<PAGE>
ANNUAL REPORT
1995
1995
1995
1995
1995
Smith Barney
Limited
Maturity
Municipals
Fund
- ----------------------------
November 30, 1995
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
Dear Shareholder:
We are pleased to provide the annual report for the fiscal year ended November
30, 1995 for Smith Barney Limited Maturity Municipals Fund. In this report, we
summarize the period's prevailing economic and market conditions. A more
detailed summary of performance and current holdings can be found in the
appropriate sections that follow in the annual report.
ECONOMIC AND MUNICIPAL BOND
MARKET OVERVIEW
The tax exempt market over the past twelve months has been anything but dull.
Following six interest rate increases by the Federal Reserve in 1994, economic
growth and inflation subsided during 1995. At this point in time, however, the
fixed income markets are rallying, perhaps having concluded that the Federal
Reserve has achieved the goal of a soft landing for the economy. While
participating in the markets' overall rally, the municipal bond market has
lagged somewhat. Other factors have impacted on the municipal bond market such
as the strong performance of the equity markets, the spillover effect of the
bankruptcy filing by Orange County, California and the current federal budget
impasse in Washington, D.C.
While there are certainly some near-term risks at current market levels, our
long-term outlook for inflation and interest rates is positive. We believe both
intermediate and long-term municipal bonds offer investors excellent value
relative to taxable investments. At more than 90% of the yield on 30-year
Treasury bonds, all but the most radical of tax reform proposals are fully
discounted in current long-term municipal bond prices.
In our view, the Federal Reserve will likely find it necessary to lower short-
term interest rates over the upcoming months to maintain steady economic growth.
A positive resolution of the current budget debate in Washington, D.C. would
perhaps help to accelerate the pattern of Federal Reserve easing. An equally
important factor to the municipal bond market, however, is the outlook for a
continued low level of inflation.
PORTFOLIO UPDATE
During the period covered by this report, the total return of the Smith Barney
Limited Maturity Municipals Fund was 7.88% for Class A shares and the Fund's
average weighted maturity at the end of November 30, 1995 was 4.10 years.
1
<PAGE>
DIVIDEND POLICY
Smith Barney Limited Maturity Municipals Fund does not fix a monthly dividend
rate, but rather instead distributes all income earned by the Fund on a monthly
basis to shareholders. We will continue to strive to offer an attractive
dividend distribution rate.
At this time, we would like to thank you for your investment in the Smith Barney
Limited Maturity Municipals Fund.
Sincerely,
/s/ Heath B. McLendon /s/ Lawrence T. McDermott
Heath B. McLendon Lawrence T. McDermott
Chairman and Chief Vice President and
Executive Officer Investment Officer
January 10, 1996
2
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Historical Peformance -- Class A Shares
- -------------------------------------------------------------------------------------------------
Net Asset Value
---------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns(1)
- ---------- --------------------------------------------
<S> <C> <C> <C> <C>
11/30/95 $7.94 $ 8.18 $0.37 7.88%
11/30/94 8.26 7.94 0.34 0.23
11/30/93 8.07 8.26 0.36 6.98
Inception* - 11/30/92 7.90 8.07 0.36 6.88+
Total $1.43
<CAPTION>
- -------------------------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- -------------------------------------------------------------------------------------------------
Net Asset Value
---------------
Beginning End Income Total
Year Ended of Year of Year Dividends Returns(1)
- ---------- --------------------------------------------
11/30/95 $7.94 $ 8.19 $0.35 7.74%
Inception* - 11/30/94 7.92 7.94 0.00 0.31+
Total $0.35
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
3
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Average Annual Total Return
- -----------------------------------------------------------------------------------------------------------------------
Without Sales Charge(1)
-----------------------
Class A Class C
-------------------
<S> <C> <C>
Year Ended 11/30/95 7.88% 7.74%
Inception* through 11/30/95 5.56 7.78
With Sales Charge(2)
-----------------------
Class A Class C
<S> <C> <C>
Year Ended 11/30/95 5.75% 6.74%
Inception* through 11/30/95 5.02 7.78
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Cumulative Total Return
- -----------------------------------------------------------------------------------------------------------------------
Without Sales Charge(1)
-----------------------
<S> <C>
Class A (Inception* through 11/30/95) 23.63%
Class C (Inception* through 11/30/95) 8.07
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of the applicable
sales charge with respect to Class A shares or the applicable contingent
deferred sales charges ("CDSC") with respect to Class C shares.
(2) Assumes reinvestment of all dividends and capital gains distributions, if
any, at net asset value. In addition, Class A shares reflect the deduction
of the maximum initial sales charge of 2.00% and Class C shares reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed less than
one year from initial purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A and C shares are December 31, 1991 and November
17, 1994, respectively.
4
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Historical Peformance (unaudited)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN CLASS A SHARES OF THE
SMITH BARNEY LIMITED MATURITY MUNICIPALS FUND
VS. LEHMAN BROTHERS 5-YEAR MUNICIPAL BOND INDEX AND
LIPPER ANALYTICAL SERVICES, INC. PEER GROUP AVERAGE+
December 1991 -- November 1995
[Chart Here]
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on December 31, 1991, assuming deduction of the maximum 2.00% sales charge at
the time of investment and reinvestment of dividends and capital gains, if
any, at net asset value through November 30, 1995. The Lehman Brothers 5-Year
Municipal Bond Index ("Index") is a 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 is composed of an average of the Fund's Peer Group of Mutual Funds
(55 funds as of November 30, 1995) investing in limited maturity municipal
securities. The index is unmanaged and is not subject to the same management
and trading expenses of a mutual fund. The performance of the Fund's other
classes may be greater or less than the Class A shares' performance indicated
on this chart, depending on whether greater or lesser sales charges and fees
were incurred by shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
5
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Portfolio Highlights (unaudited) November 30, 1995
- --------------------------------------------------------------------------------
INDUSTRY BREAKDOWN
[Pie Chart Here]
SUMMARY OF INVESTMENTS BY COMBINED RATINGS
STANDARD & PERCENTAGE OF
MOODY'S AND/OR POOR'S TOTAL INVESTMENTS
- -------------------------------------------------------------------------
Aaa AAA 29.2%
Aa AA 18.5
A A 22.1
Baa BBB 28.6
NR NR 1.6
100.0%
6
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Schedule of Investments November 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 100%
Arizona -- 1.5%
$ 810,000 AAA Yuma & La Paz County, AZ Community College
District, Arizona Western College, AMBAC-Insured,
6.200% due 7/1/98 $ 853,538
California -- 1.8%
1,000,000 BBB- Central Valley, CA Financing Authority, (Cogeneration
Project Revenue), Carson Inc., 5.000% due 7/1/98 1,003,750
Colorado -- 2.7%
610,000 AAA Arapahoe County, CO COP, AMBAC-Insured,
5.400% due 12/1/96 619,022
335,000 AA Colorado Housing Finance Authority,
(Single-Family Project), Series A3, 5.750% due 5/1/97 339,188
500,000 A3* Meridian, CO GO, Metropolitan District, Refunding
Bonds, 7.000% due 12/1/97 514,375
1,472,585
Connecticut -- 1.2%
625,000 BBB- New Haven, CT GO, Series B, 5.700% due 12/1/97 640,625
District of Columbia -- 4.2%
685,000 B- District of Columbia COP, 6.000% due 1/1/97 687,987
250,000 B District of Columbia GO, Series A, 5.000% 247,188
due 6/1/98
1,295,000 AAA Washington, DC Metro Area Transit Authority, 6.000%
due 7/1/98 1,359,750
2,294,925
Florida -- 1.6%
850,000 AAA Broward County, FL Educational Facilities Authority Revenue,
5.150% due 4/1/99 871,250
Guam -- 3.4%
1,800,000 BBB Government of Guam GO, 5.750% due 8/15/99 1,842,750
Idaho -- 0.3%
135,000 Aa* Idaho Housing Agency, Single-Family Mortgage, Refunding
Bonds, 5.500% due 1/1/97 137,299
Illinois -- 9.0%
250,000 BBB+ Hoffman Estates, IL Tax Increment Revenue, Junior Lien,
(Hoffman Estates Development Project), 6.500% due 5/15/01 271,875
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Illinois -- 9.0%
(continued)
$ 1,000,000 Aa2* Illinois Development Financing Authority,
Adjustable Demand Revenue Bonds,
Catholic Charities Housing, Series A, 5.000% due
1/1/28 $1,013,750
500,000 Aa3* Illinois Educational Facilities Authority,
Adjustable Demand Revenue Bonds, Museum of Science and
Industry, 5.625% due 10/1/26 504,170
Illinois Health Facilities
Authority, Revenue Bonds:
1,040,000 AAA Children's Memorial Hospital, MBIA-Insured,
6.000% due 8/15/98 1,089,400
1,045,000 AAA Delnor Community Hospital, FSA-Insured,
4.500% due 5/15/98 1,055,450
1,000,000 AAA St. Clair County, IL GO, FGIC-Insured, 4.600% due 10/1/98 1,015,000
4,949,645
Indiana -- 3.1%
Indiana Bond Bank, (Special Project):
415,000 A Series F, 5.800% due 8/1/97 426,931
500,000 A Guaranteed Revolving, 4.900% due 2/1/99 506,875
750,000 AA Warrick County, IN Environmental Improvement, (Southern
Indiana Gas & Electric Project), Series A, 4.650% due
5/1/28 759,375
1,693,181
Iowa -- 3.6%
400,000 AAA Iowa State, Housing Finance Authority, Single-Family
Mortgage, Series F, AMBAC-Insured, 5.150% due 1/1/98 409,000
350,000 Aa1* Iowa Student Loan Liquidity Corporation,
Student Loan Revenue, Series A, 6.000% due 3/1/98 360,063
1,190,000 AAA Sioux City, IO Hospital Revenue Refunding, Sisters of
Mercy Health, Series D, MBIA-Insured, 5.000% due 8/15/98 1,218,262
1,987,325
Kentucky -- 1.8%
990,000 AA- University of Louisville, KY, Series J, 1,007,325
4.875% due 5/1/98
Louisiana -- 2.4%
305,000 AAA Louisiana Public Facilities Revenue, Student Loan,
Louisiana Opportunity Loan, Series A, FSA-Insured,
5.700% due 1/1/97 310,893
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Louisiana -- 2.4% (continued)
$ 500,000 AAA Louisiana State GO, Refunding Bond, Series A,
CGIC-Insured, 6.600% due 8/1/97 $ 521,875
500,000 AAA New Orleans, LA Exhibit Hall Authority, Hotel
Occupancy Tax Revenue, AMBAC-Insured,
5.250% due 1/15/97 508,125
1,340,893
Maine -- 0.5%
250,000 AAA Maine Health & Higher Educational Facilities, Special
Obligation Revenue, Medium Term Facilities,
FSA-Insured, 5.500% due 7/1/97 256,562
Maryland -- 0.6%
320,000 AA+ Montgomery County, MD Housing Authority, Multi-Family
Revenue, Series 85A, Hunt Club, 6.000% due 2/1/07(a) 320,426
Massachusetts -- 10.2%
750,000 Baa1* Lowell, MA GO, 5.500% due 8/15/97 767,812
Massachusetts Municipal Electric Wholesale Company,
Power Supply System Revenue:
Series C:
285,000 BBB+ 5.800% due 7/1/96 288,297
205,000 BBB+ 6.000% due 7/1/97 211,406
100,000 BBB+ Series E, 5.100% due 7/1/97 101,750
445,000 A Massachusetts State Health and Educational
Facilities Authority, Medical Center of Central
Massachusetts, Series A, 6.000% due 7/1/97 459,462
500,000 A Massachusetts Water Resources Authority, Series A, 5.600%
due 7/15/96 505,390
New England Educational Loan Marketing Corporation,
Student Loan:
1,000,000 A- Series B, 5.000% due 6/1/98 1,012,500
1,000,000 A- Series C, 4.750% due 7/1/98 1,010,000
500,000 BBB- Plymouth County, MA COP, Series A, 5.700% due 10/1/96 507,500
720,000 Baa1* Springfield, MA (School Project), Series B, 5.300%
due 9/1/97 735,300
5,599,417
Michigan -- 1.9%
750,000 BBB+ Detroit, MI District State Aid, 5.625% due 5/1/97 763,125
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Michigan -- 1.9%
(continued)
$ 250,000 A* Michigan Higher Education Student Loan,
Education
Revenue, Series XIV-A, 5.400% due 10/1/96 $ 252,242
1,015,367
Nevada -- 1.9%
1,000,000 AAA Clark County, NV Airport Systems Revenue,
MBIA-Insured, 7.500% due 7/1/97 1,056,250
New Hampshire -- 0.5%
275,000 AAA New Hampshire Higher Education & Health Authority
Revenue, Elliot Hospital of Manchester,
AMBAC-Insured, 5.700% due 10/1/97 283,938
New Jersey -- 4.6%
500,000 Baa* Atlantic County, NJ Utilities Authority,
Solid Waste Revenue, 6.250% due 3/1/97 505,625
435,000 BBB+ Camden County, NJ PCFA, Solid Waste Resource
Recovery Revenue, Series D, 6.350% due 12/1/97 443,700
1,075,000 BBB- Hudson County, NJ Improvement Authority,
5.750% due 1/1/98 1,072,313
500,000 A- New Jersey Health Care Facilities Center, Atlantic City
Medical Center, Series C, 5.600% due 7/1/96 504,915
2,526,553
New Mexico -- 0.7%
380,000 AA New Mexico Mortgage Finance Authority, Single-Family,
Series A1, 5.500% due 1/1/97 383,720
New York -- 9.0%
1,450,000 Baa1* Babylon, NY IDA, Babylon Community Waste
Management, Series A, 7.650% due 7/1/97 1,533,375
600,000 BBB Metropolitan Transit Authority, NY Service Contract
Transit Fees, Series 5, 6.100% due 7/1/98 624,000
1,700,000 A- New York State GO, Series C, 5.000% due 10/1/98 1,740,375
640,000 BBB+ New York State Medical Care Facilities Agency, Mental
Health Service Facilities Improvement, Series D,
6.300% due 8/15/97 660,000
210,000 Baa1* North Country, NY Solid Waste Disposal, Series A,
(Pre-Refunded -- Escrowed to Maturity with U.S.
