<PAGE>
SMITH BARNEY
OREGON
MUNICIPALS FUND
CLASSIC SERIES | SEMI-ANNUAL REPORT | OCTOBER 31, 2000
[LOGO] Smith Barney
Mutual Funds
Your Serious Money. Professionally Managed.-SM-
NOT FDIC INSURED - NOT BANK GUARANTEED - MAY LOSE VALUE
<PAGE>
================================================================================
A MESSAGE FROM THE CHAIRMAN
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[PHOTO OF HEATH B. MCLENDON]
HEATH B. MCLENDON
CHAIRMAN
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $398.6 billion in assets under management,(1)
we believe that SSB Citi Asset Management Group ("SSB Citi") offers choices and
solutions, uniting the distinguished history of Smith Barney with the
unparalleled global reach of its parent, Citigroup.
The Smith Barney family of funds represents a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney Mutual Funds and the investment professionals who manage them.
The Smith Barney Oregon Municipals Fund ("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(2) Experienced bond manager Peter Coffey
and his team seek to create a built-in income stream for the long-term. Coffey
and his team believe that municipal bonds currently are attractively priced
relative to underlying inflation rates in an environment of light supply and
muted institutional demand.
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
NOVEMBER 10, 2000
------------
(1) AS OF OCTOBER 31, 2000. THIS FIGURE REPRESENTS SSB CITI'S ASSETS UNDER
MANAGEMENT FOR RETAIL, INSTITUTIONAL, MONEY AND SEPARATE ACCOUNTS.
(2) PLEASE NOTE A PORTION OF THE INCOME FROM THE FUND MAY BE SUBJECT TO THE
ALTERNATIVE MINIMUM TAX ("AMT").
1 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
DEAR SHAREHOLDER:
We are pleased to provide the semi-annual report for the Smith Barney Oregon
Municipals Fund ("Fund") for the period ended October 31, 2000. In this report
we have summarized the period's prevailing economic and market conditions and
outlined our investment strategy. A detailed summary of the Fund's performance
can be found in the appropriate sections that follow. We hope you find this
report to be useful and informative.
PERFORMANCE AND INVESTMENT STRATEGY UPDATE
As previously noted, the Fund seeks to provide Oregon investors with as high a
level dividend income exempt from federal income tax and Oregon state personal
income tax as is consistent with prudent investment management and preservation
of capital.(1)
For the six months ended October 31, 2000, the Fund's Class A shares, without
and with sales charges returned 5.85% and 1.59%, respectively. In comparison,
the Lehman Brothers Municipal Bond Index ("Lehman Index")(2) returned 5.73% for
the same period.
Because we think the bond markets are likely to remain volatile in the near
term, we continue to favor a gradual approach into the market. We tend to
emphasize longer and intermediate-term maturities, where most of the benefits of
the steep positive slope of the municipal yield curve(3) can be obtained.
During the reporting period, the Fund's average credit quality remained
relatively high. Although quality spreads during the period have widened due to
earnings pressure, especially in hospital- and healthcare- related sectors, the
difference in yield between the highest-quality issues and medium grade issues
has, in our view, remained relatively modest. We think our proprietary research
enables us to invest in select medium-term credits for which perceived market
risk may be greater than our analysis otherwise indicates. Moreover, while no
guarantees can be made, we think our investment strategy may have the potential
to increase income over time.
---------------------
(1) PLEASE NOTE THAT A PORTION OF THE INCOME FROM THE FUND MAY BE SUBJECT TO THE
ALTERNATIVE MINIMUM TAX ("AMT").
(2) THE LEHMAN INDEX IS A BROAD MEASURE OF THE MUNICIPAL BOND MARKET WITH
MATURITIES OF AT LEAST ONE YEAR. PLEASE NOTE, AN INVESTOR CANNOT INVEST
DIRECTLY IN AN INDEX.
(3) THE YIELD CURVE IS THE GRAPHICAL DEPICTION OF THE RELATIONSHIP BETWEEN THE
YIELD ON BONDS OF THE SAME CREDIT QUALITY BUT DIFFERENT MATURITIES.
2 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
During the review period, we took advantage of rising interest rates to generate
additional yield in the Fund's portfolio. We also looked to incorporate
additional call protection(4) into the Fund by selling off some of our higher
coupon bonds with shorter calls,(5) and replacing them with bonds that have a
similar high coupon structure, but are not subject to early call.
One of the ways that we manage the Fund is to seek to create a built-in income
stream for the long term. To this end, we have generally focused on investing in
securities with high credit quality and good call protection, as we believe
these securities offer solid long-term values. Moreover, we have a fairly long
weighted-average life(6) in the Fund's portfolio because we believe that the
risk of higher inflation at the present time is negligible. In addition, we
think our greater emphasis on call protection may provide our shareholders with
consistent income if interest rates do in fact go down.
OREGON ECONOMIC HIGHLIGHTS
Our outlook for Oregon continues to remain favorable because of low levels of
tax-supported debt and strong economic growth over the past few years. In our
opinion, Oregon's growth is due in large part to:
- National economic expansion;
- Growth of international trade;
- Continued immigration; and
- Industrial diversification.
In fact, Oregon has been successful in diversifying the state's economy from one
that was once dominated by timber and agriculture industries to a bona fide
leader in the high-tech and services industries. In addition, Oregon's recent
economic growth has slowed as a result of the reduction of exports to Asia, a
region that until a short time ago was in a recession. However, we believe
growth should strengthen in the near future. In fact, due to the state's
economic success and prudent debt management practices, most of Oregon's
municipal securities continue to receive high credit ratings from nationally
recognized credit rating agencies.
---------------------
(4) CALL PROTECTION IS THE LENGTH OF TIME DURING WHICH A SECURITY CANNOT BE
REDEEMED BY THE ISSUER.
