<PAGE>
A N N U A L R E P O R T
- --------------------------------------------------------------------------------
1996
1996
1996
1996
1996
SMITH BARNEY
OREGON
MUNICIPALS
FUND
------------------------------------------
April 30, 1996
[Logo] Smith Barney Mutual Funds
INVESTING FOR YOUR FUTURE.
EVERY DAY.
<PAGE>
<PAGE>
- -------------------------------------------------------------------------------
Smith Barney Oregon Municipals Fund
- -------------------------------------------------------------------------------
DEAR SHAREHOLDER:
We are pleased to provide you with the annual report for
the Smith Barney Oregon Municipals Fund. For your
convenience, we have summarized the period's prevailing economic
and market conditions below and outlined the investment strategy
employed by the Fund during this time. A detailed summary of
performance and current holdings for the Fund can be found in the
appropriate sections that follow in the annual report.
MARKET AND ECONOMIC OVERVIEW
Interest rates declined steadily over the first nine months of the
fiscal year in response to low inflation and very sluggish economic
growth. Over the last three months of the fiscal year, however,
interest rates rose sharply as economic reports pointed to much
stronger growth than was expected by most market participants, and
as concerns over the stalemated federal budget negotiations
continued.
In the past few months, the volatility of the municipal bond market
has increased and yields have reached their highest levels in over
a year. However, despite continued uncertainty over the direction
of short-term interest rates, there have been some signs of a possible municipal
bond market turnaround as the higher yields offered by municipal bonds have
begun to attract a growing number of individual and institutional investors.
OREGON ECONOMIC HIGHLIGHTS
The technology industry continues to be an important source of employment for
Oregon's growing economy. In addition, the State's manufacturing base has
diversified considerably during the 1990s, moving away from the lumber industry
and into higher-growth industries such as automobiles and semiconductors. With
respect to the creation of services jobs, Oregon has enjoyed considerable
success recently in the software and tourism industries. Because of Oregon's
high quality of life and solid economic growth, the State has attracted large
numbers of Californians and people from other states seeking cleaner air and
lower housing costs.
1
<PAGE>
<PAGE>
Oregon currently has a double-A rating from Moody's Investors Services, Inc., a
major credit reporting and bond rating agency ('Moody's') and has one of the
highest tax burdens in the nation. Yet, future tax hikes may be needed to
improve Oregon's infrastructure and to provide additional services for its
increasing population base. Notwithstanding this possibility, we remain positive
about Oregon's long-term economic prospects because of the State's broadly
diversified economy.
OREGON MUNICIPALS FUND'S PERFORMANCE
AND INVESTMENT STRATEGY
For the year ended April 30, 1996, the Smith Barney Oregon Municipals Fund
generated a total return of 7.70% for Class A shares, which compares favorably
with its Lipper Analytical Services, Inc. peer group average of 6.37%. (Lipper
Analytical Services, Inc. is a major fund tracking organization.)
During the period covered by this report, the Fund maintained its high credit
quality. On April 30, 1996, over 96% of the Fund's portfolio was comprised of
investment grade securities. An investment grade security is a security with a
rating of BBB/Baa or better from Standard & Poor's Corporation ('S&P') or
Moody's. Approximately 36% of the Fund's portfolio had a triple-A rating through
the period covered.
As of April 30, 1996, the average weighted maturity of the Smith Barney Oregon
Municipals Fund was just over 21 years and this figure remained relatively
unchanged throughout the past year. The Oregon Municipals Fund's three largest
sector holdings at year end were as follows: housing (just over 28%); general
obligation (just over 15%); and water/sewer (roughly 13%). We believe these
areas are the most likely to experience growth as many people continue to
relocate to Oregon.
Because of the recent turbulence in the municipal bond market, we believe the
Fund's high credit-quality orientation and broad sector diversification is a
prudent strategy for our Fund. In our view, the Fund's investment approach
should continue to provide investors with an attractive stream of income, while
at the same time help to minimize the fluctuation of its net asset value in an
increasingly volatile municipal bond market.
