------
Beginning End Income Capital Total
Period Ended of Period of Period Dividends Gains Returns(1)
======================================================================================================
<S> <C> <C> <C> <C> <C>
5/31/98 $8.65 $8.70 $0.18 $0.00 2.72%+
- ------------------------------------------------------------------------------------------------------
11/30/97 8.54 8.65 0.38 0.00 5.92
- ------------------------------------------------------------------------------------------------------
11/30/96 8.52 8.54 0.38 0.00 4.84
- ------------------------------------------------------------------------------------------------------
11/30/95 7.80 8.52 0.38 0.00 14.36
- ------------------------------------------------------------------------------------------------------
Inception*-11/30/94 7.76 7.80 0.02 0.00 0.72+
======================================================================================================
Total $1.34 $0.00
======================================================================================================
<CAPTION>
======================================================================================================
Historical Performance -- Class Y Shares
======================================================================================================
Net Asset Value
------------------------
Beginning End Income Capital Total
Period Ended of Period of Period Dividends Gains Returns(1)
======================================================================================================
<S> <C> <C> <C> <C> <C>
5/31/98 $8.66 $8.72 $0.20 $0.00 3.03%+
- ------------------------------------------------------------------------------------------------------
11/30/97 8.56 8.66 0.42 0.00 6.20
- ------------------------------------------------------------------------------------------------------
11/30/96 8.54 8.56 0.41 0.00 5.22
- ------------------------------------------------------------------------------------------------------
Inception*-11/30/95 8.39 8.54 0.09 0.00 2.92+
======================================================================================================
Total $1.12 $0.00
======================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
4 1998 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
================================================================================
Average Annual Total Return
================================================================================
Without Sales Charge(1)
---------------------------------
Class A Class C Class Y
================================================================================
<S> <C> <C> <C>
Six Months Ended 5/31/98+ 2.82% 2.72% 3.03%
- --------------------------------------------------------------------------------
Year Ended 5/31/98 7.60 7.38 7.78
- --------------------------------------------------------------------------------
Five Years Ended 5/31/98 5.68 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 5/31/98 6.44 7.96 6.41
================================================================================
<CAPTION>
With Sales Charge(2)
---------------------------------
Class A Class C Class Y
================================================================================
<S> <C> <C> <C>
Six Months Ended 5/31/98+ 0.73% 1.72% 3.03%
- --------------------------------------------------------------------------------
Year Ended 5/31/98 5.48 6.38 7.78
- --------------------------------------------------------------------------------
Five Years Ended 5/31/98 5.26 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 5/31/98 6.11 7.96 6.41
================================================================================
<CAPTION>
================================================================================
Cumulative Total Return
================================================================================
Without Sales Charge(1)
================================================================================
<S> <C>
Class A (Inception* through 5/31/98) 49.31%
- --------------------------------------------------------------------------------
Class C (Inception* through 5/31/98) 31.38
- --------------------------------------------------------------------------------
Class Y (Inception* through 5/31/98) 18.49
================================================================================
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A shares reflect the deduction
of the maximum initial sales charge of 2.00% and Class C shares reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within one
year from initial purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, C and Y shares are December 31, 1991, November
8, 1994 and September 8, 1995, respectively.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 5
<PAGE>
================================================================================
Historical Performance (unaudited)
================================================================================
Growth of $10,000 Invested in Class A Shares of the
Smith Barney Intermediate Maturity California Municipals Fund
vs. Lehman Brothers 10-Year Municipal Bond Index
and Lipper Analytical Services, Inc. Peer Group Average+
- --------------------------------------------------------------------------------
December 1991 -- May 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
Smith Barney
Lehman Brothers Intermediate Lipper Analytical
10-Year Maturity Services, Inc.
Municipal California Peer Group
Bond Index Municipals Fund Average
---------- --------------- -------
<S> <C> <C> <C>
12/31/91 9,802 10,000 10,000
11/92 10,422 10,767 10,623
11/93 11,537 12,028 11,682
11/94 11,116 11,491 11,246
11/95 12,767 13,623 12,910
11/96 13,412 14,394 13,566
11/97 14,233 15,410 14,307
5/31/98 14,635 15,996 14,718
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on December 31, 1991, assuming deduction of the maximum 2.00%
sales charge at the time of investment and reinvestment of dividends and
capital gains, if any, at net asset value through May 31, 1998. The Lehman
Brothers 10-Year Municipal Bond Index ("Index") is a broad-based index
which includes about 5,200 bonds totaling approximately $63 billion in
market capitalization. The Lipper Analytical Services, Inc. Peer Group
Average is composed of an average of the Fund's peer group of mutual funds
(34 funds as of May 31, 1998) investing in intermediate maturity California
tax-exempt bonds. 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.
- --------------------------------------------------------------------------------
6 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Portfolio Highlights (unaudited) May 31, 1998
================================================================================
Portfolio Breakdown
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<S> <C>
Water & Sewer 9.0%
Transportation 16.0%
Tax Allocation 6.0%
Solid Waste 6.1%
Miscellaneous 21.0%
Education 8.2%
General Obligation 5.0%
Hospital 13.3%
Housing 15.4%
</TABLE>
Summary of Municipal Bonds And Short-Term Tax Exempt
Investments by Combined Ratings
<TABLE>
<CAPTION>
Standard & Percentage of
Moody's and/or Poor's Total Investments
- --------------------------------------------------------------------------------
<S> <C> <C>
Aaa AAA 56.2%
Aa AA 13.8
A A 12.8
Baa BBB 15.4*
NR NR 1.5
P-1/VMIG 1 A-1/SP-1 0.3
-----
100.0%
=====
</TABLE>
* 0.36% of investments were rated by Fitch Investors Services, Inc.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 7
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================
Schedule of Investments (unaudited) May 31, 1998
===============================================================================================
FACE
AMOUNT RATINGS SECURITY VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education -- 8.2%
California Educational Facilities Authority, Revenue Bonds:
$ 945,000 AAA College of Osteopathic Medicine,
CONNIE LEE-Insured, 5.550% due 6/1/06 $1,008,787
320,000 A1* Loyola Marymount University, Series B,
6.300% due 10/1/03 353,200
200,000 A2* Mills College, (Escrowed to Maturity with
U.S. government securities), 6.500% due 9/1/02(a) 218,500
500,000 AA University of Southern California, 5.300% due 10/1/04 529,375
285,000 AAA Kern High School District, Series C, MBIA-Insured,
(Escrowed to Maturity with U.S. government securities),
8.750% due 8/1/03 346,631
- -----------------------------------------------------------------------------------------------
2,456,493
- -----------------------------------------------------------------------------------------------
General Obligation -- 5.0%
200,000 A+ California State GO, 6.000% due 9/1/03 217,250
1,250,000 AAA California State GO, Veteran's Bonds, FSA-Insured,
4.950% due 12/1/08(b) 1,265,625
- -----------------------------------------------------------------------------------------------
1,482,875
- -----------------------------------------------------------------------------------------------
Hospital -- 13.3%
255,000 AAA Arlington Community Hospital Corp., Parkview Community
Hospital, First Mortgage Revenue, (Escrowed to Maturity
with U.S. government securities), 8.000% due 6/1/04 282,094
California Health Facilities Financing Authority:
200,000 AAA Adventist Health System/West Agency, Series B,
MBIA-Insured, 6.150% due 3/1/99 203,418
1,000,000 AAA Mills-Peninsula, CONNIE LEE-Insured,
5.300% due 1/15/05 1,048,750
200,000 AA- Sisters of Providence, 6.200% due 10/1/03 217,250
400,000 NR St. Elizabeth's Hospital Project, (Pre-Refunded -- Escrowed
with U.S. government securities to 11/5/02 Call @ 102),
5.900% due 11/15/03(a) 435,500
100,000 A-1+ Sutter Health, 3.750% due 07/7/22(c) 100,000
1,200,000 AA California Statewide Community Development, COP,
St. Joseph's Health, (Pre-Refunded -- Escrowed with
U.S. government securities to 7/1/04 Call @ 102),
5.875% due 7/1/05(a) 1,326,000
250,000 A Riverside County Asset Leasing Corp., Leasehold Revenue,
Riverside County Hospital (Project A), 6.000% due 6/1/04 266,875
108,000 BBB-++ Valley Health Systems, COP, (Refunding Project),
6.250% due 5/15/99 109,133
- -----------------------------------------------------------------------------------------------
3,989,020
- -----------------------------------------------------------------------------------------------
Housing -- 15.4%
1,250,000 AAA ABAG Financing Authority, Multi-Family Housing Revenue,
Series A, FNMA-Insured, 5.700% mandatory
put 11/1/06(b)(d) 1,321,875
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1998 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================
Schedule of Investments (unaudited)(continued) May 31, 1998
===============================================================================================
FACE
AMOUNT RATINGS SECURITY VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Housing -- 15.4% (continued)
California, Home Mortgage Revenue:
$ 275,000 Aa2* Series B-1, FHA-Insured, 5.900% due 8/1/04(b) $ 292,531
700,000 Aa2* Series E-1, FHA-Insured, 5.900% due 2/1/05(b) 754,250
700,000 Aa2* Series E-1, FHA-Insured, 5.900% due 8/1/05(b) 757,750
5,000 Aa2* Single-Family Housing Revenue, Series A,
10.000% due 2/1/02 5,022
415,000 AAA City of Santa Rosa Mortgage Revenue Refunding,
(Marlow Apartments Project), FHA-Insured,
5.600% due 9/1/05 433,156
750,000 AAA Riverside County, Multi-Family Housing Revenue,
Series B, FNMA-Collateralized, 5.625% mandatory
put 7/1/09(b) 789,375
250,000 AAA San Luis Obispo HFA, Multi-Family Housing Revenue,
