1995
ANNUAL
REPORT
DESCRIPTION OF ART WORK ON REPORT COVER
Small box above fund name showing a highway going across New Jersey's
homes and trees.
SMITH BARNEY
NEW JERSEY
MUNICIPALS
FUND INC.
MARCH 31, 1995
Smith Barney Mutual Funds
INVESTING IN YOUR FUTURE.
EVERY DAY.
NEW JERSEY MUNICIPALS FUND INC.
DEAR SHAREHOLDER:
We are pleased to provide you with the Annual Report and portfolio of in-
vestments for Smith Barney New Jersey Municipals Fund Inc. (the "Fund")
for the fiscal year ended March 31, 1995. Although municipal bond prices
declined during the first half of the Fund's fiscal year, they rebounded
quite sharply during its second half. Despite this variable and oftentimes
difficult investment environment, the Fund provided investors in Class A
shares with a total return of 6.37% and Class B shares with a total return
of 5.76% for the twelve months ended March 31, 1995. Reflecting the im-
provement in the municipal market that began in late 1994, Class C shares,
a newly-available class of shares, earned a total return of 8.01% for the
period between December 13, 1994 and March 31, 1995. Additional perfor-
mance data for each class of shares during this and previous fiscal years
is available in the performance section of the report which follows this
letter.
ECONOMIC AND MARKET OVERVIEW
Much can be said about the municipal bond and other fixed income markets
of the past twelve months, but they certainly cannot be described as dull.
The Federal Reserve increased interest rates six times in 1994 and once in
1995 in an attempt to slow the rate of economic growth and prevent infla-
tion from increasing. This process resulted in declining bond prices and
rising interest rates during the first half of the Fund's fiscal year.
During the second half of the year, the market produced a powerful bond
rally that began in December as investors came to the conclusion that an
elusive "soft landing" was indeed possible and inflation posed no real
threat. The Fund's net asset value rebounded as a result of this rally,
allowing it to post an increase for this fiscal year. We anticipate that
slower economic growth (at least over the near term) will contribute to a
more stable interest rate environment in 1995 than investors experienced
in 1994. We believe that this will be particularly true of the tax-exempt
market.
Prices for New Jersey tax-exempt securities rallied along with the rest of
the municipal sector as investors, who had experienced a very difficult
downturn in the market and perhaps even a significant erosion in the value
of their investments, became more comfortable with the economic scenario
that began unfolding in late 1994. In addition, Governor Whitman's tax re-
ductions and general approach to less government have been viewed favor-
ably by tax-exempt investors. As a result, demand from individual inves-
tors has exceeded issuance and this, too, has led to higher prices for New
Jersey tax-exempt securities.
D I V I D E N D P O L I C Y
Although not explicitly stated in the Prospectus, the Fund's policy is to
pay a level monthly dividend based on our projections for the municipal
bond market and the general direction of interest rates. This policy has
no appreciable affect on the Fund's investment strategies or net asset
value per share since it is guided by market conditions. It means that we
do not invest in more speculative securities that may undermine the
Funds's net asset value per share in order to maintain an unrealistically
high dividend policy. We continually monitor both the market and the
Fund's income stream to see that our dividend projections are realistic.
PORTFOLIO STRATEGY
We have continued to invest the Fund's assets in a portfolio of high-
quality New Jersey tax-exempt securities with an average maturity of
approximately 21 years. As of the end of the Fund's fiscal year, 68% of
the portfolio was invested in issues rated Aaa/AAA or Aa/AA -- the two
highest ratings in the investment grade category -- by Moody's Investors
Services and Standard & Poor's Corporation, respectively. We believe these
securities offer our shareholders the best value. The majority of assets
were invested in general obligation, hospital, education, utility and pol-
lution control bonds. These types of bonds provide the Fund with competi-
tive yields and a high degree of liquidity, which makes it easier to
navigate through turbulent market periods.
OUTLOOK
While the fixed income market has had a meaningful rally since the
beginning of 1995, we think that it will be difficult to sustain for the
balance of the year. Although the market may encounter some periodic vola-
tility, we believe that it will be relatively stable for the remainder of
the year. Municipal bond issuance in New Jersey is almost 70% lower to
date in 1995 than it was in 1994, and this trend is expected to continue
for the balance of the year. This scarcity of supply should have a steady-
ing effect on the market over the months ahead.
As we have done since the Fund's inception in 1988, we will continue to
strive to provide you with superior investment management results. We look
forward to reporting to you in the Fund's semi-annual report to sharehold-
ers.
Sincerely,
Heath B. McLendon Lawrence T. McDermott
Heath B. McLendon Lawrence T. McDermott
Chairman of the Board Vice President and
Investment Officer
May 10, 1995
HISTORICAL PERFORMANCE -- CLASS A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Net Asset Value
Year Ended Capital Dividends Return of Total
March 31 Beginning Ending Gains Paid Paid Capital Return*
<S> <C> <C> <C> <C> <C> <C>
4/22/88 - 3/31/89 $11.40 $11.67 $0.01 $0.82 -- 9.84%
1990 $11.67 $11.92 $0.03 $0.82 -- 9.62%
1991 $11.92 $12.17 $0.05 $0.83 $0.01 9.89%
1992 $12.17 $12.44 $0.13 $0.77 $0.04 10.22%
1993 $12.44 $13.16 $0.14 $0.75 $0.01 13.49%
1994 $13.16 $12.55 $0.15 $0.70 -- 1.66%
1995 $12.55 $12.62 -- $0.70 -- 6.37%
Total $0.51 $5.39 $0.06
Cumulative Total Return -- (4/22/88 through 3/31/95) 78.96%
<FN>
* Figures assume reinvestment of all dividends and capital gains distri-
butions at net asset value and do not assume deduction of the front-end
sales charge (maximum 4.00%).
</TABLE>
The Fund's policy is to distribute dividends monthly and capital gains, if
any, annually.
AVERAGE ANNUAL TOTAL RETURN** -- CLASS A SHARES
<TABLE>
<CAPTION>
Without Sales Charge With Sales Charge***
With Fee Without With Fee Without
Waiver Fee Waiver Waiver Fee Waiver
and Expense and Expense and Expense and Expense
Reimbursement Reimbursement Reimbursement Reimbursement
<S> <C> <C> <C> <C>
Year Ended 3/31/95 N/A 6.37% N/A 2.11%
Five Years Ended
3/31/95 8.25% 8.09% 7.37% 7.21%
Inception 4/22/88
through 3/31/95 8.75% 8.46% 8.11% 7.82%
<FN>
** All average annual total return figures shown reflect reinvestment of
dividends and capital gains distributions at net asset value. The Fund
commenced operations on April 22, 1988. The Fund's investment adviser,
sub-investment adviser and/or administrator waived investment advi-
sory, sub-investment advisory and administration fees and/or reimbursed
expenses from April 22, 1988 to March 31, 1994. A shareholder's actual
return for periods during which waivers and reimbursements were in effect
would be the higher of the two numbers shown.
*** Average annual total return figures shown assume the deduction of the
maximum 4.00% sales charge at the time of investment.
NOTE: On November 6, 1992, existing shares of the Fund were desig-
nated Class A shares. Class A shares are subject to a maximum 4.00%
front-end sales charge and an annual service fee of 0.15% of the value
of the average daily net assets attributable to that class. The Fund's
annual rates of return would have been lower had service fees been in
effect prior to November 6, 1992.
