<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
1995
1995
1995 [ARTWORK APPEARS HERE]
1995
1995
Smith Barney
Muni Funds
National
Portfolio
--------------------------------------------------------
March 31,1995
Smith Barney Mutual Funds
[LOGO APPEARS HERE] Investing for your future.
Everyday.
<PAGE>
- ------------------
National Portfolio
- ------------------
Dear Shareholder:
We are pleased to present the annual report and audited financial statements for
Smith Barney Muni Funds: National Portfolio for the fiscal year ended March 31,
1995.
Municipal bond prices posted extremely strong gains in the first quarter of
1995, erasing most of the losses from last year's turbulent market. The National
Portfolio had a total return of 6.38% (Class A shares) for the fiscal year. That
was above the 6.20% average total return for all general municipal bond funds
over the same period, as reported by Lipper Analytical Services. Long-term
performance of the Portfolio continues to be excellent relative to its peers.
The Portfolio's five-year cumulative total return of 51.79% (Class A shares)
substantially outperformed the average cumulative total return of 45.69% for all
general municipal funds in the Lipper survey for the period ended March 31,
1995. It should be noted that this performance over the last five years has been
achieved with the need for only minimal capital-gains distributions, an
important consideration for investors interested in after-tax income.
Market and Economic Overview
Since our last report to you in November, the fixed-income markets, and
municipal bonds in particular, have enjoyed a powerful rally. Municipal bond
yields have declined more than a full percentage point, as evidenced by the drop
in the average yield on The Bond Buyer's weekly 25-Bond Revenue Index of 30-year
municipal bonds from a high of 7.37% on November 17, 1994 to 6.29% on March 31,
1995. This was substantially better than the performance of the benchmark 30-
year Treasury bond, which experienced a decline in yield of 70 basis points from
8.13% to 7.43% during the same time frame.
The vastly improved bond markets reflect a growing consensus that inflation will
remain under control, and the Federal Reserve Board will be successful in
engineering a "soft landing" by slowing the economy down to a more sustainable,
non-inflationary rate of growth. The seven increases in the federal funds rate
(the rate banks charge each other for overnight loans), orchestrated by the Fed
since February 1994, appear to be slowing the pace of economic growth. Recent
economic reports show a slower rate of increase in employment, producer prices,
and retail sales. Industrial production and capacity utilization were also lower
than expected, signalling a possible slowdown in the country's strong
manufacturing sector. These generally favorable economic fundamentals are more
than offsetting concerns about the
1
<PAGE>
substantial decline in the value of the dollar relative to the Japanese yen and
German mark on the foreign exchange markets.
Late in April, several tax-reform proposals which recommend a flat Federal
income tax rate began to receive increased attention in the national financial
press and from municipal bond market participants. Adoption of a flat tax would
diminish the advantages of tax exemption for municipal bonds. Although the
various plans being circulated are only proposals, the publicity surrounding
them has recently caused some investors to back away from the municipal bond
market. In our opinion it is much too early in the process to predict what
changes in the tax laws, if any, will actually take place, but tax reform will
certainly be a major topic of political debate over the next few years. Many
observers believe that the more radical proposals for changes in the way taxes
are collected have little chance for enactment.
Absent these tax-reform concerns, municipals would probably continue to be
strong performers relative to Treasuries and other taxable investments due to
the low supply of new issues. Not only did last year's spike in interest rates
sharply reduce refinancing activity in the municipal market, but voter pressure
on states and municipalities to rein in spending and cut taxes, or at least
avoid tax increases, has also resulted in a roughly 30% decline in new-money
financing. In addition, the universe of existing municipal bonds is shrinking.
In 1995, an estimated $230 billion of older, high-coupon issues will mature or
be called as they reach their first optional call dates. With estimates of new-
issue volume at less than $150 billion, the net reduction in municipal debt
outstanding could approach $100 billion this year, contracting the market by
about eight percent. Ordinarily, a reduction in supply of this magnitude would
be expected to provide a powerful boost for municipal bond values as it did
earlier this year. Uncertainties about various tax proposals, however, will
probably keep municipals from trading any better than their normal relationship
to taxable investment alternatives.
Portfolio Strategy and Outlook
While we have a generally positive outlook for the fixed-income markets, the
size of the rally we have experienced so far would seem to leave little room for
disappointment, and any sign of a rebound in economic activity is likely to
result in a return to higher interest rates. We also believe that the unique
supply and demand characteristics of the municipal market and tax-reform
uncertainties will tend to exaggerate price swings relative to taxable
investments.
In light of this viewpoint, we are maintaining a balanced approach to
structuring the interest-rate sensitivity of the Portfolio by investing in a
combination of both long and short effective maturities. Most long-term
2
<PAGE>
municipal bonds are callable prior to their stated maturity date. When a bond
has a coupon higher than prevailing market yields, its maturity is effectively
shortened to the call date for trading purposes because of the possibility that
the issuer will exercise its option to replace the bond with lower-cost debt. We
are retaining high-coupon bonds that trade well above their face value for the
defensiveness of their shorter effective maturities and the above-market level
of income they provide. However, we are also focusing on eliminating bonds with
shorter call dates when they are trading near their face value. Such bonds have
very unfavorable performance characteristics because they retain the downside
risk of their longer maturity if rates should rise, but their appreciation
potential is limited by the shorter call date if interest rates decline. We are
replacing such issues with bonds that have similar stated maturities but greater
call protection.
Although this strategy sacrifices some of the current income being generated by
the Portfolio, it enhances long-term performance potential if interest rates
continue to decline without adding to downside risk if interest rates rise. We
believe that positioning the Portfolio in this manner is the best way to achieve
our objective of the highest tax-free income consistent with prudent investment
risk.
We thank you for your investment in the Portfolio and your continued confidence
in our investment management.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman and Vice President and
Chief Executive Officer Investment Officer
April 28, 1995
3
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Historical Performance - Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
===========================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $13.35 $13.32 $0.84 $0.00 6.38%
- -------------------------------------------------------------------------------------------
3/31/94 13.81 13.35 0.86 0.06 3.17
- -------------------------------------------------------------------------------------------
3/31/93 12.95 13.81 0.89 0.00 13.96
- -------------------------------------------------------------------------------------------
3/31/92 12.49 12.95 0.90 0.00 11.21
- -------------------------------------------------------------------------------------------
3/31/91 12.24 12.49 0.83 0.00 9.13
- -------------------------------------------------------------------------------------------
3/31/90 12.11 12.24 0.98 0.00 9.60
- -------------------------------------------------------------------------------------------
3/31/89 11.82 12.11 0.96 0.00 10.93
- -------------------------------------------------------------------------------------------
3/31/88 12.95 11.82 0.94 0.20 (0.92)
- -------------------------------------------------------------------------------------------
Inception*-3/31/87 12.50 12.95 0.50 0.00 7.07
===========================================================================================
Total $7.70 $0.26
===========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
===========================================================================================
<S> <C> <C> <C> <C> <C>
Inception*-3/31/95 $12.41 $13.33 $0.32 $0.00 10.11%
===========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class C Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
===========================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $13.33 $13.32 $0.74 $0.00 5.80%
- -------------------------------------------------------------------------------------------
3/31/94 13.80 13.33 0.77 0.06 2.40
- -------------------------------------------------------------------------------------------
Inception*-3/31/93 13.47 13.80 0.20 0.00 3.98
===========================================================================================
Total $1.71 $0.06
===========================================================================================
</TABLE>
It is the Fund's Policy to Distribute Dividends Monthly
and Capital Gains, if any, Annually.
4
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge /(1)/
---------------------------------------
Class A Class B Class C
====================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 6.38% N/A 5.80%
Five Years Ended 3/31/95 8.70 N/A N/A
Inception* through 3/31/95 8.11 10.11% 5.48
With Sales Charge /(2)/
---------------------------------------
Class A Class B Class C
====================================================================================
Year Ended 3/31/95 2.10% N/A 4.80%
Five Years Ended 3/31/95 7.82 N/A N/A
Inception* through 3/31/95 7.60 5.61% 5.48
</TABLE>
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge /(1)/
================================================================================
<S> <C>
Class A (Inception* through 3/31/95) 95.84%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/95) 10.11
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/95) 12.65
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 4.00%, Class B shares reflect the deduction
of a 4.50% CDSC, which applies if shares are redeemed less than one year
from initial purchase. This CDSC declines by 0.50% the first year after
purchase and by 1.00% per year thereafter until no CDSC is incurred. Class C
shares reflect the deduction of a 1.00% CDSC if shares are redeemed within
the first year of purchase.
* Inception dates for Class A, B and C shares are August 20, 1986, November 7,
1994 and January 5, 1993, respectively.
5
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the National Portfolio vs.
Lehman Long Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
August 1986 - March 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
54961 S/B National Portfolio
National Lehman Long Bond Index
<S> <C> <C>
8/20/86 9600.61 10000
Mar-87 10266 11236.43
Mar-88 10121.05 11422.5
Mar-89 11169.76 12502.14
Mar-90 12202.77 13863.25
Mar-91 13281.58 14942.44
Mar-92 14728.46 16636.3
Mar-93 16739.76 19065.59
Mar-94 17283.5 19278.22
Mar-95 18353.0 21018.91
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on August 20, 1986, assuming deduction of the maximum 4.00% sales charge at
the time of investment and reinvestment of dividends (after deduction of
applicable sales charges) and capital gains (at net asset value) through March
31, 1995. The Index is unmanaged and is not subject to the same management and
trading expenses of a mutual fund. The performance of the Portfolio's other
classes may be greater or less than the Class A shares, performance indicated
on this chart, depending on whether greater or lesser sales charges and fees
were incurred by shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
values may be more or less than the original cost. No adjustment has been made
for shareholder tax liability on dividends or capital gains.
6
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Education -- 4.9%
$5,000,000 AAA Chicago, IL Board of Education Lease Certificates,
Series A Refunding, MBIA-Insured, 6.00%
due 1/1/20 $ 4,975,000
750,000 Aa1* De Kalb County, GA Development Authority Revenue,
Emory University Project, Series A, 5.90%
due 10/1/15 747,188
Nebraska Higher Education Loan Program Inc.
Revenue:
2,000,000 Aa* Sub Series A-5A, 6.20% due 6/1/13(a) 1,962,500
2,200,000 A Student Loan Program Revenue Bonds, 1993
Series B, 5.875% due 6/1/14(a) 2,073,500
1,735,000 Baa* New Hampshire Higher Education Health Facilities
Authority Revenue Refunding, Franklin Pierce College,
5.90% due 10/1/07 1,633,069
1,500,000 BBB+ New York State Dormitory Authority Revenue, State
University Educational Facilities, Series B, 7.50%
due 5/15/11 1,696,875
2,625,000 Aa* North Texas Higher Education Authority Inc., Student
Loan Revenue, Series C, 6.10% due 4/1/08 (a) 2,565,938
2,585,000 AAA Socorro ISD, El Paso County, TX Unlimited Tax
Refunding Bonds, Series 1994, PSF Guaranty,
zero coupon due 9/1/11 959,681
Texas State Higher Education, Coordinating Board
College Student Loan Revenue:
2,890,000 A 7.45% due 10/1/06 (a) 3,103,137
410,000 A* 7.70% due 10/1/25 (a) 431,525
1,000,000 AAA Utah Student Loan Revenue, Series 1991 F, AMBAC-
Insured, 7.45% due 11/1/08 (a) 1,070,000
- -------------------------------------------------------------------------------------------------------------
21,218,413
- -------------------------------------------------------------------------------------------------------------
Escrowed to Maturity (e) -- 9.4%
5,000,000 AAA Arapahoe County, CO Single-Family Mortgage
Revenue, 1984 Series A, (Escrowed to Maturity with
U.S. Government Securities), zero coupon due 9/1/10 1,856,250
785,000 AAA Boston, MA Water and Sewer Revenue, Series A,
(Escrowed to Maturity with U.S. Government
Securities), 10.875% due 1/1/09 1,097,038
1,170,000 AAA Douglas County, NE Hospital Authority No. 2, Bergan
Mercy, (Escrowed to Maturity with U.S. Government
Securities), 9.50% due 7/1/10 1,534,162
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Escrowed to Maturity (e) -- 9.4% (continued)
$25,400,000 AAA Illinois Development Finance Authority, Retirement
Housing Revenue, Regency Park, Series B,
(Escrowed to Maturity with Refco Strips),
zero coupon due 7/15/25 $2,762,250
5,000,000 AAA Indiana Bond Bank, AMBAC-Insured, (Escrowed to
Maturity with U.S. Government Securities),
9.75% due 8/1/09 6,531,250
5,000,000 AAA Kansas City, KS Single-Family Mortgage Revenue
Bonds, Series 1993 A, (Escrowed to Maturity with
Refco Strips), zero coupon due 12/1/14 1,425,000
7,750,000 AAA Labette County, KS Single-Family Mortgage Revenue,
Series A, (Escrowed to Maturity with
U.S. Government Securities), Series A,
zero coupon due 12/1/14 2,208,750
5,000,000 AAA Maricopa County, AZ Industrial Development Authority
Single-Family Mortgage Revenue, Series 1983 A,
(Escrowed to Maturity with Refco Strips),
zero coupon due 12/31/14 1,412,500
3,735,000 AAA Mississippi HFA, Single-Family Mortgage, (Escrowed to
Maturity with U.S. Government Securities),
zero coupon due 9/15/16 938,419
1,475,000 AAA Ohio State Water Development Authority Revenue, Safe
Water, Series 2, (Escrowed to Maturity with U.S.
Government Securities), 9.375% due 12/1/10 1,851,125
7,000,000 AAA Perris County, CA Single-Family Housing Mortgage,
GNMA-Collateralized, (Escrowed to Maturity with U.S.
Government Securities), 8.30% due 6/1/13 (a) 8,601,250
3,000,000 AAA Richmond County, GA Development Authority, Sub
Series C, (Escrowed to Maturity with U.S.
Government Securities), zero coupon due 12/1/21 453,750
1,000,000 AAA Rogers County, OK Housing Finance Agency Multi-
Family Mortgage Revenue, Series A, FNMA-
Collateralized, (Escrowed to Maturity with U.S.
Government Securities), 7.75% due 8/1/23 1,212,500
9,000,000 AAA Saline County, KS Single-Family Mortgage Revenue,
(Escrowed to Maturity with U.S. Government
Securities), zero coupon due 12/1/15 2,407,500
2,235,000 AAA St. Louis County, MO Mortgage Revenue, Series H,
(Escrowed to Maturity with U.S. Government
Securities), 5.40% due 1/1/16 (a) 2,098,106
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Escrowed to Maturity (e) -- 9.4% (continued)
$ 1,845,000 AAA Tom Green County Hospital Authority, TX, Series A,
San Angel, (Escrowed to Maturity with U.S.
Government Securities), 7.875% due 2/1/06 $2,110,219
4,000,000 AAA Washington, GA Wilkes Payroll Development Authority,
(Escrowed to Maturity with U.S. Government
Securities), zero coupon due 12/1/21 600,000
910,000 AAA Weber County, UT Hospital Revenue, St. Benedict's
Hospital, (Escrowed to Maturity with U.S.
Government Securities), 10.00% due 3/1/10 1,178,450
- -------------------------------------------------------------------------------------------------------------
40,278,519
- -------------------------------------------------------------------------------------------------------------
Finance -- 1.5%
1,500,000 A New York State Local Government Assistance
Corporation, Series C, 5.50% due 4/1/17 1,380,000
4,000,000 A Pennsylvania Finance Authority (Beaver County, PA)
Revenue Refunding Bonds, Series 1993,
Municipal Capital Improvement Program,
Societe Generale-GIC, 6.60% due 11/1/09 4,145,000
1,000,000 AAA Philadelphia, PA Municipal Authority Refunding Lease,
Series C, FGIC-Insured, 5.25% due 4/1/18 891,250
- -------------------------------------------------------------------------------------------------------------
6,416,250
- -------------------------------------------------------------------------------------------------------------
General Obligation -- 1.4%
2,000,000 AAA Berks County, PA GO MVRICS, FGIC-Insured, 8.285%
due 11/15/20 (c) 2,185,000
1,500,000 BBB Guam Government GO, Series A, 5.375% due 11/15/13 1,318,125
2,000,000 A- New York City GO, Series D, 7.50% due 2/1/16 2,097,500
500,000 AAA Philadelphia, PA Series B, FGIC-Insured, 6.00%
due 11/15/13 503,125
- -------------------------------------------------------------------------------------------------------------
6,103,750
- -------------------------------------------------------------------------------------------------------------
Hospital -- 12.5%
1,250,000 Baa1* Clarksville, TN Hospital Revenue Refunding &
Improvement, Clarksville Memorial Hospital Project,
6.25% due 7/1/08 1,201,562
2,000,000 BBB Colorado Health Facilities Authority Hospital Revenue
Bonds, Rocky Mountain Adventist Health, Series 1993,
6.625% due 2/1/13 1,910,000
3,500,000 A1* Elkhart County, IN Hospital Authority Revenue, Elkhart
General Hospital Insured, 7.00% due 7/1/12 3,626,875
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Hospital -- 12.5% (continued)
$ 2,065,000 BBB Franklin, PA General Authority Hospital Revenue,
Franklin Regional Medical Center, 10.875%
due 10/1/13 $2,070,163
Harris County, TX Health Facilities Development
Corporation:
2,000,000 A* Memorial Hospital Systems Project,
7.125% due 6/1/15 2,070,000
2,000,000 AA Sisters of Charity of the Incarnate Word,
7.10% due 7/1/21 2,097,500
Illinois Health Facilities Authority Hospital Revenues:
3,500,000 A- Mercy Hospital and Medical Center, 7.00% due 1/1/07 3,635,625
937,000 AAA Community Provider Pooled Loan Program, CGIC-
Insured, 7.35% due 8/15/10 1,006,104
1,000,000 AAA Methodist Health System, Series B, AMBAC-Insured,
RIBS Variable Rate, 9.111% due 5/1/21 (c) 1,095,000
4,000,000 AAA Rush-Presbyterian St. Luke's Medical Center INFLOS,
MBIA-Insured, Variable Rate, 9.26% due 10/1/24 (f) 4,285,000
1,000,000 BBB+ Klamath Falls, OR Inter-Community Hospital Merle
West, 7.10% due 9/1/24 1,027,500
4,510,000 BBB Louisiana Public Facilities Authority Hospital Revenue
Refunding, Touro Infirmary Project, Series B, 6.125%
due 8/15/23 3,777,125
Massachusetts State Health and Education Facilities
Authority Revenue:
1,470,000 AAA Valley Regional Health, Series A, Connie Lee-Insured,
7.00% due 7/1/07 1,639,050
1,000,000 AAA St. Elizabeth Hospital, FSA-Insured, 9.18%
due 8/15/21 (c) 1,085,000
2,000,000 Baa1* Michigan State Hospital Finance Authority Revenue
Refunding, Pontiac Osteopathic, Series A, 6.00%
due 2/1/24 1,632,500
4,835,000 AA Missouri State Health & Educational Facilities Authority,
(BJC Health Systems), 6.75% due 5/15/13 5,221,800
1,635,000 BBB+ New York State Medical Care Facilities Financing Agency
(Long Term Health Care), Medical Health Services,
Series 91B, 7.40% due 2/15/18 1,747,406
1,000,000 A- Philadelphia, PA Hospital and Higher Education
Facilities Authority, Presbyterian Medical Center,
6.65% due 12/1/19 966,250
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Hospital -- 12.5% (continued)
$ 500,000 BBB Puerto Rico Industrial Tourist, Educational, Medical
and Environmental Control Facilities Finance Authority,
(Ryder Memorial Hospital Project), Series A, 6.70%
due 5/1/24 $ 486,875
1,200,000 A* Quincy, IL Hospital Revenue, Blessing Hospital
Refunding, 6.00% due 11/15/18 1,084,500
Rhode Island State Health & Education Building
Corporation Revenue:
1,000,000 BBB+ Westerly Hospital, 6.00% due 7/1/14 878,750
1,500,000 A Miriam Hospital, Series B, 6.60% due 4/1/19 1,473,750
1,250,000 AAA Richland County, SC Hospital Revenue Bonds,
Community Provider Pooled Loan, CGIC-Insured,
7.125% due 7/1/17 1,351,563
2,375,000 AA+ Vermont Educational & Health Building Finance Agency,
H. Porter, FHA-Insured, 7.10% due 2/1/31 2,434,375
1,300,000 AAA Washington State Health, Sisters of Providence, FGIC-
Insured, 6.375% due 10/1/09 1,350,375
1,500,000 A Washington Health Care Facilities Authority Refunding
1990, (Our Lady of Lourdes Health Center, Pasco),
LOC Banque Paribas, 7.875% due 12/1/09 (d) 1,599,375
500,000 AAA Wayne County, PA Hospital and Health Facilities
Authority Guaranteed, Hospital Revenue, Wayne
Memorial Hospital Project, MBIA-Insured, 6.25%
due 7/1/14 509,375
2,420,000 AAA Wisconsin Health & Educational Facilities Authority,
Wheaton Franciscan Services, Inc., System Revenue
Bonds, Series 1992, MBIA-Insured, 6.10%
due 8/15/09 2,462,350
- -------------------------------------------------------------------------------------------------------------
53,725,748
- -------------------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 5.7%
1,170,000 BBB+ Chicago, IL Multi-Family Housing Revenue, FHA-
Insured Mortgage Loan, Jeffrey Apartments, 8.125%
due 8/1/30 (a) 1,213,875
1,500,000 A+ Illinois Housing Development Authority Refunding,
Multi-Family Housing, Series 91A, 8.125% due 7/1/10 1,646,250
Indiana State Housing Finance Authority, Multi-Family
Housing Mortgage Revenue:
1,500,000 AA- Hunters Run, FHA-Insured, 7.25% due 5/1/18 (a) 1,569,375
5,000,000 Aa* FHA-Insured, 7.50% due 12/1/36 (a) 5,318,750
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Housing: Multi-Family -- 5.7% (continued)
$ 1,000,000 A King County, WA Housing Authority Revenue, Series A,
6.80% due 3/1/26 $ 998,750
3,000,000 AAA Louisiana HFA, Multi-Family Housing Revenue Bonds,
Tall Timbers Apartment Project, FHA-Insured,
6.30% due 12/1/34 (a) 2,887,500
1,800,000 AA Louisiana Public Facilities Authority Revenue
Refunding, Multi-Family Housing, Oakleigh
Apartments, Series A, AXA Reinsurance, 5.95%
due 3/15/19 (Mandatory Put 3/15/05) 1,795,500
Massachusetts State Housing Finance Agency, Multi-
Family Residential Housing:
1,995,000 A+ Series A, FHA Section 8, 8.80% due 8/1/21 (a) 2,077,294
2,000,000 A+ FHA-Insured, 7.80% due 8/1/22 (a) 2,082,500
1,985,000 AAA Mohave County, AZ IDA, Multi-Family Housing
Copper Ridge Apartments, FHA-Insured,
7.375% due 4/1/32 (a) 2,099,137
1,255,000 AAA Pennsylvania HFA Refunding Rental Housing, FNMA-
Collateralized, 5.80% due 7/1/18 1,203,231
1,000,000 BBB+ Roanoke, VA Redevelopment and Housing Authority,
Multi-Family Housing Revenue Refunding, United
Dominion-Laurel Ridge, 6.625% due 5/1/23 (a) 1,002,500
500,000 AAA Roswell, GA Housing Authority, Multi-Family Revenue
Refunding, Wood Creek Apartments, FNMA-
Collateralized, 5.70% due 3/1/24 461,875
- -------------------------------------------------------------------------------------------------------------
24,356,537
- -------------------------------------------------------------------------------------------------------------
Housing: Single-Family -- 11.8%
170,000 AAA Adams County, CO Multi-County Single-Family
Mortgage Revenue, GNMA-Collateralized, 9.25%
due 11/1/17 (a) 177,650
Alaska State Housing Finance Corporation:
790,000 AAA GNMA & FNMA Collateralized Home Mortgage,
Single-Family Revenue, 8.75% due 12/1/16 (d) 824,562
1,000,000 AAA 1994 1st Series Veteran Housing, 6.80% due 12/1/36 1,018,750
1,000,000 AAA Allegheny County, PA Residential Mortgage Revenue,
Single-Family Mortgage, FHA-Insured, 6.875%
due 5/1/26 (a) 1,020,000
785,000 AAA Arkansas Housing Development, Single-Family
Mortgage Revenue, Series A, GNMA-Collateralized,
7.40% due 9/1/23 (a) 825,231
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
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National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Housing: Single-Family -- 11.8% (continued)
$ 5,000,000 AAA Aurora Kane & Dupage, IL Single-Family Mortgage
Revenue, Series A, 7.95% due 10/1/25 (a) $5,437,500
1,275,000 Aa* Colorado HFA, Single-Family Program Refunding,
Senior Bonds, 1994 Series D-1, 8.00% due 12/1/24 1,415,250
5,950,000 AAA Cowley & Shawnee Counties Mortgage Revenue,
Series B, AMBAC-Insured, GNMA-Collateralized,
zero coupon due 6/1/22 (a)(d) 728,875
780,000 AAA District of Columbia HFA Collateralized Revenue,
Single-Family GNMA & FHLMC, FNMA Mortgage
Backed, 8.10% due 12/1/23 (a)(d) 824,850
1,541,000 AAA Fort Worth, TX Housing Finance Corp. Single-Family
Mortgage Revenue, GNMA-Collateralized, Series A,
zero coupon due 6/1/21 (a)(d) 194,551
500,000 AAA Fulton County, GA Housing Authority, Single-Family
Mortgage Revenue, Series A, 6.60% due 3/1/28 (a) 498,750
1,820,000 Aa* Idaho Housing Agency, Single-Family Mortgage, Series
C-2, 7.90% due 1/1/22 (a) 1,924,650
1,585,000 Aa* Illinois Housing Development Authority, Residential
Mortgage Revenue, Series 89A, 7.40% due 2/1/20 (a) 1,636,513
2,000,000 AAA Kentucky Housing Corporation, Series B, FHA-Insured,
6.625% due 7/1/26 (a) 2,002,500
1,065,000 A* Labette County, KS Single-Family Mortgage Revenue
Refunding, Series A, 8.40% due 12/1/11 (d) 1,143,544
Maryland State Community Development Administration:
125,000 A* Single-Family Mortgage Revenue, 9.50% due 6/1/07 127,656
2,000,000 Aa* Housing & Community Development, Single-Family,
7.45% due 4/1/32 (a) 2,085,000
685,000 Aaa* Missouri Housing Development Commission Mortgage
Purchase Refunding Bonds, GNMA-Collateralized,
zero coupon due 7/1/23 91,619
4,660,000 AAA Montgomery County, TX Housing Finance Corporation,
Single-Family Mortgage Revenue, MBIA-Insured,
zero coupon due 9/1/15 506,775
Nebraska Investments Finance Authority:
900,000 AAA GNMA-Collateralized, RIBS Variable Rate, 9.507%
due 9/15/23 (a)(c) 963,000
600,000 AAA Single-Family Mortgage Revenue, (GNMA Mortgage
Backed Securities Program), 1990 Series 3, RIBS
Variable Rate, 10.721% due 9/10/30 (a)(c) 678,750
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
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National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Housing: Single-Family -- 11.8% (continued)
$ 4,677,755 AA Nevada HDC, Single-Family Mortgage Revenue, Series
1983 B, FHA-Insured, zero coupon due 4/1/15 $ 631,497
2,000,000 Aa* New Hampshire State HFA, Single-Family Residential
Mortgage, 7.25% due 7/1/15 (a) 2,092,500
Oregon State Housing & Community Services
Department Mortgage Revenue, Single-Family
Mortgage Program:
1,000,000 Aa* Series D, 6.50% due 7/1/24 1,010,000
1,000,000 Aa* Series B, 6.875% due 7/1/28 1,033,750
320,000 A- Panhandle, TX Regional Housing Finance Corporation,
Single-Family Mortgage Revenue, 10.375% due 3/1/09 331,200
Pennsylvania HFA, Single-Family Mortgage Revenue:
2,225,000 AA Series 1990-27, 8.15% due 10/1/21 (a)(d) 2,369,625
475,000 AA Series X, 8.15% due 4/1/24 (a) 495,188
1,000,000 AA Series 39B, 6.875% due 10/1/24 (a) 1,016,250
985,000 AAA Prince Georges County, MD HFA, Single-Family
Mortgage Revenue Refunding, Series A, GNMA-
Collateralized, 8.00% due 1/1/17 1,034,250
7,300,000 A* Reno County, KS Single-Family Mortgage Revenue,
Series A, zero coupon due 12/1/14 821,250
Rhode Island Housing & Mortgage Financing
Corporation:
1,445,000 AA+ Home Ownership I-D, 7.875% due 10/1/21 (a) 1,500,994
1,500,000 AA+ Home Ownership Opportunity Bonds, Series 8,
INFLOS Variable Rate 9.708% due 4/1/24 (a)(c) 1,584,375
762,345 A1* St. Bernard Parish, LA Home Mortgage Authority
Single-Family Mortgage Revenue Refunding,
Series A, 8.00% due 3/25/12 822,379
2,500,000 Aa1* South Dakota Housing Development Authority, Home
Ownership Mortgage Board, Series C, 7.30% due
5/1/24 (a) 2,603,125
1,635,000 Aa* Tennessee Housing Development Authority Home
Ownership Bonds, Series H, 7.825% due 7/1/15 (a) 1,714,706
1,000,000 AAA Travis County, TX Housing Finance Corporation,
Single-Family Mortgage Revenue, Series B,
GNMA/FNMA Collateralized, 7.10% due 10/1/27 (a) 1,035,000
Utah HFA, Single-Family Mortgage Revenue:
1,235,000 AA 7.30% due 7/1/16 1,278,225
1,000,000 AA 9.00% due 1/1/19 (a)(d) 1,028,750
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
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National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Housing: Single-Family -- 11.8% (continued)
$ 3,000,000 Aa1* Virginia State Housing Development Authority,
Commonwealth Mortgage, Series A, 7.15% due 1/1/33 $ 3,120,000
1,005,000 AA Wyoming Community Development Authority,
8.125% due 6/1/21 (a) 1,061,531
- -------------------------------------------------------------------------------------------------------------
50,710,571
- -------------------------------------------------------------------------------------------------------------
Industrial Development -- 5.5%
1,250,000 Baa3* Allegheny County, PA IDR Refunding, Environmental
Improvement, USX Corporation, 6.70% due 12/1/20 1,240,625
1,000,000 A- Bradford, PA IDA, Solid Waste, International Paper
Company Projects, 6.60% due 3/1/19 (a) 998,750
2,750,000 BBB Columbus, MS IDR Refunding Bonds, Series 1994,
Beloit Corporation Project, Harnischfeger Industries,
5.90% due 12/1/11 2,578,125
2,500,000 A+ Greenville County, SC Industrial Revenue, Lockheed
Aeromod Center Inc. Project, 7.10% due 11/1/11 (a) 2,603,125
850,000 AA Hempstead, NY IDA & IDR Bonds, (1990 Nassau
District Energy Corporation Project), LOC Toronto
Dominion, 7.75% due 9/15/15 (a) 884,000
2,650,000 A+ Iowa Finance Authority, Governor Square Project,
7.25% due 4/1/14 2,782,500
2,000,000 NR Mohave, AZ IDR, North Star Stell Company Project,
6.70% due 3/1/20 (a) 1,997,500
1,500,000 Baa3* New York City IDA Special Facilities Revenue, American
Airlines Project, 7.75% due 7/1/19 (a) 1,561,875
1,000,000 AAA Pennsylvania State IDA Revenue Refunding, Economic
Development, AMBAC-Insured, 5.50% due 1/1/14 947,500
2,275,000 Aa* Philadelphia, PA Authority for IDR, River's Edge Project,
Series A, FHA-Insured, 5.75% due 8/1/23 2,078,781
1,000,000 A Rensselaer County, NY IDA, Albany International
Corporation-Insured, 7.55% due 6/1/07 (a) 1,070,000
1,000,000 AAA Sandy City, UT IDR Refunding Bonds, (H. Shirl Wright
Project), Series 1986, Collateralized LOC: Olympus
Bank (U.S. Government Securities), 6.125% due 8/1/16 952,500
1,000,000 A+ Tucson Airport Authority, Inc. Special Facilities Revenue
Bonds, (Lockheed Aeromod Center, Inc.), Series 1990,
8.70% due 9/1/19 (a) 1,132,500
2,000,000 A West Chicago Industrial Development Revenue, Leggett
& Platt Inc. Project, 6.90% due 9/1/24 (a) 2,025,000
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
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National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Industrial Development -- 5.5% (continued)
$ 1,000,000 BBB York County, VA IDR Refunding Bonds, K-Mart Corp.
Project, Series 1993, 5.75% due 12/1/09 $ 888,750
- -------------------------------------------------------------------------------------------------------------
23,741,531
- -------------------------------------------------------------------------------------------------------------
Lease Backed -- 1.3%
3,500,000 A Pendleton County, KY Multi County Lease Revenue,
(KY Association of Counties), Series 93A, 6.50%
due 3/1/19 3,552,500
2,000,000 A+ Salt Lake City, UT Municipal Building Authority Lease
Revenue Refunding, Municipal Improvements Project,
Series A, 6.00% due 10/15/14 1,925,000
- -------------------------------------------------------------------------------------------------------------
5,477,500
- -------------------------------------------------------------------------------------------------------------
Life Care -- 0.9%
2,500,000 BBB Illinois Development Finance Authority Health Facilities,
Community Living, 7.125% due 3/1/10 2,518,750
1,600,000 A1* Rhode Island Health & Educational Building Corporation,
Health Facilities Revenue Bonds, St. Antoine Residence
Issue, Series 93, LOC Allied Irish Bank PLC,
6.75% due 11/15/18 1,592,000
- -------------------------------------------------------------------------------------------------------------
4,110,750
- -------------------------------------------------------------------------------------------------------------
Miscellaneous -- 5.7%
2,280,000 AAA Chicago, IL Motor Fuel Tax Revenue Refunding,
AMBAC-Insured, 5.375% due 1/1/14 2,074,800
4,000,000 BBB- Clarksville, TN National Gas Acquisition Corporation,
Gas Revenue, 7.50% due 11/1/04 4,080,000
1,000,000 Baa* Delaware County, PA Authority Revenue, (Elwyn Inc.
Project), 8.35% due 6/1/15 1,080,000
Illinois Development Finance Authority Revenue
Refunding:
1,000,000 A1* Marriott Retirement Communities Inc. Church Creek
Project, LOC Allied Irish Bank, 7.75% due 8/1/10,
(Mandatory Put 8/1/03) 1,053,750
2,000,000 A- City of East St. Louis, 7.25% due 11/15/09 2,092,500
2,000,000 AAA Illinois State Sales Tax Revenue, Series P,
6.50% due 6/15/13 2,117,500
1,500,000 A Indiana Bond Bank Guaranty State Revolving Fund,
Series B, 6.875% due 2/1/12 1,567,500
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
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National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Miscellaneous -- 5.7% (continued)
$ 1,000,000 Baa1* Indianapolis, IN EDA Revenue Refunding &
Improvement, National Benevolent, 7.625%
due 10/1/22 $ 980,000
1,000,000 AAA La Quinta Redevelopment Agency Tax Allocation,
Area No. 1, 7.30% due 9/1/12 1,148,750
2,000,000 AA Mt. Stearling, KY Lease Revenue League Funding,
Series A, 6.15% due 3/1/13 1,940,000
400,000 A Oregon State Bond Bank, Economic Development
Department, Series 1, 6.70% due 1/1/15 415,500
2,500,000 A- Summit County, CO Sports Facilities Refunding
Revenue, (Keystone Resorts Management Inc.
Project), Ralston Purina Company Guaranteed,
7.75% due 9/1/06 2,781,250
3,000,000 A Texas National Research Lab Community Financing
Corporation Lease Revenue, Series 91, 7.10%
due 12/1/21 3,052,500
- -------------------------------------------------------------------------------------------------------------
24,384,050
- -------------------------------------------------------------------------------------------------------------
Pollution Control -- 6.6%
1,500,000 BBB Brazos River Authority, TX (Texas Utility Electric),
8.25% due 1/1/19 (a) 1,612,500
5,000,000 Aa3* Brazos River, TX Navigation District PCR, BASF,
6.75% due 2/1/10 5,356,250
1,000,000 BBB+ Janesville, WI PCR, (General Motors Corp. Projects),
Series 1984, 5.55% due 4/1/09 910,000
1,500,000 BBB+ Lancaster, PA Solid Waste Resource Recovery,
Series A, 8.50% due 12/15/10 (a) 1,576,875
2,000,000 AAA Matagorda County, TX Navigational District No. 2,
PCR, (Houston Power & Light), Series D, FGIC-
Insured, 7.60% due 10/1/19 (a)(d) 2,157,500
1,500,000 AAA Monroe County, MI Bonds, (The Detroit Edison
Company), FGIC-Insured, 7.65% due 9/1/20 (a) 1,653,750
2,000,000 AA Mount Vernon, IN PCR, (Southern Indiana Gas),
7.25% due 3/1/14 2,150,000
1,500,000 AAA Ohio State Water Development Authority Pollution
Control Facilities Revenue, Cleveland Electric,
Secondary FGIC-Insured, 8.00% due 10/1/23 (a) 1,663,125
3,200,000 Aa2* Petersburg, IN PCR Refunding, Indianapolis Power
& Light, 5.40% due 8/1/17 2,888,000
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Pollution Control -- 6.6% (continued)
$3,440,000 BBB- Port of Corpus Christi, TX IDR Corporation, (Valero
Refining & Marketing Co.), Series A, 10.25%
due 6/1/17 $ 3,809,800
1,945,000 BBB St. Charles Parish, LA PCR, Union Carbide, 7.35%
due 11/1/22 (a) 2,005,781
2,550,000 BBB+ Trumbull County, OH Sewer Disposal Revenue, General
Motors Corp. Project, 6.75% due 7/1/14 (a) 2,664,750
- -------------------------------------------------------------------------------------------------------------
28,448,331
- -------------------------------------------------------------------------------------------------------------
Power -- 3.1%
3,880,000 AAA Clark County, NV IDR, (Nevada Power Co. Project),
Series 1990, FGIC-Insured, 7.80% due 6/1/20 (a) 4,301,950
Georgia Municipal Electric Authority Power Revenue:
2,500,000 A+ Special Obligation Fourth Crossover, Series
Project 1, 6.50% due 1/1/12 2,631,250
1,500,000 AAA Series EE, AMBAC-Insured, 7.25% due 1/1/24 1,751,250
4,250,000 AA Washington Public Power Supply System, (Nuclear
Power Project No. 2), Refunding Bonds, Series
1990 B, 7.00% due 7/1/12 4,451,875
- -------------------------------------------------------------------------------------------------------------
13,136,325
- -------------------------------------------------------------------------------------------------------------
Pre-Refunded(e) -- 8.4%
1,500,000 AAA Chattanooga-Hamilton County, TN Hospital
Authority Revenue, (Escrowed with U.S.
Government Securities to 2/25/00 Call @ 104),
9.257% due 5/25/21 (c) 1,809,375
1,000,000 AAA City of Alton, IL Health Facilities Refunding and
Improvement Revenue Bonds, (Christian Health
Services Development Corporation- Alton Memorial
Hospital), Series 1991 C, FGIC-Insured, (Escrowed
with U.S. Government Securities to 2/15/01 Call
@ 102), 7.20% due 2/15/21 1,120,000
1,500,000 AAA City of Boston, MA Hospital Revenue, (Boston City
Hospital), FHA-Insured Mortgage, Series A,
(Escrowed with U.S. Government Securities to
2/15/00 Call @ 102), 7.625% due 2/15/21 1,706,250
1,500,000 AAA Franklin County, OH Hospital Facilities Refunding &
Improvement Revenue, Series 1990 B, (Riverside
United Methodist Hospital), (Escrowed with U.S.
Government Securities to 5/15/00 Call @ 102),
7.60% due 5/15/20 1,696,875
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Pre-Refunded(e) -- 8.4% (continued)
$4,120,000 AAA Georgia Municipal Electric Authority Power Revenue,
Series P, (Escrowed with U.S. Government
Securities to 1/1/98 Call @ 102), 8.125% due 1/1/20 $4,547,450
1,000,000 AAA Harris County, TX Toll Road Senior Lien Revenue,
(Escrowed with U.S. Government Securities to
8/1/98 Call @ 102), 8.125% due 8/1/15 1,116,250
500,000 AAA Illinois Health Facilities Authority Hospital Revenues,
United Medical Center, (Escrowed with U.S.
Government Securities to 7/1/03 Call @ 100),
8.375% due 7/1/12 600,625
4,000,000 AAA Indiana Health Facilities Financing Authority Hospital
Revenue, (Bartholomew County Hospital Project),
CGIC-Insured, (Escrowed with U.S. Government
Securities to 8/15/00 Call @ 102), 7.75% due 8/15/20 4,560,000
2,000,000 AAA Industrial Development Authority of Fairfax County,
VA Hospital Revenue Bonds, (Fairfax Hospital
System Project), INOVA Health System, RITES Variable
Rate, (Escrowed with U.S. Government Securities to
8/29/01 Call @ 104), 9.257% due 8/29/23 (c) 2,420,000
2,000,000 AAA Louisiana Public Facilities Authority Revenue, (Tulane
University), (Escrowed with U.S. Government
Securities to 5/15/98 Call @ 102), 8.20%
due 5/15/18 2,217,500
1,000,000 AAA Michigan State Hospital Finance Authority Revenue,
Sisters of Mercy, (Escrowed with U.S. Government
Securities to 2/15/01 Call @ 102), 7.50%
due 2/15/18 1,132,500
1,000,000 AAA New York State Dormitory Authority Revenue,
State University Educational Facilities, (Escrowed
with U.S. Government Securities to 5/15/00
Call @ 102), 7.70% due 5/15/12 1,138,750
2,000,000 AAA New York State Local Government Assistance
Corporation, (Escrowed with U.S. Government
Securities to 4/1/01 Call @ 102), 7.50% due 4/1/20 2,285,000
North Carolina Eastern Municipal Power Agency,
Power System Revenue Refunding:
1,000,000 AAA (Escrowed with U.S. Government Securities to
1/1/97 Call @ 100), 4.50% due 1/1/24 817,500
1,310,000 AAA (Escrowed with U.S. Government Securities
to 1/1/22 Call @ 100), 6.00% due 1/1/26 1,308,362
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Pre-Refunded(e) -- 8.4% (continued)
$2,965,000 AAA Utah Associated Municipal Power System Revenue,
(Central St. George Transmission Project), AMBAC-
Insured, (Escrowed with U.S. Government
Securities to 12/1/99 Call @ 101), 7.375% due
12/1/09 (a) $ 3,265,206
2,850,000 AAA Washington County, PA Hospital Authority Revenue,
(Washington Hospital Project), (Escrowed with
U.S. Government Securities to 7/1/97 Call @ 101),
9.50% due 7/1/17 (d) 3,159,938
1,000,000 AAA West Virginia State Water Development Authority,
Water Development Revenue, CGIC-Insured,
(Escrowed with U.S. Government Securities
to 11/1/96 Call @ 102), 8.125% due 11/1/16 1,072,500
- -------------------------------------------------------------------------------------------------------------
35,974,081
- -------------------------------------------------------------------------------------------------------------
Public Facilities -- 4.8%
2,500,000 A De Kalb County, IN Redevelopment Mini-Mill Local
Public Improvement Project, 6.50% due 1/15/14 2,371,875
3,750,000 AA- George L. Smith II Georgia World Congress Authority
Revenue Bonds, (Domed Stadium Project), Series
1990, LOC Industrial Bank of Japan, 7.875%
due 7/1/20 (a) 4,017,188
Indianapolis, IN Local Public Improvement Bond Bank:
3,000,000 AA Series B, 6.00% due 1/1/13 2,992,500
3,685,000 A+ Series 1992 D, 6.75% due 2/1/14 3,896,887
1,095,000 BBB- Portland, TX Community Center Sales Tax Gross
Revenue, 7.00% due 2/15/25 1,056,675
2,000,000 Baa1* Triborough Bridge & Tunnel Authority, NY, (Convention
Center Project), Series E, 7.25% due 1/1/10 2,190,000
3,960,000 A Tulsa, OK Public Facilities Authority Lease Payment
Revenue Refunding -- Assembly Center, 6.60%
due 7/1/14 4,138,200
- -------------------------------------------------------------------------------------------------------------
20,663,325
- -------------------------------------------------------------------------------------------------------------
Short-Term (b) -- 1.2%
2,100,000 VMIG 1* Maricopa County, AZ (Samaritan Hospital), LOC
Bank of America, 4.20% due 12/1/08 2,100,000
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Short-Term (b) -- 1.2% (continued)
$3,000,000 VMIG 1* North Central Texas Health Facilities Development
Corporation Revenue, Presbyterian Medical Center,
Series D, 4.40% due 12/1/15 $ 3,000,000
- -------------------------------------------------------------------------------------------------------------
5,100,000
- -------------------------------------------------------------------------------------------------------------
Solid Waste -- 2.0%
1,000,000 A Lancaster County, PA Solid Waste Management
Authority, Resource Recovery System Revenue
Landfill, 7.875% due 12/15/09 1,033,750
1,150,000 A New Morgan, PA Industrial Development Authority,
Solid Waste Disposal, New Morgan Landfill
Company Inc. Project, Browning Ferris, 6.50%
due 4/1/19 (a) 1,138,500
1,850,000 A1* Richland County, SC Solid Waste Disposal Facilities
Revenue, (Union Camp Corporation Project),
Series B, Union Camp, 7.125% due 9/1/21 (a) 1,935,563
1,130,000 A- Southwestern, IL Development Authority Solid Waste
Disposal Revenue, (Laclede Steel Company
Project), 8.50% due 8/1/20 (a) 1,238,762
3,200,000 BBB Sweetwater County, WY Solid Waste Disposal
Revenue Bonds (FMC Corporation Project),
Series 1994 A, 7.00% due 6/1/24 (a) 3,212,000
- -------------------------------------------------------------------------------------------------------------
8,558,575
- -------------------------------------------------------------------------------------------------------------
Tax Allocation -- 0.5%
2,250,000 A Salt Lake City, UT Redevelopment Agency Tax
Increment, Series A, 5.80% due 3/1/15 2,050,313
- -------------------------------------------------------------------------------------------------------------
Transportation -- 6.6%
3,000,000 Baa2* Alliance Airport Authority Incorporated, TX Special
Facilities Revenue, (American Airlines
Incorporated Project), 7.50% due 12/1/29 (a) 3,048,750
500,000 AAA Atlanta, GA Airport Facilities Revenue Refunding,
Series B, AMBAC-Insured, 6.00% due 1/1/21 (a) 486,875
2,000,000 Baa2* Chicago, IL O'Hare International Airport Special
Facility Revenue International Terminal,
Series 1985A, American Airline Program,
7.875% due 11/1/25 (a) 2,075,000
City and County of Denver, CO Airport Systems
Revenue:
3,500,000 Baa* Series 1992B, 7.25% due 11/15/07 (a) 3,535,000
1,000,000 Baa* Series 1990A, 8.50% due 11/15/23 (a) 1,080,000
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Transportation -- 6.6% (continued)
$2,725,000 Baa1* Metropolitan Transit Authority, New York Service
Contract, Transportation Facilities, Series O, 5.75%
due 7/1/08 $ 2,595,562
New Hampshire State Turnpike Systems Revenue
Refunding:
2,500,000 AAA FGIC-Insured, 6.75% due 11/1/11 2,690,625
1,000,000 AAA Series C, 9.181% due 11/1/17 (c) 1,123,750
1,350,000 AAA New Jersey State Turnpike Authority Revenue
Refunding, 10.375% due 1/1/03 1,641,938
3,000,000 AAA Port Everglades, FL Port Improvement Authority,
7.125% due 11/1/16 3,521,250
Regional Transit Authority, Illinois:
2,000,000 AAA Series A, AMBAC-Insured, 6.40% due 6/1/12 2,087,500
1,045,000 AAA Series C, FGIC-Insured, 7.75% due 6/1/20 1,274,900
3,240,000 AAA Rhode Island Port Authority & Economic
Development, Shepard Building, 6.75% due 6/1/25 3,397,950
- -------------------------------------------------------------------------------------------------------------
28,559,100
- -------------------------------------------------------------------------------------------------------------
Utilities -- 3.7%
2,000,000 AAA Austin, TX Utility System Revenue Refunding, FGIC-
Insured, 5.75% due 5/15/24 1,895,000
3,000,000 AAA Brownsville, TX Utility System Revenue Priority
Refunding, MBIA-Insured, 6.25% due 9/1/14 3,108,750
950,000 Aa* Hogansville, GA Combined Public Utility Systems,
Asset Guaranty, 5.85% due 10/1/15 894,187
1,000,000 Aa3* New York State Energy Research & Development,
Con Edison Project A, 7.125% due 12/1/29 (a) 1,063,750
5,000,000 A North Carolina Eastern Muni Power Agency
System Revenue, Series B, 6.00% due 1/1/22 4,637,500
3,000,000 AA Oklahoma City Industrial and Cultural Facility Trust
District Heating and Cooling Revenue Bonds,
Series 92, Trigen-Oklahoma District Energy
Corporation, LOC Societe Generale, 6.75%
due 9/15/17 (a) 2,966,250
1,250,000 Baa1* Philadelphia, PA Gas Works Revenue, 6.375%
due 7/1/26 1,221,875
- -------------------------------------------------------------------------------------------------------------
15,787,312
- -------------------------------------------------------------------------------------------------------------
Water & Sewer -- 2.5%
2,400,000 A Dauphin County, PA IDA, General Water Works
Corp.-Insured, 6.90% due 6/1/24 (a) 2,529,000
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=============================================================================================================
<C> <C> <S> <C>
Water & Sewer -- 2.5% (continued)
$2,000,000 A- Idaho State Water Resources Board, Water
Revenue, Resource Development, Borse Water
Corporation, 7.25% due 12/1/21 (a) $ 2,110,000
1,000,000 A New Jersey State EDA Sewer Facility, Atlantic City
Sewer, 7.25% due 12/1/11 1,072,500
3,400,000 Aa1* Port of Umatilla Water Project Revenue, Series
1994, (LOC ABN AMRO Bank), 6.65% due 8/1/22 (a) 3,489,250
1,350,000 A+ Portland, OR Sewer System Revenue Bonds,
Series 1994 A, 6.25% due 6/1/15 1,373,625
- -------------------------------------------------------------------------------------------------------------
10,574,375
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--100%
(Cost--$411,736,803)(f) $429,375,356
=============================================================================================================
</TABLE>
(a) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(c) Residual interest bonds-coupon varies inversely with level of short-term
tax-exempt interest rates.
(d) Securities segregated by Custodian for open purchase commitment.
(e) Pre-refunded bonds escrowed by U.S. Government Securities and bonds escrowed
to maturity by U.S. Government Securities are considered by manager to be
triple-A rated even if issuer has not applied for new ratings.
(f) The cost for Federal income tax purposes is substantially the same.
See pages 24-25 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
23
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation, except those identified by an
asterisk (*) are rated by Moody's Investors Services. The definitions of the
applicable rating symbols are set forth below:
Standard & Poor's -- Rating from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issue only in a small
degree.
A -- Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB -- Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic
rating from "Aa" to "Baa", where 1 is the highest and 3 the lowest
ranking within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
NR -- Indicates that the bond is not rated by Standard & Poor's
Corporation or Moody's Investors Services.
24
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Short-Term Securities Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rate rating indicating very strong or
strong capacity to pay principal and interest; those issues
determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- (VRDO)
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABA -- Association of Bay Area Governors
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance
Company
CHFCLI -- California Health Facility
Construction Loan Insurance
COP -- Certificate of Participation
EDA -- Economic Development Authority
ETM -- Escrowed To Maturity
FAIRS -- 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 -- Federal Savings Association
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
INFLOS -- Inverse Floaters
ISD -- Independent School District
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
PSF -- Permanent School Fund
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation
Notes
SYCC -- Structured Yield Curve Certificate
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
25
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at value (Cost - $411,736,803) $429,375,356
Cash 6,968
Receivable for securities sold 772,834
Receivable for Fund shares sold 328,671
Interest receivable 7,604,207
Other assets 21,192
- --------------------------------------------------------------------------------
Total Assets 438,109,228
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 10,358,192
Payable for Fund shares purchased 499,216
Distribution costs payable 221,034
Management fees payable 163,177
- --------------------------------------------------------------------------------
Total Liabilities 11,241,619
- --------------------------------------------------------------------------------
Total Net Assets $426,867,609
================================================================================
NET ASSETS:
Par value of capital shares $ 32,044
Capital paid in excess of par value 415,108,183
Accumulated net realized loss on security transactions (5,911,171)
Net unrealized appreciation of investments 17,638,553
- --------------------------------------------------------------------------------
Total Net Assets $426,867,609
================================================================================
Shares Outstanding:
Class A 30,129,720
----------------------------------------------------------------------------
Class B 517,830
----------------------------------------------------------------------------
Class C 1,396,521
----------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $13.32
----------------------------------------------------------------------------
Class B* $13.33
----------------------------------------------------------------------------
Class C** $13.32
----------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.17% of net asset value per share) $13.88
================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed less than one year from initial purchase. This CDSC declines by
an additional 0.50% the first year after purchase and then by 1.00% per year
thereafter until no CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by 1.00% if shares are
redeemed within the first year of purchase.
See Notes to Financial Statements.