2
<PAGE>
<PAGE>
OUTLOOK
While the day-to-day volatility in the fixed income markets is likely to
continue, the sharp increase in interest rates over the last three months has
made long-term municipal bonds more attractive on a relative basis. In our view,
competitive pressures in the global economy and changing demographics should
help to keep inflation in check and keep wages from going up. (Labor costs
constitute roughly two-thirds of the total cost of all finished goods.) With
long-term municipal bonds providing roughly 90% of the yield available on
comparable maturity Treasury securities, we believe investors are well
compensated for the potential risks.
It was not too long ago that the 'flat tax' issue was touted as potentially the
biggest issue of the upcoming Presidential election in November. The exit of
Republican candidate Steve Forbes from the Presidential race has caused the flat
tax to recede from the political debate. However, between now and November, tax
reform again could move into the political spotlight as the campaign
intensifies. Nevertheless, we believe there is little chance that radical tax
reforms will be enacted. In our view, the municipal bond market remains quite
attractive and the Oregon Municipals Fund is well positioned to meet the
challenges presented by the current environment.
Thank you for investing in the Smith Barney Oregon Municipals Fund. We look
forward to helping you achieve your financial goals.
Sincerely,
<TABLE>
<S> <C>
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman and Vice President and
Chief Executive Officer Investment Officer
May 15, 1996
</TABLE>
3
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE -- CLASS A SHARES
<TABLE>
<CAPTION>
Net Asset Value
---------------------
<S> <C> <C> <C> <C> <C>
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
- --------------------------------------------------------------------------------------------------
4/30/96 $ 10.09 $ 10.26 $0.54 $0.06 7.70%
- --------------------------------------------------------------------------------------------------
Inception*- 4/30/95`DD' 9.55 10.09 0.49 0.00 11.12`D'
- --------------------------------------------------------------------------------------------------
Total $1.03 $0.06
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE -- CLASS B SHARES
<TABLE>
<CAPTION>
Net Asset Value
---------------------
<S> <C> <C> <C> <C> <C>
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
- --------------------------------------------------------------------------------------------------
4/30/96 $ 10.09 $ 10.25 $0.49 $0.06 7.09%
- --------------------------------------------------------------------------------------------------
Inception*- 4/30/95`DD' 9.55 10.09 0.45 0.00 10.62`D'
- --------------------------------------------------------------------------------------------------
Total $0.94 $0.06
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE -- CLASS C SHARES
<TABLE>
<CAPTION>
Net Asset Value
---------------------
<S> <C> <C> <C> <C> <C>
Beginning End Income Capital Gain Total
Year Ended of Year of Year Dividends Distributions Returns(1)
- --------------------------------------------------------------------------------------------------
Inception*- 4/30/96 $ 10.28 $ 10.26 $0.47 $0.06 4.99%`D'
- --------------------------------------------------------------------------------------------------
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
4
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Without Sales Charge(1)
-----------------------------------
<S> <C> <C> <C>
Class A Class B Class C
Year Ended 4/30/96 7.70% 7.09% N/A
- --------------------------------------------------------------------------------------------------
Inception* through 4/30/96 9.68# 9.11# 4.99%`D'
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
With Sales Charge(2)
-----------------------------------
<S> <C> <C> <C>
Class A Class B Class C
Year Ended 4/30/96 3.40% 2.59% N/A
- --------------------------------------------------------------------------------------------------
Inception* through 4/30/96 7.39# 7.19# 3.99%`D'
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
Without Sales Charge(1)
-----------------------------------
<S> <C>
Class A (Inception* through 4/30/96) 19.64%#
- --------------------------------------------------------------------------------------------------
Class B (Inception* through 4/30/96) 18.42#
- --------------------------------------------------------------------------------------------------
Class C (Inception* through 4/30/96) 4.99`D'
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charge with respect to Class A shares or the applicable
contingent deferred sales charges ('CDSC') with respect to Class B and 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 4.00% and Class B shares reflect the
deduction of a 4.50% CDSC, which applies if shares are redeemed less than
one year from initial purchase. This CDSC declines by 0.50% the first year
after purchase and thereafter by 1.00% per year until no CDSC is incurred.
Class C shares reflect the deduction of a 1.00% CDSC, which applies if
shares are redeemed within the first year of purchase.
* The inception date for Class A and B shares is May 23, 1994 and for Class C
shares is May 16, 1995.
`D' Total return is not annualized, as it may not be representative of the
total return for the year.
`DD' Total return includes the effect of the cash contribution to capital from
the investment adviser (See Note 4). Without this cash contribution the
total returns would have been 6.23% and 5.55% for Class A and B shares,
respectively.
