UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4395
Smith Barney Muni Funds
(Exact name of registrant as specified in charter)
| 125 Broad Street, New York, NY | 10004 | |
| (Address of principal executive offices) | (Zip code) |
Robert I. Frenkel, Esq.
Smith Barney Fund Management LLC
300 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant’s telephone number, including area code: (800) 451-2010
Date of fiscal year end: March 31,
Date of reporting period: September 30, 2004
| ITEM 1. | REPORT TO STOCKHOLDERS. |
The Semi-Annual Report to Stockholders is filed herewith.
SMITH BARNEY MUNI FUNDS
NEW YORK MONEY MARKET PORTFOLIO
NEW YORK PORTFOLIO
SEMI-ANNUAL REPORT | SEPTEMBER 30, 2004
NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE
WHAT’S INSIDE
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Fund at a Glance: | ||
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| 7 | ||
| 8 | ||
| 12 | ||
| 32 | ||
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| 42 | ||
R. JAY GERKEN, CFA
Chairman, President and Chief Executive Officer
Dear Shareholder,
For the first time in four years, the Federal Reserve Board (“Fed”)i pushed short-term interest rates higher during the six months ended September 30, 2004. The Fed raised its target for the closely watched federal funds rateii by 0.25% on three occasions, increasing it from a four-decade low of 1.00% at the beginning of June to 1.75% in September. Following the end of the fund’s reporting period, at it’s November meeting, the Fed once again raised it’s target for the federal funds rate by 0.25% to 2.00%. Higher rates can help slow a potential acceleration of economic growth and thereby help maintain a balance between that growth and the inflation that can generally accompany it.
While rising interest rates are generally troublesome for longer-term fixed income securities, because bond prices decline as rates are expected to rise, they can be good for short-term instruments such as money market securities. Prices for these securities, and the funds that invest in them, are generally held stable, while rising rates result in higher levels of income on new bonds issued in the future. Money market securities closely track movements in the federal funds rate target.
Although inflation picked up earlier this year, recently reported figures were benign. The U.S. economyiii grew at a more moderate rate during the second quarter versus the first, according to data released in September, albeit at a significantly stronger pace than the second quarter of last year. Following robust results in the early spring, labor market growth tapered off, picked up in the late summer and held steady through the end of the period.iv
Municipal bonds returned -2.37%v in the second quarter amid expectations that the Fed was positioning to push rates higher. Given that bond prices had already factored in rate hikes to a significant extent during the second quarter, and coupling this with investors’ reaction to tepid economic growth and lack of inflationary pressures, bond prices bounced back in the third quarter. Yieldsvi correspondingly dropped to levels virtually in line with those when the period began, and municipal bonds finished the period in modestly positive territory on a total return basis, which includes reinvested dividend income.v
On a local level, the Lehman Brothers New York Municipal Bond Index returned 1.43% over the six months ending September 30, 2004.vii The broader-based Lehman Brothers Municipal Bond Index also returned 1.43%.v
1 Smith Barney Muni Funds | 2004 Semi-Annual Report
During the spring, after-tax yields on municipal money market instruments exceeded those on taxable instruments with comparable maturities and credit ratings.viii Prices of short-term tax-exempt money market instruments rallied in June as proceeds from maturing bonds were reinvested into these securities. However, many investors gravitated from shorter-term instruments into longer-term bonds in August as the bond environment stabilized, causing yields on floating-rate money market instruments to rise. Given the recent rate environment and expectations that interest rates were poised to rise, the manager of the New York Money Market Portfolio maintained a cautious maturity stance in the municipal money market portfolio.
Given the view of the portfolio manager of the New York Portfolio prior to the period, which was that interest rates were poised to rise and recent figures could potentially understate actual inflation, the fund assumed a defensive posture in terms of its overall duration, or price sensitivity to interest rate movements. This low-duration approach to managing interest rate risk limited the fund’s ability to completely participate in upside market movements during intervals when bond prices rose, such as during the third quarter, when municipal bonds collectively returned 3.89%.v However, the fund benefited from this approach in absolute terms when bond prices dropped, particularly in the spring. In the recent market environment, the manager of the bond portfolio believes his defensive approach to reducing potential volatility was more prudent than a longer-duration strategy.
Within this environment, the funds performed as follows:
New York Money Market Portfolio
As of September 30, 2004, the seven-day current yield for Class A shares of the Smith Barney Muni Funds — New York Money Market Portfolio was 0.89% and its seven-day effective yield, which reflects compounding, was 0.89%.1
Past performance is no guarantee of future results. The fund’s yields will vary and performance of other share classes may differ. In addition, your investment is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
Certain investors may be subject to the federal Alternative Minimum Tax, and state and local taxes may apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.
| 1 | The seven-day current and effective yields are the same due to rounding. The seven-day effective yield is calculated similarly to the seven-day current yield but, when annualized, the income earned by an investment in the fund is assumed to be reinvested. The effective yield typically will be slightly higher than the current yield because of the compounding effect of the assumed reinvestment. |
2 Smith Barney Muni Funds | 2004 Semi-Annual Report
NEW YORK MONEY MARKET PORTFOLIO
YIELDS AS OF SEPTEMBER 30, 2004
Seven-day current yield | 0.89 | % | |
Seven-day effective yield | 0.89 | % |
The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Principal value and investment returns will fluctuate and investors’ shares, when redeemed, may be worth more or less than their original cost.
As of September 30, 2004, the seven-day current yield and seven-day effective yield, which reflects compounding, of Class Y shares were 1.01% and 1.01%, respectively. These numbers are the same due to rounding.
New York Portfolio
For the six months ended September 30, 2004, Class A shares of the Smith Barney Muni Funds — New York Portfolio, excluding sales charges, returned 1.26%. In comparison, the fund’s unmanaged benchmark, the Lehman Brothers Municipal Bond Index, returned 1.43% for the same period. The fund’s Lipper New York municipal debt funds category average2 was 1.06%.
NEW YORK PORTFOLIO
AS OF SEPTEMBER 30, 2004
(excluding sales charges)
| 6 Months | |||
Class A Shares | 1.26 | % | |
Lehman Brothers Municipal Bond Index | 1.43 | % | |
Lipper New York Municipal Debt Funds Category Average | 1.06 | % |
The performance shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Principal value and investment returns will fluctuate and investors’ shares, when redeemed, may be worth more or less than their original cost.
Performance figures may reflect reimbursements of fee waivers without which the performance would have been lower.
Class A share returns assume the reinvestment of income dividends and capital gains distributions at net asset value and the deduction of all fund expenses. Returns have not been adjusted to include sales charges that may apply when shares are purchased or the deduction of taxes that a shareholder would pay on fund distributions. Excluding sales charges, Class B shares returned 0.99%, Class C shares returned 0.90% and Class Y shares returned 1.28% over the six months ended September 30, 2004.
| 2 | Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the six-month period ended September 30, 2004, calculated among the 108 funds in the fund’s Lipper category, including the reinvestment of dividends and capital gains, if any, and excluding sales charges. |
3 Smith Barney Muni Funds | 2004 Semi-Annual Report
Special Shareholder Notice—New York Portfolio
On February 2, 2004, initial sales charges on Class L shares were eliminated. Effective April 29, 2004, Class L shares were renamed Class C shares.
Information About Your Fund
In recent months several issues in the mutual fund industry have come under the scrutiny of federal and state regulators. The fund’s Adviser and some of its affiliates have received requests for information from various government regulators regarding market timing, late trading, fees, and other mutual fund issues in connection with various investigations. The regulators appear to be examining, among other things, the fund’s response to market timing and shareholder exchange activity, including compliance with prospectus disclosure related to these subjects. The fund has been informed that the Adviser and its affiliates are responding to those information requests, but are not in a position to predict the outcome of these requests and investigations.
In November 2003, Citigroup Asset Management (“CAM”) disclosed an investigation by the Securities and Exchange Commission (“SEC”) and the U.S. Attorney relating to CAM’s entry into the transfer agency business during 1997-1999. Citigroup has disclosed that the Staff of the SEC is considering recommending a civil injunctive action and/or an administrative proceeding against certain advisory and transfer agent entities affiliated with Citigroup, the former CEO of CAM, a former employee and a current employee of CAM, relating to the creation, operation and fees of its internal transfer agent unit that serves various CAM-managed funds. Citigroup is cooperating with the SEC and will seek to resolve this matter in discussion with the SEC Staff. Although there can be no assurance, Citigroup does not believe that this matter will have a material adverse effect on the fund.
As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you continue to meet your financial goals.
Sincerely,
/s/ R. Jay Gerken
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
November 10, 2004
4 Smith Barney Muni Funds | 2004 Semi-Annual Report
The information provided is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole.
RISKS:
New York Money Market Portfolio: Certain Investors may be subject to the Federal Alternative Minimum Tax (AMT), and state and local taxes will apply. Certain gains, if any, are fully taxable. An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
All index performance reflects no deduction for fees, expenses or taxes. Please note an investor cannot invest directly in an index.
New York Portfolio: Certain Investors may be subject to the Federal Alternative Minimum Tax (AMT), and state and local taxes will apply. Certain gains, if any, are fully taxable. Keep in mind, the fund’s investments are subject to interest rate and credit risk. As interest rates rise, bond prices fall, reducing the value of the fund’s share price. As a non-diversified fund, it can invest a larger percentage of its assets in fewer issues than a diversified fund. This may magnify the fund’s losses from events affecting a particular issuer. The fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on fund performance.
| i | Source: U.S. Federal Reserve Board. The Fed is responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments. |
| ii | The federal funds rate is the interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans. |
| iii | Source: Commerce Department (Bureau of Economic Analysis). Refers to quarterly growth of Gross Domestic Product (“GDP”). GDP is a market value of goods and services produced by labor and property in a given country. |
| iv | Source: Bureau of Labor Statistics. |
| v | Source: Based upon the performance of the Lehman Brothers Municipal Bond Index over the referenced period, which is a broad measure of the municipal bond market with maturities of at least one year. |
| vi | Yields are based upon data reflecting average yields of a universe of municipal bonds over the stated period derived via data on Bloomberg L.P. |
| vii | Source: Based upon the performance of the Lehman Brothers New York Municipal Bond Index over the referenced period, which is a broad measure of the New York municipal bond market with maturities of at least one year. |
| viii | Money market yields are based upon data reflecting average yields of a universe of municipal and taxable money market instruments over the stated period derived via data on Bloomberg L.P. |
5 Smith Barney Muni Funds | 2004 Semi-Annual Report
New York Money Market Portfolio Fund at a Glance (unaudited)
Investment Breakdown†
March 31, 2004
September 30, 2004
| † | As a percentage of total investments. Please note that Fund holdings are subject to change. |
6 Smith Barney Muni Funds | 2004 Semi-Annual Report
New York Portfolio Fund at a Glance (unaudited)
Investment Breakdown†
March 31, 2004
September 30, 2004
| † | As a percentage of total investments. Please note that Fund holdings are subject to change. |
7 Smith Barney Muni Funds | 2004 Semi-Annual Report
New York Money Market Portfolio
Fund Expenses (unaudited)
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, reinvested dividends, or other distributions; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on April 1, 2004 and held for the six months ended September 30, 2004.
Actual Expenses
The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.
Based on Actual Total Return(1)
| Actual Total Return(2) | Beginning Account Value | Ending Account | Annualized Expense Ratio | Expenses Paid During the Period(3) | |||||||||||
Class A | 0.27 | % | $ | 1,000.00 | $ | 1,002.70 | 0.59 | % | $ | 2.96 | |||||
Class Y | 0.33 | 1,000.00 | 1,003.30 | 0.46 | 2.31 | ||||||||||
| (1) | For the six months ended September 30, 2004. |
| (2) | Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value. |
| (3) | Expenses (net of voluntary waiver) are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
8 Smith Barney Muni Funds | 2004 Semi-Annual Report
New York Money Market Portfolio
Fund Expenses (unaudited) (continued)
Hypothetical Example for Comparison Purposes
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Based on Hypothetical Total Return(1)
| Hypothetical Annualized Total Return | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During the Period(2) | |||||||||||
Class A | 5.00 | % | $ | 1,000.00 | $ | 1,022.11 | 0.59 | % | $ | 2.99 | |||||
Class Y | 5.00 | 1,000.00 | 1,022.76 | 0.46 | 2.33 | ||||||||||
| (1) | For the six months ended September 30, 2004. |
| (2) | Expenses (net of voluntary waiver) are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
9 Smith Barney Muni Funds | 2004 Semi-Annual Report
New York Portfolio
Fund Expenses (unaudited)
Example
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end and back-end sales charges (loads) on purchase payments, reinvested dividends, or other distributions; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested on April 1, 2004 and held for the six months ended September 30, 2004.
Actual Expenses
The table below titled “Based on Actual Total Return” provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period”.