Treasury), 6.000% due 7/1/97 214,988
180,000 Baa1* North Country, NY Solid Waste Disposal, Series A,
(Unrefunded), 6.000% due 7/1/97 184,275
4,957,013
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Oklahoma -- 0.9%
Cleveland County, OK Home Loan Authority,
Single-Family Mortgage Revenue:
$ 160,000 A* 6.000% due 8/1/96 $ 160,995
140,000 A* 6.100% due 2/1/97 141,575
170,000 A* 6.100% due 8/1/97 172,550
475,120
Oregon -- 0.9%
500,000 AA- Clackamas County, OR Hospital Facilities Authority
Revenue, Sisters of Providence, Series A,
5.300% due 10/1/96 505,700
Pennsylvania -- 8.9%
70,000 AAA Falls Township, PA Hospital Authority Revenue,
Delaware Valley Medical, FHA-Insured,
6.000% due 8/1/01 72,363
500,000 BBB Lehigh County, PA Industrial and Community
Development Authority, (Strawbridge Project),
7.200% due 12/15/01 538,125
500,000 A+ Pennsylvania State Higher Education, Thomas
Jefferson University, Series A, 5.500% due 8/15/97 515,000
1,170,000 AAA Pennsylvania State IDAR, AMBAC-Insured,
6.000% due 1/1/99 1,232,888
Philadelphia, PA Hospitals and Higher Education
Facilities Authority:
Albert Einstein Medical Center:
365,000 BBB+ 6.300% due 10/1/96 370,187
390,000 BBB+ 6.500% due 10/1/97 400,237
1,000,000 BBB+ Graduate Health Systems, 6.500% due 7/1/97 1,027,500
750,000 AA Westmoreland County, PA IDA, (Valley Landfill Project),
4.375% due 5/1/18(a) 750,405
4,906,705
Puerto Rico -- 0.8%
420,000 A- Puerto Rico Medical Hospital, Series A, St. Lukes
Hospital, 5.400% due 6/1/97 425,250
Rhode Island -- 1.0%
500,000 A* Rhode Island State, Student Loan Authority, Series A,
5.700% due 12/1/96 506,555
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
South Carolina -- 1.0%
$ 500,000 A+ South Carolina State, Public Service Authority,
(Santee - Cooper Project), Series D,
5.500% due 7/1/98 $ 518,750
Tennessee -- 0.4%
234,347 NR Health and Educational Facilities Board, Metropolitan
Government of Nashville and Davidson County, TN
Cooke County, Baptist Hospital, 7.250% due 9/1/96(b) 236,468
Texas -- 7.9%
500,000 AAA Arlington, TX Waterworks & Sewer Revenue, Refunding
and Improvement, FGIC-Insured, 5.400% due 6/1/97 511,875
1,000,000 Aa* Brazos, TX Higher Education Authority, Series A-1,
5.300% due 12/1/97 1,017,500
300,000 AAA Dallas-Fort Worth, TX Regional Airport Revenue,
Series A, FGIC-Insured, 5.875% due 11/1/07 312,375
1,000,000 Aaa* North Texas Higher Education Authority, Student
Loan Revenue, Series B, 4.850% due 4/1/98 1,008,750
1,000,000 AA- Tarrant County, TX Housing Finance Corporation,
Multi-Family Housing, Bedford Springs,
4.500% due 9/1/06 1,000,000
460,000 AA Texas State Veterans Housing Assistance, FHA-Insured,
6.050% due 12/1/12 470,925
4,321,425
Virgin Islands -- 1.2%
635,000 NR Virgin Islands Public Financing Authority, Matching
Revenue Funding, Series A, 6.250% due 10/1/96 646,240
Virginia -- 1.8%
470,000 AAA Fairfax County, VA Redevelopment & Housing Authority,
Multi-Family Housing Revenue Refunding, FHA-Insured,
Mortgage Loan, Kingsley, Series A, 6.500% due 11/1/01 495,264
500,000 Aaa* Virginia Educational Loan Authority, Guaranteed Revenue,
Series C, 4.850% due 3/1/98
997,139
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Washington -- 3.6%
$ 435,000 AAA Washington State Housing Finance, Single-Family
Mortgage Revenue, GNMA and FNMA Securities
Program, Series D, 5.800% due 7/1/97 $ 437,175
1,500,000 AA Washington State Public Power Supply, Series B,
(Nuclear Project No. 3), 7.000% due 7/1/97 1,561,875
1,999,050
Wisconsin -- 2.4%
Wisconsin Housing Economic Development Authority:
1,045,000 A 4.500% due 11/1/98 1,037,163
250,000 A Series A, 5.400% due 11/1/97 253,750
1,290,913
Wyoming -- 2.7%
1,500,000 A Platte County, WY PCR, 4.200% due 1/1/99 1,501,876
TOTAL INVESTMENTS -- 100%
(Cost -- $54,072,087*) $54,825,528
</TABLE>
(a) "Put" bonds and notes with demand features with maturities greater than one
year.
(b) Privately placed tax-exempt municipal lease agreement backed by an
irrevocable bank letter of credit in the amount of $234,347.
* Aggregate cost for Federal income tax purposes is substantially the same.
See pages 14 and 15 for definitions of ratings and certain security
descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation ("Standard & Poor's"), except
those identified by an asterisk (*) are rated by Moody's Investors Services
("Moody's"). The definitions of the applicable rating symbols are set forth
below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is
extremely strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issue only in
a small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
B -- Bonds rated "B" has a greater vulnerability to default but
currently has the the capacity to meet interest payments and
principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay
interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an
actual or implied "BB" or "BB-" rating.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic
rating from "Aa" to "Baa," where 1 is the highest and 3 the
lowest ranking within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger
than in Aaa securities.
A -- Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
NR -- Indicates that the bond is not rated by Standard & Poor's or
Moody's.
14
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Short-Term Securities Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or
strong capacity to pay principal and interest; those issues
determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate
demand obligation (VRDO) rating indicating that the degree of
safety regarding timely payment is either overwhelming or very
strong; those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature --
VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior
to the advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- American Municipal Bond Assurance Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
EDA -- Economic Development Authority
FLAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDAR -- Industrial Development Authority Revenue
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
15
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------
Schedule of Assets and Liabilities November 30, 1995
- --------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $54,072,087) $54,825,528
Interest receivable 975,952
Receivable for securities sold 70,688
Deferred organization costs 13,046
- --------------------------------------------------------------------
Total Assets 55,885,214
- --------------------------------------------------------------------
LIABILITIES:
Payable to bank 482,072
Payable for Fund shares redeemed 77,839
Distribution fees payable 18,725
Investment advisory fees payable 11,365
Administration fees payable 6,508
Accrued expenses 81,171
- --------------------------------------------------------------------
Total Liabilities 677,680
- --------------------------------------------------------------------
Total Net Assets $55,207,534
====================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 6,747
Capital paid in excess of par value 55,346,662
Undistributed net investment income 2,066
Accumulated net realized loss on security transactions (901,382)
Net unrealized appreciation of investments 753,441
- --------------------------------------------------------------------
Total Net Assets 55,207,534
====================================================================
SHARES OUTSTANDING:
Class A 6,539,722
- --------------------------------------------------------------------
Class C 207,413
- --------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $8.18
- --------------------------------------------------------------------
Class C* $8.19
- --------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 2.04% of net asset value
per share) $8.35
====================================================================
* Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- ------------------------------------------------------------------------------
Statement of Operations
- ------------------------------------------------------------------------------
For the Year Ended November 30, 1995
INVESTMENT INCOME:
Interest $ 3,321,269
- -------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 225,284
Administration fees (Note 2) 129,392
Distribution fees (Note 2) 99,183
Registration fees 31,000
Shareholder and system servicing fees 30,600
Shareholder communications 25,000
Audit and legal 21,100
Custody 20,800
Trustees' fees 16,000
Amortization of deferred organization costs 12,042
Pricing service fees 10,340
Other 1,436
- -------------------------------------------------------------------------------
Total Expenses 622,177
Less: Fee waiver (Note 2) (102,361)
- -------------------------------------------------------------------------------
Net Expenses 519,816
- -------------------------------------------------------------------------------
Net Investment Income 2,801,453
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 23,810,134
Cost of securities sold 24,049,761
- -------------------------------------------------------------------------------
Net Realized Loss (239,627)
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation)
of Investments:
Beginning of year (1,554,796)
End of year 753,441
- -------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 2,308,237
- -------------------------------------------------------------------------------
Net Gain on Investments 2,068,610
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 4,870,063
===============================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- -----------------------------------------------------------------------------
Statements of Changes in Net Assets
- ---------------------------------------------------------------------------
For the Years Ended November 30,
1995 1994
- ---------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,801,453 $ 3,882,663
Net realized loss (239,627) (616,478)
Increase (decrease) in net unrealized
appreciation 2,308,237 (3,140,215)
- ---------------------------------------------------------------------------
Increase in Net Assets From Operations 4,870,063 125,970
- ---------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (2,807,662) (3,882,663)
Net realized gains -- (8,764)
- ---------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (2,807,662) (3,891,427)
- ---------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 7,061,847 26,185,027
Net asset value of shares issued for
reinvestment of dividends 1,986,240 2,875,739
Cost of shares reacquired (32,245,904) (45,373,002)
- ---------------------------------------------------------------------------
Decrease in Net Assets From Fund
Share Transactions (23,197,817) (16,312,236)
- ---------------------------------------------------------------------------
Decrease in Net Assets (21,135,416) (20,077,693)
NET ASSETS:
Beginning of year 76,342,950 96,420,643
- ---------------------------------------------------------------------------
End of year * $55,207,534 $76,342,950
===========================================================================
* Includes undistributed net investment
income of: $2,066 $8,275
===========================================================================
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Limited Maturity Municipals Fund ("Fund") is a separate investment
fund of the Smith Barney Investment Trust ("Trust"). The Trust, a Massachusetts
business trust, is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, open-end management investment company and
consists of this Fund and two other separate investment funds: Smith Barney
Intermediate Maturity California Municipals Fund and Smith Barney Intermediate
Maturity New York Municipals Fund. The financial statements and financial
highlights for the other funds are presented in separate annual reports.
The significant accounting policies consistently followed by the Fund are: (a)
securities transactions are accounted for on the trade date; (b) securities are
valued at the mean between the quoted bid and asked prices by an independent
pricing service that are based on transactions in municipal obligations,
quotations from municipal bond dealers, market transactions in comparable
securities and various relationships between securities; (c) short-term
securities and securities that have a maturity of 60 days or less are valued at
cost plus accreted discount, or minus amortized premium, as applicable, which
approximates value; (d) gains or losses on the sale of securities are calculated
by using the specific identification method; (e) interest income, adjusted for
amortization of premium and accretion of original issue discount, is recorded on
the accrual basis; market discount is recognized upon the disposition of the
security; (f) direct expenses are charged to the Fund and each class; management
fees and general fund expenses are allocated on the basis of relative net
assets; and (g) the Fund intends to comply with the applicable provision of the
Internal Revenue Code of 1986, as amended, pertaining to regulated investment
companies and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes; (h) in accordance with
Statement of Position 93-2 Determination, Disclosure, and Financial Statement
--------------------------------------------------
Presentation of Income, Capital Gain, and Return of Capital Distributions by
- ----------------------------------------------------------------------------
Investment Companies, book and tax basis difference relating to shareholder
- --------------------
distributions and other permanent book and tax differences are reclassified to
paid-in capital. As of November 30, 1995, the cumulative effect of such
differences, totaling $38, was reclassified to paid-in capital from
overdistribution of realized gains. Net investment income, net realized gains,
and net assets were not affected by this
19
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
change; and (i) certain prior year numbers have been restated to reflect current
years presentation. Net investment income, realized gains, and net assets were
not affected by this change.
In addition, organization costs have been deferred and are being amortized on
a straight line basis over a five-year period, beginning with the commencement
of the Fund's operations in December 1991.
2. INVESTMENT ADVISORY AGREEMENT, ADMINISTRATION
AGREEMENT AND OTHER TRANSACTIONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment adviser to the Fund. The Funds
pays SBMFM an advisory fee calculated at an annual rate of 0.30% of average
daily net assets. The fee is calculated at an annual rate based on the Fund's
average daily net assets and is paid by the Fund to SBMFM. This fee is
calculated daily and paid monthly. For the year ended November 30, 1995, SBMFM
waived $64,838 of its investment advisory fees.
SBMFM also acts as the Fund's administrator for which the Fund pays a fee
calculated at an annual rate of 0.20% of the average daily net assets. This fee
is calculated daily and paid monthly. For the year ended November 30, 1995,
SBMFM waived $37,523 of its administration fees.
In addition, The Boston Company Advisors, Inc. ("Boston Advisors"), an
indirect wholly owned subsidiary of Mellon Bank Corporation, acted as sub-
administrator to the Fund. SBMFM paid Boston Advisors a portion of its
administration fee at a rate agreed upon from time to time between SBMFM and
Boston Advisors. As of June 26, 1995 this relationship was terminated.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. For the year ended November 30, 1995, SB received sales charges of
approximately $2,000 on sales of the Fund's Class A shares.
There is a contingent deferred sales charge ("CDSC") of 1.00% on Class C
shares which applies if redemption occurs less than one year from initial
purchase. For the year ended November 30, 1995, CDSCs paid to SB for Class C
shares were approximately $7,000.