# Total return includes the effect of the cash contribution to capital from
the investment adviser (See Note 4). Without this cash contribution the
total returns would have been 7.41% and 6.61% for Class A and B shares,
respectively, excluding sales charges; and 5.16% and 4.66% for Class A and B
shares, respectively, including sales charges. In addition, the cumulative
return since inception for Class A and B shares would have been 14.87% and
13.23%, respectively.
5
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE (UNAUDITED)
GROWTH OF $10,000 INVESTED IN CLASS A SHARES OF
SMITH BARNEY OREGON MUNICIPALS FUND VS.
THE LEHMAN MUNICIPAL BOND FUND INDEX`D'
- --------------------------------------------------------------------------------
May 1994 -- April 1996
[PERFORMANCE GRAPH]
`D' Hypothetical illustration of $10,000 invested in Class A shares at inception
on May 23, 1994, assuming deduction of the maximum 4.00% sales charge at the
time of investment and reinvestment of dividends and capital gains, if any,
at net asset value through April 30, 1996. The Lehman Municipal Bond Fund
Index is a weighted composite which is comprised of more than 15,000 bonds
issued within the last 5 years, having a minimum credit rating of at least
Baa and a maturity of at least 2 years, excluding all bonds subject to the
Alternative Minimum Tax and bonds with floating or zero coupons. The index
is unmanaged and is not subject to the same management and trading expenses
as 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.
* This figure includes the effect of the cash contribution to capital from the
investment adviser (See Note 4).
6
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS (UNAUDITED) APRIL 30, 1996
INDUSTRY BREAKDOWN
[PERFORMANCE GRAPH]
SUMMARY OF INVESTMENTS BY COMBINED RATINGS
<TABLE>
<CAPTION>
STANDARD & PERCENTAGE OF
MOODY'S AND/OR POOR'S TOTAL INVESTMENTS
<S> <C> <C> <C>
- -------------------------------------------------------------------
Aaa AAA 36.6%
Aa AA 13.5
A A 27.1
Baa BBB 19.2
NR NR 3.6
-----
100.0%
-----
-----
</TABLE>
7
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS APRIL 30, 1996
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
EDUCATION -- 7.6%
$1,000,000 AAA Oregon Health Sciences University Revenue,
Series A, MBIA-Insured, zero coupon due 7/1/13 $ 370,000
430,000 A1* Oregon State Health, Housing, Educational &
Cultural Facilities Authority, (Oak Tree
Foundation Project),
Series A, 6.100% due 5/1/15 431,612
500,000 AAA Washington County, School District No. 088J,
(Sherwood Project), FSA-Insured, 6.100% due
6/1/12 517,500
- --------------------------------------------------------------------------------------
1,319,112
- --------------------------------------------------------------------------------------
FINANCE -- 2.8%
505,000 AAA Oregon State Department of Administrative
Services, COP, Series A, MBIA-Insured, 5.500%
due 11/1/20 481,013
- --------------------------------------------------------------------------------------
GENERAL OBLIGATION -- 15.2%
450,000 AAA Chemeketa Community College District GO,
FGIC-Insured, 5.800% due 6/1/12 452,250
750,000 BBB Guam Government GO, Series A, 5.375% due
11/15/13 664,687
500,000 AAA Lane County Bethel GO, School District No. 052,
FGIC-Insured, 6.400% due 12/1/09 537,500
500,000 AAA Lincoln County School District GO, Series 95,
FGIC-Insured, 5.250% due 6/15/12 473,125
500,000 Aa* Oregon State GO, Veterans Welfare, Series 75,
5.850% due 10/1/15 495,625
- --------------------------------------------------------------------------------------
2,623,187
- --------------------------------------------------------------------------------------
GOVERNMENT FACILITY -- 3.1%
500,000 AAA Puerto Rico Public Buildings Authority Revenue,
Government Facilities, Series A,
AMBAC-Insured,
6.250% due 7/1/14 534,375
- --------------------------------------------------------------------------------------
HOSPITALS -- 12.0%
450,000 AAA Douglas County Hospital Facilities Authority
Revenue,
Catholic Health Facilities, Series B,
MBIA-Insured,
6.000% due 11/15/15 457,875
595,000 BBB+ Klamath Falls Intercommunity Hospital Authority
Revenue, (Gross-Merle West Medical Center
Project),
7.100% due 9/1/24 620,288
