<PAGE>
SMITH BARNEY LARGE
CAPITALIZATION GROWTH FUND
- ----------------------
The SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND ("Fund") seeks long-term
growth of capital by investing primarily in equity securities of companies with
large market capitalizations.
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS ENDED
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
WITHOUT SALES CHARGES(1)
----------------------------------------
CLASS A CLASS B CLASS L
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------
One-Year 39.50% 38.51% 38.51%
- ----------------------------------------------------------------
Since Inception+ 37.46 36.46 36.46
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
WITH SALES CHARGES(2)
----------------------------------------
CLASS A CLASS B CLASS L
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------
One-Year 32.50% 33.51% 36.15%
- ----------------------------------------------------------------
Since Inception+ 34.35 35.56 35.85
- ----------------------------------------------------------------
</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 and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect
to Class B and L shares.
(2) Assumes reinvestment of all dividends and capital gain
distributions, if any, at net asset value. In addition,
Class A and L shares reflect the deduction of the
maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a
5.00% CDSC, which applies if shares are redeemed within
one year from purchase. Thereafter, the CDSC declines
by 1.00% per year until no CDSC is incurred. Class L
shares also reflect the deduction of a 1.00% CDSC,
which applies if shares are redeemed within the first
year of purchase.
All figures represent past performance and are not a
guarantee of future results. Investment returns and
principal value will fluctuate, and redemption value
may be more or less than the original cost.
+ Inception date for Class A, B and L shares is
August 29, 1997.
</TABLE>
FUND HIGHLIGHT
- ------------------------------------------------
WE BELIEVE THAT PRESENT ECONOMIC CONDITIONS ARE FAVORABLE FOR
LARGE-CAPITALIZATION GROWTH STOCKS. WE THINK THAT AN ECONOMY CHARACTERIZED BY
LOW INFLATION AND STABLE INTEREST RATES IS CLEARLY BENEFICIAL TO THOSE COMPANIES
FOCUSED ON INCREASING SALES AND INSTITUTING EFFICIENCIES.
NASDAQ SYMBOL
- ------------------------------------------------
<TABLE>
<S> <C>
CLASS A SBLGX
CLASS B SBLBX
CLASS L SLCCX
</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
INDEPENDENT AUDITORS' REPORT............. 19
TAX INFORMATION.......................... 20
</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 annual report for the Smith Barney Large
Capitalization Growth Fund ("Fund") for the year ended November 30, 1999. We
hope you find this report useful and informative. In this report we have
summarized the period's prevailing economic and market conditions and outlined
our performance strategy. A detailed summary of the Fund's performance can be
found in the appropriate sections that follow. Any discussion of the Fund's
holdings are as of November 30, 1999. Please refer to pages six and seven for a
list of the Fund's holdings.
PERFORMANCE UPDATE AND STRATEGY
The Fund seeks long-term growth of capital by investing primarily in equity
securities of companies with market capitalizations of $5 billion or more.
For the year ended November 30, 1999, we are proud to report that Class A, B and
L shares of the Fund generated a total return, without sales charges, of 39.50%,
38.51% and 38.51%, respectively.
In comparison, the Standard & Poor's 500 Composite Index ("S&P 500") had a total
return of 20.89% for the same period. (The S&P 500 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 are
extremely high. Lastly, a third characteristic we look for is a strong
management team. Strong management is just as important as a company's financial
condition or the quality of its products or services. We look for these
characteristics to identify companies that we believe represent outstanding
long-term investment opportunities.
MARKET OVERVIEW AND OUTLOOK
The stock market continued to grow in 1999 despite a number of issues that kept
investors on edge. Both stock and bond markets were characterized by higher
levels of volatility due to concerns about the Asian economy and the effect of
the introduction of the Euro. (The Euro is the single currency of the European
Monetary Union that was adopted by Belgium, Germany, Spain, France, Ireland,
Italy, Luxembourg, Netherlands, Austria, Portugal and Finland on January 1,
1999.)
Ultimately, we think that it is the corporate earnings outlook that is the most
important factor in determining the behavior of large-capitalization growth
stocks. As such, we tend to view much of the political and economic headlines as
background noise and continue our focus on individual company balance sheets,
products and management. When questions exist about the
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 1
<PAGE>
political and economic situation worldwide, it always seems to lead many
investors back to the highest-quality companies.
Since our last report, the Fund has experienced broad gains, in large part due
to its technology holdings. At the Fund's inception in August 1997, we stated
that our investment focus was to invest in companies that can, over time, in a
low inflation environment, deliver above average unit growth. We continue to
invest in companies with the financial strength to raise dividends where
applicable, buy back shares and make strategic acquisitions.
Within the technology sector, our focus remains in the areas of software,
semiconductors, telecommunications and networking. Recognized leaders in these
areas such as Microsoft, Cisco, Texas Instruments, Lucent, Motorola and Intel,
continue to positively contribute to the performance of the Fund.
Although the technology sector continues to receive a great deal of attention,
we remain committed to the financial services sector. In our view, the
underlying fundamentals of the financial services industry remain strong, hence
our investments in American International Group, Morgan Stanley Dean Witter &
Co., Wells Fargo, Fannie Mae and Household International.
One area of disappointment this year was the consumer sector, as the effect of
the worldwide economic slowdown had a negative impact on earnings. However, we
plan to add to our positions in Coca-Cola, Gillette, Johnson & Johnson, Merck
and Procter & Gamble as we believe the worldwide economic recovery that is now
underway should benefit global, brand-name companies such as these.
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 in the new century.
Sincerely,
<TABLE>
<S> <C>
/S/ HEATH B. MCLENDON /S/ ALAN BLAKE
HEATH B. MCLENDON ALAN BLAKE
Chairman Vice President and
Investment Officer
DECEMBER 13, 1999
</TABLE>
- --------------------------------------------------------------------------------
2 1999 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
HISTORICAL PERFORMANCE -- CLASS A SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
------------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
YEAR ENDED OF YEAR OF YEAR DIVIDENDS DISTRIBUTIONS RETURNS(1)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
11/30/99 $17.41 $23.94 $0.00 $0.33 39.50%
- -------------------------------------------------------------------------------------------------------------------------------
11/30/98 12.28 17.41 0.02 0.01 42.12
- -------------------------------------------------------------------------------------------------------------------------------
Inception* -- 11/30/97 11.88 12.28 0.00 0.00 3.37+
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $0.02 $0.34
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
HISTORICAL PERFORMANCE -- CLASS B SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
------------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
YEAR ENDED OF YEAR OF YEAR DIVIDENDS DISTRIBUTIONS RETURNS(1)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
11/30/99 $17.26 $23.56 $0.00 $0.33 38.51%
- -------------------------------------------------------------------------------------------------------------------------------
11/30/98 12.26 17.26 0.01 0.01 41.02
- -------------------------------------------------------------------------------------------------------------------------------
Inception* -- 11/30/97 11.88 12.26 0.00 0.00 3.20+
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $0.01 $0.34
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
HISTORICAL PERFORMANCE -- CLASS L SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
------------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
YEAR ENDED OF YEAR OF YEAR DIVIDENDS DISTRIBUTIONS RETURNS(1)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
11/30/99 $17.26 $23.56 $0.00 $0.33 38.51%
- -------------------------------------------------------------------------------------------------------------------------------
11/30/98 12.26 17.26 0.01 0.01 41.02
- -------------------------------------------------------------------------------------------------------------------------------
Inception* -- 11/30/97 11.88 12.26 0.00 0.00 3.20+
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $0.01 $0.34
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
HISTORICAL PERFORMANCE -- CLASS Y SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
------------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
YEAR ENDED OF YEAR OF YEAR DIVIDENDS DISTRIBUTIONS RETURNS(1)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
11/30/99 $17.49 $24.14 $0.00 $0.33 40.00%
- -------------------------------------------------------------------------------------------------------------------------------
11/30/98 12.29 17.49 0.02 0.01 42.61
- -------------------------------------------------------------------------------------------------------------------------------
Inception* -- 11/30/97 12.66 12.29 0.00 0.00 (2.92)+
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $0.02 $0.34
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
HISTORICAL PERFORMANCE -- CLASS Z SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE
------------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
YEAR ENDED OF YEAR OF YEAR DIVIDENDS DISTRIBUTIONS RETURNS(1)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Inception* -- 11/30/99 $19.48 $24.02 $0.00 $0.33 25.08%+
- -------------------------------------------------------------------------------------------------------------------------------
</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 RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WITHOUT SALES CHARGES(1)
--------------------------------------------------------------------------------
CLASS A CLASS B CLASS L CLASS Y CLASS Z
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Year Ended 11/30/99 39.50% 38.51% 38.51% 40.00% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Inception* through 11/30/99 37.46 36.46 36.46 36.52 25.08%+
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
WITH SALES CHARGES(2)
---------------------------------------------
CLASS A CLASS B CLASS L CLASS Y CLASS Z
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Year Ended 11/30/99 32.50% 33.51% 36.15% 40.00% N/A
- ----------------------------------------------------------------------------------
Inception* through 11/30/99 34.35 35.56 35.85 36.52 25.08%+
- ----------------------------------------------------------------------------------
</TABLE>
CUMULATIVE TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WITHOUT SALES CHARGES(1)
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
Class A (Inception* through 11/30/99) 104.92%
- -------------------------------------------------------------------------------------------------
Class B (Inception* through 11/30/99) 101.56
- -------------------------------------------------------------------------------------------------
Class L (Inception* through 11/30/99) 101.56
- -------------------------------------------------------------------------------------------------
Class Y (Inception* through 11/30/99) 93.83
- -------------------------------------------------------------------------------------------------
Class Z (Inception* through 11/30/99) 25.08
- -------------------------------------------------------------------------------------------------
</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 AND L SHARES OR THE APPLICABLE CONTINGENT
DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS B AND
L SHARES.
(2) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS, IF ANY, AT NET ASSET VALUE. IN ADDITION,
CLASS A AND L SHARES REFLECT THE DEDUCTION OF THE MAXIMUM
INITIAL SALES CHARGES OF 5.00% AND 1.00%, RESPECTIVELY;
CLASS B SHARES REFLECT THE DEDUCTION OF A 5.00% CDSC, WHICH
APPLIES IF SHARES ARE REDEEMED WITHIN ONE YEAR FROM
PURCHASE. THEREAFTER, THE CDSC DECLINES BY 1.00% PER YEAR
UNTIL NO CDSC IS INCURRED. CLASS L SHARES ALSO REFLECT THE
DEDUCTION OF A 1.00% CDSC, WHICH APPLIES IF SHARES ARE
REDEEMED WITHIN THE FIRST YEAR OF PURCHASE.
* INCEPTION DATE FOR CLASS A, B AND L SHARES IS AUGUST 29,
1997. INCEPTION DATE FOR CLASS Y AND Z SHARES ARE
OCTOBER 15, 1997 AND JANUARY 4, 1999, RESPECTIVELY.
+ TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE
REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR.
</TABLE>
- --------------------------------------------------------------------------------
4 1999 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 L SHARES OF THE
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND VS. STANDARD & POOR'S 500 INDEX+
- --------------------------------------------------------------------------------
AUGUST 1997 -- NOVEMBER 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SMITH BARNEY LARGE SMITH BARNEY LARGE SMITH BARNEY LARGE STANDARD & POOR'S
CAPITALIZATION GROWTH CAPITALIZATION GROWTH CAPITALIZATION GROWTH 500 INDEX
FUND - CLASS A SHARES FUND - CLASS B SHARES FUND - CLASS L SHARES
<S> <C> <C> <C> <C>
Aug-97 $9,496 $10,000 $10,000 $10,000
Nov-97 $9,816 $9,820 $10,117 $10,667
May-98 $12,043 $12,114 $12,388 $12,274
Nov-98 $13,950 $14,153 $14,407 $13,367
May-99 $16,883 $17,155 $17,379 $15,051
Nov-99 $19,460 $19,857 $19,955 $16,159
</TABLE>
+ The above chart represents a hypothetical illustration of $10,000 invested in
Class A, B and L 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 L shares at the time of investment, and
reinvestment of dividends and capital gains, if any, through November 30,
1999. 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, B and L 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>
Capital Goods 2.10%
Consumer Durables 3.10%
Consumer Goods 20.50%
Consumer Services 10.10%
Financial Services 22.20%
Health Care 16.00%
Semi-Conductors 14.90%
Software/PC's 3.80%
Telecommunications 7.30%
</TABLE>
* As a percentage of total common stock.
TOP TEN HOLDINGS* AS OF NOVEMBER 30, 1999
- ------------------------------------------------
<TABLE>
<C> <S> <C>
1. AMERICA ONLINE, INC. 6.8%
- ----------------------------------------------------------------------------
2. TEXAS INSTRUMENTS INC. 6.0
- ----------------------------------------------------------------------------
3. INTEL CORP. 5.4
- ----------------------------------------------------------------------------
4. THE COCA-COLA CO. 4.8
- ----------------------------------------------------------------------------
5. MERRILL LYNCH & CO., INC. 4.1
- ----------------------------------------------------------------------------
6. WELLS FARGO & CO. 4.1
- ----------------------------------------------------------------------------
7. WARNER-LAMBERT CO. 3.9
- ----------------------------------------------------------------------------
8. MOTOROLA INC. 3.6
- ----------------------------------------------------------------------------
9. XILINX, INC. 3.5
- ----------------------------------------------------------------------------
10. THE GILLETTE CO. 3.5
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* As a percentage of total common stock.
</TABLE>
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 5
<PAGE>
SCHEDULE OF INVESTMENTS NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
COMMON STOCK -- 100.0%
CAPITAL GOODS -- 2.1%
550,000 General Electric Co. $ 71,500,000
- ----------------------------------------------------------------------------------------------------------
CONSUMER DURABLES -- 3.1%
1,315,000 The Home Depot, Inc. 103,967,188
- ----------------------------------------------------------------------------------------------------------
CONSUMER GOODS -- 20.5%
1,770,000 Avon Products Inc. 64,494,375
2,420,000 The Coca-Cola Co. 162,896,250
3,000,000 The Gillette Co. 120,562,500
1,700,000 McDonald's Corp. 76,500,000
2,600,000 PepsiCo, Inc. 89,862,500
870,000 The Procter & Gamble Co. 93,960,000
1,100,000 Wm. Wrigley Jr. Co. 91,506,250
- ----------------------------------------------------------------------------------------------------------
699,781,875
- ----------------------------------------------------------------------------------------------------------
CONSUMER SERVICES -- 10.1%
3,200,000 America Online, Inc.+ 232,600,000
4,000,000 The Walt Disney Co. 111,500,000
- ----------------------------------------------------------------------------------------------------------
344,100,000
- ----------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES -- 22.2%
850,000 American International Group Inc. 87,762,500
1,830 Berkshire Hathaway Inc.+ 104,859,000
1,150,000 Fannie Mae 76,618,750
2,500,000 Household International Inc. 98,906,250
1,750,000 Merrill Lynch & Co., Inc. 141,093,750
900,000 Morgan Stanley Dean Witter & Co. 108,562,500
3,025,000 Wells Fargo & Co. 140,662,500
- ----------------------------------------------------------------------------------------------------------
758,465,250
- ----------------------------------------------------------------------------------------------------------
HEALTH CARE -- 16.0%
2,360,000 Amgen Inc.+ 107,527,500
1,400,000 Eli Lilly and Co. 100,450,000
760,000 Johnson & Johnson 78,850,000
450,000 Merck & Co., Inc. 35,325,000
2,500,000 Pfizer Inc. 90,468,750
1,470,000 Warner-Lambert Co. 131,840,625
- ----------------------------------------------------------------------------------------------------------
544,461,875
- ----------------------------------------------------------------------------------------------------------
SEMI-CONDUCTORS -- 14.9%
2,380,000 Intel Corp. 182,516,250
2,140,000 Texas Instruments Inc. 205,573,750
1,350,000 Xilinx, Inc.+ 120,825,000
- ----------------------------------------------------------------------------------------------------------
508,915,000
- ----------------------------------------------------------------------------------------------------------
SOFTWARE/PC'S -- 3.8%
640,000 Microsoft Corp.+ 58,270,000
3,700,000 Novell Inc.+ 72,381,250
- ----------------------------------------------------------------------------------------------------------
130,651,250
- ----------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
6 1999 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 7.3%
660,000 Cisco Systems, Inc.+ $ 58,863,750
920,000 Lucent Technologies Inc. 67,217,500
1,066,000 Motorola Inc. 121,790,500
- ----------------------------------------------------------------------------------------------------------
247,871,750
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $2,471,205,237*) $3,409,714,188
- ----------------------------------------------------------------------------------------------------------
</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 NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost --
$2,471,205,237) $3,409,714,188
Receivable for Fund shares sold 16,132,490
Receivable for securities sold 10,969,562
Dividends and interest
receivable 4,297,600
- ---------------------------------------------------
TOTAL ASSETS 3,441,113,840
- ---------------------------------------------------
LIABILITIES:
Payable to bank 10,372,897
Payable for securities purchased 6,308,750
Management fees payable 2,217,076
Payable for Fund shares
purchased 1,501,605
Distribution fees payable 835,490
Accrued expenses 835,237
- ---------------------------------------------------
TOTAL LIABILITIES 22,071,055
- ---------------------------------------------------
TOTAL NET ASSETS $3,419,042,785
- ---------------------------------------------------
NET ASSETS:
Par value of shares of
beneficial interest $ 144,362
Capital paid in excess of par
value 2,474,653,357
Accumulated net realized gain
from security transactions 5,736,115
Net unrealized appreciation of
investments 938,508,951
- ---------------------------------------------------
TOTAL NET ASSETS $3,419,042,785
- ---------------------------------------------------
SHARES OUTSTANDING:
Class A 32,175,519
------------------------------------------------
Class B 72,591,730
------------------------------------------------
Class L 28,772,846
------------------------------------------------
Class Y 7,720,933
------------------------------------------------
Class Z 3,100,477
------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $23.94
------------------------------------------------
Class B * $23.56
------------------------------------------------
Class L ** $23.56
------------------------------------------------
Class Y (and redemption price) $24.14
------------------------------------------------
Class Z (and redemption price) $24.02
------------------------------------------------
MAXIMUM PUBLIC OFFERING PRICE PER
SHARE:
Class A (net asset value plus
5.26% of net asset value per
share) $25.20
------------------------------------------------
Class L (net asset value plus
1.01% of net asset value per
share) $23.80
- ---------------------------------------------------
</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
PURCHASE (SEE NOTE 2).
** REDEMPTION PRICE IS NAV OF CLASS L SHARES REDUCED BY A 1.00%
CDSC IF SHARES ARE REDEEMED WITHIN THE FIRST YEAR OF
PURCHASE.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
8 1999 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 21,965,053
Interest 333,361
- ------------------------------------------------------------------
TOTAL INVESTMENT INCOME 22,298,414
- ------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 18,933,051
Distribution fees (Note 2) 18,738,999
Shareholder and system servicing fees 2,521,749
Registration fees 497,267
Shareholder communications 184,237
Custody 95,248
Trustees' fees 76,813
Audit and legal 63,478
Other 51,618
- ------------------------------------------------------------------
TOTAL EXPENSES 41,162,460
- ------------------------------------------------------------------
NET INVESTMENT LOSS (18,864,046)
- ------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE
3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 214,942,591
Cost of securities sold 176,655,834
- ------------------------------------------------------------------
NET REALIZED GAIN 38,286,757
- ------------------------------------------------------------------
Change in Net Unrealized Appreciation of
Investments:
Beginning of year 251,549,848
End of year 938,508,951
- ------------------------------------------------------------------
INCREASE IN NET UNREALIZED APPRECIATION 686,959,103
- ------------------------------------------------------------------
NET GAIN ON INVESTMENTS 725,245,860
- ------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $706,381,814
- ------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 9
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------
OPERATIONS:
Net investment loss $ (18,864,046) $ (5,737,583)
Net realized gain 38,286,757 19,005,386
Increase in net unrealized appreciation 686,959,103 241,579,261
- ----------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS 706,381,814 254,847,064
- ----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (501,086)
Net realized gains (45,818,445) (347,287)
- ----------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (45,818,445) (848,373)
- ----------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 1,909,438,955 735,324,746
Net asset value of shares issued for
reinvestment of dividends 41,731,562 634,590
Cost of shares reacquired (475,115,261) (120,177,084)
- ----------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM FUND SHARE
TRANSACTIONS 1,476,055,256 615,782,252
- ----------------------------------------------------------------------------------
INCREASE IN NET ASSETS 2,136,618,625 869,780,943
NET ASSETS:
Beginning of year 1,282,424,160 412,643,217
- ----------------------------------------------------------------------------------
END OF YEAR $3,419,042,785 $1,282,424,160
- ----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
10 1999 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 six 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, Smith Barney S&P 500 Index
Fund, Smith Barney U.S. 5000 Index Fund and Smith Barney EAFE Index Fund. The
financial statements and financial highlights for the other funds are presented
in separate shareholder reports.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) securities 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,
1999, reclassifications were made to the Fund's capital accounts to reflect
permanent book/ tax differences and income and gains available for distributions
under income tax regulations. Accordingly, accumulated net investment loss
amounting to $18,864,046 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
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), which, in
turn, is a subsidiary of Citigroup Inc. ("Citigroup"), acts as invesment manager
to the Fund. The Fund pays SSBC 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.
Effective October 1999, Smith Barney Private Trust Company ("Private Trust"),
another subsidiary of Citigroup, became the Fund's transfer agent and PFPC
Global Fund Services ("PFPC")became the Fund's sub-transfer agent. Private Trust
receives account fees and asset-based fees that vary according to the account
size and type of account. PFPC is responsible for shareholder recordkeeping and
financial processing for all shareholder accounts and is paid by Private Trust.
During the period October 1, 1999 through November 30, 1999, the Fund paid
transfer agent fees of $461,198 to Private Trust.
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CFBDS, Inc. acts as the Fund's distributor. Salomon Smith Barney Inc. ("SSB"),
another subsidiary of SSBH, as well as certain other broker-dealers, continues
to sell Fund shares to the public as a member of the selling group.
SSB acts as the primary broker for its portfolio agency transactions. For the
year ended November 30, 1999, SSB received total brokerage commissions of
$81,775.
There is a contingent deferred sales charge ("CDSC") of 5.00% on Class B shares,
which applies if redemption occurs within one year from purchase and declines
thereafter by 1.00% per year until no CDSC is incurred. Class L shares also have
a 1.00% CDSC, which applies if redemption occurs within the first year of
purchase. In addition, Class A shares have a 1.00% CDSC, which applies if
redemption occurs within the first year of purchase. This CDSC only applies to
those purchases of Class A shares which, when combined with current holdings of
Class A shares, equal or exceed $500,000 in the aggregate. These purchases do
not incur an initial sales charge.
