SEMI-
ANNUAL
REPORT
DESCRIPTION OF ART WORK ON REPORT COVER
Small box above fund name showing a shaded, picture of the California
state centered in a circular sun-like design. Pictured on bottom right-
hand side of the box are an artist's brushstrokes curled at their ends.
Smith Barney Shearson
CALIFORNIA
MUNICIPAL
MONEY
MARKET
FUND
APRIL 30, 1994
SMITH BARNEY
CALIFORNIA MUNICIPAL MONEY MARKET FUND
DEAR SHAREHOLDER:
We are pleased to provide you with the Semi-Annual Report, which includes
the portfolio of investments for Smith Barney Shearson California Munici-
pal Money Market Fund. During the six months ended April 30, 1994, the
Fund's monthly tax-exempt dividend distribution resulted in a tax-exempt
annualized yield of 1.88%.
On February 4, 1994, the Federal Reserve signaled an important shift in
direction by tightening monetary policy for the first time since 1989. To
date, the Federal Open Market Committee has lifted the Federal funds rate
four times, after having left it unchanged at 3% for almost 18 months.
Monetary officials do not want to take the risk of waiting for the infla-
tion momentum to build; rather they have chosen to "stay ahead of the in-
flation curve" by acting early and gradually. At the core of current pre-
dictions about the path of interest rates is inflation. After the double-
digit inflation in the late 1970s and early 1980s, inflation has been in
the 3-4% range for over a decade, and during the last 18 months it has
been even lower. With a return to faster economic growth, it is not a sur-
prise that Federal Reserve Chairman Greenspan has put the focus on infla-
tion and so have the financial markets.
As has been the case for most of the year, short-term tax-exempt rates
have been attractive in comparison to short-term taxable rates. This is
because trends in short-term municipal rates have always depended more on
purely technical considerations than on the more fundamental elements such
as trends in interest rates, Federal policy, and the inflation outlook.
Looking forward, we expect demand for tax-exempt money market funds to
continue to increase. Asset flows will depend upon a variety of influ-
ences, including marginal tax rates, the risk/reward perception of other
investment opportunities (such as equity or other fixed income markets)
and the nature of Federal Reserve policy. With higher Federal individual
income tax rates and rising interest rates from the Federal Reserve's
tightening, assets invested in tax-exempt money market funds should con-
tinue to increase.
In California, although a recovery may be underway -- the unemployment
rate in April fell to 9.6% of the labor force from 10.1% in January -- a
substantial upturn is still not evident. Many sectors continue to strug-
gle: there is steady erosion in aerospace jobs, led by cutbacks in the
aircraft and military industries; and both residential and nonresidential
construction remain weak. However, cleanup, repair and rebuilding due to
the January earthquake will provide a short-run stimulus for the construc-
tion industry in the coming months. Beyond that, the industry's prospects
will hinge on a broadly-based job recovery and better income prospects.
With a solid economic recovery still questionable, California continues to
face fiscal stress. The governor's proposed budget for fiscal year 1995
relies on some very aggressive assumptions. For example, Governor Wilson's
budget incorporates $3.1 billion in highly improbable Federal aid, prima-
rily to offset the costs of immigration; interestingly, the Federal budget
allocates no money for this purpose.
We are employing a defensive investment strategy, with the majority of our
purchases three-to-six months in maturity. The Fund's average maturity is
currently 31 days. We anticipate extending it during the summer months
when short-term municipal issuance increases after July 1, which is the
beginning of the fiscal year for many states and municipalities, and rates
generally become more attractive.
The Securities and Exchange Commission has proposed amendments to Rule
2a-7 of the Investment Company Act of 1940, as amended, the rule that gov-
erns money market funds. The proposed amendments to Rule 2a-7 are designed
to address risks in tax-exempt money market funds. Last amended in 1991,
changes were made regarding asset quality, portfolio maturity and asset
diversification. Specific issues relating to tax-exempt funds were not ad-
dressed in the 1991 amendments with the understanding that these funds
would be addressed at a future date. Based on the proposed amendments that
were released in December 1993, we do not believe that the actual amend-
ments will have much impact on how we manage our tax-free money market
funds.