Based on Actual Total Return(1)
Actual Total Sales Charges(2) | Beginning Account Value | Ending Account | Annualized Expense Ratio | Expenses Paid During the Period(3) | |||||||||||
Class A | 1.26 | % | $ | 1,000.00 | $ | 1,012.60 | 0.67 | % | $ | 3.38 | |||||
Class B | 0.99 | 1,000.00 | 1,009.90 | 1.21 | 6.10 | ||||||||||
Class C(4) | 0.90 | 1,000.00 | 1,009.00 | 1.24 | 6.24 | ||||||||||
Class Y | 1.28 | 1,000.00 | 1,012.80 | 0.50 | 2.52 | ||||||||||
| (1) | For the six months ended September 30, 2004. |
| (2) | Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value and does not reflect the deduction of the applicable sales charges with respect to Class A, shares or the applicable contingent deferred sales charges (“CDSC”) with respect to Class B, C and Y shares. Total return is not annualized, as it may not be representative of the total return for the year. |
| (3) | Expenses (net of voluntary waiver) are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
| (4) | On April 29, 2004, Class L shares were renamed as Class C shares. |
10 Smith Barney Muni Funds | 2004 Semi-Annual Report
Smith Barney New York Portfolio
Fund Expenses (unaudited) (continued)
Hypothetical Example for Comparison Purposes
The table below titled “Based on Hypothetical Total Return” provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or back-end sales charges (loads). Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Based on Hypothetical Total Return(1)
| Hypothetical Annualized Total Return | Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During the Period(2) | |||||||||||
Class A | 5.00 | % | $ | 1,000.00 | $ | 1,021.71 | 0.67 | % | $ | 3.40 | |||||
Class B | 5.00 | 1,000.00 | 1,019.00 | 1.21 | 6.12 | ||||||||||
Class C(3) | 5.00 | 1,000.00 | 1,018.85 | 1.24 | 6.28 | ||||||||||
Class Y | 5.00 | 1,000.00 | 1,022.56 | 0.50 | 2.54 | ||||||||||
| (1) | For the six months ended September 30, 2004. |
| (2) | Expenses (net of voluntary waiver) are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. |
| (3) | On April 29, 2004, Class L shares were renamed as Class C shares. |
11 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) | September 30, 2004 |
NEW YORK MONEY MARKET PORTFOLIO
| FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| $ 3,335,000 | NR† | Albany GO RAN 3.00% due 1/31/05 | $ | 3,351,723 | |||
Albany IDA Civic Facilities University at Albany | |||||||
| 5,000,000 | A-1 | Series A 1.71% VRDO | 5,000,000 | ||||
| 13,965,000 | A-1 | Series B 1.71% VRDO | 13,965,000 | ||||
| 11,120,000 | A-1 | Series C 1.71% VRDO | 11,120,000 | ||||
| 15,830,000 | A-1 | Series D 1.71% VRDO | 15,830,000 | ||||
| 5,600,000 | Aa2* | Chautauqua County IDA Red Wing Co. Project 1.39% VRDO | 5,600,000 | ||||
| 5,625,000 | A-1+ | Dutchess County IDA Marist College Series 98A 1.68% VRDO | 5,625,000 | ||||
| 1,650,000 | VMIG1* | Erie County IDA Rosina Food Products Inc. 1.75% VRDO | 1,650,000 | ||||
| 2,600,000 | A-1+ | Genesee County IDR RJ Properties Project | 2,600,000 | ||||
| 2,070,000 | A-1+ | Great Neck North Water Authority System Series A FGIC-Insured 1.70% VRDO | 2,070,000 | ||||
| 920,000 | NR† | Huntington GO FSA-Insured 2.50% due 1/15/05 | 923,308 | ||||
Jay Street Development Corp. Court Facilities Lease Revenue: | |||||||
| 13,200,000 | A-1+ | Series A-1 1.72% VRDO | 13,200,000 | ||||
| 7,995,000 | A-1+ | Series A-2 1.64% VRDO | 7,995,000 | ||||
| 20,875,000 | A-1+ | Series A-3 1.68% VRDO | 20,875,000 | ||||
| 12,740,000 | A-1+ | Series A-4 1.73% VRDO | 12,740,000 | ||||
| 2,830,000 | A-1+ | Lancaster IDA Sealing Devices Inc. 1.75% VRDO AMT | 2,830,000 | ||||
| 3,500,000 | A-1+ | Lewis County IDA Climax Manufacturing Co. Project 1.75% VRDO AMT | 3,500,000 | ||||
Long Island Power Authority: | |||||||
| 17,730,000 | A-1+ | Series 1A 1.68% VRDO | 17,730,000 | ||||
| 10,550,000 | A-1+ | Series 2A 1.72% VRDO | 10,550,000 | ||||
| 1,000,000 | A-1+ | Series 3B 1.77% VRDO | 1,000,000 | ||||
| 6,300,000 | A-1+ | Series 7-B MBIA-Insured 1.72% VRDO | 6,300,000 | ||||
| 9,610,000 | A-1+ | Series D FSA-Insured 1.69% VRDO | 9,610,000 | ||||
| 7,700,000 | A-1+ | Series H FSA-Insured 1.72% VRDO | 7,700,000 | ||||
| 13,300,000 | A-1+ | Series I 1.10% due 10/4/04 TECP | 13,300,000 | ||||
Metropolitan Transportation Authority: | |||||||
BAN Series CP-1A Sub-series A: | |||||||
| 4,900,000 | A-1+ | 1.15% due 10/4/04 TECP | 4,900,000 | ||||
| 500,000 | A-1+ | 1.35% due 10/4/04 TECP | 500,000 | ||||
FSA-Insured: | |||||||
| 10,800,000 | VMIG1* | Munitop Series 99-2 PART 1.70% VRDO | 10,800,000 | ||||
| 8,000,000 | A-1+ | Series B 1.69% VRDO | 8,000,000 | ||||
| 20,790,000 | A-1+ | Series D-2 1.69% VRDO | 20,790,000 | ||||
| 30,000,000 | A-1+ | Series A-3 XLCA-Insured 1.50% VRDO | 30,000,000 | ||||
See Notes to Financial Statements.
12 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK MONEY MARKET PORTFOLIO
| FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| $16,500,000 | MIG1* | Middle County CSD GO TAN 3.00% due 6/30/05 | $ | 16,663,245 | |||
| 12,500,000 | MIG1* | Miller Place UFSD GO TAN 3.00% due 6/30/05 | 12,619,000 | ||||
Monroe County IDA: | |||||||
| 340,000 | A-1+ | JADA Precision Plastic Project Series 97 | 340,000 | ||||
| 9,540,000 | VMIG1* | Rochester Institute of Technology Project Series A 1.66% VRDO | 9,540,000 | ||||
| 1,400,000 | VMIG1* | St. Ann’s Nursing Home for the Aged Project 1.65% VRDO | 1,400,000 | ||||
| 507,764 | AAA | Monroe-Woodbury CSD GO FSA-Insured | 510,061 | ||||
| 4,750,000 | NR† | Mount Sinai UFSD GO TAN 3.00% due 6/24/05 | 4,790,778 | ||||
Nassau County GO: | |||||||
| 500,000 | AAA | Series A 4.25% due 6/1/05 | 508,710 | ||||
| 880,000 | AAA | Series F 7.00% due 3/1/05 | 899,803 | ||||
| 10,000,000 | SP-1+ | Nassau County GO TAN Series B 2.00% due 10/15/04 | 10,002,009 | ||||
Nassau County IDA: | |||||||
| 10,550,000 | A-1+ | Cold Spring Harbor Lab 1.71% VRDO | 10,550,000 | ||||
| 2,805,000 | A-1+ | Rubbies Costume Co. Project 1.75% VRDO | 2,805,000 | ||||
Nassau County IFA Sales Tax Revenue FSA-Insured: | |||||||
| 28,930,000 | A-1+ | Series A 1.68% VRDO | 28,930,000 | ||||
| 22,615,000 | A-1+ | Series B 1.69% VRDO | 22,615,000 | ||||
New York City GO: | |||||||
| 12,315,000 | A-1+ | Series 95 F-4 1.69% VRDO | 12,315,000 | ||||
| 39,000,000 | A-1+ | Series A-3 1.69% VRDO | 39,000,000 | ||||
| 8,255,000 | A-1+ | Series B-8 1.69% VRDO | 8,255,000 | ||||
| 1,000,000 | A-1+ | Series C 1.68% VRDO | 1,000,000 | ||||
| 5,800,000 | A-1+ | Series C-2 1.69% VRDO | 5,800,000 | ||||
| 5,570,000 | A-1+ | Series H-3 FSA-Insured 1.73% VRDO | 5,570,000 | ||||
| 2,500,000 | A-1+ | Series H-4 1.73% VRDO | 2,500,000 | ||||
| 5,995,000 | A-1 | Series PA 624 AMBAC-Insured PART 1.72% VRDO | 5,995,000 | ||||
| 600,000 | A-1+ | Series SGB 35 AMBAC-Insured PART 1.73% VRDO | 600,000 | ||||
| 2,100,000 | A-1+ | Sub-Series A-6 1.77% VRDO | 2,100,000 | ||||
| 675,000 | AAA | New York City Health & Hospital Corp. Series A AMBAC-Insured 4.00% due 2/15/05 | 681,725 | ||||
New York City HDC MFH: | |||||||
| 35,200,000 | A-1+ | 2 Gold Street Series A 1.69% VRDO | 35,200,000 | ||||
| 10,000,000 | A-1+ | 90 West Street Series A 1.71% VRDO | 10,000,000 | ||||
| 10,000,000 | A-1+ | 96th Street Association Monterey Series A FNMA 1.72% VRDO | 10,000,000 | ||||
| 6,000,000 | A-1+ | Columbus Green Series A FNMA 1.72% VRDO | 6,000,000 | ||||
| 30,000,000 | A-1+ | Lyric Series A FNMA 1.70% VRDO AMT | 30,000,000 | ||||
| 9,700,000 | A-1+ | Tribeca Tower Series A FNMA 1.75% VRDO AMT | 9,700,000 | ||||
See Notes to Financial Statements.
13 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK MONEY MARKET PORTFOLIO
| FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
New York City IDA IDR: | |||||||
| $ 3,950,000 | VMIG1* | Ahava Food Corp. Project 1.70% VRDO AMT | $ | 3,950,000 | |||
| 9,200,000 | VMIG1* | Center for Jewish History Project 1.70% VRDO | 9,200,000 | ||||
| 5,600,000 | A-1+ | Children’s Oncology Society 1.68% VRDO | 5,600,000 | ||||
| 2,050,000 | A-1+ | Civic Facilities Revenue Lycee Francais De NY 1.71% VRDO | 2,050,000 | ||||
| 4,600,000 | A-1+ | Gary Plastic Packaging Corp. Series 98 1.65% VRDO AMT | 4,600,000 | ||||
| 3,435,000 | A-1+ | Linear Lighting Corp. Project 1.70% VRDO AMT | 3,435,000 | ||||
| 2,645,000 | VMIG1* | Peninsula Hospital Center Project 1.72% VRDO | 2,645,000 | ||||
| 4,750,000 | NR† | Planned Parenthood Project 1.70% VRDO | 4,750,000 | ||||
| 1,495,000 | A-1+ | PS Bibbs Inc. 1.80% VRDO AMT | 1,495,000 | ||||
| 3,500,000 | A-1+ | Stock Exchange Project B 1.70% VRDO | 3,500,000 | ||||
New York City Municipal Water Finance Authority | |||||||
FGIC-Insured: | |||||||
| 6,700,000 | A-1+ | Series A 1.77% VRDO | 6,700,000 | ||||
| 3,250,000 | A-1+ | Series C-3 1.73% VRDO | 3,250,000 | ||||
| 7,000,000 | A-1+ | Series F-1 1.77% VRDO | 7,000,000 | ||||
| 12,700,000 | A-1+ | Series G 1.73% VRDO | 12,700,000 | ||||
| 7,500,000 | A-1+ | Series 1 1.16% due 10/28/04 TECP | 7,500,000 | ||||
Series 5-B TECP: | |||||||
| 5,000,000 | A-1+ | 1.13% due 10/6/04 | 5,000,000 | ||||
| 3,300,000 | A-1+ | 1.30% due 10/6/04 | 3,300,000 | ||||
| 15,000,000 | A-1+ | 1.17% due 11/4/04 | 15,000,000 | ||||
| 10,000,000 | A-1+ | Series 6 1.17% due 10/7/04 TECP | 10,000,000 | ||||
| 13,250,000 | A-1+ | Series 7 1.05% due 10/7/04 TECP | 13,250,000 | ||||
New York City TFA: | |||||||
Future Tax Secured: | |||||||
| 55,000 | A-1+ | Series 2D 3 1.70% VRDO | 55,000 | ||||
| 43,760,000 | A-1+ | Series A-2 1.72% VRDO | 43,760,000 | ||||
| 13,725,000 | A-1+ | Series C 1.70% VRDO | 13,725,000 | ||||
| 1,000,000 | A-1+ | Series D-1 1.71% VRDO | 1,000,000 | ||||
| 1,400,000 | A-1+ | Series F-3 1.71% VRDO | 1,400,000 | ||||
| 2,000,000 | A-1+ | Series H-3 1.72% VRDO | 2,000,000 | ||||
| 14,920,000 | A-1 | MSTC Series 122 PART 1.73% VRDO | 14,920,000 | ||||
New York City Recovery: | |||||||
| 7,870,000 | A-1+ | Series 1 1.69% VRDO | 7,870,000 | ||||
| 8,300,000 | A-1+ | Series 2A 1.77% VRDO | 8,300,000 | ||||
| 3,035,000 | VMIG1* | Series 162 AMBAC-Insured PART 1.71% due 7/1/29 | 3,035,000 | ||||
New York City Trust for Cultural Resources: | |||||||
| 1,205,000 | VMIG1* | Asia Society 1.68% VRDO | 1,205,000 | ||||
| 8,400,000 | A-1+ | Pierpoint Morgan Library 1.68% VRDO | 8,400,000 | ||||
| 1,430,000 | A-1+ | Soloman R. Guggenheim Museum Series B | 1,430,000 | ||||
See Notes to Financial Statements.
14 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK MONEY MARKET PORTFOLIO
| FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
New York State Dormitory Authority: | |||||||
Columbia University: | |||||||
| $ 2,000,000 | A-1+ | 1.15% due 12/7/04 TECP | $ | 2,000,000 | |||
| 5,000,000 | A-1+ | Series B 1.03% due 3/8/05 | 5,000,000 | ||||
| 2,000,000 | A-1+ | Series SGA 132 PART 1.73% VRDO | 2,000,000 | ||||
| 1,300,000 | A-1+ | Cornell University Series B 1.71% VRDO | 1,300,000 | ||||
| 6,305,000 | A-1+ | Glen Eddy Inc. 1.67% VRDO | 6,305,000 | ||||
Mental Health Services: | |||||||
| 13,400,000 | A-1+ | Series 2C MBIA-Insured 1.68% VRDO | 13,400,000 | ||||
| 51,100,000 | A-1+ | Series 2E 1.69% VRDO | 51,100,000 | ||||
| 3,500,000 | A-1+ | Series 2H 1.69% VRDO | 3,500,000 | ||||
| 13,000,000 | A-1 | Series D-2G 1.69% VRDO | 13,000,000 | ||||
Metropolitan Museum of Art: | |||||||
| 12,455,000 | A-1+ | Series A 1.68% VRDO | 12,455,000 | ||||
| 4,240,000 | A-1+ | Series B 1.68% VRDO | 4,240,000 | ||||
| 15,800,000 | A-1+ | Mount Sinai School of Medicine | 15,800,000 | ||||
New York Public Library MBIA-Insured: | |||||||
| 5,730,000 | A-1 | Series 99A 1.72% VRDO | 5,730,000 | ||||
| 9,285,000 | A-1 | Series B 1.72% VRDO | 9,285,000 | ||||
| 7,140,000 | VMIG1* | Oxford University Press Inc. 1.68% VRDO | 7,140,000 | ||||
| 1,665,000 | A-1+ | Rockefeller University Series A 1.68% VRDO | 1,665,000 | ||||
| 1,125,000 | AAA | School District Financing Program Series A MBIA-Insured 3.50% due 10/1/04 | 1,125,000 | ||||
| 7,842,500 | VMIG1* | State Personal Income Tax Revenue Series 821 FGIC-Insured PART 1.20% due 2/10/05 | 7,842,500 | ||||
| 9,945,000 | A-1 | State University Series PA 622 PART 1.76% VRDO | 9,945,000 | ||||
| 13,280,000 | VMIG1* | New York State Energy Research & Development Authority Long Island Lighting Co. Series A 1.71% VRDO AMT | 13,280,000 | ||||
New York State Environmental Facilities Corp.: | |||||||
Clean Water and Drinking: | |||||||
| 9,990,000 | A-1 | MSTC Series 9040 PART 1.74% VRDO | 9,990,000 | ||||
Series B: | |||||||
| 7,080,000 | AAA | 5.50% due 6/15/05 | 7,342,074 | ||||
| 6,695,000 | AAA | 5.60% due 6/15/05 | 6,947,507 | ||||
| 1,390,000 | AAA | Series D 3.00 % due 2/15/05 | 1,398,707 | ||||
| 9,170,000 | A-1 | Series PT-409 PART 1.71% VRDO | 9,170,000 | ||||
| 15,000,000 | A-1+ | Series 1997-A 1.21% due 1/13/05 TECP | 15,000,000 | ||||
Solid Waste Disposal General Electric Corp: | |||||||
| 1,500,000 | NR† | Series 87-A 1.64% due 10/5/04 | 1,500,000 | ||||
| 5,400,000 | NR† | Series 97-A 1.67% due 10/5/04 TECP | 5,400,000 | ||||
Series D-02: | |||||||
| 2,550,000 | NR† | 6.60% due 11/15/08 | 2,617,500 | ||||
| 2,130,000 | AAA | 6.80% due 11/15/10 | 2,186,895 | ||||
See Notes to Financial Statements.
