<PAGE>
ANNUAL REPORT NOVEMBER 30, 1993
[GRAPHIC]
SMALL BOX ABOVE FUND NAME SHOWING
CERTIFICATES, DRAFTING PAPERS AND A
MEASURING TOOL.
SMITH BARNEY SHEARSON
LIMITED
MATURITY
MUNICIPALS
FUND
[LOGO]
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
DEAR SHAREHOLDER:
We are pleased to provide the annual report for Smith Barney Shearson
Limited
Maturity Municipals Fund for the fiscal year ended November 30, 1993. During
the
past year the net asset value of the Fund increased to $8.26 from $8.07, and
the
Fund paid dividends totaling $0.36 per share. The total return on your
investment during the past fiscal year was 6.98%. This total return earned the
Fund a first quartile ranking from Lipper Analytical Services, Inc., a
nationally recognized mutual fund ranking organization. We are pleased with
this
performance, and will endeavor to provide similarly-attractive relative
performance in future years.
LIMITED MATURITY MUNICIPALS INVESTMENT PERFORMANCE
To allow you to compare the performance of your investment in the Fund to
that of the general market, we have included a chart showing the values of
$10,000 invested in the Fund since its inception and in the Lehman Brothers
Five-Year Municipal Bond Index. The Lehman Brothers Five-Year Municipal Bond
Index is an unmanaged, broad-based index which includes about 3,400 tax-free
issues totaling approximately $39 billion in market capitalization. The
average
maturity of the securities in the Index is approximately 5.09 years; in
comparison, the average maturity of the securities in the Fund is 4.6 years.
Like the Fund, the Index includes issues drawn from a diverse range of market
sectors, including general obligation, revenue and insured bonds that are
rated
investment grade (AAA to BAA). Because it is unmanaged, the Lehman Brothers
Five-Year Municipal Index is not subject to the same management and trading
expenses of a mutual fund.
THE MUNICIPAL MARKET AND THE ECONOMIC ENVIRONMENT
By the end of 1993, the tax-exempt market will have set a record for bond
issuance of approximately $300 billion. Municipalities, like individuals, took
advantage of the low level of interest rates and used it as an opportunity to
refinance higher interest rate debt. About 75% of these new issues will be
used
to retire the higher interest rate debt that was issued in the early 1980s.
Investors consequently have faced a high rate of bond calls during the past
year, and we anticipate that this is something they will have to contend with
in
1994 as well. We expect that in 1994 the volume of new issuance will once
again
be in the more traditional range of $150 to $175
CONTINUED
1
<PAGE>
billion. Although the supply of municipal securities was very high during the
Fund's fiscal year, demand was equally high. Investors whose bonds were called
or retired sought to replace them with new issues, and the passage of a
retroactive tax increase in August buoyed demand for tax-exempt issues.
The market suffered from some periodic weakness throughout the year, and
especially at the end of the year, but we are optimistic that it will regain
its
strength in early 1994. We think this will likely begin in earnest once the
higher withholding rates go into effect, and again when people begin preparing
their 1993 income taxes. We don't anticipate a surge in the inflation rate
because the increase in economic growth and consumer confidence will be offset
by higher Federal tax rates and uncertainty over the cost of health care
reform.
PORTFOLIO STRATEGY
We continue to invest the Fund's holdings in high quality investments. At
the
end of its fiscal year, 96% of the Fund was invested in issues rated BBB or
higher (investment grade) by either Standard & Poor's Corporation or Moody's
Investor Services. We believe that this strategy was partially responsible for
the Fund's excellent investment returns and low market fluctuations. We have
concentrated our investments in the Fund in general obligation securities,
high
quality hospital issues which are additionally secured by insurance, housing,
essential utility, and education issues. It is our opinion that this
diversified, high quality approach to the intermediate-term market best serves
the interests of the Fund's investors.
DIVIDEND POLICY
The Fund does not pay a level monthly dividend rate but instead distributes
to shareholders the accrued monthly income earned by the portfolio. We will
continue to strive to offer an attractive dividend distribution as we also
face
declining interest rates and rising volatility.
We appreciate the confidence you continue to place in us, and will continue
to strive to maintain your trust.
Sincerely,
Heath B. McLendon Lawrence T. McDermott
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
January 5, 1994
2
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS November 30, 1993
(unaudited)
INDUSTRY BREAKDOWN
Pie chart depicting the allocation of the Income Trust Limited Maturity
Municipals Fund investment securities held at November 30, 1993 by industry
classification. The pie is broken in pieces representing industries in the
following percentages:
<TABLE>
<CAPTION>
INDUSTRY PERCENTAGE
<S> <C>
Pollution Control Revenue 4.7%
Net Other Assets & Short-Term
Investments 3.2%
General Obligation 33.8%
Industrial Development Revenue 3.9%
Housing 9.0%
Other Municipal Bonds 2.2%
Education 7.5%
Hospital & Life Care 17.1%
Transportation 7.4%
Utilities 11.2%
</TABLE>
SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS
<TABLE>
<CAPTION>
Standard & Percent of
Moody's Poor's Market Value
<S> <C> <C> <C>
- -----------------------------------------------
Aaa OR AAA 28.6%
- -----------------------------------------------
Aa AA 21.3
- -----------------------------------------------
A A 22.9
- -----------------------------------------------
Baa BBB 18.5
- -----------------------------------------------
VMIG1 A-1 5.3
- -----------------------------------------------
NR NR 3.4
- -----------------------------------------------
100.0%
----------------
</TABLE>
AVERAGE MATURITY: 4.6 years
3
<PAGE>
HISTORICAL PERFORMANCE (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD NET ASSET VALUE CAPITAL GAINS DIVIDENDS
TOTAL
ENDED BEGINNING ENDING DISTRIBUTED PAID
RETURN**
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
- --
12/31/91*-
11/30/92 $7.90 $8.07 $-- $0.36
6.88%
- ------------------------------------------------------------------------------
- --
11/30/93 8.07 8.26 0.00+ 0.36
6.98
- ------------------------------------------------------------------------------
- --
TOTAL $0.00+ $0.72
- ------------------------------------------------------------------------------
- --
CUMULATIVE TOTAL RETURN - (12/31/91 THROUGH 11/30/93)
14.33%
- ------------------------------------------------------------------------------
- --
<FN>
*The Fund commenced operations on December 31, 1991.
**Figures assume reinvestment of all dividends and capital gains distributions
and do not reflect deduction of the applicable sales charges.
+Amount represents less than $0.01 per share.
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY
AND CAPITAL GAINS, IF ANY, ANNUALLY.
AVERAGE ANNUAL TOTAL RETURN*** (UNAUDITED)
<TABLE>
<CAPTION>
WITHOUT FRONT END
WITH FRONT END
AND CONTINGENT
AND CONTINGENT
DEFERRED SALES CHARGES
DEFERRED SALES CHARGES
WITH WAIVER WITHOUT WAIVER WITH
WAIVER WITHOUT WAIVER
<S> <C> <C> <C>
<C>
- ------------------------------------------------------------------------------
- -------
YEAR ENDED 11/30/93 6.98% 6.59%
4.65% 4.27%
- ------------------------------------------------------------------------------
- -------
INCEPTION (12/31/91) THROUGH 11/30/93 7.24% 6.69%
6.54% 6.00%
- ------------------------------------------------------------------------------
- -------
<FN>
***Shares of the Fund are subject to a maximum 1.25% front-end sales charge
and
a maximum 1% contingent deferred sales charge (CDSC). All total return
figures shown reflect the reinvestment of dividends and capital gains. The
Fund waived fees from December 31, 1991 to the present; a shareholder's
actual return for the period during which fees were waived would be the
higher of the two numbers shown.
</TABLE>
4
<PAGE>
A line graph depicting the total growth (including reinvestment of dividends
and
capital gains) of a hypothetical investment of $10,000 in Limited Maturity
Municipals Fund shares on December 31, 1991 through November 30, 1993 as
compared with the growth of a $10,000 investment in Lehman Brothers 5 Year
Municipal Bond Index and Lipper Peer Group Average Index. The plot points used
to draw the line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000 GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN THE INVESTMENT IN THE
MONTH INVESTED IN SHARES OF LEHMAN BROTHERS 5 LIPPER PEER GROUP
ENDED THE FUND YEAR MUNI BOND INDEX AVERAGE INDEX
<S> <C> <C> <C>
12/91 $ 9,875 $10,000 $10,000
01/92 9,905 10,029 10,041
03/92 9,965 10,005 10,069
06/92 10,217 10,342 10,310
09/92 10,429 10,611 10,500
12/92 10,628 10,762 10,648
03/93 10,872 11,005 10,858
06/93 11,088 11,302 11,029
09/93 11,300 11,562 11,198
11/93 11,290 11,531 11,207
</TABLE>
+ Hypothetical illustration of $10,000 invested at inception on December 31,
1991 through November 30, 1993 compared to the Lehman Brothers 5-year
Municipal Bond Index and Lipper Peer Group Average Index. Investment assumes
deduction of the front-end sales charge and CDSC.
The Lehman Brothers 5-Year Municipal Bond Index is an unmanaged, broad-based
index which includes about 3,400 tax-free issues totaling approximately $39
billion in market capitalization. The average maturity of the securities in
the index is approximately 5.09 years.
The Lipper Analytical Services, Inc. Peer Group Average Index is composed of
an average of the Fund's peer group of mutual funds (25 as of November 30,
1993) investing in limited maturity municipal securities.
This period was one in which municipal bond prices fluctuated and the
results
should not be considered as a representation of the dividend income or
capital
gain or loss which may be realized from an investment in the Fund today. No
adjustment has been made for shareholder tax liability on dividends or
capital
gains.
NOTE: All figures cited here and on the following pages represent past
performance of the Fund and do not guarantee future results.
FOR A GLOSSARY OF TERMS, PLEASE TURN TO THE END OF THIS REPORT.
5
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------
PORTFOLIO OF INVESTMENTS November 30,
1993
<TABLE>
<S> <C>
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
CONNIE LEE -- College Construction Loan Association
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Administration
FSA -- Financial Security Assurance
MBIA -- Municpal Bond Investor Assurance
</TABLE>
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
<C> <S> <C> <C>
<C>
-----------------------------------------------------------------------------
- --------
MUNICIPAL BONDS AND NOTES -- 94.8%
ALASKA -- 1.9%
North Slope Boro, Alaska:
$ 500,000 Series A, (MBIA Insured),
4.650% due 6/30/97 Aaa AAA
$ 509,375
1,300,000 4.850% due 6/30/98 Aaa AAA
1,329,250
ARIZONA -- 0.9%
810,000 Yuma & La Paz County, Arizona, Community
College District, (Arizona Western
College), (AMBAC Insured)
6.2% due 7/1/98 Aaa AAA
872,775
CALIFORNIA -- 1.6%
1,000,000 Central Valley, California, Financing
Authority, Cogeneration Project Revenue,
(Carson Inc.),
5.000% due 7/1/98 NR BBB
997,500
500,000 San Francisco, California, Bay Area Rapid
Transit District, Sales Tax Revenue, (AMBAC
Insured),
4.600% due 7/1/97 Aaa AAA
508,125
COLORADO -- 4.0%
610,000 Arapahoe County, Colorado, Certificates of
Participation, (AMBAC Insured),
5.400% due 12/1/96 Aaa AAA
638,975
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
COLORADO -- (CONTINUED)
$ 415,000 Colorado Housing Finance Authority, Single
Family Project, Series A3,
5.750% due 5/1/97 NR AA
$ 427,969
Denver, Colorado, City & County Airport
Authority:
1,190,000 Series C,
5.750% due 11/15/97 Baa1 BBB
1,230,163
1,000,000 Series D,
6.800% due 11/15/97 Baa1 BBB
1,065,000
500,000 Meridian, Colorado, Metropolitan District
Refunding,
7.000% due 12/1/97 A3 NR
538,125
CONNECTICUT -- 0.7%
625,000 New Haven, Connecticut, General Obligation,
Series B,
5.700% due 12/1/97 Baa
BBB- 646,094
DISTRICT OF COLUMBIA -- 1.6%
1,290,000 District of Columbia, Certificates of
Participation,
6.000% due 1/1/97 NR BBB
1,304,512
250,000 District of Columbia, General Obligation,
Series A,
5.000% due 6/1/98 Baa A-
252,813
FLORIDA -- 2.4%
1,125,000 Dade County, Florida, Health Facilities
Authority, Series A (Baptist Hospital,
Miami),
5.75% due 5/1/16 NR A+
1,185,469
500,000 Florida Housing Finance Agency, Adjustable
Multifamily Mortgage, Series QQ, (FSA
Insured),
5.500% due 11/1/07 Aaa AAA
511,875
625,000 South Broward, Florida, Hospital District,
(AMBAC Insured)
4.350% due 5/1/98 Aaa AAA
627,344
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
GEORGIA -- 3.2%
$1,475,000 Georgia, State, Series D, General
Obligation,
6.500% due 8/1/98 Aaa AA+
$ 1,626,188
1,250,000 Municipal Electric Authority of Georgia,
Special Obligation Refunding, Second
Crossover Series,
8.125% due 1/1/17 A1 AA-
1,432,812
IDAHO -- 0.4%
365,000 Idaho Housing Agency, Single Family
Mortgage, Refunding,
5.500% due 1/1/97 Aa NR
374,581
ILLINOIS -- 8.0%
250,000 Hoffman Estates, Illinois, Tax Increment
Revenue, Junior Lien, (Hoffman Estates
Development Project),
6.500% due 5/15/01 Baa1
BBB+ 269,063
1,000,000 Illinois Development Financing Authority
Revenue, (Catholic Charities Housing),
Series A,
5.000% due 1/1/28 Aa2 NR
1,028,750
500,000 Illinois Educational Facilities Authority,
Revenue, (Museum of Science and Industry),
5.625% due 10/1/26 Aa3 NR
515,625
Illinois Health Facilities Authority,
Refunding:
1,040,000 (Children's Memorial Hospital),
(MBIA Insured),
6.000% due 8/15/98 Aaa AAA
1,111,500
1,045,000 (Delnor Community Hospital),
(FSA Insured),
4.500% due 5/15/98 Aaa AAA
1,048,919
1,650,000 Joliet, Illinois, Corporate Purpose, (MBIA
Insured),
5.4% due 1/1/98 Aaa AAA
1,713,937
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
ILLINOIS -- (CONTINUED)
$1,000,000 St. Clair County, Illinois, General
Obligation, (FGIC Insured),
4.600% due 10/1/98 Aaa AAA
$ 1,010,000
1,000,000 State of Illinois, General Obligation,
4.500% due 8/1/98 Aa AA-
1,012,500
INDIANA -- 1.2%
415,000 Indiana Bond, Bank Special Project, Series
F,
5.800% due 8/1/97 NR A
437,825
750,000 Warrick County, Indiana, Environmental
Improvement, (Southern Indiana Gas &
Electric Project), Series A,
4.650% due 5/1/28 Aa2 AA
760,313
IOWA -- 4.8%
500,000 Iowa State, Certificates of Participation,
Series A, (AMBAC Insured),
5.400% due 7/1/96 Aaa AAA
518,750
500,000 Iowa State, Housing Finance Authority,
Single Family Mortgage, Series F,
(AMBAC Insured),
5.150% due 1/1/98 Aaa AAA
517,500
350,000 Iowa Student Loan Liquidity Corporation,
Student Loan Revenue, Series A,
6.000% due 3/1/98 Aa1 NR
368,375
2,000,000 LeClaire, Iowa, Electric Revenue, Series B,
4.125% due 9/1/26 NR NR
2,010,000
1,190,000 Sioux City, Iowa, Hospital Revenue
Refunding, (Sisters of Mercy Health),
Series D, (MBIA Insured)
5.000% due 8/15/98 Aaa AAA
1,222,725
LOUISIANA -- 1.5%
330,000 Louisiana Public Facilities Revenue,
Student Loan, Louisiana Opportunity Loan,
Series D, (FSA Insured),
5.700% due 1/1/97 Aaa AAA
344,025
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
LOUISIANA -- (CONTINUED)
$ 500,000 Louisiana State Refunding, Series A,
Capital Guaranty,
6.600% due 8/1/97 Baa1 AAA
$ 542,500
500,000 New Orleans, Louisiana, Exhibit Hall
Authority, Hotel Occupancy Tax Revenue,
(AMBAC Insured),
5.250% due 1/15/97 Aaa AAA
520,000
KENTUCKY -- 1.1%
990,000 University of Louisville, Kentucky, Series
J,
4.875% due 5/1/98 A AA-
1,013,512
MAINE -- 0.3%
250,000 Maine Health & Higher Educational
Facilities, Special Obligation Revenue,
Medium Term Facilities, (FSA Insured),
5.500% due 7/1/97 Aaa AAA
260,000
MARYLAND -- 0.3%
320,000 Montgomery County, Maryland, Housing
Authority, Multifamily Revenue, Series 85A,
Guaranteed, (Hunt Club),
6.000% due 2/1/97 NR AA
323,600
MASSACHUSETTS -- 9.1%
750,000 Lowell, Massachusetts, General Obligation,
5.500% due 8/15/97 Baa1 NR
775,313
1,000,000 Massachusetts Housing Finance Agency,
Housing Projects, Series A,
4.600% due 10/1/97 A1 A+
1,013,750
Massachusetts Municipal Electric Wholesale
Company, Power Supply System Revenue:
Series C:
285,000 5.800% due 7/1/96 Baa1
BBB+ 294,262
205,000 6.000% due 7/1/97 Baa1
BBB+ 214,481
Series E:
250,000 4.800% due 7/1/96 Baa1
BBB+ 252,500
100,000 5.100% due 7/1/97 Baa1
BBB+ 101,875
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
MASSACHUSETTS -- (CONTINUED)
$ 500,000 Massachusetts State Convention Center,
(Hynes Convention Center), Series A,
5.450% due 9/1/96 A A+
$ 517,500
445,000 Massachusetts State Health and Educational
Facilities Authority, Medical Center of
Central Massachusetts, Series A,
6.000% due 7/1/97 A A-
470,031
Massachusetts Water Resources Authority:
500,000 Series A,
5.600% due 7/15/96 A A-
518,750
1,000,000 Series B,
4.600% due 3/1/98 A A-
1,008,750
300,000 New Bedford, Massachusetts, General
Obligation,
4.900% due 3/1/98 Baa1 NR
300,375
New England Educational Loan Marketing
Corporation:
1,000,000 Student Loan, Series B,
5.000% due 6/1/98 A1 A-
1,017,500
1,000,000 Student Loan, Series C,
4.750% due 7/1/98 A1 A-
1,008,750
500,000 Plymouth County, Massachusetts,
Certificates of Participation, Series A,
5.700% due 10/1/96 NR
BBB- 515,625
720,000 Springfield, Massachusetts, School Project,
Series B,
5.300% due 9/1/97 Baa1 NR
741,600
MICHIGAN -- 2.2%
750,000 Detroit, Michigan, District State Aid,
5.625% due 5/1/97 Baa1
BBB+ 772,500
250,000 Michigan Higher Education Student Loan,
Education Revenue, Series XIV-A,
5.400% due 10/1/96 A NR
257,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
MICHIGAN -- (CONTINUED)
$1,030,000 Michigan Municipal Bd. Authority, Equipment
and Real Property Financing, Series G, (FSA
Insured),
4.600% due 5/1/97 Aaa AAA
$ 1,045,450
MISSISSIPPI -- 1.3%
1,175,000 State of Mississippi, Capital Improvement,
Series A,
6.000% due 8/1/98 AA AA-
1,273,406
NEVADA -- 2.3%
1,000,000 Clark County, Nevada, Airport Systems
Revenue, (MBIA Insured),
7.500% due 7/1/97 Aaa AAA
1,112,500
1,000,000 Clark County, Nevada, General Obligation,
(FGIC Insured),
7.500% due 7/1/04 Aaa AAA
1,152,500
NEW HAMPSHIRE -- 0.3%
275,000 New Hampshire Higher Education & Health
Authority Revenue, (Elliot Hospital of
Manchester), (AMBAC Insured),
5.700% due 10/1/97 Aaa AAA
289,094
NEW JERSEY -- 6.8%
500,000 Atlantic County, New Jersey, Utilities
Authority, Solid Waste Revenue,
6.250% due 3/1/97 Baa NR
523,125
435,000 Camden County, New Jersey, Pollution
Control, Finance Authority, Solid Waste
Resource Recovery Revenue, Series C,
6.350% due 12/1/97 Baa1
BBB+ 467,625
1,075,000 Hudson County, New Jersey, Improvement
Authority,
5.750% due 1/1/98 NR
BBB- 1,104,563
500,000 New Jersey Health Care Facilities Center,
(Atlantic City Medical Center), Series C,
5.600% due 7/1/96 A A-
518,125
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
NEW JERSEY -- (CONTINUED)
$1,250,000 New Jersey State, Certificates of
Participation, (Centrex), Series B,
5.000% due 5/1/97 A1 A+
$ 1,276,562
2,000,000 New Jersey State, Turnpike Authority,
Series A
6.000% due 1/1/98 A A
2,127,500
500,000 South Jersey Port Authority, Marine
Terminal, Series H,
4.450% due 1/1/98 NR A+
500,000
NEW MEXICO -- 0.5%
475,000 New Mexico Mortgage Finance Authority,
Single Family, Series A1,
5.500% due 1/1/97 Aa AA
488,656
NEW YORK -- 8.2%
1,450,000 Babylon, New York, Industrial Development
Authority, Babylon Community Waste
Management, Series A,
7.650% due 7/1/97 Baa1 NR
1,618,563
600,000 Metropolitan Transit Authority, New York,
Service Contract Transit Fees, Series 5,
6.100% due 7/1/98 Baa1 BBB
633,000
New York, New York, General Obligation:
750,000 Series C,
5.400% due 8/1/97 Baa1 A-
768,750
1,000,000 Series I,
6.000% due 8/1/96 Baa1 A-
1,042,500
200,000 New York State Certificates of
Participation,
5.150% due 2/1/98 Baa1 BBB
202,250
750,000 New York State Dormitory Authority Revenue,
Series U, (City University),
5.250% due 7/1/97 Baa1 BBB
767,813
680,000 New York State Medical Care Facilities
Agency, Mental Health Service Facilities
Improvement, Series D,
6.300% due 8/15/97 Baa1
BBB+ 718,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
NEW YORK -- (CONTINUED)
$1,250,000 New York State, Transportation Highway
Authority, Service Contract, Highway and
Bridge Revenue,
5.200% due 4/1/97 Baa1 BBB
$ 1,273,437
North Country, New York, Solid Waste
Disposal, Series A:
455,000 5.400% due 7/1/95 Baa NR
462,963
400,000 6.000% due 7/1/97 Baa1 NR
417,500
NORTH CAROLINA -- 0.7%
615,000 Charlotte, North Carolina, Certificates of
Participation, Municipal Facilities
Purchase Project, Series A,
4.900% due 1/1/98 NR AA
630,375
OHIO -- 1.1%
1,000,000 Ohio State, Public Facilities Commission,
Series II-A, (FSA Insured)