Going forward, we will continue to maintain our high investment standards
while providing competitive investment yields. We appreciate your contin-
ued confidence and support, and look forward to reporting to you in the
Fund's annual report.
Sincerely,
Heath B. McLendon Lawrence T. McDermott
Heath B. McLendon Lawrence T. McDermott
Chairman of the Board Vice President and
and Investment Officer Investment Officer
Karen L. Mahoney-Malcomson
Karen L. Mahoney-Malcomson
Investment Officer June 15, 1994
PORTFOLIO OF INVESTMENTS (UNAUDITED) APRIL 30, 1994
<TABLE>
<CAPTION>
MARKET VALUE
FACE VALUE
(NOTE 1)
<C> <S>
<C>
MUNICIPAL BONDS AND NOTES -- 102.0%
CALIFORNIA -- 100.2%
$ 6,250,000 Acalanes, California, Unified High School District,
Tax and Revenue Anticipation Notes,
3.000% due 6/30/94
$ 6,253,038
12,950,000 Anaheim, California, Certificates of Participation,
(Police Facilities Refinancing Project),
3.100% due 8/1/08+
12,950,000
California Alternative Energy:
27,500,000 3.100% due 9/1/20+
27,500,000
12,500,000 3.200% due 9/1/20+
12,500,000
California Health Facilities Financing Authority Revenue:
5,200,000 3.200% due 5/1/28+
5,200,000
25,000,000 3.200% due 5/1/28+
25,000,000
5,000,000 (Adventist Health Systems), Series B,
3.300% due 8/1/21+
5,000,000
(Daughters of Charity National Project):
26,210,109 3.150% due 3/1/13+
26,210,109
23,783,466 3.150% due 3/1/13+
23,783,466
3,560,000 3.150% due 11/1/13+
3,560,000
20,565,000 3.150% due 11/1/13+
20,565,000
35,100,000 3.150% due 6/1/22+
35,100,000
1,700,000 (Granada Hills Community), Series C,
3.150% due 1/1/15+
1,700,000
640,000 (King View Project), Series 85A,
2.700% due 2/1/15+
640,000
8,115,000 Series F,
2.400% due 2/1/23+++
8,083,354
California Higher Education Student Loan Authority:
5,200,000 3.300% due 12/1/22+
5,200,000
1,400,000 Series D1,
3.350% due 4/1/00+
1,400,000
1,615,000 California Housing, Finance Agency Revenue,
2.850% due 8/1/94+++
1,615,000
California Pollution Control, Financing Authority,
Pollution Control Revenue:
2,000,000 (Chevron USA Project),
2.400% due 5/15/02+++
2,000,000
1,500,000 (Pacific Gas & Electric), Series A,
2.150% due 12/1/16+++
1,500,000
4,250,000 Series A, (Sanger Project),
3.450% due 9/1/20+
4,250,000
7,000,000 (Sierra Pacific Industries Project),
3.150% due 2/1/13+
7,000,000
California Pollution Control, Financing Authority,
Solid Waste Disposal Revenue:
(Colmac Energy Project):
11,600,000 Series A,
3.450% due 12/1/16+
11,600,000
18,400,000 Series B,
3.450% due 12/1/16+
18,400,000
7,000,000 Series C,
3.450% due 12/1/16+
7,000,000
8,675,000 (Sierra Pacific Industries Project),
3.350% due 8/1/13+
8,675,000
California Rural Home Mortgage Financing:
790,000 2.960% due 12/1/04+++
790,000
19,210,000 2.960% due 12/1/14+++
19,210,000
9,770,000 California Schools, Cash Reserve Project Authority,
Series A,
2.850% due 6/21/94+++
9,770,000
25,000,000 California State, Revenue Anticipation Notes,
3.340% due 6/28/94+++
25,000,000
California State, General Obligations, (MBIA Investors
Capital Corporation Project), Series 92A:
17,500,000 2.250% due 11/1/07+++
17,500,000
17,500,000 2.250% due 11/1/07+++
17,500,000
California State, Revenue Anticipation Notes:
20,800,000 3.500% due 6/28/94
20,822,863
59,875,000 Series B,
3.500% due 7/27/94
59,956,549
California Statewide Communities Development
Authority Revenue, Certificates of Participation:
3,000,000 3.400% due 8/4/00+
3,000,000
17,000,000 (St. Joseph Health Project),
3.250% due 7/1/08+
17,000,000
5,900,000 Carlsbad, California, Multifamily Housing Revenue, Series A,
(La Costa Apartment Project),
3.150% due 6/1/11+
5,900,000
