<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
MAY 29, 1995
PROSPECTUS BEGINS ON PAGE ONE
[LOGO OF SMITH BARNEY MUTUAL FUNDS APPEAR HERE]
P R O S P E C T U S
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS MAY 29, 1995
388 Greenwich Street
New York, New York 10013
(212) 723-9218
Smith Barney New Jersey Municipals Fund Inc. (the "Fund") is a non-
diversified municipal fund that seeks to provide New Jersey investors with as
high a level of dividend income exempt from Federal income taxes and New Jersey
state personal income tax as is consistent with prudent investment management
and the preservation of capital.
This Prospectus concisely sets forth certain information about the Fund,
including sales charges, distribution and service fees and expenses, that
investors will find helpful in making an investment decision. Investors are
encouraged to read this Prospectus carefully and retain it for future refer-
ence. Additional information about the Fund is contained in a Statement of
Additional Information dated May 29, 1995, as amended or supplemented from time
to time, that is available upon request and without charge by calling or writ-
ing the Fund at the telephone number or address set forth above or by contact-
ing a Smith Barney Financial Consultant. The Statement of Additional Informa-
tion has been filed with the Securities and Exchange Commission (the "SEC") and
is incorporated by reference into this Prospectus in its entirety.
SMITH BARNEY INC.
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Adviser and Administrator
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 3
- -------------------------------------------------
FINANCIAL HIGHLIGHTS 12
- -------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 16
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NEW JERSEY MUNICIPAL SECURITIES 24
- -------------------------------------------------
VALUATION OF SHARES 26
- -------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 26
- -------------------------------------------------
PURCHASE OF SHARES 28
- -------------------------------------------------
EXCHANGE PRIVILEGE 36
- -------------------------------------------------
REDEMPTION OF SHARES 40
- -------------------------------------------------
MINIMUM ACCOUNT SIZE 42
- -------------------------------------------------
PERFORMANCE 43
- -------------------------------------------------
MANAGEMENT OF THE FUND 44
- -------------------------------------------------
DISTRIBUTOR 46
- -------------------------------------------------
ADDITIONAL INFORMATION 47
- -------------------------------------------------
</TABLE>
No person has been authorized to give any information or to
make any representations in connection with this offering other
than those contained in this Prospectus and, if given or made,
such other information or representations must not be relied upon
as having been authorized by the Fund or the Distributor. This
Prospectus does not constitute an offer by the Fund or the
Distributor to sell or a solicitation of an offer to buy any of
the securities offered hereby in any jurisdiction to any person
to whom it is unlawful to make such an offer or solicitation in
such jurisdiction.
2
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed information
appearing elsewhere in this Prospectus and in the Statement of Additional
Information. Cross references in this summary are to headings in the Prospec-
tus. See "Table of Contents."
INVESTMENT OBJECTIVE The Fund is an open-end, non-diversified, management
investment company that seeks to provide New Jersey investors with as high a
level of dividend income exempt from Federal income taxes and New Jersey state
personal income tax as is consistent with prudent investment management and the
preservation of capital. Its investments consist primarily of intermediate- and
long-term investment-grade municipal securities issued by or on behalf of the
State of New Jersey or any of its instrumentalities, and its political subdivi-
sions, agencies and public authorities and certain other municipal issuers such
as the Commonwealth of Puerto Rico, the Virgin Islands and Guam ("New Jersey
Municipal Securities") that pay interest which is excluded from gross income
for Federal income tax purposes and exempt from New Jersey state personal
income taxes. Intermediate- and long-term municipal securities have remaining
maturities at the time of purchase of three to in excess of twenty years. See
"Investment Objective and Management Policies."
ALTERNATIVE PURCHASE ARRANGEMENTS The Fund offers several classes of shares
("Classes") to investors designed to provide them with the flexibility of
selecting an investment best suited to their needs. The general public is
offered three Classes of shares: Class A shares, Class B shares and Class C
shares, which differ principally in terms of sales charges and rate of expenses
to which they are subject. A fourth Class of shares, Class Y shares, is offered
only to investors meeting an initial investment minimum of $5,000,000. See
"Purchase of Shares" and "Redemption of Shares."
Class A Shares. Class A shares are sold at net asset value plus an initial
sales charge of up to 4.00% and are subject to an annual service fee of 0.15%
of the average daily net assets of the Class. The initial sales charge may be
reduced or waived for certain purchases. Purchases of Class A shares, which
when combined with current holdings of Class A shares offered with a sales
charge equal or exceed $500,000 in the aggregate, will be made at net asset
value with no initial sales charge, but will be subject to a contingent
deferred sales charge ("CDSC") of 1.00% on redemptions made within 12 months of
purchase. See "Prospectus Summary--Reduced or No Initial Sales Charge."
3
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
Class B Shares. Class B shares are offered at net asset value subject to a
maximum CDSC of 4.50% of redemption proceeds, declining by 0.50% the first year
after purchase and by 1.00% each year thereafter to zero. This CDSC may be
waived for certain redemptions. Class B shares are subject to an annual service
fee of 0.15% and an annual distribution fee of 0.50% of the average daily net
assets of this Class. The Class B shares' distribution fee may cause that Class
to have higher expenses and pay lower dividends than Class A shares.
Class B Shares Conversion Feature. Class B shares will convert automatically
to Class A shares, based on relative net asset value, eight years after the
date of the original purchase. Upon conversion, these shares will no longer be
subject to an annual distribution fee. In addition, a certain portion of Class
B shares that have been acquired through the reinvestment of dividends and dis-
tributions ("Class B Dividend Shares") will be converted at that time. See
"Purchase of Shares--Deferred Sales Charge Alternatives."
Class C Shares. Class C shares are sold at net asset value with no initial
sales charge. They are subject to an annual service fee of 0.15% and an annual
distribution fee of 0.55% of the average daily net assets of the Class C
shares, and investors pay a CDSC of 1.00% if they redeem Class C shares within
12 months of purchase. This CDSC may be waived for certain redemptions. The
Class C shares' distribution fee may cause that Class to have higher expenses
and pay lower dividends than Class A shares. Purchases of Class C shares, which
when combined with current holdings of Class C shares of the Fund, equal or
exceed $500,000 in the aggregate, should be made in Class A shares at net asset
value with no sales charge, and will be subject to a CDSC of 1.00% on redemp-
tions made within 12 months of purchase.
Class Y Shares. Class Y shares are available only to investors meeting an
initial investment minimum of $5,000,000. Class Y shares are sold at net asset
value with no initial sales charge or CDSC. Class Y shares are not subject to
any service or distribution fees.
In deciding which Class of Fund shares to purchase, investors should consider
the following factors, as well as any other relevant facts and circumstances:
Intended Holding Period. The decision as to which Class of shares is more
beneficial to an investor depends on the amount and intended length of his or
4
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
her investment. Shareholders who are planning to establish a program of regular
investment may wish to consider Class A shares; as the investment accumulates
shareholders may qualify for reduced sales charges and the shares are subject
to lower ongoing expenses over the term of the investment. As an alternative,
Class B and Class C shares are sold without any initial sales charge so the
entire purchase price is immediately invested in the Fund. Any investment
return on these additional invested amounts may partially or wholly offset the
higher annual expenses of these Classes. Because the Fund's future return
cannot be predicted, however, there can be no assurance that this would be
the case.
Finally, investors should consider the effect of the CDSC period and any con-
version rights of the Classes in context of their own investment time frame.
For example, while Class C shares have a shorter CDSC period than Class B
shares, they do not have a conversion feature, and therefore, are subject to an
ongoing distribution fee. Thus, Class B shares may be more attractive than
Class C shares to investors with longer term investment outlooks.
Investors investing a minimum of $5,000,000 must purchase Class Y shares,
which are not subject to any initial sales charge, CDSC or service or distribu-
tion fees. The maximum purchase amount for Class A shares is $4,999,999, Class
B shares is $249,999 and Class C shares is $499,999. There is no maximum pur-
chase amount for Class Y shares.
Reduced or No Initial Sales Charge. The initial sales charge on Class A
shares may be waived for certain eligible purchasers, and the entire purchase
price will be immediately invested in the Fund. In addition, Class A share pur-
chases, which when combined with current holdings of Class A shares offered
with a sales charge equal or exceed $500,000 in the aggregate, will be made at
net asset value with no initial sales charge, but will be subject to a CDSC of
1.00% on redemptions made within 12 months of purchase. The $500,000 aggregate
investment may be met by adding the purchase to the net asset value of all
Class A shares offered with a sales charge held in funds sponsored by Smith
Barney Inc. ("Smith Barney") listed under "Exchange Privilege." Other Class A
share purchases may also be eligible for a reduced initial sales charge. See
"Purchase of Shares." Because the ongoing expenses of Class A shares may be
lower than those for Class B and Class C shares, purchasers eligible to pur-
chase Class A shares at net asset value or at a reduced sales charge should
consider doing so.
5
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SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
Smith Barney Financial Consultants may receive different compensation for
selling each Class of shares. Investors should understand that the purpose of
the CDSC on the Class B and Class C shares is the same as that of the initial
sales charge on the Class A shares.
See "Purchase of Shares" and "Management of the Fund" for a complete descrip-
tion of the sales charges and service and distribution fees for each Class of
shares and "Valuation of Shares," "Dividends, Distributions and Taxes" and "Ex-
change Privilege" for other differences between the Classes of shares.
PURCHASE OF SHARES Shares may be purchased through the Fund's distributor,
Smith Barney, a broker that clears securities transactions through Smith Barney
on a fully disclosed basis (an "Introducing Broker") or an investment dealer in
the selling group. See "Purchase of Shares."
INVESTMENT MINIMUMS Investors in Class A, Class B and Class C shares may open
an account by making an initial investment of at least $1,000. Investors in
Class Y shares may open an account for an initial investment of $5,000,000.
Subsequent investments of at least $50 may be made for all Classes. The minimum
initial investment requirement for Class A, Class B and Class C shares and the
subsequent investment requirement for all Classes through the Systematic
Investment Plan described below is $50. There is no minimum investment require-
ment in Class A for unitholders who invest distributions from a unit investment
trust ("UIT") sponsored by Smith Barney. See "Purchase of Shares."
SYSTEMATIC INVESTMENT PLAN The Fund offers shareholders a Systematic Investment
Plan under which they may authorize the automatic placement of a purchase order
each month or quarter for Fund shares in an amount of at least $50. See "Pur-
chase of Shares."
REDEMPTION OF SHARES Shares may be redeemed on each day the New York Stock
Exchange, Inc. ("NYSE") is open for business. See "Purchase of Shares" and "Re-
demption of Shares."
MANAGEMENT OF THE FUND Smith Barney Mutual Funds Management Inc. ("SBMFM"),
serves as the Fund's investment adviser. SBMFM provides investment advisory and
management services to investment companies affiliated with Smith Barney. SBMFM
is a wholly owned subsidiary of Smith Barney Holdings
6
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
Inc. ("Holdings"). Holdings is a wholly owned subsidiary of the Travelers Group
Inc. ("Travelers"), a diversified financial services holding company engaged,
through its subsidiaries, principally in four business segments: Investment
Services, Consumer Finance Services, Life Insurance Services and Property &
Casualty Insurance Services.