5.300% due 12/1/97 Aaa AAA
1,043,750
OKLAHOMA -- 1.5%
Cleveland County, Oklahoma, Home Loan
Authority, Single Family Mortgage Revenue:
220,000 6.000% due 8/1/96 A NR
225,500
185,000 6.100% due 2/1/97 A NR
190,550
235,000 6.100% due 8/1/97 A NR
243,225
750,000 Grand River Dam Authority,
4.700% due 6/1/97 A A-
769,687
OREGON -- 0.5%
500,000 Clackamas County, Oregon, Hospital
Facilities Authority Revenue, (Sisters of
Providence), Series A,
5.300% due 10/1/96 A1 AA-
520,625
PENNSYLVANIA -- 5.3%
180,000 Falls Township, Pennsylvania Hospital
Authority, (Delaware Valley Medical), (FHA
Insured),
6.000% due 8/1/01 NR AAA
181,575
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
PENNSYLVANIA -- (CONTINUED)
$ 500,000 Lehigh County, Pennsylvania, Industrial and
Community Development Authority,
(Strawbridge Project),
7.200% due 12/15/01 NR BBB
$ 547,500
1,000,000 Pennsylvania State, Certificates of
Participation,
4.600% due 6/1/97 A A-
1,017,500
500,000 Pennsylvania State Higher Education, Thomas
Jefferson University, Series A,
5.500% due 8/15/97 Aa A+
523,750
Philadelphia, Pennsylvania, Hospitals and
Higher Education Facilities Authority:
(Albert Einstein Medical Center):
365,000 6.300% due 10/1/96 A
BBB+ 374,581
390,000 6.500% due 10/1/97 A
BBB+ 403,650
1,000,000 (Graduate Health Systems),
6.500% due 7/1/97 Baa1 A-
1,048,750
275,000 Philadelphia, Pennsylvania, Water & Sewer
Revenue, 12th Series,
7.300% due 7/1/96 NR AAA
298,375
750,000 Westmoreland County, Pennsylvania,
Industrial Development Authority, (Valley
Landfill Project),
4.375% due 5/1/18 Aa1 AA
754,688
PUERTO RICO -- 1.0%
420,000 Puerto Rico Medical Hospital, Series A,
(St. Lukes Hospital),
5.400% due 6/1/97 NR A-
424,200
550,000 Commonwealth of Puerto Rico, Puerto Rico
Sugar Corporation,
6.800% due 7/1/94 Baa BBB
561,687
RHODE ISLAND -- 1.0%
440,000 Rhode Island State, Health and Higher
Education Facilities, (Salve Regina
College), (Connie Lee Insured),
4.900% due 3/15/98 NR AAA
452,650
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
RHODE ISLAND -- (CONTINUED)
$ 500,000 Rhode Island State, Student Loan Authority,
Series A,
5.700% due 12/1/96 A NR
$ 517,500
SOUTH CAROLINA -- 0.5%
500,000 South Carolina, State, Public Service
Authority, Revenue, (Santee - Cooper
Project), Series D,
5.500% due 7/1/98 A1 A+
524,375
TENNESSEE -- 1.0%
1,000,000 Bristol, Tennessee, Health & Eduactional
Facilities Board, Revenue, (Bristol
Regional Medical Center Hospital), (FGIC
Insured)
4.250% due 9/1/98 Aaa AAA
995,000
TEXAS -- 8.4%
500,000 Arlington, Texas, Waterworks & Sewer
Revenue, Refunding and Improvement, (FGIC
Insured),
5.400% due 6/1/97 Aaa AAA
522,500
2,000,000 Bell County, Texas, Health Facilities
Development Corporation, Central Texas
Pooled Health, Series A
4.750% due 10/1/23 NR AA
1,975,000
1,000,000 Brazos, Texas, Higher Education Authority,
Series A-1,
5.300% due 12/1/97 Aa NR
1,030,000
300,000 Dallas-Fort Worth, Texas, Regional Airport
Revenue, Series A, (FGIC Insured),
5.875% due 11/1/07 Aaa AAA
308,625
1,000,000 North Texas, Higher Education Authority,
Student Loan Revenue, Series B,
4.850% due 4/1/98 Aaa NR
1,010,000
670,000 Spring Branch, Texas, Independent School
District, Public Property, Contractual
Obligation,
4.300% due 2/15/98 Aa NR
674,187
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
TEXAS -- (CONTINUED)
$1,000,000 Tarrant County, Texas, Housing Finance
Corporation, Multifamily Housing, (Bedford
Springs),
4.500% due 9/1/06 NR AA
$ 1,000,000
Texas State Veterans Housing Assistance:
1,000,000 6.000% due 12/1/12 Aa AA
1,047,500
(FSA Insured),
500,000 6.050% due 12/1/12 Aa AA
524,375
VIRGIN ISLANDS -- 0.7%
635,000 Virgin Islands Public Financing Authority,
Matching Funding, Series A,
6.250% due 10/1/96 NR NR
659,605
VIRGINIA -- 1.1%
500,000 Fairfax County, Virginia, Redevelopment &
Housing Authority, Multifamily Housing
Revenue Refunding, Mortgage Loan, Kingsley,
Series A, (FHA Insured),
6.500% due 11/1/01 NR AAA
534,375
500,000 Virginia Educational Loan Authority,
Guaranteed Revenue, Series C,
4.850% due 3/1/98 Aaa NR
510,000
WASHINGTON -- 4.6%
1,000,000 Washington State, Series R93B-1,
4.125% due 10/1/97 Aa AA
1,002,500
485,000 Washington State Housing Finance, Single
Family Mortgage Revenue, (GNMA and FNMA
Securities Program), Series D,
5.800% due 7/1/97 NR AAA
488,031
Washington State Public Power Supply:
1,500,000 Series B, (Nuclear Project No. 3),
7.000% due 7/1/97 Aa AA
1,629,375
1,360,000 Series C, (Nuclear Project No. 1),
4.100% due 7/1/98 Aa AA
1,344,700
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
WISCONSIN -- 2.8%
$ 250,000 Wisconsin Housing Economic Development
Authority, Series A,
5.400% due 11/1/97 A1 A
$ 257,500
2,360,000 Wisconsin, State, Health & Educational
Facilities Authority, (Aurora Health Care),
(MBIA Insured)
5.500% due 8/15/98 Aa AAA
2,472,100
-----------------------------------------------------------------------------
- --------
TOTAL MUNICIPAL BONDS AND NOTES
(Cost $89,906,605)
91,433,424
-----------------------------------------------------------------------------
- --------
SHORT-TERM MUNICIPAL BONDS AND NOTES -- 5.4%
FLORIDA -- 0.2%
200,000 Florida Housing Finance Agency,
Multifamily, (Cypress Lake),
2.200% due 12/1/07++ NR A-1
200,000
NEW YORK -- 1.9%
1,100,000 New York, New York (Japan Airlines), City
Industries Development Agency,
2.100% due 11/1/15+ NR A-
1+ 1,100,000
200,000 New York, New York, Sub Series A-4,
2.000% due 8/1/22+ VMIG1 A-1
200,000
500,000 New York, New York Sub Series A-9,
2.250% due 8/1/18+ VMIG1 A-
1+ 500,000
PUERTO RICO -- 3.3%
3,200,000 Commonwealth of Puerto Rico, Government
Development Bank,
2.250% due 12/1/15++ VMIG1 A-
1+ 3,200,000
-----------------------------------------------------------------------------
- --------
TOTAL SHORT-TERM MUNICIPAL BONDS
AND NOTES
(Cost $5,200,000)
5,200,000
-----------------------------------------------------------------------------
- --------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P
(NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S> <C> <C>
<C>
PRIVATELY PLACED TAX-EXEMPT
MUNICIPAL LEASE AGREEMENT -- 0.7% (COST $632,372)
TENNESSEE -- 0.7%
$ 622,072 The Health and Educational Facilities Board
of the Metropolitan Government of
Nashville and Davidson County, Tennessee,
on behalf of Cocke County, Baptist
Hospital 7.250% due 9/1/96+++ NR NR
$ 642,290
-----------------------------------------------------------------------------
- --------
TOTAL INVESTMENTS (Cost $95,738,977*)
100.9% 97,275,714
OTHER ASSETS AND LIABILITIES (NET)
(0.9) (855,071)
-----------------------------------------------------------------------------
- --------
NET ASSETS
100.0% $96,420,643
-----------------------------------------------------------------------------
- --------
<FN>
*Aggregate cost for Federal tax purposes.
+Variable rate demand bonds and notes are payable upon not more than one
business day's notice.
++Variable rate demand bonds and notes are payable upon not more than seven
business day's notice.
+++Backed by an irrevocable bank letter of credit in the amount of $622,072.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES November 30,
1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $95,738,977) (Note 1)
See accompanying schedule
$97,275,714
Cash
57,729
Interest receivable
1,524,664
Receivable for Fund shares sold
544,977
Unamortized organization costs (Note 6)
37,130
- ------------------------------------------------------------------------------
- ------
TOTAL ASSETS
99,440,214
- ------------------------------------------------------------------------------
- ------
LIABILITIES:
Payable for investment securities purchased $2,482,019
Dividends payable 205,380
Investment advisory fee payable (Note 2) 93,010
Payable for Fund shares redeemed 89,395
Administration fee payable (Note 2) 52,571
Distribution fee payable (Note 3) 11,763
Custodian fees payable (Note 2) 9,600
Transfer agent fees payable (Note 2) 3,000
Accrued expenses and other payables 72,833
- ------------------------------------------------------------------------------
- ------
TOTAL LIABILITIES
3,019,571
- ------------------------------------------------------------------------------
- ------
NET ASSETS
$96,420,643
- ------------------------------------------------------------------------------
- ------
NET ASSETS consist of:
Undistributed net investment income $
8,275
Accumulated net realized loss on investments sold
(36,551)
Unrealized appreciation of investments
1,536,737
Par value
11,680
Paid-in capital in excess of par value
94,900,502
- ------------------------------------------------------------------------------
- ------
TOTAL NET ASSETS
$96,420,643
- ------------------------------------------------------------------------------
- ------
NET ASSET VALUE per share
($96,420,643 DIVIDED BY 11,679,643 shares of beneficial
interest outstanding)+
$8.26
- ------------------------------------------------------------------------------
- ------
MAXIMUM OFFERING PRICE PER SHARE ($8.26 DIVIDED BY 0.9875)
(based on sales charge of 1.25% of the offering price at
November 30, 1993)
$8.36
- ------------------------------------------------------------------------------
- ------
<FN>
+Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1993
<TABLE>
<S> <C>
<C>
INVESTMENT INCOME:
Interest
$3,247,740
- ------------------------------------------------------------------------------
- -------
EXPENSES:
Investment advisory fee (Note 2) $ 228,137
Sub-investment advisory and administration fee (Note 2) 130,364
Distribution fee (Note 3) 97,773
Registration and filing fees 62,258
Shareholder reports expense 51,888
Legal and audit fees 36,788
Custodian fees (Note 2) 31,035
Transfer agent fees (Note 2) 27,103
Amortization of organization costs (Note 6) 12,042
Trustees' fees and expenses (Note 2) 6,594
Other 15,478
Fees waived by investment adviser and administrator (Note 2) (212,920)
- ------------------------------------------------------------------------------
- -------
TOTAL EXPENSES
486,540
- ------------------------------------------------------------------------------
- -------
NET INVESTMENT INCOME
2,761,200
- ------------------------------------------------------------------------------
- -------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTES 1 AND 4):
Net realized loss on investments sold during the year
(36,551)
Net unrealized appreciation of investments during the year
1,092,054
- ------------------------------------------------------------------------------
- -------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
1,055,503
- ------------------------------------------------------------------------------
- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$3,816,703
- ------------------------------------------------------------------------------
- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR
YEAR
ENDED
ENDED
11/30/93
11/30/92*
<S> <C>
<C>
Net investment income $ 2,761,200 $
910,300
Net realized gain/(loss) on investments sold during the
period (36,551)
20,318
Net unrealized appreciation of investments during the
period 1,092,054
444,683
- ------------------------------------------------------------------------------
- -------
Net increase in net assets resulting from operations 3,816,703
1,375,301
Distributions to shareholders from:
Net investment income (2,752,925)
(910,300)
Net realized capital gain on investments (20,318)
- --
Net increase in net assets from Fund share transactions
(Note 5) 58,998,036
35,889,146
- ------------------------------------------------------------------------------
- -------
Net increase in net assets 60,041,496
36,354,147
NET ASSETS:
Beginning of period 36,379,147
25,000
- ------------------------------------------------------------------------------
- -------
End of period $96,420,643
$36,379,147
- ------------------------------------------------------------------------------
- -------
<FN>
*The Fund commenced operations on December 31, 1991.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR
PERIOD
ENDED
ENDED
11/30/93
11/30/92*
<S> <C>
<C>
Net Asset Value, beginning of period $ 8.07
$ 7.90
- ------------------------------------------------------------------------------
- -------
Income from investment operations:
Net investment income+ 0.36
0.36
Net realized and unrealized gains on investments 0.19
0.17
- ------------------------------------------------------------------------------
- -------
Total from investment operations 0.55
0.53
Less distributions:
Dividends from net investment income (0.36)
(0.36)
Distributions from net realized capital gain
(0.00)** --
- ------------------------------------------------------------------------------
- -------
Total distributions (0.36)
(0.36)
- ------------------------------------------------------------------------------
- -------
Net Asset Value, end of period $ 8.26
$ 8.07
- ------------------------------------------------------------------------------
- -------
Total return++ 6.98%
6.88%
- ------------------------------------------------------------------------------
- -------
Ratios/Supplemental data:
Net assets, end of period (in 000's) $96,421
$36,379
Ratio of operating expenses to average net assets+++ 0.75%
0.65%***
Ratio of net investment income to average net assets 4.24%
4.74%***
Portfolio turnover rate 4%
22%
- ------------------------------------------------------------------------------
- -------
<FN>
*The Fund commenced operations on December 31, 1991.
**Amount represents less than $0.01 per share.
***Annualized.
+Net investment income before waiver of fees by investment adviser and
administrator for the year ended November 30, 1993 and waiver of fees by
investment adviser, sub-investment adviser and administrator, custodian and
distributor for the period ended November 30, 1992 were $0.33 and $0.31,
respectively.
++Total return represents aggregate total returns for the periods indicated
and
does not reflect any applicable sales charges.
+++Annualized operating expense ratios before waiver of fees by investment
adviser and administrator for the year ended November 30, 1993 and waiver
of
fees by investment adviser, sub-investment adviser and administrator,
custodian and distributor for the period ended November 30, 1992 were 1.07%
and 1.28%, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Shearson Income Trust (the "Trust") was organized as a
"Massachusetts business trust" under the laws of the Commonwealth of
Massachusetts on October 17, 1991. The Trust is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company. The Trust
consists of the following four funds: Smith Barney Shearson Limited Maturity
Treasury Fund, Smith Barney Shearson Limited Maturity Municipals Fund (the
"Fund"), Smith Barney Shearson Intermediate Maturity California Municipals
Fund
and Smith Barney Shearson Intermediate Maturity New York Municipals Fund. The
following is a summary of significant accounting policies consistently
followed
by the Fund in the preparation of its financial statements.
PORTFOLIO VALUATION: Securities are valued by The Boston Company Advisors,
Inc. ("Boston Advisors") after consultation with an independent pricing
service
(the "Service") approved by the Board of Trustees. When, in the judgment of
the
Service, quoted bid prices for securities are readily available and are
representative of the bid side of the market, these investments are valued at
the mean between the quoted bid prices and asked prices. Securities for which,
in the judgment of the Service, there are no readily obtainable market
quotations (which may constitute a majority of the portfolio securities) are
carried at fair value as determined by the Service, based on methods which
include consideration of: yields or prices of municipal securities of
comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions. Securities, not valued by the service, for which
market quotations are not readily available, are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees.
Short-term investments that mature in 60 days or less are valued at amortized
cost.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued
or
delayed delivery basis may be settled a month or more after the trade date.
Interest income is recorded on the accrual basis. Realized gains and losses
from
securities sold are recorded on the identified cost basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund
to
declare dividends from net investment income daily and to pay such dividends
monthly. Distributions from net realized capital gains, if any, are declared
and
paid annually, after the end of the calendar year in which earned. In
addition,
in
24
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
order to avoid the application of a 4% nondeductible excise tax on certain
undistributed amounts of ordinary income and capital gains, the Fund may make
an
additional distribution shortly before December 31 in each year of any
undistributed ordinary income or capital gains and expects to make any other
distributions as are necessary to avoid this tax. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and
gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
FEDERAL INCOME TAXES: The Trust intends that the Fund separately qualify
as
a regulated investment company, if such qualification is in the best interest
of
its shareholders, which distributes exempt-interest dividends, by complying
with
the requirements of the Internal Revenue Code of 1986, as amended, applicable
to
regulated investment companies and by distributing substantially all of its
earnings to its shareholders. Therefore, no Federal income tax provision is
required.
2. INVESTMENT ADVISORY FEE AND ADMINISTRATION FEE AND OTHER RELATED
PARTY
TRANSACTIONS
Up to the close of business on July 30, 1993, the Fund had an investment
advisory agreement with Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers") on behalf of Shearson Lehman Advisors, a member of the Asset
Management Group of Shearson Lehman Brothers. Under the investment advisory
agreement, the Fund paid a monthly fee at the annual rate of 0.35% of the
value
of its average daily net assets.
As of the close of business on July 30, 1993, The Travelers Inc. (which at
the time was known as Primerica Corporation) ("Travelers") and Smith Barney,
Harris Upham & Co. Incorporated completed the acquisition of substantially all
of the domestic retail brokerage and asset management businesses of Shearson
Lehman Brothers and Smith Barney, Harris Upham & Co. Incorporated was renamed
Smith Barney Shearson.
As of the close of business on July 30, 1993, Greenwich Street Advisors, a
division of Mutual Management Corp., which is controlled by Smith Barney
Shearson Holdings Inc. ("Holdings"), succeeded Shearson Lehman Advisors as the
Fund's investment adviser. Holdings is a wholly owned subsidiary of Travelers.
The new investment advisory agreement with Greenwich Street
25
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Advisors (the "Advisory Agreement") contains terms and conditions
substantially
similar to the investment advisory agreement with the predecessor investment
adviser and provides for the payment of fees at the same rate as was paid to
such predecessor investment adviser.
The Fund has also entered into an administration agreement (the
"Administration Agreement") with Boston Advisors, an indirect wholly owned
subsidiary of Mellon Bank Corporation ("Mellon"). Under the Administration
Agreement, the Fund pays a monthly fee at the annual rate of 0.20% of the
value
of its average daily net assets. Prior to May 21, 1993, Boston Advisors served
as the Fund's sub-investment adviser and administrator and was entitled to
0.20%
of the value of the Fund's average daily net assets for its services.
From time to time, Smith Barney Shearson and Boston Advisors may
voluntarily
waive a portion or all of their respective fees otherwise payable to them. For
the year ended November 30, 1993, Smith Barney Shearson and Boston Advisors
voluntarily waived fees of $135,127 and $77,793, respectively.
For the year ended November 30, 1993, Smith Barney Shearson received
$576,872 from investors representing commissions (sales charges) on sales of
Fund shares.
A contingent deferred sales charge is generally payable by a shareholder
in
connection with the redemption of shares within one year after the date of
purchase. For the year ended November 30, 1993, Smith Barney Shearson received
from shareholders $41,260 in contingent deferred sales charges.
No officer, director or employee of Smith Barney Shearson, Boston Advisors
or of any parent or subsidiary of those corporations receives any compensation
from the Trust for serving as a Trustee or officer of the Trust. The Trust
pays
each Trustee who is not an officer, director or employee of Smith Barney
Shearson, Boston Advisors or any of their affiliates $4,000 per annum plus
$500
per meeting attended and reimburses each such Trustee for travel and out-of-
pocket expenses.
