UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-7149
Smith Barney Oregon Municipals Fund
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Christina T. Sydor, Esq.
300 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant's telephone number, including area code:
(800) 451-2010
Date of fiscal year end: April 30
Date of reporting period: April 30, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The Annual Report to Stockholders is filed herewith.
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SMITH BARNEY
OREGON MUNICIPALS FUND
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CLASSIC SERIES | ANNUAL REPORT | APRIL 30, 2003
[SMITH BARNEY MUTUAL FUNDS LOGO]
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Your Serious Money. Professionally Managed. (Registered Trademark) is a
registered service mark of Citigroup Global Markets Inc.
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NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
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WHAT'S INSIDE
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Letter From the Chairman .................... 1
Manager Overview ............................ 2
Fund Performance ............................ 6
Historical Performance ...................... 7
Schedule of Investments ..................... 8
Statement of Assets and Liabilities ......... 16
Statement of Operations ..................... 17
Statements of Changes in Net Assets ......... 18
Notes to Financial Statements ............... 19
Financial Highlights ........................ 26
Independent Auditors' Report ................ 29
Additional Information ...................... 30
Tax Information ............................. 32
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LETTER FROM THE CHAIRMAN
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[PIX OF R. JAY GERKEN]
[GRAPHIC OMITTED]
Chairman, President and
Chief Executive Officer
DEAR SHAREHOLDER,
The philosopher Bertrand Russell famously remarked that, "Change is one thing,
progress is another." You will notice in the following pages that we have begun
to implement some changes to your shareholder report and we will be reflecting
other changes in future reports. Our aim is to make meaningful improvements in
reporting on the management of your Fund and its performance, not just to enact
change for change's sake. Please bear with us during this transition period.
We know that you have questions about fund managers' decisions and plans, and we
want to be sure that you have easy access to the information you need. Keeping
investors informed is, and always will be, one of my top priorities as Chairman
of your Fund. To that end, we encourage you to go to our website:
www.smithbarneymutualfunds.com* where you can find additional insight on your
Fund.
I invite you to read this report in full. Please take the opportunity to talk
to your financial adviser about this report or any other questions or concerns
you have about your Fund and your financial future. As always, thank you for
entrusting your assets to us. We look forward to helping you continue to meet
your financial goals. Please read on to learn more about your Fund's
performance and the Manager's strategy.
Sincerely,
/s/ R. Jay Gerken
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R. Jay Gerken
Chairman, President and Chief Executive Officer
May 14, 2003
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* Matters referenced are not incorporated by reference unless otherwise stated.
1 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
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MANAGER OVERVIEW
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[PIX OF PETER M. COFFEY]
[GRAPHIC OMITTED]
Vice President and
Investment Officer
PERFORMANCE REVIEW
For the 12 months ended April 30, 2003, the total return on Class A shares of
the Smith Barney Oregon Municipals Fund ("Fund"), without sales charges, was
6.29%. Over the same period, the total return on the broad-based Lehman Brothers
Municipal Bond Index ("Lehman Index")(i) was 8.49%. Although the Fund
underperformed its Lipper peer group of Oregon municipal debt funds, which had
an average total return of 7.09%(1), your Fund continued to be among the leaders
of its peer group in terms of the relatively high level of tax-exempt dividend
income it provided throughout the period.(2) Certain investors may be subject to
the federal Alternative Minimum Tax, and state and local taxes may apply.
Capital gains, if any, are fully taxable. Please consult your personal tax
adviser.
Considering that interest rates are at historic lows, we reduced the Fund's
duration (its susceptibility to rising interest rates) for the possibility of a
rising rate environment. This more conservative approach contributed to the
Fund's lower total return versus the Lehman Index. However, if rates were to
eventually rise, we expect the portfolio will be more prudently positioned for
the long term. In addition, recent issue-specific and broader industry
challenges detracted from the Fund's performance relative to the Lehman Index.
We remain committed to seeking long-term results and competitive tax-exempt
yields.
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1 Lipper is a major independent mutual-fund tracking organization. Average
annual returns are based on the 12-month period ended April 30, 2003,
calculated among 19 funds in the Oregon municipal debt fund category with
reinvestment of dividends and capital gains excluding sales charges.
2 Source: Lipper, Inc. Refers to the annualized distribution yield, which is
the Fund's current monthly income dividend rate, annualized, and then divided
by the NAV as of the end of the period. The Fund's annualized distribution
yield of 4.77% (Class A shares) assumes a current monthly income dividend rate
of $0.0425 for 12 months. Yields of other share classes may vary. The average
annualized distribution yield for the funds in this Lipper universe is 3.82%.
These rates are as of April 30, 2003 and are subject to change. Note: The Fund
seeks as high a level of current income exempt from regular and federal income
taxes as is consistent with prudent investing.
2 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
SHIFTS IN SENTIMENT
Although municipal securities performed well overall during the past 12 months,
the market vacillated due to changing tides of investor sentiment throughout
the year. When the period began, lingering concerns about the integrity of
corporate financial reporting practices and the strength of the U.S. economy
prompted many investors to shift money into higher-rated fixed-income
securities. The demand boosted prices of investment-grade municipal bonds
throughout the first half of the period. Following an economic report released
in October that reflected a weak labor market, the Federal Reserve ("Fed") cut
short-term interest rates to a four-decade low to help stimulate the economy.
(Lower rates can encourage consumers and corporations to borrow and
subsequently spend more, thereby increasing economic activity.) That month many
investors reallocated money from investment-grade municipal bonds into riskier
assets anticipating that the economy would improve and help strengthen
companies' credit profiles. These outflows caused Treasuries and municipal
bonds to retreat. However, as concerns about Iraq and the economy resurfaced,
investors again gravitated to higher-rated bond issues.
Declining tax receipts significantly reduced many municipalities' revenues,
prompting many to issue heavy volumes of new bonds. Although the market
absorbed these issues with relative ease and municipal bond prices advanced,
these hefty supplies dampened their returns as the market had to assimilate
this large supply. This contributed to the municipal market's more muted
performance versus U.S. Treasuries and, as a result, municipal and Treasury
yields moved closer to parity.
IMPACT OF CREDIT QUALITY ON THE FUND
Oregon's tax collections were hit hard by the recession and the stock market's
decline due to lower capital gains tax and personal income tax receipts.
Considering Oregon's economic situation, the Fund maintained a very small
position in state-backed General Obligation debt. Instead, it had significant
exposure to bonds in the hospital sector for their higher tax-exempt income
streams. The Fund also held obligations backed by school districts and sizeable
positions in essential service revenue bonds to finance public works, such as
transportation and water-and-sewer sectors, which are supported directly by the
operating revenues of these systems.
3 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
EFFECT OF DEFENSIVE APPROACH ON PERFORMANCE
During the past two years, the bond markets have been driven higher by interest
rate reductions triggered by the Fed (bond prices move opposite to interest
rate movements.) Considering that interest rates are at historic lows, we
reduced the Fund's duration for the possibility of a rising rate environment.
o TARGETING BONDS WITH HIGHER COUPONS AND SELLING THOSE WITH LOWER-COUPONS.