2,600,000 Centralia, California, School District, Tax and Revenue
Anticipation Notes,
3.250% due 6/30/94
2,602,320
Chula Vista, California, Industrial Development Revenue,
(San Diego Gas and Electric Company):
24,500,000 Series B,
3.250% due 12/1/27+
24,500,000
2,125,000 (Sutherland/Palumbo Project),
3.500% due 12/1/21+
2,125,000
5,000,000 Conejo Valley, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.250% due 7/1/94
5,003,203
26,100,000 Eagle Trust, California, General Obligation,
Series 94C-0503,
3.440% due 9/1/03+
26,100,000
3,600,000 East Side, California, Unified High School District,
Tax and Revenue Anticipation Notes,
3.000% due 11/3/94
3,603,223
4,000,000 Fontana, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.250% due 7/1/94
4,002,964
5,500,000 Fremont, California, Multifamily Housing Revenue,
(Mission Wells Project), Series E,
3.250% due 9/1/07+
5,500,000
4,500,000 Goleta, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.250% due 7/1/94
4,504,085
1,160,000 Grand Terrace, California, Community Redevelopment
Agency, Multifamily Housing Revenue, (Mount Vernon
Villas Project), 1985 A,
3.200% due 12/1/11+
1,160,000
2,900,000 Hayward, California, Housing Authority Revenue,
(Huntwood Terrace Apartments),
3.250% due 3/1/27+
2,900,000
1,240,000 Healdsburg, California, Community Redevelopment Agency,
3.250% due 1/1/98+
1,240,000
1,800,000 Hillsborough, California, School District Revenue,
3.250% due 7/1/94
1,801,636
2,200,000 Irvine, California, Multifamily Housing Revenue,
Series 1983 A,
3.050% due 12/1/95+
2,200,000
24,500,000 Irvine, California, Public Facilities and Infrastructure
Authority, Lease Revenue, (Capital Improvement Project),
3.150% due 11/1/10+
24,500,000
700,000 Kern County, California, (Kern Public Facilities Project),
Series A,
3.150% due 8/1/06+
700,000
2,900,000 Kern County, California, Union High School District,
Financing Project,
3.100% due 12/1/03+
2,900,000
5,200,000 Livermore, California, Certificates of Participation,
(Water Reclamation Plant Project),
3.200% due 8/1/16+
5,200,000
8,000,000 Lodi, California, Industrial Development Authority,
Industrial Development Revenue, (Dart Container Project),
3.850% due 12/1/04+
8,000,000
Loma Linda, California, Hospital Revenue Anticipation Notes:
2,735,000 (Loma Linda Medical Center Project), Series A,
3.150% due 12/1/11+
2,735,000
3,000,000 Series C,
3.150% due 12/1/15+
3,000,000
7,100,000 Los Angeles, California, Community Redevelopment
Agency, Multifamily Housing Revenue, (Academy Village
Apartments Project), Series A,
3.350% due 10/1/19+
7,100,000
Los Angeles County, California, Housing Authority,
Multifamily Housing Revenue:
13,100,000 (Diamond Park Apartments Project ), Series A,
3.350% due 2/1/09+
13,100,000
3,800,000 (Riverpark),
3.050% due 9/1/10+
3,800,000
1,100,000 (Valencia Village Project), Series C,
3.350% due 10/1/14+
1,100,000
2,068,000 Los Angeles County, California, Multifamily Mortgage
Revenue, Series C,
3.100% due 9/1/06+
2,068,000
2,600,000 Los Angeles County, California, Tax and Revenue
Anticipation Notes, (Long Beach Community College),
3.250% due 11/22/94
2,605,416
6,300,000 Los Angeles County, California, Transportation Authority,
Sales Tax Revenue,
2.700% due 7/1/20+
6,300,000
3,500,000 Martinez, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.000% due 6/30/94
3,501,137
3,000,000 Millbrae, California, Elementary School District,
Tax and Revenue Anticipation Notes,
3.250% due 7/1/94
3,002,724
3,200,000 Milpitas, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.000% due 6/30/94
3,201,039
10,000,000 Oakland, California, Tax and Revenue Anticipation Notes,
3.500% due 8/15/94