26
<PAGE>
Smith Barney Muni Funds
National Portfolio
- -------------------------------------------------------------------------------
Statement of Operations For the Year Ended March 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest income $29,547,921
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 1,918,961
Distribution costs (Note 3) 445,168
Registration fees 100,849
Shareholder servicing agent fees 87,830
Shareholder communications fees 55,848
Custodian fees 48,501
Pricing service fees 33,602
Audit and legal fees 14,001
Trustees' fees 10,001
Other 1,001
- -------------------------------------------------------------------------------
Total Expenses 2,715,762
- -------------------------------------------------------------------------------
Net Investment Income 26,832,159
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 235,999,421
Cost of securities sold 241,093,239
- -------------------------------------------------------------------------------
Net Realized Loss (5,093,818)
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 12,998,032
End of year 17,638,553
- -------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 4,640,521
- -------------------------------------------------------------------------------
Net Loss on Investments (453,297)
- -------------------------------------------------------------------------------
Increase In Net Assets From Operations $26,378,862
===============================================================================
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
===============================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 26,832,159 $ 26,543,715
Net realized gain (loss) from security transactions (5,093,818) 1,331,232
Increase (decrease) in net unrealized appreciation
of investments 4,640,521 (15,789,551)
- -------------------------------------------------------------------------------
Increase In Net Assets From Operations 26,378,862 12,085,396
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (27,215,082) (26,801,766)
Net realized gain from security transactions (52,488) (1,870,485)
- -------------------------------------------------------------------------------
Decrease In Net Assets From
Distributions To Shareholders (27,267,570) (28,672,251)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 110,670,640 162,072,680
Net asset value of shares issued for reinvestment
of dividends and distributions 13,437,809 14,689,381
Cost of shares reacquired (136,182,090) (111,469,981)
- -------------------------------------------------------------------------------
Increase (Decrease) In Net Assets From
Fund Share Transactions (12,073,641) 65,292,080
- -------------------------------------------------------------------------------
Increase (Decrease) In Net Assets (12,962,349) 48,705,225
NET ASSETS:
Beginning of year 439,829,958 391,124,733
- -------------------------------------------------------------------------------
End of year* $426,867,609 $439,829,958
===============================================================================
*Includes undistributed net investment income of: -- $370,374
===============================================================================
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The National Portfolio ("Portfolio") is a separate investment portfolio of
the Smith Barney Muni Funds ("Fund"). The Fund is a Massachusetts business trust
registered under the Investment Company Act of 1940, as amended, as a non-
diversified, open-end management investment company and consists of this
Portfolio and twelve other separate investment portfolios: California, Florida,
Georgia, Limited Term, New Jersey, New York, Ohio, Pennsylvania, California
Limited Term, Florida Limited Term, California Money Market and New York Money
Market Portfolios. The financial statements and financial highlights for the
other portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolio
are: (a) security transactions are accounted for on the trade date; (b)
securities are valued at bid 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; short-term securities maturing within 60 days
are valued at cost plus (minus) accreted discount (amortized premium), if any,
which approximates value; (c) gains or losses on the sale of securities are
calculated by using the specific identification method; (d) interest income,
adjusted for amortization of premiums and accretion of original issue discount,
is recorded on the accrual basis; market discount is recognized upon the
disposition of the security; (e) direct expenses are charged to each portfolio
and each class; management fee and general fund expenses are allocated on the
basis of relative net assets; (f) the Fund intends to comply with the
requirements of the Internal Revenue Code pertaining to regulated investment
companies and to make the required distributions to shareholders; therefore, no
provision for Federal income taxes has been made; (g) during 1995, the Fund
adopted Statement of Position 93-2 Determination, Disclosure, and Financial
-------------------------------------------------------------------
Statement Presentation of Income, Capital Gain, and Return of Capital
- ---------------------------------------------------------------------
Distributions by Investment Companies. Accordingly, the net investment loss of
- --------------------------------------
$12,549 at March 31, 1995 has been reclassified to paid-in capital. Net
investment income, net realized gains, and net assets were not affected by this
change; and (h) certain prior year numbers have been restated to reflect current
year's presentation. Net investment income, net realized gains, and net assets
were not affected by this change.
2. Exempt-Interest Dividends and Other Distributions
The Portfolio intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from Federal income tax and
29
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
from designated state income taxes, to retain such tax-exempt status when
distributed to the shareholders of the Portfolio.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually. At March 31, 1995 the National Portfolio
had a net capital loss carryover of $5,911,171 (expiring March 31, 2003)
available to offset future capital gains. To the extent that this carryover loss
is used to offset capital gains it is probable that any gains so offset will not
be distributed.
3. Management Agreements and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management, Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager to the Fund. The
National Portfolio pays SBMFM a management fee calculated at the annual rate of
0.45% of the average daily net assets. Such fee is calculated daily and paid
monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. SB advised the Fund that it received sales charges of approximately
$634,554 (paid by purchasers of the Portfolio's Class A shares) for the year
ended March 31, 1995. All officers and two Trustees of the Fund are employees of
SB.
Effective November 7, 1994, the Fund adopted a new class structure,
renaming Class B shares as Class C shares, and exchanging the former Class C
shares into Class A shares. Under the new class structure, for the National
Portfolio, a contingent deferred sales charge ("CDSC") of 4.50% is imposed on
Class B shares if redemption occurs less than one year from initial purchase.
This CDSC declines by 0.50% the first year after purchase and by 1.00% per year
thereafter until no CDSC is incurred. A CDSC of 1.00% is also imposed on Class C
shares if redemption occurs less than one year from initial purchase. Any CDSC
imposed on redemptions is paid to SB. For the year ended March 31, 1995, there
were approximately $23,371 in such charges.
On September 16, 1994, a new Distribution Plan was approved by the Fund's
shareholders. Pursuant to this Distribution Plan, the National Portfolio pays a
service fee of 0.15% with respect to their Class A, B and C shares. In addition,
the Portfolio pays a distribution fee of 0.50% and 0.55% with respect to its
Class B and C shares, respectively. These fees are calculated annually on the
average daily net assets of each respective class of shares.
30
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
4. Investments
During the year ended March 31, 1995, the aggregate cost of purchases and
proceeds from sales (including maturities, but excluding short-term securities)
of investments were as follows:
<TABLE>
================================================================================
<S> <C>
Purchases $228,306,499
- --------------------------------------------------------------------------------
Sales 235,999,421
================================================================================
</TABLE>
At March 31, 1995, the gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $20,300,625
Gross unrealized depreciation (2,662,072)
- --------------------------------------------------------------------------------
Net unrealized appreciation $17,638,553
================================================================================
</TABLE>
5. Capital Shares
At March 31, 1995, there were an unlimited amount of shares of $.001 par
value capital stock authorized. The Fund has established multiple classes of
shares within each Portfolio of the Fund. Each share of a class represents an
identical interest in the Portfolio and has the same rights, except that each
class bears certain expenses specifically related to the distribution of its
shares. At March 31, 1995, total paid-in capital amounted to the following for
each class:
<TABLE>
<CAPTION>
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Total Paid-in Capital $389,024,117 $6,461,713 $19,654,397
================================================================================
</TABLE>
31
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1995 March 31, 1994
------------------------ ------------------------
Shares Amount Shares Amount
======================================================================================
<S> <C> <C> <C> <C>
Class A*
Shares sold 7,504,759 $ 97,563,455 9,919,619 $ 139,734,664
Shares issued on reinvestment 966,818 12,589,740 992,724 13,977,540
Shares redeemed (9,937,436) (129,217,695) (7,708,944) (108,674,396)
- --------------------------------------------------------------------------------------
Net Increase (Decrease) (1,465,859) $ (19,064,500) 3,203,399 $ 45,037,808
======================================================================================
Class B +
Shares sold 529,056 $ 6,600,141 -- --
Shares issued on reinvestment 7,222 93,836 -- --
Shares redeemed (18,448) (237,885) -- --
- --------------------------------------------------------------------------------------
Net Increase 517,830 $ 6,456,092 -- --
======================================================================================
Class C ++
Shares sold 497,598 $ 6,507,044 1,042,061 $ 14,725,787
Shares issued on reinvestment 57,948 754,233 35,065 493,458
Shares redeemed (522,970) (6,726,510) (128,849) (1,812,369)
- --------------------------------------------------------------------------------------
Net Increase 32,576 $ 534,767 948,277 $ 13,406,876
======================================================================================
</TABLE>
* On October 10, 1994 the former Class C shares were exchanged into Class A
shares; therefore the Class C share activity for the period from April 1,
1994 to October 9, 1994 is included with the Class A share activity. The year
ended March 31, 1994 includes only Class A share activity.
+ For the period from November 7, 1994 (inception date) to March 31, 1995.
++ On November 7, 1994 the former Class B shares were renamed Class C shares.
32
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares (a) 1995 1994 1993 1992 1991
====================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.35 $13.81 $12.95 $12.49 $12.24
- ------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.82 0.85 0.88 0.90 0.91
Net realized and unrealized gain (loss)
on investments (0.01) (0.39) 0.87 0.46 0.17
- ------------------------------------------------------------------------------------
Total Income from Investment Operations 0.81 0.46 1.75 1.36 1.08
- ------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.84) (0.86) (0.89) (0.90) (0.83)
Distributions from net realized gains
on security transactions -- (0.06) -- -- --
- ------------------------------------------------------------------------------------
Total Distributions (0.84) (0.92) (0.89) (0.90) (0.83)
- ------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.32 $13.35 $13.81 $12.95 $12.49
- ------------------------------------------------------------------------------------
Total Return 6.38% 3.17% 13.96% 11.21% 9.13%
- ------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $401,364 $412,681 $382,875 $260,718 $199,672
- ------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.60% 0.52% 0.53% 0.50% 0.39%
Net investment income 6.30 6.05 6.58 6.88 7.40
- ------------------------------------------------------------------------------------
Portfolio Turnover Rate 54.16% 42.33% 52.73% 95.29% 102.96%
====================================================================================
<CAPTION>
Class B Shares 1995(b)
====================================================================================
<S> <C>
Net Asset Value, Beginning of Year $12.41
- ------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.33
Net realized and unrealized gain
on investments 0.91
- ------------------------------------------------------------------------------------
Total Income from Investment Operations 1.24
- ------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.32)
Distributions from net realized gains
on security transactions --
- ------------------------------------------------------------------------------------
Total Distributions (0.32)
- ------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.33
- ------------------------------------------------------------------------------------
Total Return 10.11%++
- ------------------------------------------------------------------------------------
Net Assets, End of Year (000S) $6,905
- ------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.19%+
Net investment income 5.75+
- ------------------------------------------------------------------------------------
Portfolio Turnover Rate 54.16%
====================================================================================
</TABLE>
(a) On October 10, 1994 the former Class C shares were exchanged into Class
A shares.
(b) For the period from November 7, 1994 (inception date) to March 31, 1995.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
33
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class C Shares (a) 1995 1994 1993(b)
=====================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $13.33 $13.80 $13.47
- -----------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.74 0.76 0.22
Net realized and unrealized gain (loss) on investments (0.01) (0.40) 0.31
- -----------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.73 0.36 0.53
- -----------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.74) (0.77) (0.20)
Distributions from net realized gains on security transactions -- (0.06) --
- -----------------------------------------------------------------------------------------------------
Total Distributions (0.74) (0.83) (0.20)
- -----------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.32 $13.33 $13.80
- -----------------------------------------------------------------------------------------------------
Total Return 5.80% 2.40% 3.98%++
- -----------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $18,599 $18,185 $5,738
- -----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.23% 1.22% 1.20%+
Net investment income 5.69 5.29 5.68+
- -----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 54.16% 42.33% 52.73%
=====================================================================================================
</TABLE>
(a) On November 7, 1994 the former Class B shares were renamed Class C shares.
(b) For the period from January 5, 1993 (inception date) to March 31, 1993.
++ Not annualized, as the result may not be representative of the total return
for the year.
+ Annualized.
34
<PAGE>
Smith Barney Muni Funds
National Portfolio
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of the
National Portfolio of Smith Barney Muni Funds:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the National Portfolio of Smith Barney
Muni Funds as of March 31, 1995, the related statement of operations for the
year then ended, the statements of changes in net assets for each of the years
in the two-year period then ended and the financial highlights for each of the
years in the five-year period then ended. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of March 31, 1995, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
National Portfolio of Smith Barney Muni Funds as of March 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended and the financial highlights
for each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
May 8, 1995
35
<PAGE>
SMITH BARNEY
- ------------
A Member of Travelers Group [LOGO APPEARS HERE]
Smith Barney
Muni Funds
Trustees
Jessica M. Bibliowicz
Ralph D. Creasman
Joseph H. Fleiss
Donald R. Foley
Paul Hardin
Francis P.Martin, M.D.
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
C. Richard Youngdahl
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Daniel Malone
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder
Servicing Agent
The Shareholder Services Group, Inc
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds National Portfolio. It is not authorized for
distribution to prospective investors unless accompanied or preceded by a
current Prospectus for the Portfolio, which contains information concerning the
Portfolio's investment policies and expenses as well as other pertinent
information.
Smith Barney Muni Funds
388 Greenwich Street
New York, New York 10013
FD2304 E5 82107
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
1995
1995
1995 [ARTWORK APPEARS HERE]
1995
1995
Smith Barney
Muni Funds
Limited Term
Portfolio
------------------------------------------------
March 31, 1995
[LOGO APPEARS HERE] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- ----------------------
LIMITED TERM PORTFOLIO
- ----------------------
Dear Shareholder:
We are pleased to present the annual report and audited financial statements for
Smith Barney Muni Funds: Limited Term Portfolio for the fiscal year ended
March 31, 1995.
Municipal bond prices posted extremely strong gains in the first quarter of
1995, erasing most of the losses from last year's turbulent market. The Limited
Term Portfolio had a total return of 5.69% (Class A shares) for the fiscal year.
This return compared favorably with the 5.59% average total return for all
intermediate-term municipal bond funds over the same period, as reported by
Lipper Analytical Services.
Over the past five years ended March 31, 1995, the Portfolio produced a
cumulative total return of 40.61%. It should be noted that this longer-term
performance has been achieved without the necessity for any capital-gains
distributions, an important consideration for investors interested in after-tax
income.
Market and Economic Overview
Since our last report to you in November, the fixed-income markets, and
municipal bonds in particular, have enjoyed a powerful rally. Municipal bond
yields have declined more than a full percentage point, as evidenced by the drop
in the average yield on Moody's 10-Year AA Muni Bond Index from a high of 6.53%
on November 18, 1994 to 5.33% on March 31, 1995. This was substantially better
than the performance of the 10-year Treasury, which experienced a decline in
yield of 80 basis points from 8.13% to 7.20% during the same time frame.
The vastly improved bond markets reflect a growing consensus that inflation will
remain under control, and the Federal Reserve Board will be successful in
engineering a "soft landing" by slowing the economy down to a more sustainable,
non-inflationary rate of growth. The seven increases in the federal funds rate
(the rate banks charge each other for overnight loans), orchestrated by the Fed
since February 1994, appear to be slowing the pace of economic growth. Recent
economic reports show a slower rate of increase in employment, producer prices,
and retail sales. Industrial production and capacity utilization were also lower
than expected, signalling a possible slowdown in the country's strong
manufacturing sector. These generally favorable economic fundamentals are more
than offsetting concerns about the substantial decline in the value of the
dollar relative to the Japanese yen and German mark on the foreign exchange
markets.
1
<PAGE>
Late in April, several tax-reform proposals which recommend a flat federal
income tax rate began to receive increased attention in the national financial
press and from municipal bond market participants. Adoption of a flat tax would
diminish the advantages of tax exemption for municipal bonds. Although the
various plans being circulated are only proposals, the publicity surrounding
them has recently caused some investors to back away from the municipal bond
market. In our opinion it is much too early in the process to predict what
changes in the tax laws, if any, will actually take place, but tax-reform will
certainly be a major topic of political debate over the next few years. Many
observers believe that the more radical proposals for changes in the way taxes
are collected have little chance for enactment.
Absent these tax-reform concerns, municipals would probably continue to be
strong performers relative to Treasuries and other taxable investments due to
the low supply of new issues. Not only did last year's spike in interest rates
sharply reduce refinancing activity in the municipal market, but voter pressure
on states and municipalities to rein in spending and cut taxes, or at least
avoid tax increases, has also resulted in a roughly 30% decline in new money
financing. In addition, the universe of existing municipal bonds is shrinking.
In 1995, an estimated $230 billion of older, high-coupon issues will mature or
be called as they reach their first optional call dates. With estimates of new-
issue volume at less than $150 billion, the net reduction in municipal debt
outstanding could approach $100 billion this year, contracting the market by
about eight percent. Ordinarily, a reduction in supply of this magnitude would
be expected to provide a powerful boost for municipal bond values as it did
earlier this year. Uncertainties about various tax proposals, however, will
probably keep municipals from trading any better than their normal relationship
to taxable investment alternatives.
Portfolio Strategy and Outlook
While we have a generally positive outlook for the fixed-income markets, the
size of the rally we have experienced so far would seem to leave little room for
disappointment, and any sign of a rebound in economic activity is likely to
result in a return to higher interest rates. We also believe that the unique
supply and demand characteristics of the municipal market and tax-reform
uncertainties will tend to exaggerate price swings relative to taxable
investments.
In light of this viewpoint, we are taking a more cautious approach to
structuring the interest-rate sensitivity of the Portfolio. Relative stability
of principal is a key element of this fund, which is positioned in the short end
of the five- to 10-year intermediate maturity range. In this regard, we are
placing emphasis on higher coupon issues trading at a premium to their face
value. Such bonds will decline less in price than current coupon or market
discount
2
<PAGE>
bonds should the economy rebound and cause a rise in interest rates. In
addition, the maturities of these holdings are effectively shorter than their
stated maturity date, which serves to further reduce the Portfolio's interest-
rate sensitivity. Examples of such issues are bonds priced to a call date
earlier than maturity, bonds with sinking funds designed to retire a portion of
the issue prior to maturity, and housing bonds that are subject to early call
from prepayments on mortgages. We believe that positioning the Portfolio in this
manner is the best way to achieve our objective of the highest tax-free income
consistent with prudent investment risk.
We thank you for your investment in the Portfolio and your continued confidence
in our investment management.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman and Vice President and
Chief Executive Officer Investment Officer
April 28, 1995
3
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Historical Performance - Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
=======================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $6.55 $6.54 $0.37 $0.00 5.69%
- ---------------------------------------------------------------------------------------
3/31/94 6.68 6.55 0.37 0.00 3.65
- ---------------------------------------------------------------------------------------
3/31/93 6.45 6.68 0.39 0.00 9.82
- ---------------------------------------------------------------------------------------
3/31/92 6.38 6.45 0.42 0.00 7.99
- ---------------------------------------------------------------------------------------
3/31/91 6.28 6.38 0.40 0.00 8.23
- ---------------------------------------------------------------------------------------
3/31/90 6.20 6.28 0.46 0.00 9.07
- ---------------------------------------------------------------------------------------
Inception* - 3/31/89 6.25 6.20 0.13 0.00 1.09
=======================================================================================
Total $2.54 $0.00
=======================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class C Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
=======================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $6.54 $6.54 $0.35 $0.00 5.51%
- ---------------------------------------------------------------------------------------
3/31/94 6.68 6.54 0.35 0.00 3.15
- ---------------------------------------------------------------------------------------
Inception* - 3/31/93 6.62 6.68 0.09 0.00 2.28
=======================================================================================
Total $0.79 $0.00
=======================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly
and capital gains, if any, annually.
4
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
-------------------------
Class A Class C
================================================================================
<S> <C> <C>
Year Ended 3/31/95 5.69% 5.51%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/95 7.05 N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/95 7.16 4.92
- --------------------------------------------------------------------------------
With Sales Charge/(2)/
-------------------------
Class A Class C
================================================================================
Year Ended 3/31/95 3.64% 4.51%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/95 6.62 N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/95 6.82 4.92
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
-------------------------
<S> <C>
Class A (Inception* through 3/31/95) 55.03%
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/95) 11.32
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at
net asset value and does not reflect deduction of the applicable sales
charge with respect to Class A shares or the applicable contingent deferred
sales charges ("CDSC") with respect to Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at
net asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 2.00% and Class C shares reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed less than
one year from initial purchase.
* Inception dates for Class A and C shares are November 28, 1988 and January 5,
1993, respectively.
5
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the Limited Term Portfolio vs.
Lehman 5 Year Bond Index and Lehman Long Bond Index/+/
(unaudited)
- --------------------------------------------------------------------------------
November 1988 - March 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
54962 Limited Term Portfolio
Lehman Long\rBond Index Lehman 5 Year\rBond Index Limited Term
<S> <C> <C> <C>
11/28/88 10000 10000 9796.24
Mar-89 10100 10023.99 9899.7
Mar-90 11199.58 10994.09 10781.32
Mar-91 12071.42 12021.99 11653.54
Mar-92 13439.83 13046.06 12567.94
Mar-93 15402.35 14394.9 13785.75
Mar-94 15574.13 14821.36 14273.46
Mar-95 16980.37 15666.58 15075.9
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on November 28, 1988, assuming deduction of the maximum 2.00% sales charge at
the time of investment and reinvestment of dividends (after deduction of
applicable sales charges) and capital gains (at net asset value) through March
31, 1995. The Indices are unmanaged and are not subject to the same management
and trading expenses of a mutual fund. The performance of the Portfolio's
other classes may be greater or less than the Class A shares performance
indicated on this chart, depending on whether greater or lesser sales charges
and fees were incurred by shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
values may be more or less than the original cost. No adjustment has been made
for shareholder tax liability on dividends or capital gains.
6
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Education -- 13.8%
$2,825,000 A* Arizona Education Loan Marketing Corp., Education
Loan Revenue Bonds, 7.00% due 3/1/02(a) $2,987,438
3,000,000 A* Arkansas State Student Loan Authority Revenue,
Sub Series A-2, 6.125% due 12/1/00(a) 3,037,500
1,000,000 Aa* Brazos, TX Higher Education Authority, Series C-1,
6.00% due 11/1/99(a) 1,013,750
Colorado Student Obligation Board Authority,
Student Loan Revenue:
1,350,000 A* Series A-1, 6.60% due 9/1/98 1,400,625
355,000 A* Series A, 6.625% due 6/1/99 369,644
Idaho Student Loan Fund Marketing Association Inc.,
Student Loan Revenue Refunding:
1,000,000 Aaa* 6.40% due 4/1/99 1,002,500
955,000 Aaa* 6.00% due 4/1/00(a) 958,581
1,000,000 A+ Illinois Student Assistance Commission,
Student Loan Revenue, Series H, 6.10% due 3/1/01(a) 1,012,500
1,500,000 AAA Indiana Bond Bank, Pike Township Metropolitan
School District, AMBAC-Insured, 5.80% due 2/1/08 1,496,250
1,000,000 A* Kentucky Higher Education Student Loan Corp.,
Insured Student Loan Revenue, Series 91B,
6.50% due 12/1/00(a) 1,032,500
230,000 AAA Louisiana Public Facilities Authority, Revenue
Supplemental Student Loan B, AMBAC-Insured,
8.125% due 12/1/99 258,462
Montana State Higher Education Student Assistance
Corp., Student Loan Revenue:
1,345,000 A* Series 92B, 5.80% due 12/1/95(a) 1,355,088
1,515,000 A Series 92B, 7.05% due 6/1/04(a) 1,602,112
4,000,000 A1* New England Education Loan Marketing Corp.,
MA Student Loan Revenue Refunding, Series F,
5.625% due 7/1/04(a) 3,915,000
1,475,000 AAA North Texas Higher Education Authority Inc.,
Student Loan Revenue, AMBAC-Insured,
7.00% due 4/1/01(a) 1,532,156
2,000,000 AAA Pennsylvania State Higher Education Assistance
Agency, Student Loan Revenue Refunding, Series A,
FGIC-Insured, 6.80% due 12/1/00 2,100,000
1,500,000 A* Rhode Island Student Loan Authority Revenue
Refunding, Series 92B, 6.75% due 12/1/01(a) 1,578,750
750,000 A South Dakota Student Loan Assistance Corp.,
Student Loan Revenue, 7.35% due 8/1/98(a) 784,687
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Education -- 13.8% (continued)
$1,000,000 AA State of Texas College Student Loan Bonds, Series 1991,
zero coupon due 2/1/01(a) $ 730,000
1,500,000 AAA Schuykill County, PA Redevelopment Authority Lease
Revenue, FGIC-Insured, Series 91A, 6.85% due 6/1/03 1,642,500
810,000 A* Texas State Higher Education Coordinating Board,
College Student Loan Revenue, 6.80% due 4/1/98(a) 841,388
Utah State School District Co-op Revenue Financing
Pool, LOC Swiss Bank:
875,000 AAA 8.30% due 2/15/98 930,781
945,000 AAA 8.30% due 2/15/00 1,025,325
2,220,000 AAA 8.375% due 2/15/10 2,389,275
1,825,000 Aa* Volunteer State Student Funding Corp., TN Education
Loan Revenue Bonds, Senior Series 1993B, 5.15%
due 12/1/02(a) 1,758,844
- --------------------------------------------------------------------------------------------------
36,755,656
- --------------------------------------------------------------------------------------------------
Escrowed to Maturity(e) -- 8.0%
280,000 AAA Austin, TX Independent School District, (Escrowed to
Maturity with U.S. Government Securities), 9.00%
due 7/1/00 329,700
610,000 AAA Babylon, NY Industrial Development Agency, Waste
Facilities Revenue, Babylon Community Waste
Management, Series A, (Escrowed to Maturity with
U.S. Government Securities), 7.50% due 7/1/95 614,770
2,525,000 AAA Boston, MA Water & Sewer Community Revenue,
Series A, (Escrowed to Maturity with U.S.
Government Securities), 10.65% due 1/1/99 2,828,000
500,000 AAA Broward County, FL Health Facilities Authority Revenue,
Holy Cross Hospital Project, (Escrowed to Maturity
with U.S. Government Securities), 8.75% due 6/1/95 503,695
220,000 AAA Enid, OK Hospital Authority Revenue, St. Mary's
Hospital Crossover Refunding, (Escrowed to Maturity
with U.S. Government Securities), 8.00% due 7/1/98 235,125
1,255,000 AAA Erie County, OH Hospital Improvement, Sandusky
Memorial Hospital, (Escrowed to Maturity with U.S.
Government Securities), 8.75% due 1/1/06 1,513,844
2,395,000 AAA Galveston, TX Sewer System Revenue Refunding,
Series B (Escrowed to Maturity with U.S. Government
Securities), 7.80% due 5/1/99 2,568,638
1,050,000 AAA Illinois Educational Facilities Authority Revenue, Chicago
Osteopathic Medical, Series A, (Escrowed to Maturity
with U.S. Government Securities), 8.75% due 7/1/05 1,325,625
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Escrowed to Maturity(e) -- 8.0% (continued)
$ 40,000 AAA Kenton County, KY Airport Board Revenue, Greater
Cincinnati International Airport, MBIA-Insured,
(Escrowed to Maturity with U.S. Government
Securities), 7.20% due 3/1/96(a)(d) $ 40,950
830,000 AAA Michigan State Hospital Finance Authority Revenue,
St. Joseph's Mercy Hospital, Series A, (Escrowed to
Maturity with U.S. Government Securities), 9.25%
due 7/1/03 998,075
1,170,000 AAA New Jersey Educational Facilities Authority, Fairleigh
Dickinson University, Series C, (Escrowed to Maturity
with U.S. Government Securities), 7.75% due 7/1/01 1,330,875
1,850,000 AAA New Jersey State Turnpike Authority Revenue
Refunding, (Escrowed to Maturity with U.S.
Government Securities), 10.375% due 1/1/03 2,250,063
30,000 AAA New York City GO, Series F, (Escrowed to Maturity
with U.S. Government Securities), 8.10% due 11/15/99 33,938
1,110,000 AAA Ohio State Water Development Authority Revenue, Safe
Water, Series A, (Escrowed to Maturity with
U.S. Government Securities), 9.375% due 12/1/10 1,393,050
2,155,000 AAA Owensboro, KY Electric, Light & Power, (Escrowed
to Maturity with U.S. Government Securities),
10.50% due 1/1/04 2,634,487
1,035,000 AAA San Francisco, CA Airport Improvement Corp., Lease
Revenue, United Airlines, (Escrowed to Maturity with
U.S. Government Securities), 7.875% due 7/1/99 1,121,681
1,385,000 AAA Sullivan County, TN Health & Educational Facilities,
Holston Valley Community Hospital, (Escrowed to
Maturity with U.S. Government Securities),
7.00% due 9/1/99 1,488,875
- --------------------------------------------------------------------------------------------------
21,211,391
- --------------------------------------------------------------------------------------------------
Finance -- 0.4%
40,000 A- Concord Santa Cruz Southgate, CA COP, ABAG Finance
Corp., 7.10% due 6/1/99 40,050
1,000,000 A New York State Local Government Assistance Corp.,
6.60% due 4/1/98 1,045,000
- --------------------------------------------------------------------------------------------------
1,085,050
- --------------------------------------------------------------------------------------------------
General Obligation -- 6.4%
175,000 A Boston, MA GO, 7.75% due 10/1/95 177,733
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
General Obligation -- 6.4% (continued)
$ 1,525,000 AAA Harris County, TX Capital Appreciation Refunding,
MBIA-Insured, zero coupon due 10/1/00 $ 1,139,937
2,000,000 AAA Highlands Rancho Metro District #2, Douglas County,
CO GO Refunding, Series 1991, LOC Swiss Bank,
6.70% due 6/15/01 2,070,000
500,000 AA+ King County, WA Unlimited Tax Obligation, 9.00%
due 12/1/98 568,125
1,500,000 A+ Massachusetts Dedicated Income Tax Bonds, Fiscal
Recovery Loan Act of 1990, Series A, 7.25%
due 6/1/96 1,543,125
2,000,000 BBB New Haven, CT GO, Series B, 9.00% due 12/1/01 2,335,000
New York City GO:
970,000 A- Series F, 8.10% due 11/15/99 1,059,725
1,500,000 A- Series D, 7.20% due 2/1/00 1,582,500
North Slope Borough, AK GO:
6,000,000 AAA MBIA-Insured, zero coupon due 1/1/01 4,380,000
900,000 AAA Unlimited Tax Obligation Refunding, Series G,
AMBAC-Insured, 7.50% due 6/30/97(d) 947,250
750,000 AA+ Port of Houston Authority, Harris County, TX Port
Improvement Unlimited Tax Obligation, 8.50%
due 11/1/98(a) 834,375
500,000 AA San Antonio, TX Limited Tax, 9.00% due 8/1/95 507,320
- --------------------------------------------------------------------------------------------------
17,145,090
- --------------------------------------------------------------------------------------------------
Hospitals -- 13.1%
750,000 A ABAG Finance Authority Nonprofit Corps, California
Mortagage Insured, COP, Rehabilitation Mental
Health Services Inc. Project, 6.10% due 6/1/02(d) 766,875
1,915,000 BBB+ Alachua County, FL Health Facilities Authority Revenue,
Santa Fe Healthcare Facilities Project, 6.875%
due 11/15/02 1,998,781
600,000 AA- Bexar County, TX Health Facilities Development Corp.,
Health Facilities Revenue Refunding, Independence Hill
Project, LOC Banque Paribas, 7.50% mandatory tender
12/1/98(d) 651,750
1,000,000 AAA Calcasieu Parish Louisiana Memorial Hospital Services
District Revenue, Lake Charles Memorial Hospital,
Series A, Connie Lee-Insured, 7.50% due 12/1/05 1,147,500
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Hospitals -- 13.1% (continued)
$ 3,500,000 BBB Colorado Health Facilities Authority Hospital Revenue
Bonds, Series 1993, Rocky Mountain Adventist
Health Guaranteed, 6.25% due 2/1/04 $ 3,473,750
2,135,000 A* Harris County, TX Health Facilities Development Corp.,
Memorial Health System Guaranteed, 7.125%
due 6/1/05 2,289,788
Illinois Health Facilities Authority Revenue Refunding:
1,000,000 Baa1* Trinity Medical Center, 6.50% due 7/1/00 1,011,250
3,025,000 A+ OSF-Healthcare System, 5.25% due 11/15/01 2,945,594
1,425,000 Ba1* Langhorne Manor Higher Education & Health Authority,
Bucks County (Lower Bucks Hospital), 6.375%
due 7/1/99 1,400,062
Massachusetts Health & Education Facilities
Authority Revenue:
1,750,000 Baa* Massachusetts Eye & Ear Infirmary, Series A,
7.00% due 7/1/98 1,760,938
1,700,000 Aa* Series D, Daughters of Charity National Health
System, 5.50% due 7/1/04 1,693,625
1,000,000 AAA Mississippi Equipment & Facilities Authority,
Mississippi Baptist Medical Center, MBIA-Insured,
7.30% due 5/1/01 1,101,250
New Jersey Healthcare Facilities Financing Authority:
1,000,000 Baa1* Elizabeth General Medical Center, Series C, 7.10%
due 7/1/99 1,035,000
1,030,000 A- Pascack Valley Hospital, Series 91, 6.50% due 7/1/01 1,068,625
1,045,000 BBB+ New York Medical Care Facilities Finance Agency
Revenue, Mental Health Facilities, 7.10% due 2/15/99 1,098,556
320,000 A- Ouachita Parish, LA Hospital Services District #1,
Hospital Revenue Bonds, Glenwood Regional
Medical Center, Series 1991, 7.25% due 7/1/00 338,400
2,170,000 A- Palm Beach County, FL Health Facilities Authority
Revenue, Good Samaritan Health System Guaranteed,
6.15% due 10/1/06 2,159,150
Philadelphia, PA Hospitals & Higher Education Facilities
Authority Revenue:
1,675,000 BBB+ Refunding, Philadelphia MR Project Guaranteed,
5.50% due 8/1/01 1,633,125
350,000 Aa* St. Agnes Medical Center, FHA-Insured, 6.75%
due 8/15/01 365,313
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Hospitals -- 13.1% (continued)
$ 1,000,000 AAA Rio Grande Valley, TX Health Facilities, Valley Baptist
Medical Center Series, Short RITES, MBIA-Insured,
coupon varies weekly till 8/1/02 then converts to
6.25%, 7.40% due 8/1/06(c) $ 1,032,500
1,750,000 A+ Riverside, CA Asset Leasing Corp. Leasehold Revenue
Bonds, 1993 Series A, Riverside Hospital Project,
6.00% due 6/1/04 1,741,250
3,000,000 BBB++ Scranton-Lackawanna, PA Health & Welfare Authority
Revenue, Allied Services Rehabilitation Hospitals,
7.125% due 7/15/05 2,962,500
1,300,000 BBB++ Valley Health System, CA COP Refunding Project,
6.25% due 5/15/99 1,288,625
- --------------------------------------------------------------------------------------------------
34,964,207
- --------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 9.1%
3,000,000 A Aurora, IL Multi-Family Revenue Refunding Housing,
Fox Village Unit 18D Project, LOC Banque Paribas,
7.75% due 9/1/98 3,131,250
1,250,000 AA- Broward County, FL HFA Multi-Family Housing Revenue,
Surety Bond-Continental Casualty, Waters Edge
Apartments Project, 9.70% mandatory tender 11/1/95 1,281,250
2,930,000 A+ City of Burnsville, MN Multi-Family Housing Revenue
Refunding Bonds, The Atrium Project, Policy of
Indemnity Commercial Union Insurance Co. PLC
Reinsured by Trygg-Hansa Ins. Co. of Sweden, 7.20%
tender 5/1/02 3,047,200
500,000 AAA Fairfax County, VA Redevelopment & Housing Authority
Multi-Family Refunding Kingsley 91A, 6.50%
due 11/1/01 517,500
2,850,000 Aa3* Gary, IN Economic Development Revenue, Miller
Partnership, LP Series A, LOC Royal Bank of
Scotland, 7.40% mandatory tender 4/1/01(a) 2,907,000
2,995,000 AA- Lombard, IL Multi-Family Housing, Clover Creek
Apartments, Surety Bond-Continental Casualty Co.,
6.50% due 12/15/96 3,043,669
1,000,000 AA- Maine State Housing Authority, Series A-3, 6.90%
due 11/15/98 1,043,750
500,000 AAA Nashville & Davidson County, TN Metropolitan
Government IDB Revenue, FNMA-Collateralized,
Club Bellvue, 8.50% mandatory tender 5/1/97 511,250
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Housing: Multi-Family -- 9.1% (continued)
$ 590,000 A* Odessa, TX Housing Development Corp. #2, Multi-
Family Revenue Refunding, Chaparral Village - A,
6.375% due 12/1/03 $ 591,475
2,260,000 AAA Onterie Center Housing Finance Corp., IL Mortgage
Revenue Refunding, Onterie Center Project, Series A,
MBIA-Insured, 6.50% due 7/1/02 2,361,700
2,500,000 AAA Prince Georges County, MD Housing Authority
Mortgage Revenue Refunding, Cambridge Crossing
Apartments, Series A, LOC Federal Home Loan Bank
Atlanta, 5.90% mandatory tender 2/1/04 2,512,500
975,000 AAA Ridgeland, MS Multi-Family Housing Revenue, Series
1985, Sun Chase Apartments, FNMA-Collateralized,
6.50% mandatory tender 10/1/97 984,750
2,500,000 AA+ Tulsa, OK Home Finance Authority, Multi-Family
Housing Waterford Project, Series A, AXA Reinsurance,
UK PLC Guaranteed, 5.35% mandatory tender 12/1/04 2,390,625
- --------------------------------------------------------------------------------------------------
24,323,919
- --------------------------------------------------------------------------------------------------
Housing: Single-Family -- 2.7%
80,000 AA Alaska State Housing Finance Corp., State Guaranteed
Veterans Mortgage Program, Third Series 83, 9.10%
due 12/1/97(d) 82,600
2,500,000 Aa* California State Department of Veterans Affairs, Home
Purchase Revenue, Series A, 7.50% due 8/1/98(a) 2,571,875
80,000 Aaa* Louisiana Housing Finance Agency Mortgage Revenue,
GNMA-Collateralized, Single-Family, 7.60%
due 11/1/97(a) 82,200
Missouri State Housing Development Commission,
Single-Family Insured Mortgage Revenue Loans:
20,000 Aaa* FHA-VA, 9.60% due 8/1/96 20,500
45,000 AAA 10.00% due 8/1/98 47,250
1,355,728 AAA Monroe-West Monroe, Ouachita Parish, LA Public Trust
Financing Authority, FHLMC-Guaranteed, 8.50%
due 5/20/02 1,413,347
210,000 A* Quincy, IL Single-Family Mortgage Revenue Refunding,
Series 1994, 4.25% due 9/1/99 208,688
315,000 AAA St. Louis County, MO Single-Family Mortgage Revenue,
MBIA-Insured, 9.75% mandatory tender 10/1/95 320,512
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Housing: Single-Family -- 2.7% (continued)
$ 1,000,000 AAA Texas Department of Housing & Community Affairs,
GNMA & FNMA-Collateralized, Home Mortgage
Revenue Bonds, Series B, RIBS Variable Rate,
9.308% due 6/18/23(a)(c) $ 1,078,750
Texas State Housing Agency Mortgage Revenue
Single-Family:
210,000 Aa* 1987D, 7.75% due 7/1/99 217,875
665,000 Aa* Series 85A, 9.10% due 9/1/00 682,456
410,000 AA Wyoming Community Development Authority, Single-
Family Mortgage, Series 1988C, 7.80% due 6/1/99(a) 424,350
- --------------------------------------------------------------------------------------------------
7,150,403
- --------------------------------------------------------------------------------------------------
Industrial Development -- 13.8%
1,500,000 A Bel Air, MD Revenue Refunding, May Department
Stores Co. Project, 6.375% due 10/1/99 1,561,875
1,000,000 A Belmont County, OH IDR Refunding, May Department
Stores, Series 91, 6.50% due 1/1/00 1,046,250
255,000 A* Coweta County, GA Development Authority IDR, Sivaco
National Wire Georgia Project, Series 1994, Atlantic
Steel Industries Guaranteed, 5.40% due 2/1/09(a) 227,269
3,000,000 Ba1* Griffin-Spalding County, GA Development Authority
Revenue Refunding, Borden Inc. Project, Borden Inc.
Guaranteed, 7.20% due 6/1/00 3,022,500
2,405,000 AAA Hamburg, IA IDR, ADC II Project, FGIC-Insured, 8.40%
mandatory tender 6/1/95 2,417,025
1,295,000 A1* Illinois Development Finance Authority Revenue,
Economic Development, LOC American National Bank
and Trust, L. Karp and Sons Inc. Project, 7.25%
mandatory tender 9/1/95(a) 1,304,713
2,000,000 A+ Iowa Finance Authority, Governors Square Project,
Policy of Indemnity Commercial Union Assurance Co.
PLC Reinsured by Trygg-Hansa Insurance Co. of
Sweden, 7.25% mandatory tender 4/1/02 2,100,000
2,500,000 A Kanawha, WV Commercial Development Revenue,
May Department Stores Guaranteed, 5.70% due 6/1/97 2,543,750
3,000,000 A Marion, IA Commercial Development Revenue, Collins
Road Project, Commercial Union-Insured/Reinsured
by Trygg-Hansa Insurance Co. of Sweden, 7.25%
mandatory tender 7/1/02 3,142,500
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Industrial Development --13.8% (continued)
$ 3,500,000 BBB+ Metropolitan Government Nashville & Davidson County,
TN Industrial Development Board Revenue Refunding &
Improvement, Osco Treatment Inc. Guaranteed, 6.00%
due 5/1/03(a) $ 3,395,000
2,750,000 A+ Missouri Economic Development Export & Infrastructure
Board Industrial Revenue Refunding, Mark Twain Tower
Project, Lincoln National Guaranteed, 5.375%
mandatory tender 5/1/00 2,701,875
2,390,000 Aa3* New Jersey EDA, Growth Bonds, LOC Banque
Nationale de Paris, 6.20% due 12/1/02(a) 2,449,750
New York City IDA:
1,510,000 Aa1* Keystone Electric, LOC Ambro Bank, 7.50% due 3/1/98(a) 1,515,662
485,000 Aa1* SuperFlex, Ltd. Project, Composite Offering XVIII 1989,
Series A, LOC Algemene Bank Netherlands, NV, 7.75%
optional tender 11/1/99(a) 494,700
735,000 Aa1* IDR Oakdale Knitting Mills Inc., Composite Offering
XXX 1990, Series G, LOC Algemene Bank Netherlands,
NV, 7.70% mandatory tender 11/1/00(a) 755,212
Ohio State Economic Development Revenue, Ohio
Enterprise Bond Fund:
365,000 A- Superior Forge & Steel Corp. Project, 6.75%
due 6/1/96(a) 370,019
300,000 A- Series 1989-5B, Sponge Inc. Project, 7.75%
due 6/1/99(a) 311,250
90,000 Baa3* Pocahontas, IA IDR International Harvester Co., 10.25%
due 10/1/00 92,138
3,040,000 AA++ Seaford, DE Economic Development Revenue Refunding,
Seaford Association Project, 6.375% due 1/1/04 3,093,200
2,235,000 AA- Simi Valley, CA Community Development Agency COP,
Simi Valley Business Center, 6.05% due 10/1/18 2,265,731
2,000,000 A+ St. Louis County, MO IDA Refunding, Westport
Residence Joint Venture, Lincoln National
Guaranteed, 5.10% mandatory tender 12/1/00 1,902,500
- --------------------------------------------------------------------------------------------------
36,712,919
- --------------------------------------------------------------------------------------------------
Lifecare -- 0.5%
1,355,000 BBB Illinois Development Finance Authority Health Facilities
Revenue, Community Living Options, 6.375%
due 3/1/00 1,363,469
- --------------------------------------------------------------------------------------------------
Miscellaneous -- 6.0%
2,595,000 BBB Clarksville, TN Natural Gas Aquisition Corporation, Gas
Revenue, Series A, 6.50% due 11/1/00 2,591,756
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Miscellaneous -- 6.0% (continued)
$ 1,000,000 Baa* Delaware County, PA Authority Revenue, Elwyn Inc.
Project, 7.75% due 6/1/00 $ 1,048,750
2,500,000 A* Hoffman Estate, IL Tax Increment Junior Lien, Hoffman
Estate Development, Series 91, 6.50% due 5/15/01 2,615,625
2,700,000 A- Illinois Development Finance Authority Revenue, Debt
Restructure - East St. Louis, 6.875% due 11/15/05 2,720,250
810,000 NR Lehigh County, PA General Purpose Authority, Wiley
House Revenue, Series 1991, 8.50% due 11/1/96 824,175
1,990,000 Baa1* Leon County, FL COP, Series 92A, 5.875% due 1/1/98 1,992,488
1,050,000 BBB Tampa, FL Capital Improvement Program Revenue
Collateralized, Series 88B, 7.40% due 10/1/97 1,095,937
3,000,000 A* Texas National Research Lab Finance Corp., Lease
Revenue Superconducting Supercollider Project,
6.55% due 12/1/02 3,067,500
- --------------------------------------------------------------------------------------------------
15,956,481
- --------------------------------------------------------------------------------------------------
Pollution Control -- 1.5%
1,200,000 AAA Burke County, GA Development Authority PCR,
Refunding, Ogelthorpe Power Co., 7.50% due 1/1/03 1,315,500
1,500,000 AAA Montgomery, AL Industrial Development Board PCR,
General Electric Co. Project, 7.00% due 9/15/00(a) 1,623,750
500,000 A2* North Hampton County, PA IDA Revenue PCR,
Metropolitan Edison Co., 10.50% due 9/1/95 511,875
600,000 BB Ohio State Water Development Authority Pollution
Control Facilities Revenue, Cleveland Electric
Illuminating Co., 9.75% due 11/1/97(a) 645,750
- --------------------------------------------------------------------------------------------------
4,096,875
- --------------------------------------------------------------------------------------------------
Power -- 1.8%
1,500,000 A+ Chelan County, WA Public Utility District No. 1, Chelan
Hydro Consolidated System Revenue Bonds, Series
1991A, 7.00% due 7/1/01(a) 1,620,000
2,000,000 AAA Clarion County, PA IDA Energy Development Revenue,
Piney Creek Project, LOC Swiss Bank, 7.25%
mandatory tender 11/1/00(a) 2,112,500
1,000,000 BB Sam Rayburn, TX Municipal Power Supply System
Revenue Refunding, Series A, 6.20% due 10/1/01 945,000
- --------------------------------------------------------------------------------------------------
4,677,500
- --------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Pre-Refunded(e) -- 4.4%
$ 1,500,000 AAA Berks County, PA Municipal Authority, Lutheran Home at
Topton, Series B, LOC Meridian Bank, (Escrowed with
U.S. Government Securities to 4/1/98 Call @ 100),
7.25% due 4/1/01 $ 1,599,375
1,000,000 AAA Dade County, FL Health Facilities Authority Baptist Hospital
Miami, MBIA-Insured, (Escrowed with U.S. Government
Securities to 5/1/97 Call @ 102), 6.90% due 5/1/99 1,062,500
2,000,000 AAA District of Columbia GO, Series C, (Escrowed with U.S.
Government Securities to 6/1/96 Call @ 102), 8.00%
due 6/1/99 2,112,500
2,360,000 AAA Gila County, AZ IDA PCR, (Escrowed with U.S. Government
Securities to 2/15/01 Call @ 101), 11.25% due 4/1/01 2,708,100
Illinois Health Facilities Authority Revenue:
1,000,000 AAA Lutheran Social Services, LOC Industrial Bank of Japan,
(Escrowed with U.S. Government Securities to 8/1/00
Call @ 102), 7.65% mandatory tender 8/1/02 1,130,000
750,000 AAA Servantcor Hospital, Series B, (Escrowed with U.S.
Government Securities to 8/15/99 Call @ 102),
7.50% due 8/15/01 833,438
1,000,000 AAA Las Vegas Valley, NV Water District, MBIA-Insured,
(Escrowed with U.S. Government Securities to 11/1/97
Call @ 102), 7.625% due 5/1/01 1,087,500
775,000 AAA New York Medical Care Facilities Finance Agency Revenue,
Hospital & Nursing Home Mortgage, FHA-Insured,
(Escrowed with U.S. Government Securities to 2/15/97
Call @ 102), 7.75% due 2/15/02 841,844
335,000 AAA Ohio State Building Authority Toledo Government Office
Building, Series A, (Escrowed with U.S. Government
Securities to 4/1/03 Call @ 100), 10.125% due 10/1/06 421,262
- --------------------------------------------------------------------------------------------------
11,796,519
- --------------------------------------------------------------------------------------------------
Public Facilities -- 3.4%
1,710,000 AAA Iowa State COP, Series A, AMBAC-Insured, 5.75%
due 7/1/98 1,754,887
4,000,000 Aa* Mt. Stearling, KY Lease Revenue, Kentucky League of
Cities A, Transamerica Life Guaranteed, 5.625%
due 3/1/03 3,915,000
155,000 AAA Pittsburg, PA Stadium Authority Guaranty Revenue,
FGIC-Insured, 7.00% due 10/15/95 156,744
1,060,000 AAA South Dakota State Lease Revenue Certificates, Series A,
CGIC-Insured, 8.20% due 9/1/02 1,248,150
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Public Facilities -- 3.4% (continued)
$ 1,315,000 AAA Texas State Refunding, Texas Parks & Wildlife,
AMBAC-Insured, zero coupon due 10/1/02 $ 874,475
1,000,000 AA Tuscon, AZ COP, Asset Guaranty, 6.00% due 7/1/04 1,020,000
- --------------------------------------------------------------------------------------------------
8,969,256
- --------------------------------------------------------------------------------------------------
Short-Term(b) -- 1.5%
1,900,000 VMIG 1 Maricopa, AZ IDA Hospital Facilities Revenue,
Samaratin Hospital, 4.50% due 12/1/08 1,900,000
2,100,000 VMIG 1 New York City Municipal Water Finance Authority,
Series G, 4.40% due 6/15/24 2,100,000
- --------------------------------------------------------------------------------------------------
4,000,000
- --------------------------------------------------------------------------------------------------
Solid Waste -- 3.1%
Detroit, MI Economic Development Corp. Facilities
Recovery Revenue, FSA-Insured:
3,000,000 AAA Series A, 7.00% due 5/1/01 3,318,750
1,000,000 AAA Series 91A, 6.60% due 5/1/02(a) 1,076,250
1,500,000 AA- Illinois Development Financing Authority Solid Waste
Disposal Revenue Bonds, Waste Management Inc.
Project, Series 1990, 7.125% due 1/1/01 1,627,500
2,000,000 Baa* Onondaga County, NY Resource Recovery Agency Project
Revenue Bonds, Series 1992, 6.625% due 5/1/00(a) 1,997,500
250,000 AA Regional Waste Systems Inc., Maine Solid Waste Resource
Recovery System, 7.55% due 7/1/98(a)(d) 266,562
- --------------------------------------------------------------------------------------------------
8,286,562
- --------------------------------------------------------------------------------------------------
Tax Allocation -- 0.2%
505,000 BBB Miami Beach, FL Redevelopment Agency Tax Increment
Revenue, City Center Historic Convention Village,
4.75% due 12/1/00 473,437
- --------------------------------------------------------------------------------------------------
Transportation -- 5.1%
1,000,000 AAA Clark County, NV Airport Improvement Revenue,
BIG-Insured, 7.90% due 7/1/00(a) 1,092,500
Denver, CO City & County Airport Revenue:
1,590,000 Baa* Series 1992B, 7.00% due 11/15/01(a) 1,590,000
1,000,000 Baa* Series 1992B, 7.00% due 11/15/02(a) 1,000,000
1,000,000 Baa* Series 1994A, 7.20% due 11/15/02(a) 1,030,000
2,445,000 AAA Hawaii Airport System Revenue, MBIA-Insured,
Second Series of 91, 6.10% due 7/1/99(a) 2,539,744
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================
<C> <C> <S> <C>
Transportation -- 5.1% (continued)
$ 1,250,000 A Indiana Transportation Finance Authority, Airport Facilities
Lease Revenue, Series A, United Air, 6.125%
due 11/1/02 $ 1,292,188
210,000 AAA Kenton County, KY Airport Board Revenue, Greater
Cincinnati International Airport, MBIA-Insured, 7.20%
due 3/1/96(a)(d) 214,725
Massachusetts Port Authority Revenue:
500,000 Aa* Series 1990A, 7.00% due 7/1/96(a) 515,625
1,000,000 AAA Series A, FGIC-Insured, 7.20% due 7/1/03(a) 1,093,750
3,000,000 AA- Ocean Highway and Port Authority, Nassau County,
FL Adjustable Demand Revenue Bonds, Series 1990,
LOC ABN AMBRO Bank NV, 6.25% due 12/1/02(a) 3,161,250
- --------------------------------------------------------------------------------------------------
13,529,782
- --------------------------------------------------------------------------------------------------
Utilities -- 1.7%
600,000 A- Georgia Muni Gas Authority Revenue, Southern Storage
Gas Project, 6.30% due 7/1/09 603,000
3,000,000 AAA Mohave, AZ Industrial Development Authority IDR Bonds,
Citizens Utilities Co. Project 1988B, 6.875%
due 9/1/03(a) 3,157,500
770,000 Baa1* Philadelphia, PA Gas Works Revenue Bonds, 13th
Series, 7.40% due 6/15/00 842,187
- --------------------------------------------------------------------------------------------------
4,602,687
- --------------------------------------------------------------------------------------------------
Water & Sewer -- 3.5%
4,155,000 A Austin, TX Water, Sewer and Electric, 14.00%
due 11/15/01 5,666,381
1,000,000 AAA Centennial Water and Sanitation District Douglas County,
CO GO, Water & Sewer Refunding Bonds,
LOC Swiss Bank Corp., 6.625% due 6/15/98 1,027,500
1,500,000 NR New Jersey EDA Water Facilities Revenue, Series 1991,
New Jersey American Water Co. Inc. Project, Private
Placement, 7.40% due 5/1/01(a) 1,590,000
985,000 A Texas Water Resource Finance Authority Revenue,
Series 89, 7.40% due 8/15/00 1,053,950
- --------------------------------------------------------------------------------------------------
9,337,831
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--100%
(Cost--$261,735,129)(f) $266,439,034
==================================================================================================
</TABLE>
See pages 20 and 21 for definition of ratings and certain securities
descriptions.
See Notes to Financial Statements.
19
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
(a) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(c) Residual interest bonds -- coupon varies inversely with level of
short-term tax-exempt interest rates.
(d) Securities segregated by Custodian for open purchase commitment.
(e) Pre-refunded bonds escrowed by U.S. Government Securities and bonds
escrowed to maturity by U.S. Government Securities are considered by manager
to be triple-A rated even if issuer has not applied for new ratings.
(f) The cost for Federal income tax purposes is substantially the same.
+ Duff & Phelps Credit Rating Co.
++ Fitch Investors Services, Inc.
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation, except those identified by an
asterisk (*) are rated by Moody's Investors Services. The definitions of the
applicable rating symbols are set forth below:
Standard & Poor's -- Ratings from "AA" to "BB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the highest rated issue only in a
small degree.
A -- Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB -- Debt rated "BBB" is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
BB -- Debt rated "BB" has less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic
rating from "Aa" to "Baa", where 1 is the highest and 3 the lowest
ranking within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge". Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
20
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Bond Ratings (continued)
- --------------------------------------------------------------------------------
A -- Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate,
and therefore not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this
class.
NR -- Indicates that the bond is not rated by Standard & Poor's
Corporation or Moody's Investors Services.
- --------------------------------------------------------------------------------
Short-Term Securities Rating
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rate rating indicating very strong or
strong capacity to pay principal and interest; those issues
determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
MIG 1 -- Moody's highest rating for short-term municipal obligations.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
EDA -- Economic Development Authority
FAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCFA -- Pollution Control Financing Authority
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
VA -- Veterans Administration
VRDD -- Variable Rate Demand Note
VRWE -- Variable Rate Wednesday Demand
21
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost - $261,735,129) $ 266,439,034
Cash 58,576
Receivable for securities sold 955,000
Receivable for Fund shares sold 899,754
Interest receivable 5,198,981
Other assets 21,772
- --------------------------------------------------------------------------------
Total Assets 273,573,117
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 1,687,584
Payable for Fund shares purchased 205,696
Distribution costs payable 135,080
Management fees payable 104,098
- --------------------------------------------------------------------------------
Total Liabilities 2,132,458
- --------------------------------------------------------------------------------
Total Net Assets $ 271,440,659
================================================================================
NET ASSETS:
Par value of capital shares $ 41,516
Capital paid in excess of par value 271,788,443
Undistributed net investment income 37,862
Accumulated net realized loss on security transactions (5,131,067)
Net unrealized appreciation of investments 4,703,905
- --------------------------------------------------------------------------------
Total Net Assets $ 271,440,659
================================================================================
Shares Outstanding:
Class A 37,443,382
----------------------------------------------------------------------------
Class C 4,072,805
----------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $6.54
----------------------------------------------------------------------------
Class C * $6.54
----------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 2.04% of net asset value per share) $6.67
================================================================================
</TABLE>
* Redemption price is NAV of Class C shares reduced by 1.00% if shares are
redeemed less than one year from initial purchase.
See Notes to Financial Statements.