(the fixed interest rate the issuer promises to pay to the bondholder until
maturity). We continued to selectively seek premium-priced higher-coupon
bonds typically issued during previous periods when rates were higher. Their
coupons would be more in line with those on bonds issued in the future if
interest rates and yields were to rise, and these issues tend to be more
resilient than lower-coupon issues in rising rate climates. In particular, we
focused on higher-coupon callable bonds with somewhat longer maturities.
(Callable bonds can be redeemed by the issuer at specified dates prior to the
maturity date.) These issues tend to be less susceptible to interest rate
movements than non-callable bonds with similar maturities, and they offer
higher streams of tax-exempt income than shorter-term bonds.
o SHORTENING MATURITIES. Given that bonds with longer maturities are typically
more sensitive to interest rate movements, we reduced the portfolio's average
call-adjusted effective maturity (ii) from approximately 12 years at the
beginning of the period to about nine years at the period's close. The Fund's
average final maturity, which is longer and does not factor in call
provisions, likewise dropped slightly to under 19 years.
o SELLING FUTURES TO HELP HEDGE AGAINST INTEREST RATE RISK. We maintained a
short position in U.S. Treasury futures, which are exchange-traded contracts
that may be used to help hedge against interest rate movements.
4 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
Thank you for your investment in the Smith Barney Oregon Municipals Fund. We
appreciate that you have entrusted us to manage your money and value our
relationship with you.
Sincerely,
/s/ Peter M. Coffey
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Peter M. Coffey
Vice President and Investment Officer
May 14, 2003
The information provided in this letter by the Manager is not intended to be a
forecast of future events, a guarantee of future results or investment advice.
Views expressed may differ from those of the firm as a whole.
Portfolio holdings and breakdowns are as of April 30, 2003 and are subject to
change. Please refer to pages 8 through 12 for a list and percentage breakdown
of the Fund's holdings.
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i The Lehman Index is a broad measure of the municipal bond market with
maturities of at least one year. Please note that an investor cannot invest
directly in an index.
ii This average is based upon a "call-adjusted" effective maturity, which
factors in the date at which a bond may be called by the issuer (as an
alternative to the maturity date) provided that the yield on the call date is
lower than that on the maturity date. Adjusting for call refers to the
consideration of whether or not a bond is callable prior to maturity and
trading at a premium to face value when determining its effective maturity
date.
5 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
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AVERAGE ANNUAL TOTAL RETURNS(1) (UNAUDITED)
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WITHOUT SALES CHARGES(2)
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CLASS A CLASS B CLASS L
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Twelve Months Ended 4/30/03 6.29% 5.53% 5.57%
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Five Years Ended 4/30/03 5.14 4.56 4.53
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Inception* through 4/30/03++ 6.85 6.29 5.45
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WITH SALES CHARGES(3)
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CLASS A CLASS B CLASS L
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Twelve Months Ended 4/30/03 2.04% 1.03% 3.49%
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Five Years Ended 4/30/03 4.28 4.39 4.32
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Inception* through 4/30/03++ 6.37 6.29 5.32
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CUMULATIVE TOTAL RETURNS(1) (UNAUDITED)
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WITHOUT SALES CHARGES(1)
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Class A (Inception* through 4/30/03)++ 80.85%
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Class B (Inception* through 4/30/03)++ 72.46
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Class L (Inception* through 4/30/03) 52.52
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(1) The returns shown do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
(2) 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.
(3) 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.
* The inception dates for Class A, B and L shares are May 23, 1994, May 23,
1994 and May 16, 1995, respectively.
++ 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 as follows:
CLASS A CLASS B
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Inception* through 4/30/03:
Average Annual Total Returns Without Sales Charges 6.58% 5.97%
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Average Annual Total Returns With Sales Charges 6.09 5.97
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Cumulative Total Returns (Inception* through 4/30/03) 76.83% 67.92%
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6 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
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HISTORICAL PERFORMANCE (UNAUDITED)
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VALUE OF $10,000 INVESTED IN CLASS A AND B SHARES OF
SMITH BARNEY OREGON MUNICIPALS FUND VS.
LEHMAN BROTHERS MUNICIPAL BOND INDEX AND THE LIPPER OREGON
MUNICIPAL DEBT FUNDS AVERAGE+
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May 1994 -- April 2003
[GRAPHIC OMITTED]
SMITH BARNEY OREGON SMITH BARNEY OREGON LEHMAN BROTHERS LIPPER OREGON
MUNICIPALS FUND -- MUNICIPALS FUND -- MUNICIPAL MUNICIPAL DEBT
DATE CLASS A SHARES CLASS B SHARES BOND INDEX FUNDS AVERAGE
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5/23/94 9,598 10,000 10,000 10,000
4/95 10,662 11,059 10,574 10,577
4/96 11,483 11,843 11,414 11,254
4/97 12,288 12,610 12,172 11,908
4/98 13,512 13,799 13,305 12,935
4/99 14,398 14,620 14,230 13,693
4/00 13,965 14,106 14,099 13,327
4/01 15,169 15,242 15,561 14,515
4/02 16,332 16,342 17,373 15,449
4/30/03 17,358 17,246 18,848 16,543
+ 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% initial
sales charge at the time of investment for Class A shares. It also assumes
reinvestment of dividends and capital gains, if any, at net asset value
through April 30, 2003. 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 Lipper Oregon Municipal Debt Funds Average is
composed of an average of the Fund's peer group of 19 mutual funds investing
in Oregon municipal securities as of April 30, 2003. Please note that an
investor cannot invest directly in an index. 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. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
ALL FIGURES REPRESENT PAST PERFORMANCE AND ARE NOT A GUARANTEE OF FUTURE
RESULTS. The performance data represents past performance including the
investment return and principal value of an investment, which will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost.