(5) CALLABLE BONDS ARE REDEEMABLE BY THE ISSUER BEFORE THE SCHEDULED MATURITY
UNDER SPECIFIC CONDITIONS AND AT A STATED PRICE, WHICH USUALLY BEGINS AT A
PREMIUM TO PAR AND DECLINES ANNUALLY. BONDS ARE USUALLY "CALLED" WHEN
INTEREST RATES FALL SO SIGNIFICANTLY THAT THE ISSUER CAN SAVE MONEY BY
FLOATING NEW BONDS AT LOWER RATES
(6) AVERAGE LIFE IS THE LENGTH OF TIME BEFORE THE PRINCIPAL OF DEBT ISSUES IS
SCHEDULED TO BE REPAID THROUGH AMORTIZATION OR SINKING FUND.
3 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
BOND MARKET OVERVIEW AND OUTLOOK
As stock market volatility continues, we believe the case for including bonds as
part of a well-diversified portfolio has strengthened. As investors begin to
rethink the returns they can expect from stocks, we believe more and more
investors may consider the potential advantages of bonds, specifically municipal
bonds. Recently, bond investors have had many factors with which to contend -
strong economic growth, inflation fears, the decline in U.S. Treasury supply,
credit concerns for corporate bonds and potential tax law changes.
Key factors that could ignite inflation and push yields to higher levels appear
to be off the radar screen for now. Growth is slowing, underlying inflation is
low despite rising commodity prices, and higher productivity gains continue to
offset increases in labor costs. In our opinion, the Federal Reserve Board
("Fed") should remain benign in the near-term, but a likely policy direction
going forward may be towards lower short-term interest rates, which should not
slow the economy too much.
In the overall bond market, yield spreads have narrowed and benchmark yield
levels have dropped by nearly a percentage point during the period in response
to evidence that underlying inflation risks may have subsided and economic
growth is slowing down from the rapid 6% annual pace of the past year. We think
there is a good chance that the decline in yields has further to go. Yet, on the
other hand, a host of technical and other considerations may slow the market or
cause yields to rise temporarily, barring a dramatic new sign that the U.S.
economic expansion is slowing below an expected 3% to 4% annual pace.
Our outlook for interest rates remains favorable and our expectations for the
municipal bond market are one of cautious optimism. The municipal bond market
continues to be dominated by supply and demand factors such as lower new issue
volume, strong retail demand and very limited institutional demand.
New issue supply in the municipal bond market continues to trail far behind
levels reached in 1998 and 1999. As of October 31, 2000, new issue supply was
down roughly 17% from 1999 levels. Issuance for new projects is up slightly but
refundings have plummeted, because yields are not low enough to allow issuers to
benefit from a refinancing. Issuance this year should come in at roughly $185
billion, down from $227 billion in 1999, and supply in future years should stay
in the current range.
4 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
Individual investor demand for municipal bonds has remained extremely strong,
despite the recent decrease in yields from early 2000 levels. Given the small
size of the municipal bond market relative to the stock market, even a modest
shift of assets out of stocks and into municipal bonds can create an enormous
amount of new demand.
Thank you for your investment in the Smith Barney Oregon Municipals Fund. We
look forward to helping you achieve your financial goals.
Sincerely,
/s/ Peter M. Coffey
Peter M. Coffey
Vice President and Investment Officer
NOVEMBER 10, 2000
THE INFORMATION PROVIDED IN THIS LETTER REPRESENTS THE OPINION
OF THE MANAGER AND IS NOT INTENDED TO BE A FORECAST OF FUTURE EVENTS, A
GUARANTEE OF FUTURE RESULTS NOR INVESTMENT ADVICE. FURTHER, THERE IS NO
ASSURANCE THAT CERTAIN SECURITIES WILL REMAIN IN OR OUT OF THE FUND. PLEASE
REFER TO PAGES 10 THROUGH 13 FOR A LIST AND PERCENTAGE BREAKDOWN OF THE FUND'S
HOLDINGS. ALSO, PLEASE NOTE ANY DISCUSSION OF THE FUND'S HOLDINGS IS AS OF
OCTOBER 31, 2000 AND IS SUBJECT TO CHANGE.
5 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
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HISTORICAL PERFORMANCE -- CLASS A SHARES
================================================================================
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
PERIOD ENDED OF PERIOD OF PERIOD DIVIDENDS DISTRIBUTIONS RETURNS(1)
================================================================================
<S> <C> <C> <C> <C> <C>
10/31/00 $10.02 $10.33 $0.27 $0.00 5.85%+
--------------------------------------------------------------------------------
4/30/00 10.87 10.02 0.50 0.02 (3.01)
--------------------------------------------------------------------------------
4/30/99 10.76 10.87 0.49 0.09 6.56
--------------------------------------------------------------------------------
4/30/98 10.27 10.76 0.52 0.00 9.97
--------------------------------------------------------------------------------
4/30/97 10.26 10.27 0.54 0.15 7.01
--------------------------------------------------------------------------------
4/30/96 10.09 10.26 0.54 0.06 7.70
--------------------------------------------------------------------------------
Inception* - 4/30/95++ 9.55 10.09 0.49 0.00 11.08+
================================================================================
Total $3.35 $0.32
================================================================================
</TABLE>
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HISTORICAL PERFORMANCE -- CLASS B SHARES
================================================================================
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
PERIOD ENDED OF PERIOD OF PERIOD DIVIDENDS DISTRIBUTIONS RETURNS(1)
================================================================================
<S> <C> <C> <C> <C> <C>
10/31/00 $10.00 $10.30 $0.25 $0.00 5.58%+
--------------------------------------------------------------------------------
4/30/00 10.85 10.00 0.45 0.02 (3.52)
--------------------------------------------------------------------------------
4/30/99 10.75 10.85 0.44 0.09 5.94
--------------------------------------------------------------------------------
4/30/98 10.26 10.75 0.47 0.00 9.43
--------------------------------------------------------------------------------
4/30/97 10.25 10.26 0.49 0.15 6.48
--------------------------------------------------------------------------------
4/30/96 10.09 10.25 0.49 0.06 7.09
--------------------------------------------------------------------------------
Inception* - 4/30/95++ 9.55 10.09 0.45 0.00 10.59+
================================================================================
Total $3.04 $0.32
================================================================================
</TABLE>
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HISTORICAL PERFORMANCE -- CLASS L SHARES
================================================================================