500,000 AAA Ontario Catholic Health, Holy Rosary Medical
Center,
MBIA-Insured, 5.500% due 11/15/12 483,125
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 1996
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
HOSPITALS -- 12.0% (CONTINUED)
$ 500,000 BBB Puerto Rico Industrial Tourist Education,
Medical
& Environmental Control Facilities, (Ryder
Memorial
Hospital Project), Series A, 6.700% due 5/1/24 $ 500,625
- --------------------------------------------------------------------------------------
2,061,913
- --------------------------------------------------------------------------------------
HOUSING: MULTI-FAMILY -- 11.7%
215,000 A+ Oregon State Housing & Community Services,
Housing & Finance Revenue Bonds, Assisted or
Insured Multi-Unit Mortgages, Series A,
FHA-Insured, 6.800% due 7/1/13 223,331
Portland Housing Authority, Multi-Family
Revenue,
Series A:
500,000 Aaa* Cherry Blossom Apartments,
GNMA-Collateralized, 6.100% due
12/20/26(a) 498,125
1,000,000 A1* Cherry Ridge Project, 6.250% due 5/1/12(a) 1,002,500
300,000 NR Senior Lien Revenue, (Fairview Woods
Project), 6.875% due 8/1/14 301,125
- --------------------------------------------------------------------------------------
2,025,081
- --------------------------------------------------------------------------------------
HOUSING: SINGLE-FAMILY -- 16.7%
Oregon State Housing & Community Services,
Mortgage Revenue Bonds, Single-Family Mortgage
Program:
650,000 Aa* Series B, 6.875% due 7/1/28 683,313
500,000 Aa* Series D, 6.500% due 7/1/24(a) 518,125
Puerto Rico Housing Bank & Finance Agency:
500,000 BBB Kidder, 7.500% due 12/1/06 546,250
500,000 AAA Single-Family Mortgage Revenue, Afford Housing
Mortgage - Portfolio I, 6.250% due 4/1/29(a) 502,500
620,000 AAA Virgin Islands HFA, Single-Family Mortgage
Revenue,
Program A, GNMA-Collateralized, 6.450% due
3/1/16(a) 623,100
- --------------------------------------------------------------------------------------
2,873,288
- --------------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT -- 5.7%
1,000,000 BBB- Oregon State EDR, Georgia-Pacific Corporation,
Series CVLII, 6.350% due 8/1/25(a) 977,500
- --------------------------------------------------------------------------------------
MISCELLANEOUS -- 5.5%
600,000 A* Oregon State Bond Bank Revenue, Economic
Development Department, Series 1, 6.700% due
1/1/15 636,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 1996
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
MISCELLANEOUS -- 5.5% (CONTINUED)
$ 300,000 NR Western Generation Agency, (Wauna Cogeneration
Project), Series B, 7.250% due 1/1/09(a) $ 316,500
- --------------------------------------------------------------------------------------
953,250
- --------------------------------------------------------------------------------------
TAX ALLOCATION -- 1.4%
250,000 A- Medford Urban Renewal Agency, Tax Revenue,
Series A, 5.875% due 9/1/10 244,375
- --------------------------------------------------------------------------------------
TRANSPORTATION -- 5.0%
500,000 A Commonwealth of Puerto Rico, Highway &
Transportation Authority, Series W, 5.500% due
7/1/15 477,500
400,000 AAA Port Portland Airport Revenue, Portland
International
Airport, Series 10, FGIC-Insured, 5.750% due
7/1/25(a) 390,000
- --------------------------------------------------------------------------------------
867,500
- --------------------------------------------------------------------------------------
WATER AND SEWER -- 13.3%
250,000 A+ Beavertown Water Revenue, Series 1994, 6.125%
due 6/1/14 253,750
360,000 A+ Clackamas County Service District No. 001, Sewer
Revenue, 6.375% due 10/1/14 376,650
600,000 Aa1* Port Umatilla Water Revenue, 6.650% due
8/1/22(a) 628,500
1,000,000 A+ Portland Sewer System Revenue Bonds, Series 1994
A, 6.250% due 6/1/15 1,033,750
- --------------------------------------------------------------------------------------
2,292,650
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $17,005,605*) $17,253,244
- --------------------------------------------------------------------------------------
</TABLE>
(a) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
* Aggregate cost for Federal income tax purposes is $16,656,163.
