<PAGE>
[SB]Smith Barney
[MF]Mutual Funds
Your Serious Money. Professionally Managed./SM/
P R O S P E C T U S
Oregon
Municipals Fund
Class A, B, L and Y Shares
--------------------------------
August 28, 2000
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INVESTMENT PRODUCTS: NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
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The Securities and Exchange Commission has not approved or
disapproved these securities or determined whether this prospectus
is accurate or complete. Any statement to the contrary is a crime.
<PAGE>
Oregon Municipals Fund
Contents
<TABLE>
<S> <C>
Investments, risks and performance.......................................... 2
More on the fund's investments.............................................. 7
Management.................................................................. 8
Choosing a class of shares to buy........................................... 9
Comparing the fund's classes................................................ 10
</TABLE>
<TABLE>
<S> <C>
Sales charges............................................................... 11
More about deferred sales charges........................................... 13
Buying shares............................................................... 14
Exchanging shares........................................................... 15
Redeeming shares............................................................ 17
Other things to know about share transactions............................... 19
Dividends, distributions and taxes.......................................... 21
Share price................................................................. 22
Financial highlights........................................................ 23
</TABLE>
Smith Barney Mutual Funds
1
<PAGE>
Investments, risks and performance
Investment objective
The fund seeks to provide Oregon investors with as high a level of dividend
income exempt from federal income tax and Oregon state personal income tax as
is consistent with prudent investment management and preservation of capital.
Principal investment strategies
Key investments The fund invests at least 80% of its net assets in municipal
securities, and at least 65% of the aggregate principal amount of its invest-
ments in Oregon municipal securities. Oregon municipal securities include secu-
rities issued by the State of Oregon and certain other municipal issuers,
political subdivisions, agencies and public authorities that pay interest which
is exempt from Oregon personal income taxes.
The fund invests primarily in intermediate-term and long-term investment grade
municipal securities, which have remaining maturities at the time of purchase
of from three to more than twenty years. Investment grade securities are rated
in any of the four highest long-term rating categories, or if unrated, of com-
parable quality. The fund may invest up to 25% of its assets in below invest-
ment grade securities or unrated securities of equivalent quality (commonly
known as "junk bonds").
Selection process The manager selects securities primarily by identifying
undervalued sectors and individual securities, while also selecting securities
it believes will benefit from changes in market conditions. In selecting indi-
vidual securities, the manager:
. Uses fundamental credit analysis to estimate the relative value and attrac-
tiveness of various securities and sectors and to exploit opportunities in
the municipal bond market
. May trade between general obligation and revenue bonds and among various rev-
enue bond sectors, such as housing, hospital and industrial development,
based on their apparent relative values
. Considers the yield available for securities with different maturities and a
security's maturity in light of the outlook for the issuer, its sector and
interest rates
. Identifies individual securities with the most potential for added value,
such as those involving unusual situations, new issuers, the potential for
credit upgrades, unique structural characteristics or innovative features
Oregon Municipals Fund
2
<PAGE>
Principal risks of investing in the fund
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if:
. Interest rates rise, causing the value of the fund's portfolio to decline
. The issuer of a security owned by the fund defaults on its obligation to pay
principal and/or interest or the security's credit rating is downgraded
. Oregon municipal securities fall out of favor with investors. The fund will
suffer more than a national municipal fund from adverse events affecting Ore-
gon municipal issuers
. Unfavorable legislation affects the tax-exempt status of municipal bonds
. The manager's judgment about the attractiveness, value or income potential of
a particular security proves to be incorrect
It is possible that some of the fund's income distributions may be, and distri-
butions of the fund's gains generally will be, subject to federal and Oregon
state taxation. The fund may realize taxable gains on the sale of its securi-
ties or on transactions in futures contracts. Some of the fund's income may be
subject to the federal alternative minimum tax. In addition, distributions of
the fund's income and gains will be taxable to investors in states other than
Oregon.
The fund is classified as "non-diversified," which means it may invest a larger
percentage of its assets in one issuer than a diversified fund. To the extent
the fund concentrates its assets in fewer issuers, the fund will be more sus-
ceptible to negative events affecting those issuers.
Who may want to invest The fund may be an appropriate investment if you are an
Oregon taxpayer and:
. Are in a high federal tax bracket, seeking income exempt from Oregon and fed-
eral taxation
. Currently have exposure to other asset classes and are seeking to broaden
your investment portfolio
. Are willing to accept the risks of municipal securities, including the risks
of concentrating in a single state
Smith Barney Mutual Funds
3
<PAGE>
Risk return bar chart
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not neces-
sarily indicate how the fund will perform in the future. This bar chart shows
the performance of the fund's Class A shares for each full calendar year since
the fund's inception. Class B, L and Y shares have different performance
because of different expenses. The performance information in the chart does
not reflect sales charges, which would reduce your return.
Total Return for Class A Shares
[BAR CHART]
95 19.15%
96 3.87%
97 10.19%
98 5.78%
99 (4.22)%
Calendar years ended December 31
Quarterly returns:
Highest: 7.97% in 1st quarter 1995; Lowest: (2.21)% in 2nd quarter 1999
Year to date: (4.66)% through 6/30/00
Oregon Municipals Fund
4
<PAGE>
Risk return table
This table indicates the risks of investing in the fund by comparing the aver-
age annual total return of each class for the periods shown with that of the
Lehman Brothers Municipal Bond Index (the "Lehman Index"), a broad-based unman-
aged index of municipal bonds and the Lipper Oregon Municipal Fund Average (the
"Lipper Average"), an average composed of the fund's peer group of mutual
funds. This table assumes imposition of the maximum sales charge applicable to
the class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.