SBMFM also serves as the Fund's administrator and The Boston Company Advi-
sors, Inc. ("Boston Advisors") serves as the Fund's sub-administrator. Boston
Advisors is a wholly owned subsidiary of The Boston Company, Inc. ("TBC"),
which in turn is a wholly owned subsidiary of Mellon Bank Corporation
("Mellon"). See "Management of the Fund."
EXCHANGE PRIVILEGE Shares of a Class may be exchanged for shares of the same
class of certain other funds of the Smith Barney Mutual Funds at the respective
net asset values next determined, plus any applicable sales charge differen-
tial. See "Exchange Privilege."
VALUATION OF SHARES Net asset value of the Fund for the prior day generally is
quoted daily in the financial section of most newspapers and is also available
from Smith Barney Financial Consultants. See "Valuation of Shares."
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income are paid on
the last Friday of each calendar month to shareholders of record as of the
prior Tuesday. Distributions of net realized long- and short-term capital
gains, if any, are declared and paid annually after the end of the fiscal year
in which they were earned. See "Dividends, Distributions and Taxes."
REINVESTMENT OF DIVIDENDS Dividends and distributions paid on shares of a Class
will be reinvested automatically, unless otherwise specified by an investor, in
additional shares of the same Class at current net asset value. Shares acquired
by dividend and distribution reinvestments will not be subject to any sales
charge or CDSC. Class B shares acquired through dividend and distribution rein-
vestments will become eligible for conversion to Class A shares on a pro rata
basis. See "Dividends, Distributions and Taxes."
RISK FACTORS AND SPECIAL CONSIDERATIONS There can be no assurance that the Fund
will achieve its investment objective. Assets of the Fund also may be invested
in the municipal securities of non-New Jersey municipal issuers ("Other Munici-
pal Securities" and, together with New Jersey Municipal
7
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
Securities, "Municipal Securities"). Dividends paid by the Fund that are
derived from interest attributable to New Jersey Municipal Securities will be
excluded from gross income for Federal income tax purposes and exempt from New
Jersey state personal income taxes (but not from New Jersey state franchise tax
or New Jersey state corporate income tax), provided, however, the Fund is a
qualified investment fund under New Jersey law. Dividends derived from interest
on Other Municipal Securities will be exempt from Federal income taxes, but may
be subject to New Jersey state personal income taxes. Dividends derived from
certain Municipal Securities (including New Jersey Municipal Securities), how-
ever, may be a specific tax preference item for Federal alternative minimum tax
purposes. The Fund may invest without limit in securities subject to the Fed-
eral alternative minimum tax. See "Investment Objective and Management Poli-
cies" and "Dividends, Distributions and Taxes."
The Fund is more susceptible to factors adversely affecting issuers of New
Jersey Municipal Securities than is a municipal bond fund that does not empha-
size these issuers. See "New Jersey Municipal Securities" in the Prospectus and
"Special Considerations Relating to New Jersey Municipal Securities" in the
Statement of Additional Information for further details about the risks of
investing in New Jersey obligations.
The Fund is classified as a non-diversified investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), which means that
the Fund is not limited by the 1940 Act in the proportion of its assets that it
may invest in the obligations of a single issuer. The Fund's assumption of
large positions in the obligations of a small number of issuers may cause the
Fund's share price to fluctuate to a greater extent than that of a diversified
company as a result of changes in the financial conditions or in the market's
assessment of the issuers.
The Fund generally will invest at least 75% of its assets in securities rated
investment grade, and may invest the remainder of its assets in securities
rated as low as C by Moody's Investors Service, Inc. ("Moody's") or D by Stan-
dard & Poor's Corporation ("S&P"), or in unrated obligations, of comparable
quality. Securities in 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.
8
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
There are several risks in connection with the use of when-issued securities,
municipal bond index and interest rate futures contracts and put and call
options thereon as hedging devices, and municipal leases. See "Investment
Objective and Management Policies--Certain Portfolio Strategies."
THE FUND'S EXPENSES The following expense table lists the costs and expenses an
investor will incur either directly or indirectly as a shareholder of the Fund,
based on the maximum sales charge or maximum CDSC that may be incurred at the
time of purchase or redemption and, unless otherwise noted the Fund's operating
expenses for its most recent fiscal year:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(as a percentage of offering price) 4.00% None None None
Maximum CDSC (as a percentage of original cost
or redemption proceeds, whichever is lower) None* 4.50% 1.00% None
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fees 0.50% 0.50% 0.50% 0.50%
12b-1 fees** 0.15 0.65 0.70 None
Other expenses*** 0.23 0.24 0.24 0.23
- -------------------------------------------------------------------------------
TOTAL FUND OPERATING EXPENSES 0.88% 1.39% 1.44% 0.73%
- -------------------------------------------------------------------------------
</TABLE>
* Purchase of Class A shares, which when combined with current holdings of
Class A shares offered with a sales charge, equal or exceed $500,000 in the
aggregate, will be made at net asset value with no sales charge, but will
be subject to a CDSC of 1.00% on redemptions made within 12 months.
** Upon conversion of Class B shares to Class A shares, such shares will no
longer be subject to a distribution fee. Class C shares do not have a con-
version feature and, therefore, are subject to an ongoing distribution fee.
As a result, long-term shareholders of Class C shares may pay more than the
economic equivalent of the maximum front-end sales charge permitted by the
National Association of Securities Dealers, Inc.
*** For Class Y shares, "Other expenses" have been estimated based on expenses
incurred by Class A shares because no Class Y shares had been purchased as
of March 31, 1995.
The sales charge and CDSC set forth in the above table are the maximum
charges imposed on purchases or redemptions of Fund shares and investors
may actually pay lower or no charges depending on the amount purchased and, in
the case of Class B, Class C and certain Class A shares, the length of time the
shares are held. See "Purchase of Shares" and "Redemption of Shares."
9
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
Smith Barney receives an annual 12b-1 service fee of 0.15% of the value of
average daily net assets of Class A shares. Smith Barney also receives, with
respect to Class B shares, an annual 12b-1 fee of 0.65% of the value of average
daily net assets of that Class, consisting of a 0.50% distribution and a 0.15%
service fee, and with respect to Class C shares, Smith Barney receives an
annual 12b-1 fee of 0.70% of the value of average daily net assets of the
Class, consisting of a 0.55% distribution fee and a 0.15% service fee. "Other
expenses" in the above table include fees for shareholder services, custodial
fees, legal and accounting fees, printing costs and registration fees.
10
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
The following example is intended to assist an investor in understanding the
various costs that an investor in the Fund will bear directly or indirectly.
The example assumes payment by the Fund of operating expenses at the levels set
forth in the table above. See "Purchase of Shares," "Redemption of Shares" and
"Management of the Fund."
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS*
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5.00%
annual return and (2) redemption at the end
of each time period:
Class A $49 $67 $87 $144
Class B 59 74 86 151
Class C 37 58 91 185
Class Y 7 23 41 91
- ------------------------------------------------------------------------------
An investor would pay the following expenses
on the same investment, assuming the same
annual return and no redemption:
Class A 49 67 87 144
Class B 14 44 76 151
Class C 27 58 91 185
Class Y 7 23 41 91
- ------------------------------------------------------------------------------
</TABLE>
* Ten-year figures assume conversion of Class B shares to Class A shares at the
end of the eighth year following the date of purchase.
The example also provides a means for the investor to compare expense levels
of funds with different fee structures over varying investment periods. To
facilitate such comparison, all funds are required to utilize a 5.00% annual
return assumption. However, the Fund's actual return will vary and may be
greater or less than 5.00%. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTA-
TION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN.
11
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
FINANCIAL HIGHLIGHTS
Except where otherwise noted, the following information has been audited by
Coopers & Lybrand, independent accountants, whose report thereon appears in the
Fund's Annual Report dated March 31, 1995. This information should be read in
conjunction with the financial statements and related notes that also appear in
the Fund's Annual Report, which is incorporated by reference into the Statement
of Additional Information.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
3/31/95 3/31/94 3/31/93 3/31/92
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 12.55 $ 13.16 $ 12.44 $ 12.17
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income*** 0.70 0.70 0.75 0.77
Net realized and unrealized
gain/(loss) on investments 0.07 (0.46) 0.87 0.44
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.77 0.24 1.62 1.21
- --------------------------------------------------------------------------------
DISTRIBUTIONS:
Distributions from net investment
income (0.70) (0.69) (0.75) (0.77)
Distributions in excess of net
investment income -- (0.01) -- --
Distributions from net realized
gains (0.00)** (0.15) (0.14) (0.13)
Distributions from capital -- (0.00)** (0.01) (0.04)
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.70) (0.85) (0.90) (0.94)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 12.62 $ 12.55 $ 13.16 $ 12.44
- --------------------------------------------------------------------------------
TOTAL RETURN+++ 6.37% 1.66% 13.49% 10.22%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
000's) $106,919 $119,913 $115,694 $92,797
Ratio of operating expenses to
average net assets+ 0.88++ 0.83% 0.74% 0.67%++
Ratio of net investment income to
average net assets 5.61% 5.17% 5.76% 6.18%
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 32% 32% 58% 98%
- --------------------------------------------------------------------------------
</TABLE>
** Amount represents less than $0.01 per Class A share.
*** Net investment income before waiver of fees and/or reimbursement of
expenses by investment adviser, sub-investment adviser and administrator
for the years ended March 31, 1994, 1993, 1992, 1991, 1990 and 1989 would
have been $.69, $.73, $.75, $.78, $.77 and $.74, respectively.
+ Expense ratios before partial waiver of fees by investment adviser and sub-
investment adviser and/or administrator for the years ended March 31, 1994,
1993, 1992, 1991, and 1990 and before the partial waiver of fees and reim-
bursement of expenses by investment adviser and sub-investment adviser
and/or administrator for the period ended March 31, 1989 were 0.88%, 0.90%,
0.83%, 0.90%, 1.08% and 1.23%, respectively.
++ The operating expense ratio excludes interest expense. The operating
expense ratio, including interest expense, was 0.89% and 0.68% for the
years ended March 31, 1995 and 1992, respectively.
+++ Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges.
12
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
3/31/91 3/31/90 3/31/89*
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 11.92 $ 11.67 $ 11.40
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income*** 0.82 0.83 0.82
Net realized and unrealized gain on investments 0.32 0.27 0.28
- ------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.14 1.10 1.10
- ------------------------------------------------------------------------------
DISTRIBUTIONS:
Distributions from net investment income (0.83) (0.82) (0.82)
Distributions in excess of net investment income -- -- --
Distributions from net realized gains (0.05) (0.03) (0.01)
Distributions from capital (0.01) -- --
- ------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.89) (0.85) (0.83)
- ------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 12.17 $ 11.92 $ 11.67
- ------------------------------------------------------------------------------
TOTAL RETURN++ 9.89% 9.62% 9.84%
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $65,378 $38,728 $29,265
Ratio of operating expenses to average net
assets+ 0.57% 0.55% 0.52%**
Ratio of net investment income to average net
assets 6.74% 6.89% 7.23%**
- ------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 44% 42% 25%
- ------------------------------------------------------------------------------
</TABLE>
* The Fund commenced operations on April 22, 1988. Those shares in existence
prior to November 6, 1992 were designated as Class A shares.