(Parkwood Apartments Project), Series A,
FNMA-Collateralized, 5.500% due 8/1/03 260,000
- -----------------------------------------------------------------------------------------------
4,613,959
- -----------------------------------------------------------------------------------------------
Miscellaneous -- 21.0%
400,000 BBB Fresno Joint Powers Financing Authority, Series A,
5.750% due 9/2/98 400,820
480,000 A+ Irvine Ranch Water District, Joint Powers Agency,
Local Pool Revenue, Issue II, 7.800% due 8/15/01 483,490
1,080,000 AAA Los Angeles County Community Facilities District No. 3,
Special Tax Revenue, Series A, FSA-Insured,
5.250% due 9/1/07 1,146,150
145,000 Aaa* Montclair Redevelopment Agency, Residential Mortgage
Revenue, (Escrowed to Maturity with U.S. government
securities), 7.750% due 10/1/11 172,369
1,250,000 AAA Oakland State Building Authority, Lease Revenue,
Series A, AMBAC-Insured, 4.250% due 4/1/07 1,237,500
1,000,000 AAA San Diego COP, Central Jail Refunding, AMBAC-Insured,
4.800% due 10/1/08 1,021,250
San Francisco Downtown Parking, Series R:
450,000 A* 6.000% due 4/1/02 477,563
280,000 A* 6.150% due 4/1/03 302,750
Santa Barbara COP, (Harbor Refunding Project):
270,000 A* 6.400% due 10/1/02 291,937
285,000 A* 6.500% due 10/1/03 313,144
235,000 AA- Simi Valley Community Development Agency COP,
Simi Valley Business Center, Guaranty Agreement
with New England Mutual Life, 6.050% mandatory
put 10/1/99 240,581
205,000 AAA Upland COP, (Police Building Refunding Project),
AMBAC-Insured, 6.200% due 8/1/02 220,888
- -----------------------------------------------------------------------------------------------
6,308,442
- -----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 9
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================
Schedule of Investments (unaudited)(continued) May 31, 1998
===============================================================================================
FACE
AMOUNT RATINGS SECURITY VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Solid Waste -- 6.1%
Kings County Waste Management, Solid Waste
Revenue Bonds:
$ 400,000 BBB+ 6.500% due 10/1/03(b) $ 433,500
310,000 BBB+ 6.600% due 10/1/04(b) 341,000
1,000,000 Baa1* South Napa Solid Waste Management Authority,
6.000% due 2/15/04(b) 1,057,500
- -----------------------------------------------------------------------------------------------
1,832,000
- -----------------------------------------------------------------------------------------------
Tax Allocation -- 6.0%
1,000,000 Baa* Hawthorne Community Redevelopment Agency,
Tax Allocation, (Redevelopment Project Area 2),
6.200% due 9/1/05(d) 1,083,750
665,000 BBB+ Paramount Redevelopment Agency, Tax Allocation,
Refunding, (Redevelopment Project Area No. 1),
5.800% due 8/1/03 714,044
- -----------------------------------------------------------------------------------------------
1,797,794
- -----------------------------------------------------------------------------------------------
Transportation -- 16.0%
500,000 A1* Los Angeles County Transportation Commission, COP,
Series B, 6.200% due 7/1/03 544,375
1,000,000 AAA Orange County Local Transportation Authority, Sales Tax
Revenue, Series A, MBIA-Insured, 5.500% due 2/15/09 1,086,250
Palm Springs Financing Authority, Airport Revenue,
Palm Springs Regional Airport, MBIA-Insured:
200,000 AAA 5.400% due 1/1/03(b) 210,000
400,000 AAA 5.500% due 1/1/04(b) 423,500
350,000 A1* Sacramento Regional Transportation, COP, Series A,
6.400% due 3/1/03 381,937
240,000 AAA San Francisco Airport Improvement Corp., Lease Revenue,
(Escrowed to Maturity with U.S. government securities),
8.000% due 7/1/13 292,500
San Jose, Airport Revenue:
500,000 AAA MBIA-Insured, 5.750% due 3/1/03 534,375
800,000 AAA Series 93, FGIC-Insured, 5.400% due 3/1/04(b) 845,000
450,000 BBB+ Southern California Rapid Transit Authority, District A2,
Special Benefit Assessment, 6.100% due 9/1/03 479,250
- -----------------------------------------------------------------------------------------------
4,797,187
- -----------------------------------------------------------------------------------------------
Water & Sewer -- 9.0%
1,000,000 AAA El Dorado Public Agency Financing Authority, FGIC-Insured,
5.200% due 2/15/07 1,057,500
1,000,000 AAA Modesto Irrigation District Financing Authority Revenue,
MBIA-Insured, 5.350% due 10/1/06 1,070,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1998 Semi-Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================
Schedule of Investments (unaudited)(continued) May 31, 1998
===============================================================================================
FACE
AMOUNT RATINGS SECURITY VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Water & Sewer -- 9.0% (continued)
Mojave Water District, California Improvement District,
(Morongo Basin):
$ 250,000 AAA Escrowed to Maturity with U.S. government
securities, 6.250% due 9/1/02 $ 271,250
280,000 AAA Pre-Refunded -- Escrowed with U.S. government
securities to 9/1/02 Call @ 102, 6.375% due 9/1/03 309,750
- -----------------------------------------------------------------------------------------------
2,708,500
- -----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $28,207,937**) $29,986,270
===============================================================================================
</TABLE>
(a) Pre-Refunded bonds escrowed with U.S. government securities and bonds
escrowed to maturity with U.S. government securities are considered by the
investment advisor to be triple-A rated even if issuer has not applied for
new ratings.
(b) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(d) Security segregated by Custodian for open purchase commitments.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 12 and 13 for definition of ratings and certain security descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 11
<PAGE>
================================================================================
Bond Ratings
================================================================================
All ratings are by Standard & Poor's Rating Service ("Standard & Poor's"),
except those identified by an asterisk (*) are rated by Moody's Investors
Service Inc. ("Moody's") and those which are identified by a double dagger (++)
are rated by Fitch Investor Services, Inc. ("Fitch"). The definitions of the
applicable rating symbols are set forth below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issue only in a small
degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa," where 1 is the highest and 3 the lowest ranking within its
generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large in "Aaa" securities or
fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.
A -- Bonds rated "A" possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds rated "Baa" are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Fitch -- Ratings may be modified by the addition of a plus (+) or minus (-) sign
to show relative standings within the major ratings categories.
A -- Bonds rated "A" are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and/or dividends
and repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and circumstances
than securities with higher ratings.
- --------------------------------------------------------------------------------
12 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Bond Ratings (continued)
================================================================================
BBB -- Bonds rated "BBB" are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest or
dividends and repay principal is considered to be adequate. Adverse
changes in economic conditions and circumstances, however, are more
likely to have adverse impact on these securities and, therefore,
impair timely payment. The likelihood that the ratings of these bonds
will fall below investment grade is higher than for securities with
higher ratings.
NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's or
Fitch.
================================================================================
Short-Term Securities Ratings
================================================================================
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
================================================================================
Security Descriptions
================================================================================
ABAG -- Association of Bay Area
Governments
AIG -- American International Guaranty
AMBAC -- American Municipal Bond
Assurance Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance
Company
CONNIE
LEE -- College Construction Loan
Insurance Association
COP -- Certificate of
Participation
EDA -- Economic Development Authority
FLAIRS -- Floating Adjustable Interest
Rate Securities
FGIC -- Financial Guaranty Insurance
Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage
Corporation
FNMA -- Federal National Mortgage
Association
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment
Contract
GNMA -- Government National Mortgage
Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors
Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse
Coupon Security
PCFA -- Pollution Control Financing
Authority
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 13
<PAGE>
================================================================================
Statement of Assets and Liabilities (unaudited) May 31, 1998
================================================================================
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost-- $28,207,937) $29,986,270
Interest receivable 450,267
Receivable for securities sold 50,000
Receivable from investment advisor 5,108
- --------------------------------------------------------------------------------
Total Assets 30,491,645
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 116,966
Payable to bank 27,449
Investment advisory fees payable 2,132
Administration fees payable 1,299
Distribution fees payable 1,025
Accrued expenses 45,511
- --------------------------------------------------------------------------------
Total Liabilities 194,382
- --------------------------------------------------------------------------------
Total Net Assets $30,297,263
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 3,480
Capital paid in excess of par value 29,442,291
Overdistributed net investment income (1,373)
Accumulated net realized loss from security transactions (925,468)
Net unrealized appreciation of investments 1,778,333
- --------------------------------------------------------------------------------
Total Net Assets $30,297,263
================================================================================
Shares Outstanding:
Class A 2,974,908
------------------------------------------------------------------------------
Class C 470,853
------------------------------------------------------------------------------
Class Y 34,343
------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $8.71
------------------------------------------------------------------------------
Class C* $8.70
------------------------------------------------------------------------------
Class Y (and redemption price) $8.72
------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 2.04% of net asset value per share) $8.89
================================================================================
</TABLE>
* Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase (See Note 3).