Average Annual Total Returns
Calendar Years Ended December 31, 1999
<TABLE>
<CAPTION>
Class 1 year 5 years 10 years Since inception Inception date
<S> <C> <C> <C> <C> <C>
A (8.02)% 5.80% n/a 5.68% 05/23/94
B (8.82)% 5.98% n/a 5.92% 05/23/94
L (6.60)% n/a n/a 4.22% 05/16/95
Y** n/a n/a n/a n/a 11/07/94
Lehman Index (2.06)% 6.91% n/a 5.91% *
Lipper Average (4.43)% 5.79% n/a 4.84% *
</TABLE>
* Index comparisons begin on 5/31/94.
** There were no Class Y shares outstanding for the calendar year ended Decem-
ber 31, 1999.
Smith Barney Mutual Funds
5
<PAGE>
Fee table
This table sets forth the fees and expenses you will pay if you invest in fund
shares.
Shareholder fees
<TABLE>
<CAPTION>
(fees paid directly from your investment) Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases
(as a % of offering price) 4.00% None 1.00% None
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at
purchase or redemption) None* 4.50% 1.00% None
Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets) Class A Class B Class L Class Y**
<S> <C> <C> <C> <C>
Management fee*** 0.50% 0.50% 0.50% 0.50%
Distribution and service (12b-1) fees 0.15% 0.65% 0.70% None
Other expenses 0.33% 0.34% 0.33% 0.33%
----- ----- ----- -----
Total annual fund operating expenses*** 0.98% 1.49% 1.53% 0.83%
</TABLE>
*You may buy Class A shares in amounts of $500,000 or more at net asset value
(without an initial sales charge) but if you redeem those shares within 12
months of their purchase, you will pay a deferred sales charge of 1.00%.
**For Class Y shares, which had not been offered prior to April 30, 2000,
"Other expenses" have been estimated for the fiscal year ending April 30, 2001.
***Because the manager has agreed to limit total annual fund operating
expenses, actual expenses were:
<TABLE>
<CAPTION>
Class A Class B Class L
<S> <C> <C> <C>
Management fee 0.35 0.35 0.35
Total annual fund operating expenses 0.83 1.35 1.39
</TABLE>
Example
This example helps you compare the costs of investing in the fund with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
.You invest $10,000 in the fund for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a sales charge
.The fund's operating expenses remain the same
Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A (with or without redemption) $496 $700 $920 $1,553
Class B (redemption at end of period) $602 $771 $913 $1,642
Class B (no redemption) $152 $471 $813 $1,646
Class L (redemption at end of period) $354 $579 $926 $1,905
Class L (no redemption) $254 $579 $926 $1,905
Class Y (with or without redemption) $ 85 $265 $460 $1,025
</TABLE>
Oregon Municipals Fund
6
<PAGE>
More on the fund's investments
Oregon municipal securities Oregon municipal securities include debt obliga-
tions issued by certain non-Oregon governmental issuers such as Puerto Rico,
the Virgin Islands and Guam. The interest on Oregon municipal securities is
exempt from federal income tax and Oregon personal income tax. As a result, the
interest rate on these bonds normally is lower than it would be if the bonds
were subject to taxation. The Oregon municipal securities in which the fund
invests include general obligation bonds, revenue bonds and municipal leases.
These securities may pay interest at fixed, variable or floating rates. The
fund may also hold zero coupon securities which pay no interest during the life
of the obligation but trade at prices below their stated maturity value. The
fund also may invest up to 20% of its net assets in municipal securities of
non-Oregon issuers. These will generally be exempt from federal, but not Ore-
gon, income taxes.
Below investment grade securities Below investment grade securities, also known
as "junk bonds", are considered speculative with respect to the issuer's abil-
ity to pay interest and principal, involve a high risk of loss and are suscep-
tible to default or decline in market value because of adverse economic and
business developments. The market value for these securities tends to be very
volatile, and they are less liquid than investment grade debt securities.
Derivative contracts The fund may, but need not, use derivative contracts, such
as financial futures and options on financial futures, for any of the following
purposes:
. To hedge against the economic impact of adverse changes in the market value
of portfolio securities because of changes in interest rates
. As a substitute for buying or selling securities
A futures contract will obligate or entitle the fund to deliver or receive an
asset or cash payment based on the change in value of one or more securities.
Even a small investment in futures can have a big impact on a fund's interest
rate exposure. Therefore, using futures can disproportionately increase losses
and reduce opportunities for gains when interest rates are changing. The fund
may not fully benefit from or may lose money on futures if changes in their
value do not correspond accurately to changes in the value of the fund's hold-
ings. The other parties to certain futures present the same types of default
risk as issuers of fixed income securities. Futures can also make a fund less
liquid and harder to value, especially in declining markets.
Defensive investing The fund may depart from its principal investment strate-
gies in response to adverse market, economic or political conditions by taking
temporary defensive positions in all types of money market and short-term debt
securities. If the fund takes a temporary defensive position, it may be unable
to achieve its investment goal.