20
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to
its Class A and C shares, calculated at the annual rate of 0.15% of the average
daily net assets for each class. In addition, the Fund pays a distribution fee
with respect to its Class C shares calculated at the annual rate of 0.20%. For
the year ended November 30, 1995, total Distribution Plan fees incurred were as
follows:
Class A Class C
- --------------------------------------------------------------------------------
Distribution Plan Fees $95,439 $3,744
3. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
All officers and one Trustee of the Fund are employees of SB.
4. INVESTMENTS
During the year ended November 30, 1995, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term securities) of investments were as follows:
Purchases $ 1,734,731
Sales 24,049,761
At November 30, 1995, the net unrealized appreciation of investments for
Federal income tax purposes consisted of the following:
Gross unrealized appreciation $769,141
Gross unrealized depreciation (15,700)
Net unrealized appreciation $753,441
5. CAPITAL LOSS CARRYFORWARDS
At November 30, 1995, the Fund had for Federal tax purposes approximately
$864,246 of unused loss carryforwards available to offset future capital gains.
To the extent that these carryforward losses are used
21
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
to offset capital gains, it is probable that the gains so offset will not be
distributed.
The amount and year of expiration for each carryforward loss is indicated
below:
11/30/02 11/30/03
- --------------------------------------------------------------------------------
Carryforward Amount $483,118 $381,128
6. SHARES OF BENEFICIAL INTEREST
As of November 30, 1995, the Fund had an unlimited number of shares of
beneficial interest authorized with a par value of $0.001 per share. The Fund
has the ability to issue multiple classes of shares. Each share of a class
represents an identical interest and has the same rights, except that each
class bears certain direct expenses, including those specifically related to
the distribution of its shares. At November 30, 1995, total paid-in capital
amounted to the following for each class:
Class A Class C
- --------------------------------------------------------------------------------
Total Paid-in Capital $53,680,379 $ 1,673,030
Transactions in shares of each class were as follows:
Year Ended Year Ended
November 30, 1995 November 30, 1994*
----------------- ------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------
Class A
Shares sold 685,255 $ 5,505,799 3,175,899 $ 26,079,012
Shares issued on
reinvestment 241,592 1,951,766 353,609 2,875,739
Shares redeemed (3,992,142) (32,223,892) (5,604,134) (45,373,002)
- ----------------------------------------------------------------------------
Net Decrease (3,065,295) $(24,766,327) (2,074,626) $(16,418,251)
============================================================================
Class C
Shares sold 192,519 $ 1,556,048 13,354 $ 106,015
Shares issued on
reinvestment 4,237 34,474 -- --
Shares redeemed (2,697) (22,012) -- --
- ----------------------------------------------------------------------------
Net Increase 194,059 $ 1,568,510 13,354 $ 106,015
============================================================================
* For Class C shares, transactions are for the period from November 7, 1994
(inception date) to November 30, 1994.
22
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- ------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT
EACH YEAR:
Class A Shares 1995 1994 1993 1992(1)
- ------------------------------------------------------------------------------
Net Asset Value, Beginning
of Year 7.94 $8.26 $8.07 $7.90
- ------------------------------------------------------------------------------
Income From Operations:
Net investment income (2) 0.37 0.34 0.36 0.36
Net realized and
unrealized gain (loss) 0.24 (0.32) 0.19 0.17
- ------------------------------------------------------------------------------
Total Income From
Operations 0.61 0.02 0.55 0.53
- ------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.37) (0.34) (0.36) (0.36)
- ------------------------------------------------------------------------------
Total Distributions (0.37) (0.34) (0.36) (0.36)
- ------------------------------------------------------------------------------
Net Asset Value, End of
Year 8.18 $7.94 $8.26 $8.07
- ------------------------------------------------------------------------------
Total Return 7.88% 0.23% 6.98% 6.88%++
- ------------------------------------------------------------------------------
Net Assets, End of Year
(000s) $53,510 $76,237 $96,421 $36,379
- ------------------------------------------------------------------------------
Ratios to Average Net
Assets:
Expenses (2) 0.80% 0.80% 0.75% 0.65%+
Net investment income 4.33 4.15 4.24 4.74+
- ------------------------------------------------------------------------------
Portfolio Turnover Rate 3% 28% 4% 22%
==============================================================================
(1) For the period from December 31, 1991 (inception date) to November 30,
1992.
(2) The investment adviser has waived part of its fees for the three years
ended November 30, 1995 and the period ended November 30, 1992. If such
fees were not waived, the per share decreases in net investment income and
expense ratios would have been as follows:
Per Share Decreases Expense Ratios
in Net Investment Income Without Fee Waivers
------------------------ -------------------
1995 1994 1993 1992 1995 1994 1993 1992
------------------------- -------------------------
Class A $0.01 $0.01 $0.03 $0.05 0.96% 0.94% 1.07% 1.28%+
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
23
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR:
Class C Shares 1995 1994(1)
- --------------------------------------------------------------------------
Net Asset Value, Beginning of Year $7.94 $7.92
- --------------------------------------------------------------------------
Income From Operations:
Net investment income (2) 0.35 0.00*
Net realized and unrealized gain 0.25 0.02**
- --------------------------------------------------------------------------
Total Income From Operations 0.60 0.02
- --------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.35) (0.00)*
- --------------------------------------------------------------------------
Total Distributions (0.35) (0.00)
- --------------------------------------------------------------------------
Net Asset Value, End of Year $8.19 $7.94
- --------------------------------------------------------------------------
Total Return 7.74% 0.31%++
- --------------------------------------------------------------------------
Net Assets, End of Year (000s) $1,698 $106
- --------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (2) 0.99% 1.00%+
Net investment income 4.06 3.94+
- --------------------------------------------------------------------------
Portfolio Turnover Rate 3% 28%
==========================================================================
(1) For the period from November 17, 1994 (inception date) to November 30,
1994.
(2) The investment adviser has waived part of its fees for the year ended
November 30, 1995 and the period ended November 30, 1994. If such fees were
not waived, the per share decreases in net investment income and the ratios
of expenses to average net assets would have been as follows:
Per Share Decreases Expense Ratios
in Net Investment Income Without Fee Waivers
------------------------ -------------------
1995 1994 1995 1994
-----------------------------------------------
Class C $0.01 $0.00* 1.15% 1.14%+
* Amount represents less than $0.01 per share.
** Includes the net per share effect of shareholder sales and redemptions
activity during the period, most of which occurred at a net asset value less
than the beginning of the period.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
24
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees of
Smith Barney Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Smith Barney Limited Maturity
Municipals Fund of Smith Barney Investment Trust as of November 30, 1995, and
the related statement of operations, statement of changes in net assets, and
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended November 30, 1994 and the financial highlights for each of
the years in the two-year period then ended and for the period from December 31,
1991 (commencement of operations) to November 30, 1992, were audited by other
auditors whose report thereon, dated January 18, 1995 expressed an unqualified
opinion on that statement of changes in net assets and those financial
highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian. As to securities sold
but not delivered, we performed other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Smith Barney
Limited Maturity Municipals Fund of Smith Barney Investment Trust as of November
30, 1995, and the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
January 17, 1996
25
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Additional Information
- --------------------------------------------------------------------------------
Change in Independent Auditor: On October 19, 1994, based upon the
recommendation of the Audit Committee of the Fund, the Board of Trustees
determined not to retain Coopers & Lybrand L.L.P ("Coopers & Lybrand") as the
Fund's independent auditor and voted to appoint KPMG Peat Marwick LLP. During
the Fund's two most recent fiscal years, Coopers & Lybrand's audit reports
contained no adverse opinion or disclaimer of opinion; nor were the reports
qualified or modified as to uncertainty, audit scope, or accounting principles.
Further, during this same period there were no disagreements with Coopers &
Lybrand on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Coopers & Lybrand, would have caused it to
make reference to the subject matter of such disagreements in connection with
its audit reports. The Fund has requested Coopers & Lybrand to provide a letter
to the Securities and Exchange Commission stating whether Coopers & Lybrand
agrees with the foregoing statements, and to provide the Fund with a copy of
such letter. A copy of this letter is available upon request by calling the
Fund at (212) 723-9218.
26
<PAGE>
SMITH BARNEY
LIMITED MATURITY MUNICIPALS FUND
- --------------------------------------------------------------------------------
Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On March 20, 1995, a special meeting of the shareholders of the Fund was held
for the purpose of voting on the election of ten (10) trustees.
The results of the vote were as follows:
Trustees % Voting in Favor % Voting Against % Abstaining
- -----------------------------------------------------------------------------
Herbert Barg 96.308% 0.000% 3.692%
Alfred J. Bianchetti* 96.314 0.000 3.686
Martin Brody 96.308 0.000 3.692
Dwight B. Crane 96.368 0.000 3.632
Burt N. Dorsett 96.368 0.000 3.632
Elliot S. Jaffe 96.348 0.000 3.652
Stephen E. Kaugman 96.342 0.000 3.658
Joseph J. McCann 96.368 0.000 3.632
Heath B. McLendon* 96.368 0.000 3.632
Cornelius C. Rose, Jr. 96.342 0.000 3.658
=============================================================================
* Each Trustee who is an "interested person" of the Trust, as defined by the
Investment Company Act of 1940, as amended, is indicated by an asterisk.
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
100% of the dividends paid by the Fund from net investment income for the year
ended November 30, 1995, are tax-exempt for regular Federal income tax purposes.
27
<PAGE>
SMITH BARNEY [Logo] SMITH BARNEY
LIMITED
MATURITY A Member of Travelers Group [ART]
MUNICIPALS
FUND INVESTMENT ADVISER AND
ADMINISTRATOR
Smith Barney Mutual Funds
TRUSTEES Management Inc.
Herbert Barg
Alfred J. Bianchetti DISTRIBUTOR
Martin Brody Smith Barney Inc.
Dwight B. Crane
Burt N. Dorsett CUSTODIAN
Elliot S. Jaffe PNC Bank
Stephen E. Kaufman
Joseph J. McCann SHAREHOLDER
Heath B. McLendon, Chairman SERVICING AGENT
Cornelius C. Rose Jr. First Data Investor Services Group, Inc.
P.O. Box 9134
OFFICERS Boston, MA 02205-9134
Heath B. McLendon
Chairman of the Board
and Investment Officer
This report is submitted for
Jessica M. Bibliowicz the general information of the
President shareholders of Smith Barney
Limited Maturity Municipals Fund.
Lewis E. Daidone It is not authorized for
Senior Vice President distribution to prospective investors
and Treasurer unless accompanied or preceded by a
current Prospectus for the Fund, which
Lawrence T. McDermott contains information concerning the
Vice President Fund's investment policies and expenses
and Investment Officer as well as other pertinent information.
Karen L. Mahoney-Malcomson Smith Barney
Investment Officer Limited Maturity
Municipals Fund
Thomas M. Reynolds 388 Greenwich Street
Controller New York, New York 10013
Christina T. Sydor
Secretary
FD0309 1/96
<PAGE>
A N N U A L R E P O R T
1995
1995
1995
1995
1995
SMITH BARNEY
INTERMEDIATE
MATURITY
NEW YORK
MUNICIPALS
FUND
--------------------------
November 30, 1995
[LOGO] SMITH BARNEY MUTUAL FUNDS
INVESTING FOR YOUR FUTURE.
EVERY DAY.
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
We are pleased to provide the annual report for the year ended November 30, 1995
for the Smith Barney Intermediate Maturity New York Municipals Fund. In this
report, we summarize the period's prevailing economic and market conditions. A
more detailed summary of performance and current holdings can be found in the
appropriate sections that follow in the annual report.
ECONOMIC AND MUNICIPAL BOND MARKET OVERVIEW
The tax exempt market over the past year has been anything but dull. Following
six interest rate increases by the Federal Reserve in 1994, economic growth and
inflation subsided during 1995. At this point in time, however, it appears that
the fixed income markets believe the Federal Reserve has achieved the goal of a
soft landing for the economy. While participating in the market's overall rally,
the municipal bond market lagged the other fixed income markets. In addition,
other factors have impacted on the municipal bond market such as the strong
performance of the equity markets, the spillover effect of the bankruptcy filing
by Orange County, California and the current federal budget impasse in
Washington, D.C.
While there are certainly some near-term risks at current market levels, our
long-term outlook for inflation and interest rates is positive. We believe
intermediate- and long-term municipal bonds offer investors excellent value
relative to taxable investments. At more than 90% of the yield on 30-year
Treasury bonds, all but the most radical of tax reform proposals is fully
discounted in current long-term municipal bond prices.
In our view, the Federal Reserve will likely find it necessary to lower short-
term interest rates over the upcoming months to maintain steady economic growth.
A positive resolution of the current budget debate in Washington, D.C., would
perhaps help to accelerate the pattern of Federal Reserve easing. An equally
important factor to the municipal bond market, however, is the outlook for a
continued low level of inflation.
1
<PAGE>
NEW YORK ECONOMIC HIGHLIGHTS
Like his Republican counterpart in New Jersey Governor Christine Todd Whitman,
Governor George E. Pataki has done an excellent job in reducing state
government, cutting state employment and bringing much-needed fiscal discipline
to the State's budget.
Gov. Pataki has successfully merged some of the state agencies that manage debt
and there has been better control over the timing of debt issuance. To his
credit, Gov. Pataki has implemented quality management controls that have
resulted in more internal review before debt is issued, less short-term
borrowing and less reliance on one-time measures. On the positive side, we
expect reasonable revenue and expenditure estimates for New York to continue and
we believe the state legislature is committed to using fewer budget gimmicks and
relying less on short-term borrowing.
PORTFOLIO UPDATE
The one-year total return for the Smith Barney Intermediate Maturity New York
Municipals Fund was 14.31% versus its Lipper peer group average of 13.86% for
the same time period. (Lipper Analytical Services, Inc. is a major fund tracking
organization.) As of November 30, 1995, the Fund's average weighted maturity was
6.46 years.