</TABLE>
GROWTH OF $10,000 INVESTED IN CLASS A SHARES OF
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.+
VS. LIPPER NEW JERSEY PEER GROUP AVERAGE
AND LEHMAN MUNICIPAL BOND INDEX
April 22, 1988 -- March 31, 1995
DESCRIPTION OF MOUNTAIN CHART IN COVERS (CLASS A)
A line graph depicting the total growth (including reinvestment of divi-
dends and capital gains) of a hypothetical investment of $10,000 in New
Jersey Municipals Fund's Class A shares on April 22, 1988 through March
31, 1995 as compared with the growth of a $10,000 investment in Lipper New
Jersey Peer Group Average and Lehman Municipal Bond Index. The plot points
used to draw the line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000 GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN THE INVESTMENT IN THE
INVESTED IN CLASS A LIPPER NEW JERSEY LEHMAN MUNICIPAL
MONTH ENDED SHARES OF THE FUND PEER GROUP AVERAGE BOND INDEX
<S> <C> <C> <C>
04/22/88 $ 9,600 -- --
04/88 $ 9,651 $10,000 $10,000
05/88 $ 9,726 $10,002 $ 9,971
06/88 $ 9,916 $10,215 $10,117
09/88 $10,236 $10,531 $10,375
12/88 $10,530 $10,835 $10,568
03/89 $10,545 $10,895 $10,638
06/89 $11,160 $11,571 $11,268
09/89 $11,159 $11,501 $11,276
12/89 $11,506 $11,905 $11,709
03/90 $11,559 $11,926 $11,761
06/90 $11,861 $12,218 $12,036
09/90 $11,855 $12,167 $12,043
12/90 $12,429 $12,749 $12,563
03/91 $12,701 $13,042 $12,846
06/91 $12,943 $13,321 $13,121
09/91 $13,526 $13,873 $13,631
12/91 $13,949 $14,303 $14,089
03/92 $13,999 $14,331 $14,131
06/92 $14,577 $15,261 $14,667
09/92 $14,970 $14,914 $15,058
12/92 $15,264 $15,573 $15,332
03/93 $15,888 $16,169 $15,901
06/93 $16,452 $16,768 $16,421
09/93 $17,038 $17,349 $16,976
12/93 $17,246 $17,522 $17,214
03/94 $16,152 $16,463 $16,269
06/94 $16,299 $16,549 $16,450
09/94 $16,384 $16,644 $16,562
12/94 $16,039 $16,348 $16,324
03/95 $17,181 $17,406 $17,478
</TABLE>
+ Illustration of $10,000 invested in Class A shares on April 22, 1988 as-
suming deduction of the maximum 4.00% sales charge at the time of in-
vestment and reinvestment of dividends and capital gains distributions
at net asset value through March 31, 1995.
LIPPER NEW JERSEY PEER GROUP AVERAGE -- The Lipper New Jersey Peer Group
Average is composed of an average of the Fund's peer group of mutual
funds (50 as of March 31, 1995) investing in New Jersey tax-exempt
bonds.
LEHMAN MUNICIPAL BOND INDEX -- The Lehman Municipal Bond Index is an un-
managed, broad-based index which includes about 8,000 tax-free bonds and
reflects approximately $300 billion of market capitalization.
Index information is available at month-end only; therefore the closest
month-end to inception date of the Fund has been used.
NOTE: All figures cited here represent past performance of the Fund and
do not guarantee future results.
HISTORICAL PERFORMANCE -- CLASS B SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Net Asset Value
Year Ended Capital Dividends Return of Total
March 31 Beginning Ending Gains Paid Paid Capital Return*
<S> <C> <C> <C> <C> <C> <C>
11/6/92 - 3/31/93 $12.75 $13.16 $0.14 $0.27 $0.01 6.60%
1994 $13.16 $12.55 $0.15 $0.63 -- 1.15%
1995 $12.55 $12.62 -- $0.62 -- 5.76%
Total $0.29 $1.52 $0.01
Cumulative Total Return -- (11/6/92 through 3/31/95) 14.04%
<FN>
* Figures assume reinvestment of all dividends and capital gains distri-
butions at net asset value and do not assume deduction of the contin-
gent deferred sales charge ("CDSC").
</TABLE>
AVERAGE ANNUAL TOTAL RETURN** -- CLASS B SHARES
<TABLE>
<CAPTION>
Without CDSC With CDSC***
With Fee Without With Fee Without
Waiver Fee Waiver Waiver Fee Waiver
and Expense and Expense and Expense and Expense
Reimbursement Reimbursement Reimbursement Reimbursement
<S> <C> <C> <C> <C>
Year Ended 3/31/95 N/A 5.76% N/A 1.26%
Inception 11/6/92
through 3/31/95 5.63% 5.55% 4.47% 4.40%
<FN>
** All average annual total return figures shown reflect reinvestment of
dividends and capital gains distributions at net asset value. The
Fund's investment adviser, sub-investment adviser and/or administrator
waived fees and/or reimbursed expenses from November 6, 1992 to March
31, 1994. A shareholder's actual return for periods during which waiv-
ers and reimbursements were in effect would be the higher of the two
numbers shown.
*** Average annual total return figures shown assume the deduction of the
maximum applicable CDSC which is described in the prospectus.
NOTE: The Fund began offering Class B shares on November 6, 1992.
Class B shares are subject to a maximum 4.50% CDSC and annual service
and distribution fees of 0.15% and 0.50%, respectively, of the value
of the average daily net assets attributable to that class.
</TABLE>
GROWTH OF $10,000 INVESTED IN CLASS B SHARES OF
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.+
VS. LIPPER NEW JERSEY PEER GROUP AVERAGE
AND LEHMAN MUNICIPAL BOND INDEX
November 6, 1992 -- March 31, 1995
DESCRIPTION OF MOUNTAIN CHART IN COVERS (CLASS B)
A line graph depicting the total growth (including reinvestment of divi-
dends and capital gains) of a hypothetical investment of $10,000 in New
Jersey Municipals Fund's Class B shares on November 6, 1992 through March
31, 1995 as compared with the growth of a $10,000 investment in Lipper New
Jersey Peer Group Average and Lehman Municipal Bond Index. The plot points
used to draw the line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000 GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN THE INVESTMENT IN THE
INVESTED IN CLASS B LIPPER NEW JERSEY LEHMAN MUNICIPAL
MONTH ENDED SHARES OF THE FUND PEER GROUP AVERAGE BOND INDEX
<S> <C> <C> <C>
10/31/92 -- $10,000 $10,000
11/06/92 $10,000 -- --
11/92 $10,140 $10,265 $10,179
12/92 $10,255 $10,398 $10,283
03/93 $10,660 $10,797 $10,664
06/93 $11,025 $11,197 $11,013
09/93 $11,404 $11,585 $11,385
12/93 $11,529 $11,700 $11,545
03/94 $10,782 $10,993 $10,911
06/94 $10,865 $11,051 $11,032
09/94 $10,907 $11,114 $11,108
12/94 $10,662 $10,916 $10,948
03/95 $11,404 $11,623 $11,722
</TABLE>
+ Illustration of $10,000 invested in Class B shares on November 6, 1992
assuming reinvestment of dividends and capital gains distributions at
net asset value through March 31, 1995.
++ Value does not assume deduction of applicable CDSC.
+++ Value assumes deduction of applicable CDSC (assuming redemption on
March 31, 1995).
LIPPER NEW JERSEY PEER GROUP AVERAGE -- The Lipper New Jersey Peer Group
Average is composed of an average of the Fund's peer group of mutual funds
(50 as of March 31, 1995) investing in New Jersey tax- exempt bonds.
LEHMAN MUNICIPAL BOND INDEX -- The Lehman Municipal Bond Index is an un-
managed, broad-based index which includes about 8,000 tax-free bonds and
reflects approximately $300 billion of market capitalization.