22
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- ------------------------------------------------------------------------------
Statement of Operations For the Year Ended March 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 18,693,059
- ------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 1,351,567
Distribution costs (Note 3) 299,070
Registration fees 101,086
Shareholder servicing agent fees 53,881
Pricing service fees 32,000
Custodian fees 31,475
Shareholder communications fees 28,872
Audit and legal fees 15,827
Trustees' fees 7,001
Other 4,000
- ------------------------------------------------------------------------------
Total Expenses 1,924,779
- ------------------------------------------------------------------------------
Net Investment Income 16,768,280
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 112,187,811
Cost of securities sold 115,929,287
- ------------------------------------------------------------------------------
Net Realized Loss (3,741,476)
- ------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 2,097,769
End of year 4,703,905
- ------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 2,606,136
- ------------------------------------------------------------------------------
Net Loss on Investments (1,135,340)
- ------------------------------------------------------------------------------
Increase In Net Assets From Operations $ 15,632,940
==============================================================================
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
========================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 16,768,280 $ 16,346,956
Net realized loss from security transactions (3,741,476) (454,765)
Increase (decrease) in net unrealized appreciation
of investments 2,606,136 (7,475,919)
- ----------------------------------------------------------------------------------------
Increase In Net Assets From Operations 15,632,940 8,416,272
- ----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (17,091,230) (16,375,813)
- ----------------------------------------------------------------------------------------
Decrease In Net Assets From
Distributions To Shareholders (17,091,230) (16,375,813)
- ----------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 48,752,624 140,364,229
Net asset value of shares issued for
reinvestment of dividends and distributions 9,178,863 8,437,469
Cost of shares reacquired (113,025,019) (71,012,257)
- ----------------------------------------------------------------------------------------
Increase (Decrease) In Net Assets From
Fund Share Transactions (55,093,532) 77,789,441
- ----------------------------------------------------------------------------------------
Increase (Decrease) In Net Assets (56,551,822) 69,829,900
NET ASSETS
Beginning of year 327,992,481 258,162,581
- ----------------------------------------------------------------------------------------
End of year* $271,440,659 $327,992,481
========================================================================================
*Includes undistributed net investment income of: $37,862 $360,812
========================================================================================
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Limited Term Portfolio ("Portfolio") is a separate investment portfolio
of the Smith Barney Muni Funds ("Fund"). The Fund, a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company and consists of this
Portfolio and twelve other separate investment portfolios: California, Florida,
Georgia, New Jersey, New York, Ohio, Pennsylvania, National, California Limited
Term, Florida Limited Term, California Money Market and New York Money Market
Portfolios. The financial statements and financial highlights for the other
portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolio
are: (a) security transactions are accounted for on the trade date; (b)
securities are valued at bid 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; short-term securities maturing within 60 days
are valued at cost plus (minus) accreted discount (amortized premium), which
approximates value; (c) gains or losses on the sale of securities are calculated
by using the specific identification method; (d) interest income, adjusted for
amortization of premiums and accretion of original issue discount, is recorded
on the accrual basis; market discount is recognized upon the disposition of the
security; (e) direct expenses are charged to each portfolio and each class;
management fees and general fund expenses are allocated on the basis of relative
net assets; and (f) the Fund intends to comply with the requirements of the
Internal Revenue Code pertaining to regulated investment companies and to make
the required distributions to shareholders; therefore, no provision for Federal
income taxes has been made.
2. Exempt-Interest Dividends and Other Distributions
The Portfolio 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 Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually. At March 31, 1995 the Limited Term
Portfolio had a net capital loss carryover of $5,131,067 available to offset
future capital gains. To the extent that this carryover loss is used to offset
capital gains it is probable that any gains so offset will not be distributed.
25
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
The amount and expiration of the carryovers are indicated below. Expiration
occurs on March 31 of the year indicated.
<TABLE>
<CAPTION>
2000 2001 2003
================================================================================
<S> <C> <C> <C>
Limited Term Portfolio $450,254 $195,915 $4,484,898
================================================================================
</TABLE>
3. Management Agreements and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management, Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager to the Fund. The
Limited Term Portfolio pays SBMFM a management fee calculated at the annual rate
of 0.45% of its average daily net assets. Such fees are calculated daily and
paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. SB advised the Fund that it received sales charges of approximately
$271,731 (paid by purchasers of the Portfolio's Class A shares) for the year
ended March 31, 1995. All officers and two Trustees of the Fund are employees of
SB.
Effective November 7, 1994, the Fund adopted a new class structure,
renaming Class B shares as Class C shares and exchanging the former Class C
shares into Class A shares. Under the new structure, a contingent deferred sales
charge ("CDSC") of 1.00% is imposed on Class C shares if redemption occurs less
than one year from initial purchase. Any CDSC imposed on redemptions is paid to
SB. For the year ended March 31, 1995, there were approximately $35,201 in such
charges.
On September 16, 1994, a new Distribution Plan was approved by the Fund's
shareholders. Pursuant to this Distribution Plan, the Limited Term Portfolio
pays a service fee with respect to its Class A shares calculated at an annual
rate of 0.15% of the average daily net assets. In addition, the Portfolio will
continue to pay a service and distribution fee with respect to its Class C
shares calculated at an annual rate of 0.15% and 0.20%, respectively, of the
average daily net assets.
4. Investments
During the year ended March 31, 1995, the aggregate cost of purchases and
proceeds from sales (including maturities, but excluding short-term securities)
of investments were as follows:
<TABLE>
================================================================================
<S> <C>
Purchases $ 64,177,803
- --------------------------------------------------------------------------------
Sales 112,187,811
================================================================================
</TABLE>
26
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At March 31, 1995, the gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $ 6,239,802
Gross unrealized depreciation (1,535,897)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 4,703,905
================================================================================
</TABLE>
5. Capital Shares
At March 31, 1995, there were an unlimited amount of shares of $.001 par
value capital stock authorized. The Fund has established multiple classes of
shares within each Portfolio of the Fund. Each share of a class represents an
identical interest in the Portfolio and has the same rights, except that each
class bears certain expenses specifically related to the distribution of its
shares. At March 31, 1995, total paid-in capital amounted to the following for
each class:
<TABLE>
<CAPTION>
Class A Class C
================================================================================
<S> <C> <C>
Total Paid-In Capital $244,283,284 $27,546,675
================================================================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1995 March 31, 1994
---------------------------- --------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Class A*
Shares sold 6,753,825 $ 43,787,327 15,022,441 $101,659,920
Shares issued on reinvestment 1,257,227 8,139,136 1,112,648 7,525,790
Shares redeemed (16,560,560) (106,844,106) (9,391,335) (63,345,164)
- --------------------------------------------------------------------------------------------
Net Increase (Decrease) (8,549,508) $ (54,917,643) 6,743,754 $ 45,840,546
============================================================================================
Class C+
Shares sold 763,796 $ 4,965,297 3,516,779 $ 23,785,553
Shares issued on reinvestment 160,710 1,039,727 82,112 555,173
Shares redeemed (958,968) (6,180,913) (350,865) (2,358,040)
- --------------------------------------------------------------------------------------------
Net Increase (Decrease) (34,462) $ (175,889) 3,248,026 $ 21,982,686
============================================================================================
</TABLE>
* On October 10, 1994 the former Class C shares were exchanged into class A
shares; therefore the Class C share activity for the period from April 1, 1994
to October 9, 1994 is included with the Class A share activity. The year ended
March 31, 1994 includes only Class A share activity.
+ On November 7, 1994, the former Class B shares were renamed Class C shares.
27
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares (a) 1995 1994 1993 1992 1991
=================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $6.55 $6.68 $6.45 $6.38 $6.28
- -------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.36 0.37 0.39 0.42 0.43
Net realized and unrealized gain (loss)
on investments -- (0.13) 0.23 0.07 0.07
- -------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.36 0.24 0.62 0.49 0.50
- -------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.37) (0.37) (0.39) (0.42) (0.40)
- -------------------------------------------------------------------------------------------------
Total Distributions (0.37) (0.37) (0.39) (0.42) (0.40)
- -------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $6.54 $6.55 $6.68 $6.45 $6.38
- -------------------------------------------------------------------------------------------------
Total Return 5.69% 3.65% 9.82% 7.99% 8.23%
- -------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $244,818 $281,771 $242,491 $157,426 $64,660
- -------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.61% 0.53% 0.55% 0.49% 0.33%
Net investment income 5.61 5.53 5.90 6.42 6.77
- -------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 21.80% 24.72% 24.53% 26.27% 14.92%
=================================================================================================
</TABLE>
(a) On October 10, 1994 the former Class C shares were exchanged into Class A
shares.
28
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class C Shares (a) 1995 1994 1993(b)
============================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $6.54 $6.68 $6.62
- ----------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.35 0.35 0.10
Net realized and unrealized gain (loss)
on investments -- (0.14) 0.05
- ----------------------------------------------------------------------------
Total Income from Investment Operations 0.35 0.21 0.15
- ----------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.35) (0.35) (0.09)
- ----------------------------------------------------------------------------
Total Distributions (0.35) (0.35) (0.09)
- ----------------------------------------------------------------------------
Net Asset Value, End of Year $6.54 $6.54 $6.68
- ----------------------------------------------------------------------------
Total Return 5.51% 3.15% 2.28%++
- ----------------------------------------------------------------------------
Net Assets, End of Year (000s) $26,622 $26,869 $5,738
- ----------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.89% 0.88% 0.88%+
Net investment income 5.34 5.10 5.35+
- ----------------------------------------------------------------------------
Portfolio Turnover Rate 21.80% 24.72% 24.53%
============================================================================
</TABLE>
(a) On November 7, 1994 the former Class B shares were renamed Class C shares.
(b) From January 5, 1993 (inception date) to March 31, 1993.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
29
<PAGE>
Smith Barney Muni Funds
Limited Term Portfolio
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of the
Limited Term Portfolio of Smith Barney Muni Funds:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Limited Term Portfolio of Smith
Barney Muni Funds as of March 31, 1995, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended and the financial highlights for each of
the years in the five-year period then ended. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of March 31, 1995, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Limited Term Portfolio of Smith Barney Muni Funds as of March 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the years in the two-year period then ended and the financial
highlights for each of the years in the five-year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
May 8, 1995
30
<PAGE>
SMITH BARNEY
- ------------
A Member of Travelers Group [LOGO APPEARS HERE]
Smith Barney
Muni Funds
Trustees
Jessica M. Bibliowicz
Ralph D. Creasman
Joseph H. Fleiss
Donald R. Foley
Paul Hardin
Francis P.Martin, M.D.
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
C. Richard Youngdahl
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Daniel Malone
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder
Servicing Agent
The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds Limited Term Portfolio. It is not authorized for
distribution to prospective investors unless accompanied by a current Prospectus
for the Portfolio, which contains information concerning the Portfolio's
investment policies and expenses as well as other pertinent information.
Smith Barney Muni Funds
388 Greenwich Street
New York, New York 10013
FD2305 E5 82106
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
1995
1995
1995 [ARTWORK APPEARS HERE]
1995
1995
Smith Barney
Muni Funds
California Money
Market Portfolio
California Limited
Term Portfolio
California Portfolio
--------------------------------------------------------
March 31,1995
[LOGO APPEARS HERE] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- --------------------------------------
California, California Limited Term
and California Money Market Portfolios
- --------------------------------------
Dear Shareholder:
We are pleased to present the annual report and audited financial statements for
Smith Barney Muni Funds California Portfolio, California Limited Term Portfolio
and California Money Market Portfolio for the fiscal year ended March 31, 1995.
Market and Economic Overview
Since our last report to you in November, the fixed-income markets, and
municipal bonds in particular, have enjoyed a powerful rally. Municipal bond
yields have declined more than a full percentage point, as evidenced by the drop
in the average yield on The Bond Buyer's weekly 25-Bond Revenue Index of 30-year
municipal bonds from a high of 7.37% on November 17, 1994 to 6.29% on March 31,
1995. This was substantially better than the performance of the benchmark 30-
year Treasury bond, which experienced a decline in yield of 70 basis points from
8.13% to 7.43% during the same time frame.
The vastly improved bond markets reflect a growing consensus that inflation will
remain under control, and the Federal Reserve Board will be successful in
engineering a "soft landing" by slowing the economy down to a more sustainable,
non-inflationary rate of growth. The seven increases in the federal funds rate
(the rate banks charge each other for overnight loans), orchestrated by the Fed
since February 1994, appear to be slowing the pace of economic growth. Recent
economic reports show a slower rate of increase in employment, producer prices,
and retail sales. Industrial production and capacity utilization were also lower
than expected, signalling a possible slowdown in the country's strong
manufacturing sector. These generally favorable economic fundamentals are more
than offsetting concerns about the substantial decline in the value of the
dollar relative to the Japanese yen and German mark on the foreign exchange
markets.
Late in April, several tax-reform proposals which recommend a flat Federal
income tax rate began to receive increased attention in the national financial
press and from municipal bond market participants. Adoption of a flat tax would
diminish the advantages of tax exemption for municipal bonds. Although the
various plans being circulated are only proposals, the publicity surrounding
them has recently caused some investors to back away from the municipal bond
market. In our opinion it is much too early in the process to predict what
changes in the tax laws, if any, will actually take place, but tax reform will
certainly be a major topic of political debate over the next few years. Many
observers believe that the more radical proposals for changes in the way taxes
are collected have little chance for enactment.
1
<PAGE>
Absent these tax-reform concerns, municipals would probably continue to be
strong performers relative to Treasuries and other taxable investments due to
the low supply of new issues. Not only did last year's spike in interest rates
sharply reduce refinancing activity in the municipal market, but voter pressure
on states and municipalities to rein in spending and cut taxes, or at least
avoid tax increases, has also resulted in a roughly 30% decline in new-money
financing. In addition, the universe of existing municipal bonds is shrinking.
In 1995, an estimated $230 billion of older, high-coupon issues will mature or
be called as they reach their first optional call dates. With estimates of new-
issue volume at less than $150 billion, the net reduction in municipal debt
outstanding could approach $100 billion this year, contracting the market by
about eight percent. Ordinarily, a reduction in supply of this magnitude would
be expected to provide a powerful boost for municipal bond values as it did
earlier this year. Uncertainties about various tax proposals, however, will
probably keep municipals from trading any better than their normal relationship
to taxable investment alternatives.
We would also like to briefly discuss the Orange County, California financial
crisis that forced both the county and its investment pool to declare bankruptcy
late in 1994. The seeds of this situation were sown in the declining interest-
rate environment of prior years. As short-term interest rates plummeted through
late 1993, some market participants, such as Orange County's investment pool
manager, turned to leverage or derivatives as a way of boosting yields. Leverage
is simply the process of borrowing in the short-term market and investing in
longer-term bonds in order to take advantage of the difference in yield between
the two sectors. Derivatives are securities that have a rate of return that is
derived from an underlying asset or market index. In many cases, the use of
derivatives had the same effect as leverage by allowing investors to magnify
returns, but without actually borrowing money. When short-term rates rebounded,
many of these portfolios suffered serious damage, with Orange County the most
prominent example due to its size and the severity of its losses. Leverage,
rather than the use of derivatives, caused the bulk of the harm that occurred in
this situation.
Fortunately, the extent of the problems facing the county and other participants
in its investment pool appear to be virtually unique. While certain other
municipalities experienced losses as a result of higher interest rates, none of
these losses appear to be of sufficient magnitude to create the risk of default
or bankruptcy. However, should Orange County default on upcoming repayments of
short-term notes--and its disclosed plans for dealing with this crisis have so
far demonstrated a less than forthright willingness to pay--there could be
serious repercussions for other California local government issuers and possibly
the entire municipal market. In any case, neither the California Portfolio nor
the California Limited Term Portfolio held bonds issued by Orange County, and
only one issue held by the California Portfolio (that was not insured or
otherwise credit enhanced) was identified as a pool
2
<PAGE>
participant. This solid-waste system issue represents less than one percent of
the Portfolio's assets and is secured by a separate, ongoing revenue stream that
should not be encumbered because revenue bond payments are not subject to the
automatic stay of a bankruptcy.
The California Economy
Economic conditions in California are stronger than they have been in four
years. Nevertheless, California was the only state to experience a rating
reduction from the two major rating agencies in 1994. Moody's lowered its rating
from Aa to A1 and Standard & Poor's reduced its rating from A+ to A. Rating
agencies look at both a state's economy and its budget; and expenditures for
social services, although more realistic than in previous years, are still high
in California's current budget proposal.
California Portfolio
The California Portfolio had a total return of 6.47% (Class A shares) for the
fiscal year. That was well above the 5.94% average total return for all
California municipal bond funds over the same period, as reported by Lipper
Analytical Services.
Long-term performance of the Portfolio is also excellent relative to its peers.
The Portfolio's five-year cumulative total return (excluding sales charge) of
48.62% (Class A shares) substantially outperformed the average cumulative total
return of 44.09% for all California municipal bond funds in the Lipper survey
for the period ended March 31, 1995. (Please see Average Annual Total Return
chart on page 10 of this report for additional performance information.) It is
also noteworthy that this strong performance over the last five years has been
achieved with the need for only minimal capital gains distributions, an
important consideration for investors interested in after-tax income.
While we have a generally positive outlook for the fixed-income markets, the
size of the rally we have experienced so far would seem to leave little room for
disappointment, and any sign of a rebound in economic activity is likely to
result in a return to higher interest rates. We also believe that the unique
supply and demand characteristics of the municipal market and tax-reform
uncertainties will tend to exaggerate price swings relative to taxable
investments.
In light of this viewpoint, we are maintaining a balanced approach to
structuring the interest-rate sensitivity of the Portfolio by investing in a
combination of both long and short effective maturities. Most long-term
municipal bonds are callable prior to their stated maturity date. When a bond
has a coupon higher than prevailing market yields, its maturity is effectively
shortened to the call date for trading purposes because of the possibility that
the issuer will exercise its option to replace the bond with lower-cost debt.
3
<PAGE>
We are retaining high-coupon bonds that trade well above their face value for
the defensiveness of their shorter effective maturities and the above-market
level of income they provide. However, we are also focusing on eliminating bonds
with shorter call dates when they are trading near their face value. Such bonds
have unfavorable performance characteristics because they retain the downside
risk of their longer maturity if rates should rise, but their appreciation
potential is limited by the shorter call date if interest rates decline. We are
replacing such issues with bonds that have similar stated maturities but greater
call protection.
Although this strategy sacrifices some of the current income being generated by
the Portfolio, it enhances long term performance potential if interest rates
continue to decline without adding to downside risk if interest rates rise. We
believe that positioning the Portfolio in this manner is the best way to achieve
our objective of the highest tax-free income consistent with prudent investment
risk.
California Limited Term Portfolio
The California Limited Term Portfolio had a total return of 5.89% (Class A
shares) for the fiscal year. This return compared favorably with the 5.21%
average total return for all California intermediate municipal bond funds over
the same period, as reported by Lipper Analytical Services.
As discussed above in our commentary on the California Portfolio, any rebound in
economic activity is likely to result in a return to higher interest rates.
Accordingly, we are taking a more cautious approach to structuring the interest-
rate sensitivity of the Portfolio. Relative stability of principal is an
important consideration for this fund, which is positioned in the five- to 10-
year intermediate maturity range. In this regard, we are placing emphasis on
higher coupon issues trading at a premium to their face value. Such bonds will
decline less in price than current coupon or market discount bonds should the
economy rebound and cause a rise in interest rates. In addition, the maturities
of these holdings are effectively shorter than their stated maturity date, which
serves to further reduce the Portfolio's interest-rate sensitivity. Examples of
such issues are bonds priced to a call date earlier than maturity, bonds with
sinking funds designed to retire a portion of the issue prior to maturity, and
housing bonds that are subject to early call from prepayments on mortgages.
California Money Market Portfolio
As of March 31, 1995, the California Money Market Portfolio's 7-day current
yield was 3.39%, and its 7-day effective yield, which reflects compounding, was
3.45%. For the same period, the Portfolio's tax-equivalent yield, the yield you
would have to earn on a similar taxable investment to match the
4
<PAGE>
tax-free yield, was 5.71% assuming you are in the 39.6% tax bracket. During the
12 months ended March 31, 1995, the Portfolio's monthly tax-exempt dividend
distributions resulted in a tax-exempt annualized yield of 2.66%.
As mentioned earlier in this letter, Orange County, California and its
investment fund were pushed into bankruptcy late in 1994. The California Money
Market Portfolio did hold a small amount of securities issued by Orange County
which were backed by commercial bank letters of credit which guarantee payment
to the security holder in case of default.
The California Money Market Portfolio invests only in short-term securities
which carry minimal credit risk. All of the Portfolio's holdings are rated
within the top two short-term rating categories or are of comparable quality.
The Portfolio's average maturity, which has not changed during the past year, is
in the 30- to 50-day range. This relatively short maturity range allows us to
readjust the Portfolio's holdings sooner should interest rates rise, as we
believe they might sometime later this year.
An investment in the California Money Market Portfolio is neither insured nor
guaranteed by the U.S. Government and there can be no assurance that the
Portfolio will be able to maintain a stable net asset value of $1.00 per share.
We thank you for your investment in the Portfolios and your continued confidence
in our investment management.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman and Chief Vice President and Investment Officer
Executive Officer
/s/ Karen Mahoney-Malcomson
Karen Mahoney-Malcomson
Vice President and Investment Officer
April 28, 1995
5
<PAGE>
Smith Barney Muni Funds
California Limited Term Portfolio
- --------------------------------------------------------------------------------
Historical Performance - Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
========================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $6.41 $6.44 $0.32 $0.01 5.89%
- ----------------------------------------------------------------------------------------
Inception* - 3/31/94 6.50 6.41 0.24 0.00 2.29
========================================================================================
Total $0.56 $0.01
========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class C Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
========================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $6.41 $6.44 $0.31 $0.01 5.56%
- ----------------------------------------------------------------------------------------
Inception* - 3/31/94 6.51 6.41 0.23 0.00 1.87
========================================================================================
Total $0.54 $0.01
========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class Y Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
========================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $6.41 $6.44 $0.32 $0.01 5.87%
- ----------------------------------------------------------------------------------------
Inception* - 3/31/94 6.57 6.41 0.16 0.00 N/A
========================================================================================
Total $0.48 $0.01
========================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
6
<PAGE>
Smith Barney Muni Funds
California Limited Term Portfolio
- --------------------------------------------------------------------------------
Annual Average Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
--------------------------------------------
Class A Class C Class Y
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 5.89% 5.56% 5.87%
- --------------------------------------------------------------------------------
Inception* through 3/31/95 4.23 3.97 3.22
- --------------------------------------------------------------------------------
<CAPTION>
With Sales Charge/(2)/
--------------------------------------------
Class A Class C Class Y
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 3.79% 4.56% N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/95 3.17 3.97 N/A
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
================================================================================
<S> <C>
Class A (Inception* through 3/31/95) 8.32%
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/95) 7.54
- --------------------------------------------------------------------------------
Class Y (Inception* through 3/31/95) 5.76
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 2.00% and Class C shares reflect the
deduction of a 1.00% CDSC which applies if shares are redeemed less than one
year from initital purchase.
* Inception dates for Class A, C and Y shares are April 27, 1993, May 18,
1993 and June 23, 1993, respectively.
7
<PAGE>
Smith Barney Muni Funds
California Limited Term Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the California
Limited Term Portfolio vs. Lehman Ten Year General Obligation Index/+/
(unaudited)
- --------------------------------------------------------------------------------
April 1993 - March 1995
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
54990 S/B Calif. Money Mkt. pg. 7
California Limited Term Lehman 10 Year\General Obligation Index
<S> <C> <C>
4/27/93 9800 10000
Apr-93 9800 10101
May-93 9800 10143.42
Jun-93 9939.7 10322.96
Jul-93 9964.8 10357.03
Aug-93 10156.5 10571.42
Sep-93 10257.8 10703.56
Oct-93 10267.7 10717.48
Nov-93 10201.4 10640.31
Dec-93 10411.5 10864.82
Jan-94 10530.1 11002.8
Feb-94 10276.2 10657.32
Mar-94 10021.2 10265.13
Apr-94 10391.39
May-94 10474.52
Jun-94 10416.91
Jul-94 10583.58
Aug-94 10635.44
Sep-94 10240.5 10484.42
Mar-95 10,605.00 11,000.12
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on April 27, 1993, assuming deduction of the maximum 2.00% sales charge at the
time of investment and reinvestment of dividends (after deduction of sales
charges, if any) and capital gains (at net asset value) through March 31,
1995. The Index is unmanaged and is not subject to the same management and
trading expenses of a mutual fund. The performance of the Portfolio's other
classes may be greater or less than the Class A shares' performance indicated
on this chart, depending on whether greater or lesser sales charges and fees
were incurred by shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
8
<PAGE>
Smith Barney Muni Funds
California Portfolio
- --------------------------------------------------------------------------------
Historical Performance - Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
==============================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $12.27 $12.28 $0.75 $0.00 6.47%
- ----------------------------------------------------------------------------------------------
3/31/94 12.78 12.27 0.77 0.03 2.15
- ----------------------------------------------------------------------------------------------
3/31/93 12.05 12.78 0.78 0.00 12.93
- ----------------------------------------------------------------------------------------------
3/31/92 11.62 12.05 0.80 0.00 11.11
- ----------------------------------------------------------------------------------------------
3/31/91 11.47 11.62 0.84 0.00 8.90
- ----------------------------------------------------------------------------------------------
3/31/90 11.17 11.47 0.85 0.00 10.44
- ----------------------------------------------------------------------------------------------
3/31/89 10.96 11.17 0.86 0.00 10.07
- ----------------------------------------------------------------------------------------------
Inception* - 3/31/88 12.50 10.96 0.88 0.00 (5.79)
==============================================================================================
Total $6.53 $0.03
==============================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
==============================================================================================
<S> <C> <C> <C> <C> <C>
Inception* - 3/31/95 $11.52 $12.29 $0.28 $0.00 9.18%
==============================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class C Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
==============================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $12.26 $12.28 $0.66 $0.00 5.80%
- ----------------------------------------------------------------------------------------------
3/31/94 12.77 12.26 0.68 0.03 1.45
- ----------------------------------------------------------------------------------------------
Inception* - 3/31/93 12.46 12.77 0.18 0.00 3.95
==============================================================================================
Total $1.52 $0.03
==============================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
9
<PAGE>
Smith Barney Muni Funds
California Portfolio
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
---------------------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 6.47% N/A 5.80%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/95 8.24 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/95 6.88 9.18 5.02
- --------------------------------------------------------------------------------
<CAPTION>
With Sales Charge/(2)/
---------------------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 2.22% N/A 4.80%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/95 7.36 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/95 6.33 4.68 5.02
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
================================================================================
<S> <C>
Class A (Inception* through 3/31/95) 70.16%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/95) 9.18
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/95) 11.57
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 4.00%; Class B shares reflect the deduction
of a 4.50% CDSC, which applies if shares are redeemed less than one year
from initital purchase. This CDSC declines by 0.50% the first year after
purchase and by 1.00% per year thereafter until no CDSC is incurred. Class C
shares reflect the deduction of a 1.00% CDSC which applies if shares are
redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are April 3, 1987, November 11,
1994 and January 5, 1993, respectively.
10
<PAGE>
Smith Barney Muni Funds
California Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the California
Portfolio vs. Lehman Long Bond Index/+/
(unaudited)
- --------------------------------------------------------------------------------
April 1987 - March 1995
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
54990 S/B Calif. Money Mkt. pg. 10
California Lehman Long Bond Index
<S> <C> <C>
4/3/87 9600.61 10000
Mar-88 9394.4 10165.6
Mar-89 10307 11126.44
Mar-90 11350.4 12337.77
Mar-91 12324.8 13298.21
Mar-92 13657 14805.68
Mar-93 15383.5 16967.65
Mar-94 15677.1 17156.89
Mar-95 16666.7 18706.04
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on April 3, 1987, assuming deduction of the maximum 4.00% sales charge at the
time of investment and reinvestment of dividends (after deduction of
applicable sales charges, if any) and capital gains (at net asset value)
through March 31, 1995. The Index is unmanaged and is not subject to the same
management and trading expenses of a mutual fund. The performance of the
Portfolio's other classes may be greater or less than the Class A shares'
performance indicated on this chart, depending on whether greater or lesser
sales charges and fees were incurred by shareholders investing in the other
classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
values may be more or less than the original cost. No adjustment has been made
for shareholder tax liability on dividends or capital gains.
11
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
========================================================================================================
<C> <C> <S> <C>
$ 2,000,000 VMIG 1 ABAG Finance Authority for Nonprofit Corporations
COP (Lucile Salter Packard Project) 3.90%(b) $ 2,000,000
12,350,000 VMIG 1 Anaheim COP (Police Facility Refinancing
Project) 4.00%(b) 12,350,000
4,000,000 A-1 Anaheim Housing Authority Multi-Family Housing
(Park Vista Apartments-A) 4.20%(a)(b) 4,000,000
1,100,000 A-1+ Burbank Redevelopment Agency Multi-Family
Revenue 4.05%(b) 1,100,000
6,000,000 SP-1 Butte County Office of Education BAN 5.00%
due 10/27/95 6,022,366
California Alternative Energy Source Finance Authority:
Cogeneration Revenue Refunding Arroyo Energy:
27,100,000 A-1+ Series A 4.10%(a)(b) 27,100,000
8,000,000 A-1+ Series B 4.10%(a)(b) 8,000,000
3,800,000 VMIG 1 Hydroelectric Rock Creek Limited 3.95%(a)(b) 3,800,000
2,300,000 A-1 Modesto Energy Project Series A 4.25%(b) 2,300,000
California Health Facility Authority Revenue
Daughters of Charity:
26,983,466 MIG 1 O' Connor Hospital Series A 4.15%(b) 26,983,466
6,340,000 MIG 1 O' Connor Hospital Series B 4.15%(b) 6,340,000
20,245,000 MIG 1 Seton Medical Center Series B 4.15%(b) 20,245,000
34,500,000 VMIG 1 St. Francis Medical Center 4.15%(b) 34,500,000
25,810,109 MIG 1 Tri-Provincial Health Care System
Sister Mary's Health Hospital 3.95%(b) 25,810,109
California Housing Finance Agency Revenue:
12,120,000 VMIG 1 P-Floats (PT - 40A) 4.35%(a)(b) 12,120,000
900,000 VMIG 1 Multi-Family Housing Series A 4.20%(a)(b) 900,000
California Health Facility Financing Authority Revenue:
5,000,000 P-1 Adventist Health System Series B 4.00%(b) 5,000,000
1,700,000 VMIG 1 Granada Hills Community Hospital 4.35%(b) 1,700,000
9,000,000 VMIG 1 Kaiser Permanente Series 93A 4.00%(b) 9,000,000
1,500,000 MIG 1 Orange County Children's Hospital 3.95%(b) 1,500,000
2,200,000 VMIG 1 Pool Program Series 90A 4.20%(b) 2,200,000
California Pollution Control Finance Authority:
4,000,000 AA PCR (Chevron USA Inc. Project) 3.10%
due 5/15/95(f) 3,993,932
300,000 A-1+ PCR (Southdown Inc. Project) 3.60%(b) 300,000
4,900,000 A-1+ PCR (Southdown Inc. Project) 3.60%(b) 4,900,000
1,100,000 A-1+ PCR (Southdown Inc. Project) Series B 3.60%(b) 1,100,000
1,500,000 A-1 PCR (San Diego Gas & Electric) 4.25% due 9/1/95(f) 1,500,000
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
========================================================================================================
<C> <C> <S> <C>
$ 2,000,000 A-1 PCR (San Diego Gas & Electric) Series A 4.25%
due 8/1/95(f) $ 2,000,000
7,000,000 P-1 PCR Refunding (Sierra Pacific Project) 4.05%(b) 7,000,000
5,300,000 A-1 Resource Recovery (Wadham Energy Project)
Series A 4.15%(a)(b) 5,300,000
1,900,000 A-1 Resource Recovery (Wadham Energy Project)
Series C 4.15%(a)(b) 1,900,000
4,250,000 Aa2 Resource Recovery (Sanger Project) Series A
4.05%(a)(b) 4,250,000
Solid Waste Disposal Revenue:
17,900,000 VMIG 1 Colmac Energy Project Series A 4.05%(a)(b) 17,900,000
18,400,000 VMIG 1 Colmac Energy Project Series B 4.05%(a)(b) 18,400,000
7,000,000 VMIG 1 Colmac Energy Project Series C 4.05%(a)(b) 7,000,000
2,075,000 P-1 Sierra Pacific Project 4.15%(a)(b) 2,075,000
7,000,000 MIG 1 California School Cash Reserve Program Authority
Pool Series A 4.50% due 7/5/95 7,013,154
1,200,000 Aa2 California State Community Development Authority
Solid Waste Facility Revenue (Chevron U.S.A. Inc
Project) 4.45% (a)(b) 1,200,000
9,500,000 MIG 1 California State RAN Series A 5.00% due 6/28/95 9,515,526
80,800,000 MIG 1 California State RAN Series B 4.07% due 6/28/95 80,795,087
22,780,000 VMIG 1 California State TOB (BTP-93 A) 4.35%(b) 22,780,000
8,500,000 VMIG 1 California State TOB (BTP-94 A) 4.35%(b) 8,500,000
27,420,000 VMIG 1 California State TOB (BTP-106 A) 4.35%(b) 27,420,000
17,500,000 VMIG 1 California State GO Custody Receipt Series 1992A
4.10% due 5/1/95(f) 17,500,000
6,255,000 A-1+ California State Trust Receipts Series 95 (SGA-7)
4.40%(b) 6,255,000
5,000,000 MIG 1 California Statewide Community Development Authority
TRAN Series A 4.50% due 7/17/95 5,010,586
2,600,000 SP-1+ Castro Valley Union School District TRAN 4.50%
due 7/5/95 2,604,234
845,000 SP-1+ Chula Vista IDR (Sutherland/Palumbo Project)
4.15%(a)(b) 845,000
26,500,000 P-1 Chula Vista IDR (San Diego Gas & Electric Co.)
4.20%(a)(b) 26,500,000
12,570,000 VMIG 1 Clipper California Series 94-2 4.22%(b) 12,570,000
23,100,000 MIG 2 Clovis Union School District TRAN 4.50% due 7/31/95 23,141,749
3,500,000 A-1+ Concord Multi-Family Mortgage Revenue (Crossroads
Apartments) Series 88B 4.00%(b) 3,500,000
12,000,000 VMIG 1 Contra Costa County Multi-Family Housing Revenue
(Park Regency) Series 92A 4.20% (a)(b) 12,000,000
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
========================================================================================================
<C> <C> <S> <C>
$ 3,500,000 A-1 Contra Costa County Multi-Family Housing Revenue
Refunding (Del Norte Apartments) Series 94A
4.30%(a)(b) $ 3,500,000
2,000,000 VMIG 1 Fairfield IDA (R. Dakin & Company Project) 3.65%(b) 2,000,000
100,000 VMIG 1 Fontana Multi-Family Housing Revenue Bonds
(Citrus Avenue Apartments Project) Series A 4.05%(b) 100,000
500,000 A-1+ Fontana Multi-Family Housing Revenue Bonds
(Springtime Apartments Project) Series A 4.05%(a)(b) 500,000
5,500,000 A-1 Fremont Multi-Family Housing Revenue (Mission
Wells Project) 4.10%(b) 5,500,000
1,000,000 VMIG 1 Garden Grove Multi-Family Housing (Valley View
Senior Villas) 4.35%(b) 1,000,000
2,800,000 A-1+ Glendale Public Parking (Reliance Development
Company) 1984A 3.60%(b) 2,800,000
1,140,000 VMIG 1 Grand Terrace Community Redevelopment Agency
Multi-Family Revenue (Mt Vernon Villas) 4.20%(b) 1,140,000
2,900,000 A-1 Hayward Housing Authority Multi-Family Revenue
Refunding Mortgage (Huntwood Terrace
Apartments) 4.15%(b) 2,900,000
1,230,000 A-1 Healdsburg Community Redevelopment Agency
Revenue Refunding (Vineyard Plaza Project- A
Shopping Center) 4.20%(b) 1,230,000
4,000,000 SP-1 Humbolt County Office of Education TRAN 4.25%
due 7/5/95 4,005,512
1,225,000 VMIG 1 Indigo Housing Authority Revenue (Smoketree
Apartments) 4.20%(b) 1,225,000
6,550,000 SP-1+ Irvine TRAN 4.50% due 7/28/95 6,560,138
27,400,000 A-1 Irvine Multi-Family Housing Revenue Series 1993A
4.20%(b) 27,400,000
Kern County COP (Kern Public Facility Project):
1,900,000 VMIG 1 Series A 3.95%(b) 1,900,000
4,000,000 VMIG 1 Series C 3.95%(b) 4,000,000
1,900,000 VMIG 1 Series D 3.95%(b) 1,900,000
2,600,000 A-1+ Kern County Union School District COP Financing
Project 4.10%(b) 2,600,000
1,675,000 VMIG 1 Livermore COP Water Reclamation Plant Project
4.05%(b) 1,675,000
8,000,000 P-1 Lodi IDR (Dart Container) 4.13%(b) 8,000,000
9,500,000 VMIG 1 Long Beach Health Facility Revenue (Memorial
Health Services) 1991 4.05%(b) 9,500,000
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
========================================================================================================
<C> <C> <S> <C>
$ 1,500,000 VMIG 1 Los Angeles COP (Simon Wiesenthal Center Project)
3.95%(b) $ 1,500,000
Los Angeles Community Redevelopment Agency COP:
100,000 VMIG 1 Broadway Spring Center Project 4.10%(a)(b) 100,000
2,770,000 VMIG 1 Multi-Family Housing Revenue Skyline at Southpark
Apartments Series 85 4.10%(b) 2,770,000
Los Angeles Convention & Exhibition Center
Authority COP:
2,800,000 A-1+ Series 89B 4.10%(b) 2,800,000
25,740,000 A-1+ Series 95B 4.35%(b) 25,740,000
4,005,000 A-1+ Los Angeles Department of Water & Power Electric
4.40%(b) 4,005,000
Los Angeles Multi-Family Housing Revenue:
2,700,000 NR++ Beverly Park Apartments 4.00%(a)(b) 2,700,000
2,000,000 VMIG 1 Masselin Manor 4.05%(b) 2,000,000
18,100,000 A-1+ Series K 3.70%(b) 18,100,000
1,500,000 MIG 1 Los Angeles County TRAN 4.50% due 6/30/95 1,502,315
Los Angeles County Housing Authority Multi-Family
Housing Revenue:
13,000,000 A-1 Diamond Apartments Project Series A 4.00%(a)(b) 13,000,000
5,000,000 A-1 Malibu Meadows II Project Series B 4.00%(b) 5,000,000
15,300,000 VMIG 1 Riverpark Apartments Project Series D 4.10%(a)(b) 15,300,000
14,700,000 A-1+ Los Angeles County Metropolitan Transportation Authority
Sales Tax Revenue Refunding Series A 4.00%(b) 14,700,000
21,100,000 VMIG 1 Los Angeles County Metropolitan Transportation Authority
(General Union Station Gateway) Series A 4.10%(b) 21,100,000
1,100,000 A-1 Los Angeles County Housing Multi-Family Mortgage
Revenue (Valencia Village Project) Series C 3.90%(b) 1,100,000
8,750,000 A-1+ Los Angeles County Sanitation District 93A 4.35%(b) 8,750,000
2,100,000 SP-1 Milpitas Union School District TRAN 4.50% due 7/5/95 2,103,683
4,875,000 A-1+ Modesto Multi-Family Housing Revenue Refunding
(Live Oak Apartments Project) 4.10%(a)(b) 4,875,000
13,500,000 VMIG 1 Mountain View Multi-Family Housing Revenue
(Villa Mariposa Project) 4.00%(b) 13,500,000
2,000,000 SP-1+ Newark Union School District TRAN 4.50% due 7/5/95 2,003,508
9,600,000 VMIG 1 Newport News Redevelopment & Housing Authority
Multi-Family Housing Revenue (Newport Oxford
Project) 4.20%(b) 9,600,000
3,650,000 MIG 1 North Monterey County Union School District TRAN
4.25% due 7/5/95 3,655,030
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
========================================================================================================
<C> <C> <S> <C>
$ 3,000,000 A-1+ Oakland Revenue (Children's Hospital Medical
Center) 4.00%(b) $ 3,000,000
260,000 VMIG 1 Ontario Multi-Family Revenue (Vineyard
Village Project) 4.10%(b) 260,000
Orange County Apartment Development Revenue:
1,725,000 VMIG 1 Latern Pines Project 4.25%(b) 1,725,000
15,800,000 A-1+ Monarch Bay Apartments 4.50%(b) 15,800,000
2,700,000 A-1 The Lakes Project Series A 4.20%(b) 2,700,000
1,700,000 VMIG 1 Wood Canyon Villas 4.40%(a)(b) 1,700,000
1,070,000 SP-1 Petaluma City Union School District TRAN 4.50%
due 7/5/95 1,071,606
8,160,000 A-1+ Pleasanton Multi-Family Mortgage Revenue
(Valley Plaza) 4.00%(b) 8,160,000
400,000 VMIG 1 Puerto Rico Commonwealth Government Development
Bank 4.10%(b) 400,000
500,000 P-1 Rancho Mirage Redevelopment Agency COP 4.15%(a)(b) 500,000
3,940,000 A-1+ Riverside County Housing Authority Multi-Family
Mortgage Revenue (Woodcreek Village)
Series D 4.00%(b) 3,940,000
1,000,000 A-1+ Roseville Finance Authority Hospital Lease Revenue
(Roseville Hospital) Series A 4.05%(b) 1,000,000
500,000 VMIG 1 Sacramento County Housing Authority Multi-Family
Housing Revenue Refunding (Grouse Run
Apartments) 4.05%(b) 500,000
Sacramento County Multi-Family Housing Revenue:
2,200,000 VMIG 1 Series 1985A 4.20%(b) 2,200,000
200,000 VMIG 1 Series 1985B 4.20%(b) 200,000
1,200,000 VMIG 1 Series 1985C 4.20%(b) 1,200,000
5,000,000 VMIG 1 Saint Charles County IDA Revenue (Sun River Village
Apartments Project) 4.10%(b) 5,000,000
510,000 VMIG 1 San Bernardino IDR (Gate City Beverage
Distributor Inc.) 4.10%(b) 510,000
950,000 A-1 San Bernardino Multi-Family Housing Revenue
(Castle Park Apartments Project) 4.45%(b) 950,000
2,550,000 A-1+ San Bernardino County Multi-Family Housing
Revenue (Quail Apartments) 4.00%(b) 2,550,000
San Bernardino County IDA:
2,100,000 P-1 Master Halco Series 1986II 4.20%(a)(b) 2,100,000
190,000 P-1 Ring Can Co. Series 1986II 4.20%(a)(b) 190,000
1,045,000 P-1 Tower Industries Series IV 4.20%(a)(b) 1,045,000
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
$ 3,000,000 MIG 1 San Diego (City of) TAN 4.25% due 6/30/95 $ 3,004,636
1,500,000 A-1+ San Diego Multi-Family Mortgage Revenue (La Hoya
Point) 3.90%(b) 1,500,000
100,000 VMIG 1 San Diego Multi-Family Housing Revenue Refunding
(University Town Center Apartments) 4.05%(b) 100,000
16,000,000 VMIG 1 San Diego County Regional Transportation Community
Sales Tax Revenue 3.90%(b) 16,000,000
3,000,000 A-1 San Dimas Redevelopment Agency (San Dimas
Community Center) 3.85%(b) 3,000,000
San Francisco (City & County of) Multi-Family Housing
2,400,000 A-1 Winterland Project Series 1985C 3.95%(b) 2,400,000
8,500,000 A-1 San Francisco (City & County of) Redevelopment
Agency Multi-Family Housing (Fillmore Center) 3.95%(b) 8,500,000
100,000 VMIG 1 San Joaquin County Transportation Authority Sales
Tax Revenue 4.15%(b) 100,000
300,000 VMIG 1 San Jose Mortgage Revenue Multi-Family (Somerset
Park) Series A 4.25%(a)(b) 300,000
3,300,000 VMIG 1 San Jose Multi-Family Housing Revenue (Fairway Glen)
Series A 4.00%(b) 3,300,000
6,000,000 SP-1+ San Jose Union School District Santa Clara County
TRAN 4.25% due 7/5/95 6,008,268
1,125,000 A-1+ San Leandro Multi-Family Revenue (Parkside
Commons) Series A 4.00%(b) 1,125,000
2,750,000 SP-1+ San Mateo Union High School District TRAN
4.50% due 7/10/95 2,754,344
2,000,000 VMIG 1 Santa Ana IDR (Fiesta Market Place) 4.20%(b) 2,000,000
2,100,000 A-1 Santa Clara County Multi-Family Housing Revenue
Refunding (Garden Grove Apartments) 3.95%(b) 2,100,000
5,000,000 MIG 1 Temecula Union School District TRAN
4.25% due 7/5/95 5,006,890
1,200,000 VMIG 1 Visilia IDR (Akers West Association) 4.25%(a)(b) 1,200,000
3,490,000 Aa2 West Covina Lease Revenue Refunding (The Lake
Public Parking Project) 4.15%(b) 3,490,000
1,000,000 AAA Whittier Health Facility Revenue (Presbyterian
Intercommunity Hospital) 9.50% due 6/1/95(f) 1,029,335
3,320,000 A-1+ Woodland Multi-Family Mortgage Revenue
(Crossroads Village) Series A 4.00%(b) 3,320,000
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost - $946,020,474)(g) $946,020,474
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See page 30 for full footnote disclosures.
See Notes to Financial Statements.
17
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED TERM PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Education - 8.7%
$ 375,000 A* Fresno Unified School District COP Refunding,
Measure A Capital Project, Series A, 5.40% due 4/1/03 $ 363,750
300,000 A- New Haven Unified School District, Alameida County
1993 Refunding COP, 5.30% due 7/1/01 296,250
- ---------------------------------------------------------------------------------------------------------
660,000
- ---------------------------------------------------------------------------------------------------------
Escrowed to Maturity (e) - 15.0%
440,000 AAA Arlington Community Hospital Corporation, Parkview
Community Hospital First Mortgage Revenue,
(Escrowed to Maturity with U.S. Government
Securities), 8.00% due 6/1/04 486,200
135,000 AAA Montclair Redevelopment Agency, Residential
Mortgage Revenue, (Escrowed to Maturity with U.S.
Government Securities), 7.75% due 10/1/11 155,250
220,000 AAA San Francisco Airport Improvement Corp., Lease
Revenue, (Escrowed to Maturity with U.S.
Government Securities), 8.00% due 7/1/13 257,125
215,000 AAA Virgin Islands Territory GO, (Escrowed to Maturity
with U.S. Government Securities), 8.00% due 3/1/98 234,350
- ---------------------------------------------------------------------------------------------------------
1,132,925
- ---------------------------------------------------------------------------------------------------------
Hospital - 13.0%
345,000 AAA City of Marysville Hospital Revenue Refunding Bonds,
(The Fremont-Rideout Health Group), 1993 Series A,
AMBAC-Insured, 5.10% due 1/1/03(d) 336,806
250,000 A+ Riverside County Asset Leasing Corp., Leasehold
Revenue, Riverside County Hospital Project-A,
6.00% due 6/1/04 248,750
400,000 NR Valley Health Systems COP Refunding Project, 6.25%
due 5/15/99 396,500
- ---------------------------------------------------------------------------------------------------------
982,056
- ---------------------------------------------------------------------------------------------------------
Housing: Multi-Family - 10.7%
300,000 AAA San Luis Obispo HFA Multi-Family Housing Revenue,
Parkwood Apartments Project, Series A, FNMA-
Collateralized, 5.50% due 8/1/03 297,000
525,000 AAA City of Santa Rosa Mortgage Revenue Refunding,
Marlow Apartments Project, FHA-Insured,
5.60% due 9/1/05 511,219
- ---------------------------------------------------------------------------------------------------------
808,219
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED TERM PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Housing: Single-Family - 4.0%
$ 300,000 Aa* California HFA Home Mortgage Series B-1, 5.90%
due 8/1/04(a) $ 300,375
- ---------------------------------------------------------------------------------------------------------
Industrial Development - 3.6%
270,000 AA- Simi Valley Community Development Agency COP,
Simi Valley Business Center, Guaranty Agreement with
New England Mutual Life, 6.05% mandatory put 10/1/99 273,713
- ---------------------------------------------------------------------------------------------------------
Public Facilities - 17.9%
300,000 AA- Berkeley Revenue, Berkeley YMCA, LOC Banque
Nationale De Paris, 4.80% mandatory put 6/1/98 294,000
500,000 A- Foster City Public Financing Authority Revenue,
Foster City Community Development, Project Loan,
Series A, 5.20% due 9/1/00 489,375
345,000 A Mendocino County Public Facilities Authority
Corporation COP 1993, 5.50% due 8/15/03 329,906
250,000 A San Francisco City & County COP, San Francisco
Permit Center, 5.00% due 3/1/03 235,625
- ---------------------------------------------------------------------------------------------------------
1,348,906
- ---------------------------------------------------------------------------------------------------------
Short-Term (b) - 4.0%
300,000 P-1* California Pollution Control Financing Authority,
Resource Recovery Revenue, Delano Project, LOC
ABN Amro Bank, 4.35% due 8/1/19(a) 300,000
- ---------------------------------------------------------------------------------------------------------
Tax Allocation - 18.9%
690,000 AAA Lynwood Redevelopment Agency Tax Allocation,
Project Area, Series A, AMBAC-Insured, 5.125%
due 7/1/03(d) 676,200
750,000 A- Paramount Redevelopment Agency Tax Allocation
Refunding, Redevelopment Project Area No. 1, 5.80%
due 8/1/03 748,125
- ---------------------------------------------------------------------------------------------------------
1,424,325
- ---------------------------------------------------------------------------------------------------------
Utility - 4.2%
325,000 BBB- Trinity County Public Utilities District COP, Electric
District Facilities, 5.60% due 4/1/00 (a) 315,656
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost - $7,581,187)(g) $7,546,175
=========================================================================================================
</TABLE>
See page 30 for full footnote disclosures.
See Notes to Financial Statements.
19
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Education - 6.8%
$ 2,000,000 AAA Adelanto School District Series-B, FGIC-Insured,
zero coupon due 9/1/18 $ 452,500
1,000,000 Baa* California Educational Facilities Authority Revenue,
Pooled College & University Financing Series B,
Refunding, 6.125% due 6/1/09 975,000
1,000,000 A- California State Public Works Board High Technology
Facility Revenue, San Jose Facility Series-A, 7.75%
due 8/1/06 1,121,250
1,000,000 AAA Gilroy Unified School District, COP Refunding, FSA-
Insured, 6.25%, due 9/1/12 1,018,750
1,020,000 AAA Pomona Unified School District, Series B, FGIC-Insured,
6.25% due 8/1/14 1,049,323
4,000,000 AAA San Dieguito Union High School District COP, FSA-
Insured, stepped zero coupon to 4/1/00 then 5.95% to
maturity, due 4/1/23 2,800,000
1,530,000 AAA Santa Rosa High School, FGIC-Insured, 5.90% due 5/1/14 1,512,787
2,500,000 Baa1* Yuba City Unified School District COP, Andors
Karperos School Construction Project, 6.70%
due 2/1/13 2,462,500
- ---------------------------------------------------------------------------------------------------------
11,392,110
- ---------------------------------------------------------------------------------------------------------
Escrowed to Maturity (e) - 7.8%
270,000 AAA Contra Costa County Home Mortgage, GNMA-Collateralized
(Escrowed to Maturity with U.S. Government
Securities), 7.75% due 5/1/22(a) 324,337
3,325,000 AAA Perris County Single Family Mortgage Revenue, GNMA-
Backed Security Series A (Escrowed to Maturity with
U.S. Government Securities), 8.30% due 6/1/13(a) 4,085,593
400,000 AAA Pleasanton Capital Projects 1 & 2, (Escrowed to Maturity
with U.S. Government Securities), 8.75% due 10/1/08 444,500
6,000,000 AAA Pleasanton-Suisun City Home Finance Authority
Home Mortgage Revenue, MBIA-Insured (Escrowed
to Maturity with U.S. Government Securities),
zero coupon due 10/1/16 1,455,000
2,620,000 AAA Riverside County Single-Family Mortgage Revenue
Series-A (Escrowed to Maturity with U.S. Government
Securities), 8.30% due 11/1/12(a) 3,245,525
1,500,000 AAA Sacramento County Single-Family Mortgage Revenue,
GNMA-Collateralized, Issue A, (Escrowed to Maturity with
U.S. Government Securities), 8.125% due 7/1/16(a) 1,805,625
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Escrowed to Maturity (e) - 7.8% (continued)
$4,310,000 AAA San Marcos Public Facilities Authority, Public Facilities
Revenue (Escrowed to Maturity with U.S. Government
Securities), zero coupon due 1/1/19 $ 894,325
700,000 AAA Santa Rosa Hospital Revenue, Santa Rosa Memorial
Hospital Project, (Escrowed to Maturity with U.S.
Government Securities), 10.30% due 3/1/01 936,250
- ---------------------------------------------------------------------------------------------------------
13,191,155
- ---------------------------------------------------------------------------------------------------------
Finance - 1.9%
Association of Bay Area Governments:
1,000,000 A Finance Corp. California COP, ABAG XXVI-Series A,
6.25% due 6/1/11 968,750
765,000 A* Municipal Financing Pool, 8.05% due 9/1/10 816,637
150,000 A- Concord Santa Cruz South Gate COP, 7.625%
due 6/1/11 150,187
750,000 Baa* Public Capital Improvements Financing Authority,
SunLife GIC, 8.50% due 3/1/18 805,313
500,000 Baa* Special District Financing Authority, COP, SunLife GIC,
8.50% due 7/1/18 540,000
- ---------------------------------------------------------------------------------------------------------
3,280,887
- ---------------------------------------------------------------------------------------------------------
Government Facilities - 1.9%
2,000,000 A- State Public Works Board Lease Revenue, Various
California State University Projects, Series A,
6.70% due 10/1/17 2,052,500
1,300,000 BBB Murrieta Financing Authority Police & Civic Center
Lease Revenue, Series A, 6.375% due 8/1/18 1,212,250
- ---------------------------------------------------------------------------------------------------------
3,264,750
- ---------------------------------------------------------------------------------------------------------
General Obligation - 1.7%
1,000,000 AAA San Diego Public Safety Communication Project,
6.65% due 7/15/11 1,091,250
1,500,000 AAA Santa Margarita/Dana Point Authority Revenue Bond,
MBIA-Insured, 7.25% due 8/1/14 1,717,500
- ---------------------------------------------------------------------------------------------------------
2,808,750
- ---------------------------------------------------------------------------------------------------------
Hospital - 15.7%
1,500,000 A Association of Bay Area Governments Finance
Authority Nonprofit Corps, California-Insured
COP, Rehabilitation Mental Health Services Inc.