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Statement of Operations (unaudited)
================================================================================
<TABLE>
<CAPTION>
For the Six Months Ended May 31, 1998
<S> <C>
INVESTMENT INCOME:
Interest $ 790,122
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 45,484
Administration fees (Note 3) 30,322
Distribution fees (Note 3) 26,650
Audit and legal 14,950
Shareholder communications 14,000
Registration fees 12,500
Shareholder and system servicing fees 11,012
Trustees' fees 11,000
Pricing service fees 3,600
Custody 850
Other 2,006
- --------------------------------------------------------------------------------
Total Expenses 172,374
Less: Investment advisory and administrative fee waivers (Note 3) (54,580)
- --------------------------------------------------------------------------------
Net Expenses 117,794
- --------------------------------------------------------------------------------
Net Investment Income 672,328
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTE 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceed from sales 1,246,618
Cost of securities sold 1,205,637
- --------------------------------------------------------------------------------
Net Realized Gain 40,981
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 1,649,690
End of period 1,778,333
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 128,643
- --------------------------------------------------------------------------------
Net Gain on Investments 169,624
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 841,952
================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 15
<PAGE>
================================================================================
Statements of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
For the Six Months Ended May 31, 1998 (unaudited)
and the Year Ended November 30, 1997
1998 1997
===================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 672,328 $ 1,293,429
Net realized gain 40,981 19,713
Increase in net unrealized appreciation 128,643 350,069
- -----------------------------------------------------------------------------------
Increase in Net Assets From Operations 841,952 1,663,211
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 4):
Net investment income (668,518) (1,299,901)
- -----------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (668,518) (1,299,901)
- -----------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 3,140,210 5,448,545
Net asset value of shares issued for
reinvestment of dividends 380,833 918,801
Cost of shares reacquired (2,738,334) (4,807,692)
- -----------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 782,709 1,559,654
- -----------------------------------------------------------------------------------
Increase in Net Assets 956,143 1,922,964
NET ASSETS:
Beginning of period 29,341,120 27,418,156
- -----------------------------------------------------------------------------------
End of period* $ 30,297,263 $ 29,341,120
===================================================================================
* Includes overdistributed net investment income of: $(1,373) $(5,183)
===================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)
================================================================================
1. Significant Accounting Policies
Smith Barney Intermediate Maturity California Municipals Fund ("Fund") is a
separate, non-diversified, investment fund of the Smith Barney Investment Trust
("Trust"). The Trust, a Massachusetts business trust, is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company and consists of this Fund and four other separate investment funds:
Smith Barney Intermediate Maturity New York Municipals Fund, Smith Barney Large
Capitalization Growth Fund, Smith Barney Mid Cap Blend Fund and Smith Barney S&P
500 Index Fund. The financial statements and financial highlights for the other
funds are presented in separate semi-annual reports with the exception of the
Smith Barney Mid Cap Blend Fund which began operation after May 31, 1998.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on the trade date; (b) securities are
valued at the mean between the quoted bid and asked prices provided by an
independent pricing service that are based on transactions in municipal
obligations, quotations from municipal bond dealers, market transactions in
comparable securities and various relationships between securities; (c)
securities maturing within 60 days are valued at cost plus accreted discount, or
minus amortized premium, which approximates value; (d) gains or losses on the
sale of securities are calculated by using the specific identification method;
(e) interest income, adjusted for amortization of premium and accretion of
original issue discount, is recorded on the accrual basis; market discount is
recognized upon the disposition of the security; (f) direct expenses are charged
to the Fund and each class; management fees and general fund expenses are
allocated on the basis of relative net assets; (g) dividends and distributions
to shareholders are recorded on the ex-dividend date; (h) 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; and (i) estimates and assumptions are required to be made
regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ.
2. Portfolio Concentration
Since the Fund invests primarily in obligations of issuers within California, it
is subject to possible concentration risks associated with economic, political,
or legal developments or industrial or regional matters specifically affecting
California.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 17
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)(continued)
================================================================================
3. Investment Advisory Agreement, Administration
Agreement and Other Transactions
Mutual Management Corp. ("MMC"), a subsidiary of Salomon Smith Barney Holdings
Inc. ("SSBH"), acts as investment adviser to the Fund. The Fund pays MMC an
advisory fee calculated at an annual rate of 0.30% of the average daily net
assets. This fee is calculated daily and paid monthly. For the six months ended
May 31, 1998, MMC waived $32,748 of its investment advisory fees.
MMC also acts as the Fund's administrator for which the Fund pays a fee
calculated at the annual rate of 0.20% of the average daily net assets. This fee
is calculated daily and paid monthly. For the six months ended May 31, 1998, MMC
waived $21,832 of its administration fees.
Smith Barney Inc. ("SB"), another subsidiary of SSBH, acts as distributor of
Fund shares. For the six months ended May 31, 1998, SB received sales charges of
approximately $32,000 on sales of the Fund's Class A shares.
There is a contingent deferred sales charge ("CDSC") of 1.00% on Class C shares,
which applies if redemption occurs within one year from initial purchase. For
the six months ended May 31, 1998, there were no CDSCs paid to SB for Class C
shares.
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A and C shares, calculated at the annual rate of 0.15% of the average
daily net assets for each class. In addition, the Fund pays a distribution fee
with respect to its Class C shares calculated at the annual rate of 0.20%.
For the six months ended May 31, 1998, total Distribution Plan fees were:
<TABLE>
<CAPTION>
Class A Class C
================================================================================
<S> <C> <C>
Distribution Plan Fees $19,422 $7,228
================================================================================
</TABLE>
All officers and one Trustee of the Fund are employees of SB.
4. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from municipal
securities, which is exempt from regular Federal income tax and from designated
state income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
- --------------------------------------------------------------------------------
18 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)(continued)
================================================================================
5. Investments
During the six months ended May 31, 1998, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
================================================================================
<S> <C>
Purchases $3,564,943
- --------------------------------------------------------------------------------
Sales 1,246,618
================================================================================
</TABLE>
At May 31, 1998, the aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $1,778,333
Gross unrealized depreciation --
- --------------------------------------------------------------------------------
Net unrealized appreciation $1,778,333
================================================================================
</TABLE>
6. Capital Loss Carryforwards
At November 30, 1997, the Fund had for Federal tax purposes approximately
$966,000 of capital loss carryforwards available, subject to certain
limitations, to offset future capital gains. To the extent that these
carryforward losses are used to offset capital gains, it is probable that the
gains so offset will not be distributed.
The amount and year of expiration for each carryforward loss is indicated below:
<TABLE>
<CAPTION>
11/30/01 11/30/02 11/30/03
================================================================================
<S> <C> <C> <C>
Capital Loss Carryforwards $2,000 $695,000 $269,000
================================================================================
</TABLE>
7. Shares of Beneficial Interest
At May 31, 1998, the Fund 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 May 31, 1998, total paid-in capital amounted to the following for each class.
<TABLE>
<CAPTION>
Class A Class C Class Y
================================================================================
<S> <C> <C> <C>
Total Paid-in Capital $25,197,139 $4,003,480 $245,152
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 19
<PAGE>
================================================================================
Notes to Financial Statements (unaudited)(continued)
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 1998 November 30, 1997
-------------------- --------------------
Shares Amount Shares Amount
================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 226,783 $ 1,981,786 474,080 $ 4,054,918
Shares issued on
reinvestment 37,218 324,216 94,422 805,955
Shares redeemed (250,339) (2,184,000) (477,346) (4,081,984)
- -------------------------------------------------------------------------------
Net Increase 13,662 $ 122,002 91,156 $ 778,889
================================================================================
Class C
Shares sold 133,342 $ 1,158,424 162,920 $ 1,393,627
Shares issued on
reinvestment 5,862 51,011 12,138 103,598
Shares redeemed (63,862) (554,334) (84,783) (725,708)
- -------------------------------------------------------------------------------
Net Increase 75,342 $ 655,101 90,275 $ 771,517
================================================================================
Class Y
Shares sold -- -- --
Shares issued on
reinvestment 643 $ 5,606 1,598 $ 9,248
Shares redeemed -- -- -- --
- -------------------------------------------------------------------------------
Net Increase 643 $ 5,606 1,598 $ 9,248
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
20 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of each class of beneficial interest outstanding throughout each
period:
<TABLE>
<CAPTION>
Class A Shares 1998(1) 1997 1996 1995 1994 1993
====================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 8.66 $ 8.55 $ 8.53 $ 7.80 $ 8.50 $ 8.04
- ----------------------------------------------------------------------------------------------------
Income (Loss)
From Operations:
Net investment income(2) 0.19 0.40 0.40 0.40 0.39 0.39
Net realized and
unrealized gain (loss) 0.05 0.11 0.02 0.73 (0.69) 0.46
- ----------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.24 0.51 0.42 1.13 (0.30) 0.85
- ----------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.19) (0.40) (0.40) (0.40) (0.39) (0.39)
Net realized gains -- -- -- -- (0.01) --
- ----------------------------------------------------------------------------------------------------
Total Distributions (0.19) (0.40) (0.40) (0.40) (0.40) (0.39)
- ----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 8.71 $ 8.66 $ 8.55 $ 8.53 $ 7.80 $ 8.50
- ----------------------------------------------------------------------------------------------------
Total Return 2.82%++ 6.13% 5.05% 14.84% (3.65)% 10.70%
- ----------------------------------------------------------------------------------------------------
Net Assets,
End of Period (000s) $25,903 $25,630 $24,537 $26,211 $25,359 $32,514
- ----------------------------------------------------------------------------------------------------
Ratios to Average
Net Assets:
Expenses(2) 0.75%+ 0.75% 0.77% 0.75% 0.75% 0.72%
Net investment income 4.46+ 4.65 4.69 4.89 4.73 4.45
- ----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 4% 9% 15% 8% 39% 16%
====================================================================================================
</TABLE>
(1) For the six months ended May 31, 1988 (unaudited).
