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, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The Semi-Annual Report to Stockholders is filed herewith.
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SMITH BARNEY MUNI FUNDS
NEW YORK MONEY MARKET PORTFOLIO
NEW YORK PORTFOLIO
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SEMI-ANNUAL REPORT | SEPTEMBER 30, 2003
[LOGO] Smith Barney
Mutual Funds
Your Serious Money. Professionally Managed.(R)
Your Serious Money. Professionally Managed. is a registered service mark of
Citigroup Global Markets Inc.
--------------------------------------------------------
NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE
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WHAT'S INSIDE
Letter from the Chairman............ 1
Schedules of Investments............ 4
Statements of Assets and Liabilities 22
Statements of Operations............ 23
Statements of Changes in Net Assets. 24
Notes to Financial Statements....... 26
Financial Highlights................ 34
LETTER FROM THE CHAIRMAN
[PHOTO]
R. Jay Gerken
Chairman, President and
Chief Executive Officer
Dear Shareholder,
In an effort to jump-start a weak economy, the Federal Reserve reduced
short-term interest rates again in late June, driving the federal funds rate/i/
to just 1%, its lowest level since the Eisenhower Administration. During this
declining-rate environment yields continued to drop. Meanwhile, many states,
including New York, have been grappling with budget deficits brought on by the
faltering economy, layoffs and declining incomes -- all leading to lower tax
revenues.
Shortly after the Fed eased rates in June, bonds experienced a sharp reversal
over the summer as signs emerged that economic growth was more robust than
previously thought and rates moved up sharply as a result. If they were to
continue rising, that would lead to higher levels of income from fixed-income
securities. However, rising rates would lead to declining prices on outstanding
bonds because prices move in the opposite direction of interest rates.
In this environment, the funds performed as follows:
Smith Barney Muni Funds: New York Portfolio's Performance
For the six months ended September 30, 2003, Class A shares of the fund,
without sales charges, returned 2.48%./1/ These shares performed worse than the
fund's unmanaged benchmark, the Lehman Brothers Municipal Bond Index,/ii/ which
returned 2.66% for the same period. They also underperformed the average of the
fund's Lipper peer group of New York municipal debt funds, which returned 2.54%
for the same period./2/
Smith Barney Muni Funds: New York Money Market Portfolio's Performance
As of September 30, 2003, the seven-day current yield and seven-day effective
yield, which reflects compounding, of the fund were both 0.45%. These
/1/Performance for the fund's other share classes can be found in the Financial
Highlights section in this report. Performance for other share classes may
vary.
/2/Lipper is a major independent mutual-fund tracking organization. Returns are
based on the six-month period ended September 30, 2003, calculated among 110
funds in the Lipper New York municipal debt funds category with reinvestment
of dividends and capital gains excluding sales charges.
1 Smith Barney Muni Funds | 2003 Semi-Annual Report
numbers 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. Please note that
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 a money market fund.
At times of uncertainty such as these, it is more important than ever to
develop and stick with a long-range plan. In addition to their income-producing
capabilities, we believe that bonds can be an effective means of
diversification in an overall investment portfolio. And municipal securities
can provide income free from federal, and sometimes state and local, income
taxes. Certain investors may be subject to the federal Alternative Minimum Tax
and state and local income taxes may apply. Capital gains, if any, are fully
taxable. Consult your personal tax adviser for more details. Please work
closely with your financial adviser to determine your proper allocation to
fixed-income securities based on your risk/reward profile and to explore the
role they can play in achieving your long-term financial goals.
As always, thank you for your entrusting your assets to us. 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
October 9, 2003
The information provided in this letter by the Investment Adviser 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.
Portfolio holdings and breakdowns are as of September 30, 2003 and are subject
to change. Please refer to pages 4 through 18 for a list and percentage
breakdown of the fund's holdings.
/i/ 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.
/ii/The Lehman Brothers Municipal Bond Index is a broad measure of the
municipal bond market with maturities of at least one year. Please note
that an investor cannot invest directly in an index.
2 Smith Barney Muni Funds | 2003 Semi-Annual Report
PERFORMANCE SNAPSHOT
AS OF SEPTEMBER 30, 2003
(not including sales charges)
6 Months
New York Portfolio Class A Shares 2.48%
Lehman Brothers Municipal Bond Index 2.66%
Average of Lipper New York municipal debt funds 2.54%
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. All figures represent past performance and
are not a guarantee of future results. Principal value and investment returns
will fluctuate and investors' shares, when redeemed may be worth more or less
than their original cost.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market with maturities of at least one year. Please note that an
investor cannot invest directly in an index.
Lipper is a major independent mutual-fund tracking organization. Lipper
average annual returns are based on the six-month period ended September 30,
2003, calculated among 110 funds in the Lipper New York municipal debt funds
category with reinvestment of dividends and capital gains excluding sales
charges.
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 adviser.
NEW YORK MONEY MARKET PORTFOLIO
CLASS A SHARES'
YIELDS AS OF SEPTEMBER 30, 2003
Seven-day current yield 0.45%
Seven-day effective yield 0.45%
These numbers 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. Please note
that 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 a money market 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 adviser.
3 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) SEPTEMBER 30, 2003
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ---------------------------------------------------------------------------------------------
Albany IDA Civic Facilities University at Albany
AMBAC-Insured:
$ 5,100,000 A-1 Series A 1.07% VRDO $ 5,100,000
8,140,000 A-1 Series B 1.07% VRDO 8,140,000
11,275,000 A-1 Series C 1.07% VRDO 11,275,000
10,000,000 A-1 Series D 1.07% VRDO 10,000,000
Chautauqua County IDA:
7,300,000 A-1+ Gerry Homes Project Series A 1.10% VRDO AMT 7,300,000
3,600,000 Aa2* Red Wing Co. Project 0.99% VRDO 3,600,000
1,380,000 NR+ Chenango County IDR Series A Sherburne Project
1.15% VRDO 1,380,000
Dutchess County IDA:
5,720,000 A-1+ Marist College Series 98A 1.05% VRDO 5,720,000
4,260,000 A-1+ St. Francis Hospital Series B 1.05% VRDO 4,260,000
Erie County:
1,985,000 P-1* IDA Rosina Food Products Inc. 1.10% VRDO AMT 1,985,000
15,000,000 MIG 1* RAN Series A 1.50% due 6/23/04 15,064,824
510,000 Aaa* Frewsburg CSD GO FGIC-Insured 1.50% due 6/15/04 511,783
2,720,000 A-1 Genesee County IDR RJ Properties Project
1.10% VRDO AMT 2,720,000
4,500,000 NR++ Hampton Bays UFSD TAN 1.50% due 6/24/04 4,518,857
2,980,000 A-1+ Lancaster IDA Sealing Devices Inc. 1.10% VRDO AMT 2,980,000
4,000,000 A-1 Lewis County IDA Climax Manufacturing Co. Project
1.10% VRDO AMT 4,000,000
Long Island Power Authority:
6,250,000 A-1+ Series 7-B MBIA-Insured 1.05% VRDO 6,250,000
2,005,000 A-1+ Series F FSA-Insured 1.07% VRDO 2,005,000
19,400,000 A-1+ Series H FSA-Insured 1.05% VRDO 19,400,000
26,000,000 A-1+ Series I 0.95% due 10/7/03 TECP 26,000,000
26,070,000 A-1+ Series PA-368 PART 1.18% VRDO 26,070,000
Metropolitan Transportation Authority:
BAN Series CP-1A TECP:
29,300,000 A-1+ 0.90% due 10/2/03 29,300,000
11,000,000 A-1+ 0.90% due 10/6/03 11,000,000
4,900,000 A-1+ 0.90% due 11/7/03 4,900,000
FSA-Insured:
10,800,000 VMIG 1* Munitop Series 99-2 PART 1.13% VRDO 10,800,000
18,575,000 A-1+ Series D-1 1.05% VDRO 18,575,000
18,150,000 A-1+ Series D-2 1.05% VRDO 18,150,000
8,000,000 NR++ Middle Country CSD TAN 1.50% due 6/25/04 8,034,833
Monroe County IDA:
375,000 A-1 JADA Precision Plastic Project Series 97 1.10% VRDO 375,000
9,620,000 VMIG 1* Rochester Institute of Technology Project Series A
1.05% VRDO 9,620,000
See Notes to Financial Statements.