Project, 6.55% due 6/1/22 1,492,500
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Hospital - 15.7% (continued)
$1,500,000 A Bakersfield Hospital Revenue, Bakersfield Memorial
Hospital, Series A, 6.50% due 1/1/22 $1,468,125
465,000 A+ California Health Facilities Financing Authority Revenue:
Community Provider Pooled Loan Program Series
1990A, LOC Swiss Bank Corporation,
7.35% due 6/1/20 489,994
1,150,000 A Episcopal Homes Foundation Project, CHFCLI-
Insured, 7.70% due 7/1/18 1,208,938
2,015,000 Aa* Hospital Revenue Bonds (Daughters of Charity
National Health System), Series 1994A,
5.65% due 10/1/14 1,858,838
1,450,000 A+ St. Elizabeth Hospital Project, 6.20% due 11/15/09 1,431,875
1,250,000 A South Coast Medical Center, CHFCLI-Insured,
7.25% due 7/1/15 1,300,000
1,200,000 AAA California Statewide Community Development
Corporation, COP (Villaview Hospital), CHFCLI-
Insured, 7.00% due 9/1/09 1,249,500
1,000,000 AA California Statewide Community Development Authority
Revenue, (St. Joseph Health System),
6.625% due 7/1/21 1,021,250
1,405,000 A+ Contra Costa County, California COP, Merrithew Memorial
Hospital, 6.50% due 11/1/06 1,429,588
2,000,000 A+ County of Riverside Asset Leasing Corp. Leasehold
Revenue Bonds 1993A, Riverside Hospital Project,
6.375% due 6/1/09 1,995,000
1,000,000 Aa* Fresno Health Facilities Revenue (Holy Cross System-
St. Agnes), 6.625% due 6/1/21 1,016,250
250,000 BB+ Glendale Hospital Revenue Refunding (Glendale
Memorial Hospital), 9.00% due 11/1/17 262,500
1,000,000 A+ Inglewood Insured Hospital Revenue Bonds
(Daniel Freeman Hospital Inc.), Series 1991,
CHFCLI-Insured, 6.75% due 5/1/13 1,012,500
1,000,000 A Rancho Mirage Joint Powers Financing Authority
(Eisenhower Memorial Hospital), 7.00% due 3/1/22 1,013,750
2,000,000 A San Bernardino Capital Facilities Project, COP
Series B, 6.875% due 8/1/24 2,237,500
2,620,000 A- San Bernardino County Medical Center
Financing Project, 6.00% due 8/1/09 2,390,750
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Hospital - 15.7% (continued)
$2,750,000 A* San Joaquin County COP, General Hospital Poject
1993, 6.25% due 9/1/13 $ 2,653,750
910,000 A Torrance Hospital Revenue (Little Co. of Mary Hospital),
6.875% due 7/1/15 933,888
- ---------------------------------------------------------------------------------------------------------
26,466,496
- ---------------------------------------------------------------------------------------------------------
Housing: Multi-Family - 4.0%
California HFA Revenue:
245,000 AAA Multi-Family Housing Revenue, MBIA-Insured,
8.75% due 8/1/10(d) 259,394
1,630,000 A+ Multi-Unit Rental Housing Series A, 6.625%
due 2/1/24 1,615,738
1,100,000 A California Statewide Communities Development
Corporation (Solheim Lutheran Home),
6.50% due 11/1/17 1,038,124
2,400,000 Aaa* San Francisco City & County Redevelopment Agency
Multi-Family Revenue Refunding South Beach
Project, GNMA-Collateralized, 5.70% due 3/1/29 2,211,000
1,500,000 A1* San Jose Multi-Family Housing Senior Revenue
(Timberwood Apartments), Series A, LOC Wells Fargo
Bank, 7.50% due 2/1/20 1,550,625
- ---------------------------------------------------------------------------------------------------------
6,674,881
- ---------------------------------------------------------------------------------------------------------
Housing: Single-Family - 3.2%
California HFA Home Mortgage Revenue:
40,000 AA 9.125% due 2/1/07 41,200
615,000 Aa* 8.25% due 8/1/08(a) 639,600
235,000 Aa* 8.60% due 8/1/19(a) 247,338
770,000 Aa* 8.30% due 8/1/19(a) 809,462
1,000,000 AA- 7.00% due 8/1/26 1,010,000
350,000 Aa* Zero coupon due 8/1/15 45,062
520,000 Aa* Series E, 8.35% due 8/1/19(a) 544,700
480,000 AAA California Housing Finance Agency Revenue Housing
Series C, MBIA-Insured, 7.00% due 8/1/23(a) 495,600
800,000 AAA Los Angeles Single-Family Home Mortgage Revenue,
GNMA-Collateralized Mortgage Backed Securities
Program, Issue A, 7.55% due 12/1/23(a) 833,000
295,000 Baa* Riverside County Housing Authority, 7.90% due 10/1/18 308,643
115,000 AAA San Francisco City & County Single-Family Mortgage
Revenue GNMA & FNMA Mortgage Backed Securities
Program, Series 1990, 7.45% due 1/1/24(a) 120,463
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Housing: Single-Family - 3.2% (continued)
$ 25,000 BBB+ Sonoma County Home Mortgage Revenue, 9.125%
due 6/1/15(d) $ 25,938
195,000 AAA Southern California Home Financing Authority Single-
Family Mortgage Revenue, GNMA & FNMA Mortgage
Backed Securities Program, 1990 Issue B, 7.75%
due 3/1/24(a) 207,188
- --------------------------------------------------------------------------------------------------------
5,328,194
- --------------------------------------------------------------------------------------------------------
Industrial Development - 2.1%
1,000,000 A1* Los Angeles County, IDA Revenue (Altshule Properties
Project) LOC Security Pacific, 7.20% due 10/1/11(a) 1,022,500
2,470,000 AA- Simi Valley Community Development Agency COP, Simi
Valley Business Center, Guaranty Agreement with New
England Mutual Life, 6.05% mandatory put 10/1/99 2,503,963
- --------------------------------------------------------------------------------------------------------
3,526,463
- --------------------------------------------------------------------------------------------------------
Miscellaneous - 4.1%
1,000,000 A- COP County of Los Angeles, 1991 Master Refunding
Project-RIBS, 8.772% due 5/1/15(c) 1,011,250
1,000,000 A COP County of Los Angeles, For Multiple Capital
Facilities Projects III SYCC, 7.34% due 11/1/11 1,022,500
Orange County Community Facilities District Special Tax:
1,000,000 A- #87-5A Rancho Santa Margarita, 7.80% due 8/15/13 1,108,750
1,500,000 AAA Rancho Santa Margarita, CGIC-Insured, 7.125%
due 8/15/17 1,580,625
1,000,000 A* Orange County (Mission Viejo) Series A 1990, Special
Tax Bonds Community Facilities District (Mello Roos),
7.80% due 8/15/15 1,142,500
1,000,000 AAA San Diego County Building Authority, Registered Fixed
Option Certificates, 6.363% due 11/18/19 1,018,750
- --------------------------------------------------------------------------------------------------------
6,884,375
- --------------------------------------------------------------------------------------------------------
Pollution Control - 5.2%
California Pollution Control Financing Authority:
2,500,000 A1* PCR (Pacific Gas & Electric Co.), 6.35%
due 6/1/09(a) 2,550,000
800,000 A1* PCR (Pacific Gas & Electric Co.), 8.20% due 12/1/18 863,000
500,000 AA- Resource Recovery Revenue Bonds (Waste
Management Inc.), 1991 Corporate Series A,
7.15% due 2/1/11(a) 530,000
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Pollution Control - 5.2% (continued)
$1,500,000 Aa3* San Diego Gas & Electric Co. Series A, 6.80% due
6/1/15(a) $1,618,125
1,000,000 A2* Southern California (Edison), 4.25% due 2/28/08 1,000,000
2,125,000 AAA Southern California, 6.40% due 12/1/24(a) 2,143,594
- ---------------------------------------------------------------------------------------------------------
8,704,719
- ---------------------------------------------------------------------------------------------------------
Power -- 2.6%
1,110,000 A* Northern California Power Agency (Geothermal Project),
5.00% due 7/1/09 978,188
2,000,000 AAA Northern California Power Agency (Hydroelectric Project),
5.50% due 7/1/16 1,865,000
1,000,000 AAA Redding COP Electric System Revenue, 8.345% due
7/1/22(c) 1,073,750
600,000 A Southern California Public Power Authority, Multiple
Project Revenue 1989 Series, 5.50% due 7/1/20 537,000
- ---------------------------------------------------------------------------------------------------------
4,453,938
- ---------------------------------------------------------------------------------------------------------
Pre-Refunded (e) - 16.1%
1,500,000 AAA California COP Lease Finance Authority, CSAC-Nevada
County, (Escrowed with U.S. Government Securities to
10/1/98 Call @ 101), 7.60% due 10/1/19 1,629,375
1,245,000 AAA Concord Redevelopment Agency Tax Allocation Bonds
(Central Concord Redevelopment Project) BIG-Insured,
(Escrowed with U.S. Government Securities to 7/1/98
Call @ 102), 8.00% due 7/1/18 1,386,619
1,500,000 AAA Desert Hospital Corporation Project, COP Series 1990,
(Escrowed with U.S. Government Securities to 7/1/00
Call @ 102), 8.10% due 7/1/20 1,736,250
320,000 AAA Dublin COP, Public Facilities Project No. 1, (Escrowed with
U.S. Government Securities to 2/1/96 Call @ par),
9.25% due 2/1/10 332,800
750,000 AAA El Camino Hospital Revenue COP, (Escrowed with U.S.
Government Securities to 9/1/97 Call @ 102), 8.50%
due 9/1/17 822,188
550,000 AAA Grossmont Hospital District, MBIA-Insured, (Escrowed with
U.S. Government Securities to 11/15/97 Call @ 102),
8.00% due 11/15/17 605,000
1,200,000 AAA Huntington Beach COP, Civic Center Project, (Escrowed with
U.S. Government Securities to 8/1/95 Call @ 102),
7.90% due 8/1/16 1,237,500
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Pre-Refunded (e) - 16.1% (continued)
$1,500,000 AAA Kings River Conservation District, Pine Flat Power
Revenue Series C, (Escrowed with U.S. Government
Securities to 1/1/97 Call @ 102), 7.90% due 1/1/20(d) $1,612,500
640,000 AAA Loma Linda Water Revenue, (Escrowed with U.S.
Government Securities to 12/1/95 Call @ 102),
9.25% due 12/1/10 672,800
500,000 AAA Los Angeles County Transportation Commission
Sales Tax Revenue Series A, (Escrowed with U.S.
Government Securities to 7/1/98 Call @ 102),
8.00% due 7/1/18 556,875
450,000 AAA Los Angeles Convention and Exhibition Center
Authority COP, (Escrowed with U.S. Government
Securities to 12/1/05 Call @ 100), 9.00% due 12/1/20 587,250
Los Angeles Department of Water and Power:
1,550,000 AAA Water Works Revenue, (Escrowed with U..S. Government
Securities to 2/15/99 Call @ 102), 7.20% due 2/15/19 1,699,188
1,000,000 AAA Electric Revenue, (Escrowed with U.S. Government
Securities to 5/1/98 Call @ 102), 7.90% due 5/1/28 1,105,000
1,950,000 AAA Electric Revenue, (Escrowed with U.S. Government
Securities to 1/15/01 Call @ 102), 7.10% due 1/15/31 2,164,500
1,200,000 AAA Los Angeles Waste Water System Revenue, (Escrowed
with U.S. Government Securities to 11/1/97 Call @ 102),
8.125% due 11/1/17 1,321,500
425,000 AAA Norwalk Redevelopment Agency (Norwalk Redevelopment
Area 1), (Escrowed with U.S. Government Securities to
12/1/95 Call @ 102), 9.10% due 12/1/15 444,656
500,000 AAA Oceanside County COP, AMBAC-Insured, (Escrowed with
U.S. Government Securities to 8/1/02 Call @ 102),
7.30% due 8/1/21 575,000
1,000,000 AAA Rancho Water District Finance Authority Revenue Bonds,
Series 1991, RITES, AMBAC-Insured, (Escrowed with
U.S. Government Securities to 8/17/01 Call @ 104),
9.574% due 8/15/21(c) 1,180,000
2,500,000 AAA Riverside County Asset Leasing Corp. Leasehold
Revenue (Riverside County Hospital Project)
(Escrowed with U.S. Government Securities to 6/1/99
Call @ 102), 7.40% due 6/1/14 2,768,750
1,000,000 AAA Sacramento Municipal Utilities District Electric Revenue,
Series P, (Escrowed with U.S. Government Securities to
7/1/95 Call @ 102), 8.625% due 7/1/10 1,030,500
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Pre-Refunded (e) - 16.1% (continued)
$1,000,000 AAA San Bernardino County COP (West Valley Detention
Center Project), (Escrowed with U.S. Government
Securities to 11/1/98 Call @ 102), 7.70% due 11/1/18 $ 1,112,500
250,000 AAA San Diego Redevelopment Agency (Marina
Redevelopment Project), (Escrowed with U.S.
Government Securities to 12/1/97 Call @ 101.5),
8.75% due 12/1/08 278,750
500,000 AAA Santa Clara County 1986 COP Capital Project I
(Courthouse and Detention Center), (Escrowed with
U.S. Government Securities to 10/1/96 Call @ 102),
8.00% due 10/1/16 535,000
1,000,000 AAA State Public Works Board Lease Revenue, Department
of Corrections (State Prison-Madera County),
(Escrowed with U.S. Government Securities to
9/1/00 Call @ 102), 7.00% due 9/1/09 1,111,250
500,000 AAA Upland COP (Police Building Construction Project),
(Escrowed with U.S. Government Securities to 8/1/98
Call @ 102), 8.20% due 8/1/16 533,125
- ---------------------------------------------------------------------------------------------------------
27,038,876
- ---------------------------------------------------------------------------------------------------------
Public Facilities - 9.7%
2,000,000 AAA Anaheim COP Convention Center RITES, MBIA-
Insured, 6.20% due 7/16/23(c) 2,035,000
2,000,000 AAA Anaheim Public Financing Authority Tax Allocation
Revenue, 6.45% due 12/28/18 2,077,500
500,000 A3* Association of Bay Area Governments Penninsula Family
YMCA, LOC Daiwa Bank, 6.80% due 10/1/11 504,375
1,025,000 Baa* Azusa COP Refunding Capital Improvement Refining
Project, 6.625% due 8/1/13 1,010,906
2,000,000 A- Burbank Redevelopment Agency Tax Allocation Series
A, 6.00% due 12/1/23 1,802,500
2,000,000 AAA California Public School District Financing Authority
Convertible Capital Appreciation Bonds, Palmdale School
District, FSA-Insured, Series 1993B, stepped zero coupon
to 9/30/99 then 6.20% to maturity, due 10/1/23 1,322,500
1,500,000 Baa* Corona Public Finance Authority 1993 Public
Improvement Refunding Revenue Bonds, 6.00%
due 7/1/14 1,365,000
2,000,000 A Mendocino County Public Facilities Authority
Corporation COP, Series 1993, 6.00% due 8/15/23 1,832,500
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==========================================================================================================
<C> <C> <S> <C>
Public Facilities - 9.7% (continued)
$2,875,000 AAA Santa Ana Financing Authority Lease Revenue-Police
Administration and Holding Facility, 6.25%
due 7/1/24 $ 2,925,313
1,500,000 NR Valley Health System COP Refunding Project, 6.875%
due 5/15/23 1,393,125
- ---------------------------------------------------------------------------------------------------------
16,268,719
- ---------------------------------------------------------------------------------------------------------
Short-Term (b) - 0.1%
100,000 A-1+ California Health Facilities Financing Authority Revenue,
St. Joseph Health System, 4.40% due 7/1/13 100,000
100,000 P-1* California Pollution Control Financing Authority, Shell
Oil Company Project, 4.40% due 10/1/11 100,000
- ---------------------------------------------------------------------------------------------------------
200,000
- ---------------------------------------------------------------------------------------------------------
Solid Waste - 1.8%
1,300,000 CAA Orange County COP, Orange County Public Facilities
Corp. (Solid Waste Management), 7.875%
due 12/1/07 1,314,625
750,000 A- Southeast Resource Recovery Facilities Authority,
Lease Revenue, 9.00% due 12/1/08 780,000
1,000,000 A- West Nevada County COP Solid Waste, 7.50%
due 6/1/21 990,000
- ---------------------------------------------------------------------------------------------------------
3,084,625
- ---------------------------------------------------------------------------------------------------------
Tax Allocation - 3.2%
1,000,000 Baa* Azusa Redevelopment Agency Tax Allocation Refunding
Merged Project Area, Series A, 6.75% due 8/1/23 993,750
295,000 AAA Brea Public Finance Authority Tax Allocation, MBIA-
Insured, 7.00% due 8/1/15 315,281
1,000,000 BBB Carson Redevelopment Agency Redevelopment Project
Area No. 2, 6.00% due 10/1/13 922,500
30,000 AAA Concord Redevelopment Agency Tax Allocation Bonds
(Central Concord Redevelopment Project), BIG-Insured,
8.00% due 7/1/18 33,075
1,000,000 Baa* Pomona Public Finance Authority Revenue Refunding
Southwest Pomona Redevelopment, 5.50% due 2/1/08 921,250
2,000,000 AAA South Orange County Public Financing Authority
Special Tax Revenue-Series A, 7.00% due 9/1/10 2,227,500
- ---------------------------------------------------------------------------------------------------------
5,413,356
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================================
<C> <C> <S> <C>
Transportation - 4.0%
$2,500,000 AAA Sacramento County Airport System Revenue, Series A,
FGIC-Insured, 6.00% due 7/1/12(a) $ 2,468,750
3,000,000 AAA San Francisco City & County Airports Second Series
Issue 5, FGIC-Insured, 6.50% due 5/1/19(a) 3,052,500
1,250,000 A* Santa Barbara COP Harbor Refunding Project, 6.75%
due 10/1/27 1,262,500
- ---------------------------------------------------------------------------------------------------------
6,783,750
- ---------------------------------------------------------------------------------------------------------
Utilities - 1.0%
1,760,000 BBB- Trinity County Public Utilities District COP, Electric
District Facilities, 6.75% due 4/1/23(a) 1,713,800
- ---------------------------------------------------------------------------------------------------------
Water & Sewer - 7.1%
1,200,000 A1* Bakersfield, COP (Waste Water Treatment Plant 3
Projects), 8.00% due 1/1/10 1,291,500
1,000,000 AAA Eastern Municipal Water District, Water & Sewer
Revenue COP, FGIC-Insured, 6.75% due 7/1/12 1,088,750
Irvine Ranch Water District Joint Powers Agency,
Local Agency Pool Revenue Bonds:
1,750,000 A+ 7.875% due 2/15/23(d) 1,820,000
1,000,000 A+ 8.25% due 8/15/23(d) 1,057,500
3,000,000 AAA Los Angeles Department of Water & Power,
Electric Plant Revenue, 5.375% due 9/1/23 2,700,000
1,425,000 AAA Los Angeles Wastewater Systems Revenue,
5.60% due 6/1/20 1,330,594
1,000,000 AAA San Buenaventura COP (1990 Water Enterprise
Financing), AMBAC-Insured, 7.50% due 10/1/20 1,136,250
1,300,000 AAA Yolo County Flood Control & Water Conservation
District COP, FGIC-Insured, 7.125% due 7/15/15 1,475,500
- ---------------------------------------------------------------------------------------------------------
11,900,094
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost - $163,257,338)(g) $168,379,938
=========================================================================================================
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
(a) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Variable rate obligations payable at par on demand at any time on no more
than seven days notice.
(c) Residual interest bonds-coupon varies inversely with level of short-term
tax-exempt interest rates.
(d) Securities segregated by Custodian for open purchase commitment.
(e) Pre-refunded bonds escrowed by U.S. Government Securities and bonds escrowed
to maturity by U.S. Government Securities are considered by manager to be
triple-A rated even if issuer has not applied for new ratings.
(f) Variable rate obligations payable at par on demand on the date indicated.
(g) The cost for Federal income tax purposes is substantially the same.
++ Security has not been rated by either Moody's Investors Services or
Standard & Poors, however, the portfolio manager has determined the
equivalent rating to be A-1+.
See pages 31 and 32 for definition of ratings and certan security
descriptions.
See Notes to Financial Statements.
30
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation, except those identified by an
asterisk (*) are rated by Moody's Investors Services. The definitions of the
applicable rating symbols are set forth below:
Standard & Poor's -- Rating from "AA" to "BB" may be modified by the addition of
a plus (+) or minus (-) sign to show relative standings within the major rating
categories.
AAA -- Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issue only in a small
degree.
A -- Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB -- Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher rated categories.
BB -- Debt rated "BB" has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa", where 1 is the highest and 3 the lowest ranking
within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
NR -- Indicates that the bond is not rated by Standard & Poor's
Corporation or Moody's Investors Services.
31
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Short-Term Security Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rate rating indicating very strong
or strong capacity to pay principal and interest; those issues
determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate
demand obligation (VRDO) rating indicating that the degree of
safety regarding timely payment is either overwhelming or very
strong; those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature --
(VRDO)
P-1 -- Moody's highest rating for commercial paper and for VRDO
prior to the advent of the VMIG 1 rating.
MIG 1 -- Moody's highest rating for short-term municipal obligations.
MIG 2 -- Moody's second highest rating for short-term municipal
obligations.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governors
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
CHFCLI -- California Health Facility Construction Loan Insurance
COP -- Certificate of Participation
EDA -- Economic Development Authority
ETM -- Escrowed To Maturity
FAIRS -- 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 -- Federal Savings Association
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
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation Notes
SYCC -- Structured Yield Curve Certificate
VA -- Veterans Administration
VRWE -- Variable Rate Wednesday Demand
32
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
California California
Money Market Limited Term California
Portfolio Portfolio Portfolio
==================================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost--$946,020,474,
$7,581,187 and $163,257,338, respectively) $946,020,474 $7,546,175 $168,379,938
Cash 41,743 39,508 11,412
Receivable for Fund shares sold -- -- 96,033
Interest receivable 9,264,118 108,201 2,820,179
Receivable from manager (Note 4) -- 8,087 --
Other receivables 27,419 -- 558
- --------------------------------------------------------------------------------------------------
Total Assets 955,353,754 7,701,971 171,308,120
- --------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for Fund shares purchased -- -- 72,052
Payable for securities purchased -- -- 1,574,775
Management fees payable 315,080 -- 64,719
Distribution costs payable 30,069 4,270 84,032
Dividends payable 1,640,278 -- --
Accrued expenses and other liabilities 48,493 11,722 24,650
- --------------------------------------------------------------------------------------------------
Total Liabilities 2,033,920 15,992 1,820,228
- --------------------------------------------------------------------------------------------------
Total Net Assets $953,319,834 $7,685,979 $169,487,892
==================================================================================================
NET ASSETS:
Par value of capital shares $ 953,647 $ 1,193 $ 13,800
Capital paid in excess of par value 952,693,160 7,876,194 164,073,039
Undistributed net investment income -- 31,762 197,611
Accumulated net realized gain (loss) on
security transactions (326,973) (188,158) 80,842
Net unrealized appreciation (depreciation) of
investments -- (35,012) 5,122,600
- --------------------------------------------------------------------------------------------------
Total Net Assets $953,319,834 $7,685,979 $169,487,892
==================================================================================================
Shares Outstanding:
Class A 953,646,807 834,901 13,189,538
----------------------------------------------------------------------------------------------
Class B -- -- 49,404
----------------------------------------------------------------------------------------------
Class C -- 277,285 560,918
----------------------------------------------------------------------------------------------
Class Y -- 81,185 --
----------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $1.00 $6.44 $12.28
----------------------------------------------------------------------------------------------
Class B * -- -- $12.29
----------------------------------------------------------------------------------------------
Class C ** -- $6.44 $12.28
----------------------------------------------------------------------------------------------
Class Y (and redemption price) -- $6.44 --
----------------------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
($6.44 plus 2.04% and $12.28 plus 4.17% of net
asset value per share, respectively) -- $6.57 $12.79
==================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by 4.50% if shares are
redeemed less than one year from initial purchase, declines by 0.50% the
first year after purchase and by 1.00% per year thereafter until no CDSC is
incurred.
** Redemption price is NAV of Class C shares reduced by 1.00% which applies
if shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
33
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Operations For the Year Ended March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
California California
Money Market Limited Term California
Portfolio Portfolio Portfolio
========================================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $16,977,373 $469,595 $11,647,965
- --------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 2,339,712 39,849 773,229
Distribution costs (Note 4) 467,929 11,585 172,390
Shareholder servicing agent fees 99,166 2,200 28,634
Shareholder communication fees 36,629 6,500 26,003
Audit and legal fees 5,767 8,000 9,902
Registration fees 5,154 4,000 12,001
Trustees' fees 3,188 4,796 9,001
Pricing service fees 1,200 3,600 23,002
Other 5,748 9,200 18,002
- --------------------------------------------------------------------------------------------------------
Total Expenses 2,964,493 89,730 1,072,164
Less: Expense reimbursement and
management fee waiver 100,000 47,936 --
- --------------------------------------------------------------------------------------------------------
Net Expenses 2,864,493 41,794 1,072,164
- --------------------------------------------------------------------------------------------------------
Net Investment Income 14,112,880 427,801 10,575,801
- --------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Realized Gain (Loss) From Security Transactions
(excluding short-term securities*):
Proceeds from sales 9,600,191 3,602,130 55,858,979
Cost of securities sold 9,601,626 3,790,197 55,689,937
- --------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) (1,435) (188,067) 169,042
- --------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
(Depreciation) of Investments:
Beginning of year -- (256,768) 5,567,001
End of year -- (35,012) 5,122,600
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Unrealized
Appreciation -- 221,756 (444,401)
- --------------------------------------------------------------------------------------------------------
Net Gain (Loss) on Investments (1,435) 33,689 (275,359)
- --------------------------------------------------------------------------------------------------------
Increase in Net Assets
From Operations $14,111,445 $461,490 $10,300,442
========================================================================================================
</TABLE>
* Represents only short-term securities for the California Money Market
----
Portfolio.
See Notes to Financial Statements.
34
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Years Ended March 31,
<TABLE>
<CAPTION>
California California
Money Market Portfolio Limited Term Portfolio
------------------------------ --------------------------
1995 1994 1995 1994(a)
==================================================================================================
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 14,112,880 $ 3,268,439 $ 427,801 $ 457,146
Net realized gain (loss)
from security transactions (1,435) 4,258 (188,067) 11,343
Increase (decrease) in net
unrealized appreciation
of investments -- -- 221,756 (256,768)
- --------------------------------------------------------------------------------------------------
Increase In Net Assets
From Operations 14,111,445 3,272,697 461,490 211,721
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS
FROM (Note 3):
Net investment income (14,075,680) (3,268,439) (443,189) (409,996)
Net realized gain from
security transactions -- -- (11,434) --
- --------------------------------------------------------------------------------------------------
Decrease In Net Assets From
Distributions To Shareholders (14,075,680) (3,268,439) (454,623) (409,996)
- --------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale
of shares 2,335,326,000 1,043,269,466 1,026,856 15,494,663
Net value of shares issued in
connection with the transfer of
the Smith Barney Shearson
California Municipal Money
Market Fund net assets 830,711,463 -- -- --
Net asset value of shares issued
for reinvestment of dividends 12,583,409 3,127,064 309,019 283,108
Cost of shares reacquired (2,415,119,839) (1,016,298,261) (4,531,777) (4,704,482)
- --------------------------------------------------------------------------------------------------
Increase (Decrease) In Net
Assets From Fund Share
Transactions 763,501,033 30,098,269 (3,195,902) 11,073,289
- --------------------------------------------------------------------------------------------------
Increase (Decrease) In Net Assets 763,536,798 30,102,527 (3,189,035) 10,875,014
NET ASSETS:
Beginning of year 189,783,036 159,680,509 10,875,014 --
- --------------------------------------------------------------------------------------------------
End of year* $ 953,319,834 $ 189,783,036 $ 7,685,979 $ 10,875,014
==================================================================================================
*Includes undistributed net
investment income of: -- -- $ 31,762 $ 47,150
==================================================================================================
</TABLE>
(a) For the period from April 27, 1993 (commencement of operations) to March 31,
1994.
See Notes to Financial Statements.
35
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
For the Years Ended March 31,
<TABLE>
<CAPTION>
California Portfolio
----------------------------
1995 1994
====================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 10,575,801 $ 10,731,905
Net realized gain from security transactions 169,042 483,893
Decrease in net unrealized appreciation
of investments (444,401) (7,814,856)
- ------------------------------------------------------------------------------------
Increase In Net Assets From Operations 10,300,442 3,400,942
- ------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 3):
Net investment income (10,612,295) (10,789,706)
Net realized gain from security transactions (16,954) (545,063)
- ------------------------------------------------------------------------------------
Decrease In Net Assets From Distributions
To Shareholders (10,629,249) (11,334,769)
- ------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 30,935,315 53,466,294
Net value of shares issued in connection with the
transfer of the Smith Barney Shearson California
Municipal Money Market Fund net assets -- --
Net asset value of shares issued for reinvestment
of dividends 3,672,477 4,422,622
Cost of shares reacquired (41,508,956) (38,954,545)
- ------------------------------------------------------------------------------------
Increase (Decrease) In Net Assets From
Fund Share Transactions (6,901,164) 18,934,371
- ------------------------------------------------------------------------------------
Increase (Decrease) In Net Assets (7,229,971) 11,000,544
NET ASSETS:
Beginning of year 176,717,863 165,717,319
- ------------------------------------------------------------------------------------
End of year* $169,487,892 $176,717,863
====================================================================================
*Includes undistributed net investment income of: $197,611 $234,105
====================================================================================
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The California Money Market, California Limited Term and California
Portfolios ("Portfolios") are separate investment portfolios of the Smith Barney
Muni Funds ("Fund"). The Fund, a Massachusetts business trust, is registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company and consists of these Portfolios and ten
other separate investment portfolios: Florida, Georgia, New Jersey, New York,
National, Ohio, Pennsylvania, Limited Term, Florida Limited Term and New York
Money Market Portfolios. The financial statements and financial highlights for
the other portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolios
are: (a) security transactions are accounted for on the trade date; (b)
securities are valued at bid 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; short-term securities and securities maturing
within 60 days are valued at cost plus (minus) accreted discount (amortized
premium), which approximates value; (c) gains or losses on the sale of
securities are calculated by using the specific identification method; (d)
interest income, adjusted for amortization of premiums and accretion of original
issue discount, is recorded on the accrual basis; market discount is recognized
upon the disposition of the security; (e) direct expenses are charged to each
Portfolio and each class; management fees and general fund expenses are
allocated on the basis of relative net assets; and (f) the Portfolios intend to
comply with the requirements of the Internal Revenue Code pertaining to
regulated investment companies and to make the required distributions to
shareholders; therefore, no provision for Federal income taxes has been made.
2. Portfolio Concentration
Since each Portfolio invests primarily in obligations of issuers within
California, it is subject to possible concentration risks associated with
economic, political, or legal developments or industrial or regional matters
specifically affecting California.
37
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
3. Exempt-Interest Dividends and Other Distributions
The California Money Market Portfolio declares and records a dividend of
substantially all its net investment income on each business day. Such dividends
are paid or reinvested monthly in fund shares on the payable date. Furthermore,
all Portfolios intend 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 Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually. At March 31, 1995 the California Money
Market and California Limited Term Portfolios had net capital loss carryovers of
$326,973 and $188,158, respectively, available to offset future capital gains.
To the extent that this carryover loss is used to offset capital gains it is
probable that any gains so offset will not be distributed. The amount and
expiration of the carryovers are indicated below. Expiration occurs on March 31
of the year indicated.
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002 2003
======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
California Money Market Portfolio $93,180 $58,601 $7,368 $74,192 $10,769 $81,428 $ 1,435
California Limited Term Portfolio -- -- -- -- -- -- 188,158
======================================================================================================
</TABLE>
4. Management Agreements and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager to the Fund. The
California Money Market Portfolio pays SBMFM a management fee calculated at an
annual rate of 0.50% of average daily net assets. The California Limited Term
and California Portfolios pay SBMFM a management fee calculated at an annual
rate of 0.45% of their average daily net assets. Such fees are calculated daily
and paid monthly. SBMFM waived $39,849 and $100,000 of its management fees for
the California Limited Term and California Money Market Portfolios,
respectively, for the year ended March 31, 1995. SBMFM also reimbursed expenses
of $8,087 for the California Limited Term Portfolio.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. SB received sales charges of approximately $255,000 (paid by
purchasers of the Portfolios' Class A shares) for the year ended March 31, 1995.
All officers and two Trustees of the Fund are employees of SB.
38
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Effective November 7, 1994, the Fund adopted a new class structure,
renaming Class B shares as Class C shares for the California Limited Term and
California Portfolios. In addition, in the California Limited Term Portfolio the
former Class C shares were renamed as Class Y shares and in the California
Portfolio the former Class C shares were exchanged into Class A shares. Under
the new class structure, for the California Portfolio, a contingent deferred
sales charge ("CDSC") of 4.50% is imposed on Class B shares if redemption occurs
less than one year from initial purchase. This CDSC declines by 0.50% the first
year after purchase and by 1.00% per year thereafter until no CDSC is incurred.
For the California Limited Term and California Portfolios a CDSC of 1.00% is
also imposed on Class C shares if redemption occurs less than one year from
initial purchase. Any CDSC imposed on redemptions is paid to SB. For the year
ended March 31, 1995, there were approximately $7,000 in such charges.
On September 16, 1994, a new Distribution Plan was approved by the Fund's
shareholders. Pursuant to this Distribution Plan, the California Portfolio pays
a service fee of 0.15% of average net asssets on an annual basis with respect to
its Class A, B and C shares; the California Limited Term Portfolio pays a
service fee of 0.15% of average net assets on an annual basis with respect to
its Class A and C shares. In addition, the California Portfolio pays a
distribution fee of 0.50% and 0.55% of average net assets on an annual basis
with respect to its Class B and C shares, respectively; the California Limited
Term Portfolio pays a distribution fee of 0.55% of average net assets on an
annual basis with respect to its Class C shares. The California Money Market
Portfolio pays for distribution related services calculated at annual rate of
0.10% of average net assets.
5. Investments
During the year ended March 31, 1995, the aggregate cost of purchases and
proceeds from sales (including maturities, but excluding short-term securities)
of investments were as follows:
<TABLE>
<CAPTION>
California California
Money Market Limited Term California
Portfolio Portfolio Portfolio
==============================================================================
<S> <C> <C> <C>
Purchases -- $2,332,226 $53,053,788
- ------------------------------------------------------------------------------
Sales -- 3,602,130 55,858,979
==============================================================================
</TABLE>
39
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At March 31, 1995, the gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were as follows:
<TABLE>
<CAPTION>
California California
Money Market Limited Term California
Portfolio Portfolio Portfolio
================================================================================
<S> <C> <C> <C>
Gross unrealized appreciation -- $ 56,614 $ 6,843,249
Gross unrealized depreciation -- (91,626) (1,720,649)
- --------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) -- $ (35,012) $ 5,122,600
================================================================================
</TABLE>
6. Transfer of Assets
On November 18, 1994 the net assets of the Smith Barney Shearson California
Municipal Money Market Fund were merged into Smith Barney California Money
Market Portfolio pursuant to an Agreement and Plan of Reorganization dated
August 2, 1994.
The transaction was structured for tax purposes to qualify as a tax-free
reorganization under the Internal Revenue Code. The Smith Barney Shearson
California Municipal Money Market Fund net assets at that date were
$830,711,463. Directly after the merger the combined net assets were
$1,034,833,204 for the Smith Barney California Money Market Portfolio.
7. Capital Shares
At March 31, 1995, there were an unlimited amount of shares of $.001 par
value capital stock authorized. The Fund has multiple classes of shares within
each Portfolio of the Fund. Each share of a class represents an identical
interest in its respective Portfolio and has the same rights, except that each
class bears certain expenses specifically related to the distribution of its
shares. At March 31, 1995, total paid-in capital amounted to the following for
each class and respective Portfolio:
<TABLE>
<CAPTION>
Portfolio Class A Class B Class C Class Y
=============================================================================
<S> <C> <C> <C> <C>
California Money Market $953,646,807 -- -- --
California Limited Term 5,520,311 -- $1,859,511 $497,565
California 156,275,600 $578,555 7,232,684 --
=============================================================================
</TABLE>
40
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1995 March 31, 1994
California Money ------------------------ ------------------------
Market Portfolio Shares Amount Shares Amount
================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 2,335,326,000 $ 2,335,326,000 1,043,269,466 $ 1,043,269,466
Transfer from
Smith Barney
Shearson California
Municipal Money
Market Fund 831,064,777 831,064,777 -- --
Shares issued on
reinvestment 12,583,409 12,583,409 3,127,064 3,127,064
Shares redeemed (2,415,119,839) (2,415,119,839) (1,016,298,261) (1,016,298,261)
- ------------------------------------------------------------------------------------------------
Net Increase 763,854,347 $ 763,854,347 30,098,269 $ 30,098,269
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1995 March 31, 1994*
California Limited ------------------------ ------------------------
Term Portfolio Shares Amount Shares Amount
================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 112,206 $ 711,580 1,698,497 $11,136,992
Shares issued on
reinvestment 31,795 202,029 37,037 246,457
Shares redeemed (560,588) (3,557,722) (484,046) (3,219,025)
- ------------------------------------------------------------------------------------------------
Net Increase (Decrease) (416,587) $(2,644,113) 1,251,488 $ 8,164,424
================================================================================================
Class C+
Shares sold 49,747 $ 315,276 386,889 $ 2,558,573
Shares issued on
reinvestment 12,721 80,696 4,738 31,447
Shares redeemed (153,794) (974,055) (23,016) (152,426)
- ------------------------------------------------------------------------------------------------
Net Increase (Decrease) (91,326) $ (578,083) 368,611 $ 2,437,594
================================================================================================
Class Y++
Shares sold -- -- 274,912 $ 1,799,098
Shares issued on
reinvestment 4,143 $ 26,294 793 5,204
Shares redeemed -- -- (198,663) (1,333,031)
- ------------------------------------------------------------------------------------------------
Net Increase 4,143 $ 26,294 77,042 $ 471,271
================================================================================================
</TABLE>
* For Class A shares, transactions are for the period from April 27, 1993
(inception date) to March 31, 1994; for Class C shares, transactions are for
the period from May 18, 1993 (inception date) to March 31, 1994 and for Class
Y shares, transactions are for the period from June 23, 1993 (inception date)
to March 31, 1994.
+ On November 7, 1994 the former Class B shares were renamed Class C shares.
++ On November 7, 1994 the former Class C shares were renamed Class Y shares.
41
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1995 March 31, 1994
------------------------ ------------------------
California Portfolio Shares Amount Shares Amount
================================================================================================
<S> <C> <C> <C> <C>
Class A*
Shares sold 2,324,798 $ 27,987,508 2,938,814 $ 38,173,347
Shares issued on
reinvestment 287,711 3,455,371 313,867 4,066,011
Shares redeemed (3,314,660) (39,556,136) (2,305,447) (29,781,514)
- ------------------------------------------------------------------------------------------------
Net Increase (Decrease) (702,151) $ (8,113,257) 947,234 $ 12,457,844
================================================================================================
Class B+
Shares sold 84,879 $ 1,001,483 -- --
Shares issued on
reinvestment 480 5,781 -- --
Shares redeemed (35,955) (428,708) -- --
- ------------------------------------------------------------------------------------------------
Net Increase 49,404 $ 578,556 -- --
================================================================================================
Class C++
Shares sold 161,193 $ 1,946,324 457,886 $ 5,950,014
Shares issued on
reinvestment 17,630 211,325 8,761 113,273
Shares redeemed (129,420) (1,524,112) (94,684) (1,212,861)
- ------------------------------------------------------------------------------------------------
Net Increase 49,403 $ 633,537 371,963 $ 4,850,426
================================================================================================
</TABLE>
* On October 10, 1994 the former Class C shares were exchanged into Class A
shares; therefore Class C share activity for the period from April 1, 1994 to
October 9, 1994 is included with the Class A share activity. The year ended
March 31, 1994 includes only Class A share activity.
+ For the period from November 11, 1994 (inception date) to March 31, 1995.
++ On November 7, 1994 the former Class B shares were renamed Class C
shares.
42
<PAGE>
Smith Barney Muni Funds
California Money Market Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares: 1995 1994 1993 1992 1991(a)
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.026 0.018 0.021 0.035 0.044
- --------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.026 0.018 0.021 0.035 0.044
- --------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.026) (0.018) (0.021) (0.035) (0.044)
- --------------------------------------------------------------------------------------------------------------
Total Distributions (0.026) (0.018) (0.021) (0.035) (0.044)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------
Total Return 2.66% 1.84% 2.05% 3.51% 4.49%++
- --------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $953,320 $189,783 $159,681 $167,172 $135,608
- --------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.61% 0.64% 0.67% 0.60% 0.46%+
Net investment income 3.02 1.82 2.05 3.46 4.73 +
==============================================================================================================
</TABLE>
(a) From May 10, 1990 (inception date) to March 31, 1991.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
(1) The manager has waived all or part of its fees for the period ended March
31, 1991 and the year ended March 31, 1995. If such fees were not waived,
the per share decrease of net investment income and the ratios of expenses
to average net assets would be as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waivers
-----------------------------------------------------
1995 1991 1995 1991
---- ---- ---- ----
<S> <C> <C> <C> <C>
Class A $.002 $.001 0.63% 0.60%+
</TABLE>
43
<PAGE>
Smith Barney Muni Funds
California Limited Term Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Class C(a) Class Y(b)
-------------------- -------------------- ------------------
1995 1994(c) 1995 1994(d) 1995 1994(e)
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 6.41 $ 6.50 $ 6.41 $ 6.51 $6.41 $6.57
- ------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income(1) 0.32 0.27 0.30 0.25 0.31 0.15
Net realized and unrealized gain (loss)
on investments 0.04 (0.12) 0.05 (0.12) 0.05 (0.15)
- ------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.36 0.15 0.35 0.13 0.36 --
- ------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.32) (0.24) (0.31) (0.23) (0.32) (0.16)
Distributions from net realized gains
on security transactions (0.01) -- (0.01) -- (0.01) --
- ------------------------------------------------------------------------------------------------------------
Total Distributions (0.33) (0.24) (0.32) (0.23) (0.33) (0.16)
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 6.44 $ 6.41 $ 6.44 $ 6.41 $6.44 $6.41
- ------------------------------------------------------------------------------------------------------------
Total Return 5.89% 2.29%++ 5.56% 1.87%++ 5.87% N/A
- ------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $5,377 $8,020 $1,786 $2,361 $523 $ 494
- ------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(1) 0.40% 0.19%+ 0.69% 0.53%+ 0.43% 0.35%+
Net investment income 4.89 4.99+ 4.63 4.52+ 4.89 4.84+
- ------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27.40% 47.91% 27.40% 47.91% 27.40% 47.91%
============================================================================================================
</TABLE>
(a) On November 7, 1994 the former Class B shares were renamed Class C shares.
(b) On November 7, 1994 the former Class C shares were renamed Class Y shares.
(c) For the period from April 27, 1993 (inception date) to March 31, 1994.
(d) For the period from May 18, 1993 (inception date) to March 31, 1994.
(e) For the period from June 23, 1993 (inception date) to March 31, 1994.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
(1) The manager has waived all of its fees and reimbursed expenses of $8,087 and
$10,992 for the year ended March 31, 1995 and the period ended March 31,
1994, respectively. If such fees were not waived, the per share decrease of
net investment income and the ratios of expenses to average net assets would
be as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waivers*
-------------------------------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Class A $0.037 $0.032 0.95% 0.75%+
Class C 0.037 0.041 1.23 1.18+
Class Y 0.036 0.011 1.98 0.88+
</TABLE>
* As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.80%, 1.00% and 0.65% for Class A, C and
Y Shares, respectively.
44
<PAGE>
Smith Barney Muni Funds
California Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares (a) 1995 1994 1993 1992 1991
====================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.27 $12.78 $12.05 $11.62 $11.47
- ----------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.74 0.76 0.78 0.81 0.84
Net realized and unrealized gain (loss)
on investments (2) 0.02 (0.47) 0.73 0.42 0.15
- ----------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.76 0.29 1.51 1.23 0.99
- ----------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.75) (0.77) (0.78) (0.80) (0.84)
Distributions from net realized gains
on security transactions -- (0.03) -- -- --
- ----------------------------------------------------------------------------------------------------
Total Distributions (0.75) (0.80) (0.78) (0.80) (0.84)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.28 $12.27 $12.78 $12.05 $11.62
- ----------------------------------------------------------------------------------------------------
Total Return 6.47% 2.15% 12.93% 11.11% 8.90%
- ----------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $161,993 $164,833 $159,635 $123,268 $98,740
- ----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.59% 0.51% 0.53% 0.38% 0.21%
Net investment income 6.16 5.90 6.32 6.78 7.25
- ----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 31.65% 38.68% 24.28% 44.03% 45.37%
====================================================================================================
Class B Shares 1995(b)
====================================================================================================
Net Asset Value, Beginning of Period $11.52
- ----------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.30
Net realized and unrealized gain
on security transactions (2) 0.75
- ----------------------------------------------------------------------------------------------------
Total Income from Investment Operations 1.05
- ----------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.28)
Distributions from net realized gains
on security transactions --
- ----------------------------------------------------------------------------------------------------
Total Distributions (0.28)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.29
- ----------------------------------------------------------------------------------------------------
Total Return 9.18%++
- ----------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $607
- ----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.19%+
Net investment income 5.56+
- ----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 31.65%
====================================================================================================
</TABLE>
(a) On October 10, 1994 the former Class C shares were exchanged into Class A
shares.
(b) For the period from November 11, 1994 (inception date) to March 31, 1995.
(1) See page 45 for full footnote disclosure.
(2) Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at net asset values less
than the beginning of the period.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
45
<PAGE>
Smith Barney Muni Funds
California Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class C Shares (a) 1995 1994 1993(b)
======================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $12.26 $12.77 $12.46
- ------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.67 0.68 0.20
Net realized and unrealized gain (loss)
on investments (2) 0.01 (0.48) 0.29
- ------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.68 0.20 0.49
- ------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.66) (0.68) (0.18)
Distributions from net realized gains
on security transactions -- (0.03) --
- ------------------------------------------------------------------------------------------------------
Total Distributions (0.66) (0.71) (0.18)
- ------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.28 $12.26 $12.77
- ------------------------------------------------------------------------------------------------------
Total Return 5.80% 1.45% 3.95%++
- ------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $6,888 $6,269 $1,784
- ------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.23% 1.22% 1.20%+
Net investment income 5.57 5.15 5.44+
- ------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 31.65% 38.68% 24.28%
======================================================================================================
</TABLE>
(a) On November 7, 1994 the former Class B shares were renamed Class C shares.
(b) From January 5, 1993 (inception date) to March 31, 1993.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
(1) The manager has waived all or part of its fees for each of the periods in
the two-year period ended March 31, 1992. If such fees were not waived, the
per share decrease of net investment income and the ratios of expenses to
average net assets would be as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decrease Without Fee Waivers*
----------------------------------------------------------
<S> <C> <C> <C> <C>
1992 1991 1992 1991
---- ---- ---- ----
Class A $0.017 $0.029 0.51% 0.46%
</TABLE>
* As a result of voluntary expense limitations, the ratios of expenses to
average net assets will not exceed 0.80%, 1.30% and 1.35% for Class A, B and
C shares, respectively.
(2) Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at net asset values less
than the beginning of the period.
46
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
of the California Money Market, California Limited Term
and California Portfolios of Smith Barney Muni Funds:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the California Money Market,
California Limited Term and California Portfolios of Smith Barney Muni Funds as
of March 31, 1995, the related statements of operations for the year then ended,
the statements of changes in net assets for each of the years in the two-year
period then ended with respect to the California Money Market and California
Portfolios and for the year then ended and the period from April 27, 1993
(commencement of operations) to March 31, 1994 with respect to the California
Limited Term Portfolio and the financial highlights for each of the years in the
four-year period then ended and for the period from May 10, 1990 (commencement
of operations) to March 31, 1991 with respect to the California Money Market
Portfolio, for the year then ended and the period from April 27, 1993
(commencement of operations) to March 31, 1994 with respect to the California
Limited Term Portfolio and for each of the years in the five-year period then
ended with respect to California Portfolio. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
47
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Independent Auditors' Report (continued)
- --------------------------------------------------------------------------------
In our opinion, the financials statements referred to above present fairly,
in all material respects, the financial position of the California Money Market
California Limited Term and California Portfolios of Smith Barney Muni Funds as
of March 31, 1995, the results of their operations for the year then ended, the
changes in net assets for each of the years in the two-year period then ended
with respect to the California Money Market and California Portfolios and for
the year then ended and the period from April 27, 1993 (commencement of
operations) to March 31, 1994 with respect to the California Limited Term
Portfolio and the financial highlights for each of the years in the four-year
period then ended and the period from May 10, 1990 (commencement of operations)
to March 31, 1991 with respect to the California Money Market Portfolio, for the
year then ended and the period from April 27, 1993 (commencement of operations)
to March 31, 1994 with respect to the California Limited Term Portfolio and for
each of the years in the five-year period then ended with respect to the
California Portfolio, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
New York, New York
May 15, 1995
48
<PAGE>
SMITH BARNEY
- ------------
A Member of Travelers Group [LOGO APPEARS HERE]
Smith Barney
Muni Funds
Trustees
Jessica M. Bibliowicz
Ralph D. Creasman
Joseph H. Fleiss
Donald R. Foley
Paul Hardin
Francis P.Martin, M.D.
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
C. Richard Youngdahl
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Daniel Malone
Vice President
Karen L. Mahoney-Malcomson
Vice President
Irving P. David
Controller
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder
Servicing Agent
The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds California Money Market, California Limited Term and
California Portfolios. It is not authorized for distribution to prospective
investors unless accompanied or preceded by a current Prospectus for the
Portfolio, which contains information concerning the Portfolio's investment
policies and expenses as well as other pertinent information.
Smith Barney Muni Funds
388 Greenwich Street
New York, New York 10013
FD2309 E5 82110
<PAGE>
N-30D
Annual Report-Florida Limited Term Portfolio
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
1995
1995
1995
1995
1995
Smith Barney
Muni Funds
Florida Limited
Term Portfolio
Florida Portfolio
-------------------------------------------------
March 31, 1995
[Logo] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- --------------------------------------------------------------------------------
Florida Limited Term and Florida Portfolios
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the annual report and audited financial statements for
Smith Barney Muni Funds Florida Portfolio and Florida Limited Term Portfolio for
the fiscal year ended March 31, 1995.
Market and Economic Overview
Since our last report to you in November, the fixed-income markets, and
municipal bonds in particular, have enjoyed a powerful rally. Municipal bond
yields have declined more than a full percentage point, as evidenced by the drop
in the average yield on The Bond Buyer's weekly 25-Bond Revenue Index of 30-year
municipal bonds from a high of 7.37% on November 17, 1994 to 6.29% on March 31,
1995. This was substantially better than the performance of the benchmark
30-year Treasury bond, which experienced a decline in yield of 70 basis points
from 8.13% to 7.43% during the same time frame.
The vastly improved bond markets reflect a growing consensus that inflation will
remain under control, and the Federal Reserve Board will be successful in
engineering a "soft landing" by slowing the economy down to a more sustainable,
non-inflationary rate of growth. The seven increases in the federal funds rate
(the rate banks charge each other for overnight loans), orchestrated by the Fed
since February 1994, appear to be slowing the pace of economic growth. Recent
economic reports show a slower rate of increase in employment, producer prices,
and retail sales. Industrial production and capacity utilization were also lower
than expected, signalling a possible slowdown in the country's strong
manufacturing sector. These generally favorable economic fundamentals are more
than offsetting concerns about the substantial decline in the value of the
dollar relative to the Japanese yen and German mark on the foreign exchange
markets.
Late in April, several tax-reform proposals which recommend a flat Federal
income tax rate began to receive increased attention in the national financial
press and from municipal bond market participants. Adoption of a flat tax would
diminish the advantages of tax exemption for municipal bonds. Although the
various plans being circulated are only proposals, the publicity surrounding
them has recently caused some investors to back away from the municipal bond
market. In our opinion it is much too early in the process to predict what
changes in the tax laws, if any, will actually take place, but tax reform will
certainly be a major topic of political debate over the next few years. Many
observers believe that the more radical proposals for changes in the way taxes
are collected have little chance for enactment.
1
<PAGE>
Absent these tax-reform concerns, municipals would probably continue to be
strong performers relative to Treasuries and other taxable investments due to
the low supply of new issues. Not only did last year's spike in interest rates
sharply reduce refinancing activity in the municipal market, but voter pressure
on states and municipalities to rein in spending and cut taxes, or at least
avoid tax increases, has also resulted in a roughly 30% decline in new-money
financing. In addition, the universe of existing municipal bonds is shrinking.
In 1995, an estimated $230 billion of older, high-coupon issues will mature or
be called as they reach their first optional call dates. With estimates of
new-issue volume at less than $150 billion, the net reduction in municipal debt
outstanding could approach $100 billion this year, contracting the market by
about eight percent. Ordinarily, a reduction in supply of this magnitude would
be expected to provide a powerful boost for municipal bond values as it did
earlier this year. Uncertainties about various tax proposals, however, will
probably keep municipals from trading any better than their normal relationship
to taxable investment alternatives.
The Florida Economy
Strong service and trade sectors continue to be the driving force behind
Florida's rapid economic growth. Florida's economy continues to broaden and
diversify with substantial activity in the insurance, banking and export markets
in addition to its traditional base of agriculture and tourism. The state is
rated double-A by both Moody's and Standard & Poor's with a stable outlook.
Florida Portfolio
The Florida Portfolio had a total return of 6.77% (Class A shares) for the
fiscal year. This return compares favorably with the 6.67% average total return
for all Florida municipal bond funds over the same period, as reported by Lipper
Analytical Services.
Longer-term performance of the Portfolio continues to be excellent relative to
its peers. The Portfolio's three-year cumulative total return (excluding sales
charge) of 25.28% (Class A shares) substantially outperformed the average
cumulative total return of 23.78% for all Florida municipal bond funds in the
Lipper survey for the period ended March 31, 1995. (Please see Average Annual
Total Return chart on page 8 of this report for additional performance
information.) It should be noted that this strong showing over the last three
years has been achieved with the need for only minimal capital gains
distributions, an important consideration for investors interested in after-tax
income.
While we generally have a positive outlook for the fixed-income markets, the
size of the rally we have experienced so far would seem to leave little room for
disappointment, and any sign of a rebound in economic activity is likely to
result in a return to higher interest rates. We also believe that the unique
supply and demand characteristics of the municipal market and tax-reform
uncertainties will tend to exaggerate price swings relative to taxable
investments.
In light of this viewpoint, we are maintaining a balanced approach to
structuring the interest-rate sensitivity of the Portfolio by investing in a
combination of both long and short effective maturities. Most long-term
municipal bonds are callable prior to their stated maturity date. When a bond
has a coupon higher than prevailing market yields, its maturity is effectively
shortened to the call date for trading purposes because of the possibility that
2
<PAGE>
the issuer will exercise its option to replace the bond with lower-cost debt. We
are retaining high-coupon bonds that trade well above their face value for the
defensiveness of their shorter effective maturities and the above-market level
of income they provide. However, we are also focusing on eliminating bonds with
shorter call dates when they are trading near their face value. Such bonds have
unfavorable performance characteristics because they retain the downside risk of
their longer maturity if rates should rise, but their appreciation potential is
limited by the shorter call date if interest rates decline. We are replacing
such issues with bonds that have similar stated maturities but greater call
protection.
Although this strategy sacrifices some of the current income being generated by
the Portfolio, it enhances long-term performance potential if interest rates
continue to decline without adding to downside risk if interest rates rise. We
believe that positioning the Portfolio in this manner is the best way to achieve
our objective of the highest tax-free income consistent with prudent investment
risk.