** Annualized.
*** Net investment income before waiver of fees and/or reimbursement of
expenses by investment adviser, sub-investment adviser and/or administrator
for the years ended March 31, 1994, 1993, 1992, 1991, 1990, and 1989 would
have been $.69, $.73, $.75, $.78, $.77, and $.74, respectively.
+ Expense ratios before partial waiver of fees by investment adviser and sub-
investment adviser and administrator for the years ended March 31, 1994,
1993, 1992, 1991, and 1990 and before the partial waiver of fees and reim-
bursement of expenses by investment adviser and sub-investment adviser and
administrator for the period ended March 31, 1989 were 0.88%, 0.90%, 0.83%,
0.90%, 1.08% and 1.23%, respectively.
++ Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges.
13
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
3/31/95 3/31/94 3/31/93*
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.55 $ 13.16 $ 12.75
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income*** 0.63 0.64 0.28
Net realized and unrealized gain/(loss) on
investments 0.06 (0.47) 0.55
- ------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.69 0.17 0.83
- ------------------------------------------------------------------------------
DISTRIBUTIONS:
Distributions from net investment income (0.62) (0.62) (0.27)
Distributions in excess of net investment
income -- (0.01) --
Distributions from net realized gains (0.00)+++ (0.15) (0.14)
Distributions from capital -- (0.00)+++ (0.01)
- ------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.62) (0.78) (0.42)
- ------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.62 $ 12.55 $ 13.16
- ------------------------------------------------------------------------------
TOTAL RETURN++ 5.76% 1.15% 6.60%
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) 55,334 $48,375 $16,293
Ratio of operating expenses to average net
assets+ 1.39# 1.36% 1.33%**
Ratio of net investment income to average
net assets 5.09% 4.64% 5.17%**
- ------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 32% 32% 58%
- ------------------------------------------------------------------------------
</TABLE>
* The Fund commenced selling Class B shares on November 6, 1992.
** Annualized.
*** Net investment income before waiver of fees and/or reimbursement of
expenses by investment adviser, sub-investment adviser and/or administrator
for the years ended March 31, 1994 and 1993 would have been $.63 and $.27,
respectively.
+ Annualized expense ratio before partial waivers of fees by investment
adviser and sub-investment adviser and administrator for the years ended
March 31, 1994 and 1993 were 1.41% and 1.49%, respectively.
++ Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges.
+++ Amount represents less than $0.01 per Class B share.
# The operating expense ratio excludes interest expense. The operating
expense ratio, including interest expense, was 1.40% for the year ended
March 31, 1995.
14
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
PERIOD FROM
11/07/94 TO
3/31/95*
- -------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.86
- -------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income*** 0.20
Net realized and unrealized gain/(loss) on investments 0.74
- -------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.94
- -------------------------------------------------------------------
DISTRIBUTIONS:
Distributions from net investment income (0.18)
Distributions from net realized gains (0.00)#
- -------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.18)
- -------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.62
- -------------------------------------------------------------------
TOTAL RETURN++ 8.01%
- -------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 248
Ratio of operating expenses to average net assets+ 1.44%**
Ratio of net investment income to average net assets 5.05%**
- -------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 32%
- -------------------------------------------------------------------
</TABLE>
* The Fund commenced selling Class C shares on December 13, 1994.
** Annualized.
+ The operating expense ratio excludes interest expense. The operating ratio
including interest expense was 1.45%.
++ Total return represents aggregate total return for the period and does not
reflect any applicable sales charge.
# Amount represents less than $0.01 per Class C share.
As of March 31, 1995, the Fund had not sold any Class Y shares and,
accordingly, no comparable financial information is available at this time for
that Class.
15
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The investment objective of the Fund is to provide New Jersey investors with
as high a level of income exempt from Federal and New Jersey personal income
taxes as is consistent with prudent investment management and the preservation
of capital. This investment objective may not be changed without the approval
of the holders of a majority of the Fund's outstanding shares. There can be no
assurance that the Fund's investment objective will be achieved.
The Fund operates subject to an investment policy providing that, under nor-
mal market conditions, the Fund will invest at least 80% of its net assets in
Municipal Securities and at least 65% of the aggregate principal amount of the
Fund's investments in New Jersey Municipal Securities. Whenever less than 80%
of the Fund's assets are invested in New Jersey Municipal Securities, the Fund,
in order to maintain its status as a "qualified investment fund" under New Jer-
sey law, will seek to invest in debt obligations which, in the opinion of coun-
sel to the issuers, are free from state or local taxation under New Jersey or
Federal laws ("Tax-Exempt Obligations"). The Fund's investments in New Jersey
Municipal Securities and Tax-Exempt Obligations will represent at least 80% of
the aggregate principal amount of all of its investments, excluding cash and
cash items (including receivables). Subject to these minimum investment inten-
tions, the Fund also may acquire intermediate- and long-term debt obligations
consisting of Other Municipal Securities, the interest on which is at least
exempt from Federal income taxation (not including the possible applicability
of the alternative minimum tax). When SBMFM believes that market conditions
warrant adoption of a temporary defensive investment posture, the Fund may
invest without limit in Other Municipal Securities and in "Temporary Invest-
ments" as described below.
The Fund generally will invest at least 75% of its total assets in invest-
ment- grade debt obligations rated no lower than Baa, MIG 3 or Prime-1 by
Moody's or BBB, SP-2 or A-1 by S&P, or in unrated obligations of comparable
quality. Unrated securities will be considered to be of investment grade if
deemed by SBMFM to be comparable in quality to instruments so rated, or if
other outstanding obligations of the issuers of the unrated securities 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. (These securities are sometimes
referred to as "junk bonds.") Securities in 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
16
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
payments. A description of the rating systems of Moody's and S&P is contained
in the Statement of Additional Information.
The Fund's average weighted maturity will vary from time to time based on the
judgment of SBMFM. The Fund intends to focus on intermediate- and long-term
obligations, that is, obligations with remaining maturities at the time of pur-
chase of three to in excess of twenty years. Obligations which are rated Baa by
Moody's or BBB by S&P and those which are rated lower than investment grade are
subject to greater market fluctuation and more uncertainty as to payment of
principal and interest, and therefore generate higher yields, than obligations
rated above Baa or BBB.
The value of debt securities varies inversely to changes in the direction of
interest rates. When interest rates rise, the value of debt securities gener-
ally falls, and when interest rates fall, the value of debt securities gener-
ally rises.
Low and Unrated Securities. While the market values of lower-rated and compa-
rable unrated securities tend to react less to fluctuations in interest rate
levels than the market values of higher-rated securities, the market values of
certain lower-rated and comparable unrated municipal securities also tend to be
more sensitive than higher-rated securities to short-term corporate and indus-
try developments and changes in economic conditions (including recession) in
specific regions or localities or among specific types of issuers. In addition,
lower-rated securities and comparable unrated securities generally present a
higher degree of credit risk. During an economic downturn or a prolonged period
of rising interest rates, the ability of issuers of lower-rated and comparable
unrated securities to service their payment obligations, meet projected goals
or obtain additional financing may be impaired. The risk of loss due to default
by such issuers is significantly greater because lower-rated and comparable
unrated securities generally are unsecured and frequently are subordinated to
the prior payment of senior indebtedness. The Fund may incur additional
expenses to the extent it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings.
While the market for municipal bonds is considered to be generally adequate,
the existence of limited markets for particular lower-rated and comparable
unrated securities may diminish the Fund's ability to (a) obtain accurate mar-
ket quotations for purposes of valuing such securities and calculating its net
asset value and (b) sell the securities at fair value either to meet redemption
requests
17
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
or to respond to changes in the economy or in the financial markets. A severe
economic recession would likely disrupt the market for such securities and
adversely affect the ability of the issuers of such securities to repay princi-
pal and pay interest thereon.
Fixed-income securities, including lower-rated securities and comparable
unrated securities, frequently have call or buy-back features that permit their
issuers to call or repurchase the securities from their holders, such as the
Fund. If an issuer exercises these rights during periods of declining interest
rates, the Fund may have to replace the security with a lower yielding securi-
ty, thus resulting in a decreased return to the Fund.
Because many issuers of New Jersey Municipal Securities may choose not to
have their obligations rated, it is possible that a large portion of the Fund's
portfolio may consist of unrated obligations. Unrated obligations are not nec-
essarily of lower quality than rated obligations, but to the extent the Fund
invests in unrated obligations, the Fund will be more reliant on SBMFM's judg-
ment, analysis and experience than would be the case if the Fund invested only
in rated obligations.
Municipal Lease Obligations. The Fund may invest without limit in participa-
tions in municipal lease obligations or installment purchase contract obliga-
tions, (collectively, "municipal lease obligations") of state and local govern-
ments or authorities to finance the acquisition of equipment or facilities. The
interest on such obligations is, in the opinion of counsel to the issuers,
excluded from gross income for Federal and New Jersey State personal income tax
purposes provided that the liability for payments of principal and interest is
solely that of a New Jersey governmental entity. Although lease obligations do
not constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation is ordinarily backed
by the municipality's covenant to budget for, appropriate and make the payments
due under the lease obligation. However, certain lease obligations contain
"non-appropriation" clauses which provide that the municipality has no obliga-
tion to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. In addition to the
"non-appropriation" risk, these securities represent a relatively new type of
financing that has not yet developed the depth of marketability associated with
more conventional bonds. Although "non-appropriation" lease obligations are
often secured by the underlying property, disposition of the property in the
event of
18
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
foreclosure might prove difficult. There is no limitation on the percentage of
the Fund's assets that may be invested in municipal lease obligations. In eval-
uating municipal lease obligations, SBMFM will consider such factors as it
deems appropriate, which may include: (a) whether the lease can be canceled;
(b) the ability of the lease obligee to direct the sale of the underlying
assets; (c) the general creditworthiness of the lease obligor; (d) the likeli-
hood that the municipality will discontinue appropriating funding for the
leased property in the event such property is no longer considered essential by
the municipality; (e) the legal recourse of the lease obligee in the event of
such a failure to appropriate funding; (f) whether the security is backed by a
credit enhancement such as insurance; and (g) any limitations which are imposed
on the lease obligor's ability to utilize substitute property or services
rather than those covered by the lease obligation.
Private Activity Bonds. The Fund may invest without limit in private activity
bonds. Interest income on certain types of private activity bonds issued after
August 7, 1986 to finance non-governmental activities is a specific tax prefer-
ence item for purposes of the Federal individual and corporate alternative min-
imum taxes. Individual and corporate shareholders may be subject to a Federal
alternative minimum tax to the extent the Fund's dividends are derived from
interest on those bonds. Dividends derived from interest income on Municipal
Securities are a component of the "current earnings" adjustment items for pur-
poses of the Federal corporate alternative minimum tax.