DIVIDEND POLICY
The Smith Barney Intermediate Maturity New York Municipals Fund does not fix a
monthly dividend rate, but rather instead distributes all income earned by the
Fund on a monthly basis to shareholders. We will continue to strive to offer an
attractive dividend distribution rate.
At this time, we would like to thank you for your investment in the Smith Barney
Intermediate Maturity New York Municipals Fund.
Sincerely,
/s/ Heath B. McLendon /s/ Lawrence T. McDermott
Heath B. McLendon Lawrence T. McDermott
Chairman and Vice President and
Chief Executive Officer Investment Officer
January 10, 1996
2
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
- --------------------------------------------------------------------------------
11/30/95 $7.80 $8.48 $0.41 $0.00 14.31%
11/30/94 8.54 7.80 0.40 0.02 (3.97)
11/30/93 8.18 8.54 0.40 0.02 9.76
Inception* - 11/30/92 7.90 8.18 0.38 0.00 8.59+
- --------------------------------------------------------------------------------
Total $ 1.59 $0.04
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
Net Asset Value
--------------------
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
- --------------------------------------------------------------------------------
Inception* - 11/30/95 $7.87 $8.48 $0.38 $0.00 13.01%+
- --------------------------------------------------------------------------------
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
3
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
-------------------------
Class A Class C
- --------------------------------------------------------------------------------
Year Ended 11/30/95 14.31% N/A
Inception* through 11/30/95 7.18 13.01%+
- --------------------------------------------------------------------------------
With Sales Charge(2)
-------------------------
Class A Class C
- --------------------------------------------------------------------------------
Year Ended 11/30/95 12.01% N/A
Inception* through 11/30/95 6.63 12.01%+
- --------------------------------------------------------------------------------
Cumulative Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
- --------------------------------------------------------------------------------
Class A (Inception* through 11/30/95) 31.21% N/A
Class C (Inception* through 11/30/95) 13.01 12.01%+
- --------------------------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of the applicable
sales charge with respect to Class A shares or the applicable contingent
deferred sales charges ("CDSC") with respect to Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A shares reflect the deduction
of the maximum initial sales charge of 2.00% and Class C shares reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed less than
one year from initial purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A and C shares are December 31, 1991 and
December 5, 1994, respectively.
4
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Historical Performance (unaudited)
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN CLASS A SHARES OF THE
SMITH BARNEY INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
VS. LEHMAN BROTHERS 10 YEAR MUNICIPAL BOND INDEX
AND LIPPER ANALYTICAL SERVICES, INC. PEER GROUP AVERAGE+
- --------------------------------------------------------------------------------
December 1991 -- November 1995
(GRAPH HERE)
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on December 31, 1991, assuming deduction of the maximum 2.00% sales charge at
the time of investment and reinvestment of dividends and capital gains, if
any, at net asset value through November 30, 1995. The Lehman Brothers 10
Year Municipal Bond Index is a broad-based index comprised of approximately
5,200 bonds totaling approximately $63 billion in market capitalization. The
bonds are all municipal bonds with an average maturity of 9.8 years, an
average yield of 4.93% and a duration of 7.08 years. The Lipper Analytical
Services, Inc. Peer Group Average is an average of the Fund's peer group of
mutual funds (33 funds as of November 30, 1995) investing in intermediate
maturity New York tax-exempt bonds. The index is unmanaged and is not subject
to the same management and trading expenses of a mutual fund. The performance
of the Fund's other classes may be greater or less than the Class A shares'
performance indicated on this chart, depending on whether greater or lesser
sales charges and fees were incurred by shareholders investing in the other
classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost.
5
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Portfolio Highlights November 30, 1995
- --------------------------------------------------------------------------------
INDUSTRY BREAKDOWN
(PIE CHART HERE)
Summary of Investments by Combined Ratings
Standard & Percentage of
Moody's and/or Poor's Total Investments
- --------------------------------------------------------------------------------
Aaa AAA 29.0%
Aa AA 10.4
A A 7.3
Baa BBB 50.5
B B 0.2
NR NR 2.6
-----
100.0%
=====
6
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments November 30, 1995
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
EDUCATION -- 19.5%
$ 200,000 AAA Canandaigua City School District,
AMBAC-Insured, 6.400% due 6/1/99 $ 215,750
200,000 AAA Central Square School District,
FGIC-Insured, 6.500% due 6/15/99 216,500
2,000,000 AAA New York, New York, Educational
Construction Fund, Series A, MBIA-Insured,
6.500% due 4/1/04 2,272,500
New York State Dormitory Authority,
Revenue Bonds:
1,000,000 Baa1* City University, Second Generation,
Series A, 5.500% due 7/1/03 1,037,500
1,000,000 Baa1* City University, Series F, 5.200% due 7/1/03 1,012,500
500,000 AAA College and University Educational Loan,
MBIA-Insured, 6.200% due 7/1/01(a) 543,125
350,000 AA Genesee Valley, Series B, FHA-Insured,
6.300% due 8/1/02 388,500
750,000 AAA Manhattan College, 5.900% due 7/1/02 822,188
985,000 AAA New York State Urban Development, MBIA-Insured,
5.300% due 4/1/04 1,030,556
Puerto Rico Public Buildings Authority,
Public Education and Health Facilities Refunding:
500,000 A+ Series I, 6.600% due 7/1/99 533,750
600,000 AAA Series K, FGIC-Insured, 6.000% due 7/1/01 649,500
500,000 A Series M, 5.300% due 7/1/03 517,500
1,000,000 BBB+ State University Educational Facilities, Series A,
5.300% due 5/15/03 1,026,250
100,000 AAA Wappingers Central School District,
AMBAC-Insured, 6.250% due 12/1/99 108,125
- --------------------------------------------------------------------------------
10,374,244
- --------------------------------------------------------------------------------
GENERAL OBLIGATION -- 21.4%
400,000 AAA Albany City School District, Series B,
MBIA-Insured, 6.000% due 12/15/00 434,000
Buffalo GO:
100,000 AAA FGIC-Insured, 5.800% due 2/1/00 106,000
205,000 AAA Series A, MBIA-Insured, 5.900% due 4/1/01 220,375
385,000 AAA Series B, MBIA-Insured, 5.900% due 4/1/01 413,875
250,000 AAA Erie County Public Improvement Project GO,
FGIC-Insured, 5.500% due 1/15/00 262,500
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
GENERAL OBLIGATION -- 21.4% (CONTINUED)
$ 750,000 AAA Government of Guam, Limited Obligation,
Highway Revenue, Series A, CGIC-Insured,
5.900% due 5/1/02 $ 810,000
495,000 Baa* Jamestown GO, Series A, 7.000% due 3/15/00
New York City GO:
3,000,000 BBB+ Series A, 7.000% due 8/1/04 3,292,500
500,000 BBB+ Series B, 6.250% due 10/1/01 521,875
5,000 AAA Series C, Subseries C-1, MBIA-Insured,
6.000% due 8/1/01 5,425
New York State COP:
250,000 Baa1* 6.500% due 3/1/96 251,370
300,000 Baa1* 6.900% due 3/1/98 314,625
New York State Urban Development,
Correctional Facilities, Series 3:
1,230,000 Baa1* 6.700% due 11/1/99 1,297,650
595,000 Baa1* 6.800% due 1/1/00 635,906
1,000,000 Baa1* 5.250% due 1/1/03 1,006,250
375,000 AAA Niagara County GO, MBIA-Insured,
5.700% due 8/15/01 400,781
Oyster Bay GO:
200,000 AAA Series B, FGIC-Insured, 6.400% due 2/1/99 213,500
150,000 AAA Series C, FGIC-Insured, 6.300% due 10/1/99 161,438
500,000 AAA Yonkers GO, Series A, FGIC-Insured,
6.000% due 2/15/01 542,500
- --------------------------------------------------------------------------------
11,427,645
- --------------------------------------------------------------------------------
HOSPITAL -- 15.3%
365,000 AAA New York State Dormitory Authority Revenue
Loan, Episcopal Health, FHA-Insured,
5.200% due 2/1/03 378,231
New York State Medical Care Facilities,
Revenue Bonds:
650,000 BBB Central Suffolk Hospital, (Project A),
5.400% due 11/1/00 657,313
815,000 AAA Hospital and Nursing Home, Series A,
FHA-Insured, 5.500% due 8/15/04 850,656
725,000 BBB+ Mental Health Services, Facilities Improvement,
Series F, 6.100% due 2/15/02 768,500
600,000 AA Methodist Hospital, Series A, FHA-Insured,
6.000% due 8/15/02 643,500
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
HOSPITAL -- 15.3% (CONTINUED)
$ 250,000 Baa* Secured Hospital, Series 1991A,
6.625% due 8/15/98 $ 263,125
Series B, FHA-Insured, (Long Island College):
110,000 AAA 7.250% due 2/15/98 117,563
700,000 AAA 5.650% due 8/15/02 736,750
Series C, FHA-Insured:
730,000 AA 5.900% due 8/15/02 767,413
190,000 AAA 5.950% due 8/15/09 197,125
1,500,000 BBB+ Series F, 6.000% due 2/15/03 1,586,250
New York State Urban Development
(Cornell Center Project):
565,000 Baa1* 5.400% due 1/1/02 579,831
595,000 Baa1* 5.500% due 1/1/03 614,337
- --------------------------------------------------------------------------------
8,160,594
- --------------------------------------------------------------------------------
HOUSING: SINGLE FAMILY -- 5.0%
2,500,000 AA New York Housing, Revenue Refunding,
6.000% due 11/1/03 2,659,375
- --------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT -- 2.8%
100,000 B1* Monroe County, New York,
Industrial Development Authority, Series A
(Genesee Hospital), 6.500% due 11/1/99 102,125
1,345,000 NR Westchester County Industrial Development
(AGR Realty Company Project), Revenue Bonds,
5.750% due 1/1/02 1,383,669
- --------------------------------------------------------------------------------
1,485,794
- --------------------------------------------------------------------------------
LIFE CARE SYSTEMS -- 1.5%
750,000 AAA New York State Medical Care Facilities,
Long-Term Health Care Facilities, Series D,
CGIC-Insured, 5.750% due 11/1/02 801,562
- --------------------------------------------------------------------------------
MISCELLANEOUS -- 5.3%
1,500,000 BBB+ New York State Dormitory Authority Revenue
Bonds, Court Facilities Lease Revenue,
Series A, 6.000% due 5/15/03 1,582,500
New York State Municipal Bond Bank Agency,
Special Program Revenue:
925,000 BBB+ Buffalo, Series A, 6.500% due 3/15/00 983,969
250,000 A+ Rochester, Series A, 6.300% due 3/15/00 264,062
- --------------------------------------------------------------------------------
2,830,531
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
POLLUTION CONTROL -- 6.2%
New York State Environmental Facilities
Corporation:
$ 500,000 AAA PCR, State Water Revolving Fund, Series A,
5.950% due 3/15/02 $ 545,625
200,000 Baa1* Resource Recovery Revenue, (Huntington
Project), Series A, 7.375% due 10/1/99(a) 213,500
1,135,000 BBB Solid Waste Disposal Revenue, (Occidental
Petroleum Corporation), Sub-Series B,
5.500% due 9/1/03(a) 1,153,444
Oneida-Herkimer Solid Waste Management
Authority:
530,000 Baa* 5.900% due 4/1/98 543,250
800,000 Baa* 6.300% due 4/1/01 843,000
- --------------------------------------------------------------------------------
3,298,819
- --------------------------------------------------------------------------------
TRANSPORTATION -- 15.7%
750,000 A Commonwealth of Puerto Rico,
Highway and Transit Authority, Series U,
5.875% due 7/1/99 791,250
Metropolitan Transportation Authority,
New York Service Contract Transit Facilities,
Series 5:
735,000 Baa1* 6.100% due 7/1/98 764,400
200,000 Baa1* 6.250% due 7/1/99 211,000
New York State Thruway Authority,
Service Contract Local Highway and Bridges:
1,000,000 Baa1* 6.000% due 4/1/02 1,061,250
1,750,000 Baa1* 6.000% due 4/1/03 1,855,000
2,000,000 AAA Niagara, New York, Frontier Transportation
Authority, Greater Buffalo International
Airport, Series B, AMBAC-Insured, 5.750% due
4/1/04(a) 2,140,000
920,000 AA Syracuse COP, Hancock International Airport,
6.300% due 1/1/02(a) 1,014,300
500,000 AAA Triborough Bridge & Tunnel Authority,
Special Obligation Refunding, Series A,
MBIA-Insured, 6.100% due 1/1/00 536,875
- --------------------------------------------------------------------------------
8,374,075
- --------------------------------------------------------------------------------
UTILITIES -- 7.3%
550,000 AAA Buffalo Municipal Water, Finance Authority,
Water Systems Revenue, FSA-Insured,
5.350% due 7/1/02 $ 576,812
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
UTILITIES -- 7.3% (CONTINUED)
Guam Power Authority Revenue, Series A:
$ 560,000 BBB 5.700% due 10/1/01 561,400
300,000 BBB 5.900% due 10/1/02 302,625
850,000 BBB 5.100% due 10/1/03 836,188
750,000 A* New York City Municipal Water Authority,
Water and Sewer Systems Revenue, Series A,
5.700% due 6/15/02 794,062
250,000 Aa* New York State Power Authority
Revenue and General Purpose, Series Z,
5.850% due 1/1/00 266,250
North Country, New York, Development Authority,
Solid Waste Management Systems Revenue:
295,000 AAA Series A, (Pre-Refunded -- Escrowed with
U.S. Government Securities to 7/1/99
Call @ 102), 6.500% due 7/1/01(b) 323,394
245,000 Baa* Series A, 6.500% due 7/1/01 258,781
- --------------------------------------------------------------------------------
3,919,512
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $51,200,257)(c) $53,332,151
- --------------------------------------------------------------------------------
(a) Income from these issues is considered a preference item for purposes of
calculating alternative minimum tax.