4 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ------------------------------------------------------------------------------------------------
Nassau County:
$ 2,990,000 A-1 IDA Rubbies Costume Co. Project 1.10% VRDO $ 2,990,000
7,950,000 A-1+ IFA Sales Tax Secured Series B FSA-Insured 1.05% VRDO 7,950,000
New York City GO:
1,100,000 A-1+ Series 94 H-3 FSA-Insured 1.20% VRDO 1,100,000
7,000,000 A-1+ Series 95 E-5 1.05% VRDO 7,000,000
7,500,000 A-1+ Series A-3 1.10% VRDO 7,500,000
10,000,000 A-1 Series A-5 1.10% VRDO 10,000,000
2,300,000 A-1+ Series A-6 FSA-Insured 1.20% VRDO 2,300,000
1,500,000 A-1+ Series B FGIC-Insured 1.20% VRDO 1,500,000
25,000,000 A-1+ Series C-2 1.05% VRDO 25,000,000
10,000,000 A-1+ Series G-2 1.05% VRDO 10,000,000
3,200,000 A-1+ Series H-3 FSA-Insured 1.20% VRDO 3,200,000
5,000,000 A-1+ Series H-5 MBIA-Insured 0.85% due 10/15/03 5,000,000
5,995,000 A-1 Series PA 624 AMBAC-Insured PART 1.11% VRDO 5,995,000
600,000 A-1+ Series SGB 35 AMBAC-Insured PART 1.10% VRDO 600,000
New York City HDC MFH FNMA-Insured:
31,000,000 A-1 2 Gold Street Series A 1.10% VRDO 31,000,000
13,700,000 A-1+ Carnegie Park Series A 1.05% VRDO 13,700,000
10,000,000 A-1+ Columbus Apartments 1.05% VRDO 10,000,000
33,100,000 A-1+ Monterey Series A 1.05% VRDO 33,100,000
9,700,000 A-1+ Tribeca Tower Series A 1.10% VRDO AMT 9,700,000
New York City IDA IDR:
10,000,000 A-1 Air Express International Corp. Project 1.11% VRDO AMT 10,000,000
5,800,000 A-1+ Children's Oncology Society 1.03% VRDO 5,800,000
4,900,000 A-1+ Gary Plastic Packaging Corp. Series 98 1.10% VRDO AMT 4,900,000
4,205,000 A-1+ Linear Lighting Corp. Project 1.30% VRDO AMT 4,205,000
4,000,000 NR+ Planned Parenthood Project 1.05% VRDO 4,000,000
1,560,000 A-1+ PS Bibbs Inc. 1.20% VRDO AMT 1,560,000
New York City Municipal Water Finance Authority:
FGIC-Insured:
2,900,000 A-1+ Series A 1.20% VRDO 2,900,000
9,100,000 A-1+ Series G 1.20% VRDO 9,100,000
4,600,000 A-1+ Fiscal 2003 Series C-3 1.20% VRDO 4,600,000
10,000,000 A-1+ Series 5B 0.85% due 10/9/03 TECP 10,000,000
15,000,000 A-1+ Series 6 0.90% due 12/11/03 TECP 15,000,000
20,000,000 A-1+ Series 7 0.90% due 10/2/03 TECP 20,000,000
15,000,000 A-1+ Series 7 0.95% due 10/7/03 TECP 15,000,000
New York City TFA:
14,920,000 A-1 MSTC Series 122 PART 1.12% due 10/8/03 14,920,000
New York City Recovery:
5,500,000 A-1+ Series 1-A 1.05% VRDO 5,500,000
6,750,000 A-1+ Series 1-B 1.07% VRDO 6,750,000
1,500,000 A-1+ Series 1-D 1.20% VRDO 1,500,000
See Notes to Financial Statements.
5 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ---------------------------------------------------------------------------------------------
$ 2,500,000 A-1+ Series 2A 1.20% VRDO $ 2,500,000
12,310,000 A-1+ Series 2C 1.07% VRDO 12,310,000
1,600,000 A-1+ Series 3B 1.23% VRDO 1,600,000
2,000,000 A-1+ Series 3E 1.20% VRDO 2,000,000
2,300,000 A-1+ Series 3G 1.08% VRDO 2,300,000
3,035,000 VMIG 1* Series 162 AMBAC-Insured PART 1.05% due 7/8/04 3,035,000
2,585,000 A-1 Series A 1.07% VRDO 2,585,000
3,225,000 A-1+ Series A1 1.07% VRDO 3,225,000
25,500,000 A-1+ Series B 1.20% VRDO 25,500,000
2,300,000 A-1+ Series C2 1.20% VRDO 2,300,000
4,080,000 A-1+ Series C3 1.07% VRDO 4,080,000
3,300,000 A-1 New York City Trust for Cultural Resources Museum
of Modern Art Series 596 AMBAC-Insured PART
1.10% VRDO 3,300,000
New York State Dormitory Authority:
Columbia University:
11,800,000 A-1+ 0.93% due 1/7/04 TECP 11,800,000
2,000,000 A-1+ Series SGA 132 PART 1.10% VRDO 2,000,000
Cornell University:
8,000,000 A-1+ 0.85% due 11/6/03 TECP 8,000,000
26,200,000 A-1+ Series A 1.05% VRDO 26,200,000
12,000,000 A-1+ Series B 1.05% VRDO 12,000,000
5,045,000 A-1 Glen Eddy Inc. 1.05% VRDO 5,045,000
Mental Health Services:
35,000,000 A-1+ Series D-2B FSA-Insured 1.05% VRDO 35,000,000
17,000,000 A-1+ Series D-2E 1.10% VRDO 17,000,000
7,965,000 A-1+ Metropolitan Museum of Art Series A 1.10% VRDO 7,965,000
4,100,000 A-1+ Mount Sinai School of Medicine
0.80% due 10/8/03 TECP 4,100,000
New York Public Library MBIA-Insured:
5,830,000 A-1 Series A 1.05% VRDO 5,830,000
7,890,000 A-1 Series B 1.05% VRDO 7,890,000
1,865,000 A-1+ Rockefeller University Series A 1.05% VRDO 1,865,000
School District Financing Program MBIA-Insured:
17,840,000 AAA Series D 3.00% due 10/1/03 17,840,000
3,445,000 AAA Series E 5.00% due 10/1/03 3,445,000
3,921,500 VMIG 1* State Personal Income Tax Revenue Series 821
FGIC-Insured PART 1.10% VRDO 3,921,500
State University:
9,945,000 A-1+ Series PA 622 PART 1.18% VRDO 9,945,000
15,170,000 A-1+ Series PA 842 FGIC-Insured PART 1.09% VRDO 15,170,000
13,280,000 VMIG 1* New York State Energy Research & Development Authority
Long Island Lighting Co. Series A 1.08% VRDO AMT 13,280,000
New York State Environmental Facilities Corp.:
Clean Water and Drinking:
9,990,000 A-1 MSTC Series 9040 PART 1.13% VRDO 9,990,000
9,170,000 A-1 Series PT-409 PART 1.20% due 4/15/04 9,170,000
See Notes to Financial Statements.
6 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ------------------------------------------------------------------------------------------------
Series 1997A TECP:
$ 17,000,000 A-1+ 0.80% due 10/6/03 $ 17,000,000
15,000,000 A-1+ 0.85% due 10/15/03 15,000,000
4,000,000 A-1+ 0.85% due 10/27/03 4,000,000
12,000,000 A-1+ 0.85% due 11/13/03 12,000,000
3,500,000 A-1+ Solid Waste Disposal General Electric Co. Series 1987A
0.80% due 11/7/03 TECP 3,500,000
New York State GO:
Series 1998A TECP:
10,000,000 A-1+ 0.85% due 10/6/03 10,000,000
34,500,000 A-1+ 0.85% due 11/6/03 34,500,000
19,120,000 A-1+ Series A 1.50% due 10/9/03 19,120,000
9,000,000 A-1+ Series B 1.02% due 8/5/04 9,000,000
New York State HFA:
7,500,000 VMIG 1* 20 River Terrace Series A 1.03% VRDO 7,500,000
1,700,000 VMIG 1* 240 East 39th Street FNMA-Insured 1.08% VRDO AMT 1,700,000
5,000,000 VMIG 1* 360 West 43rd Street 1.30% VRDO AMT 5,000,000
38,100,000 VMIG 1* 750 Sixth Avenue Series A FNMA-Insured
1.08% VRDO AMT 38,100,000
25,000,000 VMIG 1* Chelsea Apartments Series A FNMA-Insured
1.07% VRDO AMT 25,000,000
16,700,000 VMIG 1* Kew Gardens Hills Series A FNMA-Insured
1.05% VRDO AMT 16,700,000
38,800,000 VMIG 1* Series A 1.08% VRDO AMT 38,800,000
19,300,000 A-1+ Service Contract Revenue Series C 1.03% VRDO 19,300,000
4,200,000 VMIG 1* Theatre Row Series A 1.30% VRDO AMT 4,200,000
2,500,000 VMIG 1* Theatre Row Tower Series A 1.30% VRDO AMT 2,500,000
10,000,000 VMIG 1* Worth Street Series A 1.30% VRDO AMT 10,000,000
New York State LGAC:
20,000,000 A-1+ Series 3V FGIC-Insured 1.05% VRDO 20,000,000
3,932,500 VMIG 1* Series 544 AMBAC-Insured PART 1.10% VRDO 3,932,500
44,280,000 A-1+ Series 93A 1.03% VRDO 44,280,000
6,750,000 A-1+ Series C 1.02% VRDO 6,750,000
785,000 VMIG 1* New York State Mortgage Agency MERLOT Series B-3
PART 1.16% VRDO AMT 785,000
New York State Power Authority:
Series 1 TECP:
10,000,000 A-1 0.90% due 10/15/03 10,000,000
5,229,000 A-1 0.88% due 11/4/03 5,229,000
2,945,000 A-1 0.93% due 1/7/04 2,945,000
4,400,000 A-1 0.93% due 1/13/04 4,400,000
Series 2 TECP:
30,000,000 A-1 0.90% due 10/1/03 30,000,000
2,600,000 A-1 0.85% due 10/14/03 2,600,000
4,390,000 A-1 0.85% due 11/3/03 4,390,000
9,800,000 A-1 0.85% due 11/6/03 9,800,000
See Notes to Financial Statements.