Index information is available at month-end only; therefore, the closest
month-end to inception date of the Fund has been used.
NOTE: All figures cited here represent past performance of the Fund and
do not guarantee future results.
HISTORICAL PERFORMANCE -- CLASS C SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Net Asset Value
Period Ended Capital Dividends Total
March 31 Beginning Ending Gains Paid Paid Return*
<S> <C> <C> <C> <C> <C>
12/13/94 - 3/31/95 $11.86 $12.62 -- $0.18 8.01%
Cumulative Total Return -- (12/13/94 through 3/31/95) 8.01%
<FN>
* Figures assume reinvestment of all dividends and capital gains distri-
butions at net asset value and do not assume deduction of the CDSC.
</TABLE>
AGGREGATE TOTAL RETURN** -- CLASS C SHARES
<TABLE>
<CAPTION>
Without CDSC With CDSC
Actual Actual***
<S> <C> <C>
Inception 12/13/94
through 3/31/95 8.01% 7.01%
<FN>
** All aggregate total return figures shown reflect reinvestment of divi-
dends and capital gains distributions at net asset value.
*** Aggregate total return figures shown assume the deduction of the maxi-
mum applicable CDSC which is described in the prospectus.
NOTE: The Fund began offering Class C shares on November 7, 1994 and
commenced selling these shares on December 13, 1994. Class C shares
are subject to a maximum 1.00% CDSC and annual service and distribu-
tion fees of 0.15% and 0.55%, respectively, of the value of the aver-
age daily net assets attributable to that class.
</TABLE>
PORTFOLIO HIGHLIGHTS (UNAUDITED) MARCH 31, 1995
INDUSTRY BREAKDOWN
DESCRIPTION OF PIE CHARTS IN SHAREHOLDER REPORT
Pie chart depicting the allocation of the New Jersey Municipals Fund's in-
vestment securities held at March 31, 1995 by industry classification. The
pie is broken in pieces representing industries in the following percent-
ages:
<TABLE>
<CAPTION>
INDUSTRY PERCENTAGE
<S> <C>
TRANSPORTATION 1.8%
HOUSING 4.8%
POLLUTION CONTROL 9.6%
EDUCATION 12.3%
UTILITY 10.4%
OTHER 17.6%
HOSPITAL 20.3%
GENERAL OBLIGATIONS 21.7%
NET OTHER ASSETS AND LIABILITIES 1.5%
</TABLE>
SUMMARY OF MUNICIPAL BONDS AND SHORT-TERM
TAX-EXEMPT INVESTMENTS BY COMBINED RATINGS
<TABLE>
<CAPTION>
Standard & Percentage of
Moody's Poor's Market Value
<S> <C> <C> <C>
Aaa or AAA 55%
Aa AA 13
A A 11
Baa BBB 10
NR NR 11
100%
</TABLE>
AVERAGE MATURITY 21.4 years
PORTFOLIO OF INVESTMENTS MARCH 31, 1995
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
BIGI -- Bond Investors Guaranty Insurance
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Administration
FSA -- Federal Security Assurance
MBIA -- Municipal Bond Investors Assurance
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 98.3%
NEW JERSEY -- 98.0%
Atlantic County, New Jersey:
$2,500,000 Certificates of Participation, Public
Facilities Lease Agreement, (FGIC In-
sured),
7.400% due 3/1/2009 Aaa AAA $ 2,903,125
375,000 Improvement Authority Revenue, Luxury
Tax Revenue, (Convention Center), (MBIA
Insured),
7.400% due 7/1/2016 Aaa AAA 432,656
950,000 Utilities Authority, Solid Waste Reve-
nue,
7.125% due 3/1/2016 Baa NR 917,937
1,340,000 Bayonne, New Jersey, General Obligation
Bonds, (FGIC Insured),
6.125% due 5/1/2014 Aaa AAA 1,361,775
700,000 Beachwood, New Jersey, Sewer Authority
Revenue, Junior Lien,
6.500% due 12/1/2012 Baa1 NR 713,125
665,000 Belvedere, New Jersey, General Obliga-
tion Refunding Bonds, (AMBAC Insured),
7.300% due 12/1/2014 Aaa AAA 729,837
1,000,000 Bordentown, New Jersey, Sewerage Au-
thority Revenue, Series C, (MBIA In-
sured),
6.900% due 12/1/2016 Aaa AAA 1,056,250
1,000,000 Camden County, New Jersey, Improvement
Authority Revenue, Series B, (AMBAC In-
sured),
5.250% due 12/1/2018 Aaa AAA 916,250
385,000 Cape May County, New Jersey, Bridge
Commission, Guaranteed Revenue Bonds,
6.700% due 6/1/2002 A1 A 399,919
200,000 Delaware River Junction, Toll Bridge
Commission, Refunding Bonds, (FGIC In-
sured),
6.250% due 7/1/2012 Aaa AAA 206,750
500,000 Delaware River Port Authority, Pennsyl-
vania and New Jersey, Delaware River
Bridge Revenue Refunding, (AMBAC In-
sured),
7.375% due 1/1/2007 Aaa AAA 543,750
550,000 Dover, New Jersey, Board of Education,
Certificates of Participation, (FGIC
Insured),
6.600% due 6/1/2011 Aaa AAA 576,812
Essex County, New Jersey:
175,000 General Obligation Bonds, (FSA In-
sured),
6.500% due 12/1/2011 Aaa AAA 182,438
2,500,000 Improvement Authority, (FGIC Insured),
5.200% due 12/1/2024 Aaa AAA 2,215,625
650,000 Improvement Authority, Newark, Lease
Revenue Bonds,
6.600% due 4/1/2014 Baa1 BBB+ 650,812
750,000 Evesham Township, New Jersey, Board of
Education, Certificates of Participa-
tion, (FGIC Insured),
6.875% due 9/1/2011 Aaa AAA 809,062
Gloucester County, New Jersey:
900,000 Utilities Authority,
6.250% due 1/1/2024 A1 AA- 910,125
1,000,000 Utilities Authority, Sewerage System
Revenue, Series 91A,
6.500% due 1/1/2021 A1 AA- 1,023,750
500,000 Hoboken, New Jersey, Parking Authority
Revenue, (FGIC Insured),
6.000% due 6/1/2014 Aaa AAA 503,125
Hudson County, New Jersey:
425,000 Certificates of Participation, Correc-
tional Facilities, (MBIA Insured),
6.600% due 12/1/2021 Aaa AAA 443,062
200,000 General Obligation Bonds, (FGIC In-
sured),
6.550% due 7/1/2010 Aaa AAA 214,250
3,750,000 Improvement Authority, Solid Waste Sys-
tem Revenue,
7.100% due 1/1/2020 NR BBB- 3,506,250
1,000,000 Improvement Authority, Solid Waste Sys-
tem Revenue, Series A,
6.100% due 7/1/2020 NR A+ 980,000
Jersey City, New Jersey:
1,700,000 Sewerage Authority, (AMBAC Insured),
6.250% due 1/1/2014 Aaa AAA 1,778,625
530,000 Water Utility, General Obligation
Bonds, (AMBAC Insured),
7.500% due 10/1/2003 Aaa AAA 571,737
1,385,000 Kearney, New Jersey, Municipal Utili-
ties Authority Revenue, (FGIC Insured),
7.300% due 11/15/2018 Aaa AAA 1,662,000
1,500,000 Lower Township, New Jersey, Municipal