(b) Pre-Refunded bonds escrowed by U.S. Government Securities and bonds
escrowed to maturity by U.S. Government Securities are considered by the
investment adviser to be triple-A even if issuer has not applied for new
ratings.
(c) Aggregate cost for Federal income tax purposes is substantially the same.
See pages 12 and 13 for definition of ratings and certain security descriptons.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation ("Standard & Poor's"), except
those identified by an asterisk (*) are rated by Moody's Investors Services
("Moody's"). The definitions of the applicable rating symbols are set forth
below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issue only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa," where 1 is the highest and 3 the lowest ranking
within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated "A" possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
B -- Bonds that are rated "B" generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's.
12
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Short-Term Securities Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- American Municipal Bond Assurance Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
EDA -- Economic Development Authority
FLAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
13
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities November 30, 1995
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $51,200,257) $ 53,332,151
Interest receivable 817,643
Receivable for Fund shares sold 20,553
Deferred organization costs 13,046
- --------------------------------------------------------------------------------
TOTAL ASSETS 54,183,393
- --------------------------------------------------------------------------------
LIABILITIES:
Payable to bank 1,120,371
Payable for Fund shares purchased 20,417
Distribution fees payable 16,965
Investment advisory fees payable 6,347
Administration fees payable 3,652
Accrued expenses 54,806
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 1,222,558
- --------------------------------------------------------------------------------
TOTAL NET ASSETS $ 52,960,835
- --------------------------------------------------------------------------------
NET ASSETS:
Par value of beneficial interest $ 6,247
Capital paid in excess of par value 52,609,315
Undistributed net investment income 460
Accumulated net realized loss on security transactions (1,787,081)
Net unrealized appreciation of investments 2,131,894
- --------------------------------------------------------------------------------
TOTAL NET ASSETS $ 52,960,835
- --------------------------------------------------------------------------------
SHARES OUTSTANDING:
Class A 6,200,765
------------------------------------------------------------------------------
Class C 46,327
------------------------------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $8.48
------------------------------------------------------------------------------
Class C* $8.48
------------------------------------------------------------------------------
CLASS A MAXIMUM PUBLIC OFFERING PRICE PER SHARE
(net asset value plus 2.00% of net asset value per share) $8.65
- --------------------------------------------------------------------------------
* Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended November 30, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 3,210,896
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 198,729
Administration fees (Note 2) 113,559
Distribution fees (Note 2) 84,737
Registration fees 30,000
Shareholder communications 27,947
Audit and legal 26,500
Shareholder and system servicing fees 25,980
Custody 13,553
Trustees' fees 12,900
Amortization of deferred organization costs 12,042
Other 4,931
- --------------------------------------------------------------------------------
TOTAL EXPENSES 550,878
Less: Fee waiver (Note 2) (181,695)
- --------------------------------------------------------------------------------
NET EXPENSES 369,183
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,841,713
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 5:)
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 10,283,525
Cost of securities sold 10,515,105
- --------------------------------------------------------------------------------
NET REALIZED LOSS (231,580)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
(Depreciation) of Investments:
Beginning of year (2,904,872)
End of year 2,131,894
- --------------------------------------------------------------------------------
INCREASE IN NET UNREALIZED APPRECIATION 5,036,766
- --------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 4,805,186
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $ 7,646,899
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Years Ended November 30,
1995 1994
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,841,713 $ 3,291,902
Net realized loss (231,580) (1,555,501)
Increase (decrease) in net unrealized appreciation 5,036,766 (4,498,322)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS 7,646,899 (2,761,921)
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (2,841,253) (3,291,902)
Net realized gains -- (164,958)
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (2,841,253) (3,456,860)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 3,982,346 16,902,649
Net asset value of shares issued
for reinvestment of dividends 1,988,128 2,400,444
Cost of shares reacquired (19,905,297) (18,224,100)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS (13,934,823) 1,078,993
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS (9,129,177) (5,139,788)
NET ASSETS
Beginning of year 62,090,012 67,229,800
- --------------------------------------------------------------------------------
END OF YEAR* $52,960,835 $62,090,012
- --------------------------------------------------------------------------------
*Includes undistributed net investment income of: $460 --
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Intermediate Maturity New York Municipals Fund ("Fund") is a
separate investment fund of Smith Barney Investment Trust ("Trust"). The Trust,
a Massachusetts business trust, is registered under the Investment Company Act
of 1940, as amended, as a non-diversified, open-end management investment
company and consists of this Fund and two other separate investment funds: Smith
Barney Intermediate Maturity California Municipals Fund and Smith Barney Limited
Maturity Municipals Fund. The financial statements and financial highlights for
these funds are presented in separate annual reports.
The significant accounting policies consistently followed by the Fund are:
(a) securities transactions are accounted for on the trade date; (b) securities
are valued at the mean between the quoted bid and asked prices by an independent
pricing service that are based on transactions in municipal obligations,
quotations from municipal bond dealers, market transactions in comparable
securities and various relationships between securities; (c) short-term
securities and securities that have a maturity of 60 days or less are valued at
cost plus accreted discount, or minus amortized premium, as applicable, which
approximates value; (d) gains or losses on the sale of securities are calculated
by using the specific identification method; (e) interest income, adjusted for
amortization of premium and accretion of original issue discount, is recorded on
the accrual basis; market discount is recognized upon the disposition of the
security; (f) direct expenses are charged to the Fund and each class; management
fees and general fund expenses are allocated on the basis of relative net
assets; (g) the Fund intends to comply with the applicable provisions of the
Internal Revenue Code of 1986, as amended, pertaining to regulated investment
companies and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes; (h) in accordance with
Statement of Position 93-2 Determination, Disclosure, and Financial Statement
--------------------------------------------------
Presentation of Income, Capital Gain, and Return of Capital Distributions by
- ----------------------------------------------------------------------------
Investment Companies, book and tax basis differences relating to shareholder
- --------------------
distributions and other permanent book and tax differences are reclassified to
paid-in capital. As of November 30, 1995, the cumulative effect of such
differences, totaling $320, was reclassified to
17
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
paid-in capital from accumulated net realized loss. Net investment income, net
realized gains, and net assets were not affected by this change; and (i) certain
prior year numbers have been restated to reflect current year's presentation.
Net investment income, net realized gains, and net assets were not affected by
this change.
In addition, organization costs have been deferred and are being amortized on
a straight line basis over a five year period, beginning with the commencement
of the Fund's operations in December 1991.
2. INVESTMENT ADVISORY AGREEMENT, ADMINISTRATION
AGREEMENT AND OTHER TRANSACTIONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment adviser to the Fund. Effective
November 17, 1995, the investment advisory fee declined from 0.35% to 0.30%. The
fee is calculated at an annual rate based on the Fund's average daily net assets
and is paid by the Fund to SBMFM. This fee is calculated daily and paid monthly.
For the year ended November 30, 1995, SBMFM waived $115,831 of its investment
advisory fees.
SBMFM also acts as the Fund's administrator for which the Fund pays a fee
calculated at the annual rate of 0.20% of the average daily net assets. This fee
is calculated daily and paid monthly. For the year ended November 30, 1995,
SBMFM waived $65,864 of its administration fee.
In addition, The Boston Company Advisors, Inc. ("Boston Advisors"), an
indirect wholly owned subsidiary of Mellon Bank Corporation, acted as sub-
administrator to the Fund. SBMFM paid Boston Advisors a portion of its
administration fee at a rate agreed upon from time to time between SBMFM and
Boston Advisors. As of June 26, 1995, this relationship was terminated.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. For the year ended November 30, 1995, SB received sales charges of
approximately $32,000 on purchases of the Fund's Class A shares.
There is a contingent deferred sales charge ("CDSC") of 1.00% on Class C
shares, which applies if redemption occurs less than one year
18
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
from initial purchase. For the year ended November 30, 1995, CDSCs paid to SB
for Class C shares were approximately $8,000.
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to
its Class A and C shares, calculated at the annual rate of 0.15% of the average
daily net assets for each class. In addition, the Fund pays a distribution fee
with respect to its Class C shares calculated at the annual rate of 0.20% of the
average daily net assets. For the year ended November 30, 1995, total
Distribution Plan Fees incurred were:
CLASS A CLASS C
- --------------------------------------------------------------------------------
Distribution Plan Fees $84,263 $474
- --------------------------------------------------------------------------------
All officers and one Trustee of the Fund are employees of SB.
3. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. FUND CONCENTRATION
The Fund primarily invests in debt obligations issued by the State of New
York and 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.
5. Investments
For the year ended November 30, 1995, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term investments) of investments were as follows:
- --------------------------------------------------------------------------------
Purchases $ --
- --------------------------------------------------------------------------------
Sales 10,283,525
- --------------------------------------------------------------------------------
19
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At November 30, 1995, the aggregate gross unrealized appreciation and
depreciation of investments for tax purposes were as follows:
- --------------------------------------------------------------------------------
Gross unrealized appreciation $ 2,145,904
Gross unrealized depreciation (14,010)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 2,131,894
- --------------------------------------------------------------------------------
6. CAPITAL LOSS CARRYFORWARDS
At November 30, 1995, the Fund had for Federal tax purposes approximately
$1,787,081 of unused loss carryforwards available to offset future capital
gains. To the extent that these carryforward losses are used to offset capital
gains, it is probable that the gains so offset will not be distributed .
The amount and year of the expiration for each carryforward loss is
indicated below:
11/30/02 11/30/03
- --------------------------------------------------------------------------------
Carryforward Amount $1,450,416 $336,665
- --------------------------------------------------------------------------------
7. SHARES OF BENEFICIAL INTEREST
As of November 30, 1995, the Fund had an unlimited number of shares of
beneficial interest authorized with a par value of $0.001 per share. The Fund
has the ability to issue multiple classes of shares. Each share of a class
represents an identical interest and has the same rights, except that each class
bears certain direct expenses, including those specifically related to the
distribution of its shares. At November 30, 1995, total paid-in capital amounted
to the following for each class:
Class A Class C
- --------------------------------------------------------------------------------
Total Paid-in Capital $52,230,053 $385,509
- --------------------------------------------------------------------------------
20
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
Year Ended Year Ended
November 30, 1995 November 30, 1994
------------------------ --------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------
CLASS A
Shares sold 445,483 $ 3,603,196 2,019,093 $ 16,902,649
Shares issued on
reinvestment 241,744 1,981,748 289,917 2,400,444
Shares redeemed (2,443,262) (19,905,297) (2,224,208) (18,224,100)
- --------------------------------------------------------------------------------
Net Increase (Decrease) (1,756,035) $(14,320,353) 84,802 $ 1,078,993
- --------------------------------------------------------------------------------
CLASS C
Shares sold 45,901 $ 379,150 -- --
Shares issued on
reinvestment 426 6,380 -- --
Shares redeemed -- -- -- --
- --------------------------------------------------------------------------------
Net Increase 46,327 $ 385,530 -- --
- --------------------------------------------------------------------------------
21
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year:
Class A Shares 1995 1994 1993 1992(1)
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 7.80 $ 8.54 $ 8.18 $ 7.90
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income (2) 0.41 0.40 0.40 0.38
Net realized and unrealized gain (loss) 0.68 (0.72) 0.38 0.28
- --------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.09 (0.32) 0.78 0.66
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.41) (0.40) (0.40) (0.38)
Net realized gains -- (0.02) (0.02) --
- --------------------------------------------------------------------------------
Total Distributions (0.41) (0.42) (0.42) (0.38)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 8.48 $ 7.80 $ 8.54 $ 8.18
- --------------------------------------------------------------------------------
TOTAL RETURN 14.31% (3.97)% 9.76% 8.59%++
- --------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000s) $52,568 $62,090 $67,230 $24,543
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (2) 0.65% 0.65% 0.65% 0.65%+
Net investment income 5.01 4.77 4.59 4.95+
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE -- 68% 22% 68%
- --------------------------------------------------------------------------------
(1) For the period from December 31, 1991 (inception date) to November 30,
1992.
(2) The investment adviser has waived all or part of its fees for the three
years ended November 30, 1995 and the period ended November 30, 1992. If
such fees were not waived, the per share decreases in net investment income
and the expense ratios would have been as follows:
Per Share Decreases Expense Ratios
in Net Investment Income Without Fee Waivers
----------------------------- -----------------------------
1995 1994 1993 1992 1995 1994 1993 1992
----- ----- ----- ----- ----- ----- ----- ------
Class A $0.03 $0.03 $0.04 $0.06 0.97% 0.98% 1.10% 1.45%+
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
22
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout
each year:
Class C Shares 1995(1)
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 7.87
- --------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
Net investment income (2) 0.38
Net realized and unrealized gain 0.61
- --------------------------------------------------------------------------------
Total Income From Operations 0.99
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.38)
Net realized gains --
- --------------------------------------------------------------------------------
Total Distributions (0.38)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 8.48
- --------------------------------------------------------------------------------
TOTAL RETURN 13.01%++
- --------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $ 393
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (2) 0.86%+
Net investment income 4.74+
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE --
- --------------------------------------------------------------------------------
(1) For the period from December 5, 1994 (inception date) to November 30, 1995.