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------------
BEGINNING END INCOME CAPITAL GAIN TOTAL
PERIOD ENDED OF PERIOD OF PERIOD DIVIDENDS DISTRIBUTIONS RETURNS(1)
================================================================================
<S> <C> <C> <C> <C> <C>
10/31/00 $10.01 $10.32 $0.25 $0.00 5.65%+
--------------------------------------------------------------------------------
4/30/00 10.86 10.01 0.45 0.02 (3.55)
--------------------------------------------------------------------------------
4/30/99 10.76 10.86 0.44 0.09 5.90
--------------------------------------------------------------------------------
4/30/98 10.27 10.76 0.46 0.00 9.38
--------------------------------------------------------------------------------
4/30/97 10.26 10.27 0.48 0.15 6.43
--------------------------------------------------------------------------------
Inception* - 4/30/96 10.28 10.26 0.47 0.06 4.99+
================================================================================
Total $2.55 $0.32
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</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
6 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
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AVERAGE ANNUAL TOTAL RETURNS
================================================================================
<TABLE>
<CAPTION>
WITHOUT SALES CHARGES(1)
--------------------------------
CLASS A CLASS B CLASS L
================================================================================
<S> <C> <C> <C>
Six Months Ended 10/31/00+ 5.85% 5.58% 5.65%
--------------------------------------------------------------------------------
Year Ended 10/31/00 8.25 7.59 7.64
--------------------------------------------------------------------------------
Five Years Ended 10/31/00 5.35 4.79 4.78
--------------------------------------------------------------------------------
Inception* through 10/31/00 6.93++ 6.37++ 5.19
================================================================================
</TABLE>
<TABLE>
<CAPTION>
WITH SALES CHARGES(2)
--------------------------------
CLASS A CLASS B CLASS L
================================================================================
<S> <C> <C> <C>
Six Months Ended 10/31/00+ 1.59% 1.08% 3.60%
--------------------------------------------------------------------------------
Year Ended 10/31/00 3.92 3.09 5.59
--------------------------------------------------------------------------------
Five Years Ended 10/31/00 4.49 4.63 4.57
--------------------------------------------------------------------------------
Inception* through 10/31/00 6.25++ 6.37++ 5.01
================================================================================
</TABLE>
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
WITHOUT SALES CHARGES(1)
================================================================================
<S> <C>
Class A (Inception* through 10/31/00) 54.01%++
--------------------------------------------------------------------------------
Class B (Inception* through 10/31/00) 48.92++
--------------------------------------------------------------------------------
Class L (Inception* through 10/31/00) 31.89
================================================================================
</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 CHARGES WITH RESPECT TO CLASS A AND L SHARES OR THE APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ("CDSC") WITH RESPECT TO CLASS B AND L
SHARES.
(2) ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF
ANY, AT NET ASSET VALUE. IN ADDITION, CLASS A AND L SHARES REFLECT THE
DEDUCTION OF THE MAXIMUM INITIAL SALES CHARGES OF 4.00% AND 1.00%,
RESPECTIVELY. CLASS B SHARES REFLECT THE DEDUCTION OF A 4.50% CDSC, WHICH
APPLIES IF SHARES ARE REDEEMED WITHIN ONE YEAR FROM 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 L SHARES ALSO REFLECT THE DEDUCTION
OF A 1.00% CDSC, WHICH APPLIES IF SHARES ARE REDEEMED WITHIN THE FIRST YEAR
OF PURCHASE.
+ TOTAL RETURN IS NOT ANNUALIZED, AS IT MAY NOT BE REPRESENTATIVE OF THE TOTAL
RETURN FOR THE YEAR.
* THE INCEPTION DATE FOR CLASS A AND B SHARES IS MAY 23, 1994 AND MAY 16, 1995
FOR CLASS L SHARES.
++ TOTAL RETURN INCLUDES THE EFFECT OF THE CASH CONTRIBUTION TO CAPITAL FROM
THE INVESTMENT ADVISER WHICH WAS MADE ON OCTOBER 24, 1994. WITHOUT THIS
CASH CONTRIBUTION THE TOTAL RETURNS WOULD HAVE BEEN:
<TABLE>
<CAPTION>
CLASS A CLASS B
================================================================================
<S> <C> <C>
Inception* through 4/30/95 6.23% 5.55%
================================================================================
Inception* through 10/31/00:
Average Annual Total Returns Without Sales Charges 6.44% 5.82%
Average Annual Total Returns With Sales Charges 5.76 5.82
================================================================================
Cumulative Total Returns 49.52% 43.97%
================================================================================
</TABLE>
7 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
HISTORICAL PERFORMANCE (UNAUDITED)
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GROWTH OF $10,000 INVESTED IN CLASS A AND B SHARES OF
SMITH BARNEY OREGON MUNICIPALS FUND VS.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX+
-------------------------------------------------------------------------------
MAY 1994 -- OCTOBER 2000
[LINE GRAPH]
[PLOT POINTS]
<TABLE>
<CAPTION>
SB OREGON SB OREGON LEHMAN BROTHERS
MUNICIPALS FUND - MUNICIPALS FUND - MUNICIPAL BOND
CLASS A SHARES CLASS B SHARES INDEX
<S> <C> <C> <C>
5/23/1994 9,598 10,000 10,000
10/94 9,822 9,762 9,830
4/95 10,662 10,609 10,574
10/95 11,389 11,385 11,289
4/96 11,483 11,442 11,414
10/96 12,062 12,109 11,932
4/97 12,287 12,310 12,172
10/97 13,146 13,259 12,946
4/98 13,512 13,599 13,305
10/98 14,133 13,948 13,985
4/99 14,398 14,520 14,230
10/99 13,655 13,841 13,737
4/00 13,965 14,106 14,099
10/31/2000 14,782* 14,892* 14,906
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A and B shares on
May 23, 1994 (inception date), assuming deduction of the maximum 4.00% sales
charge at the time of investment for Class A shares and the deduction of the
maximum 4.50% CDSC for Class B shares, which applies if shares are redeemed
within one year from purchase. This CDSC declines by 0.50% the first year
after purchase and thereafter by 1.00% per year until no CDSC is incurred. It
also assumes reinvestment of dividends and capital gains, if any, at net asset
value through October 31, 2000. The Lehman Brothers Municipal Bond Index is a
broad based, total return index comprised of investment grade, fixed rate
municipal bonds selected from issues larger than $50 million issued since
January 1991. 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
class of shares may be greater or less than Class A and B shares' performance
indicated on this chart, depending on whether greater or lesser sales charges
and fees were incurred by shareholders investing in the other class.