See pages 11 and 12 for definition of ratings and certain security
descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
<PAGE>
Smith Barney Oregon 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.
<TABLE>
<S> <C> <C>
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 differs 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.
</TABLE>
11
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
SHORT-TERM SECURITIES RATINGS
<TABLE>
<S> <C> <C>
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.
</TABLE>
- --------------------------------------------------------------------------------
SECURITY DESCRIPTIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
ABAG -- Association of Bay Area Governors HFA -- Housing Finance Authority
AIG -- American International Guaranty IDA -- Industrial Development
AMBAC -- American Municipal Bond Authority
Assurance Corporation IDB -- Industrial Development Board
BAN -- Bond Anticipation Notes IDR -- Industrial Development
BIG -- Bond Investors Guaranty Revenue
CGIC -- Capital Guaranty Insurance INFLOS -- Inverse Floaters
Company ISD -- Independent School District
CHFCLI -- California Health Facility LOC -- Letter of Credit
Construction Loan Insurance MBIA -- Municipal Bond Investors
CONNIE LEE -- College Construction Loan Assurance Corporation
Insurance Association MVRICS -- Municipal Variable Rate Inverse
COP -- Certificate of Participation Coupon Security
EDA -- Economic Development Authority PCR -- Pollution Control Revenue
EDR -- Economic Development Revenue
ETM -- Escrowed To Maturity PSF -- Permanent School Fund
FLAIRS -- Floating Adjustable Interest RAN -- Revenue Anticipation Note
Rate Securities RIBS -- Residual Interest Bonds
FGIC -- Financial Guaranty Insurance RITES -- Residual Interest Tax-Exempt
Company Securities
FHA -- Federal Housing Administration TAN -- Tax Anticipation Notes
FHLMC -- Federal Home Loan Mortgage TECP -- Tax-Exempt Commercial Paper
Corporation TOB -- Tender Option Bonds
FNMA -- Federal National Mortgage TRAN -- Tax and Revenue Anticipation
Association Notes
FRTC -- Floating Rate Trust Certificates SYCC -- Structured Yield Curve
FSA -- Federal Savings Association Certificate
GIC -- Guaranteed Investment Contract VA -- Veterans Administration
GNMA -- Government National Mortgage VRDD -- Variable Rate Daily Demand
Association VRWE -- Variable Rate Wednesday
GO -- General Obligation Demand
HDC -- Housing Development
Corporation
</TABLE>
12
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $17,005,605) $17,253,244
Cash 576,733
Interest receivable 340,775
Receivable for Fund shares sold 238,905
Receivable from investment adviser 85,446
Deferred organization costs 20,318
Other assets 65,715
- --------------------------------------------------------------------------------------
TOTAL ASSETS 18,581,136
- --------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 496,344
Distribution fees payable 8,606
Accrued expenses 81,262
- --------------------------------------------------------------------------------------
TOTAL LIABILITIES 586,212
- --------------------------------------------------------------------------------------
TOTAL NET ASSETS $17,994,924
- --------------------------------------------------------------------------------------
NET ASSETS:
Par value of shares of beneficial interest $ 1,755
Capital paid in excess of par value 17,752,248
Overdistributed net investment income (6,694)
Accumulated net realized loss from security transactions (24)
Net unrealized appreciation of investments 247,639
- -------------------------------------------------------------------------------------
TOTAL NET ASSETS $17,994,924
- -------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Class A 733,200
----------------------------------------------------------------------------------
Class B 962,062
----------------------------------------------------------------------------------
Class C 59,822
----------------------------------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $10.26
----------------------------------------------------------------------------------
Class B * $10.25
----------------------------------------------------------------------------------
Class C ** $10.26
----------------------------------------------------------------------------------
CLASS A MAXIMIUM PUBLIC OFFERING PRICE PER SHARE
(net asset value plus 4.17% of net asset value per share) $10.69
- -------------------------------------------------------------------------------------
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed less than one year from initial purchase (See Note 4).