Smith Barney Mutual Funds
7
<PAGE>
Management
Manager The fund's investment adviser and administrator is SSB Citi Fund Man-
agement LLC ("SSB Citi") (successor to SSBC Fund Management Inc.), an affiliate
of Salomon Smith Barney Inc. ("Salomon Smith Barney"). The manager's address is
388 Greenwich Street, New York, New York 10013. The manager selects the fund's
investments and oversees its operations. The manager and Salomon Smith Barney
are subsidiaries of Citigroup Inc. Citigroup businesses produce a broad range
of financial services--asset management, banking and consumer finance, credit
and charge cards, insurance, investments, investment banking and trading--and
use diverse channels to make them available to consumer and corporate customers
around the world.
Peter M. Coffey, investment officer of SSB Citi and managing director of Salo-
mon Smith Barney has been responsible for the day-to-day management of the
fund's portfolio since its inception. Mr. Coffey has over 31 years of securi-
ties business experience.
Management fees During the fiscal year ended April 30, 2000, the manager
received an advisory fee and an administrative fee equal to 0.21% and 0.14%,
respectively, of the fund's average daily net assets.
Distribution plan The fund has adopted a Rule 12b-1 distribution plan for its
Class A, B and L shares. Under the plan, the fund pays distribution and/or
service fees. These fees are an ongoing expense and, over time, may cost you
more than other types of sales charges.
In addition, the distributor may make payments for distribution and/or share-
holder servicing activities out of its past profits and other available sourc-
es. The distributor may also make payments for marketing, promotional or
related expenses to dealers. The amount of these payments is determined by the
distributor and may be substantial. SSB Citi or an affiliate may make similar
payments under similar arrangements.
Transfer agent and shareholder servicing agent Citi Fiduciary Trust Company
serves as the fund's transfer agent and shareholder servicing agent (the
"transfer agent"). The transfer agent has entered into a sub-transfer agency
and services agreement with PFPC Global Fund Services to serve as the fund's
sub-transfer agent (the "sub-transfer agent"). The sub-transfer agent will per-
form certain functions including shareholder record keeping and accounting
services.
Oregon Municipals Fund
8
<PAGE>
Choosing a class of shares to buy
You can choose among four classes of shares: Classes A, B, L and Y. Each class
has different sales charges and expenses, allowing you to choose the class that
best meets your needs. Which class is more beneficial to an investor depends on
the amount and intended length of the investment.
. If you plan to invest regularly or in large amounts, buying Class A shares
may help you reduce sales charges and ongoing expenses.
. For Class B shares, all of your purchase amount and, for Class L shares, more
of your purchase amount (compared to Class A shares) will be immediately
invested. This may help offset the higher expenses of Class B and Class L
shares, but only if the fund performs well.
. Class L shares have a shorter deferred sales charge period than Class B
shares. However, because Class B shares convert to Class A shares, and Class
L shares do not, Class B shares may be more attractive to long-term invest-
ors.
You may buy shares from:
. A broker-dealer, financial intermediary, financial institution or a distribu-
tor's financial consultants (each called a "Service Agent")
. The fund, but only if you are investing through certain Service Agents.
All classes of shares are not available through all Service Agents. You should
contact your Service Agent for further information.
Investment minimums Minimum initial and additional investment amounts vary
depending on the class of shares you buy and the nature of your investment
account.
<TABLE>
<CAPTION>
Initial Additional
Classes A, B, L Class Y All Classes
<S> <C> <C> <C>
General $1,000 $15 million $50
Monthly Systematic Investment Plans $25 n/a $25
Quarterly Systematic Investment Plans $50 n/a $50
Uniform Gift to Minor Accounts $250 $15 million $50
</TABLE>
Smith Barney Mutual Funds
9
<PAGE>
Comparing the fund's classes
Your Service Agent can help you decide which class meets your goals. The Serv-
ice Agent may receive different compensation depending upon which class you
choose.
<TABLE>
<CAPTION>
Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Key features .Initial .No initial .Initial .No initial
sales sales sales or
charge charge charge is deferred
.You may .Deferred lower than sales
qualify sales Class A charge
for reduc- charge .Deferred .Must
tion or declines sales invest at
waiver of over time charge for least $5
initial .Converts only 1 million
sales to Class A year .Lower
charge after 8 .Does not annual
.Lower years convert to expenses
annual .Higher Class A than the
expenses annual .Higher other
than Class expenses annual classes
B and than Class expenses
Class L A than Class
A
------------------------------------------------------------------------
Initial sales charge Up to None 1.00% None
4.00%;
reduced for
large pur-
chases and
waived for
certain
investors.
No charge
for pur-
chases of
$500,000 or
more
------------------------------------------------------------------------
Deferred sales charge 1.00% on Up to 4.50% 1.00% if None
purchases charged you redeem
of $500,000 when you within 1
or more if redeem year of
you redeem shares. The purchase
within 1 charge is
year of reduced
purchase over time
and there
is no
deferred
sales
charge
after 6
years
------------------------------------------------------------------------
Annual distribution and 0.15% of 0.65% of 0.70% of None
service fees average average average
daily net daily net daily net
assets assets assets
------------------------------------------------------------------------
Exchangeable into* Class A Class B Class L Class Y
shares of shares of shares of shares of
most Smith most Smith most Smith most Smith
Barney Barney Barney Barney
funds funds funds funds
------------------------------------------------------------------------
</TABLE>
*Ask your Service Agent for the Smith Barney funds available for exchange.