Utilities Authority, (MBIA Insured),
6.125% due 12/1/2013 Aaa AAA 1,528,125
1,000,000 Lumberton Township, New Jersey, School
District, Certificates of Participa-
tion, (Fiscal Funding New Jersey,
Inc.), (MBIA Insured),
6.100% due 10/1/2013 Aaa AAA 1,017,500
200,000 Mercer County, New Jersey, Improvement
Authority Revenue, Refunding Bonds,
Solid Waste, Series A, (FGIC Insured),
6.700% due 4/1/2012 Aaa AAA 210,750
Middlesex County, New Jersey, Pollution
Control Authority Financing Revenue,
(Amerada Hess):
1,000,000 7.875% due 6/1/2022 NR NR 1,098,750
2,000,000 6.875% due 12/1/2022 NR NR 2,042,500
500,000 Monroe Township, New Jersey, Municipal
Utilities Authority, Gloucester County
Revenue, (AMBAC Insured),
6.650% due 7/1/2011 Aaa AAA 530,000
Morris Township, New Jersey, General
Obligation Notes:
550,000 6.550% due 7/1/2009 Aa AA 601,562
550,000 6.550% due 7/1/2010 Aa AA 601,562
500,000 6.550% due 7/1/2011 Aa AA 545,625
1,200,000 Morristown, New Jersey, Revenue Refund-
ing, General Obligation Bonds,
6.500% due 2/1/2006 A1 A+ 1,252,500
1,000,000 New Brunswick, New Jersey, Parking Au-
thority Revenue, City Guaranteed Park-
ing, Series A,
6.500% due 9/1/2019 Aaa AAA 1,041,250
New Jersey, Economic Development Au-
thority:
1,000,000 Economic Development Revenue, (Health
Village Inc.),
7.800% due 5/1/2016 NR BBB 1,055,000
480,000 Economic Development Revenue, (National
Association of Accountants),
7.650% due 7/1/2009 NR NR 509,400
660,000 Economic Development Revenue, Series S,
(Princeton Montessori Society),
6.500% due 6/1/2012 Aaa NR 673,200
1,000,000 Economic Development Revenue, (Trane
Division), (1990 Project),
9.500% due 9/1/2000 NR NR 1,113,750
1,500,000 Economic Development Revenue, (Zirser-
Greenbriar),
7.375% due 7/15/2003 NR NR 1,496,250
1,500,000 Electric Revenue, (Vineland Cogenera-
tion Limited Partnership),
7.875% due 6/1/2019 NR NR 1,567,500
1,250,000 Industrial Revenue, (Garden State Paper
Co.),
7.125% due 4/1/2022 Aa1 NR 1,295,313
2,005,000 Industrial Revenue, (State Plaza Park
and Ride Limited Partnership),
6.625% due 7/1/2003 NR NR 2,030,063
1,000,000 Miscellaneous Revenue, (State Con-
tract), (FSA Insured),
6.000% due 3/15/2021 Aaa AAA 997,500
1,000,000 Natural Gas Facilities Revenue, (NUI
Corporation), Series A, (AMBAC Insured)
6.350% due 10/1/2022 Aaa AAA 1,022,500
500,000 Nursing Home Revenue, (Absecon Manor
Project), (FHA Insured),
8.250% due 2/1/2028 NR AA+ 520,625
1,500,000 Nursing Home Revenue, Series A, (Fran-
ciscan Oaks),
8.500% due 10/1/2023 NR NR 1,518,750
1,000,000 Nursing Home Revenue, (Morris Hall-St.
Lawrence),
6.250% due 4/1/2025 NR A+ 992,500
2,500,000 Nursing Home Revenue, (RWJ Health Care
Corporation), (FSA Insured),
6.500% due 7/1/2024 Aaa AAA 2,575,000
Nursing Home Revenue, (St. Barnabas Re-
alty Development Corporation), (MBIA
Insured):
2,000,000 5.250% due 7/1/2013 Aaa AAA 1,850,000
500,000 5.250% due 7/1/2020 Aaa AAA 450,000
4,500,000 Pollution Control Revenue, (Public Ser-
vice Electric & Gas Corporation), (MBIA
Insured),
6.400% due 5/1/2032 Aaa AAA 4,522,500
1,500,000 Sewer Facilities Revenue, (Atlantic
City Sewer Facility),
7.250% due 12/1/2011 NR A 1,612,500
1,500,000 Terminal Revenue, (GATX Terminal Corpo-
ration), Series 1994,
7.300% due 9/1/2019 Baa1 A- 1,629,375
1,000,000 Waste Paper Recycling Revenue, (Marcel
Paper Mills Inc. Project),
8.500% due 2/1/2010 NR NR 1,116,250
750,000 Water Revenue, Series D, (Hackensack
Water),
7.000% due 10/1/2017 NR A 768,750
New Jersey Health Care Facilities, Fi-
nancing Authority Revenue:
250,000 (Atlantic City Medical Center), Series
B, (FHA Insured),
8.375% due 8/1/2020 Aaa AAA 278,125
1,000,000 (Atlantic City Medical Center), Series
C,
6.800% due 7/1/2011 A A- 1,038,750
(Burdett Tomlin Memorial Hospital), Se-
ries D, (FGIC Insured):
1,400,000 6.500% due 7/1/2012 Aaa AAA 1,452,500
850,000 6.500% due 7/1/2021 Aaa AAA 876,563
(Columbus Hospital), Series A:
1,200,000 7.200% due 7/1/2001 Baa1 BB- 1,209,000
1,000,000 7.500% due 7/1/2021 Baa1 BB- 963,750
1,500,000 (Community Medical Center), Series E,
(MBIA Insured),
6.000% due 7/1/2019 Aaa AAA 1,498,125
250,000 (Community Memorial Hospital Associa-
tion), Series C,
8.000% due 7/1/2014 A A- 267,500
1,550,000 (Deborah Heart & Lung Center),
6.300% due 7/1/2023 Baa1 BBB+ 1,505,438
1,500,000 (Helene Fuld Medical Center), Series C,
8.125% due 7/1/2013 Aaa A 1,616,250
3,000,000 (Irvington General Hospital), (FHA In-
sured),
6.375% due 8/1/2015 NR AAA 3,090,000
1,125,000 (J.F.K. Health System), Obligated
Group, (FGIC Insured),
6.700% due 7/1/2021 Aaa AAA 1,178,438
260,000 (Kennedy Memorial University Medical
Center), Series D,
7.875% due 7/1/2009 A A- 276,900
435,000 (Kimball Medical Center), Series C,
8.000% due 7/1/1998 Baa BBB- 452,400
830,000 (Medical Center of Ocean County), Se-
ries C, (FSA Insured),
6.750% due 7/1/2020 Aaa AAA 874,613
825,000 (Muhlenberg Regional Medical Center),
Series A, (AMBAC Insured),
8.000% due 7/1/2018 Aaa AAA 900,281
3,550,000 (Newark Beth Israel Medical Center),
(FSA Insured),
6.000% due 7/1/2024 Aaa AAA 3,510,063
600,000 (Newcomb Medical Center), Series A,
7.875% due 7/1/2003 Baa BBB+ 645,750
2,000,000 (Ocean County Hospital),
6.250% due 7/1/2023 Baa NR 1,795,000
1,000,000 (Overlook Hospital Association), Series
E, (FGIC Insured),
6.700% due 7/1/2017 Aaa AAA 1,032,500
1,000,000 (Raritan Bay Medical Center),
7.250% due 7/1/2027 NR NR 940,000
1,250,000 (St. Elizabeth's Hospital Project), Se-
ries B,
8.250% due 7/1/2020 Baa BBB 1,326,563
1,750,000 (St. Mary Hospital),
5.875% due 7/1/2012 Baa BBB- 1,529,063
820,000 (Spectrum for Living), (FHA Insured),
6.500% due 2/1/2022 NR AAA 836,400
750,000 (Wayne General Hospital), (FHA In-
sured),
5.750% due 8/1/2011 NR AAA 723,750
New Jersey Sports and Expo Authority,