** 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.
13
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest $895,076
- --------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 4) 50,110
Administration fees (Note 4) 30,605
Distribution fees (Note 4) 66,942
Audit and legal 51,000
Shareholder communications 38,500
Trustees' fees 29,500
Registration fees 20,000
Shareholder and system servicing fees 13,941
Amortization of deferred organization costs 6,773
Pricing service fees 4,500
Custody 1,900
Other 1,500
- --------------------------------------------------------------------------------------
TOTAL EXPENSES 315,271
Less: Investment advisory and administration fee waivers
and expense reimbursement (Note 4) (166,161)
- --------------------------------------------------------------------------------------
NET EXPENSES 149,110
- --------------------------------------------------------------------------------------
NET INVESTMENT INCOME 745,966
- --------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 11,095,513
Cost of securities sold 10,993,239
- --------------------------------------------------------------------------------------
NET REALIZED GAIN 102,274
- --------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 151,284
End of year 247,639
- --------------------------------------------------------------------------------------
INCREASE IN NET UNREALIZED APPRECIATION 96,355
- --------------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 198,629
- --------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $944,595
- --------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED APRIL 30,
<TABLE>
<CAPTION>
1996 1995(A)
- --------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 745,966 $ 472,638
Net realized gain (loss)`D' 102,274 (13,541)
Increase in net unrealized appreciation 96,355 151,284
- --------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS 944,595 610,381
- --------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (745,929) (472,638)
Overdistribution of net investment income -- (3,823)
Net realized gains (91,665) --
- --------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (837,594) (476,461)
- --------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 7,071,022 11,759,339
Net asset value of shares issued for reinvestment
of dividends 553,001 380,937
Cost of shares reacquired (2,615,666) (1,867,535)
- --------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 5,008,357 10,272,741
- --------------------------------------------------------------------------------------
CASH CONTRIBUTION (NOTE 4) -- 472,905
- --------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 5,115,358 10,879,566
NET ASSETS:
Beginning of year 12,879,566 2,000,000
- --------------------------------------------------------------------------------------
END OF YEAR* $17,994,924 $12,879,566
- --------------------------------------------------------------------------------------
* Includes overdistributed net investment income of: $(6,694) $(3,823)
- --------------------------------------------------------------------------------------
(a) For the period from May 23, 1994 (inception date) to April 30, 1995.
`D' For the year ended April 30, 1996, net realized gains for Federal income
tax purposes are $225,737.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Oregon Municipals Fund ('Fund'), a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on the trade date; (b) securities
are valued at the mean between the quoted bid and ask prices by an independent
pricing service; (c) securities maturing within 60 days are valued at cost plus
accreted discount or minus amortized premium, which approximates market 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)
dividends and distributions to shareholders are recorded on the ex-dividend
date; (h) 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; (i) the character of
income and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles. At
April 30, 1996, reclassifications are made to the Fund's capital accounts to
reflect permanent book/tax differences and income and gains available for
distributions under income tax regulations. Net investment income, net realized
gains and net assets were not affected by this change; and (j) estimates and
assumptions are required to be made regarding assets, liabilities and changes in
net assets resulting from operations when financial statements are prepared.
Changes in the economic environment, financial markets and any other parameters
used in determining these estimates could cause actual results to differ from
these amounts.
In addition, organization and initial offering costs have been deferred and
are being amortized on a straight-line method over a five-year period, beginning
with the commencement of the Fund's operations in May, 1994.
16
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. FUND CONCENTRATION
Since the Fund invests primarily in obligations of issuers within Oregon, it
is subject to possible concentration risks associated with economic, political
or legal developments or industrial or regional matters specifically affecting
Oregon.
3. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from regular 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. Additional taxable distributions may be
made if necessary to avoid a Federal excise tax.
4. INVESTMENT ADVISORY AGREEMENT, ADMINISTRATION
AGREEMENT AND AFFILIATED 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 Fund pays SBMFM an annual advisory fee of 0.30% of the
Fund's average daily net assets. This fee is calculated daily and paid monthly.
SBMFM waived all of the investment advisory fees for the Fund for the year ended
April 30, 1996. Prior to November 17, 1995, the Fund paid SBMFM an advisory fee
calculated at an annual rate of 0.35% of average daily net assets up to $500
million; and 0.32% of average daily net assets in excess of $500 million.
At October 24, 1994, SBMFM also made a cash contribution to capital of
$251,349, and $221,556 for Class A and B shares, respectively.