Florida Limited Term Portfolio
The Florida Limited Term Portfolio had a total return of 7.17% (Class A shares)
for the fiscal year. This return significantly outperformed the average total
return of 5.92% for all Florida intermediate municipal bond funds for the same
period, according to Lipper Analytical Services.
As discussed above in our commentary on the Florida Portfolio, any rebound in
economic activity is likely to result in a return to higher interest rates.
Accordingly, we are taking a more cautious approach to structuring the
interest-rate sensitivity of the Portfolio. Relative stability of principal is
an important consideration for this fund, which is positioned in the five- to
10-year intermediate maturity range. In this regard, we are placing emphasis on
higher coupon issues trading at a premium to their face value. Such bonds will
decline less in price than current coupon or market discount bonds should the
economy rebound and cause a rise in interest rates. In addition, the maturities
of holdings are effectively shorter than their stated maturity date, which
serves to further reduce the Portfolio's interest-rate sensitivity. Examples of
such issues are bonds priced to a call date earlier than maturity, bonds with
sinking funds designed to retire a portion of the issue prior to maturity, and
housing bonds that are subject to early call from prepayments on mortgages.
We thank you for your investment in the Portfolios and your continued confidence
in our investment management.
Sincerely,
/s/Heath B. McLendon /s/Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman and Vice President and
Chief Executive Officer Investment Officer
April 28, 1995
3
<PAGE>
Smith Barney Muni Funds
Florida Limited Term Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
-----------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/95 $6.44 $6.56 $0.33 $0.00 7.17%
- --------------------------------------------------------------------------------
Inception* - 3/31/94 6.50 6.44 0.24 0.00 2.74
================================================================================
Total $0.57 $0.00
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
Net Asset Value
-----------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/95 $6.43 $6.55 $0.31 $0.00 6.84%
- --------------------------------------------------------------------------------
Inception* - 3/31/94 6.51 6.43 0.23 0.00 2.17
================================================================================
Total $0.54 $0.00
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
4
<PAGE>
Smith Barney Muni Funds
Florida Limited Term Portfolio
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
------------------------------
Class A Class C
================================================================================
Year Ended 3/31/95 7.17% 6.84%
- --------------------------------------------------------------------------------
Inception* through 3/31/95 5.12 4.70
- --------------------------------------------------------------------------------
With Sales Charge (2)
------------------------------
Class A Class C
================================================================================
Year Ended 3/31/95 5.05% 5.84%
- --------------------------------------------------------------------------------
Inception* through 3/31/95 4.05 4.70
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
------------------------
Class A (Inception* through 3/31/95) 10.11%
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/95) 9.15
- --------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 2.00% and Class C shares reflect the
deduction of a 1.00% CDSC which applies if shares are redeemed within the
first year of purchase.
* Inception dates for Class A and C shares are April 27, 1993 and May 4,
1993, respectively.
5
<PAGE>
Smith Barney Muni Funds
Florida Limited Term Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the
Florida Limited Term Portfolio vs. Lehman
10 Year General Obligation Index+
(unaudited)
- --------------------------------------------------------------------------------
April 1993 -- March 1995
[Presented as a line graph in the printed report]
LEHMAN
10 YEAR
FLORIDA GENERAL
LIMITED OBLIGATION
DATE TERM INDEX
- ---- ------- -----
4/27/93 9,800.00 10,000.00
6/93 9,980.92 10,322.96 1.77%
9/93 10,313.99 10,703.56 1.25%
12/93 10,467.48 10,864.82 2.11%
3/94 10,072.80 10,265.13 -3.68%
6/94 10,184.00 10,416.91 -0.55%
9/94 10,296.90 10,484.42 -1.42%
12/94 10,139.70 10,318.53 1.80%
3/95 10,780.00 11,032.31 1.35%
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on April 27, 1993, assuming deduction of the maximum 2.00% sales
charge at the time of investment and reinvestment of dividends (after
deduction of sales charges, if any) and capital gains (at net asset value)
through March 31, 1995. The Index is unmanaged and is not subject to the
same management and trading expenses of a mutual fund. The performance of
the Portfolio's other classes may be greater or less than the Class A
shares' performance indicated on this chart, depending on whether greater
or lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
6
<PAGE>
Smith Barney Muni Funds
Florida Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
-----------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/95 $12.82 $12.89 $0.76 $0.00 6.77%
- --------------------------------------------------------------------------------
3/31/94 13.21 12.82 0.77 0.00 2.75
- --------------------------------------------------------------------------------
3/31/93 12.32 13.21 0.80 0.01 14.21
- --------------------------------------------------------------------------------
Inception*-3/31/92 12.00 12.32 0.70 0.00 8.70
================================================================================
Total $3.03 $0.01
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
-----------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
Inception*-3/31/95 $11.91 $12.89 $0.29 $0.00 10.77%
================================================================================
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
Net Asset Value
-----------------
Beginning End of Income Capital Gain Total
Year Ended of Year Year Dividends Distributions Returns(1)
================================================================================
3/31/95 $12.81 $12.89 $0.67 $0.00 6.12%
- --------------------------------------------------------------------------------
3/31/94 13.20 12.81 0.68 0.00 2.05
- --------------------------------------------------------------------------------
Inception*-3/31/93 12.86 13.20 0.18 0.00 4.05
================================================================================
Total $1.53 $0.00
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
7
<PAGE>
Smith Barney Muni Funds
Florida Portfolio
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
---------------------------------------
Class A Class B Class C
================================================================================
Year Ended 3/31/95 6.77% N/A 6.12%
- --------------------------------------------------------------------------------
Inception* through 3/31/95 8.03 10.77% 5.50
- --------------------------------------------------------------------------------
With Sales Charge (2)
---------------------------------------
Class A Class B Class C
================================================================================
Year Ended 3/31/95 2.53% N/A 5.12%
- --------------------------------------------------------------------------------
Inception* through 3/31/95 6.93 6.27% 5.50
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
------------------------
Class A (Inception* through 3/31/95) 36.16%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/95) 10.77
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/95) 12.69
- --------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 4.00%; Class B shares reflect the deduction
of a 4.50% CDSC, which applies if shares are redeemed less than one year
from initial purchase. This CDSC declines by 0.50% the first year after
purchase and by 1.00% per year thereafter until no CDSC is incurred. Class
C shares reflect the deduction of a 1.00% CDSC which applies if shares are
redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are April 2, 1991, November 16,
1994 and January 5, 1993, respectively.
8
<PAGE>
Smith Barney Muni Funds
Florida Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the Florida Portfolio vs. Lehman Long Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
April 1991 -- March 1995
[Presented as a line graph in the printed report]
LEHMAN
LONG BOND
DATE FLORIDA INDEX
- ---- ------- -----
4/2/91 9,600.00 10,000.00
3/92 10,409.59 11,138.77 0.25%
3/93 11,857.00 12,768.26 -1.20%
3/94 12,156.30 12,914.69 -5.97%
3/95 12,961.00 14,080.80 1.20%
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on April 2, 1991, assuming deduction of the maximum 4.00% sales
charge at the time of investment and reinvestment of dividends (after
deduction of sales charges, if any) and capital gains (at net asset value)
through March 31, 1995. The Index is unmanaged and is not subject to the
same management and trading expenses of a mutual fund. The performance of
the Portfolio's other classes may be greater or less than the Class A
shares' performance indicated on this chart, depending on whether greater
or lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
9
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA LIMITED TERM PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Education -- 5.8%
$500,000 AAA Dade County School Board COP (G. Holmes Braddock Sr.
High School), MBIA-Insured, 5.125% due 8/1/03 $ 494,375
600,000 AAA Hillsborough County School Board COP, MBIA-Insured,
5.50% due 7/1/04 606,750
- ---------------------------------------------------------------------------------------------------
1,101,125
- ---------------------------------------------------------------------------------------------------
Escrowed to Maturity (e) -- 22.8%
710,000 AAA Altamonte Springs Health Facility Authority Hospital Revenue
Adventist Health System, (Escrowed to Maturity with U.S.
Government Securities), 13.00% due 10/1/01 894,600
300,000 AAA Cape Coral Health Facility Authority Hospital Revenue,
(Escrowed to Maturity with U.S. Government Securities),
8.125% due 11/1/08 352,500
400,000 AAA Escambia County Housing Finance Authority Multi-Family Revenue,
Genesis Health Series A, (Escrowed to Maturity with
U.S. Government Securities), zero coupon due 4/15/01 269,500
170,000 AAA Jacksonville Health Facilities Authority Revenue, St. Catherine
Laboure Manor, Inc., (Escrowed to Maturity with U.S. Government
Securities), 9.125% due 1/1/03 199,325
165,000 AAA Jacksonville Health Facilities Authority Revenue, St. Vincents
Medical Center, Inc., (Escrowed to Maturity with U.S.
Government Securities), 9.125% due 1/1/03 190,369
465,000 AAA Orange County Health Facility Authority Revenue, Southern
Adventist Hospital, (Escrowed to Maturity with U.S. Government
Securities), 8.75% due 10/1/09 579,506
415,000 AAA Palm Beach County Health Facility Authority Revenue,
John F. Kennedy Memorial Hospital, Inc.,
(Escrowed to Maturity with U.S. Government Securities),
9.50% due 8/1/13 549,875
670,000 AAA Palm Beach Solid Waste Authority Revenue, (Escrowed to
Maturity with U.S. Government Securities), MBIA-Insured,
10.00% due 12/1/04 830,800
410,000 Aaa* Virgin Islands Territory GO, (Escrowed to Maturity with U.S.
Government Securities), 8.00% due 3/1/98 446,900
- ---------------------------------------------------------------------------------------------------
4,313,375
- ---------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA LIMITED TERM PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
General Obligation -- 2.6%
$ 475,000 A+ Guam Government Limited Obligation Revenue, Series A,
LOC Fuji Bank, 7.00% due 11/15/04 $ 499,938
- ---------------------------------------------------------------------------------------------------
Hospital -- 15.1%
685,000 BAA Bay County Hospital Systems Revenue Refunding,
Bay Medical Center Project, 6.875% due 10/1/99 703,838
1,000,000 BAA1 Bradford County Health Facilities Authority Revenue Refunding,
Sante Fe Healthcare Facility, 6.00% due 11/15/09 936,250
725,000 A1 Brevard County Health Facilities Authority Revenue, Hospital-
Holmes Regulated Medical Center Project, 5.40%, due 10/1/03 708,687
500,000 A- Palm Beach County Health Facilities Authority Revenue, Good
Samaritan Health Systems, 5.70% due 10/1/02 496,250
- ---------------------------------------------------------------------------------------------------
2,845,025
- ---------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 1.6%
300,000 AAA Escambia County, HFA Multi-Family Refunding, Meadow Run
Project, LOC Federal Home Loan Bank of Atlanta, 5.50% due 5/1/03 299,625
- ---------------------------------------------------------------------------------------------------
Housing: Single-Family -- 5.0%
130,000 AAA Duval County HFA Single-Family Mortgage Revenue, Mortgage Backed
Securities Program, GNMA-Collateralized, 8.00% due 6/1/00(a) 134,387
250,000 Aaa* Escambia County Housing Finance Authority Single-Family Mortgage
Revenue, GNMA-Collateralized, 6.15% due 4/1/00 252,500
275,000 AAA Leon County HFA Single-Family Mortgage Revenue Multi-County
Project 84, Series A, MBIA-Collateralized, zero coupon due 3/1/03 130,281
410,000 Aaa* Orange County HFA Single-Family Mortgage Revenue, Mortgage
Backed Securities Program, GNMA/FNMA-Collateralized,
6.10% due 10/1/05 418,713
- ---------------------------------------------------------------------------------------------------
935,881
- ---------------------------------------------------------------------------------------------------
Industrial Development -- 8.7%
500,000 AAA City of Miami IDR Refunding, Bayside Center Project, FGIC-Insured,
5.25% due 7/1/03 498,750
735,000 BBB Collier County Pine Ridge Industrial Park & Naples Production
Park, Municipal Service Taxing & Benefit Unit Special Assessment
Bond, Series 93, 5.20% due 11/1/01 722,137
400,000 AAA Osceola County IDA Community Provider Pooled Loan Program,
Series A, CGIC-Insured, 7.50% due 7/1/02 420,500
- ---------------------------------------------------------------------------------------------------
1,641,387
- ---------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA LIMITED TERM PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Nursing Home -- 5.2%
$ 600,000 BBB+ Collier County Health Facilities Authority Revenue Refunding,
The Moorings Inc. Project, 6.125% due 12/1/06 $ 588,750
400,000 Baa1* Jacksonville Health Facilities Authority Development Revenue,
National Benevolent Association Cypress Village Program,
6.00% due 12/1/03 388,500
- ---------------------------------------------------------------------------------------------------
977,250
- ---------------------------------------------------------------------------------------------------
Pollution Control -- 3.0%
530,000 A Broward County Resource Recovery Revenue, Broward Waste
Energy-LP North, 7.95% due 12/1/08 573,725
- ---------------------------------------------------------------------------------------------------
Public Facilities -- 2.6%
500,000 AAA Pembroke Pines Public Improvement Revenue, AMBAC-Insured,
5.00% due 10/1/02 (d) 491,250
- ---------------------------------------------------------------------------------------------------
Short-Term (b) -- 3.2%
600,000 AAA Jacksonville Health Facility, Baptist Medical Center Series 93
MBIA-Insured, VRDD, 4.15% due 6/1/08 600,000
- ---------------------------------------------------------------------------------------------------
Solid Waste -- 3.7%
715,000 A Brevard County Solid Waste Disposal System Revenue,
5.20% due 4/1/04 690,869
- ---------------------------------------------------------------------------------------------------
Tax Allocation -- 7.6%
1,000,000 BBB Miami Beach Redevelopment Agency Tax Increment Revenue, City
Center Historic Convention Village, 5.10% due 10/1/04 926,250
500,000 AAA Orange County Tourist Development Tax Revenue Refunding,
Series A, MBIA-Insured, 5.40% due 10/1/04 502,500
- ---------------------------------------------------------------------------------------------------
1,428,750
- ---------------------------------------------------------------------------------------------------
Transportation-- 13.1%
320,000 AA Dade County Aviation Revenue Refunding, Series Y, 5.125%
due 10/1/03 318,000
1,050,000 A+ Dunes Community Development District Revenue Refunding,
Intracoastal Waterway Bridge, 5.20% due 10/1/02 1,036,875
700,000 BBB Escambia County Road Improvement Revenue, Series A, 5.25%
due 1/1/04 665,875
460,000 AAA Jacksonville Port Authority Airport Revenue Refunding,
AMBAC-Insured, 5.20% due 10/1/03(a) 452,525
- ---------------------------------------------------------------------------------------------------
2,473,275
- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100% (Cost -- $18,822,690) (f) $18,871,475
===================================================================================================
</TABLE>
See page 19 for full footnote disclosures.
See Notes to Financial Statements.
12
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Education -- 1.8%
$1,500,000 AAA Hillsborough County School Board, COP, MBIA-Insured,
6.00% due 7/1/2 $ 1,500,000
460,000 AA- Pensacola Junior College Foundation, Education Facility Revenue,
LOC Bank of Tokyo, 7.125% due 7/1/09 475,525
- ---------------------------------------------------------------------------------------------------
1,975,525
- ---------------------------------------------------------------------------------------------------
Escrowed to Maturity (e) -- 5.0%
Escambia County HFA Multi-Family Housing Revenue (Genesis
Healthcare) (Escrowed to Maturity with REFCO Strips):
400,000 AAA Coupon Custodial Receipts of the County, zero coupon
due 10/15/14 102,500
3,000,000 AAA Principal Custodial Receipts, zero coupon due 10/15/18 573,750
1,500,000 Water and Sewer District IV Revenue, 7.30% due 1/1/15 1,698,750
385,000 AAA Florida State Community Service Suburban Utilities (Escrowed to
Maturity with U.S. Government Securities), 8.125% due 10/1/98 412,913
1,500,000 AAA Gainesville Utility System Revenue (Escrowed to Maturity with
U.S. Government Securities), 8.125% due 10/1/14 1,861,875
680,000 AAA Palm Beach County HFA, John F. Kennedy Memorial Hospital Inc.
Project, Series C, (Escrowed to Maturity with U.S. Government
Securities), 9.50% due 8/1/13 901,000
- ---------------------------------------------------------------------------------------------------
5,550,788
- ---------------------------------------------------------------------------------------------------
Finance -- 0.5%
500,000 AAA Gulf Breeze Local Government Revenue, FGIC-Insured,
7.75% due 12/1/15 561,250
- ---------------------------------------------------------------------------------------------------
Government Facilities -- 0.9%
1,000,000 A1* Florida State Department of Corrections, COP, 6.00% due 3/1/14 986,250
- ---------------------------------------------------------------------------------------------------
General Obligation -- 4.7%
1,000,000 AA Florida State Broward County,10.00% due 7/1/14 1,443,750
485,000 AA Florida State Board of Education Capital Outlay Refunding,
Series A, 7.25% due 6/1/23(d) 527,437
1,000,000 BBB Guam Government GO, Series A, 5.375% due 11/15/13 878,750
Puerto Rico Commonwealth:
1,500,000 AAA 5.00% due 7/1/21 1,290,000
1,000,000 A 6.50% due 7/1/23 1,021,250
- ---------------------------------------------------------------------------------------------------
5,161,187
- ---------------------------------------------------------------------------------------------------
Hospital -- 22.3%
Alachua County Health Facilities Authority Revenue
Santa Fe Healthcare Facilities Project:
1,000,000 BBB+ 6.00% due 11/15/09 941,250
1,000,000 BBB+ 7.60% due 11/15/13 1,050,000
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Hospital -- 22.3% (continued)
$1,500,000 Baa* Bay County Hospital Revenue, Bay County Medical Center Project,
8.00% due 11/15/12 $ 1,590,000
2,355,000 AAA Dade County IDR Refunding Susanna
Wesley, FHA-Insured, 6.625% due 7/1/30 2,393,268
Escambia County Health Facilities Authority Revenue:
1,000,000 BBB+ Baptist Hospital Inc. & Baptist Manor Inc. Guaranteed,
6.75% due 10/1/14 997,500
1,000,000 BBB+ Series A, Baptist Hospital Inc. Guaranteed, Series A, 6.00%
due 10/1/14 915,000
2,000,000 AA+ Jacksonville Health Facilities Authority
Hospital Revenue, St. Luke's Hospital, FHA-Insured,
7.125% due 11/15/20 2,120,000
1,000,000 Baa1* Leesburg Hospital Revenue Leesburg Regional Medical
Center, 5.70% due 7/1/18 870,000
Lee County Hospital Board of Directors, Hospital Revenue Bonds -
Lee Memorial Hospital Project:
1,000,000 AAA 91 Series A, INFLOS, MBIA-Insured, 8.861% due 4/1/20(c) 1,071,250
2,000,000 AAA MBIA-Insured, 6.35% due 4/1/20 2,047,500
Orange County Health Facilities Authority Hospital Revenue Bonds:
1,500,000 AAA Adventist Health Systems, CGIC-Insured, FAIRS, 6.55% due
11/15/07(c) 1,496,250
2,000,000 AAA RIBS Linked, MBIA-Insured, 6.274% due
10/29/21(c) 2,047,500
1,000,000 AAA Series 1991B (Adventist Health
Systems/Sunbelt Inc.), CGIC-Insured, 6.75% due 11/15/21 1,047,500
799,000 AAA Osceola County IDA Revenue (Community Provider Pooled Loan
Program), CGIC-Insured, 7.75% due 7/1/10 834,955
1,000,000 Aa* Pensacola Health Facilities Authority, 5.25% due 1/1/11 920,000
1,030,000 BBB- Pinellas County Health Facilities Authority,
Sun Coast Health System Revenue, Sun Coast
Hospital Guaranteed, Series A, 8.50% due 3/1/20(d) 1,053,175
350,000 BBB+ Santa Rosa County Health Facilities Authority Revenue
Refunding, Gulf Breeze Hospital Inc., Series A, Gulf
Breeze Hospital Guaranteed, 6.20% due 10/1/14 322,875
1,000,000 AAA South Broward Hospital District Revenue Bonds, RIBS,
Series 1991C, AMBAC-Insured, 8.70% due 5/13/21(c) 1,072,500
2,000,000 A* Venice Health Facilities Revenue Bonds,
Series 1994, Venice Hospital Inc. Guaranteed, 6.00% due 12/1/14 1,922,500
- ---------------------------------------------------------------------------------------------------
24,713,023
- ---------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Housing: Multi-Family -- 5.0%
Broward County HFA Multi-Family Housing Revenue:
$1,000,000 AA- Southern Pointe Apartments Project, Surety Bond-Continental
Casualty, 9.70% mandatory tender 11/1/95(d) $ 1,025,000
1,000,000 A+ Waterford Park Project, Series 1991, Policy of Indemnity
Commercial Union Assurance Co. PLC Reinsured by
Trygg-Hansa Insurance Co. of Sweden, 7.20% mandatory
tender 5/1/94 1,035,000
1,250,000 AA- Waters Edge Apartments Project, Surety Bond-Continental
Casualty, 9.70% mandatory tender 11/1/95(d) 1,281,250
1,000,000 AAA Oceanside Housing Development Corporation, Multi-Family
Housing and Funding, FHA-Insured, 6.875% due 2/1/20 1,037,500
1,095,000 AAA Southwest Housing Development Corporation, Multi-Family
Housing Revenue Refunding, FHA-Insured, 6.875% due 2/1/20 1,126,481
- ---------------------------------------------------------------------------------------------------
5,505,231
- ---------------------------------------------------------------------------------------------------
Housing: Single-Family -- 6.5%
1,355,000 A1 Broward County HFA Revenue Home Mortgage, VEREX Mortgage
Insurance, GNMA-Collaterized, Series A, zero coupon
due 4/1/14 196,475
1,000,000 Aaa* Broward County HFA Revenue Home Mortgage, 6.65% due
8/1/21(a) 1,001,250
135,000 Aaa* Clay County HFA Single-Family Mortgage Revenue, Series A,
Investment Agreement with AIG/GNMA-Collateralized,
8.00% due 12/1/12(a) 142,932
Dade County HFA Single-Family Mortgage Revenue:
355,000 Aaa* Series B, GNMA-FNMA-Collateralized, 7.25% due 9/1/23(a) 367,869
35,000 Aaa* Series E, GNMA-Collateralized, 7.00% due 3/1/24 36,050
475,000 AAA Duval County HFA Single-Family Mortgage Revenue,
GNMA-Collateralized, 8.50% due 9/1/19(a) 500,531
305,000 Aaa* Escambia County HFA Single-Family Mortgage Revenue,
GNMA-Collateralized, 7.80% due 4/1/22(a) 324,825
Florida HFA:
180,000 Aaa* Home Ownership Revenue, GNMA-Collateralized,
7.80% due 9/1/10(a) 192,150
1,990,000 AA Residential Mortgage Series 1, GEMICO Mortgage Insurance,
zero coupon due 11/1/12(d) 350,738
440,000 Aaa* Hillsborough County HFA Single-Family Mortgage Revenue,
Series A5, GNMA-Collateralized, 7.70% due 4/1/23(a) 465,850
505,000 Aaa* Palm Beach HFA Single-Family Mortgage Revenue Bonds,
Series 1991 A, GNMA-Collateralized, 7.875% due 4/1/23(a) 514,468
800,000 Aaa* Pinellas County HFA Single-Family Mortgage Revenue, 6.55%
due 8/1/27(a) 803,000
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Housing: Single-Family -- 6.5% (continued)
$1,200,000 BBB Puerto Rico Housing Bank & Finance Agency Single-Family
Mortgage, 7.50% due 12/1/06 $ 1,309,500
1,000,000 Aaa* Virgin Islands HFA
Single-Family Mortgage, 6.50% due 3/1/25 995,000
- ---------------------------------------------------------------------------------------------------
7,200,638
- ---------------------------------------------------------------------------------------------------
Industrial Development -- 0.4%
550,000 BBB Collier County, Pine Ridge Industrial Park & Naples Production Park
Municipal Service Taxing & Benefit Unit, Special Assistance Bonds,
Series 1993, 5.60% due 11/1/13 492,250
- ---------------------------------------------------------------------------------------------------
Miscellaneous -- 4.7%
1,000,000 AAA Celebration Community Development District, Special Assessment,
MBIA-Insured, 6.10% due 5/1/16 1,003,750
1,000,000 AAA Jacksonville Capital Improvement-- Gator Bowl Project,
AMBAC-Insured, 6.00% due 10/1/25 988,750
1,200,000 North Springs Improvement District, MBIA-Insured, 7.00%
due 10/1/09 1,360,500
1,745,000 BBB Tampa Capital Improvement Program, Series B, 8.375% due 10/1/18 1,843,157
- ---------------------------------------------------------------------------------------------------
5,196,157
- ---------------------------------------------------------------------------------------------------
Nursing Home -- 2.2%
1,000,000 A1* Broward County Health Facilities Authority Revenue Refunding,
County Nursing Home, LOC Allied Irish Banks Ltd.,
7.50% due 8/15/20(d) 1,071,250
750,000 Baa1* Jacksonville Health Facilities Authority Development Revenue,
National Benevolent Association, Cypress Hill Village Program,
6.40% due 12/1/16 705,000
650,000 AAA Jacksonville, Florida Methodist Hospital, 10.00% due 12/1/05 712,563
- ---------------------------------------------------------------------------------------------------
2,488,813
- ---------------------------------------------------------------------------------------------------
Pollution Control -- 5.1%
2,000,000 A+ Citrus County Pollution Control Refunding, Florida Power
Corporation, Crystal River, 6.625% due 1/1/27 2,070,000
2,000,000 Baa1* Escambia County, Florida Pollution Control Revenue, Champion
International, 6.90% due 8/1/22 2,035,000
1,390,000 BBB- Putnam County Development Authority PCR, Georgia
Pacific Corp. 1984, 7.00% due 12/1/05 1,490,775
- ---------------------------------------------------------------------------------------------------
5,595,775
- ---------------------------------------------------------------------------------------------------
Power -- 4.3%
1,265,000 Aa1* Jacksonville Electric Authority Revenue Refunding, St. John's
River Power Park Services Refunding, 6.90% due 10/1/13 1,336,156
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Power -- 4.3% (continued)
$1,000,000 A+ Pinellas County Pollution Control Revenue, Florida Power
Corporation, Anclote & Bartlow Plants Project,
7.20% due 12/1/14 $ 1,075,000
2,000,000 AAA Port Everglades Florida Port Improvement, 7.125% due 11/1/16 2,347,500
- ---------------------------------------------------------------------------------------------------
4,758,656
- ---------------------------------------------------------------------------------------------------
Pre-Refunded (e) -- 13.4%
1,000,000 AAA Broward County School Board COP, Series A, MBIA-Insured,
(Escrowed with U.S. Government Securities to 7/1/00
Call @ 102), 7.125% due 7/1/10 1,112,500
1,750,000 AAA Charlotte County Hospital Revenue, Bon Secours
Health (St. Joseph's) Series A, (Escrowed with U.S.
Government Securities to 8/15/98 Call @ 102),
8.25% due 8/15/18 1,960,000
1,060,000 AAA Dunedin Hospital Revenue, Mease Health Care, MBIA-Insured,
(Escrowed with U.S. Government Securities to 11/15/01
Call @ 102), 6.75% due 11/15/11 1,175,275
1,365,000 AAA Edgewater Water & Sewer Authority, MBIA-Insured,
(Escrowed with U.S. Government Securities to 10/1/01
Call @ 102), 7.00% due 10/1/21 1,530,506
1,105,000 AAA Florida State Pollution Control, Series X, (Escrowed with
U.S. Government Securities to 7/1/01 Call @ 101),
6.40% due 7/1/09 1,185,113
515,000 AAA Florida State Board of Education Capital Outlay Refunding,
Series A, (Escrowed with U.S. Government Securities to
6/1/00 Call @ 102), 7.25% due 6/1/23 (d) 574,869
1,000,000 AAA Florida State Turnpike Authority Revenue, AMBAC-Insured,
(Escrowed with U.S. Government Securities to 7/1/01
Call @ 102), 7.20% due 7/1/11 1,128,750
1,050,000 AAA Fort Pierce Utilities Authority Revenue Refunding,
AMBAC-Insured, (Escrowed with U.S. Government
Securities to 10/1/01 Call @ 102), 6.50% due 10/1/16 1,148,438
1,000,000 AAA Lee County Capital & Transportation Facilities Revenue Bonds,
Series 1991, MBIA-Insured, (Escrowed with U.S. Government
Securities to 10/1/00 Call @ 102), 6.50% due 10/1/21 1,086,250
1,000,000 AAA Miami Sports & Exhibition Authority Special Obligation
Refunding, FGIC-Insured, (Escrowed with U.S. Government
Securities to 10/1/00 Call @ 102), 7.20% due 10/1/20 1,111,250
835,000 AAA Pinellas County Health Facilities Authority, Sun Coast Health
System Revenue, Sun Coast Hospital Guaranteed, Series A,
(Escrowed with U.S. Government Securities to 3/1/00
Call @ 102), 8.50% due 3/1/20 (d) 972,775
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Pre-Refunded (e) -- 13.4% (continued)
$1,500,000 AAA Port of Orange Water & Sewer Revenue, (Escrowed with U.S.
Government Securities to 4/1/01 Call @ 24.4), zero coupon
due 10/1/21 $ 268,125
1,000,000 AAA St. Lucie County Sales Tax Revenue, FGIC-Insured,
(Escrowed with U.S. Government Securities to 10/1/02
Call @ 102), 6.50% due 10/1/22 1,100,000
445,000 AAA Volusia County Airport System Revenue, Daytona Beach Regional
Airport, MBIA-Insured, (Escrowed with U.S. Government
Securities to 10/1/00 Call @ 102), 7.00% due 10/1/21(a) 490,613
- ---------------------------------------------------------------------------------------------------
14,844,464
- ---------------------------------------------------------------------------------------------------
Short-Term (b) -- 0.1%
100,000 AAA Jacksonville Health Facilities Baptist Medical Series 93,
4.25% Due 6/1/08 100,000
- ---------------------------------------------------------------------------------------------------
Solid Waste -- 4.4%
2,050,000 A Broward County Resource Recovery Revenue, Broward Waste
Energy North Project, 7.95% due 12/1/08(d) 2,219,125
1,000,000 AAA Lee County Solid Waste, MBIA-Insured, 7.00% due 10/1/11(a) 1,073,750
1,500,000 A St. Lucie County Solid Waste Disposal Revenue Bonds,
Florida Power & Light Co. Project, 7.15% due 2/1/23(a) 1,576,875
- ---------------------------------------------------------------------------------------------------
4,869,750
- ---------------------------------------------------------------------------------------------------
Tax Allocation -- 1.6%
2,000,000 BBB Miami Beach Redevelopment Agency Tax Increment Revenue,
City Center Historic Convention Village, 5.875% due 12/1/22(a) 1,782,500
- ---------------------------------------------------------------------------------------------------
Transportation -- 6.0%
Dade County Avaition Facilities Revenue Bonds:
1,000,000 AAA Series B, 6.00% due 10/1/24(a) 971,250
1,250,000 Aa* Series U, 6.75% due 10/1/06(a) 1,317,188
1,500,000 AA- Ocean Highway and Port Authority, Nassau County, Adjustable
Demand Revenue Bonds, Series 1990, LOC ABN Ambro Bank NV,
6.25% mandatory tender 12/1/02(a) 1,580,625
1,500,000 AA- Port Everglades Authority, Port
Improvement Revenue Refunding, FSA-Insured, 5.00%
due 9/1/16 1,305,000
1,355,000 AAA Volusia County Airport System Revenue, Daytona Beach Regional
Airport, MBIA-Insured, 7.00% due 10/1/21(a) 1,434,605
- ---------------------------------------------------------------------------------------------------
6,608,668
- ---------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================
<C> <C> <S> <C>
Utilities -- 6.8%
Escambia County Utility System Authority Revenue Bonds,
$3,000,000 AAA Series B, FGIC-Insured, 6.25 due 1/1/15 $ 3,078,750
1,350,000 BBB Guam Power Authority Revenue Series A, 6.75% due 10/1/24 1,353,375
1,000,000 AAA Martin County Conservation Utilities System FGIC-Insured,
6.00% due 10/1/24 997,500
1,000,000 BBB Martin County Industrial Development Authority Indiantown,
7.875% due 12/15/25 1,067,500
1,000,000 Aa1* Orlando Utility Commission Water & Electric Revenue Refunding,
6.00% due 10/1/10 1,021,250
- ---------------------------------------------------------------------------------------------------
7,518,375
- ---------------------------------------------------------------------------------------------------
Water & Sewer -- 4.3%
1,000,000 AAA Coral Springs Improvement District, Broward County Water and
Sewer Refunding, Series 92, MBIA-Insured, 6.00% due 6/1/10 1,018,750
2,000,000 AAA Seminole County Water & Sewer Refunding & Improvement,
MBIA-Insured, 6.00% due 10/1/12 2,025,000
1,725,000 AAA Titusville Water & Sewer Revenue, Series 94, MBIA-Insured,
6.00% due 10/1/24 1,718,530
- ---------------------------------------------------------------------------------------------------
4,762,280
- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100% (Cost -- $106,405,261)(f) $110,671,580
===================================================================================================
</TABLE>
(a) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Variable rate obligation payable at par on demand at anytime on no more
than seven days notice.
(c) Residual interest bonds -- coupon varies inversely with level of short-term
tax-exempt interest rates.
(d) Securities segregated by Custodian for open purchase commitment.
(e) Pre-refunded bonds escrowed by U.S. Government Securities and bonds
escrowed to maturity by U.S. Government Securities are considered by
manager to be triple-A rated even if issuer has not applied for new
ratings.
(f) The cost for Federal income tax purposes is substantially the same.
See page 20 for definition of ratings and certain security descriptions.
See Notes to Financial Statements.
19
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation, except those identified by an
asterisk (*) are rated by Moody's Investors Services. The definitions of the
applicable rating symbols are set forth below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or a minus (-) sign to show relative standings within the major
rating categories.
AAA --Debt rated "AAA"' has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA --Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issue only in a small
degree.
A --Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB --Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Moody's --Numerical modifiers 1,2, and 3 may be applied to each generic rating
from "Aa" to `Baa", where 1 is the highest and 3 the lowest rating
within its generic category.
Aaa --Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa --Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A --Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa --Bonds that are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
NR --Indicates that the bond is not rated by Standard & Poor's
Corporation or Moody's Investor's Services.
- --------------------------------------------------------------------------------
Short-Term Securities Ratings
- --------------------------------------------------------------------------------
SP-1 --Standard & Poor's highest rate 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 VRDO rating
indicating that the degree of safety regarding timely payment is
either overwhelming or very strong; those issues determined to possess
overwhelming safety characteristics are denoted with a (+) sign.
VMIG 1 --Moody's highest rating for issues having demand feature --
variable-rate demand obligation (VRDO)
P-1 --Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
SECURITY DESCRIPTIONS
---------------------
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
FAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GEMICO -- General Electric Mortgage Insurance Company
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Agency
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
PCFA -- Pollution Control Financing Authority
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
VRDD -- Variable Rate Demand Note
VRWE -- Variable Rate Wednesday Demand
20
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Florida
Limited Term Florida
Portfolio Portfolio
=====================================================================================================================
<S> <C> <C>
ASSETS:
Investments, at value (Cost -- $18,822,690 and
$106,405,261, respectively) $ 18,871,475 $ 110,671,580
Cash 35,400 --
Receivable for securities sold -- 39,924
Receivable for Fund shares sold -- 385,316
Interest receivable 430,473 2,382,399
- ---------------------------------------------------------------------------------------------------------------------
Total Assets 19,337,348 113,479,219
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 767,304 884,367
Management fees payable 12,445 42,934
Distribution costs payable 10,835 54,104
Accrued expenses and other liabilities 23,845 33,774
- ---------------------------------------------------------------------------------------------------------------------
Total Liabilities 814,429 1,015,179
- ---------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 18,522,919 $ 112,464,040
=====================================================================================================================
NET ASSETS:
Par value of capital shares $ 2,825 $ 8,722
Capital paid in excess of par value 18,878,596 108,388,908
Undistributed net investment income 107,040 114,089
Accumulated net realized loss on security transactions (514,327) (313,998)
Net unrealized appreciation of investments 48,785 4,266,319
- ---------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 18,522,919 $ 112,464,040
=====================================================================================================================
Shares Outstanding:
Class A 2,329,693 8,354,564
- ---------------------------------------------------------------------------------------------------------------------
Class B -- 154,372
- ---------------------------------------------------------------------------------------------------------------------
Class C 495,367 213,351
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $6.56 $12.89
- ---------------------------------------------------------------------------------------------------------------------
Class B* -- $12.89
- ---------------------------------------------------------------------------------------------------------------------
Class C** $6.55 $12.89
- ---------------------------------------------------------------------------------------------------------------------
ClassA Maximum Public Offering Price Per Share (net asset value plus 2.04% and
4.17% of net asset
value per share, respectively) $6.69 $13.43
=====================================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed less than one year from initial purchase. This CDSC declines
by 0.50% the first year after purchase and by 1.00% per year thereafter
until no CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC which
applies if shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
21
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Operations For the Year Ended March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Florida
Limited Term Florida
Portfolio Portfolio
===================================================================================
<S> <C> <C>
INVESTMENT INCOME:
Interest $1,193,395 $7,108,820
- ----------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 80,664 484,744
Distribution costs (Note 4) 28,865 102,065
Shareholder communications fees 17,000 13,902
Legal and auditing fees 10,000 8,702
Pricing service fees 6,500 15,001
Shareholder servicing agent fees 4,000 22,115
Trustees' fees 4,000 5,100
Custodian fees 3,500 12,001
Registration fees 2,000 14,001
Other 13,500 2,701
- ----------------------------------------------------------------------------------
Total Expenses 170,029 680,332
Less: Management fee waiver 68,219 --
- ----------------------------------------------------------------------------------
Net Expenses 101,810 680,332
- ----------------------------------------------------------------------------------
Net Investment Income 1,091,585 6,428,488
- ----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 14,387,299 45,983,968
Cost of securities sold 14,898,365 46,254,610
- ----------------------------------------------------------------------------------
Net Realized Loss (511,066) (270,642)
- ----------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
(Depreciation) of Investments:
Beginning of year (699,517) 3,069,693
End of year 48,785 4,266,319
- ----------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 748,302 1,196,626
- ----------------------------------------------------------------------------------
Net Gain on Investments 237,236 925,984
- ----------------------------------------------------------------------------------
Increase in Net Assets From Operations $1,328,821 $7,354,472
===================================================================================
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Florida
Limited Term Florida
Portfolio Portfolio
===================================================================================================================================
1995 1994 (a) 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,091,585 $ 772,869 $ 6,428,488 $ 6,384,121
Net realized gain (loss) from
security transactions (511,066) (3,261) (270,642) 6,436
Increase (decrease) in net unrealized
appreciation of investments 748,302 (699,517) 1,196,626 (3,692,047)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets
From Operations 1,328,821 70,091 7,354,472 2,698,510
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (1,059,373) (698,041) (6,449,732) (6,395,091)
Net realized gain from security
transactions -- -- (5,896) --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets
From Distributions
to Shareholders (1,059,373) (698,041) (6,455,628) (6,395,091)
- -----------------------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 8,700,699 28,710,862 28,605,984 27,918,314
Net asset value of shares issued for
reinvestment of dividends 509,582 374,671 2,040,050 1,797,671
Cost of shares reacquired (14,454,248) (4,960,145) (29,493,648) (18,499,477)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in
Net Assets From Fund
Share Transactions (5,243,967) 24,125,388 1,152,386 11,216,508
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in
Net Assets (4,974,519) 23,497,438 2,051,230 7,519,927
NET ASSETS:
Beginning of year 23,497,438 -- 110,412,810 102,892,883
- -----------------------------------------------------------------------------------------------------------------------------------
End of year* $ 18,522,919 $ 23,497,438 $ 112,464,040 $ 110,412,810
===================================================================================================================================
* Includes undistributed net
investment income of $ 107,040 $ 74,828 $ 114,089 $ 135,333
===================================================================================================================================
</TABLE>
(a) For the period from April 27, 1993 (commencement of operations) to March
31, 1994.
See Notes to Financial Statements.
23
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Florida Limited Term and Florida Portfolios ("Portfolios") are separate
investment portfolios of the Smith Barney Muni Funds ("Fund"). The Fund is a
Massachusetts business trust registered under the Investment Company Act of
1940, as amended, as a non-diversified, open-end management investment company.
The Fund consists of these two Portfolios and eleven other separate investment
portfolios: California, Georgia, Limited Term, National, New York, New Jersey,
Ohio, Pennsylvania, California Limited Term, New York Money Market and
California Money Market Portfolios. The financial statements and financial
highlights for the other portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) securities are
valued at bid 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; short-term securities and securities maturing within 60 days
are valued at cost plus (minus) accreted discount (amortized premium), which
approximates value; (c) gains or losses on the sale of securities are calculated
by using the specific identification method; (d) interest income, adjusted for
amortization of premiums and accretion of original issue discount, is recorded
on the accrual basis; market discount is recognized upon the disposition of the
security; (e) direct expenses are charged to each Portfolio and each class;
management fees and general fund expenses are allocated on the basis of relative
net assets; and (f) the Portfolios intend to comply with the requirements of the
Internal Revenue Code pertaining to regulated investment companies and to make
the required distributions to shareholders; therefore, no provision for Federal
income taxes has been made.
2. PORTFOLIO CONCENTRATION
Since each Portfolio invests primarily in obligations of issuers within
Florida, it is subject to possible concentration risks associated with economic,
political, or legal developments or industrial or regional matters specifically
affecting Florida.
3. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS
The Portfolios intend 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 respective Portfolios.
Capital gain distributions, if any, are taxable to shareholders, and are
24
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
declared and paid at least annually. At March 31, 1995 the Florida Limited Term
and Florida Portfolios had net capital loss carryovers of $514,327 and $313,998,
respectively, available to offset future capital gains. To the extent that this
carryover loss is used to offset future capital gains, it is probable that any
gains so offset will not be distributed. The amount and expiration of the
carryovers are indicated below. Expiration occurs on March 31, of the year
indicated.
2002 2003
================================================================================
Florida Limited Term Portfolio $1,644 $512,683
Florida Portfolio -- 313,998
================================================================================
4. MANAGEMENT AGREEMENTS AND TRANSACTIONS WITH
AFFILIATED PERSONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager to the Fund. The
Florida Limited Term and Florida Portfolios pay SBMFM a management fee
calculated at the annual rate of 0.45% of average daily net assets. Such fees
are calculated daily and paid monthly. SBMFM waived $68,219 of its management
fees for the Florida Limited Term Portfolio, for the year ended March 31, 1995.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. SB received sales charges of approximately $258,000 (paid by
purchasers of the Portfolios' Class A shares) for the year ended March 31, 1995.
All officers and two Trustees are employees of SB.
Effective November 7, 1994, the Fund adopted a new class structure,
renaming Class B shares as Class C shares, and exchanging the former Class C
shares into Class A shares. Under the new class structure, for the Florida
Portfolio, a contingent deferred sales charge ("CDSC") of 4.50% is imposed on
Class B shares if redemption occurs less than one year from initial purchase.
This CDSC declines by 0.50% the first year after purchase and by 1.00% per year
thereafter until no CDSC is incurred. For the Florida Limited Term and Florida
Portfolios a CDSC of 1.00% is also imposed on Class C shares if redemption
occurs less than one year from initial purchase. Any CDSC imposed on redemptions
is paid to SB. For the year ended March 31, 1995, there were approximately
$24,000 in such charges.
On September 16, 1994, a new Distribution Plan was approved by the Fund's
shareholders. Pursuant to this Distribution Plan, the Florida Limited Term
Portfolio pays a service fee of 0.15% of average net assets on an annual basis
with respect to its Class A and C shares; the Florida Portfolio pays a service
fee of 0.15% of average net assets on an annual basis with respect to its Class
A, B and C shares. In addition, the Florida Limited Term Portfolio pays a
distribution fee of 0.20% of average net assets on an annual basis with respect
25
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
to its Class C shares and the Florida Portfolio pays a distribution fee of 0.50%
and 0.55% of average net assets on an annual basis with respect to its Class B
and C shares, respectively.
5. INVESTMENTS
During the year ended March 31, 1995, the aggregate cost of purchases and
proceeds from sales (including maturities, but excluding short-term securities)
of investments were as follows:
Florida
Limited Term Florida
Portfolio Portfolio
================================================================================
Purchases $11,204,335 $46,501,770
- --------------------------------------------------------------------------------
Sales 14,387,299 45,983,968
================================================================================
At March 31, 1995, the gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were as follows:
Florida
Limited Term Florida
Portfolio Portfolio
================================================================================
Gross unrealized appreciation $244,803 $4,818,053
Gross unrealized depreciation (196,018) (551,734)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 48,785 $4,266,319
================================================================================
6. CAPITAL SHARES
At March 31, 1995, there were an unlimited amount of shares of $.001 par
value capital stock authorized. The Fund has established multiple classes of
shares within each Portfolio of the Fund. Each share of a class represents an
identical interest in its respective Portfolio and has the same rights, except
that each class bears expenses specifically related to the distribution of its
shares. At March 31, 1995, total paid-in capital amounted to the following for
each class and respective Portfolio:
Portfolio Class A Class B Class C
================================================================================
Florida Limited Term $ 15,564,775 -- $3,316,646
Florida 103,630,514 $1,890,367 2,876,749
================================================================================
26
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1995 March 31, 1994
------------------------------- ------------------------------
Florida Limited Term Portfolio Shares Amount Shares Amount
===================================================================================================================================
<S> <C> <C> <C> <C>
Class A (1)*
Shares sold 1,317,436 $ 8,400,374 2,728,592 $ 17,984,820
Shares issued on reinvestment 68,245 436,507 26,559 178,001
Shares redeemed (2,113,417) (13,459,174) (713,498) (4,689,704)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (727,736) $ (4,622,293) 2,041,653 $ 13,473,117
===================================================================================================================================
Class C (2)++
Shares sold 46,614 $ 300,325 609,463 $ 4,048,337
Shares issued on reinvestment 11,437 73,075 6,128 41,026
Shares redeemed (155,645) (995,074) (22,630) (151,042)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (97,594) $ (621,674) 592,961 $ 3,938,321
===================================================================================================================================
Florida Portfolio
===================================================================================================================================
Class A*
Shares sold 2,038,171 $ 25,235,982 1,678,097 $ 22,582,804
Shares issued on reinvestment 153,840 1,937,080 127,557 1,718,222
Shares redeemed (2,258,420) (28,184,592) (1,374,961) (18,453,207)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (66,409) $ (1,011,530) 430,693 $ 5,847,819
===================================================================================================================================
Class B+
Shares sold 177,570 $ 2,186,727 -- --
Shares issued on reinvestment 1,046 13,159 -- --
Shares redeemed (24,244) (309,519) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase 154,372 $ 1,890,367 -- --
===================================================================================================================================
Class C (3)++
Shares sold 92,926 $ 1,183,275 142,504 $ 1,931,636
Shares issued on reinvestment 7,147 89,811 2,802 37,767
Shares redeemed (80,891) (999,537) (3,445) (46,270)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase 19,182 $ 273,549 141,861 $ 1,923,133
===================================================================================================================================
</TABLE>
(1) For the period from April 27, 1993 (inception date) to March 31, 1994.
(2) For the period from May 4, 1993 (inception date) to March 31, 1994.
(3) For the period from August 11, 1993 (inception date) to March 31, 1994.
* On October 10, 1994, the former Class C shares were exchanged into Class A
shares; therefore the Class C share activity for the period from April 1,
1994 to October 9, 1994 is included with the Class A share activity. The
year ended March 31, 1994 includes only Class A share activity.
+ For the period from November 16, 1994 (inception date) to March 31, 1995.
++ On November 7, 1994 the former Class B shares were renamed Class C shares.
27
<PAGE>
Smith Barney Muni Funds
Florida Limited Term Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
Class A Shares (a) 1995 1994 (b)
================================================================================
Net Asset Value, Beginning of Year $ 6.44 $ 6.50
- --------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.34 0.26
Net realized and unrealized gain (loss)
on investments 0.11 (0.08)
- --------------------------------------------------------------------------------
Total Income from Investment Operations 0.45 0.18
- --------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.33) (0.24)
Distributions from net realized gains
on security transactions -- --
- --------------------------------------------------------------------------------
Total Distributions (0.33) (0.24)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 6.56 $ 6.44
- --------------------------------------------------------------------------------
Total Return 7.17% 2.74%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $15,277 $13,147
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.44% 0.20%+
Net investment income 5.37 4.90+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 54.65% 16.28%
================================================================================
(a) On October 10, 1994 the former Class C shares were exchanged into Class A
shares.
(b) For the period from April 27, 1993 (inception date) to March 31, 1994.
(1) See page 29 for full footnote disclosure.
++ Not annualized as the result may not be representative of the total return
for the year.
+ Annualized.
28
<PAGE>
Smith Barney Muni Funds
Florida Limited Term Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
Class C Shares (a) 1995 1994 (b)
================================================================================
Net Asset Value, Beginning of Year $ 6.43 $ 6.51
- --------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.32 0.24
Net realized and unrealized gain (loss)
on investments 0.11 (0.09)
- --------------------------------------------------------------------------------
Total Income from Investment Operations 0.43 0.15
- --------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.31) (0.23)
Distributions from net realized gains
on security transactions -- --
- --------------------------------------------------------------------------------
Total Distributions (0.31) (0.23)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $ 6.55 $ 6.43
- --------------------------------------------------------------------------------
Total Return 6.84% 2.17%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $3,246 $3,815
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.70% 0.52%+
Net investment income 4.98 4.28+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 54.65% 16.28%
================================================================================
(a) On November 7, 1994 the former Class B shares were renamed Class C shares.
(b) For the period from May 4, 1993 (inception date) to March 31, 1994.
++ Not annualized as the result may not be representative of the total return
for the year.
+ Annualized.
(1) The manager has waived all or part of its fees in each of the periods in
the two-year period ended March 31, 1995. If such fees were not waived, the
per share decrease of net investment income and the ratios of expenses to
average net assets would be as follows:
Expense Ratios
Per Share Decreases without Fee Waivers*
------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
Class A $.010 $.029 0.82% 0.71%+
Class C .025 .033 1.09 1.04+
* As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.80% and 1.00% for Class A and C
shares, respectively.
29
<PAGE>
Smith Barney Muni Funds
Florida Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares (a) 1995 1994 1993 1992(b)
===================================================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.82 $13.21 $12.32 $12.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.75 0.77 0.79 0.73
Net realized and unrealized gain (loss)
on investments (2) 0.08 (0.39) 0.91 0.29
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.83 0.38 1.70 1.02
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.76) (0.77) (0.80) (0.70)
Distributions from net realized gains
on security transactions -- -- (0.01) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.76) (0.77) (0.81) (0.70)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.89 $12.82 $13.21 $12.32
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 6.77% 2.75% 14.21% 8.70%++
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $107,724 $104,681 $102,202 $67,998
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.61% 0.54% 0.46% 0.23%+
Net investment income 5.97 5.71 6.15 6.70+
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43.23% 20.40% 25.57% 41.72%
===================================================================================================================================
Class B Shares 1995(c)
===================================================================================================================================
Net Asset Value, Beginning of Year $11.91
- -----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.30
Net realized and unrealized gain
on investments (2) 0.97
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 1.27
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.29)
Distributions from net realized gains
on security transactions --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.29)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.89
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 10.77%++
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $1,990
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.20%+
Net investment income 5.57+
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43.23%
===================================================================================================================================
</TABLE>
(a) On October 10, 1994 the former Class C shares were exchanged into Class A
shares.
(b) For the priod from April 2, 1991 (inception date) to March 31, 1992.
(c) For the period from November 16, 1994 (inception date) to March 31, 1995.
++ Not annualized, as the result may not be representative of the total return
for the year.
+ Annualized.
See page 31 for full footnote disclosures for (1) and (2).
30
<PAGE>
Smith Barney Muni Funds
Florida Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
Class C Shares (a) 1995 1994 1993(b)
================================================================================
Net Asset Value, Beginning of Year $12.81 $13.20 $12.86
- --------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.67 0.68 0.19
Net realized and unrealized gain (loss)
on investments (2) 0.08 (0.39) 0.33
- --------------------------------------------------------------------------------
Total Income from Investment Operations 0.75 0.29 0.52
- --------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.67) (0.68) (0.18)
Distributions from net realized gains -- -- --
- --------------------------------------------------------------------------------
Total Distributions (0.67) (0.68) (0.18)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $12.89 $12.81 $13.20
- --------------------------------------------------------------------------------
Total Return 6.12% 2.05% 4.05%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $2,750 $2,487 $ 691
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.25% 1.24% 1.24%+
Net investment income 5.40 4.95 5.21+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 43.23% 20.40% 25.57%
================================================================================
(a) On November 7, 1994 the former Class B shares were renamed Class C shares.
(b) For the period from January 5, 1993 (inception date) to March 31, 1993.
++ Not annualized as the result may not be representative of the total return
for the year.
+ Annualized.
(1) The manager has waived all or part of its fees in each of the periods in
the two-year period ended March 31, 1993. If such fees were not waived, the
per share decrease of net investment income and the ratios of expenses to
average net assets would be as follows:
Expense Ratios
Per Share Decreases without Fee Waivers*
------------------- --------------------
1993 1992 1993 1992
---- ---- ---- ----
Class A $.012 $.040 0.56% 0.59%+
* As a result of voluntary expense limitations, the ratios of expenses to
average net assets will not exceed 0.80%, 130% and 1.35% for Class A, B and
C shares, respectively.
(2) Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at net asset values less
than the beginning of the period.
31
<PAGE>
Smith Barney Muni FundS
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
of the Florida Limited Term and Florida Portfolios
of Smith Barney Muni Funds:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Florida Limited Term and Florida
Portfolios of Smith Barney Muni Funds as of March 31, 1995, the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended with respect
to the Florida Portfolio and for the year then ended and the period from April
27, 1993 (commencement of operations) to March 31, 1994 with respect to the
Florida Limited Term Portfolio, and the financial highlights for each of the
years in the three-year period then ended and for the period from April 2, 1991
(commencement of operations) to March 31, 1992 with respect to the Florida
Portfolio and for the year then ended and for the period from April 27, 1993
(commencement of operations) to March 31, 1994 with respect to the Florida
Limited Term Portfolio. These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Florida Limited Term and
Florida Portfolios of Smith Barney Muni Funds as of March 31, 1995, the results
of their operations for the year then ended, the changes in net assets for each
of the years in the two-year period then ended with repect to the Florida
Portfolio and for the year then ended and the period from April 27, 1993
(commencement of operations) to March 31, 1994 with respect to the Florida
Limited Term Portfolio, and the financial highlights for each of the years in
the three-year period then ended and for the period from April 2, 1991
(commencement of operations) to March 31, 1992 with respect to the Florida
Portfolio and for the year then ended and for the period from April 27, 1993
(commencement of operations) to March 31, 1994 with respect to the Florida
Limited Term Portfolio, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
May 15, 1995
32
<PAGE>
Smith Barney
Muni Funds
Trustees
Jessica M. Bibliowicz
Ralph D. Creasman
Joseph H. Fleiss
Donald R. Foley
Paul Hardin
Francis P. Martin, M.D.