(2) The investment adviser has waived all or part of its fees for the year
ended November 30, 1995. If such fees were not waived, the per share
decreases in net investment income and expense ratios would have been as
follows:
Per Share Decreases Expense Ratios
in Net Investment Income Without Fee Waivers
------------------------ -------------------
1995 1995
---- ----
Class C $0.03 1.19%+
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
23
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Trustees of Smith Barney Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Smith Barney Intermediate Maturity
New York Municipals Fund of Smith Barney Investment Trust as of November 30,
1995, and the related statement of operations, statement of changes in net
assets, and financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of changes
in net assets for the year ended November 30, 1994 and the financial highlights
for each of the years in the two-year period then ended and for the period from
December 31, 1991 (commencement of operations) to November 30, 1992, were
audited by other auditors whose report thereon, dated January 18, 1995 expressed
an unqualified opinion on that statement of changes in net assets and those
financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Smith Barney Intermediate
Maturity New York Municipals Fund of Smith Barney Investment Trust as of
November 30, 1995, and the results of its operations, changes in its net assets
and its financial highlights for the year then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
January 17, 1996
24
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Additional Information
- --------------------------------------------------------------------------------
Change in Independent Auditor: On October 19, 1994, based upon the
recommendation of the Audit Committee of the Fund, the Board of Trustees
determined not to retain Coopers & Lybrand L.L.P ("Coopers & Lybrand") as the
Fund's independent auditor and voted to appoint KPMG Peat Marwick LLP. During
the Fund's two most recent fiscal years, Coopers & Lybrand's audit reports
contained no adverse opinion or disclaimer of opinion; nor were the reports
qualified or modified as to uncertainty, audit scope, or accounting principles.
Further, during this same period there were no disagreements with Coopers &
Lybrand on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Coopers & Lybrand, would have caused it to make reference
to the subject matter of such disagreements in connection with its audit
reports. The Fund has requested Coopers & Lybrand to provide a letter to the
Securities and Exchange Commission stating whether Coopers & Lybrand agrees with
the foregoing statements, and to provide the Fund with a copy of such letter.
A copy of this letter is available upon request by calling the Fund at
(212) 723-9218.
25
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY NEW YORK MUNICIPALS FUND
- --------------------------------------------------------------------------------
Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On March 20, 1995, a special meeting of the shareholders of the Fund was held
for the purpose of voting on the election of ten (10) trustees.
The results of the vote were as follows:
TRUSTEES % VOTING IN FAVOR % VOTING AGAINST % ABSTAINING
- --------------------------------------------------------------------------------
Herbert Barg 97.467% 0.000% 2.533%
Alfred J. Bianchetti* 97.467 0.000 2.533
Martin Brody 97.467 0.000 2.533
Dwight B. Crane 97.700 0.000 2.300
Burt N. Dorsett 97.700 0.000 2.300
Elliot S. Jaffe 97.700 0.000 2.300
Stephen E. Kaufman 97.700 0.000 2.300
Joseph J. McCann 97.700 0.000 2.300
Heath B. McLendon* 97.627 0.000 2.373
Cornelius C. Rose, Jr. 97.700 0.000 2.300
- --------------------------------------------------------------------------------
* Each Trustee who is an "interested person" of the Trust, as defined by the
Investment Company Act of 1940, as amended, is indicated by an asterisk.
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
100% of the dividends paid by the Fund from net investment income for the year
ended November 30, 1995, are tax-exempt for regular Federal income tax purposes.
26
<PAGE>
SMITH BARNEY
INTERMEDIATE
MATURITY NEW YORK
MUNICIPALS FUND
TRUSTEES
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliot S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon, Chairman
Cornelius C. Rose
OFFICERS
Heath B. McLendon
Chairman of the Board and
Investment Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Lawrence T. McDermott
Vice President
and Investment Officer
Karen L. Mahoney-Malcomson
Investment Officer
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
SMITH BARNEY
- ------------
A Member of TravelersGroup [LOGO]
INVESTMENT ADVISER
AND ADMINISTRATOR
Smith Barney Mutual Funds
Management Inc.
DISTRIBUTOR
Smith Barney Inc.
CUSTODIAN
PNC Bank
SHAREHOLDER
SERVICING AGENT
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Intermediate Maturity New York Municipals Fund. It is not
authorized for distribution to prospective investors unless accompanied or
preceded by a current Prospectus for the Fund, which contains information
concerning the Fund's investment policies and expenses as well as other
pertinent information.
SMITH BARNEY
INTERMEDIATE MATURITY
NEW YORK
MUNICIPALS FUND
388 Greenwich Street
New York, New York 10013
FD0311 1/96
<PAGE>
ANNUAL REPORT
1995
1995
1995 [PHOTO APPEARS HERE]
1995
1995
SMITH BARNEY
INTERMEDIATE
MATURITY
CALIFORNIA
MUNICIPALS FUND
- -----------------------------------
November 30, 1995
[LOGO] SMITH BARNEY MUTUAL FUNDS
INVESTING FOR YOUR FUTURE.
EVERY DAY.
<PAGE>
- --------------------------------------------------------------------------------
SMITH BARNEY INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
We are pleased to provide you with this annual report for the Smith Barney
Intermediate Maturity California Municipals Fund for the year ended November 30,
1995. In this report, we summarize the period's prevailing economic and market
conditions. A more detailed summary of performance and current holdings can be
found in the appropriate sections that follow in the annual report.
MARKET REVIEW AND PORTFOLIO UPDATE
The year ended November 30, 1995 concluded with weakening economic indicators,
fairly benign inflation indicators and bond prices moving higher. Since our
investment focus for the Intermediate Maturity California Municipals Fund is
income-oriented, we have positioned the Fund in the 7-to-8 year area of the
yield curve while being diversified among investment grade ratings. This
strategy has allowed us to maximize our income while capturing most of the
recent rally.
At present, the market is rapidly approaching interest rate levels not seen
since the fall of 1993. Although the market could potentially move even higher,
we believe it is unlikely. Accordingly, we adopted a more conservative strategy
as we approached the New Year. In the event of any further increases in bond
prices, we will shorten our maturities to make the Fund less susceptible to
interest rate fluctuations. We believe this is the hallmark of a disciplined
investment approach.
For most of the period covered by this report, we kept our holdings because the
Fund was fully invested in what we believed to be the right maturity range. But
as the market nears the record price levels of 1993, we are adopting a more
conservative stance by increasing our cash position and shortening maturities.
This will be an ongoing process with any future market rallies.
CALIFORNIA ECONOMIC HIGHLIGHTS
The California economy displayed impressive growth in 1995. Civilian employment
increased 3% during the year, reflecting strong gains in entertainment, advanced
technology, manufacturing and international trade. Consumer spending continued
to advance, with retail sales up 6.2% for the year. Durable goods sales were
also up 7.3% for the year. However, the
1
<PAGE>
housing segment of California's economy still appears to be stagnant, despite
historically attractive mortgage rates. This translated into general fund
revenues that are currently 5.4% above the 1994 state budget forecast.
MARKET OUTLOOK
The outlook for the next six months in the municipal bond market is fairly
benign. A slower economy and low inflation rate are normally positive signs for
the bond market. However, betting on a weak economy in a Presidential election
year in this century has left many an investor wiser (and poorer). Washington
D.C. still has considerable fiscal flexibility and the Federal Reserve clearly
has some room to ease. As a result, we do not believe there will be another
massive drop in long-term rates in the U.S. Therefore we have adopted a more
conservative structure for the Fund.
We believe municipal bonds will continue to provide the best after-tax income
stream available in today's market, and should be considered an integral part of
many investors' overall investment strategy.
At this time, we would like to thank you for your investment in the Smith Barney
Intermediate California Municipals Fund.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman and Chief Vice President and
Executive Officer Investment Officer
January 10, 1996
2
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Historical Performance -- Class A Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End Income Capital Total
Year Ended of Year of Year Dividends Gains Returns(1)
- -------------------------------------------------------------------------
11/30/95 $7.80 $8.53 $0.40 $0.00 14.85%
11/30/94 8.50 7.80 0.39 0.01 (3.65)
11/30/93 8.04 8.50 0.39 0.00 10.70
Inception* - 11/30/92 7.90 8.04 0.35 0.00 6.33+
Total $1.53 $0.01
- --------------------------------------------------------------------------------
Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End Income Capital Total
Year Ended of Year of Year Dividends Gains Returns(1)
- -------------------------------------------------------------------------
11/30/95 $7.80 $8.52 $0.38 $0.00 14.36%
Inception* - 11/30/94 7.76 7.80 0.02 0.00 0.72+
Total $0.40 $0.00
- --------------------------------------------------------------------------------
Historical Performance -- Class Y Shares
- --------------------------------------------------------------------------------
Net Asset Value
------------------
Beginning End Income Capital Total
Year Ended of Year of Year Dividends Gains Returns(1)
- ---------------------------------------------------------------------------
Inception* - 11/30/95 $ 8.39 $8.54 $0.09 $0.00 2.92%+
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
3
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------------------------------
Without Sales Charge(1)
------------------------------------
Class A Class C Class Y
------------------------------------
Year Ended 11/30/95 14.85% 14.36% N/A
Inception* through 11/30/95 6.99 14.31 2.92%
------------------------------------
With Sales Charge(2)
------------------------------------
Class A Class C Class Y
------------------------------------
Year Ended 11/30/95 12.54% 13.36% N/A
Inception* through 11/30/95 6.44 14.31 2.92%
Cumulative Total Return
------------------------------------
Without Sales Charge(1)
------------------------------------
Class A (Inception* through 11/30/95) 30.31%
Class C (Inception* through 11/30/95) 15.23
Class Y (Inception* through 11/30/95) 3.88
------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of the applicable
sales charge with respect to Class A shares or the applicable contingent
deferred sales charges ("CDSC") with respect to Class C shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A shares reflect the deduction
of the maximum initial sales charge of 2.00% and Class C shares reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed less than
one year from initial purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, C and Y shares are December 31, 1991, November
8, 1994 and September 8, 1995, respectively.
4
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Historical Performance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the
Smith Barney Intermediate Maturity California Municipals Fund
vs. Lehman Brothers 10-Year Municipal Bond Index
and Lipper Analytical Services, Inc. Peer Group Average+
- --------------------------------------------------------------------------------
December 1991 -- November 1995
[GRAPH APPEARS HERE]
+ Hypothetical illustration of $10,000 invested in Class A shares at inception
on December 31, 1991, assuming deduction of the maximum 2.00% sales charge at
the time of investment and reinvestment of dividends and capital gains, if
any, at net asset value through November 30, 1995. The Lehman Brothers 10-Year
Municipal Bond Index ("Index") is a broad-based index which includes about
5,200 bonds totaling approximately $63 billion in market capitalization. The
Lipper Analytical Services, Inc. Peer Group Average is composed of an average
of the Fund's peer group of mutual funds (32 funds as of November 30, 1995)
investing in intermediate maturity California tax-exempt bonds. The index is
unmanaged and is not subject to the same management and trading expenses of a
mutual fund. The performance of the Fund's other classes may be greater or
less than the Class A shares' performance indicated on this chart, depending
on whether greater or lesser sales charges and fees were incurred by
shareholders investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and redemption
values may be more or less than the original cost. No adjustment has been made
for shareholder tax liability on dividends or capital gains.