7 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
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SCHEDULE OF INVESTMENTS APRIL 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
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EDUCATION -- 23.1%
Clackamas County GO:
$ 500,000 AA Canby School District No. 86, School Board Guaranty,
5.250% due 6/15/20 $ 532,175
500,000 Aaa* Lake Oswego School District No. 7J, MBIA-Insured,
5.000% due 6/1/26 517,090
300,000 Aaa* Deschutes County GO, Administrative School District No. 1,
Series A, FSA-School Board Guaranty,
5.500% due 6/15/18 332,430
850,000 AA Forest Grove, Campus Improvement & Refunding Revenue,
Pacific University, Radian-Insured, 6.300% due 5/1/25 958,783
500,000 AAA Jackson County GO, Central Point School District No. 6,
FGIC-School Board Guaranty, 5.250% due 6/15/20 531,330
500,000 AAA Jefferson County GO, School District No. 509J, FGIC-School
Board Guaranty, 5.250% due 6/15/16 551,325
2,000,000 Aaa* Lane County GO, School District No. 4J, Eugene, FSA-Insured,
5.000% due 7/1/17 (b) 2,148,780
500,000 Aaa* Multnomah-Clackamas Counties GO, Centennial School
District No. 28-302, FGIC-School Board Guaranty,
5.000% due 6/15/21 522,340
600,000 BBB+ Multnomah County Educational Facilities Revenue, (University
of Portland Project), 6.000% due 4/1/25 640,050
500,000 AA Multnomah County GO, Reynolds School District No. 7,
School Board Guaranty, 5.125% due 6/15/20 527,970
Oregon State Health, Housing, Educational & Cultural
Facilities Authority, Series A:
1,000,000 Baa1* Linfield College Project, 6.625% due 10/1/20 1,109,040
Western States Chiropractic, ACA-Insured:
785,000 A 6.350% due 12/1/20 868,100
545,000 A 6.350% due 12/1/25 595,244
500,000 AAA Tillamook County GO, School District No. 9, FSA-School
Board Guaranty, 5.250% due 6/15/22 533,530
500,000 A University of the Virgin Islands, Refunding & Improvement
Bonds, Series A, ACA-Insured, 6.250% due 12/1/29 544,790
500,000 Aaa* Washington County GO, Forest Grove School District No. 15,
FSA-School Board Guaranty, 5.000% due 6/15/21 522,340
1,135,000 Aaa* Washington, Multnomah & Yamhill Counties GO, School
District No. 1J, MBIA-Insured, 5.125% due 6/1/17 1,224,756
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12,660,073
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ESCROWED TO MATURITY -- 0.3%
135,000 AAA Puerto Rico Commonwealth, Aqueduct & Sewer Authority
Revenue, 10.25% due 7/1/09 171,798
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FINANCE -- 2.1%
1,000,000 BBB-- Virgin Islands Public Finance Authority Revenue, Series A,
Gross Receipts Taxes, 6.500% due 10/1/24 1,127,200
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SEE NOTES TO FINANCIAL STATEMENTS.
8 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
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SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
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GENERAL OBLIGATION -- 7.7%
$ 500,000 AAA Lane County Bethel School District No. 52, FGIC-Insured,
6.400% due 12/1/09 $ 582,430
500,000 NR Northern Mariana Islands Commonwealth, Series A,
7.375% due 6/1/30 521,295
450,000 AA Oregon State, Veterans Welfare, Series 80A,
5.700% due 10/1/32 466,655
2,000,000 AAA Puerto Rico Commonwealth, RITES-PA 931, XLCA-Insured,
9.136% due 7/1/17 (b) 2,634,080
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4,204,460
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HOSPITALS -- 16.9%
Clackamas County Hospital Facility Authority Revenue:
500,000 AA Gross-Williamette Falls Hospital Project, Radian-Insured,
5.500% due 4/1/22 540,140
Legacy Health System:
500,000 AA 5.750% due 5/1/16 547,520
1,000,000 AA 5.250% due 5/1/21 1,031,060
1,000,000 Baa2* Williamette Falls Hospital Project, 6.000% due 4/1/19 1,023,930
1,000,000 AA Hillsboro Hospital Facility Authority Revenue, (Tuality
Healthcare Project), Radian-Insured, 5.375% due 10/1/31 1,042,150
Klamath Falls Inter-Community Hospital Authority Revenue:
595,000 BBB Gross-Merle West Medical Center Project,
7.100% due 9/1/24 652,447
1,000,000 BBB Merle West Medical Center Project, 6.250% due 9/1/31 (b) 1,043,960
Puerto Rico Industrial, Tourist, Educational, Medical &
Environmental Control Facilities Financing Authority,
Series A:
1,000,000 BBB-- Mennonite General Hospital Project,
5.625% due 7/1/27 831,660
1,000,000 BBB-- Ryder Memorial Hospital Project, 6.700% due 5/1/24 (b) 1,010,730
Umatilla County Hospital Facility Authority Revenue, Catholic
Health Initiatives, Series A:
1,000,000 AA 5.750% due 12/1/20 1,058,120
500,000 AA 5.500% due 3/1/22 516,905
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9,298,622
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HOUSING: MULTI-FAMILY -- 8.0%
470,000 NR Multi-Family Housing Revenue Bond Pass-Through
Certificates Beneficial Ownership, Pacific Tower
Apartments, Series 6, 6.050% due 11/1/34 470,949
215,000 A+ Oregon State Housing & Community Services Department,
Housing Finance Revenue, Assisted or Insured Multi-Unit,
Series A, FHA-Insured, 6.800% due 7/1/13 215,776
SEE NOTES TO FINANCIAL STATEMENTS.
9 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
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SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
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HOUSING: MULTI-FAMILY -- 8.0% (CONTINUED)
Portland Housing Authority, Multi-Family Revenue:
$ 500,000 Aa1* Cherry Blossom Apartments, Series A,
GNMA-Collateralized, 6.100% due 12/20/26 (b)(c) $ 528,005
850,000 Aa2* Cherry Ridge Project, LOC-U.S. Bank Trust N.A.,
6.250% due 5/1/12 (b)(c) 877,506
Washington County Housing Authority, Multi-Family
Revenue:
1,000,000 NR Affordable Housing Pool, Series A, 6.125% due 7/1/29 991,530
1,000,000 Aa2* Bethany Meadows Project, LOC-U.S. Bank N.A.,
6.250% due 8/1/13 (c) 1,051,500
220,000 AAA Terrace View Project, FNMA-Collateralized,
5.500% due 12/1/17 (c) 228,710
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4,363,976
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HOUSING: SINGLE-FAMILY -- 3.6%
Oregon State Housing & Community Services Department,
Mortgage Revenue, Single-Family Mortgage Program:
Series B:
475,000 Aa2* 6.250% due 7/1/29 (c) 501,078
250,000 Aa2* Pool-Insured, 6.875% due 7/1/28 254,070
230,000 Aa2* Series D, 6.500% due 7/1/24 (c) 237,443
495,000 Aa2* Series F, 5.550% due 7/1/30 510,201
295,000 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 (c) 307,304
185,000 AAA Virgin Islands HFA, Single-Family Revenue Bonds, GNMA
Mortgage-Backed Securities Program, Series A,
GNMA-Collateralized, 6.450% due 3/1/16 (c) 192,916
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2,003,012
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INDUSTRIAL DEVELOPMENT -- 1.4%
1,000,000 BB+ Oregon State EDR, Georgia-Pacific Corp., Series CLVII,
6.350% due 8/1/25 (c) 764,010
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LIFE CARE SYSTEMS -- 4.7%
Clackamas County Hospital Facility Authority Revenue:
2,000,000 NR Mary's Woods at Marylhurst Inc., Sr. Living Facility,
Series A, 6.625% due 5/15/29 (d) 2,085,120
500,000 NR Robison Jewish Home Project, 6.250% due 10/1/28 500,420
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2,585,540
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MISCELLANEOUS -- 1.6%
300,000 NR Lebanon Urban Renewal Agency, 5.500% due 6/1/14 324,711
500,000 A Virgin Islands Public Finance Authority Revenue, Sr. Lien,
Series A, ACA/CBI-Insured, 5.500% due 10/1/18 527,170
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851,881
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SEE NOTES TO FINANCIAL STATEMENTS.