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
C. Richard Youngdahl
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Daniel Malone
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
SMITH BARNEY
------------
A Member of Travelers Group [Logo]
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder Servicing
Agent
The Shareholder Services
Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for
the general information of the
shareholders of Smith Barney
Muni Funds Florida Limited Term and
Florida Portfolios. It is not authorized for
distribution to prospective investors
unless accompanied or preceded by a
current Prospectus for the Fund,
which contains information concerning the
Fund's investment policies and expenses
as well as other pertinent information.
Smith Barney Muni Funds
388 Greenwich Street
New York, New York 10013
FD2308 E5
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
1995
1995
1995 [ARTWORK APPEARS HERE]
1995
1995
Smith Barney
Muni Funds
New Jersey
Portfolio
--------------------------------------------------------
March 31, 1995
[LOGO APPEARS HERE] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- --------------------
New Jersey Portfolio
- --------------------
Dear Shareholder:
We are pleased to present the annual report and audited financial statements
for Smith Barney Muni Funds: New Jersey Portfolio for the fiscal year ended
March 31, 1995.
Municipal bond prices posted extremely strong gains in the first quarter of
1995, erasing most of the losses from last year's turbulent market. The New
Jersey Portfolio had a total return of 6.64% (Class A shares) for the fiscal
year. That was significantly above the 5.68% average total return for all New
Jersey municipal bond funds over the same period, as reported by Lipper
Analytical Services.
Longer-term performance of the Portfolio is also excellent relative to its
peers. The Portfolio's three-year cumulative total return (excluding sales
charge) of 23.73% (Class A shares) outperformed the average cumulative total
return of 22.61% for all New Jersey municipal bond funds in the Lipper survey
for the period ended March 31, 1995. (Please see Average Annual Total Return
chart on page 5 of this report for additional performance information.) It
should be noted that this strong performance over the last three years has been
achieved with the need for only minimal capital gains distributions, an
important consideration for investors interested in after-tax income.
Market and Economic Overview
Since our last report to you in November, the fixed-income markets, and
municipal bonds in particular, have enjoyed a powerful rally. Municipal bond
yields have declined more than a full percentage point, as evidenced by the drop
in the average yield on The Bond Buyer's weekly 25-Bond Revenue Index of 30-year
municipal bonds from a high of 7.37% on November 17, 1994 to 6.29% on March 31,
1995. This was substantially better than the performance of the benchmark 30-
year Treasury bond, which experienced a decline in yield of 70 basis points from
8.13% to 7.43% during the same time frame.
The vastly improved bond markets reflect a growing consensus that inflation will
remain under control, and the Federal Reserve Board will be successful in
engineering a "soft landing" by slowing the economy down to a more sustainable,
non-inflationary rate of growth. The seven increases in the federal funds rate
(the rate banks charge each other for overnight loans), orchestrated by the Fed
since February 1994, appear to be slowing the pace of economic growth. Recent
economic reports show a slower rate of increase in employment, producer prices,
and retail sales. Industrial production and
1
<PAGE>
capacity utilization were also lower than expected signaling a possible slowdown
in the country's strong manufacturing sector. These generally favorable economic
fundamentals are more than offsetting concerns about the substantial decline in
the value of the dollar relative to the Japanese yen and German mark on the
foreign exchange markets.
Late in April, several tax-reform proposals which recommend a flat Federal
income tax rate began to receive increased attention in the national financial
press and from municipal bond market participants. Adoption of a flat tax would
diminish the advantages of tax exemption for municipal bonds. Although the
various plans being circulated are only proposals, the publicity surrounding
them has recently caused some investors to back away from the municipal bond
market. In our opinion it is much too early in the process to predict what
changes in the tax laws, if any, will actually take place, but tax reform will
certainly be a major topic of political debate over the next few years. Many
observers believe that the more radical proposals for changes in the way taxes
are collected have little chance for enactment.
Absent these tax-reform concerns, municipals would probably continue to be
strong performers relative to Treasuries and other taxable investments due to
the low supply of new issues. Not only did last year's spike in interest rates
sharply reduce refinancing activity in the municipal market, but voter pressure
on states and municipalities to rein in spending and cut taxes, or at least
avoid tax increases, has also resulted in a roughly 30% decline in new-money
financing. In addition, the universe of existing municipal bonds is shrinking.
In 1995, an estimated $230 billion in older high-coupon issues will mature or be
called as they reach their first optional call dates. With estimates of new-
issue volume at less than $150 billion, the net reduction in municipal debt
outstanding could approach $100 billion this year, contracting the market by
about eight percent. Ordinarily, a reduction in supply of this magnitude would
be expected to provide a powerful boost for municipal bond values as it did
earlier this year. Uncertainties about various tax proposals, however, will
probably keep municipals from trading any better than their normal relationship
to taxable investment alternatives.
The New Jersey Economy
Economic conditions in New Jersey are slowly recovering, producing increased
state revenue collections. A proposed tax-cut plan will be closely watched by
the major rating agencies for offsetting reductions in expenditures. New
Jersey's general obligation debt currently carries an Aa1 rating from Moody's
and at AA+ rating from Standard & Poor's with a "stable" outlook.
Portfolio Strategy and Outlook
While we generally have a positive outlook for the fixed-income markets, the
2
<PAGE>
size of the rally we have experienced so far would seem to leave little room for
disappointment, and any sign of a rebound in economic activity is likely to
result in a return to higher interest rates. We also believe that the unique
supply and demand characteristics of the municipal market and tax-reform
uncertainties will tend to exaggerate price swings relative to taxable
investments.
In light of this viewpoint, we are maintaining a balanced approach to
structuring the interest-rate sensitivity of the Portfolio by investing in a
combination of both long and short effective maturities. Most long-term
municipal bonds are callable prior to their stated maturity date. When a bond
has a coupon higher than prevailing market yields, its maturity is effectively
shortened to the call date for trading purposes because of the possibility that
the issuer will exercise its option to replace the bond with lower-cost debt. We
are retaining high-coupon bonds that trade well above their face value for the
defensiveness of their shorter effective maturities and the above-market level
of income they provide. However, we are also focusing on eliminating bonds with
shorter call dates when they are trading near their face value. Such bonds have
unfavorable performance characteristics because they retain the downside risk of
their longer maturity if rates should rise, but their appreciation potential is
limited by the shorter call date if interest rates decline. We are replacing
such issues with bonds that have similar stated maturities but greater call
protection.
Although this strategy sacrifices some of the current income being generated by
the Portfolio, it enhances long-term performance potential if interest rates
continue to decline without adding to downside risk if interest rates rise. We
believe that positioning the Portfolio in this manner is the best way to achieve
our objective of the highest tax-free income consistent with prudent investment
risk.
We thank you for your investment in the Portfolio and your continued confidence
in our investment management.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman and Vice President and
Chief Executive Officer Investment Officer
April 28, 1995
3
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
==================================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $13.23 $13.29 $0.78 $0.00 6.64%
- --------------------------------------------------------------------------------------------------
3/31/94 13.71 13.23 0.80 0.00 2.17
- --------------------------------------------------------------------------------------------------
3/31/93 12.90 13.71 0.82 0.06 13.55
- --------------------------------------------------------------------------------------------------
3/31/92 12.52 12.90 0.85 0.08 10.73
- --------------------------------------------------------------------------------------------------
Inception* - 3/31/91 12.00 12.52 0.33 0.00 7.12
==================================================================================================
Total $3.58 $0.14
==================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
==================================================================================================
<S> <C> <C> <C> <C> <C>
Inception* - 3/31/95 $12.26 $13.28 $0.29 $0.00 10.86%
==================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
==================================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $13.22 $13.28 $0.69 $0.00 5.91%
- --------------------------------------------------------------------------------------------------
3/31/94 13.71 13.22 0.71 0.00 1.40
- --------------------------------------------------------------------------------------------------
Inception* - 3/31/93 13.36 13.71 0.19 0.00 4.04
==================================================================================================
Total $1.59 $0.00
==================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
4
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
-----------------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 6.64% N/A 5.91%
- --------------------------------------------------------------------------------
Inception* through 3/31/95 8.96 10.86% 5.10
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
With Sales Charge/(2)/
-----------------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 2.38% N/A 4.91%
- --------------------------------------------------------------------------------
Inception* through 3/31/95 7.97 6.36% 5.10
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
-------------------------
<S> <C>
Class A (Inception* through 3/31/95) 46.74%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/95) 10.86
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/95) 11.74
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 4.00%; Class B shares reflect the deduction
of a 4.50% CDSC, which applies if shares are redeemed less than one year
from initial purchase. This CDSC declines by 0.50% the first year after
purchase and by 1.00% per year thereafter until no CDSC is incurred. Class C
shares reflect the deduction of a 1.00% CDSC which applies if shares are
redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are October 11, 1990, November
16, 1994 and January 5, 1993, respectively.
5
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the New Jersey Portfolio vs. Lehman Long Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
October 1990 - March 1995
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
54964 S/B New Jersey Portfolio
New Jersey Lehman Long Bond Index
<S> <C> <C>
10/11/90 9600 10000
Mar-91 10273.03 10757.71
Mar-92 11345.4 11982.77
Mar-93 12851.1 13735.72
Mar-94 13099.6 13893.25
Mar-95 13949.8 15147.72
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on October 11, 1990, assuming deduction of the maximum 4.00% sales charge at
the time of investment and reinvestment of dividends (after deduction of sales
charges, if any) and capital gains (at net asset value) through March 31,
1995. The Index is unmanaged and is not subject to the same management and
trading expenses of a mutual fund. The performance of the Portfolio's other
classes may be greater or less than the Class A shares' performance indicated
on this chart, depending on whether greater or lesser sales charges and fees
were incurred by shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
values may be more or less than the original cost. No adjustment has been made
for shareholder tax liability on dividends or capital gains.
6
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Education -- 6.9%
$ 750,000 AAA Hamilton Township Board of Education, FSA-Insured,
7.00% due 12/15/15 $ 800,625
650,000 AAA Lakewood Township School District, AMBAC-Insured,
Bank Qualified, Series 92, 6.25% due 2/15/11 679,250
600,000 AA Rutgers State University Refunding, State University of
New Jersey, Series 92A, 6.40% due 5/1/13 645,000
1,000,000 Baa1* Shrewsbury Board of Education, COP, 6.60% due 8/15/15 1,015,000
1,000,000 AAA South Brunswick Township, New Jersey Board of
Education, FGIC-Insured 6.40% due 8/1/21 1,032,500
- ------------------------------------------------------------------------------------------------------
4,172,375
- ------------------------------------------------------------------------------------------------------
Escrowed to Maturity (e) -- 5.4%
700,000 AAA Atlantic County Improvement Luxury Tax Revenue,
Convention Center, MBIA-Insured, (Escrowed to Maturity
with U.S. Government Securities), 7.40% due 7/1/16 806,750
1,705,000 AAA New Jersey State Turnpike Authority Revenue Refunding,
(Escrowed to Maturity with U.S. Government Securities),
10.375% due 1/1/03 2,073,706
200,000 AAA Ringwood Boro Sewer Authority Special Obligation,
(Escrowed to Maturity with U.S. Government Securities),
9.875% due 7/1/13 263,000
125,000 AAA Virgin Islands Public Financing Authority Revenue, Series A,
(Escrowed to Maturity with U.S. Government Securities),
7.30% due 10/1/18 146,094
- ------------------------------------------------------------------------------------------------------
3,289,550
- ------------------------------------------------------------------------------------------------------
General Obligation -- 4.3%
500,000 AAA The City of Jersey City, (Hudson County) Fiscal Year
Adjustment Bonds, Series 1991 B, FSA-Insured, 8.40%
due 5/15/06 611,875
1,000,000 BBB Guam Government, GO, Series A, 5.375% due 11/15/13 878,750
2,025,000 Aa1* Parsippany-Troy Hills Township Refunding, zero coupon
due 4/1/06 1,103,625
- ------------------------------------------------------------------------------------------------------
2,594,250
- ------------------------------------------------------------------------------------------------------
Hospital -- 19.1%
New Jersey Health Care Facilities Financing Authority Revenue:
2,000,000 A* Atlantic City Medical Center, 6.80% due 7/1/11 2,072,500
1,985,000 Aa* Cathedral Health Services Inc., FHA-Insured, 7.25%
due 2/15/21 2,121,469
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Hospital -- 19.1% (continued)
$ 1,300,000 Baa1* Deborah Heart & Lung Center, 6.30% due 7/1/23 $ 1,259,375
750,000 BBB+ East Orange General Hospital, Series B, 7.75%
due 7/1/20 (d) 780,000
1,500,000 AAA Irvington General Hospital, FHA-Insured, 6.375%
due 8/1/15 1,541,250
1,000,000 A- Pascack Valley Hospital, Series 91, 6.70% due 7/1/11 990,000
1,000,000 AAA St. Clare's Hospital, Riverside Medical Center,
MBIA-Insured, 5.75% due 7/1/10 991,250
1,000,000 Baa* St. Mary's Hospital, Franciscan Sisters Health Systems,
5.875% due 7/1/12 871,250
1,150,000 AAA Somerset Medical Center, Series A, FGIC-Insured,
5.20% due 7/1/24 1,006,250
- ------------------------------------------------------------------------------------------------------
11,633,344
- ------------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 3.3%
1,000,000 AAA New Jersey Housing & Mortgage Finance Agency
Housing Revenue Refunding Bonds, Presidential Plaza,
FHA-Insured, 7.00% due 5/1/30 1,037,500
1,000,000 A+ New Jersey State HFA Mortgage Revenue, Series A,
Sec 236, 8.25% due 11/1/20 1,000,000
- ------------------------------------------------------------------------------------------------------
2,037,500
- ------------------------------------------------------------------------------------------------------
Housing: Single-Family -- 4.8%
New Jersey State Housing & Mortgage Finance Agency
Revenue:
100,000 AAA Home Mortgage, Series A, MBIA-Insured, 7.875%
due 10/1/17 105,624
450,000 AAA Home Mortgage, Series C, MBIA-Insured, 8.00%
due 4/1/12 479,813
225,000 AAA Puerto Rico Housing Finance Corporation, Single-Family
Mortgage, Series A, GNMA-Collateralized, 7.80%
due 10/15/21 235,969
1,000,000 BBB Puerto Rico Housing Bank & Finance Agency, Single-Family
Mortgage, 7.50% due 12/01/06 1,091,250
1,000,000 AAA Virgin Islands HFA, Single-Family Mortgage,
GNMA-Collateralized, 6.50% due 3/1/25 (a) 995,000
- ------------------------------------------------------------------------------------------------------
2,907,656
- ------------------------------------------------------------------------------------------------------
Industrial Development -- 9.2%
New Jersey EDA Economic Development Revenue:
1,000,000 Aa3* Economic Growth Bonds, LOC Banque Nationale De
Paris, 6.55% due 12/1/07 (a) 1,021,250
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- ------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
Industrial Development -- 9.2% (continued)
$ 1,435,000 AA- Economic Growth Bonds, Series E, LOC National
Westminster USA, 5.40% due 10/1/13 (a) $ 1,329,168
1,250,000 AAA The Market Transition Facilities Revenue, Senior
Lien-Series A, MBIA-Insured, 5.875% due 7/1/11 1,248,438
2,000,000 A+ State Contract Economic Recovery, zero coupon
due 9/15/10 785,000
1,155,000 Aa1* State 91L, LOC Banque Nationale De Paris, 7.10%
due 12/1/11 (a) 1,230,075
- ------------------------------------------------------------------------------------------------------
5,613,931
- ------------------------------------------------------------------------------------------------------
Nursing Home -- 1.8%
1,000,000 Aaa* New Jersey EDA, Economic Development Bonds,
(Eagle Rock Convalescent, Inc 1990),
GNMA-Collateralized, 7.375% due 12/20/06 1,092,500
- ------------------------------------------------------------------------------------------------------
Pollution Control -- 1.6%
1,000,000 Aa2* Salem County Pollution Control Financing Authority,
Waste Disposal Revenue, E.I. Dupont De Nemours
& Co., 6.125% due 7/15/22 (a) 982,500
- ------------------------------------------------------------------------------------------------------
Power -- 1.6%
1,000,000 AAA Puerto Rico Electric Power Authority, Power Revenue,
FSA-Insured, 8.478% due 7/1/23 (c) 1,001,250
- ------------------------------------------------------------------------------------------------------
Pre-Refunded (e) -- 9.4%
500,000 AAA Hoboken, Union City, Weehawken Sewer Authority,
Sewer Revenue, MBIA-Insured, (Escrowed with U.S.
Government Securities to 8/1/99 Call @ 102), 7.25%
due 8/1/19 553,125
250,000 AAA Long Branch Sewer Authority Revenue, FGIC-Insured,
Series 90A, (Escrowed with U.S. Government Securities
to 6/1/00 Call @ 102), 7.15% due 6/1/10 278,125
750,000 AAA New Jersey Highway Authority, Garden State Parkway
Revenue, (Escrowed with U.S. Government Securities
to 1/1/99 Call @ 102), 7.25% due 1/1/16 823,125
500,000 AAA New Jersey State GO, (Escrowed with U.S. Government
Securities to 9/15/01 Call @ 101.5), 6.80% due 9/15/11 550,000
500,000 AAA North Jersey District Water Supply Commission,
New Jersey Wanaque South Project, Series A, (Escrowed
with U.S. Government Securities to 7/1/96 Call @ 102),
7.375% due 7/1/16 526,875
1,000,000 AAA Puerto Rico Commonwealth Highway Revenue, (Escrowed
with U.S. Government Securities to 7/1/00 Call @ 102),
7.75% due 7/1/10 1,142,500
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Pre-Refunded (e) -- 9.4% (continued)
$ 790,000 AAA Puerto Rico Electric Power Authority, (Escrowed with
U.S. Government Securities to 7/1/99 Call @ 101.5)
7.125% due 7/1/74 $ 870,975
875,000 AAA Virgin Islands Public Financing Authority Revenue,
Series A, (Escrowed with U.S. Government Securities
to 10/1/01 Call @ 101), 7.30% due 10/1/18 981,094
- ------------------------------------------------------------------------------------------------------
5,725,819
- ------------------------------------------------------------------------------------------------------
Public Facilities -- 4.5%
615,000 A- City of Atlantic City, COP Series 1991 (Public Facilities
Lease Agreements Atlantic City Project), 8.875%
due 1/15/13 782,588
1,000,000 Aa* New Jersey Building Authority State Building Revenue,
Garden State Savings Bond, Series 91A, Capital
Appreciation, zero coupon due 6/15/11 377,500
500,000 A+ New Jersey EDA Revenue Bonds, (New Jersey Performing
Arts Center Site Acquisition Project), 6.75% due 6/15/12 521,875
1,000,000 NR New Jersey Sports & Exposition Authority Revenue,
Monmouth Park, Series A, 8.00% due 1/1/25 1,041,250
- ------------------------------------------------------------------------------------------------------
2,723,213
- ------------------------------------------------------------------------------------------------------
Solid Waste -- 6.8%
1,000,000 AAA Mercer County Improvement Revenue, FGIC-Insured,
Series A, 6.70% due 4/1/13 (a) 1,052,500
2,000,000 A- Union County Utility Authority Solid Waste Revenue,
Series A, 7.15% due 6/15/09 (a) 2,035,000
1,035,000 A- Union County, Solid Waste Revenue, Series A, 7.20%
due 6/15/14 (a) 1,049,231
- ------------------------------------------------------------------------------------------------------
4,136,731
- ------------------------------------------------------------------------------------------------------
Transportation -- 9.8%
800,000 Baa1* Essex County Improvement Authority Airport Project
Revenue, Series 92, 6.80% due 11/1/21 (a) 833,000
1,000,000 Baa2* New Jersey EDA Revenue, American Airlines Inc. Project,
7.10% due 11/1/31 (a) 1,013,750
1,500,000 AA- Port Authority of New York & New Jersey,
67th Series, 6.875% due 1/1/25 1,560,000
1,750,000 A Puerto Rico Commonwealth Highway & Transportation
Authority Highway Revenue, Series W, 5.50%
due 7/1/15 1,614,375
1,000,000 A+ South Jersey Port Corporation Marine Terminal Revenue
Bonds, 1993 Series H, 5.75% due 1/1/13 (a) 965,000
- ------------------------------------------------------------------------------------------------------
5,986,125
- ------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Utilities -- 4.2%
$ 1,000,000 AAA Middlesex County Utility Authority Sewer Revenue
Refunding, Series A, MBIA-Insured, (Inverse Floating
Rate Security convertible to 6.25% on 8/15/97),
6.775% variable rate due 8/15/10 (c) $ 1,028,750
1,000,000 AAA New Jersey EDA, Natural Gas Facilities Revenue,
Series A, AMBAC-Insured, 6.25% due 8/1/24 (a) 1,011,250
1,500,000 AAA West New York Municipal Utility Authority Sewer
Revenue Refunding, FGIC-Insured, zero coupon
due 12/15/12 536,250
- ------------------------------------------------------------------------------------------------------
2,576,250
- ------------------------------------------------------------------------------------------------------
Water & Sewer -- 7.3%
245,000 A+ The Hudson County Improvement Authority (Essential
Purpose Pooled Governmental Loan Project), Series
1986, 7.60% due 8/1/25 267,356
New Jersey EDA:
1,000,000 A Sewer Facility (Atlantic Sewer Co.), 7.25% due 12/1/11 1,072,500
1,000,000 AAA Water Facilities Revenue Refunding, New Jersey
American Water Company Project), Series A,
FGIC-Insured, 5.35% due 6/1/23 906,250
1,000,000 NR Water Facilities Revenue, Series 1991, (New Jersey
American Water Company Inc. Project), 7.40%
due 11/1/01 (a) 1,060,000
345,000 A* Pennsville Authority Sewer Revenue, 7.10% due 11/1/20 369,150
700,000 AAA Willingboro Municipal Utilities Authority Water & Sewer
Revenue, Series C, MBIA-Insured, 7.00% due 1/1/11 769,125
- ------------------------------------------------------------------------------------------------------
4,444,381
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--100% (Cost--$58,993,068)(f) $60,917,375
======================================================================================================
</TABLE>
(a) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Variable rate obligations payable at par on demand at any time on no more
than seven days notice.
(c) Residual interest bonds - coupon varies inversely with level of short-term
tax-exempt interest rates.
(d) Securities segregated by custodian for open purchase commitment.
(e) Pre-refunded bonds escrowed by U.S. Government Securities and bonds escrowed
to maturity by U.S. Government Securities are considered by manager to be
triple-A rated even if issuer has not applied for new ratings.
(f) The cost for Federal income tax purposes is substantially the same.
See pages 12 and 13 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
11
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation, except those identified by an
asterisk (*) are rated by Moody's Investors Services. The definitions of the
applicable rating symbols are set forth below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the highest rated issue only in a
small degree.
A -- Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB -- Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher rated categories.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic
rating from "Aa" to "Baa", where 1 is the highest and 3 the lowest
ranking within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
NR -- Indicates that the bond is not rated by Standard & Poor's
Corporation or Moody's Investors Services.
12
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Short-Term Securities Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rate rating indicating very strong or
strong capacity to pay principal and interest; those issues
determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate
demand obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Decriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
EDA -- Economic Development Authority
FAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
13
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost--$58,993,068) $60,917,375
Cash 309,469
Receivable for securities sold 30,000
Receivable for Fund shares sold 397,187
Interest receivable 1,070,005
Other receivables 370
- ------------------------------------------------------------------------------------------
Total Assets 62,724,406
- ------------------------------------------------------------------------------------------
LIABILITIES:
Payable for Fund shares purchased 5,005
Management fees payable 23,919
Distribution costs payable 32,422
Accrued expenses and other liabilities 11,909
- ------------------------------------------------------------------------------------------
Total Liabilities 73,255
- ------------------------------------------------------------------------------------------
Total Net Assets $62,651,151
- ------------------------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 4,714
Capital paid in excess of par value 61,698,299
Undistributed net investment income 23,140
Accumulated net realized loss on security transactions (999,309)
Net unrealized appreciation on investments 1,924,307
- ------------------------------------------------------------------------------------------
Total Net Assets $62,651,151
==========================================================================================
Shares Outstanding:
Class A 4,371,985
--------------------------------------------------------------------------------------
Class B 81,274
--------------------------------------------------------------------------------------
Class C 261,068
--------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $13.29
--------------------------------------------------------------------------------------
Class B* $13.28
--------------------------------------------------------------------------------------
Class C** $13.28
--------------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.17% of net asset value per share) $13.84
==========================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed less than one year from initial purchase. This CDSC declines by
0.50% the first year after purchase and by 1.00% per year thereafter until no
CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC which
applies if shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
14
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $4,399,983
- ------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 301,338
Distribution costs (Note 4) 69,588
Shareholder servicing agent fees 17,282
Shareholder communications fees 14,111
Audit and legal fees 11,159
Pricing service fees 11,001
Registration fees 8,001
Custodian fees 7,501
Trustees' fees 3,000
Other 4,000
- ------------------------------------------------------------------------------------
Total Expenses 446,981
- ------------------------------------------------------------------------------------
Net Investment Income 3,953,002
- ------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 27,419,804
Cost of securities sold 28,313,411
- ------------------------------------------------------------------------------------
Net Realized Loss (893,607)
- ------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
of Investments:
Beginning of year 1,021,954
End of year 1,924,307
- ------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 902,353
- ------------------------------------------------------------------------------------
Net Gain on Investments 8,746
- ------------------------------------------------------------------------------------
Increase In Net Assets From Operations $3,961,748
====================================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
===============================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,953,002 $ 3,798,018
Net realized loss on security transactions (893,607) (73,918)
Increase (decrease) in net unrealized
appreciation on investments 902,353 (3,020,513)
- -----------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 3,961,748 703,587
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE3):
Net investment income (3,976,821) (3,830,335)
Net realized gain from security transactions (8,752) --
- -----------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (3,985,573) (3,830,335)
- -----------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 11,016,066 25,151,376
Net asset value of shares issued for
reinvestment of dividends 2,086,806 1,930,645
Cost of shares reacquired (22,333,035) (8,529,411)
- -----------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions (9,230,163) 18,552,610
- -----------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (9,253,988) 15,425,862
NET ASSETS
Beginning of year 71,905,139 56,479,277
- -----------------------------------------------------------------------------------------------
End of year* $62,651,151 $71,905,139
===============================================================================================
*Includes undistributed net investment income of: $23,140 $46,959
===============================================================================================
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The New Jersey Portfolio ("Portfolio") is a separate investment portfolio
of the Smith Barney Muni Funds ("Fund"). The Fund, a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company and consists of this
Portfolio and twelve other separate investment portfolios: California, Florida,
Georgia, Limited Term, New York, National, Ohio, Pennsylvania, California
Limited Term, Florida Limited Term, California Money Market and New York Money
Market Portfolios. The financial statements and financial highlights for the
other portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolio
are: (a) security transactions are accounted for on the trade date; (b)
securities are valued at bid 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; short-term securities and securities maturing
within 60 days are valued at cost plus (minus) accreted discount (amortized
premium), which approximates value; (c) gains or losses on the sale of
securities are calculated by using the specific identification method; (d)
interest income, adjusted for amortization of premiums and accretion of original
issue discount, is recorded on the accrual basis; market discount is recognized
upon the disposition of the security; (e) direct expenses are charged to the
Portfolio and each class; management fees and general fund expenses are
allocated on the basis of relative net assets; and (f) the Portfolio intends to
comply with the requirements of the Internal Revenue Code pertaining to
regulated investment companies and to make the required distributions to
shareholders; therefore, no provision for Federal income taxes has been made.
2. Portfolio Concentration
Since the Portfolio invests primarily in obligations of issues within New
Jersey, it is subject to possible concentration risks associated with economic,
political, or legal developments or individual or regional matters specifically
affecting New Jersey.
3. Exempt-Interest Dividends and Other Distributions
The Portfolio 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
17
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
when distributed to the shareholders of the Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually. At March 31, 1995 the New Jersey Portfolio
had a net capital loss carryover of $999,309 (expiring March 31, 2003) available
to offset future capital gains. To the extent that this carryover loss is used
to offset capital gains it is probable that any gains so offset will not be
distributed.
4. Management Agreements and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager to the Fund. The New
Jersey Portfolio pays SBMFM a management fee calculated at the annual rate of
0.45% of the average daily net assets. Such fee is calculated daily and paid
monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. SB received sales charges of approximately $181,000 (paid by
purchasers of the Portfolio's Class A shares) for the year ended March 31, 1995.
All officers and two Trustees of the Fund are employees of SB.
Effective November 7, 1994, the Fund adopted a new class structure,
renaming Class B shares as Class C shares and exchanging the former Class C
shares into Class A shares. Under this new class structure, a contingent
deferred sales charge ("CDSC") of 4.50% is imposed on Class B shares if
redemption occurs less than one year from initial purchase. This CDSC declines
by 0.50% the first year after purchase and by 1.00% per year thereafter until no
CDSC is incurred. A CDSC of 1.00% is also imposed on Class C shares if
redemption occurs less than one year from initial purchase. Any CDSC imposed on
redemptions is paid to SB. For the year ended March 31, 1995, there were
approximately $600 in such charges.
On September 16, 1994, a new Distribution Plan was approved by the
shareholders. Pursuant to this Distribution Plan, the New Jersey Portfolio pays
a service fee of 0.15% of average net assets on an annual basis with respect to
its Class A, B and C shares. In addition, the New Jersey Portfolio pays a
distribution fee of 0.50% and 0.55% of average net assets on an annual basis
with respect to its Class B and C shares, respectively.
18
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
5. Investments
During the year ended March 31, 1995, the aggregate cost of purchases and
proceeds from sales (including maturities, but excluding short-term securities)
of investments were as follows:
<TABLE>
================================================================================
<S> <C>
Purchases $18,164,811
- --------------------------------------------------------------------------------
Sales 27,419,804
================================================================================
</TABLE>
At March 31, 1995, the gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $ 2,608,530
- --------------------------------------------------------------------------------
Gross unrealized depreciation (684,223)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 1,924,307
================================================================================
</TABLE>
6. Capital Shares
At March 31, 1995, there were an unlimited amount of shares of $.001 par
value capital stock authorized. The Fund has established multiple classes of
shares within each Portfolio of the Fund. Each share of a class represents an
identical interest in the Portfolio and has the same rights, except that each
class bears certain expenses specifically related to the distribution of its
shares. At March 31, 1995, total paid-in capital amounted to the following for
each class:
<TABLE>
<CAPTION>
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Total Paid-In Capital $57,024,725 $1,040,643 $3,637,645
================================================================================
</TABLE>
19
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1995 March 31, 1994
----------------------------- ----------------------------
Shares Amount Shares Amount
=========================================================================================================
<S> <C> <C> <C> <C>
Class A*
Shares sold 720,829 $ 9,328,289 1,477,357 $20,728,190
Shares issued on reinvestment 149,704 1,955,106 131,800 1,846,214
Shares redeemed (1,696,457) (21,851,611) (604,828) (8,443,372)
- ---------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (825,924) $(10,568,216) 1,004,329 $14,131,032
- ---------------------------------------------------------------------------------------------------------
Class B+
Shares sold 81,393 $ 1,042,288 -- --
Shares issued on reinvestment 667 8,718 -- --
Shares redeemed (786) (10,363) -- --
- ---------------------------------------------------------------------------------------------------------
Net Increase 81,274 $ 1,040,643 -- --
- ---------------------------------------------------------------------------------------------------------
Class C++
Shares sold 49,774 $ 645,489 183,145 $ 2,587,089
Shares issued on reinvestment 9,488 122,982 4,578 64,075
Shares redeemed (37,013) (471,061) (6,207) (86,039)
- ---------------------------------------------------------------------------------------------------------
Net Increase 22,249 $ 297,410 181,516 $ 2,565,125
=========================================================================================================
</TABLE>
* On October 10, 1994 the former Class C shares were exchanged into Class A
shares; therefore Class C share activity for the period from April 1, 1994 to
October 9, 1994 is included with the Class A share activity. The year ended
March 31, 1994 includes only Class A share activity.
+ For the period from November 16, 1994 (inception date) to March 31, 1995.
++ On November 7, 1994 the former Class B shares were renamed Class C shares.
20
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares (a) 1995 1994 1993 1992 1991(b)
========================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.23 $13.71 $12.90 $12.52 $12.00
- ------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.77 0.79 0.82 0.86 0.34
Net realized and unrealized gain (loss)
on investments (2) 0.07 (0.47) 0.87 0.45 0.51
- ------------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.84 0.32 1.69 1.31 0.85
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.78) (0.80) (0.82) (0.85) (0.33)
Distributions from net realized gains on
security transactions -- -- (0.06) (0.08) --
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.78) (0.80) (0.88) (0.93) (0.33)
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.29 $13.23 $13.71 $12.90 $12.52
- ------------------------------------------------------------------------------------------------------------------------
Total Return 6.64% 2.17% 13.55% 10.73% 7.12%++
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $58,103 $66,459 $55,137 $35,969 $23,484
- ------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.63% 0.44% 0.38% 0.31% 0.30%+
Net investment income 5.94 5.63 6.15 6.63 7.15+
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27.76% 11.02% 26.04% 55.13% 19.61%
========================================================================================================================
Class B Shares 1995(c)
========================================================================================================================
Net Asset Value, Beginning of Year $12.26
- ------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.31
Net realized and unrealized gain
on investments (2) 1.00
- ------------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 1.31
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.29)
Distributions from net realized gains on
security transactions --
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.29)
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.28
- ------------------------------------------------------------------------------------------------------------------------
Total Return 10.86%++
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $1,080
- ------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.23%+
Net investment income 5.24+
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27.76%
========================================================================================================================
</TABLE>
(a) On October 10, 1994 the former Class C shares were exchanged into Class A
shares.
(b) For the period from October 11, 1990 (inception date) to March 31, 1991.
(c) For the period from November 16, 1994 (inception date) to March 31, 1995.
(1) See page 22 for full footnote disclosure.
(2) See page 22 for full footnote disclosure.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
21
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class C Shares (a) 1995 1994 1993(b)
=================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $13.22 $13.71 $13.36
- -------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.69 0.70 0.21
Net realized and unrealized gain (loss)
on investments (2) 0.06 (0.48) 0.33
- -------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.75 0.22 0.54
- -------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.69) (0.71) (0.19)
Distributions from net realized gains on
security transactions -- -- --
- -------------------------------------------------------------------------------------------------
Total Distributions (0.69) (0.71) (0.19)
- -------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.28 $13.22 $13.71
- -------------------------------------------------------------------------------------------------
Total Return 5.91% 1.40% 4.04%++
- -------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $3,468 $3,156 $786
- -------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 1.27% 1.17% 1.08%+
Net investment income 5.28 4.85 5.28+
- -------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27.76% 11.02% 26.04%
=================================================================================================
</TABLE>
(a) On November 7, 1994 the former Class B shares were renamed Class C shares.
(b) For the period from January 5, 1993 (inception date) to March 31, 1993.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
(1) The manager has waived all or a part of its fees in each of the years in the
four-year period ended March 31, 1994. If such fees were not waived, the per
share decrease of net investment income and the ratios of expenses to
average net assets would be as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waivers*
------------------------------------- --------------------------------------
1994 1993 1992 1991 1994 1993 1992 1991
------ ------ ------ ------ ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $0.014 $0.023 $0.031 $0.017 0.54% 0.55% 0.54% 0.50%+
Class C 0.012 0.007 -- -- 1.25 1.23+ -- --
</TABLE>
* As a result of voluntary expense limitations, the ratios of expenses to
average net assets will not exceed 0.80%, 1.30% and 1.35% for Class A, B and
C shares, respectively.
(2) Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at net asset values less
than the beginning of the period.
22
<PAGE>
Smith Barney Muni Funds
New Jersey Portfolio
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and the Board of Trustees of the
New Jersey Portfolio of Smith Barney Muni Funds:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the New Jersey Portfolio of Smith
Barney Muni Funds as of March 31, 1995, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended and the financial highlights for each of
the years in the four-year period then ended and the period from October 11,
1990 (commencement of operations) to March 31, 1991. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of March 31, 1995, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
New Jersey Portfolio of Smith Barney Muni Funds as of March 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the years in the two-year period then ended and the financial
highlights for each of the years in the four-year period then ended and the
period from October 11, 1990 (commencement of operations) to March 31, 1991, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
May 15, 1995
23
<PAGE>
SMITH BARNEY
- ------------
A Member of Travelers Group [LOGO APPEARS HERE]
Smith Barney
Muni Funds
Trustees
Jessica M. Bibliowicz
Ralph D. Creasman
Joseph H. Fleiss
Donald R. Foley
Paul Hardin
Francis P. Martin, M.D.
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
C. Richard Youngdahl
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Daniel Malone
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Manager
Smith Barney Mutual
Funds Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder
Servicing Agent
The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds New Jersey Portfolio. It is not authorized for
distribution to prospective investors unless accompanied or preceded by a
current Prospectus for the Portfolio, which contains information concerning the
Portfolio's investment policies and expenses as well as other pertinent
information.
Smith Barney Muni Funds
388 Greenwich Street
New York, New York 10013
FD2307 E5 82108
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
1995
1995
1995 [ARTWORK APPEARS HERE]
1995
1995
Smith Barney
Muni Funds
New York Money
Market Portfolio
New York Portfolio
--------------------------------------------------------
March 31, 1995
[LOGO APPEARS HERE] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- ---------------------------------------------
New York Money Market and New York Portfolios
- ---------------------------------------------
Dear Shareholder:
We are pleased to present the annual report and audited financial statements for
Smith Barney Muni Funds New York Portfolio and New York Money Market Portfolio
for the fiscal year ended March 31, 1995.
Market and Economic Overview
Since our last report to you in November, the fixed-income markets, and
municipal bonds in particular, have enjoyed a powerful rally. Municipal bond
yields have declined more than a full percentage point, as evidenced by the drop
in the average yield on The Bond Buyer's weekly 25-Bond Revenue Index of 30-year
municipal bonds from a high of 7.37% on November 17, 1994 to 6.29% on March 31,
1995. This was substantially better than the performance of the benchmark 30-
year Treasury bond, which experienced a decline in yield of 70 basis points from
8.13% to 7.43% during the same time frame.
The vastly improved bond markets reflect a growing consensus that inflation will
remain under control, and the Federal Reserve Board will be successful in
engineering a "soft landing" by slowing the economy down to a more sustainable,
non-inflationary rate of growth. The seven increases in the federal funds rate
(the rate banks charge each other for overnight loans), orchestrated by the Fed
since February 1994, appear to be slowing the pace of economic growth. Recent
economic reports show a slower rate of increase in employment, producer prices,
and retail sales. Industrial production and capacity utilization were also lower
than expected, signalling a possible slowdown in the country's strong
manufacturing sector. These generally favorable economic fundamentals are more
than offsetting concerns about the substantial decline in the value of the
dollar relative to the Japanese yen and German mark on the foreign exchange
markets.
Late in April, several tax-reform proposals which recommend a flat Federal
income tax rate began to receive increased attention in the national financial
press and from municipal bond market participants. Adoption of a flat tax would
diminish the advantages of tax exemption for municipal bonds. Although the
various plans being circulated are only proposals, the publicity surrounding
them has recently caused some investors to back away from the municipal bond
market. In our opinion it is much too early in the process to predict what
changes in the tax laws, if any, will actually take place, but tax reform will
certainly be a major topic of political debate over the next few
1
<PAGE>
years. Many observers believe that the more radical proposals for changes in the
way taxes are collected have little chance for enactment.
Absent these tax-reform concerns, municipals would probably continue to be
strong performers relative to Treasuries and other taxable investments due to
the low supply of new issues. Not only did last year's spike in interest rates
sharply reduce refinancing activity in the municipal market, but voter pressure
on states and municipalities to rein in spending and cut taxes, or at least
avoid tax increases, has also resulted in a roughly 30% decline in new-money
financing. In addition, the universe of existing municipal bonds is shrinking.
In 1995, an estimated $230 billion in older, high-coupon issues will mature or
be called as they reach their first optional call dates. With estimates of new-
issue volume at less than $150 billion, the net reduction in municipal debt
outstanding could approach $100 billion this year, contracting the market by
about eight percent. Ordinarily, a reduction in supply of this magnitude would
be expected to provide a powerful boost for municipal bond values as it did
earlier this year. Uncertainties about various tax proposals, however, will
probably keep municipals from trading any better than their normal relationship
to taxable investment alternatives.
The New York State Economy
Economic conditions in New York remain below average, although financial
performance has shown recent signs of improvement. In 1994, for the second
consecutive year, the state closed the fiscal year with a budget surplus.
Governor Pataki has proposed a cut in personal income taxes as well as cuts in
the current budget's spending plan for transportation, education, health and
social services. The rating agencies will be scrutinizing his tax-cut plans for
offsetting reductions in expenditures. New York is currently rated A by Moody's
and A- (with a positive outlook) by Standard & Poor's.
New York Portfolio
The New York Portfolio had a total return of 6.32% (Class A shares) for the
fiscal year. That was significantly above the 5.20% average total return for all
New York municipal bond funds over the same period, as reported by Lipper
Analytical Services.
Long-term performance of the Portfolio is also excellent relative to its peers.
The Portfolio's five-year cumulative total return (excluding sales charge) of
52.14% (Class A shares) substantially outperformed the 46.48% average cumulative
total return for all New York municipal bond funds in the Lipper survey for the
period ended March 31, 1995. (Please see Average Annual Total Return chart on
page 6 of this report for additional information.) It is also noteworthy that
this outstanding performance over the last five years has been
2
<PAGE>
achieved without the necessity for any capital gains distributions, an important
consideration for investors interested in after-tax income.
While we generally have a positive outlook for the fixed-income markets, the
size of the rally we have experienced so far would seem to leave little room for
disappointment, and any sign of a rebound in economic activity is likely to
result in a return to higher interest rates. We also believe that the unique
supply and demand characteristics of the municipal market and tax-reform
uncertainties will tend to exaggerate price swings relative to taxable
investments.
In light of this viewpoint, we are maintaining a balanced approach to
structuring the interest-rate sensitivity of the Portfolio by investing in a
combination of both long and short effective maturities. Most long-term
municipal bonds are callable prior to their stated maturity date. When a bond
has a coupon higher than prevailing market yields, its maturity is effectively
shortened to the call date for trading purposes because of the possibility that
the issuer will exercise its option to replace the bond with lower-cost debt. We
are retaining high-coupon bonds that trade well above their face value for the
defensiveness of their shorter effective maturities and the above-market level
of income they provide. However, we are also focusing on eliminating bonds with
shorter call dates when they are trading near their face value. Such bonds have
unfavorable performance characteristics because they retain the downside risk of
their longer maturity if rates should rise, but their appreciation potential is
limited by the shorter call date if interest rates decline. We are replacing
such issues with bonds that have similar stated maturities but greater call
protection.
Although this strategy sacrifices some of the current income being generated by
the Portfolio, it enhances long-term performance potential if interest rates
continue to decline without adding to downside risk if interest rates rise. We
believe that positioning the Portfolio in this manner is the best way to achieve
our objective of the highest tax-free income consistent with prudent investment
risk.
New York Money Market Portfolio
As of March 31, 1995, the New York Money Market Portfolio's 7-day current yield
was 3.32%, and its 7-day effective yield, which reflects compounding, was 3.38%.
The Portfolio's tax-equivalent yield, or the yield you would have to earn on a
similar taxable investment to match the tax-free yield, was 5.60% assuming you
are in the 39.6% tax bracket. During the 12 months ended March 31, 1995, the
Portfolio's monthly tax-exempt dividend distributions resulted in a tax-exempt
annualized yield of 2.49%.
3
<PAGE>
The New York Money Market Portfolio invests only in short-term securities which
carry minimal credit risk. All of the Portfolio's holdings are rated within the
top two short-term rating categories or are of comparable quality. The
Portfolio's average maturity, which has not changed during the past year, is in
the 30- to 50-day range. This relatively short maturity range allows us to
readjust the Portfolio's holdings sooner should interest rates rise, as we
believe they might sometime later this year.
An investment in the New York Money Market Portfolio is neither insured nor
guaranteed by the U.S. Government and there can be no assurance that the
Portfolio will be able to maintain a stable net asset value of $1.00 per share.
We thank you for your investment and your continued confidence in our investment
management.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman and Chief Executive Officer Vice President and Investment Officer
/s/ Karen L. Mahoney-Malcomson
Karen L. Mahoney-Malcomson
Vice President and Investment Officer
April 28, 1995
4
<PAGE>
Smith Barney Muni Funds
New York Portfolio
- --------------------------------------------------------------------------------
Historical Performance - Class A Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
===============================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $12.83 $12.83 $0.77 $0.00 6.32%
- -----------------------------------------------------------------------------------------------
3/31/94 13.25 12.83 0.79 0.00 2.66
- -----------------------------------------------------------------------------------------------
3/31/93 12.33 13.25 0.81 0.00 14.48
- -----------------------------------------------------------------------------------------------
3/31/92 11.80 12.33 0.81 0.00 11.98
- -----------------------------------------------------------------------------------------------
3/31/91 11.67 11.80 0.85 0.00 8.74
- -----------------------------------------------------------------------------------------------
3/31/90 11.48 11.67 0.87 0.00 9.28
- -----------------------------------------------------------------------------------------------
3/31/89 11.25 11.48 0.86 0.00 10.03
- -----------------------------------------------------------------------------------------------
3/31/88 12.46 11.25 0.85 0.00 (2.63)
- -----------------------------------------------------------------------------------------------
Inception* - 3/31/87 12.50 12.46 0.13 0.00 0.52
===============================================================================================
Total $6.74 $0.00
===============================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
===============================================================================================
<S> <C> <C> <C> <C> <C>
Inception* - 3/31/95 $11.96 $12.84 $0.29 $0.00 9.92%
===============================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Historical Performance - Class C Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
----------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns/(1)/
===============================================================================================
<S> <C> <C> <C> <C> <C>
3/31/95 $12.82 $12.83 $0.68 $0.00 5.66%
- -----------------------------------------------------------------------------------------------
3/31/94 13.24 12.82 0.70 0.00 1.96
- -----------------------------------------------------------------------------------------------
Inception* - 3/31/93 12.84 13.24 0.12 0.00 4.04
===============================================================================================
Total $1.50 $0.00
===============================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
5
<PAGE>
Smith Barney Muni Funds
New York Portfolio
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
-------------------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 6.32% N/A 5.66%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/95 8.75 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/95 7.36 9.92% 5.25
- --------------------------------------------------------------------------------
<CAPTION>
With Sales Charge/(2)/
-------------------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/95 2.10% N/A 4.66%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/95 7.86 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/95 6.82 5.42% 5.25
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge/(1)/
================================================================================
<S> <C>
Class A (Inception* through 3/31/95) 79.06%
- --------------------------------------------------------------------------------
Class B (Inception* through 3/31/95) 9.92
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/95) 12.06
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 4.00%; Class B shares reflect the deduction
of a 4.50% CDSC, which applies if shares are redeemed less than one year
from initital purchase. This CDSC declines by 0.50% the first year after
purchase and by 1.00% per year thereafter until no CDSC is incurred. Class C
shares reflect the deduction of a 1.00% CDSC which applies if shares are
redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are January 16, 1987,
November 11, 1994 and January 8, 1993, respectively.
6
<PAGE>
Smith Barney Muni Funds
New York Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the New York Portfolio vs.
Lehman Long Bond Index/+/
(unaudited)
- --------------------------------------------------------------------------------
January 1987 - March 1995
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
54950 S/B NY Money Mkt/N.Y Portfolio
New York Lehman Long Bond Index
<S> <C> <C>
1/16/87 9600.61 10000
Mar-87 9595.6 10212
Mar-88 9315.3 10381.11
Mar-89 10218.7 11362.32
Mar-90 11134.8 12599.33
Mar-91 12072.7 13580.13
Mar-92 13481.2 15119.56
Mar-93 15394.1 17327.37
Mar-94 15767.2 17520.61
Mar-95 16739.5 19102.61
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on January 16, 1987, assuming deduction of the maximum 4.00% sales charge at
the time of investment and reinvestment of dividends (after deduction of sales
charges, if any) and capital gains (at net asset value) through March 31,
1995. The Index is unmanaged and is not subject to the same management and
trading expenses of a mutual fund. The performance of the Portfolio's other
classes may be greater or less than the Class A shares' performance indicated
on this chart, depending on whether greater or lesser sales charges and fees
were incurred by shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
values may be more or less than the original cost. No adjustment has been made
for shareholder tax liability on dividends or capital gains.
7
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Albany IDA IDR:
$ 1,365,000 NR+ PBS Development Co. Project 5.00% due
12/1/95(a)(f) $ 1,365,000
1,440,000 A-1 540 Project Series B-2 5.00% due 12/1/95(a)(f) 1,440,000
1,430,000 A-1 540 Project Series B-3 5.00% due 12/1/95(a)(f) 1,430,000
Town of Babylon IDA IDR:
1,000,000 VMIG 1 J. D'Addario & Co. Inc. Project 4.00%(a)(b) 1,000,000
500,000 Aa3 Napco Security System Inc. 3.85%(b) 500,000
2,500,000 NR+ Board Cooperative Educational Services Monroe County
First Supervisory District RAN Series A 3.72%
due 6/23/95 2,500,108
6,500,000 NR+ Board Cooperative Educational Services Onodaga, Cortland
and Madison County First Supervisory District RAN
Series A 3.72% due 6/21/95 6,500,274
15,000,000 MIG 1 Buffalo RAN Series A 5.00% due 7/12/95 15,032,846
13,000,000 NR+ East Islip Union Free School District TAN 4.05%
due 6/29/95 13,001,519
8,200,000 A-1 Franklin County IDA IDR (Kes Chateaugay Project)
Series A 3.80%(a)(b) 8,200,000
6,000,000 NR+ Freeport Union Free School District TAN 3.86%
due 6/29/95 6,000,129
4,045,000 A-1 Geneva IDA Civic Facilities Revenue (Colleges of the
Seneca) Series A 4.00%(b) 4,045,000
550,000 A-1 Glenn Falls IDA IDR (Broad Street Plaza Project)
3.85%(b) 550,000
11,800,000 VMIG 1 Great Neck North Water Authority Water System
Revenue Series A 4.00%(b) 11,800,000
600,000 A-1 Jefferson County IDA IDR (The Climax Manufacturing
Co. Project) 4.10%(a)(b) 600,000
4,000,000 P-1 Lewis County IDA IDR (The Climax Manufacturing
Co. Project) 4.10%(a)(b) 4,000,000
13,030,000 NR+ Lindenhurst Union Free School District TAN 4.00%
and 4.50% due 6/29/95 13,033,263
5,000,000 NR+ Long Beach City School District 4.23% due 6/29/95 4,997,607
2,400,000 NR+ Manhasset Union Free School District TAN 4.25%
due 6/29/95 2,403,106
43,700,000 VMIG 1 Metropolitan Transit Authority Commuter Facilities
Revenue 3.90%(b) 43,700,000
6,730,000 NR+ Miller Place Union Free School District TAN 4.00%
due 6/28/95 6,733,894
5,800,000 A-1 Monroe County IDA (Granite Building) Series
1992 3.85%(b) 5,800,000
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
$ 100,000 A-1 Montgomery IDA IDR (Service Merchandise Co.)
3.90%(b) $ 100,000
1,000,000 AAA Nassau County General Improvement Series O 5.625%
due 8/1/95 1,005,236
17,075,000 SP-1 Nassau County TAN Series C 5.40% due 9/28/95 17,102,494
15,500,000 MIG 1 Nassau County BAN Series 1995B 5.25% due 11/15/95 15,585,906
7,131,000 NR+ New Rochelle Urban Development Notes 4.50%
due 8/21/95(a) 7,139,074
3,500,000 MIG 1 New York City RAN Series A 4.50% due 4/12/95 3,500,884
25,500,000 MIG 1 New York City RAN Series B 4.75% due 6/30/95 25,537,917
New York City Variable Muni Trust Receipts:
14,700,000 VMIG 1 Series B 4.35%(b) 14,700,000
9,800,000 VMIG 1 Series C 4.35%(b) 9,800,000
24,500,000 VMIG 1 New York City Subseries H-6 4.20% due 6/9/95(f) 24,500,000
New York City GO:
15,000,000 VMIG 1 Subseries B-8 3.70%(b) 15,000,000
28,800,000 VMIG 1 Subseries B-10 3.65%(b) 28,800,000
New York City Housing Development Corp. Mortgage
Revenue Multi-Family:
7,770,000 A-1+ Columbus Apartments Project 4.10%(b) 7,770,000
2,600,000 A-1 Columbus Gardens Project 4.10%(b) 2,600,000
7,100,000 VMIG 1 Parkgate Towers 3.95%(b) 7,100,000
2,000,000 VMIG 1 Queenswood Apartments 4.10%(b) 2,000,000
1,400,000 A-1+ New York City IDA Civic Facilities Revenue
(Childrens Oncology Society) 3.55%(b) 1,400,000
New York City IDA IDR:
3,400,000 VMIG 1 Andin International Inc. Series 87A 3.75%(a)(b) 3,400,000
1,820,000 VMIG 1 Monarch Construction Corp. Project
Series 89G 4.10%(a)(b) 1,820,000
850,000 VMIG 1 Series 88D 4.10%(a)(b) 850,000
785,000 VMIG 1 Sleep Products Inc. Project Series 88E 4.10%(a)(b) 785,000
5,000,000 A-1+ New York City Muni Water Finance 4.00% due 6/7/95(f) 5,000,000
New York City Trust for Cultural Resources Revenue:
2,800,000 VMIG 1 Museum of Broadcasting 4.10%(b) 2,800,000
700,000 VMIG 1 The Jewish Museum 4.10%(b) 700,000
13,300,000 VMIG 1 New York City Water & Sewer Certificate Series 1992A
3.75%(b) 13,300,000
10,500,000 VMIG 1 New York State Energy Research & Development
Electricity Facilities Revenue (Long Island Lighting
Co.) 4.10%(a)(b) 10,500,000
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=====================================================================================================
<C> <C> <S> <C>
New York State Energy Research &
Development Authority:
$ 6,000,000 A-1+ Central Hudson Gas & Electricity Series 85B
4.10%(b) $ 6,000,000
1,000,000 P-1 Rochester Gas & Electricity 3.75%(b) 1,000,000
17,222,500 NR+ New York State Environmental Facilities Corp.
PCR 4.35%(b) 17,222,500
New York State Housing Finance Agency Revenue
Multi-Family Housing:
35,100,000 VMIG 1 Normandie Court I Project 4.05%(b) 35,100,000
1,900,000 VMIG 1 Series 1988A 3.90%(b) 1,900,000
51,700,000 VMIG 1 New York State Local Government Assistance Corp.