For the year ended November 30, 1999, CFBDS received sales charges of
approximately $5,565,000 and $3,693,000 on sales of the Fund's Class A and L
shares, respectively. In addition, CDSCs paid to CFBDS were approximately:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS L
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
CDSCs $6,000 $1,827,000 $201,000
- --------------------------------------------------------------------
</TABLE>
Pursuant to the Distribution Plan, the Fund pays a service fee with respect to
its Class A, B and L 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 L shares calculated at an annual rate of
0.75% of the average daily net assets of each class, respectively. For the year
ended November 30, 1999, total Distribution Plan fees incurred were:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS L
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Distribution Plan Fees $1,463,411 $12,650,700 $4,624,888
- --------------------------------------------------------------------------
</TABLE>
All officers and one Trustee of the Fund are employees of SSB.
3. INVESTMENTS
During the year ended November 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<S> <C> <C>
- -------------------------------------------
Purchases $1,629,776,481
- -------------------------------------------
Sales 214,942,591
- -------------------------------------------
</TABLE>
At November 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
<TABLE>
<S> <C> <C>
- ---------------------------------------------------
Gross unrealized appreciation $1,021,034,847
Gross unrealized depreciation (82,525,896)
- ---------------------------------------------------
Net unrealized appreciation $938,508,951
- ---------------------------------------------------
</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 November 30, 1999, 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.
- --------------------------------------------------------------------------------
12 1999 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
At November 30, 1999, total paid-in capital amounted to the following for each
class:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS L CLASS Y CLASS Z
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Total Paid-in Capital $538,522,189 $1,247,711,393 $528,423,450 $95,318,977 $64,821,710
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
CLASS A
Shares sold 23,731,239 $ 505,854,149 13,771,364 $209,717,045
Shares issued on reinvestment 431,103 9,948,950 21,312 266,404
Shares reacquired (10,631,459) (230,412,224) (4,189,188) (63,108,524)
- -------------------------------------------------------------------------------------------
Net Increase 13,530,883 $ 285,390,875 9,603,488 $146,874,925
- -------------------------------------------------------------------------------------------
CLASS B
Shares sold 42,889,477 $ 899,051,446 25,048,618 $379,750,655
Shares issued on reinvestment 976,603 22,200,016 24,425 304,576
Shares reacquired (8,143,078) (173,222,099) (2,852,373) (42,088,247)
- -------------------------------------------------------------------------------------------
Net Increase 35,723,002 $ 748,029,363 22,220,670 $337,966,984
- -------------------------------------------------------------------------------------------
CLASS L(1)
Shares sold 20,331,362 $ 427,811,707 8,853,448 $135,608,815
Shares issued on reinvestment 378,887 8,620,818 5,102 63,610
Shares reacquired (2,812,646) (60,235,428) (1,019,293) (14,978,593)
- -------------------------------------------------------------------------------------------
Net Increase 17,897,603 $ 376,197,097 7,839,257 $120,693,832
- -------------------------------------------------------------------------------------------
CLASS Y
Shares sold 404,218 $ 8,664,910 740,914 $ 10,248,231
Shares issued on reinvestment 1 23 -- --
Shares reacquired (319,814) (7,000,000) (136) (1,720)
- -------------------------------------------------------------------------------------------
Net Increase 84,405 $ 1,664,933 740,778 $ 10,246,511
- -------------------------------------------------------------------------------------------
CLASS Z(2)
Shares sold 3,251,720 $ 68,056,743 -- --
Shares issued on reinvestment 41,505 961,755 -- --
Shares reacquired (192,748) (4,245,510) -- --
- -------------------------------------------------------------------------------------------
Net Increase 3,100,477 $ 64,772,988 -- --
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) ON JUNE 12, 1998, CLASS C SHARES WERE RENAMED CLASS L
SHARES.
(2) FOR CLASS Z SHARES, TRANSACTIONS ARE FOR THE PERIOD FROM
JANUARY 4, 1999 (INCEPTION DATE) TO NOVEMBER 30, 1999.
</TABLE>
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 13
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR ENDED NOVEMBER 30:
<TABLE>
<CAPTION>
CLASS A SHARES 1999(1) 1998(1) 1997(2)
<S> <C> <C> <C>
- ---------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $17.41 $12.28 $11.88
- ---------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income (loss) (0.06) (0.04) 0.01
Net realized and unrealized gain 6.92 5.20 0.39
- ---------------------------------------------------------------------
Total Income From Operations 6.86 5.16 0.40
- ---------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income -- (0.02) --
Net realized gains (0.33) (0.01) --
- ---------------------------------------------------------------------
Total Distributions (0.33) (0.03) --
- ---------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $23.94 $17.41 $12.28
- ---------------------------------------------------------------------
TOTAL RETURN 39.50% 42.12% 3.37%++
- ---------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $770,392 $324,664 $111,063
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.15% 1.19% 1.15%+
Net investment income (loss) (0.27) (0.38) 0.38+
- ---------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 9% 14% 1%
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE MONTHLY
AVERAGE SHARES METHOD.
(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 1999 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR ENDED NOVEMBER 30:
<TABLE>
<CAPTION>
CLASS B SHARES 1999(1) 1998(1) 1997(2)
<S> <C> <C> <C>
- -----------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $17.26 $12.26 $11.88
- -----------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment loss (0.22) (0.17) (0.01)
Net realized and unrealized gain 6.85 5.19 0.39
- -----------------------------------------------------------------------
Total Income From Operations 6.63 5.02 0.38
- -----------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income -- (0.01) --
Net realized gains (0.33) (0.01) --
- -----------------------------------------------------------------------
Total Distributions (0.33) (0.02) --
- -----------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $23.56 $17.26 $12.26
- -----------------------------------------------------------------------
TOTAL RETURN 38.51% 41.02% 3.20%++
- -----------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $1,710,004 $636,464 $179,598
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.89% 1.95% 1.90%+
Net investment loss (1.01) (1.14) (0.37)+
- -----------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 9% 14% 1%
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE MONTHLY
AVERAGE SHARES METHOD.
(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>
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 15
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR ENDED NOVEMBER 30:
<TABLE>
<CAPTION>
CLASS L SHARES 1999(1) 1998(1)(2) 1997(3)
<S> <C> <C> <C>
- -----------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $17.26 $12.26 $11.88
- -----------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment loss (0.22) (0.17) (0.01)
Net realized and unrealized gain 6.85 5.19 0.39
- -----------------------------------------------------------------------
Total Income From Operations 6.63 5.02 0.38
- -----------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income -- (0.01) --
Net realized gains (0.33) (0.01) --
- -----------------------------------------------------------------------
Total Distributions (0.33) (0.02) --
- -----------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $23.56 $17.26 $12.26
- -----------------------------------------------------------------------
TOTAL RETURN 38.51% 41.02% 3.20%++
- -----------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $677,792 $187,741 $ 37,224
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.89% 1.96% 1.90%+
Net investment loss (1.01) (1.14) (0.38)+
- -----------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 9% 14% 1%
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE MONTHLY
AVERAGE SHARES METHOD.
(2) ON JUNE 12, 1998, CLASS C SHARES WERE RENAMED CLASS L
SHARES.
(3) 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>
- --------------------------------------------------------------------------------
16 1999 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR ENDED NOVEMBER 30:
<TABLE>
<CAPTION>
CLASS Y SHARES 1999(1) 1998(1) 1997(2)
<S> <C> <C> <C>
- --------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $17.49 $12.29 $12.66
- --------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income (loss) 0.02 (0.00)* 0.01
Net realized and unrealized gain
(loss) 6.96 5.23 (0.38)
- --------------------------------------------------------------------
Total Income (Loss) From Operations 6.98 5.23 (0.37)
- --------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income -- (0.02) --
Net realized gains (0.33) (0.01) --
- --------------------------------------------------------------------
Total Distributions (0.33) (0.03) --
- --------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $24.14 $17.49 $12.29
- --------------------------------------------------------------------
TOTAL RETURN 40.00% 42.61% (2.92)%++
- --------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $186,369 $133,556 $84,758
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.78% 0.83% 0.82%+
Net investment income (loss) 0.09 (0.02) 0.54+
- --------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 9% 14% 1%
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE MONTHLY
AVERAGE SHARES METHOD.
(2) FOR THE PERIOD FROM OCTOBER 15, 1997 (INCEPTION DATE) TO
NOVEMBER 30, 1997.
* AMOUNT REPRESENTS LESS THAN $0.01 PER SHARE.
++ 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 17
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT THE
PERIOD ENDED NOVEMBER 30:
<TABLE>
<CAPTION>
CLASS Z SHARES 1999(1)(2)
<S> <C>
- -----------------------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $19.48
- -----------------------------------------------
INCOME FROM OPERATIONS:
Net investment income 0.02
Net realized and unrealized gain 4.85
- -----------------------------------------------
Total Income From Operations 4.87
- -----------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income --
Net realized gains (0.33)
- -----------------------------------------------
Total Distributions (0.33)
- -----------------------------------------------
NET ASSET VALUE, END OF PERIOD $24.02
- -----------------------------------------------
TOTAL RETURN++ 25.08%
- -----------------------------------------------
NET ASSETS, END OF PERIOD (000S) $74,486
- -----------------------------------------------
RATIOS TO AVERAGE NET ASSETS+:
Expenses 0.78%
Net investment income 0.11
- -----------------------------------------------
PORTFOLIO TURNOVER RATE 9%
- -----------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD FROM JANUARY 4, 1999 (INCEPTION DATE) TO
NOVEMBER 30, 1999.
(2) PER SHARE AMOUNTS HAVE BEEN CALCULATED USING THE MONTHLY
AVERAGE SHARES METHOD.
++ TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE
REPRESENTATIVE OF THE TOTAL RETURN FOR THE YEAR.
+ ANNUALIZED.
</TABLE>
- --------------------------------------------------------------------------------
18 1999 ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
SMITH BARNEY INVESTMENT TRUST
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Smith Barney Large Capitalization Growth Fund of
the Smith Barney Investment Trust as of November 30, 1999, the related statement
of operations for the year then ended and statements of changes in net assets
and financial highlights for each of the years in the two-year period then ended
and for the period from August 29, 1997 (commencement of operations) to
November 30, 1997. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1999, by correspondence with the custodian. As to securities
purchased or sold but not yet received or delivered, we performed other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Smith
Barney Large Capitalization Growth Fund of Smith Barney Investment Trust as of
November 30, 1999, the results of its operations for the year then ended and the
changes in its net assets and financial highlights for each of the years in the
two-year period then ended and for the period from August 29, 1997 (commencement
of operations) to November 30, 1997, in conformity with generally accepted
accounting principles.
[SIGNATURE]
New York, New York
January 14, 2000
- --------------------------------------------------------------------------------
SMITH BARNEY LARGE CAPITALIZATION GROWTH FUND 19
<PAGE>
TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
November 30, 1999:
- A corporate dividends received deduction of 43.43%.
- Total long-term capital gain distributions paid of $32,498,175.
- --------------------------------------------------------------------------------
20 1999 ANNUAL REPORT TO SHAREHOLDERS
<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
Paul A. Brook
CONTROLLER
Christina T. Sydor
SECRETARY
INVESTMENT ADVISER AND ADMINISTRATOR
SSB Citi Fund Management LLC
DISTRIBUTOR
CFBDS, Inc.
CUSTODIAN
PNC Bank, N.A.
TRANSFER AGENT
Smith Barney Private Trust Company
388 Greenwich Street, 22nd Floor
New York, New York 10013
SUB-TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
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]
SALOMON SMITH BARNEY IS A SERVICE MARK OF SALOMON SMITH BARNEY, INC.
SMITH BARNEY
LARGE CAPITALIZATION
GROWTH FUND
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
WWW.SMITHBARNEY.COM/MUTUALFUNDS
FD01380 1/00
<PAGE>
<PAGE>
[GRAPHIC]
SMITH BARNEY
MID CAP BLEND
Fund
[GRAPHIC]
STYLE PURE SERIES
ANNUAL REPORT
NOVEMBER 30, 1999
[LOGO SMITH BARNEY MUTUAL FUNDS]
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Letter
- --------------------------------------------------------------------------------
[PHOTO] [PHOTO]
HEATH B. MCLENDON LAWRENCE WEISSMAN
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney Mid Cap Blend
Fund ("Fund") for the year ended November 30, 1999. We hope you find this report
useful and informative. 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. Any discussion of the Fund's holdings are as of November
30, 1999. Please refer to pages 7 through 10 for a list of Portfolio's holdings.
Performance Update
For the year ended November 30, 1999, the Fund returned 34.36%, 33.43% and
33.35% for its Class A, B and L shares, respectively, without sales charges. In
comparison, the Standard & Poor's Midcap 400 Index ("S&P Midcap 400") posted a
total return of 21.37% during the same time period. (The S&P Midcap 400 is an
unmanaged index consisting of 400 domestic stocks chosen for market size,
liquidity and industry group representation.) Additional Fund performance
information can be found beginning on page four.
Since its inception on September 1, 1998, the Fund's Class A, B and L shares
generated cumulative total returns of 60.65%, 59.18% and 59.09%, respectively,
excluding sales charges. For the same time period, the S&P Midcap 400 had a
cumulative total return of 51.78%.
Mid-Cap Market Update
During the year, we remained committed to our investment style and continued to
focus on maintaining a quality-oriented portfolio that we believe should provide
higher returns with potentially lower risk over time. We think our positive
performance during the period was due both to our solid stock selection and our
disciplined and conservative investment management style. (Of course, past
performance is not indicative of future results.)
Recently, the middle-capitalization market began to perform better versus the
broader market as measured by the Standard & Poor's 500 Index. ("S&P 500") (The
S&P 500 is an unmanaged capitalization-weighted measure of 500 widely held
common stocks.) Additionally, the Fund has benefited from its holdings in
quality companies that have recently begun to receive greater recognition from
investors. We continue to believe that mid-cap companies with leadership
positions in fast-growing market niches with competitive advantages should
continue to perform well over the near term.
Investment Strategy and Portfolio Update
As its name implies, the Mid Cap Blend Fund blends growth and value investment
styles in an effort to provide our shareholders with consistent returns. (Growth
investing typically focuses on the stocks of companies with rapidly rising
earnings and profitability with the expectation of above-average long-term
growth. Value investing attempts to identify companies that are perhaps growing
more slowly but whose valuation may be below average relative to earnings and or
assets.)
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 1
<PAGE>
As mentioned earlier, we define mid-cap companies as companies with market
capitalizations in the range of approximately $165 million to $37 billion, the
range represented by the S&P Midcap 400. Presently, the companies held in the
Fund have an average market capitalization of approximately $6 billion. Our
investment style is one that focuses on companies that are in the middle of
their growth phase. That is, we seek to purchase companies once they have
reached a certain level of success and stability and before they are widely
recognized by investors as high-quality, ultimately blue-chip companies.
To accomplish our mandate, we pursue an investment approach that focuses on
companies with competitive advantages and excellent market positions. In our
view, many of these companies are leaders in their respective fields and are
poised to leverage and exploit current growth opportunities. In the companies
under consideration, we look for consistency of growth, good management,
positive cash flow and a high return on equity ("ROE") as factors in determining
where to invest.
We believe that mid-cap stocks still represent one of the best investment
opportunities today. In our opinion, shareholders are getting the best of both
worlds -- potentially less relative risk than small-cap stocks and potentially
more relative value than large-cap stocks. Bear in mind that mid-cap stocks may
involve more risk than large-cap stocks. Moreover, by investing in the Fund, you
are participating in companies that fall slightly below the radar screen of the
investment community yet still have established track records. Our objective is
to find companies that have yet to be discovered by Wall Street.
In addition, we look to form a relationship with the management of those
companies we are considering adding to the portfolio. We find that the more
thorough research we conduct on a particular company, the better chance we have
of finding quality companies with undervalued stock prices.
We plan to be long-term owners of the majority of the companies we buy. In our
view, if we are buying quality companies that continue to grow, there is really
no need to sell. We generally have only three reasons for selling a stock. The
first is a change in the fundamentals. It is possible that the company's niche
is not as protected as it once was, or they are heading in a different direction
and diluting the value of their franchise. A second reason is that a stock, in
our opinion, is grossly overvalued. We will either sell or reduce positions that
begin to reach extraordinary valuations. Our final reason for selling a stock is
that we simply have found another company that we deem represents better value
for the Fund's portfolio.
As of November 30, 1999, the Fund's portfolio is comprised of 86 stocks
representing approximately 83% of net assets.1 Roughly 12% was invested in
mid-cap index futures and 5% in cash equivalents. We expect to see the
percentage of the Fund's assets held in stock index futures to be reduced over
time as we attempt to take advantage of short-term price swings by purchasing
our favored stocks at opportune times. We expect, over time, that the number of
holdings in the Fund's portfolio to remain at or about its current level.
The median market capitalization of stocks held by the Fund is approximately $4
billion with the top ten names representing about 19% of net assets. The average
P/E for the portfolio is approximately equal to that of the S&P 500. (A P/E
shows the relationship between a stock's price and the company's earnings for
the last four quarters.) As for sector weightings versus the Index, we are
overweighted in consumer durables, electronic technology, finance and technology
services and underweighted in process industries and utilities, because these
two sectors do not meet our requirements for growth.
- -------------
1 Please note that portfolio holdings are subject to change.
2 1999 Annual Report to Shareholders
<PAGE>
Some examples of the types of companies investors can expect to see in the
portfolio are:
. Sepracor, is a specialty pharmaceutical company uniquely positioned to
enhance both the clinical benefit and patent life of many drugs. The company
has received a license to market improved forms of best-selling products to
the parent drug's innovator and to self-market products that can be promoted
with Sepracor's specialized sales force.
. Electronic Arts, a leader in the interactive entertainment industry,
distributes its products in 75 countries, owns studios and has several
strategic alliances with partners in North America, Europe and Asia. In our
view, interactive entertainment content will prove to be increasingly more
valuable as the use and popularity of the Internet grows.
. FactSet Research Systems Inc., is a leading provider of online-integrated
database services to the financial community. The company's software combines
over 100 financial databases into a single, user-friendly format. Presently,
there is no other data provider that can boast the breadth, depth and quality
of data that is provided by FactSet. The company also boasts a high customer
and employee retention rate, high revenue visibility and significant
international market opportunities.
. VERITAS Software, new to our top-ten list, is a leading supplier of storage
management software. The company offers high-caliber storage management
software products integrated with an operating system optimized for numerous
business applications.
. Outdoor Systems, Inc., the number one outdoor advertising company, was
eliminated during the period. The company was recently acquired by Infinity
Broadcasting, a company with a market capitalization of $30 billion and
therefore no longer fits our investment criteria.
In closing, while no guarantees can be made, we are confident that our
investments in the mid-cap arena have solid potential for future growth. Thank
you for investing in the Smith Barney Mid Cap Blend Fund. We look forward to
continuing to help you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Lawrence Weissman
Heath B. McLendon Lawrence Weissman, CFA
Chairman Vice President and
Investment Officer
December 16, 1999
- --------------------------------------------------------------------------------
Top Ten Holdings* As of November 30, 1999
- --------------------------------------------------------------------------------
1. Electronic Arts Inc. 2.9%
- --------------------------------------------------------------------------------
2. Sepracor Inc. 2.8
- --------------------------------------------------------------------------------
3. VERITAS Software Corp. 2.8
- --------------------------------------------------------------------------------
4. Annuity and Life Re Holdings, Ltd. 2.7
- --------------------------------------------------------------------------------
5. FactSet Research Systems Inc. 2.5
- --------------------------------------------------------------------------------
6. Imax Corp. 2.4
- --------------------------------------------------------------------------------
7. AES Corp. 2.3
- --------------------------------------------------------------------------------
8. Ambac Financial Group, Inc. 2.3
- --------------------------------------------------------------------------------
9. Harley-Davidson, Inc. 2.2
- --------------------------------------------------------------------------------
10. Valassis Communications, Inc. 2.1
- --------------------------------------------------------------------------------
* As a percentage of total common stock.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 3
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
-------------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/30/99 $13.63 $17.74 $0.01 $0.55 34.36%
- -----------------------------------------------------------------------------------------------------------------------------------
Inception* -- 11/30/98 11.40 13.63 0.00 0.00 19.56+
- -----------------------------------------------------------------------------------------------------------------------------------
Total $0.01 $0.55
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
-------------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/30/99 $13.60 $17.58 $0.00 $0.55 33.43%
- -----------------------------------------------------------------------------------------------------------------------------------
Inception* -- 11/30/98 11.40 13.60 0.00 0.00 19.30+
- -----------------------------------------------------------------------------------------------------------------------------------
Total $0.00 $0.55
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
-------------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/30/99 $13.60 $17.57 $0.00 $0.55 33.35%
- -----------------------------------------------------------------------------------------------------------------------------------
Inception* -- 11/30/98 11.40 13.60 0.00 0.00 19.30+
- -----------------------------------------------------------------------------------------------------------------------------------
Total $0.00 $0.55
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
-------------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return(1)+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception* -- 11/30/99 $13.65 $17.78 $0.01 $0.55 34.49%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns
- -----------------------------------------------------------------------------------------------------------------------------------
Without Sales Charges(1)
----------------------------------------------------------------
Class A Class B Class L Class Y
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended 11/30/99 34.36% 33.43% 33.35% N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Inception* through 11/30/99 46.27 45.19 45.13 34.49%+
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
With Sales Charges(2)
----------------------------------------------------------------
Class A Class B Class L Class Y
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended 11/30/99 27.62% 28.43% 30.99% N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Inception* through 11/30/99 40.37 42.26 43.91 34.49%+
</TABLE>
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
- --------------------------------------------------------------------------------
Class A (Inception* through 11/30/99) 60.65%
- --------------------------------------------------------------------------------
Class B (Inception* through 11/30/99) 59.18
- --------------------------------------------------------------------------------
Class L (Inception* through 11/30/99) 59.09
- --------------------------------------------------------------------------------
Class Y (Inception* through 11/30/99) 34.49
- --------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of the applicable
sales charges with respect to Class A and L shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 5.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 5.00% CDSC, which
applies if shares are redeemed within one year from purchase. Thereafter,
the CDSC declines by 1.00% per year until no CDSC is incurred. Class L
shares also reflect the deduction of a 1.00% CDSC which applies if shares
are redeemed within the first year of purchase.