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 up to $500
million and 0.18% of the average daily net assets in excess of $500 million.
This fee is calculated daily and paid monthly. SBMFM waived all of its
administration fees for the year ended April 30, 1996.
In addition, The Boston Company Advisors, Inc. ('Boston Advisors'), an
indirect wholly owned subsidiary of Mellon Bank, acted as sub-administrator to
the Fund. SBMFM paid Boston Advisors a portion of its administration fee at
17
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
a rate agreed upon from time to time between SBMFM and Boston Advisors. As of
June 19, 1995 this relationship was terminated.
Smith Barney Inc. ('SB'), another subsidiary of SBH, acts as distributor of
the Fund's shares. For the year ended April 30, 1996, SB received sales charges
of approximately $59,000 on sales of the Fund's Class A shares.
There is a contingent deferred sales charge ('CDSC') of 4.50% on Class B
shares, which applies if redemption occurs less than one year from initial
purchase. This CDSC declines by 0.50% the first year after purchase and
thereafter by 1.00% per year until no CDSC is incurred. Class C shares have a
1.00% CDSC, which applies if redemption occurs within the first year of
purchase. For the year ended April 30, 1996, CDSCs paid to SB for Class B shares
were approximately $13,000.
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to
its Class A, B and C shares calculated at the annual rate of 0.15% of the
average daily net assets for each respective class. In addition, the Fund pays a
distribution fee with respect to its Class B and C shares calculated at the
annual rates of 0.50% and 0.55% of the average daily net assets for each class,
respectively. For the year ended April 30, 1996, total Distribution Plan fees
incurred were:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Distribution Plan Fees $9,912 $54,586 $2,444
- -----------------------------------------------------------------------------------------
</TABLE>
All officers and one Trustee of the Fund are employees of SB.
5. INVESTMENTS
During the year ended April 30, 1996, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding short-
term securities) were as follows:
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------
Purchases $15,602,679
- -----------------------------------------------------------------------------------------
Sales 11,095,513
- -----------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At April 30, 1996, the gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were approximately as follows:
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------
Gross unrealized appreciation $660,517
Gross unrealized depreciation (63,436)
- -----------------------------------------------------------------------------------------
Net unrealized appreciation $597,081
- -----------------------------------------------------------------------------------------
</TABLE>
6. SHARES OF BENEFICIAL INTEREST
At April 30, 1996, the Fund had an unlimited number of shares of beneficial
interest authorized with 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 April 30, 1996, total paid-in capital amounted to the following for each
class:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Paid-in Capital $7,369,959 $9,757,699 $626,345
- -------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1996* APRIL 30, 1995**
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 240,150 $ 2,505,912 510,557 $ 4,937,232
Shares issued on reinvestment 24,222 251,973 23,390 226,604
Shares redeemed (157,979) (1,633,575) (116,563) (1,169,190)
- ----------------------------------------------------------------------------------------------
Net Increase 106,393 $ 1,124,310 417,384 $ 3,994,646
- ----------------------------------------------------------------------------------------------
CLASS B
Shares sold 376,867 $ 3,938,442 706,972 $ 6,822,107
Shares issued on reinvestment 27,599 287,148 15,881 154,333
Shares redeemed (92,345) (967,867) (72,913) (698,345)
- ----------------------------------------------------------------------------------------------
Net Increase 312,121 $ 3,257,723 649,940 $ 6,278,095
- ----------------------------------------------------------------------------------------------
CLASS C
Shares sold 59,834 $ 626,668 -- --
Shares issued on reinvestment 1,328 13,880 -- --
Shares redeemed (1,340) (14,224) -- --
- ----------------------------------------------------------------------------------------------
Net Increase 59,822 $ 626,324 -- --
- ----------------------------------------------------------------------------------------------
</TABLE>
* For Class C shares, transactions are for the period from May 16, 1995
(inception date) to April 30, 1996.