Series A 3.85%(b) 51,700,000
New York State Mortgage Agency Revenue:
4,380,000 VMIG 1 P-Floats (PT - 26) 4.35%(a)(b) 4,380,000
11,410,000 VMIG 1 P-Floats (PT - 11) 4.40%(b) 11,410,000
New York State Medical Care Facilities Finance
Agency Revenue:
2,700,000 VMIG 1 Lenox Hill Hospital Series A 3.70%(b) 2,700,000
8,140,000 VMIG 1 P-Floats PA - 82 4.35%(b) 8,140,000
4,530,000 A-1+ P-Floats (PT - 17) 4.35%(b) 4,530,000
20,100,000 VMIG 1 Pooled Equipment Loan Program II-A 4.10%(b) 20,100,000
16,335,000 A-1+ New York State Urban Development Corp. Revenue
Certificates Correctional Facilities Series A 4.15%(b) 16,335,000
16,000,000 VMIG 1 Niagara County IDA (American Re-Fuel)
4.25% due by 5/2/95(f) 16,000,000
20,400,000 VMIG 1 Niagara County IDA (American Re-Fuel)
4.25% due by 5/18/95(f) 20,400,000
1,500,000 VMIG 1 North Hempstead Solid Waste Management Authority
Solid Waste Management Revenue Refunding
Series A 3.80%(b) 1,500,000
400,000 A-1+ Onondaga County IDA IDR (Pass & Seymour Project)
3.50%(b) 400,000
3,180,000 NR++ Oswego County IDA IDR (Regal Textile Corp.) 4.95%(b) 3,180,000
6,600,000 VMIG 1 Port Authority of New York & New Jersey Special
Obligation Revenue 3rd Installment Series
4.10%(a)(b) 6,600,000
2,600,000 VMIG 1 Puerto Rico Commonwealth Government Development
Bank Refunding 4.10%(b) 2,600,000
6,000,000 NR+ Puerto Rico Industrial Medical PCR (Abbot Laboratory)
Series 1983A 5.10% due 3/1/96(f) 6,000,000
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
$ 1,430,000 NR+ Rensselear County IDA IDR (Millers Supermarket Inc.
Project) 5.10% due 3/1/96(f) $ 1,430,000
5,690,000 NR++ Rochester TOB Short (BTP - 72) 4.375%(b) 5,690,000
13,050,000 MIG 1 Sachem Central School District TAN
4.50% due 6/29/95 13,070,684
2,300,000 P1 Schenectady County IDA IDR Refunding (Scotia
Industrial Parking Project) Series A 3.95%(b) 2,300,000
5,355,000 NR# Sullivan County BAN 4.12% due 5/12/95 5,355,111
Triborough Bridge & Tunnel Authority Revenue:
19,800,000 A-1+ Certificates General Purpose Series A 4.40%(b) 19,800,000
2,000,000 AAA Convention Center Project Series D
9.00% Pre-Refunded 7/1/95 @ 102 2,059,145
15,100,000 A-1+ Special Obligation 3.80%(b) 15,100,000
4,540,000 NR+ Uniondale Union Free School District TAN 4.00%
due 6/28/95 4,541,043
5,835,000 MIG 1 West Islip Union Free School District TAN 4.20%
and 4.25% due 6/29/95 5,840,174
14,700,000 VMIG 1 Yonkers IDA Civic Facility Revenue Consumers
Union 4.05%(b) 14,700,000
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost - $704,512,914)(g) $704,512,914
======================================================================================================
</TABLE>
See page 18 for full footnote disclosures.
See Notes to Financial Statements.
11
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Education -- 7.6%
$ 500,000 A Brookhaven Industrial Development Agency Civic
Facilities Revenue for St. Joseph College, LOC Norstar
Bank, 8.10% due 4/1/08 $ 532,500
New York State Dormitory Authority Revenue:
2,500,000 Baa1* City University, 7.50% due 7/1/10 (d) 2,800,000
1,600,000 AA Niagara Frontier Home, FHA-Insured, 6.20%
due 2/1/15 1,618,000
1,000,000 BBB+ State University Educational Facilities, 7.50%
due 5/15/11 1,131,250
1,000,000 BBB+ State University Educational Facilities, Series A,
5.875% due 5/15/17 932,500
- ------------------------------------------------------------------------------------------------------
7,014,250
- ------------------------------------------------------------------------------------------------------
Escrowed to Maturity (e) -- 3.7%
3,042,000 AAA New York State Power Authority Revenue and General
Purpose, (Escrowed to Maturity with U.S.
Government Securities), 9.50% due 1/1/01 3,422,250
- ------------------------------------------------------------------------------------------------------
Finance -- 2.6%
500,000 Aa* Municipal Assistance Corporation, New York, Series 64,
7.625% due 7/1/08 550,000
2,000,000 A New York State Local Government Assistance Corporation,
Series 1993 B Refunding, 5.50% due 4/1/17 1,840,000
- ------------------------------------------------------------------------------------------------------
2,390,000
- ------------------------------------------------------------------------------------------------------
Government Facilities -- 1.5%
1,500,000 Baa1* New York State Urban Development Refunding,
Correctional Capital Facilities - A, 5.50% due 1/1/09 1,370,625
- ------------------------------------------------------------------------------------------------------
General Obligation -- 1.6%
1,565,000 A- New York City GO Bonds, Fiscal 1993 Series E,
6.00% due 5/15/20 1,424,150
- ------------------------------------------------------------------------------------------------------
Hospital -- 16.0%
New York State Medical Care Facilities Finance Agency:
1,380,000 AAA Albany Medical Center-Alice Hyde Association,
FHA-Insured, 8.00% due 2/15/28 1,542,150
1,200,000 BBB Central Suffolk Hospital Mortgage, Series A Refunding,
5.875% due 11/1/05 1,158,000
1,000,000 AAA Hospital and Nursing Home, FHA-Insured, Series B,
8.00% due 2/15/28 1,082,500
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Hospital -- 16.0% (continued)
$ 1,500,000 AA Hospital and Nursing Home, (Methodist Hospital
Brooklyn), FHA-Insured, 6.70% due 8/15/23 $ 1,554,375
2,000,000 AAA Hospital and Nursing Home, FHA-Insured, 6.40%
due 8/15/14 2,075,000
1,845,000 AAA Hospital and Nursing Home, Series B, FHA-Insured,
5.50% due 2/15/22 1,672,030
485,000 AAA Mental Health Services Facilities Improvement,
MBIA-Insured, 7.75% due 2/15/20 531,075
1,000,000 AAA Mental Health Services Facilities, Series A,
MBIA-Insured, 6.00% due 2/15/25 980,000
2,000,000 AAA Mental Health Services Facilities, Series D,
FGIC-Insured, 5.25% due 8/15/23 1,752,500
500,000 AA Nursing Home Insured Mortgage
(St. Vincent's Medical Center), FHA-Insured,
8.00% due 2/15/27 545,625
1,500,000 AAA St. Luke's - Roosevelt Hospital, Series A, Refunding,
FHA-Insured, 5.625% due 8/15/18 1,383,750
550,000 BBB Onondaga County Industrial Development Agency
Civic Facility Revenue Bonds, 1993 Series B,
6.625% due 1/1/18 528,685
- ------------------------------------------------------------------------------------------------------
14,805,690
- ------------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 4.8%
New York State Housing Financing Agency, Multi-Family:
1,000,000 AAA Series 1993 A, FSA-Insured, zero coupon
due 11/1/08 (a) 440,000
500,000 AA Second Mortgage, PG-A, 7.00% due 8/15/12 (a) 521,875
500,000 AA Second Mortgage, PG-A, 7.05% due 8/15/24 (a) 513,125
1,000,000 A* Rensselear Multi-Family Housing Mortgage Revenue,
Rensselear Elderly Housing Apartments, 7.75%
due 1/1/11 1,055,000
2,000,000 Aa* UFA Development Corp., New York Mortgage Revenue,
Loretto Utica Project, Series 1993, FSA-Insured,
5.75% due 7/1/13 1,890,000
- ------------------------------------------------------------------------------------------------------
4,420,000
- ------------------------------------------------------------------------------------------------------
Housing: Single-Family -- 1.6%
State of New York Mortgage Agency:
320,000 Aa* Eighth Series E, 8.10% due 10/1/17 338,000
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Housing: Single-Family -- 1.6% (continued)
$ 165,000 Aa* Homeowner Mortgage Revenue, Series HH-1, 8.25%
due 4/1/22 (a) $ 176,345
860,000 Aa* Homeowner Mortgage Revenue, Series SS, 7.95%
due 10/1/22 (a) 923,425
- ------------------------------------------------------------------------------------------------------
1,437,770
- ------------------------------------------------------------------------------------------------------
Industrial Development -- 11.8%
355,000 NR Albany County IDA (Historic Hudson River Heritage
Office Building), 9.50% due 12/1/95 365,650
1,300,000 A1* Grand Central, District Management Association
Refunding-Business Import District-Capital, 5.125%
due 1/1/14 1,142,375
500,000 BBB+ Monroe County, IDA Public Improvement
(Canal Ponds Park) Series A, 7.00% due 6/15/13 532,500
New York City IDA:
1,000,000 AA Civic Facility Revenue (The Lighthouse Project),
LOC Barclays Bank, 6.375% due 7/1/10 1,006,250
955,000 Aa1* Prime Laboratories Inc. Industrial Development
Revenue, LOC Algamene Bank Nederland, NV,
7.70% mandatory tender 11/1/00 (a) 981,260
1,450,000 Baa3* Special Facility Revenue (American Airlines Inc.
Project), 8.00% due 7/1/20 (a) 1,520,690
2,000,000 A Special Facilities Revenue, Terminal One Group
Association Project, 6.00% due 1/1/24 1,912,500
1,000,000 AAA Onondaga County IDA Sewer Facilities Revenue,
(Bristol-Myers Squibb Co. Project), 5.75%
due 3/1/24 (a) 947,500
1,410,000 A- Rensselear County, IDA (Albany International Corp.),
7.55% due 6/1/07 (a) 1,508,700
1,000,000 AA Town of Hempstead IDA Industrial Development
Revenue Bonds (1990 Nassau District Energy
Corp. Project), LOC Toronto Dominion Bank,
7.75% due 9/15/15 (a) 1,040,000
- ------------------------------------------------------------------------------------------------------
10,957,425
- ------------------------------------------------------------------------------------------------------
Miscellaneous -- 1.0%
1,000,000 Baa1* New York State HFA Service Contract, Series C, Refunding,
5.875% due 9/15/14 941,250
- ------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Nursing Home -- 4.0%
$ 990,000 Aa* State Medical Care Facilities Finance Agency Hospital
& Nursing Home Insured Mortgage Series B,
FHA-Insured, 7.00% due 8/15/32 $ 1,033,310
750,000 AAA Syracuse Industrial Development Authority Mortgage
Revenue Refunding, Series 1991 (James Square
Association Nursing Home Facilities), FHA-Insured,
7.00% due 8/1/25 780,940
2,000,000 AA New York State Dormority Authority Revenue
(James G. Johnston Nursing Home Facilities),
FHA-Insured, 5.75% due 8/1/23 1,860,000
- ------------------------------------------------------------------------------------------------------
3,674,250
- ------------------------------------------------------------------------------------------------------
Pollution Control -- 2.2%
1,100,000 AAA State Energy and Research PCR (Central Hudson
Gas & Electric Corp. Project), Series B, FGIC-Insured,
7.375% due 10/1/14 (d) 1,190,750
1,000,000 AAA New York State Environmental Facilities Corporation,
Pollution Control Revenue, State Water-Revolution,
5.20% due 5/15/14 911,250
- ------------------------------------------------------------------------------------------------------
2,102,000
- ------------------------------------------------------------------------------------------------------
Power -- 2.0%
New York State Energy Research and Development Authority:
1,000,000 BB+ Electric Facilities Revenue (LILCO) 1992 Series A,
7.15% due 2/1/22 (a) 931,250
1,000,000 Aa2* Consolidated Edison Co. Project, 6.00% due 3/15/28 (a) 925,000
- ------------------------------------------------------------------------------------------------------
1,856,250
- ------------------------------------------------------------------------------------------------------
Pre-Refunded (e) -- 9.1%
200,000 AAA New York City GO (Escrowed with U.S. Government Securities
to 11/1/97 Call @ 101.5), 8.75% due 11/1/17 222,500
750,000 AAA New York City Municipal Water Finance Authority Water &
Sewer System (Escrowed with U.S. Government Securities
to 6/15/97 Call @ 102), 9.00% due 6/15/17 (d) 831,560
580,000 AAA New York State Housing Finance Agency, State University
Construction, Series A (Escrowed with U.S. Government
Securities to 11/1/96 Call @ 102), 8.00% due 11/1/16 613,350
800,000 AAA New York State Local Government Assistance Corp.,
Series D (Escrowed with U.S. Government Securities
to 4/1/02 Call @ 102), 7.00% due 4/1/18 902,000
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Pre-Refunded (e) -- 9.1% (continued)
$ 500,000 AAA New York State Urban Development Corporation
Revenue, Correctional Facilities (Escrowed with
U.S. Government Securities to 1/1/00 Call @ 100),
7.00% due 1/1/17, $ 550,625
500,000 AAA Hospital Insured Mortgage (Brooklyn, Caledonia and
Long Island College Hospitals), FHA-Insured (Escrowed
with U.S. Government Securities to 1/15/02 Call @ 102),
8.375% due 1/15/06 525,000
1,025,000 AAA Hospital Insured Mortgage Refunding Revenue
(Columbia Presbyterian Hospital) FHA-Insured
(Escrowed with U.S. Government Securities to 2/15/97
Call @ 102), 8.00% due 2/15/25 1,121,100
1,700,000 AAA St. Luke's Hospital-B, FHA-Insured (Escrowed with U.S.
Government Securities to 2/15/02 Call @ 102),
7.45% due 2/15/29 1,908,250
480,000 AAA Mental Health Services Facilities Improvement,
MBIA-Insured (Escrowed with U.S. Government Securities
to 2/15/00 Call @ 102), 7.75% due 2/15/20 544,800
1,000,000 AAA Orangetown Housing Authority, Rockland, (Senior Housing
Center), 1990 Series (Escrowed with U.S. Government
Securities to 4/1/00 Call @ 102), 7.60% due 4/1/30 1,136,250
100,000 AAA Puerto Rico Electric Power Authority (Escrowed with U.S.
Government Securities to 7/1/95 Call @ 103), 9.00%
due 7/1/05 104,180
- ------------------------------------------------------------------------------------------------------
8,459,615
- ------------------------------------------------------------------------------------------------------
Public Facilities -- 5.1%
1,000,000 A Albany Parking Authority New York Revenue Refunding
(Green and Hudson Street Garage) LOC Key Bank,
7.15% due 9/15/16 1,033,750
2,260,000 BBB+ New York State Dormitory Authority Court Facilities Lease
Revenue A, 5.50% due 5/15/23 1,980,325
1,500,000 Baa1* Triborough Bridge and Tunnel Authority, Convention
Center, 7.25% due 1/1/10 1,642,500
- ------------------------------------------------------------------------------------------------------
4,656,575
- ------------------------------------------------------------------------------------------------------
Retirement Communities (Continuing Care) -- 2.1%
New York State Dormitory Authority Revenue:
800,000 AA- Ideal Senior Living Center Housing Corporation,
FHA-Insured, 7.625% due 8/1/28 876,000
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Retirement Communities (Continuing Care) -- 2.1% (continued)
$ 990,000 AAA United Health Services Inc., 7.35% due 8/1/29 $ 1,053,113
- ------------------------------------------------------------------------------------------------------
1,929,113
- ------------------------------------------------------------------------------------------------------
Short-Term (b) -- 1.4%
700,000 A-1+ New York Energy Research and Development, Niagara
Mohawk, Series A, 4.05% due 7/1/15 700,000
600,000 VMIG1 New York City Municipal Water Finance Authority,
Series G, FGIC-Insured, 4.00% due 6/15/24 600,000
- ------------------------------------------------------------------------------------------------------
1,300,000
- ------------------------------------------------------------------------------------------------------
Solid Waste -- 2.5%
495,000 BBB+ Babylon IDA Resource Recovery (Ogden Martin Systems),
8.50% due 1/1/19 538,310
1,000,000 AAA Dutchess County Resource Recovery Agency, Solid Waste
Management System Revenue, Series 1990 A,
FGIC-Insured, 7.50% due 1/1/09 1,087,500
650,000 A- Town of Hempstead IDA Resource Recovery Revenue,
7.40% due 12/1/10 677,625
- ------------------------------------------------------------------------------------------------------
2,303,435
- ------------------------------------------------------------------------------------------------------
Transportation -- 10.5%
1,000,000 AAA Monroe County Airport Authority for Greater Rochester
Int'l, MBIA-Insured, 7.25% due 1/1/19 (a) 1,065,000
1,600,000 AAA Niagara Falls Bridge Authority Toll Revenue Series B,
FGIC-Insured, 5.25% due 10/1/15 1,448,000
1,000,000 A Puerto Rico Commonwealth Highway & Transportation
Authority Highway Revenue, Series W, Refunding,
5.50% due 7/1/13 927,500
500,000 Aa* Triborough Bridge and Tunnel Authority General Purpose
Revenue, 8.125% due 1/1/12 (d) 546,250
1,000,000 Baa1* Metropolitan Transit Authority New York, Commuter
Facilities, Series O, 5.75% due 7/1/13 941,250
2,000,000 Baa1* Metropolitan Transit Authority New York, Service
Contract Transportation Facilities, Series O, 5.75%
due 7/1/13 1,882,500
1,500,000 AAA New York State Thruway Authority, Series C,
FGIC-Insured, 6.00% due 1/1/25 1,479,375
1,650,000 Baa1* New York State Thruway Authority, Service Contract
Revenue, Local Highway & Bridges, 5.25% due 4/1/13 1,458,190
- ------------------------------------------------------------------------------------------------------
9,748,065
- ------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
NEW YORK PORTFOLIO
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<C> <C> <S> <C>
Utilities -- 2.9%
$ 1,500,000 A1* New York State Energy Reasearch and Development
Authority Facilities Revenue Bonds (The Brooklyn
Union Gas Co. Project), Series B RIBS, 9.413%
due 7/15/26 (a)(c) $ 1,651,875
1,000,000 Aa3* New York State Energy Reasearch and Development
Authority Facilities Revenue Bonds (The Con Edison
Co. Project), 7.125% due 12/1/29 (a) 1,063,750
- ------------------------------------------------------------------------------------------------------
2,715,625
- ------------------------------------------------------------------------------------------------------
Water & Sewer -- 6.0%
1,000,000 AAA Nassau County Sewer Districts, Series E, Refunding,
MBIA-Insured, 5.40% due 5/1/10 975,000
2,000,000 AAA New York City Municipal Water Finance Authority
Systems Revenue Series B, AMBAC-Insured,
5.375% due 6/15/19 1,817,500
2,000,000 AAA New York City Muni Water Finance Authority, Water &
Sewage System Revenue, Capital Appreciation,
Series A, zero coupon due 6/15/11 760,000
1,240,000 AAA Clifton Park, New York Water Authority Water Systems
Revenue, FGIC-Insured, 5.00% due 10/1/14 1,098,950
1,000,000 AAA Suffolk County Water Authority Water Works Revenue,
SR Lien, Refunding, MBIA-Insured, 5.10% due 6/1/09 927,500
- ------------------------------------------------------------------------------------------------------
5,578,950
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100% (Cost - $89,336,377)(g) $92,507,288
======================================================================================================
</TABLE>
(a) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(c) Residual interest bonds -- coupon varies inversely with level of
short-term tax-exempt interest rates.
(d) Securities segregated by Custodian for open purchase commitment.
(e) Pre-refunded bonds escrowed by U.S. Government Securities and bonds escrowed
to maturity by U.S. Government Securities are considered by manager to be
triple-A rated even if issuer has not applied for new ratings.
(f) Variable rate obligations payable at par on demand on the date indicated.
(g) The cost for Federal income tax purposes is substantially the same.
+ Security has not been rated by either Moody's Investors Services or
Standard & Poors, however, the portfolio manager has determined the
equivalent rating to be MIG 1.
++ Security has not been rated by either Moody's Investors Services or
Standard & Poors, however, the portfolio manager has determined the
equivalent rating to be VMIG 1.
# Security has not been rated by either Moody's Investors Services or
Standard & Poors, however, the portfolio manager has determined the
equivalent rating to be MIG 2.
See pages 19 and 20 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
18
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation, except those identified by an
asterisk (*) that are by Moody's Investors Services. The definitions of the
applicable rating symbols are set forth below:
Standard & Poor's -- Rating from "AA" to "BB" may be modified by the addition of
a plus (+) or minus (-) sign to show relative standings within the major rating
categories.
AAA -- Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issue only in a small
degree.
A -- Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB -- Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher rated categories.
BB -- Debt rated "BB" has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa", where 1 is the highest and 3 the lowest ranking
within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
NR -- Indicates that the bond is not rated by Standard & Poor's
Corporation or Moody's Investors Services.
19
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Short-Term Security Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rate rating indicating very strong or
strong capacity to pay principal and interest; those issues
determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior
to the advent of the VMIG 1 rating.
MIG 1 -- Moody's highest rating for short-term municipal obligations.
MIG 2 -- Moody's second highest rating for short-term municipal obligations.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
ETM -- Escrowed to Maturity
FAIRS -- 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
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
INFLOS -- Inverse Floaters
IRB -- Industrial Revenue Bonds
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCFA -- Pollution Control Financing Authority
PCR -- Pollution Control Revenue
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bond
TRAN -- Tax and Revenue Anticipation Notes
VRDD -- Variable Rate Demand Note
VRWE -- Variable Rate Wednesday Demand
20
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Money New York
Market Portfolio Portfolio
=============================================================================================================
<S> <C> <C>
ASSETS:
Investments, at value (Cost -- $704,512,914
and $89,336,377) $704,512,914 $92,507,288
Cash 15,227 35,807
Receivable for securities sold 12,500,815 110,000
Receivable for Fund shares sold -- 65,147
Interest receivable 6,648,531 1,503,845
Other assets -- 4,269
- -------------------------------------------------------------------------------------------------------------
Total Assets 723,677,487 94,226,356
- -------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 13,576,333 1,608,818
Payable for Fund shares purchased -- 53,102
Management fees payable 288,153 35,167
Distribution costs payable 22,634 52,282
Dividends payable 1,199,789 --
Accrued expenses and other liabilities 199,789 --
- -------------------------------------------------------------------------------------------------------------
Total Liabilities 15,286,698 1,749,369
- -------------------------------------------------------------------------------------------------------------
Total Net Assets $708,390,789 $92,476,987
=============================================================================================================
NET ASSETS:
Par value of capital shares $ 708,690 $ 7,206
Capital paid in excess of par value 707,981,892 90,605,201
Undistributed net investment income -- 3,788
Accumulated net realized loss on security
transactions (299,793) (1,310,119)
Net unrealized appreciation of investments -- 3,170,911
- -------------------------------------------------------------------------------------------------------------
Total Net Assets $708,390,789 $92,476,987
=============================================================================================================
Shares Outstanding:
Class A 708,690,582 6,449,188
- -------------------------------------------------------------------------------------------------------------
Class B -- 296,936
- -------------------------------------------------------------------------------------------------------------
Class C -- 459,653
- -------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $1.00 $12.83
- -------------------------------------------------------------------------------------------------------------
Class B * -- $12.84
- -------------------------------------------------------------------------------------------------------------
Class C ** -- $12.83
- -------------------------------------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.17% of net asset value per share) $13.36
=============================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed less than one year from initial purchase. This CDSC declines by
0.50% the first year after purchase and then by 1.00% per year thereafter
until no CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC which
applies if shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
21
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Operations For the Year Ended March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York Money New York
Market Portfolio Portfolio
===================================================================================================
<S> <C> <C>
INVESTMENT INCOME:
Interest $11,072,590 $ 5,532,297
- ---------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 1,525,102 373,385
Distribution costs (Note 4) 305,688 108,252
Shareholder communications fees 80,854 18,002
Shareholder servicing agent fees 75,155 22,513
Insurance 20,000 401
Registration fees 12,844 8,001
Custodian fees 10,000 8,001
Pricing service fees 10,000 12,001
Trustees' fees 9,582 3,953
Audit and legal fees 5,528 9,201
Other 14,706 3,425
- ---------------------------------------------------------------------------------------------------
Total Expenses 2,069,459 567,135
- ---------------------------------------------------------------------------------------------------
Net Investment Income 9,003,131 4,965,162
- ---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized Gain (Loss) From Security Transactions
(excluding short-term securities*):
Proceeds from sales 41,067,764 24,732,296
Cost of securities sold 41,060,813 25,536,566
- ---------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) 6,951 (804,270)
- ---------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year -- 1,984,609
End of year -- 3,170,911
- ---------------------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation -- 1,186,302
- ---------------------------------------------------------------------------------------------------
Net Gain on Investments 6,951 382,032
- ---------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 9,010,082 $ 5,347,194
===================================================================================================
</TABLE>
* Represents only short-term securities for the New York Money Market Portfolio.
----
See Notes to Financial Statements.
22
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
New York New York
Money Market Portfolio Portfolio
------------------------ -----------------------
1995 1994 1995 1994
=========================================================================================================================
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 9,003,131 $ 1,195,788 $ 4,965,162 $ 4,272,540
Net realized gain (loss) from
security transactions 6,951 (1,844) (804,270) 280,945
Increase (decrease) in net unrealized
appreciation of investments -- -- 1,186,302 (3,198,744)
- -------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets
From Operations 9,010,082 1,193,944 5,347,194 1,354,741
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (8,962,020) (1,195,788) (5,027,432) (4,309,218)
- -------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (8,962,020) (1,195,788) (5,027,432) (4,309,218)
- -------------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares 1,427,039,238 291,171,028 34,196,422 26,634,117
Net asset value of shares issued
in connection with the transfer
of the Smith Barney Shearson
New York Municipal Money
Market Fund net assets 605,236,129 -- -- --
Net asset value of shares issued
for reinvestment of dividends 8,014,448 1,147,229 2,496,848 2,169,990
Cost of shares reacquired (1,414,406,279) (269,367,048) (22,088,943) (11,196,380)
- -------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 625,883,536 22,951,209 14,604,327 17,607,727
- -------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets 625,931,598 22,949,365 14,924,089 14,653,250
NET ASSETS:
Beginning of year 82,459,191 59,509,826 77,552,898 62,899,648
- -------------------------------------------------------------------------------------------------------------------------
End of year * $ 708,390,789 $ 82,459,191 $ 92,476,987 $ 77,552,898
=========================================================================================================================
* Includes undistributed
net investment income of: -- -- $3,788 $66,058
=========================================================================================================================
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The New York Money Market and New York Portfolios ("Portfolios") are
separate investment portfolios of the Smith Barney Muni Funds ("Fund"). The
Fund, a Massachusetts business trust, is registered under the Investment Company
Act of 1940, as amended, as a non-diversified, open-end management investment
company and consists of these Portfolios and eleven other separate investment
portfolios: California, Florida, Georgia, New Jersey, Ohio, Pennsylvania,
Limited Term, National, California Limited Term, Florida Limited Term and
California Money Market Portfolios. The financial statements and financial
highlights for the other portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolios
are: (a) security transactions are accounted for on the trade date; (b)
securities are valued at bid 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; short-term securities and securities maturing
within 60 days are valued at cost plus (minus) accreted discount (amortized
premium), which approximates value; (c) gains or losses on the sale of
securities are calculated by using the specific identification method; (d)
interest income, adjusted for amortization of premiums and accretion of original
issue discount, is recorded on the accrual basis; market discount is recognized
upon the disposition of the security; (e) direct expenses are charged to each
Portfolio and each class; management fees and general fund expenses are
allocated on the basis of relative net assets; and (f) the Portfolios intend to
comply with the requirements of the Internal Revenue Code pertaining to
regulated investment companies and to make the required distributions to
shareholders; therefore, no provision for Federal income taxes has been made.
2. Portfolio Concentration
Since each Portfolio invests 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 its net investment income on each business day. Such dividends
are paid or reinvested monthly in Portfolio shares on the payable date.
Furthermore, the Portfolios intend to satisfy conditions that will enable
interest from municipal securities, which is exempt from
24
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Federal income tax and from designated state income taxes, to retain such tax-
exempt status when distributed to the shareholders of the Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually. At March 31, 1995, the New York Money
Market and New York Portfolios had net capital loss carryovers of $299,793 and
$1,310,119, respectively, available to offset future capital gains. To the
extent that these carryover losses are used to offset capital gains it is
probable that any gains so offset will not be distributed. The amount and
expiration of the carryovers are indicated below. Expiration occurs on March 31
of the year indicated.
<TABLE>
1997 1998 2002 2003
==========================================================================================
<S> <C> <C> <C> <C>
New York Money Market Portfolio -- -- $2,166 $297,627
New York Portfolio $427,106 $78,743 -- 804,270
==========================================================================================
</TABLE>
4. Management Agreements and Transactions with Affiliated Persons
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager to the Fund. The New
York Money Market and New York Portfolios pay SBMFM a management fee calculated
at the annual rate of 0.50% and 0.45%, respectively, of their average daily net
assets. Such fees are calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. SB received sales charges of approximately $176,000 (paid by
purchasers of the New York Portfolio's Class A shares) for the year ended March
31, 1995. All officers and two trustees of the Fund are employees of SB.
Effective November 7, 1994, the Fund adopted a new class structure,
renaming Class B shares as Class C shares and exchanging the former Class C
shares into Class A shares. Under this new class structure, a contingent
deferred sales charge ("CDSC") of 4.50% is imposed on Class B shares if
redemption occurs less than one year from initial purchase. This CDSC declines
by 0.50% the first year after purchase and by 1.00% per year thereafter until no
CDSC is incurred. A CDSC of 1.00% is also imposed on Class C shares if
redemption occurs less than one year from initial purchase. Any CDSC imposed on
redemptions is paid to SB. For the year ended March 31, 1995, there were
approximately $8,000 in such charges.
On September 16, 1994, a new Distribution Plan was approved by the
shareholders. Pursuant to this Distribution Plan, the New York Portfolio
25
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
pays a service fee of 0.15% of average net assets on an annual basis with
respect to its Class A, B and C shares. In addition, the New York Portfolio pays
a distribution fee of 0.50% and 0.55% of average net assets on an annual basis
with respect to its Class B and C shares, respectively. The New York Money
Market Portfolio pays for distribution related services at the annual rate of
0.10% of average net assets.
5. Investments
During the year ended March 31, 1995, the aggregate cost of purchases and
proceeds from sales (including maturities, but excluding short-term securities)
of investments were as follows:
<TABLE>
<CAPTION>
New York Money New York
Market Portfolio Portfolio
===============================================================================
<S> <C> <C>
Purchases -- $39,675,740
- -------------------------------------------------------------------------------
Sales -- 24,732,296
===============================================================================
</TABLE>
At March 31, 1995, the gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were as follows:
<TABLE>
<CAPTION>
New York Money New York
Market Portfolio Portfolio
==============================================================================
<S> <C> <C>
Gross unrealized appreciation -- $4,149,642
Gross unrealized depreciation -- (978,731)
- ------------------------------------------------------------------------------
Net unrealized appreciation -- $3,170,911
==============================================================================
</TABLE>
6. Transfer of Assets
On November 18, 1994 the net assets of the Smith Barney Shearson New York
Municipal Money Market Fund were merged into the New York Money Market Portfolio
pursuant to an Agreement and Plan of Reorganization dated August 2, 1994.
The transaction was structured for tax purposes to qualify as a tax-free
reorganization under the Internal Revenue Code. The Smith Barney Shearson New
York Municipal Money Market Fund net assets at that date were $605,236,129.
Directly after the merger the combined net assets were $690,110,795 for the New
York Money Market Portfolio.
7. Capital Shares
At March 31, 1995, there were an unlimited amount of shares of $.001 par
value capital stock authorized. The Fund has multiple classes of shares within
each Portfolio of the Fund. Each share of a class represents an identical
interest in its respective Portfolio and has the same rights, except
26
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
that each class bears certain expenses specifically related to the distribution
of its shares. At March 31, 1995, total paid-in capital amounted to the
following for each class and respective Portfolio:
<TABLE>
<CAPTION>
Portfolio Class A Class B Class C
====================================================================================
<S> <C> <C> <C>
New York Money Market $708,690,582 -- --
New York 80,788,614 $3,634,969 $6,188,824
====================================================================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1995 March 31, 1994
New York ------------------------ ------------------------
Money Market Portfolio Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 1,427,039,238 $1,427,039,238 291,171,028 $291,171,028
Transfer from Smith Barney
Shearson New York Municipal
Money Market Fund 605,581,400 605,581,400 -- --
Shares issued on reinvestment 8,014,448 8,014,448 1,147,229 1,147,229
Shares redeemed (1,414,406,279) (1,414,406,279) (269,367,048) (269,367,048)
- --------------------------------------------------------------------------------------------
Net Increase 626,228,807 $ 626,228,807 22,951,209 $ 22,951,209
============================================================================================
New York Portfolio
============================================================================================
Class A*
Shares sold 2,286,499 $ 28,645,014 1,441,586 $ 19,534,054
Shares issued on reinvestment 177,827 2,228,332 149,103 2,014,647
Shares redeemed (1,632,862) (20,362,510) (775,166) (10,434,944)
- --------------------------------------------------------------------------------------------
Net Increase 831,464 $ 10,510,836 815,523 $ 11,113,757
============================================================================================
Class B+
Shares sold 300,125 $ 3,675,800 -- --
Shares issued on reinvestment 2,867 35,862 -- --
Shares redeemed (6,056) (76,693) -- --
- --------------------------------------------------------------------------------------------
Net Increase 296,936 $ 3,634,969 -- --
============================================================================================
Class C++
Shares sold 148,675 $ 1,875,608 361,749 $ 4,900,052
Shares issued on reinvestment 18,547 232,654 9,425 127,261
Shares redeemed (133,522) (1,649,740) (48,452) (656,328)
- --------------------------------------------------------------------------------------------
Net Increase 33,700 $ 458,522 322,722 $ 4,370,985
============================================================================================
</TABLE>
* On October 10, 1994 the former Class C shares were exchanged into Class A
shares; therefore the Class C share activity for the period April 1, 1994 to
October 9, 1994 is included with the Class A share activity. The year ended
March 31, 1994 includes only Class A share activity.
+ For the period from November 11, 1994 (inception date) to March 31, 1995.
++ On November 7, 1994 the former Class B shares were renamed Class C shares.
27
<PAGE>
Smith Barney Muni Funds
New York Money Market Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares: 1995 1994 1993(a)
=================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.025 0.018 0.010
- -------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.025 0.018 0.010
- -------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.025) (0.018) (0.010)
- -------------------------------------------------------------------------------------------------
Total Distributions (0.025) (0.018) (0.010)
- -------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------------------
Total Return 2.49% 1.77% 1.01%++
- -------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $708,391 $82,459 $59,510
- -------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.68% 0.60% 0.56%+
Net investment income 2.94% 1.73 1.84 +
=================================================================================================
</TABLE>
(a) For the period from September 17, 1992 (inception date) to March 31, 1993.
(1) The manager has waived all or part of its fees for each of the years in the
two-year period ended March 31, 1994. If such fees were not waived, the per
share decrease of net investment income would have been $0.001 and $0.001
for 1994 and 1993, respectively, and the ratio of expenses to average net
assets would have been 0.67% and 0.69% for 1994 and 1993, respectively.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
28
<PAGE>
Smith Barney Muni Funds
New York Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares (a) 1995 1994 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.83 $13.25 $12.33 $11.80 $11.67
- ------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (1) 0.76 0.78 0.81 0.83 0.85
Net realized and unrealized gain (loss)
on investments (2) 0.01 (0.41) 0.92 0.51 0.13
- ------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.77 0.37 1.73 1.34 0.98
- ------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.77) (0.79) (0.81) (0.81) (0.85)
- ------------------------------------------------------------------------------------------------------------------
Total Distributions (0.77) (0.79) (0.81) (0.81) (0.85)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.83 $12.83 $13.25 $12.33 $11.80
- ------------------------------------------------------------------------------------------------------------------
Total Return 6.32% 2.66% 14.48% 11.98% 8.74%
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $82,768 $70,065 $61,532 $40,370 $33,158
- ------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.63% 0.55% 0.55% 0.48% 0.28%
Net investment income 6.00 5.79 6.32 6.86 7.31
- ------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 30.38% 19.65% 21.91% 23.80% 69.75%
==================================================================================================================
Class B Shares 1995(b)
==================================================================================================================
Net Asset Value, Beginning of Year $11.96
- ------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.31
Net realized and unrealized gain
on investments (2) 0.86
- ------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 1.17
- ------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.29)
- ------------------------------------------------------------------------------------------------------------------
Total Distributions (0.29)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.84
- ------------------------------------------------------------------------------------------------------------------
Total Return 9.92%++
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $3,813
- ------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.27%+
Net investment income 5.76+
- ------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 30.38%
==================================================================================================================
</TABLE>
(a) On October 10, 1994, the former Class C shares were exchanged into Class
A shares.
(b) For the period from November 11, 1994 (inception date) to March 31, 1995.
(1) The manager has waived all or part of its fees for each of the years in the
two-year period ended March 31, 1992. If such fees were not waived, the per
share decrease of net investment income would have been $0.007 and $0.031
for 1992 and 1991, respectively, and the ratio of expenses to average net
assets would have been 0.53% and 0.50% for 1992 and 1991, respectively. As a
result of voluntary expense limitations, the ratio of expenses to average
net assets will not exceed 0.80%, 1.30% and 1.35% for Class A, B and C
shares, respectively.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
29
<PAGE>
Smith Barney Muni Funds
New York Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class C Shares (a) 1995 1994 1993(b)
================================================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Year $12.82 $13.24 $12.84
- ----------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.68 0.68 0.15
Net realized and unrealized gain (loss) on investments (2) 0.01 (0.40) 0.37
- ----------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.69 0.28 0.52
- ----------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.68) (0.70) (0.12)
- ----------------------------------------------------------------------------------------------------------------
Total Distributions (0.68) (0.70) (0.12)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.83 $12.82 $13.24
- ----------------------------------------------------------------------------------------------------------------
Total Return 5.66% 1.96% 4.04%++
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $5,896 $5,461 $1,368
- ----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.28% 1.23% 1.23%+
Net investment income 5.38 4.98 5.37 +
- ----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 30.38% 19.65% 21.91%
================================================================================================================
</TABLE>
(a) On November 7, 1994 the former Class B shares were renamed Class C
shares.
(b) For the period from January 8, 1993 (inception date) to March 31, 1993.
(2) Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at net asset values less
than the beginning of the period.
++ Not annualized, as the result may not be representative of the total
return for the year.
+ Annualized.
30
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
of the New York Money Market and
New York Portfolios of Smith Barney Muni Funds:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the New York Money Market and New
York Portfolios of Smith Barney Muni Funds as of March 31, 1995, the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended and the
financial highlights for each of the years in the two-year period then ended and
the period from September 17, 1992 (commencement of operations) to March 31,
1993 with respect to the New York Money Market Portfolio and each of the years
in the five-year period then ended with respect to the New York Portfolio. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
31
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Independent Auditors' Report (continued)
- --------------------------------------------------------------------------------
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the New York Money Market
and New York Portfolios of Smith Barney Muni Funds as of March 31, 1995, the
results of their operations for the year then ended, the changes in net assets
for each of the years in the two-year period then ended and the financial
highlights for each of the years in the two-year period then ended and the
period from September 17, 1992 (commencement of operations) to March 31, 1993
with respect to the New York Money Market Portfolio and for each of the years in
the five-year period then ended with respect to the New York Portfolio, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
May 15, 1995
32
<PAGE>
SMITH BARNEY
- ------------
A Member of Travelers Group [LOGO APPEARS HERE]
Smith Barney
Muni Funds
Trustees
Jessica M. Bibliowicz
Ralph D. Creasman
Joseph H. Fleiss
Donald R. Foley
Paul Hardin
Francis P. Martin, M.D.
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
C. Richard Youngdahl
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Karen L. Mahoney-Malcomson
Vice President
Daniel Malone
Vice President
Irving P. David
Controller
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder
Servicing Agent
The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Muni Funds New York Money Market and New York Portfolios. It is not
authorized for distribution to prospective investors unless accompanied or
preceded by a current Prospectus for the Portfolios, which contains information
concerning the Portfolios' investment policies and expenses as well as other
pertinent information.
Smith Barney Muni Funds
388 Greenwich Street
New York, New York 10013
FD2306 E5 82107
<PAGE>
ANNUAL REPORT
1995
1995
1995
1995
1995
Smith Barney
Muni Funds
Georgia Portfolio
Ohio Portfolio
Pennsylvania Portfolio
------------------------------------------------------------------------
March 31, 1995
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
- --------------------------------------------------------------------------------
Georgia, Ohio and Pennsylvania Portfolios
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the annual report and audited financial statements for
Smith Barney Muni Funds Georgia, Pennsylvania and Ohio Portfolios for the fiscal
year ended March 31, 1995.
Market and Economic Overview
Since our last report to you in November, the fixed-income markets, and
municipal bonds in particular, have enjoyed a powerful rally. Municipal bond
yields have declined more than a full percentage point, as evidenced by the drop
in the average yield on The Bond Buyer's weekly 25-Bond Revenue Index of 30-year
municipal bonds from a high of 7.37% on November 17, 1994 to 6.29% on March 31,
1995. This was substantially better than the performance of the benchmark
30-year Treasury bond, which experienced a decline in yield of 70 basis points
from 8.13% to 7.43% during the same time frame.
The vastly improved bond markets reflect a growing consensus that inflation will
remain under control, and the Federal Reserve Board will be successful in
engineering a "soft landing" by slowing the economy down to a more sustainable,
non-inflationary rate of growth. The seven increases in the federal funds rate
(the rate banks charge each other for overnight loans), orchestrated by the Fed
since February 1994, appear to be slowing the pace of economic growth. Recent
economic reports show a slower rate of increase in employment, producer prices,
and retail sales. Industrial production and capacity utilization were also lower
than expected, signalling a possible slowdown in the country's strong
manufacturing sector. These generally favorable economic fundamentals are more
than offsetting concerns about the substantial decline in the value of the
dollar relative to the Japanese yen and German mark on the foreign exchange
markets.
Late in April, several tax-reform proposals which recommend a flat Federal
income tax rate began to receive increased attention in the national financial
press and from municipal bond market participants. Adoption of a flat tax would
diminish the advantages of tax exemption for municipal bonds. Although the
various plans being circulated are only proposals, the publicity surrounding
them has recently caused some investors to back away from the municipal bond
market. In our opinion it is much too early in the process to predict what
changes in the tax laws, if any, will actually take place, but tax reform will
certainly be a major topic of political debate over the next few years. Many
observers believe that the more radical proposals for changes in the way taxes
are collected have little chance for enactment.
1
<PAGE>
Absent these tax-reform concerns, municipals would probably continue to be
strong performers relative to Treasuries and other taxable investments due to
the low supply of new issues. Not only did last year's spike in interest rates
sharply reduce refinancing activity in the municipal market, but voter pressure
on states and municipalities to rein in spending and cut taxes, or at least
avoid tax increases, has also resulted in a roughly 30% decline in new-money
financing. In addition, the universe of existing municipal bonds is shrinking.
In 1995, an estimated $230 billion in older, high-coupon issues will mature or
be called as they reach their first optional call dates. With estimates of
new-issue volume at less than $150 billion, the net reduction in municipal debt
outstanding could approach $100 billion this year, contracting the market by
about eight percent. Ordinarily, a reduction in supply of this magnitude would
be expected to provide a powerful boost for municipal bond values as it did
earlier this year. Uncertainties about various tax proposals, however, will
probably keep municipals from trading any better than their normal relationship
to taxable investment alternatives.
Georgia Portfolio
The Georgia Portfolio had a total return of 6.29% (Class A shares) for the
period from April 4, 1994 (inception) to March 31, 1995. That was comparable to
the 6.32% average total return for all Georgia municipal bond funds for the
12-month period, as reported by Lipper Analytical Services.
Georgia's economy is growing and should experience a substantial boost from the
1996 Summer Olympics which will be held in Atlanta. The state is rated Aaa by
Moody's and AA+ by Standard & Poor's.
Pennsylvania Portfolio
The Pennsylvania Portfolio had a total return of 8.82% (Class A shares) for the
period from April 4, 1994 (inception) to March 31, 1995. This performance was
significantly better than the 6.39% average total return for all Pennsylvania
municipal bond funds for the 12-month period, according to the Lipper survey.
Pennsylvania continues to maintain its A1 rating from Moody's. Its long-term AA-
rating from Standard & Poor's reflects an increasing, but manageable, debt
burden, a stagnant economy which is restructuring, good fiscal management, and
improving financial operations.
Georgia and Pennsylvania: Portfolio Strategy
While we generally have a positive outlook for the fixed-income markets, the
size of the rally we have experienced so far would seem to leave little room for
disappointment, and any sign of a rebound in economic activity is likely to
2
<PAGE>
result in a return to higher interest rates. We also believe that the unique
supply and demand characteristics of the municipal market and tax-reform
uncertainties will tend to exaggerate price swings relative to taxable
investments.
In light of this viewpoint, we are maintaining a balanced approach to
structuring the interest-rate sensitivity of the Portfolios by investing in a
combination of both long and short effective maturities. Most long-term
municipal bonds are callable prior to their stated maturity date. When a bond
has a coupon higher than prevailing market yields, its maturity is effectively
shortened to the call date for trading purposes because of the possibility that
the issuer will exercise its option to replace the bond with lower-cost debt. We
are retaining high-coupon bonds that trade well above their face value for the
defensiveness of their shorter effective maturities and the above-market level
of income they provide. However, we are also focusing on eliminating bonds with
shorter call dates when they are trading near their face value. Such bonds have
unfavorable performance characteristics because they retain the downside risk of
their longer maturity if rates should rise, but their appreciation potential is
limited by the shorter call date if interest rates decline. We are replacing
such issues with bonds that have similar stated maturities but greater call
protection.
Although this strategy sacrifices some of the current income being generated by
the Portfolios, it enhances long-term performance potential if interest rates
continue to decline without adding to downside risk if interest rates rise. We
believe that positioning the Portfolios in this manner is the best way to
achieve our objective of the highest tax-free income consistent with prudent
risk management.
Ohio Portfolio
For the period from June 13, 1994 (inception) to March 31, 1995, the Ohio
Portfolio produced a total return of 4.04% for Class A shares.
Ohio's economy performed extremely well during last year's period of rising
interest rates. An expanding service sector and strong export activity have made
Ohio less dependent on the manufacturing sector. The state has historically been
conservative in debt management and, under the leadership of Governor Voinovich,
Ohio has once again become a highly regarded bond issuer.
During the past year, Cuyahoga County, as a result of speculative investment in
derivative securities, had to raise $125 million to cover investment losses.
While this has led to a slight decline in the county's debt rating, we believe
that new investment guidelines will correct the situation, and it will not occur
again.
The Ohio Portfolio remains quality oriented with 67% of its holdings rated AAA,
3
<PAGE>
19% rated AA, 3% rated A and 11% rated BAA. The average maturity of the
Portfolio is 24 years.
We believe that the current economic slowdown will create a favorable outlook
for fixed income investors. We thank you for your investment in the Portfolios
and your continued confidence in our investment management.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman and Vice President and
Chief Executive Officer Investment Officer
/s/ Lawrence T. McDermott
Lawrence T. McDermott
Vice President and
Investment Officer
April 28, 1995
4
<PAGE>
Smith Barney Muni Funds
Georgia Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.00 $12.10 $0.62 $0.00 6.29%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.27 $12.11 $0.49 $0.00 2.88%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.06 $12.09 $0.56 $0.00 5.11%
- --------------------------------------------------------------------------------
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
-------------------------------------
Class A Class B Class C
================================================================================
Inception* through 3/31/95 6.29% 2.88% 5.11%
- --------------------------------------------------------------------------------
With Sales Charge (2)
-------------------------------------
Class A Class B Class C
================================================================================
Inception* through 3/31/95 2.04% (1.56)% 4.11%
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
-------------------------------------
Class A (Inception* through 3/31/95) 6.29%
Class B (Inception* through 3/31/95) 2.88
Class C (Inception* through 3/31/95) 5.11
- --------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 4.00%. Class B shares reflect the deduction
of a 4.50% CDSC. This CDSC applies if shares are redeemed less than one
year from initial purchase. This CDSC declines by 0.50% the first year
after purchase and by 1.00% per year thereafter until no CDSC is incurred.
Class C shares reflect the deduction of a 1.00% CDSC which applies if
shares are redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are April 4, 1994, June 15,
1994 and April 14, 1994, respectively.
5
<PAGE>
Smith Barney Muni Funds
Georgia Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the Georgia Portfolio vs. Lehman Long Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
April 1994 -- March 1995
This table is represented by a chart in the printed material.
LEHMAN
LONG BOND
DATE GEORGIA INDEX
4/04/94 9,600.00 10,000.00
6/94 9,588.30 9,918.63 -1.20%
9/94 9,662.10 10,147.24 -2.31%
12/94 9,392.60 9,916.01 3.55%
3/95 10,193.40 10,902.93 1.20%
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on April 4, 1994, assuming deduction of the maximum 4.00% sales
charge at the time of investment and reinvestment of dividends (after
deduction of sales charges, if any) and capital gains at net asset value
through March 31, 1995. The Index is unmanaged and is not subject to the
same management and trading expenses of a mutual fund. The performance of
the Portfolio's other classes may be greater or less than the Class A
shares' performance indicated on this chart, depending on whether greater
or lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
6
<PAGE>
Smith Barney Muni Funds
Ohio Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.00 $11.97 $0.48 $0.00 4.04%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.02 $11.96 $0.43 $0.00 3.31%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.02 $11.96 $0.43 $0.00 3.28%
- --------------------------------------------------------------------------------
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
-------------------------------------
Class A Class B Class C
================================================================================
Inception* through 3/31/95 4.04% 3.31% 3.28%
- --------------------------------------------------------------------------------
With Sales Charge (2)
-------------------------------------
Class A Class B Class C
================================================================================
Inception* through 3/31/95 (0.13)% (1.17)% 2.28%
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (2)
-------------------------------------
Class A (Inception* through 3/31/95) 4.04%
Class B (Inception* through 3/31/95) 3.31
Class C (Inception* through 3/31/95) 3.28
- --------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 4.00%. Class B shares reflect the deduction
of a 4.50% CDSC, which applies if shares are redeemed less than one year
from initial purchase. This CDSC declines by 0.50% the first year after
purchase and by 1.00% per year thereafter until no CDSC is incurred. Class
C shares reflect the deduction of a 1.00% CDSC which applies if shares are
redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are June 13, 1994, June 14,
1994 and June 14, 1994, respectively.
7
<PAGE>
Smith Barney Muni Funds
Ohio Portfolio
Smith Barney Municipal Fund, Inc.
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the Ohio Portfolio vs. Lehman Long Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
June 1994 -- March 1995
This table is represented by a chart in the printed material.
LEHMAN
LONG BOND
DATE OHIO INDEX
- ---- ---- -----
4/04/94 9,600.00 10,000.00
6/94 9,392.00 9,880.00 -1.20%
9/94 9,391.90 10,107.72 -2.31%
12/94 9,139.60 9,877.39 3.55%
3/95 9,980.50 10,860.47 1.20%
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on June 13, 1994, assuming deduction of the maximum 4.00% sales
charge at the time of investment and reinvestment of dividends (after
deduction of sales charges, if any) and capital gains at net asset value
through March 31, 1995. The Index is unmanaged and is not subject to the
same management and trading expenses of a mutual fund. The performance of
the Portfolio's other classes may be greater or less than the Class A
shares' performance indicated on this chart, depending on whether greater
or lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
8
<PAGE>
Smith Barney Muni Funds
Pennsylvania Portfolio
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.00 $12.40 $0.62 $0.00 8.82%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.35 $12.39 $0.48 $0.00 4.43%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End of Income Capital Gain Total
Period Ended of Period Period Dividends Distributions Returns (1)
================================================================================
Inception*-3/31/95 $12.00 $12.39 $0.56 $0.00 8.14%
- --------------------------------------------------------------------------------
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
-------------------------------------
Class A Class B Class C
================================================================================
Inception* through 3/31/95 8.82% 4.43% 8.14%
- --------------------------------------------------------------------------------
With Sales Charge (2)
-------------------------------------
Class A Class B Class C
================================================================================
Inception* through 3/31/95 4.47% (0.07)% 7.14%
================================================================================
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge (1)
-------------------------------------
Class A (Inception* through 3/31/95) 8.82%
Class B (Inception* through 3/31/95) 4.43
Class C (Inception* through 3/31/95) 8.14
- --------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions at net
asset value and does not reflect deduction of the applicable sales charge
with respect to Class A shares or the applicable contingent deferred sales
charges ("CDSC") with respect to Class B and Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions at net
asset value. In addition, Class A shares reflect the deduction of the
maximum initial sales charge of 4.00%. Class B shares reflect the deduction
of a 4.50% CDSC which applies if shares are redeemed less than one year
from initial purchase. This CDSC declines by 0.50% the first year after
purchase and by 1.00% per year thereafter until no CDSC is incurred. Class
C shares reflect the deduction of a 1.00% CDSC which applies if shares are
redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are April 4, 1994, June 20,
1994 and April 5, 1994, respectively.
9
<PAGE>
Smith Barney Muni Funds
Pennsylvania Portfolio
- --------------------------------------------------------------------------------
Historical Performance
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of
the Pennsylvania Portfolio vs. Lehman Long Bond Index+
(unaudited)
- --------------------------------------------------------------------------------
April 1994 -- March 1995
This table is represented by a chart in the printed material.