* Inception date for Class A, B and L shares is September 1, 1998 and for
Class Y shares is December 3, 1998.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 5
<PAGE>
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A, B and L Shares of the Smith Barney Mid
Cap Blend Fund vs. S&P Midcap 400 Index+
- --------------------------------------------------------------------------------
September 1998--November 1999
[GRAPH]
Smith Barney Smith Barney Smith Barney
Mid Cap Blend Mid Cap Blend Mid Cap Blend S&P Midcap
Date Fund -- Class A Fund -- Class B Fund -- Class L 400 Index
9/1/98 $ 9,500 $10,000 $ 9,797 $10,000
11/30/98 $11,358 $11,430 $11,706 $12,505
2/28/99 $12,872 $13,009 $13,259 $12,764
5/31/99 $13,689 $13,833 $14,084 $14,218
8/31/99 $13,819 $13,944 $14,194 $14,158
11/30/99 $15,261 $15,518 $15,743 $15,178
+ The above chart represents a hypothetical illustration of $10,000 invested
in Class A, B and L shares at inception on September 1, 1998, assuming
deduction of the maximum 5.00% and 1.00% sales charge at the time of
investment for Class A and L shares, respectively, the deduction of the
maximum 5.00% CDSC for Class B shares and the deduction of the 1.00% CDSC
for Class L shares and reinvestment of dividends and capital gains, if any,
through November 30, 1999. The Standard & Poor's Midcap 400 Index ("S&P
Midcap 400") is a market-value weighted index, consisting of 400 domestic
stocks chosen for market size liquidating and industry group
representation. This index is unmanaged and is not subject to the same
management and trading expenses of a mutual fund. An investor may not
invest directly in an index. The performance of the Fund's other class may
be greater or less than the Class A, B and L shares' performance indicated
on this chart, depending on whether greater or lesser sales charges and
fees were incurred by shareholders investing in the other class.
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*
- --------------------------------------------------------------------------------
[GRAPH]
Broadcast Media 6.7%
Communications - Equipment 3.3%
Computer Software 13.4%
Electronics - Instruments 6.7%
Electronics - Semiconductors 5.9%
Health Care - Drugs 4.6%
Insurance - Life 3.2%
Investment Bankers - Brokers 3.4%
Medical Products & Services 3.1%
Services - Computer Systems 3.7%
Other 46.0%
* As a percentage of total common stock.
Investment Breakdown**
- --------------------------------------------------------------------------------
[GRAPH]
Repurchase Agreement 15.1%
Common Stock 84.9%
** As a percentage of total investments.
- --------------------------------------------------------------------------------
6 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
COMMON STOCK -- 84.9%
Airlines -- 0.8%
299,400 Southwest Airlines Co. $ 4,883,962
- --------------------------------------------------------------------------------
Automotive Aftermarket -- 1.9%
198,900 Harley-Davidson, Inc. 12,132,900
- --------------------------------------------------------------------------------
Banking -- 1.7%
74,670 Commerce Bancorp, Inc. 3,210,810
164,300 First Tennessee National Corp. 5,401,362
115,800 North Fork Bancorporation, Inc. 2,330,475
- --------------------------------------------------------------------------------
10,942,647
- --------------------------------------------------------------------------------
Broadcast Media -- 5.7%
104,900 Cablevision Systems Corp., Class A Shares (a) 7,192,206
186,400 Entercom Communications Corp. (a) 10,659,750
485,000 Imax Corp. (a) 13,178,359
168,540 Spanish Broadcasting System, Inc. (a) 5,351,145
13,000 World Wrestling Federation Entertainment, Inc. (a) 261,625
- --------------------------------------------------------------------------------
36,643,085
- --------------------------------------------------------------------------------
Building & Construction -- 1.1%
180,600 Vulcan Materials Co. 7,269,150
- --------------------------------------------------------------------------------
Communications - Equipment -- 2.8%
120,000 ADC Telecommunications, Inc. (a) 6,397,500
1,165 Sycamore Networks, Inc. (a) 258,630
292,500 Valassis Communications, Inc. (a) 11,517,187
- --------------------------------------------------------------------------------
18,173,317
- --------------------------------------------------------------------------------
Computer Hardware -- 1.7%
128,900 Lexmark International Group, Inc., Class A Shares (a) 10,698,700
- --------------------------------------------------------------------------------
Computer Software -- 11.4%
26,800 Advent Software, Inc. (a) 1,500,800
105,600 Citrix Systems, Inc. (a) 10,018,800
63,050 Covad Communications Group, Inc. (a) 3,274,659
149,300 Electronic Arts Inc. (a) 15,657,837
279,550 Fiserv, Inc. (a) 9,924,025
112,100 Mercury Interactive Corp. (a) 9,318,312
120,000 Siebel Systems, Inc. 8,415,000
165,750 VERITAS Software Corp. (a) 15,176,484
- --------------------------------------------------------------------------------
73,285,917
- --------------------------------------------------------------------------------
Consumer Sundries -- 0.5%
106,400 Dial Corp. 2,985,850
- --------------------------------------------------------------------------------
Electronics - Instruments -- 5.7%
219,400 AES Corp. (a) 12,711,487
11,577 Agilent Technologies, Inc. 488,405
116,800 Applied Micro Circuits Corp. (a) 9,709,000
189,100 Molex, Inc., Class A Shares 7,694,006
145,300 Teradyne, Inc. (a) 6,329,630
- --------------------------------------------------------------------------------
36,932,528
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Electronics - Semiconductors -- 5.0%
127,900 Linear Technology Corp. $ 9,088,894
109,000 Maxim Integrated Products, Inc. (a) 8,754,062
118,200 The Montana Power Co. 3,649,425
121,400 Xilinx, Inc. (a) 10,865,300
- --------------------------------------------------------------------------------
32,357,681
- --------------------------------------------------------------------------------
Entertainment -- 1.3%
342,300 Premier Parks Inc. (a) 8,557,500
- --------------------------------------------------------------------------------
Financial -- 2.0%
230,100 Ambac Financial Group, Inc. 12,540,450
- --------------------------------------------------------------------------------
Foods -- 2.3%
306,000 Keebler Foods Co. (a) 8,434,125
358,500 Pepsi Bottling Group, Inc. 6,273,750
- --------------------------------------------------------------------------------
14,707,875
- --------------------------------------------------------------------------------
Health Care - Drugs -- 3.9%
100,200 Affymetrix, Inc. (a) 9,819,600
156,700 Sepracor Inc. (b) 15,219,488
- --------------------------------------------------------------------------------
25,039,088
- --------------------------------------------------------------------------------
Household Furniture & Apparel -- 0.8%
166,000 Bed Bath & Beyond Inc. (a) 5,187,500
- --------------------------------------------------------------------------------
Insurance - Life -- 2.8%
518,435 Annuity and Life Re Holdings, Ltd. 14,775,397
80,943 Nationwide Financial Services, Inc., Class A Shares 2,908,889
- --------------------------------------------------------------------------------
17,684,286
- --------------------------------------------------------------------------------
Insurance - Property -- 0.7%
93,420 XL Capital, Ltd., Class A Shares 4,764,420
- --------------------------------------------------------------------------------
Internet Services -- 1.6%
2,000 Akamai Technologies, Inc. (a) 474,000
250 Foundry Networks, Inc. (a) 58,781
5,000 Juniper Networks, Inc. (a) 1,385,625
22,300 NBC Internet, Inc., Class A Shares 1,694,800
33,600 Project Software & Development, Inc. (a) 2,998,800
7,500 Silknet Software, Inc. (a) 661,875
37,400 VerticalNet, Inc. (a) 3,277,175
- --------------------------------------------------------------------------------
10,551,056
- --------------------------------------------------------------------------------
Investment Bankers - Brokers -- 2.9%
187,200 Capital One Financial Corp. 8,716,500
54,000 E*Trade Group, Inc. (a) 1,623,375
107,650 Providian Financial Corp. 8,517,806
- --------------------------------------------------------------------------------
18,857,681
- --------------------------------------------------------------------------------
Manufacturing -- 1.9%
117,500 Danaher Corp. 5,772,188
132,600 Waters Corp. (a) 6,497,400
- --------------------------------------------------------------------------------
12,269,588
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Medical Products & Services -- 2.6%
85,800 Genentech, Inc. (a) $ 7,368,075
47,300 MedImmune, Inc. 5,684,869
63,900 Wellpoint Health Networks, Inc. (a) 3,678,244
- --------------------------------------------------------------------------------
16,731,188
- --------------------------------------------------------------------------------
Metals & Mining -- 1.7%
298,200 Mueller Industries, Inc. (a) 10,735,200
- --------------------------------------------------------------------------------
Oil - Domestic -- 0.9%
143,700 Anadarko Petroleum Corp. 4,328,963
96,400 EOG Resources, Inc. (a) 1,783,400
- --------------------------------------------------------------------------------
6,112,363
- --------------------------------------------------------------------------------
Oil & Gas Drilling & Equipment -- 1.8%
175,100 Diamond Offshore Drilling, Inc. 5,340,550
234,800 Newfield Exploration Co. (a) 6,060,775
- --------------------------------------------------------------------------------
11,401,325
- --------------------------------------------------------------------------------
Oil Well Equipment & Service -- 1.3%
104,000 BJ Services Co. (a) 3,627,000
104,900 Cooper Cameron Corp. (a) 4,497,588
- --------------------------------------------------------------------------------
8,124,588
- --------------------------------------------------------------------------------
Pharmaceuticals -- 0.8%
200,700 Elan Corp. PLC, Sponsored ADR (a) 5,494,163
- --------------------------------------------------------------------------------
Real Estate Investment Trusts -- 0.8%
446,500 IndyMac Mortgage Holdings, Inc. 4,939,406
- --------------------------------------------------------------------------------
Retail - Apparel -- 1.2%
98,600 Abercrombie & Fitch Co., Class A Shares (a) 3,192,175
182,200 Children's Place, Inc. (a) 4,498,063
- --------------------------------------------------------------------------------
7,690,238
- --------------------------------------------------------------------------------
Retail - Drug Stores -- 0.5%
146,500 Duane Reade Inc. (a) 3,241,313
- --------------------------------------------------------------------------------
Retail - Specialty -- 1.3%
121,100 Best Buy Co., Inc. (a) 7,568,750
14,600 eToys, Inc. (a) 914,325
- --------------------------------------------------------------------------------
8,483,075
- --------------------------------------------------------------------------------
Savings & Loan -- 1.0%
240,100 Countrywide Credit Industries, Inc. (b) 6,752,813
- --------------------------------------------------------------------------------
Services - Advertising & Marketing -- 0.2%
6,800 eBay Inc. (a) 1,122,425
- --------------------------------------------------------------------------------
Services - Commercial & Construction -- 2.0%
131,100 Ecolab, Inc. 4,539,338
114,000 SPX Corp. (a) 8,493,000
- --------------------------------------------------------------------------------
13,032,338
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
Services - Computer Systems -- 3.1%
217,750 FactSet Research Systems Inc. $ 13,500,500
131,700 Intuit, Inc. (a) 6,585,000
- --------------------------------------------------------------------------------
20,085,500
- --------------------------------------------------------------------------------
Specialized Services -- 1.4%
127,000 Bowater, Inc. 6,223,000
17,200 CMGI Inc. (a) 2,530,550
- --------------------------------------------------------------------------------
8,753,550
- --------------------------------------------------------------------------------
Telecommunications - Long Distance -- 2.4%
48,800 Colt Telecom Group PLC, Sponsored ADR (a) 7,277,300
131,200 L-3 Communications Holdings, Inc. (a) 5,412,000
101,000 Time Warner Telecom Inc. (a) 2,935,313
- --------------------------------------------------------------------------------
15,624,613
- --------------------------------------------------------------------------------
Telephone -- 1.8%
247,100 Century Telephone Enterprises, Inc. 11,366,600
- --------------------------------------------------------------------------------
Transportation - Railroad -- 0.8%
89,400 Kansas City Southern Industries, Inc. 5,324,888
- --------------------------------------------------------------------------------
Trucking -- 0.8%
401,100 Knightsbridge Tankers Ltd. 5,339,644
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $436,549,619) 546,820,411
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
REPURCHASE AGREEMENT -- 15.1%
$97,258,000 Goldman, Sachs & Co., 5.630% due 12/1/99; Proceeds at
maturity -- $97,273,210; (Fully collateralized by U.S.
Treasury Notes & Bonds, 5.250% to 11.875% due 11/30/00
to 11/15/28; Market value -- $99,203,375) (Cost --
$97,258,000) 97,258,000
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $553,807,619*) $644,078,411
================================================================================
(a) Non-income producing security.
(b) A portion of this security has been segregated by the custodian for futures
contract commitments.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities November 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $436,549,619) $546,820,411
Repurchase agreement, at value (Cost -- $97,258,000) 97,258,000
Cash 1,029
Receivable for securities sold 11,203,110
Receivable for Fund shares sold 2,811,087
Dividends and interest receivable 404,514
- --------------------------------------------------------------------------------
Total Assets 658,498,151
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for Fund shares purchased 1,891,692
Management fees payable 421,391
Payable to broker - variation margin 158,100
Distribution fees payable 146,148
Payable for securities purchased 98,100
Accrued expenses 185,573
- --------------------------------------------------------------------------------
Total Liabilities 2,901,004
- --------------------------------------------------------------------------------
Total Net Assets $655,597,147
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 37,159
Capital paid in excess of par value 539,933,163
Accumulated net realized gain on security transactions and
futures contracts 1,149,282
Net unrealized appreciation of investments and futures contracts 114,477,543
- --------------------------------------------------------------------------------
Total Net Assets $655,597,147
================================================================================
Shares Outstanding:
Class A 7,358,817
- --------------------------------------------------------------------------------
Class B 13,958,236
- --------------------------------------------------------------------------------
Class L 9,540,353
- --------------------------------------------------------------------------------
Class Y 6,301,962
- --------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $17.74
- --------------------------------------------------------------------------------
Class B * $17.58
- --------------------------------------------------------------------------------
Class L ** $17.57
- --------------------------------------------------------------------------------
Class Y (and redemption price) $17.78
- --------------------------------------------------------------------------------
Maximum Public Offering
Price Per Share:
Class A (net asset value plus 5.26% of net asset value per share) $18.67
- --------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $17.75
================================================================================
* Redemption price is NAV of Class B shares reduced by a 5.00% CDSC if shares
are redeemed within one year from purchase (See Note 2).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within one year from initial purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended November 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 4,065,044
Dividends 2,357,170
- --------------------------------------------------------------------------------
Total Investment Income 6,422,214
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 3,544,958
Distribution fees (Note 2) 3,057,281
Shareholder and system servicing fees 312,234
Registration fees 200,065
Shareholder communications 69,400
Audit and legal 36,155
Custody 29,670
Trustees' fees 21,600
Other 2,000
- --------------------------------------------------------------------------------
Total Expenses 7,273,363
- --------------------------------------------------------------------------------
Net Investment Loss (851,149)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 3 AND 6):
Realized Gain From:
Security transactions (excluding short-term securities) 17,323,814
Futures contracts 6,401,125
- --------------------------------------------------------------------------------
Net Realized Gain 23,724,939
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments and Futures
Contracts:
Beginning of year 21,726,448
End of year 114,477,543
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 92,751,095
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 116,476,034
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $115,624,885
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended November 30,
- --------------------------------------------------------------------------------
1999 1998(a)
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (851,149) $ 58,310
Net realized gain (loss) 23,724,939 (1,832,594)
Increase in net unrealized appreciation 92,751,095 21,726,448
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 115,624,885 19,952,164
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (75,601) --
Net realized gain (19,891,914) --
- --------------------------------------------------------------------------------
Decrease in Net Assets From Distributions to
Shareholders (19,967,515) --
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 660,011,233 134,103,020
Net asset value of shares issued for reinvestment
of dividends 15,814,511 --
Cost of shares reacquired (266,843,767) (3,097,384)
- --------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 408,981,977 131,005,636
- --------------------------------------------------------------------------------
Increase in Net Assets 504,639,347 150,957,800
NET ASSETS:
Beginning of year 150,957,800 --
- --------------------------------------------------------------------------------
End of year* $ 655,597,147 $150,957,800
- --------------------------------------------------------------------------------
* Includes undistributed net investment income of: -- $ 75,601
- --------------------------------------------------------------------------------
(a) For the period from September 1, 1998 (commencement of operations) to
November 30, 1998.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 13
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Smith Barney Mid Cap Blend 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 six other separate investment funds: Smith Barney Intermediate Maturity
California Municipals Fund, Smith Barney Intermediate Maturity New York
Municipals Fund, Smith Barney Large Capitalization Growth Fund, Smith Barney S&P
500 Index Fund, Smith Barney U.S. 5000 Index Fund and Smith Barney EAFE Index
Fund. The financial statements and financial highlights for the other funds are
presented in separate shareholder reports.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities traded on
national securities markets are valued at the closing prices on such markets;
securities for which no sales price was reported and U.S. government and agency
obligations are valued at the bid price. Investments in securities for which
market quotations are not available are valued at fair value as determined in
good faith by the Board of Directors; (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 and
interest income is recorded on an accrual basis; (e) gains or losses on the sale
of securities are calculated by using the specific identification method; (f)
direct expenses are charged to 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; (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, 1999, reclassifications were made to the Fund's capital accounts to
reflect permanent book/tax differences and income and gains available for
distributions under income tax regulations. Net investment income, net realized
gains and net assets were not affected by this adjustment; 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 Management Agreement and Other Transactions
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH") which, in
turn, is a subsidiary of Citigroup Inc. ("Citigroup"), acts as investment
manager to the Fund. The Fund pays SSBC 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.
Effective October 1999, Smith Barney Private Trust Company ("Private Trust"),
another subsidiary of Citigroup, became the Fund's transfer agent and PFPC
Global Fund Services ("PFPC") became the Fund's sub-transfer agent. Private
Trust receives account fees and asset-based fees that vary according to the
account size and type of account. PFPC is responsible for shareholder
recordkeeping and financial processing for all shareholder accounts and is paid
by Private Trust. During the period October 1, 1999 through November 30, 1999,
the Fund paid transfer agent fees of $84,330 to Smith Barney Private Trust
Company.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
CFBDS, Inc. acts as the Fund's distributor. Salomon Smith Barney Inc. ("SSB"),
another subsidiary of SSBH, as well as certain other broker-dealers, continues
to sell Fund shares to the public as members of the selling group.
There is a contingent deferred sales charge ("CDSC") of 5.00% on Class B shares,
which applies if redemption occurs within one year from purchase. This CDSC
declines by 1.00% per year until no CDSC is incurred. Class L shares also have a
1.00% CDSC, which applies if redemption occurs within the first year of
purchase. In certain cases, Class A shares have a 1.00% CDSC, which applies if
redemption occurs within the first year of purchase. This CDSC only applies to
those purchases of Class A shares, which, when combined with current holdings of
Class A shares, equal or exceed $500,000 in the aggregate. These purchases do
not incur an initial sales charge.
For the year ended November 30, 1999, SSB received sales charges of
approximately $1,421,000 and $919,000 on sales of the Fund's Class A and Class L
shares, respectively. In addition, CDSCs paid to SSB were approximately:
Class A Class B Class L
- --------------------------------------------------------------------------------
CDSCs $6,000 $318,000 $44,000
- --------------------------------------------------------------------------------
Pursuant to a Distribution Plan the Fund pays a service fee with respect to its
Class A, B and L shares calculated at the annual rate of 0.25% of the average
daily net assets of each respective class. The Fund also pays a distribution fee
with respect to Class B and L shares calculated at the annual rate of 0.75% of
the average daily net assets of each class, respectively. For the year ended
November 30, 1999, total Distribution Plan fees were as follows:
Class A Class B Class L
- --------------------------------------------------------------------------------
Distribution Plan Fees $231,993 $1,695,042 $1,130,246
- --------------------------------------------------------------------------------
All officers and one Director of the Fund are employees of SSB.
3. Investments
During the year ended November 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term securities) were as follows:
- --------------------------------------------------------------------------------
Purchases $552,176,263
- --------------------------------------------------------------------------------
Sales 236,133,585
- --------------------------------------------------------------------------------
At November 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
- --------------------------------------------------------------------------------
Gross unrealized appreciation $134,763,935
Gross unrealized depreciation (24,493,143)
- --------------------------------------------------------------------------------
Net unrealized appreciation $110,270,792
- --------------------------------------------------------------------------------
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. Lending of Portfolio Securities
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations. Fees earned by the Fund on securities lending are recorded as
interest income. Loans of securities by the Fund are collateralized by cash,
U.S. government securities or high quality money market instruments that are
maintained at all times in an amount at least equal to the current market value
of the loaned securities, plus a margin which may vary depending on the type of
securities loaned. The custodian establishes and maintains the collateral in a
segregated account. The Fund maintains exposure for the risk of any losses in
the investment of amounts received as collateral.
At November 30, 1999, the Fund had no securities on loan.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are made or received and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the 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) and the credit risk should a counterparty
fail to perform under such contracts.
At November 30, 1999, the Fund had the following open futures contracts:
<TABLE>
<CAPTION>
# of Basis Market Unrealized
Purchased Contracts Contracts Expiration Value Value Gain
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Midcap 400 Index 372 12/99 $73,866,749 $78,073,500 $4,206,751
- ---------------------------------------------------------------------------------------
</TABLE>
7. Options Contracts
Premiums paid when put or call options are purchased by the Fund represents
investments, which are marked-to-market daily and are included in the schedule
of investments. When a purchased option expires, the Fund will realize a loss in
the amount of the premium paid. When the Fund enters into a closing sales
transaction, the Fund will realize a gain or loss depending on whether the
proceeds from the closing sales transaction are greater or less than the premium
paid for the option. When the Fund exercises a put option, it will realize a
gain or loss from the sale of the underlying security and the proceeds from such
sale will be decreased by the premium originally paid. When the Fund exercises a
call option, the cost of the security which the Fund purchases upon exercise
will be increased by the premium originally paid.
At November 30, 1999, the Fund had no open purchased call or put option
contracts.
When the Fund writes a covered call or put option, an amount equal to the
premium received by the Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Fund realizes a gain.
When the Fund enters into a closing purchase transaction, the Fund realizes a
gain or loss depending upon whether the cost of the closing transaction is
greater or less than the premium originally received without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is eliminated. When a written call option is exercised, the cost of
the security sold will be decreased by the premium originally received. When a
put option is exercised, the amount of the premium originally received will
reduce the cost of the security which the Fund purchased upon exercise. When
written index options are exercised, settlement is made in cash.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
The risk associated with purchasing options is limited to the premium originally
paid. The Fund enters into options for hedging purposes. The risk in writing a
covered call option is that the Fund gives up the opportunity to participate in
any increase in the price of the underlying security beyond the exercise price.
The risk in writing a put option is that the Fund is exposed to the risk of a
loss if the market price of the underlying security declines.
During the year ended November 30, 1999, the Fund did not write any options.
8. Shares of Beneficial Interest
At November 30, 1999, 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
expenses, including those specifically related to the distribution of its
shares.