10 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
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SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2003
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
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PRE-REFUNDED (D) -- 2.5%
$ 500,000 AAA Oregon State Department of Administrative Services, COP,
Series A, AMBAC-Insured, (Call 5/1/10 @ 101),
6.250% due 5/1/17 (e) $ 603,720
430,000 NR Oregon State Health, Housing, Educational & Cultural
Facilities Authority, Oak Tree Foundation Project, Series A,
(Call 5/1/05 @ 101), 6.100% due 5/1/15 473,688
300,000 AAA Portland Housing Authority, Multi-Family Revenue, (Fairview
Woods Project), Series A, Sr. Lien, (Call 8/1/04 @ 100),
6.875% due 8/1/14 (b) 320,982
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1,398,390
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PUBLIC FACILITIES -- 2.2%
Oregon State Bond Bank Revenue:
500,000 AAA Economic & Community Development Department,
Series B, MBIA-Insured, 5.500% due 1/1/26 535,320
50,000 A2* Economic Development Department, Series 1,
6.700% due 1/1/15 51,232
1,000,000 AAA Puerto Rico Public Buildings Authority Revenue Guaranteed,
Convertible Capital Appreciation, Series D,
AMBAC-Insured, zero coupon due 7/1/31 647,070
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1,233,622
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SOLID WASTE -- 3.7%
1,975,000 NR Wasco County Solid Waste Disposal Revenue, (Waste
Connections Inc. Project), 7.250% due 3/1/21 (c) 2,045,804
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TRANSPORTATION -- 10.5%
Oregon State Department of Transportation, Highway User
Tax Revenue:
500,000 AA+ 5.375% due 11/15/20 539,245
Series A:
1,000,000 AA+ 5.500% due 11/15/18 (b) 1,125,450
1,000,000 AA+ 5.500% due 11/15/20 (b) 1,107,000
1,000,000 AAA Port of Portland Airport Revenue, Portland International
Airport, Series B, AMBAC-Insured, 5.500% due 7/1/18 (b)(c) 1,055,530
1,250,000 AA-- Port of Portland Special Obligation Revenue, (Horizon Air
Industries Inc. Project), LOC-Bank of America,
1.280% due 6/15/27 (f) 1,250,000
500,000 CCC Puerto Rico Port Authority Revenue, Special Facilities,
American Airlines Inc., Series A, 6.250% due 6/1/26 (c) 165,025
500,000 AA+ Tri-County Metropolitan Transportation District Revenue,
Series A, 5.375% due 8/1/20 537,925
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5,780,175
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SEE NOTES TO FINANCIAL STATEMENTS.
11 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2003
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------
UTILITIES -- 4.8%
$1,500,000 Aaa* Emerald Peoples Utility District, Refunding, Series A,
FSA-Insured, 5.250% due 11/1/20 $ 1,616,655
1,000,000 BB+++ Klamath Falls Electric Revenue, Klamath Cogeneration,
Sr. Lien, 6.000% due 1/1/25 921,560
100,000 NR Western Generation Agency, Cogeneration Project Revenue,
(Wauna Cogeneration Project), Series B,
7.250% due 1/1/09 (c) 93,782
- -----------------------------------------------------------------------------------------------------
2,631,997
- -----------------------------------------------------------------------------------------------------
WATER AND SEWER -- 6.9%
360,000 AA-- Clackamas County Service District No. 1, Sewer Revenue,
6.375% due 10/1/14 416,358
500,000 AAA Eugene Water Revenue, Utility System, FSA-Insured,
5.875% due 8/1/30 557,055
1,000,000 AAA Klamath Falls Wastewater Revenue, AMBAC-Insured,
5.500% due 6/1/25 (b) 1,067,450
600,000 Aa3* Port of Umatilla Water Revenue, LOC-ABN AMRO Bank N.V.,
6.650% due 8/1/22 (b)(c) 632,658
1,000,000 AAA Portland, Sewer System Revenue, Refunding, Second Lien,
Series A, FSA-Insured, 5.250% due 6/1/19 (b) 1,091,490
- -----------------------------------------------------------------------------------------------------
3,765,011
- -----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $52,161,876**) $ 54,885,571
- -----------------------------------------------------------------------------------------------------
(a) All ratings are by Standard & Poor's Ratings Service, except for those
identified by an asterisk (*), which are rated by Moody's Investors Service
and those identified by a double dagger (++), which are rated by Fitch
Ratings.
(b) All or a portion of this security is segregated for open futures contracts
commitments and extended settlements.
(c) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(d) Pre-Refunded bonds are escrowed with U.S. government securities and are
considered by the investment adviser to be triple-A rated even if the issuer
has not applied for new ratings.
(e) All or a portion of this security is held as collateral for open futures
contracts commitments.
(f) Inverse floating rate security-coupon varies inversely with level of short
term tax exempt interest rates.
** Aggregate cost for Federal income tax purposes is $52,289,384.
See pages 13 through 15 for definitions of ratings and certain security
descriptons.
SEE NOTES TO FINANCIAL STATEMENTS.
12 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
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
"CCC" 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.
BB, B, -- Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded, on balance, as predominantly
CCC, speculative with respect to capacity to pay interest and repay principal in accordance with
CC the terms of the obligation. "BB" represents the lowest degree of speculation and "C" the
and C highest degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighted by large uncertainties or major risk
exposures to adverse conditions.
Moody's Investors Service ("Moody's") -- Numerical modifiers 1, 2 and 3 may be
applied to each generic rating from "Aa" to "Caa," 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.
B -- Bonds rated "B" generally lack characteristics of desirable investments. Assurance of
interest and principal payments or of maintenance of other terms of the contract over any
long period of time may be small.
Caa -- Bonds rated "Caa" are of poor standing. These issues may be in default, or present elements
of danger may exist with respect to principal or interest.
13 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
BOND RATINGS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
Fitch Ratings ("Fitch") -- Ratings from "BBB" to "BB" may be modified by the
addition of a plus (+) or minus (-) sign to show relative standings with the
major rating categories.
AAA -- Bonds rated AAA by Fitch have the lowest expectation of credit risk. The obligor has an
exceptionally strong capacity for timely payment of financial commitments which is
highly unlikely to be adversely affected by foreseeable events.
BBB -- Bonds rated BBB by Fitch currently have a lower expectation of credit risk. The capacity
for timely payment of financial commitments is considered to be adequate. Adverse
changes in economic conditions and circumstances, however, are more likely to impair
this capacity. This is the lowest investment grade category assigned by Fitch.