7 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- -------------------------------------------------------------------------------------------------
$ 10,000,000 A-1 0.85% due 11/13/03 $ 10,000,000
5,000,000 A-1 0.90% due 12/5/03 5,000,000
580,000 Aa2* Series A 5.00% due 2/15/04 588,592
New York State Thruway Authority:
3,000,000 A-1+ 0.90% due 10/10/03 TECP 3,000,000
1,500,000 A-1+ 0.88% due 11/7/03 TECP 1,500,000
19,500,000 A-1+ 0.90% due 12/5/03 TECP 19,500,000
15,000,000 A-1+ 0.90% due 12/8/03 TECP 15,000,000
8,845,000 A-1 MSTC Series 120 FGIC-Insured PART
1.12% due 10/9/03 8,845,000
2,200,000 VMIG 1* Series 267 FSA-Insured PART 1.10% VRDO 2,200,000
5,000,000 A-1+ Series SGA 66 PART 1.10% VRDO 5,000,000
New York State Urban Development Corp. PART:
8,000,000 VMIG 1* MERLOT Series N AMBAC-Insured 1.11% VRDO 8,000,000
21,580,000 A-1+ Putter 313 1.12% VRDO 21,580,000
1,875,000 A-1 Oneida County IDR Harden Furniture Series 98
1.10% VRDO AMT 1,875,000
17,500,000 A-1+ Oneida Indian Nation Series 2002 1.10% VRDO 17,500,000
Onondaga County IDA:
Solvay Paperboard LLC Project:
10,000,000 A-1+ Series 02 1.15% VRDO AMT 10,000,000
15,000,000 A-1+ Series A 1.15% VRDO AMT 15,000,000
19,000,000 A-1+ Series B 1.15% VRDO AMT 19,000,000
3,455,000 A-1 Syracuse Executive Air 1.10% VRDO AMT 3,455,000
5,720,000 A-1 Syracuse Research Corp. 1.10% VRDO 5,720,000
Ontario County IDR Series B:
2,320,000 A-1+ Dixit Enterprise 1.10% VRDO AMT 2,320,000
8,000,000 VMIG 1* Frederick Ferris Thompson Hospital 1.08% VRDO 8,000,000
2,830,000 A-1 Oswego County IDR Fulton Thermal Corp. 1.10% VRDO
AMT 2,830,000
Port Authority of New York & New Jersey:
7,860,000 A-1+ Putter Series 177 MBIA-Insured PART 1.10% VRDO 7,860,000
3,500,000 NR++ Series 98-1 Equipment Notes 1.25% VRDO AMT 3,500,000
3,500,000 NR++ Series 98-2 Equipment Notes 1.15% VRDO 3,500,000
4,755,000 A-1 Series 646 FSA-Insured PART 1.08% VRDO 4,755,000
20,000,000 A-1+ Series 2000-A 0.80% due 10/8/03 TECP AMT 20,000,000
Series B TECP:
2,600,000 A-1+ 0.85% due 10/7/03 2,600,000
3,100,000 A-1+ 0.88% due 11/4/03 3,100,000
7,610,000 A-1+ 0.88% due 11/7/03 7,610,000
2,500,000 A-1+ 0.93% due 1/7/04 2,500,000
Versatile Structure Obligation:
1,440,000 A-1+ Series 3 1.20% VRDO 1,440,000
800,000 A-1+ Series 5 1.20% VRDO 800,000
7,000,000 A-1 Puerto Rico Commonwealth Highway & Transportation
Authority Series A AMBAC-Insured 1.05% VRDO 7,000,000
2,900,000 A-1+ Puerto Rico Electrical Power MSTC MBIA-Insured PART
1.05% VRDO 2,900,000
See Notes to Financial Statements.
8 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK MONEY MARKET PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- -----------------------------------------------------------------------------------------------
$ 4,000,000 A-1 Puerto Rico GO Series PA-650 PART 1.13% VRDO $ 4,000,000
Puerto Rico IFA MSTC PART:
9,995,000 A-1 Series 103 1.05% VRDO 9,995,000
8,000,000 A-1 Series 106 1.05% VRDO 8,000,000
2,050,000 A-1 Puerto Rico MFA Series PA-610 FSA-Insured PART
1.06% VRDO 2,050,000
Puerto Rico PFC MBIA-Insured PART:
5,000,000 VMIG 1* Series 520 1.15% due 8/12/04 5,000,000
1,940,000 VMIG 1* Series 522X 1.08% VRDO 1,940,000
25,000,000 NR++ Rochester BAN Series I 2.00% due 3/4/04 25,086,842
5,245,000 A-1 Rotterdam IDA IDR Rotterdam Park Project 1.10% VRDO 5,245,000
2,230,000 P-1 Schenectady County IDR Scotia Industrial Park Project
Series 98A 1.10% VRDO 2,230,000
3,490,000 A-1 St. Lawrence County IDA United Helpers Independent
Living Corp. 1.10% VRDO 3,490,000
4,340,000 A-1+ Suffolk County IDR JBC Realty 1.10% VRDO 4,340,000
14,835,000 A-1+ Tompkins County IDA Civic Facilities Cornell University
1.05% VRDO 14,835,000
Triborough Bridge & Tunnel Authority:
FSA-Insured:
4,275,000 A-1+ Series A 1.05% VRDO 4,275,000
18,855,000 A-1+ Series B 1.05% VRDO 18,855,000
7,055,000 A-1+ Putters Series 342 AMBAC-Insured PART 1.12% VRDO 7,055,000
22,905,000 A-1 Series 72 MBIA-Insured PART 1.12% due 10/9/03 22,905,000
9,235,000 VMIG 1* Series 109 PART 1.20% VRDO 9,235,000
20,800,000 A-1+ Series C AMBAC-Insured 1.05% VRDO 20,800,000
7,000,000 A-1+ Series F 1.05% VRDO 7,000,000
6,500,000 A-1+ Troy IDA Rensselaer Polytech Institute Series E 1.03% VRDO 6,500,000
5,000,000 SP-1+ Ulster County BAN 1.75% due 6/11/04 5,025,747
3,910,000 A-1+ Westchester County IDA Boys & Girls Club Project
1.05% VRDO 3,910,000
2,430,000 A-1 Yates IDR Coach Equipment Manufacturing Corp.
1.10% VRDO 2,430,000
2,920,000 A-1+ Yonkers IDA Consumers Union Facilities AMBAC-Insured
1.03% VRDO 2,920,000
- -----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $1,783,229,478**) $1,783,229,478
- -----------------------------------------------------------------------------------------------
(a) All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's"),
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 19 through 21 for definitions of ratings and certain abbreviations.
See Notes to Financial Statements.
9 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ------------------------------------------------------------------------------------------------------
Education -- 26.8%
$ 2,755,000 Aaa* Albany IDA, Civic Facility Revenue, (St. Rose Project), Series A,
AMBAC-Insured, 5.375% due 7/1/31 $ 2,890,904
Amherst IDA, Civic Facilities Revenue, UBF Faculty-Student
Housing, Series B, AMBAC-Insured:
1,000,000 AAA 5.125% due 8/1/20 1,072,130
3,615,000 AAA 5.250% due 8/1/31 3,761,154
Madison County IDA, Civic Facilities Revenue,
(Colgate University Project), Series B:
2,250,000 AA- 5.000% due 7/1/23 2,303,887
2,000,000 AA- 5.000% due 7/1/33 2,016,740
New York State Dormitory Authority Revenue Bonds:
City University Systems:
16,925,000 AAA 3rd Generation, Series 1, FGIC-Insured,
5.250% due 7/1/25 (b) 17,505,866
625,000 AA- 4th Generation, Series A:
5.250% due 7/1/31 638,100
2,840,000 AA- Call 7/1/08 @ 100, 5.000% due 7/1/28 (c) 3,245,410
5,375,000 AA- Call 7/1/11 @ 100, 5.250% due 7/1/31 (c) 6,196,945
1,660,000 AA- MBIA-Insured, 5.000% due 7/1/28 1,678,808
Series A, FGIC-Insured:
5,825,000 AAA 5.625% due 7/1/16 6,884,160
14,000,000 AAA 2nd Generation, 5.000% due 7/1/16 (b) 15,109,080
7,000,000 AAA Series B, FSA-Insured, 6.000% due 7/1/14 (b) 8,423,170
2,500,000 A3* Series C, 7.500% due 7/1/10 3,009,550
2,000,000 AAA Columbia University, 5.000% due 7/1/18 2,127,080
Court Facilities, City of New York Issue:
5,000,000 A 6.000% due 5/15/39 5,399,500
3,000,000 AAA AMBAC-Insured, 5.750% due 5/15/30 3,314,460
5,000,000 AAA New School University, MBIA-Insured, 5.000% due 7/1/29 5,060,450
10,260,000 AAA Rockefeller University, 5.000% due 7/1/28 (b) 10,429,495
1,000,000 AA- School Improvement Program, 5.000% due 7/1/18 1,052,980
1,150,000 AAA St. John's University, MBIA-Insured, 5.250% due 7/1/25 1,193,205
State University Dormitory Facility, FGIC-Insured:
1,000,000 AAA 5.500% due 7/1/26 1,076,220
1,000,000 AAA 5.500% due 7/1/27 1,076,220
12,000,000 AAA 5.100% due 7/1/31 (b) 12,206,400
State University Educational Facility:
Series A:
12,750,000 AAA FGIC-Insured, (Call 5/15/12 @ 101),
5.000% due 5/15/27 (b)(c) 14,531,940
12,110,000 AAA FSA-Insured, 5.875% due 5/15/17 (b) 14,589,038
7,030,000 AAA MBIA-Insured, 5.000% due 5/15/16 (b) 7,532,434
See Notes to Financial Statements.