At November 30, 1999, total paid-in capital amounted to the following for each
class:
Class A Class B Class L Class Y
- --------------------------------------------------------------------------------
Total Paid-in Capital $107,282,585 $204,037,679 $140,167,201 $ 88,482,857
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended
November 30, 1999* November 30, 1998**
-------------------------- --------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold 18,175,913 $301,643,398 2,860,539 $ 33,790,943
Shares issued on reinvestment 228,627 3,975,514 -- --
Shares reacquired (13,743,206) (230,130,201) (163,056) (1,992,806)
- --------------------------------------------------------------------------------------------------
Net Increase 4,661,334 $ 75,488,711 2,697,483 $ 31,798,137
- --------------------------------------------------------------------------------------------------
Class B
Shares sold 9,971,095 $161,741,585 5,137,470 $ 60,746,323
Shares issued on reinvestment 408,337 7,040,982 -- --
Shares reacquired (1,505,278) (24,849,310) (53,388) (634,079)
- --------------------------------------------------------------------------------------------------
Net Increase 8,874,154 $143,933,257 5,084,082 $ 60,112,244
- --------------------------------------------------------------------------------------------------
Class L
Shares sold 6,669,388 $108,143,611 3,350,388 $ 39,565,754
Shares issued on reinvestment 278,238 4,797,797 -- --
Shares reacquired (718,967) (11,864,256) (38,694) (470,499)
- --------------------------------------------------------------------------------------------------
Net Increase 6,228,659 $101,077,152 3,311,694 $ 39,095,255
- --------------------------------------------------------------------------------------------------
Class Y
Shares sold 6,301,950 $ 88,482,639 -- --
Shares issued on reinvestment 12 218 -- --
Shares reacquired -- -- -- --
- --------------------------------------------------------------------------------------------------
Net Increase 6,301,962 $ 88,482,857 -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
* For Class Y shares, transactions are for the period from December 3, 1998
(inception date) to November 30, 1999.
** For the period from September 1, 1998 (inception date) to November 30, 1998.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 17
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended November 30, except where noted:
Class A Shares 1999(1) 1998(2)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $ 13.63 $ 11.40
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.04 0.02
Net realized and unrealized gain 4.63 2.21
- --------------------------------------------------------------------------------
Total Income From Operations 4.67 2.23
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.01) --
Net realized gains (0.55) --
- --------------------------------------------------------------------------------
Total Distributions (0.56) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 17.74 $ 13.63
- --------------------------------------------------------------------------------
Total Return 34.36% 19.56%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $130,534 $ 36,760
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.16% 1.27%+
Net investment income 0.21 0.78+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 61% 15%
- --------------------------------------------------------------------------------
Class B Shares 1999(1) 1998(2)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $ 13.60 $ 11.40
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.09) 0.00*
Net realized and unrealized gain 4.62 2.20
- --------------------------------------------------------------------------------
Total Income From Operations 4.53 2.20
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
Net realized gains (0.55) --
- --------------------------------------------------------------------------------
Total Distributions (0.55) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 17.58 $ 13.60
- --------------------------------------------------------------------------------
Total Return 33.43% 19.30%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $245,317 $ 69,153
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.90% 2.01%+
Net investment income (loss) (0.54) 0.02+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 61% 15%
- --------------------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from September 1, 1998 (inception date) to November 30, 1998.
* Represents less than $0.01.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended November 30, except where noted:
Class L Shares 1999(1) 1998(2)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $ 13.60 $ 11.40
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss) (0.09) 0.00*
Net realized and unrealized gain 4.61 2.20
- --------------------------------------------------------------------------------
Total Income From Operations 4.52 2.20
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income -- --
Net realized gains (0.55) --
- --------------------------------------------------------------------------------
Total Distributions (0.55) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 17.57 $ 13.60
- --------------------------------------------------------------------------------
Total Return 33.35% 19.30%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $167,671 $ 45,045
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.90% 2.01%+
Net investment income (loss) (0.54) 0.03+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 61% 15%
- --------------------------------------------------------------------------------
Class Y Shares 1999(1)(3)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 13.65
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.08
Net realized and unrealized gain 4.61
- --------------------------------------------------------------------------------
Total Income From Operations 4.69
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.01)
Net realized gains (0.55)
- --------------------------------------------------------------------------------
Total Distributions (0.56)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $ 17.78
- --------------------------------------------------------------------------------
Total Return++ 34.49%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $112,075
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 0.82%
Net investment income 0.50
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 61%
- --------------------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from September 1, 1998 (inception date) to November 30, 1998.
(3) For the period from December 3, 1998 (inception date) to November 30, 1999.
* Represents less than $0.01.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 19
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Smith Barney Investment Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Smith Barney Mid Cap Blend Fund ("Fund") of
Smith Barney Investment Trust as of November 30, 1999, the related statements of
operations for the year then ended, and changes in net assets and financial
highlights for the year then ended, and for the period from September 1, 1998
(commencement of operations) to November 30, 1998. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1999, by
correspondence with the custodian. As to securities purchased or sold but not
yet received or delivered, we performed other appropriate auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of November 30, 1999, the results of its operations for the year then
ended, and the changes in its net assets and the financial highlights for the
year then ended, and for the period from September 1, 1998 (commencement of
operations) to November 30, 1998, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
New York, New York
January 14, 2000
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
November 30, 1999:
. A corporate dividends received deduction of 8.11%.
. Total long-term capital gain distributions paid of $2,449,895.
- --------------------------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 21
<PAGE>
Smith Barney
Mid Cap Blend 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
Lawrence Weissman, CFA
Vice President and Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Manager
SSB Citi Fund Management LLC
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Transfer Agent
Smith Barney Private Trust Company
388 Greenwich Street, 22nd Floor
New York, New York 10013
Sub-Transfer Agent
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
This report is submitted for the general information of shareholders of the
Smith Barney Investment Trust -- Smith Barney Mid Cap Blend Fund. It is not 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 OF SALOMON SMITH BARNEY]
Salomon Smith Barney is a service mark of Salomon Smith Barney, Inc.
Smith Barney
Mid Cap Blend Fund
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com/mutualfunds
Smith Barney
Intermediate
Maturity
California
Municipals Fund
ANNUAL REPORT
November 30, 1999
[LOGO OF SMITH BARNEY]
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
Smith Barney
Intermediate
Maturity
California
Municipals Fund
[PHOTO] [PHOTO]
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney Intermediate
Maturity California Municipals Fund ("Fund") for the year ended November 30,
1999. We hope you find this report useful and informative. 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.
Performance Update
For the year ended November 30, 1999, the Fund's Class A shares returned a
negative 0.70%, without the effects of sales charges. In comparison for the same
period, the Lehman Brothers Municipal Bond Index1 and the Lehman Brothers
10-Year Municipal Bond Index1 returned a negative 1.07% and a negative 0.42%,
respectively.
Municipal Bond Market Update and Outlook
The yield on the 30-year Treasury bond has stayed within a narrow 40 basis point
trading range since the beginning of June, currently trading just above 6%,
while select long-term municipal bonds are yielding approximately 95% - 100% of
long-term U.S. Treasury bonds. Under typical market conditions, municipal bonds
yield roughly 85% of similar-maturity U.S. Treasury bonds.
We do not expect long-term rates to move appreciably higher. Municipal bond
yields have moved up relative to U.S. Treasury yields because institutional
demand has virtually disappeared. With long-term municipal yields close to 6%
and the yield curve steep, extending maturity may be a prudent strategy.
- -----------
1 The Lehman Brothers Municipal Bond Index is a broad measure of the
municipal bond market with maturities of at least one year. The Lehman
Brothers 10-Year Municipal Bond Index is a broad-based index comprised of
approximately 5,000 bonds totaling approximately $63 billion in market
capitalization.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 1
The municipal bond market is providing some intriguing opportunities as a result
of reticent dealers and year-end tax swapping. In our opinion, investors who
have been waiting on the sidelines out of fears related to Y2K should move some
cash into these sectors now. We have also observed an increased dominance of
retail investors in the municipal bond market.
Investment Strategy and Portfolio Update
The Fund seeks to provide California investors with as high a level of current
income exempt from federal income taxes and California state personal income
taxes as is consistent with the preservation of principal. (Please note a
portion of the income from this Fund may be subject to the Alternative Minimum
Tax ("AMT").)
The Fund invests primarily in investment grade municipal securities issued by
the State of California and certain other municipal issuers, political
subdivisions, agencies and public authorities that pay interest that is exempt
from federal income and California personal income taxes. The Fund maintains an
average portfolio maturity of between three and ten years.
Our investment strategy has been to maximize our dividend yield. In our view,
the municipal bond market has provided us with excellent opportunities during
the reporting period. Since interest rates have gone up to higher levels, we
have been able to invest our excess cash at higher yields. In addition, we have
also been focusing on adding high-grade bonds to the Fund's portfolio.
During the past year and at the Fund's year end, the Fund focused on the
following industries: hospital bonds (14.9%), general obligation bonds (13.2%)
and housing bonds (12.4%) because we believe they offered good relative values.
At the end of November, the Fund's weighted average maturity was approximately
7.4 years. (Average maturity is the timeframe within the portfolio for which the
debt instruments are due and payable.) In addition, as of November 30, 1999,
roughly 99% of the Fund's holdings were rated investment grade2 by either
Standard and Poor's Ratings Group or Moody's Investors Services Group Inc., with
approximately 62% of the Fund invested in AAA bonds, the highest rating.
California Economic Highlights
California's economy passed several important milestones recently, reaching a
30-year low in unemployment and passing the 14 million job mark in nonfarm wage
and salary employment. Moreover, on October 15, 1999, California's unemployment
rate dropped to 4.9% -- the lowest level since 1969. The Golden
- -----------
2 Investment-grade bonds are those rated Aaa, Aa, A and Baa by Moody's
Investors Service, Inc. or AAA, AA, A and BBB by Standard & Poor's Ratings
Service, or that have an equivalent rating by any nationally recognized
statistical rating organization, are determined by the manager to be of
equivalent quality.
- --------------------------------------------------------------------------------
2 1999 Annual Report to Shareholders
nonresidential construction value grew 6% more than in the same period last
year. Sales of single-family homes rose with the median single family home price
9.2% above the price one-year ago. There was also substantial growth in auto
sales and service, building and garden supply, and furniture and home
furnishings.
Prior to 1990, California's economy was supported in large part by its aerospace
and defense industries and a continually appreciating real estate market.
However, in recent years, we think that the Golden State's economic recovery has
been mainly driven by the growth of new high-tech industries which has resulted
in a state with a broader and more diversified economy.
We believe these statistics lend support to our view that California is
currently experiencing a meaningful economic resurgence. Factors such as strong
employment growth, high real estate values and a more broadly diversified state
economy should allow California to remain competitive for many years to come.
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 in the new century.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
December 13, 1999
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 3
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End Income Capital Total
Year Ended of Year of Year Dividends Gains Returns(1)
================================================================================
11/30/99 $8.85 $8.42 $0.37 $0.00 (0.70)%
- --------------------------------------------------------------------------------
11/30/98 8.66 8.85 0.39 0.00 6.78
- --------------------------------------------------------------------------------
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 $3.09 $0.01
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End Income Capital Total
Year Ended of Year of Year Dividends Gains Returns(1)
================================================================================
11/30/99 $8.84 $8.42 $0.35 $0.00 (0.79)%
- --------------------------------------------------------------------------------
11/30/98 8.65 8.84 0.37 0.00 6.57
- --------------------------------------------------------------------------------
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 $1.88 $0.00
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End Income Capital Total
Year Ended of Year of Year Dividends Gains Returns(1)
================================================================================
11/30/99 $8.86 $8.44 $0.39 $0.00 (0.40)%
- --------------------------------------------------------------------------------
11/30/98 8.66 8.86 0.40 0.00 7.09
- --------------------------------------------------------------------------------
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 $1.71 $0.00
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
-------------------------------
Class A Class L Class Y
================================================================================
Year Ended 11/30/99 (0.70)% (0.79)% (0.40)%
- --------------------------------------------------------------------------------
Five Years Ended 11/30/99 6.31 6.07 N/A
- --------------------------------------------------------------------------------
Inception* through 11/30/99 5.60 6.14 4.95
================================================================================
With Sales Charges(2)
-------------------------------
Class A Class L Class Y
================================================================================
Year Ended 11/30/99 (2.68)% (2.74)% (0.40)%
- --------------------------------------------------------------------------------
Five Years Ended 11/30/99 5.87 5.85 N/A
- --------------------------------------------------------------------------------
Inception* through 11/30/99 5.33 5.93 4.95
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 11/30/99) 53.98%
- --------------------------------------------------------------------------------
Class L (Inception* through 11/30/99) 35.23
- --------------------------------------------------------------------------------
Class Y (Inception* through 11/30/99) 22.67
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to Class
L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 2.00% and 1.00%,
respectively. Class L shares also reflect the deduction of a 1.00% CDSC,
which applies if shares are redeemed within one year from purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, L and Y shares are December 31, 1991, November
8, 1994 and September 8, 1995, respectively.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 5
- --------------------------------------------------------------------------------
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 -- November 1999
SB Intermediate Lehman Bros.
Maturity California 10 Year Lipper California
Municipals Fund Municipal Bond Index Municipal Fund Average
12/31/91 9,802 10,000 10,000
Nov-92 10,422 10,767 10,623
Nov-93 11,537 12,028 11,682
Nov-94 11,116 11,491 11,246
Nov-95 12,766 13,623 12,910
Nov-96 13,411 14,394 13,566
Nov-97 14,233 15,410 14,307
Nov-98 15,199 16,651 15,261
11/30/99 15,092 16,581 15,180
+ 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 November 30, 1999. 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 (28 funds as of November 30, 1999)
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 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Portfolio Highlights (unaudited) November 30, 1999
- --------------------------------------------------------------------------------
Portfolio Breakdown*
[CHART]
Education 6.0%
General Obligation 13.2%
Hospital 14.9%
Housing 12.4%
Miscellaneous 23.8%
Solid Waste 5.1%
Tax Allocation 5.1%
Transportation 10.6%
Water & Sewer 8.9%
Summary of Municipal Bonds And Short-Term Tax Exempt
Investments by Combined Ratings
Standard & Percentage of
Moody's and/or Poor's Total Investments
- --------------------------------------------------------------------------------
Aaa AAA 61.8%
Aa AA 13.7
A A 8.9
Baa BBB 14.4
NR NR 1.2
-----
100.0%
=====
- ---------
* As a percentage of total investments.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 7
- --------------------------------------------------------------------------------
Schedule of Investments November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
Education -- 6.0%
California Educational Facilities Authority Revenue:
$ 945,000 AAA College of Osteopathic Medicine, CONNIE LEE-Insured,
5.550% due 6/1/06 $ 989,888
320,000 A2* Loyola Marymount University, Series B,
(Pre-Refunded--Escrowed to Maturity with
U.S. government securities to 10/1/02 Call @ 102),
6.300% due 10/1/03 (b) 343,200
200,000 A2* Mills College, (Escrowed to Maturity with U.S. government
securities), 6.500% due 9/1/02 (b) 211,750
500,000 AA University of Southern California, 5.300% due 10/1/04 520,000
- ------------------------------------------------------------------------------------------------
2,064,838
- ------------------------------------------------------------------------------------------------
General Obligation -- 13.2%
200,000 AA- California State GO, 6.000% due 9/1/03 211,500
1,250,000 AAA California State GO, Veterans Bonds, Series BL,
FSA-Insured, 4.950% due 12/1/08 (c) 1,229,688
285,000 AAA Kern High School District GO, Series C, MBIA-Insured,
(Escrowed to Maturity with U.S. government securities),
8.750% due 8/1/03 327,750
475,000 AA Los Angeles GO, Series B, 5.000% due 9/1/10 473,813
Mojave Water Agency Improvement District GO,
Morongo Basin GO:
250,000 AAA Escrowed to Maturity with U.S. government securities,
6.250% due 9/1/02 263,438
280,000 AAA Pre-Refunded--Escrowed with U.S. government
securities to 9/1/02 Call @ 102, 6.375% due 9/1/03 301,000
300,000 Aa3* Torrance Unified School District GO, Series A,
4.250% due 8/1/11 275,625
1,500,000 AAA Visalia Unified School District GO, Series A, FGIC-Insured,
4.900% due 8/1/12 1,455,000
- ------------------------------------------------------------------------------------------------
4,537,814
- ------------------------------------------------------------------------------------------------
Hospital -- 14.9%
215,000 AAA Arlington Community Hospital Corp. Revenue,
(Escrowed to Maturity with U.S. government securities),
8.000% due 6/1/04 228,975
California Health Facilities Financing Authority Revenue:
700,000 AAA Kaiser Permanente, Series B, AMBAC-Insured,
5.250% due 10/1/10 676,375
1,000,000 AAA Mills-Peninsula Hospital, Series B, CONNIE LEE-Insured,
5.300% due 1/15/05 1,032,500
1,000,000 AAA Scripps Health, Series C, MBIA-Insured,
5.000% due 10/1/13 963,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
Hospital -- 14.9% (continued)
$ 200,000 AA- Sisters of Providence, 6.200% due 10/1/03 $ 209,750
400,000 NR St. Elizabeth's Community Hospital Project,
(Pre-Refunded--Escrowed with U.S. government
securities to 11/5/02 Call @ 102),
5.900% due 11/15/03 (b) 425,500
1,200,000 AA California Statewide Communities Development Authority,
COP, St. Joseph's Health Systems Group,
(Pre-Refunded--Escrowed with state and local
government securities to 7/1/04 Call @ 102),
5.875% due 7/1/05 1,294,500
250,000 A3* Riverside County Asset Leasing Corp., Leasehold Revenue,
(Riverside County Hospital Project), Series A,
6.000% due 6/1/04 260,312
- ------------------------------------------------------------------------------------------------
5,091,662
- ------------------------------------------------------------------------------------------------
Housing -- 12.4%
1,250,000 AAA ABAG Finance Authority for Non-Profit Corporations,
Multi-Family Housing Revenue, (Edgewood Apartments
Project), Series A, FNMA-Collateralized, 5.700% mandatory
put 11/1/06 (c)(d) 1,260,938
California Housing Finance Agency, Home Mortgage Revenue:
5,000 Aa2* MGIC-Insured, LOC-Citibank N.A., 10.000% due 2/1/02 5,000
240,000 Aa2* Series B-1, FHA-Insured, 5.900% due 8/1/04 (c) 246,900
700,000 Aa2* Series E-1, FHA/VA-Insured, 5.900% due 2/1/05 (c) 725,375
700,000 Aa2* Series E-1, FHA/VA-Insured, 5.900% due 8/1/05 (c) 725,375
745,000 AAA Riverside County Housing Authority, Multi-Family
Housing Revenue, (Brandon Place Apartments Project),
Series B, FNMA-Collateralized, 5.625% mandatory put 7/1/09 (c) 751,519
190,000 AAA San Luis Obispo Housing Authority, Multi-Family Housing
Revenue, (Parkwood Apartments Project), Series A,
FNMA-Collateralized, 5.500% due 8/1/03 192,612
335,000 AAA Santa Rosa Mortgage Revenue Refunding,
(Marlow Apartments Project), Series A, FHA-Insured,
5.600% due 9/1/05 337,512
- ------------------------------------------------------------------------------------------------
4,245,231
- ------------------------------------------------------------------------------------------------
Miscellaneous -- 23.8%
1,470,000 AAA Inglewood Public Financing Authority Revenue,
Series A, AMBAC-Insured, 5.125% due 8/1/13 1,444,275
1,080,000 AAA Los Angeles County Community Facilities District No. 3,
Special Tax Refunding, Series A, FSA-Insured,
5.250% due 9/1/07 1,119,150
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 9
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
Miscellaneous -- 23.8% (continued)
$ 130,000 Aaa* Montclair Redevelopment Agency, Residential Mortgage
Revenue, (Escrowed to Maturity with U.S. government
securities), 7.750% due 10/1/11 $ 146,575
1,000,000 AAA Roseville Community Facilities District No.1,
Special Tax Refunding, FSA-Insured, 4.625% due 9/1/10 965,000
1,000,000 AAA San Diego COP, Central Jail Refunding, AMBAC-Insured,
4.800% due 10/1/08 1,002,500
San Francisco Downtown Parking Corp. Revenue:
450,000 A3* 6.000% due 4/1/02 466,875
280,000 A3* 6.150% due 4/1/03 295,050
Santa Barbara COP, (Harbor Refunding Project):
270,000 A* 6.400% due 10/1/02 285,187
285,000 A* 6.500% due 10/1/03 305,306
1,000,000 AAA Solano County COP, Capital Improvement Program,
AMBAC-Insured, 4.875% due 11/15/11 977,500
205,000 AAA Upland COP, (Police Building Refunding Project),
AMBAC-Insured, 6.200% due 8/1/02 215,506
1,000,000 BBB- Virgin Islands Public Financing Authority Revenue,
Series A, 5.300% due 10/1/11 955,000
- ------------------------------------------------------------------------------------------------
8,177,924
- ------------------------------------------------------------------------------------------------
Solid Waste -- 5.1%
Kings County Waste Management Authority,
Solid Waste Revenue:
375,000 BBB 6.500% due 10/1/03 (c) 397,031
290,000 BBB 6.600% due 10/1/04 (c) 310,663
1,000,000 Baa1* South Napa Waste Management Authority, (Solid Waste
Transfer Facilities Project), 6.000% due 2/15/04 (c) 1,037,500
- ------------------------------------------------------------------------------------------------
1,745,194
- ------------------------------------------------------------------------------------------------
Tax Allocation -- 5.1%
1,000,000 Baa* Hawthorne Community Redevelopment Agency, Tax
Allocation, (Redevelopment Project, Area 2),
Pre-Refunded--Escrowed with U.S. government securities
(Partially to 9/1/04 call @ 102), 6.200% due 9/1/05 (b) (d) 1,060,000
665,000 BBB+ Paramount Redevelopment Agency, Tax Allocation Refunding,
(Redevelopment Project, Area No. 1), 5.800% due 8/1/03 698,250
- ------------------------------------------------------------------------------------------------
1,758,250
- ------------------------------------------------------------------------------------------------
Transportation -- 10.6%
500,000 A1* Los Angeles County Transportation Commission, COP,
Series B, 6.200% due 7/1/03 529,375
Palm Springs Financing Authority, Regional Airport
Revenue, MBIA-Insured:
200,000 AAA 5.400% due 1/1/03 (c) 205,500
400,000 AAA 5.500% due 1/1/04 (c) 414,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================================
<S> <C> <C> <C>
Transportation -- 10.6% (continued)
$ 350,000 A1* Sacramento Regional Transportation District COP, Series A,
6.400% due 3/1/03 $ 371,437
240,000 AAA San Francisco Airport Improvement Authority, Lease Revenue,
United Airlines Inc., (Escrowed to Maturity with U.S.
government securities), 8.000% due 7/1/13 280,800
San Jose Airport Revenue:
800,000 AAA FGIC-Insured, 5.400% due 3/1/04 (c) 824,000
500,000 AAA MBIA-Insured, 5.750% due 3/1/03 522,500
450,000 BBB+ Southern California Rapid Transit Authority, Special
Benefit Assessment, District A-2, 6.100% due 9/1/03 470,250
- ------------------------------------------------------------------------------------------------
3,617,862
- ------------------------------------------------------------------------------------------------
Water & Sewer -- 8.9%
1,000,000 AAA Castaic Lake Water Agency COP, (Water Systems Improvement
Project), AMBAC-Insured, 5.000% due 8/1/12 981,250
1,000,000 AAA El Dorado County Public Agency Financing Authority
Revenue, FGIC-Insured, 5.200% due 2/15/07 1,031,250
1,000,000 AAA Modesto Irrigation District Financing Authority Revenue,
Series A, MBIA-Insured, 5.350% due 10/1/06 1,043,750
- ------------------------------------------------------------------------------------------------
3,056,250
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $33,410,707**) $34,295,025
================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Rating Service, except those
identified by an asterisk (*), which are rated by Moody's Investors
Service, Inc.