The Fund is classified as a non-diversified investment company under the 1940
Act, which means that the Fund is not limited by the 1940 Act in the proportion
of its assets that it may invest in the obligations of a single issuer. The
Fund intends to conduct its operations so as to qualify as a "regulated invest-
ment company" for purposes of the Internal Revenue Code of 1986, as amended
(the "Code"), which will relieve the Fund of any liability for Federal income
tax to the extent its earnings are distributed to shareholders. The Fund must
qualify as a regulated investment company to be a qualified investment fund
under New Jersey law. To so qualify, among other requirements, the Fund will
limit its investments so that, at the close of each quarter of the taxable
year, (a) not more than 25% of the market value of the Fund's total assets will
be invested in the securities of a single issuer and (b) with respect to 50% of
the market value of its total assets, not more than 5% of the market value of
its total assets will be invested in the securities of a single issuer and the
Fund will not own more than 10% of the outstanding voting securities of a sin-
gle
19
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
issuer. The Fund's assumption of large positions in the obligations of a small
number of issuers may cause the Fund's share price to fluctuate to a greater
extent than that of a diversified company as a result of changes in the finan-
cial condition or in the market's assessment of the issuers.
The Fund may invest without limit in debt obligations that are repayable out
of revenue streams generated from economically related projects or facilities.
Revenue securities may also include private activity bonds which may be issued
by or on behalf of public authorities to finance various privately operated
facilities and are not payable from the unrestricted revenues of the issuer.
Sizeable investments in such obligations could involve an increased risk to the
Fund should any of the related projects or facilities experience financial dif-
ficulties. The Fund also may invest up to 15% of its total assets in securities
with contractual or other restrictions on resale and other instruments which
are not readily marketable. Notwithstanding the foregoing, the Fund will not
invest more than 10% of its assets in securities (excluding those subject to
Rule 144A under the Securities Act of 1933, as amended) that are restricted.
The Fund does not expect to invest more than 5% of its assets in repurchase
agreements. In addition, the Fund may invest up to 5% of its assets in the
securities of issuers which have been in continuous operation for less than
three years. The Fund also is authorized to borrow in an amount of up to 10% of
its total assets (including the amount borrowed) valued at market less liabili-
ties (not including the amount borrowed) in order to meet anticipated redemp-
tions and to pledge its assets to the same extent in connection with the
borrowings.
Further information about the Fund's investment policies, including a list of
those restrictions on the Fund's investment activities that cannot be changed
without shareholder approval, appears in the Statement of Additional Informa-
tion.
CERTAIN PORTFOLIO STRATEGIES
In attempting to achieve its investment objective, the Fund may employ, among
others, the following strategies:
When-Issued Securities. New issues of Municipal Securities frequently are
offered on a when-issued basis, which means that delivery and payment for the
securities normally take place 15 to 45 days after the date of the commitment
to purchase. The payment obligation and interest rate that will be received on
when-issued securities are fixed at the time that the buyer enters into the
20
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
commitment. As a result, the yields obtained on the securities may be higher or
lower than the yields available in the market on the dates when the instruments
are actually delivered to the buyers. In addition, during the period before
delivery and payment, there is no accrual of interest and there may be fluctua-
tions in the price of the securities so that there may be an unrealized loss at
the time of delivery. The Fund will establish a segregated account with the
Fund's custodian consisting of cash, obligations issued or guaranteed by the
United States government, its agencies or instrumentalities ("U.S. government
securities") or other high grade debt obligations in an amount equal to the
purchase price of the Fund's when-issued securities. Placing securities rather
than cash in the segregated account may have a leveraging effect on the Fund's
net assets. The Fund generally will make commitments to purchase Municipal
Securities and other tax-exempt obligations on a when-issued basis with the
intention of actually acquiring the securities, but the Fund may sell the secu-
rities before the delivery date if it is deemed advisable.
Temporary Investments. Under normal market conditions, the Fund may hold up
to 20% of its total assets in cash or money market instruments, including tax-
able money market instruments ("Temporary Investments"). In addition, when
SBMFM believes that market conditions warrant, including when acceptable New
Jersey Municipal Securities are unavailable, the Fund may take a temporary
defensive posture and invest without limitation in Temporary Investments. To
the extent the Fund holds Temporary Investments, it will not achieve its
investment objective. Tax-exempt securities eligible for short-term investment
by the Fund under such circumstances are municipal notes rated at the time of
purchase within the three highest grades by Moody's or S&P or, if not rated,
issued by issuers with outstanding debt securities rated within the three high-
est grades by Moody's or S&P. Any Temporary Investments made for defensive pur-
poses will be made in conformity with the requirements of a qualified invest-
ment fund under New Jersey law. Since the commencement of its operations, the
Fund has not found it necessary to invest in taxable Temporary Investments.
Financial Futures and Options Transactions. To hedge against a decline in the
value of Municipal Securities it owns or an increase in the price of Municipal
Securities it proposes to purchase, the Fund may enter into financial futures
contracts and invest in options on financial futures contracts that are traded
on a domestic exchange or board of trade. The futures contracts or options on
futures contracts that may be entered into by the Fund will be restricted to
21
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
those that are either based on an index of Municipal Securities or relate to
debt securities the prices of which are anticipated by SBMFM to correlate with
the prices of the Municipal Securities owned or to be purchased by the Fund.
In entering into a financial futures contract, the Fund will be required to
deposit with the broker through which it undertakes the transaction an amount
of cash or cash equivalents equal to approximately 5% of the contract amount.
This amount, which is known as "initial margin," is subject to change by the
exchange or board of trade on which the contract is traded, and members of the
exchange or board of trade may charge a higher amount. Initial margin is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. In accordance with a process known
as "marking-to-market," subsequent payments, known as "variation margin," to
and from the broker will be made daily as the price of the index or securities
underlying the futures contract fluctuates, making the long and short positions
in the futures contract more or less valuable. At any time prior to the expira-
tion of a futures contract, the Fund may elect to close the position by taking
an opposite position, which will operate to terminate the Fund's existing posi-
tion in the contract.
A financial futures contract provides for the future sale by one party and
the purchase by the other party of a certain amount of a specified property at
a specified price, date, time and place. Unlike the direct investment in a
futures contract, an option on a financial futures contract gives the purchaser
the right, in return for the premium paid, to assume a position in the finan-
cial futures contract at a specified exercise price at any time prior to the
expiration date of the option. Upon exercise of an option, the delivery of the
futures position by the writer of the option to the holder of the option will
be accompanied by delivery of the accumulated balance in the writer's futures
margin account, which represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is less than, in the case
of a put, the exercise price of the option on the futures contract. The poten-
tial loss related to the purchase of an option on financial futures contracts
is limited to the premium paid for the option (plus transaction costs). The
value of the option may change daily and that change would be reflected in the
net asset value of the Fund.
Regulations of the Commodity Futures Trading Commission applicable to the
Fund require that its transactions in financial futures contracts and options
22
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
on financial futures contracts be engaged in for bona fide hedging purposes, or
if the Fund enters into futures contracts for speculative purposes, that the
aggregate initial margin deposits and premiums paid by the Fund will not exceed
5% of the market value of its assets. In addition, the Fund will, with respect
to its purchases of financial futures contracts, establish a segregated account
consisting of cash or cash equivalents in an amount equal to the total market
value of the futures contracts, less the amount of initial margin on deposit
for the contracts. The Fund's ability to trade in financial futures contracts
and options on financial futures contracts may be limited to some extent by the
requirements of the Code applicable to a regulated investment company, in addi-
tion to the requirements of a qualified investment fund under New Jersey law,
that are described below under "Dividends, Distributions and Taxes."
Although the Fund intends to enter into financial futures contracts and
options on financial futures contracts that are traded on a domestic exchange
or board of trade only if an active market exists for those instruments, no
assurance can be given that an active market will exist for them at any partic-
ular time. If closing a futures position in anticipation of adverse price move-
ments is not possible, the Fund would be required to make daily cash payments
of variation margin. In those circumstances, an increase in the value of the
portion of the Fund's investments being hedged, if any, may offset partially or
completely losses on the futures contract. No assurance can be given, however,
that the price of the securities being hedged will correlate with the price
movements in a futures contract and, thus, provide an offset to losses on the
futures contract or option on the futures contract. In addition, in light of
the risk of an imperfect correlation between securities held by the Fund that
are the subject of a hedging transaction and the futures or options used as a
hedging device, the hedge may not be fully effective because, for example,
losses on the securities held by the Fund may be in excess of gains on the
futures contract or losses on the futures contract may be in excess of gains on
the securities held by the Fund that were the subject of the hedge. In an
effort to compensate for the imperfect correlation of movement in the price of
the securities being hedged and movements in the price of futures contracts,
the Fund may enter into financial futures contracts or options on financial
futures contracts in a greater of lesser dollar amount than the dollar amount
of the securities being hedged if the historical volatility of the futures con-
tract has been less or greater than that of the securities. This "over hedging"
or "under hedging" may adversely affect the Fund's net investment results if
market movements are not as anticipated when the hedge is established.
23
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
If the Fund has hedged against the possibility of an increase in interest
rates adversely affecting the value of securities it holds and rates decrease
instead, the Fund will lose part or all of the benefit of the increased value
of securities that it has hedged because it will have offsetting losses in its
futures or options position. In addition, in those situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily variation mar-
gin requirements on the futures contracts at a time when it may be disadvanta-
geous to do so. These sales of securities may, but will not necessarily, be at
increased prices that reflect the decline in interest rates.
NEW JERSEY MUNICIPAL SECURITIES
As used in this Prospectus, the term "New Jersey Municipal Securities" gener-
ally refers to intermediate- and long-term debt obligations issued by the State
of New Jersey and its political subdivisions, agencies and public authorities
(together with certain other governmental issuers such as the Commonwealth of
Puerto Rico, the Virgin Islands and Guam) to obtain funds for various public
purposes. The interest on such obligations is, in the opinion of bond counsel
to the issuers, excluded from gross income for Federal income tax purposes and
exempt under the New Jersey Gross Income Tax Act. For that reason, interest on
these obligations is generally fixed at a lower rate than it would be if it
were subject to such taxes. Interest income on certain New Jersey Municipal
Securities is a specific tax preference item for purposes of the Federal indi-
vidual and corporate alternative minimum taxes. See "Dividends, Distributions
and Taxes."
CLASSIFICATIONS
The two principal classifications of New Jersey Municipal Securities are
"general obligation bonds" and "revenue bonds." General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable from the reve-
nues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise tax or other specific revenue
source, but not from the general taxing power. In addition, certain types of
"private activity bonds" issued by or on behalf of public authorities to obtain
funds for privately operated facilities are included in the term New Jersey
Municipal Securities, so long as the interest paid on the bonds qualifies as
excluded from gross income for Federal income tax purposes and exempt under the
New Jersey
24
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
NEW JERSEY MUNICIPAL SECURITIES (CONTINUED)
Gross Income Tax Act. Private activity bonds are in most cases revenue bonds
and generally do not carry the pledge of the full faith, credit and taxing
power of the issuing entity.
SPECIAL CONSIDERATIONS
Economic, financial and other conditions relating to the State of New Jersey
have an obvious impact upon the state's general obligation bonds. These condi-
tions, to varying degrees, also will affect the bonds issued by the state's
political subdivisions, agencies and public authorities, including special
obligation bonds. In general, the State of New Jersey has a diversified eco-
nomic base consisting of, among others, commerce, construction and service
industries, selective commercial, agriculture, insurance, tourism, petroleum
refining and manufacturing, although New Jersey's manufacturing industry has
shown a downward trend in the last few years. New Jersey is a major recipient
of Federal assistance and, of all the states, is among the highest in the
amount of Federal aid received. Hence, a decrease in Federal financial assis-
tance may adversely affect New Jersey's financial condition. While New Jersey's
economic base has become more diversified over time and thus its economy
appears to be less vulnerable during recessionary periods, a recurrence of high
levels of unemployment could adversely affect New Jersey's overall economy and
its ability to meet its financial obligations.