15 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK MONEY MARKET PORTFOLIO
| FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
New York State GO: | |||||||
| $52,900,000 | NR† | Series 1998A 1.30% due 12/7/04 TECP | $ | 52,900,000 | |||
| 14,200,000 | A-1+ | Series A 1.05% due 10/7/04 | 14,200,000 | ||||
New York State HFA: | |||||||
| 1,700,000 | VMIG1* | 240 East 39th Street FNMA-Insured 1.71% VRDO AMT | 1,700,000 | ||||
| 12,800,000 | VMIG1* | 750 Sixth Avenue Series A FNMA-Insured 1.71% VRDO AMT | 12,800,000 | ||||
| 2,000,000 | VMIG1* | 1501 Lexington Avenue FNMA-Insured | 2,000,000 | ||||
| 6,000,000 | VMIG1* | Biltmore Tower Series A 1.71% VRDO AMT | 6,000,000 | ||||
| 2,400,000 | VMIG1* | Historic Front Street Series A 1.72% VRDO | 2,400,000 | ||||
Service Contract Revenue: | |||||||
| 37,500,000 | A-1+ | Series A 1.68% VRDO | 37,500,000 | ||||
| 17,000,000 | A-1+ | Series C 1.68% VRDO | 17,000,000 | ||||
| 4,200,000 | VMIG1* | Theatre Row Series A 1.88% VRDO AMT | 4,200,000 | ||||
| 2,500,000 | VMIG1* | Theatre Row Tower Series A 1.88% VRDO AMT | 2,500,000 | ||||
| 10,000,000 | VMIG1* | Worth Street Series A FNMA-Insured | 10,000,000 | ||||
New York State LGAC: | |||||||
| 27,500,000 | A-1+ | Series 3V FGIC-Insured 1.69% VRDO | 27,500,000 | ||||
| 40,090,000 | A-1+ | Series 93A 1.68% VRDO | 40,090,000 | ||||
| 7,000,000 | A-1+ | Series 94B 1.68% VRDO | 7,000,000 | ||||
| 16,250,000 | A-1+ | Series 95E 1.68% VRDO | 16,250,000 | ||||
| 515,000 | VMIG1* | New York State Mortgage Agency MERLOT Series B-3 PART 1.76% VRDO | 515,000 | ||||
New York State Power Authority: | |||||||
| 25,000,000 | A-1+ | 1.33% due 3/1/05 | 25,000,000 | ||||
Series 1 TECP: | |||||||
| 20,400,000 | A-1 | 1.14% due 10/7/04 | 20,400,000 | ||||
| 10,000,000 | A-1 | 1.19% due 11/1/04 | 10,000,000 | ||||
Series 2 TECP: | |||||||
| 9,600,000 | A-1 | 1.12% due 10/1/04 | 9,600,000 | ||||
| 15,000,000 | A-1 | 1.31% due 10/18/04 | 15,000,000 | ||||
| 1,510,000 | Aa2* | Series C 5.00% due 2/15/04 (Escrowed to Maturity in U.S. Government Securities) | 1,532,383 | ||||
New York State Thruway Authority: | |||||||
| 16,000,000 | A-1+ | 1.12% due 10/1/04 TECP | 16,000,000 | ||||
| 15,700,000 | A-1+ | 1.10% due 10/6/04 TECP | 15,700,000 | ||||
| 19,500,000 | A-1+ | 0.95% due 10/7/04 TECP | 19,500,000 | ||||
| 21,750,000 | A-1+ | 1.33% due 11/2/04 TECP | 21,750,000 | ||||
| 8,845,000 | A-1 | MSTC Series 120 FGIC-Insured PART 1.73% VRDO | 8,845,000 | ||||
| 1,200,000 | AAA | Series C FGIC-Insured 6.00% due 1/01/05 | 1,238,596 | ||||
| 5,000,000 | A-1+ | Series SGA 66 PART 1.73% VRDO | 5,000,000 | ||||
New York State Urban Development Corp. PART: | |||||||
| 8,000,000 | VMIG1* | MERLOT Series N AMBAC-Insured 1.71% VRDO | 8,000,000 | ||||
| 21,395,000 | A-1+ | Putter 313 1.71% VRDO | 21,395,000 | ||||
See Notes to Financial Statements.
16 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK MONEY MARKET PORTFOLIO
| FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
North Salem CSD GO MBIA-Insured: | |||||||
| $ 205,000 | Aaa* | Series A 2.00% due 10/15/04 | $ | 205,057 | |||
| 305,000 | Aaa* | Series B 3.00% due 6/15/05 | 308,179 | ||||
| 1,500,000 | A-1+ | Oneida County IDR Harden Furniture Series 98 1.75% VRDO | 1,500,000 | ||||
| 35,525,000 | A-1+ | Oneida Indian Nation Series 2002 1.65% VRDO | 35,525,000 | ||||
Onondaga County IDA: | |||||||
| 3,405,000 | A-1+ | Syracuse Executive Air 1.70% VRDO AMT | 3,405,000 | ||||
| 5,570,000 | A-1+ | Syracuse Research Corp. 1.70% VRDO | 5,570,000 | ||||
Ontario County IDR: | |||||||
| 1,815,000 | A-1+ | Dixit Enterprises Series B 1.75% VRDO AMT | 1,815,000 | ||||
| 8,000,000 | VMIG1* | Frederick Ferris Thompson Hospital 1.71% VRDO | 8,000,000 | ||||
| 2,525,000 | A-1+ | Oswego County IDR Fulton Thermal Corp. | 2,525,000 | ||||
Port Authority of New York & New Jersey: | |||||||
| 7,860,000 | A-1+ | Putter Series 177 MBIA-Insured PART 1.74% VRDO | 7,860,000 | ||||
| 3,500,000 | NR‡ | Series 98-1 Equipment Notes 1.85% VRDO AMT | 3,500,000 | ||||
| 3,500,000 | NR‡ | Series 98-2 Equipment Notes 1.75% VRDO | 3,500,000 | ||||
| 4,755,000 | A-1 | Series 646 FSA-Insured PART 1.69% VRDO | 4,755,000 | ||||
Series B TECP: | |||||||
| 1,800,000 | A-1+ | 1.13% due 10/8/04 | 1,800,000 | ||||
| 14,720,000 | A-1+ | 1.15% due 12/1/04 | 14,720,000 | ||||
Versatile Structure Obligation: | |||||||
| 2,550,000 | A-1+ | Series 95-3 1.74% VRDO | 2,550,000 | ||||
| 2,010,000 | A-1+ | Series 96-5 1.74% VRDO | 2,010,000 | ||||
Puerto Rico Commonwealth Highway & | |||||||
| 11,550,000 | A-1 | Series A AMBAC-Insured 1.72% VRDO | 11,550,000 | ||||
| 3,475,000 | VMIG1* | Series FFF 1.71% MBIA-Insured VRDO | 3,475,000 | ||||
| 3,665,000 | A-1+ | Series PA 472 FSA-Insured PART 1.68%VRDO | 3,665,000 | ||||
| 2,900,000 | A-1+ | Puerto Rico Electric Power Authority MBIA-Insured PART 1.70% VRDO | 2,900,000 | ||||
Puerto Rico GDB TECP: | |||||||
| 10,000,000 | A-1 | 1.17% due 10/6/04 | 10,000,000 | ||||
| 10,000,000 | A-1 | 1.17% due 10/8/04 | 10,000,000 | ||||
Puerto Rico GO: | |||||||
| 7,990,000 | VMIG1* | MERLOT Series A44 FGIC-Insured PART 1.71% VRDO | 7,990,000 | ||||
| 7,320,000 | A-1 | Series PA-650 PART 1.72% VRDO | 7,320,000 | ||||
Puerto Rico IFA MSTC PART: | |||||||
| 19,995,000 | A-1 | Series 103 1.70% VRDO | 19,995,000 | ||||
| 19,995,000 | A-1 | Series 106 1.70% VRDO | 19,995,000 | ||||
| 9,320,000 | VMIG1* | Puerto Rico Industrial Tourist Education Medical & Environmental Control Facilities Series 464 MBIA-Insured PART 1.60% VRDO | 9,320,000 | ||||
See Notes to Financial Statements.
17 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK MONEY MARKET PORTFOLIO
| FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| $ 4,850,000 | A-1 | Puerto Rico MFA Series PA-610 FSA-Insured PART | $ | 4,850,000 | |||
| 2,197,000 | VMIG1* | Puerto Rico PFC Series 522X MBIA-Insured 1.69% VRDO | 2,197,000 | ||||
| 4,945,000 | P-1* | Rotterdam IDA IDR Rotterdam Park Project 1.70% VRDO | 4,945,000 | ||||
| 1,830,000 | P-1* | Schenectady County IDR Scotia Industrial Park Project Series 98A 1.70% VRDO | 1,830,000 | ||||
| 3,380,000 | A-1+ | St. Lawrence County IDA United Helpers Independent Living Corp. 1.70% VRDO | 3,380,000 | ||||
| 23,000,000 | MIG1* | South County CSD GO TAN 2.75% due 6/21/05 | 23,164,400 | ||||
| 4,060,000 | A-1+ | Suffolk County IDR JBC Realty 1.75% VRDO | 4,060,000 | ||||
| 3,325,000 | MIG1* | Syracuse GO RAN Series A 2.10% due 10/29/04 | 3,327,203 | ||||
Triborough Bridge & Tunnel Authority: | |||||||
| 7,055,000 | A-1+ | Putters Series 342 AMBAC-Insured PART 1.71% VRDO | 7,055,000 | ||||
| 20,280,000 | AAA | Series 72 MBIA-Insured PART 1.73% VRDO | 20,280,000 | ||||
| 9,235,000 | VMIG1* | Series 109 PART 1.80% VRDO | 9,235,000 | ||||
| 15,155,000 | A-1+ | Series A FSA-Insured 1.69% VRDO | 15,155,000 | ||||
| 35,400,000 | A-1+ | Series C AMBAC-Insured 1.70% VRDO | 35,400,000 | ||||
| 6,500,000 | A-1+ | Troy IDA Rensselaer Polytech Institute Series E 1.70% VRDO | 6,500,000 | ||||
| 5,055,000 | A-1+ | Westchester County IDA Boys & Girls Club Project 1.68% VRDO | 5,055,000 | ||||
| 2,225,000 | A-1+ | Yates IDR Coach Equipment Manufacturing Corp. 1.75% VRDO AMT | 2,225,000 | ||||
Yonkers IDA Consumers Union Facilities: | |||||||
| 2,300,000 | VMIG1* | 1.66% VRDO | 2,300,000 | ||||
| 5,890,000 | A-1+ | AMBAC-Insured 1.66% VRDO | 5,890,000 | ||||
TOTAL INVESTMENTS — 99.4% (Cost — $1,872,758,363**) | 1,872,758,363 | ||||||
Other Assets in Excess of Liabilities — 0.6% | 10,808,259 | ||||||
| TOTAL NET ASSETS — 100.0% | $ | 1,883,566,622 | |||||
| (a) | All ratings are by Standard & Poor’s Ratings Service (“Standard & Poors”) except for those which are identified by an asterisk (*), are rated by Moody’s Investors Service (“Moody’s”). |
| † | Security has not been rated by either Standard & Poor’s or Moody’s. However, the Board of Trustees has determined this security to be considered as a first tier quality issue due to enhancement features; such as insurance and/or irrevocable letters of credit. |
| ‡ | Security has not been rated by either Standard & Poor’s or Moody’s. However, the Board of Trustees has determined that the security presents minimal credit risk. |
| ** | Aggregate cost for Federal income tax purposes is substantially the same. |
See pages 29 through 31 for definitions of ratings and certain abbreviations.
See Notes to Financial Statements.
18 Smith Barney Muni Funds | 2004 Semi-Annual Report
Summary of Investments by Industry* (unaudited)
NEW YORK MONEY MARKET PORTFOLIO
| Transportation | 16.5 | % | |
| Finance | 15.1 | ||
| General Obligation | 14.1 | ||
| Housing | 10.4 | ||
| Utilities | 8.7 | ||
| Industrial Development Revenue | 6.6 | ||
| Hospitals | 6.2 | ||
| Water & Sewer | 6.0 | ||
| Education | 5.1 | ||
| Government Facilities | 4.5 | ||
| Other | 6.8 | ||
| 100.0 | % | ||
| * | As a percentage of total investments. Please note that Fund holdings are as of September 30, 2004 and are subject to change. |
See Notes to Financial Statements.
19 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Education — 27.0% | |||||||
| $ 2,755,000 | Aaa* | Albany IDA, Civic Facility Revenue, (St. Rose Project), Series A, AMBAC-Insured, 5.375% due 7/1/31 | $ | 2,912,724 | |||
Amherst IDA, Civic Facilities Revenue, UBF Faculty-Student Housing, Series B, AMBAC-Insured: | |||||||
| 1,000,000 | AAA | 5.125% due 8/1/20 | 1,088,070 | ||||
| 3,615,000 | AAA | 5.250% due 8/1/31 | 3,786,243 | ||||
Madison County IDA, Civic Facilities Revenue, (Colgate University Project), Series B: | |||||||
| 2,250,000 | AA- | 5.000% due 7/1/23 | 2,348,573 | ||||
| 2,000,000 | AA- | 5.000% due 7/1/33 | 2,032,420 | ||||
New York State Dormitory Authority Revenue Bonds: | |||||||
City University Systems: | |||||||
| 16,925,000 | AAA | 3rd Generation, Series 1, FGIC-Insured, | 17,716,413 | ||||
4th Generation, Series A: | |||||||
| 625,000 | AA- | 5.250% due 7/1/31 | 640,619 | ||||
| 2,840,000 | AA- | MBIA/IBC Insured, (Call 7/1/08 @ 101), | 3,148,907 | ||||
| 5,375,000 | AA- | Call 7/1/11 @ 100, 5.250% due 7/1/31 (c) | 6,107,666 | ||||
| 1,660,000 | AA- | MBIA-Insured, 5.000% due 7/1/28 | 1,685,514 | ||||
Series A, FGIC-Insured: | |||||||
| 5,825,000 | AAA | 5.625% due 7/1/16 | 6,872,335 | ||||
| 14,000,000 | AAA | 2nd Generation, 5.000% due 7/1/16 (b) | 14,939,400 | ||||
| 7,000,000 | AAA | Series B, FSA-Insured, 6.000% due 7/1/14 | 8,414,000 | ||||
| 2,500,000 | A3* | Series C, 7.500% due 7/1/10 | 2,870,200 | ||||
| 2,000,000 | AAA | Columbia University, 5.000% due 7/1/18 | 2,122,460 | ||||
Court Facilities, City of New York Issue: | |||||||
| 5,000,000 | A | 6.000% due 5/15/39 | 5,412,100 | ||||
| 3,000,000 | AAA | AMBAC-Insured, 5.750% due 5/15/30 | 3,301,290 | ||||
| 2,000,000 | AA- | Department of Education, 5.000% due 7/1/24 | 2,065,260 | ||||
| 5,000,000 | AAA | New School University, MBIA-Insured, 5.000% due 7/1/29 | 5,099,900 | ||||
| 10,260,000 | AAA | Rockefeller University, 5.000% due 7/1/28 (b) | 10,485,002 | ||||
| 1,000,000 | AA- | School Improvement Program, 5.000% due 7/1/18 | 1,048,360 | ||||
| 1,150,000 | AAA | St. John’s University, MBIA-Insured, 5.250% due 7/1/25 | 1,196,288 | ||||
State University Dormitory Facility, FGIC-Insured, | |||||||
| 1,000,000 | AAA | 5.500% due 7/1/26 (c) | 1,151,460 | ||||
| 1,000,000 | AAA | 5.500% due 7/1/27 (c) | 1,151,460 | ||||
| 12,000,000 | AAA | 5.100% due 7/1/31 (b)(c) | 13,526,640 | ||||
State University Educational Facility: | |||||||
Series A: | |||||||
| 12,750,000 | AAA | FGIC-Insured, (Call 5/15/12 @ 101), | 14,343,112 | ||||
See Notes to Financial Statements.