(2) The investment adviser and administrator waived all or part of their fees
for the six months ended May 31, 1998 and the five years ended November 30,
1997. In addition, the investment adviser reimbursed the Fund for $75,189
in expenses for the year ended November 30, 1996. If such fees were not
waived and expenses were not reimbursed, the per share effect on net
investment income and the expense ratios would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Income and Reimbursements
-------------------------------------------------- -------------------------------------------------
1998(1) 1997 1996 1995 1994 1993 1998(1) 1997 1996 1995 1994 1993
------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $0.02 $0.03 $0.07 $0.03 $0.04 $0.07 1.10% 1.12% 1.54% 1.16% 1.24% 1.49%
</TABLE>
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 21
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of beneficial interest outstanding throughout each
period:
<TABLE>
<CAPTION>
Class C Shares 1998(1) 1997 1996 1995 1994(2)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $8.65 $8.54 $8.52 $7.80 $7.76
- -------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income (3) 0.18 0.38 0.38 0.38 0.01
Net realized and unrealized gain 0.05 0.11 0.02 0.72 0.05**
- -------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.23 0.49 0.40 1.10 0.06
- -------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.18) (0.38) (0.38) (0.38) (0.02)
- -------------------------------------------------------------------------------------------------------------
Total Distributions (0.18) (0.38) (0.38) (0.38) (0.02)
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.70 $8.65 $8.54 $8.52 $7.80
- -------------------------------------------------------------------------------------------------------------
Total Return 2.72%++ 5.92% 4.84% 14.36% 0.72%++
- -------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $4,095 $3,419 $2,607 $2,254 $45
- -------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (3) 0.96%+ 0.96% 0.98% 0.98% 0.95%+
Net investment income 4.25+ 4.44 4.48 4.54 4.53+
- -------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 4% 9% 15% 8% 39%
=============================================================================================================
</TABLE>
(1) For the six months ended May 31, 1998 (unaudited).
(2) For the period from November 8, 1994 (inception date) to November 30, 1994.
(3) The investment adviser and administrator waived all or part of their fees
for the six months ended May 31, 1998, the three years ended November 30,
1997 and the period ended November 30, 1994. In addition, the investment
adviser reimbursed the Fund for $75,189 in expenses for the year ended
November 30, 1996. If such fees were not waived and expenses were not
reimbursed, the per share effect on net investment income and the expense
ratios would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases to Without Fee Waivers
Net Investment Income and Reimbursements
-------------------------------------- -------------------------------------
1998(1) 1997 1996 1995 1994 1998(1) 1997 1996 1995 1994
------- ---- ---- ---- ---- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class C $0.02 $0.03 $0.07 $0.03 $0.00* 1.31% 1.33% 1.75% 1.39% 1.44%+
</TABLE>
* Amount represents less than $0.01 per share.
** The amount in this caption for each share outstanding throughout the period
may not accord with the change in aggregate gains and losses in the
portfolio securities for the period because of the timing of purchases and
withdrawals of shares in relation to the fluctuating market values of the
portfolio.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
22 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of beneficial interest outstanding throughout each
period:
<TABLE>
<CAPTION>
Class Y Shares 1998(1) 1997 1996 1995(2)
================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $8.66 $8.56 $8.54 $8.39
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income (3) 0.20 0.41 0.41 0.09
Net realized and unrealized gain 0.06 0.11 0.02 0.15
- --------------------------------------------------------------------------------
Total Income From Operations 0.26 0.52 0.43 0.24
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.20) (0.42) (0.41) (0.09)
- --------------------------------------------------------------------------------
Total Distributions (0.20) (0.42) (0.41) (0.09)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $8.72 $8.66 $8.56 $8.54
- --------------------------------------------------------------------------------
Total Return 3.03%++ 6.20% 5.22% 2.92%++
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $299 $292 $274 $261
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (3) 0.57%+ 0.56% 0.59% 0.58%+
Net investment income 4.64+ 4.84 4.87 4.74+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 4% 9% 15% 8%
================================================================================
</TABLE>
(1) For the six months ended May 31, 1998 (unaudited).
(2) For the period from September 8, 1995 (inception date) to November 30,
1995.
(3) The investment adviser and administrator waived all or part of their fees
for the six months ended May 31, 1998, the two years ended November 30,
1997 and the period ended November 30, 1995. In addition, the investment
adviser reimbursed the Fund for $75,189 in expenses for the year ended
November 30, 1996. If such fees were not waived and expenses were not
reimbursed, the per share effect on net investment income and the expense
ratios would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decrease to Without Fee Waivers
Net Investment Income and Reimbursements
----------------------------- -------------------------------
1998(1) 1997 1996 1995 1998(1) 1997 1996 1995
------- ---- ---- ---- ------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class Y $0.02 $0.03 $0.07 $0.03 0.92% 0.94% 1.36% 0.99%+
</TABLE>
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 23
<PAGE>
================================================================================
Additional Shareholder Information (unaudited)
================================================================================
On February 6, 1998 a special meeting of shareholders of the Trust was held
for the purpose of voting on the following matters:
1. To elect Trustees of the Trust; and
2. To approve or disapprove the reclassification, modification and/or
elimination of certain fundamental investment policies.
The results of the vote on Proposal 1 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>
Herbert Barg 22,978,059.782 97.961% 478,327.074 2.039%
Alfred J. Bianchetti 22,968,583.475 97.920 487,803.381 2.080
Martin Brody 22,972,548.241 97.937 483,838.615 2.063
Dwight B. Crane 23,013,405.483 98.111 442,981.373 1.889
Burt N. Dorsett 23,007,677.873 98.087 448,708.983 1.913
Elliot S. Jaffe 22,981,247.160 97.974 475,139.696 2.026
Stephen E. Kaufman 22,999,681.445 98.053 456,705.411 1.947
Joseph J. McCann 23,011,195.450 98.102 445,191.406 1.898
Heath B. McLendon 23,010,138.021 98.098 446,248.835 1.902
Cornelius C. Rose, Jr 23,006,201.971 98.081 450,184.885 1.919
====================================================================================
</TABLE>
Proposal 2 requested that shareholders approve certain changes to the
fundamental policies of the Fund in order to modernize them in view of certain
regulatory, business or industry developments that have occurred since original
adoption of these policies by the Fund. The following chart demonstrates that
all proposals were approved by shareholders.
Please note that "M" indicates a modification of the policy; "E" indicates
the elimination of the policy; and "R" indicates the reclassification of the
policy from fundamental (which would require shareholder approval to change) to
non-fundamental (which can be changed by a vote of the Board of Directors).
<TABLE>
================================================================================
<S> <C>
"E" Ability to Pledge Assets Approved
- -------------------------------------------------------------------------------
"M" Underwriting of Securities Approved
- -------------------------------------------------------------------------------
"M" Lending by the Fund Approved
- -------------------------------------------------------------------------------
"M" Real Estate Approved
- -------------------------------------------------------------------------------
"R" Margin and the Short Sales of Securities Approved
- -------------------------------------------------------------------------------
"E" Purchases of Certain Securities Approved
- -------------------------------------------------------------------------------
"R" Investments in Oil, Gas and Mineral Exploration Approved
- -------------------------------------------------------------------------------
"R" Options Approved
- -------------------------------------------------------------------------------
"M" Industry Concentration Approved
- -------------------------------------------------------------------------------
"M" Borrowing Approved
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
24 1998 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
Additional Shareholder Information (unaudited) (continued)
================================================================================
The information below reports the lowest percentage of shares voting for the
proposals, the highest percentage of shares voting against and abstaining by
shareholders of the Fund on all proposals.
<TABLE>
<CAPTION>
Percentage Percentage Percentage
Shares Voted of Shares Shares Voted of Shares Shares of Shares
For Voted Against Voted Abstaining Abstained
================================================================================
<S> <C> <C> <C> <C> <C>
1,574,087.901 88.256% 78,648.951 4.410% 130,812.843 7.334%
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 25
<PAGE>
Smith Barney SMITH BARNEY
Intermediate ------------
Maturity California
Municipals Fund A Member of TravelersGroup [LOGO]
Trustees Investment Adviser and Administrator
Herbert Barg Mutual Management Corp.
Alfred J. Bianchetti
Martin Brody Distributor
Dwight B. Crane Smith Barney Inc.
Burt N. Dorsett
Elliot S. Jaffe Custodian
Stephen E. Kaufman PNC Bank, N.A.
Joseph J. McCann
Heath B. McLendon, Chairman Shareholder
Cornelius C. Rose, Jr. Servicing Agent
First Data Investor Services Group, Inc.
James J. Crisona, Emeritus P.O. Box 9134
Boston, MA 02205-9134
Officers
Heath B. McLendon
President and This report is submitted for the general
Chief Executive Officer information of the shareholders of Smith
Barney Intermediate Maturity California
Lewis E. Daidone Municipals Fund. It is not authorized
Senior Vice President for distribution to prospective
and Treasurer investors unless accompanied or preceded
by an effective Prospectus for the Fund,
Joseph P. Deane which contains information concerning
Vice President and the Fund's investment policies and
Investment Officer expenses as well as other pertinent
information.
Thomas M. Reynolds
Controller
Smith Barney
Christina T. Sydor Intermediate Maturity
Secretary California Municipals Fund
388 Greenwich Street
New York, New York 10013
www.smithbarney.com
FD2400 7/98
[GRAPHIC OMITTED]
Smith Barney
S&P 500
Index Fund
--------------------
SEMI - ANNUAL REPORT
--------------------
May 31, 1998
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(sm)
<PAGE>
Smith Barney [PHOTO OMITTED] [PHOTO OMITTED]
S&P 500
Index Fund HEATH B. MCLENDON JOHN LAU
Chairman Investment Officer
Dear Shareholder:
We are pleased to provide the first semi-annual report of the Smith Barney S&P
500 Index* Fund ("Fund") for the period ended May 31, 1998. In this report we
summarize the period's prevailing economic and market conditions. A detailed
summary of performance and current holdings in the Fund can be found in the
appropriate sections that follow.
Investment Objective and Performance Update
The Fund seeks to provide investment results that, before expenses, correspond
to the price and yield performance of the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500 Index"), which is representative of the U.S. stock market.