10 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- --------------------------------------------------------------------------------------------------
Education -- 26.8% (continued)
Series B:
$ 676,000 AA- 7.500% due 5/15/11 $ 825,430
5,000,000 AAA FGIC-Insured, 5.250% due 5/15/19 5,651,900
5,000,000 AAA FSA-Insured, (Call 5/15/10 @ 101),
5.500% due 5/15/30 (c) 5,868,200
University of Rochester, Series A:
7,370,000 A+ Call 7/1/04 @ 102, 6.500% due 7/1/19 (b)(c) 7,818,907
MBIA-Insured:
3,915,000 AAA 5.000% due 7/1/16 4,218,687
2,300,000 AAA 5.000% due 7/1/27 2,327,393
Rensselaer County IDA, Civic Facilities Revenue Bonds,
(Polytechnic Institute Dormitory Project):
5,430,000 A+ Series A, 5.125% due 8/1/29 5,501,242
5,820,000 A+ Series B, 5.125% due 8/1/27 5,903,866
Schenectady IDA, Civic Facilities Revenue Bonds,
(Union College Project), Series A, AMBAC-Insured:
2,000,000 Aaa* 5.375% due 12/1/19 2,207,860
1,725,000 Aaa* 5.000% due 7/1/22 1,788,187
3,000,000 Aaa* 5.450% due 12/1/29 3,159,150
2,390,000 Aaa* 5.625% due 7/1/31 2,574,627
Taconic Hills School District at Craryville, FGIC-Insured,
State Aid Withholding:
1,420,000 Aaa* 5.000% due 6/15/25 1,449,025
700,000 Aaa* 5.000% due 6/15/26 712,803
3,000,000 Aaa* Teachers College, MBIA-Insured, 5.000% due 7/1/22 3,100,680
- --------------------------------------------------------------------------------------------------
207,433,283
- --------------------------------------------------------------------------------------------------
Finance -- 3.4%
New York City Transitional Finance Authority Revenue,
Future Tax Secured:
10,000,000 AA+ Series C, (Call 5/1/10 @ 101), 5.500% due 11/1/29 (b)(c) 11,694,800
2,000,000 A-1+ Sub-Series 2F, 1.200% due 11/1/22 (d) 2,000,000
1,300,000 A-1+ Sub-Series C5, 1.150% due 8/1/31 (d) 1,300,000
5,000,000 AAA New York State Local Government Assistance Corp.,
Series B, MBIA-Insured, 4.875% due 4/1/20 5,155,600
635,000 BBB- New York State Municipal Bond Bank Agency, Special Revenue
Program, City of Buffalo, Series A, 6.875% due 3/15/06 647,281
5,000,000 BBB+ Puerto Rico Public Financial Corp., Series E,
5.500% due 8/1/29 5,272,700
- --------------------------------------------------------------------------------------------------
26,070,381
- --------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
11 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- --------------------------------------------------------------------------------------------------------
General Obligation -- 2.3%
New York City GO:
$ 4,000,000 AAA Series B1, MBIA-Insured, (Call 8/15/04 @ 101),
6.950% due 8/15/12 (c) $ 4,248,080
3,150,000 AAA Series I, AMBAC-Insured, 7.250% due 8/15/14 (e) 3,636,990
New York State:
1,000,000 AA 12.000% due 11/15/03 1,012,800
2,750,000 AA 9.875% due 11/15/05 3,240,050
4,505,000 Aaa* North Hempstead, Series A, FGIC-Insured, 5.000% due 9/1/22 4,658,981
1,000,000 AAA Yonkers, Series C, FGIC-Insured, State Aid Withholding,
5.000% due 6/1/19 1,047,790
- --------------------------------------------------------------------------------------------------------
17,844,691
- --------------------------------------------------------------------------------------------------------
Government Facilities -- 7.5%
New York State Urban Development Corp. Revenue:
20,000,000 AA- Correctional & Youth Facilities, Series A, 5.500% due 1/1/17 (b) 22,484,400
3,050,000 AAA Correctional Capital Facilities, MBIA-Insured,
5.000% due 1/1/20 3,162,240
Correctional Facilities Service Contract:
6,600,000 AAA Series C, AMBAC-Insured, (Call 1/1/09 @ 101),
6.000% due 1/1/29 (c) 7,829,448
18,400,000 AAA Series D, FSA-Insured, (Call 1/1/11 @ 100),
5.250% due 1/1/30 (c) 21,051,072
3,000,000 AA- State Facilities, 5.700% due 4/1/20 3,450,180
- --------------------------------------------------------------------------------------------------------
57,977,340
- --------------------------------------------------------------------------------------------------------
Hospitals -- 12.8%
1,620,000 AAA East Rochester, Housing Authority Revenue, (North Park Nursing
Home), GNMA-Collateralized, 5.200% due 10/20/24 1,710,882
5,000,000 AAA Nassau Health Care Corp., Health System Revenue Bonds,
FSA-Insured, 5.500% due 8/1/19 5,487,500
New York City Health & Hospital Corp. Revenue, Health System,
Series A:
3,000,000 AAA AMBAC-Insured, 5.000% due 2/15/20 3,112,350
FSA-Insured:
1,110,000 AAA 5.000% due 2/15/22 1,142,035
3,750,000 AAA 5.125% due 2/15/23 3,861,600
New York State Dormitory Authority Revenue:
5,350,000 A1* Lutheran Center at Poughkeepsie, LOC-Key Bank N.A.,
6.050% due 7/1/26 5,631,891
Mental Health Services Facilities:
Series B:
2,500,000 AA- 5.000% due 2/15/18 2,595,025
6,955,000 AA- 5.625% due 2/15/21 7,381,411
45,000 AA- Call 2/15/07 @ 102, 5.625% due 2/15/21 (c) 51,493
See Notes to Financial Statements.
12 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------
Hospitals -- 12.8% (continued)
$2,600,000 AAA Series D, FSA-Insured, 5.250% due 8/15/30 $ 2,664,532
324,000 AA- Series B, (Partially Pre-Refunded with U.S. government
securities to various call dates and prices),
7.500% due 5/15/11 410,518
3,000,000 AA St. Luke's Home, Residential Health, FHA-Insured,
6.375% due 8/1/35 3,213,120
2,450,000 AAA St. Vincent's Hospital & Medical Center, FHA-Insured,
7.400% due 8/1/30 2,456,394
1,500,000 AAA United Cerebral Palsy, AMBAC-Insured, 5.125% due 7/1/21 1,588,980
2,000,000 AAA Victory Memorial Hospital, MBIA-Insured, 5.375% due 8/1/25 2,098,880
2,500,000 AAA Willow Towers Inc. Project, GNMA-Collateralized,
5.400% due 2/1/34 2,606,025
New York State Medical Care Facilities, Finance Agency Revenue:
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 4,395,880
2,500,000 B Central Suffolk Hospital Mortgage Project,
6.125% due 11/1/16 1,771,200
2,350,000 NR FHA-Insured, (Partially Pre-Refunded with U.S. government
securities to 2/15/04 Call @ 100), 7.450% due 8/15/31 2,356,345
955,000 Aa1* Health Center Projects, Secured Mortgage Program,
SONYMA-Insured, 6.375% due 11/15/19 1,009,292
6,675,000 AA Hospital & Nursing Home, FHA-Insured,
(Call 2/15/04 @ 102), 6.200% due 2/15/21 (c) 6,868,909
4,000,000 AA Mortgage Project, FHA-Insured, (Pre-Refunded -- Escrowed
with state & local government securities to 8/15/04
Call @ 102), 6.375% due 8/15/24 4,267,960
4,700,000 AAA New York Downtown Hospital, (Pre-Refunded --
Escrowed with state & local government securities to
2/15/05 Call @ 102), 6.800% due 2/15/20 5,165,159
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 9,341,245
7,600,000 AAA 6.500% due 8/15/29 (f) 8,321,316
2,500,000 AAA 6.900% due 8/15/34 2,750,825
Series B:
940,000 AA Hospital & Nursing Home Insured Mortgage, FHA-Insured,
7.000% due 8/15/32 951,938
1,860,000 AAA Long Term Healthcare, FSA-Insured, 6.450% due 11/1/14 1,886,505
3,500,000 AA Mortgage Project, FHA-Insured, 6.100% due 2/15/15 3,752,105
665,000 BBB+ Puerto Rico Commonwealth Renewal & Housing Corp.,
7.875% due 10/1/04 667,733
- ------------------------------------------------------------------------------------------------------
99,519,048
- ------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
13 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 3.3%
$ 35,000 NR Battery Park City Authority, Housing Revenue, FHA-Insured,
(Call 6/1/05 @ 100), 8.625% due 6/1/23 (c) $ 39,354
New York City HDC:
1,339,533 NR Cadman Project, 6.500% due 11/15/18 1,301,812
844,688 NR Heywood Towers Project, 6.500% due 10/15/17 827,195
1,082,644 NR Kelly Project, 6.500% due 2/15/18 1,056,910
4,000,000 AAA Mortgage Revenue, Series A, FHA-Insured,
6.600% due 4/1/30 (f) 4,070,080
1,385,857 NR Riverbend Project, 6.500% due 11/15/18 1,418,217
New York State Dormitory Authority Revenue,
Park Ridge Housing Inc., FNMA-Collateralized:
1,000,000 AAA 6.375% due 8/1/20 (f) 1,109,010
1,470,000 AAA 6.500% due 8/1/25 1,636,331
New York State Housing Finance Agency Revenue,
Secured Mortgage Program:
Series A, SONYMA-Insured:
500,000 Aa1* 7.000% due 8/15/12 (g) 506,335
2,000,000 Aa1* 6.200% due 8/15/15 (g) 2,099,520
500,000 Aa1* 7.050% due 8/15/24 (g) 505,745
6,870,000 Aa1* Series B, SONYMA-Insured, 6.250% due 8/15/29 (g) 7,215,492
Series C:
1,500,000 AAA FHA-Insured, 6.500% due 8/15/24 1,514,940
1,750,000 Aa1* SONYMA-Insured, 6.600% due 8/15/27 (f) 1,808,450
740,000 A1* Rensselaer Housing Authority, Multi-Family Mortgage Revenue,
Rensselaer Elderly Apartments, Series A, 7.750% due 1/1/11 749,909
- --------------------------------------------------------------------------------------------------------
25,859,300
- --------------------------------------------------------------------------------------------------------
Housing: Single-Family -- 2.0%
New York State Mortgage Agency Revenue,
Homeowner Mortgage:
4,295,000 Aa1* Series 65, 5.850% due 10/1/28 (g) 4,448,933
4,935,000 Aa1* Series 67, 5.800% due 10/1/28 (g) 5,139,802
6,000,000 Aa1* Series 71, 5.350% due 10/1/18 (g) 6,209,220
- --------------------------------------------------------------------------------------------------------
15,797,955
- --------------------------------------------------------------------------------------------------------
Industrial Development -- 2.0%
2,250,000 BBB Essex County IDA Revenue, Solid Waste, (International Paper Co.
Project), Series A, 6.150% due 4/1/21 (g) 2,307,825
470,000 NR Monroe County IDA Revenue, Public Improvement,
Canal Ponds Park, Series A, 7.000% due 6/15/13 478,827
Onondaga County IDA:
750,000 AA- Civic Facilities Revenue, (Syracuse Home Association Project),
LOC-HSBC Bank USA, 5.200% due 12/1/18 812,205
See Notes to Financial Statements.