5
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Portfolio Highlights (unaudited) November 30, 1995
- --------------------------------------------------------------------------------
Industry Breakdown
[PIE CHART APPEARS HERE]
Summary of Investments by Combined Ratings
Standard & Percentage of
Moody's and/or Poor's Total Investments
- ----------------------------------------------------------
Aaa AAA 28.4%
Aa AA 14.8
A A 31.0
Baa BBB 22.2
VMIG 1 A-1 2.2
NR NR 1.4
-----
100.0%
=====
6
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
<C> <C> <S> <C>
Education -- 9.9%
California Educational Facilities Authority,
Revenue Bonds:
$ 945,000 AAA College of Osteopathic Medicine,
5.550% due 6/1/06 $ 982,800
320,000 A1* Loyola Marymount University, Series B,
6.300% due 10/1/03 354,400
200,000 A* Mills College, 6.500% due 9/1/02 221,500
500,000 AA University of Southern California,
5.300% due 10/1/04 526,875
285,000 AAA Kern High School District, Series C,
MBIA-Insured, 8.750% due 8/1/03 361,950
300,000 A New Haven University School District,
5.300% due 7/1/01 311,250
- --------------------------------------------------------------------------------
2,758,775
- --------------------------------------------------------------------------------
General Obligation -- 2.1%
California State GO:
100,000 A+ 9.800% due 10/1/00 123,375
200,000 A 6.000% due 9/1/03 217,250
215,000 AAA Virgin Islands Territory GO, (Escrowed to
Maturity with U.S. Government Securities),
8.000% due 3/1/98(a) 233,812
- --------------------------------------------------------------------------------
574,437
- --------------------------------------------------------------------------------
Hospital -- 16.8%
405,000 AAA Arlington Community Hospital Corporation,
Parkview Community Hospital First
Mortgage Revenue, (Escrowed to Maturity
with U.S. Government Securities),
8.000% due 6/1/04(a) 465,750
California Health Facilities, Financing Authority:
200,000 AAA Adventist Health System/West Agency,
Series B, MBIA-Insured, 6.150% due 3/1/99 212,000
1,000,000 AAA Mills-Peninsula, CONNIE LEE-Insured,
5.300% due 1/15/05 1,028,750
200,000 AA- Sisters of Providence, 6.200% due 11/15/03 219,250
400,000 AAA St. Elizabeth's Hospital Project, (Escrowed with
U.S. Government Securities to 11/15/02
Call @ 102), 5.900% due 11/15/03(a) 439,000
1,200,000 AA California Statewide Community Development COP,
St. Joseph's Health, 5.875% due 7/1/05 1,270,500
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
<C> <C> <S> <C>
Hospital -- 16.8% (continued)
$ 345,000 AAA City of Marysville Hospital Revenue Refunding
Bonds, (The Fremont-Rideout Health Group),
1993 Series A, AMBAC-Insured,
5.100% due 1/1/03(b) $ 356,643
250,000 A+ Riverside County Asset Leasing Corp., Leasehold
Revenue, Riverside County Hospital (Project A),
6.000% due 6/1/04 261,875
400,000 BBB+ Valley Health Systems COP, (Refunding Project),
6.250% due 5/15/99 407,000
- --------------------------------------------------------------------------------
4,660,768
- --------------------------------------------------------------------------------
Housing -- 9.5%
California Housing Finance Agency Revenue,
Home Mortgage:
5,000 AA- Single-Family Housing Revenue, Series A,
10.000% due 2/1/02 5,010
295,000 AA- Series B1, 5.900% due 8/1/04(c) 309,012
700,000 AA- Series E1, FHA-Insured,
5.900% due 8/1/05(c) 740,250
700,000 AA- Series E1, FHA-Insured,
5.900% due 8/1/05(c) 742,000
300,000 AAA San Luis Obispo HFA Multi-Family Housing
Revenue, (Parkwood Apartments
Project), Series A, FNMA-Collateralized,
5.500% due 8/1/03 304,875
525,000 AAA City of Santa Rosa Mortgage Revenue Refunding,
(Marlow Apartments Project), FHA-Insured,
5.600% due 9/1/05 528,281
- --------------------------------------------------------------------------------
2,629,428
- --------------------------------------------------------------------------------
Miscellaneous -- 18.0%
1,200,000 BBB Fresno Joint Powers Financing Authority,
Series A, 5.750% due 9/2/98 1,209,000
Irvine Ranch Water District, Joint Powers Agency,
Local Pool Revenue, Issue II:
800,000 A+ 7.200% due 8/15/96 814,528
480,000 A+ 7.800% due 8/15/01 515,400
345,000 A Mendocino County Public Facilities Authority
Corporation, COP 1993, 5.500% due 8/15/03 348,450
155,000 AAA* Montclair Redevelopment Agency, Residential
Mortgage Revenue, (Escrowed to Maturity with
U.S. Government Securities), 7.750% due
10/1/11(a) 189,875
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
<C> <C> <S> <C>
Miscellaneous -- 18.0% (continued)
San Francisco Downtown Parking, Series R:
$ 450,000 A* 6.000% due 4/1/02 $ 473,625
280,000 A* 6.150% due 4/1/03 297,500
Santa Barbara COP,
(Harbor Refunding Project):
270,000 A* 6.400% due 10/1/02 292,950
285,000 A* 6.500% due 10/1/03 311,362
265,000 AA- Simi Valley Community Development Agency COP,
Simi Valley Business Center, Guaranty
Agreement with New England Mutual Life,
6.050% mandatory put 10/1/99 275,269
205,000 AAA Upland COP, (Police Building Refunding
Project), AMBAC-Insured 6.200% due 9/1/00 226,269
- --------------------------------------------------------------------------------
4,954,228
- --------------------------------------------------------------------------------
Short-Term -- 2.2%
600,000 VMIG 1*California Health Facilities,
(St. Joseph's Hospital Project),
3.450% due 7/13/13(d) 600,000
- --------------------------------------------------------------------------------
Solid Waste -- 9.2%
Kings County Waste Management, Solid Waste
Revenue Bonds:
400,000 BBB+ 6.500% due 10/1/03 427,000
310,000 BBB+ 6.600% due 10/1/04 332,088
795,000 A* Redding Joint Powers Financing Authority,
Solid Waste and Corporate Yard, Series A,
5.00% due 1/1/94 771,150
1,000,000 Baa1* South Napa Waste Management Facilities,
6.00% due 2/15/04(c) 1,020,000
- --------------------------------------------------------------------------------
2,550,238
- --------------------------------------------------------------------------------
Tax Allocation -- 15.8%
855,000 A Garden Grove Agency Tax Allocation Revenue,
(Garden Grove Community Project),
5.375% due 10/1/03 864,619
1,000,000 Baa* Hawthorne Community Redevelopment Agency,
(Tax Allocation Redevelopment Project,
Area 2), 6.200% due 9/1/05 1,058,750
630,000 AAA Lynwood Redevelopment Agency Tax Allocation,
(Project Area), Series A, AMBAC-Insured,
5.125% due 7/1/03 655,988
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------
<C> <C> <S> <C>
TAX ALLOCATION -- 15.8% (continued)
Orange County Development Agency Tax Allocation,
(Santa Anna Heights Project):
$500,000 BBB 5.500% due 9/1/00 $ 500,000
500,000 BBB 5.600% due 9/1/01 500,000
750,000 A- Paramount Redevelopment Agency Tax Allocation
Refunding, Redevelopment Project Area
No. 1, 5.800% due 8/1/03 790,313
- --------------------------------------------------------------------------------
4,369,670
- --------------------------------------------------------------------------------
TRANSPORTATION -- 13.4%
500,000 A1* Los Angeles County, Transportation Commission
COP, Series B, 6.200% due 7/1/03 545,625
Palm Springs Financing Authority, Airport
Revenue, (Palm Springs Regional Airport),
MBIA-Insured:
200,000 AAA 5.400% due 1/1/03 210,500
400,000 AAA 5.500% due 1/1/04 423,000
350,000 A1* Sacramento, Regional Transportation COP,
Series A, 6.400% due 3/1/03 384,562
240,000 AAA San Francisco Airport Improvement Corp.,
Lease Revenue, (Escrowed to Maturity with U.S.
Government Securities), 8.000% due 7/1/13(a) 300,900
San Jose, Airport Revenue:
500,000 AAA MBIA-Insured, 5.750% due 3/1/03 537,500
800,000 AAA Series 93, FGIC-Insured, 5.400% due 3/1/04(c) 833,000
450,000 A- Southern California Rapid Transit Authority,
District A2, Special Benefit Assessment,
6.100% due 9/1/03 481,500
- --------------------------------------------------------------------------------
3,716,587
- --------------------------------------------------------------------------------
UTILITIES -- 1.1%
325,000 BBB- Trinity County Public Utilities District
COP, Electric
District Facilities, 5.600% due 4/1/00(c) 329,875
- --------------------------------------------------------------------------------
WATER & SEWER -- 2.0%
Mojave Water District, California Improvement
District, (Morongo Basin):
250,000 BBB+ 6.250% due 9/1/02 265,313
280,000 BBB+ 6.375% due 9/1/03 299,950
- --------------------------------------------------------------------------------
565,263
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $26,421,066)(e) $ 27,709,269
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued) November 30, 1995
- --------------------------------------------------------------------------------
(a) Pre-Refunded bonds escrowed by U.S. Government Securities and bonds
escrowed to maturity by U.S. Government Securities are considered by the
investment adviser to be triple-A rated even if issuer has not applied for
new ratings.
(b) Securities segregated by Custodian for open purchase commitment.
(c) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(d) Variable rate obligations payable at par on demand at any time on more than
seven days notice.
(e) Aggregate cost for Federal income tax purposes is substantially the same.
+ Fitch Investors Services, Inc.
See pages 12 and 13 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
11
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation ("Standard & Poor's"), except
those identified by an asterisk (*) are rated by Moody's Investors Services
("Moody's"). The definitions of the applicable rating symbols are set forth
below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA - Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA - Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issue only in a small
degree.
A - Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Moody's - Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa," where 1 is the highest and 3 the lowest ranking
within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated "A" possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's.
12
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Short-Term Securities Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1-- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- American Municipal Bond Assurance Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
EDA -- Economic Development Authority
FLAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
13
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost--$26,421,066) $27,709,269
Receivable for securities sold 512,750
Interest receivable 469,241
Receivable for Fund shares sold 62,334
Deferred organization costs 13,046
- -------------------------------------------------------------------------------
TOTAL ASSETS 28,766,640
- -------------------------------------------------------------------------------
LIABILITIES:
Distribution fees payable 10,043
Investment advisory fees payable 2,115
Payable for Fund shares purchased 1,926
Administration fees payable 1,212
Accrued expenses 25,643
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 40,939
- -------------------------------------------------------------------------------
TOTAL NET ASSETS $28,725,701
- -------------------------------------------------------------------------------
NET ASSETS:
Par value of shares of beneficial interest $ 3,367
Capital paid in excess of par value 28,442,165
Accumulated net realized loss on security transactions (1,008,034)
Net unrealized appreciation of investments 1,288,203
- -------------------------------------------------------------------------------
TOTAL NET ASSETS $28,725,701
- -------------------------------------------------------------------------------
SHARES OUTSTANDING:
Class A 3,071,957
- -------------------------------------------------------------------------------
Class C 264,384
- -------------------------------------------------------------------------------
Class Y 30,581
- -------------------------------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $8.53
- -------------------------------------------------------------------------------
Class C* $8.52
- -------------------------------------------------------------------------------
Class Y (and redemption price) $8.54
- -------------------------------------------------------------------------------
CLASS A MAXIMUM PUBLIC OFFERING PRICE PER SHARE
(net asset value plus 2.04% of net asset value per share) $8.70
- -------------------------------------------------------------------------------
</TABLE>
* Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
14
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $1,424,850
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2) 88,385
Administration fees (Note 2) 50,505
Distribution fees (Note 2) 38,884
Registration fees 30,000
Audit and legal 22,600
Shareholder and system servicing fees 14,812
Custody 13,800
Trustees' fees 13,500
Amortization of deferred organization costs 12,042
Shareholder communications 7,000
Other 3,314
- --------------------------------------------------------------------------------
Total Expenses 294,842
Less: Fee waiver (Note 2) (103,536)
- --------------------------------------------------------------------------------
Net Expenses 191,306
- --------------------------------------------------------------------------------
Net Investment Income 1,233,544
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 5):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 7,926,839
Cost of securities sold 7,997,868
- --------------------------------------------------------------------------------
Net Realized Loss (71,029)
Increase in Net Unrealized Appreciation (Note 8) 2,337,768
- --------------------------------------------------------------------------------
Net Gain on Investments 2,266,739
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 3,500,283
================================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Years Ended November 30,
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,233,544 $ 1,505,492
Net realized loss (71,029) (731,956)
Increase (decrease) in net unrealized appreciation 2,337,768 (1,997,496)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations 3,500,283 (1,223,960)
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (1,233,544) (1,505,492)
Net realized gains -- (44,755)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (1,233,544) (1,550,247)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 2,161,490 10,344,195
Net asset value of shares issued in connection
with the transfer of the Smith Barney Muni
Funds: California Limited Term Portfolio's
net assets (Note 8) 6,851,373 --
Net asset value of shares issued for
reinvestment of dividends 901,975 1,207,127
Cost of shares reacquired (8,859,955) (15,886,918)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 1,054,883 (4,335,596)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 3,321,622 (7,109,803)
NET ASSETS:
Beginning of year 25,404,079 32,513,882
- --------------------------------------------------------------------------------
End of year $28,725,701 $ 25,404,079
- -------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Smith Barney Intermediate Maturity California Municipals Fund ("Fund") is a
separate investment fund of the Smith Barney Investment Trust ("Trust"). The
Trust, a Massachusetts business trust, is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open-end management
investment company and consists of this Fund and two other separate investment
funds: Smith Barney Limited Maturity Municipals Fund and Smith Barney
Intermediate Maturity New York Municipals Fund. The financial statements and
financial highlights for the other funds are presented in separate annual
reports.
The significant accounting policies consistently followed by the Fund are: (a)
securities transactions are accounted for on the trade date; (b) securities are
valued at the mean between the quoted bid and asked prices by an independent
pricing service that are based on transactions in municipal obligations,
quotations from municipal bond dealers, market transactions in comparable
securities and various relationships between securities; (c) short-term
securities and securities that have a maturity of 60 days or less are valued at
cost plus accreted discount, or minus amortized premium, as applicable, which
approximates value; (d) gains or losses on the sale of securities are calculated
by using the specific identification method; (e) interest income, adjusted for
amortization of premiums and accretion of original issue discount, is recorded
on the accrual basis; market discount is recognized upon the disposition of the
security; (f) direct expenses are charged to the Fund and each class; management
fees and general fund expenses are allocated on the basis of relative net
assets; (g) the Fund intends to comply with the applicable provisions of the
Internal Revenue Code of 1986, as amended, pertaining to regulated investment
companies and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes; (h) in accordance with
Statement of Position 93-2 Determination, Disclosure, and Financial Statement
--------------------------------------------------
Presentation of Income, Capital Gain, and Return of Capital Distributions by
- ----------------------------------------------------------------------------
Investment Companies, book and tax basis differences relating to shareholder
- --------------------
distributions and other permanent book and tax differences are reclassified to
paid-in capital. As of November 30, 1995, the cumulative effect of such
differences, totaling $186, was reclassified to paid-in capital from
overdistribution of realized gains. Net investment
17
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
income, net realized gains, and net assets were not affected by this change; and
(i) certain prior years numbers have been restated to reflect current year's
presentation. Net investment income, realized gains, and net assets were not
affected by this change.
In addition, organization costs have been deferred and are being amortized on
a straight line basis over a five-year period, beginning with the commencement
of the Fund's operations in December 1991.
2. INVESTMENT ADVISORY AGREEMENT, ADMINISTRATION
AGREEMENT AND OTHER TRANSACTIONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment adviser to the Fund. Effective
November 17, 1995, the investment advisory fee declined from 0.35% to 0.30%. The
fee is calculated at an annual rate based on the Fund's average daily net assets
and is paid by the Fund to SBMFM. This fee is calculated daily and paid monthly.
For the year ended November 30, 1995, SBMFM waived $65,910 of its investment
advisory fee.
SBMFM also acts as the Fund's administrator for which the Fund pays a fee
calculated at the annual rate of 0.20% of the average daily net assets. This fee
is calculated daily and paid monthly. For the year ended November 30, 1995,
SBMFM waived $37,626 of its administration fee.