New Jersey maintains a balanced budget, which generally restricts total
appropriation increases to only 5% annually to any municipality or county or an
index rate determined annually by the Director of the Division of Local Govern-
ment Services, whichever is less. New Jersey law provides for those situations
where the index percentage rate exceeds 5%. As a result, the balanced budget
plan may adversely affect a municipality's or county's ability to repay its
obligations. Of course, each municipality, county or other political subdivi-
sion will be subject to different economic, financial and other conditions,
which will affect its ability to pay the principal and interest on its bonds.
Similarly, special obligation or revenue bonds payable from revenues generated
by particular projects or other specific revenue sources also will be subject
to unique economic, financial and other conditions. If New Jersey or any of its
political subdivisions, agencies or public authorities is unable to meet its
financial obligations, the income derived by the Fund, the ability to preserve
or realize appreciation of the Fund's capital and the Fund's liquidity could be
adversely affected.
25
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
VALUATION OF SHARES
The Fund's net asset value per share is determined as of the close of regular
trading on the NYSE, on each day that the NYSE is open, by dividing the value
of the Fund's net assets attributable to each Class by the total number of
shares of that Class outstanding.
Generally, the Fund's investments are valued at market value or, in the
absence of a market value with respect to any securities, at fair value as
determined by or under the direction of the Fund's Board of Directors. Short-
term investments that mature in 60 days or less are valued at amortized cost
whenever the Board of Directors determines that amortized cost is fair value.
Further information regarding the Fund's valuation policies is contained in the
Statement of Additional Information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund pays dividends from its net investment income (that is, income other
than net realized long- and short-term capital gains) on the last Friday of
each calendar month to shareholders of record as of the preceding Tuesday. Dis-
tributions of net realized long- and short-term capital gains, if any, are
declared and paid annually after the end of the fiscal year in which they have
been earned.
If a shareholder does not otherwise instruct, dividends or capital gains dis-
tributions will be reinvested automatically in additional shares of the same
Class at net asset value, subject to no sales charge or CDSC. In addition, in
order to avoid the application of a 4.00% nondeductible excise tax on certain
undistributed amounts of ordinary income and capital gains, the Fund may make a
distribution shortly before December 31 in each year of any undistributed ordi-
nary income or capital gains and expects to make any other distributions as are
necessary to avoid the application of this tax.
If, for any full fiscal year, the Fund's total distributions exceed net
investment income and net realized capital gains, the excess distributions gen-
erally will be treated as a tax-free return of capital (up to the amount of the
shareholder's tax basis in his or her shares). The amount treated as a tax-free
return of capital will reduce a shareholder's adjusted basis in his or her
shares. Pursuant to the requirements of the 1940 Act and other applicable laws,
a notice will
26
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
accompany any distribution paid from sources other than net investment income.
In the event the Fund distributes amounts in excess of its net investment
income and net realized capital gains, such distributions may have the effect
of decreasing the Fund's total assets, which may increase the Fund's expense
ratio.
The per share dividends on Class B shares and Class C shares may be lower
than the per share dividends on Class A and Class Y shares principally as a
result of the distribution fee applicable with respect to Class B and Class C
shares. The per share dividends on Class A shares of the Fund may be lower than
the per share dividends on Class Y shares principally as a result of the serv-
ice fee applicable to Class A shares. Distributions of capital gains, if any,
will be in the same amount for Class A, B, C and Y shares.
TAXES
The Fund has qualified and intends to continue to qualify each year as a reg-
ulated investment company under the Code, and will designate and pay exempt-
interest dividends derived from interest earned on qualifying tax-exempt obli-
gations. Such exempt-interest dividends may be excluded by shareholders from
their gross income for Federal income tax purposes although (a) all or a por-
tion of such exempt-interest dividends will be a specific preference item for
purposes of the Federal individual and corporate alternative minimum taxes to
the extent that they are derived from certain types of private activity bonds
issued after August 7, 1986 and (b) all exempt-interest dividends will be a
component of the "current earnings" adjustment item for purposes of the Federal
corporate alternative minimum tax. In addition, corporate shareholders may
incur a greater Federal "environmental" tax liability through the receipt of
Fund dividends and distributions. With the exception of gains derived from
investments in financial options, futures, forward contracts or similar finan-
cial instruments, distributions paid by the Fund, provided it is a qualified
investment fund under New Jersey law, attributable to interest on or gains from
New Jersey Municipal Securities and Tax-Exempt Obligations also will be exempt
from the New Jersey personal income tax (but not the New Jersey Corporation
Business Tax).
Dividends paid from taxable net investment income, if any, and distributions
of net realized short- and long-term capital gains from taxable securities are
taxable to shareholders at ordinary income rates, regardless of how long share-
holders have held their Fund shares and whether such dividends or distributions
are
27
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
received in cash or reinvested in additional shares. Distributions of net real-
ized long-term capital gains are taxable to shareholders as long-term capital
gains, regardless of how long they have held their Fund shares and whether such
distributions are received in cash or reinvested in Fund shares. Furthermore,
as a general rule, a shareholder's gain or loss on a sale or redemption of his
or her shares will be a long-term capital gain or loss if the shareholder has
held the shares for more than one year and will be a short-term capital gain or
loss if the shareholder has held the shares for one year or less. Gains result-
ing from the redemption or sales of shares of the Fund, provided it is a quali-
fied investment fund under New Jersey law, would be exempt from the New Jersey
personal income tax. The Fund's dividends and distributions will not qualify
for the dividends-received deduction for corporations. Any dividends or distri-
butions paid by the Fund attributable to investments other than New Jersey
Municipal Securities or Tax-Exempt Obligations will be subject to theNew Jersey
personal income tax.
Statements as to the tax status of each shareholder's dividends and distribu-
tions are mailed annually. Each shareholder will also receive, if appropriate,
various written notices after the close of the Fund's prior taxable year as to
the Federal income tax status of his or her dividends and distributions which
were received from the Fund during the Fund's prior taxable year. These state-
ments may set forth the dollar amount of income excluded or exempt from Federal
income or New Jersey state personal income taxes and the dollar amount, if any,
subject to such taxes. Moreover, these statements will designate the amount of
exempt-interest dividends that is a specific preference item for purposes of
the Federal individual and corporate alternative minimum taxes. Shareholders
should consult their tax advisors with specific reference to their own tax sit-
uations.
PURCHASE OF SHARES
GENERAL
The Fund offers four Classes of shares. Class A shares are sold to investors
with an initial sales charge and Class B and Class C shares are sold without an
initial sales charge but are subject to a CDSC payable upon certain redemp-
tions. Class Y shares are sold without an initial sales charge or a CDSC and
are available only to investors investing a minimum of $5,000,000. See "Pro-
spectus
28
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
Summary--Alternative Purchase Arrangements" for a discussion of factors to con-
sider in selecting which Class of shares to purchase.
Purchases of Fund shares must by made through a brokerage account maintained
with Smith Barney, an Introducing Broker or an investment dealer in the selling
group. When purchasing shares of the Fund, investors must specify whether the
purchase is for Class A, Class B, Class C or Class Y shares. No maintenance fee
will be charged by the Fund in connection with a brokerage account through
which an investor purchases or holds shares.
Investors in Class A, Class B and Class C shares may open an account in the
Fund by making an initial investment of at least $1,000. Investors in Class Y
shares may open an account by making an initial investment of $5,000,000. Sub-
sequent investments of at least $50 may be made for all Classes. For the Fund's
Systematic Investment Plan, the minimum initial investment requirement for
Class A, Class B and Class C shares and the subsequent investment requirement
for all Classes is $50. There are no minimum investment requirements for Class
A shares for employees of Travelers and its subsidiaries, including Smith Bar-
ney, unitholders who invest distributions from a UIT sponsored by Smith Barney,
and Directors of the Fund and their spouses and children. The Fund reserves the
right to waive or change minimums, to decline any order to purchase its shares
and to suspend the offering of shares from time to time. Shares purchased will
be held in the shareholder's account by the Fund's transfer agent, The Share-
holder Services Group, Inc., a subsidiary of First Data Corporation ("TSSG").
Share certificates are issued only upon a shareholder's written request to
TSSG.
Purchase orders received by the Fund or Smith Barney prior to the close of
regular trading on the NYSE, on any day the Fund calculates its net asset val-
ue, are priced according to the net asset value determined on that day. Orders
received by dealers or Introducing Brokers prior to the close of regular trad-
ing on the NYSE on any day the Fund calculates its net asset value, are priced
according to the net asset value determined on that day, provided the order is
received by the Fund or Smith Barney prior to Smith Barney's close of business
(the "trade date"). Effective June 7, 1995, payment for Fund shares is due on
the third business day (the "settlement date") after the trade date.
29
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at any time by purchasing
shares through a service known as the Systematic Investment Plan. Under the
Systematic Investment Plan, Smith Barney or TSSG is authorized through preau-
thorized transfers of $50 or more to charge the shareholder's account with a
bank or other financial institution on a monthly or quarterly basis as indi-
cated by the shareholder to provide for systematic additions to the sharehold-
er's Fund account. A shareholder who has insufficient funds to complete the
transfer will be charged a fee of up to $25 by Smith Barney or TSSG. The Sys-
tematic Investment Plan also authorizes Smith Barney to apply cash held in the
shareholder's Smith Barney brokerage account or redeem the shareholder's shares
of a Smith Barney money market fund to make additions to the account. Addi-
tional information is available from the Fund or a Smith Barney Financial Con-
sultant.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES
The sales charges applicable to purchases of Class A shares of the Fund are
as follows:
<TABLE>
<CAPTION>
DEALERS
SALES CHARGE AS % SALES CHARGE AS % REALLOWANCE AS
AMOUNT OF INVESTMENT OF TRANSACTION OF AMOUNT INVESTED % OF OFFERING PRICE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $ 25,000 4.00% 4.17% 3.60%
$ 25,000 - 49,999 3.50 3.63 3.15
50,000 - 99,999 3.00 3.09 2.70
100,000 - 249,999 2.50 2.56 2.25
250,000 - 499,999 1.50 1.52 1.35
500,000 and over* * * *
- ---------------------------------------------------------------------------------
</TABLE>
* Purchases of Class A shares, which when combined with current holdings of
Class A shares offered with a sales charge equal or exceed $500,000 in the
aggregate, will be made at net asset value without any initial sales charge,
but will be subject to a CDSC of 1.00% on redemptions made within 12 months
of purchase. The CDSC on Class A shares is payable to Smith Barney which
compensates Smith Barney Financial Consultants and other dealers whose
clients make purchases of $500,000 or more. The CDSC is waived in the same
circumstances in which the CDSC applicable to Class B and Class C shares is
waived. See "Deferred Sales Charge Alternatives" and "Waivers of CDSC."
Members of the selling group may receive up to 90% of the sales charge and
may be deemed to be underwriters of the Fund as defined in the Securities Act
of 1933, as amended.