(The S&P 500 Index is a broad-based measurement of changes in stock market
conditions based on the average performance of 500 widely held common stocks.)
The Fund holds a broadly diversified portfolio of common stocks that is
comparable to the S&P 500 Index in terms of sector weightings and market
capitalization. Since the Fund's inception on January 5, 1998, the Fund had a
total return of 11.70% compared with the 12.41% for the S&P 500 Index over the
same period.
Financial Markets Overview
During the reporting period, large-cap stocks continued to dominate as investors
moved money into the perceived safer haven of well-diversified, larger company
stocks. Growth stocks generally performed well in the first quarter of 1998.
- ----------
* Standard & Poor's, "S&P(R)" and "S&P 500(R)" are trademarks of Standard &
Poor's, a division of the McGraw Hill Companies, Inc. and have been licensed for
use by the Fund. The Fund is not sponsored, endorsed or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the advisability
of investing in the Fund.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 1
<PAGE>
The U.S. stock market got off to a surprisingly strong start in the first
quarter. Investors were expecting the worst on the earnings front in early 1998
in the aftermath of the Asian crisis. The action in the U.S. stock market was
even more remarkable in light of the slight increase in interest rates at the
end of the first quarter of 1998. According to our research, about 46% of all
companies exceeded earnings expectations while 31% reported earnings below
consensus.
The anxiously awaited fourth-quarter earnings, however, turned out to be better
than the worst-case scenario. As a result, investors heaved a big sigh of relief
and embarked on a furious buying spree. In a broad-based market rally, the S&P
500 Index gained 13.53% for the first quarter of 1998 versus the Fund's return
of 12.70% during the same period.
Stock market volatility increased significantly during the month of April. A
seesaw pattern in stock prices persisted through the month and the S&P 500 Index
rose by 0.91% in April.
Interest rates took center stage towards the end of April as the Federal Reserve
Board publicly discussed a shift to a tightening bias. Long-term interest rates
shot up above 6% while the S&P 500 Index fell 3.9% from April 22, 1998 to April
27, 1998. Inflation, however, continued to remain low and, despite a strong
first quarter Gross Domestic Product report, economic data still suggests a
slowdown in the second half of 1998. Bond prices stabilized as a result of such
evidence in late April and early May and stock prices recovered to the levels
established at the end of the first quarter of 1998.
Renewed concerns over Asia and slowing earnings growth shook the stock market in
May. The S&P 500 Index declined by almost 2%. Several companies provided early
guidance about lower second quarter earnings. However, fund investors who had
exposure to big company stocks in the second quarter of 1998 did well, as the
S&P 500 Index again outpaced most other types of funds and had a return of
roughly 3.17% in the second quarter of 1998 compared with the slight loss
experienced by most average U.S. stock funds. Despite the fact that the earnings
of large companies that dominate the S&P 500 have come under pressure lately,
investors appeared to prefer the relative "safety" of large-capitalization
company stocks during the reporting period that can still maintain their
earnings in a slowing economy.
Conclusion
The recent environment of low inflation, stable interest rates and steady
economic growth has been conducive to rising stock prices. Not
surprisingly, returns from the U.S. stock market during the reporting
- --------------------------------------------------------------------------------
2 1998 Semi-Annual Report to Shareholders
<PAGE>
period were very healthy. However, extended bull markets can cause some
investors to lose sight of some of the risks of investing in stocks. We register
a note of caution on the U.S. stock market based on high valuations and earnings
risk related to the Asian crisis and a slowing domestic economy. Therefore, we
believe investors in the Smith Barney S&P 500 Index Fund should stay true to
their long-term investment plan and be prepared for greater market volatility.
In closing, thank you for investing in the Smith Barney S&P 500 Index Fund. We
look forward to helping you pursue your investment goals.
Sincerely,
/s/ Heath B. McLendon /s/ John Lau
Heath B. McLendon John Lau
Chairman Investment Officer
July 13, 1998
- --------------------------------------------------------------------------------
Some Risks to Remember about the Smith Barney
S&P 500 Index Fund
Please note that the net asset value of the Fund's shares will fluctuate and
these shares may be worth more or less than their original cost upon redemption.
There can be no assurances given that the Fund will achieve its investment
objective. Moreover, the investment performance of the S&P 500 Index does not
factor in sales charges, brokerage commissions, management fees and other fund
costs assumed by the Fund. Therefore, the Fund cannot exactly replicate the
performance of the S&P 500 Index.
Moreover, when the stock market goes down, as defined by the S&P 500 Index, the
Fund's net asset value will decline as well. Since the Fund tries to mirror,
before expenses, the performance of the S&P 500 Index, the investment management
team will usually not try and judge the merits of any one particular security,
and the poor performance of any one single security will not necessarily mean
the security will be removed from the Fund.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 3
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividend Distribution Return+
================================================================================
1/5/98* - 5/31/98 $10.00 $11.17 $0.00 $0.00 11.70%++
================================================================================
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
- --------------------------------------------------------------------------------
Average Annual Total Return+
- --------------------------------------------------------------------------------
1/5/98* through 5/31/98 11.70%++
================================================================================
+ Assumes reinvestment of all dividends and capital gain distributions.
* Commencement of operations.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
4 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) S May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
COMMON STOCK -- 89.3%
Auto & Transportation -- 3.2%
230 AMR Corp.+ $ 35,405
394 Burlington Northern Santa Fe Corp. 39,203
1,636 Chrysler Corp. 91,002
199 Cooper Tire & Rubber Co. 4,713
549 CSX Corp. 26,146
96 Cummins Engine Co., Inc. 4,992
235 Dana Corp. 12,249
188 Delta Air Lines, Inc. 21,620
194 Eaton Corp. 17,423
141 Echlin, Inc. 6,697
371 FDX Corp.+ 23,790
93 Fleetwood Enterprises Inc. 3,720
3,024 Ford Motor Co. 156,870
1,783 General Motors Corp. 128,264
452 Genuine Parts Co. 15,339
393 Goodyear Tire & Rubber Co. 28,246
301 ITT Industries, Inc. 11,099
212 Johnson Controls Inc. 12,614
180 Navistar International Corp. 5,433
953 Norfolk Southern Corp. 29,840
196 Paccar, Inc. 10,822
195 Ryder Systems, Inc. 6,642
156 Snap-On, Inc. 6,844
557 Southwest Airlines Co. 14,864
160 The Timken Co. 6,020
311 TRW, Inc. 16,657
645 Union Pacific Resources 13,061
230 USAIR Group, Inc.+ 16,100
- --------------------------------------------------------------------------------
765,675
- --------------------------------------------------------------------------------
Consumer Discretionary -- 13.8%
593 Abercrombie & Fitch Co., Class A Shares+ 25,054
144 Alberto Culver Co., Class B Shares 4,284
620 Albertsons, Inc. 28,713
186 American Greetings Corp., Class A Shares 8,835
690 American Stores Co. 17,206
381 Autozone, Inc.+ 12,668
332 Avon Products, Inc. 27,161
249 Brunswick Corp. 7,827
1,792 CBS Corp. 56,896
2,044 Cendant Corp.+ 44,329
248 Circuit City Stores - Circuit City Group 10,509
312 Clear Channel Communications Inc.+ 29,913
259 Clorox Co. 21,626
745 Colgate Palmolive Co. 64,815
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 5
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Consumer Discretionary -- 13.8% (continued)
879 Comcast Corp., Class A Shares $ 30,133
274 Consolidated Stores Corp.+ 10,463
540 Costco Cos., Inc. 31,252
483 CVS Corp. 33,900
379 Darden Restaurants, Inc. 5,850
1,101 Dayton-Hudson Corp. 51,058
204 Deluxe Corp. 6,846
278 Dillard, Inc., Class A Shares 11,693
244 Dow Jones & Co., Inc. 11,742
431 Dun & Bradstreet Corp. 14,546
818 Eastman Kodak Co. 58,384
529 Federated Department Stores, Inc.+ 27,408
186 Fruit of the Loom Inc., Class A Shares+ 6,684
716 Gannett Co. 47,211
882 Gap, Inc. 47,628
149 Giant Foods, Inc. 6,407
1,411 Gillette Co. 165,263
94 Great Atlantic & Pacific Tea Co., Inc. 3,008
178 Harcourt General, Inc. 9,701
258 Harrah's Entertainment, Inc.+ 6,450
337 Hasbro, Inc. 12,890
533 HBO & Co. 30,764
630 Hilton Hotels Corp. 19,805
1,844 Home Depot, Inc. 144,869
336 Ikon Office Solutions Inc. 7,119
276 International Flavors & Fragrances, Inc. 13,248
319 Interpublic Group Cos., Inc. 18,920
630 J.C. Penney Co. 45,241
102 Jostens, Inc. 2,575
1,230 K Mart Corp.+ 23,831
1,400 Kimberly-Clark Corp. 69,387
183 King World Productions Inc.+ 4,666
201 Knight Ridder, Inc. 11,469
643 Kroger Co.+ 27,608
166 Liz Claiborne, Inc. 8,414
101 Longs Drug Stores Corp. 3,061
440 Lowe's Cos. 34,842
566 Marriott International Inc., Class A Shares 19,668
732 Mattel, Inc. 27,724
584 May Department Stores Co. 37,558
238 Maytag Corp. 12,004
1,737 McDonald's Corp. 113,990
248 McGraw Hill, Inc. 19,390
92 Mercantile Stores Co., Inc. 7,233
134 Meredith Corp. 5,326
456 Mirage Resorts, Inc. 9,490