Series A, State Contract:
1,250,000 6.250% due 7/1/2020, (MBIA Insured) Aaa AAA 1,267,188
2,900,000 6.000% due 3/1/2021 Aa A+ 2,871,000
2,000,000 8.000% due 1/1/2025 NR NR 2,087,500
2,500,000 New Jersey State, Certificates of Par-
ticipation, Equipment Leasing Revenue,
Series A,
6.400% due 4/1/2005 A1 A+ 2,621,875
New Jersey State Educational Facili-
ties, Financing Authority Revenue,
Higher Education:
1,285,000 (Drew University), Series B,
7.450% due 2/1/2005 NR A 1,376,556
2,700,000 (Farleigh Dickinson University), Series
C,
6.625% due 7/1/2023 NR NR 2,369,250
2,500,000 New Jersey State, General Obligation
Bond, Series D,
8.000% due 2/15/2007 Aa1 AA+ 3,050,000
2,500,000 New Jersey State Higher Education As-
sistance,
5.300% due 7/1/2010 NR A+ 2,293,750
New Jersey State Housing & Mortgage Fi-
nance Agency:
1,500,000 Mortgage Revenue Refunding, (Manor
Apartments, Newark), Series A, (FHA In-
sured),
7.500% due 2/15/2024 NR AAA 1,603,125
Multifamily Housing Revenue:
1,550,000 (Presidential Plaza-FHA), Series 1,
7.000% due 5/1/2030 NR AAA 1,612,000
1,000,000 (Regency Park Project), Series H,
7.700% due 11/1/2030 NR AA 1,043,750
Home Mortgage Revenue, (MBIA Insured):
740,000 Series B,
8.100% due 10/1/2017 Aaa AAA 788,100
30,000 Series C,
8.375% due 4/1/2017 Aaa AAA 32,175
315,000 Series D,
7.700% due 10/1/2029 Aaa AAA 332,719
1,500,000 New Jersey State Transportation Trust
Fund, (FSA Insured),
4.750% due 6/15/2003 Aaa AAA 1,436,250
North Bergen, New Jersey:
1,500,000 Township Capital Appreciation, (FSA In-
sured),
8.000% due 8/15/2007 Aaa AAA 1,818,750
1,960,000 Township Municipal Utilities Authority,
Sewer Revenue, (FGIC Insured),
7.875% due 12/15/2009 Aaa AAA 2,359,350
North Jersey District Water Supply Com-
mission, New Jersey Refunding, (Wanaque
North Project), Series A, (MBIA In-
sured):
2,500,000 6.000% due 7/1/2021 Aaa AAA 2,503,125
1,195,000 6.500% due 11/15/2021 Aaa AAA 1,248,775
Old Bridge Township, New Jersey, Gen-
eral Obligation Bonds, (FGIC Insured):
560,000 6.550% due 7/15/2010 Aaa AAA 588,700
720,000 6.550% due 7/15/2011 Aaa AAA 756,900
750,000 Municipal Utilities Authority Revenue,
(FGIC Insured),
6.400% due 11/1/2009 Aaa AAA 787,500
Passaic Valley, New Jersey, Sewer Com-
mission Revenue, Water Supply Revenue,
Series A:
2,000,000 (AMBAC Insured),
5.875% due 12/1/2022 Aaa AAA 1,960,000
100,000 (FGIC Insured),
6.400% due 12/15/2022 Aaa AAA 102,750
500,000 Perth Amboy, New Jersey, Board of Edu-
cation, Certificates of Participation,
(FSA Insured),
6.125% due 12/15/2017 Aaa AAA 507,500
1,750,000 Piscataway Township, New Jersey School
District, (FHA Insured),
5.375% due 12/15/2010 Aaa AAA 1,664,687
1,750,000 Pleasantville, New Jersey, School Dis-
trict, Certificates of Participation,
(Fiscal Funding New Jersey, Inc.),
(BIGI Insured),
7.700% due 10/1/2013 Aaa AAA 1,894,375
2,000,000 Port Authority New York and New Jersey,
Consolidated Loan, Series 96, (FGIC In-
sured),
6.600% due 10/1/2023 Aaa AAA 2,075,000
750,000 Rutgers State University, New Jersey,
University of New Jersey, Series P,
6.850% due 5/1/2021 A1 AA 803,437
740,000 Sayreville, New Jersey, Housing Devel-
opment Corporation, Mortgage Revenue,
FHA Refunding, (Lakeview Apartments),
7.750% due 8/1/2024 NR AAA 811,225
1,500,000 Scotch Plains Township, New Jersey, Se-
nior Citizen Housing Corporation, Reve-
nue Bonds,
5.750% due 3/1/2023 Aa NR 1,408,125
2,500,000 Somerset Raritan Valley, New Jersey,
Sewer Authority Revenue, Series G,
6.750% due 7/1/2010 A1 AA 2,637,500
500,000 South Amboy, New Jersey, General Obli-
gation Bonds, (MBIA Insured),
6.375% due 12/1/2010 Aaa AAA 523,750
South Brunswick Township, New Jersey
Board of Education, (FGIC Insured):
1,500,000 6.400% due 8/1/2018 Aaa AAA 1,556,250
1,500,000 6.400% due 8/1/2019 Aaa AAA 1,550,625
750,000 South Monmouth, New Jersey, Regional
Sewer Authority, (MBIA Insured),
6.000% due 1/15/2014 Aaa AAA 760,313
1,000,000 Southeast Morris County, New Jersey,
Municipal Utilities Authority, Water
Revenue, Series A, (FGIC Insured),
6.500% due 1/1/2011 Aaa AAA 1,043,750
1,500,000 Stafford, New Jersey, Municipal Utili-
ties Authority, Sewer and Water Reve-
nue, (FGIC Insured),
6.125% due 12/1/2022 Aaa AAA 1,520,625
750,000 Trenton, New Jersey, General Obligation
Bonds, (MBIA Insured),
6.550% due 8/15/2009 Aaa AAA 790,312
900,000 Union City, New Jersey, General Obliga-
tion Bonds, (MBIA Insured),
6.700% due 9/1/2012 Aaa AAA 950,625
1,000,000 Union County, New Jersey, Improvement
Authority Revenue, (Cranford Township
Project),
7.750% due 5/1/2003 A1 A+ 1,088,750
1,140,000 University of New Jersey, School of
Medicine and Dentistry, Series C,
7.200% due 12/1/2019 A AA 1,225,500
1,400,000 Warren Hills, New Jersey, Regional
School District, (FSA Insured),
5.250% due 12/15/2009 Aaa AAA 1,324,750
854,000 Weehawken Township, New Jersey, General
Obligation Bonds, (FSA Insured),
6.350% due 7/1/2007 Aaa AAA 896,700
West Windsor, Plainsboro, New Jersey,
Regional School District:
180,000 6.750% due 4/1/2006 A1 AA 199,800
490,000 6.750% due 4/1/2007 A1 AA 542,675
435,000 6.800% due 4/1/2008 A1 AA 484,481
170,000 6.800% due 4/1/2009 A1 AA 189,125
159,174,587
PUERTO RICO -- 0.3%
495,000 Commonwealth of Puerto Rico,
8.000% due 7/1/2008 Baa1 A 546,356
TOTAL MUNICIPAL BONDS AND NOTES
(Cost $156,126,777) 159,720,943
SHORT-TERM MUNICIPAL BOND -- 0.2%
(Cost $300,000)
PUERTO RICO -- 0.2%
300,000 Commonwealth of Puerto Rico, Government
Development Bank, Revenue Bond,
4.100% due 12/1/2015+ VMIG1 A-1+ 300,000
TOTAL INVESTMENTS (Cost $156,426,777*) 98.5% 160,020,943
OTHER ASSETS AND LIABILITIES (NET) 1.5 2,480,932
NET ASSETS 100.0% $162,501,875
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate demand notes payable upon not more than one business
day's notice.