BB -- Bonds rated BB by Fitch carry the possibility of credit risk developing, particularly as the
result of adverse economic change over time. Business or financial alternatives may,
however, be available to allow financial commitments to be met. Securities rated in this
category are not considered by Fitch to be investment grade.
NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's or Fitch.
- --------------------------------------------------------------------------------
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
ACA -- American Capital Assurance
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CBI -- Certificate of Bond Issuance
CGIC -- Capital Guaranty Insurance
Company
CHFCLI -- California Health Facility
Construction Loan Insurance
CONNIE -- College Construction Loan
LEE 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
14 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
SECURITY DESCRIPTIONS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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
MFH -- Multi-Family Housing
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
XLCA -- XL Capital Assurance Inc.
15 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 2003
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $52,161,876) $ 54,885,571
Cash 62,390
Interest receivable 938,040
Receivable for Fund shares sold 16,674
- ----------------------------------------------------------------------------------------------
TOTAL ASSETS 55,902,675
- ----------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 1,605,959
Payable to broker -- variation margin 103,125
Payable for Fund shares purchased 9,626
Investment advisory fee payable 9,612
Distribution fees payable 8,296
Deferred compensation payable 5,707
Administration fee payable 5,695
Accrued expenses 47,274
- ----------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,795,294
- ----------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 54,107,381
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Par value of shares of beneficial interest $ 5,072
Capital paid in excess of par value 52,723,353
Undistributed net investment income 9,610
Accumulated net realized loss from security transactions and futures contracts (1,387,474)
Net unrealized appreciation of investments and futures contracts 2,756,820
- ----------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 54,107,381
- ----------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Class A 2,601,140
- ------------------------------------------------------------------------------------------------
Class B 1,478,267
- ------------------------------------------------------------------------------------------------
Class L 992,208
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE:
Class A (and redemption price) $10.70
- ------------------------------------------------------------------------------------------------
Class B * $10.63
- ------------------------------------------------------------------------------------------------
Class L ** $10.65
- ------------------------------------------------------------------------------------------------
MAXIMUM PUBLIC OFFERING PRICE PER SHARE:
Class A (net asset value plus 4.17% of net asset value per share) $11.15
- ------------------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $10.76
- ------------------------------------------------------------------------------------------------
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed within one year from 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 Note 4).
SEE NOTES TO FINANCIAL STATEMENTS.
16 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2003
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 2,962,727
- ------------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 9) 209,868
Investment advisory fee (Note 4) 157,134
Administration fee (Note 4) 104,756
Shareholder communications (Note 9) 67,268
Custody 42,436
Audit and legal 37,143
Shareholder servicing fees (Note 9) 12,273
Trustees' fees 12,131
Registration fees 3,698
Other 4,124
- ------------------------------------------------------------------------------------
TOTAL EXPENSES 650,831
Less: Investment advisory and administration fee waivers (Note 4) (78,567)
- ------------------------------------------------------------------------------------
NET EXPENSES 572,264
- ------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,390,463
- ------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 5 AND 6):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 323,369
Futures contracts (884,536)
- ------------------------------------------------------------------------------------
NET REALIZED LOSS (561,167)
- ------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments and Futures Contracts:
Beginning of year 1,712,663
End of year 2,756,820
- ------------------------------------------------------------------------------------
INCREASE IN NET UNREALIZED APPRECIATION 1,044,157
- ------------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS AND FUTURES CONTRACTS 482,990
- ------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $ 2,873,453
- ------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
17 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED APRIL 30,
- --------------------------------------------------------------------------------
2003 2002
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,390,463 $ 2,048,090
Net realized loss (561,167) (184,754)
Increase in net unrealized appreciation 1,044,157 1,149,112
- --------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS 2,873,453 3,012,448
- --------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTES 3 AND 10):
Net investment income (2,380,361) (2,146,418)
In excess of net investment income (40,392) --
- --------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (2,420,753) (2,146,418)
- --------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 11):
Net proceeds from sale of shares 13,939,846 15,177,692
Net asset value of shares issued for reinvestment of dividends 1,380,720 1,235,386
Cost of shares reacquired (8,843,569) (7,053,936)
- --------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 6,476,997 9,359,142
- --------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 6,929,697 10,225,172
NET ASSETS:
Beginning of year 47,177,684 36,952,512
- --------------------------------------------------------------------------------------------------------
END OF YEAR* $54,107,381 $47,177,684
- --------------------------------------------------------------------------------------------------------
* Includes undistributed (overdistributed) net investment income of: $ 9,610 $ (1,087)
- --------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
18 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Smith Barney Oregon Municipals Fund ("Fund"), a Massachusetts business trust,
is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities are
valued at the mean between the quoted bid and asked 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; (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 accounting principles generally accepted in the United States of
America. At April 30, 2003, reclassifications were made to the Fund's capital
accounts to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations. Accordingly, a
portion of accumulated net realized loss and over-distributed net investment
income amounting to $25,504 and $40,987, respectively, has been reclassified to
paid-in capital. Net investment income, net realized gains and net assets were
not affected by this adjustment; 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 | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. Fund Concentration
Since the Fund invests primarily in obligations of issuers within Oregon, it is
subject to possible concentration risks associated with economic, political or
legal developments or industrial or regional matters specifically affecting
Oregon.
3. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from municipal
securities, which is exempt from regular Federal income tax and from designated
state income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
It is the Fund's policy to distribute dividends monthly. Capital gains
distributions, if any, are taxable to shareholders, and are declared and paid
at least annually. Additional taxable distributions may be made if necessary to
avoid a Federal excise tax.
4. Investment Advisory Agreement, Administration Agreement and Affiliated
Transactions
Smith Barney Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary
of Citigroup Inc. ("Citigroup"), acts as investment adviser to the Fund. The
Fund pays SBFM 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. SBFM voluntarily waived $47,140 of its investment advisory fee for the
year ended April 30, 2003.
SBFM 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. SBFM voluntarily waived
$31,427 of its administration fee for the year ended April 30, 2003.
Citicorp Trust Bank, fsb. ("CTB"), formerly known as Travelers Bank & Trust,
fsb., another subsidiary of Citigroup, acts as the Fund's transfer agent. PFPC
Global Fund Services ("PFPC") acts as the Fund's sub-transfer agent. CTB
receives account fees and asset-based fees that vary according to the size and
type of account. PFPC is
20 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
responsible for shareholder recordkeeping and financial processing for all
shareholder accounts and is paid by CTB. For the year ended April 30, 2003, the
Fund paid transfer agent fees of $13,095 to CTB.
Citigroup Global Markets Inc. ("CGM"), formerly known as Salomon Smith Barney
Inc., another indirect wholly-owned subsidiary of Citigroup, and 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. In certain cases, Class A shares have a 1.00% CDSC, which applies if
redemption occurs within the first year of purchase. This CDSC only applies to
those purchases of Class A shares, which, when combined with current holdings
of Class A shares, equal or exceed $500,000 in the aggregate. These purchases
do not incur an initial sales charge.