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.
8 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
PORTFOLIO HIGHLIGHTS (UNAUDITED) OCTOBER 31, 2000
================================================================================
================================================================================
PORTFOLIO BREAKDOWN*
================================================================================
[PIE CHART]
<TABLE>
<S> <C>
Housing: Single-Family 7.9%
Education 16.9%
Utilities 5.4%
General Obligation 3.0%
Industrial Development 5.5%
Water and Sewer 8.8%
Hospitals 8.9%
Life Care Systems 5.1%
Transportation 12.4%
Housing: Multi-Family 12.8%
Miscellaneous 13.3%
</TABLE>
================================================================================
SUMMARY OF INVESTMENTS BY COMBINED RATINGS
================================================================================
<TABLE>
<CAPTION>
Standard & Percentage of
Moody's and/or Poor's Total Investments
-----------------------------------------------------------------------------------
<S> <C> <C>
Aaa AAA 31.0%
Aa AA 28.3
A A 10.9
Baa BBB 20.6
NR NR 9.2
------
100.0%
======
</TABLE>
---------------------
* AS A PERCENTAGE OF TOTAL INVESTMENTS. ALL INFORMATION IS AS OF
OCTOBER 31, 2000. PLEASE NOTE THAT PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
9 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED) OCTOBER 31, 2000
================================================================================
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===============================================================================================
<S> <C> <C> <C>
EDUCATION-- 16.9%
$1,000,000 AAA Columbia County School District No. 502, FGIC-Insured,
zero coupon due 6/1/18 $ 377,500
850,000 AA Forest Grove, Pacific University Revenue, Campus
Improvement & Refunding Bonds, Asset Guaranteed,
6.300% due 5/1/25 877,625
500,000 AAA Jackson County Central Point School District No. 006,
FGIC-Insured, 5.250% due 6/15/20 486,250
600,000 BBB+ Multnomah County Educational Facilities Revenue,
(University of Portland Project), 6.000% due 4/1/25 586,500
750,000 AAA Oregon Health Sciences, University Revenue,
Capital Appreciation, Series A, MBIA-Insured,
zero coupon due 7/1/21 232,500
Oregon State Health, Housing, Educational & Cultural
Facilities Authority, Series A:
1,000,000 Baa1* Linfield College Project, 6.625% due 10/1/20 1,040,000
430,000 Aa3* Oak Tree Foundation Project, 6.100% due 5/1/15 459,025
Western State Chiropractic, ACA-Insured:
665,000 A 6.350% due 12/1/20 689,106
545,000 A 6.350% due 12/1/25 556,581
500,000 A University of Virgin Islands, Refunding & Improvement Bonds,
Series A, ACA-Insured, 6.250% due 12/1/29 516,250
-----------------------------------------------------------------------------------------------
5,821,337
-----------------------------------------------------------------------------------------------
GENERAL OBLIGATION -- 3.0%
500,000 AAA Lane County GO, Bethel School District No. 052,
FGIC-Insured, 6.400% due 12/1/09 545,000
500,000 AA Oregon State Veterans Welfare, GO, Series 80A,
5.700% due 10/1/32 500,625
-----------------------------------------------------------------------------------------------
1,045,625
-----------------------------------------------------------------------------------------------
HOSPITALS -- 8.9%
1,000,000 Baa1* Clackamas County Hospital Facility Authority Revenue,
(Williamette Falls Hospital Project), 6.000% due 4/1/19 951,250
595,000 BBB+ Klamath Falls Inter-Community Hospital Authority
Revenue, (Gross-Merle West Medical Center Project),
7.100% due 9/1/24 606,900
500,000 BBB- Puerto Rico Industrial Tourist Education, Medical &
Environmental Control Facilities, (Ryder Memorial
Hospital Project), Series A, 6.700% due 5/1/24 489,375
1,000,000 AA- Umatilla County Hospital Facility Authority Revenue,
Catholic Health Initiatives, Series A, 5.750% due 12/1/20 1,007,500
-----------------------------------------------------------------------------------------------
3,055,025
-----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) OCTOBER 31, 2000
================================================================================
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===============================================================================================
<S> <C> <C> <C>
HOUSING: MULTI-FAMILY -- 12.8%
$ 215,000 Aa2* 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 $ 221,130
Portland Housing Authority, Multi-Family Revenue:
500,000 AA Columbia Street Apartments Project, Series B,
Asset Guaranteed, 5.500% due 12/1/21 (b) 480,625
Series A:
500,000 Aa1* Cherry Blossom Apartments, GNMA-Collateralized,
6.100% due 12/20/26(b) 520,000
875,000 Aa3* Cherry Ridge Project, 6.250% due 5/1/12 (b) 901,250
300,000 AAA Sr. Lien Revenue, (Fairview Woods Project),
(Pre-Refunded Escrowed with U.S. government
securities to 8/1/04 Call @ 100), 6.875% due 8/1/14 323,250
Washington County Housing Authority,
Multi-Family Revenue:
1,000,000 NR Affordable Housing Pool, Series A,
6.125% due 7/1/29 952,500
1,000,000 Aa3* Bethany Meadows Project, 6.250% due 8/1/13 (b) 1,033,750
-----------------------------------------------------------------------------------------------
4,432,505
-----------------------------------------------------------------------------------------------
HOUSING: SINGLE-FAMILY -- 7.9%
Oregon State Housing & Community Services, Mortgage
Revenue Bonds, Single-Family Mortgage Program:
Series B:
595,000 Aa2* 6.875% due 7/1/28 617,313
1,000,000 Aa2* 6.250% due 7/1/29 (b) 1,018,750
495,000 Aa2* Series D, 6.500% due 7/1/24 (b) 509,231
310,000 AAA Puerto Rico Housing Bank & Finance Agency,
Single-Family Mortgage Revenue, Affordable Housing