20 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Education — 27.0% (continued) | |||||||
| $12,110,000 | AAA | FSA-Insured, 5.875% due 5/15/17 (b) | $ | 14,662,909 | |||
| 7,030,000 | AAA | MBIA-Insured, 5.000% due 5/15/16 | 7,429,374 | ||||
Series B: | |||||||
| 676,000 | AA- | 7.500% due 5/15/11 | 791,927 | ||||
| 5,000,000 | AAA | FGIC-Insured, 5.250% due 5/15/19 | 5,710,150 | ||||
| 5,000,000 | AAA | FSA-Insured, (Call 5/15/10 @ 101), | 5,722,300 | ||||
University of Rochester, Series A: | |||||||
MBIA-Insured: | |||||||
| 3,915,000 | AAA | 5.000% due 7/1/16 | 4,143,401 | ||||
| 2,300,000 | AAA | 5.000% due 7/1/27 | 2,341,147 | ||||
Rensselaer County IDA, Civic Facilities Revenue Bonds, (Polytechnic Institute Dormitory Project): | |||||||
| 5,430,000 | A+ | Series A, 5.125% due 8/1/29 | 5,569,388 | ||||
| 5,820,000 | A+ | Series B, 5.125% due 8/1/27 | 5,983,076 | ||||
Schenectady IDA, Civic Facilities Revenue Bonds, | |||||||
| 2,000,000 | Aaa* | 5.375% due 12/1/19 | 2,207,840 | ||||
| 1,725,000 | Aaa* | 5.000% due 7/1/22 | 1,822,376 | ||||
| 3,000,000 | Aaa* | 5.450% due 12/1/29 | 3,181,950 | ||||
| 2,390,000 | Aaa* | 5.625% due 7/1/31 | 2,613,704 | ||||
Taconic Hills School District at Craryville, FGIC-Insured, State Aid Withholding: | |||||||
| 1,420,000 | Aaa* | 5.000% due 6/15/25 | 1,470,325 | ||||
| 700,000 | Aaa* | 5.000% due 6/15/26 | 721,126 | ||||
| 3,000,000 | Aaa* | Teachers College, MBIA-Insured, 5.000% due 7/1/22 | 3,152,940 | ||||
| 202,990,349 | |||||||
| Finance — 4.3% | |||||||
New York City Transitional Finance Authority Revenue, Future Tax Secured: | |||||||
| 400,000 | AA+ | Series B, 1.770% due 2/1/31 (d) | 400,000 | ||||
Series C: | |||||||
| 3,350,000 | AA+ | 1.720% due 5/1/28 (d) | 3,350,000 | ||||
| 10,000,000 | AA+ | (Call 5/1/10 @ 101), 5.500% due 11/1/29 (b)(c) | 11,436,100 | ||||
| 1,000,000 | AA+ | Sub-Series C5, 1.720% due 8/1/31 (d) | 1,000,000 | ||||
New York City TFA Revenue: | |||||||
| 335,000 | AA+ | Sub-Series 1D, 1.71% due 11/1/22 (d) | 335,000 | ||||
NYC Recovery: | |||||||
| 1,640,000 | AA+ | Sub-Series 1C, 1.720% due 11/1/22 (d) | 1,640,000 | ||||
| 2,700,000 | AA+ | Sub-Series 3H, 1.720% due 11/1/22 (d) | 2,700,000 | ||||
| 5,000,000 | AAA | New York State Local Government Assistance Corp., Series B, MBIA-Insured, 4.875% due 4/1/20 | 5,173,100 | ||||
See Notes to Financial Statements.
21 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Finance — 4.3% (continued) | |||||||
| $ 435,000 | BBB+ | New York State Municipal Bond Bank Agency, Special Revenue Program, City of Buffalo, Series A, 6.875% due 3/15/06 | $ | 436,540 | |||
| 5,000,000 | BBB+ | Puerto Rico Public Financial Corp., Series E, | 5,592,114 | ||||
| 32,062,854 | |||||||
| General Obligation — 1.8% | |||||||
New York City GO: | |||||||
| 3,150,000 | AAA | Series I, AMBAC-Insured, 7.250% due 8/15/14 (e) | 3,618,342 | ||||
| 200,000 | AA | Sub-Series A4, LOC-Westdeutsche Landesbank, | 200,000 | ||||
| 700,000 | AAA | Sub-Series A6, FSA-Insured, 1.770% due 11/1/26 (d) | 700,000 | ||||
| 500,000 | AA- | Sub-Series E5 1.680% due 8/1/17(d) | 500,000 | ||||
| 2,750,000 | AA | New York State GO, 9.875% due 11/15/05 | 2,990,845 | ||||
| 4,505,000 | Aaa* | North Hempstead GO, Series A, FGIC-Insured, | 4,691,597 | ||||
| 1,000,000 | AAA | Yonkers GO, Series C, FGIC-Insured, State Aid Withholding, 5.000% due 6/1/19 | 1,052,540 | ||||
| 13,753,324 | |||||||
| Government Facilities — 7.6% | |||||||
New York State Urban Development Corp. Revenue: | |||||||
| 20,000,000 | AA- | Correctional & Youth Facilities, Series A, | 22,342,000 | ||||
| 3,050,000 | AAA | Correctional Capital Facilities, MBIA-Insured, | 3,178,039 | ||||
Correctional Facilities Service Contract: | |||||||
| 6,600,000 | AAA | Series C, AMBAC-Insured, (Call 1/1/09 @ 101), | 7,588,482 | ||||
| 18,400,000 | AAA | Series D, FSA-Insured, (Call 1/1/11 @ 100), | 20,738,824 | ||||
| 3,000,000 | AA- | State Facilities, 5.700% due 4/1/20 | 3,493,650 | ||||
| 57,340,995 | |||||||
| Hospitals — 12.0% | |||||||
| 1,620,000 | AAA | East Rochester, Housing Authority Revenue, (North Park Nursing Home), GNMA-Collateralized, | 1,711,449 | ||||
| 5,000,000 | AAA | Nassau Health Care Corp., Health System Revenue Bonds, | 5,468,350 | ||||
New York City Health & Hospital Corp. Revenue, Health System, Series A: | |||||||
| 3,000,000 | AAA | AMBAC-Insured, 5.000% due 2/15/20 | 3,128,610 | ||||
FSA-Insured: | |||||||
| 1,110,000 | AAA | 5.000% due 2/15/22 | 1,160,660 | ||||
| 3,750,000 | AAA | 5.125% due 2/15/23 | 3,933,600 | ||||
See Notes to Financial Statements.
22 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Hospitals — 12.0% (continued) | |||||||
New York State Dormitory Authority Revenue: | |||||||
| $ 5,350,000 | A1* | Lutheran Center at Poughkeepsie, LOC-Key Bank N.A., | $ | 5,607,603 | |||
| 5,000,000 | AAA | Maimonides FHA-Insured, 5.000% due 8/1/24 | 5,200,450 | ||||
Mental Health Services Facilities: | |||||||
Series B: | |||||||
| 2,500,000 | AA- | 5.000% due 2/15/18 | 2,605,950 | ||||
| 4,180,000 | AA- | 5.625% due 2/15/21 | 4,414,331 | ||||
| 2,820,000 | AA- | (Call 2/15/07 @ 102), 5.625% due 2/15/21 (c) | 3,111,109 | ||||
Series D, FSA-Insured: | |||||||
| 280,000 | AAA | 5.250% due 8/15/30 | 288,806 | ||||
| 2,320,000 | AAA | (Call 8/15/10 @ 100), 5.250% due 8/15/30 (c) | 2,617,169 | ||||
| 324,000 | AA- | Series B, (Partially Pre-Refunded with U.S. government securities to various call dates and prices), | 393,213 | ||||
| 3,000,000 | AA | St. Luke’s Home, Residential Health, FHA-Insured, | 3,133,200 | ||||
| 2,450,000 | AAA | St. Vincent’s Hospital & Medical Center, FHA-Insured, | 2,460,143 | ||||
| 1,500,000 | AAA | United Cerebral Palsy, AMBAC-Insured, 5.125% due 7/1/21 | 1,618,155 | ||||
| 2,000,000 | AAA | Victory Memorial Hospital, MBIA-Insured, | 2,111,580 | ||||
| 2,500,000 | AAA | Willow Towers Inc. Project, GNMA-Collateralized, | 2,618,925 | ||||
New York State Medical Care Facilities, | |||||||
Series A: | |||||||
| 4,000,000 | AAA | Brookdale Hospital Medical Center, (Pre-Refunded — Escrowed with state & local government securities to 2/15/05 Call @ 102), 6.800% due 8/15/12 | 4,158,240 | ||||
| 2,500,000 | B | Central Suffolk Hospital Mortgage Project, | 1,799,875 | ||||
| 665,000 | AA- | FHA-Insured, 7.450% due 8/15/31 | 667,766 | ||||
| 955,000 | Aa1* | Health Center Projects, Secured Mortgage Program, SONYMA-Insured, 6.375% due 11/15/19 | 1,004,832 | ||||
| 4,700,000 | AAA | New York Downtown Hospital, (Pre-Refunded — Escrowed with state & local government securities to | 4,885,932 | ||||
New York Hospital, AMBAC/FHA-Insured, (Pre-Refunded — Escrowed with state & local government securities to 2/15/05 Call @ 102): | |||||||
| 8,500,000 | AAA | 6.800% due 8/15/24 (b) | 8,836,260 | ||||
| 7,600,000 | AAA | 6.500% due 8/15/29 (f) | 7,892,448 | ||||
| 2,500,000 | AAA | 6.900% due 8/15/34 | 2,599,775 | ||||
See Notes to Financial Statements.
23 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Hospitals — 12.0% (continued) | |||||||
Series B: | |||||||
| $ 920,000 | AA | Hospital & Nursing Home Insured Mortgage, FHA-Insured, 7.000% due 8/15/32 | $ | 923,634 | |||
| 1,860,000 | AAA | Long Term Healthcare, FSA-Insured, | 1,866,993 | ||||
| 3,325,000 | AA | Mortgage Project, FHA-Insured, 6.100% due 2/15/15 | 3,439,712 | ||||
| 665,000 | BBB+ | Puerto Rico Commonwealth Renewal & Housing Corp., | 665,000 | ||||
| 90,323,770 | |||||||
| Housing: Multi-Family — 3.2% | |||||||
| 35,000 | NR | Battery Park City Authority, Housing Revenue, FHA-Insured, | 36,603 | ||||
New York City HDC: | |||||||
| 1,289,152 | NR | Cadman Project, 6.500% due 11/15/18 | 1,357,323 | ||||
| 1,041,434 | NR | Kelly Project, 6.500% due 2/15/18 | 1,097,557 | ||||
| 1,333,734 | NR | Riverbend Project, 6.500% due 11/15/18 | 1,373,679 | ||||
| 5,000,000 | AA | Series A 5.100% due 11/1/24 | 5,168,150 | ||||
New York State Dormitory Authority Revenue, Park Ridge | |||||||
| 1,000,000 | AAA | 6.375% due 8/1/20 (f) | 1,138,520 | ||||
| 1,470,000 | AAA | 6.500% due 8/1/25 | 1,669,126 | ||||
New York State Housing Finance Agency Revenue, Secured Mortgage Program: | |||||||
Series A, SONYMA-Insured: | |||||||
| 500,000 | Aa1* | 7.000% due 8/15/12 (g) | 502,755 | ||||
| 2,000,000 | Aa1* | 6.200% due 8/15/15 (g) | 2,069,020 | ||||
| 500,000 | Aa1* | 7.050% due 8/15/24 (g) | 502,595 | ||||
| 6,870,000 | Aa1* | Series B, SONYMA-Insured, 6.250% due 8/15/29 (g) | 7,160,601 | ||||
| 1,205,000 | AAA | Series C, FHA-Insured, 6.500% due 8/15/24 | 1,210,483 | ||||
| 675,000 | A1* | Rensselaer Housing Authority, MFH Mortgage Revenue, Rensselaer Elderly Apartments, Series A, 7.750% due 1/1/11 | 680,191 | ||||
| 23,966,603 | |||||||
| Housing: Single-Family — 1.9% | |||||||
New York State Mortgage Agency Revenue, | |||||||
| 3,045,000 | Aa1* | Series 65, 5.850% due 10/1/28 (g) | 3,134,645 | ||||
| 4,800,000 | Aa1* | Series 67, 5.800% due 10/1/28 (g) | 4,964,784 | ||||
| 6,000,000 | Aa1* | Series 71, 5.350% due 10/1/18 (g) | 6,165,660 | ||||
| 14,265,089 | |||||||
| Industrial Development — 1.9% | |||||||
| 2,250,000 | BBB | Essex County IDA Revenue, Solid Waste, (International Paper Co. Project), Series A, 6.150% due 4/1/21 (g) | 2,342,790 | ||||
See Notes to Financial Statements.