14 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- -------------------------------------------------------------------------------------------------------
Industrial Development -- 2.0% (continued)
$ 8,000,000 AA- Sewer Facilities Revenue, (Bristol-Myers Squibb Co. Project),
5.750% due 3/1/24 (g) $ 8,729,280
1,410,000 A+ Rensselaer County IDA, Albany International Corp., LOC-Fleet
Trust Co., 7.550% due 7/15/07 1,611,827
1,490,000 B2* Warren & Washington Counties, IDA Resource Recovery
Revenue Bonds, Series A, 7.900% due 12/15/07 1,482,416
- -------------------------------------------------------------------------------------------------------
15,422,380
- -------------------------------------------------------------------------------------------------------
Life Care Systems -- 2.0%
New York State Dormitory Authority Revenue Bonds, FHA-Insured:
3,815,000 AA Hebrew Nursing Home, 6.125% due 2/1/37 4,043,328
1,220,000 AAA Heritage House Nursing Center, 7.000% due 8/1/31 1,222,965
1,600,000 AAA Jewish Geriatric Center, 7.150% due 8/1/14 (f) 1,693,632
1,500,000 AAA Menorah Campus Nursing Home, 6.100% due 2/1/37 1,659,675
1,545,000 AA Niagara Frontier Home, Mortgage Revenue,
6.200% due 2/1/15 1,614,664
3,350,000 AA Wesley Garden Nursing Home, 6.125% due 8/1/35 3,664,398
1,250,000 AAA Syracuse IDA Revenue, James Square Association, FHA-Insured,
7.000% due 8/1/25 1,253,037
- -------------------------------------------------------------------------------------------------------
15,151,699
- -------------------------------------------------------------------------------------------------------
Pollution Control Revenue -- 0.4%
New York State Environmental Facilities Corp., State Water
Revolving Fund, Series A:
190,000 AAA 7.500% due 6/15/12 190,912
805,000 AAA GIC-Societe General, 7.250% due 6/15/10 808,300
1,000,000 AAA North Country Development Authority, Solid Waste Management
System Revenue, FSA-Insured, 6.000% due 5/15/15 1,210,270
1,710,000 CCC Puerto Rico Industrial, Medical & Environmental Facilities, Finance
Authority Revenue, American Airlines Inc., Series A,
6.450% due 12/1/25 1,009,960
- -------------------------------------------------------------------------------------------------------
3,219,442
- -------------------------------------------------------------------------------------------------------
Public Facilities -- 1.9%
New York City Trust Cultural Resource Revenue, AMBAC-Insured:
1,655,000 AAA American Museum of Natural History, Series A,
5.250% due 7/1/17 1,802,659
Museum of Modern Art:
3,100,000 AAA Series A, 5.000% due 4/1/23 3,188,567
9,000,000 AAA Series D, 5.125% due 7/1/31 (b) 9,219,150
770,000 AA- New York State COP, (Hanson Redevelopment Project),
8.375% due 5/1/08 890,166
- -------------------------------------------------------------------------------------------------------
15,100,542
- -------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
15 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ----------------------------------------------------------------------------------------------------
Transportation -- 19.5%
$ 750,000 BBB+ Albany Parking Authority Revenue, Series A,
5.625% due 7/15/25 $ 785,100
Metropolitan Transportation Authority:
Dedicated Tax Fund, Series A:
11,000,000 AAA FGIC-Insured, 5.250% due 11/15/23 (b) 11,524,700
FSA-Insured, (Call 10/1/14 @ 100):
2,290,000 AAA 5.125% due 4/1/19 (c) 2,607,005
4,500,000 AAA 5.250% due 4/1/23 (c) 5,173,650
Transit Facilities Revenue, Series A:
5,000,000 AAA Call 7/1/09 @ 100, 6.000% due 7/1/19 (c) 5,966,200
10,000,000 AAA MBIA-Insured, (Call 7/1/07 @ 101.50),
5.625% due 7/1/25 (b)(c) 11,570,500
Triborough Bridge & Tunnel Authority:
Series A:
5,200,000 AAA 5.250% due 11/15/30 5,419,388
3,500,000 AA- Call 1/1/22 @ 100, 5.250% due 1/1/28 (c) 3,879,610
Series B:
4,200,000 AAA Call 1/1/16 @ 100, 5.375% due 1/1/19 (c) 4,855,998
10,125,000 AAA Call 1/1/22 @ 100, 5.500% due 1/1/30 (b)(c) 11,375,235
Triborough Bridge COP, AMBAC-Insured:
2,595,000 AAA 5.875% due 1/1/30 2,872,509
20,000,000 AAA Series A, 5.250% due 1/1/29 (b) 20,654,800
New York State Thruway Authority:
5,000,000 AA- General Revenue, Series E, 5.000% due 1/1/25 5,050,350
Highway & Bridge Toll Revenue Fund, FGIC-Insured:
Series A:
3,410,000 AAA 5.000% due 4/1/19 3,600,721
2,000,000 AAA 5.000% due 4/1/20 2,095,840
2,500,000 AAA 5.000% due 4/1/21 2,601,750
15,000,000 AAA Series B, 5.000% due 4/1/19 (b) 15,846,300
4,000,000 AAA Series B-1, 5.500% due 4/1/18 4,448,720
Port Authority New York & New Jersey:
7,250,000 AA- 109th Series, GO-Insured, 5.375% due 1/15/32 7,438,935
8,000,000 BB- Delta Airlines Inc. Project, Series 1R, 6.950% due 6/1/08 8,036,240
Special Obligation Revenue:
12,000,000 NR 5th Installment, 6.750% due 10/1/19 (b)(g) 12,425,160
Versatile Structure:
110,000 A-1+ Bayerische Landesbank, Series 5,
1.200% due 8/1/24 (d) 110,000
800,000 A-1+ Morgan Guaranty Trust, Series 3,
1.200% due 6/1/20 (d) 800,000
1,500,000 AA- Triborough Bridge & Tunnel Authority, (Convention
Center Project), Series E, 7.250% due 1/1/10 1,743,195
- ----------------------------------------------------------------------------------------------------
150,881,906
- ----------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
16 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ------------------------------------------------------------------------------------------------
Utilities -- 7.7%
Long Island Power Authority, Electric System Revenue,
Series A, MBIA-Insured:
$35,335,000 AAA 5.250% due 12/1/26 (b) $ 36,452,293
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) 6,177,110
Gas Facilities Revenue:
3,000,000 A+ Brooklyn Union Gas Co. Project, RIBS, Series B,
12.504% due 7/1/26 (g)(h) 3,735,870
1,500,000 Baa2* Corning Natural Gas Corp., Series A,
8.250% due 12/1/18 (g) 1,520,340
12,000,000 A- Puerto Rico Electric Power Authority, Power Revenue,
Series NN, 5.125% due 7/1/29 12,206,280
- ------------------------------------------------------------------------------------------------
60,091,893
- ------------------------------------------------------------------------------------------------
Water and Sewer -- 8.4%
1,000,000 AAA Buffalo Municipal Water Finance Authority, Water Systems
Revenue, FGIC-Insured, (Call 7/1/06 @ 102),
6.100% due 7/1/26 (c) 1,150,340
1,070,000 AAA Commonwealth of Puerto Rico, Aqueduct & Sewer Authority
Revenue Bonds, 10.250% due 7/1/09 (e) 1,344,337
2,150,000 AAA Monroe County Water Authority Revenue, AMBAC-Insured,
(Pre-Refunded -- Escrowed with state & local government
securities to 8/1/04 Call @ 101), 7.000% due 8/1/19 (f) 2,279,215
New York City Municipal Water Finance Authority,
Water & Sewer Systems Revenue:
16,000,000 AA 5.500% due 6/15/33 (b) 17,255,680
Series B:
990,000 AA 6.000% due 6/15/33 1,157,389
5,205,000 AAA FGIC-Insured, 5.125% due 6/15/30 5,270,687
FSA-Insured:
2,750,000 AAA 5.000% due 6/15/29 2,779,425
1,000,000 AAA 5.250% due 6/15/29 1,022,460
1,565,000 AA Pre-Refunded -- Escrowed with state & local
government securities to 6/15/10 Call @ 101,
6.000% due 6/15/33 1,887,249
Series D:
5,000,000 AA 5.250% due 6/15/25 5,190,550
2,375,000 AAA MBIA-Insured, 5.000% due 6/15/15 (b) 2,558,920
New York State Environmental Facilities Corp.,
Clean Water & Drinking Revolving Funds:
8,500,000 AAA 5.000% due 6/15/32 8,636,595
See Notes to Financial Statements.
17 Smith Barney Muni Funds | 2003 Semi-Annual Report
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 2003
NEW YORK PORTFOLIO
FACE
AMOUNT RATING(a) SECURITY VALUE
- ---------------------------------------------------------------------------------------
Water and Sewer -- 8.4% (continued)
Series B:
$ 965,000 AAA 5.250% due 4/15/17 $ 1,052,284
2,490,000 AAA 5.250% due 10/15/17 2,715,220
1,340,000 AAA 5.250% due 4/15/18 1,458,175
1,880,000 AAA 5.250% due 10/15/18 2,045,797
Call 10/15/09 @100:
295,000 AAA 5.250% due 4/15/17 (c) 340,527
400,000 AAA 5.250% due 4/15/18 (c) 461,732
Series C:
1,060,000 AAA 5.000% due 6/15/16 1,139,214
4,980,000 AAA Pre-Refunded -- Escrowed with state & local
government securities to 6/15/08 Call @ 101,
5.000% due 6/15/16 5,392,792
- ---------------------------------------------------------------------------------------
65,138,588
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $712,367,135**) $775,508,448
- ---------------------------------------------------------------------------------------
(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 has been segregated for open futures
contracts commitments (Note 6).
(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 commitments (Note 6).
(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 19 through 21 for definitions of ratings and certain abbreviations.
See Notes to Financial Statements.
18 Smith Barney Muni Funds | 2003 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
"B" 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 circum- stances 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 -- Bonds rated "BB", "B" and "CCC" are regarded, on balance, as
CCC 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 out- weighed 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 pay- ments 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 ampli- tude, 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 consid- ered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a sus- ceptibility 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 out- standing 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.