10,012,794
1,400,000 Ojai, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.250% due 7/1/94
1,401,037
16,400,000 Orange County, California, Apartment Development Revenue,
(Monarch Bay Apartments Project),
3.300% due 10/1/07+
16,400,000
1,000,000 Paramount, California, Housing Authority Multifamily
Housing Revenue, (Century Place Project), Series A,
3.200% due 10/1/18+
1,000,000
4,900,000 Pittsburgh, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.000% due 6/30/94
4,901,590
5,200,000 Pleasanton, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.000% due 6/30/94
5,201,688
5,000,000 Rialto, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.250% due 7/1/94
5,003,703
Riverside, California, Sewer Revenue Tender:
1,000,000 3.300% due 8/1/07+
1,000,000
1,760,000 3.300% due 8/1/08+
1,760,000
Sacramento County, California, Multifamily
Housing Revenue:
2,200,000 (Bradshaw Corte Apartments), Series A,
3.200% due 4/15/07+
2,200,000
200,000 Series B,
3.200% due 4/15/07+
200,000
1,000,000 Series C,
3.200% due 4/15/07+
1,000,000
1,000,000 San Bernardino, California, Multi-Family Housing
Revenue, (Castle Park Apartments Project), Series 85A,
3.400% due 11/1/05+
1,000,000
14,000,000 San Bernardino County, California, Housing Authority,
Multi-family Housing Revenue,
3.100% due 5/1/06+
14,000,000
21,000,000 San Diego, California, Area Local Government, Certificates
of Participation,
3.250% due 6/30/94
21,013,597
San Francisco, California, City and County Redevelopment
Agency, Multifamily Housing Revenue, Retirement Housing:
1,500,000 (Fillmore Center Project), Series A
3.050% due 12/1/17+
1,500,000
2,100,000 (Winterland 1985 Project),
3.050% due 6/1/06+
2,100,000
20,000,000 San Francisco, California, City and County,
Tax and Revenue Anticipation Notes,
3.250% due 7/15/94
20,018,100
5,500,000 San Francisco, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.500% due 8/12/94
5,506,837
4,000,000 San Juan, California, Unified School District,
Tax and Revenue Anticipation Notes,
3.500% due 8/4/94
4,004,587
1,000,000 San Mateo, California, Unified High School District,
Tax and Revenue Anticipation Notes,
3.250% due 7/1/94
1,000,909
2,600,000 Santa Ana, California, Industrial Development Authority Reve-
nue, (Fiesta Marketplace Project),
3.210% due 11/1/95+
2,600,000
1,100,000 Santa Paula, California, School District,
Tax and Revenue Anticipation Notes,
3.250% due 7/1/94
1,100,909
20,000,000 Simi Valley, California, Multifamily Housing Authority,
(Lincoln Wood Ranch Project),
3.150% due 6/1/10+
20,000,000
2,000,000 Solano County, California, Tax and Revenue
Anticipation Notes,
3.250% due 11/1/94
2,004,930
10,000,000 Stanislaus County, California, Tax and Revenue
Anticipation Notes,
3.500% due 8/2/94
10,011,235
5,200,000 Sunnyvale, California, Elementary School District,
Tax and Revenue Anticipation Notes,
3.000% due 6/30/94
5,201,688
1,200,000 Visalia, California Industrial Development Revenue,
3.600% due 12/1/16+
1,200,000
821,533,730
GUAM -- 0.3%
2,080,000 Guam Government, Limited Obligation Highway
Revenue Bonds, Series A,
4.250% due 5/1/94
2,080,095
PUERTO RICO -- 1.5%
5,200,000 Commonwealth of Puerto Rico, Government Development Bank,
3.000% due 12/1/15+
5,200,000
7,000,000 Puerto Rico Industrial, Medical and Environmental
Pollution Control Revenue,
3.000% due 12/1/13+++
7,000,000
12,200,000
<S> <C>
<C>
TOTAL INVESTMENTS (Cost $835,813,825*)
102.0% 835,813,825
OTHER ASSETS AND LIABILITIES
(2.0) (16,156,338)
NET ASSETS
100.0% $819,657,487
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate demand notes are payable upon not more than seven calen-
dar days' notice.