24 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Industrial Development — 1.9% (continued) | |||||||
| $ 435,000 | NR | Monroe County IDA Revenue, Public Improvement, Canal Ponds Park, Series A, 7.000% due 6/15/13 | $ | 435,700 | |||
| 300,000 | A+ | Nassau County IDA, Cold Springs Harbor, | 300,000 | ||||
Onondaga County, IDA: | |||||||
| 750,000 | AA- | Civic Facilities Revenue, (Syracuse Home Association Project), LOC-HSBC Bank USA, 5.200% due 12/1/18 | 806,108 | ||||
| 8,000,000 | A+ | Sewer Facilities Revenue, (Bristol-Myers Squibb Co. Project), 5.750% due 3/1/24 (b)(g) | 8,813,040 | ||||
| 1,410,000 | AA- | Rensselaer County IDA, Albany International Corp., LOC-Fleet | 1,562,209 | ||||
| 14,259,847 | |||||||
| Life Care Systems — 1.8% | |||||||
New York State Dormitory Authority Revenue Bonds, FHA-Insured: | |||||||
| 3,815,000 | AA | Hebrew Nursing Home, 6.125% due 2/1/37 | 4,010,977 | ||||
| 1,465,000 | AAA | Jewish Geriatric Center, 7.150% due 8/1/14 (f) | 1,503,676 | ||||
| 1,500,000 | AAA | Menorah Campus Nursing Home, 6.100% due 2/1/37 | 1,621,575 | ||||
| 1,470,000 | AA | Niagara Frontier Home, Mortgage Revenue, | 1,509,205 | ||||
| 3,350,000 | AA | Wesley Garden Nursing Home, 6.125% due 8/1/35 | 3,587,012 | ||||
| 1,250,000 | AAA | Syracuse IDA Revenue, James Square Association, FHA-Insured, 7.000% due 8/1/25 | 1,254,937 | ||||
| 13,487,382 | |||||||
| Pollution Control Revenue — 0.5% | |||||||
New York State Environmental Facilities Corp., | |||||||
State Water Revolving Fund, Series A: | |||||||
| 190,000 | AAA | 7.500% due 6/15/12 | 191,235 | ||||
| 805,000 | AAA | GIC-Societe General, 7.250% due 6/15/10 | 810,434 | ||||
| 1,000,000 | AAA | North Country Development Authority, Solid Waste Management System Revenue, FSA-Insured, | 1,208,110 | ||||
| 1,710,000 | CCC | Puerto Rico Industrial, Medical & Environmental Facilities, Finance Authority Revenue, American Airlines Inc., Series A, 6.450% due 12/1/25 | 1,093,374 | ||||
| 3,303,153 | |||||||
| Public Facilities — 2.0% | |||||||
| 1,655,000 | AAA | New York City Trust Cultural Resource Revenue, AMBAC-Insured: | |||||
American Museum of Natural History, Series A, | 1,796,685 | ||||||
See Notes to Financial Statements.
25 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Public Facilities — 2.0% (continued) | |||||||
Museum of Modern Art: | |||||||
| $ 3,100,000 | AAA | Series A, 5.000% due 4/1/23 | $ | 3,239,686 | |||
| 9,000,000 | AAA | Series D, 5.125% due 7/1/31 (b) | 9,280,440 | ||||
| 640,000 | AA- | New York State COP, (Hanson Redevelopment Project), | 698,035 | ||||
| 15,014,846 | |||||||
| Transportation — 20.4% | |||||||
| 750,000 | BBB+ | Albany, Parking Authority Revenue, Series A, | 795,705 | ||||
Metropolitan Transportation Authority: | |||||||
Dedicated Tax Fund, Series A: | |||||||
| 11,000,000 | AAA | FGIC-Insured, 5.250% due 11/15/23 (b) | 11,696,190 | ||||
FSA-Insured, (Call 10/1/14 @ 100): | |||||||
| 2,290,000 | AAA | 5.125% due 4/1/19 (c) | 2,618,020 | ||||
| 4,500,000 | AAA | 5.250% due 4/1/23 (c) | 5,191,830 | ||||
Transit Facilities Revenue, Series A: | |||||||
| 5,000,000 | AAA | Call 7/1/09 @ 100, 6.000% due 7/1/19 (c) | 5,762,750 | ||||
| 10,000,000 | AAA | MBIA-Insured, (Call 7/1/07 @ 101.50), | 11,100,300 | ||||
Triborough Bridge & Tunnel Authority: | |||||||
Series A, GO-Insured: | |||||||
| 3,500,000 | AA- | Call 1/1/22 @ 100, 5.250% due 1/1/28 (c) | 3,933,580 | ||||
| 5,200,000 | AAA | MBIA-IBC Insured, 5.250% due 11/15/30 | 5,456,880 | ||||
Series B, GO of Authority: | |||||||
| 4,200,000 | AAA | Call 1/1/16 @ 100, 5.375% due 1/1/19 (c) | 4,862,802 | ||||
| 10,125,000 | AAA | Call 1/1/22 @ 100, 5.500% due 1/1/30 (b)(c) | 11,394,574 | ||||
Triborough Bridge COP, AMBAC-Insured: | |||||||
| 2,595,000 | AAA | 5.875% due 1/1/30 | 3,005,010 | ||||
| 20,000,000 | AAA | Series A, 5.250% due 1/1/29 (b) | 22,554,600 | ||||
New York State Thruway Authority: | |||||||
| 5,000,000 | AA- | General Revenue, Series E, GO of Authority, | 5,103,500 | ||||
Highway & Bridge Toll Revenue Fund, FGIC-Insured: | |||||||
Series A: | |||||||
| 3,410,000 | AAA | 5.000% due 4/1/19 | 3,637,617 | ||||
| 2,000,000 | AAA | 5.000% due 4/1/20 | 2,121,680 | ||||
| 2,500,000 | AAA | 5.000% due 4/1/21 | 2,637,225 | ||||
| 15,000,000 | AAA | Series B, 5.000% due 4/1/19 (b) | 15,907,650 | ||||
| 4,000,000 | AAA | Series B-1, 5.500% due 4/1/18 | 4,435,760 | ||||
Port Authority New York & New Jersey: | |||||||
| 7,250,000 | AA- | 109th Series, GO of Authority, 5.375% due 1/15/32 | 7,519,482 | ||||
| 8,000,000 | CCC | Delta Airlines Inc. Project, Series 1R, 6.950% due 6/1/08 | 7,714,160 | ||||
See Notes to Financial Statements.
26 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Transportation — 20.4% (continued) | |||||||
Special Obligation Revenue: | |||||||
| $12,000,000 | NR | 5th Installment, 6.750% due 10/1/19 (b)(g) | $ | 12,452,520 | |||
| 2,000,000 | A+ | Versatile Structure, Morgan Guaranty Trust, Series 3, 1.110% due 6/1/20 (d) | 2,000,000 | ||||
| 1,325,000 | AA- | Triborough Bridge & Tunnel Authority, Convention Center Project, Series E, 7.250% due 1/1/10 | 1,494,362 | ||||
| 153,396,197 | |||||||
| Utilities — 5.0% | |||||||
| 18,660,000 | AAA | Long Island Power Authority, Electric System Revenue, Series A, MBIA-Insured, 5.250% due 12/1/26 (b) | 19,348,181 | ||||
New York State Energy, Research & Development Authority: | |||||||
| 5,750,000 | A | Electric Facilities Revenue, (Consolidated Edison Co. Inc. Project), Series A, 7.125% due 12/1/29 (d) | 5,908,412 | ||||
Gas Facilities Revenue: | |||||||
| 3,000,000 | A+ | Brooklyn Union Gas Co. Project, RIBS, Series B, | 3,524,310 | ||||
| 1,500,000 | Baa2* | Corning Natural Gas Corp., Series A, | 1,512,885 | ||||
| 7,000,000 | A- | Puerto Rico Electric Power Authority, Power Revenue, Series NN, 5.125% due 7/1/29 | 7,205,660 | ||||
| 37,499,448 | |||||||
| Water & Sewer — 8.7% | |||||||
| 1,000,000 | AAA | Buffalo Municipal Water Finance Authority, Water Systems Revenue, FGIC-Insured, (Call 7/1/06 @ 102), | 1,094,650 | ||||
| 940,000 | AAA | Commonwealth of Puerto Rico, Aqueduct & Sewer Authority Revenue Bonds, 10.250% due 7/1/09 (e) | 1,138,500 | ||||
New York City Municipal Water Finance Authority, Water & Sewer Systems Revenue: | |||||||
| 16,000,000 | AA+ | 5.500% due 6/15/33 (b) | 17,093,440 | ||||
| 200,000 | AAA | Series A, 1.770% due 6/15/25 (d) | 200,000 | ||||
Series B: | |||||||
| 990,000 | AA+ | 6.000% due 6/15/33 | 1,142,589 | ||||
| 5,205,000 | AAA | FGIC-Insured, 5.125% due 6/15/30 | 5,282,398 | ||||
FSA-Insured: | |||||||
| 2,750,000 | AAA | 5.000% due 6/15/29 | 2,790,618 | ||||
| 1,000,000 | AAA | 5.250% due 6/15/29 | 1,023,490 | ||||
| 1,565,000 | AA+ | Pre-Refunded — Escrowed with state & local government securities to Call 6/15/10 @ 101, 6.000% due 6/15/33 (c) | 1,834,775 | ||||
| 1,900,000 | AA+ | Series C-3, 1.730% due 6/15/18 (d) | 1,900,000 | ||||
See Notes to Financial Statements.
27 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Schedules of Investments (unaudited) (continued) | September 30, 2004 |
NEW YORK PORTFOLIO
| |||||||
FACE AMOUNT | RATING(a) | SECURITY | VALUE | ||||
| Water & Sewer — 8.7% (continued) | |||||||
Series D: | |||||||
| $ 5,000,000 | AA+ | 5.250% due 6/15/25 | $ | 5,308,050 | |||
| 2,375,000 | AAA | MBIA-Insured, 5.000% due 6/15/15 | 2,520,778 | ||||
| 600,000 | AA+ | Series F-1, 1.770% due 6/15/33 (d) | 600,000 | ||||
New York State Environmental Facilities Corp., Clean Water & Drinking Revolving Funds: | |||||||
| 8,500,000 | AAA | 5.000% due 6/15/32 (b) | 8,710,205 | ||||
Series B: | |||||||
| 965,000 | AAA | 5.250% due 4/15/17 | 1,039,459 | ||||
| 2,490,000 | AAA | 5.250% due 10/15/17 | 2,682,128 | ||||
| 1,340,000 | AAA | 5.250% due 4/15/18 | 1,435,743 | ||||
| 1,880,000 | AAA | 5.250% due 10/15/18 | 2,014,326 | ||||
Call 10/15/09 @ 100: | |||||||
| 295,000 | AAA | 5.250% due 4/15/17 (c) | 332,211 | ||||
| 400,000 | AAA | 5.250% due 4/15/18 (c) | 450,456 | ||||
Series C: | |||||||
| 1,060,000 | AAA | 5.000% due 6/15/16 | 1,123,165 | ||||
| 4,980,000 | AAA | Pre-Refunded — Escrowed with state & local government securities to Call 6/15/08 @ 101, 5.000% due 6/15/16 | 5,343,092 | ||||
| 65,060,073 | |||||||
TOTAL INVESTMENTS — 98.1% (Cost — $675,476,604**) | 736,723,930 | ||||||
Other Assets in Excess of Liabilities — 1.9% | 14,214,585 | ||||||
| TOTAL NET ASSETS — 100.0% | $ | 750,938,515 | |||||
| (a) | All ratings are by Standard & Poor’s Ratings Service, except for those which are identified by an asterisk (*), are rated by Moody’s Investors Service. |
| (b) | All or a portion of this security is segregated for open futures contracts. |
| (c) | Pre-Refunded bonds are escrowed with U.S. government securities and are considered by the Manager to be triple-A rated even if issuer has not applied for new ratings. |
| (d) | Variable rate obligation payable at par on demand at any time on no more than seven days notice. |
| (e) | Bonds are escrowed to maturity with U.S. government securities and are considered by the Manager to be triple-A rated even if issuer has not applied for new ratings. |
| (f) | All or a portion of this security is held as collateral for open futures contracts. |
| (g) | Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax. |
| (h) | Residual interest bond — coupon varies inversely with level of short-term tax-exempt interest rates. |
| ** | Aggregate cost for Federal income tax purposes is substantially the same. |
See pages 29 through 31 for definitions of ratings and certain abbreviations.
See Notes to Financial Statements.
28 Smith Barney Muni Funds | 2004 Semi-Annual Report
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 “CCC” 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 to a debt obligation. 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 they are 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 bonds in this category than in higher rated categories. | |
BB, B, and CCC | — Bonds rated “BB”, “B” and “CCC” are regarded, on balance, as predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal in accordance with the terms of the obligation. “BB” indicates the lowest degree of speculation than “B” and “CCC” the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. |
Moody’s Investors Service (“Moody’s”) — Numerical modifiers 1, 2 and 3 may be applied to each generic rating from “Aa” to “Caa”, 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 these bonds. | |
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 as 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 payment 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, and 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 the desirable investments. Assurance of interest and principal payments or maintenance of other terms of the contract over any long period of time may be small. |
29 Smith Barney Muni Funds | 2004 Semi-Annual Report
Bond Ratings (unaudited) (continued)
Caa | — Bonds that are rated “Caa” are of poor standing. Such issues may be in default or present elements of danger with respect to principal or interest. | |
NR | — Indicates that the bond is not rated by Standard & Poor’s or Moody’s. |
Short-Term Security 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. | |
P-1 | — Moody’s highest rating for commercial paper and for VRDO prior to the advent of the VMIG 1 rating. | |
VMIG 1 | — Moody’s highest rating for issues having a demand feature — VRDO. | |
MIG 1 | — Moody’s highest rating for short-term municipal obligations. | |
MIG 2 | — Moody’s second highest rating for short-term municipal obligations. |
30 Smith Barney Muni Funds | 2004 Semi-Annual Report
Abbreviations* (unaudited)
ABAG | — Association of Bay Area | |
AIG | — American International Guaranty | |
AMBAC | — Ambac Assurance Corporation | |
AMT | — Alternative Minimum Tax | |
BAN | — Bond Anticipation Notes | |
BIG | — Bond Investors Guaranty | |
CDA | — Community Development Authority | |
CGIC | — Capital Guaranty Insurance Company | |
CHFCLI | — California Health Facility Construction Loan Insurance | |
CONNIE LEE | — College Construction Loan Insurance Association | |
COP | — Certificate of Participation | |
CSD | — Central School District | |
CTFS | — Certificates | |
DFA | — Development Finance Agency | |
EDA | — Economic Development Authority | |
EFA | — Educational Facilities Authority | |
ETM | — Escrowed to Maturity | |
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 | |
FRTC | — Floating Rate Trust Certificates | |
FSA | — Federal Savings Association | |
GDB | — Government Development Bank | |
GIC | — Guaranteed Investment Contract | |
GNMA | — Government National Mortgage Association | |
GO | — General Obligation | |
HDC | — Housing Development Corporation | |
HEFA | — Health & Educational Facilities Authority | |
HFA | — Housing Finance Authority | |
IBC | — Insured Bond Certificates | |
IDA | — Industrial Development Authority | |
IDB | — Industrial Development Board | |
IDR | — Industrial Development Revenue | |
IFA | — Industrial Finance Agency | |
INFLOS | — Inverse Floaters | |
ISD | — Independent School District |
ISO | — Independent System Operator | |
LGAC | — Local Government Assistance Corporation | |
LOC | — Letter of Credit | |
MBIA | — Municipal Bond Investors Assurance Corporation | |
MERLOT | — Municipal Exempt Receipts Liquidity Optional Tender | |
MFH | — Multi-Family Housing | |
MSTC | — Municipal Securities Trust Certificates | |
MUD | — Municipal Utilities District | |
MVRICS | — Municipal Variable Rate Inverse Coupon Security | |
PART | — Partnership Structure | |
PCFA | — Pollution Control Finance Authority | |
PCR | — Pollution Control Revenue | |
PFA | — Public Facilities Authority | |
PFC | — Public Facilities Corporation | |
PSFG | — Permanent School Fund Guaranty | |
Q-SBLF | — Qualified School Bond Loan Fund | |
Radian | — Radian Asset Assurance | |
RAN | — Revenue Anticipation Notes | |
RAW | — Revenue Anticipation Warrants | |
RDA | — Redevelopment Agency | |
RIBS | — Residual Interest Bonds | |
RITES | — Residual Interest Tax-Exempt Securities | |
SPA | — Standby Bond Purchase Agreement | |
SWAP | — Swap Structure | |
SYCC | — Structured Yield Curve Certificate | |
TAN | — Tax Anticipation Notes | |
TCRS | — Transferable Custodial Receipts | |
TECP | — Tax Exempt Commercial Paper | |
TFA | — Transitional Finance Authority | |
TOB | — Tender Option Bond Structure | |
TRAN | — Tax and Revenue Anticipation Notes | |
UFSD | — Unified Free School District | |
UHSD | — Unified High School District | |
USD | — Unified School District | |
VA | — Veterans Administration | |
VRDD | — Variable Rate Daily Demand | |
VRDO | — Variable Rate Demand Obligation | |
VRWE | — Variable Rate Wednesday Demand | |
XLCA | — XL Capital Assurance |
| * | Abbreviations may or may not appear in the schedule of investments. |
31 Smith Barney Muni Funds | 2004 Semi-Annual Report
| Statements of Assets and Liabilities (unaudited) | September 30, 2004 |
| New York Money Market Portfolio | New York Portfolio | ||||||
| ASSETS: | |||||||
Investments, at value (Cost — $1,872,758,363 and $675,476,604, respectively) | $ | 1,872,758,363 | $ | 736,723,930 | |||
Cash | — | 23,311 | |||||
Receivable for securities sold | 46,582,164 | 160,083 | |||||
Receivable for Fund shares sold | 9,728,998 | 2,987,395 | |||||
Interest receivable | 4,648,034 | 10,592,856 | |||||
Receivable from broker — variation margin | — | 1,003,432 | |||||
Prepaid expenses | 48,507 | 18,152 | |||||
Other assets | 20,834 | — | |||||
Total Assets | 1,933,786,900 | 751,509,159 | |||||
| LIABILITIES: | |||||||
Payable for securities purchased | 25,314,925 | — | |||||
Payable for Fund shares reacquired | 22,524,849 | 94,206 | |||||
Dividends payable | 755,822 | — | |||||
Management fees payable | 743,405 | 307,820 | |||||
Bank overdraft | 680,325 | — | |||||
Distribution plan fees payable | 49,352 | 71,984 | |||||
Deferred compensation payable | 20,834 | 13,416 | |||||
Accrued expenses | 130,766 | 83,218 | |||||
Total Liabilities | 50,220,278 | 570,644 | |||||
Total Net Assets | $ | 1,883,566,622 | $ | 750,938,515 | |||
| NET ASSETS: | |||||||
Par value of shares of beneficial interest | $ | 1,883,173 | $ | 55,891 | |||
Capital paid in excess of par value | 1,881,337,717 | 722,004,884 | |||||
Undistributed net investment income | 50 | 1,083,443 | |||||
Accumulated net realized gain (loss) from investment transactions and futures contracts | 345,682 | (29,117,336 | ) | ||||
Net unrealized appreciation of investments and futures contracts | — | 56,911,633 | |||||
Total Net Assets | $ | 1,883,566,622 | $ | 750,938,515 | |||
Shares Outstanding: | |||||||
Class A | 1,763,711,447 | 44,621,906 | |||||
Class B | — | 7,800,296 | |||||
Class C | — | 3,188,695 | |||||
Class Y | 119,461,500 | 280,288 | |||||
Net Asset Value: | |||||||
Class A (and redemption price) | $1.00 | $13.44 | |||||
Class B * | — | $13.44 | |||||
Class C * | — | $13.42 | |||||
Class Y (and redemption price) | $1.00 | $13.43 | |||||
Maximum Public Offering Price Per Share: | |||||||
Class A (based on maximum sales charge of 4.00%) | N/A | $14.00 | |||||
| * | Redemption price is NAV of Class B and C shares reduced by a 4.50% and 1.00% CDSC, respectively, if shares are redeemed within one year from purchase payment (See Note 2). |
See Notes to Financial Statements.