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary
of Mellon, serves as the Trust's custodian. The Shareholder Services Group
Inc.,
a subsidiary of First Data Corporation, serves as the Trust's transfer agent.
26
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. DISTRIBUTION PLAN
The Trust has adopted a plan of distribution (the "Plan") under Rule 12b-1
of the 1940 Act. Under the Plan, the Fund pays Smith Barney Shearson a monthly
fee at the annual rate of 0.15% of the value of its average daily net assets
for
activities primarily intended to result in the sale of its shares.
Under its terms, the Plan shall remain in effect from year to year,
provided
that such continuance is approved annually by vote of the Trust's Trustees,
including a majority of those Trustees who are not "interested persons" of the
Trust and who have no direct or indirect financial interest in the operation
of
the Plan.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the year ended November 30, 1993 were $58,745,661
and $2,171,538, respectively.
At November 30, 1993, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $1,658,677,
and aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over value was $121,940.
5. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest
with a $.001 par value. Changes in shares of beneficial interest in the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED
11/30/93
11/30/92*
Shares Amount
Shares Amount
<S> <C> <C>
<C> <C>
- ------------------------------------------------------------------------------
- -------
Sold 8,687,874 $ 71,494,853
4,881,537 $38,890,720
Issued as reinvestment of dividends 249,827 2,058,125
77,008 616,375
Redeemed (1,768,690) (14,554,942)
(451,078) (3,617,949)
- ------------------------------------------------------------------------------
- -------
Net increase 7,169,011 $ 58,998,036
4,507,467 $35,889,146
- ------------------------------------------------------------------------------
- -------
<FN>
*The Fund commenced operations on December 31, 1991.
</TABLE>
27
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. ORGANIZATION COSTS
The Fund bears all costs in connection with its organization including the
fees and expenses of registering and qualifying its shares for distribution
under Federal and state securities regulations. All such costs are being
amortized on the straight-line method over a period of five years from the
commencement of operations of the Fund. In the event that any of the initial
shares of the Fund are redeemed during such amortization period, the Fund will
be reimbursed for any unamortized organization costs in the same proportion as
the number of shares redeemed bears to the number of initial shares held at
the
time of redemption.
28
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
SMITH BARNEY SHEARSON INCOME TRUST:
We have audited the accompanying statement of assets and liabilities,
including the schedule of portfolio investments, of Limited Maturity
Municipals
Fund, of Smith Barney Shearson Income Trust, as of November 30, 1993, and the
related statement of operations for the year then ended, and the statement of
changes in net assets and the financial highlights for the year then ended and
the period from December 31, 1991 (commencement of operations) to November 30,
1992. 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 includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1993 by correspondence with the custodian and brokers. 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
Limited Maturity Municipals Fund, of Smith Barney Shearson Income Trust, as of
November 30, 1993, the results of its operations for the year then ended, and
the changes in its net assets and the financial highlights for the year then
ended and the period from December 31, 1991 (commencement of operations) to
November 30, 1992, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 10, 1994
29
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
TAX INFORMATION
YEAR ENDED NOVEMBER 30, 1993 (UNAUDITED)
Of the dividends paid by the Fund from investment income for the period
ended
November 30, 1993, 100% is tax-exempt for regular Federal income tax purposes.
30
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
- ---------------------------------------------------------------------------
GLOSSARY OF COMMONLY USED MUTUAL FUND TERMS
CAPITAL GAIN (OR LOSS): This is the increase (or decrease) in the market value
(price) of a security in your portfolio. If a stock or bond appreciates in
price, there is a capital gain; if it depreciates there is a capital loss. A
capital gain or loss is "realized" upon the sale of a security; if net capital
gains exceed net capital losses, there may be a capital gain distribution to
shareholders.
CONTINGENT DEFERRED SALES CHARGE (CDSC): One kind of back-end load, a CDSC is
imposed if shares are redeemed during the first few years of ownership. The
CDSC
may be expressed as a percentage of either the original purchase price or the
redemption proceeds. Most CDSCs decline over time, and some will not be
charged
if shares are redeemed after a certain period of time.
DISTRIBUTION RATE: This is the rate at which a mutual fund pays out (or
distributes) interest, dividends and realized capital gains to shareholders. A
fund's distribution rate is usually expressed as an annualized percent of the
fund's offering price.
DIVIDEND: This is income generated by securities in a portfolio and
distributed
after expenses to shareholders.
FRONT-END SALES CHARGE: This is the sales charge applied to an investment at
the
time of initial purchase.
NET ASSET VALUE (NAV): Net asset value is the total market value of all
securities held by a fund, minus any liabilities, divided by the number of
shares outstanding. It is the value of a single share of a mutual fund on a
given day. The total value of your investment would be the NAV multiplied by
the
number of shares you own.
SEC YIELD: This standardized calculation of a mutual fund's yield is based on
a
formula developed by the Securities and Exchange Commission (SEC) to allow
funds
to be compared on an equal basis. It is an annualized yield based on the
portfolio's potential earnings from dividends, interest and yield to maturity
of
its holdings, and it reflects the payments of all portfolio expenses for the
most recent 30-day period. Mutual funds are required to use this figure when
stating yield.
TOTAL RETURN: Total return measures a fund's performance, taking into account
the combination of dividends paid and the gain or loss in the value of the
securities held in the portfolio. It may be expressed on an AVERAGE ANNUAL
basis
or CUMULATIVE basis (total change over a given period). In addition, total
return may be expressed with or without the effects of sales charges or the
reinvestment of dividends and capital gains.
Whenever a fund reports any type of performance, it must also report the
average
annual total return according to the standardized calculation developed by the
SEC. The SEC AVERAGE ANNUAL TOTAL RETURN calculation includes the effects of
all
fees and sales charges and assumes the reinvestment of all dividends and
capital
gains.
31
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY MUNICIPALS FUND
TRUSTEES
Burt N. Dorsett
Peter H. Gallary
Elliot S. Jaffe
Harry W. Knight
Heath B. McLendon
Cornelius C. Rose
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD
Stephen J. Treadway
PRESIDENT
Richard P. Roelofs
EXECUTIVE VICE PRESIDENT
Lawrence T. McDermott
VICE PRESIDENT AND
INVESTMENT OFFICER
Vincent Nave
TREASURER
Francis J. McNamara, III
SECRETARY
DISTRIBUTOR
Smith Barney Shearson
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISER
Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
32
<PAGE>
INVESTOR BENEFITS MONTHLY DISTRIBUTIONS It's your fund's
policy to distribute dividend income monthly.
AUTOMATIC REINVESTMENT You may reinvest
your
dividends and/or capital gains automatically in
additional shares of your fund at the current
net
asset value.
UNLIMITED EXCHANGES If your investment
goals
change, you may exchange into another Smith
Barney
Shearson mutual fund with the same sales charge
structure without incurring a sales charge.*
SYSTEMATIC INVESTMENT PLAN This program
allows you to invest equal dollar amounts
automatically on a regular basis, monthly or
quarterly.
AUTOMATIC CASH WITHDRAWAL PLAN With this
plan, you may withdraw money on a regular basis
while maintaining your investment.
MUTUAL FUND EVALUATION SERVICE Through your
Financial Consultant, you may obtain a free
personalized analysis of how your fund has
performed for you, taking into account the
effect
of every transaction.
FOR MORE INFORMATION ABOUT THESE BENEFITS, OR IF
YOU HAVE ANY OTHER QUESTIONS, PLEASE CALL YOUR
FINANCIAL CONSULTANT OR WRITE:
MUTUAL FUND POLICY GROUP
SMITH BARNEY SHEARSON
388 GREENWICH STREET 37TH FLOOR
NEW YORK, NY 10013
*AFTER WRITTEN NOTIFICATION, EXCHANGE
PRIVILEGE MAY BE MODIFIED OR TERMINATED
AT ANY TIME.
<PAGE>
THIS REPORT IS SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF
THE SMITH BARNEY SHEARSON LIMITED MATURITY
MUNICIPALS FUND. IT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
UNLESS
ACCOMPANIED OR PRECEDED BY AN EFFECTIVE
PROSPECTUS FOR THE FUND, WHICH CONTAINS
INFORMATION CONCERNING THE FUND'S
INVESTMENT
POLICIES AND APPLICABLE SALES CHARGES, FEES
AND EXPENSES AS WELL AS OTHER PERTINENT
INFORMATION.
SMITH BARNEY SHEARSON
LIMITED
MATURITY
MUNICIPALS
FUND
Two World Trade Center
New York, New York 10048
Fund 163
FD0309 A4
<PAGE>
ANNUAL REPORT NOVEMBER 30, 1993
[GRAPHIC]
SMALL BOX ABOVE FUND NAME SHOWING
A ROUND, EAGLE SYMBOL LAYING
ON THE AMERICAN FLAG.
SMITH BARNEY SHEARSON
LIMITED
MATURITY
TREASURY
FUND
[LOGO]
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
DEAR SHAREHOLDER:
INTEREST RATES AND ECONOMIC ENVIRONMENT
The election in November of 1992 of a new President, especially a
Democratic
President for the first time in 12 years, created confusion and speculation in
the financial markets. Much of the speculation was centered on the question of
whether this party's stereotypical label of "government knows best" would
continue, or would a "new Presidency" emerge? From our vantage point, there is
enough evidence to suggest that both labels are appropriate. We're going to
use
the graph below to show the effect of the economic and political environment
on
the interest rate of a 30-year Treasury bond.
LIMITED MATURITY TREASURY
To allow you to compare the performance of your investment in the Fund to
that of the general market, we have included a chart showing the values of
$10,000 invested in the Fund since its inception and in the Lehman Brothers
Intermediate Treasury Index. The Lehman Brothers Intermediate Treasury Index
is
an unmanaged, broad-based index which includes about 131 actively-traded
Treasury issues totaling approximately $1.4 billion in market capitalization.
The average maturity of the securities in the Index is approximately 3.9
years;
in comparison, the average maturity of the securities in the Fund is 4.8
years.
Because it is unmanaged, the Lehman Brothers Intermediate Treasury Index is
not
subject to the same management and trading expenses of a mutual fund.
In expectation of a promised budget compromise and continued economic
growth
that was slow by historical standards, interest rates resumed their downward
movement in mid-January (A). Once long-term interest rates dropped below 7%,
the
market basically treaded water (B) while waiting for the close margin of
approval for the budget package. Although economic statistics indicated a
reluctantly-improving economy, it was also apparent that renewed inflation was
unlikely. Ongoing reports of layoffs and low levels of consumer confidence
prompted the Federal Reserve Board to maintain its neutral wait-and-see
policy.
CONTINUED
1
<PAGE>
YIELD ON U.S. TREASURY BOND
(12/25/92 -- 11/30/93)
[GRAPHIC]
Chart showing the fluctuation
of interest rates of the 30 year
Treasury Bond over the past 12 months.
Phase C of the interest rate cycle reflects the market's reaction to higher
tax rates and concern over the cost of health care reform. As consumers
attempted to pare down their debt levels and bolster savings, a vicious
downward
spiral in interest rates began in mid-May. The combination of mortgage
refinancings and thirst for yield caused long-term rates to fall to levels not
seen since the early 1970's.
As economic growth gained momentum and attention turned toward NAFTA and
its
implications, fear of a tightening in the Federal Reserve's monetary policy
infiltrated the minds of many investors. Many investors subsequently took
their
profits, and a slowdown in new money entering the financial markets caused
rates
to rise by 50 basis points (one-half of a percentage point) to the current
market rate of approximately 6.30%(D).
The key issue confronting the financial markets today is whether the
economy
truly is finally on the road to a healthy recovery or whether this is yet
another example of short-lived growth. By early in the second quarter of 1994,
when the effect of the retroactive tax increase becomes more fully felt and
the
costs of health care reform are clearer, we should have a good idea of the
sustainability of the recovery. If the combined costs prove to be surprisingly
high and consumer confidence becomes negative, we would anticipate lower
interest rates than we saw in 1993. Stay tuned!
PORTFOLIO STRATEGY
The management philosophy of the Fund and its investment restrictions limit
the volatility of the net asset value per share -- and rightfully so. During
the
past fiscal year and as we have mentioned in prior reports, we
CONTINUED
2
<PAGE>
have invested primarily in five-year Treasury securities and allowed these
investments to roll down the maturity curve. The essence of this strategy is
that as time passes the security becomes less volatile but still pays the
higher
yield of its purchase date. We will change this strategy only if we anticipate
a
significant rise in interest rates which would make it necessary for us to
quickly shorten the maturity of our investments in order to reduce their
volatility.
PERFORMANCE
The Limited Maturity Treasury Fund produced a compounded total return of
9.49% for the fiscal year which ended on November 30, 1993. Based on an
analysis
of its peer group of similarly-managed funds as measured by Lipper Analytical
Services, Inc., a nationally recognized mutual fund ranking organization, the
Fund was among the best-performing funds for this twelve-month period. In
comparison, the 10- and 30-year Treasuries returned 12.08% and 19.16%,
respectively. However, achieving these returns also required investors to
assume
greater risk in the financial markets. We believe that our management style
will
generate returns similar to if not better than longer-maturity securities but
with substantially less volatility.
DIVIDEND YIELD AND POLICY
The Fund does not pay a level monthly dividend rate but instead distributes
to shareholders the accrued monthly income earned by the portfolio. We will
continue to strive to offer an attractive dividend distribution as we also
face
declining interest rates and rising volatility.
As the vagaries of the new world order influence fiscal policy and inter-
national treaties, we will attempt to give you a timely interpretation of the
impact on the financial markets. Once again, we appreciate your continued
support of the Fund and look forward to hearing from you.
Sincerely,
Heath B. McLendon James E. Conroy
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
January 5, 1994
3
<PAGE>
HISTORICAL PERFORMANCE (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD NET ASSET VALUE CAPITAL GAINS DIVIDENDS TOTAL
ENDED BEGINNING ENDING DISTRIBUTED PAID RETURN**
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------
12/31/91* -
11/30/92 $7.90 $7.88 -- $0.37 4.54%
------------------------------------------------------------------
11/30/93 7.88 8.14 $0.09 0.38 9.49
------------------------------------------------------------------
TOTAL $0.09 $0.75
------------------------------------------------------------------
CUMULATIVE TOTAL RETURN (12/31/91 THROUGH 11/30/93) 14.46%
------------------------------------------------------------------
<FN>
*The Fund commenced operations on December 31, 1991.
**Figures assume reinvestment of all dividends and capital gain distributions
at
net asset value and do not reflect deduction of the applicable sales charge.
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY
AND CAPITAL GAINS, IF ANY, ANNUALLY.
AVERAGE ANNUAL TOTAL RETURN*** (UNAUDITED)
<TABLE>
<CAPTION>
WITHOUT FRONT END AND WITH
FRONT END AND
CONTINGENT DEFERRED SALES
CONTINGENT DEFERRED SALES
CHARGES
CHARGES
WITH WAIVER WITHOUT WAIVER WITH
WAIVER WITHOUT WAIVER
<S> <C> <C> <C>
<C>
- ------------------------------------------------------------------------------
- -------
Year Ended 11/30/93 9.49% 9.22% 7.14%
6.88%
- ------------------------------------------------------------------------------
- -------
Inception (12/31/91) through 11/30/93 7.30% 6.89% 6.60%
6.19%
- ------------------------------------------------------------------------------
- -------
<FN>
***Shares of the Fund are subject to a maximum 1.25% front-end sales charge
and
a maximum 1% contingent deferred sales charge (CDSC). All total return
figures shown reflect the reinvestment of dividends and capital gains. The
Fund waived fees from December 31, 1991 to the present; a shareholder's
actual return for the period during which fees were waived would be the
higher of the two numbers shown.
</TABLE>
4
<PAGE>
A line graph depicting the total growth (including reinvestment of dividends
and
capital gains) of a hypothetical investment of $10,000 in Limited Maturity
Treasury Fund shares on December 31, 1991 through November 30, 1993 as
compared
with the growth of a $10,000 investment in Lehman Brothers Intermediate
Treasury
Index and Lipper Peer Group Average Index. The plot points used to draw the
line
graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
INVESTMENT IN THE GROWTH OF $10,000
GROWTH OF $10,000 LEHMAN BROTHERS INVESTMENT IN THE
MONTH INVESTED IN SHARES INTERMEDIATE LIPPER PEER GROUP
ENDED OF THE FUND TREASURY INDEX AVERAGE INDEX
<S> <C> <C> <C>
12/91 $ 9,875 $10,000 $10,000
01/92 $ 9,728 $ 9,900 $ 9,941
03/92 $ 9,673 $ 9,890 $ 9,938
06/92 $10,085 $10,275 $10,252
09/92 $10,616 $10,733 $10,606
12/92 $10,474 $10,694 $10,578
03/93 $10,955 $11,097 $10,873
06/93 $11,180 $11,316 $10,997
09/93 $11,391 $11,556 $11,151
11/93 $11,303 $11,526 $11,150
</TABLE>
+ Hypothetical illustration of $10,000 invested at inception on December 31,
1991 through November 30, 1993 compared to the Lehman Brothers Intermediate
Treasury Index and the Lipper Peer Group Average Index. Investment assumes
deduction of the front-end sales charge and CDSC.
The Lehman Brothers Intermediate Treasury Index is an unmanaged, broad-based
index with approximately $1.4 billion in market capitalization which tracks
the market value of approximately 131 actively-traded U.S. Treasury
securities
with maturities of 3 to 10 years.
The Lipper Analytical Services, Inc. Peer Group Average Index is composed of
an average of the Fund's peer group of mutual funds (11 as of November 30,
1993) investing in limited maturity Treasury securities.
This period was one in which treasury prices fluctuated and the results
should
not be considered as a representation of the dividend income or capital gain
or loss which may be realized from an investment in the Fund today. No
adjustment has been made for shareholder tax liability on dividends or
capital
gains.
NOTE: All figures cited here and on the following pages represent past
performance and do not guarantee future results.
FOR A GLOSSARY OF TERMS, PLEASE TURN TO THE END OF THIS REPORT.
5
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- ---------------------------------------------
PORTFOLIO OF INVESTMENTS November 30,
1993
<TABLE>
<CAPTION>
MARKET VALUE
FACE VALUE (NOTE 1)
<C> <S> <C>
-----------------------------------------------------------------------------
U.S. TREASURY SECURITIES -- 98.6%
U.S. TREASURY NOTES --
$ 500,000 6.000% due 12/31/97 $ 519,545
1,300,000 4.750% due 08/31/98 1,280,916
46,250,000 4.750% due 09/30/98 45,560,875
4,000,000 4.750% due 10/31/98 3,934,481
-----------------------------------------------------------------------------
TOTAL INVESTMENTS (Cost $51,939,473*) 98.6% 51,295,817
OTHER ASSETS AND LIABILITIES (NET) 1.4 730,164
-----------------------------------------------------------------------------
NET ASSETS 100.0% $52,025,981
-----------------------------------------------------------------------------
<FN>
*Aggregate cost for Federal tax purposes.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- ---------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES November 30,
1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $51,939,473) (Note 1)
See accompanying schedule
$51,295,817
Cash
296,132
Interest receivable
418,125
Receivable for Fund shares sold
396,815
Unamortized organization costs (Note 6)
37,130
- ------------------------------------------------------------------------------
- -
TOTAL ASSETS
52,444,019
- ------------------------------------------------------------------------------
- -
LIABILITIES:
Dividends payable $113,195
Investment advisory fee payable (Note 2) 91,652
Payable for Fund shares redeemed 84,256
Administration fee payable (Note 2) 51,860
Accrued shareholder reports expense 34,594
Accrued legal and audit 21,750
Distribution fee payable (Note 3) 6,629
Custodian fees payable (Note 2) 4,200
Transfer agent fees payable (Note 2) 3,400
Accrued expenses and other payables 6,502
- ------------------------------------------------------------------------------
- -
TOTAL LIABILITIES
418,038
- ------------------------------------------------------------------------------
- -
NET ASSETS
$52,025,981
- ------------------------------------------------------------------------------
- -
NET ASSETS consist of:
Undistributed net investment income $
707
Accumulated net realized gain on investments sold
2,172,569
Unrealized depreciation of investments
(643,656)
Par value
6,389
Paid-in capital in excess of par value
50,489,972
- ------------------------------------------------------------------------------
- -
TOTAL NET ASSETS
$52,025,981
NET ASSET VALUE per share
($52,025,981 DIVIDED BY 6,388,691 shares of beneficial
interest outstanding)+
$8.14
- ------------------------------------------------------------------------------
- -
MAXIMUM OFFERING PRICE PER SHARE ($8.14 DIVIDED BY 0.9875)
(based on sales charge of 1.25% of the offering price at
November 30, 1993)
$8.24
- ------------------------------------------------------------------------------
- -
<FN>
+Redemption price per share is equal to Net Asset Value less any
applicable
contingent deferred sales charge.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- ---------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest
$2,627,530
- ------------------------------------------------------------------------------
- --
EXPENSES:
Investment advisory fee (Note 2) $171,260
Sub-investment advisory and administration fee
(Note 2) 97,863
Distribution fee (Note 3) 73,397
Shareholder reports expense 44,179
Transfer agent fees (Note 2) 39,550
Legal and audit fees 27,815
Custodian fees (Note 2) 15,843
Amortization of organization costs (Note 6) 12,042
Trustees' fees and expenses (Note 2) 6,594
Other 21,622
Fees waived by investment adviser and
administrator (Note 2) (125,611)
- ------------------------------------------------------------------------------
- --
TOTAL EXPENSES
384,554
- ------------------------------------------------------------------------------
- --
NET INVESTMENT INCOME
2,242,976
- ------------------------------------------------------------------------------
- --
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTES 1 AND 4):
Net realized gain on investments sold during the
period
2,172,569
Net unrealized depreciation of investments
during the period
(217,200)
- ------------------------------------------------------------------------------
- --
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
1,955,369
- ------------------------------------------------------------------------------
- --
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$4,198,345
- ------------------------------------------------------------------------------
- --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- ---------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR
PERIOD
ENDED
ENDED
11/30/93
11/30/92*
<S> <C>
<C>
Net investment income $ 2,242,976 $
1,170,876
Net realized gain on investments during the period 2,172,569
518,134
Net unrealized depreciation of investments during the
period (217,200)
(426,456)
- ------------------------------------------------------------------------------
- -------
Net increase in net assets resulting from operations 4,198,345
1,262,554
Distributions to shareholders from:
Net investment income (2,242,269)
(1,170,876)
Net realized capital gain on investments (518,134)
- --
Net increase in net assets from Fund share transactions
(Note 5) 5,620,932
44,850,429
- ------------------------------------------------------------------------------
- -------
Net increase in net assets 7,058,874
44,942,107
NET ASSETS:
Beginning of period 44,967,107
25,000
- ------------------------------------------------------------------------------
- -------
End of period $52,025,981
$44,967,107
- ------------------------------------------------------------------------------
- -------
*The Fund commenced operations on December 31, 1991.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- ---------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
11/30/93 11/30/92*
<S> <C> <C>
Net asset value, beginning of period $ 7.88 $ 7.90
- ---------------------------------------------------------------------
Income from investment operations:
Net investment income+ 0.38 0.37
Net realized and unrealized gain/loss on
investments 0.35 (0.02)
- ---------------------------------------------------------------------
Total from investment operations 0.73 0.35
Less distributions:
Dividends from net investment income (0.38) (0.37)
Distributions from net realized capital
gains (0.09) --
- ---------------------------------------------------------------------
Total distributions (0.47) (0.37)
- ---------------------------------------------------------------------
Net asset value, end of period $ 8.14 $ 7.88
- ---------------------------------------------------------------------
Total return++ 9.49% 4.54%
- ---------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (in 000's) $52,026 $44,967
Ratio of operating expenses to average net
assets+++ 0.79% 0.65%**
Ratio of net investment income to average
net assets 4.58% 4.96%**
Portfolio turnover rate 104% 188%
- ---------------------------------------------------------------------
<FN>
*The Fund commenced operations on December 31, 1991.