30
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
The reduced sales charges shown above apply to the aggregate of purchases of
Class A shares of the Fund made at one time by "any person," which includes an
individual, including his or her spouse and children, or a trustee or other
fiduciary of a single trust estate or single fiduciary account. The reduced
sales charge minimums may also be met by aggregating the purchase with the net
asset value of all Class A shares held in funds sponsored by Smith Barney that
are offered with a sales charge listed under "Exchange Privilege."
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be made at net asset value without a sales
charge in the following circumstances: (a) sales of Class A shares to Directors
of the Fund and employees of Travelers and its subsidiaries, or to the spouses
and children of such persons (including the surviving spouse of a deceased
Director or employee, and retired Directors or employees); (b) offers of Class
A shares to any other investment company in connection with the combination of
such company with the Fund by merger, acquisition of assets or otherwise; (c)
purchases of Class A shares by any client of a newly employed Smith Barney
Financial Consultant (for a period up to 90 days from the commencement of the
Financial Consultant's employment with Smith Barney), on the condition the pur-
chase of Class A shares is made with the proceeds of the redemption of shares
of a mutual fund which (i) was sponsored by the Financial Consultant's prior
employer, (ii) was sold to the client by the Financial Consultant and (iii) was
subject to a sales charge; (d) shareholders who have redeemed Class A shares in
the Fund (or Class A shares of another fund of the Smith Barney Mutual Funds
that are offered with a sales charge equal to or greater than the maximum sales
charge of the Fund) and who wish to reinvest their redemption proceeds in the
Fund, provided the reinvestment is made within 60 calendar days of the redemp-
tion; (e) accounts managed by registered investment advisory subsidiaries of
Travelers; and (f) investments of distributions from a UIT sponsored by Smith
Barney. In order to obtain such discounts, the purchaser must provide suffi-
cient information at the time of purchase to permit verification that the pur-
chase would qualify for the elimination of the sales charge.
RIGHT OF ACCUMULATION
Class A shares of the Fund may be purchased by "any person" (as defined
above) at a reduced sales charge or at net asset value determined by aggregat-
ing the dollar amount of the new purchase and the total net asset value of all
Class
31
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
A shares of the Fund and of funds sponsored by Smith Barney which are offered
with a sales charge listed under "Exchange Privilege" then held by such person
and applying the sales charge applicable to such aggregate. In order to obtain
such discount, the purchaser must provide sufficient information at the time of
purchase to permit verification that the purchase qualifies for the reduced
sales charge. The right of accumulation is subject to modification or discon-
tinuance at any time with respect to all shares purchased thereafter.
GROUP PURCHASES
Upon completion of certain automated systems, a reduced sales charge or pur-
chase at net asset value will also be available to employees (and partners) of
the same employer purchasing as a group, provided each participant makes the
minimum initial investment required. The sales charge applicable to purchases
by each member of such a group will be determined by the table set forth above
under "Initial Sales Charge Alternative--Class A Shares" and will be based upon
the aggregate sales of Class A shares of Smith Barney Mutual Funds offered with
a sales charge to, and share holdings of, all members of the group. To be eli-
gible for such reduced sales charges or to purchase at net asset value, all
purchases must be pursuant to an employee or partnership-sanctioned plan meet-
ing certain requirements. One such requirement is that the plan must be open to
specified partners or employees of the employer and its subsidiaries, if any.
Such plan may, but is not required to, provide for payroll deductions. Smith
Barney may also offer a reduced sales charge or net asset value purchase for
aggregating related fiduciary accounts under such conditions that Smith Barney
will realize economies of sales efforts and sales related expenses. An individ-
ual who is a member of a qualified group may also purchase Class A shares of
the Fund at the reduced sales charge applicable to the group as a whole. The
sales charge is based upon the aggregate dollar value of Class A shares offered
with a sales charge that have been previously purchased and are still owned by
the group, plus the amount of the current purchase. A "qualified group" is one
which (a) has been in existence for more than six months, (b) has a purpose
other than acquiring Fund shares at a discount and (c) satisfies uniform crite-
ria which enable Smith Barney to realize economies of scale in its costs of
distributing shares. A qualified group must have more than 10 members, must be
available to arrange for group meetings between representatives of the Fund and
the members, and must agree to include sales and other materials related to the
Fund in its publications and mailings to members at no cost to Smith Barney. In
order to obtain such reduced sales charge or to purchase at net asset value,
the purchaser
32
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
must provide sufficient information at the time of purchase to permit verifica-
tion that the purchase qualifies for the reduced sales charge. Approval of
group purchase reduced sales charge plans is subject to the discretion of Smith
Barney.
LETTER OF INTENT
Class A Shares. A Letter of Intent for amounts of $50,000 or more provides an
opportunity for an investor to obtain a reduced sales charge by aggregating
investments over a 13 month period, provided that the investor refers to such
Letter when placing orders. For purposes of a Letter of Intent, the "Amount of
Investment" as referred to in the preceding sales charge table includes (i) all
Class A shares of the Fund and other funds of the Smith Barney Mutual Funds
offered with a sales charge acquired during the term of the Letter plus (ii)
the value of all Class A shares previously purchased and still owned. Each
investment made during the period receives the reduced sales charge applicable
to the total amount of the investment goal. If the goal is not achieved within
the period, the investor must pay the difference between the sales charges
applicable to the purchases made and the charges previously paid, or an appro-
priate number of escrowed shares will be redeemed.The term of the Letter will
commence upon the date the Letter is signed, or at the option of the investor,
up to 90 days before such date. Please contact a Smith Barney Financial Consul-
tant or TSSG to obtain a Letter of Intent application.
Class Y Shares. A Letter of Intent may also be used as a way for investors to
meet the minimum investment requirement for Class Y shares. Such investors must
make an initial minimum purchase of $1,000,000 in Class Y shares of the Fund
and agree to purchase a total of $5,000,000 of Class Y shares of the Fund
within six months from the date of the Letter. If a total investment of
$5,000,000 is not made within the six month period, all Class Y shares pur-
chased to date will be transferred to Class A shares, where they will be sub-
ject to all fees (including a service fee of 0.25%) and expenses applicable to
the Fund's Class A shares, which may include a CDSC of 1.00%. Please contact a
Smith Barney Financial Consultant or TSSG for further information.
DEFERRED SALES CHARGE ALTERNATIVES
"CDSC Shares" are sold at net asset value next determined without an initial
sales charge so that the full amount of an investor's purchase payment may be
immediately invested in the Fund. A CDSC, however, may be imposed on cer-
33
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
tain redemptions of these shares. "CDSC Shares" are: (a) Class B shares; (b)
Class C shares; and (c) Class A shares which when combined with Class A shares
offered with a sales charge currently held by an investor equal or exceed
$500,000 in the aggregate.
Any applicable CDSC will be assessed on an amount equal to the lesser of the
original cost of the shares being redeemed or their net asset value at the time
of redemption. CDSC Shares that are redeemed will not be subject to a CDSC to
the extent that the value of such shares represents: (a) capital appreciation
of Fund assets; (b) reinvestment of dividends or capital gain distributions;
(c) with respect to Class B shares, shares redeemed more than five years after
their purchase; or (d) with respect to Class C shares and Class A shares that
are CDSC Shares, shares redeemed more than 12 months after their purchase.
Class C shares and Class A shares that are CDSC Shares are subject to a 1.00%
CDSC if redeemed within 12 months of purchase. In circumstances in which the
CDSC is imposed on Class B shares, the amount of the charge will depend on the
number of years since the shareholder made the purchase payment from which the
amount is being redeemed. Solely for purposes of determining the number of
years since a purchase payment, all purchase payments made during a month will
be aggregated and deemed to have been made on the last day of the preceding
Smith Barney statement month. The following table sets forth the rates of the
charge for redemptions of Class B shares by shareholders.
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE
PAYMENT WAS MADE CDSC
- --------------------------------
<S> <C>
First 4.50%
Second 4.00%
Third 3.00%
Fourth 2.00%
Fifth 1.00%
Sixth 0.00%
Seventh 0.00%
Eighth 0.00%
- --------------------------------
</TABLE>
Class B shares will convert automatically to Class A shares eight years after
the date on which they were purchased and thereafter will no longer be subject
to any distribution fees. There will also be converted at that time such pro-
portion of Class B Dividend Shares owned by the shareholders as the total num-
ber of his or her Class B shares converting at the time bears to the total num-
ber of outstanding Class B shares (other than Class B Dividend Shares) owned by
the
34
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
shareholder. Shareholders who held Class B shares of Smith Barney Shearson
Short-Term World Income Fund (the "Short-Term World Income Fund") on July 15,
1994 and who subsequently exchange those shares for Class B shares of the Fund
will be offered the opportunity to exchange all such Class B shares for Class A
shares of the Fund four years after the date on which those shares were deemed
to have been purchased. Holders of such Class B shares will be notified of the
pending exchange in writing approximately 30 days before the fourth anniversary
of the purchase date and, unless the exchange has been rejected in writing, the
exchange will occur on or about the fourth anniversary date. See "Prospectus
Summary--Alternative Purchase Arrangements--Class B Shares Conversion Feature."
The length of time that CDSC Shares acquired through an exchange have been
held will be calculated from the date that the shares exchanged were initially
acquired in one of the other Smith Barney Mutual Funds, and Fund shares being
redeemed will be considered to represent, as applicable, capital appreciation
or dividend and capital gain distribution reinvestments in such other funds.
For Federal income tax purposes, the amount of the CDSC will reduce the gain or
increase the loss, as the case may be, on the amount realized on redemption.
The amount of any CDSC will be paid to Smith Barney.
To provide an example, assume an investor purchased 100 Class B shares at $10
per share for a cost of $1,000. Subsequently, the investor acquired 5 addi-
tional shares through dividend reinvestment. During the fifteenth month after
the purchase, the investor decided to redeem $500 of his or her investment.
Assuming at the time of the redemption the net asset value had appreciated to
$12 per share, the value of the investor's shares would be $1,260 (105 shares
at $12 per share). The CDSC would not be applied to the amount which represents
appreciation ($200) and the value of the reinvested dividend shares ($60).
Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would be
charged at a rate of 4.00% (the applicable rate for Class B shares) for a total
deferred sales charge of $9.60.
WAIVERS OF CDSC
The CDSC will be waived on: (a) exchanges (see "Exchange Privilege"); (b)
automatic cash withdrawals in amounts equal to or less than 1.00% per month of
the value of the shareholder's shares at the time the withdrawal plan commences
(see "Automatic Cash Withdrawal Plan") (provided, however, that auto-
35
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
matic cash withdrawals in amounts equal to or less than 2.00% per month of the
value of the shareholder's shares will be permitted for withdrawal plans that
were established prior to November 7, 1994); (c) redemptions of shares within
12 months following the death or disability of the shareholder; (d) involuntary
redemptions; and (e) redemptions of shares in connection with a combination of
the Fund with any investment company by merger, acquisition of assets or other-
wise. In addition, a shareholder who has redeemed shares from other funds of
the Smith Barney Mutual Funds may, under certain circumstances, reinvest all or
part of the redemption proceeds within 60 days and receive pro rata credit for
any CDSC imposed on the prior redemption.