Oregon Municipals Fund
10
<PAGE>
Sales charges
Class A shares
You buy Class A shares at the offering price, which is the net asset value plus
a sales charge. You pay a lower sales charge as the size of your investment
increases to certain levels called breakpoints. You do not pay a sales charge
on the fund's distributions or dividends you reinvest in additional Class A
shares.
The table below shows the rate of sales charge you pay, depending on the amount
you purchase. The table below also shows the amount of broker/dealer compensa-
tion that is paid out of the sales charge. This compensation includes commis-
sions and other fees which Service Agents that sell shares of the Fund receive.
The distributor keeps up to approximately 10% of the sales charge imposed on
Class A shares. Service Agents also will receive the service fee payable on
Class A shares at an annual rate equal to 0.15% of the average daily net assets
represented by the Class A shares sold by them
<TABLE>
<CAPTION>
Sales Charge as a % of:
Dealers'
Reallowance
Net as % of
Offering amount offering
Amount of purchase price (%) invested (%) price
<S> <C> <C> <C>
Less than $25,000 4.00 4.17 3.60
$25,000 but less than $50,000 3.50 3.63 3.15
$50,000 but less than $100,000 3.00 3.09 2.70
$100,000 but less than $250,000 2.50 2.56 2.25
$250,000 but less than $500,000 1.50 1.52 1.35
$500,000 or more -0- -0- -0-
</TABLE>
Investments of $500,000 or more You do not pay an initial sales charge when you
buy $500,000 or more of Class A shares. However, if you redeem these Class A
shares within one year of purchase, you will pay a deferred sales charge of 1%.
Qualifying for a reduced Class A sales charge There are several ways you can
combine multiple purchases of Class A shares of Smith Barney funds to take
advantage of the breakpoints in the sales charge schedule.
Accumulation privilege - lets you combine the current value of Class A shares
owned
.by you, or
.by members of your immediate family,
Smith Barney Mutual Funds
11
<PAGE>
and for which a sales charge was paid, with the amount of your next purchase of
Class A shares for purposes of calculating the initial sales charge. Certain
trustees and fiduciaries may be entitled to combine accounts in determining
their sales charge.
Letter of intent - lets you purchase Class A shares of the fund and other Smith
Barney funds over a 13-month period and pay the same sales charge, if any, as
if all shares had been purchased at once. You may include purchases on which
you paid a sales charge within 90 days before you sign the letter.
Waivers for certain Class A investors Class A initial sales charges are waived
for certain types of investors, including:
. Employees of NASD members
. Investors participating in a fee-based program sponsored by certain broker-
dealers affiliated with Citigroup
. Investors who redeemed Class A shares of a Smith Barney fund in the past 60
days, if the investor's Service Agent is notified
If you want to learn about additional waivers of Class A initial sales charges,
contact your Service Agent or consult the Statement of Additional Information
("SAI").
Class B shares
You buy Class B shares at net asset value without paying an initial sales
charge. However, if you redeem your Class B shares within six years of pur-
chase, you will pay a deferred sales charge. The deferred sales charge
decreases as the number of years since your purchase increases.
<TABLE>
<CAPTION>
Year after purchase 1st 2nd 3rd 4th 5th 6th through 8th
<S> <C> <C> <C> <C> <C> <C>
Deferred sales charge 4.5% 4% 3% 2% 1% 0%
</TABLE>
Service Agents selling Class B shares receive a commission of up to 4.00% of
the purchase price of the Class B shares they sell. Service Agents also receive
a service fee at an annual rate equal to 0.15% of the average daily net assets
represented by the Class B shares they are servicing.
Oregon Municipals Fund
12
<PAGE>
Class B conversion After 8 years, Class B shares automatically convert into
Class A shares. This helps you because Class A shares have lower annual
expenses. Your Class B shares will convert to Class A shares as follows:
<TABLE>
<CAPTION>
Shares issued: Shares issued: Shares issued:
At initial On reinvestment of Upon exchange from
purchase dividends and another Smith
distributions Barney fund
<S> <C> <C>
Eight years after the date of purchase In same proportion On the date the
as the number of shares originally
Class B shares acquired would
converting is to have converted
total Class B into Class A
shares you own shares
(excluding shares
issued as a divi-
dend)
</TABLE>
Class L shares
You buy Class L shares at the offering price, which is the net asset value plus
a sales charge of 1% (1.01% of the net amount invested). In addition, if you
redeem your Class L shares within one year of purchase, you will pay a deferred
sales charge of 1%. If you held Class C shares of the fund and/or other Smith
Barney mutual funds on June 12, 1998, you will not pay an initial sales charge
on Class L shares you buy before June 22, 2001.
Service Agents selling Class L shares receive a commission of up to 1.75% of
the purchase price of the Class L shares they sell. Starting in the thirteenth
month Service Agents also receive an annual fee of up to 1.00% of the average
daily net assets represented by the Class L shares held by their clients.
Class Y shares
You buy Class Y shares at net asset value with no initial sales charge and no
deferred sales charge when you redeem. You must meet the $15,000,000 initial
investment requirement. You can use a letter of intent to meet this requirement
by buying Class Y shares of the fund over a 13-month period. To qualify, you
must initially invest $5,000,000.
More about deferred sales charges
The deferred sales charge is based on the net asset value at the time of pur-
chase or redemption, whichever is less. Therefore you do not pay a sales charge
on amounts representing appreciation or depreciation.