32 Smith Barney Muni Funds | 2004 Semi-Annual Report
Statements of Operations (unaudited)
For the Six Months Ended September 30, 2004
| New York Money Market Portfolio | New York Portfolio | |||||||
| INVESTMENT INCOME: | ||||||||
Interest | $ | 11,080,178 | $ | 19,599,669 | ||||
| EXPENSES: | ||||||||
Management fees (Note 2) | 4,566,416 | 1,896,904 | ||||||
Distribution plan fees (Notes 2 and 4) | 934,606 | 963,507 | ||||||
Transfer agency services (Notes 2 and 4 ) | 199,776 | 105,307 | ||||||
Custody | 45,750 | 36,099 | ||||||
Shareholder communications (Note 4) | 22,000 | 17,101 | ||||||
Registration fees | 20,955 | 8,248 | ||||||
Audit and legal | 16,787 | 15,192 | ||||||
Trustees’ fees | 8,250 | 3,315 | ||||||
Other | 16,782 | 5,630 | ||||||
Total Expenses | 5,831,322 | 3,051,303 | ||||||
Less: Management fee waiver (Notes 2 and 7) | (115,738 | ) | (86,614 | ) | ||||
Net Expenses | 5,715,584 | 2,964,689 | ||||||
Net Investment Income | 5,364,594 | 16,634,980 | ||||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS (NOTES 1 AND 3): | ||||||||
Realized Gain (Loss) From: | ||||||||
Investment transactions | 277,085 | 725,770 | ||||||
Futures contracts | — | (1,233,241 | ) | |||||
Net Realized Gain (Loss) | 277,085 | (507,471 | ) | |||||
Decrease in Net Unrealized Appreciation of Investments and Futures Contracts | — | (7,530,720 | ) | |||||
Net Gain (Loss) on Investments and Futures Contracts | 277,085 | (8,038,191 | ) | |||||
Increase in Net Assets From Operations | $ | 5,641,679 | $ | 8,596,789 | ||||
See Notes to Financial Statements.
33 Smith Barney Muni Funds | 2004 Semi-Annual Report
Statements of Changes in Net Assets
For the Six Months Ended September 30, 2004 (unaudited) and the Year Ended March 31, 2004
| New York Money Market Portfolio | September 30 | March 31 | ||||||
| OPERATIONS: | ||||||||
Net investment income | $ | 5,364,594 | $ | 7,535,401 | ||||
Net realized gain | 277,085 | 122,961 | ||||||
Increase in Net Assets From Operations | 5,641,679 | 7,658,362 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 and 5): | ||||||||
Net investment income | (5,364,594 | ) | (7,535,351 | ) | ||||
Net realized gains | — | (55,938 | ) | |||||
Decrease in Net Assets From | (5,364,594 | ) | (7,591,289 | ) | ||||
| FUND SHARE TRANSACTIONS (NOTE 6): | ||||||||
Net proceeds from sale of shares | 3,220,216,401 | 6,925,591,491 | ||||||
Net asset value of shares issued for reinvestment of dividends | 4,888,395 | 7,496,507 | ||||||
Cost of shares reacquired | (3,309,268,807 | ) | (6,793,548,643 | ) | ||||
Increase (Decrease) in Net Assets From Fund Share Transactions | (84,164,011 | ) | 139,539,355 | |||||
Increase (Decrease) in Net Assets | (83,886,926 | ) | 139,606,428 | |||||
| NET ASSETS: | ||||||||
Beginning of period | 1,967,453,548 | 1,827,847,120 | ||||||
End of period* | $ | 1,883,566,622 | $ | 1,967,453,548 | ||||
* Includes undistributed net investment income of: | $50 | $50 | ||||||
See Notes to Financial Statements.
34 Smith Barney Muni Funds | 2004 Semi-Annual Report
Statements of Changes in Net Assets (continued)
For the Six Months Ended September 30, 2004 (unaudited) and the Year Ended March 31, 2004
| New York Portfolio | September 30 | March 31 | ||||||
| OPERATIONS: | ||||||||
Net investment income | $ | 16,634,980 | $ | 34,745,015 | ||||
Net realized loss | (507,471 | ) | (597,387 | ) | ||||
Decrease in net unrealized appreciation | (7,530,720 | ) | (4,235,959 | ) | ||||
Increase in Net Assets From Operations | 8,596,789 | 29,911,669 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 1 and 5): | ||||||||
Net investment income | (16,312,268 | ) | (34,661,370 | ) | ||||
In excess of net investment income | — | (54,503 | ) | |||||
Decrease in Net Assets From | (16,312,268 | ) | (34,715,873 | ) | ||||
| FUND SHARE TRANSACTIONS (NOTE 6): | ||||||||
Net proceeds from sale of shares | 40,049,033 | 82,850,159 | ||||||
Net asset value of shares issued for reinvestment of dividends | 9,680,039 | 20,776,310 | ||||||
Cost of shares reacquired | (77,298,749 | ) | (129,069,085 | ) | ||||
Decrease in Net Assets From Fund Share Transactions | (27,569,677 | ) | (25,442,616 | ) | ||||
Decrease in Net Assets | (35,285,156 | ) | (30,246,820 | ) | ||||
| NET ASSETS: | ||||||||
Beginning of period | 786,223,671 | 816,470,491 | ||||||
End of period* | $ | 750,938,515 | $ | 786,223,671 | ||||
* Includes undistributed net investment income of: | $1,083,443 | $760,731 | ||||||
See Notes to Financial Statements.
35 Smith Barney Muni Funds | 2004 Semi-Annual Report
For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:
| New York Money Market Portfolio | ||||||||||||||||||||||||
| Class A Shares | 2004(1) | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||||
Income From Operations: | ||||||||||||||||||||||||
Net investment income | 0.003 | 0.004 | 0.007 | 0.017 | 0.034 | 0.027 | ||||||||||||||||||
Net realized gain | 0.000 | * | 0.000 | * | — | — | — | — | ||||||||||||||||
Total Income From Operations | 0.003 | 0.004 | 0.007 | 0.017 | 0.034 | 0.027 | ||||||||||||||||||
Less Distributions From: | ||||||||||||||||||||||||
Net investment income | (0.003 | ) | (0.004 | ) | (0.007 | ) | (0.017 | ) | (0.034 | ) | (0.027 | ) | ||||||||||||
Net realized gains | — | (0.000 | )* | — | — | — | — | |||||||||||||||||
Total Distributions | (0.003 | ) | (0.004 | ) | (0.007 | ) | (0.017 | ) | (0.034 | ) | (0.027 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||||
Total Return(2) | 0.27 | %‡ | 0.42 | % | 0.74 | % | 1.67 | % | 3.40 | % | 2.76 | % | ||||||||||||
Net Assets, End of Period (millions) | $1,764 | $1,915 | $1,828 | $2,044 | $2,058 | $1,573 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Expenses(3) | 0.59 | %†(4) | 0.60 | % | 0.64 | % | 0.64 | % | 0.65 | % | 0.67 | % | ||||||||||||
Net investment income | 0.54 | † | 0.41 | 0.74 | 1.65 | 3.32 | 2.73 | |||||||||||||||||
| (1) | For the six months ended September 30, 2004 (unaudited). |
| (2) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, total return would have been lower. |
| (3) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.80%. |
| (4) | The manager waived a portion of its management fee for the six months ended September 30, 2004. If such fees were not waived the actual expense ratio would have been 0.60% for Class A Shares. |
| * | Amount represents less than $0.001 per share. |
| ‡ | Total return is not annualized, as it may not be representative of the total return for the period. |
| † | Annualized. |
36 Smith Barney Muni Funds | 2004 Semi-Annual Report
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout the period ended March 31, unless otherwise noted:
| New York Money Market Portfolio | ||||||||
| Class Y Shares | 2004(1) | 2004(2) | ||||||
Net Asset Value, Beginning of Period | $ | 1.00 | $ | 1.00 | ||||
Income From Operations: | ||||||||
Net investment income | 0.003 | 0.002 | ||||||
Net realized gain | 0.000 | * | 0.000 | * | ||||
Total Income From Operations | 0.003 | 0.002 | ||||||
Less Distributions From: | ||||||||
Net investment income | (0.003 | ) | (0.002 | ) | ||||
Net realized gains | — | (0.000 | )* | |||||
Total Distributions | (0.003 | ) | (0.002 | ) | ||||
Net Asset Value, End of Period | $ | 1.00 | $ | 1.00 | ||||
Total Return(3) | 0.33 | %‡ | 0.17 | %‡ | ||||
Net Assets, End of Period (millions) | $119 | $52 | ||||||
Ratios to Average Net Assets: | ||||||||
Expenses(4) | 0.46 | %†(5) | 0.47 | %† | ||||
Net investment income | 0.67 | † | 0.51 | † | ||||
| (1) | For the six months ended September 30, 2004 (unaudited). |
| (2) | For the period December 3, 2003 (inception date) to March 31, 2004. |
| (3) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, total return would have been lower. |
| (4) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.70%. |
| (5) | The manager waived a portion of it’s management fee for the six months ended September 30, 2004. If such fees were not waived the actual expense ratio would have been 0.47% for Class Y Shares. |
| * | Amount represents less than $0.001 per share. |
| ‡ | Total return is not annualized, as it may not be representative of the total return for the period. |
| † | Annualized. |
37 Smith Barney Muni Funds | 2004 Semi-Annual Report
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:
| New York Portfolio | ||||||||||||||||||
| Class A Shares(1) | 2004(2) | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||
Net Asset Value, Beginning | $13.57 | $13.66 | $13.19 | $13.42 | $12.78 | $13.69 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||
Net investment income | 0.30 | 0.61 | 0.63 | 0.65 | (3) | 0.67 | 0.68 | |||||||||||
Net realized and unrealized | (0.13 | ) | (0.09 | ) | 0.46 | (0.23 | )(3) | 0.64 | (0.91 | ) | ||||||||
Total Income (Loss) From Operations | 0.17 | 0.52 | 1.09 | 0.42 | 1.31 | (0.23 | ) | |||||||||||
Less Distributions From: | ||||||||||||||||||
Net investment income | (0.30 | ) | (0.61 | ) | (0.62 | ) | (0.65 | ) | (0.67 | ) | (0.67 | ) | ||||||
In excess of net investment | — | (0.00 | )* | — | — | — | — | |||||||||||
Net realized gains | — | — | — | — | — | (0.01 | ) | |||||||||||
Total Distributions | (0.30 | ) | (0.61 | ) | (0.62 | ) | (0.65 | ) | (0.67 | ) | (0.68 | ) | ||||||
Net Asset Value, End of Period | $13.44 | $13.57 | $13.66 | $13.19 | $13.42 | $12.78 | ||||||||||||
Total Return(4) | 1.26 | %‡ | 3.87 | % | 8.42 | % | 3.15 | % | 10.57 | % | (1.61 | )% | ||||||
Net Assets, End of Period (millions) | $599 | $617 | $627 | $633 | $583 | $482 | ||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||
Expenses(5) | 0.67 | %†(6) | 0.68 | % | 0.70 | % | 0.70 | % | 0.69 | % | 0.71 | % | ||||||
Net investment income | 4.51 | † | 4.46 | 4.62 | 4.86 | (3) | 5.14 | 5.20 | ||||||||||
Portfolio Turnover Rate | 2 | % | 8 | % | 14 | % | 20 | % | 16 | % | 33 | % | ||||||
| (1) | Per share amounts have been calculated using the monthly average shares method. |
| (2) | For the six months ended September 30, 2004 (unaudited). |
| (3) | Effective April 1, 2001, the Fund adopted a change in the accounting method that requires the Fund to amortize premiums and accrete all discounts. Without the adoption of this change, for the year ended March 31, 2002, the ratio of net investment income to average net assets would have been 4.85%. Per share information, ratios and supplemental data for the periods prior to April 1, 2001 have not been restated to reflect this change in presentation. In addition, the impact of this change to net investment income and net realized and unrealized loss was less than $0.01 per share. |
| (4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, total return would have been lower. |
| (5) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.85%. |
| (6) | The manager waived a portion of its management fee for the six months ended September 30, 2004. If such fees were not waived, the actual expense ratio would have been 0.69% for Class A Shares. |
| * | 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 period. |
| † | Annualized. |
38 Smith Barney Muni Funds | 2004 Semi-Annual Report
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:
| New York Portfolio | ||||||||||||||||||
| Class B Shares(1) | 2004(2) | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||
Net Asset Value, Beginning of Period | $13.57 | $13.66 | $13.19 | $13.42 | $12.78 | $13.68 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||
Net investment income | 0.27 | 0.54 | 0.56 | 0.57 | (3) | 0.60 | 0.61 | |||||||||||
Net realized and unrealized gain (loss) | (0.14 | ) | (0.09 | ) | 0.46 | (0.22 | )(3) | 0.64 | (0.90 | ) | ||||||||
Total Income (Loss) From Operations | 0.13 | 0.45 | 1.02 | 0.35 | 1.24 | (0.29 | ) | |||||||||||
Less Distributions From: | ||||||||||||||||||
Net investment income | (0.26 | ) | (0.54 | ) | (0.55 | ) | (0.58 | ) | (0.60 | ) | (0.60 | ) | ||||||
In excess of net investment income | — | (0.00 | )* | — | — | — | — | |||||||||||
Net realized gains | — | — | — | — | — | (0.01 | ) | |||||||||||
Total Distributions | (0.26 | ) | (0.54 | ) | (0.55 | ) | (0.58 | ) | (0.60 | ) | (0.61 | ) | ||||||
Net Asset Value, End of Period | $13.44 | $13.57 | $13.66 | $13.19 | $13.42 | $12.78 | ||||||||||||
Total Return(4) | 0.99 | %‡ | 3.35 | % | 7.86 | % | 2.60 | % | 9.96 | % | (2.09 | )% | ||||||
Net Assets, End of Period (millions) | $105 | $120 | $140 | $139 | $148 | $156 | ||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||
Expenses(5) | 1.21 | %†(6) | 1.21 | % | 1.22 | % | 1.21 | % | 1.22 | % | 1.23 | % | ||||||
Net investment income | 3.97 | † | 3.93 | 4.10 | 4.27 | (3) | 4.63 | 4.67 | ||||||||||
Portfolio Turnover Rate | 2 | % | 8 | % | 14 | % | 20 | % | 16 | % | 33 | % | ||||||
| (1) | Per share amounts have been calculated using the monthly average shares method. |
| (2) | For the six months ended September 30, 2004 (unaudited). |
| (3) | Effective April 1, 2001, the Fund adopted a change in the accounting method that requires the Fund to amortize premiums and accrete all discounts. Without the adoption of this change, for the year ended March 31, 2002, the ratio of net investment income to average net assets would have been 4.26%. Per share information, ratios and supplemental data for the periods prior to April 1, 2001 have not been restated to reflect this change in presentation. In addition, the impact of this change to net investment income and net realized and unrealized loss was less than $0.01 per share. |