LEHMAN
LONG BOND
DATE PENNSYLVANIA INDEX
- ---- ------------ -----
4/04/94 9,600.00 10,000.00
6/94 9,780.60 9,918.63 -1.20%
9/94 9,839.50 10,147.24 -2.31%
12/94 9,659.20 9,916.01 3.55%
3/95 10,435.60 10,902.93 1.20%
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on April 4, 1994, assuming deduction of the maximum 4.00% sales
charge at the time of investment and reinvestment of dividends (after
deduction of sales charges, if any) and capital gains at net asset value
through March 31, 1995. The Index is unmanaged and is not subject to the
same management and trading expenses of a mutual fund. The performance of
the Portfolio's other classes may be greater or less than the Class A
shares' performance indicated on this chart, depending on whether greater
or lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
10
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================
<C> <C> <S> <C>
Education -- 8.0%
$ 250,000 AAA Cherokee County School, 5.875% due 2/1/09 $ 255,625
250,000 Aa1* De Kalb County Development Authority Revenue, Emory University
Project, Series A, 5.90% due 10/1/15 249,063
500,000 AA Fulton County School District, 5.60% due 1/1/14 483,125
- -------------------------------------------------------------------------------------------------
987,813
- -------------------------------------------------------------------------------------------------
Escrowed to Maturity (a) -- 12.7%
1,875,000 Aaa* Colquitt County, Development Authority Revenue, Sub Series C,
(Escrowed to Maturity with U.S. Government Securities),
zero coupon due 12/1/21 269,531
420,000 AAA Puerto Rico Commonwealth Aqueduct & Sewer Authority Revenue,
(Escrowed to Maturity with U.S. Government Securities),
10.25% due 7/1/09 576,975
1,025,000 Aaa* Richmond County Development Authority, Sub Series-C, (Escrowed
to Maturity with U.S. Goverment Securities), zero coupon
due 12/1/21 155,030
300,000 AAA Tri-City Hospital Authority, South Fulton Hospital, FGIC-Insured,
(Escrowed to Maturity with U.S. Government Securities),
10.25% due 7/1/06 411,750
1,000,000 Aaa* Washington Georgia Wilkes Payroll Development Authority,
(Escrowed to Maturity with U.S. Government Securities),
zero coupon due 12/1/23 150,000
- -------------------------------------------------------------------------------------------------
1,563,286
- -------------------------------------------------------------------------------------------------
General Obligation -- 5.5%
220,000 Aaa* Georgia State GO, 6.80% due 3/1/11 247,775
500,000 BBB Guam Government GO, Series A, 5.375% due 11/15/13 439,375
- -------------------------------------------------------------------------------------------------
687,150
- -------------------------------------------------------------------------------------------------
Hospitals -- 13.2%
500,000 Baa1* Fulco County Hospital Authority Revenue Anticipation Certificates,
Georgia Baptist Healthcare, Series A, 6.25% due 9/1/13 451,875
500,000 AAA Gwinnett Hospital Authority Revenue Anticipation Certificates,
Gwinnett Hospital System Inc. Project, AMBAC-Insured,
5.00% due 9/1/19 428,750
250,000 BBB Puerto Rico Industrial Tourist Educational, Medical, & Environmental
Control Facility Finance Authority, Series A, Ryder Memorial
Hospital Project, 6.70% due 5/1/24 243,438
500,000 BBB+ Savannah Hospital Authority, Candler Hospital, 7.00% due 1/1/11 498,750
- -------------------------------------------------------------------------------------------------
1,622,813
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================
<C> <C> <S> <C>
Housing: Multi-Family -- 8.2%
$ 250,000 A1* De Kalb County Housing Authority Revenue Multi-Family Mortgage
Refunding, Section 8, 5.25% due 5/1/10 $ 223,125
300,000 AAA De Kalb County Housing Authority Revenue Refunding,
FHA-Insured, 7.75% due 1/1/26 321,750
500,000 AAA Rosewell Housing Authority Multi-Family Refunding, 5.70% due
3/1/24 461,875
- -------------------------------------------------------------------------------------------------
1,006,750
- -------------------------------------------------------------------------------------------------
Housing: Single-Family -- 16.3%
1,000,000 Aaa* Atlanta Urban Residential Finance Authority Single-Family Mortgage,
FNMA-Collateralized, zero coupon due 10/1/16 247,500
500,000 AAA Fulton County Housing Authority Single-Family Management
Revenue, Series A, GNMA-Collateralized, 6.60% due 3/1/28(b) 498,750
350,000 AA+ Georgia State Housing Finance Authority Revenue Single-Family
Mortgage, Series A, FHA-Insured, 6.60% due 12/1/23(b) 351,750
345,000 AA+ Georgia State Residential Finance Authority Home Ownership
Mortgage, Series A, FHA-Insured, 7.25% due 12/1/21(b) 362,250
550,000 AAA Virgin Islands Housing Finance Authority Single-Family Mortgage,
Series A, GNMA-Collateralized, 6.45% due 3/1/26(b) 547,250
- -------------------------------------------------------------------------------------------------
2,007,500
- -------------------------------------------------------------------------------------------------
Industrial Development -- 3.6%
500,000 A* Coweta Development Authority IDR Sivaco National Wire Co.,
5.40% due 2/1/09(b) 445,625
- -------------------------------------------------------------------------------------------------
Pollution Control -- 6.0%
400,000 AAA Burke County Pollution Control Ogelthorpe Power Co. Vogtle Project,
MBIA-Insured, 7.50% due 1/1/03 438,500
300,000 A2* Monroe County Development Authority PCR, Gulf Power Co., 6.30%
due 9/1/24 297,375
- -------------------------------------------------------------------------------------------------
735,875
- -------------------------------------------------------------------------------------------------
Power -- 6.7%
500,000 AAA Georgia Municipal Electric Authority Power Revenue, Series EE,
AMBAC-Insured, 7.25% due 1/1/24 583,750
300,000 BBB Guam Government Power Authority Revenue, Series A, 5.25%
due 10/1/23 243,000
- -------------------------------------------------------------------------------------------------
826,750
- -------------------------------------------------------------------------------------------------
Public Facilities -- 2.1%
250,000 AAA Butts County COP, MBIA-Insured, 6.75% due 12/1/14 264,687
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GEORGIA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================
<C> <C> <S> <C>
Transportation -- 4.1%
$ 250,000 AAA Atlanta Airport Facility Revenue, Series B, AMBAC-Insured, 6.00%
due 1/1/21(b) $ 243,438
250,000 AAA Metro Atlanta Rapid Tranist Authority Revenue Refunding
Series P, AMBAC-Insured, 6.25% due 7/1/20 259,687
- -------------------------------------------------------------------------------------------------
503,125
- -------------------------------------------------------------------------------------------------
Utilities -- 8.0%
500,000 A- Georgia Muni Gas Authority Revenue Southern Storage Gas
Project, 6.30% due 7/1/09 502,500
515,000 AA Hogansville Combined Public Utilty System, Asset Guaranty,
5.85% due 10/1/05 484,744
- -------------------------------------------------------------------------------------------------
987,244
- -------------------------------------------------------------------------------------------------
Water & Sewer -- 5.6%
300,000 AAA Fulton County Water & Sewer Revenue, FGIC-Insured,
6.375% due 1/1/14 317,625
850,000 AA+ Gwinnett County Water & Sewer Revenue, zero coupon
due 8/1/09 372,938
- -------------------------------------------------------------------------------------------------
690,563
- -------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100% (Cost -- $12,054,439)(d) $12,329,181
=================================================================================================
</TABLE>
See page 18 for full footnote disclosures.
See Notes to Financial Statements.
13
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================
<C> <C> <S> <C>
Education -- 19.0%
$ 100,000 AAA Dublin County City School Districts, AMBAC-Insured, 6.20%
due 12/1/19 $ 101,375
200,000 AAA Lakeview Local School District, AMBAC-Insured,
6.90% due 12/1/14 215,500
100,000 AAA North Royalton City School, MBIA-Insured,
6.10% due 12/1/19 100,875
Ohio State Higher Education Facilities Revenue:
100,000 AAA Case Western University, 6.00% due 10/1/22 99,500
180,000 AAA University of Dayton, FGIC-Insured, 5.80% due 12/1/19 175,725
100,000 AA- Ohio State University Revenue, General Receipts, Series A1,
5.875% due 12/1/12 98,625
100,000 AAA Strongville City Schools Improvement, AMBAC-Insured,
6.00% due 12/1/14 100,250
100,000 AAA Woodbridge Local School District, AMBAC-Insured,
6.00% due 12/1/19 100,125
- -------------------------------------------------------------------------------------------------
991,975
- -------------------------------------------------------------------------------------------------
General Obligation -- 26.6%
150,000 A1* Avon Lake City School District GO, 6.25% due 12/1/19 151,312
250,000 AA Columbiana County GO, Asset Guarantee, 6.60% due 12/1/17 257,500
105,000 AA+ Columbus Sewer Improvement #28, 6.00% due 5/1/12 106,575
300,000 AAA Defiance Water Works System GO, MBIA-Insured, 6.20% due 12/1/20 303,375
250,000 AA Ohio State GO, 6.20% due 8/1/14 260,938
300,000 AAA Summit County Addiction & Mental Health, AMBAC-Insured,
6.40% due 12/1/14 314,625
- -------------------------------------------------------------------------------------------------
1,394,325
- -------------------------------------------------------------------------------------------------
Hospital -- 8.4%
100,000 Aa* Franklin County Hospital Revenue Refunding, Riverside United
Methodist, Series A, 5.75% due 5/15/12 95,125
350,000 BBB- Green Springs Health Care Facilities Revenue, St. Francis Health
Care Center Project, Series A, 7.125% due 5/15/25 342,125
- -------------------------------------------------------------------------------------------------
437,250
- -------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 5.9%
300,000 AAA Kent Multi-Family Housing, GNMA-Collateralized FHA Supported,
7.15% due 12/20/26 310,875
- -------------------------------------------------------------------------------------------------
Housing: Single-Family -- 8.7%
Ohio Housing Finance Agency Residential Mortgage:
100,000 AAA GNMA Series A-1, 6.10% due 9/1/14 (b) 99,250
100,000 AAA GNMA Series A-2, 6.125% due 9/1/24 (b) 99,125
250,000 Aaa* GNMA Series A-2, 6.625% due 3/1/26 (b) 257,188
- -------------------------------------------------------------------------------------------------
455,563
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OHIO PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================
<C> <C> <S> <C>
Industrial Development -- 2.8%
$ 150,000 Aa3* Toledo-Lucas County Port Authority Revenue Refunding,
Cargill Project, 5.90% due 12/1/15 $ 147,750
- -------------------------------------------------------------------------------------------------
Miscellaneous -- 5.9%
100,000 AAA Franklin County Convention Facilities Authority Revenue
Refunding, MBIA-Insured, 5.85% due 12/1/19 98,250
200,000 AAA Ohio State Building Authority Juvenile Correction Facility,
Series A, AMBAC-Insured, 6.60% due 10/1/14 210,750
- -------------------------------------------------------------------------------------------------
309,000
- -------------------------------------------------------------------------------------------------
Pollution Control -- 4.8%
250,000 AAA Ohio State Air Quality Development Authority Revenue Refunding,
PA Power Company, AMBAC-Insured, 6.15% due 8/1/23 252,187
- -------------------------------------------------------------------------------------------------
Utilities -- 10.1%
Cleveland Ohio Public Power System:
200,000 AAA First Mortgage Series A, MBIA-Insured, 7.00% due 11/15/24 216,250
195,000 AAA First Mortgage Series B, MBIA-Insured, 7.00% due 11/15/17 212,306
100,000 AAA Hamilton City Electric System Mortgage Revenue Refunding,
Series A, FGIC-Insured, 6.00% due 10/15/23 98,750
- -------------------------------------------------------------------------------------------------
527,306
- -------------------------------------------------------------------------------------------------
Water & Sewer -- 7.8%
100,000 AAA Cleveland Water Works Revenue, First Mortgage, Series 92B,
AMBAC-Insured, 6.25% due 1/1/16 101,875
200,000 BBB+ Trumbull County Sewer Disposal Revenue, General Motors Corp.
Project, 6.75% due 7/1/14 (a) 209,000
100,000 AAA Warren County Water Works Revenue, MBIA-Insured,
6.00% due 12/1/19 99,500
- -------------------------------------------------------------------------------------------------
410,375
- -------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100% (Cost -- $5,078,021)(d) $5,236,606
=================================================================================================
</TABLE>
See page 18 for full footnote disclosures.
See Notes to Financial Statements.
15
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================
<C> <C> <S> <C>
Education -- 3.2%
$ 500,000 AA Bucks County Community College, Authority College Building
Revenue Refunding, 6.25% due 6/15/14 $ 507,500
- -------------------------------------------------------------------------------------------------
Escrowed to Maturity (a) -- 15.3%
140,000 AAA Allegheny County Hospital Authority Montefiore Hospital
Association, (Escrowed to Maturity with U.S. Government
Securities), 6.875% due 7/1/09 154,175
385,000 AAA Blair County Hospital Authority Revenue Altoona Hospital,
(Escrowed to Maturity with U.S. Government Securities),
6.90% due 7/1/08 420,131
570,000 AAA Cambria County Hospital Development Authority Conemaugh VY,
(Escrowed to Maturity with U.S. Government Securities),
7.625% due 9/1/11 658,350
435,000 AAA Lewisburg Area School District Building, (Escrowed to Maturity
with U.S. Government Securities), AMBAC-Insured,
9.75% due 2/15/04 544,294
125,000 AAA Philadelphia Hospital Authority Graduate Hospital Project,
(Escrowed to Maturity with U.S. Government Securities),
7.00% due 7/1/10 138,594
305,000 AAA Southeastern Greene School District, (Escrowed to Maturity with U.S.
Government Securities), 9.375% due 7/1/03 359,137
100,000 AAA York County Refunding, AMBAC-Insured, (Escrowed to Maturity with
U.S. Government Securities), 8.875% due 6/1/06 124,625
- -------------------------------------------------------------------------------------------------
2,399,306
- -------------------------------------------------------------------------------------------------
Finance -- 3.3%
500,000 A Pennsylvania State Finance Authority Revenue Refunding Municipal
Capital Input Project, Societe Generale, 6.60% due 11/1/09 518,125
- -------------------------------------------------------------------------------------------------
General Obligation -- 9.0%
500,000 BBB Guam Government GO Series A, 5.375% due 11/15/13 439,375
500,000 AAA Pennsylvania Intergovernmental Coop Authority Special Tax Revenue,
City of Pennsylvania, MBIA-Insured, 5.60% due 6/15/15 476,250
500,000 AAA Philadelphia Series B, 6.00% due 11/15/13 503,125
- -------------------------------------------------------------------------------------------------
1,418,750
- -------------------------------------------------------------------------------------------------
Hospital -- 21.3%
500,000 AAA Allegheny County Hospital Development Authority Revenue,
Allegheny General Hospital Project-Series A, MBIA-Insured,
6.25% due 9/1/20 501,875
500,000 AA- Chester County Health & Education Facilities Authority
Main Line Health Systems Series A, 5.50% due 5/15/15 456,250
500,000 AAA Lancaster Hospital Authority Revenue Refunding Health Center
Masonic Homes Project, AMBAC-Insured, 5.00% due 11/15/20 428,750
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================
<C> <C> <S> <C>
Hospital -- 21.3% (continued)
$ 250,000 BBB Puerto Rico Industrial Tourist Educational
Medical & Environmental Control Facilities Finance
Authority (Ryder Memorial Hospital Project-A),
6.70% due 5/1/24 $ 243,438
225,000 BBB Ridley Park Hospital Authority Taylor Hospital
Series A - Refunding, 6.00% due 12/1/13 189,281
500,000 AAA Scranton Lackawanna Health & Welfare Authority Revenue
University of Scranton Project, AMBAC-Insured, 6.80%
due 11/1/14 526,875
500,000 NR Scranton Lackawanna Health & Welfare Authority Revenue Allied
Services Rehabilitation Hospitals Project-A, DTC, MSTC,
7.60% due 7/15/20 495,625
500,000 AAA Wayne County Hospital & Health Facilities Authority County
Guaranteed Hospital Revenue Wayne Memorial Hospital Project,
MBIA-Insured, 6.25% due 7/1/14 509,375
- -------------------------------------------------------------------------------------------------
3,351,469
- -------------------------------------------------------------------------------------------------
Housing: Single-Family -- 2.8%
2,000,000 Aaa* Allegheny County Residential Mortgage Refunding Single-Family,
zero coupon due 5/1/27(b) 187,500
250,000 A Pittsburg Urban Redevelopment Authority Mortgage Revenue,
Series B, 6.95% due 10/1/10 252,188
- -------------------------------------------------------------------------------------------------
439,688
- -------------------------------------------------------------------------------------------------
Industrial Development -- 8.4%
1,000,000 A3* Erie County IDA, Environmental Improvement Revenue,
International Paper Co., Project-Series-A,
7.625% due 11/1/18 1,078,750
250,000 AAA Pennsylvania State IDA Revenue Refunding - Economic Development,
AMBAC-Insured, 5.50% due 1/1/14 236,875
- -------------------------------------------------------------------------------------------------
1,315,625
- -------------------------------------------------------------------------------------------------
Nursing Home -- 2.8%
500,000 AAA Allegheny County IDA Nursing Home Revenue Refunding
South Hills - A, FHA-Insured, 5.70% due 9/1/30 445,625
- -------------------------------------------------------------------------------------------------
Pollution Control -- 3.2%
500,000 AAA Lehigh County IDA Power & Light, MBIA-Insured, 6.40% due 9/1/29 510,000
- -------------------------------------------------------------------------------------------------
Pre-Refunded (a) -- 8.3%
980,000 AAA Philadelphia, Hospital Revenue United Hospital Inc.
(Escrowed with U.S. Government Securities to 7/1/05 Call @ 100),
10.875% due 7/1/08 1,304,625
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Schedules of Investments (continued) March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PENNSYLVANIA PORTFOLIO
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================
<C> <C> <S> <C>
Short-Term (c) -- 4.5%
$ 700,000 VMIG 1 Pennsylvania Higher Education Assistant Corp. Student
Loan Revenue, 4.20% due 7/1/18 $ 700,000
- -------------------------------------------------------------------------------------------------
Solid Waste -- 3.2%
250,000 A* Lancaster County Solid Waste Management Authority Resource
Recovery Systems Revenue Landfill, 7.875% due 12/15/09 258,437
250,000 A New Morgan IDA Solid Waste Disposal,New Morgan
Landfill Co. Inc. Project, Browning Ferris, 6.50% due 4/1/19(b) 247,500
- -------------------------------------------------------------------------------------------------
505,937
- -------------------------------------------------------------------------------------------------
Transportation -- 5.8%
1,000,000 AAA Allegheny County Pennsylvania Airport Revenue, Pittsburgh
International Airport-Series C, FSA-Insured, 5.625% due 1/1/23 908,750
- -------------------------------------------------------------------------------------------------
Utilities -- 2.5%
400,000 BBB Guam Power Authority Revenue-Series A, 6.75% due 10/1/24 401,000
- -------------------------------------------------------------------------------------------------
Water and Sewer -- 6.4%
1,000,000 AAA Erie Pennsylvania Water Revenue-Series B, FGIC-Insured,
6.00% due 12/1/12 1,003,750
- -------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100% (Cost - $15,304,464)(d) $15,730,150
=================================================================================================
</TABLE>
(a) Pre-refunded bonds escrowed by U.S. Government Securities and bonds
escrowed to maturity with U.S. Government Securities are considered by the
manager to be triple-A rated even if issuer has not applied for new
ratings.
(b) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(d) The cost for Federal income tax purposes is substantially the same.
See pages 19 and 20 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
18
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation, except that those identified
by an asterisk (*) are rated by Moody's Investors Services. The definitions of
the applicable rating symbols are set forth below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or a minus (-) sign to show relative standings within the major
rating categories.
AAA --Debt rated "AAA"' has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA --Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the highest rated issue only in a
small degree.
A --Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB --Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
BB --Debt rated "BB" has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties of exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments.
Moody's --Numerical modifiers 1, 2, and 3 may be applied to each generic
rating from "Aa" to `Baa", where 1 is the highest and 3 the lowest
rating within its generic category.
Aaa --Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa --Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A --Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment some time in the future.
Baa --Bonds that are rated "Baa" are considered as medium grade
obligations,i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
NR --Indicates that the bond is not rated by Standard & Poor's
Corporation or Moody's Investor's Services.
19
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Short-Term Security Ratings
- --------------------------------------------------------------------------------
SP-1 --Standard & Poor's highest rate rating indicating very strong or
strong capacity to pay principal and interest; those issues
determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign.
A-1 --Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 --Moody's highest rating for issues having a demand feature --
(VRDO) P-1 -- Moody's highest rating for commercial paper and for
VRDO prior to the advent of the VMIG 1 rating.
MIG 1 --Moody's highest rating for short-term municipal obligations.
Security Descriptions
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG --Association of Bay Area Governors
AIG --American International Guaranty
AMBAC --AMBAC Indemnity Corporation
BAN --Bond Anticipation Notes
BIG --Bond Investors Guaranty
CGIC --Capital Guaranty Insurance Company
CHFCLI --California Health Facility Construction Loan Insurance
COP --Certificate of Participation
EDA --Economic Development Authority
ETM --Escrowed to Maturity
FAIRS --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 --Federal Savings Association
GIC --Guaranteed Investment Contract
GNMA --Government National Mortgage Association
GO --General Obligation
HDC --Housing Development Corporation
HFA --Housing Finance Authority
IDA --Industrial Development Agency
IDB --Industrial Development Board
IDR --Industrial Development Revenue
INFLOS --Inverse Floaters
LOC --Letter of Credit
MBIA --Municipal Bond Investors Assurance Corporation
MVRICS --Municipal Variable Rate Inverse Coupon Security
PCR --Pollution Control Revenue
RAN --Revenue Anticipation Notes
RIBS --Residual Interest Bonds
RITES --Residual Interest Tax-Exempt Securities
SYCC --Structured Yield Curve Certificate
TAN --Tax Anticipation Notes
TECP --Tax-Exempt Commercial Paper
TOB --Tender Option Bonds
TRAN --Tax and Revenue Anticipation Notes
VA --Veterans Administration
VRWE --Variable Rate Wednesday Demand
20
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Georgia Ohio Pennsylvania
Portfolio Portfolio Portfolio
===================================================================================================================================
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost -- $12,054,439,
$5,078,021 and $15,304,464, respectively) $ 12,329,181 $ 5,236,606 $ 15,730,150
Cash -- -- 79,492
Receivable for securities sold 254,061 -- --
Receivable for Fund shares sold 95,874 89,129 80,224
Interest receivable 175,858 118,651 281,704
Receivable from manager (Note 4) 42,317 41,401 32,063
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 12,897,291 5,485,787 16,203,633
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 503,025 -- --
Payable for Fund shares purchased -- -- 10,248
Distribution costs payable 10,549 6,041 16,747
Accrued expenses and other liabilities 17,609 91,150 15,719
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 531,183 97,191 42,714
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 12,366,108 $ 5,388,596 $ 16,160,919
===================================================================================================================================
NET ASSETS:
Par value of capital shares $ 1,022 $ 450 $ 1,304
Capital paid in excess of par value 12,126,523 5,245,881 15,808,913
Undistributed net investment income -- 12,493 39,711
Accumulated net realized loss on
security transactions (36,179) (28,813) (114,695)
Net unrealized appreciation of investments 274,742 158,585 425,686
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 12,366,108 $ 5,388,596 $ 16,160,919
===================================================================================================================================
Shares Outstanding:
Class A 704,003 231,140 643,167
--------------------------------------------------------------------------------------------------------------------------------
Class B 210,720 170,690 391,304
--------------------------------------------------------------------------------------------------------------------------------
Class C 107,104 48,607 269,276
--------------------------------------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 12.10 $ 11.97 $ 12.40
--------------------------------------------------------------------------------------------------------------------------------
Class B* $ 12.11 $ 11.96 $ 12.39
--------------------------------------------------------------------------------------------------------------------------------
Class C** $ 12.09 $ 11.96 $ 12.39
--------------------------------------------------------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.17% of net asset value) $ 12.60 $ 12.47 $ 12.92
===================================================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed less than one year from initial purchase. This CDSC declines
by 0.50% the first year after purchase and by 1.00% per year thereafter
until no CDSC is incurred.
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC, which
applies if shares are redeemed within the first year of purchase.
See Notes to Financial Statements.
21
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Operations For the Period Ended March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Georgia Ohio Pennsylvania
Portfolio(a) Portfolio(b) Portfolio(a)
====================================================================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 512,192 $ 193,803 $ 742,542
- ------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 4) 39,664 14,820 50,793
Shareholder communication fees 22,000 14,000 15,000
Distribution costs (Note 4) 19,434 11,297 36,939
Shareholder and system servicing fees 12,100 10,050 13,200
Audit and legal fees 7,000 7,000 7,000
Trustees' fees 4,100 2,500 4,500
Pricing fees 3,600 2,200 5,000
Custodian fees 2,500 3,500 2,500
Registration fees 1,500 1,200 2,500
Other 6,500 4,150 6,500
- ------------------------------------------------------------------------------------
Total Expenses 118,398 70,717 143,932
Less: Expense reimbursement and
management fee waiver 81,981 56,221 82,856
- ------------------------------------------------------------------------------------
Net Expenses 36,417 14,496 61,076
- ------------------------------------------------------------------------------------
Net Investment Income 475,775 179,307 681,466
- ------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized Loss from Security Transactions
(excluding short-term securities):
Proceeds from sales 2,879,965 1,707,753 4,545,410
Cost of securities sold 2,916,144 1,736,566 4,660,105
- ------------------------------------------------------------------------------------
Net Realized Loss (36,179) (28,813) (114,695)
- ------------------------------------------------------------------------------------
Change in Net Unrealized
Appreciation of Investments:
Beginning of period -- -- --
End of period 274,742 158,585 425,686
- ------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 274,742 158,585 425,686
- ------------------------------------------------------------------------------------
Net Gain on Investments 238,563 129,772 310,991
- ------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 714,338 $ 309,079 $ 992,457
====================================================================================
</TABLE>
(a) For the period from April 4, 1994 (commencement of operations) to March 31,
1995.
(b) For the period from June 13, 1994 (commencement of operations) to March 31,
1995.
See Notes to Financial Statements.
22
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Period Ended March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Georgia Ohio Pennsylvania
Portfolio(a) Portfolio(b) Portfolio(a)
==================================================================================================================
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 475,775 $ 179,307 $ 681,466
Net realized loss from
security transactions (36,179) (28,813) (114,695)
Increase in net unrealized
appreciation of investments 274,742 158,585 425,686
- ------------------------------------------------------------------------------------------------------------------
Increase in Net
Assets From Operations 714,338 309,079 992,457
- ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (476,952) (166,814) (641,755)
- ------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (476,952) (166,814) (641,755)
- ------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from sales of shares 13,961,785 5,899,431 24,437,918
Net asset value of shares issued for
reinvestment of dividends 371,720 121,117 475,982
Cost of shares reacquired (2,204,783) (774,217) (9,103,683)
- ------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 12,128,722 5,246,331 15,810,217
- ------------------------------------------------------------------------------------------------------------------
Increase in Net Assets 12,366,108 5,388,596 16,160,919
NET ASSETS:
Beginning of year -- -- --
- ------------------------------------------------------------------------------------------------------------------
End of year* $ 12,366,108 $ 5,388,596 $ 16,160,919
==================================================================================================================
* Includes undistributed
net investment income of: -- $ 12,493 $ 39,711
==================================================================================================================
</TABLE>
(a) For the period from April 4, 1994 (commencement of operations) to March 31,
1995.
(b) For the period from June 13, 1994 (commencement of operations) to March 31,
1995.
See Notes to Financial Statements.
23
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Georgia, Ohio and Pennsylvania Portfolios ("Portfolios") are separate
investment portfolios of the Smith Barney Muni Funds ("Fund"). The Fund is a
Massachusetts business trust registered under the Investment Company Act of
1940, as amended, as a non-diversified, open-end management investment company
and consists of these Portfolios and ten other separate investment portfolios:
California, Florida, New Jersey, New York, National, Limited Term, California
Limited Term, Florida Limited Term, California Money Market and New York Money
Market Portfolios. The financial statements and financial highlights for the
other portfolios are presented in separate annual reports.
The significant accounting policies consistently followed by the Portfolios
are:(a) security transactions are accounted for on the trade date;(b) securities
are valued at bid 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; short-term securities and securities maturing within 60 days
are valued at cost plus (minus) accreted discount (amortized premium), which
approximates value; (c) gains or losses on the sale of securities are calculated
by using the specific identification method; (d) interest income, adjusted for
amortization of premiums and original issue discount, is recorded on the accrual
basis, market discount is recognized upon the disposition of the security; (e)
direct expenses are charged to each Portfolio and each class; management fees
and general fund expenses are allocated on the basis of relative net assets; (f)
the Portfolios intend to comply with the requirements of the Internal Revenue
Code pertaining to regulated investment companies and to make the required
distributions to shareholders; therefore, no provision for Federal income taxes
has been made; and (g) during 1995, the Fund adopted Statement of Position 93-2
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.
Accordingly, the overdistributed net investment income of $1,177 for the Georgia
Portfolio at March 31, 1995 has been reclassified to paid-in capital. Net
investment income, net realized gains, and net assets were not affected by this
change.
2. PORTFOLIO CONCENTRATION
Since each Portfolio invests primarily in obligations of issuers within
either Georgia, Ohio and Pennsylvania, each portfolio is subject to possible
concentration risks associated with economic, political, or legal developments
or industrial or regional matters specifically affecting the respective state in
which it invests.
24
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
3. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS
The Portfolios intend 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 Portfolio.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually. At March 31, 1995, the Georgia, Ohio and
Pennsylvania Portfolios had net capital loss carryovers of $36,179, $28,813 and
$114,695, respectively, (expiring March 31, 2003) available to offset future
capital gains. To the extent that this carryover loss is used to offset capital
gains it is probable that any gains so offset will not be distributed.
4. MANAGEMENT AFFILIATES AND TRANSACTIONS WITH AFFILIATED PERSONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment manager to the Fund. The
Georgia, Ohio and Pennsylvania Portfolios pay SBMFM a management fee calculated
at the annual rate of 0.45% of their average daily net assets. Such fee is
calculated daily and paid monthly. SBMFM waived all of its management fees for
each of the Portfolios, for the period ended March 31, 1995. SBMFM also has
agreed to reimburse the Portfolios for certain expenses of totalling $42,317,
$41,401 and $32,063 for the Georgia, Ohio and Pennsylvania Portfolios,
respectively.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. SB received sales charges of approximately $394,000 (paid by the
purchasers of the Portfolios' Class A Shares) for the year ended March 31, 1995.
All officers and two Trustees of the Fund are employees of SB.
Effective November 7, 1994, the Fund adopted a new class structure,
renaming Class B shares as Class C shares, Class E shares as Class B shares and
exchanging the former Class C shares into Class A shares. Under the new class
structure, a contingent deferred sales charge ("CDSC") of 4.50% is imposed on
Class B shares if redemption occurs less than one year from initial purchase.
This CDSC declines by 0.50% the first year after purchase and by 1.00% per year
thereafter until no CDSC is incurred. A CDSC of 1.00% is also imposed on Class C
shares if redemption occurs less than one year from initial purchase. Any CDSC
imposed on redemptions is paid to SB. For the year ended March 31, 1995, there
were approximately $19,000 in such charges.
On September 16, 1994, a new Distribution Plan was approved by the
shareholders. Pursuant to this Distribution Plan, the Georgia, Ohio and
Pennsylvania Portfolios pay a service fee of 0.15% of average net assets on an
25
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
annual basis with respect to their Class A, Class B and C shares. In addition,
the Georgia, Ohio and Pennsylvania Portfolios pay a distribution fee of 0.50%
and 0.55% of average net assets on an annual basis with respect to their Class B
and C shares, respectively.
5. INVESTMENTS
During the year ended March 31, 1995, the aggregate cost of purchases and
proceeds from sales (including maturities, but excluding short-term securities)
of investments were as follows:
Georgia Ohio Pennsylvania
Portfolio Portfolio Portfolio
================================================================================
Purchases $14,945,009 $ 6,814,120 $19,282,856
- --------------------------------------------------------------------------------
Sales 2,879,965 1,707,753 4,545,410
================================================================================
At March 31, 1995, the gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were as follows:
Georgia Ohio Pennsylvania
Portfolio Portfolio Portfolio
================================================================================
Gross unrealized appreciation $ 332,564 $ 164,944 $ 444,904
Gross unrealized depreciation (57,822) (6,359) (19,218)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 274,742 $ 158,585 $ 425,686
================================================================================
6. CAPITAL SHARES
At March 31, 1995, there were an unlimited amount of shares of $.001 par
value capital stock authorized. The Fund has established multiple classes of
shares within each Portfolio of the Fund. Each share of a class represents an
identical interest in its respective Portfolio and has the same rights, except
that each class bears certain expenses specifically related to the distribution
of its shares. At March 31, 1995, total paid-in capital amounted to the
following for each class and respective Portfolio:
Portfolio Class A Class B Class C
================================================================================
Georgia $8,371,509 $2,479,208 $1,276,828
Ohio 2,678,837 1,993,147 574,347
Pennsylvania 7,859,426 4,699,265 3,251,526
================================================================================
Transactions in shares of each class were as follows:
26
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Period Ended
March 31, 1995
-----------------------------
Georgia Portfolio Shares Amount
================================================================================
Class A (a)
Shares sold 845,310 $ 10,050,182
Shares issued on reinvestment 25,159 294,082
Shares redeemed (166,466) (1,972,238)
- --------------------------------------------------------------------------------
Net Increase 704,003 $ 8,372,026
================================================================================
Class B (b)+
Shares sold 225,294 $ 2,642,378
Shares issued on reinvestment 3,501 40,774
Shares redeemed (18,075) (203,875)
- --------------------------------------------------------------------------------
Net Increase 210,720 $ 2,479,277
================================================================================
Class C (c)++
Shares sold 106,527 $ 1,269,225
Shares issued on reinvestment 3,151 36,864
Shares redeemed (2,574) (28,670)
- --------------------------------------------------------------------------------
Net Increase 107,104 $ 1,277,419
================================================================================
(a) For the period from April 4, 1994 (inception date) to March 31, 1995.
(b) For the period from June 15, 1994 (inception date) to March 31, 1995.
(c) For the period from April 14, 1994 (inception date) to March 31, 1995.
+ On November 7, 1994 the former Class E shares were renamed Class B shares.
++ On November 7, 1994 the former Class B shares were renamed Class C shares.
27
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ohio Portfolio Pennsylvania Portfolio
---------------------- --------------------------
Period Ended March 31, 1995 Shares Amount Shares Amount
=============================================================================================
<S> <C> <C> <C> <C>
Class A (a)*
Shares sold 258,461 $ 3,004,398 1,367,202 $ 16,434,416
Shares issued on reinvestment 6,332 72,536 27,911 333,727
Shares redeemed (33,653) (398,097) (751,946) (8,908,717)
- ---------------------------------------------------------------------------------------------
Net Increase 231,140 $ 2,678,837 643,167 $ 7,859,426
=============================================================================================
Class B (b)+
Shares sold 199,988 $ 2,331,711 399,935 $ 4,803,754
Shares issued on reinvestment 3,274 37,556 5,025 60,078
Shares redeemed (32,572) (376,120) (13,656) (164,567)
- ---------------------------------------------------------------------------------------------
Net Increase 170,690 $ 1,993,147 391,304 $ 4,699,265
=============================================================================================
Class C (c)++
Shares sold 47,644 $ 563,322 265,002 $ 3,199,748
Shares issued on reinvestment 963 11,025 6,866 82,177
Shares redeemed -- -- (2,592) (30,399)
- ---------------------------------------------------------------------------------------------
Net Increase 48,607 $ 574,347 269,276 $ 3,251,526
=============================================================================================
</TABLE>
(a) For the period from June 13, 1994 (inception date) to March 31, 1995 for
the Ohio Portfolio. For the period from April 4, 1994 (inception date) to
March 31, 1995 for the Pennsylvania Portfolio.
(b) For the period from June 14, 1994 (inception date) to March 31, 1995 for
the Ohio Portfolio. For the period from June 20, 1994 (inception date) to
March 31, 1995 for the Pennsylvania Portfolio.
(c) For the period from June 14, 1994 (inception date) to March 31, 1995 for
the Ohio Portfolio. For the period from April 5, 1994 (inception date) to
March 31, 1995 for the Pennsylvania Portfolio.
* On October 10, 1994 the former Class C shares of the Pennsylvania Portfolio
were exchanged into Class A shares; therefore Class C share activity for
the period from April 4, 1994 to October 9, 1994 is included with Class A
share activity.
+ On November 7, 1994 the former Class E shares were renamed Class B shares.
++ On November 7, 1994 the former Class B shares were renamed Class C shares.
28
<PAGE>
Smith Barney Muni Funds
Georgia Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock oustanding throughout each period:
1995 Class A(a) Class B(b) Class C(c)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.00 $12.27 $12.06
- --------------------------------------------------------------------------------
Income From Investment Operations:
Net investment income (1) 0.62 0.49 0.55
Net realized and unrealized gain (loss)
on investments (2) 0.10 (0.16) 0.04
- --------------------------------------------------------------------------------
Total Income from Investment Operations 0.72 0.33 0.59
- --------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.62) (0.49) (0.56)
Distributions from net realized gains
on security transactions -- -- --
Total Distributions (0.62) (0.49) (0.56)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $12.10 $12.11 $12.09
- --------------------------------------------------------------------------------
Total Return++ 6.29% 2.88% 5.11%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $8,520 $2,551 $1,295
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses (1) 0.28% 0.85% 0.90%
Net investment income 5.43 5.37 5.22
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 34.05% 34.05% 34.05%
================================================================================
(a) For the period from April 4, 1994 (inception date) to March 31, 1995.
(b) For the period from June 15, 1994 (inception date) to March 31, 1995.
(c) For the period from April 14, 1994 (inception date) to March 31, 1995.
++ Not annualized as the result may not be representative of the total return
for the year.
+ Annualized.
(1) The manager has waived all of its fees and reimbursed expenses of $42,317
for the year ended March 31, 1995. If such fees were not waived and
expenses not reimbursed, the per share decrease of net investment income
and the ratios of expenses to average net assets would have been:
Expense Ratios
Per Share Decreases Without Fee Waivers*
------------------- --------------------
Class A $0.12 1.20%+
Class B 0.11 1.82+
Class C 0.12 1.85+
* As a result of voluntary expense limitations, expense ratios would not
exceed 0.80%, 1.30% and 1.35% for Class A, B and C shares, respectively.
(2) Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at net asset values less
than the beginning of the period.
29
<PAGE>
Smith Barney Muni Funds
Ohio Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock oustanding throughout each period:
1995 Class A(a) Class B(b) Class C(c)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.00 $12.02 $12.02
- --------------------------------------------------------------------------------
Income From Investment Operations:
Net investment income (1) 0.52 0.47 0.46
Net realized and unrealized loss
on investments (2) (0.07) (0.10) (0.09)
- --------------------------------------------------------------------------------
Total Income from Investment Operations 0.45 0.37 0.37
- --------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.48) (0.43) (0.43)
Distributions from net realized gains
on security transactions -- -- --
- --------------------------------------------------------------------------------
Total Distributions (0.48) (0.43) (0.43)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $11.97 $11.96 $11.96
- --------------------------------------------------------------------------------
Total Return++ 4.04% 3.31% 3.28%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $2,766 $2,041 $ 582
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses (1) 0.20% 0.72% 0.77%
Net investment income 5.75 5.10 5.09
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 43.84% 43.84% 43.84%
================================================================================
(a) For the period from June 13, 1994 (inception date) to March 31, 1995.
(b) For the period from June 14, 1994 (inception date) to March 31, 1995.
(c) For the period from June 14, 1994 (inception date) to March 31, 1995.
++ Not annualized as the result may not be representative of the total return
for the year.
+ Annualized.
(1) The manager has waived all of its fees and reimbursed expenses of $41,401
for the year ended March 31, 1995. If such fees were not waived and
expenses not reimbursed, the per share decrease of net investment income
and the ratios of expenses to average net assets would have been:
Expense Ratios
Per Share Decreases Without Fee Waivers*
------------------- --------------------
Class A $0.21 1.91%+
Class B 0.25 2.43+
Class C 0.25 2.48+
* As a result of voluntary expense limitations, expense ratios would not
exceed 0.80%, 1.30% and 1.35% for Class A, B and C shares, respectively.
(2) Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at net asset values less
than the beginning of the period.
30
<PAGE>
Smith Barney Muni Funds
Pennsylvania Portfolio
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock oustanding throughout each period:
1995 Class A(a) Class B(b) Class C(c)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.00 $12.35 $12.00
- --------------------------------------------------------------------------------
Income From Investment Operations:
Net investment income (1) 0.67 0.51 0.59
Net realized and unrealized gain
on investments (2) 0.35 0.01 0.36
- --------------------------------------------------------------------------------
Total Income from Investment Operations 1.02 0.52 0.95
- --------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income (0.62) (0.48) (0.56)
Distributions from net realized gains
on security transactions -- -- --
- --------------------------------------------------------------------------------
Total Distributions (0.62) (0.48) (0.56)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $12.40 $12.39 $12.39
- --------------------------------------------------------------------------------
Total Return++ 8.82% 4.43% 8.14%
- --------------------------------------------------------------------------------
Net Assets, End of Period (000s) $7,974 $4,850 $3,337
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses (1) 0.29% 0.82% 0.86%
Net investment income 5.76 5.31 5.04
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 37.60% 37.60% 37.60%
================================================================================
(a) For the period from April 4, 1994 (inception date) to March 31, 1995.
(b) For the period from June 20, 1994 (inception date) to March 31, 1995.
(c) For the period from April 5, 1994 (inception date) to March 31, 1995.
++ Not annualized as the result may not be representative of the total return
for the year.
+ Annualized.
(1) The manager has waived all of its fees and reimbursed expenses of $32,063
for the year ended March 31, 1995. If such fees were not waived and
expenses not reimbursed, the per share decrease of net investment income
and the ratios of expenses to average net assets would have been:
Expense Ratios
Per Share Decreases Without Fee Waivers*
------------------- --------------------
Class A $0.09 1.03%+
Class B 0.08 1.58+
Class C 0.09 1.56+
* As a result of voluntary expense limitations, expense ratios would not
exceed 0.80%, 1.30% and 1.35% for Class A, B and C shares, respectively.
(2) Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at net asset values less
than the beginning of the period.
31
<PAGE>
Smith Barney Muni Funds
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
of the Georgia, Ohio and Pennsylvania Portfolios
of Smith Barney Muni Funds:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Georgia, Ohio and Pennsylvania
Portfolios of Smith Barney Muni Funds as of March 31, 1995, the related
statements of operations, statements of changes in net assets and financial
highlights for the period from April 4, 1994 (commencement of operations) to
March 31, 1995 with respect to the Georgia Portfolio, for the period from June
13, 1994 (commencement of operations) to March 31, 1995 with respect to the Ohio
Portfolio, and for the period from April 4, 1994 (commencement of operations) to
March 31, 1995 with respect to the Pennsylvania Portfolio. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Georgia, Ohio and
Pennsylvania Portfolios of Smith Barney Muni Funds as of March 31, 1995, the
results of their operations, the changes in their net assets and the financial
highlights for the period from April 4, 1994 (commencement of operations) to
March 31, 1995 with respect to the Georgia Portfolio, for the period from June
13, 1994 (commencement of operations) to March 31, 1995 with respect to the Ohio
Portfolio, and for the period from April 4, 1994 (commencement of operations) to
March 31, 1995 with respect to the Pennsylvania Portfolio, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LL
New York, New York
May 15, 1995
32
<PAGE>
Smith Barney
Muni Funds
Trustees
Jessica M. Bibliowicz
Ralph D. Creasman
Joseph H. Fleiss
Donald R. Foley
Paul Hardin
Francis P. Martin, M.D.
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
C. Richard Youngdahl
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Daniel Malone
Vice President
Larry T. McDermott
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Smith Barney
A Member of Travelers Group[LOGO]
Investment Manager
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder
Servicing Agent
The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for
the general information of the
shareholders of Smith Barney
Muni Funds, Georgia, Ohio
and Pennsylvania Portfolios. It is not
authorized for distribution to prospective
investors unless accompanied or preceded
by a current Prospectus for the Fund,
which contains information concerning
the Fund's investment policies and
expenses as well as other pertinent
information.
Smith Barney Muni Funds
388 Greenwich Street
New York, New York 10013
FD0867 E5 82110
<PAGE>
GRAPHICS APPENDIX LIST
----------------------
EDGAR Version Typeset Version
- ------------- ---------------
Cover -
California Photo of a highway on the coast
Cover - Limited
Term Photo of a monument at night
Cover - National Photo of a canyon
Cover - New
Jersey Photo of a mill on a river
Cover - New
York Photo of a forest in a mountain
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> NATIONAL PORTFOLIO - CLASS A
<NUMBER> 1
<S> <C>
<PERIOD-TYPE> YEAR
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<NAME> NATIONAL PORTFOLIO - CLASS B
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<TABLE> <S> <C>
<PAGE>
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<NAME> NATIONAL PORTFOLIO - CLASS C
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<TABLE> <S> <C>
<PAGE>
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<NAME> LIMITED TERM PORTFOLIO-CLASS A
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> LIMITED TERM PORTFOLIO-CLASS C
<NUMBER> 5
<S> <C>
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<PERIOD-START> APR-01-1994
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> CALIFORNIA MONEY MARKET PORTFOLIO CLASS A
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> CALIFORNIA LIMITED TERM PORTFOLIO - CLASS A
<NUMBER> 7
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> CALIFORNIA LIMITED TERM PORTFOLIO-CLASS C
<NUMBER> 8
<S> <C>
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<FISCAL-YEAR-END> MAR-31-1995
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> CALIFORNIA LIMITED TERM PORTFOLIO-CLASS Y
<NUMBER> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
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<NET-CHANGE-IN-ASSETS> (3,189,035)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> CALIFORNIA PORTFOLIO - CLASS A
<NUMBER> 10
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
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<NUMBER-OF-SHARES-SOLD> 2,324,798
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> CALIFORNIA PORTFOLIO - CLASS B
<NUMBER> 11
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> NOV-11-1994
<PERIOD-END> MAR-31-1995
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<OVERDISTRIBUTION-GAINS> 0
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<EXPENSES-NET> 1,072,164
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<DISTRIBUTIONS-OF-GAINS> (734)
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<NUMBER-OF-SHARES-SOLD> 84,879
<NUMBER-OF-SHARES-REDEEMED> (35,955)
<SHARES-REINVESTED> 480
<NET-CHANGE-IN-ASSETS> (7,229,971)
<ACCUMULATED-NII-PRIOR> 234,105
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<PER-SHARE-NAV-BEGIN> 11.52
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> CALIFORNIA PORTFOLIO - CLASS C
<NUMBER> 12
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 163,257,338
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<RECEIVABLES> 2,916,770
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<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 1,072,164
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<DISTRIBUTIONS-OF-GAINS> (1)
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<NUMBER-OF-SHARES-SOLD> 161,193
<NUMBER-OF-SHARES-REDEEMED> (129,420)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> FLORIDA LIMITED TERM PORTFOLIO-CLASS A
<NUMBER> 13
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 18,822,690
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<TOTAL-ASSETS> 19,337,348
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<OVERDISTRIBUTION-GAINS> (514,327)
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<NET-ASSETS> 18,522,919
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,193,395
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<EXPENSES-NET> 101,810
<NET-INVESTMENT-INCOME> 1,091,585
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<NUMBER-OF-SHARES-SOLD> 1,317,436
<NUMBER-OF-SHARES-REDEEMED> (2,113,417)
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<NET-CHANGE-IN-ASSETS> (4,974,519)
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<ACCUMULATED-GAINS-PRIOR> (3,261)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> FLORIDA LIMITED TERM PORTFOLIO CLASS C
<NUMBER> 14
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 18,822,690
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<NET-CHANGE-IN-ASSETS> (4,974,519)
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<PER-SHARE-DISTRIBUTIONS> (0.31)
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> FLORIDA PORTFOLIO - CLASS A
<NUMBER> 15
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 106,405,261
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<NUMBER-OF-SHARES-SOLD> 2,038,171
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> FLORIDA PORTFOLIO CLASS B
<NUMBER> 16
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> NOV-16-1994
<PERIOD-END> MAR-31-1995
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> FLORIDA PORTFOLIO-CLASS C
<NUMBER> 17
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> NEW JERSEY PORTFOLIO CLASS-A
<NUMBER> 18
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 58,993,068
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> NEW JERSEY PORTFOLIO-CLASS B
<NUMBER> 19
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> NOV-16-1994
<PERIOD-END> MAR-31-1995
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<OVERDISTRIBUTION-GAINS> (999,309)
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<REALIZED-GAINS-CURRENT> (893,607)
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<DISTRIBUTIONS-OF-INCOME> (9,928)
<DISTRIBUTIONS-OF-GAINS> 20
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<NUMBER-OF-SHARES-SOLD> 81,393
<NUMBER-OF-SHARES-REDEEMED> (786)
<SHARES-REINVESTED> 667
<NET-CHANGE-IN-ASSETS> (9,253,988)
<ACCUMULATED-NII-PRIOR> 3,798,018
<ACCUMULATED-GAINS-PRIOR> (73,918)
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 446,981
<AVERAGE-NET-ASSETS> 67,052,851
<PER-SHARE-NAV-BEGIN> 12.26
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> 1.00
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.29)
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<EXPENSE-RATIO> 1.23
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> NEW JERSEY PORTFOLIO-CLASS C
<NUMBER> 20
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 58,993,068
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<RECEIVABLES> 1,497,562
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<TOTAL-ASSETS> 62,724,406
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> (999,309)
<ACCUM-APPREC-OR-DEPREC> 1,924,307
<NET-ASSETS> 62,651,151
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,399,983
<OTHER-INCOME> 0
<EXPENSES-NET> 466,981
<NET-INVESTMENT-INCOME> 3,953,002
<REALIZED-GAINS-CURRENT> (893,607)
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<DISTRIBUTIONS-OF-INCOME> (174,067)
<DISTRIBUTIONS-OF-GAINS> (458)
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<NUMBER-OF-SHARES-SOLD> 49,774
<NUMBER-OF-SHARES-REDEEMED> (37,013)
<SHARES-REINVESTED> 9,488
<NET-CHANGE-IN-ASSETS> (9,253,988)
<ACCUMULATED-NII-PRIOR> 3,798,018
<ACCUMULATED-GAINS-PRIOR> (73,918)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 301,338
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 446,981
<AVERAGE-NET-ASSETS> 67,052,851
<PER-SHARE-NAV-BEGIN> 13.22
<PER-SHARE-NII> 0.69
<PER-SHARE-GAIN-APPREC> 0.06
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.69)
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<PER-SHARE-NAV-END> 13.28
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> NEW YORK MONEY MARKET PORTFOLIO CLASS A
<NUMBER> 21
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 704,512,914
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<RECEIVABLES> 19,149,346
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<SHARES-COMMON-STOCK> 708,690,582
<SHARES-COMMON-PRIOR> 82,461,775
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (299,793)
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 708,390,789
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<INTEREST-INCOME> 11,072,590
<OTHER-INCOME> 0
<EXPENSES-NET> (2,069,459)
<NET-INVESTMENT-INCOME> 9,003,131
<REALIZED-GAINS-CURRENT> 6,951
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<DISTRIBUTIONS-OF-INCOME> (8,962,020)
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<NUMBER-OF-SHARES-SOLD> 2,032,275,367
<NUMBER-OF-SHARES-REDEEMED> (1,414,406,279)
<SHARES-REINVESTED> 8,014,448
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<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,844)
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<GROSS-EXPENSE> 2,069,459
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<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.025
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<PER-SHARE-DISTRIBUTIONS> (0.025)
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> NEW YORK PORTFOLIO-CLASS A
<NUMBER> 22
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 89,336,377
<INVESTMENTS-AT-VALUE> 92,507,288
<RECEIVABLES> 1,678,992
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<PAID-IN-CAPITAL-COMMON> 80,788,614
<SHARES-COMMON-STOCK> 6,449,188
<SHARES-COMMON-PRIOR> 5,459,822
<ACCUMULATED-NII-CURRENT> 3,788
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,310,119)
<ACCUM-APPREC-OR-DEPREC> 3,170,911
<NET-ASSETS> 92,476,987
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,532,297
<OTHER-INCOME> 0
<EXPENSES-NET> 567,135
<NET-INVESTMENT-INCOME> 4,965,162
<REALIZED-GAINS-CURRENT> (804,270)
<APPREC-INCREASE-CURRENT> 1,186,302
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<DISTRIBUTIONS-OF-INCOME> (4,602,508)
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 2,286,499
<NUMBER-OF-SHARES-REDEEMED> (1,632,862)
<SHARES-REINVESTED> 177,827
<NET-CHANGE-IN-ASSETS> 14,924,089
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 567,135
<AVERAGE-NET-ASSETS> 83,567,673
<PER-SHARE-NAV-BEGIN> 12.83
<PER-SHARE-NII> 0.76
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.77)
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<EXPENSE-RATIO> 0.63
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> NEW YORK PORTFOLIO-CLASS B
<NUMBER> 23
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> NOV-11-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 89,336,377
<INVESTMENTS-AT-VALUE> 92,507,288
<RECEIVABLES> 1,678,992
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<TOTAL-ASSETS> 94,226,356
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<TOTAL-LIABILITIES> 1,749,369
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<PAID-IN-CAPITAL-COMMON> 3,634,969
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3,788
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,310,119)
<ACCUM-APPREC-OR-DEPREC> 3,170,911
<NET-ASSETS> 92,476,987
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,532,297
<OTHER-INCOME> 0
<EXPENSES-NET> 567,135
<NET-INVESTMENT-INCOME> 4,965,162
<REALIZED-GAINS-CURRENT> (804,270)
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<DISTRIBUTIONS-OF-INCOME> (228,092)
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<NUMBER-OF-SHARES-SOLD> 300,125
<NUMBER-OF-SHARES-REDEEMED> (6,056)
<SHARES-REINVESTED> 2,867
<NET-CHANGE-IN-ASSETS> 14,924,089
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<AVERAGE-NET-ASSETS> 83,567,673
<PER-SHARE-NAV-BEGIN> 11.96
<PER-SHARE-NII> 0.31
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<PER-SHARE-DISTRIBUTIONS> (0.29)
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> NEW YORK PORTFOLIO CLASS-C
<NUMBER> 24
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
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<SHARES-COMMON-PRIOR> 425,953
<ACCUMULATED-NII-CURRENT> 3,788
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,310,119)
<ACCUM-APPREC-OR-DEPREC> 3,170,911
<NET-ASSETS> 92,476,987
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,532,297
<OTHER-INCOME> 0
<EXPENSES-NET> 567,135
<NET-INVESTMENT-INCOME> 4,965,162
<REALIZED-GAINS-CURRENT> (804,270)
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<DISTRIBUTIONS-OF-INCOME> (196,832)
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<NUMBER-OF-SHARES-SOLD> 148,675
<NUMBER-OF-SHARES-REDEEMED> (133,522)
<SHARES-REINVESTED> 18,547
<NET-CHANGE-IN-ASSETS> 14,924,089
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 567,135
<AVERAGE-NET-ASSETS> 83,567,673
<PER-SHARE-NAV-BEGIN> 12.82
<PER-SHARE-NII> 0.68
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<PER-SHARE-DISTRIBUTIONS> (0.68)
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<EXPENSE-RATIO> 1.28
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> GEORGIA PORTFOLIO - CLASS A
<NUMBER> 25
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-04-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 12,054,439
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<PAID-IN-CAPITAL-COMMON> 8,371,509
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (36,179)
<ACCUM-APPREC-OR-DEPREC> 274,742
<NET-ASSETS> 12,366,108
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<INTEREST-INCOME> 512,192
<OTHER-INCOME> 0
<EXPENSES-NET> 36,417
<NET-INVESTMENT-INCOME> 475,775
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<NUMBER-OF-SHARES-SOLD> 845,310
<NUMBER-OF-SHARES-REDEEMED> (166,466)
<SHARES-REINVESTED> 25,159
<NET-CHANGE-IN-ASSETS> 12,366,108
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<GROSS-ADVISORY-FEES> 39,664
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<GROSS-EXPENSE> 118,398
<AVERAGE-NET-ASSETS> 9,048,059
<PER-SHARE-NAV-BEGIN> 12.00
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> 0.10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.62)
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<PER-SHARE-NAV-END> 12.10
<EXPENSE-RATIO> .28
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> GEORGIA PORTFOLIO - CLASS B
<NUMBER> 26
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> JUN-15-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 12,054,439
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (36,179)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> GEORGIA PORTFOLIO - CLASS C
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> OHIO PORTFOLIO-CLASS A
<NUMBER> 28
<S> <C>
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<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> JUN-13-1994
<PERIOD-END> MAR-31-1995
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> OHIO PORTFOLIO-CLASS B
<NUMBER> 29
<S> <C>
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<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> JUN-14-1994
<PERIOD-END> MAR-31-1995
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> OHIO PORTFOLIO-CLASS C
<NUMBER> 30
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> JUN-14-1994
<PERIOD-END> MAR-31-1995
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> PENNSYLVANIA PORTFOLIO - CLASS A
<NUMBER> 31
<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> PENNSYLVANIA PORTFOLIO - CLASS B
<NUMBER> 32
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NAME> PENNSYLVANIA PORTFOLIO - CLASS C
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<S> <C>
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</TABLE>