Mortgage-Portfolio I, GNMA/FNMA/FHLMC-Collateralized,
6.250% due 4/1/29 (b) 319,688
240,000 AAA Virgin Islands HFA, Single-Family Mortgage Revenue,
Program A, GNMA-Collateralized, 6.450% due 3/1/16 (b) 249,900
-----------------------------------------------------------------------------------------------
2,714,882
-----------------------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT -- 5.5%
Oregon State EDR:
1,000,000 Baa2* Georgia-Pacific Corp., Series CVLII, 6.350%
due 8/1/25 (b) 987,500
1,000,000 Baa1* USG Corp. Project, Solid Waste Disposal, Series 192,
6.400% due 12/1/29 (b) 928,750
-----------------------------------------------------------------------------------------------
1,916,250
-----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) OCTOBER 31, 2000
================================================================================
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===============================================================================================
<S> <C> <C> <C>
LIFE CARE SYSTEMS -- 5.1%
$ 400,000 NR Albany Hospital Facilities Authority Revenue, Mennonite
Home of Albany Inc., 5.900% due 10/1/20 $ 349,000
Clackamas County Hospital Facility Authority Revenue:
500,000 NR Robison Jewish Home Project, 6.250% due 10/1/28 441,250
1,000,000 NR Senior Living Facility, Mary's Woods at Marylhurst,
Series A, 6.625% due 5/15/29 988,750
-----------------------------------------------------------------------------------------------
1,779,000
-----------------------------------------------------------------------------------------------
MISCELLANEOUS -- 13.3%
500,000 A1* Hillsboro Oregon Revenue, (Graduate Center Project),
4.350% due 6/1/09 500,000
345,000 NR Lebanon Urban Renewal Agency, 5.500% due 6/1/14 341,981
Oregon State Bond Bank Revenue:
Economic Development Department, Series 1:
50,000 A2* 6.700% due 1/1/15 52,375
550,000 A2* Pre-Refunded Escrowed with U.S. government
securities to 1/1/03 Call @ 102, 6.700% due 1/1/15 (c) 584,375
500,000 AAA Economic & Community Development Department,
Series B, MBIA-Insured, 5.500% due 1/1/26 495,000
Oregon State Department of Administrative Services,
COP, Series A, AMBAC-Insured:
500,000 AAA 6.250% due 5/1/17 541,250
500,000 AAA 5.000% due 5/1/24 462,500
Virgin Islands Public Finance Authority Revenue, Series A:
1,000,000 BBB- Gross Receipts Taxes, 6.500% due 10/1/24 1,033,750
500,000 A Refunding Bonds, Sr. Lien, ACA-Insured, 5.500% due 10/1/18 479,375
100,000 NR Western Generation Agency, (Wauna Cogeneration
Project), Series B, 7.250% due 1/1/09 (b) 103,875
-----------------------------------------------------------------------------------------------
4,594,481
-----------------------------------------------------------------------------------------------
TRANSPORTATION -- 12.4%
500,000 AA+ Oregon State Department of Transportation, Highway
Usertax Revenue, 5.375% due 11/15/20 489,459
1,000,000 AAA Port Portland Airport Revenue, Portland International
Airport, Series B, AMBAC-Insured, 5.500% due 7/1/18 (b) 1,000,000
Puerto Rico Commonwealth Highway & Transportation
Authority, MBIA-Insured:
1,000,000 AAA Highway Revenue, Series Y, 5.000% due 7/1/36 918,750
1,000,000 AAA Transportation Revenue, Series A, 4.750% due 7/1/38 867,500
500,000 Baa2* Puerto Rico Port Authority Revenue, Special Facilities,
(American Airlines Project), Series A,
6.250% due 6/1/26 (b) 499,375
500,000 AA+ Tri-Country Metropolitan Transportation District Revenue,
Series A, 5.375% due 8/1/20 493,750
-----------------------------------------------------------------------------------------------
4,268,834
-----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) OCTOBER 31, 2000
================================================================================
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===============================================================================================
<S> <C> <C> <C>
UTILITIES -- 5.4%
$1,000,000 AAA Guam Power Authority Revenue, Series A,
MBIA-Insured, 5.250% due 10/1/34 $ 952,500
1,000,000 NR Klamath Falls Electric Revenue Refunding, Sr. Lien,
Klamath Cogeneration, 6.000% due 1/1/25 901,250
-----------------------------------------------------------------------------------------------
1,853,750
-----------------------------------------------------------------------------------------------
WATER AND SEWER -- 8.8%
360,000 A+ Clackamas County Service District No. 001, Sewer
Revenue, 6.375% due 10/1/14 380,250
500,000 AAA Eugene Water Revenue, Utility Systems, FSA-Insured,
5.875% due 8/1/30 510,625
1,000,000 AAA Klamath Falls Wastewater Revenue,
AMBAC-Insured, 5.500% due 6/1/25 1,001,250
500,000 AAA Portland Sewer Systems Revenue, Series A,
FGIC-Insured, 5.750% due 8/1/18 515,625
600,000 Aa2* Port Umatilla Water Revenue, LOC-ABN AMRO Bank,
6.650% due 8/1/22 (b) 620,250
-----------------------------------------------------------------------------------------------
3,028,000
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $33,723,236**) $34,509,689
===============================================================================================
</TABLE>
(a) ALL RATINGS ARE BY STANDARD & POOR'S RATINGS SERVICE EXCEPT THOSE IDENTIFIED
BY AN ASTERISK (*), WHICH ARE RATED BY MOODY'S INVESTORS SERVICE, INC.
(b) INCOME FROM THESE ISSUES IS CONSIDERED A PREFERENCE ITEM FOR PURPOSES OF
CALCULATING THE ALTERNATIVE MINIMUM TAX.
(c) PRE-REFUNDED BONDS ESCROWED WITH U.S. GOVERNMENT SECURITIES ARE CONSIDERED
BY THE INVESTMENT ADVISOR TO BE TRIPLE-A RATED EVEN IF THE ISSUER HAS NOT
APPLIED FOR NEW RATINGS.
** AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME.
See pages 14 and 15 for definitions of ratings and certain security
descriptions.