In addition, you do not pay a deferred sales charge on:
. Shares exchanged for shares of another Smith Barney fund
. Shares representing reinvested distributions and dividends
. Shares no longer subject to the deferred sales charge
Smith Barney Mutual Funds
13
<PAGE>
Each time you place a request to redeem shares, the fund will first redeem any
shares in your account that are not subject to a deferred sales charge and then
the shares in your account that have been held the longest.
If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund at the current net asset
value and be credited with the amount of the deferred sales charge, if you
notify your Service Agent.
The fund's distributor receives deferred sales charges as partial compensation
for its expenses in selling shares, including the payment of compensation to
your Service Agent.
Deferred sales charge waivers
The deferred sales charge for each share class will generally be waived:
. On payments made through certain systematic withdrawal plans
. For involuntary redemptions of small account balances
. For 12 months following the death or disability of a shareholder
If you want to learn more about additional waivers of deferred sales charges,
contact your Service Agent or consult the SAI.
Buying shares
Through a You should contact your Service Agent to open a brokerage
Service Agent account and make arrangements to buy shares.
If you do not provide the following information, your order
will be rejected:
. Class of shares being bought
. Dollar amount or number of shares being bought
Your Service Agent may charge an annual account maintenance
fee.
--------------------------------------------------------------------------------
Through the Certain investors who are clients of certain Service Agents
fund are eligible to buy shares directly from the fund.
. Write the fund at the following address:
Smith Barney Oregon Municipals Fund
(Specify class of shares)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
Oregon Municipals Fund
14
<PAGE>
. Enclose a check to pay for the shares. For initial pur-
chases, complete and send an account application.
. For more information, call the transfer agent at 1-800-451-
2010.
Through a You may authorize your Service Agent or the sub-transfer
systematic agent to transfer funds automatically from (i) a regular bank
investment account, (ii) cash held in a brokerage account opened with a
plan Service Agent or (iii) certain money market funds, in order
to buy shares on a regular basis.
. Amounts transferred should be at least: $25 monthly or $50
quarterly
. If you do not have sufficient funds in your account on a
transfer date, your Service Agent or the sub-transfer agent
may charge you a fee
For more information, contact your Service Agent or the
transfer agent or consult the SAI.
Exchanging shares
Smith Barney You should contact your Service Agent to exchange into other
offers a Smith Barney funds. Be sure to read the prospectus of the
distinctive Smith Barney fund you are exchanging into. An exchange is a
family of taxable transaction.
funds
tailored to . You may exchange shares only for shares of the same class
help meet the of another Smith Barney fund. Not all Smith Barney funds
varying needs offer all classes.
of both large
and small . Not all Smith Barney funds may be offered in your state of
investors residence. Contact your Service Agent or the transfer agent
for further information.
. You must meet the minimum investment amount for each fund
(except for systematic investment plan exchanges).
. If you hold share certificates, the transfer agent must
receive the certificates endorsed for transfer or with
signed stock powers (documents transferring ownership of
certificates) before the exchange is effective.
Smith Barney Mutual Funds
15
<PAGE>
. The fund may suspend or terminate your exchange privilege
if you engage in an excessive pattern of exchanges.
--------------------------------------------------------------------------------
Waiver of Your shares will not be subject to an initial sales charge at
additional the time of the exchange.
sales charges
Your deferred sales charge (if any) will continue to be mea-
sured from the date of your original purchase. If the fund
you exchange into has a higher deferred sales charge, you
will be subject to that charge. If you exchange at any time
into a fund with a lower charge, the sales charge will not be
reduced.
--------------------------------------------------------------------------------
By telephone If you do not have a brokerage account with a Service Agent,
you may be eligible to exchange shares through the fund. You
must complete an authorization form to authorize telephone
transfers. If eligible, you may make telephone exchanges on
any day the New York Stock Exchange is open. Call the trans-
fer agent at 1-800-451-2010 between 9:00 a.m. and 4:00 p.m.
(Eastern time).
You can make telephone exchanges only between accounts that
have identical registrations.
--------------------------------------------------------------------------------
By mail If you do not have a brokerage account, contact your Service
Agent or write to the sub-transfer agent at the address on
the following page.
Oregon Municipals Fund
16
<PAGE>
Redeeming shares
Generally Contact your Service Agent to redeem shares of the fund.
If you hold share certificates, the sub-transfer agent must
receive the certificates endorsed for transfer or with signed
stock powers before the redemption is effective.
If the shares are held by a fiduciary or corporation, other
documents may be required.
Your redemption proceeds will be sent within three business
days after your request is received in good order. However,
if you recently purchased your shares by check, your redemp-
tion proceeds will not be sent to you until your original
check clears, which may take up to 15 days.
If you have a brokerage account with a Service Agent, your
redemption proceeds will be placed in your account and not
reinvested without your specific instruction. In other cases,
unless you direct otherwise, your redemption proceeds will be
paid by check mailed to your address of record.
--------------------------------------------------------------------------------
By mail For accounts held directly at the fund, send written requests
to the fund at the following address:
Smith Barney Oregon Municipals Fund
(Specify class of shares)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
Your written request must provide the following:
. The fund and account number
. The class of shares and the dollar amount or number of
shares to be redeemed
. Signatures of each owner exactly as the account is regis-
tered
Smith Barney Mutual Funds
17
<PAGE>
--------------------------------------------------------------------------------
By telephone
If you do not have a brokerage account with a Service Agent,
you may be eligible to redeem shares in amounts up to $50,000
per day through the fund. You must complete an authorization
form to authorize telephone redemptions. If eligible, you may
request redemptions by telephone on any day the New York
Stock Exchange is open. Call the transfer agent at 1-800-451-
2010 between 9:00 a.m. and 4:00 p.m. (Eastern time).