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.
19 Smith Barney Muni Funds | 2003 Semi-Annual Report
BOND RATINGS (UNAUDITED) (CONTINUED)
Fitch Ratings ("Fitch") -- Ratings from "AA" to "BBB" may be modified by the
addition of a plus (+) sign or minus (-) sign to show relative standings within
the major ratings categories.
AA -- Bonds rated "AA" are considered to be investment-grade and of very
high credit quality. The obligator's ability to pay interest
and/or dividends and repay principal is very strong.
A -- Bonds rated "A" are considered to be investment-grade and of high
credit quality. The obligor's ability to pay interest and/or
dividends and repay principal is consid- ered to be strong, but
may be more vulnerable to adverse changes in economic con- ditions
and circumstances than debt or preferred securities with higher
ratings.
BBB -- Bonds rated "BBB" are considered to be investment-grade and of
satisfactory credit quality. The obligator's ability to pay
interest or dividends and repay principal is considered to be
adequate. Adverse changes in economic conditions and
circum- stances, however, are more likely to have adverse impact
on these securities and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below
investment-grade is higher than for securities with higher ratings.
NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's
or Fitch.
SHORT-TERM 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 over- whelming 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.
20 Smith Barney Muni Funds | 2003 Semi-Annual Report
ABBREVIATIONS* (UNAUDITED)
ABAG --Association of Bay Area Governments
AIG --American International Guaranty
AMBAC --American Municipal Bond Assurance Corporation
AMT --Alternative Minimum Tax
BAN --Bond Anticipation Notes
BIG --Bond Investors Guaranty
BOCES --Board of Cooperative Education Services
CGIC --Capital Guaranty Insurance Company
COP --Certificate of Participation
CSD --Central School District
ETM --Escrowed to Maturity
FLAIRS --Floating Adjustable Interest Rate Securities
FGIC --Financial Guaranty Insurance Company
FHA --Federal Housing Administration
FHLMC --Federal Home Loan Mortgage Corporation
FNMA --Federal National Mortgage Association
FRTC --Floating Rate Trust Certificates
FSA --Financial Security Assurance
GDB --Government Development Bank
GIC --Guaranteed Investment Contract
GNMA --Government National Mortgage Association
GO --General Obligation
HDC --Housing Development Corporation
HFA --Housing Finance Authority
IDA --Industrial Development Authority
IDB --Industrial Development Board
IDR --Industrial Development Revenue
IFA --Infrastructure Financing Authority
INFLOS --Inverse Floaters
IRB --Industrial Revenue Bonds
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
MVRICS --Municipal Variable Rate Inverse Coupon Security
PART --Partnership Structure
PCFA --Pollution Control Financing Authority
PCR --Pollution Control Revenue
RAN --Revenue Anticipation Notes
RIBS --Residual Interest Bonds
SAVRS --Select Auction Variable Rate Securities
SONYMA --State of New York Mortgage Association
SWAP --SWAP Structure
TAN --Tax Anticipation Notes
TECP --Tax Exempt Commercial Paper
TFA --Transitional Financial Authority
TRAN --Tax and Revenue Anticipation Notes
UFSD --Union Free School District
VRDN --Variable Rate Demand Note
VRDO --Variable Rate Demand Obligation
VRWE --Variable Rate Wednesday Demand
- --------
*Abbreviations may or may not appear in the schedule of investments.
21 Smith Barney Muni Funds | 2003 Semi-Annual Report
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) SEPTEMBER 30, 2003
New York
Money Market New York
Portfolio Portfolio
- ---------------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $1,783,229,478 and
$712,367,135, respectively) $1,783,229,478 $775,508,448
Cash 91,179 7,057
Receivable for Fund shares sold 15,870,958 433,292
Receivable for securities sold 7,000,988 12,213,156
Interest receivable 3,373,801 11,326,470
Prepaid expenses 3,776 11,592
Other assets 15,401 --
- --------------------------------------------------------------------------------------
Total Assets 1,809,585,581 799,500,015
- --------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 56,030,000 --
Payable for Fund shares reacquired 21,547,723 734,712
Management fees payable 679,432 326,599
Dividends payable 295,445 --
Distribution plan fees payable 48,102 68,742
Deferred compensation payable 15,401 13,882
Payable to broker -- variation margin -- 4,766,875
Accrued expenses 157,664 63,539
- --------------------------------------------------------------------------------------
Total Liabilities 78,773,767 5,974,349
- --------------------------------------------------------------------------------------
Total Net Assets $1,730,811,814 $793,525,666
- --------------------------------------------------------------------------------------
NET ASSETS:
Par value of shares of beneficial interest $ 1,730,706 $ 57,988
Capital paid in excess of par value 1,729,023,548 750,524,302
Undistributed net investment income 50 926,371
Accumulated net realized gain (loss) from investment
transactions and futures contracts 57,510 (3,649,527)
Net unrealized appreciation of investments and
futures contracts -- 45,666,532
- --------------------------------------------------------------------------------------
Total Net Assets $1,730,811,814 $793,525,666
- --------------------------------------------------------------------------------------
Shares Outstanding:
Class A 1,730,706,310 44,797,759
Class B -- 9,631,263
Class L -- 3,280,858
Class Y -- 278,413
Net Asset Value:
Class A (and redemption price) $1.00 $13.69
Class B * -- $13.68
Class L * -- $13.67
Class Y (and redemption price) -- $13.68
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value) -- $14.26
Class L (net asset value plus 1.01% of net asset value) -- $13.81
- --------------------------------------------------------------------------------------
*Redemption price is NAV of Class B and L shares reduced by a 4.50% and 1.00%
contingent deferred sales charge, respectively, if shares are redeemed within
one year from purchase payment (See Note 4).
See Notes to Financial Statements.
22 Smith Barney Muni Funds | 2003 Semi-Annual Report
STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended September 30, 2003
New York
Money Market New York
Portfolio Portfolio
- ---------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $9,346,041 $ 21,046,304
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 4,329,048 2,018,686
Distribution plan fees (Note 7) 898,397 1,070,466
Shareholder servicing fees (Note 7) 189,512 120,737
Custody 47,387 34,887
Shareholder communications (Note 7) 22,509 18,479
Audit and legal 17,478 12,262
Registration fees 11,620 4,741
Trustees' fees 7,875 3,676
Other 15,065 4,223
- --------------------------------------------------------------------------------
Total Expenses 5,538,891 3,288,157
- --------------------------------------------------------------------------------
Net Investment Income 3,807,150 17,758,147
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES CONTRACTS
(NOTES 5 AND 6):
Realized Gain From:
Investment transactions 55,936 2,411,167
Futures contracts -- 21,973,118
- --------------------------------------------------------------------------------
Net Realized Gain 55,936 24,384,285
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments
and Futures Contracts:
Beginning of period -- 68,678,312
End of period -- 45,666,532
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation -- (23,011,780)
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 55,936 1,372,505
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $3,863,086 $ 19,130,652
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
23 Smith Barney Muni Funds | 2003 Semi-Annual Report
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended September 30, 2003 (unaudited) and the Year Ended
March 31, 2003
New York Money Market Portfolio September 30 March 31
- ---------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 3,807,150 $ 14,124,646
Net realized gain 55,936 150,049
- --------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 3,863,086 14,274,695
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
(NOTES 3 AND 8):
Net investment income (3,807,100) (14,124,646)
- --------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (3,807,100) (14,124,646)
- --------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 3,204,329,369 6,255,293,832
Net asset value of shares issued for reinvestment of dividends 3,837,838 14,493,091
Cost of shares reacquired (3,305,258,499) (6,486,126,340)
- --------------------------------------------------------------------------------------------------
Decrease in Net Assets From Fund Share Transactions (97,091,292) (216,339,417)
- --------------------------------------------------------------------------------------------------
Decrease in Net Assets (97,035,306) (216,189,368)
NET ASSETS:
Beginning of period 1,827,847,120 2,044,036,488
- --------------------------------------------------------------------------------------------------
End of period* $ 1,730,811,814 $ 1,827,847,120
- --------------------------------------------------------------------------------------------------
* Includes undistributed net investment income of: $50 --
- --------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
24 Smith Barney Muni Funds | 2003 Semi-Annual Report
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the Six Months Ended September 30, 2003 (unaudited)
and the Year Ended March 31, 2003
New York Portfolio September 30 March 31
---------------------------------------------------------------------
OPERATIONS:
Net investment income $ 17,758,147 $ 37,786,975
Net realized gain (loss) 24,384,285 (16,006,348)
Increase (decrease) in net unrealized
appreciation (23,011,780) 45,124,626
--------------------------------------------------------------------
Increase in Net Assets From Operations 19,130,652 66,905,253
--------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
(NOTES 3 and 8):
Net investment income (17,530,196) (37,462,510)
--------------------------------------------------------------------
Decrease in Net Assets
From Distributions to Shareholders (17,530,196) (37,462,510)
--------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 36,702,909 108,871,403
Net asset value of shares issued for
reinvestment of dividends 10,470,670 23,115,978
Cost of shares reacquired (71,718,860) (169,116,496)
--------------------------------------------------------------------
Decrease in Net Assets From Fund Share
Transactions (24,545,281) (37,129,115)
--------------------------------------------------------------------
Decrease in Net Assets (22,944,825) (7,686,372)
NET ASSETS:
Beginning of period 816,470,491 824,156,863
--------------------------------------------------------------------
End of period* $793,525,666 $ 816,470,491
--------------------------------------------------------------------
* Includes undistributed net investment
income of: $926,371 $698,420
--------------------------------------------------------------------
See Notes to Financial Statements.
25 Smith Barney Muni Funds | 2003 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
Trust consists of these Funds and seven other separate investment funds:
Florida, Georgia, Pennsylvania, Limited Term, National, Massachusetts Money
Market and California Money Market Portfolios. The financial statements and
financial highlights for the other funds are presented in separate shareholder
reports.