**Annualized
+Net investment income per share before waiver of fees by investment adviser
and administrator for the year ended November 30, 1993 and waiver of fees
by
investment adviser, sub-investment adviser, administrator, and custodian
for
the period ended November 30, 1992 was $0.36 and $0.33, respectively.
++Total return represents aggregate total returns for the periods indicated
and
does not reflect any applicable sales charges.
+++Annualized operating expense ratios before waiver of fees by investment
adviser and administrator for the year ended November 30, 1993 and waiver
of
fees by investment adviser, sub-investment adviser and administrator and
custodian for the period ended November 30, 1992 were 1.04% and 1.19%,
respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Shearson Income Trust (the "Trust") was organized as a
"Massachusetts business trust" under the laws of the Commonwealth of
Massachusetts on October 17, 1991. The Trust is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company. The Trust
consists of the following four funds: Smith Barney Shearson Limited Maturity
Treasury Fund (the "Fund"), Smith Barney Shearson Limited Maturity Municipals
Fund, Smith Barney Shearson Intermediate Maturity California Municipals Fund
and
Smith Barney Shearson Intermediate Maturity New York Municipals Fund. The
following is a summary of significant accounting policies consistently
followed
by the Fund in the preparation of its financial statements.
PORTFOLIO VALUATION: Securities are valued at market value or, in the
absence of market value, at fair value as determined by or under the direction
of the Board of Trustees. Short-term investments that mature within 60 days or
less are valued at amortized cost.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued
or
delayed delivery basis may be settled a month or more after the trade date.
Interest income is recorded on the accrual basis. Realized gains and losses
from
securities sold are recorded on the identified cost basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund
to
declare dividends from net investment income daily and to pay such dividends
monthly. Distributions from net realized capital gains, if any, are declared
and
paid annually, after the end of the calendar year in which earned. In
addition,
in order to avoid the application of a 4% nondeductible excise tax on certain
undistributed amounts of ordinary income and capital gains, the Fund may make
an
additional distribution shortly before December 31 in each year of any
undistributed ordinary income or capital gains and expects to make any other
distributions as are necessary to avoid this tax. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and
gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
11
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEDERAL INCOME TAXES: The Trust intends that the Fund separately qualify
as
a regulated investment company, if such qualification is in the best interest
of
its shareholders, by complying with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and by
distributing substantially all of its earnings to its shareholders. Therefore,
no Federal income tax provision is required.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY
TRANSACTIONS
Up to the close of business on July 30, 1993, the Fund had an investment
advisory agreement with Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers") on behalf of Shearson Lehman Advisors, a member of the Asset
Management Group of Shearson Lehman Brothers. Under the Advisory Agreement,
the
Fund paid a monthly fee at the annual rate of 0.35% of the value of its
average
daily net assets.
As of the close of business on July 30, 1993, The Travelers Inc. (which at
the time was known as Primerica Corporation) ("Travelers") and Smith Barney,
Harris Upham & Co. Incorporated completed the acquisition of substantially all
of the domestic retail brokerage and asset management businesses of Shearson
Lehman Brothers and Smith Barney, Harris Upham & Co. Incorporated was renamed
Smith Barney Shearson Inc. ("Smith Barney Shearson").
As of the close of business on July 30, 1993, Greenwich Street Advisors, a
division of Mutual Management Corp., which is controlled by Smith Barney
Shearson Holdings Inc. ("Holdings"), succeeded Shearson Lehman Advisors as the
Fund's investment adviser. Holdings is a wholly owned subsidiary of Travelers.
The new investment advisory agreement with Greenwich Street Advisors (the
"Advisory Agreement") contains terms and conditions substantially similar to
the
investment advisory agreement with the predecessor investment adviser and
provides for the payment of fees at the same rate as was paid to such
predecessor investment adviser.
The Fund has also entered into an administration agreement (the
"Administration Agreement") with Boston Advisors, an indirect wholly owned
subsidiary of Mellon Bank Corporation ("Mellon"). Under the Administration
Agreement, the Fund pays a monthly fee at the annual rate of 0.20% of the
value
of its average daily net assets. Prior to May 21, 1993, Boston Advisors served
as sub-investment adviser and administrator to the Fund.
12
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
From time to time, Smith Barney Shearson and Boston Advisors may
voluntarily
waive a portion or all of their respective fees otherwise payable to them. For
the year ended November 30, 1993, Smith Barney Shearson and Boston Advisors
voluntarily waived fees of $79,608 and $46,003, respectively.
For the year ended November 30, 1993, Smith Barney Shearson received
$216,976 from investors representing commissions (sales charges) on sales of
Fund shares.
A contingent deferred sales charge is generally payable by a shareholder
in
connection with the redemption of shares within one year after the date of
purchase. For the year ended November 30, 1993, Smith Barney Shearson received
from shareholders $53,181 in contingent deferred sales charges.
No officer, director or employee of Smith Barney Shearson, Boston Advisors
or of any parent or subsidiary of those corporations receives any compensation
from the Trust for serving as a Trustee or officer of the Trust. The Trust
pays
each Trustee who is not an officer, director or employee of Smith Barney
Shearson, Boston Advisors or any of their affiliates $4,000 per annum plus
$500
per meeting attended and reimburses each such Trustee for travel and out-of-
pocket expenses.
Boston Safe Deposit and Trust Company ("Boston Safe"), an indirect wholly
owned subsidiary of Mellon, serves as the Trust's custodian. The Shareholder
Services Group, Inc., a subsidiary of First Data Corporation, serves as the
Trust's transfer agent.
3. DISTRIBUTION PLAN
The Trust has adopted a plan of distribution (the "Plan") under Rule 12b-1
of the 1940 Act. Under the Plan, the Fund pays an annual fee computed daily
and
payable monthly of 0.15% of its average daily net assets to Smith Barney
Shearson for activities primarily intended to result in the sale of its
shares.
Under its terms, the Plan shall remain in effect from year to year,
provided
that such continuance is approved annually by vote of the Trust's Board of
Trustees, including a majority of those Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Plan.
13
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds of U.S. government securities, excluding
short-term investments, for the year ended November 30, 1993, were $56,350,568
and $49,079,703, respectively.
At November 30, 1993, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost of $20,590, and
aggregate gross unrealized depreciation for all securities in which there was
an
excess of tax cost over value of $664,246.
5. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest
with a $.001 par value. Changes in shares of beneficial interest in the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED
NOVEMBER 30, 1993
NOVEMBER 30, 1992*
Shares Amount
Shares Amount
<S> <C> <C>
<C> <C>
- ------------------------------------------------------------------------------
- -------
Sold 2,881,661 $ 23,543,768
3,285,463 $ 26,028,593
Issued in exchange for net assets of
Shearson Lehman Brothers Income
Portfolio's Intermediate Term Government
Portfolio (Note 7) -- --
3,764,994 29,637,330
Issued as reinvestment of dividends 303,092 2,449,289
115,167 920,573
Redeemed (2,500,147)
(20,372,125) (1,464,704) (11,736,067)
- ------------------------------------------------------------------------------
- -------
Net increase 684,606 $ 5,620,932
5,700,920 $ 44,850,429
- ------------------------------------------------------------------------------
- -------
<FN>
*The Fund commenced operations on December 31, 1991.
</TABLE>
6. ORGANIZATION COSTS
The Fund bears all cost in connection with its organization including the
fees and expenses of registering and qualifying its shares for distribution
under Federal and state securities regulations. All such costs are being
amortized on the straight-line basis over a period of five years from
commencement of operations of the Fund. In the event that any of the initial
shares of the Fund are redeemed
14
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
during such amortization period, the Fund will be reimbursed for any
unamortized
organization costs in the same proportion as the number of shares redeemed
bears
to the number of initial shares held at the time of redemption.
7. REORGANIZATION
On July 10, 1992, the Fund ("Acquiring Fund") acquired the assets and
liabilities of the Intermediate Term Government Portfolio ("Acquired Fund"), a
portfolio of Shearson Lehman Brothers Income Portfolios (now known as Smith
Barney Shearson Income Portfolios), in exchange for shares of the Acquiring
Fund, pursuant to a plan of reorganization approved by the Acquiring Fund's
shareholders on June 25, 1992. Total shares issued by the Acquiring Fund,
total
net assets of the Acquired Fund and the Acquiring Fund and any unrealized
appreciation included in the Acquired Fund's total net assets is as follows:
<TABLE>
<CAPTION>
SHARES TOTAL NET TOTAL NET
ACQUIRED
ISSUED BY ASSETS OF ASSETS OF
FUND
ACQUIRING ACQUIRED ACQUIRING
UNREALIZED
ACQUIRING FUND ACQUIRED FUND FUND FUND FUND
APPRECIATION
<S> <C> <C> <C> <C>
<C>
- ------------------------------------------------------------------------------
- -------
Limited Maturity Intermediate Term
Treasury Fund Government Portfolio 3,764,994 $29,943,860
$13,597,825 $306,530
- ------------------------------------------------------------------------------
- -------
</TABLE>
15
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- ---------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
SMITH BARNEY SHEARSON INCOME TRUST:
We have audited the accompanying statement of assets and liabilities,
including the schedule of portfolio investments, of Limited Maturity Treasury
Fund, of Smith Barney Shearson Income Trust, as of November 30, 1993, and the
related statement of operations for the year then ended, and the statement of
changes in net assets and the financial highlights for the year then ended and
the period from December 31, 1991 (commencement of operations) to November 30,
1992. 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 includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1993 by correspondence with the custodian and brokers. 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
Limited Maturity Treasury Fund, of Smith Barney Shearson Income Trust, as of
November 30, 1993, the results of its operations for the year then ended, and
the changes in its net assets and the financial highlights for the year then
ended and the period from December 31, 1991 (commencement of operations) to
November 30, 1992, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 10, 1994
16
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- --------------------------------------------------------------------
TAX INFORMATION
YEAR ENDED NOVEMBER 30, 1993 (UNAUDITED)
Of the dividends paid by the Fund from investment income for the period
ended
November 30, 1993, 100% has been derived from investments in U.S. government
and
agency obligations. All or a portion of the distributions from this income may
be exempt from taxation at the state level. Consult your tax advisor for state
specific information.
17
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
- ---------------------------------------------------------------------------
GLOSSARY OF COMMONLY USED MUTUAL FUND TERMS
CAPITAL GAIN (OR LOSS): This is the increase (or decrease) in the market value
(price) of a security in your portfolio. If a stock or bond appreciates in
price, there is a capital gain; if it depreciates there is a capital loss. A
capital gain or loss is "realized" upon the sale of a security; if net capital
gains exceed net capital losses, there may be a capital gain distribution to
shareholders.
CDSC (CONTINGENT DEFERRED SALES CHARGE): One kind of back-end load, a CDSC is
imposed if shares are redeemed during the first few years of ownership. The
CDSC
may be expressed as a percentage of either the original purchase price or the
redemption proceeds. Most CDSCs decline over time, and some will not be
charged
if shares are redeemed after a certain period of time.
DISTRIBUTION RATE: This is the rate at which a mutual fund pays out (or
distributes) interest, dividends and realized capital gains to shareholders. A
fund's distribution rate is usually expressed as an annualized percent of the
fund's offering price.
DIVIDEND: This is income generated by securities in a portfolio and
distributed
after expenses to shareholders.
FRONT-END SALES CHARGE: This is the sales charge applied to an investment at
the
time of initial purchase.
NET ASSET VALUE (NAV): Net asset value is the total market value of all
securities held by a fund, minus any liabilities, divided by the number of
shares outstanding. It is the value of a single share of a mutual fund on a
given day. The total value of your investment would be the NAV multiplied by
the
number of shares you own.
SEC YIELD: This standardized calculation of a mutual fund's yield is based on
a
formula developed by the Securities and Exchange Commission (SEC) to allow
funds
to be compared on an equal basis. It is an annualized yield based on the
portfolio's potential earnings from dividends, interest and yield to maturity
of
its holdings, and it reflects the payments of all portfolio expenses for the
most recent 30-day period. Mutual funds are required to use this figure when
stating yield.
TOTAL RETURN: Total return measures a fund's performance, taking into account
the combination of dividends paid and the gain or loss in the value of the
securities held in the portfolio. It may be expressed on an AVERAGE ANNUAL
basis
or CUMULATIVE basis (total change over a given period). In addition, total
return may be expressed with or without the effects of sales charges or the
reinvestment of dividends and capital gains.
Whenever a fund reports any type of performance, it must also report the
average
annual total return according to the standardized calculation developed by the
SEC. The SEC AVERAGE ANNUAL TOTAL RETURN calculation includes the effects of
all
fees and sales charges and assumes the reinvestment of all dividends and
capital
gains.
18
<PAGE>
SMITH BARNEY SHEARSON
LIMITED MATURITY TREASURY FUND
TRUSTEES
Burt N. Dorsett
Peter H. Gallary
Elliot S. Jaffe
Harry W. Knight
Heath B. McLendon
Cornelius C. Rose
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD
Stephen Treadway
PRESIDENT
Richard P. Roelofs
EXECUTIVE VICE PRESIDENT
James C. Conroy
VICE PRESIDENT AND
INVESTMENT OFFICER
Vincent Nave
TREASURER
Francis J. McNamara, III
SECRETARY
DISTRIBUTOR
Smith Barney Shearson
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISORS
Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
SUB-INVESTMENT ADVISER
AND ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
19
<PAGE>
THE SMITH BARNEY
SHEARSON
APPROACH TO
MUTUAL FUND
INVESTING
1. PERSONAL SERVICE The Smith Barney Shearson
Financial Consultant (FC) is highly trained and
deeply committed to client service. Your FC works
with you to establish a relationship based on
one-to-one communication and the highest
standards of quality.
2. ANALYZING YOUR NEEDS Defining your needs
and establishing specific goals is the first step
toward any successful investment program. The
Smith Barney Shearson Strategic Asset Allocator
-- a sophisticated financial planning tool -- can
help you and your FC evaluate your resources and
objectives. This groundwork then becomes the
basis for a strategy designed specifically for
you. Your FC can use the Strategic Asset
Allocator on a periodic basis to ensure that your
investment strategy is keeping pace with your
changing needs and goals.
3. A UNIQUE MUTUAL FUND INVESTMENT
PROGRAM Your Smith Barney Shearson FC offers a
number of mutual fund assessment tools that are
unmatched in the financial services industry.
Smith Barney Shearson FCs have access to a
proprietary mutual fund research database that
provides information at their fingertips on more
than 2,100 funds. In addition, working with
another proprietary system known as the Mutual
Fund Evaluation Service, your FC can help guide
you through the complex mutual fund maze.
4. LOOKING AHEAD Selecting a mutual fund
should not be a one-event process that ends with
the purchase of shares. You can count on the
expertise of your FC as he or she continues to
monitor and evaluate your funds, to suggest new
strategies and to listen. That, in our opinion,
is how to use mutual funds to help achieve your
financial goals.
20
<PAGE>
INVESTOR BENEFITS MONTHLY DISTRIBUTIONS It's your fund's
policy to distribute dividend income monthly.
AUTOMATIC REINVESTMENT You may reinvest your
dividends and/or capital gains automatically in
additional shares of your fund at the current
net
asset value.
UNLIMITED EXCHANGES If your invest-
ment goals change, you may exchange into another
Smith Barney Shearson mutual fund with the same
sales charge structure without incurring a sales
charge.*
SYSTEMATIC INVESTMENT PLAN This program
allows
you to invest equal dollar amounts automatically
on a regular basis, monthly or quarterly.
AUTOMATIC CASH WITHDRAWAL PLAN With this
plan,
you may withdraw money on a regular basis while
maintaining your investment.
MUTUAL FUND EVALUATION SERVICE Through your
Financial Consultant, you may obtain a free
personalized analysis of how your fund has
performed for you, taking into account the
effect
of every transaction. The analysis is based upon
month-end data from CDA Investment Technologies,
Inc., a widely recognized mutual fund
information
service. An evaluation also gives you other
important facts and figures about your
investment.
FOR MORE INFORMATION ABOUT THESE BENEFITS, OR IF
YOU HAVE ANY OTHER QUESTIONS, PLEASE CALL YOUR
FINANCIAL CONSULTANT OR WRITE:
MUTUAL FUND POLICY GROUP
SMITH BARNEY SHEARSON
388 GREENWICH STREET 37TH FLOOR
NEW YORK, NY 10013
*AFTER WRITTEN NOTIFICATION, EXCHANGE
PRIVILEGE MAY BE MODIFIED OR TERMINATED
AT ANY TIME.
<PAGE>
THIS REPORT IS SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF
SMITH BARNEY SHEARSON LIMITED MATURITY
TREASURY FUND. IT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
UNLESS
ACCOMPANIED OR PRECEDED BY AN EFFECTIVE
PROSPECTUS FOR THE FUND, WHICH CONTAINS
INFORMATION CONCERNING THE FUND'S
INVESTMENT
POLICIES AND APPLICABLE SALES CHARGES, FEES
AND EXPENSES AS WELL AS OTHER PERTINENT
INFORMATION.
SMITH BARNEY SHEARSON
LIMITED MATURITY
TREASURY FUND
Two World Trade Center
New York, New York 10048
Fund 162
FD0308 A4
<PAGE>
ANNUAL REPORT NOVEMBER 30, 1993
[GRAPHIC]
SMALL BOX ABOVE FUND NAME
SHOWING A MAP, HOSPITAL SIGN
AND WARNING ROAD SIGNS.
SMITH BARNEY SHEARSON
INTERMEDIATE
MATURITY
NEW YORK
MUNICIPALS
FUND
[LOGO]
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
DEAR SHAREHOLDER:
We are pleased to provide the annual report for Smith Barney Shearson
Intermediate Maturity New York Municipals Fund for the fiscal year ended
November 30, 1993. During the past year the net asset value of the Fund
increased to $8.54 from $8.18, and the Fund paid dividends totaling $0.42 per
share. The total return on your investment during the past fiscal year was
9.76%. This total return earned the Fund a first quartile ranking from Lipper
Analytical Services, Inc., a nationally recognized mutual fund ranking
organization. We are pleased with this performance and will endeavor to provide
similarly-attractive relative performance in future years.
To allow you to compare the performance of your investment in the Fund to
that of the general market, we have included a chart showing the values of
$10,000 invested in the Fund since its inception and in the Lehman Brothers Ten
Year Municipal Bond Index. The Lehman Brothers Ten Year Municipal Bond Index is
an unmanaged, broad-based index which includes about 5,200 tax-free issues
totaling approximately $63 billion in market capitalization. The average
maturity of the securities in the Index is approximately 9.8 years; in
comparison, the average maturity of the securities in the Fund is 7.7 years.
Like the Fund, the Index includes issues drawn from a diverse range of market
sectors, including general obligation, revenue and insured bonds that are rated
investment grade (AAA to BAA). Because it is unmanaged, the Lehman Brothers Ten
Year Municipal Index is not subject to the same management and trading expenses
of a mutual fund. In addition, the Index does not fully reflect the performance
of California securities which are in high demand because of the state's high
personal income tax rates.