Your redemption proceeds can be sent by check to your address
of record or by wire or electronic transfer (ACH) to a bank
account designated on your authorization form. You must sub-
mit a new authorization form to change the bank account des-
ignated to receive wire or electronic transfers and you may
be asked to provide certain other documents. The sub-transfer
agent may charge a fee on an electronic transfer (ACH).
--------------------------------------------------------------------------------
Automatic You can arrange for the automatic redemption of a portion of
cash your shares on a monthly or quarterly basis. To qualify you
withdrawal must own shares of the fund with a value of at least $10,000
plans and each automatic redemption must be at least $50. If your
shares are subject to a deferred sales charge, the sales
charge will be waived if your automatic payments do not
exceed 1% per month of the value of your shares subject to a
deferred sales charge.
The following conditions apply:
. Your shares must not be represented by certificates
. All dividends and distributions must be reinvested
For more information, contact your Service Agent or consult
the SAI.
Oregon Municipals Fund
18
<PAGE>
Other things to know about share transactions
When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information, without which your
request will not be processed:
. Name of the fund
. Account number
. Class of shares being bought, exchanged or redeemed
. Dollar amount or number of shares being bought, exchanged or redeemed
. Signature of each owner exactly as the account is registered
The fund will try to confirm that any telephone exchange or redemption request
is genuine by recording calls, asking the caller to provide certain personal
identification information, sending you a written confirmation or requiring
other confirmation procedures from time to time.
Signature guarantees To be in good order, your redemption request must include
a signature guarantee if you:
. Are redeeming over $50,000 of shares
. Are sending signed share certificates or stock powers to the sub-transfer
agent
. Instruct the sub-transfer agent to mail the check to an address different
from the one on your account
. Changed your account registration
. Want the check paid to someone other than the account owner(s)
. Are transferring the redemption proceeds to an account with a different reg-
istration
You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loan institutions, but not from a notary public.
The fund has the right to:
. Suspend the offering of shares
. Waive or change minimum and additional investment amounts
. Reject any purchase or exchange order
. Change, revoke or suspend the exchange privilege
. Suspend telephone transactions
Smith Barney Mutual Funds
19
<PAGE>
. Suspend or postpone redemptions of shares on any day when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the Securi-
ties and Exchange Commission
. Pay redemption proceeds by giving you securities. You may pay transaction
costs to dispose of the securities
Small account balances If your account falls below $500 because of a redemption
of fund shares, the fund may ask you to bring your account up to the applicable
minimum investment amounts. If you choose not to do so within 60 days, the fund
may close your account and send you the redemption proceeds.
Excessive exchange transactions The manager may determine that a pattern of
frequent exchanges is detrimental to the fund's performance and other share-
holders. If so, the fund may limit additional purchases and/or exchanges by the
shareholder.
Share certificates The fund does not issue share certificates unless a written
request signed by all registered owners is made to the sub-transfer agent. If
you hold share certificates it will take longer to exchange or redeem shares.
Oregon Municipals Fund
20
<PAGE>
Dividends, distributions and taxes
Dividends The fund pays dividends each month from its net investment income.
The fund generally makes capital gain distributions, if any, once a year, typi-
cally in December. The fund may pay additional distributions and dividends at
other times if necessary for the fund to avoid a federal tax. Capital gain dis-
tributions and dividends are reinvested in additional fund shares of the same
class you hold. The fund expects distributions to be primarily from income. You
do not pay a sales charge on reinvested distributions or dividends. Alterna-
tively, you can instruct your Service Agent, the transfer agent or the sub-
transfer agent to have your distributions and/or dividends paid in cash. You
can change your choice at any time to be effective as of the next distribution
or dividend, except that any change given to the transfer agent less than five
days before the payment date will not be effective until the next distribution
or dividend.
Taxes In general, redeeming shares, exchanging shares and receiving distribu-
tions (whether in cash or additional shares) are all taxable events.
<TABLE>
<CAPTION>
Transaction Federal tax status Oregon tax status
<S> <C> <C>
Redemption or exchange Usually capital Usually capital gain
of shares gain or loss; long-term only or loss
if shares owned
more than one year
Long-term capital gain Taxable gain Taxable gain
distributions
Short-term capital gain Ordinary income Ordinary income
distributions
Dividends Exempt if from Exempt if from
interest on tax-exempt interest on Oregon
securities, otherwise municipal securities,
ordinary income otherwise ordinary
income
</TABLE>
Any taxable dividends and capital gain distributions are taxable whether
received in cash or reinvested in fund shares. Long-term capital gain distribu-
tions are taxable to you as long-term capital gain regardless of how long you
have owned your shares. You may want to avoid buying shares when the fund is
about to declare a capital gain distribution or a taxable dividend, because it
will be taxable to you even though it may actually be a return of a portion of
your investment.