++ Variable rate daily demand notes are payable upon not more than one
business day's notice.
+++ "Put" bonds and notes have demand features which mature within one
year.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1994
<TABLE>
<S> <C>
<C>
ASSETS:
Investments, at value (Cost $835,813,825) (Note 1)
See accompanying schedule
$835,813,825
Cash
54,034
Receivable for Fund shares sold
13,341,577
Interest receivable
7,182,036
TOTAL ASSETS
856,391,472
LIABILITIES:
Payable for investment securities purchased $23,846,387
Payable for Fund shares redeemed 11,492,170
Dividends payable 953,830
Investment advisory fee payable (Note 2) 204,525
Administration fee payable (Note 2) 136,350
Transfer agent fees payable (Note 2) 33,500
Custodian fees payable (Note 2) 18,000
Accrued expenses and other payables 49,223
TOTAL LIABILITIES
36,733,985
NET ASSETS
$819,657,487
NET ASSETS CONSIST OF:
Accumulated net realized loss on investments sold
$ (314,098)
Par value
819,972
Paid-in capital in excess of par value
819,151,613
TOTAL NET ASSETS
$819,657,487
NET ASSET VALUE, offering price and redemption price per
share ($819,657,487 / 819,971,585 shares of beneficial
interest outstanding)
$1.00
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest
$10,170,025
EXPENSES:
Investment advisory fee (Note 2) $1,223,524
Administration fee (Note 2) 815,683
Transfer agent fees (Notes 2) 194,229
Custodian fees (Note 2) 49,269
Legal and audit fees 25,363
Trustees' fees and expenses (Note 2) 10,078
Other 129,513
TOTAL EXPENSES
2,447,659
NET INVESTMENT INCOME
7,722,366
NET REALIZED LOSS ON INVESTMENTS SOLD (NOTE 1)
(79,412)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $
7,642,954
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED
ENDED
4/30/94
10/31/93
(UNAUDITED)
<S> <C> <C>
Net investment income $ 7,722,366 $
15,051,377
Net realized loss on investments sold during
the period (79,412)
(8,713)
Net increase in net assets resulting from op-
erations 7,642,954
15,042,664
Distributions to shareholders from net invest-
ment income (7,722,366)
(15,051,377)
Net increase in net assets from Fund share
transactions (Note 3) 52,052,376
70,583,132
Net increase in net assets 51,972,964
70,574,419
NET ASSETS:
Beginning of period 767,684,523
697,110,104
End of period $819,657,487
$767,684,523
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR
YEAR
ENDED ENDED
ENDED ENDED
4/30/94 10/31/93
10/31/92 10/31/91
(UNAUDITED)
<S> <C> <C> <C>
<C>
Operating performance:
Net asset value, beginning of period $1.00 $1.00
$1.00 $1.00
Income from investment operations:
Net investment income 0.0093 0.0199
0.0264 0.0395
Less distributions:
Dividends from net investment income (0.0093) (0.0199)
(0.0264) (0.0395)
Net realized gain/(loss) on investments (0.0001) 0.0000
(0.0001) 0.0002
Net asset value, end of period $1.00 $1.00
$1.00 $1.00
Total return++ 0.94% 2.01%
2.67% 4.02%
Ratios to average net assets/supplemen-
tal data:
Net assets, end of period (in 000's) $819,657 $767,685
$697,110 $647,959
Ratio of operating expenses to average
net assets 0.60%+ 0.60%
0.60% 0.60%
Ratio of net investment income to aver-
age net assets 1.89%+ 1.99%
2.64% 3.98%
<FN>
+ Annualized.