THE MUNICIPAL MARKET AND THE ECONOMIC ENVIRONMENT
By the end of 1993, the tax-exempt market will have set a record for bond
issuance of approximately $300 billion. Municipalities, like individuals, took
advantage of the low level of interest rates and used it as an opportunity to
refinance higher interest rate debt. About 75% of these new issues will be used
to retire the higher interest rate debt that was issued in the early 1980s.
Investors consequently have faced a high rate of bond calls during the past
year, and we anticipate that this is something they will have to contend with in
1994 as well. We expect that in 1994 the volume of new issuance will once again
be in the more traditional of $150 to $175 billion.
CONTINUED
1
<PAGE>
Although the supply of municipal securities was very high during the Fund's
fiscal year, demand was equally high. Investors whose bonds were called or
retired sought to replace them with new issues, and the passage of a retroactive
tax increase in August buoyed demand for tax-exempt issues.
The market suffered from some periodic weakness throughout the year, and
especially at the end of the year, but we are optimistic that it will regain its
strength in early 1994. We think this will likely begin in earnest once the
higher withholding rates go into effect, and again when people begin preparing
their 1993 income taxes. We don't anticipate a surge in the inflation rate
because the increase in economic growth and consumer confidence should be offset
by higher Federal tax rates and uncertainty over the cost of health care reform.
INTERMEDIATE NEW YORK MUNICIPALS
The economy of New York State improved over the past few months thanks to a
strong year for the financial community and a rebound in consumer spending. Both
contributed to increased tax receipts which will leave the State with a budget
surplus for the first time in many years. If tax revenues continue to increase
in 1994, New York State could receive an upgrade in its bond rating. A higher
bond rating benefits New York State taxpayers in a very tangible way:
higher-rated bonds generally are required to pay investors lower interest rates.
For New York City, the picture is quite different. New York City is faced with a
budget deficit in the neighborhood of $1.7 billion as a result of higher welfare
and Medicaid costs. Its budget problems are compounded by the loss of businesses
lured to New Jersey and Connecticut by attractive economic development packages.
While the State's economy is clearly rebounding, we are waiting for Mayor
Guiliani's response to the City's budget problems.
PORTFOLIO STRATEGY
We continue to invest the Fund's holdings in high quality investments. At the
end of its fiscal year, 99% of the Fund was invested in issues rated BBB or
higher (investment grade) by either Standard & Poor's Corporation or Moody's
Investor Services. We believe that this strategy was partially responsible for
the Fund's excellent investment returns and low market fluctuations. We have
concentrated our investments in the Fund in general obligation securities,
transportation issues, hospital and life care, and education issues. It is our
opinion that this diversified, high quality approach to the intermediate-term
market best serves the interests of the Fund's
CONTINUED
2
<PAGE>
investors. During the past year the average maturity of the portfolio was
between seven and eight years because we believed that this area of the market
offered the best value along with limited price volatility.
DIVIDEND YIELD AND POLICY
The Fund does not pay a level monthly dividend rate but instead distributes
to shareholders the accrued monthly income earned by the portfolio. We will
continue to strive to offer an attractive dividend distribution as we also face
declining interest rates and rising volatility.
We appreciate the confidence you continue to place in us, and will continue
to strive to maintain your trust.
Sincerely,
Heath B. McLendon Lawrence T. McDermott
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
January 5, 1994
3
<PAGE>
HISTORICAL PERFORMANCE (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD NET ASSET VALUE CAPITAL GAINS DIVIDENDS TOTAL
ENDED BEGINNING ENDING DISTRIBUTED PAID RETURN**
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
12/31/91*-
11/30/92 $7.90 $8.18 -- $0.38 8.59%
-------------------------------------------------------------------------
11/30/93 8.18 8.54 $0.02 0.40 9.76
-------------------------------------------------------------------------
TOTAL $0.02 $0.78
-------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN - (12/31/91 THROUGH 11/30/93) 19.19%
-------------------------------------------------------------------------
<FN>
*The Fund commenced operations on December 31, 1991.
**Figures assume reinvestment of all dividends and capital gain distributions
and do not reflect deduction of the applicable sales charge.
+Amount represents less than $0.01 per share.
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY
AND CAPITAL GAINS, IF ANY, ANNUALLY.
AVERAGE ANNUAL TOTAL RETURN*** (UNAUDITED)
<TABLE>
<CAPTION>
WITHOUT FRONT END WITH FRONT END
AND CONTINGENT AND CONTINGENT
DEFERRED SALES DEFERRED SALES
CHARGES CHARGES
WITH WITHOUT WITH WITHOUT
WAIVER WAIVER WAIVER WAIVER
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
YEAR ENDED 11/30/93 9.76% 9.25% 7.40% 6.90%
- -------------------------------------------------------------------------------------
INCEPTION (12/31/91) THROUGH 11/30/93 9.59% 8.92% 8.87% 8.21%
- -------------------------------------------------------------------------------------
<FN>
***Shares of the Fund are subject to a maximum 1.25% front-end sales charge and
a maximum 1% contingent deferred sales charge (CDSC). All total return
figures shown reflect the reinvestment of dividends and capital gains. The
Fund waived fees from December 31, 1991 to the present; a shareholder's
actual return for the period during which fees were waived would be the
higher of the two numbers shown.
</TABLE>
4
<PAGE>
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in Intermediate Maturity
New York Municipals Fund shares on December 31, 1991 through November 30, 1993
as compared with the growth of a $10,000 investment in the Lehman Borthers 10
Year Bond Index and Lipper Peer Group Average Index. The plot points used to
draw the line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
INVESTMENT IN THE GROWTH OF $10,000
GROWTH OF $10,000 LEHMAN BROTHERS INVESTMENT IN THE
MONTH INVESTED IN SHARES 10 YEAR MUNI LIPPER PEER GROUP
ENDED OF THE FUND BOND INDEX AVERAGE INDEX
<S> <C> <C> <C>
12/91 $ 9,875 $10,000 $10,000
01/92 $ 9,918 $10,021 $10,014
03/92 $ 9,943 $ 9,991 $10,048
06/92 $10,332 $10,380 $10,366
09/92 $10,619 $10,682 $10,621
12/92 $10,840 $10,892 $10,808
03/93 $11,211 $11,314 $11,132
06/93 $11,537 $11,687 $11,417
09/93 $11,862 $12,106 $11,717
11/93 $11,770 $12,026 $11,662
</TABLE>
+ Hypothetical illustration of $10,000 invested at inception on December 31,
1991 through November 30, 1993 compared to the Lehman 10 Year Municipal Bond
Index and the Lipper Peer Group Average Index. Investment assumes deduction of
the front-end sales charge and CDSC.
The Lehman 10 Year Municipal Bond Index, which began in January 1980, is an
unmanaged, broad-based index comprised of approximately 5,200 bonds totaling
approximately $63 billion in market capitalization. The bonds are all
municipal bonds with an average maturity of 9.8 years, an average yield of
4.93% and a duration of 7.08 years.
The Lipper Analytical Services, Inc. Peer Group Average Index is composed of
an average of the Fund's peer group of mutual funds (10 as of November 30,
1993) investing in intermediate maturity New York tax-exempt bonds.
This period was one in which municipal bond prices fluctuated and the results
should not be considered as a representation of the dividend income or capital
gain or loss which may be realized from an investment in the Fund today. No
adjustment has been made for shareholder tax liability on dividends or capital
gains.
NOTE: All figures cited here and on the following pages represent past
performance of the Fund and do not guarantee future results.
FOR A GLOSSARY OF TERMS, PLEASE TURN TO THE END OF THIS REPORT.
5
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- ---------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS November 30, 1993 (unaudited)
INDUSTRY BREAKDOWN
Pie chart depicting the allocation of the Income Trust Intermediate Maturity New
York Municipals Fund's investment securities held at November 30, 1993 by
industry classification. The pie is broken in pieces representing industries in
the following percentages:
<TABLE>
<CAPTION>
INDUSTRY PERCENTAGE
<S> <C>
Pollution Control Revenue 6.4%
Transportation 18.9%
General Obligation 36.9%
Other Municipal Bonds,
Short-Term Investment
& Net Other Assets 0.6%
Education 16.0%
Hospital & Life Care 16.7%
Utilities 4.5%
</TABLE>
SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS
<TABLE>
<CAPTION>
Standard & Percent of
Moody's Poor's Market Value
<S> <C> <C> <C> <C>
- --------------------------------------------------
Aaa or AAA 26.5%
- --------------------------------------------------
Aa AA 16.1
- --------------------------------------------------
A A 14.2
- --------------------------------------------------
Baa BBB 38.6
- --------------------------------------------------
VMIG1 A-1 3.5
- --------------------------------------------------
NR NR 1.1
- --------------------------------------------------
100.0%
----------------
</TABLE>
AVERAGE MATURITY: 7.7 years
6
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- ---------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS November 30, 1993
<TABLE>
<S> <C> <C>
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Administration
MBIA -- Municipal Bond Investors Assurance
</TABLE>
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<C> <S> <C> <C> <C>
-------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES -- 107.6%
NEW YORK -- 95.5%
$ 400,000 Albany, New York, City School District,
Series B, (MBIA Insured),
6.000% due 12/15/00 Aaa AAA $ 440,500
200,000 Babylon, New York, Industrial
Development Authority, Babylon
Community Waste Management, Series A,
7.650% due 7/1/97 Baa1 NR 223,250
Battery Park City Authority, New York
Revenue:
175,000 7.400% due 5/1/02 A A- 200,812
2,000,000 Series A,
6.000% due 11/1/03 A1 AA 2,147,500
790,000 Brookhaven, New York, General
Obligation, (MBIA Insured),
5.300% due 5/1/01 Aaa AAA 823,575
100,000 Buffalo, New York, General Obligation,
(FGIC Insured),
5.800% due 2/1/00 Aaa AAA 106,750
Buffalo, New York:
205,000 Series A, (MBIA Insured),
5.900% due 4/1/01 Aaa AAA 221,144
385,000 Series B, (MBIA Insured),
5.900% due 4/1/01 Aaa AAA 415,319
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30, 1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
NEW YORK -- (CONTINUED)
$2,090,000 Buffalo, New York, Refunding,
(MBIA Insured),
4.75% due 4/1/03 Aaa AAA $ 2,087,388
550,000 Buffalo, New York, Municipal Water
Authority, Finance Authority, (FSA
Insured),
5.350% due 7/1/02 Aaa AAA 577,500
200,000 Canandaigua, New York, City School
District, (AMBAC Insured),
6.400% due 6/1/99 Aaa AAA 220,750
200,000 Central Square, New York, Central
School District, (FGIC Insured),
6.500% due 6/15/99 Aaa AAA 221,750
220,000 Chautauqua County, New York,
(AMBAC Insured),
4.625% due 3/1/02 Aaa AAA 220,825
250,000 Erie County, New York, Public
Improvement Project, (FGIC Insured),
5.500% due 1/15/00 Aaa AAA 263,750
2,500,000 Housing, New York, Revenue Refunding,
6.000% due 11/1/03 A1 AA 2,696,875
875,000 Huntington, New York, General
Obligation, Refunding, (FGIC Insured),
4.900% due 4/1/03 Aaa AAA 877,187
495,000 Jamestown, New York, General
Obligation, Series A,
7.000% due 3/15/00 Baa NR 538,313
Metropolitan Transportation Authority,
New York Service Contract Transit
Facilities:
Series 5,
735,000 6.100% due 7/1/98 Baa1 BBB 775,425
200,000 6.250% due 7/1/99 Baa1 BBB 213,000
1,000,000 Series 7,
5.100% due 7/1/03 Baa1 BBB 987,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30, 1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
NEW YORK -- (CONTINUED)
$ 100,000 Monroe County, New York, Industrial
Development Authority, Series A,
(Genesee Hospital),
6.500% due 11/1/99 A NR $ 105,750
1,500,000 Monroe County, New York, Public
Improvements, (AMBAC Insured),
4.700% due 6/1/03 Aaa AAA 1,492,500
750,000 New York, New York, City Municipal
Water Authority, Water & Sewer Systems
Revenue, Series A,
5.700% due 6/15/02 A A- 794,062
500,000 New York, New York, Series B,
6.25% due 10/1/01 Baa1 A- 525,000
1,500,000 New York, New York, Series B,
(AMBAC Insured),
5.400% due 8/15/03 Aaa AAA 1,554,375
New York, New York, Series C, Subseries
C-1, (MBIA Insured):
345,000 Prerefunded Balance,
6.000% due 8/1/01 Aaa AAA 375,619
5,000 Unrefunded Balance,
6.000% due 8/1/01 Aaa AAA 5,406
2,400,000 New York, New York, Series D,
5.375% due 8/15/03 Baa1 A- 2,370,000
New York State, Certificates of
Participation:
250,000 6.500% due 3/1/96 Baa1 BBB 260,000
650,000 5.150% due 2/1/98 Baa1 BBB 657,313
300,000 6.900% due 3/1/98 Baa1 BBB 322,125
New York State Dormitory Authority
Revenue Loan:
500,000 (City University), Series U,
5.250% due 7/1/97 Baa1 BBB 511,875
440,000 Genesee Valley B, (FHA Insured),
6.300% 8/1/02 NR AA 484,550
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30, 1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
NEW YORK -- (CONTINUED)
New York State Dormitory Authority
Revenue Loan: (continued)
$ 750,000 (Manhattan College),
5.900% due 7/1/02 NR NR $ 804,375
500,000 College and University Educational
Loan, (MBIA Insured),
6.200% due 7/1/01 Aaa AAA 541,250
365,000 (Episcopal Health), (FHA Insured),
5.200% due 2/1/03 NR AA 371,844
1,500,000 (City University), Second Generation,
Series A,
5.500% due 7/1/03 Baa1 BBB 1,515,000
Educational Facilities:
1,500,000 (State University), Series B,
5.200% due 5/15/03 Baa1 BBB+ 1,486,875
1,000,000 (City University), Series F,
5.200% due 7/1/03 Baa1 BBB 991,250
State University Educational
Facilities:
1,000,000 Series A,
5.300% due 5/15/03 Baa1 BBB+ 998,750
1,980,000 Series B,
7.200% due 5/15/02 Baa1 BBB+ 2,306,700
2,135,000 New York State Environmental Facilities
Corporation, Solid Waste Disposal,
(Occidental Petroleum Corporation),
Sub-Series B,
5.500% due 9/1/03 Baa2 BBB 2,145,675
200,000 New York State Environmental Facilities
Corporation, Resource Recovery Revenue
(Huntington Project), Series A,
7.375% due 10/1/99 Baa NR 220,000
500,000 New York State Environmental Facilities
Corporation, Pollution Control Revenue,
State Water Revolving Fund, Series A,
5.950% due 3/15/02 Aa AA 543,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30, 1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
NEW YORK -- (CONTINUED)
$1,250,000 New York State Local Government
Assistance Corporation, Refunding,
Series C,
4.900% due 4/1/03 A A $ 1,254,687
New York State Medical Care Facilities,
Finance Agency:
650,000 (Central Suffolk Hospital - Project A)
5.400% due 11/1/00 NR BBB 649,188
1,000,000 (Seed Meeting Health Care - Project B)
5.000% due 2/15/01 Aa NR 1,017,500
1,410,000 Mental Health Services, Series D
4.875% due 2/15/03 Baa1 BBB+ 1,369,462
750,000 Mental Health Services, Improvement,
Series F,
6.100% due 2/15/02 Baa1 BBB+ 791,250
600,000 Methodist Hospital, Series A,
(FHA Insured)
6.000% due 8/15/02 NR AA 648,750
250,000 Wycoff Hospital, Series A,
6.625% due 8/15/98 Baa BBB 268,750
600,000 Hospital and Nursing Home, Series A,
(FHA Insured),
5.100% due 2/15/03 NR AAA 613,500
Series B, (FHA Insured):
200,000 (Long Island College),
7.250% due 2/15/98 Aa AA 222,000
700,000 5.650% due 8/15/02 NR AAA 749,875
Series C, (FHA Insured):
850,000 5.900% due 8/15/02 Aa AA 912,688
245,000 (Mt. Sinai Hospital),
5.950% due 8/15/09 NR AAA 255,412
750,000 Series D, Longterm Health Facilities,
(Capital Guaranty),
5.750% due 11/1/02 Aaa AAA 809,063
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30, 1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
NEW YORK -- (CONTINUED)
New York State Municipal Bond Bank
Agency, Special Program Revenue:
$ 925,000 Buffalo, Series A,
6.500% due 3/15/00 NR BBB+ $ 1,000,156
250,000 Rochester, Series A,
6.300% due 3/15/00 NR A+ 269,062
250,000 New York State Power Authority Revenue
and General Purpose, Series Z,
5.850% due 1/1/00 Aa AA- 267,813
1,000,000 New York State Thruway Authority,
Emergency Highway Reconditioning and
Preservation, Series A, (FGIC Insured),
5.000% due 1/1/03 Aaa AAA 1,023,750
New York State Thruway Authority,
Service Contract Local Highway and
Bridges:
1,000,000 6.000% due 4/1/02 Baa1 BBB 1,043,750
1,750,000 6.000% due 4/1/03 Baa1 BBB 1,826,562
New York State Urban Development:
Correctional Facilities, Series 3:
1,230,000 6.700% due 1/1/99 Baa1 BBB 1,325,325
595,000 6.800% due 1/1/00 Baa1 BBB 647,062
1,000,000 5.250% due 1/1/03 Baa1 BBB 996,250
Cornell Center:
565,000 5.400% due 1/1/02 Baa1 BBB 570,650
595,000 5.500% due 1/1/03 Baa1 BBB 600,950
Niagara County, New York, (MBIA
Insured):
350,000 5.700% due 8/15/00 Aaa AAA 374,500
375,000 5.700% due 8/15/01 Aaa AAA 400,781
550,000 North Country, New York, Development
Authority, Waste Management Systems
Revenue, Series A,
6.500% due 7/1/01 Baa1 NR 584,375
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30, 1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
NEW YORK -- (CONTINUED)
Oneida-Herkimer, New York, Solid Waste
Disposal:
$ 530,000 5.900% due 4/1/98 Baa BBB $ 547,225
800,000 6.300% due 4/1/01 Baa BBB 840,000
Oyster Bay, New York, General
Obligation, (FGIC Insured):
200,000 Series B,
6.400% due 2/1/99 Aaa AAA 218,500
150,000 Series C,
6.300% due 10/1/99 Aaa AAA 164,625
Port Authority of New York
and New Jersey:
500,000 Consolidated Bonds 79th Series,
5.750% due 7/15/02 A1 AA- 541,250
2,000,000 Rites (AMBAC Insured),
4.400% due 10/1/03 Aaa AAA 1,925,000
920,000 Syracuse, New York, Certificates of
Participation, Hancock International
Airport,
6.300% due 1/1/02 A1 A 1,010,850
Triborough Bridge & Tunnel Authority,
New York:
1,000,000 General Purpose, Series X,
5.500% due 1/1/03 Aa A+ 1,053,750
500,000 Special Obligation Refunding, Series A,
(MBIA Insured),
6.100% due 1/1/00 Aaa AAA 545,625
1,000,000 Series R,
7.375% due 1/1/10 Aa A+ 1,162,500
100,000 Wappingers Central School District,
(AMBAC Insured),
6.250% due 12/1/99 Aaa AAA 110,625
-------------------------------------------------------------------------------------
64,256,218
-------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30, 1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
-------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
PUERTO RICO -- 8.3%
<C> <S> <C> <C> <C>
$1,500,000 Commonwealth of Puerto Rico, Highway
Revenue, Series X, Rites,
7.176% due 7/1/03 Baa1 A $ 1,511,250
750,000 Commonwealth of Puerto Rico, Highway
and Transit Authority, Series U,
5.875% due 7/1/99 Baa1 A 792,188
750,000 Puerto Rico Housing Finance Agency,
Special Obligation, Series H, (FSA In-
sured),
5.950% due 10/1/01 Aaa AAA 783,750
Puerto Rico Public Buildings Authority,
Public Education and Health Facilities
Refunding:
500,000 Series I,
6.600% due 7/1/99 A1 A+ 555,625
600,000 Series K, (FGIC Insured),
6.000% due 7/1/01 Aaa AAA 652,500
1,250,000 Series M,
5.300% due 7/1/03 Baa1 A 1,268,750
-------------------------------------------------------------------------------------
5,564,063
-------------------------------------------------------------------------------------
GUAM -- 3.8%
Guam Airport Authority Revenue, Series
A:
560,000 5.700% due 10/1/01 NR BBB 579,600
300,000 5.900% due 10/1/02 NR BBB 313,875
850,000 5.100% due 10/1/03 NR BBB 827,688
750,000 Government of Guam, Limited Obliga-
tion, Highway Revenue, Series A,
5.900% due 5/1/02 NR AAA 812,812
-------------------------------------------------------------------------------------
2,533,975
-------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES
(Cost $70,788,371) 72,354,256
-------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30, 1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM MUNICIPAL BONDS AND NOTES -- 3.9%
NEW YORK -- 1.8%
$ 300,000 New York, New York, Daily Adjustable
Series D,
2.000% due 8/1/95+ VMIG1 A- $ 300,000
200,000 New York, New York, Daily Adjustable
Sub-Series A-4
2.000% due 8/1/21+ VMIG1 A-1 200,000
700,000 New York, New York, Daily Adjustable
Sub-Series A-4
2.000% due 8/1/22+ VMIG1 A-1 700,000
PUERTO RICO -- 2.1%
1,400,000 Commonwealth of Puerto Rico,
Government Development Bank,
2.250% due 12/1/15++ VMIG1 A-1+ 1,400,000
-------------------------------------------------------------------------------------
TOTAL SHORT-TERM MUNICIPAL BONDS
AND NOTES
(Cost $2,600,000) 2,600,000
-------------------------------------------------------------------------------------
TOTAL INVESTMENTS (Cost $73,388,371*) 111.5% 74,954,256
OTHER ASSETS AND LIABILITIES (NET) (11.5) (7,724,456)
-------------------------------------------------------------------------------------
NET ASSETS 100.0% $ 67,229,800
-------------------------------------------------------------------------------------
<FN>
*Aggregate cost for Federal tax purposes.