(b) 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.
(c) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(d) Security segregated by Custodian for open purchase commitments.
** Aggregate cost for Federal income tax purpose 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
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"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 Investor Service, Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3 may
be applied to each generic rating from "Aa" to "Baa," where 1 is the highest and
3 the lowest 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 Investor Services, Inc. ("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 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Bond Ratings (unaudited) (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 (unaudited)
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
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
MGIC -- Mortgage Guaranty Insurance Corp.
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
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities November 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $33,410,707) $34,295,025
Cash 14,458
Interest receivable 528,567
Receivable for Fund shares sold 244,442
- --------------------------------------------------------------------------------
Total Assets 35,082,492
- --------------------------------------------------------------------------------
LIABILITIES:
Investment advisory fees payable 19,190
Administration fees payable 12,695
Payable for Fund shares reacquired 8,995
Distribution fees payable 1,696
Accrued expenses 63,095
- --------------------------------------------------------------------------------
Total Liabilities 105,671
- --------------------------------------------------------------------------------
Total Net Assets $34,976,821
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 4,152
Capital paid in excess of par value 35,440,444
Undistributed net investment income 3,026
Accumulated net realized loss on security transactions (1,355,119)
Net unrealized appreciation of investments 884,318
- --------------------------------------------------------------------------------
Total Net Assets $34,976,821
================================================================================
Shares Outstanding:
Class A 3,504,054
- --------------------------------------------------------------------------------
Class L 611,103
- --------------------------------------------------------------------------------
Class Y 36,882
- --------------------------------------------------------------------------------
Net Asset Value:
Class A $8.42
- --------------------------------------------------------------------------------
Class L* $8.42
- --------------------------------------------------------------------------------
Class Y $8.44
- --------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 2.04% of net asset value per share) $8.59
- --------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $8.51
================================================================================
* Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase (See Note 3).
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended November 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 1,872,167
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 109,906
Administration fees (Note 3) 73,271
Distribution fees (Note 3) 65,374
Audit and legal 38,928
Shareholder communications 32,709
Shareholder and system servicing fees 28,183
Registration fees 14,587
Trustees' fees 10,587
Pricing service fees 7,935
Custody 2,701
Other 9,662
- --------------------------------------------------------------------------------
Total Expenses 393,843
Less: Investment advisory and administration fee waivers (Note 3) (77,897)
- --------------------------------------------------------------------------------
Net Expenses 315,946
- --------------------------------------------------------------------------------
Net Investment Income 1,556,221
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 5):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 10,274,133
Cost of securities sold 10,703,408
- --------------------------------------------------------------------------------
Net Realized Loss (429,275)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 2,275,964
End of year 884,318
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (1,391,646)
- --------------------------------------------------------------------------------
Net Loss on Investments (1,820,921)
- --------------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (264,700)
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 15
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Years Ended November 30,
1999 1998
================================================================================
OPERATIONS:
Net investment income $ 1,556,221 $ 1,377,748
Net realized gain (loss) (429,275) 40,605
Increase (decrease) in net unrealized appreciation (1,391,646) 626,274
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations (264,700) 2,044,627
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 4):
Net investment income (1,556,080) (1,369,680)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (1,556,080) (1,369,680)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 12,926,222 7,542,952
Net asset value of shares issued for
reinvestment of dividends 1,099,677 948,174
Cost of shares reacquired (11,102,994) (4,632,497)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 2,922,905 3,858,629
- --------------------------------------------------------------------------------
Increase in Net Assets 1,102,125 4,533,576
NET ASSETS:
Beginning of year 33,874,696 29,341,120
- --------------------------------------------------------------------------------
End of year* $34,976,821 $33,874,696
================================================================================
* Includes undistributed net investment income of: $3,026 $2,885
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 six other separate investment funds: Smith
Barney Intermediate Maturity New York Municipals Fund, Smith Barney Large
Capitalization Growth Fund, Smith Barney Mid Cap Blend Fund, Smith Barney S&P
500 Index Fund, Smith Barney U.S. 5000 Index Fund and Smith Barney EAFE Index
Fund. The financial statements and financial highlights for the other funds are
presented in separate shareholder reports.
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
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
3. Investment Advisory Agreement, Administration
Agreement and Other Transactions
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH") which, in
turn, is a subsidiary of Citigroup Inc. ("Citigroup"), acts as investment
adviser to the Fund. The Fund pays SSBC an investment advisory fee calculated at
an annual rate of 0.30% of the average daily net assets. This fee is calculated
daily and paid monthly. For the year ended November 30, 1999, SSBC waived
investment advisory fees of $46,738.
SSBC 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 year ended November 30, 1999, SSBC
waived administration fees of $31,159.
Effective October 1999, Smith Barney Private Trust Company ("Private Trust"),
another subsidiary of Citigroup, became the Fund's transfer agent and PFPC
Global Fund Services ("PFPC") became the Fund's sub-transfer agent. Private
Trust receives account fees and asset-based fees that vary according to the
account size and type of account. PFPC is responsible for shareholder
recordkeeping and financial processing for all shareholder accounts and is paid
by Private Trust. During the period October 1, 1999 through November 30, 1999,
the Fund paid transfer agent fees of $1,273 to Smith Barney Private Trust
Company.
CFBDS, Inc. acts as the Fund's distributor. Salomon Smith Barney Inc. ("SSB"),
another subsidiary of SSBH, as well as certain other broker-dealers, continues
to sell Fund shares to the public as a member of the selling group.
There is a contingent deferred sales charge ("CDSC") of 1.00% on Class L shares,
which applies if redemption occurs within the first year of purchase. For the
year ended November 30, 1999, CDSCs paid to CFBDS for Class L shares were
approximately $2,000. In addition CFBDS received sales charges of $85,000 and
$12,000 on sales of the Fund's Class A and L shares, respectively.
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A and L 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 L shares calculated at the annual rate of 0.20%. For
the year ended November 30, 1999, total Distribution Plan fees were:
Class A Class L
================================================================================
Distribution Plan Fees $46,319 $19,055
================================================================================
All officers and one Trustee of the Fund are employees of SSB.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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.
5. Investments
During the year ended November 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term securities) were as follows:
================================================================================
Purchases $13,638,998
- --------------------------------------------------------------------------------
Sales 10,274,133
================================================================================
At November 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $1,090,961
Gross unrealized depreciation (206,643)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 884,318
================================================================================
6. Capital Loss Carryforwards
At November 30, 1999, the Fund had for Federal tax purposes approximately
$1,142,000 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:
11/30/02 11/30/03 11/30/07
================================================================================
Capital Loss Carryforwards $657,000 $269,000 $216,000
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 19
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
7. Shares of Beneficial Interest
At November 30, 1999, 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 November 30, 1999, total paid-in capital amounted to the following for each
class.
Class A Class L Class Y
================================================================================
Total Paid-in Capital $29,931,948 $ 5,245,425 $ 267,223
================================================================================
Transactions in shares of each class were as follows:
Year Ended Year Ended
November 30, 1999 November 30, 1998
------------------------- -------------------------
Shares Amount Shares Amount
================================================================================
Class A
Shares sold 1,354,473 $11,737,460 571,108 $ 5,019,763
Shares issued on
reinvestment 107,682 927,878 91,477 800,601
Shares reacquired (1,157,437) (9,906,616) (424,495) (3,722,275)
- --------------------------------------------------------------------------------
Net Increase 304,718 $ 2,758,722 238,090 $ 2,098,089
================================================================================
Class L+
Shares sold 135,995 $ 1,188,762 288,836 $ 2,523,189
Shares issued on
reinvestment 18,313 157,924 15,296 133,771
Shares reacquired (138,454) (1,196,378) (104,394) (910,222)
- --------------------------------------------------------------------------------
Net Increase 15,854 $ 150,308 199,738 $ 1,746,738
================================================================================
Class Y
Shares issued on
reinvestment 1,607 $ 13,875 1,575 $ 13,802
- --------------------------------------------------------------------------------
Net Increase 1,607 $ 13,875 1,575 $ 13,802
================================================================================
+ On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended November 30:
<TABLE>
<CAPTION>
Class A Shares 1999(1) 1998 1997 1996 1995
========================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $8.85 $8.66 $8.55 $8.53 $7.80
- ----------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(2) 0.37 0.39 0.40 0.40 0.40
Net realized and
unrealized gain (loss) (0.43) 0.19 0.11 0.02 0.73
- ----------------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.06) 0.58 0.51 0.42 1.13
- ----------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.37) (0.39) (0.40) (0.40) (0.40)
Net realized gains -- -- -- -- --
- ----------------------------------------------------------------------------------------
Total Distributions (0.37) (0.39) (0.40) (0.40) (0.40)
- ----------------------------------------------------------------------------------------
Net Asset Value, End of Year $8.42 $8.85 $8.66 $8.55 $8.53
- ----------------------------------------------------------------------------------------
Total Return (0.70)% 6.78% 6.13% 5.05% 14.84%
- ----------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $29,520 $28,303 $25,630 $24,537 $26,211
- ----------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.85% 0.75% 0.75% 0.77% 0.75%
Net investment income 4.27 4.45 4.65 4.69 4.89
- ----------------------------------------------------------------------------------------
Portfolio Turnover Rate 29% 8% 9% 15% 8%
========================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) The investment adviser and administrator waived all or part of their fees
for each of the five years ended November 30, 1999. 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
------------------------------------------ ---------------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $0.02 $0.02 $0.03 $0.07 $0.03 1.06% 1.00% 1.12% 1.54% 1.16%
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 21
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended November 30:
Class L Shares 1999(1) 1998(2) 1997 1996 1995
================================================================================
Net Asset Value, Beginning of Year $8.84 $8.65 $8.54 $8.52 $7.80
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(3) 0.35 0.37 0.38 0.38 0.38
Net realized and
unrealized gain (loss) (0.42) 0.19 0.11 0.02 0.72
- --------------------------------------------------------------------------------
Total Income
From Operations (0.07) 0.56 0.49 0.40 1.10
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.35) (0.37) (0.38) (0.38) (0.38)
- --------------------------------------------------------------------------------
Total Distributions (0.35) (0.37) (0.38) (0.38) (0.38)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $8.42 $8.84 $8.65 $8.54 $8.52
- --------------------------------------------------------------------------------
Total Return (0.79)% 6.57% 5.92% 4.84% 14.36%
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $5,146 $5,260 $3,419 $2,607 $2,254
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(3) 0.98% 0.97% 0.96% 0.98% 0.98%
Net investment income 4.13 4.22 4.44 4.48 4.54
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 29% 8% 9% 15% 8%
================================================================================
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) The investment adviser and administrator waived all or part of their fees
for each of the five years ended November 30, 1999. 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
------------------------------------------ ---------------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class L $0.02 $0.02 $0.03 $0.07 $0.03 1.19% 1.21% 1.33% 1.75% 1.39%
</TABLE>
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended November 30:
Class Y Shares 1999(1) 1998 1997 1996 1995(2)
================================================================================
Net Asset Value, Beginning of Year $8.86 $8.66 $8.56 $8.54 $8.39
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(3) 0.39 0.41 0.41 0.41 0.09
Net realized and
unrealized gain (loss) (0.42) 0.19 0.11 0.02 0.15
- --------------------------------------------------------------------------------
Total Income
From Operations (0.03) 0.60 0.52 0.43 0.24
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.39) (0.40) (0.42) (0.41) (0.09)
- --------------------------------------------------------------------------------
Total Distributions (0.39) (0.40) (0.42) (0.41) (0.09)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $8.44 $8.86 $8.66 $8.56 $8.54
- --------------------------------------------------------------------------------
Total Return (0.40)% 7.09% 6.20% 5.22% 2.92%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $311 $312 $292 $274 $261
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(3) 0.56% 0.57% 0.56% 0.59% 0.58%+
Net investment income 4.52 4.62 4.84 4.87 4.74+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 29% 8% 9% 15% 8%
================================================================================
(1) Per share amounts have been calculated using the monthly average shares
method.
(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 each of the four years ended November 30, 1999 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
------------------------------------------ ---------------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Y $0.02 $0.02 $0.03 $0.07 $0.03 0.79% 0.82% 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.
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes, the Fund hereby designates for the fiscal year ended
November 30, 1999:
-- 100% of the dividends paid by the Fund from net investment income as
tax-exempt for regular Federal income tax purposes.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity California Municipals Fund 23
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees of
Smith Barney Investment Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Smith Barney Intermediate Maturity
California Municipals Fund of Smith Barney Investment Trust as of November 30,
1999, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
then ended and financial highlights for each of the years in the five-year
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Smith Barney Intermediate Maturity California Municipals Fund of Smith Barney
Investment Trust as of November 30, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the two-
year period then ended and financial highlights for each of the years in the
five-year period then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
New York, New York
January , 2000
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
[LOGO OF SMITH BARNEY]
Trustees Custodian
Herbert Barg PNC Bank, N.A.
Alfred J. Bianchetti
Martin Brody Transfer Agent
Dwight B. Crane Smith Barney Private Trust Company
Burt N. Dorsett 388 Greenwich Street, 22nd Floor
Elliot S. Jaffe New York, New York 10013
Stephen E. Kaufman
Joseph J. McCann Sub-Transfer Agent
Heath B. McLendon, Chairman PFPC Global Fund Services
Cornelius C. Rose, Jr. P.O. Box 9699
Providence, Rhode Island 02940-9699
James J. Crisona, Emeritus
Officers This report is submitted for the general
Heath B. McLendon information of the shareholders of Smith
President and Barney Intermediate Maturity California
Chief Executive Officer Municipals Fund. It is not authorized
for distribution to prospective
Lewis E. Daidone investors unless accompanied or preceded
Senior Vice President and Treasurer by a current Prospectus for the Fund,
which contains information concerning
Joseph P. Deane the Fund's investment policies and
Vice President and Investment Officer expenses as well as other pertinent
information.
Paul A. Brook
Controller
Salomon Smith Barney is a service mark
Christina T. Sydor of Salomon Smith Barney Inc.
Secretary
Smith Barney
Investment Adviser and Administrator Intermediate Maturity
SSB Citi Fund Management LLC California Municipals Fund
388 Greenwich Street, MF-2
Distributor New York, New York 10013
CFBDS, Inc.
www.smithbarney.com/mutualfunds
FD0310 1/00
Smith Barney
Intermediate
Maturity New York
Municipals Fund
ANNUAL REPORT
November 30, 1999
[LOGO] Smith Barney Mutual Funds
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
<PAGE>
Smith Barney
Intermediate
Maturity New York
Municipals Fund
[PHOTO] [PHOTO]
HEATH B. JOSEPH P.
MCLENDON DEANE
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to present the annual report for the Smith Barney Intermediate
Maturity New York Municipals Fund ("Fund") for the year ended November 30, 1999.
We hope you find this report to be useful and informative. In this report, we
summarize the period's prevailing economic and market conditions and outline 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.
Performance Update
For the year ended November 30, 1999, the Fund's Class A shares returned a
negative 1.18%, without the effects of sales charges. In comparison the Lehman
Brothers Municipal Bond Index and the Lehman Brothers 10-year Municipal Bond
Index returned a negative 1.07% and a negative 0.42%, respectively.1
Market Update
The yield on the 30-year Treasury bond has stayed within a narrow 40 basis point
trading range since the beginning of June, currently trading just above 6%,
while select long-term municipal bonds are yielding approximately 95% - 100% of
long-term U.S. Treasury bonds. (A basis point is the smallest measurement in
quoting yields, equals to 1/100 of one percent or 0.01%.) Under typical market
conditions, municipal bonds yield roughly 85% of similar-maturity U.S. Treasury
bonds.
Investment Strategy and Portfolio Update
The Fund's investment seeks to provide New York investors with as high a level
of current income exempt from federal income taxes and New York state and New
York City personal income taxes as is consistent with the preservation of
- --------------
1 The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market with the maturities of at least one year. The Lehman Brothers 10-
year Municipal Bond Index is a broad-based index comprised of approximately
5,000 bonds totaling roughly $63 billion in market capitalization.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 1
<PAGE>
principal. The Fund invests primarily in investment grade municipal securities.
(Please note a portion of the income from this Fund may be subject to the
Alternative Minimum Tax ("AMT").)
Our investment strategy during the last year has been to maximize our dividend
yield. In our view, the municipal bond market has provided us with excellent
opportunities throughout the period under review. Since interest rates have gone
up to higher levels, we have been able to invest our excess cash in bonds. In
addition, we have also been focusing on adding high-grade bonds to the Fund's
portfolio.
During the past year, the Fund focused on transportation bonds (18.1%),
education bonds (17.0%) and general obligations bonds (15.7%) because we believe
they offered good relative values. At the end of November, the Fund's weighted
average maturity was approximately 8.5 years. (Average maturity is the average
timeframe within the portfolio for which the debt instruments are due and
payable.) In addition, as of November 30, 1999, roughly 93% of the Fund's
holdings were rated investment grade/2/ by either Standard and Poor's Ratings
Service or Moody's Investors Service, Inc., with 49% of the Fund invested in AAA
bonds, the highest rating.
New York Economic Highlights
The Empire State is moving aggressively to create a top-rate business climate,
and it is clearly having a positive impact on its economy. This turnaround comes
as New York continues to reduce taxes, eliminate red tape and other bureaucratic
obstacles and change failed state government programs that may have previously
held back New York's economic growth.
New York State is home to the 10th largest economy in the world. With a Gross
State Product of roughly $593 billion, New York accounts for nearly 8% of the
nation's Gross Domestic Product ("GDP"). New York is home to 65 FORTUNE 500
companies - more than any other U.S. state. More than $1 trillion in financial
transactions take place at the New York Stock Exchange on a typical trading day,
making New York City the undisputed financial capital of the world./3/
- --------------
2 Investment-grade bonds are those rated Aaa, Aa, A and Baa by Moody's
Investors Service, Inc. or AAA, AA, A and BBB by Standard & Poor's Ratings
Service, or that have an equivalent rating by any nationally recognized
statistical rating organization, are determined by the manager to be of
equivalent quality
3 Fitch IBCA, Inc., an internationally recognized rating agency, is the
source of these statistics.
- --------------------------------------------------------------------------------
2 1999 Annual Report to Shareholders
<PAGE>
New York has a diverse economy with concentrations of employment in many
industries. New York's economic strength has been supported by its highly
educated workforce, extensive infrastructure and world class universities and
colleges. Taxes have been cut 31 times in three years. Every year since 1995,
New York has cut taxes more than any other state, and in 1996 taxes were cut
more than the other 49 states combined. In addition, workers'compensation rates
have been reduced by 30% since 1995, and other business costs have been lowered
as well.
Market Outlook
We do not expect long-term rates to move appreciably higher. Municipal bond
yields have moved up relative to U.S. Treasury yields because institutional
demand has virtually disappeared. With long-term municipal yields close to 6%
and the yield curve steep, extending maturity may be a prudent strategy.
In our judgement, a number of factors bode well for the municipal market. Yields
are at their highest levels since early 1999, new issue supply is likely to be
modest in the period ahead and recent narrowing of spreads in the taxable market
has made alternatives less attractive. We remain optimistic about the prospects
for the municipal market as a whole.
The municipal bond market is providing some intriguing opportunities as a result
of reticent dealers and year-end tax swapping. In our opinion, investors who
have been waiting on the sidelines out of fears related to Y2K should move some
cash into these sectors now. We have also observed an increased dominance of
retail investors in the municipal bond market.
Thank you for your investment in the Smith Barney Intermediate Maturity New York
Municipals Fund. We look forward to continuing to help you achieve your
financial goals in the new century.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
December 13, 1999
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 3
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance--Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
11/30/99 $8.76 $8.28 $0.38 $0.00 (1.18)%
- --------------------------------------------------------------------------------
11/30/98 8.57 8.76 0.40 0.00 7.01
- --------------------------------------------------------------------------------
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 $3.19 $0.04
================================================================================
- --------------------------------------------------------------------------------
Historical Performance--Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
================================================================================
11/30/99 $8.76 $8.27 $0.36 $0.00 (1.49)%
- --------------------------------------------------------------------------------
11/30/98 8.57 8.76 0.38 0.00 6.79
- --------------------------------------------------------------------------------
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 $1.90 $0.00
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
------------------------
Class A Class L
================================================================================
Year Ended 11/30/99 (1.18)% (1.49)%
- --------------------------------------------------------------------------------
Five Years Ended 11/30/99 6.13 N/A
- --------------------------------------------------------------------------------
Inception* through 11/30/99 5.61 5.69
================================================================================
With Sales Charges(2)
------------------------
Class A Class L
================================================================================
Year Ended 11/30/99 (3.17)% (3.42)%
- --------------------------------------------------------------------------------
Five Years Ended 11/30/99 5.70 N/A
- --------------------------------------------------------------------------------
Inception* through 11/30/99 5.34 5.48
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (Inception* through 11/30/99) 54.10%
- --------------------------------------------------------------------------------
Class L (Inception* through 11/30/99) 31.87
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to Class
L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 2.00% and 1.00%,
respectively. Class L shares also reflect the deduction of a 1.00% CDSC,
which applies if shares are redeemed within one year from initial purchase.
* Inception dates for Class A and L shares are December 31, 1991 and December
5, 1994, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 5
<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-- November 1999
[LINE GRAPH]
Smith Barney Intermediate Lehman Brothers 10-Year Lipper Peer
Maturity New York Municipals Municipal Bond Fund Index Group Average
12/31/91 9,802 10,000 10,000
Nov-92 10,644 10,767 10,685
Nov-93 11,683 12,028 11,625
Nov-94 11,219 11,491 11,230
Nov-95 12,824 13,623 12,796
Nov-96 13,447 14,394 13,383
Nov-97 14,284 15,410 14,134
Nov-98 15,285 16,660 15,054
11/30/99 15,104 16,708 15,351
+ 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 November 30, 1999. 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.