The significant accounting policies consistently followed by the Funds are:
(a) security transactions are accounted for on trade date; (b) with respect to
the New York Portfolio, securities are valued at the mean between the quoted
bid and asked prices provided by an independent pricing service that are based
on transactions in municipal obligations, quotations from municipal bond
dealers, market transactions in comparable securities and various relationships
between securities; 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; (c)
securities maturing within 60 days are valued at cost plus accreted discount,
or minus amortized premium, which approximates value; (d) securities for which
market quotations are not available will be valued in good faith at fair value
by or under the directions of the Board of Trustees; (e) gains or losses on the
sale of securities are calculated by using the specific identification method;
(f ) interest income, adjusted for amortization of premium and accretion of
discount, is recorded on an accrual basis; (g) dividends and distributions to
shareholders are recorded on the ex-dividend date; (h) class specific expenses
are charged to each Fund and each class; management fees and general fund
expenses are allocated on the basis of relative net assets of each class or on
another reasonable basis; (i) 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 them from substantially all Federal income and excise
taxes; ( j) the character of income and gains to be distributed is determined
in accordance with income tax regulations which may differ from accounting
principles generally accepted in the United States of
26 Smith Barney Muni Funds | 2003 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
America; and (k) estimates and assumptions are required to be made regarding
assets, liabilities and changes in net assets resulting from operations when
financial statements are prepared. Changes in the economic environment,
financial markets and any other parameters used in determining these estimates
could cause actual results to differ.
2. 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.
3. 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.
Furthermore, each Fund intends to satisfy conditions that will enable interest
from municipal securities, which is exempt from Federal income tax and from
designated state income taxes, to retain such tax-exempt status when
distributed to the shareholders of the Fund.
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.
4. 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 Fund.
Effective July 1, 2003, 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.
27 Smith Barney Muni Funds | 2003 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Prior to July 1, 2003, the New York Money Market Portfolio paid SBFM a
management fee calculated at an annual rate of 0.50% on the first $2.5 billion
of the Fund's average daily net assets; 0.475% on the next $2.5 billion; 0.45%
on the next $2.5 billion; and 0.40% on the Fund's average daily net assets in
excess of $7.5 billion. This fee was calculated daily and paid monthly.
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, 2003, the Funds paid
transfer agent fees totaling $280,650 to CTB. The totals for each Fund were as
follows:
Fund Transfer Agent Fees
- --------------------------------------------------------------------------------
New York Money Market Portfolio $190,776
- -------------------------------------------------------------------------------
New York Portfolio 89,874
- -------------------------------------------------------------------------------
Citigroup Global Markets Inc. ("CGM") and PFS Distributors, Inc., both of which
are subsidiaries of Citigroup, act as the Funds' distributors.
For the New York Portfolio, there are maximum initial sales charges of 4.00%
and 1.00% for Class A and L shares, respectively. 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 L 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.
28 Smith Barney Muni Funds | 2003 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
For the six months ended September 30, 2003, CGM and its affiliates received
sales charges of approximately $264,000 and $33,000 on sales of the New York
Portfolio's Class A and L shares, respectively. In addition, for the six months
ended September 30, 2003, CDSCs paid to CGM and its affiliates were
approximately:
Class A Class B Class L
-----------------------------------------------------
New York Portfolio $14,000 $100,000 $1,000
-----------------------------------------------------
All officers and one Trustee of the Trust are employees of Citigroup or its
affiliates.
5. Investments
During the six months ended September 30, 2003, 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:
New York Money New York
Market Portfolio Portfolio
------------------------------------------------
Purchases -- $49,203,332
------------------------------------------------
Sales -- 83,753,929
------------------------------------------------
At September 30, 2003, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
New York Money New York
Market Portfolio Portfolio
----------------------------------------------------------------
Gross unrealized appreciation -- $65,224,120
Gross unrealized depreciation -- (2,082,807)
----------------------------------------------------------------
Net unrealized appreciation -- $63,141,313
----------------------------------------------------------------
6. 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 contracts. During the period the futures contract is open,
changes in
29 Smith Barney Muni Funds | 2003 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
the value of the contract are recognized as unrealized gains or losses by
marking to market on a daily basis to reflect the market value of the contract
at the end of each day's trading. Variation margin payments are received or
made and recognized as assets due from or liabilities due to broker, depending
upon whether unrealized gains or losses are incurred. When the contract is
closed, the Fund records a realized gain or loss equal to the difference
between the proceeds from (or cost of ) the closing transactions and the Fund's
basis in the contract. The Fund enters into such contracts 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.
At September 30, 2003, the New York Portfolio had the following open futures
contracts:
# of Basis Market Unrealized
Contracts Expiration Value Value Loss
- -------------------------------------------------------------------------------
Contracts to Sell:
U.S. 20 Year
Treasury Bond 2,630 12/03 $277,496,156 $294,970,937 $(17,474,781)
- -------------------------------------------------------------------------------
7. 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 Class A, B and L 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 L shares calculated at the annual rate of 0.50% and 0.55% of
the Fund's average daily net assets of each class, respectively. For the six
months ended September 30, 2003, total Rule 12b-1 Distribution Plan fees, which
are accrued daily and paid monthly, were as follows:
Class A Class B Class L
----------------------------------------------------------
New York Money Market Portfolio $898,397 -- --
----------------------------------------------------------
New York Portfolio 465,834 $445,972 $158,660
----------------------------------------------------------
30 Smith Barney Muni Funds | 2003 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
For the six months ended September 30, 2003, total Shareholder Servicing fees
were as follows:
Class A Class B Class L Class Y
----------------------------------------------------------------
New York Money Market Portfolio $189,512 -- -- --
----------------------------------------------------------------
New York Portfolio 81,177 $33,172 $6,285 $103
----------------------------------------------------------------
For the six months ended September 30, 2003, total Shareholder Communication
expenses were as follows:
Class A Class B Class L Class Y
---------------------------------------------------------------
New York Money Market Portfolio $22,509 -- -- --
---------------------------------------------------------------
New York Portfolio 12,729 $4,818 $926 $ 6
---------------------------------------------------------------
8. Distributions Paid to Shareholders by Class
New York Six Months Ended Year Ended
Money Market Portfolio September 30, 2003 March 31, 2003
--------------------------------------------------------
Net Investment Income
Class A $ 3,807,100 $14,124,646
--------------------------------------------------------
New York Portfolio
--------------------------------------------------------
Net Investment Income
Class A $13,841,550 $29,471,544
Class B 2,712,510 5,750,779
Class L 887,601 1,757,345
Class Y 88,535 482,842
--------------------------------------------------------
Total $17,530,196 $37,462,510
--------------------------------------------------------
9. Shares of Beneficial Interest
At September 30, 2003, 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.
31 Smith Barney Muni Funds | 2003 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Transactions in shares of each class were as follows:
Six Months Ended Year Ended
September 30, 2003 March 31, 2003
New York ------------------------------- -------------------------------
Money Market Portfolio Shares Amount Shares Amount
- - -----------------------------------------------------------------
Class A
Shares sold 3,204,329,369 $ 3,204,329,369 6,255,293,832 $ 6,255,293,832
Shares issued on reinvestment 3,837,838 3,837,838 14,493,091 14,493,091
Shares reacquired (3,305,258,499) (3,305,258,499) (6,486,126,340) (6,486,126,340)
- -----------------------------------------------------------------------------------------------
Net Decrease (97,091,292) $ (97,091,292) (216,339,417) $ (216,339,417)
- -----------------------------------------------------------------------------------------------
New York Portfolio
- -----------------------------------------------------------------------------------------------
Class A
Shares sold 1,947,119 $ 26,649,778 5,619,910 $ 76,292,635
Shares issued on reinvestment 602,078 8,235,474 1,335,210 18,137,590
Shares reacquired (3,660,471) (50,113,803) (9,073,094) (123,475,514)
- -----------------------------------------------------------------------------------------------
Net Decrease (1,111,274) $ (15,228,551) (2,117,974) $ (29,045,289)
- -----------------------------------------------------------------------------------------------
Class B
Shares sold 457,460 $ 6,261,965 1,880,545 $ 25,565,327
Shares issued on reinvestment 118,975 1,627,198 257,018 3,491,918
Shares reacquired (1,244,531) (17,023,663) (2,383,698) (32,314,967)
- -----------------------------------------------------------------------------------------------
Net Decrease (668,096) $ (9,134,500) (246,135) $ (3,257,722)
- -----------------------------------------------------------------------------------------------
Class L
Shares sold 277,298 $ 3,791,166 515,918 $ 7,013,441
Shares issued on reinvestment 44,504 607,998 90,109 1,223,148
Shares reacquired (335,073) (4,581,394) (444,395) (6,026,015)
- -----------------------------------------------------------------------------------------------
Net Increase (Decrease) (13,271) $ (182,230) 161,632 $ 2,210,574
- -----------------------------------------------------------------------------------------------
Class Y
Shares issued on reinvestment -- -- 19,447 $ 263,322
Shares reacquired -- -- (532,295) (7,300,000)
- -----------------------------------------------------------------------------------------------
Net Decrease -- -- (512,848) $ (7,036,678)
- -----------------------------------------------------------------------------------------------
10.Subsequent Event
The Funds have received the following information from Citigroup Asset
Management ("CAM"), the Citigroup business unit which includes the Funds'
Investment Manager and other investment advisory companies, all of which are
indirect, wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry,
through an affiliate, into the transfer agent business in the period 1997-1999.
As CAM currently understands the facts, at the time CAM decided to enter the
transfer agent business, CAM sub-contracted for a period of five years certain
of
32 Smith Barney Muni Funds | 2003 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
the transfer agency services to a third party and also concluded a revenue
guarantee agreement with this sub-contractor providing that the sub-contractor
would guarantee certain benefits to CAM or its affiliates (the "Revenue
Guarantee Agreement"). In connection with the subsequent purchase of the
sub-contractor's business by an affiliate of the current sub-transfer agent
(PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee
Agreement was amended eliminating those benefits in exchange for arrangements
that included a one-time payment from the sub-contractor.