For the year ended April 30, 2003, CGM received sales charges of approximately
$28,000 and $51,000 on sales of the Fund's Class A and L shares, respectively.
In addition, for the year ended April 30, 2003, CDSCs paid to CGM were
approximately $29,000 and $4,000 for Class B and L shares, respectively.
All officers and one Trustee of the Fund are employees of Citigroup or its
affiliates.
5. Investments
During the year ended April 30, 2003 the aggregate cost of purchases and
proceeds from sales of investments (including maturities of long-term
securities, but excluding short-term securities) were as follows:
- --------------------------------------------------------------------------------
Purchases $16,049,024
- --------------------------------------------------------------------------------
Sales 9,874,441
- --------------------------------------------------------------------------------
21 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
At April 30, 2003, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were as follows:
- --------------------------------------------------------------------------------
Gross unrealized appreciation $3,279,312
Gross unrealized depreciation (683,125)
- --------------------------------------------------------------------------------
Net unrealized appreciation $2,596,187
- --------------------------------------------------------------------------------
6. Futures Contracts
Initial margin deposits made upon entering into futures contracts 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 bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At April 30, 2003, the Fund had the following open futures contracts:
NUMBER OF BASIS MARKET UNREALIZED
CONTRACTS EXPIRATION VALUE VALUE GAIN
- ---------------------------------------------------------------------------------------------------
To Sell:
20 year, 6.000%
U.S. Treasury Bond 110 6/03 $12,576,563 $12,543,438 $33,125
- ---------------------------------------------------------------------------------------------------
7. Capital Loss Carryforward
At April 30, 2003, the Fund had, for Federal income tax purposes, approximately
$862,000 of unused capital loss carryforwards available to offset future
capital gains, if any. To the extent that these carryforward losses are used to
offset capital gains, it is probable that the gains so offset will not be
distributed. The amount and expiration of the carryforwards are indicated on
the following page.
22 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Expiration occurs on April 30 of the year indicated:
2008 2009 2011
- --------------------------------------------------------------------------------
Carryforward amounts $279,000 $238,000 $345,000
- --------------------------------------------------------------------------------
In addition, the Fund had $492,060 of capital losses realized after October 31,
2002, which were deferred for tax purposes to the first day of the following
fiscal year.
8. Income Tax Information and Distributions to Shareholders
At April 30, 2003, the tax basis components of distributable earnings were:
- --------------------------------------------------------------------------------
Accumulated capital losses $ (862,289)
- --------------------------------------------------------------------------------
Unrealized appreciation 2,596,187
- --------------------------------------------------------------------------------
The difference between book basis and tax basis unrealized appreciation and
depreciation is attributable primarily to mark-to-market of futures contracts
and the treatment of accretion of discounts.
The tax character of distributions paid during the year ended April 30, 2003
was:
- --------------------------------------------------------------------------------
Tax-exempt income $2,376,688
Ordinary income 44,065
- --------------------------------------------------------------------------------
Total $2,420,753
- --------------------------------------------------------------------------------
9. Class Specific Expenses
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 an
annual rate of 0.50% and 0.55% of the average daily net assets of each class,
respectively. For the year ended April 30, 2003, total Distribution Plan fees
incurred, which are accrued daily and paid monthly, were as follows:
CLASS A CLASS B CLASS L
- --------------------------------------------------------------------------------
Distribution Plan Fees $40,492 $108,011 $61,365
- --------------------------------------------------------------------------------
23 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
For the year ended April 30, 2003, total Shareholder Servicing fees were as
follows:
CLASS A CLASS B CLASS L
- --------------------------------------------------------------------------------
Shareholder Servicing Fees $5,003 $5,312 $1,958
- --------------------------------------------------------------------------------
For the year ended April 30, 2003, total Shareholder Communication expenses
were as follows:
CLASS A CLASS B CLASS L
- --------------------------------------------------------------------------------
Shareholder Communication Expenses $27,854 $28,696 $10,718
- --------------------------------------------------------------------------------
10. Distributions Paid to Shareholders by Class
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
- --------------------------------------------------------------------------------
CLASS A
Net investment income $1,295,296 $ 1,103,015
In excess of net investment income 21,980 --
- --------------------------------------------------------------------------------
Total $1,317,276 $ 1,103,015
- --------------------------------------------------------------------------------
CLASS B
Net investment income $ 709,417 $ 811,281
In excess of net investment income 12,038 --
- --------------------------------------------------------------------------------
Total $ 721,455 $ 811,281
- --------------------------------------------------------------------------------
CLASS L
Net investment income $ 375,648 $ 232,122
In excess of net investment income 6,374 --
- --------------------------------------------------------------------------------
Total $ 382,022 $ 232,122
- --------------------------------------------------------------------------------
11. Shares of Beneficial Interest
At April 30, 2003, 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.
24 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
YEAR ENDED YEAR ENDED
APRIL 30, 2003 APRIL 30, 2002
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
CLASS A
Shares sold 494,295 $ 5,307,517 873,637 $ 9,190,985
Shares issued on reinvestment 67,546 722,152 54,030 570,859
Shares reacquired (245,716) (2,628,613) (255,125) (2,698,019)
- ---------------------------------------------------------------------------------------------------
Net Increase 316,125 $ 3,401,056 672,542 $ 7,063,825
- ---------------------------------------------------------------------------------------------------
CLASS B
Shares sold 323,629 $ 3,453,713 319,587 $ 3,369,948
Shares issued on reinvestment 38,971 414,147 49,219 517,648
Shares reacquired (501,978) (5,322,004) (360,873) (3,794,561)
- ---------------------------------------------------------------------------------------------------
Net Increase (Decrease) (139,378) $ (1,454,144) 7,933 $ 93,035
- ---------------------------------------------------------------------------------------------------
CLASS L
Shares sold 483,186 $ 5,178,616 248,019 $ 2,616,759
Shares issued on reinvestment 22,960 244,421 13,950 146,879
Shares reacquired (83,771) (892,952) (53,470) (561,356)
- ---------------------------------------------------------------------------------------------------
Net Increase 422,375 $ 4,530,085 208,499 $ 2,202,282
- ---------------------------------------------------------------------------------------------------
25 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, unless otherwise noted:
CLASS A SHARES 2003(1) 2002(1) 2001(1) 2000(1) 1999(1)
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $10.57 $10.33 $10.02 $10.87 $10.76
- ------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(2)(3) 0.52 0.53 0.54 0.51 0.49
Net realized and unrealized
gain (loss)(3) 0.13 0.25 0.31 (0.84) 0.20
- ------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.65 0.78 0.85 (0.33) 0.69
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.51) (0.54) (0.54) (0.50) (0.49)
Net realized gains -- -- -- (0.02) (0.09)
In excess of net investment income (0.01) -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Total Distributions (0.52) (0.54) (0.54) (0.52) (0.58)
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.70 $10.57 $10.33 $10.02 $10.87
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN 6.29% 7.67% 8.62% (3.01)% 6.56%
- ------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $27,820 $24,163 $16,657 $14,272 $15,994
- ------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(2) 0.81% 0.77% 0.82% 0.83% 0.87%
Net investment income(3) 4.85 4.98 5.23 5.02 4.49
- ------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 19% 20% 35% 81% 28%
- ------------------------------------------------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) The investment adviser and administrator voluntarily waived all or part
of their fees for the five years ended April 30, 2003. 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:
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
------------------------------------------------------ ------------------------------------------------------
2003 2002 2001 2000 1999 2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Class A $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.01 0.96% 0.92% 0.97% 0.98% 0.99%
(3) Effective May 1, 2001, the Fund adopted a change in the accounting method
that requires the Fund to amortize premiums and accrete all discounts.