</TABLE>
See Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost
$156,426,777) (Note 1)
See accompanying schedule $160,020,943
Interest receivable 2,962,836
Receivable for Fund shares sold 170,004
TOTAL ASSETS 163,153,783
LIABILITIES:
Dividends payable $268,556
Payable for Fund shares redeemed 189,078
Investment advisory fee payable
(Note 2) 48,321
Administration fee payable (Note 2) 27,611
Distribution fee payable (Note 3) 23,474
Service fee payable (Note 3) 20,707
Due to custodian 10,797
Transfer agent fees payable (Note
2) 7,500
Custodian fees payable (Note 2) 6,600
Accrued expenses and other payables 49,264
TOTAL LIABILITIES 651,908
NET ASSETS $162,501,875
NET ASSETS CONSIST OF:
Distributions in excess of net in-
vestment income $(111,297)
Accumulated net realized loss on
investments sold (3,197,132)
Unrealized appreciation of invest-
ments 3,594,166
Par value 12,879
Paid-in capital in excess of par
value 162,203,259
TOTAL NET ASSETS $162,501,875
NET ASSET VALUE:
CLASS A SHARES
NET ASSET VALUE and redemption price
per share
($106,919,491 / 8,474,514 shares of
common stock outstanding) $12.62
MAXIMUM OFFERING PRICE per share
($12.62 / 0.960) (based on maximum
sales charge of 4.00% of the offer-
ing price on March 31, 1995) $13.15
CLASS B SHARES
NET ASSET VALUE and offering price
per share+
($55,334,297 / 4,384,740 shares of
common stock outstanding) $12.62
CLASS C SHARES
NET ASSET VALUE and offering price
per share+
($248,087 / 19,666 shares of common
stock outstanding) $12.62
<FN>
+ Redemption price per share is equal to net asset value less any applica-
ble CDSC.
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $10,758,237
EXPENSES:
Investment advisory fee (Note 2) $579,652
Administration fee (Note 2) 331,230
Distribution fee (Note 3) 260,190
Service fee (Note 3) 248,422
Transfer agent fees (Notes 2 and 4) 72,589
Legal and audit fees 70,711
Custodian fees (Note 2) 42,083
Directors' fees and expenses (Note
2) 16,692
Other 104,608
Total before interest expense 1,726,177
Interest expense (Note 9) 10,129
TOTAL EXPENSES 1,736,306
NET INVESTMENT INCOME 9,021,931
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS
(NOTES 1 AND 5):
Net realized loss on investments
sold during the year (3,197,132)
Net unrealized appreciation of in-
vestments during the year 3,571,504
NET REALIZED AND UNREALIZED GAIN ON IN-
VESTMENTS 374,372
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 9,396,303
</TABLE>
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
3/31/95 3/31/94
<S> <C> <C>
Net investment income $ 9,021,931 $ 8,076,673
Net realized gain/(loss) on investments
sold during the year (3,197,132) 1,474,192
Net unrealized appreciation/(deprecia-
tion) of investments during the year 3,571,504 (8,942,109)
Net increase in net assets resulting
from operations 9,396,303 608,756
Distributions to shareholders from net
investment income:
Class A (6,381,567) (6,377,318)
Class B (2,618,738) (1,613,063)
Class C (1,631) --
Distributions to shareholders in excess
of net investment income:
Class A -- (68,872)
Class B -- (17,420)
Distributions to shareholders from net
realized gain on investments:
Class A (20,959) (1,446,042)
Class B (8,600) (490,715)
Class C (5) --
Distributions to shareholders from cap-
ital:
Class A -- (35,156)
Class B -- (9,844)
Net increase/(decrease) in net assets
from Fund share transactions (Note
6):
Class A (13,038,237) 10,438,364
Class B 6,645,094 35,313,040
Class C 242,421 --
Net increase/(decrease) in net assets (5,785,919) 36,301,730
NET ASSETS:
Beginning of year 168,287,794 131,986,064
End of year (including distributions in
excess of net investment income of
$111,297 and $131,292, respectively) $162,501,875 $ 168,287,794
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
3/31/95 3/31/94
<S> <C> <C>
Operating performance:
Net asset value, beginning of year $ 12.55 $ 13.16
Income from investment operations:
Net investment income*** 0.70 0.70
Net realized and unrealized gain/(loss)
on investments 0.07 (0.46)
Total from investment operations 0.77 0.24
Less distributions:
Distributions from net investment in-
come (0.70) (0.69)
Distributions in excess of net invest-
ment income -- (0.01)
Distributions from net realized gains (0.00)# (0.15)
Distributions from capital -- (0.00)#
Total distributions (0.70) (0.85)
Net asset value, end of year $ 12.62 $ 12.55
Total return+++ 6.37% 1.66%
Ratios/supplemental data:
Net assets, end of year (in 000's) $106,919 $119,913
Ratio of operating expenses to average
net assets+ 0.88%++ 0.83%
Ratio of net investment income to aver-
age net assets 5.61% 5.17%
Portfolio turnover rate 32% 32%
<FN>
* The Fund commenced operations on April 22, 1988. Those shares in ex-
istence 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 administra-
tor for the years ended March 31, 1994, 1993, 1992, 1991 and 1990, and
the period ended March 31, 1989 would have been $0.69, $0.73, $0.75,
$0.78, $0.77, and $0.74, respectively.
+ Expense ratios 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, and 1990 and the pe-
riod 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 indi-
cated and does not reflect any applicable sales charges.
# Amount represents less than $0.01 per Class A share.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
3/31/93 3/31/92 3/31/91 3/31/90 3/31/89*
<S> <C> <C> <C> <C>
$ 12.44 $ 12.17 $ 11.92 $ 11.67 $ 11.40
0.75 0.77 0.82 0.83 0.82
0.87 0.44 0.32 0.27 0.28
1.62 1.21 1.14 1.10 1.10
(0.75) (0.77) (0.83) (0.82) (0.82)
-- -- -- -- --
(0.14) (0.13) (0.05) (0.03) (0.01)
(0.01) (0.04) (0.01) -- --
(0.90) (0.94) (0.89) (0.85) (0.83)
$ 13.16 $ 12.44 $ 12.17 $ 11.92 $ 11.67
13.49% 10.22% 9.89% 9.62% 9.84%
$115,694 $92,797 $65,378 $38,728 $29,265
0.74% 0.67%++ 0.57% 0.55% 0.52%**
5.76% 6.18% 6.74% 6.89% 7.23%**
58% 98% 44% 42% 25%
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
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>
Operating performance:
Net asset value, beginning of year $ 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
Less distributions:
Distributions from net investment in-
come (0.62) (0.62) (0.27)
Distributions in excess of net invest-
ment 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 year $ 12.62 $ 12.55 $ 13.16
Total return+++ 5.76% 1.15% 6.60%
Ratios/supplemental data:
Net assets, end of year (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 aver-
age net assets 5.09% 4.64% 5.17%**
Portfolio turnover rate 32% 32% 58%
<FN>
* 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 advisor, sub-investment advisor and administra-
tor for the years ended March 31, 1994 and 1993 would have been $0.63
and $0.27, respectively.
+ Expense ratios before partial waivers of fees by investment adviser,
sub-investment adviser and administrator for the years ended March
31, 1994 and 1993 were 1.41% and 1.49%, respectively.
