[Front cover]

SEMI-ANNUAL REPORT


Smith Barney
Oregon
Municipals
Fund
October 31, 1996


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Smith Barney Oregon Municipals Fund 

Dear Shareholder: 

We are pleased to bring you the semi-annual report of the Smith Barney Oregon 
Municipals Fund for the period ended October 31, 1996. In this report, we 
summarize the period's prevailing economic and market conditions and outline 
the Fund's investment strategy. A detailed summary of the Fund's performance 
can be found in the appropriate sections that follow in the semi-annual 
report. 

Oregon Municipals Fund's Performance and Investment Strategy 

The Smith Barney Oregon Municipals Fund seeks to pay its shareholders as high 
a level of dividend income exempt from Federal income taxes and Oregon state 
personal income tax as is consistent with prudent investing and the 
preservation of capital. 

For the six months ended October 31, 1996, the Class A shares of the Oregon 
Municipals Fund had a total return of 5.04%. In comparison, the Fund's Lipper 
Analytical Services, Inc. Oregon municipal bond fund peer average had a total 
return of 4.33% for the same time period. (Lipper is an independent fund 
tracking organization.) As of October 31, 1996, approximately 94% of the 
Oregon Municipals Fund's holdings were in investment-grade securities, with 
roughly 34% invested in AAA-rated bonds, the highest rating. (An 
investment-grade security is a security with a rating of BBB/Baa or better 
from Standard & Poor's Ratings Services or Moody's Investors Service, Inc., 
two major credit reporting and bond rating agencies.) 

During the period covered by this report, the Fund maintained its 
high-quality credit orientation. The largest sectors of the Oregon Municipals 
Fund were education bonds (17.2%), multi-family housing bonds (14.1%), and 
single-family housing bonds (10.7%). 

In response to market conditions, the Oregon Municipals Fund has maintained a 
bias toward good quality, higher coupon bonds, with a focus on current income 
more so than on total return. As a general rule, we concentrate on the 
coupon, maturity and call features of the Fund's holdings rather than the 
specific purpose for which the municipal bonds are being issued. However, the 
Fund remains broadly diversified across various sectors. 

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Market and Economic Overview 

Because of the uncertainty surrounding the future direction of the U.S. 
economy, the bond markets have continued to experience significant volatility 
over the past six months. However, since April, this heightened volatility 
has been confined to a narrow yield range from 6.75% and 7.20% on 30-year 
U.S. Treasury yields. 

The heightened bond market volatility of recent months stems from several 
conditions in the U.S. economy, with the most important being the underlying 
strength of the U.S. economy. For example, gross domestic product (GDP) in 
the U.S. for the second quarter of 1996 grew at an annualized rate of 4.7%, 
up from 2.0% in the first quarter. This pace of economic growth has caused 
pressures on both labor and capital to increase, yet there have been no signs 
of a pick-up in inflation. Bond market investors have closely monitored 
recent U.S. economic data for signs of whether the rate of U.S. economic 
growth will moderate, or whether the economy will continue to grow at its 
current pace. While the majority of key U.S. economic announcements in the 
beginning of 1996 months pointed towards a strengthening rather than a 
weakening economy, government reports released during the months of September 
and October suggest that the economy may be headed for a slowdown. 

Over the last weeks of September and the beginning of October, the bond 
markets, including the municipal bond market, have rallied. The markets 
started to climb with the announcement that the Federal Reserve Board (the 
Fed) would not raise short-term rates at their Federal Open Market Committee 
meeting on September 24, 1996. In our view, the bond markets rallied because 
of two reasons. One, there appears to be little or no evidence of upward 
pressure on inflation, in spite of signs of strong economic growth in 1996 
and extremely tight labor markets. Two, U.S. economic growth in the third 
quarter slowed substantially -- to roughly a 2% annual rate, from 4.7% in the 
second quarter. Therefore, inflation fears -- and the need for Fed tightening 
-- which had pushed the yield on the 30-year Treasury up to the 7.20% range 
in early September seem to have subsided. In addition, rates have continued 
to fall since the November elections. 

Oregon Economic Highlights 

As of October 31, 1996, Oregon's general obligation debt was rated double-A 
by Fitch Investors Service, L.P., one of the three major credit reporting and 
bond rating agencies. Oregon's double-A rating is based on the State's strong