CDSC waivers will be granted subject to confirmation (by Smith Barney in the
case of shareholders who are also Smith Barney clients or by TSSG in the case
of all other shareholders) of the shareholder's status or holdings, as the case
may be.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each Class may be exchanged at the
net asset value next determined for shares of the same Class in the following
funds of the Smith Barney Mutual Funds, to the extent shares are offered for
sale in the shareholder's state of residence. Exchanges of Class A, Class B and
Class C shares are subject to minimum investment requirements and all shares
are subject to other requirements of the fund into which exchanges are made,
and a sales charge differential may apply.
FUND NAME
Growth Funds
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Growth Opportunity Fund
Smith Barney Managed Growth Fund
Smith Barney Special Equities Fund
Smith Barney Telecommunications Growth Fund
36
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
Growth and Income Funds
Smith Barney Convertible Fund
Smith Barney Funds, Inc.--Income and Growth Portfolio
Smith Barney Funds, Inc.--Utilities Portfolio
Smith Barney Growth and Income Fund
Smith Barney Premium Total Return Fund
Smith Barney Strategic Investors Fund
Smith Barney Utilities Fund
Taxable Fixed-Income Funds
**Smith Barney Adjustable Rate Government Income Fund
Smith Barney Diversified Strategic Income Fund
*Smith Barney Funds, Inc.--Income Return Account Portfolio
Smith Barney Funds, Inc.--Monthly Payment Government Portfolio
+++Smith Barney Funds, Inc.--Short-Term U.S. Treasury Securities Portfolio
Smith Barney Funds, Inc.--U.S. Government Securities Portfolio
Smith Barney Government Securities Fund
Smith Barney High Income Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Managed Governments Fund Inc.
Tax-Exempt Funds
*Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
Smith Barney Florida Municipals Fund
*Smith Barney Intermediate Maturity California Municipals Fund
*Smith Barney Intermediate Maturity New York Municipals Fund
*Smith Barney Limited Maturity Municipals Fund
Smith Barney Managed Municipals Fund Inc.
37
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
Smith Barney Massachusetts Municipals Fund
Smith Barney Muni Funds--California Portfolio
*Smith Barney Muni Funds--Florida Limited Term Portfolio
Smith Barney Muni Funds--Florida Portfolio
Smith Barney Muni Funds--Georgia Portfolio
*Smith Barney Muni Funds--Limited Term Portfolio
Smith Barney Muni Funds--National Portfolio
Smith Barney Muni Funds--New Jersey Portfolio
Smith Barney Muni Funds--New York Portfolio
Smith Barney Muni Funds--Ohio Portfolio
Smith Barney Muni Funds--Pennsylvania Portfolio
Smith Barney New York Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Tax-Exempt Income Fund
International Funds
Smith Barney World Funds, Inc.--Emerging Markets Portfolio
Smith Barney World Funds, Inc.--European Portfolio
Smith Barney World Funds, Inc.--Global Government Bond Portfolio
Smith Barney World Funds, Inc.--International Balanced Portfolio
Smith Barney World Funds, Inc.--International Equity Portfolio
Smith Barney World Funds, Inc.--Pacific Portfolio
Smith Barney Precious Metals and Minerals Fund Inc.
Money Market Funds
+Smith Barney Exchange Reserve Fund
++Smith Barney Money Funds, Inc.--Cash Portfolio
++Smith Barney Money Funds, Inc.--Government Portfolio
***Smith Barney Money Funds, Inc.--Retirement Portfolio
38
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
++Smith Barney Municipal Money Market Fund, Inc.
++Smith Barney Muni Funds--California Money Market Portfolio
++Smith Barney Muni Funds--New York Money Market Portfolio
- --------------------------------------------------------------------------------
* Available for exchange with Class A, Class C and Class Y shares of the Fund.
** Available for exchange with Class A, Class B and Class Y shares of the Fund.
*** Available for exchange with Class A shares of the Fund.
+ Available for exchange with Class B and Class C shares of the Fund.
++ Available for exchange with Class A and Class Y shares of the Fund.
Class A Exchanges. Class A shares of Smith Barney Mutual Funds sold without a
sales charge or with a maximum sales charge of less than the maximum charged by
other Smith Barney Mutual Funds will be subject to the appropriate "sales
charge differential" upon the exchange of such shares for Class A shares of a
fund sold with a higher sales charge. The "sales charge differential" is lim-
ited to a percentage rate no greater than the excess of the sales charge rate
applicable to purchases of shares of the mutual fund being acquired in the
exchange over the sales charge rate(s) actually paid on the mutual fund shares
relinquished in the exchange and on any predecessor of those shares. For pur-
poses of the exchange privilege, shares obtained through automatic reinvestment
of dividends and capital gains distributions are treated as having paid the
same sales charges applicable to the shares on which the dividends or distribu-
tions were paid; however, if no sales charge was imposed upon the initial pur-
chase of the shares, any shares obtained through automatic reinvestment will be
subject to a sales charge differential upon exchange.
Class B Exchanges. In the event a Class B shareholder (unless such share-
holder was a Class B shareholder of the Short-Term World Income Fund on July
15, 1994) wishes to exchange all or a portion of his or her shares in any of
the funds imposing a higher CDSC than that imposed by the Fund, the exchanged
Class B shares will be subject to the higher applicable CDSC. Upon an exchange,
the new Class B shares will be deemed to have been purchased on the same date
as the Class B shares of the Fund that have been exchanged.
Class C Exchanges. Upon an exchange, the new Class C shares will be deemed to
have been purchased on the same date as the Class C shares of the Fund that
have been exchanged.
39
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
Class Y Exchanges. Class Y shareholders of the Fund who wish to exchange all
or a portion of their Class Y shares for Class Y shares in any of the funds
identified above may do so without imposition of any charge.
Additional Information Regarding the Exchange Privilege. Although the
exchange privilege is an important benefit, excessive exchange transactions can
be detrimental to the Fund's performance and its shareholders. SBMFM may deter-
mine that a pattern of frequent exchanges is excessive and contrary to the best
interests of the Fund's other shareholders. In this event, SBMFM will notify
Smith Barney and Smith Barney may, at its discretion, decide to limit addi-
tional purchases and/or exchanges by a shareholder. Upon such a determination,
Smith Barney will provide notice in writing or by telephone to the shareholder
at least 15 days prior to suspending the exchange privilege and during the 15
day period the shareholder will be required to (a) redeem his or her shares of
the Fund or (b) remain invested in the Fund or exchange into any of the funds
of the Smith Barney Mutual Funds ordinarily available, which position the
shareholder would be expected to maintain for a significant period of time. All
relevant factors will be considered in determining what constitutes an abusive
pattern of exchanges.
Exchanges will be processed at the net asset value next determined, plus any
applicable sales charge differential. Redemption procedures discussed below are
also applicable for exchanging shares, and exchanges will be made upon receipt
of all supporting documents in proper form. If the account registration of the
shares of the fund being acquired is identical to the registration of the
shares of the fund exchanged, no signature guarantee is required. A capital
gain or loss for tax purposes will be realized upon the exchange, depending
upon the cost or other basis of shares redeemed. Before exchanging shares,
investors should read the current prospectus describing the shares to be
acquired. The Fund reserves the right to modify or discontinue exchange privi-
leges upon 60 days' prior notice to shareholders.
REDEMPTION OF SHARES
The Fund is required to redeem the shares of the Fund tendered to it, as
described below, at a redemption price equal to their net asset value per share
next determined after receipt of a written request in proper form at no charge
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SMITH BARNEY
New Jersey Municipals Fund Inc.
REDEMPTION OF SHARES (CONTINUED)
other than any applicable CDSC. Redemption requests received after the close of
regular trading on the NYSE are priced at the net asset value next determined.
If a shareholder holds shares in more than one Class, any request for redemp-
tion must specify the Class being redeemed. In the event of a failure to spec-
ify which Class, or if the investor owns fewer shares of the Class than speci-
fied, the redemption request will be delayed until the Fund's transfer agent
receives further instructions from Smith Barney, or if the shareholder's
account is not with Smith Barney, from the shareholder directly. Effective June
7, 1995, redemption proceeds will be remitted on or before the third day fol-
lowing receipt of proper tender, except on any days on which the NYSE is closed
or as permitted under the 1940 Act in extraordinary circumstances. Generally,
if the redemption proceeds are remitted to a Smith Barney brokerage account,
these funds will not be invested for the shareholder's benefit without specific
instruction and Smith Barney will benefit from the use of temporarily
uninvested funds. Redemption proceeds for shares purchased by check, other than
a certified or official bank check, will be remitted upon clearance of the
check, which may take up to ten days or more.
Shares held by Smith Barney as custodian must be redeemed by submitting a
written request to a Smith Barney Financial Consultant. Shares other than those
held by Smith Barney as custodian may be redeemed through an investor's Finan-
cial Consultant, Introducing Broker or dealer in the selling group or by sub-
mitting a written request for redemption to:
Smith Barney New Jersey Municipals Fund Inc.
Class A, B, C or Y (please specify)
c/o The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, Massachusetts 02205-9134
A written redemption request must (a) state the Class and number or dollar
amount of shares to be redeemed, (b) identify the shareholder's account number
and (c) be signed by each registered owner exactly as the shares are regis-
tered. If the shares to be redeemed were issued in certificate form, the cer-
tificates must be endorsed for transfer (or be accompanied by an endorsed stock
power) and must be submitted to TSSG together with the redemption request. Any
signature appearing on a redemption request, share certificate or stock power
must
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SMITH BARNEY
New Jersey Municipals Fund Inc.
REDEMPTION OF SHARES (CONTINUED)
be guaranteed by an eligible guarantor institution such as a domestic bank,
savings and loan institution, domestic credit union, member bank of the Federal
Reserve System or member firm of a national securities exchange. TSSG may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees or guardians. A redemption request will not
be deemed properly received until TSSG receives all required documents in
proper form.
AUTOMATIC CASH WITHDRAWAL PLAN
The Fund offers shareholders an automatic cash withdrawal plan, under which
shareholders who own shares with a value of at least $10,000 many elect to
receive cash payments of at least $50 monthly or quarterly. The withdrawal plan
will be carried over on exchanges between funds or Classes of the Fund. Any
applicable CDSC will not be waived on amounts withdrawn by a shareholder that
exceed 1.00% per month of the value of the shareholder's shares subject to the
CDSC at the time the withdrawal plan commences. (With respect to withdrawal
plans in effect prior to November 7, 1994, any applicable CDSC will be waived
on amounts withdrawn that do not exceed 2.00% per month of the shareholder's
shares subject to the CDSC.) For further information regarding the automatic
cash withdrawal plan, shareholders should contact a Smith Barney Financial Con-
sultant.
MINIMUM ACCOUNT SIZE
The Fund reserves the right to involuntarily liquidate any shareholder's
account in the Fund if the aggregate net asset value of the shares held in the
Fund account is less than $500. (If a shareholder has more than one account in
this Fund, each account must satisfy the minimum account size.) The Fund, how-
ever, will not redeem shares based solely on market reductions in net asset
value. Before the Fund exercises such right, shareholders will receive written
notice and will be permitted 60 days to bring accounts up to the minimum to
avoid automatic redemption.
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SMITH BARNEY
New Jersey Municipals Fund Inc.