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Consumer Discretionary -- 13.8% (continued)
222 Moore Corp. Ltd. $ 3,219
108 National Service Industries, Inc. 5,508
241 New York Times Co., Class A Shares 16,990
400 Newell Co. 19,300
735 Nike Inc., Class B Shares 33,810
194 Nordstrom, Inc. 13,980
411 Omnicom Group, Inc. 19,239
165 Pep Boys - Manny, Moe & Jack 3,671
111 Polaroid Corp. 4,502
3,384 Procter & Gamble Corp. 284,044
144 Reebok International Ltd.+ 4,140
649 Rite Aid Corp. 23,242
369 R R Donnelley & Sons Co. 16,605
377 Rubbermaid, Inc. 12,299
91 Russell Corp. 2,479
987 Sears Roebuck & Co. 61,008
634 Service Corp. 25,914
53 Springs Industries, Inc. 2,974
153 Supervalu, Inc. 6,406
260 Tandy Corp. 11,505
1,281 Tele-Communications, Inc., Class A Shares+ 43,954
1,459 Time Warner, Inc. 113,528
223 Times Mirror Corp., Class A Shares 14,272
405 TJX Cos., Inc. 18,933
719 Toys "R" Us, Inc.+ 19,053
310 Tribune Co. 20,731
381 Tricon Global Restaurants, Inc.+ 11,834
156 Tupperware Corp. 4,212
1,615 Unilever NV+ 127,484
1,528 U.S. West Media Group Inc.+ 56,631
309 VF Corp. 16,434
890 Viacom, Inc.+ 48,950
1,250 Walgreen Co. 43,984
5,663 Wal-Mart Stores, Inc. 312,526
1,701 Walt Disney Co. 192,425
329 Wendy's International, Inc. 8,122
190 Whirlpool Corp. 12,979
375 Winn-Dixie Stores Inc. 15,257
337 Woolworth Corp. 6,655
- --------------------------------------------------------------------------------
3,335,354
- --------------------------------------------------------------------------------
Consumer Staples -- 6.4%
95 Adolph Coors Co., Class B Shares 3,562
1,237 Anheuser-Busch Co., Inc. 56,824
1,436 Archer-Daniels-Midland Co. 27,104
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Consumer Staples-- 6.4% (continued)
726 Bestfoods $ 40,973
173 Brown-Forman, Class B Shares 9,969
1,150 Campbell Soup Co. 62,675
6,235 Coca-Cola Co. 488,668
1,195 Conagra Inc. 34,953
434 Fortune Brands, Inc. 16,681
398 General Mills, Inc. 27,163
361 Hershey Foods Corp. 24,999
919 HJ Heinz & Co. 48,764
1,033 Kellogg Co. 42,675
290 Loews Corp. 26,317
3,825 PepsiCo, Inc. 156,107
6,116 Philip Morris Cos., Inc. 228,585
617 Pioneer Hi-Bred International, Inc. 23,484
347 Quaker Oats Co. 20,017
271 Ralston-Purina Group 30,165
1,194 Sara Lee Corp. 70,296
896 Seagram Co., Ltd. 39,368
860 Sysco Corp. 20,048
467 UST, Inc. 12,433
292 William Wrigley Jr. Co. 28,105
- --------------------------------------------------------------------------------
1,539,935
- --------------------------------------------------------------------------------
Finance -- 15.6%
1,082 Allstate Corp. 101,843
1,171 American Express Co. 120,173
640 American General Corp. 42,960
1,768 American International Group, Inc. 218,900
424 Aon Corp. 27,162
873 Associated First Capital Corp.+ 65,311
1,628 Banc One Corp. 89,743
367 Bank of Boston Corp. 38,672
950 The Bank of New York, Inc. 58,068
1,749 BankAmerica Corp. 144,620
247 Bankers Trust New York Corp. 30,504
359 BB&T Corp. 23,761
135 Beneficial Corp. 18,090
672 Charles Schwab Corp. 22,176
1,062 Chase Manhattan Corp. 144,365
430 Chubb Corp. 34,211
560 CIGNA Corp. 38,360
418 Cincinnati Financial Corp. 17,556
1,018 Citicorp, Inc. 151,809
397 Comerica, Inc. 26,102
473 Conseco, Inc. 22,053
274 Countrywide Credit Industries, Inc. 12,672
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Finance -- 15.6% (continued)
380 Equifax, Inc. $ 13,822
2,676 Fannie Mae 160,225
1,753 Federal Home Loan Mortgage Corp. 79,761
589 Fifth Third Bancorp 29,008
735 First Chicago NBD Corp. 64,266
2,439 First Union Corp. 134,907
686 Fleet Financial Group, Inc. 56,252
637 Franklin Resources, Inc. 31,133
198 General Re Corp. 43,535
143 Golden West Financial Corp. 15,444
345 Green Tree Financial Corp. 13,864
277 H.F. Ahmanson & Co. 21,121
232 H&R Block, Inc. 10,208
298 Hartford Financial Services, Inc. 32,798
271 Household International, Inc. 36,669
481 Huntington Bancshares Inc. 15,752
448 J.P. Morgan & Co., Inc. 55,636
267 Jefferson Pilot Corp. 15,285
1,109 Keycorp 42,072
258 Lehman Brothers Holdings, Inc. 18,301
257 Lincoln National Corp. 23,097
428 Marsh & McLennan Cos., Inc. 37,476
248 MBIA, Inc. 18,491
1,263 MBNA Corp. 40,021
643 Mellon Bank Corp. 43,362
332 Mercantile Bancorp, Inc. 16,973
839 Merrill Lynch & Co., Inc. 75,090
289 MGIC Investment Corp. 17,321
1,494 Morgan Stanley, Dean Witter, Discover & Co. 116,625
829 National City Corp. 56,164
2,370 NationsBank Corp. 179,527
282 Northern Trust Corp. 19,889
1,907 Norwest Corp. 74,134
770 PNC Bank Corp. 44,467
182 Progressive Corp. 25,093
238 Providian Financial Corp. 15,142
138 Republic of New York Corp. 17,724
357 SAFECO Corp. 16,600
582 St. Paul Cos. 25,826
406 State Street Boston Corp. 27,988
444 Summit Bancorp 22,255
492 SunAmerica, Inc. 23,923
532 Suntrust Banks, Inc. 42,028
659 Synovus Financial Corp. 14,786
352 Torchmark Corp. 15,092
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Finance -- 15.6% (continued)
157 Transamerica Corp. $ 18,055
2,555 Travelers Group, Inc. 155,855
1,854 U.S. Bancorp. 72,537
350 UNUM Corp. 19,446
518 Wachovia Corp. 41,472
649 Washington Mutual, Inc. 45,835
218 Wells Fargo & Co. 78,807
- --------------------------------------------------------------------------------
3,780,271
- --------------------------------------------------------------------------------
Health Care -- 10.4%
1,930 Abbott Labs, Inc. 143,181
375 AETNA, Inc. 29,320
165 Allergan, Inc. 6,930
1 Allergan Specialty Therapeutics Inc., Class A Shares 9
216 Alza Corp.+ 10,449
3,278 American Home Products Corp. 158,368
663 Amgen, Inc.+ 40,111
139 Bausch & Lomb, Inc. 6,923
706 Baxter International, Inc. 40,374
308 Becton Dickinson & Co. 21,791
282 Biomet, Inc. 8,142
492 Boston Scientific Corp.+ 31,365
2,507 Bristol-Myers Squibb & Co. 269,502
144 C.R. Bard, Inc. 4,995
276 Cardinal Health, Inc. 24,598
409 Cognizant Corp. 21,779
1,632 Columbia/HCA Healthcare Corp. 53,346
2,797 Eli Lilly & Co. 171,840
380 Guidant Corp. 24,486
994 HealthSouth Corp.+ 28,204
411 Humana, Inc.+ 12,766
3,391 Johnson & Johnson 234,190
181 Mallinckrodt, Inc. 5,577
157 Manor Care, Inc. 4,955
1,183 Medtronic, Inc. 65,804
3,022 Merck & Co., Inc. 353,762
3,260 Pfizer, Inc. 341,688
1,278 Pharmacia & Upjohn, Inc. 56,471
1,846 Schering Plough Corp. 154,487
213 St. Jude Medical, Inc. 7,614
771 Tenet Healthcare Corp. 26,985
189 U.S. Surgical Corp. 7,512
477 United Healthcare Corp. 30,528
2,061 Warner-Lambert Co. 131,517
- --------------------------------------------------------------------------------
2,529,569
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Integrated Oil -- 5.9%
231 Amerada Hess Corp. $ 12,488
2,455 Amoco Corp. 102,649
191 Ashland, Inc. 9,526
809 Atlantic Richfield Co. 63,809
1,657 Chevron Corp. 132,352
6,217 Exxon Corp. 438,298
121 Kerr McGee Corp. 7,653
1,979 Mobil Oil Corp. 154,362
856 Occidental Petroleum Corp. 23,647
119 Pennzoil Co. 6,879
664 Phillips Petroleum Co. 33,241
5,406 Royal Dutch Petroleum Co. 303,073
180 Sun Co., Inc. 7,650
1,382 Texaco, Inc. 79,810
623 Unocal Corp. 22,194
728 USX Marathon Group, Inc. 25,480
- --------------------------------------------------------------------------------
1,423,111
- --------------------------------------------------------------------------------
Materials & Processing -- 4.4%
295 Air Products & Chemicals, Inc. 25,665
574 Alcan Aluminium Ltd. 16,359
497 Allegheny Teledyne, Inc. 11,555
436 Aluminum Co. of America 30,247
264 Armco, Inc.+ 1,435
102 Armstrong World Industries, Inc. 8,580
100 Asarco, Inc. 2,268
259 Avery Dennison Corp. 13,419
75 Ball Corp. 2,957
939 Barrick Gold Corp.+ 18,075
594 Battle Mountain Gold Co. 3,155
134 Bemis, Inc. 5,653
290 Bethlehem Steel Corp.+ 3,552
241 Black & Decker Corp. 14,068
143 Boise Cascade Corp. 4,772
241 Champion International Corp. 11,568
323 Crown Cork & Seal Co., Inc. 16,755
240 Cyprus Amax Minerals Co. 3,810
570 Dow Chemical Corp. 55,218
2,852 E.I. du Pont de Nemours & Co. 219,604
197 Eastman Chemical Co. 13,199
328 Ecolab, Inc. 10,127
360 Engelhard Corp. 7,492
92 FMC Corp.+ 7,032
526 Fort James Corp. 25,149
491 Freeport-McMoRan Copper & Gold, Inc. 8,224
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Materials & Processing -- 4.4% (continued)
233 Georgia Pacific Corp. $ 14,955
152 Great Lakes Chemical Corp. 6,080
244 Hercules, Inc. 10,751
529 Homestake Mining Co. 5,752
422 INCO Ltd. 6,066
123 Inland Steel Industries, Inc. 3,520
762 International Paper Co. 35,052
272 Louisiana Pacific Corp. 5,423
417 MASCO Corp. 23,456
267 Mead Corp. 8,310
1,495 Monsanto Co. 82,785
328 Morton International, Inc. 9,983
169 Nalco Chemical Co. 6,337
394 Newmont Mining Corp. 9,825
223 Nucor Corp. 11,484
136 Owens-Corning 5,100
352 Owens-Illinois, Inc.+ 15,818
147 Phelps Dodge Corp. 8,967
617 Placer Dome, Inc. 7,673
75 Potlatch Corp. 3,285
450 PPG Industries, Inc. 32,793
396 Praxair, Inc. 19,527
188 Reynolds Metals Co. 10,904
154 Rohm & Hass Co. 16,920
160 Sealed Air Corp.+ 8,560
438 Sherwin-Williams Co. 14,563
251 Sigma Aldrich Corp. 9,161
228 Stanley Works 10,830
248 Stone Container Corp. 4,402
141 Temple-Inland, Inc. 8,283
428 Tenneco, Inc. 17,815
175 Union Camp Corp. 9,570
311 Union Carbide Corp. 15,530
218 USX-U.S. Steel Group, Inc. 7,820
279 W.R. Grace & Co.+ 5,178
254 Westvaco Corp. 7,239
503 Weyerhaeuser Co. 25,558
280 Willamette Industries, Inc. 9,607
248 Worthington Industries, Inc. 4,371
- --------------------------------------------------------------------------------
1,059,191
- --------------------------------------------------------------------------------
Other Energy -- 1.1%
149 Anadarko Petroleum Corp. 9,834
239 Apache Corp. 8,170
426 Baker Hughes, Inc. 15,336
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Other Energy -- 1.1% (continued)
447 Burlington Resources, Inc. $ 18,829
441 Dresser Industries, Inc. 20,534
662 Halliburton Co. 31,362
129 Helmerich & Payne, Inc. 3,257
153 McDermott International, Inc. 5,842