++ Total return represents aggregate total return for the period indi-
cated.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS (continued)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR YEAR YEAR
YEAR PERIOD
ENDED ENDED ENDED
ENDED ENDED
10/31/90 10/31/89 10/31/88
10/31/87 10/31/86*
<S> <C> <C> <C>
<C> <C>
Operating performance:
Net asset value, beginning of pe-
riod $1.00 $1.00 $1.00
$1.00 $1.00
Income from investment opera-
tions:
Net investment income 0.0523 0.0574 0.0463
0.0383 0.0400
Less distributions:
Dividends from net investment
income (0.0523) (0.0574) (0.0463)
(0.0383) (0.0400)
Net realized gain/(loss) on in-
vestments (0.0001) (0.0002) 0.0000
(0.0002) 0.0004
Net asset value, end of period $1.00 $1.00 $1.00
$1.00 $1.00
Total return++ 5.36% 5.89% 4.73%
3.90% 4.07%
Ratios to average net assets/sup-
plemental data:
Net assets, end of period (in
000's) $797,802 $678,205 $275,084
$146,952 $111,588
Ratio of operating expenses to
average
net assets 0.58% 0.58% 0.61%
0.70% 0.75%+
Ratio of net investment income to
average net assets 5.22% 5.73% 4.68%
3.85% 4.03%+
<FN>
* The Fund commenced operations on November 25, 1985.
+ Annualized.
++ Total return represents aggregate total return for the period indi-
cated.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Shearson California Municipal Money Market Fund (the "Fund")
was organized under the laws of the Commonwealth of Massachusetts as a
"Massachusetts business trust" on August 30, 1985. The Fund is a no-load,
non-diversified, open-end management investment company registered with
the Securities and Exchange Commission under the Investment Company Act of
1940, as amended. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its fi-
nancial statements.
Portfolio Valuation: Securities are valued at amortized cost which ap-
proximates market value. Amortized cost valuation involves valuing an in-
strument at its cost initially and, thereafter, assuming a constant amor-
tization/accretion to maturity of any premium or discount, regardless of
the effect of fluctuating interest rates on the market value of the in-
strument.
Securities transactions and investment income: Securities transactions
are recorded as of the trade date. Realized gains and losses on invest-
ments sold are recorded on the identified cost basis. Interest income is
recorded on the accrual basis.
Dividends and distributions to shareholders: It is the policy of the Fund
to declare dividends from net investment income on each day that the Fund
is open for business and to pay such dividends on the second Friday of
each calendar month. The Fund will distribute net realized capital gains,
if any, annually or more frequently to maintain its net asset value of
$1.00 per share. Additional distributions of net investment income and
capital gains may be made at the discretion of the Board of Trustees in
order to avoid application of the 4% nondeductible excise tax. Income dis-
tributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted ac-
counting principles. These differences are primarily due to timing differ-
ences and differing characterization of distributions made by the Fund as
a whole.
Federal income taxes: It is the policy of the Fund to qualify as a regu-
lated investment company, if such qualification is in the best interest of
its shareholders, by complying with the requirements of the Internal Reve-
nue Code of 1986, as amended, applicable to regulated investment companies
and by distributing substantially all of its earnings to its shareholders.
