SMITH BARNEY ARIZONA MUNICIPALS FUND INC.
(the "Fund")
Supplement to Prospectus
dated
July 30, 1996
The following information supplements, and to the extent inconsistent
therewith, supersedes the information set forth in the Prospectus of the above
Fund:
Investment Policies
The Fund generally will invest at least 80% of its total assets in
investment grade debt obligations rated no lower than Baa, MIG 3 or Prime-1 by
Moody's Investors Service, Inc. ("Moody's") or BBB, SP-2 or A-1 by Standard &
Poor's Corporation ("S&P"), or in unrated obligations of comparable quality.
Unrated obligations will be considered to be of investment grade if deemed by
the Fund's investment adviser, Smith Barney Mutual Funds Management Inc., to
be comparable in quality to instruments so rated, or if other outstanding
obligations of the issuers thereof are rated Baa or better by Moody's or BBB
or better by S&P. The balance of the Fund's assets may be invested in
securities rated as low as C by Moody's or D by S&P, or comparable unrated
securities, which are sometimes referred to as "junk bonds." Securities the
fourth highest rating category, though considered to be investment grade, have
speculative characteristics. Securities rated as low as D are extremely
speculative and are in actual default of interest and/or principal payments.
The Fund will not purchase an unrated municipal security if, after such
purchase, more than 20% of the Fund's total assets would be invested in
unrated municipal securities.
The Fund may also invest in zero coupon securities. Such bonds carry an
additional risk in that, unlike bonds which pay interest throughout the period
to maturity, the Fund will realize no cash until the cash payment date unless
a portion of such securities is sold and, if the issuer defaults, the Fund may
obtain no return at all on its investment.
In addition, the Fund may invest up to an aggregate of 15% of its total
assets in securities with contractual or other restrictions on resale and
other instruments which are not readily marketable.
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Supplement dated July 24, 1996