Peer Group Average is an average of the Fund's peer group of mutual funds
(17 funds as of November 30, 1999) investing in intermediate maturity New
York tax-exempt bonds. The performance of the Fund's other class 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 class. An investor may not
invest directly in an index.
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 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Highlights (unaudited) November 30, 1999
- --------------------------------------------------------------------------------
Industry Breakdown*
[PIE CHART]
Education 17.00%
General Obligations 15.70%
Government Facilities 4.20%
Hospitals 9.80%
Industrial Development 6.60%
Other 14.30%
Pollution Control 3.80%
Transportation 18.10%
Finance 2.70%
Water & Sewer 7.80%
Summary of Investments by Combined Ratings
Standard & Percentage of
Moody's and/or Poor's Total Investments
- ----------------------------------------------------------------------------
Aaa AAA 49.0%
Aa AA 14.2
A A 20.0
Baa BBB 9.5
B B 4.7
NR NR 2.6
-----
100.0%
=====
- ----------
* As a percentage of total investments.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================
Education -- 17.0%
<S> <C> <C> <C>
$1,000,000 BBB+ City University of New York COP, John Jay College,
6.000% due 8/15/06 $ 1,057,500
860,000 Aaa* Huntington Union Free School District, FGIC-Insured,
5.500% due 7/15/11 883,650
Nassau County Industrial Development Agency, Civic
Facility Revenue, Refunded, (Hofstra University Project),
MBIA-Insured:
1,250,000 AAA 5.250% due 7/1/13 1,237,500
2,000,000 AAA 5.250% due 7/1/14 1,960,000
2,000,000 AAA New York Educational Construction Fund, Series A,
MBIA-Insured, 6.500% due 4/1/04 2,150,000
New York State Dormitory Authority, Revenue Bonds:
500,000 AAA College and University Educational Loan, MBIA-Insured,
6.200% due 7/1/01 (c) 513,750
940,000 Aaa* New York Law School, AMBAC-Insured,
5.200% due 7/1/08 952,925
1,100,000 AA Saint Thomas Aquinas, 5.000% due 7/1/14 1,017,500
1,000,000 A State University Educational Facilities,
5.000% due 5/15/10 977,500
100,000 AAA Wappingers Central School District, AMBAC-Insured,
6.250% due 12/1/99 100,000
- --------------------------------------------------------------------------------------------------
10,850,325
- --------------------------------------------------------------------------------------------------
Finance -- 2.7%
City of Troy Municipal Assistance Corp., MBIA-Insured:
1,080,000 AAA Series A, 5.000% due 1/15/08 1,082,700
1,990,000 AAA Series B, zero coupon bond to yield 5.690% 651,725
due 1/15/19
- --------------------------------------------------------------------------------------------------
1,734,425
- --------------------------------------------------------------------------------------------------
General Obligation -- 15.7%
400,000 AAA Albany City School District GO, Series B, MBIA-Insured,
6.000% due 12/15/00 408,136
Buffalo GO:
100,000 AAA FGIC-Insured, 5.800% due 2/1/00 100,290
205,000 AAA Series A, MBIA-Insured, 5.900% due 4/1/01 209,356
385,000 AAA Series B, MBIA-Insured, 5.900% due 4/1/01 (b) 393,181
Erie County Public Improvement Project GO, FGIC-Insured:
1,000,000 AAA Series A, 5.750% due 10/1/11 1,047,500
250,000 AAA 5.500% due 1/15/00 250,450
495,000 Baa2* Jamestown GO, Series A, 7.000% due 3/15/00 498,861
1,000,000 AA Monroe County Public Improvement Project GO, Series A,
6.000% due 3/1/18 1,035,000
1,000,000 AAA Nassau County GO, Combined Sewer District, Series E,
MBIA-Insured, 5.400% due 5/1/10 1,013,750
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================
General Obligation -- 15.7% (continued)
<S> <C> <C> <C>
New York City GO:
$2,000,000 A- Series A, 7.000% due 8/1/04 (b) $ 2,177,500
325,000 A- Series B, 6.250% due 10/1/01 335,562
175,000 A- Series B, (Escrowed to maturity with U.S. government
securities), 6.250% due 10/1/01 (d) 181,125
435,000 AAA Niagara County GO, Environmental Infrastructure,
Series A, MBIA-Insured, 5.250% due 8/15/13 431,193
275,000 Aaa* North Hempstead GO, FGIC-Insured, 5.000% due 5/15/12 267,438
630,000 Aaa* Nyack Unified Free School District GO, FGIC-Insured,
5.250% due 12/15/15 612,675
1,125,000 AAA Yonkers GO, Series A, FGIC-Insured, 5.000% due 9/1/14 1,056,094
- --------------------------------------------------------------------------------------------------
10,018,111
- --------------------------------------------------------------------------------------------------
Government Facilities -- 4.2%
New York State Urban Development, Correctional Facilities:
595,000 A- Series 3, 6.800% due 1/1/00 596,089
1,900,000 A- Series A, 6.500% due 1/1/09 2,068,625
- --------------------------------------------------------------------------------------------------
2,664,714
- --------------------------------------------------------------------------------------------------
Hospitals -- 9.8%
New York State Dormitory Authority, Revenue Bonds:
130,000 AA Genessee Valley, Series B, FHA-Insured,
6.300% due 8/1/02 135,850
1,500,000 AA Good Samaritan Hospital, 5.500% due 7/1/10 1,520,625
875,000 AAA Long Beach Medical Center, MBIA/FHA-Insured,
5.550% due 8/1/15 864,063
1,000,000 A Mental Health Services Facilities Improvement,
6.000% due 2/15/12 1,048,750
500,000 Baa2* Nyack Hospital, Series A, 6.250% due 7/1/13 500,625
1,000,000 AAA Presbyterian Hospital, Series A, AMBAC/FHA-Insured,
Series A, 5.500% due 2/15/07 1,032,500
New York State Medical Care Facilities, Revenue Bonds:
725,000 A Mental Health Services Facility, 6.100% due 2/15/02 749,469
Methodist Hospital, FHA-Insured:
265,000 AA Series A, 6.000% due 8/15/02 275,931
135,000 AA Series C, 5.900% due 8/15/02 136,856
- --------------------------------------------------------------------------------------------------
6,264,669
- --------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 2.2%
1,000,000 AA New York State Housing Corp., (Battery Park City Project),
6.000% due 11/1/03 1,040,000
350,000 Aa* North Tonawanda Housing Development Corp., Mortgage
Revenue, Bishop Gibbons, Series B, FHA-Insured,
6.350% due 12/15/02 362,688
- --------------------------------------------------------------------------------------------------
1,402,688
- --------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================
Industrial Development -- 6.6%
<S> <C> <C> <C>
$ 535,000 A Amherst Industrial Development Agency, Lease Revenue,
Multi-Surface Rink Complex, Series A, LOC Keybank,
5.050% due 10/1/05 $ 543,694
500,000 Baa3* New York City IDA, Civil Facilities Revenue, (YMCA Greater
NY Project), 6.000% due 8/1/07 513,750
605,000 A Onondaga County, NY IDA, (Syracuse Home Association
Project), 5.000% due 12/1/13 550,550
1,000,000 A Syracuse Industrial Development Agency, Civic Facilities
Revenue, (Crouse Health Inc. Project), 5.000% due 1/1/10 947,500
Westchester County IDA:
1,000,000 AAA Resource Recovery Revenue, (Westchester Resco Co.
Project), AMBAC-Insured, 6.000% due 7/1/09 (c) 1,058,750
580,000 NR Revenue Bonds, (AGR Realty Co. Project),
5.750% due 1/1/02 583,625
- --------------------------------------------------------------------------------------------------
4,197,869
- --------------------------------------------------------------------------------------------------
Life Care Systems -- 1.2%
750,000 AA New York State Dormitory Authority Revenue, Hebrew
Home for the Aged, FHA-Insured, 5.625% due 2/1/17 750,000
- --------------------------------------------------------------------------------------------------
Miscellaneous -- 8.1%
500,000 A Capital District Youth Center Lease Revenue, LOC Key Bank,
6.000% due 2/1/17 486,875
New York State Municipal Bond Bank Agency,
Special Program Revenue:
925,000 BBB+ Buffalo, Series A, 6.500% due 3/15/00 930,069
250,000 AAA Rochester, Series A, 6.300% due 3/15/00 251,688
Suffolk County Judicial Facilities Agency Service Agreement
Revenue, John P. Cohalan Complex, AMBAC-Insured:
1,000,000 AAA 5.750% due 10/15/11 1,040,000
1,580,000 BBB- 5.300% due 10/1/11 1,508,900
1,000,000 BBB- Virgin Islands Public Finance Authority Revenue, Series A,
5.500% due 10/1/13 950,000
- --------------------------------------------------------------------------------------------------
5,167,532
- --------------------------------------------------------------------------------------------------
Pollution Control -- 3.8%
750,000 A3* Essex County Industrial Development Agency, Pollution
Control Revenue, 5.700% due 7/1/16 722,812
New York State Energy Research & Development Authority
Pollution Control Revenue, Niagara Mohawk Power
Company Project, Series A:
200,000 Aa3* 3.750% due 6/12/08 (c)(e) 200,000
200,000 Aa3* 3.750% due 12/1/26 (c)(e) 200,000
500,000 AAA New York State Environmental Facilities Corp., PCR,
Series A, 5.950% due 3/15/02 518,125
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================
<S> <C> <C> <C>
Pollution Control -- 3.8% (continued)
$ 800,000 Baa3* Oneida-Herkimer Solid Waste Management Authority,
6.300% due 4/1/01 $ 821,000
- --------------------------------------------------------------------------------------------------
2,461,937
- --------------------------------------------------------------------------------------------------
Public Facilities -- 1.0%
600,000 AAA Puerto Rico Public Buildings Authority, Public Education
and Health Facilities Refunding, Series K, FGIC-Insured,
6.000% due 7/1/01 618,000
- --------------------------------------------------------------------------------------------------
Transportation -- 18.1%
560,000 BBB Guam Transportation Authority Revenue, Series A,
5.700% due 10/1/01 567,700
2,500,000 AAA Metropolitan Transportation Authority, New York Dedicated
Tax Fund, Series A, FSA-Insured, 5.250% due 4/1/10 2,518,750
1,545,000 AA- New York State Thruway Authority General Revenue,
Series E, 5.000% due 1/1/16 1,409,812
1,000,000 BBB+ New York State Thruway Authority, Service Contract,
Local Highway and Bridges, 6.000% due 4/1/02 1,033,750
600,000 AAA Niagara Falls Bridge Commission Toll Revenue, Series B,
FGIC-Insured, 5.250% due 10/1/15 581,250
1,820,000 AAA Niagara Frontier Transportation Authority, Greater Buffalo
International Airport, Series B, AMBAC-Insured,
5.750% due 4/1/04 (c) 1,840,475
1,400,000 A2* Port Authority of New York & New Jersey, Special Obligation
Revenue Bonds, Series 3, 3.650% due 6/1/20 (e) 1,400,000
1,000,000 NR Port Authority of New York & New Jersey, Revenue Bonds,
6.750%, due 10/1/11 (c) 1,055,000
670,000 Baa1* Syracuse COP, Hancock International Airport,
6.300% due 1/1/02 (c) 688,425
500,000 AAA Triborough Bridge & Tunnel Authority, Special Obligation
Refunding, Series A, MBIA-Insured, 6.100% due 1/1/00 500,770
- --------------------------------------------------------------------------------------------------
11,595,932
- --------------------------------------------------------------------------------------------------
Utilities -- 1.8%
1,000,000 AAA Long Island Power Authority, Electric System Revenue,
FSA-Insured, 5.000% due 12/1/15 918,750
250,000 AAA New York State Power Authority Revenue & General
Purpose, Series Z, (Escrowed to Maturity with U.S.
government securities), 5.850% due 1/1/00 250,373
- --------------------------------------------------------------------------------------------------
1,169,123
- --------------------------------------------------------------------------------------------------
Water & Sewer -- 7.8%
1,500,000 AAA New York City Municipal Water Financing Authority, Water
& Sewer System Revenue, Series B, FSA-Insured,
5.250% due 6/15/10 1,511,250
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================
<S> <C> <C> <C>
Water & Sewer -- 7.8% (continued)
$1,000,000 Aa1* New York State Environmental Facility Corp., Clean Water &
Drinking, Series F, 5.250% due 6/15/14 $ 970,000
1,390,000 AAA Suffolk County Southwest Sewer District GO, MBIA-Insured,
6.000% due 2/1/07 1,476,875
1,000,000 AAA Suffolk County Water Authority, Waterworks Revenue,
MBIA-Insured, 5.100% due 6/1/09 1,002,500
- --------------------------------------------------------------------------------------------------
4,960,625
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENT -- 100%
(Cost -- $63,845,762**) $63,855,950
==================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except those
identified by an asterisk (*) which are rated by Moody's Investors Service,
Inc.
(b) Security segregated by Custodian for open purchase commitment.
(c) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(d) 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.
(e) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
** 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 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"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 Investors Service, Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3
may be applied to each generic rating from "Aa" to "B," where 1 is the highest
and 3 the lowest ranking within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large in Aaa securities or
fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A -- Bonds rated "A" possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds rated "Baa" are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate thereby not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B -- Bonds rated "B" generally lack characteristics of 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 IBCA, Inc. ("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.
- --------------------------------------------------------------------------------
Short-Term Security Ratings (unaudited)
- --------------------------------------------------------------------------------
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG-1 rating.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
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 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities November 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $63,845,762) $63,855,950
Cash 1,785
Interest receivable 1,056,449
Receivable for Fund shares sold 4,993
Receivable from manager 15,571
- --------------------------------------------------------------------------------
Total Assets 64,934,748
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for Fund shares purchased 22,000
Administration fees payable 17,308
Distribution fees payable 1,473
Accrued expenses 40,555
- --------------------------------------------------------------------------------
Total Liabilities 81,336
- --------------------------------------------------------------------------------
Total Net Assets $64,853,412
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 7,835
Capital paid in excess of par value 66,563,605
Overdistributed net investment income (5,079)
Accumulated net realized loss from security transactions (1,723,137)
Net unrealized appreciation of investments 10,188
- --------------------------------------------------------------------------------
Total Net Assets $64,853,412
================================================================================
Shares Outstanding:
Class A 7,235,779
------------------------------------------------------------------------------
Class L 598,941
------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption value) $8.28
------------------------------------------------------------------------------
Class L * $8.27
------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 2.04% of net asset value per share) $8.45
------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $8.35
================================================================================
* Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended November 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 3,277,787
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 189,247
Administration fees (Note 2) 126,165
Distribution fees (Note 2) 105,002
Shareholder and system servicing fees 37,691
Audit and legal 36,623
Shareholder communications 25,797
Registration fees 11,217
Pricing service fees 11,117
Trustees' fees 9,858
Custody 3,553
Other 6,274
- --------------------------------------------------------------------------------
Total Expenses 562,544
Less: Investment advisory and administration fee waivers (Note 2) (94,853)
- --------------------------------------------------------------------------------
Net Expenses 467,691
- --------------------------------------------------------------------------------
Net Investment Income 2,810,096
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 14,142,960
Cost of securities sold 14,597,125
- --------------------------------------------------------------------------------
Net Realized Loss (454,165)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 3,231,584
End of year 10,188
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (3,221,396)
- --------------------------------------------------------------------------------
Net Loss on Investments (3,675,561)
- --------------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (865,465)
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended November 30,
1999 1998
======================================================================================
OPERATIONS:
<S> <C> <C>
Net investment income $2,810,096 $2,453,059
Net realized gain (loss) (454,165) 225,219
Increase (decrease) in net unrealized appreciation (3,221,396) 913,904
- --------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations (865,465) 3,592,182
- --------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (2,809,830) (2,444,832)
In excess of net investment income -- (2,540)
- --------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (2,809,830) (2,447,372)
- --------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 19,640,773 14,963,416
Net asset value of shares issued for
reinvestment of dividends 1,875,275 1,698,753
Cost of shares reacquired (11,858,196) (9,977,772)
- --------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 9,657,852 6,684,397
- --------------------------------------------------------------------------------------
Increase in Net Assets 5,982,557 7,829,207
NET ASSETS:
Beginning of year 58,870,855 51,041,648
- --------------------------------------------------------------------------------------
End of year* $64,853,412 $58,870,855
======================================================================================
* Includes overdistributed net investment income of: $(5,079) $(5,345)
======================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 17
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 six other separate investment funds: Smith
Barney Intermediate Maturity California Municipals Fund, Smith Barney Large
Capitalization Growth Fund, Smith Barney S&P 500 Index Fund, Smith Barney Mid
Cap Blend Fund, Smith Barney U.S. 5000 Index Fund and Smith Barney EAFE Index
Fund. The financial statements and financial highlights for the other funds are
presented in separate shareholder reports.
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; (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; (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; 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.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), which in turn
is a subsidiary of Citigroup Inc. ("Citigroup"), acts as investment adviser to
the Fund. The Fund pays SSBC an 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 year ended November 30, 1999, SSBC waived $56,912 of its
investment advisory fee.
SSBC 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 year ended November 30, 1999, SSBC
waived $37,941 of its administration fee.
Effective October 1999, Smith Barney Private Trust Company ("Private Trust"),
another subsidiary of Citigroup, became the Fund's transfer agent and PFPC
Global Fund Services ("PFPC") became the Fund's sub-transfer agent. Private
Trust receives account fees and asset-based fees that vary according to the
account size and type of account. PFPC is responsible for shareholder
recordkeeping and financial processing for all shareholder accounts and is paid
by Private Trust. During the period October 1, 1999 through November 30, 1999,
the Fund paid transfer agent fees of $2,504 to Smith Barney Private Trust
Company.
CFBDS, Inc. acts as the Fund's distributor. Salomon Smith Barney Inc. ("SSB"),
another subsidiary of SSBH, as well as certain other broker-dealers, continues
to sell Fund shares to the public as a member of the selling group.
Class L shares are being sold at net asset value plus a maximum initial sales
charge of 1.00%. Class L shares also have a 1.00% contingent deferred sales
charge ("CDSC"), which applies if redemption occurs within the first year of
purchase.
For the year ended November 30, 1999, SSB received sales charges of $119,000 and
$18,000 on sales of the Fund's Class A and Class L shares, respectively. In
addition, CDSCs paid to SSB were approximately $3,000 for Class L shares.
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A and L 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 L shares calculated at the annual
rate of 0.20% of the average daily net assets.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
For the year ended November 30, 1999, total Distribution Plan fees incurred
were:
Class A Class L
- --------------------------------------------------------------------------------
Distribution Plan Fees $86,840 $18,162
- --------------------------------------------------------------------------------
All officers and one Trustee of the Fund are employees of SSB.
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 year ended November 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
========================================================
Purchases $22,056,754
- --------------------------------------------------------
Sales 14,142,960
========================================================
At November 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
===============================================================
Gross unrealized appreciation $ 905,698
Gross unrealized depreciation (895,510)
- ---------------------------------------------------------------
Net unrealized appreciation $ 10,188
===============================================================
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
6. Capital Loss Carryforward
At November 30, 1999, the Fund had, for Federal income tax purposes,
approximately $1,723,000 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. Expiration occurs on November 30 of the year indicated:
2002 2003 2004 2007
================================================================================
Carryforward Amounts $856,000 $337,000 $76,000 $454,000
================================================================================
7. Shares of Beneficial Interest
At November 30, 1999, 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. Effective June 12, 1998, the Fund adopted the renaming of existing Class
C shares as Class L shares.
At November 30, 1999, total paid-in capital amounted to the following for each
class:
Class A Class L
===========================================================================
Total Paid-in Capital $61,404,000 $5,167,440
===========================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, 1999 November 30, 1998
------------------------ ------------------------
Shares Amount Shares Amount
==========================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 2,067,594 $17,655,669 1,430,450 $12,454,137
Shares issued on reinvestment 201,079 1,710,081 183,973 1,597,366
Shares reacquired (1,270,139) (10,724,174) (1,065,095) (9,271,847)
- ------------------------------------------------------------------------------------------
Net Increase 998,534 $8,641,576 549,328 $4,779,656
==========================================================================================
Class L*
Shares sold 228,446 $1,985,104 288,386 $2,509,279
Shares issued on reinvestment 19,436 165,194 11,668 101,387
Shares reacquired (133,953) (1,134,022) (81,355) (705,925)
- ------------------------------------------------------------------------------------------
Net Increase 113,929 $1,016,276 218,699 $1,904,741
==========================================================================================
* On June 12, 1998, Class C shares were renamed as Class L shares
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 21
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended November 30:
<TABLE>
<CAPTION>
Class A Shares 1999(1) 1998 1997 1996 1995
========================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $8.76 $8.57 $8.47 $8.48 $7.80
- --------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(2) 0.38 0.40 0.41 0.41 0.41
Net realized and unrealized gain (loss) (0.48) 0.19 0.10 (0.01) 0.68
- --------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.10) 0.59 0.51 0.40 1.09
- --------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.38) (0.40) (0.41) (0.41) (0.41)
- --------------------------------------------------------------------------------------------------------
Total Distributions (0.38) (0.40) (0.41) (0.41) (0.41)
- --------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $8.28 $8.76 $8.57 $8.47 $8.48
- --------------------------------------------------------------------------------------------------------
Total Return (1.18)% 7.01% 6.23% 4.85% 14.31%
- --------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $59,896 $54,624 $48,759 $49,355 $52,568
- --------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.73% 0.70% 0.67% 0.66% 0.65%
Net investment income 4.47 4.59 4.83 4.86 5.01
- --------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 23% 53% 52% 67% --
========================================================================================================
</TABLE>
(1) Per share amounts have been calculated using the average shares method.
(2) The investment adviser has waived all or part of its fees for the five
years ended November 30, 1999. If such fees were not waived, the per share
effect on net investment income and the expense ratios would have been as
follows:
Per Share Decreases to Expense Ratios
Net Investment Income Without Fee Waivers
------------------------------- -------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Class A $0.01 $0.02 $0.03 $0.04 $0.03 0.88% 0.89% 0.98% 1.08% 0.97%
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended November 30:
<TABLE>
<CAPTION>
Class L Shares 1999(1) 1998(2) 1997 1996 1995(3)
===============================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 8.76 $ 8.57 $ 8.47 $ 8.48 $ 7.87
- -----------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(4) 0.37 0.38 0.39 0.39 0.38
Net realized and unrealized gain (loss) (0.50) 0.19 0.10 (0.01) 0.61
- -----------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.13) 0.57 0.49 0.38 0.99
- -----------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.36) (0.38) (0.39) (0.39) (0.38)
- -----------------------------------------------------------------------------------------------
Total Distributions (0.36) (0.38) (0.39) (0.39) (0.38)
- -----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 8.27 $ 8.76 $ 8.57 $ 8.47 $ 8.48
- -----------------------------------------------------------------------------------------------
Total Return (1.49)% 6.79% 6.00% 4.64% 13.01%++
- -----------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $4,957 $4,247 $2,283 $1,192 $393
- -----------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 0.92% 0.89% 0.89% 0.88% 0.86%+
Net investment income 4.28 4.38 4.61 4.64 4.74+
- -----------------------------------------------------------------------------------------------
Portfolio Turnover Rate 23% 53% 52% 67% --
===============================================================================================
</TABLE>
(1) Per share amounts have been calculated using the average shares method.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) For the period from December 5, 1994 (inception date) to November 30, 1995.