Without the adoption of this change, for the year ended April 30, 2002,
the ratio of net investment income to average net assets would have been
4.99%. Per share, ratios and supplemental data for the periods prior to
May 1, 2001 have not been restated to reflect this change in
presentation. In addition, the impact of this change to net investment
income and net realized and unrealized gain was less than $0.01.
26 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, unless otherwise noted:
CLASS B SHARES 2003(1) 2002(1) 2001(1) 2000(1) 1999(1)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $10.52 $10.29 $10.00 $10.85 $10.75
- ----------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(2)(3) 0.45 0.47 0.48 0.46 0.43
Net realized and unrealized
gain (loss)(3) 0.12 0.26 0.31 (0.84) 0.20
- ----------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.57 0.73 0.79 (0.38) 0.63
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.45) (0.50) (0.50) (0.45) (0.44)
Net realized gains -- -- -- (0.02) (0.09)
In excess of net investment income (0.01) -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.46) (0.50) (0.50) (0.47) (0.53)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.63 $10.52 $ 10.29 $10.00 $10.85
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.53% 7.21% 8.06% (3.52)% 5.94%
- ----------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $15,718 $17,014 $16,572 $16,199 $19,833
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(2) 1.39% 1.29% 1.35% 1.35% 1.39%
Net investment income(3) 4.26 4.46 4.72 4.49 3.97
- ----------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 19% 20% 35% 81% 28%
- ----------------------------------------------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) The investment adviser and administrator voluntarily waived all or part
of their fees for the five years ended April 30, 2003. 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:
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
------------------------------------------------------ ----------------------------------------------------
2003 2002 2001 2000 1999 2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Class B $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.01 1.54% 1.44% 1.49% 1.49% 1.51%
(3) Effective May 1, 2001, the Fund adopted a change in the accounting method
that requires the Fund to amortize premiums and accrete all discounts.
Without the adoption of this change, for the year ended April 30, 2002,
the ratio of net investment income to average net assets would have been
4.47%. Per share, ratios and supplemental data for the periods prior to
May 1, 2001 have not been restated to reflect this change in
presentation. In addition, the impact of this change to net investment
income and net realized and unrealized gain was less than $0.01.
27 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended April 30, unless otherwise noted:
CLASS L SHARES 2003(1) 2002(1) 2001(1) 2000(1) 1999(1)(2)
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.53 $ 10.31 $ 10.01 $ 10.86 $ 10.76
- ------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
Net investment income(3)(4) 0.46 0.46 0.48 0.46 0.43
Net realized and unrealized
gain (loss)(4) 0.12 0.26 0.32 (0.84) 0.20
- ------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 0.58 0.72 0.80 (0.38) 0.63
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.45) (0.50) (0.50) (0.45) (0.44)
Net realized gains -- -- -- (0.02) (0.09)
In excess of net investment income (0.01) -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Total Distributions (0.46) (0.50) (0.50) (0.47) (0.53)
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 10.65 $ 10.53 $ 10.31 $ 10.01 $ 10.86
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.57% 7.05% 8.10% (3.55)% 5.90%
- ------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000S) $10,569 $ 6,001 $ 3,724 $ 2,997 $ 3,157
- ------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses(3) 1.39% 1.35% 1.39% 1.39% 1.43%
Net investment income(4) 4.28 4.39 4.67 4.46 3.94
- ------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 19% 20% 35% 81% 28%
- ------------------------------------------------------------------------------------------------------------
(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) The investment adviser and administrator voluntarily waived all or part
of their fees for the five years ended April 30, 2003. 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:
Expense Ratios
Per Share Decreases Without Fee Waivers
to Net Investment Income and Reimbursements
------------------------------------------------------ --------------------------------------------------------
2003 2002 2001 2000 1999 2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Class L $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.01 1.54% 1.50% 1.54% 1.53% 1.55%
(4) Effective May 1, 2001, the Fund adopted a change in the accounting method
that requires the Fund to amortize premiums and accrete all discounts.
Without the adoption of this change, for the year ended April 30, 2002,
net investment income, net realized and unrealized gain and the ratio of
net investment income to average net assets would have been $0.47, $0.25
and 4.40%, respectively. Per share, ratios and supplemental data for the
periods prior to May 1, 2001 have not been restated to reflect this
change in presentation.
28 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
OF THE SMITH BARNEY OREGON MUNICIPALS FUND:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Smith Barney Oregon Municipals Fund as of
April 30, 2003, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and financial highlights for each of the years in
the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of April 30, 2003, by
correspondence with the custodian and broker. As to securities purchased but
not yet received we performed other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Smith Barney Oregon Municipals Fund as of April 30, 2003, and the results of
its operations for the year then ended, the changes in its net assets for each
of the years in the two-year period then ended and financial highlights for
each of the years in the five-year period then ended, in conformity with
accounting principles generally accepted in the United States of America.
[KPMG LLP LOGO]
New York, New York
June 13, 2003
29 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
INFORMATION ABOUT TRUSTEES AND OFFICERS
The business and affairs of the Smith Barney Oregon Municipals Fund ("Fund")
are managed under the direction of the Board of Trustees. Information
pertaining to the Trustees and Officers of the Fund is set forth below. The
Statement of Additional Information includes additional information about the
Fund's Trustees and is available, without charge, upon request by calling the
Fund's transfer agent (Citicorp Trust Bank, fsb. at 1-800-451-2010).
NUMBER OF
TERM OF PORTFOLIOS
OFFICE* AND PRINCIPAL IN FUND OTHER
POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX TRUSTEESHIPS
HELD WITH TIME DURING PAST OVERSEEN HELD BY
NAME, ADDRESS AND AGE FUND SERVED FIVE YEARS BY TRUSTEE TRUSTEE
- ------------------------- ------------- ------------- ----------------------- ------------ -----------------
NON-INTERESTED TRUSTEES:
Herbert Barg Trustee Since Retired 44 None
1460 Drayton Lane 1994
Wynewood, PA 19096
Age 79
Dwight B. Crane Trustee Since Professor -- Harvard 51 None
Harvard Business School 1994 Business School
Soldiers Field
Morgan Hall #375
Boston, MA 02163
Age 65
Burt N. Dorsett Trustee Since President - Dorsett 28 None
201 East 62nd Street 1994 McCabe Capital
Apt 3C Management Inc.;
New York, NY 10021 Chief Investment
Age 72 Officer - Leeb Capital
Management Inc.