SEE NOTES TO FINANCIAL STATEMENTS.
13 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
BOND RATINGS (UNAUDITED)
================================================================================
The definitions of the applicable rating symbols are set forth below:
STANDARD & POOR'S RATINGS SERVICE ("STANDARD & POOR'S") -- Ratings from "AA" to
"BBB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and 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 INVESTORS SERVICE, INC. ("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 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 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 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 rated "Baa" are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's.
14 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
SHORT-TERM SECURITY RATINGS (UNAUDITED)
================================================================================
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
--------------------------------------------------------------------------------
SECURITY DESCRIPTIONS (UNAUDITED)
--------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
CHFCLI -- California Health Facility Construction Loan Insurance
CONNIE
LEE -- College Construction Loan Insurance Association
COP -- Certificate of Participation
EDA -- Economic Development Authority
EDR -- Economic Development Revenue
ETM -- Escrowed To Maturity
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FLAIRS -- Floating Adjustable Interest Rate Securities
FNMA -- Federal National Mortgage Association
FRTC -- Floating Rate Trust Certificates
FSA -- Financing Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
ISD -- Independent School District
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
PSF -- Permanent School Fund
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
TAN -- Tax Anticipation Notes
TECP -- Tax-Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation Notes
SYCC -- Structured Yield Curve Certificate
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
15 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) OCTOBER 31, 2000
================================================================================
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost-- $33,723,236) $34,509,689
Interest receivable 604,581
Receivable for securities sold 46,000
Receivable for Fund shares sold 25,000
--------------------------------------------------------------------------------
TOTAL ASSETS 35,185,270
--------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 482,170
Investment advisory fees payable 43,940
Administration fees payable 29,294
Distribution fees payable 5,432
Payable to bank 3,802
Accrued expenses 53,293
--------------------------------------------------------------------------------
TOTAL LIABILITIES 617,931
--------------------------------------------------------------------------------
TOTAL NET ASSETS $34,567,339
================================================================================
NET ASSETS:
Par value of shares of beneficial interest $ 3,351
Capital paid in excess of par value 34,623,622
Undistributed net investment income 34,706
Accumulated net realized loss from security transactions (880,793)
Net unrealized appreciation of investments 786,453
--------------------------------------------------------------------------------
TOTAL NET ASSETS $34,567,339
================================================================================
SHARES OUTSTANDING:
Class A 1,484,347
--------------------------------------------------------------------------------
Class B 1,548,971
--------------------------------------------------------------------------------
Class L 317,648
--------------------------------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $10.33
--------------------------------------------------------------------------------
Class B * $10.30
--------------------------------------------------------------------------------
Class L ** $10.32
--------------------------------------------------------------------------------
MAXIMUM PUBLIC OFFERING PRICE PER SHARE:
Class A (net asset value plus 4.17% of net asset value per share) $10.76
--------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $10.42
================================================================================
</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 L SHARES REDUCED BY A 1.00% CDSC IF SHARES
ARE REDEEMED WITHIN THE FIRST YEAR OF PURCHASE.
SEE NOTES TO FINANCIAL STATEMENTS.
16 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
STATEMENT OF OPERATIONS (UNAUDITED)
================================================================================
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $1,047,169
--------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 4) 75,099
Investment advisory fees (Note 4) 51,628
Administration fees (Note 4) 34,419
Audit and legal 15,812
Shareholder and system servicing fees 12,520
Shareholder communications 8,270
Trustees' fees 7,705
Pricing service fees 3,661
Registration fees 3,325
Custody 1,079
Other 9,380
--------------------------------------------------------------------------------
TOTAL EXPENSES 222,898
Less: Investment advisory and administration fee waiver (Note 4) (25,814)
--------------------------------------------------------------------------------
NET EXPENSES 197,084
--------------------------------------------------------------------------------
NET INVESTMENT INCOME 850,085
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 5):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 9,524,082
Cost of securities sold 9,597,332
--------------------------------------------------------------------------------
NET REALIZED LOSS (73,250)
--------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation) of Investments:
Beginning of period (301,025)
End of period 786,453
--------------------------------------------------------------------------------
INCREASE IN NET UNREALIZED APPRECIATION 1,087,478
--------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 1,014,228
--------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $1,864,313
================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
FOR THE SIX MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
AND THE YEAR ENDED APRIL 30, 2000
<TABLE>
<CAPTION>
OCTOBER 31 APRIL 30
================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 850,085 $ 1,703,356
Net realized loss (73,250) (853,563)
Increase (decrease) in net unrealized
appreciation 1,087,478 (2,199,027)
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS 1,864,313 (1,349,234)
--------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 3):
Net investment income (860,186) (1,661,834)
Net realized gains -- (54,102)
--------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (860,186) (1,715,936)
--------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net proceeds from sale of shares 2,878,765 4,082,910
Net asset value of shares issued for
reinvestment of dividends 527,220 1,086,644
Cost of shares reacquired (3,310,545) (7,620,619)
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 95,440 (2,451,065)
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 1,099,567 (5,516,235)
NET ASSETS:
Beginning of period 33,467,772 38,984,007
--------------------------------------------------------------------------------
END OF PERIOD* $34,567,339 $33,467,772
================================================================================
* Includes undistributed net investment income: $34,706 $44,807
================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
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 trade date; (b) securities are valued
at the mean between the quoted bid and ask prices provided by an independent
pricing service; (c) securities maturing within 60 days are valued at cost plus
accreted discount or minus amortized premium, which approximates value; (d)
gains or losses on the sale of securities are calculated by using the specific
identification method; (e) interest income, adjusted for amortization of premium
and accretion of discount, is recorded on an accrual basis; market discount is
recognized upon the disposition of the security; (f) direct expenses are charged
to the Fund and each class; investment advisory, administration fees and general
fund expenses are allocated on the basis of relative net assets by class; (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, 2000, reclassifications were made to the capital accounts of the Fund
to reflect permanent book/tax differences and income and gains available for
distribution under income tax regulations. Accordingly, reclassifications were
made from total paid-in capital to accumulated net realized gain and
undistributed net investment income in the amounts of $46,020 and $2,153,
respectively. 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.