(4) The investment adviser has waived all or part of its fees for the four years
ended November 30, 1999 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:
Per Share Decreases to Expense Ratios
Net Investment Income Without Fee Waivers
-------------------------------- -------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Class L $0.01 $0.01 $0.03 $0.02 $0.03 1.07% 1.09% 1.20% 1.30% 1.19%+
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
November 30, 1999:
. 100% of the dividends paid by the Fund from net investment income as
tax-exempt for regular Federal income tax purposes.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Maturity New York Municipals Fund 23
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees of Smith Barney Investment Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Smith Barney Intermediate Maturity New York
Municipals Fund ("Fund") of Smith Barney Investment Trust as of November 30,
1999, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
then ended and financial highlights for each of the years in the five-year
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Smith Barney Intermediate Maturity New York Municipals Fund of Smith Barney
Investment Trust as of November 30, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended and financial highlights for each of the years in the
five-year period then ended, in conformity with generally accepted accounting
principles.
KPMG LLP
New York, New York
January 14, 2000
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
[LOGO OF SALOMON SMITH BARNEY]
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
Joseph P. Deane
Vice President and
Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Adviser and
Administrator
SSB Citi Fund Management LLC
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Transfer Agent
Smith Barney Private Trust Company
388 Greenwich Street, 22nd Floor
New York, New York 10013
Sub-Transfer Agent
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
This report is submitted for the general information of the shareholders of
Smith Barney Investment Trust -- Smith Barney Intermediate Maturity New York
Municipals Fund. It is not authorized for distribution to prospective investors
unless accompanied or preceded by a current Prospectus for the Fund, which
contains information concerning the Fund's investment policies and expenses as
well as other pertinent information.
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney
Intermediate Maturity
New York Municipals Fund
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com/mutualfunds
FD0311 1/00
[GRAPHIC OMITTED]
Smith Barney
S&P 500
Index Fund
-------------
ANNUAL REPORT
-------------
November 30, 1999
[LOGO] Smith Barney
Mutual Funds
NOT FDIC INSURED - NOT BANK GUARANTEED - MAY LOSE VALUE
<PAGE>
Smith Barney
S&P 500
Index Fund
[PHOTO OMITTED]
Heath B. McLendon
Chairman
[PHOTO OMITTED]
Sandip A. Bhagat, CFA
Vice President and Investment Officer
[PHOTO OMITTED]
John Lau
Investment Officer
Dear Shareholder:
We are pleased to provide the annual report of the Smith Barney S&P 500 Index
Fund ("Fund") for the year ended November 30, 1999.(1) We hope you find this
report useful and informative. 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
Index ("S&P 500 Index"), (2) 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 is designed to provide reliable exposure to the large-cap segment of
the U.S. market through a broadly diversified portfolio structure of common
stocks that is comparable to the S&P 500 Index in terms of sector weightings and
market capitalization. The average annual total returns for the year ended
November 30, 1999 for its Class A and D shares were 19.96% and 20.29%,
respectively, compared with the 20.89% for the S&P 500 Index over the same
period.
- ----------
(1) The Smith Barney S&P 500 Index Fund's fiscal year end was changed to
December 31.
(2) 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>
Financial Markets Overview
The U.S. stock market has continued its historically unprecedented rise. We
observed in our report last year that low interest rates and favorable money
flows were the dominant influences on market performance. While interest rates
have gone up this year, their adverse impact on stock prices has been more than
offset by strong earnings growth in 1999 and money flows into the stock market
continue to be robust.
In our view, the most persuasive argument for the strength of the stock market
is the significant gain in productivity. According to statistics compiled by the
Bureau of Labor Statistics, the ratio of productivity growth to output growth
has been above the historical norm in four out of the last six years -- often by
wide margins.
The magnitude and duration of this long bull market in stocks is unparalleled as
evidenced by the historically high price/earnings ratios for many large-cap
stocks. (The price/earnings ratio is the price of a stock divided by its
earnings per share.)
The breadth of the current market run is also worth noting. Last year, 50% of
"momentum" stocks in the top quartile were in either the technology or
telecommunications sectors. This year, that figure is approximately 70%. The
strong U.S. stock market is, in fact, segmented into the haves and have-nots.
While the S&P 500 Index has advanced by nearly 21% in the twelve months ended
November 30, 1999, the NASDAQ 100 Index has risen by over 90%. (The NASDAQ 100
Index is a modified capitalization-weighted index comprised of 100 of the
largest non-financial companies listed on the National Market tier of the NASDAQ
stock market.)
On the other hand, the Russell 2000 Index of smaller companies has gained only
15%. (The Russell 2000 Index measures the performance of the 2,000 smallest
companies in the Russell 3000 Index. The Russell 3000 Index measures the
performance of the 3,000 largest U.S. companies based on a total market
capitalization which represents approximately 98% of the investable U.S. equity
market.)
- --------------------------------------------------------------------------------
2 1999 Annual Report to Shareholders
<PAGE>
Thank you for investing in the Smith Barney S&P 500 Index Fund. We look forward
to helping you pursue your financial goals in the next century.
Sincerely,
/s/ Heath B. McLendon /s/ Sandip A. Bhagat
Heath B. McLendon Sandip A. Bhagat, CFA
Chairman Vice President
and Investment Officer
/s/ John Lau
John Lau
Investment Officer
December 22, 1999
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 3
<PAGE>
- --------------------------------------------------------------------------------
Historical Performance - Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
-----------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividend Distribution Returns+
================================================================================
11/30/99 $11.98 $14.24 $0.06 $0.07 19.96%
- --------------------------------------------------------------------------------
Inception*-11/30/98 10.00 11.98 0.00 0.00 19.80++
================================================================================
Total $0.06 $0.07
================================================================================
- --------------------------------------------------------------------------------
Historical Performance - Class D Shares
- --------------------------------------------------------------------------------
Net Asset Value
-----------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividend Distribution Returns+
================================================================================
11/30/99 $11.99 $14.28 $0.07 $0.07 20.29%
- --------------------------------------------------------------------------------
Inception*-11/30/98 11.00 11.99 0.00 0.00 9.00++
================================================================================
Total $0.07 $0.07
================================================================================
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
- --------------------------------------------------------------------------------
Average Annual Total Returns+
- --------------------------------------------------------------------------------
Class A Class D
================================================================================
Year Ended 11/30/99 19.96% 20.29%
- --------------------------------------------------------------------------------
Inception* through 11/30/99 21.01 22.72
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Returns
- --------------------------------------------------------------------------------
================================================================================
Class A (Inception* through 11/30/99) 43.71%
- --------------------------------------------------------------------------------
Class D (Inception* through 11/30/99) 31.11
================================================================================
* Inception dates for Class A and D shares are January 5, 1998 and August 4,
1998, respectively.
+ Assumes reinvestment of all dividends and capital gain distributions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
- --------------------------------------------------------------------------------
4 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
COMMON STOCK -- 99.7%
Auto & Transportation -- 2.0%
3,085 AMR Corp.* $ 187,799
9,526 Burlington Northern Santa Fe Corp. 276,254
1,534 Cooper Tire & Rubber Co. 23,010
4,481 CSX Corp. 159,356
886 Cummins Engine Co., Inc. 35,883
3,400 Dana Corp. 94,350
2,862 Delta Air Lines, Inc. 140,953
1,479 Eaton Corp. 114,530
6,078 FDX Corp.* 256,416
670 Fleetwood Enterprises, Inc. 14,070
24,782 Ford Motor Co. 1,251,491
13,220 General Motors Corp. 951,840
3,632 Genuine Parts Co. 93,524
3,182 The Goodyear Tire & Rubber Co. 107,392
1,815 ITT Industries, Inc. 63,298
1,732 Johnson Controls Inc. 94,394
2,282 Kansas City Southern Industries, Inc. 135,922
1,371 Navistar International Corp. 50,984
7,765 Norfolk Southern Corp. 165,977
1,623 Paccar, Inc. 66,746
1,298 Ryder Systems, Inc. 29,286
1,330 Snap-On, Inc. 40,233
10,336 Southwest Airlines Co. 168,606
1,308 The Timken Co. 25,016
2,503 TRW, Inc. 130,625
5,103 Union Pacific Resources 66,658
1,485 US Airways Group, Inc.* 41,487
- --------------------------------------------------------------------------------
4,786,100
- --------------------------------------------------------------------------------
Consumer Discretionary -- 14.3%
1,137 Alberto Culver Co., Class B Shares 29,917
8,612 Albertsons, Inc. 275,046
1,411 American Greetings Corp., Class A Shares 33,247
3,094 Autozone, Inc.* 85,278
5,330 Avon Products, Inc. 194,212
2,840 Bed Bath & Beyond Inc.* 88,750
4,159 Best Buy Co., Inc.* 259,937
1,925 Brunswick Corp. 41,989
12,594 Carnival Corp. 555,710
15,622 CBS Corp. 812,357
14,768 Cendant Corp.* 244,595
4,115 Circuit City Stores - Circuit City Group 199,577
6,911 Clear Channel Communications Inc.* 555,472
4,814 Clorox Co. 214,524
11,965 Colgate Palmolive Co. 656,579
15,363 Comcast Corp., Class A Shares 694,216
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 5
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Consumer Discretionary -- 14.3% (continued)
2,269 Consolidated Stores Corp.* $ 35,737
4,540 Costco Cos., Inc. 416,261
8,033 CVS Corp. 318,810
2,718 Darden Restaurants, Inc. 48,414
9,063 Dayton-Hudson Corp. 639,508
1,547 Deluxe Corp. 40,512
2,186 Dillard, Inc., Class A Shares 41,261
4,644 Dollar General Corp. 113,778
1,854 Dow Jones & Co., Inc. 112,399
3,301 Dun & Bradstreet Corp. 89,127
6,495 Eastman Kodak Co. 401,878
4,262 Federated Department Stores, Inc.* 200,580
5,737 Gannett Co. 410,554
17,566 The Gap, Inc. 711,423
22,241 The Gillette Co. 893,810
742 The Great Atlantic & Pacific Tea Co., Inc. 18,875
1,437 Harcourt General, Inc. 47,601
2,649 Harrah's Entertainment, Inc.* 73,179
4,014 Hasbro, Inc. 86,552
5,317 Hilton Hotels Corp. 53,502
30,408 Home Depot, Inc. 2,404,133
2,966 Ikon Office Solutions Inc. 19,835
2,206 International Flavors & Fragrances, Inc. 81,208
5,758 The Interpublic Group of Cos., Inc. 270,626
5,424 J.C. Penney Co., Inc. 121,023
641 Jostens, Inc. 11,778
10,911 Kimberly-Clark Corp. 696,940
10,201 KMart Corp.* 101,372
1,672 Knight Ridder, Inc. 91,229
3,324 Kohl's Corp.* 239,951
17,056 Kroger Co.* 363,506
4,389 The Limited, Inc. 186,258
1,234 Liz Claiborne, Inc. 46,198
840 Longs Drug Stores Corp. 21,105
7,820 Lowe's Cos., Inc. 389,534
5,112 Marriott International Inc., Class A Shares 166,460
8,580 Mattel, Inc. 122,801
6,877 May Department Stores Co. 231,239
1,776 Maytag Corp. 84,693
27,759 McDonald's Corp. 1,249,155
4,044 McGraw Hill, Inc. 229,244
1,050 Meredith Corp. 39,703
4,001 Mirage Resorts, Inc. 51,263
857 National Service Industries, Inc. 25,335
3,576 The New York Times Co., Class A Shares 137,453
5,746 Newell Co. 188,541
5,743 Nike Inc., Class B Shares 264,178
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Consumer Discretionary -- 14.3% (continued)
2,890 Nordstrom, Inc. $ 80,378
7,719 Office Depot, Inc.* 85,874
3,633 Omnicom Group, Inc. 320,158
3,320 Pactiv Corp.* 34,030
998 The Pep Boys - Manny, Moe & Jack 9,668
874 Polaroid Corp. 16,825
27,234 The Procter & Gamble Co. 2,941,272
2,641 R.R. Donnelley & Sons Co. 63,384
1,061 Reebok International Ltd.* 9,549
5,365 Rite Aid Corp. 40,573
764 Russell Corp. 9,980
7,793 Sears Roebuck & Co. 266,423
5,502 Service Corp. 41,609
362 Springs Industries, Inc. 14,480
9,547 Staples, Inc.* 224,355
2,882 Supervalu, Inc. 56,019
3,946 Tandy Corp. 302,362
26,514 Time Warner, Inc. 1,635,582
1,233 Times Mirror Corp., Class A Shares 79,606
6,509 TJX Cos., Inc. 170,454
5,111 Toys 'R' Us, Inc.* 89,443
4,875 Tribune Co. 234,305
3,134 Tricon Global Restaurants, Inc.* 130,061
1,193 Tupperware Corp. 21,250
10,346 U.S. West Media Group Inc.* 642,099
11,735 Unilever NV 638,824
2,464 VF Corp. 73,612
14,268 Viacom, Inc., Class B Shares* 709,833
20,569 Walgreen Co. 599,072
91,249 Wal-Mart Stores, Inc. 5,258,224
42,254 Walt Disney Co. 1,177,830
196 Water Pik Technologies, Inc.* 1,450
2,440 Wendy's International, Inc. 53,833
1,541 Whirlpool Corp. 94,001
3,005 Winn-Dixie Stores Inc. 78,693
- --------------------------------------------------------------------------------
33,735,039
- --------------------------------------------------------------------------------
Consumer Staples -- 4.8%
738 Adolph Coors Co., Class B Shares 36,715
9,587 Anheuser-Busch Co., Inc. 717,227
12,729 Archer-Daniels-Midland Co. 158,317
5,698 Bestfoods 312,322
1,400 Brown-Forman Corp., Class B Shares 87,762
8,914 Campbell Soup Co. 397,787
50,618 The Coca-Cola Co. 3,407,224
8,722 Coca-Cola Enterprises Inc. 184,797
9,962 ConAgra, Inc. 240,333
3,445 Fortune Brands, Inc. 117,776
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Consumer Staples -- 4.8% (continued)
6,282 General Mills, Inc. $ 236,753
7,320 H.J. Heinz Co. 306,525
2,881 Hershey Foods Corp. 141,529
8,314 Kellogg Co. 281,637
2,208 Loews Corp. 141,312
6,762 Nabisco Group Holdings Corp. 78,186
29,981 PepsiCo, Inc. 1,036,218
48,979 Phillip Morris Cos., Inc. 1,288,760
2,759 Quaker Oats Co. 180,025
6,669 Ralston-Purina Group 197,986
10,478 Safeway, Inc.* 386,376
18,506 Sara Lee Corp. 448,771
8,871 Seagram Co., Ltd. 386,443
6,771 Sysco Corp. 257,721
3,577 UST, Inc. 95,238
2,381 Wm. Wrigley Jr. Co. 198,069
- --------------------------------------------------------------------------------
11,321,809
- --------------------------------------------------------------------------------
Finance -- 14.5%
5,455 AFLAC Inc. 261,158
16,390 Allstate Corp. 429,213
9,213 American Express Co. 1,394,042
5,106 American General Corp. 374,334
31,740 American International Group, Inc. 3,277,155
8,017 AmSouth Bancorporation 180,884
5,250 Aon Corp. 187,359
14,961 Associates First Capital Corp.* 497,453
35,405 Bank of America Corp. 2,071,193
15,099 The Bank of New York Co., Inc. 602,073
24,073 Bank One Corp. 848,573
6,577 BB&T Corp. 211,286
2,506 Bear Stearns Cos. Inc. 102,276
4,041 Capital One Financial Corp. 188,159
16,791 Charles Schwab Corp. 637,009
17,062 Chase Manhattan Corp. 1,318,039
3,618 Chubb Corp. 193,789
3,819 CIGNA Corp. 314,112
3,363 Cincinnati Financial Corp. 112,660
69,258 Citigroup Inc. 3,731,275
3,201 Comerica, Inc. 169,653
6,753 Conseco, Inc. 136,748
2,351 Countrywide Credit Industries, Inc. 66,122
2,991 Equifax, Inc. 74,027
21,030 Fannie Mae 1,401,124
6,194 Fifth Third Bancorp 433,580
19,586 First Union Corp. 757,733
20,212 Firstar Corp. 525,512
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Finance -- 14.5% (continued)
18,909 FleetBoston Financial Corp. $ 714,997
5,145 Franklin Resources, Inc. 161,746
14,267 Freddie Mac 704,433
1,122 Golden West Financial Corp. 113,252
2,013 H&R Block, Inc. 86,559
4,635 Hartford Financial Services, Inc. 216,397
9,795 Household International, Inc. 387,515
4,709 Huntington Bancshares Inc. 130,380
3,602 J.P. Morgan & Co., Inc. 473,663
2,166 Jefferson Pilot Corp. 147,017
9,198 Keycorp 248,346
2,467 Lehman Brothers Holdings, Inc. 188,417
4,065 Lincoln National Corp. 169,460
5,403 Marsh & McLennan Cos., Inc. 424,811
2,037 MBIA, Inc. 101,850
16,457 MBNA Corp. 415,539
10,557 Mellon Financial Corp. 384,671
7,576 Merrill Lynch & Co., Inc. 610,815
2,254 MGIC Investment Corp. 127,351
11,706 Morgan Stanley Dean Witter & Co. 1,412,036
12,699 National City Corp. 316,681
2,298 Northern Trust Corp. 222,475
2,983 PaineWebber Group, Inc. 116,896
5,068 Paychex, Inc. 202,403
1,752 Pinnacle West Capital Corp. 58,145
6,225 PNC Bank Corp. 347,044
1,486 Progressive Corp. 119,716
2,913 Providian Financial Corp. 230,491
4,606 Regions Financial Corp. 126,377
2,133 Republic New York Corp. 150,776
2,728 SAFECO Corp. 64,620
3,276 SLM Holding Corp. 162,367
3,449 SouthTrust Corp. 133,864
4,678 St. Paul Cos. 141,217
3,319 State Street Corp. 243,739
3,644 Summit Bancorp 118,886
6,606 Suntrust Banks, Inc. 461,594
5,555 Synovus Financial Corp. 111,100
2,517 T. Rowe Price Associates 90,612
2,697 Torchmark Corp. 85,630
15,031 U.S. Bancorp 513,872
2,954 Union Planters Corp. 125,914
4,923 UnumProvident Corp. 160,305
4,149 Wachovia Corp. 321,288
11,865 Washington Mutual, Inc. 344,085
33,789 Wells Fargo & Co. 1,571,189
- --------------------------------------------------------------------------------
34,257,082
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Health Care -- 10.5%
31,216 Abbott Laboratories $ 1,186,208
3,078 AETNA, Inc. 168,136
1,361 Allergan, Inc. 133,888
2,079 Alza Corp.* 89,787
26,795 American Home Products Corp. 1,393,340
1,285 Amgen, Inc.* 58,548
1,196 Bausch & Lomb, Inc. 65,556
5,978 Baxter International, Inc. 403,889
5,097 Becton Dickinson & Co. 138,893
2,294 Biomet, Inc. 72,691
8,510 Boston Scientific Corp.* 179,774
40,727 Bristol-Myers Squibb & Co. 2,975,616
1,032 C.R. Bard, Inc. 56,050
5,585 Cardinal Health, Inc. 292,165
11,528 Columbia/HCA Healthcare Corp. 314,138
22,406 Eli Lilly & Co. 1,607,631
6,202 Guidant Corp. 310,100
8,581 HealthSouth Corp.* 48,804
3,525 Humana, Inc. 24,675
6,429 IMS Health, Inc. 151,483
27,562 Johnson & Johnson 2,859,558
1,482 Mallinckrodt, Inc. 49,277
2,189 Manor Care, Inc. 43,917
5,744 McKesson HBOC, Inc. 134,266
24,055 Medtronic, Inc. 935,138
48,085 Merck & Co., Inc. 3,774,673
2,098 PE Corp.-PE Biosystems Group 171,249
79,451 Pfizer, Inc. 2,875,133
10,400 Pharmacia & Upjohn, Inc. 568,750
2,353 Quintiles Transnational* 51,913
30,113 Schering Plough Corp. 1,539,527
1,760 St. Jude Medical, Inc. 46,750
6,402 Tenet Healthcare Corp. 142,845
3,557 United Healthcare Corp. 184,742
17,527 Warner-Lambert Co. 1,571,953
1,955 Watson Pharmaceuticals, Inc.* 72,702
1,354 WellPoint Health Networks, Inc.* 77,940
- --------------------------------------------------------------------------------
24,771,705
- --------------------------------------------------------------------------------
Integrated Oil -- 5.0%
1,861 Amerada Hess Corp. 107,822
1,496 Ashland, Inc. 50,490
6,620 Atlantic Richfield Co. 638,003
13,448 Chevron Corp. 1,190,988
49,775 Exxon Corp. 3,947,780
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Integrated Oil -- 5.0% (continued)
1,790 Kerr-McGee Corp. $ 102,478
16,052 Mobil Oil Corp. 1,674,424
7,134 Occidental Petroleum Corp. 156,502
5,178 Phillips Petroleum Co. 247,573
43,958 Royal Dutch Petroleum Co. 2,549,564
1,900 Sunoco, Inc. 48,569
11,316 Texaco, Inc. 689,569
3,094 Tosco Corp. 83,731
4,984 Unocal Corp. 165,407
6,306 USX Marathon Group, Inc. 166,715
- --------------------------------------------------------------------------------
11,819,615
- --------------------------------------------------------------------------------
Materials & Processing -- 3.2%
4,690 Air Products and Chemicals, Inc. 151,839
4,648 Alcan Aluminium Ltd. 158,032
1,966 Allegheny Technologies, Inc. 49,531
836 Armstrong World Industries, Inc. 28,006
2,337 Avery Dennison Corp. 138,759
612 Ball Corp. 22,759
7,966 Barrick Gold Corp.* 143,388
1,036 Bemis, Inc. 32,634
2,700 Bethlehem Steel Corp.* 16,875
1,762 Black & Decker Corp. 79,070
1,163 Boise Cascade Corp. 40,269
1,985 Champion International Corp. 110,043
12,847 Conoco Inc. 336,452
2,488 Crown Cork & Seal Co., Inc. 50,693
4,513 Dow Chemical Corp. 528,585
21,376 E.I. du Pont de Nemours & Co. 1,270,579
1,584 Eastman Chemical Co. 61,578
2,674 Ecolab, Inc. 92,587
2,546 Engelhard Corp. 42,805
658 FMC Corp.* 31,913
4,538 Fort James Corp. 130,468
3,352 Freeport-McMoRan Copper & Gold, Inc. 53,004
3,505 Georgia Pacific Corp. 139,543
1,176 Great Lakes Chemical Corp. 39,029
2,199 Hercules, Inc. 52,226
5,455 Homestake Mining Co. 45,004
3,920 Inco Ltd. 72,030
8,490 International Paper Co. 443,072
3,991 Leggett & Platt, Inc. 85,557
2,111 Louisiana Pacific Corp. 25,860
9,122 Masco Corp. 230,331
2,089 Mead Corp. 74,551
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Materials & Processing -- 3.2% (continued)
12,977 Monsanto Co. $ 547,467
3,388 Newmont Mining Corp. 80,253
1,786 Nucor Corp. 90,081
1,148 Owens Corning 18,081
3,149 Owens-Illinois, Inc.* 75,379
1,591 Phelps Dodge Corp. 82,750
6,727 Placer Dome, Inc. 76,520
587 Potlatch Corp. 23,737
3,547 PPG Industries, Inc. 207,721
3,248 Praxair, Inc. 144,942
1,297 Reynolds Metals Co. 81,144
4,464 Rohm & Haas Co. 163,494
1,718 Sealed Air Corp.* 80,746
3,481 Sherwin-Williams Co. 74,624
2,083 Sigma Aldrich Corp. 59,626
1,848 The Stanley Works 57,519
1,127 Temple-Inland, Inc. 64,521
2,739 Union Carbide Corp. 160,232
1,818 USX-U.S. Steel Group, Inc. 46,018
2,053 Vulcan Materials Co. 82,633
1,572 W.R. Grace & Co.* 21,419
2,064 Westvaco Corp. 62,307
4,847 Weyerhaeuser Co. 296,879
2,282 Willamette Industries, Inc. 94,418
1,950 Worthington Industries, Inc. 31,200
- --------------------------------------------------------------------------------
7,500,783
- --------------------------------------------------------------------------------
Other Energy -- 0.8%
2,628 Anadarko Petroleum Corp. 79,168
2,326 Apache Corp. 83,300
6,701 Baker Hughes, Inc. 169,200
4,456 Burlington Resources, Inc. 149,833
9,037 Halliburton Co. 349,619
977 Helmerich & Payne, Inc. 22,105
1,345 McDermott International, Inc. 11,517
148 NACCO Industries, Inc., Class A Shares 7,169
1,648 Rowan Cos., Inc.* 28,222
11,234 Schlumberger Ltd. 674,742
5,095 Union Pacific Corp. 239,783
- --------------------------------------------------------------------------------
1,814,658
- --------------------------------------------------------------------------------
Producer Durables -- 7.7%
7,513 Alcoa Inc. 492,101