After the end of each year, the fund will provide you with information about
the distributions and dividends you received and any redemptions of
Smith Barney Mutual Funds
21
<PAGE>
shares during the previous year. If you do not provide the fund with your cor-
rect taxpayer identification number and any required certifications, you may be
subject to back-up withholding of 31% of your distributions, dividends, and
redemption proceeds. Because each shareholder's circumstances are different and
special tax rules may apply, you should consult your tax adviser about your
investment in the fund.
Share price
You may buy, exchange or redeem shares at their net asset value, plus any
applicable sales charge, next determined after receipt of your request in good
order. The fund's net asset value is the value of its assets minus its liabili-
ties. Net asset value is calculated separately for each class of shares. The
fund calculates its net asset value every day the New York Stock Exchange is
open. The Exchange is closed on certain holidays listed in the SAI. This calcu-
lation is done when regular trading closes on the Exchange (normally 4:00 p.m.,
Eastern time).
Generally, the fund's investments are valued by an independent pricing service.
If market quotations or a valuation from the pricing service is not readily
available or if a security's value has been materially affected by events
occurring after the close of the Exchange or market on which the security is
principally traded, that security may be valued by another method that the
fund's board believes accurately reflects fair value. A fund that uses fair
value to price securities may value those securities higher or lower than
another fund using market quotations to price the same securities. A security's
valuation may differ depending on the method used for determining fair value.
In order to buy, redeem or exchange shares at that day's price, you must place
your order with your Service Agent or the fund's sub-transfer agent before the
New York Stock Exchange closes. If the Exchange closes early, you must place
your order prior to the actual closing time. Otherwise, you will receive the
next business day's price.
Service Agents must transmit all orders to buy, exchange or redeem shares to
the fund's sub-transfer agent before the sub-transfer agent's close of busi-
ness.
Oregon Municipals Fund
22
<PAGE>
Financial highlights
The financial highlights tables are intended to help you understand the perfor-
mance of each class for the past 5 years (or since inception if less than 5
years). Certain information reflects financial results for a single share.
Total return represents the rate that a shareholder would have earned (or lost)
on a fund share assuming reinvestment of all dividends and distributions. The
information in the following tables was audited by KPMG LLP, independent
accountants, whose report, along with the fund's financial statements, is
included in the annual report (available upon request). No information is pres-
ent for Class Y shares because no class Y shares were outstanding during these
fiscal years.
For a Class A share of beneficial interest outstanding throughout each year
ended April 30
<TABLE>
<CAPTION>
2000(/1/) 1999(/1/) 1998 1997 1996
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $ 10.87 $ 10.76 $ 10.27 $ 10.26 $10.09
-------------------------------------------------------------------------------
Income (loss) from operations:
Net investment income(/2/) 0.51 0.49 0.53 0.54 0.55
Net realized and unrealized
gain (loss) (0.84) 0.20 0.48 0.16 0.22
-------------------------------------------------------------------------------
Total income (loss) from
operations (0.33) 0.69 1.01 0.70 0.77
-------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.50) (0.49) (0.52) (0.54) (0.54)
Net realized gain (0.02) (0.09) -- (0.13) (0.06)
Excess of net realized gain -- -- -- (0.02) --
-------------------------------------------------------------------------------
Total distributions (0.52) (0.58) (0.52) (0.69) (0.60)
-------------------------------------------------------------------------------
Net asset value, end of year $ 10.02 $ 10.87 $ 10.76 $ 10.27 $10.26
-------------------------------------------------------------------------------
Total return (3.01)% 6.56% 9.97% 7.01% 7.70%
-------------------------------------------------------------------------------
Net assets, end of year
(000)'s $14,272 $15,994 $12,371 $9,769 $7,520
-------------------------------------------------------------------------------
Ratios to average net assets:
Expenses(/2/) 0.83% 0.87% 0.65% 0.65% 0.66%
Net investment income 5.02 4.49 4.96 5.21 5.21
-------------------------------------------------------------------------------
Portfolio turnover rate 81% 28% 49% 37% 75%
-------------------------------------------------------------------------------
</TABLE>
(/1/) Per share amounts have been calculated using the monthly average shares
method.
(/2/) The investment adviser and administrator waived all or part of their fees
for the five years ended April 30, 2000. In addition, the investment
adviser has reimbursed the fund for $53,166 and $85,446 in expenses for
the years ended April 30, 1997 and 1996, respectively. If such fees had
not been waived and expenses not reimbursed, the per share effect on the
net investment income and the ratios of expenses to average net assets
would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
2000 1999 1998 1997 1996 2000 1999 1998 1997 1996
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $0.02 $0.01 $0.05 $0.07 $0.11 0.98% 0.99% 1.12% 1.41% 1.75%
--------------------------------------------------------------------
</TABLE>
Smith Barney Mutual Funds
23
<PAGE>
For a Class B share of beneficial interest outstanding throughout each year
ended April 30:
<TABLE>
<CAPTION>
2000(/1/) 1999(/1/) 1998 1997 1996
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 10.85 $ 10.75 $ 10.26 $ 10.25 $10.09
------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment
income(/2/) 0.46 0.43 0.48 0.48 0.49
Net realized and
unrealized gain (loss) (0.84) 0.20 0.48 0.17 0.22
------------------------------------------------------------------------------
Total income (loss) from
operations (0.38) 0.63 0.96 0.65 0.71
------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.45) (0.44) (0.47) (0.49) (0.49)
Net realized gains (0.02) (0.09) -- (0.13) (0.06)
Capital -- -- -- (0.02) --
------------------------------------------------------------------------------
Total distributions (0.47) (0.53) (0.47) (0.64) (0.55)
------------------------------------------------------------------------------
Net asset value, end of
year $ 10.00 $ 10.85 $ 10.75 $ 10.26 $10.25
------------------------------------------------------------------------------
Total return (3.52)% 5.94% 9.43% 6.48% 7.09%
------------------------------------------------------------------------------
Net assets, end of year
(000)'s $16,199 $19,833 $16,691 $13,184 $9,861
------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses(/2/) 1.35% 1.39% 1.17% 1.17% 1.21%
Net investment income 4.49 3.97 4.44 4.69 4.62
------------------------------------------------------------------------------
Portfolio turnover rate 81% 28% 49% 37% 75%
------------------------------------------------------------------------------
</TABLE>
(/1/) Per share amounts have been calculated using the monthly average shares
method.