Therefore, no Federal income tax provision is required.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE
AND OTHER TRANSACTIONS
The Fund has entered into an investment advisory agreement (the "Advisory
Agreement") with Greenwich Street Advisors, a division of Mutual Manage-
ment Corp., which is controlled by Smith Barney Holdings Inc. ("Hold-
ings"). Holdings is a wholly owned subsidiary of The Travelers Inc. Under
the Advisory Agreement, the Fund pays a monthly fee at the annual rate of
0.30% of the value of its average daily net assets.
Smith Barney Inc. ("Smith Barney") acts as the exclusive distributor of
the Fund's shares.
Prior to April 20, 1994, the Fund was a party to an administration agree-
ment with The Boston Company Advisors, Inc. ("Boston Advisors"), an indi-
rect wholly owned subsidiary of Mellon Bank Corporation ("Mellon"). Under
this agreement, the Fund paid a monthly fee at the annual rate of 0.20% of
the value of its average daily net assets.
As of the close of business on April 20, 1994, Smith, Barney Advisers,
Inc. ("Smith Barney Advisers"), which is controlled by Holdings, succeeded
Boston Advisors as the Fund's administrator. The new administration agree-
ment contains substantially the same terms and conditions, including the
level of fees as the predecessor agreement.
As of the close of business on April 20, 1994, the Fund also entered into
a sub-administration agreement ("Sub-Administration Agreement") with Bos-
ton Advisors. Under the Sub-Administration Agreement, Boston Advisors is
paid a portion of the fee paid by the Fund to Smith Barney Advisers at a
rate agreed upon from time to time between Smith Barney Advisers and Bos-
ton Advisors.
No officer, director or employee of Smith Barney or of any parent or sub-
sidiary of Smith Barney receives any compensation from the Fund for serv-
ing as a Trustee or officer of the Fund. The Fund pays each Trustee who is
not an officer, director or employee of Smith Barney or any of its affili-
ates $1,000 per annum plus $250 per meeting attended and reimburses each
such Trustee for travel and out-of-pocket expenses.
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary
of Mellon, serves as the Fund's custodian. The Shareholder Services Group,
Inc., a subsidiary of First Data Corporation, serves as the Fund's trans-
fer agent.
3. FUND SHARES
The authorized capital of the Fund consists of an unlimited number of
shares of beneficial interest with a par value of $.001 per share.
The table below summarizes transactions in Fund shares for the periods
shown in the accompanying Statement of Changes in Net Assets. Because the
Fund has sold shares, issued shares as reinvestments of dividends and re-
deemed shares only at a constant net asset value of $1.00 per share, the
number of shares represented by such sales, reinvestments and redemptions
is the same as the amounts shown below for such transactions.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR
ENDED
4/30/94
10/31/93
<S> <C> <C>
Sold $1,589,645,766
$3,177,160,184
Issued as reinvestment of dividends 7,537,706
14,656,779
Redeemed (1,545,131,096)
(3,121,233,831)
Net increase $ 52,052,376 $
70,583,132
</TABLE>
4. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of Cal-
ifornia 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 fund that is not concentrated in these issuers to the same ex-
tent.
5. CAPITAL LOSS CARRYFORWARDS
At October 31, 1993, the Fund had available for Federal tax purposes un-
used capital loss carryforwards expiring in 2001, 2000, 1998 and 1997 of
$8,713, $74,192, $58,601 and $93,180, respectively.
6. SUBSEQUENT EVENT
On May 25, 1994, the Board of Trustees of the Fund approved a proposed re-
organization pursuant to which all or substantially all of the assets of
the Fund would be acquired by California Money Market Portfolio, a series
of Smith Barney Muni Funds. The proposed reorganization is subject to the
approval of shareholders of the Fund and a meeting of shareholders is ex-
pected to be held in September, 1994.
PARTICIPANTS
DISTRIBUTOR
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISER
Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
ADMINISTRATOR
Smith, Barney Advisers, Inc.