+Variable rate demand bonds and notes are payable upon not more than one
business days' notice.
++Variable rate demand bonds and notes are payable upon not more than seven
business days' notice.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES November 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $73,388,371) (Note 1)
(See accompanying schedule) $74,954,256
Interest receivable 1,047,379
Receivable for Fund shares sold 841,860
Unamortized organization costs (Note 6) 37,130
- -----------------------------------------------------------------------------------
TOTAL ASSETS 76,880,625
- -----------------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities purchased $9,339,033
Dividends payable 163,055
Investment advisory fee payable (Note 2) 23,824
Due to custodian 21,277
Administration fee payable (Note 2) 16,167
Payable for Fund shares redeemed 12,300
Distribution fee payable (Note 3) 8,119
Custodian fees payable (Note 2) 7,500
Transfer agent fees payable (Note 2) 2,000
Accrued expenses and other payables 57,550
- -----------------------------------------------------------------------------------
TOTAL LIABILITIES 9,650,825
- -----------------------------------------------------------------------------------
NET ASSETS $67,229,800
- -----------------------------------------------------------------------------------
NET ASSETS consist of:
Accumulated net realized gain on investments sold $ 164,638
Unrealized appreciation of investments 1,565,885
Par value 7,872
Paid-in capital in excess of par value 65,491,405
- -----------------------------------------------------------------------------------
TOTAL NET ASSETS $67,229,800
- -----------------------------------------------------------------------------------
NET ASSET VALUE per share
($67,229,800 DIVIDED BY 7,871,998 shares of beneficial interest
outstanding)+ $8.54
- -----------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE ($8.54 DIVIDED BY 0.9875)
(based on sales charge of 1.25% of the offering price at
November 30, 1993) $8.65
- -----------------------------------------------------------------------------------
<FN>
+Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $2,377,764
EXPENSES:
Investment advisory fee (Note 2) $ 158,835
Sub-investment advisory and administration fee
(Note 2) 90,763
Distribution fee (Note 3) 68,072
Legal and audit fees 38,538
Shareholder reports expense 38,163
Registration and filing fees 30,140
Custodian fees (Note 2) 24,348
Transfer agent fees (Note 2) 19,716
Amortization of organization costs (Note 6) 12,042
Trustees' fees and expenses (Note 2) 6,594
Other 11,524
Fees waived by investment adviser and
administrator (Note 2) (204,826)
- ----------------------------------------------------------------------------------
TOTAL EXPENSES 293,909
- ----------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,083,855
- ----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTES 1 AND 4):
Net realized gain on investments sold during the
year 168,933
Net unrealized appreciation of investments
during the year 1,222,704
- ----------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,391,637
- ----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,475,492
- ----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
11/30/93 11/30/92*
<S> <C> <C>
Net investment income $ 2,083,855 $ 591,554
Net realized gain on investments sold during the period 168,933 68,863
Net unrealized appreciation of investments during the
period 1,222,704 343,181
- -------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,475,492 1,003,598
Distributions to shareholders from:
Net investment income (2,083,855) (591,554)
Net realized capital gain on investments (73,158) --
Net increase in net assets from Fund share
transactions (Note 5) 41,368,808 24,105,469
- -------------------------------------------------------------------------------------
Net increase in net assets 42,687,287 24,517,513
NET ASSETS:
Beginning of period 24,542,513 25,000
- -------------------------------------------------------------------------------------
End of period $67,229,800 $24,542,513
- -------------------------------------------------------------------------------------
<FN>
*The Fund commenced operations on December 31, 1991.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- ---------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
11/30/93 11/30/92*
<S> <C> <C>
Net Asset Value, beginning of period $ 8.18 $ 7.90
- -------------------------------------------------------------------------------------
Income from investment operations:
Net investment income+ 0.40 0.38
Net realized and unrealized gains++ 0.38 0.28
- -------------------------------------------------------------------------------------
Total from investment operations 0.78 0.66
- -------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.40) (0.38)
Distributions from net realized capital gains on investments (0.02) --
- -------------------------------------------------------------------------------------
Total distributions (0.42) (0.38)
- -------------------------------------------------------------------------------------
Net Asset Value, end of period $ 8.54 $ 8.18
- -------------------------------------------------------------------------------------
Total return+++ 9.76% 8.59%
- -------------------------------------------------------------------------------------
Ratios/Supplemental data:
Net assets, end of period (in 000's) $67,230 $24,543
Ratio of operating expenses to average net assets++++ 0.65% 0.65%**
Ratio of net investment income to average net assets 4.59% 4.95%**
Portfolio turnover rate 22% 68%
- -------------------------------------------------------------------------------------
<FN>
*The Fund commenced operations on December 31, 1991.
**Annualized.
+Net investment income before waiver of fees by investment adviser and
administrator for the year ended November 30, 1993 and waiver of fees and
reimbursement of expenses by investment adviser, sub-investment adviser and
administrator, custodian and distributor for the period ended November 30,
1992 were $0.36 and $0.32, respectively.
++The amount shown at this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities for the period because of the timing of purchases
and withdrawals of shares in relation to fluctuating market values of the
portfolio.
+++Total return represents aggregate total returns for the periods indicated
and does not reflect any applicable sales charges.
++++Annualized operating expense ratios before waiver of fees by investment
adviser and administrator for the year ended November 30, 1993 and waiver of
fees and reimbursement of expenses by investment adviser, sub-investment
adviser and administrator, custodian and distributor for the period ended
November 30, 1992 were 1.10% and 1.45%, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Shearson Income Trust (the "Trust") was organized as a
"Massachusetts business trust" under the laws of the Commonwealth of
Massachusetts on October 17, 1991. The Trust is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company. The Trust
consists of the following four funds: Smith Barney Shearson Limited Maturity
Treasury Fund, Smith Barney Shearson Limited Maturity Municipals Fund, Smith
Barney Shearson Intermediate Maturity California Municipals Fund and Smith
Barney Shearson Intermediate Maturity New York Municipals Fund (the "Fund"). The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
PORTFOLIO VALUATION: Securities are valued by The Boston Company Advisors,
Inc. ("Boston Advisors") after consultation with an independent pricing service
(the "Service") approved by the Board of Trustees. When, in the judgment of the
Service, quoted bid prices for securities are readily available and are
representative of the bid side of the market, these investments are valued at
the mean between the quoted bid prices and asked prices. Securities for which,
in the judgment of the Service, there are no readily obtainable market
quotations (which may constitute a majority of the portfolio securities) are
carried at fair value as determined by the Service, based on methods which
include consideration of: yields or prices of municipal securities of comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions. Securities, not valued by the service, for which
market quotations are not readily available, are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees.
Short-term investments that mature in 60 days or less are valued at amortized
cost.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued or
delayed delivery basis may be settled a month or more after the trade date.
Interest income is recorded on the accrual basis. Realized gains and losses from
securities sold are recorded on the identified cost basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund to
declare dividends from net investment income daily and to pay such dividends
monthly. Distributions from net realized capital gains, if any, are declared and
paid annually, after the end of the calendar year in which earned. In addition,
in
20
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
order to avoid the application of a 4% nondeductible excise tax on certain
undistributed amounts of ordinary income and capital gains, the Fund may make an
additional distribution shortly before December 31 in each year of any
undistributed ordinary income or capital gains and expects to make any other
distributions as are necessary to avoid this tax. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
FEDERAL INCOME TAXES: The Trust intends that the Fund separately qualify as
a regulated investment company, if such qualification is in the best interest of
its shareholders, by complying with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and by
distributing substantially all of its earnings to its shareholders. Therefore,
no Federal income tax provision is required.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY
TRANSACTIONS
Up to the close of business on July 30, 1993, the Fund had an investment
advisory agreement with Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers") on behalf of Shearson Lehman Advisors, a member of the Asset
Management Group of Shearson Lehman Brothers. Under the investment advisory
agreement, the Fund paid a monthly fee at the annual rate of 0.35% of the value
of its average daily net assets.
As of the close of business on July 30, 1993, The Travelers Inc. (which at
the time was known as Primerica Corporation) ("Travelers") and Smith Barney,
Harris Upham & Co. Incorporated completed the acquisition of substantially all
of the domestic retail brokerage and asset management businesses of Shearson
Lehman Brothers and Smith Barney, Harris Upham & Co. Incorporated was renamed
Smith Barney Shearson.
As of the close of business on July 30, 1993, Greenwich Street Advisors, a
division of Mutual Management Corp., which is controlled by Smith Barney
Shearson Holdings Inc. ("Holdings"), succeeded Shearson Lehman Advisors as the
Fund's investment adviser. Holdings is a wholly owned subsidiary of Travelers.
The new investment advisory agreement with Greenwich Street Advisors (the
"Advisory Agreement") contains terms and conditions substantially
21
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
similar to the investment advisory agreement with the predecessor investment
adviser and provides for payment of fees at the same rate as was paid to such
predecessor investment adviser.
The Fund has also entered into an administration agreement (the
"Administration Agreement") with Boston Advisors, an indirect wholly owned
subsidiary of Mellon Bank Corporation ("Mellon"). Under the Administration
Agreement, the Fund pays a monthly fee at the annual rate of 0.20% of the value
of its average daily net assets. Prior to May 21, 1993, Boston Advisors served
as the Fund's sub-investment adviser and administrator and was entitled to 0.20%
of the value of the Fund's average daily net assets for its services.
From time to time, Smith Barney Shearson and Boston Advisors may voluntarily
waive a portion or all of their respective fees otherwise payable to them. For
the year ended November 30, 1993, Smith Barney Shearson and Boston Advisors
voluntarily waived fees of $130,230 and $74,596, respectively.
For the year ended November 30, 1993, Smith Barney Shearson received
$412,346 from investors representing commissions (sales charges) on sales of
Fund shares.
A contingent deferred sales charge is generally payable by a shareholder in
connection with the redemption of shares within one year after the date of
purchase. For the year ended November 30, 1993, $26,433, in contingent deferred
sales charges were paid to Smith Barney Shearson.
No officer, director or employee of Smith Barney Shearson, Boston Advisors
or of any parent or subsidiary of those corporations receives any compensation
from the Trust for serving as a Trustee or officer of the Trust. The Trust pays
each Trustee who is not an officer, director or employee of Smith Barney
Shearson, Boston Advisors or any of their affiliates $4,000 per annum plus $500
per meeting attended and reimburses each such Trustee for travel and out-of-
pocket expenses.
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary
of Mellon, serves as the Trust's custodian. The Shareholder Services Group Inc.,
a subsidiary of First Data Corporation, serves as the Fund's transfer agent.
22
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. DISTRIBUTION PLAN
The Trust has adopted a plan of distribution (the "Plan") under Rule 12b-1
of the 1940 Act. Under the Plan, the Fund pays Smith Barney Shearson a monthly
fee at the annual rate of 0.15% of the value of its average daily net assets for
activities primarily intended to result in the sale of its shares.
Under its terms, the Plan shall remain in effect from year to year, provided
that such continuance is approved annually by vote of the Trust's Trustees,
including a majority of those Trustees who are not "interested persons" of the
Trust and who have no direct or indirect financial interest in the operation of
the Plan.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding short-
term investments, for the year ended November 30, 1993, were $54,530,772 and
$9,895,745, respectively.
At November 30, 1993, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $1,919,407
and aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over value was $353,522.
5. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest
with a $.001 par value. Changes in shares of beneficial interest in the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
11/30/93 11/30/92*
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Sold 5,539,351 $ 47,098,821 3,126,676 $ 25,143,207
Issued as reinvestment of dividends 178,195 1,514,219 50,012 405,446
Redeemed (846,976) (7,244,232) (178,425) (1,443,184)
- -------------------------------------------------------------------------------------
Net increase 4,870,570 $ 41,368,808 2,998,263 $ 24,105,469
- -------------------------------------------------------------------------------------
<FN>
*The Fund commenced operations on December 31, 1991.
</TABLE>
23
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
6. ORGANIZATION COSTS
The Fund bears all costs in connection with its organization including the
fees and expenses of registering and qualifying its shares for distribution
under Federal and state securities regulations. All such cost are being
amortized on the straight-line method over a period of five years from the
commencement of operations of the Fund. In the event that any of the initial
shares of the Fund are redeemed during such amortization period, the Fund will
be reimbursed for any unamortized organization costs in the same proportion as
the number of shares redeemed bears to the number of initial shares held at the
time of redemption.
7. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of New
York, its political subdivisions, agencies and public authorities to obtain
funds for various public purposes. The Fund is more susceptible to factors
adversely affecting issuers of New York municipal securities than is a municipal
bond fund that is not concentrated in these issuers to the same extent.
24
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- ---------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
SMITH BARNEY SHEARSON INCOME TRUST:
We have audited the accompanying statement of assets and liabilities,
including the schedule of portfolio investments, of Intermediate Maturity New
York Municipals Fund, of Smith Barney Shearson Income Trust, as of November 30,
1993, and the related statement of operations for the year then ended, and the
statement of changes in net assets and the financial highlights for the year
then ended and the period from December 31, 1991 (commencement of operations) to
November 30, 1992. 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 includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1993 by correspondence with the custodian and brokers. 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
Intermediate Maturity New York Municipals Fund, of Smith Barney Shearson Income
Trust, as of November 30, 1993, the results of its operations for the year then
ended, and the changes in its net assets and the financial highlights for the
year then ended and the period from December 31, 1991 (commencement of
operations) to November 30, 1992, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 10, 1994
25
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------
TAX INFORMATION
PERIOD ENDED NOVEMBER 30, 1993 (UNAUDITED)
Of the dividends paid by the Fund from investment income for the period ended
November 30, 1993, 100% is tax-exempt for regular Federal income tax purposes.
26
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
GLOSSARY OF COMMONLY USED MUTUAL FUND TERMS
CAPITAL GAIN (OR LOSS): This is the increase (or decrease) in the market value
(price) of a security in your portfolio. If a stock or bond appreciates in
price, there is a capital gain; if it depreciates there is a capital loss. A
capital gain or loss is "realized" upon the sale of a security; if net capital
gains exceed net capital losses, there may be a capital gain distribution to
shareholders.
CONTINGENT DEFERRED SALES CHARGE (CDSC): One kind of back-end load, a CDSC is
imposed if shares are redeemed during the first few years of ownership. The CDSC
may be expressed as a percentage of either the original purchase price or the
redemption proceeds. Most CDSCs decline over time, and some will not be charged
if shares are redeemed after a certain period of time.
DISTRIBUTION RATE: This is the rate at which a mutual fund pays out (or
distributes) interest, dividends and realized capital gains to shareholders. A
fund's distribution rate is usually expressed as an annualized percent of the
fund's offering price.
DIVIDEND: This is income generated by securities in a portfolio and distributed
after expenses to shareholders.
FRONT-END SALES CHARGE: This is the sales charge applied to an investment at the
time of initial purchase.
NET ASSET VALUE (NAV): Net asset value is the total market value of all
securities held by a fund, minus any liabilities, divided by the number of
shares outstanding. It is the value of a single share of a mutual fund on a
given day. The total value of your investment would be the NAV multiplied by the
number of shares you own.
SEC YIELD: This standardized calculation of a mutual fund's yield is based on a
formula developed by the Securities and Exchange Commission (SEC) to allow funds
to be compared on an equal basis. It is an annualized yield based on the
portfolio's potential earnings from dividends, interest and yield to maturity of
its holdings, and it reflects the payments of all portfolio expenses for the
most recent 30-day period. Mutual funds are required to use this figure when
stating yield.
TOTAL RETURN: Total return measures a fund's performance, taking into account
the combination of dividends paid and the gain or loss in the value of the
securities held in the portfolio. It may be expressed on an AVERAGE ANNUAL basis
or CUMULATIVE basis (total change over a given period). In addition, total
return may be expressed with or without the effects of sales charges or the
reinvestment of dividends and capital gains.
Whenever a fund reports any type of performance, it must also report the average
annual total return according to the standardized calculation developed by the
SEC. The SEC AVERAGE ANNUAL TOTAL RETURN calculation includes the effects of all
fees and sales charges and assumes the reinvestment of all dividends and capital
gains.
27
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
TRUSTEES
Burt N. Dorsett
Peter H. Gallary
Elliot S. Jaffe
Harry W. Knight
Heath B. McLendon
Cornelius C. Rose
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD
Stephen J. Treadway
PRESIDENT
Richard P. Roelofs
EXECUTIVE VICE PRESIDENT
Lawrence T. McDermott
VICE PRESIDENT AND
INVESTMENT OFFICER
Vincent Nave
TREASURER
Francis J. McNamara, III
SECRETARY
DISTRIBUTOR
Smith Barney Shearson
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISER
Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
28
<PAGE>
INVESTOR BENEFITS MONTHLY DISTRIBUTIONS It's your fund's
policy to distribute dividend income monthly.
AUTOMATIC REINVESTMENT You may reinvest your
dividends and/or capital gains automatically in
additional shares of your fund at the current net
asset value.
UNLIMITED EXCHANGES If your investment goals
change, you may exchange into another Smith Barney
Shearson mutual fund with the same sales charge
structure without incurring a sales charge.*
SYSTEMATIC INVESTMENT PLAN This program
allows you to invest equal dollar amounts
automatically on a regular basis, monthly or
quarterly.
AUTOMATIC CASH WITHDRAWAL PLAN With this
plan, you may withdraw money on a regular basis
while maintaining your investment.
MUTUAL FUND EVALUATION SERVICE Through your
Financial Consultant, you may obtain a free
personalized analysis of how your fund has
performed for you, taking into account the effect
of every transaction.
FOR MORE INFORMATION ABOUT THESE BENEFITS, OR IF
YOU HAVE ANY OTHER QUESTIONS, PLEASE CALL YOUR
FINANCIAL CONSULTANT OR WRITE:
MUTUAL FUND POLICY GROUP
SMITH BARNEY SHEARSON
388 GREENWICH STREET 37TH FLOOR
NEW YORK, NY 10013
*AFTER WRITTEN NOTIFICATION, EXCHANGE
PRIVILEGE MAY BE MODIFIED OR TERMINATED
AT ANY TIME.
<PAGE>
THIS REPORT IS SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF
THE SMITH BARNEY SHEARSON INTERMEDIATE
MATURITY NEW YORK MUNICIPALS FUND. IT IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS UNLESS ACCOMPANIED OR PRECEDED BY
AN EFFECTIVE PROSPECTUS FOR THE FUND, WHICH
CONTAINS INFORMATION CONCERNING THE FUND'S
INVESTMENT POLICIES AND APPLICABLE SALES
CHARGES, FEES AND EXPENSES AS WELL AS OTHER
PERTINENT INFORMATION.
SMITH BARNEY SHEARSON
INTERMEDIATE
MATURITY
NEW YORK
MUNICIPALS FUND
Two World Trade Center
New York, New York 10048
Fund 164
FD0311 A4
<PAGE>
ANNUAL REPORT NOVEMBER 30, 1993
[GRAPHIC]
SMALL BOX ABOVE FUND NAME SHOWING
A MAP AND MEASURING TOOLS.
SMITH BARNEY SHEARSON
INTERMEDIATE
MATURITY
CALIFORNIA
MUNICIPALS
FUND
[LOGO]
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
DEAR SHAREHOLDER:
We are pleased to provide the annual report for Smith Barney Shearson
Intermediate Maturity California Municipals Fund for the fiscal year ended
November 30, 1993. During the past year the net asset value of the Fund
increased to $8.50 from $8.04, and the Fund paid dividends totaling $0.39 per
share. The total return on your investment during the past fiscal year was
10.70%. This is an attractive total return, especially in comparison to
longer-maturity funds which may offer a somewhat higher return but also are
more
volatile. The Fund's total return earned it a first quartile ranking from
Lipper
Analytical Services, Inc., a nationally-recognized mutual fund ranking
organization. We are pleased with this performance, and will endeavor to
provide
similarly attractive relative performance in future years.
To allow you to compare the performance of your investment in the Fund to
that of the general market, we have included a chart showing the values of
$10,000 invested in the Fund since its inception and in the Lehman Brothers
Ten
Year Municipal Bond Index. The Lehman Brothers Ten Year Municipal Bond Index
is
an unmanaged, broad-based index which includes about 5,200 tax-free issues
totaling approximately $63 billion in market capitalization. The average
maturity of the securities in the Index is approximately 9.8 years; in
comparison, the average maturity of the securities in the Fund is 8.5 years.