| (4) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, total return would have been lower. |
| (5) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.35%. |
| (6) | The manager waived a portion of its management fee for the six months ended September 30, 2004. If such fees were not waived, the actual expense ratio would have been 1.23% for Class B Shares. |
| * | 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 period. |
| † | Annualized. |
39 Smith Barney Muni Funds | 2004 Semi-Annual Report
Financial Highlights (continued)
+For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:
| New York Portfolio | ||||||||||||||||||
| Class C Shares(1)(2) | 2004(3) | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||
Net Asset Value, Beginning | $13.56 | $13.65 | $13.18 | $13.41 | $12.77 | $13.67 | ||||||||||||
Income (Loss) From Operations: | ||||||||||||||||||
Net investment income | 0.27 | 0.53 | 0.55 | 0.57 | (4) | 0.58 | 0.60 | |||||||||||
Net realized and unrealized | (0.15 | ) | (0.08 | ) | 0.47 | (0.23 | )(4) | 0.65 | (0.90 | ) | ||||||||
Total Income (Loss) From Operations | 0.12 | 0.45 | 1.02 | 0.34 | 1.23 | (0.30 | ) | |||||||||||
Less Distributions From: | ||||||||||||||||||
Net investment income | (0.26 | ) | (0.54 | ) | (0.55 | ) | (0.57 | ) | (0.59 | ) | (0.59 | ) | ||||||
In excess of net investment | — | (0.00 | )* | — | — | — | — | |||||||||||
Net realized gains | — | — | — | — | — | (0.01 | ) | |||||||||||
Total Distributions | (0.26 | ) | (0.54 | ) | (0.55 | ) | (0.57 | ) | (0.59 | ) | (0.60 | ) | ||||||
Net Asset Value, End of Period | $13.42 | $13.56 | $13.65 | $13.18 | $13.41 | $12.77 | ||||||||||||
Total Return(5) | 0.90 | %‡ | 3.30 | % | 7.82 | % | 2.56 | % | 9.91 | % | (2.14 | )% | ||||||
Net Assets, End of Period | $43 | $45 | $45 | $41 | $32 | $18 | ||||||||||||
Ratios to Average Net Assets: |
| |||||||||||||||||
Expenses(6) | 1.24 | %†(7) | 1.24 | % | 1.26 | % | 1.26 | % | 1.26 | % | 1.27 | % | ||||||
Net investment income | 3.94 | 3.90 | 4.05 | 4.27 | (4) | 4.55 | 4.64 | |||||||||||
Portfolio Turnover Rate | 2 | % | 8 | % | 14 | % | 20 | % | 16 | % | 33 | % | ||||||
| (1) | Per share amounts have been calculated using the monthly average shares method. |
| (2) | On April 29, 2004, Class L shares were renamed as Class C shares. |
| (3) | For the six months ended September 30, 2004 (unaudited). |
| (4) | Effective April 1, 2001, the Fund adopted a change in the accounting method that requires the Fund to amortize premiums and accrete all discounts. Without the adoption of this change, for the year ended March 31, 2002, the ratio of net investment income to average net assets would have been 4.26%. Per share information, ratios and supplemental data for the periods prior to April 1, 2001 have not been restated to reflect this change in presentation. In addition, the impact of this change to net investment income and net realized and unrealized loss was less than $0.01 per share. |
| (5) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, total return would have been lower. |
| (6) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 1.40%. |
| (7) | The manager waived a portion of it’s management fee for the six months ended September 30, 2004. If such fees were not waived the actual expense ratio would have been 1.26% for Class C Shares. |
| * | 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 period. |
| † | Annualized. |
40 Smith Barney Muni Funds | 2004 Semi-Annual Report
Financial Highlights (continued)
For a share of each class of beneficial interest outstanding throughout each year ended March 31, unless otherwise noted:
| New York Portfolio | |||||||||||||||
| Class Y Shares(1) | 2004(2) | 2004 | 2003 | 2002 | 2001(3) | ||||||||||
Net Asset Value, Beginning of Period | $13.57 | $13.65 | $13.19 | $13.42 | $13.46 | ||||||||||
Income (Loss) From Operations: | |||||||||||||||
Net investment income | 0.32 | 0.63 | 0.67 | 0.67 | (4) | 0.16 | |||||||||
Net realized and unrealized gain (loss) | (0.15 | ) | (0.07 | ) | 0.44 | (0.23 | )(4) | (0.03 | ) | ||||||
Total Income From Operations | 0.17 | 0.56 | 1.11 | 0.44 | 0.13 | ||||||||||
Less Distributions From: | |||||||||||||||
Net investment income | (0.31 | ) | (0.64 | ) | (0.65 | ) | (0.67 | ) | (0.17 | ) | |||||
In excess of net investment income | — | (0.00 | )* | — | — | — | |||||||||
Total Distributions | (0.31 | ) | (0.64 | ) | (0.65 | ) | (0.67 | ) | (0.17 | ) | |||||
Net Asset Value, End of Period | $13.43 | $13.57 | $13.65 | $13.19 | $13.42 | ||||||||||
Total Return(5) | 1.28 | %‡ | 4.13 | % | 8.53 | % | 3.33 | % | 1.00 | %‡ | |||||
Net Assets, End of Period (millions) | $4 | $4 | $4 | $11 | $10 | ||||||||||
Ratios to Average Net Assets: | |||||||||||||||
Expenses(6) | 0.50 | %(7) | 0.51 | % | 0.52 | % | 0.52 | % | 0.54 | %† | |||||
Net investment income | 4.68 | † | 4.63 | 4.78 | 5.01 | (4) | 4.97 | † | |||||||
Portfolio Turnover Rate | 2 | % | 8 | % | 14 | % | 20 | % | 16 | % | |||||
| (1) | Per share amounts have been calculated using the monthly average shares method. |
| (2) | For the six months ended September 30, 2004 (unaudited). |
| (3) | For the period January 4, 2001 (inception date) to March 31, 2001. |
| (4) | Effective April 1, 2001, the Fund adopted a change in the accounting method that requires the Fund to amortize premiums and accrete all discounts. Without the adoption of this change, for the year ended March 31, 2002, the ratio of net investment income to average net assets would have been 5.00%. Per share information, ratios and supplemental data for the periods prior to April 1, 2001 have not been restated to reflect this change in presentation. In addition, the impact of this change to net investment income and net realized and unrealized loss was less than $0.01 per share. |
| (5) | Performance figures may reflect fee waivers and/or expense reimbursements. Past performance is no guarantee of future results. In the absence of fee waivers and/or expense reimbursements, total return would have been lower. |
| (6) | As a result of voluntary expense limitations, the ratio of expenses to average net assets will not exceed 0.70%. |
| (7) | The manager waived a portion of its management fee for the six months ended September 30, 2004. If such fees were not waived, the actual expense ratio would have been 0.52% for Class Y Shares. |
| * | 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 period. |
| † | Annualized. |
41 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited)
| 1. | Significant Accounting Policies |
The New York Money Market and New York Portfolios (“Funds”) are separate investment funds of the Smith Barney Muni Funds (“Trust”), a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as an open-end, non-diversified management investment company.
The following is a summary of the significant accounting consistently followed by the Fund and is in conformity with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions 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.
(a) Investment Valuation. New York Portfolio securities are valued at the mean between the 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 relationship between securities. Securities for which market quotations are not available will be valued in good faith at fair value by or under the direction of the Board of Directors. Short-term obligations with maturities of 60 days or less are valued at cost plus accreted discount, or minus amortized premium, which approximates value. The New York Money Market Portfolio uses the amortized cost method for valuing investments; accordingly, the cost of securities plus accreted discount, or minus amortized premium, approximates value.
(b) Futures Contracts. The New York Portfolio may from time to time enter into futures contracts. Securities or cash equal to the initial margin amount are either deposited with the broker or segregated by the custodian upon entering into the futures contract. Additional securities are also segregated up to the current market value of the futures contract. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking-to-market” on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin payments are received or made and recognized as assets due from or liabilities due to broker, depending upon whether unrealized gains or losses are incurred. When the
42 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
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 typically 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.
(c) Fund Concentration. Since the Funds invest primarily in obligations of issuers within New York, it is subject to possible concentration risks associated with economic, political, or legal developments or industrial or regional matters specifically affecting New York.
(d) Investment Transactions and Investment Income. Security transactions are accounted for on trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Gains or losses on the sale of securities are calculated by using the specific identification method.
(e) Class Accounting. Class specific expenses are charged to each class; investment advisory fees and general fund expenses, income, gains and/or losses are allocated on the basis of relative net assets of each class or on another reasonable basis.
(f ) Federal Income Taxes. The Funds intend 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.
(g) Exempt-Interest Dividends and Other Distributions. The New York Money Market Portfolio declares and records a dividend of substantially all of its net investment income on each business day. Such dividends are paid or reinvested monthly in Fund shares on the payable date. The Funds intend to satisfy conditions that will enable interest from municipal securities, which is exempt from regular Federal income tax and from designate state income taxes, to retain such tax-exempt status when distributed to the shareholders of the Funds. It is the New York Portfolio’s policy to distribute dividends monthly. Capital gain distributions, if any, are taxable to shareholders, and are declared and paid at least annually. The character of income and gains to be distributed is determined in accordance with income tax regulations, which may differ from GAAP.
43 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
| 2. | Management Agreement and Other Transactions |
Smith Barney Fund Management LLC (“SBFM”), an indirect wholly-owned subsidiary of Citigroup Inc. (“Citigroup”), acts as investment manager to the Funds. The New York Money Market Portfolio pays SBFM a management fee calculated at an annual rate of 0.475% on the first $1 billion of the Fund’s average daily net assets; 0.45% on the next $1 billion; 0.425% on the next $3 billion; 0.40% on the next $5 billion and 0.375% on the Fund’s average daily net assets in excess of $10 billion. The New York Portfolio pays SBFM a management fee calculated at the annual rate of 0.50% of the Fund’s average daily net assets. These fees are calculated daily and paid monthly.
During the six months ended September 30, 2004, the investment manager waived a portion of its management fee for the New York Money Market Portfolio and the New York Portfolio amounting to $115,738 and $86,614, respectively.
Citicorp Trust Bank, fsb. (“CTB”), another subsidiary of Citigroup, acts as the Funds’ transfer agent. PFPC Inc. (“PFPC”) and Primerica Shareholder Services (“PSS”), another subsidiary of Citigroup, act as the Funds’ sub-transfer agents. CTB receives account fees and asset-based fees that vary according to the size and type of account. PFPC and PSS are responsible for shareholder recordkeeping and financial processing for all shareholder accounts and are paid by CTB. For the six months ended September 30, 2004, the Funds paid transfer agent fees totaling $268,835 to CTB. The totals for each Fund were as follows:
| Transfer Agent Fees | |||
New York Money Market Portfolio | $ | 187,633 | |
New York Portfolio | 81,202 | ||
Citigroup Global Markets Inc. (“CGM”) and PFS Distributors, Inc., both of which are subsidiaries of Citigroup, act as the Funds’ distributors.
On February 2, 2004, initial sales charges on Class L were eliminated. Effective April 29, 2004, the Fund’s Class L shares were renamed as Class C shares.
44 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
For the New York Portfolio, there is a maximum initial sales charges of 4.00% for Class A shares. There is also a contingent deferred sales charge (“CDSC”) of 4.50% on Class B shares of the New York Portfolio, which applies if redemption occurs within one year from purchase payment. This CDSC declines by 0.50% one year from purchase payment and thereafter by 1.00% per year until no CDSC is incurred. Class C shares also have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. In certain cases, Class A shares have a 1.00% CDSC, which applies if redemption occurs within one year from purchase payment. This CDSC only applies to those purchases of Class A shares, which, when combined with current holdings of Class A shares, equal or exceed $500,000 in the aggregate. These purchases do not incur an initial sales charge.