20 NACCO Industries Inc., Class A Shares 2,930
263 Oryx Energy Co.+ 6,131
216 Rowan Cos., Inc.+ 5,521
1,254 Schlumberger Ltd. 97,890
621 Union Pacific Corp. 30,040
137 Western Atlas, Inc.+ 11,859
- --------------------------------------------------------------------------------
267,535
- --------------------------------------------------------------------------------
Producer Durables -- 7.5%
72 Aeroquip-Vickers, Inc. 4,446
1,423 Allied Signal, Inc. 60,833
557 AMP, Inc. 21,166
181 The B.F. Goodrich Co. 9,276
2,518 Boeing Co. 119,919
65 Briggs & Stratton Corp. 2,949
491 Browning Ferris Industries, Inc. 17,461
189 Case Corp. 10,938
938 Caterpillar Inc. 51,531
151 Centex Corp. 5,398
101 Cincinnati Milacron, Inc. 3,023
307 Cooper Industries, Inc. 19,763
585 Corning, Inc. 23,070
115 Crane Co. 6,059
628 Deere & Co. 32,577
563 Dover Corp. 21,112
111 EG&G, Inc. 3,496
1,119 Emerson Electric Co. 67,979
212 Fluor Corp. 10,109
103 Foster Wheeler Corp. 2,613
318 General Dynamics Corp. 14,131
8,251 General Electric Co. 687,927
128 General Signal Corp. 5,264
125 Harnischfeger Industries, Inc. 3,937
320 Honeywell, Inc. 26,860
629 Illinois Tool Works, Inc. 41,514
415 Ingersoll-Rand Co. 18,700
102 Kaufman & Broad Home Corp. 2,620
831 Laidlaw, Inc. 10,283
491 Lockheed Martin Corp. 55,114
109 Millipore Corp. 3,637
1,030 Minnesota Mining & Manufacturing Co. 95,403
168 Northrop Grumman Corp. 18,007
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Producer Durables -- 7.5% (continued)
34 Octel Corp.+ $ 730
311 Pall Corp. 6,161
281 Parker-Hannifin Corp. 11,538
55 Pulte Corp. 2,932
216 Raychem Corp. 8,127
853 Raytheon Co. 46,648
505 Rockwell International Corp. 27,775
414 Textron, Inc. 30,713
381 Thermo Electron Corp.+ 13,382
139 Thomas & Betts Corp. 7,427
1,441 Tyco International Ltd. 79,795
589 United Technologies Corp. 55,366
126 W.W. Grainger, Inc. 13,300
1,147 Waste Management, Inc. 37,277
- --------------------------------------------------------------------------------
1,818,286
- --------------------------------------------------------------------------------
Technology -- 12.1%
174 Adobe Systems, Inc. 6,949
360 Advanced Micro Devices, Inc.+ 7,020
225 Andrew Corp.+ 4,942
337 Apple Computer, Inc.+ 8,972
926 Applied Materials, Inc.+ 29,632
119 Autodesk, Inc. 5,057
752 Automatic Data Processing Inc. 47,846
551 Bay Networks, Inc.+ 15,255
396 Cabletron Systems, Inc.+ 5,098
184 Ceridian Corp.+ 9,936
2,566 Cisco Systems, Inc.+ 194,053
3,816 Compaq Computer Corp. 104,224
1,379 Computer Associates International, Inc.+ 72,397
394 Computer Sciences Corp. 20,463
121 Data General Corp.+ 1,845
1,646 Dell Computer Corp.+ 135,640
371 Digital Equipment Corp.+ 20,358
297 DSC Communications Corp.+ 5,076
1,250 EMC Corp.+ 51,796
1,078 First Data Corp. 35,843
389 Gateway 2000, Inc.+ 17,529
372 General Instrument Corp.+ 8,858
201 Harris Corp. 9,685
2,621 Hewlett-Packard Co. 162,829
4,125 Intel Corp. 294,679
2,451 International Business Machines Corp. 287,898
211 KLA-Tencor Corp.+ 7,147
354 LSI Logic Corp.+ 7,544
3,282 Lucent Technologies, Inc. 232,816
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Technology -- 12.1% (continued)
532 Micron Tech, Inc. $ 12,535
6,140 Microsoft Corp.+ 520,748
1,504 Motorola, Inc. 79,618
412 National Semiconductor Corp.+ 6,695
1,314 Northern Telecom Ltd. 84,096
874 Novell, Inc.+ 9,177
2,481 Oracle Systems Corp.+ 58,613
649 Parametric Technology, Inc.+ 19,895
122 Perkin-Elmer Corp. 8,357
731 Pitney Bowes, Inc. 34,357
198 Scientific-Atlanta, Inc. 4,368
612 Seagate Technology, Inc.+ 14,152
65 Shared Medical Systems Corp. 4,728
475 Silicon Graphics, Inc.+ 5,700
953 Sun Microsystems, Inc.+ 38,179
125 Tektronix, Inc. 4,781
457 Tellabs, Inc.+ 31,404
985 Texas Instruments, Inc. 50,604
896 3Com Corp.+ 22,736
629 UNISYS Corp.+ 15,410
821 Xerox Corp. 84,357
- --------------------------------------------------------------------------------
2,921,897
- --------------------------------------------------------------------------------
Utilities -- 8.9%
1,424 AirTouch Communications, Inc., Class A Shares + 67,818
463 ALLTEL Corp. 18,259
346 Ameren Corp. 13,537
477 American Electric Power, Inc. 21,643
4,096 American Telephone & Telegraph Corp. 249,344
2,762 Ameritech Corp. 117,212
372 Baltimore Gas & Electric Co. 11,322
1,958 Bell Atlantic Corp. 179,401
2,499 Bellsouth Corp. 161,185
381 Carolina Power & Light Co. 15,621
539 Central & Southwest Corp. 14,249
395 Cinergy Corp. 12,763
267 Coastal Corp. 18,823
140 Columbia Gas System, Inc. 11,812
595 Consolidated Edison, Inc. 25,473
239 Consolidated Natural Gas Co. 13,518
488 Dominion Resources, Inc. 19,367
366 DTE Energy Co. 14,479
908 Duke Energy Corp. 52,323
53 Eastern Enterprises 2,126
962 Edison International 28,379
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Utilities -- 8.9% (continued)
783 Enron Corp. $ 39,247
612 Entergy Corp. 16,103
578 FirstEnergy Corp. 17,159
458 FPL Group, Inc. 28,138
413 Frontier Corp. 12,570
317 GPU, Inc. 12,204
2,415 GTE Corp. 140,824
712 Houston Industries, Inc. 20,381
1,756 MCI Communications Corp.+ 93,891
659 Nextel Communications, Inc.+ 15,527
363 Niagara Mohawk Power Co.+ 4,492
121 NICOR, Inc. 4,673
188 Northern States Power Co. 10,692
79 ONEOK, Inc. 3,085
208 Pacific Enterprises 7,917
744 Pacificorp 17,158
563 Peco Energy Co. 15,904
87 Peoples Energy Corp. 3,208
1,104 PG&E Corp. 34,776
418 PP&L Resources, Inc. 9,248
586 Public Service Enterprise Group, Inc. 19,374
4,624 SBC Communications, Inc. 179,758
277 Sonat, Inc. 10,854
1,744 Southern Co. 46,325
956 Sprint Corp. 68,593
621 Texas Utilities Co. 24,529
1,220 U.S. West Communications Group, Inc. 61,915
546 Unicom Corp. 18,768
1,036 Williams Cos., Inc. 33,605
2,552 Worldcom, Inc.+ 116,116
- --------------------------------------------------------------------------------
2,155,688
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $21,232,591) 21,596,512
================================================================================
CONVERTIBLE PREFERRED STOCK -- 0.0%
Materials & Processing -- 0.0%
43 Sealed Air Corp., Series A
(Cost -- $2,622) 2,394
================================================================================
SUB-TOTAL INVESTMENTS
(Cost -- $21,235,213) 21,598,906
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 1998
- --------------------------------------------------------------------------------
FACE
AMOUNT DESCRIPTION VALUE
================================================================================
SHORT-TERM INVESTMENTS -- 10.7%
U.S. Treasury Bills -- 0.4%
$ 105,000 U.S. Treasury Bills, due 6/11/98 $ 104,830
- --------------------------------------------------------------------------------
Repurchase Agreement -- 10.3%
2,492,000 Chase Manhattan Bank, 5.500% due 6/1/98,
Proceeds at maturity -- $2,493,142; (Fully
collateralized by U.S. Treasury Bonds, 7.875%
due 2/15/21; Market value -- $2,547,675)
(Cost -- $2,492,000) 2,492,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(Cost -- $2,596,826) 2,596,830
================================================================================
TOTAL INVESTMENTS --100%
(Cost-- $23,832,039*) $24,195,736
================================================================================
+ Non-income producing security.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) May 31, 1998
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $21,235,213) $21,598,906
Short-term investments, at value (Cost -- $2,596,826) 2,596,830
Receivable for Fund shares sold 259,598
Dividends and interest receivable 30,446
Other assets 37,700
- --------------------------------------------------------------------------------
Total Assets 24,523,480
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 2,474,659
Payable to bank 235,311
- --------------------------------------------------------------------------------
Total Liabilities 2,709,970
- --------------------------------------------------------------------------------
Total Net Assets $21,813,510
================================================================================
NET ASSETS:
Par value of capital shares $ 1,953
Capital paid in excess of par value 21,231,071
Undistributed net investment income 61,378
Accumulated net realized gain on investments and
futures contracts 155,205
Net unrealized appreciation of investments and
futures contracts 363,903
- --------------------------------------------------------------------------------
Total Net Assets $21,813,510
================================================================================
Shares Outstanding -- Class A 1,953,007
- --------------------------------------------------------------------------------
Net Asset Value -- Class A $11.17
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Period Ended May 31, 1998(a)
INVESTMENT INCOME:
Dividends $ 66,438
Interest 22,075
- --------------------------------------------------------------------------------
Total Investment Income 88,513
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 11,498
Distribution fees (Note 2) 9,198
Shareholder and system servicing fees 1,581
Other 4,858
- --------------------------------------------------------------------------------
Total Expenses 27,135
- --------------------------------------------------------------------------------
Net Investment Income 61,378
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 3 AND 6):
Realized Gain From:
Security transactions (excluding short-term securities) 49,500
Future contracts 105,705
- --------------------------------------------------------------------------------
Net Realized Gain 155,205
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments
and Futures Contracts:
Beginning of period --
End of period 363,903
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 363,903
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 519,108
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $580,486