Like the Fund, the Index includes issues drawn from a diverse range of market
sectors, including general obligation, revenue and insured bonds that are
rated
investment grade (AAA to BAA). Because it is unmanaged, the Lehman Brothers
Ten
Year Municipal Index is not subject to same management and trading expenses of
a
mutual fund. In addition, the Index does not fully reflect the performance of
California securities which are in high demand because of the state's high
personal income tax rates.
AN OVERVIEW OF THE MUNICIPAL MARKET
Over the past year the municipal market experienced a historic decline in
interest rates as well as a record amount of new issuance. The decline in
rates
was caused primarily by increased demand resulting from the increase in
Federal
tax rates. As interest rates dropped steadily, municipalities -- like
individuals -- rushed to refinance older, higher interest rate debt at the
new,
lower levels. In fact, of the $300 billion in new issues in 1993, $195 billion
were refinancing deals. The mix of heavy supply and strong demand was mutually
beneficial to both issuers and investors as the market experienced two
significant price rallies.
CONTINUED
1
<PAGE>
In 1994, we anticipate a drop in the number of refinancing deals brought to
the market by municipalities. In contrast to 1993's record number, total new
issuance should be in the range of $165 to $170 billion. With this expected
drop
in supply and the reality of higher tax rates, we believe that tax-exempt
securities should outperform taxable bonds over the next year.
PORTFOLIO STRATEGY
Over the past year the municipal market has experienced a flattening of the
yield curve for maturities between ten and thirty years. Because the shorter
end
(maturities between two and ten years) has remained steep, we have kept our
average maturity at nine years. Throughout 1994, we expect to see a flattening
of the entire yield curve -- including the short end. When a yield curve
flattens, the difference in yield between the short-term and long-term
securities narrows. Until we see yields rise in the short-end of the curve, we
will continue to keep our average maturity at about nine years. This strategy
will allow us to provide shareholders with the maximum amount of dividend
income
without assuming additional interest rate risk.
We continue to invest the Fund's holdings in high quality investments. At
the
end of its fiscal year, 100% of the Fund was invested in issues rated BBB or
higher (investment grade) by either Standard & Poor's Corporation or Moody's
Investor Services. The majority of the Fund's holdings were in the Water &
Sewer, Hospital, and Transportation sectors. It is our opinion that this
diversified, high quality approach to the market best serves the interests of
the Fund's investors.
DIVIDEND POLICY
The Fund does not pay a level monthly dividend rate but instead distributes
to Shareholders the accrued monthly income earned by the portfolio. We will
continue to strive to offer an attractive dividend distribution as we also
face
declining interest rates and rising volatility.
We appreciate the confidence you continue to place in us, and will continue
to strive to maintain your trust.
Sincerely,
Heath B. McLendon Joseph P. Deane
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
January 5, 1994
2
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- ---------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS November 30, 1993
(unaudited)
INDUSTRY BREAKDOWN
Pie chart depicting the allocation of the Income Trust Intermediate Maturity
California Municipals Fund Investment securities held at November 30, 1993 by
industry classification. The pie is broken in pieces representing industries
in
the following percentages:
<TABLE>
<CAPTION>
INDUSTRY PERCENTAGE
<S> <C>
Utilities 11.6%
Transportation 10.8%
Other Municipal Bonds, Net
Other Assets & Short-Term
Investment 18.9%
Industrial Development
Revenue 4.8%
Education 6.1%
General Obligation 7.9%
Hospital 16.7%
Housing 4.0%
Water & Sewer 19.2%
</TABLE>
SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS.
<TABLE>
<CAPTION>
Percent
Standard & of
Moody's Poor's Value
<S> <C> <C> <C>
- ----------------------------------------
Aaa OR AAA 34.4%
- ----------------------------------------
Aa AA 7.1
- ----------------------------------------
A A 26.7
- ----------------------------------------
Baa BBB 27.8
- ----------------------------------------
VMIG1 A-1 3.7
- ----------------------------------------
P1 NR 0.3
- ----------------------------------------
100 %
----------------
</TABLE>
AVERAGE MATURITY: 8.5 years
3
<PAGE>
HISTORICAL PERFORMANCE (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD NET ASSET VALUE CAPITAL GAINS DIVIDENDS TOTAL
ENDED BEGINNING ENDING DISTRIBUTED PAID RETURN**
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------
12/31/91* -
11/30/92 $7.90 $8.04 -- $0.35 6.33%
---------------------------------------------------------------------
11/30/93 8.04 8.50 -- 0.39 10.70
---------------------------------------------------------------------
TOTAL $0.74
---------------------------------------------------------------------
CUMULATIVE TOTAL RETURN - (12/31/91 THROUGH 11/30/93) 17.71%
---------------------------------------------------------------------
<FN>
*The Fund commenced operations on December 31, 1991.
**Figures assume reinvestment of all dividends and capital gains distributions
and do not reflect deduction of the applicable sales charges.
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY
AND CAPITAL GAINS, IF ANY, ANNUALLY.
AVERAGE ANNUAL TOTAL RETURN*** (UNAUDITED)
<TABLE>
<CAPTION>
WITHOUT FRONT END WITH FRONT END
AND CONTINGENT AND CONTINGENT
DEFERRED SALES DEFERRED SALES
CHARGES CHARGES
WITH WITHOUT WITH WITHOUT
WAIVER WAIVER WAIVER WAIVER
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
- ---
YEAR ENDED 11/30/93 10.70% 9.79% 8.33%
7.44%
- ------------------------------------------------------------------------------
- ---
INCEPTION (12/31/91) THROUGH 11/30/93 8.88% 7.67% 8.17%
6.97%
- ------------------------------------------------------------------------------
- ---
<FN>
***Shares of the Fund are subject to a maximum 1.25% front-end sales charge
and
a maximum 1% contingent deferred sales charge (CDSC). All total return
figures shown reflect the reinvestment of dividends and capital gains. The
Fund waived fees and reimbursed expenses from December 31, 1991 to the
present; a shareholder's actual return for the period during which fees
were
waived would be the higher of the two numbers shown.
</TABLE>
4
<PAGE>
A line graph depicting the total growth (including reinvestment of dividends
and
capital gains) of a hypothetical investment of $10,000 in Intermediate
Maturity
California Municipals Fund shares on December 31, 1991 through November 30,
1993
as compared with the growth of a $10,000 investment in Lehman Brothers 10 Year
Bond Index and Lipper Peer Group Average Index. The plot points used to draw
the
line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000 GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN THE INVESTMENT IN THE
MONTH INVESTED IN SHARES OF LEHMAN BROTHERS 10 LIPPER PEER GROUP
ENDED THE FUND YEAR MUNI BOND INDEX AVERAGE INDEX
<S> <C> <C> <C>
12/91 $ 9,875 $10,000 $10,000
01/92 9,880 10,021 10,020
03/92 9,839 9,991 9,980
06/92 10,182 10,381 10,293
09/92 10,425 11,682 10,552
12/92 10,625 10,892 10,728
03/93 10,977 11,314 11,065
06/93 11,373 11,687 11,361
09/93 11,717 12,106 11,719
11/93 11,624 12,026 11,654
</TABLE>
+ Hypothetical illustration of $10,000 invested at inception on December 31,
1991 through November 30, 1993 compared to the Lehman 10 Year Municipal Bond
Index and the Lipper Peer Group Average Index. Investment assumes deduction
of
the front-end sales charge and CDSC.
The Lehman 10 Year Municipal Bond Index, which began in January 1980, is an
unmanaged, broad-based index comprised of approximately 5,200 bonds totaling
approximately $63 billion in market capitalization. The bonds are all
municipal bonds with an average maturity of 9.8 years, an average yield of
4.93% and a duration of 7.08 years.
The Lipper Analytical Services, Inc. Peer Group Average Index is composed of
an average of the Fund's peer group of mutual funds (10 as of November 30,
1993) investing in intermediate maturity California tax-exempt bonds.
This period was one in which municipal bond prices fluctuated and the
results
should not be considered as a representation of the dividend income or
capital
gain or loss which may be realized from an investment in the Fund today. No
adjustment has been made for shareholder tax liability on dividends or
capital
gains.
NOTE: All figures cited here and on the following pages represent past
performance of the Fund and do not guarantee future results.
FOR A GLOSSARY OF TERMS, PLEASE TURN TO THE END OF THIS REPORT.
5
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- ---------------------------------------------
PORTFOLIO OF INVESTMENTS November 30,
1993
<TABLE>
<S> <C>
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
</TABLE>
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
<C> <S>
<C> <C> <C>
-----------------------------------------------------------------------------
- --------
MUNICIPAL BONDS AND NOTES -- 102.0%
CALIFORNIA -- 97.5%
$ 500,000 Alameda County, California, Certificates of
Participation, (Santa Rita Jail Project), (MBIA
Insured),
5.250% due 12/1/04
Aaa AAA $ 511,250
500,000 Bakersfield, California, Hospital Revenue, (Adventist
Health Systems/West Agency), (MBIA Insured),
5.100% due 3/1/03
Aaa AAA 509,375
Belmont, California, Redevelopment Agency, Tax
Allocation Project, (Los Costanos Community
Development), Series A:
150,000 5.850% due 8/1/02
A A- 156,000
160,000 5.950% due 8/1/03
A A- 167,000
California Educational Facilities Authority:
1,000,000 Pooled College and University Financing, Series B,
5.800% 6/1/02
Baa NR 1,001,250
985,000 (Saint Mary's College)
4.900% due 10/1/03
A NR 977,613
(Loyola Marymount University), Series B:
35,000 5.500% due 10/1/00
A1 NR 36,881
320,000 6.300% due 10/1/03
A1 NR 352,400
200,000 (Mills College),
6.500% due 9/1/02
Baa1 NR 216,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S>
<C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
California Educational Facilities Authority:
Pooled College and University Financing (continued)
$ 500,000 (University of Southern California),
5.300% due 10/1/04
Aa AA $ 514,375
100,000 California, General Obligation Bonds,
9.800% due 10/1/00
Aa AA 128,750
200,000 California Health Facilities Financing Authority,
(Sisters of Providence),
6.200% due 10/1/03
A1 AA- 210,000
400,000 California Health Facilities, (St. Elizabeth's Hospital
Project),
5.900% due 11/15/03
A1 A+ 416,500
200,000 California Health Facilities Revenue, Adventist Health
System/West, Series B, (MBIA Insured),
6.150% due 3/1/99
Aaa AAA 215,500
15,000 California Housing Finance Agency Revenue, Home
Mortgage,
10.000% due 2/1/02
Aa A+ 15,169
305,000 Cucamonga, California, County Water District,
Certificates of Participation, (FGIC Insured),
6.000% due 9/1/03
Aaa AAA 324,444
300,000 Daly City, California, Certificates of Participation,
(MBIA Insured),
5.375% due 6/1/04
Aaa AAA 306,750
Desert Sands, California, Unified School District,
Certificates of Participation:
500,000 (Measure O Project), Series C
4.650% due 3/1/00
A NR 490,625
1,000,000 (Measure O Project), Series C
4.900% due 3/1/02
A NR 976,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S>
<C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
$ 200,000 Escondido, California, Joint Powers Financing
Authority, Certificates of Participation, Tax
Allocation Revenue, (AMBAC Insured),
5.500% due 9/1/00
Aaa AAA $ 210,500
190,000 Escondido, California, Unified School District,
Certificates of Participation, Series A,
5.400% due 7/1/03
A A- 190,475
1,465,000 Foothill, California, Trans Zone, Certificates of
Participation, Series A,
5.050% due 5/1/00
Baa1 NR 1,450,350
355,000 Fresno, California, Joint Powers Financing Authority,
Certificates of Participation, (Street Light
Acquisition Project), Series A,
5.375% due 8/1/03
A A+ 355,444
855,000 Garden Grove, California, Agency Tax Allocation
Revenue, Community Development,
5.375% due 10/1/03
NR A 846,450
Irvine Ranch, California, Water District, Joint Powers
Agency, Local Pool Revenue, Issue II,
800,000 7.200% due 8/15/96
NR BBB 849,000
480,000 7.800% due 8/15/01
NR BBB 533,400
285,000 Kern, California, High School District, Series C, (MBIA
Insured),
8.750% due 8/1/03
Aaa AAA 361,950
230,000 Kings River Conservation District, (California Pine
Flat Power Project), Series D,
5.375% due 2/1/00
Aa AA 240,062
45,000 Los Angeles County Transportation, Certificates of
Participation, Series G,
6.100% due 1/1/00
A NR 48,319
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S>
<C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
$ 30,000 Los Angeles County, Multiple Capital Facilities,
Certificates of Participation, (Project III),
5.800% due 11/1/98
A1 A $ 31,313
Los Angeles County, California, Transportation
Authority, Transportation Commission Certificates of
Participation:
500,000 Series B,
6.200% due 7/1/03
A NR 539,375
30,000 Series G,
6.300% due 1/1/02
A1 NR 32,587
375,000 Marysville, California, Hospital Revenue, (Fremont
Rideout Health Group), Group A, (AMBAC Insured),
5.900% due 1/1/03
Aaa AAA 401,250
500,000 Modesto, California, High School District, (Stanislaus
Company), (FGIC Insured),
5.300% due 8/1/04
Aaa AAA 513,750
Mojave, California, Water District, California
Improvement District, (Moronogo Basin):
250,000 6.250% due 9/1/02
Baa1 BBB+ 261,250
280,000 6.375%, due 9/1/03
Baa1 BBB+ 294,000
Olivenhain Municipal Water District, California,
530,000 4.900% due 6/1/04
Aaa AAA 526,688
555,000 5.000% due 6/1/05
Aaa AAA 551,531
Orange County, Cailfornia, Development Agency Tax
Allocation, (Santa Ana Heights Project):
500,000 5.500% due 9/1/00
Baa1 BBB 505,625
500,000 5.600% due 9/1/01
Baa1 BBB 506,250
30,000 Padre Dam Municipal Water District, California
Improvement District, Series C,
6.200% due 11/1/02
A A- 32,325
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S>
<C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
Palm Springs, California, Financing Authority, Airport
Revenue, (Palm Springs Regional Airport), (MBIA
Insured):
$ 200,000 5.400% due 1/1/03
Aaa AAA $ 208,750
400,000 5.500% due 1/1/04
Aaa AAA 417,500
75,000 Pasadena, California, Certificates of Participation,
6.750% due 8/1/00
A1 A+ 82,781
385,000 Pinole, California, Redevelopment Agency, Series A,
(Pinole Vista Redevelopment Project Tax Allocation),
(MBIA Insured),
5.500% due 8/1/03
Aaa AAA 407,619
1,000,000 Pleasanton, California, Joint Powers Financing
Authority, Reassessment, Series A,
5.600% due 9/2/00
Baa1 NR 1,007,500
200,000 Rancho, California, Revenue Refunding, Water District
Financing Authority, (FGIC Insured),
5.600% due 8/1/00
Aaa AAA 213,500
795,000 Redding, California, Joint Powers Financing Authority,
Solid Waste and Corporate Yard, Series A,
5.000% due 1/1/04
A BBB+ 768,169
Riverside, California, Electric Revenue:
300,000 4.700% due 10/1/03
Aa AA- 296,625
300,000 4.800% due 10/1/04
Aa AA- 296,625
150,000 Riverside County, California, Transportation
Commission, Sales Tax Revenue, Series A,
6.500% due 6/1/00
A A+ 165,375
Sacramento, California, Regional Transportation,
Certificates of Participation, Series A:
300,000 6.375% due 3/1/02
A1 NR 325,125
350,000 6.400% due 3/1/03
A1 NR 380,187
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S>
<C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
$ 200,000 San Bernardino County, California, Certificates of
Participation, Airport Improvement Project, (MBIA
Insured),
5.700% due 1/1/01
Aaa AAA $ 211,750
100,000 San Diego, California, Certificates of Participation,
Unified School District, Series B,
6.000% due 7/1/03
Aa AA- 106,375
375,000 San Diego County, California, Regional Building
Authority, Lease Revenue, (San Miguel Fire Protection),
Series A,
5.200% due 1/1/04
Aaa AAA 383,438
25,000 San Diego County, California, Regional Transportation
Commission, Sales Tax Revenue, Series A,
6.400% due 4/1/01
A A+ 27,063
San Francisco, California, City and County Public
Utilities Commission, Series A:
500,000 Sewer Revenue, (AMBAC Insured),
5.600% due 10/1/03
Aaa AAA 527,500
200,000 Water Revenue,
6.000% due 11/1/01
Aa AA 217,250
San Francisco, California, Downtown Parking, Series R:
450,000 6.000% due 4/1/02
A NR 461,250
280,000 6.150% due 4/1/03
A NR 288,750
San Jose, California, Airport Revenue:
500,000 (MBIA Insured),
5.750% due 3/1/03
Aaa AAA 528,750
800,000 (FGIC Insured),
5.400% due 3/1/04
Aaa AAA 811,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S>
<C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
Santa Barbara, California, Certificates of
Participation, (Harbor Refunding Project):
$ 270,000 6.400% due 10/1/02
A NR $ 292,612
285,000 6.500% due 10/1/03
A NR 309,581
200,000 Santa Fe Springs, California, Redevelopment Agency,
Redevelopment Project Tax Allocation, Series A, (MBIA
Insured),
5.600% due 9/1/00
Aaa AAA 213,000
Sierra Sands Unified School District, California,
Sierra Sands School Financing Corporation, Certificates
of Participation:
450,000 5.250% due 3/1/00
Baa NR 450,000
470,000 5.350% due 3/1/01
Baa NR 470,000
200,000 Southern California, Public Power Authority, (Palo
Verde Project), Series C, (AMBAC Insured),
5.700% due 7/1/02
Aaa AAA 212,750
450,000 Southern California Rapid Transit Authority, District
A2, Special Assessment,
6.100% due 9/1/03
Baa1 A- 471,937
200,000 State of California, General Obligation Bonds,
6.000% due 9/1/03
Aa A+ 216,000
200,000 State of California State Department, Water Revenue,
Series J-2, (Central Valley Project),
5.600% due 12/1/02
Aa AA 212,000
900,000 Suisun City, California, Redevelopment Agency, Tax
Allocation,
5.200% due 10/1/04
Aaa AAA 913,500
105,000 Tehachapi, California, Unified School District, School
Facilities Corporation, Certificates of Participation,
5.900% due 8/1/03
Baa1 NR 104,081
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
-----------------------------------------------------------------------------
- --------
<C> <S>
<C> <C> <C>
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
Tulare County, California, Certificates of
Participation, (Financing Project), (MBIA Insured),
$ 200,000 5.700% due 11/15/03
Aaa AAA $ 213,000
250,000 5.800% due 11/15/04
Aaa AAA 267,500
500,000 Ukiah, California, Unified School District, Certificate
of Participation, (Measure A Capital Projects),
5.625% due 9/1/02
Baa1 BBB 500,625
University of California, Multiple Purpose Projects,
(MBIA Insured),
200,000 Series A,
6.100% due 9/1/00
Aaa AAA 216,500
1,320,000 Series B,
4.500% due 9/1/04
Aaa AAA 1,270,500
205,000 Upland, California, Certificates of Participation,
Police Building Refunding Project, (AMBAC Insured),
6.200% due 8/1/02
Aaa AAA 223,706
200,000 Walnut Valley, California, Water District, Certificates
of Participation, (Badillo/Grand Transmission Project),
(FGIC Insured),
5.800% due 2/1/02
Aaa AAA 214,500
-----------------------------------------------------------------------------
- --------
31,713,450
-----------------------------------------------------------------------------
- --------
GUAM -- 4.5%
1,500,000 Guam Power Authority Revenue, Series A,
5.200% due 10/1/04
NR BBB 1,458,750
-----------------------------------------------------------------------------
- --------
TOTAL MUNICIPAL BONDS AND NOTES
(Cost $32,389,738)
33,172,200
-----------------------------------------------------------------------------
- --------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED) November 30,
1993
<TABLE>
<C> <S>
<C> <C> <C>
SHORT-TERM MUNICIPAL BONDS AND NOTES -- 4.3%
CALIFORNIA -- 4.3%
California Health Facilities:
$ 575,000 (St. Joseph's Hospital Project), Series B,
1.800% due 7/1/13+
VMIG1 A-1+ $ 575,000
100,000 (Sutter Hospital Project), Series A,
1.800% due 3/1/20+
VMIG1 A-1+ 100,000
California Pollution Control Project:
100,000 (Shell Oil Project), Series B,
1.800% 10/1/11+
VMIG1 A-1+ 100,000
100,000 (Honey Lake Power Company Project),
2.150%, due 9/1/18+
P1 NR 100,000
Irvine Ranch, California, Water District,
500,000 1.850% due 8/1/16+
VMIG1 A-1+ 500,000
-----------------------------------------------------------------------------
- --------
TOTAL SHORT-TERM MUNICIPAL BONDS AND NOTES
(Cost $1,375,000)
1,375,000
-----------------------------------------------------------------------------
- --------
TOTAL INVESTMENTS (Cost $33,764,738*)
106.3% 34,547,200
OTHER ASSETS AND LIABILITIES (NET)
(6.3) (2,033,318)
-----------------------------------------------------------------------------
- --------
NET ASSETS
100.0% $32,513,882
-----------------------------------------------------------------------------
- --------
<FN>
*Aggregate cost for Federal tax purposes.