1999 - Present
Elliot S. Jaffe Trustee Since Chairman of The 28 Zweig Total
The Dress Barn Inc. 1994 Dress Barn Inc. Return Fund;
Executive Office Zweig Fund, Inc.
30 Dunnigan Drive
Suffern, NY 10901
Age 76
Stephen E. Kaufman Trustee Since Attorney 62 None
Stephen E. Kaufman PC 1994
277 Park Avenue
47th Floor
New York, NY 10172
Age 71
Joseph J. McCann Trustee Since Retired 28 None
200 Oak Park Place 1994
Suite One
Pittsburgh, PA 15243
Age 72
30 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE* AND PRINCIPAL IN FUND OTHER
POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX TRUSTEESHIPS
HELD WITH TIME DURING PAST OVERSEEN HELD BY
NAME, ADDRESS AND AGE FUND SERVED FIVE YEARS BY TRUSTEE TRUSTEE
- ------------------------ ---------------- ------------- ----------------------- ------------ -------------
NON-INTERESTED TRUSTEES:
Cornelius C. Rose, Jr. Trustee Since Chief Executive 28 None
Meadowbrook Village 1994 Officer,Performance
Building 1, Apt. 6 Learning Systems
West Lebanon, NH 03784
Age 70
INTERESTED TRUSTEE:
R. Jay Gerken** Chairman, Since Managing Director of 225 N/A
CGM President 2002 CGM; Chairman,
399 Park Avenue and President and Chief
4th Floor Chief Executive Officer of
New York, NY 10022 Executive SBFM, Travelers
Age 52 Officer Investment Adviser,
Inc. ("TIA") and Citi
Fund Management
Inc.
OFFICERS:
Lewis E. Daidone Senior Since Managing Director of N/A N/A
CGM Vice 1995 CGM; Director and
125 Broad Street President, Senior Vice President
11th Floor and of SBFM and TIA;
New York, NY 10004 Chief Former Chief Financial
Age 45 Administrative Officer and Treasurer
Officer of mutual funds
affiliated with
Citigroup Inc.
Richard L. Peteka Chief Since Managing Director of N/A N/A
CGM Financial 2002 CGM; Director and
125 Broad Street Officer Head of Internal
11th Floor and Control for Citigroup
New York, NY 10004 Treasurer Asset Management
Age 41 U.S. Mutual Fund
Administration from
1999 -- 2002; Vice
President, Head of
Mutual Fund
Administration and
Treasurer of
Oppenheimer Capital
from 1996 -- 1999
31 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE* AND PRINCIPAL IN FUND OTHER
POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX TRUSTEESHIPS
HELD WITH TIME DURING PAST OVERSEEN HELD BY
NAME, ADDRESS AND AGE FUND SERVED FIVE YEARS BY TRUSTEE TRUSTEE
- ----------------------------------------------------------------------------------------------------------
OFFICERS:
Peter M. Coffey Vice Since Managing Director of N/A N/A
CGM President 1989 CGM; Investment
399 Park Avenue and Officer of SBFM
4th Floor Investment
New York, NY 10022 Officer
Age 58
Kaprel Ozsolak Controller Since Vice President of CGM N/A N/A
CGM 2002
125 Broad Street
11th Floor
New York, NY 10004
Age 37
Christina T. Sydor Secretary Since Managing Director of N/A N/A
CGM 1995 CGM; General
300 First Stamford Place Counsel and Secretary
4th Floor of SBFM and TIA
Stamford, CT 06902
Age 52
- -----------
* Each Trustee and officer serves until his or her respective successor has
been duly elected and qualified.
** Mr. Gerken is an "interested person" of the Fund as defined in the
Investment Company Act of 1940, as amended, because Mr. Gerken is an
officer of SBFM and certain of its affiliates.
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
For the year ended April 30, 2003, 99.85% of the dividends paid by the Fund
from net investment income were tax-exempt for regular Federal income tax and
Oregon state income tax purposes.
32 SMITH BARNEY OREGON MUNICIPALS FUND | 2003 Annual Report to Shareholders
- --------------------------------------------------------------------------------
SMITH BARNEY
OREGON MUNICIPALS FUND
- --------------------------------------------------------------------------------
TRUSTEES INVESTMENT ADVISER
Herbert Barg Smith Barney Fund
Dwight B. Crane Management LLC
Burt N. Dorsett
R. Jay Gerken, DISTRIBUTOR
Chairman Citigroup Global Markets Inc.
Elliott S. Jaffe
Stephen E. Kaufman CUSTODIAN
Joseph J. McCann State Street Bank and
Cornelius C. Rose, Jr. Trust Company
OFFICERS TRANSFER AGENT
R. Jay Gerken Citicorp Trust Bank, fsb.
President and Chief 125 Broad Street, 11th Floor
Executive Officer New York, New York 10004
Lewis E. Daidone SUB-TRANSFER AGENT
Senior Vice President PFPC Global Fund Services
and Chief Administrative P.O. Box 9699
Officer Providence, Rhode Island
02940-9699
Richard L. Peteka
Chief Financial Officer
and Treasurer
Peter M. Coffey
Vice President and
Investment Officer
Kaprel Ozsolak
Controller
Christina T. Sydor
Secretary
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 July 31, 2003, this report must be
accompanied by performance information for the most recently completed calendar
quarter.
SMITH BARNEY OREGON MUNICIPALS FUND
Smith Barney Mutual Funds
125 Broad Street
10th Floor, MF-2
New York, New York 10004
For complete information on any 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.smithbarneymutualfunds.com
(Copyright) 2003 Citigroup Global Markets Inc.
Member NASD, SIPC
FD0955 6/03 03-4947
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the
Investment Company Act of 1940, as amended) are effective based on
their evaluation of the disclosure controls and procedures as of a
date within 90 days of the filing date of this document.
(b) In the last 90 days, there have been no significant changes in the
Registrant's internal controls or in other factors that could
significantly affect these controls.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) Attached hereto.
Exhibit 99.CERT Certifications pursuant to section 302 of
the Sarbanes-Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to be
signed on its behalf by the undersigned, there unto duly authorized.
Smith Barney Oregon Municipals Fund
By: /s/ R. Jay Gerken
--------------------------
R. Jay Gerken
Chief Executive Officer of
Smith Barney Oregon Municipals Fund
Date: June 30, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ R. Jay Gerken
--------------------------
R. Jay Gerken
Chief Executive Officer of
Smith Barney Oregon Municipals Fund
Date: June 30, 2003
By: /s/ Richard Peteka
--------------------------
Chief Financial Officer of
Smith Barney Oregon Municipals Fund
Date: June 30, 2003