(/2/) The investment adviser and administrator waived all or part of their fees
for the five years ended April 30, 2000. In addition, the investment
adviser has reimbursed the fund for $53,166 and $85,446 in expenses for
the years ended April 30, 1997 and 1996, respectively. If such fees had
not been waived and expenses not reimbursed, the per share effect on the
net investment income and the ratios of expenses to average net assets
would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
2000 1999 1998 1997 1996 2000 1999 1998 1997 1996
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class B $0.02 $0.01 $0.05 $0.07 $0.11 1.49% 1.51% 1.63% 1.93% 2.29%
--------------------------------------------------------------------
</TABLE>
Oregon Municipals Fund
24
<PAGE>
For a Class L shares of beneficial interest outstanding throughout each year
ended April 30, except where noted:
<TABLE>
<CAPTION>
2000(/1/) 1999(/1/)(/2/) 1998 1997 1996(/3/)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $10.86 $10.76 $10.27 $10.26 $10.28
-------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment
income(/4/) 0.46 0.43 0.47 0.47 0.45
Net realized and
unrealized gain (loss) (0.84) 0.20 0.48 0.17 0.06
-------------------------------------------------------------------------------
Total income (loss) from
operations (0.38) 0.63 0.95 0.64 0.51
-------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.45) (0.44) (0.46) (0.48) (0.47)
Net realized gain (0.02) (0.09) -- (0.13) (0.06)
Excess of net realized
gain -- -- -- (0.02) --
-------------------------------------------------------------------------------
Total distributions (0.47) (0.53) (0.46) (0.63) (0.53)
-------------------------------------------------------------------------------
Net asset value, end of
year $10.01 $10.86 $10.76 $10.27 $10.26
-------------------------------------------------------------------------------
Total return (3.55)% 5.90% 9.38% 6.43% 4.99%++
-------------------------------------------------------------------------------
Net assets, end of year
(000)'s $2,997 $3,157 $2,110 $913 $614
-------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses(/4/) 1.39% 1.43% 1.21% 1.21% 1.25%+
Net investment income 4.46 3.94 4.39 4.66 4.80+
-------------------------------------------------------------------------------
Portfolio turnover rate 81% 28% 49% 37% 75%
-------------------------------------------------------------------------------
</TABLE>
(/1/) Per share amounts have been calculated using the monthly average shares
method.
(/2/) On June 12, 1998, Class C shares were renamed Class L shares.
(/3/) For the period from May 16, 1995 (inception date) to April 30, 1996.
(/4/) The investment adviser and administrator waived all or part of their fees
for the four years ended April 30, 2000 and the period ended April 30, 1996.
In addition, the investment adviser has reimbursed the Fund for $53,166 and
$85,446 in expenses for the year ended April 30, 1997 and the period ended
April 30, 1996, respectively. If such fees had not been waived and expenses
not reimbursed, the per share effect on the net investment income and the
ratios of expenses to average net assets would have been follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
2000 1999 1998 1997 1996 2000 1999 1998 1997 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class L $0.02 $0.01 $0.04 $0.06 $0.10 1.53% 1.55% 1.67% 1.96% 2.38%+
---------------------------------------------------------------------
</TABLE>
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
Smith Barney Mutual Funds
25
<PAGE>
[SB] Smith Barney
[MF] Mutual Funds
Your Serious Money. Professionally Managed./SM/
Oregon
Municipals Fund
Shareholder reports Annual and semiannual reports to shareholders provide addi-
tional information about the fund's investments. These reports discuss the mar-
ket conditions and investment strategies that significantly affected the fund's
performance during its last fiscal year end or period.
The fund sends only one report to a household if more than one account has the
same address. Contact your Service Agent or the transfer agent if you do not
want this policy to apply to you.
Statement of additional information The statement of additional information
provides more detailed information about the fund and is incorporated by refer-
ence into (is legally part of) this prospectus.
You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Service
Agent at 1-800-451-2010, or by writing to the fund at Smith Barney Mutual
Funds, 388 Greenwich Street, MF2, New York, New York 10013.
Visit our web site Our web site is located at www.smithbarney.com
Information about the fund (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the
Public Reference Room may be obtained by calling the Commission at 1-202-942-
8090. Reports and other information about the funds are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov. Copies of
this information may be obtained for a duplicating fee by electronic request at
the following E-mail address: [email protected], or by writing the Commis-
sion's Public Reference Section, Washington, D.C. 20549-0102.
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not law-
fully sell its shares.
(Investment Company Act
file no. 811-7149)
FD0543 8/00