3,848 Allied Waste Industries* 31,265
11,300 AlliedSignal, Inc. 675,881
2,246 The B.F. Goodrich Co. 50,675
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Producer Durables -- 7.7% (continued)
19,665 Boeing Co. $ 802,578
474 Briggs & Stratton Corp. 25,329
7,276 Caterpillar Inc. 337,424
1,193 Centex Corp. 28,334
1,931 Cooper Industries, Inc. 82,912
5,007 Corning, Inc. 469,093
1,405 Crane Co. 25,817
2,897 Danaher Corp. 142,315
4,802 Deere & Co. 206,186
11,563 Delphi Automotive Systems Corp. 182,117
4,268 Dover Corp. 185,125
8,899 Emerson Electric Co. 507,243
1,566 Fluor Corp. 65,870
904 Foster Wheeler Corp. 9,210
4,061 General Dynamics Corp. 209,395
67,244 General Electric Co. 8,741,720
2,617 Honeywell, Inc. 292,940
5,125 Illinois Tool Works, Inc. 331,844
3,398 Ingersoll-Rand Co. 164,591
949 Kaufman & Broad Home Corp. 20,997
6,943 Laidlaw, Inc. 42,526
8,132 Lockheed Martin Corp. 161,624
819 Milacron, Inc. 11,927
911 Millipore Corp. 29,892
8,264 Minnesota Mining & Manufacturing Co. 789,729
1,413 Northrop Grumman Corp. 79,393
2,594 Pall Corp. 60,797
912 Pulte Corp. 18,297
6,950 Raytheon Co. 213,278
3,925 Rockwell International Corp. 194,778
3,090 Textron, Inc. 219,583
3,236 Thermo Electron Corp.* 48,540
1,152 Thomas & Betts Corp. 47,232
34,306 Tyco International Ltd. 1,374,384
9,877 United Technologies Corp. 558,051
1,907 W.W. Grainger, Inc. 89,867
12,729 Waste Management, Inc. 206,846
- --------------------------------------------------------------------------------
18,227,706
- --------------------------------------------------------------------------------
Technology -- 26.2%
7,310 3Com Corp.* 291,029
2,490 Adobe Systems, Inc. 171,032
3,026 Advanced Micro Devices, Inc.* 85,484
45,439 America Online, Inc.* 3,302,847
3,537 Analog Devices, Inc.* 203,156
1,736 Andrew Corp.* 24,195
3,292 Apple Computer, Inc.* 322,204
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Technology -- 26.2% (continued)
7,702 Applied Materials, Inc.* $ 750,464
1,217 Autodesk, Inc. 35,673
12,664 Automatic Data Processing Inc. 625,285
4,891 BMC Software, Inc.* 356,126
3,545 Cabletron Systems, Inc.* 81,313
2,929 Ceridian Corp.* 63,340
66,639 Cisco Systems, Inc.* 5,943,366
1,300 Citrix Systems, Inc.* 123,337
34,837 Compaq Computer Corp. 851,343
11,004 Computer Associates International, Inc.* 715,260
3,292 Computer Sciences Corp. 214,803
7,307 Compuware Corp.* 247,068
1,428 Comverse Technology, Inc.* 172,609
52,074 Dell Computer Corp.* 2,239,182
10,108 Electronic Data Systems Corp. 650,071
20,766 EMC Group Inc.* 1,735,260
8,778 First Data Corp. 379,648
6,411 Gateway 2000, Inc.* 489,640
3,554 General Instrument Corp.* 232,787
15,771 Global Crossing Ltd.* 688,010
20,772 Hewlett-Packard Co. 1,970,744
67,825 Intel Corp. 5,201,330
37,085 International Business Machines Corp. 3,822,073
1,797 KLA-Tencor Corp.* 151,959
2,651 Lexmark International Group 220,033
3,039 LSI Logic Corp.* 183,670
62,812 Lucent Technologies, Inc. 4,589,202
12,432 MediaOne Group, Inc.* 985,236
5,127 Micron Technology, Inc. 344,150
104,629 Microsoft Corp.* 9,526,143
3,300 Molex, Inc. 167,063
12,451 Motorola, Inc. 1,422,527
3,450 National Semiconductor Corp.* 146,625
1,510 Network Appliance, Inc.* 177,708
27,195 Nortel Networks Corp. 2,012,430
6,835 Novell, Inc.* 133,710
29,517 Oracle Corp.* 2,001,622
5,484 Parametric Technology, Inc.* 124,418
2,215 Parker-Hannifin Corp. 104,243
5,022 PeopleSoft, Inc.* 94,476
959 PerkinElmer, Inc. 39,439
5,477 Pitney Bowes, Inc. 262,554
3,293 QUALCOMM, Inc.* 1,193,095
1,569 Scientific-Atlanta, Inc. 91,492
4,276 Seagate Technology, Inc.* 158,212
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Technology -- 26.2% (continued)
519 Shared Medical Systems Corp. $ 22,706
3,761 Silicon Graphics, Inc.* 35,494
5,521 Solectron Corp.* 454,792
15,864 Sun Microsystems, Inc.* 2,098,014
989 Tektronix, Inc. 33,626
561 Teledyne Technologies, Inc.* 4,951
8,015 Tellabs, Inc.* 519,973
3,505 Teradyne, Inc.* 152,687
16,096 Texas Instruments, Inc. 1,546,222
6,258 Unisys Corp.* 179,918
13,632 Xerox Corp. 368,916
3,253 Xilinx, Inc.* 291,144
- --------------------------------------------------------------------------------
61,827,129
- --------------------------------------------------------------------------------
Utilities -- 10.7%
2,138 Adaptec, Inc.* 115,185
3,082 ADC Telecommunications, Inc.* 164,309
4,239 AES Corp.* 245,597
6,244 ALLTEL Corp. 540,106
2,847 Ameren Corp. 98,577
3,968 American Electric Power, Inc. 124,496
65,511 AT&T Corp. 3,660,427
31,836 Bell Atlantic Corp. 2,015,617
38,636 BellSouth Corp. 1,784,500
3,267 Carolina Power & Light Co. 98,418
4,415 Central & Southwest Corp. 88,300
2,868 CenturyTel, Inc. 131,928
3,284 Cinergy Corp. 83,126
2,423 CMS Energy Corp. 80,565
4,347 Coastal Corp. 153,232
1,679 Columbia Energy Group 105,357
4,517 Consolidated Edison, Inc. 155,836
1,969 Consolidated Natural Gas Co. 126,262
3,094 Constellation Energy Group 91,080
3,959 Dominion Resources, Inc. 179,640
2,978 DTE Energy Co. 98,460
7,461 Duke Energy Corp. 378,179
545 Eastern Enterprises 30,929
7,092 Edison International 187,938
4,651 El Paso Energy Corp. 179,063
14,656 Enron Corp. 557,844
5,086 Entergy Corp. 140,183
4,748 FirstEnergy Corp. 110,688
1,989 Florida Progress Corp. 85,030
3,694 FPL Group, Inc. 161,612
2,607 GPU, Inc. 83,424
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1999
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
================================================================================
Utilities -- 10.7% (continued)
20,111 GTE Corp. $ 1,468,103
38,407 MCI WorldCom, Inc.* 3,175,779
2,387 New Century Energies Inc. 75,041
7,423 Nextel Communications, Inc.* 735,805
3,851 Niagara Mohawk Holdings Inc.* 57,765
943 NICOR, Inc. 32,710
3,182 Northern States Power Co. 65,032
626 ONEOK, Inc. 16,863
3,790 PECO Energy Co. 124,833
707 Peoples Energy Corp. 25,982
7,831 PG&E Corp. 175,219
3,207 PP&L Resources, Inc. 73,961
4,485 Public Service Enterprise Group, Inc. 156,975
6,024 Reliant Energy, Inc. 149,471
69,979 SBC Communications, Inc. 3,634,534
4,872 Sempra Energy 90,132
14,053 Southern Co. 328,489
17,783 Sprint Corp. (FON Group) 1,233,696
9,007 Sprint Corp. (PCS Group)* 826,392
5,672 Texas Utilities Co. 203,129
4,425 Unicom Corp. 141,323
8,925 Williams Cos., Inc. 301,219
- --------------------------------------------------------------------------------
25,148,361
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost -- $211,654,181) 235,209,987
================================================================================
FACE
AMOUNT SECURITY VALUE
================================================================================
U.S. Treasury Bills -- 0.3%
$120,000 U.S. Treasury Bills, 3.000% due 12/16/99 119,850
105,000 U.S. Treasury Bills, 3.500% due 12/16/99 104,847
25,000 U.S. Treasury Bills, 4.350% due 12/16/99 24,955
500,000 U.S. Treasury Bills, 4.550% due 12/16/99 499,052
- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY BILLS (Cost -- $748,704) 748,704
================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $212,402,885**) $235,958,691
================================================================================
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities November 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost - $212,402,885) $ 235,958,691
Receivable for Fund shares sold 2,099,482
Dividends and interest receivable 286,857
Receivable for securities sold 128,791
Receivable from administrator 71,783
- --------------------------------------------------------------------------------
Total Assets 238,545,604
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 289,987
Payable to bank 160,591
Payable for Fund shares purchased 131,304
Distribution fees payable 10,545
Accrued expenses 98,388
- --------------------------------------------------------------------------------
Total Liabilities 690,815
- --------------------------------------------------------------------------------
Total Net Assets $237,854,789
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 16,699
Capital paid in excess of par value 212,811,908
Undistributed net investment income 1,263,970
Accumulated net realized gain on investments and
futures contracts 206,406
Net unrealized appreciation of investments 23,555,806
- --------------------------------------------------------------------------------
Total Net Assets $237,854,789
================================================================================
Shares Outstanding:
Class A 15,714,082
- --------------------------------------------------------------------------------
Class D 984,943
- --------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 14.24
- --------------------------------------------------------------------------------
Class D (and redemption price) $ 14.28
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended November 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 1,952,792
Interest 260,666
- --------------------------------------------------------------------------------
Total Investment Income 2,213,458
- --------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 2) 292,236
Investment advisory fees (Note 2) 233,127
Administration fees (Note 2) 155,418
Shareholder and system servicing fees 99,497
Custody 90,085
Registration fees 64,321
Audit and legal 40,357
Shareholder communications 23,281
Trustees' fees 11,502
Other 7,125
- --------------------------------------------------------------------------------
Total Expenses 1,016,949
Less: Administration fee waiver (Note 2) (122,303)
- --------------------------------------------------------------------------------
Net Expenses 894,646
- --------------------------------------------------------------------------------
Net Investment Income 1,318,812
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 3 AND 6):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 1,683,279
Futures contracts (520,261)
- --------------------------------------------------------------------------------
Net Realized Gain 1,163,018
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 3,647,032
End of year 23,555,806
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 19,908,774
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 21,071,792
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 22,390,604
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended November 30, 1999
and the Period Ended November 30, 1998(a)
1999 1998
================================================================================
OPERATIONS:
Net investment income $ 1,318,812 $ 256,578
Net realized gain 1,163,018 83,845
Increase in net unrealized appreciation 19,908,774 3,647,032
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 22,390,604 3,987,455
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (314,888) --
Net realized gains (1,040,165) --
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (1,355,053) --
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 221,497,229 74,919,867
Net asset value of shares issued
for reinvestment of dividends 1,313,876 --
Cost of shares reacquired (62,988,825) (21,910,364)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 159,822,280 53,009,503
- --------------------------------------------------------------------------------
Increase in Net Assets 180,857,831 56,996,958
NET ASSETS:
Beginning of year 56,996,958 --
- --------------------------------------------------------------------------------
End of year* $237,854,789 $ 56,996,958
================================================================================
* Includes undistributed net investment income of: $ 1,263,970 $ 259,754
================================================================================
(a) For the period from January 5, 1998 (commencement of operations) to
November 30, 1998.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 six other funds: Smith Barney Intermediate Maturity California
Municipals Fund, Smith Barney Intermediate Maturity New York Municipals Fund,
Smith Barney Large Capitalization Growth Fund, Smith Barney Mid Cap Blend Fund,
Smith Barney U.S. 5000 Index Fund and Smith Barney EAFE Index Fund. The
financial statements and financial highlights for the other funds are presented
in separate shareholder reports.
The significant accounting policies consistently followed by the Fundare: (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; (c) securities for which market
quotations are not available will be valued in good faith at fair value by or
under the direction of the Board of Trustees; (d) securities maturing within 60
days are valued at cost plus accreted discount, or minus amortized premium,
which approximates value; (e) interest income is recorded on an accrual basis
and dividend income is recorded on the ex-dividend date; (f) 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;
(g) gains or losses on the sale of securities are calculated by using the
specific identification method; (h) dividends and distributions to shareholders
are recorded by the Fund on the ex-dividend date; (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, 1999 reclassifications were made to the Fund's capital accounts to
reflect permanent book/tax differences and income and gains available for
distributions under income tax regulations. Net investment income, net realized
gains and net assets were not affected by this adjustment; (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
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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,
Administration Agreement and Other Transactions
Travelers Investment Management Company, ("TIMCO"), a wholly owned subsidiary of
Citigroup Inc. ("Citigroup"), 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.
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., another subsidiary of Citigroup, acts as administrator to the Fund. The
Fund pays SSBC 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. For
the year ended November 30, 1999, SSBC waived a portion of its administration
fees amounting to $122,303.
Effective October 1999, Smith Barney Private Trust Company ("Private Trust"),
another subsidiary of Citigroup, became the Fund's transfer agent and PFPC
Global Fund Services ("PFPC") became the sub-transfer agent. Private Trust
receives account fees and asset-based fees that vary according to the account
size and type of account. PFPC is responsible for shareholder recordkeeping and
financial processing for all shareholder accounts and is paid by Private Trust.
During the period October 1, 1999 through November 30, 1999, the Fund paid
transfer agent fees of $20,557 to Private Trust.
CFBDS, Inc. ("CFBDS") acts as the Fund's distributor. Salomon Smith Barney Inc.
("SSB"), another subsidiary of Citigroup, as well as certain other
broker-dealers, continues to sell Fund shares to the public as a member of the
selling group.
Pursuant to a Distribution Plan, the Fund pays CFBDS 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 SSB.
3. Investments
During the year ended November 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $171,118,238
- --------------------------------------------------------------------------------
Sales 9,658,264
================================================================================
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At November 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 34,928,944
Gross unrealized depreciation (11,373,138)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 23,555,806
================================================================================
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. 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 November 30, 1999, the Fund held no purchased call or put options.
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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 purchases upon exercise. When written index options are exercised,
settlement is made in cash.
The risk associated with purchasing options is limited to the premium originally
paid. The Fund enters into options for hedging purposes. The risk in writing a
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 year ended November 30, 1999, 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 November 30, 1999, the Fund had no open futures contracts.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
7. Lending of Portfolio Securities
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations. Fees earned by the Fund on securities lending are recorded as
interest income. Loans of securities by the Fund are collateralized by cash,
U.S. government securities or high quality money market instruments that are
maintained at all times in an amount at least equal to the current market value
of the loaned securities, plus a margin 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 November 30, 1999, the Fund had no securities on loan.
8. Shares of Beneficial Interest
At November 30, 1999, 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 November 30, 1999, total paid-in capital amounted to the following for each
class:
Class A Class D
================================================================================
Total Paid-In Capital $199,697,976 $13,130,631
================================================================================
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of the Fund were as follows:
Year Ended Period Ended
November 30, 1999 November 30, 1998(1)(2)
================================================================================
Class A
Shares sold 14,264,265 6,596,036
Shares issued on reinvestment 89,688 --
Shares reacquired (3,247,873) (1,988,034)
- --------------------------------------------------------------------------------
Net Increase 11,106,080 4,608,002
================================================================================
Class D
Shares sold 2,270,347 175,689
Shares issued on reinvestment 5,161 --
Shares reacquired (1,441,526) (24,728)
- --------------------------------------------------------------------------------
Net Increase 833,982 150,961
================================================================================
(1) For Class A shares, transactions are for the period from January 5, 1998
(inception date) to November 30, 1998.
(2) For Class D shares, transactions are for the period from August 4, 1998
(inception date) to November 30, 1998.
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 25
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended November 30:
Class A Class D
----------------- -----------------
1999(1) 1998(2) 1999(1) 1998(3)
================================================================================
Net Asset Value, Beginning of Year $11.98 $10.00 $11.99 $11.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income(4) 0.12 0.05 0.17 0.03
Net realized and unrealized gain 2.27 1.93 2.26 0.96
- --------------------------------------------------------------------------------
Total Income From Operations 2.39 1.98 2.43 0.99
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.06) -- (0.07) --
Net realized gains (0.07) -- (0.07) --
- --------------------------------------------------------------------------------
Total Distributions (0.13) -- (0.14) --
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $14.24 $11.98 $14.28 $11.99
- --------------------------------------------------------------------------------
Total Return 19.96% 19.80%++ 20.29% 9.00%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $223,787 $55,187 $14,068 $1,810
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4)(5) 0.59% 0.59%+ 0.34% 0.36%+
Net investment income 0.83 1.05+ 1.08 1.33+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 4% 6% 4%
================================================================================
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from January 5, 1998 (inception date) to November 30, 1998.
(3) For the period from August 4, 1998 (inception date) to November 30, 1998.
(4) The administrator agreed to waive all or a portion of its fees for the
year ended November 30, 1999 and for the period ended November 30, 1998.
In addition, the administrator agreed to reimburse expenses of $177,520
for the period ended November 30, 1998. If these expenses were not waived
and reimbursed, the per share effect on net investment income and the
expense ratio would have been as follows:
Per Share Decreases to Expense Ratios Without
Net Investment Income Waiver and Reimbursement
----------------------- ------------------------
Class A Class D Class A Class D
------- ------- ------- -------
1999 $0.01 $0.01 0.68% 0.43%
1998 0.04 0.02 1.42+ 1.18+
(5) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.60% and 0.40% for Class A and Class D
shares, respectively.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
26 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees of
Smith Barney Investment Trust
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Smith Barney S&P 500 Index Fund of the
Smith Barney Investment Trust as of November 30, 1999, the related statement of
operations for the year then ended, and the statements of changes in net assets
and financial highlights for the year then ended and for the period from January
5, 1998 (commencement of operations) to November 30, 1998. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1999, by correspondence with the custodian. As to securities
purchased or sold but not yet received or delivered, we performed other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Smith Barney S&P 500 Index Fund of the Smith Barney Investment Trust as of
November 30, 1999, the results of its operations for the year then ended, and
the changes in its net assets and financial highlights for the year then ended
and for the period from January 5, 1998 (commencement of operations) to November
30, 1998, in conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
January 14, 2000
- --------------------------------------------------------------------------------
Smith Barney S&P 500 Index Fund 27
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For federal tax purposes the fund hereby designates for the fiscal year ended
November 30, 1999:
o A corporate dividends received deduction of 99.82%
o Total long-term capital gain distributions paid of $748,868
A total of 0.79% of the ordinary dividends paid by the Fund from net investment
income are derived from Federal obligations and may be exempt from taxation at
the state level.
- --------------------------------------------------------------------------------
28 1999 Annual Report to Shareholders
<PAGE>
SALOMON SMITH BARNEY
----------------------------
A member of citigroup [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
Sandip A. Bhagat
Vice President and
Investment Officer
John Lau
Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Adviser
Travelers Investment
Management Co.
Administrator
SSB Citi Fund Management LLC
Distributor
CFBDS, Inc.
Custodian
PNCBank, N.A.
Transfer Agent
Smith Barney Private Turst Company
388 Greenwich Street, 22nd Floor
New York, New York 10013
Sub-Transfer Agent
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940
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.
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney
S&P 500 Index Fund
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com/mutualfunds
FD1580 1/00