** For the period from May 23, 1994 (inception date) to April 30, 1995.
20
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR:
<TABLE>
<CAPTION>
CLASS C
CLASS A SHARES CLASS B SHARES SHARES
----------------- ----------------- -------
1996 1995(1) 1996 1995(1) 1996(2)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.09 $ 9.55 $10.09 $ 9.55 $10.28
- ----------------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
Net investment income(3) 0.55 0.49 0.49 0.44 0.45
Net realized and unrealized gain 0.22 0.54 0.22 0.55 0.06
- ----------------------------------------------------------------------------------------
Total Income From Operations 0.77 1.03 0.71 0.99 0.51
- ----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.54) (0.49) (0.49) (0.45) (0.47)
Overdistribution of net investment
income -- (0.00)* -- (0.00)* --
Net realized gains (0.06) -- (0.06) -- (0.06)
- ----------------------------------------------------------------------------------------
Total Distributions (0.60) (0.49) (0.55) (0.45) (0.53)
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.26 $10.09 $10.25 $10.09 $10.26
- ----------------------------------------------------------------------------------------
TOTAL RETURN(4) 7.70% 11.12%`DD' 7.09% 10.62%`DD' 4.99%`DD'
- ----------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $7,520 $6,323 $9,861 $6,556 $614
- ----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3) 0.66% 0.82%`D' 1.21% 1.36%`D' 1.25%`D'
Net investment income 5.21 5.28`D' 4.62 4.74`D' 4.80`D'
- ----------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 75% 30% 75% 30% 75%
- ----------------------------------------------------------------------------------------
</TABLE>
(1) For the period from May 23, 1994 (inception date) to April 30, 1995.
(2) For the period from May 16, 1995 (inception date) to April 30, 1996.
(3) The investment adviser and administrator waived all or part of their fees
for the periods ended April 30, 1996 and April 30, 1995. In addition, the
investment adviser has reimbursed the Fund for $85,446 and $64,336 in
expenses for the periods ended April 30, 1996 and April 30, 1995,
respectively. If such fees were not waived and expenses were not reimbursed,
the per share effect on net investment income and the expense ratios would
have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
---------------------------- -----------------------
1996 1995 1996 1995
------------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Class A $0.11 $0.12 1.75% 2.05%`D'
Class B 0.11 0.11 2.29 2.59`D'
Class C 0.10 -- 2.38`D' --
</TABLE>
(4) Total return for Class A and B shares for the period ended April 30, 1995
includes the effect of the cash contribution from the investment adviser
(See Note 4). Without this cash contribution the total returns would have
been 6.23% and 5.55%, respectively.
* Amount represents less than $0.01.
`DD' Total return is not annualized, as it may not be representative of the
total return for the year.
`D' Annualized.
21
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE
SMITH BARNEY OREGON MUNICIPALS FUND:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Smith Barney Oregon Municipals Fund as of
April 30, 1996, and the related statements of operations, 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
and financial highlights for the period from May 23, 1994 (commencement of
operations) to April 30, 1995, were audited by other auditors whose report
thereon, dated June 19, 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 April 30, 1996, by
correspondence with the custodian. As to securities purchased but not received,
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 Oregon
Municipals Fund as of April 30, 1996, 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
June 14, 1996
22
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
Change in Independent Auditor: On April 19, 1995, based upon the
recommendation of the Audit Committee of the Fund, the Board of Trustees
determined not to retain Cooper & Lybrand L.L.P. ('Coopers & Lybrand') as the
Fund's independent auditor and voted to appoint KPMG Peat Marwick LLP. During
the Fund's prior fiscal year, Coopers & Lybrand's audit report contained no
adverse opinion or disclaimer of opinion; nor was the report 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
references to the subject matter of such disagreements in connection with its
audit report. The Fund has requested Coopers & Lybrand to provide a letter to
the Securities & 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.
23
<PAGE>
<PAGE>
Smith Barney Oregon Municipals Fund
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
For the year ended April 30, 1996, 100% of the dividends paid by the Fund
from net investment income were tax-exempt for regular Federal income tax and
Oregon state income tax purposes.
The amount of long-term capital gains paid by the Fund to its shareholders
for the fiscal year ended April 30, 1996 was $88,654.
24
STATEMENT OF DIFFERENCES
--------------------------
The dagger symbol shall be expressed as 'D'
The double dagger symbol shall be expressed as 'DD'
<PAGE>
<PAGE>
SMITH BARNEY
OREGON 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
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President and
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, N.A.
TRANSFER 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 Oregon 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 OREGON
MUNICIPALS FUND
388 Greenwich Street
New York, New York 10013
FD0955 6/96