For the six months ended September 30, 2004, CGM and its affiliates received sales charges of approximately $306,419 on sales of the New York Portfolio’s Class A shares. In addition, for the six months ended September 30, 2004, CDSCs paid to CGM and its affiliates were approximately:
| Class A | Class B | Class C | |||||||
New York Portfolio | $ | 13,000 | $ | 111,359 | $ | 2,000 | |||
All officers and one Trustee of the Trust are employees of Citigroup or its affiliates.
| 3. | Investments |
During the six months ended September 30, 2004, the aggregate cost of purchases and proceeds from sales of investments (including maturities of long-term investments, but excluding short-term investments) were as follows:
| Purchases | Sales | |||||
New York Money Market Portfolio | — | — | ||||
New York Portfolio | $ | 14,791,761 | $ | 39,332,804 | ||
At September 30, 2004, the aggregate gross unrealized appreciation and depreciation of investments for Federal income tax purposes were substantially as follows:
| Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | ||||||||
New York Portfolio | $ | 63,684,711 | $ | (2,437,385 | ) | $ | 61,247,326 | |||
45 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
At September 30, 2004, the New York Portfolio had the following open futures contracts:
Number of Contracts | Expiration | Basis Value | Market Value | Unrealized Loss | ||||||||||
Contracts to Sell: | ||||||||||||||
U.S. 20 Year Treasury Bond | 2,470 | 12/04 | $ | 272,844,626 | $ | 277,180,319 | $ | (4,335,693 | ) | |||||
| 4. | Class Specific Expenses |
Pursuant to a Rule 12b-1 Distribution Plan, the New York Money Market Portfolio pays a distribution fee calculated at the annual rate of 0.10% of the average daily net assets of its Class A shares. The New York Portfolio pays a service fee with respect to its Class A, B and C shares calculated at the annual rate of 0.15% of the Fund’s average daily net assets of each respective class. In addition, the New York Portfolio also pays a distribution fee with respect to its Class B and C shares calculated at the annual rate of 0.50% and 0.55% of the average daily net assets of each class, respectively. For the six months ended September 30, 2004, total Rule 12b-1 Distribution Plan fees, which are accrued daily and paid monthly, were as follows:
| Class A | Class B | Class C | |||||||
New York Money Market Portfolio | $ | 934,606 | — | — | |||||
New York Portfolio | 450,251 | $ | 361,438 | $ | 151,818 | ||||
For the six months ended September 30, 2004, total Transfer Agency Service expenses were as follows:
| Class A | Class B | Class C | Class Y | |||||||||
New York Money Market Portfolio | $ | 199,776 | — | — | — | |||||||
New York Portfolio | 69,189 | $ | 28,577 | $ | 7,521 | $ | 20 | |||||
For the six months ended September 30, 2004, total Shareholder Communication expenses were as follows:
| Class A | Class B | Class C | Class Y | |||||||||
New York Money Market Portfolio | $ | 20,832 | — | — | $ | 1,168 | ||||||
New York Portfolio | 11,531 | $ | 4,311 | $ | 1,254 | 5 | ||||||
46 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
| 5. | Distributions Paid to Shareholders by Class |
| New York Money Market Portfolio | Six Months Ended September 30, 2004 | Year Ended March 31, 2004 | ||||
Class A | ||||||
Net investment income | $ | 5,009,994 | $ | 7,467,004 | ||
Net realized gains | — | 54,826 | ||||
Total | $ | 5,009,994 | $ | 7,521,830 | ||
Class Y† | ||||||
Net investment income | $ | 354,600 | $ | 68,347 | ||
Net realized gains | — | 1,112 | ||||
Total | $ | 354,600 | $ | 69,459 | ||
† For Class Y shares of New York Money Market Portfolio, transactions are for the period December 3, 2003 (inception date) to March 31, 2004. | ||||||
| New York Portfolio | ||||||
Class A | ||||||
Net investment income | $ | 13,248,868 | $ | 27,524,202 | ||
In excess of net investment income | — | 42,158 | ||||
Total | $ | 13,248,868 | $ | 27,566,360 | ||
Class B | ||||||
Net investment income | $ | 2,144,648 | $ | 5,185,005 | ||
In excess of net investment income | — | 8,984 | ||||
Total | $ | 2,144,648 | $ | 5,193,989 | ||
Class C | ||||||
Net investment income | $ | 830,871 | $ | 1,774,470 | ||
In excess of net investment income | — | 3,099 | ||||
Total | $ | 830,871 | $ | 1,777,569 | ||
Class Y | ||||||
Net investment income | $ | 87,881 | $ | 177,693 | ||
In excess of net investment income | — | 262 | ||||
Total | $ | 87,881 | $ | 177,955 | ||
| 6. | Shares of Beneficial Interest |
At September 30, 2004, the Trust had an unlimited amount of shares of beneficial interest authorized with a par value of $0.001 per share. The Funds have the ability to issue multiple classes of shares. Each share of a class represents an identical interest in its respective Fund and has the same rights, except that each class bears certain expenses specifically related to the distribution of its shares.
47 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
Transactions in shares of each class were as follows:
| New York Money Market Portfolio | Six Months Ended September 30, 2004 | Year Ended March 31, 2004 | ||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||
Class A | ||||||||||||||
Shares sold | 3,089,062,401 | $ | 3,089,062,401 | 6,853,379,478 | $ | 6,853,379,478 | ||||||||
Shares issued on reinvestment | 4,576,847 | 4,576,847 | 7,445,635 | 7,445,635 | ||||||||||
Shares reacquired | (3,244,579,759 | ) | (3,244,579,759 | ) | (6,773,970,758 | ) | (6,773,970,758 | ) | ||||||
Net Increase (Decrease) | (150,940,511 | ) | $ | (150,940,511 | ) | 86,854,355 | $ | 86,854,355 | ||||||
Class Y† | ||||||||||||||
Shares sold | 131,154,000 | $ | 131,154,000 | 72,212,013 | $ | 72,212,013 | ||||||||
Shares issued on reinvestment | 311,548 | 311,548 | 50,872 | 50,872 | ||||||||||
Shares reacquired | (64,689,048 | ) | (64,689,048 | ) | (19,577,885 | ) | (19,577,885 | ) | ||||||
Net Increase | 66,776,500 | $ | 66,776,500 | 52,685,000 | $ | 52,685,000 | ||||||||
| † | For Class Y shares of New York Money Market Portfolio, transactions are for the period December 3, 2003 (inception date) to March 31, 2004. |
| New York Portfolio | ||||||||||||||
Class A | ||||||||||||||
Shares sold | 2,633,190 | $ | 35,547,236 | 4,849,558 | $ | 66,585,524 | ||||||||
Shares issued on reinvestment | 582,360 | 7,843,634 | 1,200,560 | 16,447,286 | ||||||||||
Shares reacquired | (4,062,504 | ) | (54,899,268 | ) | (6,490,291 | ) | (89,079,717 | ) | ||||||
Net Decrease | (846,954 | ) | $ | (11,508,398 | ) | (440,173 | ) | $ | (6,046,907 | ) | ||||
Class B | ||||||||||||||
Shares sold | 148,587 | $ | 2,006,235 | 689,683 | $ | 9,459,820 | ||||||||
Shares issued on reinvestment | 94,432 | 1,271,928 | 227,292 | 3,113,545 | ||||||||||
Shares reacquired | (1,276,662 | ) | (17,240,545 | ) | (2,382,395 | ) | (32,675,016 | ) | ||||||
Net Decrease | (1,033,643 | ) | $ | (13,962,382 | ) | (1,465,420 | ) | $ | (20,101,651 | ) | ||||
Class C* | ||||||||||||||
Shares sold | 185,337 | $ | 2,495,562 | 479,861 | $ | 6,574,815 | ||||||||
Shares issued on reinvestment | 41,957 | 564,477 | 88,814 | 1,215,479 | ||||||||||
Shares reacquired | (367,659 | ) | (4,958,936 | ) | (533,744 | ) | (7,314,352 | ) | ||||||
Net Increase (Decrease) | (140,365 | ) | $ | (1,898,897 | ) | 34,931 | $ | 475,942 | ||||||
Class Y | ||||||||||||||
Shares sold | — | — | 16,679 | $ | 230,000 | |||||||||
Shares issued on reinvestment | — | — | — | — | ||||||||||
Shares reacquired | (14,804 | ) | $ | (200,000 | ) | — | — | |||||||
Net Increase (Decrease) | (14,804 | ) | $ | (200,000 | ) | 16,679 | $ | 230,000 | ||||||
| * | Effective April 29, 2004, the Fund renamed Class L shares as Class C shares. |
48 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
| 7. | Additional Information |
In connection with an investigation previously disclosed by Citigroup, the Staff of the Securities and Exchange Commission (“SEC”) has notified Citigroup Asset Management (“CAM”), the Citigroup business unit that includes the funds’ investment manager and other investment advisory companies; Citicorp Trust Bank (“CTB”), an affiliate of CAM; Thomas W. Jones, the former CEO of CAM; and two other individuals, one of whom is an employee and the other of whom is a former employee of CAM, that the SEC Staff is considering recommending a civil injunctive action and/or an administrative proceeding against each of them relating to the creation and operation of an internal transfer agent unit to serve various CAM-managed funds.
In 1999, CTB entered the transfer agent business. CTB hired an unaffiliated subcontractor to perform some of the transfer agent services. The subcontractor, in exchange, had signed a separate agreement with CAM in 1998 that guaranteed investment management revenue to CAM and investment banking revenue to a CAM affiliate. The subcontractor’s business was later taken over by PFPC Inc., and at that time the revenue guarantee was eliminated and a one-time payment was made by the subcontractor to a CAM affiliate.
CAM did not disclose the revenue guarantee when the boards of various CAM-managed funds hired CTB as transfer agent. Nor did CAM disclose to the boards of the various CAM-managed funds the one-time payment received by the CAM affiliate when it was made.
In addition, the SEC Staff has indicated that it is considering recommending action based on the adequacy of the disclosures made to the fund boards that approved the transfer agency arrangement, CAM’s initiation and operation of, and compensation for, the transfer agent business and CAM’s retention of, and agreements with, the subcontractor.
Citigroup is cooperating fully in the investigation and will seek to resolve the matter in discussions with the SEC Staff. Although there can be no assurance, Citigroup does not believe that this matter will have a material adverse effect on the fund. As previously disclosed, CAM has already agreed to pay the applicable funds, primarily through fee waivers, a total of approximately $17 million (plus interest) that is the amount of the revenue received by Citigroup relating to the revenue guarantee.
49 Smith Barney Muni Funds | 2004 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
| 8. | Legal Matters |
Class action lawsuits have been filed against Citigroup Global Markets Inc. and a number of its affiliates, including Smith Barney Fund Management LLC and Salomon Brothers Asset Management Inc. (the “Advisers”), substantially all of the mutual funds managed by the Advisers (the “Funds”), and directors or trustees of the Funds. The complaints allege, among other things, that the Distributor created various undisclosed incentives for its brokers to sell Smith Barney and Salomon Brothers funds. In addition, according to the complaints, the Advisers caused the Funds to pay excessive brokerage commissions to the Distributor for steering clients towards proprietary funds. The complaints also allege that the defendants breached their fiduciary duty to the Funds by improperly charging Rule 12b-1 fees and by drawing on Fund assets to make undisclosed payments of soft dollars and excessive brokerage commissions. The complaints seek injunctive relief and compensatory and punitive damages, rescission of the Funds’ contracts with the Advisers, recovery of all fees paid to the Advisers pursuant to such contracts and an award of attorneys’ fees and litigation expenses. Citigroup Asset Management believes that the suits are without merit and intends to defend the cases vigorously.
Additional lawsuits arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the defendants in the future. Neither Citigroup Asset Management nor the Funds believe that any of the pending actions will have a material adverse effect on the Funds or the ability of the Distributor or the Advisers to perform under their respective contracts with the Funds.
50 Smith Barney Muni Funds | 2004 Semi-Annual Report
SMITH BARNEY
MUNI FUNDS
TRUSTEES Lee Abraham Allan J. Bloostein Jane F. Dasher R. Jay Gerken, CFA Richard E. Hanson, Jr. Paul Hardin Roderick C. Rasmussen John P. Toolan
OFFICERS R. Jay Gerken, CFA President and Chief
Andrew B. Shoup Senior Vice President and Chief Administrative
Robert J. Brault Chief Financial Officer
Julie P. Callahan, CFA Vice President and Investment Officer
Joseph P. Deane Vice President and Investment Officer
David T. Fare Vice President and Investment Officer
Andrew Beagley Chief Anti-Money Laundering Compliance | OFFICERS (continued) Kaprel Ozsolak Controller
Robert I. Frenkel Secretary and Chief Legal Officer
INVESTMENT MANAGER Smith Barney Fund Management LLC
DISTRIBUTORS Citigroup Global Markets Inc. PFS Distributors, Inc.
CUSTODIAN State Street Bank and
TRANSFER AGENT Citicorp Trust Bank, fsb. 125 Broad Street, 11th Floor New York, New York 10004
SUB-TRANSFER AGENTS PFPC Inc. P.O. Box 9699 Providence, Rhode Island 02940-9699
Primerica Shareholder Services P.O. Box 9662 Providence, Rhode Island 02940-9662 |
Smith Barney Muni Funds
New York Money Market Portfolio
New York Portfolio
The Funds are separate investment funds of the Smith Barney Muni Funds, a Massachusetts business trust.
The Fund files its complete schedule of portfolio holdings with Securities Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Fund, shareholders can call 1-800-451-2010.
Information on how the fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2004 and a description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling 1-800-451-2010, (2) on the fund’s website at www.citigroupAM.com and (3) on the SEC’s website at www.sec.gov.
This report is submitted for the general information of the shareholders of Smith Barney Muni Funds — New York Money Market Portfolio and New York Portfolio.
SMITH BARNEY MUNI FUNDS
Smith Barney Mutual Funds
125 Broad Street
10th Floor, MF-2
New York, New York 10004
©2004 Citigroup Global Markets Inc.
Member NASD, SIPC
FD0807 11/0404-7427
| ITEM 2. | CODE OF ETHICS. |
Not Applicable.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not Applicable.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
| ITEM 6. | [RESERVED] |
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 8. | [RESERVED] |
| ITEM 9. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
Not applicable.
| ITEM 10. | CONTROLS AND PROCEDURES. |
| (a) | The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934. |
| (b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting. |
| ITEM 11. | EXHIBITS. |
| (a) | Not applicable. |
| (b) | Attached hereto. |
| Exhibit 99.CERT | Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 99.906CERT | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.
| Smith Barney Muni Funds | ||
| By: | /s/ R. JAY GERKEN | |
| R. Jay Gerken | ||
| Chief Executive Officer of Smith Barney Muni Funds | ||
Date: December 6, 2004 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ R. JAY GERKEN | |
| R. Jay Gerken | ||
| Chief Executive Officer of Smith Barney Muni Funds | ||
Date: December 6, 2004 | ||
| By: | /s/ ROBERT J. BRAULT | |
| Robert J. Brault | ||
| Chief Financial Officer of Smith Barney Muni Funds | ||
Date: December 6, 2004 | ||