PERFORMANCE
YIELD
From time to time, the Fund may advertise the 30-day "yield" and "equivalent
taxable yield" of each Class of shares. The yield refers to the income gener-
ated by an investment in those shares of the Fund over the 30-day period iden-
tified in the advertisement and is computed by dividing the net investment
income per share earned by the Class during the period by the maximum public
offering price per share on the last day of the period. This income is
"annualized" by assuming that the amount of income is generated each month over
a one-year period and is compounded semi-annually. The annualized income is
then shown as a percentage of the net asset value.
The equivalent taxable yield demonstrates the yield on a taxable investment
necessary to produce an after-tax yield equal to the Fund's tax-exempt yield
for each Class. It is calculated by increasing the yield shown for the Class to
the extent necessary to reflect the payment of taxes at specified tax rates.
Thus, the equivalent taxable yield always will exceed the Fund's yield.
TOTAL RETURN
From time to time the Fund may include its total return, average annual total
return and current dividend return in advertisements and/or other types of
sales literature. These figures are computed separately for Class A, Class B,
Class C and Class Y shares of the Fund. These figures are based on historical
earnings and are not intended to indicate future performance. Total return is
computed for a specified period of time assuming deduction of the maximum sales
charge, if any, from the initial amount invested and reinvestment of all income
dividends and capital gain distributions on the reinvestment dates at prices
calculated as stated in this Prospectus, then dividing the value of the invest-
ment at the end of the period so calculated by the initial amount invested and
subtracting 100%. The standard average annual total return, as prescribed by
the SEC, is derived from this total return, which provides the ending redeem-
able value. Such standard total return information may also be accompanied with
nonstandard total return information for differing periods computed in the same
manner but without annualizing the total return or taking sales charges into
account. The Fund calculates current dividend return for each Class by
annualizing the most recent monthly distribution and then dividing by the net
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SMITH BARNEY
New Jersey Municipals Fund Inc.
PERFORMANCE (CONTINUED)
asset value or the maximum public offering price (including sales charge) on
the last day of the period for which current dividend return is presented. The
current dividend return for each Class may vary from time to time depending on
market conditions, the composition of the Fund's investment portfolio and oper-
ating expenses. These factors and possible differences in the methods used in
calculating current dividend return should be considered when comparing a
Class' current return to yields published for other investment companies and
other investment vehicles. The Fund may also include comparative performance
information in advertising or marketing its shares. Such performance informa-
tion may include data from Lipper Analytical Services, Inc. or similar indepen-
dent services that monitor the performance of mutual funds, or other industry
publications. The Fund will include performance data for Class A, Class B,
Class C and Class Y shares in any advertisement or information including per-
formance data of the Fund.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
Overall responsibility for management and supervision of the Fund rests with
the Fund's Board of Directors. The Directors approve all significant agreements
between the Fund and the companies that furnish services to the Fund, including
agreements with the Fund's distributor, investment adviser, administrator, sub-
administrator, custodian and transfer agent. The day-to-day operations of the
Fund are delegated to the Fund's investment adviser, administrator and sub-
administrator. The Statement of Additional Information contains general back-
ground information regarding each Director and executive officer of the Fund.
INVESTMENT ADVISER -- SBMFM
SBMFM, located at 388 Greenwich Street, New York, New York 10013, serves as
the Fund's investment adviser pursuant to a transfer of the advisory agreement,
effective November 7, 1994, from its affiliate, Mutual Management Corp. (Mutual
Management Corp. and SBMFM are both wholly owned subsidiaries of Holdings.)
Investment advisory services continue to be provided to the Fund by the same
portfolio managers who had provided services under the agreement with Mutual
Management Corp. SBMFM (through predecessor entities) has been in the invest-
ment counseling business since 1934 and is a registered
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SMITH BARNEY
New Jersey Municipals Fund Inc.
MANAGEMENT OF THE FUND (CONTINUED)
investment adviser. SBMFM renders investment advice to investment companies
that had aggregate assets under management as of April 28, 1995 in excess of
$58.36 billion.
Subject to the supervision and direction of the Fund's Board of Directors,
SBMFM manages the Fund's portfolio in accordance with the Fund's investment
objective and policies, makes investment decisions for the Fund, places orders
to purchase and sell securities and employs professional portfolio managers and
securities analysts who provide research services to the Fund. For investment
advisory services rendered, the Fund pays SBMFM an investment advisory fee at
the following annual rates: 0.35% of average daily net assets up to $500 mil-
lion; and 0.32% of average daily net assets in excess of $500 million. For the
fiscal year ended March 31, 1995, Mutual Management Corp. and SBMFM were paid
investment advisory fees equal to 0.35% of the value of the average daily net
assets of the Fund.
PORTFOLIO MANAGEMENT
Lawrence T. McDermott, an Investment Officer of SBMFM, has served as Vice
President and Investment Officer of the Fund since it commenced operations, and
manages the day-to-day operations of the Fund, including making all investment
decisions.
Management's discussion and analysis, and additional performance information
regarding the Fund during the fiscal year ended March 31, 1995, are included in
the Annual Report dated March 31, 1995. A copy of the Annual Report may be
obtained upon request and without charge from a Smith Barney Financial Consul-
tant or by writing or calling the Fund at the address or telephone number
listed on page one of this Prospectus.
ADMINISTRATOR
SBMFM also serves as the Fund's administrator and oversees all aspects of the
Fund's administration. For administration services rendered, the Fund pays
SBMFM a fee at the following annual rates of average daily net assets: 0.20% to
$500 million; and 0.18% in excess of $500 million. For the fiscal year ended
March 31, 1995, the Fund paid administration fees equal to 0.20% of the value
of its average net assets.
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SMITH BARNEY
New Jersey Municipals Fund Inc.
MANAGEMENT OF THE FUND (CONTINUED)
SUB-ADMINISTRATOR -- BOSTON ADVISORS
Boston Advisors, located at One Boston Place, Boston, Massachusetts 02108,
serves as the Fund's sub-administrator. Boston Advisors provides investment
management, investment advisory and/or administrative services to investment
companies which had aggregate assets under management as of April 29, 1995, in
excess of $13.157 billion.
Boston Advisors calculates the net asset value of the Fund's shares and gen-
erally assists SBMFM in all aspects of the Fund's administration and operation.
Under a sub-administration agreement dated July 20, 1994, Boston Advisors is
paid a portion of the fee paid by the Fund to SBMFM at a rate agreed upon from
time to time between Boston Advisors and SBMFM. Prior to July 20, 1994, Boston
Advisors served as the Fund's administrator.
DISTRIBUTOR
Smith Barney is located at 388 Greenwich Street, New York, New York 10013.
Smith Barney distributes shares of the Fund as principal underwriter and as
such conducts a continuous offering pursuant to a "best efforts" arrangement
requiring Smith Barney to take and pay for only such securities as may be sold
to the public. Pursuant to a plan of distribution adopted by the Fund under
Rule 12b-1 under the 1940 Act (the "Plan"), Smith Barney is paid a service fee
with respect to Class A, Class B and Class C shares of the Fund at the annual
rate of 0.15% of the average daily net assets of the respective Class. Smith
Barney is also paid a distribution fee with respect to Class B and Class C
shares at the annual rate of 0.50% and 0.55%, respectively, of the average
daily net assets attributable to those Classes. Class B shares which automati-
cally convert to Class A shares eight years after the date of original purchase
will no longer be subject to a distribution fee. The fees are used by Smith
Barney to pay its Financial Consultants for servicing shareholder accounts and,
in the case of Class B and Class C shares, to cover expenses primarily intended
to result in the sale of those shares. These expenses include: advertising
expenses; the cost of printing and mailing prospectuses to potential investors;
payments to and expenses of Smith Barney Financial Consultants and other per-
sons who provide support services in connection with the distribution of
shares; interest and/or carrying charges; and indirect and overhead costs of
Smith Barney associated with the sale of Fund shares, including lease, utility,
communications and sales promotion expenses.
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SMITH BARNEY
New Jersey Municipals Fund Inc.
DISTRIBUTOR (CONTINUED)
The payments to Smith Barney Financial Consultants for selling shares of a
Class include a commission or fee paid by the investor or Smith Barney at the
time of sale and, with respect to Class A, Class B and Class C shares, a con-
tinuing fee for servicing shareholder accounts for as long as a shareholder
remains a holder of that Class. Smith Barney Financial Consultants may receive
different levels of compensation for selling different Classes of shares.
Payments under the Plan are not tied exclusively to the distribution and
shareholder service expenses actually incurred by Smith Barney and the payments
may exceed distribution expenses actually incurred. The Fund's Board of Direc-
tors will evaluate the appropriateness of the Plan and its payment terms on a
continuing basis and in so doing will consider all relevant factors, including
expenses borne by Smith Barney, amounts received under the Plan and proceeds of
the CDSC.
ADDITIONAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on November
12, 1987, and is registered with the SEC as a non-diversified, open-end manage-
ment investment company. The Fund offers shares of common stock currently clas-
sified into four Classes--A, B, C and Y. Each Class of shares has a par value
of $.001 per share and represents identical interest in the Fund's investment
portfolio. As a result, the Classes have the same rights, privileges and pref-
erences, except with respect to: (a) the designation of each Class; (b) the
effect of the respective sales charges, if any, for each Class; (c) the distri-
bution and/or service fees, if any, borne by each Class; (d) the expenses allo-
cable exclusively to each Class; (e) voting rights on matters exclusively
affecting a single Class; (f) the exchange privilege of each Class; and (g) the
conversion feature of the Class B shares. The Board of Directors does not
anticipate that there will be any conflicts among the interests of the holders
of the different Classes. The Directors, on an ongoing basis, will consider
whether any such conflict exists and, if so, will take appropriate action.
The Fund does not hold annual shareholder meetings. There normally will be no
meetings of shareholders for the purpose of electing Directors unless and until
such time as less than a majority of the Directors holding office have been
elected by shareholders. The Directors will call a meeting for any purpose upon
written request of shareholders holding at least 10% of the Fund's outstanding
47
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SMITH BARNEY
New Jersey Municipals Fund Inc.
ADDITIONAL INFORMATION (CONTINUED)
shares, and the Fund will assist shareholders in calling such a meeting as
required by the 1940 Act. When matters are submitted for shareholder vote,
shareholders of each Class will have one vote for each full share owned and a
proportionate, fractional vote for any fractional share held of that Class.
Generally, shares of the Fund will be voted on a Fund-wide basis on all matters
except matters affecting only the interests of one Class.
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary of
Mellon located at One Boston Place, Boston, Massachusetts 02108, serves as cus-
todian of the Fund's investments.
TSSG is located at Exchange Place, Boston, Massachusetts 02109, and serves as
the Fund's transfer agent.
The Fund sends to each of its shareholders a semi-annual report and an
audited annual report, which include listings of investment securities held by
the Fund at the end of each reporting period. In an effort to reduce the Fund's
printing and mailing costs, the Fund plans to consolidate the mailing of its
semi-annual and annual reports by household. This consolidation means that a
household having multiple accounts with the identical address of record will
receive a single copy of each report. Shareholders who do not want this consol-
idation to apply to their account should contact their Smith Barney Financial
Consultant or TSSG.
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[LOGO OF SMITH BARNEY A MEMBER OF TRAVELERS GROUP APPEAR HERE]
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.
388 Greenwich Street New York, New York 10013
FD0231 E5