1345 Avenue of the Americas
New York, New York 10105
SUB-ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services
Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit
and Trust Company
One Boston Place
Boston, Massachusetts 02108
OUR APPROACH TO MUTUAL FUND INVESTING
1. PERSONAL SERVICE
The Smith Barney Financial Consultant ("FC") is highly trained and deeply
committed to client service. Your FC works with you to establish a rela-
tionship based on one-to-one communication and the highest standards of
quality.
2. ANALYZING YOUR NEEDS
Defining your needs and establishing specific goals is the first step to-
ward any successful investment program. The Smith Barney Strategic Asset
Allocator -- a sophisticated financial planning tool -- can help you and
your FC evaluate your resources and objectives. This groundwork then be-
comes the basis for a strategy designed specifically for you. Your FC can
use the Strategic Asset Allocator on a periodic basis to ensure that your
investment strategy is keeping pace with your changing needs and goals.
3. A UNIQUE MUTUAL FUND INVESTMENT PROGRAM
Your Smith Barney FC offers a number of mutual fund assessment tools that
are unmatched in the financial services industry. Smith Barney FCs have
access to a proprietary mutual fund research database that provides infor-
mation at their fingertips on more than 2,100 funds. In addition, working
with another proprietary system known as the Mutual Fund Evaluation Ser-
vice, your FC can help guide you through the complex mutual fund maze.
Specifically, the Evaluation Service can provide a clear picture of the
past performance of mutual funds you currently own. Presented in both
graphic and numerical form, this illustration provides a wealth of easily
understood data on more that 2,100 funds. This complimentary service al-
lows you to judge whether your mutual fund has helped meet your investment
needs.
4. LOOKING AHEAD
Selecting a mutual fund should not be a one-event process that ends with
the purchase of shares. You can count on the expertise of your FC as he or
she continues to monitor and evaluate your funds, to suggest new strate-
gies and to listen. That, in our opinion, is how to use mutual funds to
help achieve your financial goals.
INVESTOR BENEFITS
MONTHLY DISTRIBUTIONS
It's your fund's policy to distribute dividend income monthly.
AUTOMATIC REINVESTMENT
You may reinvest your dividends and/or capital gains automatically in ad-
ditional shares of your fund at the current net asset value.
UNLIMITED EXCHANGES
If your investment goals change, you may exchange into another Smith Bar-
ney Shearson mutual fund with the same sales charge structure without in-
curring a sales charge.*
MUTUAL FUND EVALUATION SERVICE
Through your Financial Consultant, you may obtain a free personalized
analysis of how your fund has performed for you, taking into account the
effect of every transaction. The analysis is based upon month-end data
from CDA Investment Technologies, Inc., a widely recognized mutual fund
information service. An evaluation also gives you other important facts
and figures about your investment.
For more information about these benefits, or if you have any other ques-
tions, please call your Financial Consultant or write:
MUTUAL FUND POLICY GROUP
SMITH BARNEY INC.
388 GREENWICH STREET 37TH FLOOR
NEW YORK, NY 10013
* After written notification, exchange privilege may be modified or
terminated at any time.
CALIFORNIA
MUNICIPAL
MONEY MARKET
FUND
TRUSTEES
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
James J. Crisona
Robert A. Frankel
Dr. Paul Hardin
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon
OFFICERS
Heath B. McLendon
Chairman of the Board
and Investment Officer
Stephen J. Treadway
President
Richard P. Roelofs
Executive Vice President
Lawrence T. McDermott
Vice President and
Investment Officer
Karen L. Mahoney-Malcomson
Investment Officer
Lewis E. Daidone
Treasurer
Christina T. Sydor
Secretary
This report is submitted for the general information of the shareholders
of Smith Barney Shearson California Municipal Money Market Fund. It is not
authorized for distribution to prospective investors unless accompanied or
preceded by an effective Prospectus for the Fund, which contains informa-
tion concerning the Fund's investment policies and expenses as well as
other pertinent information.
SMITH BARNEY
SMITH BARNEY SHEARSON
MUTUAL FUNDS
Two World Trade Center
New York, New York 10048
Fund 22
FD2216 F4