++ The operating expense ratio excludes interest expense. The operating
expense ratio including interest expense was 1.40% for the year ended
March 31, 1995.
+++ Total return represents aggregate total return for the periods indi-
cated and does not reflect any applicable sales charge.
# Amount represents less than $0.01 per Class B share.
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
3/31/95*
<S> <C>
Operating performance:
Net asset value, beginning of period $11.86
Income from investment operations:
Net investment income 0.20
Net realized and unrealized gain on investments 0.74
Total from investment operations 0.94
Less 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%
<FN>
* The Fund commenced selling Class C shares on December 13, 1994.
** Annualized.
++ The operating expense ratio excludes interest expense. The operating
expense ratio including interest expense was 1.45% for the period
ended March 31, 1995.
+++ 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.
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney New Jersey Municipals Fund Inc. (formerly known as "Smith
Barney Shearson New Jersey Municipals Fund Inc.") (the "Fund") was incor-
porated under the laws of the State of Maryland on November 12, 1987. The
Fund is a non-diversified, open-end management investment company regis-
tered with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Fund commenced oper-
ations on April 22, 1988. Effective November 7, 1994, the Fund began of-
fering Class C and Class Y shares and continued to offer Class A and Class
B shares. The Fund commenced selling Class C shares on December 13, 1994.
As of March 31, 1995, no Class Y shares had been sold. Class A shares are
sold with a front-end sales charge. Class B and Class C shares may be sub-
ject to a contingent deferred sales charge ("CDSC") upon redemption. Class
B shares will convert automatically to Class A shares eight years after
the date of original purchase. Class Y shares are available to investors
making an initial investment of at least $5 million and are not subject to
any sales charges, service or distribution fees. All classes of shares
have identical rights and privileges except with respect to the effect of
the respective sales charges to each class, the distribution and/or ser-
vice fees borne by each class, expenses allocable exclusively to each
class, voting rights on matters affecting a single class, the exchange
privilege of each class and the conversion feature of Class B shares. The
following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
Portfolio valuation: Securities are valued at the close of trading on the
New York Stock Exchange by The Boston Company Advisors, Inc. ("Boston
Advisors") after consultation with an independent pricing service (the
"Service") approved by the Board of Directors. When, in the judgment of
the Service, quoted bid prices for investments are readily available and
are representative of the bid side of the market, these investments are
valued at the mean between the quoted bid prices and asked prices (as ob-
tained by the Service from dealers in such securities). Securities for
which, in the judgment of the Service, there are no readily available mar-
ket quotations (which may constitute a majority of the portfolio securi-
ties) are carried at fair value as determined by the Service, based on
methods which include consideration of: yields or prices of municipal se-
curities of comparable quality, coupon, maturity and type; indications as
to values from dealers; and general market conditions. Short-term invest-
ments that mature in 60 days or less are valued at amortized cost whenever
the Board of Directors determines that amortized cost reflects the fair
value of those investments.
Securities transactions and investment income: Securities transactions
are recorded as of the trade date. Realized gains and losses from securi-
ties sold are recorded on the identified cost basis. Investment income and
realized and unrealized gains and losses are allocated based upon relative
net assets of each class. Interest income is recorded on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date; interest income
is not accrued until settlement date. When required, the Fund instructs
the custodian to segregate assets in a separate account with a current
value at least equal to the amount of its when-issued purchase commit-
ments.
Dividends and distributions to shareholders: Dividends from net invest-
ment income determined on a class level, if any, of the Fund are declared
daily and paid on the last business day of the Smith Barney Inc. ("Smith
Barney") statement month. Distributions determined on a fund level, if
any, of any net short- and long-term capital gains earned by the Fund will
be declared and paid annually after the close of the fiscal year in which
they are earned. Additional distributions of net investment income and
capital gains for the Fund may be made at the discretion of the Board of
Directors in order to avoid the application of a 4% nondeductible excise
tax on certain undistributed amounts of net investment income and capital
gains. To the extent net realized capital gains can be offset by capital
losses and loss carryforwards, it is the policy of the Fund not to dis-
tribute such gains. Income distributions and capital gain distributions
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are pri-
marily due to differing treatments of income and gains on various invest-
ment securities held by the Fund, timing differences and differing charac-
terization of distributions made by the Fund as a whole.
Federal taxes: The Fund intends to qualify as a regulated investment com-
pany, if such qualification is in the best interests of its shareholders,
by complying with the requirements of the Internal Revenue Code of 1986,
as amended, applicable to regulated investment companies and by distribut-
ing substantially all of its earnings to its shareholders. Therefore, no
Federal income tax provision is required.
2. INVESTMENT ADVISORY AGREEMENT, ADMINISTRATION
AGREEMENT AND OTHER TRANSACTIONS
The Fund has entered into an investment advisory agreement (the "Advisory
Agreement") with Greenwich Street Advisors, a division of Mutual
Management Corp., which was transferred effective November 7, 1994 to
Smith Barney Mutual Funds Management Inc. ("SBMFM"). Mutual Management
Corp. and SBMFM (formerly known as "Smith, Barney Advisers, Inc."), are
both wholly owned subsidiaries of Smith Barney Holdings Inc. ("Holdings").
Holdings is a wholly owned subsidiary of Travelers Group Inc. Under the
Advisory Agreement, the Fund pays a monthly fee at the annual rate of
0.35% of the value of its average daily net assets up to $500 million and
0.32% of the value of its average daily net assets in excess of $500 mil-
lion.
Prior to April 20, 1994, the Fund was party to an administration agreement
(the "Administration Agreement") with Boston Advisors, an indirect wholly
owned subsidiary of Mellon Bank Corporation ("Mellon"). Under this Agree-
ment, the Fund paid a monthly fee at the annual rate of 0.20% of the value
of its average daily net assets up to $500 million and 0.18% of the value
of its average daily net assets in excess of $500 million.
As of the close of business on April 20, 1994, SBMFM succeeded Boston Ad-
visors as the Fund's administrator. The new administration agreement con-
tains substantially the same terms and conditions, including the same
level of fees, as the predecessor agreement.
As of the close of business on April 20, 1994, the Fund and SBMFM entered
into a sub-administration agreement (the "Sub-Administration Agreement")
with Boston Advisors. Under the Sub-Administration Agreement, SBMFM pays
Boston Advisors a portion of its administration fee at a rate agreed upon
from time to time between SBMFM and Boston Advisors.
For the year ended March 31, 1995, Smith Barney received from investors
$199,930 representing commissions (sales charges) on sales of Class A
shares.
A CDSC is generally payable by a shareholder in connection with the re-
demption of certain Class A, Class B and Class C shares. In circumstances
in which the CDSC is imposed, the amount of the charge will vary depending
on the number of years since the date of purchase. For the year ended
March 31, 1995, Smith Barney received from shareholders $178,656 in CDSC
on the redemption of Class B shares.
No officer, director or employee of Smith Barney or of any parent or sub-
sidiary of Smith Barney receives any compensation from the Fund for serv-
ing as a Director or officer of the Fund. The Fund pays each Director who
is not an officer, director, or employee of Smith Barney or any of its af-
filiates $1,000 per annum plus $100 per meeting attended and each Director
emeritus who is not an officer, director or employee of Smith Barney or
any of its affiliates $500 per annum plus $50 per meeting attended. The
Fund reimburses all Directors for travel and out-of-pocket expenses in-
curred to attend such meetings.
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary
of Mellon, serves as the Fund's custodian. The Shareholder Services Group,
Inc., a subsidiary of First Data Corporation, serves as the Fund's trans-
fer agent.