19 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(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
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup") acts as investment adviser to the Fund. The Fund pays SSBC an
investment advisory fee calculated at an annual rate of 0.30% of the Fund's
average daily net assets. This fee is calculated daily and paid monthly. SSBC
waived $15,488 of the investment advisory fees for the Fund for the six months
ended October 31, 2000.
SSBC 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. SSBC waived $10,326 of its
administration fees for the six months ended October 31, 2000.
Citi Fiduciary Trust Company ("CFTC"), another subsidiary of Citigroup, acts as
the Fund's transfer agent and PFPC Global Fund Services ("PFPC") acts as the
Fund's sub-transfer agent. CFTC receives account fees and asset-based fees that
vary according to the account size and type of account. PFPC is responsible for
shareholder recordkeeping and financial processing for all shareholder accounts
and is paid by CFTC. For the six months ended October 31, 2000, the Fund paid
transfer agent fees of $5,309 to CFTC.
20 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
================================================================================
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, became the Fund's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Fund's portfolio agency
transactions. Certain other broker-dealers continue to sell Fund shares to the
public as members of the selling group.
There are maximum initial sales charges of 4.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
4.50% on Class B shares, which applies if redemption occurs within one year from
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 L shares also have
a 1.00% CDSC, which applies if redemption occurs within the first year of
purchase.
For the six months ended October 31, 2000, SSB and CFBDS received sales charges
of $15,000 and $3,000 on sales of the Fund's Class A and L shares, respectively.
In addition, CDSCs paid to SSB were approximately $18,000 for Class B shares.
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A, B and L shares calculated at an 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 L shares calculated at the
annual rates of 0.50% and 0.55% of the average daily net assets for each class,
respectively. For the six months ended October 31, 2000, total Distribution Plan
fees incurred were:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS L
================================================================================
<S> <C> <C> <C>
Distribution Plan Fees $11,245 $53,242 $10,612
================================================================================
</TABLE>
All officers and one Trustee of the Fund are employees of SSB.
5. Investments
During the six months ended October 31, 2000, 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 $8,337,456
--------------------------------------------------------------------------------
Sales 9,524,082
================================================================================
</TABLE>
21 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
================================================================================
At October 31, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $1,041,114
Gross unrealized depreciation (254,661)
--------------------------------------------------------------------------------
Net unrealized appreciation $ 786,453
================================================================================
</TABLE>
6. Futures Contracts
Initial margin deposits are made upon entering into futures contracts and are
recognized as assets. Securities equal to the initial margin amount are
segregated by the custodian in the name of the broker. Additional securities are
also segregated up to the current market value of the futures contracts. During
the period the futures contract is open, changes in the value of the contract
are recognized as unrealized gains or losses by "marking to market" on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Variation margin payments are received or made and recognized as assets
due from or liabilities due to broker, depending upon whether unrealized gains
or losses are incurred. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the proceeds from (or cost of) the
closing transactions and the Fund's basis in the contract.
The Fund enters into such contracts to hedge a portion of its portfolio. The
Fund bear the market risk that arises from changes in the value of the financial
instruments and securities indices (futures contracts).
At October 31, 2000, the Fund had no open futures contracts.
7. Capital Loss Carryforward
At April 30, 2000, the Fund had, for Federal income tax purposes, approximately
$435,000 of unused capital loss carryforwards available to offset future capital
gains expiring April 30, 2008. To the extent that these carryforward losses are
used to offset capital gains, it is probable that the gains so offset will not
be distributed.
22 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
================================================================================
8. Shares of Beneficial Interest
At October 31, 2000, 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 October 31, 2000, total paid-in capital amounted to the following for each
class:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS L
================================================================================
<S> <C> <C> <C>
Total Paid-in Capital $15,255,751 $15,954,877 $3,416,345
================================================================================
</TABLE>
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 2000 APRIL 30, 2000
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
===============================================================================
<S> <C> <C> <C> <C>
CLASS A
Shares sold 137,734 $ 1,409,026 116,692 $ 1,210,347
Shares issued on
reinvestment 23,296 237,828 47,284 481,813
Shares reacquired (101,356) (1,032,621) (210,943) (2,175,344)
--------------------------------------------------------------------------------
Net Increase (Decrease) 59,674 $ 614,233 (46,967) $ (483,184)
================================================================================
CLASS B
Shares sold 106,917 $ 1,095,108 195,654 $ 2,010,892
Shares issued on
reinvestment 22,947 233,663 47,547 484,029
Shares reacquired (200,518) (2,044,324) (451,127) (4,587,119)
--------------------------------------------------------------------------------
Net Decrease (70,654) $ (715,553) (207,926) $ (2,092,198)
================================================================================
CLASS L
Shares sold 36,293 $ 374,631 82,012 $ 861,671
Shares issued on
reinvestment 5,462 55,729 11,849 120,802
Shares reacquired (23,391) (233,600) (85,135) (858,156)
--------------------------------------------------------------------------------
Net Increase 18,364 $ 196,760 8,726 $ 124,317
================================================================================
</TABLE>
23 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, except where noted:
<TABLE>
<CAPTION>
CLASS A SHARES 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.02 $ 10.87 $ 10.76 $ 10.27 $ 10.26 $ 10.09
-----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income (3) 0.26 0.51 0.49 0.53 0.54 0.55
Net realized and
unrealized gain (loss) 0.32 (0.84) 0.20 0.48 0.16 0.22
-----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.58 (0.33) 0.69 1.01 0.70 0.77
-----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.27) (0.50) (0.49) (0.52) (0.54) (0.54)
Net realized gains -- (0.02) (0.09) -- (0.13) (0.06)
In excess of net realized gains -- -- -- -- (0.02) --
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.27) (0.52) (0.58) (0.52) (0.69) (0.60)
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.33 $ 10.02 $ 10.87 $ 10.76 $ 10.27 $ 10.26
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.85%++ (3.01)% 6.56% 9.97% 7.01% 7.70%
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000s) $ 15,331 $ 14,272 $ 15,994 $ 12,371 $ 9,769 $ 7,520
-----------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (3) 0.86%+ 0.83% 0.87% 0.65% 0.65% 0.66%
Net investment income 5.29+ 5.02 4.49 4.96 5.21 5.21
-----------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 46% 81% 28% 49% 37% 75%
===================================================================================================================================
</TABLE>
(1) For the six months ended October 31, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) The investment adviser and administrator waived all or part of their fees
for the period ended October 31, 2000 and 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 were not waived and expenses were 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(1) 2000 1999 1998 1997 1996 2000(1) 2000 1999 1998 1997 1996
------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $0.01 $0.02 $0.01 $0.05 $0.07 $0.11 1.01%+ 0.98% 0.99% 1.12% 1.41% 1.75%
</TABLE>
++ Total return is not annualized, as it may not be representative of total
return for the year.