The Boards of CAM-managed funds (the "Boards") were not informed of the Revenue
Guarantee Agreement with the sub-contractor at the time the Boards considered
and approved the transfer agent arrangements. Nor were the Boards informed of
the subsequent amendment to the Revenue Guarantee Agreement when that occurred.
CAM has begun to take corrective actions. CAM will pay to the applicable funds
$16 million (plus interest) that CAM and its affiliates received from the
Revenue Guarantee Agreement and its amendment. CAM also plans an independent
review to verify that the transfer agency fees charged by CAM were fairly
priced as compared to competitive alternatives. CAM is instituting new
procedures and making changes designed to ensure no similar arrangements are
entered into in the future.
CAM has briefed the SEC, the New York State Attorney General and other
regulators with respect to this matter, as well as the U.S. Attorney who is
investigating the matter. CAM is cooperating with governmental authorities on
this matter, the ultimate outcome of which is not yet determinable.
33 Smith Barney Muni Funds | 2003 Semi-Annual Report
FINANCIAL HIGHLIGHTS
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 2003/(1)/ 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------
Net investment income 0.002 0.007 0.017 0.034 0.027 0.027
Dividends from net investment income (0.002) (0.007) (0.017) (0.034) (0.027) (0.027)
- ---------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------
Total Return 0.21%++ 0.74% 1.67% 3.40% 2.76% 2.72%
- ---------------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $1,731 $1,828 $2,044 $2,058 $1,573 $1,380
- ---------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(2)/ 0.62%+ 0.64% 0.64% 0.65% 0.67% 0.65%
Net investment income 0.42+ 0.74 1.65 3.32 2.73 2.65
- ---------------------------------------------------------------------------------------------
(1) For the six months ended September 30, 2003 (unaudited).
(2) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.80%.
++ Total return is not annualized, as it may be representative of the total
return for the year.
+ Annualized.
34 Smith Barney Muni Funds | 2003 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 2003/(1)(2)/ 2003/(2)/ 2002/(2)/ 2001/(2)/ 2000/(2)/ 1999/(2)/
- --------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $13.66 $13.19 $13.42 $12.78 $13.69 $13.91
- --------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income/(3)/ 0.31 0.63 0.65 0.67 0.68 0.68
Net realized and unrealized
gain (loss)/(3)/ 0.03 0.46 (0.23) 0.64 (0.91) 0.07
- --------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.34 1.09 0.42 1.31 (0.23) 0.75
- --------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.31) (0.62) (0.65) (0.67) (0.67) (0.70)
Net realized gains -- -- -- -- (0.01) (0.27)
- --------------------------------------------------------------------------------------------------------
Total Distributions (0.31) (0.62) (0.65) (0.67) (0.68) (0.97)
- --------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.69 $13.66 $13.19 $13.42 $12.78 $13.69
- --------------------------------------------------------------------------------------------------------
Total Return 2.48%++ 8.42% 3.15% 10.57% (1.61)% 5.50%
- --------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $613 $627 $633 $583 $482 $556
- --------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(4)/ 0.70%+ 0.70% 0.70% 0.69% 0.71% 0.70%
Net investment income/(3)/ 4.52+ 4.62 4.86 5.14 5.20 4.94
- --------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 14% 20% 16% 33% 60%
- --------------------------------------------------------------------------------------------------------
(1) For the six months ended September 30, 2003 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(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) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.85%.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
35 Smith Barney Muni Funds | 2003 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 2003/(1)(2)/ 2003/(2)/ 2002/(2)/ 2001/(2)/ 2000/(2)/ 1999/(2)/
- ----------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $13.66 $13.19 $13.42 $12.78 $13.68 $13.89
- ----------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income/(3)/ 0.27 0.56 0.57 0.60 0.61 0.61
Net realized and unrealized
gain (loss)/(3)/ 0.02 0.46 (0.22) 0.64 (0.90) 0.07
- ----------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.29 1.02 0.35 1.24 (0.29) 0.68
- ----------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.27) (0.55) (0.58) (0.60) (0.60) (0.62)
Net realized gains -- -- -- -- (0.01) (0.27)
- ----------------------------------------------------------------------------------------------------
Total Distributions (0.27) (0.55) (0.58) (0.60) (0.61) (0.89)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.68 $13.66 $13.19 $13.42 $12.78 $13.68
- ----------------------------------------------------------------------------------------------------
Total Return 2.15%++ 7.86% 2.60% 9.96% (2.09)% 5.02%
- ----------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $132 $140 $139 $148 $156 $192
- ----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(4)/ 1.22%+ 1.22% 1.21% 1.22% 1.23% 1.23%
Net investment income/(3)/ 3.99+ 4.10 4.27 4.63 4.67 4.42
- ----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 14% 20% 16% 33% 60%
- ----------------------------------------------------------------------------------------------------
(1) For the six months ended September 30, 2003 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(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) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.35%.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
36 Smith Barney Muni Funds | 2003 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 L Shares 2003/(1)(2)/ 2003/(2)/ 2002/(2)/ 2001/(2)/ 2000/(2)/ 1999/(2)(3)/
- -------------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $13.65 $13.18 $13.41 $12.77 $13.67 $13.88
- -------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income/(4)/ 0.27 0.55 0.57 0.58 0.60 0.60
Net realized and unrealized
gain (loss)/(4)/ 0.02 0.47 (0.23) 0.65 (0.90) 0.07
- -------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.29 1.02 0.34 1.23 (0.30) 0.67
- -------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.27) (0.55) (0.57) (0.59) (0.59) (0.61)
Net realized gains -- -- -- -- (0.01) (0.27)
- -------------------------------------------------------------------------------------------------------------
Total Distributions (0.27) (0.55) (0.57) (0.59) (0.60) (0.88)
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.67 $13.65 $13.18 $13.41 $12.77 $13.67
- -------------------------------------------------------------------------------------------------------------
Total Return 2.12%++ 7.82% 2.56% 9.91% (2.14)% 4.95%
- -------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $45 $45 $41 $32 $18 $18
- -------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(5)/ 1.25%+ 1.26% 1.26% 1.26% 1.27% 1.27%
Net investment income/(4)/ 3.97+ 4.05 4.27 4.55 4.64 4.37
- -------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 14% 20% 16% 33% 60%
- -------------------------------------------------------------------------------------------------------------
(1) For the six months ended September 30, 2003 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed as Class L shares.
(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) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 1.40%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
37 Smith Barney Muni Funds | 2003 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 2003/(1)(2)/ 2003/(2)/ 2002/(2)/ 2001/(2)(3)/
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $13.65 $13.19 $13.42 $13.46
- -----------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income/(4)/ 0.32 0.67 0.67 0.16
Net realized and unrealized gain (loss)/(4)/ 0.03 0.44 (0.23) (0.03)
- -----------------------------------------------------------------------------------------------------
Total Income From Operations 0.35 1.11 0.44 0.13
- -----------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.32) (0.65) (0.67) (0.17)
- -----------------------------------------------------------------------------------------------------
Total Distributions (0.32) (0.65) (0.67) (0.17)
- -----------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.68 $13.65 $13.19 $13.42
- -----------------------------------------------------------------------------------------------------
Total Return 2.57%++ 8.53% 3.33% 1.00%++
- -----------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $4 $4 $11 $10
- -----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses/(5)/ 0.52%+ 0.52% 0.52% 0.54%+
Net investment income/(4)/ 4.69+ 4.78 5.01 4.97+
- -----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 14% 20% 16%
- -----------------------------------------------------------------------------------------------------
(1) For the six months ended September 30, 2003 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(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) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.70%.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
38 Smith Barney Muni Funds | 2003 Semi-Annual Report
SMITH BARNEY
MUNI FUND
TRUSTEES INVESTMENT MANAGER
Lee Abraham Smith Barney Fund
Allan J. Bloostein Management LLC
Jane F. Dasher
Donald R. Foley DISTRIBUTORS
R. Jay Gerken, CFA Citigroup Global Markets Inc.
Chairman PFS Distributors, Inc.
Richard E. Hanson, Jr.
Paul Hardin CUSTODIAN
Roderick C. Rasmussen State Street Bank and
John P. Toolan Trust Company
OFFICERS TRANSFER AGENT
R. Jay Gerken, CFA Citicorp Trust Bank, fsb.
President and Chief Executive Officer 125 Broad Street, 11th Floor
New York, New York 10004
Andrew B. Shoup*
Senior Vice President and SUB-TRANSFER AGENTS
Chief Administrative Officer PFPC Inc.
P.O. Box 9699
Richard L. Peteka Providence, Rhode Island
Chief Financial Officer and Treasurer 02940-9699
Julie P. Callahan, CFA Primerica Shareholder Services
Vice President and P.O. Box 9662
Investment Officer Providence, Rhode Island
02940-9662
Joseph P. Deane
Vice President and
Investment Officer
Kaprel Ozsolak
Controller
Robert I. Frenkel*
Secretary and
Chief Legal Officer
* As of November 25, 2003.
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.
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, but it may also be used as sales literature when preceded or
accompanied by the current Prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the Funds. If used
as sales material after December 31, 2003, this report must be accompanied by
performance information for the most recently completed calendar quarter.
SMITH BARNEY MUNI FUNDS
Smith Barney Mutual Funds
125 Broad Street
10th Floor, MF-2
New York, New York 10004
For complete information on any of the Smith Barney Mutual Funds, including
management fees and expenses, call or write your financial professional for a
free prospectus. Read it carefully before you invest or send money.
www.smithbarneymutualfunds.com
(C)2003 Citigroup Global Markets Inc.
Member NASD, SIPC
FD0807 11/03 03-5687
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. 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 10. 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 12, 2003
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 12, 2003
By: /s/ Richard L. Peteka
Richard L. Peteka
Chief Financial Officer of
Smith Barney Muni Funds
Date: December 12, 2003