3. DISTRIBUTION PLAN
Smith Barney acts as distributor of the Fund's shares pursuant to a dis-
tribution agreement with the Fund, and sells shares of the Fund through
Smith Barney or its affiliates.
Pursuant to Rule 12b-1 under the 1940 Act, as amended, the Fund has
adopted a services and distribution plan (the "Plan"). Under this Plan,
the Fund compensates Smith Barney for servicing shareholder accounts for
Class A, Class B and Class C shareholders and covers expenses incurred in
distributing Class B and Class C shares. Smith Barney is paid an annual
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 value of the average daily net
assets of each respective class of shares. Smith Barney is also paid an
annual distribution fee with respect to Class B and Class C shares at the
annual rate of 0.50% and 0.55% of the value of the average daily net as-
sets of Class B and Class C shares, respectively. For the year ended March
31, 1995, the Fund incurred service fees of $170,371, $77,993 and $58 for
Class A, Class B and Class C shares, respectively. For the year ended
March 31, 1995, the Fund incurred distribution fees of $259,976 and $214
for Class B and Class C shares, respectively.
Under its terms, the Plan shall remain in effect from year to year, pro-
vided that such continuance is approved annually by vote of the Fund's
Board of Directors, including a majority of those Directors who are not
"interested persons" of the Fund and who have no direct or indirect finan-
cial interest in the operation of the Plan.
4. EXPENSE ALLOCATION
Expenses of the Fund not directly attributable to the operations of any
class of shares are prorated among the classes based upon the relative net
assets of each class. Operating expenses directly attributable to a class
of shares are charged to that class' operations. In addition to the above
servicing and distribution fees, class specific operating expenses include
transfer agent fees. For the year ended March 31, 1995, transfer agent
fees for Class A, Class B and Class C shares were $43,741, $28,828, and
$20, respectively.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities,
excluding short-term investments, during the year ended March 31, 1995,
amounted to $53,299,273 and $59,740,268, respectively.
At March 31, 1995, the aggregate gross unrealized appreciation for all se-
curities in which there was an excess of value over tax cost amounted to
$5,781,773 and the aggregate gross unrealized depreciation for all securi-
ties in which there was an excess of tax cost over value amounted to
$2,187,607.
6. COMMON STOCK
As of March 31, 1995, the Fund had authorized 100 million shares of $.001
par value common stock divided into four classes: Class A, Class B, Class
C and Class Y. Changes in common stock outstanding were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, 1995 MARCH 31, 1994
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Sold 806,228 $ 9,970,151 1,647,480 $ 22,242,307
Issued as reinvestment of
dividends 326,175 4,033,183 392,313 5,278,384
Redeemed (2,211,779) (27,041,571) (1,274,430) (17,082,327)
Net increase/(decrease) (1,079,376) $(13,038,237) 765,363 $ 10,438,364
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, 1995 MARCH 31, 1994
CLASS B SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Sold 1,011,453 $12,515,653 2,659,770 $35,847,840
Issued as reinvestment of
dividends 146,701 1,813,092 114,141 1,536,557
Redeemed (628,611) (7,683,651) (156,456) (2,071,357)
Net increase 529,543 $ 6,645,094 2,617,455 $35,313,040
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31, 1995*
CLASS C SHARES: SHARES AMOUNT
<S> <C> <C>
Sold 19,546 $240,919
Issued as reinvestment of
dividends 120 1,502
Net increase 19,666 $242,421
<FN>
* The Fund commenced selling Class C shares on December 13, 1994.
</TABLE>
As of March 31, 1995, no Class Y shares had been sold.
7. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of New
Jersey and its political subdivisions, agencies and public authorities to
obtain funds for various public purposes. The Fund is more susceptible to
factors adversely affecting issuers of New Jersey municipal securities
than is a municipal bond fund that is not concentrated in these issuers to
the same extent.
8. CAPITAL LOSS CARRYFORWARD
At March 31, 1995, the Fund had capital loss carryforwards of $2,456,970
expiring in 2003 to offset future capital gains.
In accordance with tax law, the Fund has elected to defer the recognition
of losses occurring between October 31, 1994 and March 31, 1995 until the
first day of the following fiscal year. The amount of such deferral is
$740,162 of capital losses. These losses for tax purposes will be deemed
to occur on April 1, 1995.
9. LINE OF CREDIT
The Fund and several affiliated entities participate in a $50 million line
of credit provided by Bank of America (formerly known as Continental Bank
N.A.) under an Amended and Restated Line of Credit Agreement (the "Agree-
ment") dated April 30, 1992, and renewed effective May 31, 1994, primarily
for temporary or emergency purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of securi-
ties. Under this Agreement, the Fund may borrow up to the lesser of $25
million or 25% of its net assets. However, pursuant to the Fund's prospec-
tus, the Fund may only borrow up to 10% of its total net assets. Under the
terms of the Agreement, as amended, the Fund and the other affiliated en-
tities are charged an aggregate commitment fee of $100,000 which is allo-
cated equally among each of the participants. The Agreement requires,
among other provisions, each participating fund to maintain a ratio of net
assets (not including funds borrowed pursuant to the Agreement) to aggre-
gate amount of indebtedness pursuant to the Agreement of no less than 5 to
1. During the year ended March 31, 1995, the Fund had an average outstand-
ing daily balance of $163,836 with interest rates ranging from 5.125% to
7.125%. Interest expense totaled $10,129 for the year ended March 31,
1995. At March 31, 1995, the Fund had no outstanding borrowings under this
Agreement.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.:
We have audited the accompanying statement of assets and liabilities of
Smith Barney New Jersey Municipals Fund Inc., including the schedule of
portfolio investments, as of March 31, 1995, the related statement of op-
erations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended and the financial high-
lights for each of the six years in the period ended March 31, 1995 and
for the period from April 22, 1988 (commencement of operations) to March
31, 1989. These financial statements and financial highlights are the re-
sponsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and fi-
nancial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclo-
sures in the financial statements. Our procedures included confirmation of
securities owned as of March 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Smith Barney New Jersey Municipals Fund Inc. as of March 31, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the finan-
cial highlights for each of the six years in the period then ended and for
the period from April 22, 1988 (commencment of operations) to March 31,
1989, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
May 10, 1995
TAX INFORMATION (UNAUDITED) YEAR ENDED MARCH 31, 1995
Of the dividends paid by the Fund attributable to net investment income
for the year ended March 31, 1995, 100% is tax-exempt for regular Federal
income tax purposes.
The above figure may differ from those cited elsewhere in this report due
to differences in the calculations of income and capital gains for Securi-
ties and Exchange Commission (book) purposes and Internal Revenue Service
(tax) purposes.
NEW JERSEY
MUNICIPALS
FUND INC.
DIRECTORS
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt Dorsett
Elliot Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon
Cornelius Rose
OFFICERS
Heath B. McLendon
Chairman of the Board
and Investment Officer
Jessica Bibliowicz
President
Lawrence T. McDermott
Vice President and
Investment Officer
Karen L. Mahoney-Malcomson
Investment Officer
Lewis E. Daidone
Senior Vice President and
Treasurer
Christina T. Sydor
Secretary
Recycled
Recyclable
SMITH BARNEY
A Member of TravelersGroup
This report is submitted for the
general information of the
shareholders of Smith Barney
New Jersey Municipals Fund Inc.
It is not authorized for distribution
to prospective investors unless
accompanied or preceded by an
effective Prospectus for the Fund,
which contains information
concerning the Fund's investment
policies, fees and expenses as well
as other pertinent information.
SMITH BARNEY
MUTUAL FUNDS
388 Greenwich Street
New York, New York 10013
Fund 66, 206, 485, 467
FD0370 E5