+ Annualized.
24 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, except where noted:
<TABLE>
<CAPTION>
CLASS B SHARES 2000(1)(2) 2000(2) 1999(2) 1998 1997 1996
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.00 $ 10.85 $ 10.75 $ 10.26 $ 10.25 $ 10.09
-------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income (3) 0.25 0.46 0.43 0.48 0.48 0.49
Net realized and
unrealized gain (loss) 0.30 (0.84) 0.20 0.48 0.17 0.22
-------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.55 (0.38) 0.63 0.96 0.65 0.71
-------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.25) (0.45) (0.44) (0.47) (0.49) (0.49)
Net realized gains -- (0.02) (0.09) -- (0.13) (0.06)
In excess of net realized gains -- -- -- -- (0.02) --
-------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.25) (0.47) (0.53) (0.47) (0.64) (0.55)
-------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.30 $ 10.00 $ 10.85 $ 10.75 $ 10.26 $ 10.25
-------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.58%++ (3.52)% 5.94% 9.43% 6.48% 7.09%
-------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000s) $ 15,959 $ 16,199 $ 19,833 $ 16,691 $ 13,184 $ 9,861
-------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (3) 1.38%+ 1.35% 1.39% 1.17% 1.17% 1.21%
Net investment income 4.77+ 4.49 3.97 4.44 4.69 4.62
-------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 46% 81% 28% 49% 37% 75%
===============================================================================================================================
</TABLE>
(1) For the six months ended October 31, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) The investment adviser and administrator waived all or part of their fees
for the period ended October 31, 2000 and 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 were not waived and expenses were 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(1) 2000 1999 1998 1997 1996 2000(1) 2000 1999 1998 1997 1996
------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class B $0.01 $0.02 $0.01 $0.05 $0.07 $0.11 1.53%+ 1.49% 1.51% 1.63% 1.93% 2.29%
</TABLE>
++ Total return is not annualized, as it may not be representative of total
return for the year.
+ Annualized.
25 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS (CONTINUED)
================================================================================
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, except where noted:
<TABLE>
<CAPTION>
CLASS L SHARES 2000(1)(2) 2000(2) 1999(2)(3) 1998 1997 1996(4)
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.01 $ 10.86 $ 10.76 $ 10.27 $ 10.26 $ 10.28
--------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income (5) 0.23 0.46 0.43 0.47 0.47 0.45
Net realized and
unrealized gain (loss) 0.33 (0.84) 0.20 0.48 0.17 0.06
--------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.56 (0.38) 0.63 0.95 0.64 0.51
--------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.25) (0.45) (0.44) (0.46) (0.48) (0.47)
Net realized gains -- (0.02) (0.09) -- (0.13) (0.06)
In excess of net realized gains -- -- -- -- (0.02) --
--------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.25) (0.47) (0.53) (0.46) (0.63) (0.53)
--------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.32 $ 10.01 $ 10.86 $ 10.76 $ 10.27 $ 10.26
--------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.65%++ (3.55)% 5.90% 9.38% 6.43% 4.99%++
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000s) $ 3,277 $ 2,997 $ 3,157 $ 2,110 $ 913 $ 614
--------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses (5) 1.41%+ 1.39% 1.43% 1.21% 1.21% 1.25%+
Net investment income 4.74+ 4.46 3.94 4.39 4.66 4.80+
--------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 46% 81% 28% 49% 37% 75%
================================================================================================================================
</TABLE>
(1) For the six months ended October 31, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) For the period from May 16, 1995 (inception date) to April 30, 1996.
(5) The investment adviser and administrator waived all or part of their fees
for the period ended October 31, 2000, 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 were not waived and expenses were 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(1) 2000 1999 1998 1997 1996 2000(1) 2000 1999 1998 1997 1996
------- ---- ---- ---- ---- ---- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class L $0.01 $0.02 $0.01 $0.04 $0.06 $0.10 1.56%+ 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.
26 SMITH BARNEY OREGON MUNICIPALS FUND | 2000 Semi-Annual Report to Shareholders
<PAGE>
SMITH BARNEY
OREGON MUNICIPALS FUND
TRUSTEES
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliott S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon,
CHAIRMAN
Cornelius C. Rose, Jr.
James J. Crisona,
EMERITUS
OFFICERS
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Anthony Pace
Controller
Christina T. Sydor
Secretary
INVESTMENT ADVISER
AND ADMINISTRATOR
SSB Citi Fund Management LLC
DISTRIBUTOR
Salomon Smith Barney Inc.
CUSTODIAN
PFPC Trust Company
TRANSFER AGENT
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
SUB-TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island
02940-9699
<PAGE>
SMITH BARNEY OREGON MUNICIPALS FUND
================================================================================
This report is submitted for the general information of the shareholders of
Smith Barney Oregon Municipals Fund, but it may also be used as sales literature
when preceded or accompanied by the current Prospectus, which gives details
about charges, expenses, investment objectives and operating policies of the
Fund. If used as sales material after January 31, 2001, this report must be
accompanied by performance information for the most recently completed calendar
quarter.
SMITH BARNEY OREGON MUNICIPALS FUND
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
For complete information on any of the Smith Barney Mutual Funds, including
management fees and expenses, call or write your financial professional for a
free prospectus. Read it carefully before you invest or send money.
WWW.SMITHBARNEY.COM/MUTUALFUNDS
SALOMON SMITH BARNEY
-------------------------------------
A member of citigroup [LOGO]
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
FD0820 12/00