+Variable rate demand bonds and notes are payable upon not more than one
business day's notice.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES November 30,
1993
<TABLE>
<S> <C>
<C>
ASSETS:
Investments, at value (Cost $33,764,738) (Note 1)
See accompanying schedule
$34,547,200
Receivable for Fund shares sold
602,963
Interest receivable
449,660
Receivable from investment advisor (Note 2)
53,658
Unamortized organization costs (Note 6)
37,130
- ------------------------------------------------------------------------------
- -------
TOTAL ASSETS
35,690,611
- ------------------------------------------------------------------------------
- -------
LIABILITIES:
Payable for investment securities purchased
$2,981,668
Dividends payable
79,167
Due to custodian
30,683
Payable for Fund shares redeemed
28,167
Custodian fees payable (Note 2)
4,000
Transfer agent fees payable (Note 2)
1,200
Accrued expenses and other payables
51,844
- ------------------------------------------------------------------------------
- -------
TOTAL LIABILITIES
3,176,729
- ------------------------------------------------------------------------------
- -------
NET ASSETS
$32,513,882
- ------------------------------------------------------------------------------
- -------
NET ASSETS consist of:
Accumulated net realized gain on investments sold
$ 21,329
Unrealized appreciation of investments
782,462
Par value
3,827
Paid-in capital in excess of par value
31,706,264
- ------------------------------------------------------------------------------
- -------
TOTAL NET ASSETS
$32,513,882
- ------------------------------------------------------------------------------
- -------
NET ASSET VALUE per share
($32,513,882 DIVIDED BY 3,827,066 shares of beneficial interest
outstanding)+
$8.50
- ------------------------------------------------------------------------------
- -------
MAXIMUM OFFERING PRICE PER SHARE ($8.50 DIVIDED BY 0.9875)
(based on sales charge of 1.25% of the offering price at November 30,
1993) $8.61
- ------------------------------------------------------------------------------
- -------
<FN>
+Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest
$1,028,828
- ------------------------------------------------------------------------------
- -------
EXPENSES:
Investment advisory fee (Note 2) $ 69,649
Shareholder reports expense 43,107
Sub-investment advisory and administration (Note 2) 39,799
Legal and audit fees 39,746
Distribution fee (Note 3) 29,849
Registration and filing fees 23,308
Custodian fees (Note 2) 13,659
Amortization of organization costs (Note 6) 12,042
Transfer agent fees (Note 2) 8,581
Trustees' fees and expenses (Note 2) 6,613
Other 9,386
Fees waived and expenses reimbursed by investment adviser,
administrator and distributor (Note 2) (153,375)
- ------------------------------------------------------------------------------
- -------
TOTAL EXPENSES
142,364
- ------------------------------------------------------------------------------
- -------
NET INVESTMENT INCOME
886,464
- ------------------------------------------------------------------------------
- -------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTES 1 AND 4):
Net realized gain on investments during the year
25,380
Net unrealized appreciation of investments during the year
673,107
- ------------------------------------------------------------------------------
- -------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
698,487
- ------------------------------------------------------------------------------
- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$1,584,951
- ------------------------------------------------------------------------------
- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- ---------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR
PERIOD
ENDED
ENDED
11/30/93
11/30/92*
<S> <C>
<C>
Net investment income $ 886,464 $
262,796
Net realized gain/(loss) on investments sold during the
period 25,380
(4,051)
Net unrealized appreciation of investments during the
period 673,107
109,355
- ------------------------------------------------------------------------------
- -------
Net increase in net assets resulting from operations 1,584,951
368,100
Distributions to shareholders from:
Net investment income (886,464)
(262,796)
Net increase in net assets from Fund share transactions
(Note 5) 21,148,865
10,536,226
- ------------------------------------------------------------------------------
- -------
Net increase in net assets 21,847,352
10,641,530
NET ASSETS:
Beginning of period 10,666,530
25,000
- ------------------------------------------------------------------------------
- -------
End of period $32,513,882
$10,666,530
- ------------------------------------------------------------------------------
- -------
<FN>
*The Fund commenced operations on December 31, 1991.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- ---------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR
PERIOD
ENDED
ENDED
11/30/93
11/30/92*
<S> <C> <C>
Net Asset Value, beginning of period $ 8.04 $
7.90
- ------------------------------------------------------------------------------
- -----
Income from investment operations:
Net investment income+ 0.39
0.35
Net realized and unrealized gain on investments++ 0.46
0.14
- ------------------------------------------------------------------------------
- -----
Total from investment operations 0.85
0.49
Less distributions:
Dividends from net investment income (0.39)
(0.35)
- ------------------------------------------------------------------------------
- -----
Net Asset Value, end of year $ 8.50 $
8.04
- ------------------------------------------------------------------------------
- -----
Total return+++ 10.70%
6.33%
- ------------------------------------------------------------------------------
- -----
Ratios/supplemental data:
Net assets, end of year (in 000's) $32,514
$10,667
Ratio of operating expenses to average net assets++++ 0.72%
0.65%**
Ratio of net investment income to average net assets 4.45%
4.81%**
Portfolio turnover rate 16%
46%
- ------------------------------------------------------------------------------
- -----
<FN>
*The Fund commenced operations on December 31, 1991.
**Annualized.
+Net investment income before waiver of fees and reimbursement of expenses
by
investment adviser and administrator for the year ended November 30, 1993
and
waiver of fees and reimbursement of expenses by investment adviser,
sub-investment adviser and administrator, custodian and distributor for the
period ended November 30, 1992 were $0.32 and $0.24 respectively.
++The amount shown at this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities for the period because of the timing of purchases
and withdrawals of shares in relation to fluctuating market values of the
portfolio.
+++Total return represents aggregate total returns for the periods indicated
and does not reflect any applicable sales charges.
++++Annualized operating expense ratio before waiver of fees and reimbursement
of expenses by investment adviser and administrator for the year ended
November 30, 1993 and waiver of fees and reimbursement of expenses by
investment adviser, sub-investments adviser and administrator, custodian
and
distributor for the period ended November 30, 1992 were 1.49% and 2.18%
respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Shearson Income Trust (the "Trust") was organized as a
"Massachusetts business trust" under the laws of the Commonwealth of
Massachusetts on October 17, 1991. The Trust is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company. The Trust
consists of the following four funds: Smith Barney Shearson Limited Maturity
Treasury Fund, Smith Barney Shearson Limited Maturity Municipals Fund, Smith
Barney Shearson Intermediate Maturity California Municipals Fund (the "Fund")
and Smith Barney Shearson Intermediate Maturity New York Municipals Fund. The
following is a summary of significant accounting policies consistently
followed
by the Fund in the preparation of its financial statements.
PORTFOLIO VALUATION: Securities are valued by The Boston Company Advisors,
Inc. ("Boston Advisors") after consultation with an independent pricing
service
(the "Service") approved by the Board of Trustees. When, in the judgment of
the
Service, quoted bid prices for securities are readily available and are
representative of the bid side of the market, these investments are valued at
the mean between the quoted bid prices and asked prices. Securities for which,
in the judgment of the Service, there are no readily obtainable market
quotations (which may constitute a majority of the portfolio securities) are
carried at fair value as determined by the Service, based on methods which
include consideration of: yields or prices of municipal securities of
comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions. Securities, not valued by the service, for which
market quotations are not readily available, are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees.
Short-term investments that mature in 60 days or less are valued at amortized
cost.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued
or
delayed delivery basis may be settled a month or more after the trade date.
Interest income is recorded on the accrual basis. Realized gains and losses
from
securities sold are recorded on the identified cost basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund
to
declare dividends from net investment income daily and to pay such dividends
monthly. Distributions from net realized capital gains, if any, are declared
and
paid annually, after the end of the calendar year in which earned. In
addition,
in
19
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
order to avoid the application of a 4% nondeductible excise tax on certain
undistributed amounts of ordinary income and capital gains, the Fund may make
an
additional distribution shortly before December 31 in each year of any
undistributed ordinary income or capital gains and expects to make any other
distributions as are necessary to avoid this tax. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and
gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund.
FEDERAL INCOME TAXES: The Trust intends that the Fund separately qualify
as
a regulated investment company, if such qualification is in the best interest
of
its shareholders, which distributes exempt-interest dividends, by complying
with
the requirements of the Internal Revenue Code of 1986, as amended, applicable
to
regulated investment companies and by distributing substantially all of its
earnings to its shareholders. Therefore, no Federal income tax provision is
required.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY
TRANSACTIONS
Up to the close of business on July 30, 1993, the Fund had an investment
advisory agreement with Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers") on behalf of Shearson Lehman Advisors, a member of the Asset
Management Group of Shearson Lehman Brothers. Under the investment advisory
agreement, the Fund paid a monthly fee at the annual rate of 0.35% of the
value
of its average daily net assets.
As of the close of business on July 30, 1993, The Travelers Inc. (which at
the time was known as Primerica Corporation) ("Travelers") and Smith Barney,
Harris Upham & Co. Incorporated completed the acquisition of substantially all
of the domestic retail brokerage and asset management businesses of Shearson
Lehman Brothers and Smith Barney, Harris Upham & Co. Incorporated was renamed
Smith Barney Shearson.
As of the close of business on July 30, 1993, Greenwich Street Advisors, a
division of Mutual Management Corp., which is controlled by Smith Barney
Shearson Holdings Inc. ("Holdings"), succeeded Shearson Lehman Advisors as the
Fund's investment adviser. Holdings is a wholly owned subsidiary of Travelers.
The new investment advisory agreement with Greenwich Street
20
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Advisors (the "Advisory Agreement") contains terms and conditions
substantially
similar to the investment advisory agreement with the predecessor investment
adviser and provides for payment of fees at the same rate as was paid to such
predecessor investment adviser.
The Fund has also entered into an administration agreement (the
"Administration Agreement") with Boston Advisors, an indirect wholly owned
subsidiary of Mellon Bank Corporation ("Mellon"). Under the Administration
Agreement, the Fund pays a monthly fee at the annual rate of 0.20% of the
value
of its average daily net assets. Prior to May 21, 1993, Boston Advisors served
as the Fund's sub-investment adviser and administrator and was entitled to
0.20%
of the value of the Fund's average daily net assets for its services.
From time to time, Smith Barney Shearson and Boston Advisors may
voluntarily
waive a portion or all of their respective fees otherwise payable to them. For
the year ended November 30, 1993, Smith Barney Shearson and Boston Advisors
voluntarily waived fees of $69,649 and $39,799, respectively. For the year
ended
November 30, 1993, Smith Barney Shearson reimbursed expenses of $14,078.
For the year ended November 30, 1993, Smith Barney Shearson received
$179,329 from investors representing commissions (sales charges) on sales of
Fund shares.
A contingent deferred sales charge is generally payable by a shareholder
in
connection with the redemption of shares within one year after the date of
purchase. For the year ended November 30, 1993 Smith Barney Shearson received
from shareholders $5,932 in contingent deferred sales charges.
No officer, director or employee of Smith Barney Shearson, Boston Advisors
or of any parent or subsidiary of those corporations receives any compensation
from the Trust for serving as a Trustee or officer of the Trust. The Trust
pays
each Trustee who is not an officer, director or employee of Smith Barney
Shearson, Boston Advisors or any of their affiliates $4,000 per annum plus
$500
per meeting attended and reimburses each such Trustee for travel and out-of-
pocket expenses.
21
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary
of Mellon, serves as the Trust's custodian. The Shareholder Services Group
Inc.,
a subsidiary of First Data Corporation, serves as the Trust's transfer agent.
3. DISTRIBUTION PLAN
The Trust has adopted a plan of distribution (the "Plan") under Rule 12b-1
of the 1940 Act. Under the Plan, the Fund pays Smith Barney Shearson a monthly
fee at the annual rate of 0.15% of the value of its average daily net assets
for
activities primarily intended to result in the sale of its shares. For the
year
ended November 30, 1993, distribution fees of $29,849 were waived by Smith
Barney Shearson.
Under its terms, the Plan shall remain in effect from year to year,
provided
that such continuance is approved annually by vote of the Trust's Trustees,
including a majority of those Trustees who are not "interested persons" of the
Trust and who have no direct or indirect financial interest in the operation
of
the Plan.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding short-
term investments, for the year ended November 30, 1993 were $24,408,918 and
$2,981,844, respectively.
At November 30, 1993, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $920,523
and
aggregate gross unrealized depreciation for all securities in which there was
an
excess of tax cost over value was $138,061.
22
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest
with a $.001 par value. Changes in shares of beneficial interest in the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED
11/30/93
11/30/92*
Shares Amount
Shares Amount
<S> <C> <C> <C>
<C>
- ------------------------------------------------------------------------------
- -------
Sold 2,773,792 $23,473,658
1,325,320 $10,550,648
Issued as reinvestment of dividends 81,600 688,363
25,060 200,373
Redeemed (355,224) (3,013,156)
(26,647) (214,795)
- ------------------------------------------------------------------------------
- -------
Net increase 2,500,168 $21,148,865
1,323,733 $10,536,226
- ------------------------------------------------------------------------------
- -------
<FN>
*The Fund commenced operations on December 31, 1991.
</TABLE>
6. ORGANIZATION COSTS
The Fund bears all costs in connection with its organization including the
fees and expenses of registering and qualifying its shares for distribution
under Federal and state securities regulations. All such costs are being
amortized on the straight-line method over a period of five years from the
commencement of operations of the Fund. In the event that any of the initial
shares of the Fund are redeemed during such amortization period, the Fund will
be reimbursed for any unamortized organization costs in the same proportion as
the number of shares redeemed bears to the number of initial shares held at
the
time of redemption.
7. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of
California, its political subdivisions, agencies and public authorities to
obtain funds for various public purposes. The Fund is more susceptible to
factors adversely affecting issuers of California municipal securities than is
a
municipal bond fund that is not concentrated in these issuers to the same
extent.
23
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- ---------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
SMITH BARNEY SHEARSON INCOME TRUST:
We have audited the accompanying statement of assets and liabilities,
including the schedule of portfolio investments, of Intermediate Maturity
California Municipals Fund, of Smith Barney Shearson Income Trust, as of
November 30, 1993, and the related statement of operations for the year then
ended, and the statement of changes in net assets and the financial highlights
for the year then ended and the period from December 31, 1991 (commencement of
operations) to November 30, 1992. 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 includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1993 by correspondence with the custodian and brokers. 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
Intermediate Maturity California Municipals Fund, of Smith Barney Shearson
Income Trust, as of November 30, 1993, the results of its operations for the
year then ended, and the changes in its net assets and the financial
highlights
for the year then ended and the period from December 31, 1991 (commencement of
operations) to November 30, 1992, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 10, 1994
24
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
TAX INFORMATION
PERIOD ENDED NOVEMBER 30, 1993 (UNAUDITED)
Of the dividends paid by the Fund from investment income for the period
ended
November 30, 1993, 100% is tax-exempt for regular Federal income tax purposes.
25
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------
GLOSSARY OF COMMONLY USED MUTUAL FUND TERMS
CAPITAL GAIN (OR LOSS): This is the increase (or decrease) in the market value
(price) of a security in your portfolio. If a stock or bond appreciates in
price, there is a capital gain; if it depreciates there is a capital loss. A
capital gain or loss is "realized" upon the sale of a security; if net capital
gains exceed net capital losses, there may be a capital gain distribution to
shareholders.
CONTINGENT DEFERRED SALES CHARGE (CDSC): One kind of back-end load, a CDSC is
imposed if shares are redeemed during the first few years of ownership. The
CDSC
may be expressed as a percentage of either the original purchase price or the
redemption proceeds. Most CDSCs decline over time, and some will not be
charged
if shares are redeemed after a certain period of time.
DISTRIBUTION RATE: This is the rate at which a mutual fund pays out (or
distributes) interest, dividends and realized capital gains to shareholders. A
fund's distribution rate is usually expressed as an annualized percent of the
fund's offering price.
DIVIDEND: This is income generated by securities in a portfolio and
distributed
after expenses to shareholders.
FRONT-END SALES CHARGE: This is the sales charge applied to an investment at
the
time of initial purchase.
NET ASSET VALUE (NAV): Net asset value is the total market value of all
securities held by a fund, minus any liabilities, divided by the number of
shares outstanding. It is the value of a single share of a mutual fund on a
given day. The total value of your investment would be the NAV multiplied by
the
number of shares you own.
SEC YIELD: This standardized calculation of a mutual fund's yield is based on
a
formula developed by the Securities and Exchange Commission (SEC) to allow
funds
to be compared on an equal basis. It is an annualized yield based on the
portfolio's potential earnings from dividends, interest and yield to maturity
of
its holdings, and it reflects the payments of all portfolio expenses for the
most recent 30-day period. Mutual funds are required to use this figure when
stating yield.
TOTAL RETURN: Total return measures a fund's performance, taking into account
the combination of dividends paid and the gain or loss in the value of the
securities held in the portfolio. It may be expressed on an AVERAGE ANNUAL
basis
or CUMULATIVE basis (total change over a given period). In addition, total
return may be expressed with or without the effects of sales charges or the
reinvestment of dividends and capital gains.
Whenever a fund reports any type of performance, it must also report the
average
annual total return according to the standardized calculation developed by the
SEC. The SEC AVERAGE ANNUAL TOTAL RETURN calculation includes the effects of
all
fees and sales charges and assumes the reinvestment of all dividends and
capital
gains.
26
<PAGE>
SMITH BARNEY SHEARSON
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
TRUSTEES
Burt N. Dorsett
Peter H. Gallary
Elliot S. Jaffe
Harry W. Knight
Heath B. McLendon
Cornelius C. Rose
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD
Stephen J. Treadway
PRESIDENT
Richard P. Roelofs
EXECUTIVE VICE PRESIDENT
Lawrence T. McDermott
VICE PRESIDENT AND
INVESTMENT OFFICER
Vincent Nave
TREASURER
Francis J. McNamara, III
SECRETARY
DISTRIBUTOR
Smith Barney Shearson Inc.
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISORS
Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
27
<PAGE>
THE SMITH BARNEY
SHEARSON
APPROACH TO
MUTUAL FUND
INVESTING
1. PERSONAL SERVICE The Smith Barney Shearson
Financial Consultant (FC) is highly trained and
deeply committed to client service. Your FC works
with you to establish a relationship based on
one-to-one communication and the highest
standards of quality.
2. ANALYZING YOUR NEEDS Defining your needs
and establishing specific goals is the first step
toward any successful investment program. The
Smith Barney Shearson Strategic Asset Allocator
-- a sophisticated financial planning tool -- can
help you and your FC evaluate your resources and
objectives. This groundwork then becomes the
basis for a strategy designed specifically for
you. Your FC can use the Strategic Asset
Allocator on a periodic basis to ensure that your
investment strategy is keeping pace with your
changing needs and goals.
3. A UNIQUE MUTUAL FUND INVESTMENT
PROGRAM Your Smith Barney Shearson FC offers a
number of mutual fund assessment tools that are
unmatched in the financial services industry.
Smith Barney Shearson FCs have access to a
proprietary mutual fund research database that
provides information at their fingertips on more
than 2,100 funds. In addition, working with
another proprietary system known as the Mutual
Fund Evaluation Service, your FC can help guide
you through the complex mutual fund maze.
4. LOOKING AHEAD Selecting a mutual fund
should not be a one-event process that ends with
the purchase of shares. You can count on the
expertise of your FC as he or she continues to
monitor and evaluate your funds, to suggest new
strategies and to listen. That, in our opinion,
is how to use mutual funds to help achieve your
financial goals.
28
<PAGE>
INVESTOR BENEFITS MONTHLY DISTRIBUTIONS It's your fund's
policy to distribute dividend income monthly.
AUTOMATIC REINVESTMENT You may reinvest
your
dividends and/or capital gains automatically in
additional shares of your fund at the current
net
asset value.
UNLIMITED EXCHANGES If your investment
goals
change, you may exchange into another Smith
Barney
Shearson mutual fund with the same sales charge
structure without incurring a sales charge.*
SYSTEMATIC INVESTMENT PLAN This program
allows you to invest equal dollar amounts
automatically on a regular basis, monthly or
quarterly.
AUTOMATIC CASH WITHDRAWAL PLAN With this
plan, you may withdraw money on a regular basis
while maintaining your investment.
MUTUAL FUND EVALUATION SERVICE Through your
Financial Consultant, you may obtain a free
personalized analysis of how your fund has
performed for you, taking into account the
effect
of every transaction.
FOR MORE INFORMATION ABOUT THESE BENEFITS, OR IF
YOU HAVE ANY OTHER QUESTIONS, PLEASE CALL YOUR
FINANCIAL CONSULTANT OR WRITE:
MUTUAL FUND POLICY GROUP
SMITH BARNEY SHEARSON
388 GREENWICH STREET 37TH FLOOR
NEW YORK, NY 10013
*AFTER WRITTEN NOTIFICATION, EXCHANGE
PRIVILEGE MAY BE MODIFIED OR TERMINATED
AT ANY TIME.
<PAGE>
THIS REPORT IS SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF
THE INTERMEDIATE MATURITY CALIFORNIA
MUNICIPALS FUND OF THE SMITH BARNEY
SHEARSON.
IT IS NOT AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS UNLESS ACCOMPANIED OR
PRECEDED BY AN EFFECTIVE PROSPECTUS FOR THE
FUND, WHICH CONTAINS INFORMATION CONCERNING
THE FUND'S INVESTMENT POLICIES AND
APPLICABLE
SALES CHARGES, FEES AND EXPENSES AS WELL AS
OTHER PERTINENT INFORMATION.
SMITH BARNEY SHEARSON
INTERMEDIATE
MATURITY
CALIFORNIA
MUNICIPALS FUND
Two World Trade Center
New York, New York 10048
Fund 165
FD0310 A4