In addition, The Boston Company Advisors, Inc. ("Boston Advisors"), an indirect
wholly owned subsidiary of Mellon Bank Corporation, acted as sub-administrator
to the Fund. SBMFM paid Boston Advisors a portion of its administration fee at a
rate agreed upon from time to time between SBMFM and Boston Advisors. As of July
10, 1995, this relationship was terminated.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of Fund
shares. For the year ended November 30, 1995, SB received sales charges of
approximately $22,000 on sales of the Fund's Class A shares.
18
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
There is a contingent deferred sales charge ("CDSC") of 1.00% on Class C
shares, which applies if redemption occurs less than one year from initial
purchase. For the year ended November 30, 1995, CDSCs paid to SB were
approximately $4,000 for Class C shares.
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to
its Class A and C shares, calculated at the annual rate of 0.15% of the average
daily net assets for each class. In addition, the Fund pays a distribution fee
with respect to its Class C shares calculated at the annual rate of 0.20%.
All officers and one Trustee of the Fund are employees of SB.
3. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. FUND CONCENTRATION
The Fund primarily invests in debt obligations issued by the State of
California and 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.
5. INVESTMENTS
For the year ended November 30, 1995, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term investments) were as follows:
- --------------------------------------------------------------------------------
Purchases $1,929,802
- --------------------------------------------------------------------------------
Sales 7,926,839
- --------------------------------------------------------------------------------
19
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At November 30, 1995, the net unrealized appreciation of investments for
Federal income tax purposes consisted of the following:
- --------------------------------------------------------------------------------
Gross unrealized appreciation $ 1,304,235
Gross unrealized depreciation (16,032)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 1,288,203
- --------------------------------------------------------------------------------
6. CAPITAL LOSS CARRYFORWARDS
At November 30, 1995, the Fund had for Federal tax purposes approximately
$1,008,000 of unused capital loss carryforwards available, subject to certain
limitations, to offset future capital gains. To the extent that these
carryforward losses are used to offset capital gains, it is probable that the
gains so offset will not be distributed.
The amount and year of expiration for each carryforward loss is indicated
below:
11/30/02 11/30/03
- --------------------------------------------------------------------------------
Capital Loss Carryforwards $739,000 $269,000
- --------------------------------------------------------------------------------
7. SHARES OF BENEFICIAL INTEREST
As of November 30, 1995, the Fund had an unlimited number of shares of
beneficial interest authorized with a par value of $0.001 per share. The Fund
has the ability to issue multiple classes of shares. Each share of a class
represents an identical interest and has the same rights, except that each class
bears certain direct expenses, including those specifically related to the
distribution of its shares. At November 30, 1995, total paid-in capital amounted
to the following for each class:
Class A Class C Class Y
- --------------------------------------------------------------------------------
Total Paid-in Capital $25,995,215 $2,232,853 $217,464
- --------------------------------------------------------------------------------
20
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
--------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 200,184 $ 1,627,590 1,242,342 $ 10,299,195
Net assets of shares
issued
in connection with
transfer of the Smith
Barney Muni Funds:
California Limited Term
Portfolio's net assets
(Note 8) 558,469 4,685,557 -- --
Shares issued on
reinvestment 107,116 875,765 146,296 1,207,127
Shares redeemed (1,046,887) (8,539,501) (1,962,629) (15,886,918)
- --------------------------------------------------------------------------------
Net Decrease (181,118) $(1,350,589) (573,991) $ (4,380,596)
- --------------------------------------------------------------------------------
CLASS C
Shares sold 65,405 $ 533,900 5,799 $ 45,000
Net assets of shares
issued
in connection with
transfer of the Smith Barney
Muni Funds: California
Limited Term Portfolio's
net assets (Note 8) 193,073 1,616,289 -- --
Shares issued on
reinvestment 2,539 21,251 -- --
Shares redeemed (2,432) (20,454) -- --
- --------------------------------------------------------------------------------
Net Increase 258,585 $ 2,150,986 5,799 $ 45,000
- --------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS Y
Shares sold -- -- -- --
Net assets of shares issued
in connection with
transfer of the Smith
Barney Muni Funds: California
Limited Term Portfolio's
net assets (Note 8) 65,496 $ 549,527 -- --
Shares issued on
reinvestment 588 4,959 -- --
Shares redeemed (35,503) (300,000) -- --
- --------------------------------------------------------------------------------
Net Increase 30,581 $ 254,486 -- --
- --------------------------------------------------------------------------------
</TABLE>
*For Class C shares, transactions are for the period from November 7, 1994
(inception date) to November 30, 1994.
8. TRANSFER OF NET ASSETS
On September 8, 1995, the Fund acquired the net assets and certain liabilities
of the Smith Barney Muni Funds: California Limited Term Portfolio ("California
Limited Term") pursuant to a plan of reorganization approved by California
Limited Term shareholders on August 28, 1995. Total shares issued by the Fund
and the total net assets of California Limited Term and the Fund on the date of
the transfer were:
TOTAL NET
SHARES ASSETS OF TOTAL NET
ISSUED BY ACQUIRED ASSETS OF
ACQUIRED FUND THE FUND PORTFOLIO THE FUND
- --------------------------------------------------------------------------------
California Limited Term 817,038 $6,851,373 $23,045,761
- --------------------------------------------------------------------------------
The total net assets of California Limited Term before acquisition included
unrealized appreciation of $155,851 and a net realized loss of $181,719. The
transaction was structured for tax purposes to qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended.
22
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year:
<TABLE>
<CAPTION>
CLASS A SHARES 1995 1994 1993 1992(1)
===============================================================================
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 7.80 $ 8.50 $ 8.04 $ 7.90
- -------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income (2) 0.40 0.39 0.39 0.35
Net realized and unrealized
gain (loss) 0.73 (0.69) 0.46 0.14
- -------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.13 (0.30) 0.85 0.49
- -------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.40) (0.39) (0.39) (0.35)
Net realized gains -- (0.01) -- --
- -------------------------------------------------------------------------------
Total Distributions (0.40) (0.40) (0.39) (0.35)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 8.53 $ 7.80 $ 8.50 $ 8.04
- -------------------------------------------------------------------------------
TOTAL RETURN 14.85% (3.65)% 10.70% 6.33%++
- -------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $26,211 $25,359 $32,514 $ 10,667
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (2) 0.75% 0.75% 0.72% 0.65%+
Net investment income 4.89 4.73 4.45 4.81+
- -------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 8% 39% 16% 46%
================================================================================
</TABLE>
(1) For the period from December 31, 1991 (inception date) to November 30,
1992.
(2) The investment adviser has waived all or part of its fees for the three
years ended November 30, 1995 and the period ended November 30, 1992. If
such fees were not waived, the per share decreases in net investment income
and expense ratios would be as follows:
<TABLE>
<CAPTION>
Per Share Decreases Expense Ratios
in Net Investment Income Without Fee Waivers
-------------------------- --------------------------
1995 1994 1993 1992 1995 1994 1993 1992
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $0.03 $0.04 $0.07 $0.11 1.16% 1.24% 1.49% 2.18%+
</TABLE>
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
23
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR:
<TABLE>
<CAPTION>
CLASS C SHARES 1995 1994(1)
===========================================================
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 7.80 $ 7.76
- -----------------------------------------------------------
INCOME FROM OPERATIONS:
Net investment income (2) 0.38 0.01
Net realized and unrealized gain 0.72 0.05**
- -----------------------------------------------------------
Total Income From Operations 1.10 0.06
- -----------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.38) (0.02)
Net realized gains -- --
- -----------------------------------------------------------
Total Distributions (0.38) (0.02)
- -----------------------------------------------------------
NET ASSET VALUE, END OF YEAR $8.52 $7.80
- -----------------------------------------------------------
TOTAL RETURN 14.36% 0.72%++
- -----------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $2,254 $45
- -----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (2) 0.98% 0.95%+
Net investment income 4.54 4.53+
- -----------------------------------------------------------
PORTFOLIO TURNOVER RATE 8% 39%
===========================================================
</TABLE>
(1) For the period from November 8, 1994 (inception date) to November 30, 1994.
(2) The investment adviser has waived a part of its fees for the year ended
November 30, 1995, and the period ended November 30, 1994. If such fees
were not waived, the per share decreases in net investment income and
expense ratios would be as follows:
<TABLE>
<CAPTION>
Per Share Decreases Expense Ratios
in Net Investment Income Without Fee Waivers
------------------------ -------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Class C $0.03 0.00* 1.39% 1.44%+
</TABLE>
* Amount represents less than $0.01 per share.
** The amount in this caption for each share outstanding throughout the period
may not accord with the change in aggregate gains and losses in the portfolio
securities for the period because of the timing of purchases and withdrawals
of shares in relation to the fluctuating market values of the portfolio.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
24
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR:
<TABLE>
<CAPTION>
CLASS Y SHARES 1995(1)
===============================================================================
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR $8.39
- -------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
Net investment income (2) 0.09
Net realized and unrealized gain 0.15
- -------------------------------------------------------------------------------
Total Income From Operations 0.24
- -------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.09)
Net realized gains --
- -------------------------------------------------------------------------------
Total Distributions (0.09)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $8.54
- -------------------------------------------------------------------------------
TOTAL RETURN 2.92%++
- -------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $ 261
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (2) 0.58%+
Net investment income 4.74+
- -------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 8%
===============================================================================
</TABLE>
(1) For the period from September 8, 1995 (inception date) to November 30,
1995.
(2) The investment adviser has waived a part of its fees for the period ended
November 30, 1995. If such fees were not waived, the per share decrease in
net investment income and expense ratio would be as follows:
<TABLE>
<CAPTION>
Per Share Decrease Expense Ratio
in Net Investment Income Without Fee Waiver
------------------------ ------------------
1995 1995
---- ----
<S> <C> <C>
Class Y $0.03 0.99%+
</TABLE>
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
25
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
SMITH BARNEY INVESTMENT TRUST:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Smith Barney Intermediate Maturity
California Municipals Fund of Smith Barney Investment Trust as of November 30,
1995, and the related statement of operations, statement of changes in net
assets, and financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of changes
in net assets for the year ended November 30, 1994 and the financial highlights
for each of the years in the two-year period then ended and for the period from
December 31, 1991 (commencement of operations) to November 30, 1992, were
audited by other auditors whose report thereon, dated January 25, 1995 expressed
an unqualified opinion on that statement of changes in net assets and those
financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian. As to securities sold
but not delivered, we performed other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Smith Barney International
Maturity California Municipals Fund of Smith Barney Investment Trust as of
November 30, 1995, and the results of its operations, changes in its net assets
and financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
January 17, 1996
26
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Additional Information
- --------------------------------------------------------------------------------
Change in Independent Auditor: On October 19, 1994, based upon the
recommendation of the Audit Committee of the Fund, the Board of Trustees
determined not to retain Coopers & Lybrand L.L.P ("Coopers & Lybrand") as the
Fund's independent auditor and voted to appoint KPMG Peat Marwick LLP. During
the Fund's two most recent fiscal years, Coopers & Lybrand's audit reports
contained no adverse opinion or disclaimer of opinion; nor were the reports
qualified or modified as to uncertainty, audit scope, or accounting principles.
Further, during this same period there were no disagreements with Coopers &
Lybrand on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Coopers & Lybrand, would have caused it to make reference
to the subject matter of such disagreements in connection with its audit
reports. The Fund has requested Coopers & Lybrand to provide a letter to the
Securities and Exchange Commission stating whether Coopers & Lybrand agrees with
the foregoing statements, and to provide the Fund with a copy of such letter. A
copy of this letter is available upon request by calling the Fund at (212) 723-
9218.
27
<PAGE>
SMITH BARNEY
INTERMEDIATE MATURITY CALIFORNIA MUNICIPALS FUND
- --------------------------------------------------------------------------------
Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On March 20, 1995, a special meeting of the shareholders of the Fund was held
for the purpose of voting on the election of ten (10) trustees.
The results of the vote were as follows:
<TABLE>
<CAPTION>
Trustees % Voting in Favor % Voting Against % Abstaining
================================================================================
<S> <C> <C> <C>
Herbert Barg 97.898% 0.00% 2.102%
Alfred J. Bianchetti* 98.100 0.00 1.900
Martin Brody 98.100 0.00 1.900
Dwight B. Crane 98.100 0.00 1.900
Burt N. Dorsett 98.100 0.00 1.900
Elliot S. Jaffe 98.100 0.00 1.900
Stephen E. Kaufman 98.100 0.00 1.900
Joseph J. McCann 97.898 0.00 2.102
Heath B. McLendon* 98.100 0.00 1.900
Cornelius C. Rose, Jr. 98.100 0.00 1.900
</TABLE>
* Each Trustee who is an "interested person" of the Trust, as defined by the
Investment Company Act of 1940, as amended, is indicated by an asterisk.
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
100% of the dividends paid by the Fund from net investment income for the
year ended November 30, 1995, are tax-exempt for regular Federal income tax
purposes.
28
<PAGE>
Smith Barney
Intermediate
Maturity
California
Municipals
Fund
TRUSTEES
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliot S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon, Chairman
Cornelius C. Rose, Jr.
OFFICERS
Heath B. McLendon
Chairman of the Board and
Investment Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Joseph P. Deane
Vice President
and Investment Officer
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
SMITH BARNEY
- ------------
A Member of Travelers Group [LOGO}
INVESTMENT ADVISER AND
ADMINISTRATOR
Smith Barney Mutual Funds
Management Inc.
DISTRIBUTOR
Smith Barney Inc.
CUSTODIAN
PNC Bank
SHAREHOLDER
SERVICING AGENT
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Intermediate Maturity California Municipals Fund. It is not
authorized for distribution to prospective investors unless accompanied or
preceded by a current Prospectus for the Fund, which contains information
concerning the Fund's investment policies and expenses as well as other
pertinent information.
SMITH BARNEY
INTERMEDIATE MATURITY
CALIFORNIA
MUNICIPALS FUND
388 Greenwich Street
New York, New York 10013
FD0310 1/96