================================================================================
(a) For the period from January 5, 1998 (commencement of operations) to May 31,
1998.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (unaudited)
- --------------------------------------------------------------------------------
For the Period Ended May 31, 1998(a)
================================================================================
OPERATIONS:
Net investment income $ 61,378
Net realized gain 155,205
Increase in net unrealized appreciation 363,903
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 580,486
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income --
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders --
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 27,685,736
Cost of shares reacquired (6,452,712)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 21,233,024
- --------------------------------------------------------------------------------
Increase in Net Assets 21,813,510
NET ASSETS:
Beginning of period --
- --------------------------------------------------------------------------------
End of period* $21,813,510
================================================================================
* Includes undistributed net investment income of: $ 61,378
================================================================================
(a) For the period from January 5, 1998 (commencement of operations) to May 31,
1998.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney S&P 500 Index Fund ("Fund") is a separate investment fund of
the Smith Barney Investment Trust ("Trust"). The 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 four other funds: the Smith Barney Intermediate Maturity California
Municipals Fund, the Smith Barney Intermediate Ma tu ri ty New York Municipals
Fund, Smith Barney Large Capitalization Growth Fund and Smith Barney Mid Cap
Blend Fund. The financial statements and financial highlights for the other
funds are presented in separate semi-annual reports with the exception of the
Smith Barney Mid Cap Blend Fund which did not begin operation until after May
31, 1998.
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 are valued at the last sale price on that
exchange or, if there were no sales, at the current quoted bid price;
over-the-counter securities and listed securities are valued at the bid price at
the close of business on each day; U.S. government securities are valued at the
quoted bid price in the over-the-counter market; investment in securities for
which market quotations are not available are valued at fair value as determined
by the Board of Trustees; (c) securities maturing within 60 days are valued at
cost plus accreted discount, or minus amortized premium, which approximates
value; (d) interest income is recorded on an accrual basis and dividend income
is recorded on the ex-dividend date; (e) the accounting records of the Fund 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; (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 by the Fund on the
ex-dividend date; (h) 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; (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
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
from substantially all Federal income and excise taxes; and (j) 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 and Other Transactions
Travelers Investment Management Company, ("TIMCO"), a wholly owned subsidiary
of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment adviser to
the Fund. The Fund pays TIMCO an advisory fee calculated at an annual rate of
0.15% of the average daily net assets. This fee is calculated daily and paid
monthly.
Mutual Management Corp. ("MMC"), formerly known as Smith Barney Mutual Funds
Management Inc., another subsidiary of SSBH, acts as administrator to the Fund.
The Fund pays MMC an administration fee calculated at an annual rate of 0.10% of
the average daily net assets. This fee is calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SSBH, acts as distributor of
Trust shares.
Pursuant to a Distribution Plan, the Fund pays SB a service fee calculated at an
annual rate of 0.20% of the average daily net assets for Class A shares.
All officers and one Trustee of the Trust are employees of SB.
3. Investments
During the period ended May 31, 1998, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $21,572,552
- --------------------------------------------------------------------------------
Sales 386,839
================================================================================
At May 31, 1998, the aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $ 784,330
Gross unrealized depreciation (420,633)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 363,697
================================================================================
- --------------------------------------------------------------------------------
22 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
4. Repurchase Agreements
The Fund purchases (and its custodian takes possession of) U.S. govern ment
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. 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, they 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 May 31, 1998, the Fund held no purchased call or put options.
When the Fund writes a 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 if the cost of the
closing purchase transaction exceeds the premium received when the option was
sold) 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 written index options are exercised,
settlement is made in cash.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (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
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 loss if
the market price of the underlying security declines.
During the period ended May 31, 1998, the Fund did not write any call or put
options.
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 received or made and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the 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 May 31, 1998, the Fund had the following open futures contracts:
# of Basis Market Unrealized
Contracts to Buy Contracts Expiration Value Value Gain
================================================================================
S&P 500 Emini future 1 6/98 $54,334 $54,540 $206
================================================================================
- --------------------------------------------------------------------------------
24 1998 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
7. Lending of Portfolio Securities
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations. 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
main tained at all times in an amount at least equal to the current market value
of the loaned securities, plus a margin 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 May 31, 1998, the Fund had no securities on loan.
8. Shares of Beneficial Interest
At May 31, 1998, the Fund 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.
Transactions in shares of the Fund were as follows:
Period Ended
May 31, 1998*
================================================================================
Shares sold 2,557,548
Shares redeemed (604,541)
- --------------------------------------------------------------------------------
Net Increase 1,953,007
================================================================================
* For the period from January 5, 1998 (commencement of operations) to May 31,
1998.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 25
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of beneficial interest outstanding throughout the period:
Class A Shares 1998(1)
================================================================================
Net Asset Value, Beginning of Period $10.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.03
Net realized and unrealized gain 1.14
- --------------------------------------------------------------------------------
Total Income From Operations 1.17
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income --
- --------------------------------------------------------------------------------
Total Distributions --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $11.17
- --------------------------------------------------------------------------------
Total Return++ 11.70%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $21,814
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 0.60%
Net investment income 1.35
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 3%
- --------------------------------------------------------------------------------
Average commissions per share
paid on equity transactions $0.03
================================================================================
(1) For the period from January 5, 1998 (commencement of operations) to May 31,
1998 (unaudited).
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
26 1998 Semi-Annual Report to Shareholders
<PAGE>
Smith Barney SMITH BARNEY
S&P 500
Index Fund A Member of TravelersGroup [LOGO]
Trustees
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliot S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon, Chairman
Cornelius C. Rose, Jr.
James J. Crisona, Emeritus
Officers
Heath B. McLendon
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
John Lau
Investment Officer
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Adviser
Travelers Investment
Management Co.
Administrator
Mutual Management Corp.
Distributor
Smith Barney Inc.
Custodian
PNCBank, N.A.
Shareholder Service Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney S&P 500 Index 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.
Smith Barney
S&P 500 Index Fund
388 Greenwich Street
New York, New York 10013
www.smithbarney.com
FD01525 7/98
