Registration Nos. 33
187
79
811
548
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X Pre-Effective Amendment No.
Post-Effective Amendment No. 14
X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
X
Amendment No. 16
X
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.
(Exact name of Registrant as specified in
Charter)
388 Greenwich Street, New York, New York 10013
(Address of principal executive offices) (Zip
Code)
(212) 723-9218
(Registrant's telephone number, including Area
Code)
Christina T. Sydor
Secretary
Smith Barney New Jersey Municipals Fund
Inc. 388 Greenwich Street
New York, New York 10013
(22nd Floor)
(Name and address of agent for service)
Approximate Date of Proposed Public Offering:
As soon as possible after this
Post-Effective Amendment
becomes effective.
It is proposed that this filing will become effective:
X immediately upon filing pursuant
to
Rule
485(b)
on
pursuant
to
Rule 485(b)
on pursuant to Rule
485(a)
The Registrant has previously filed a
declaration of indefinite registration of its shares
pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended March 31, 1995 was filed on
May 25, 1995.
CALCULATION OF REGISTRATION FEE UNDER THE
SECURITIES ACT OF 1933 (1)
Proposed Proposed Proposed
Maximum Maximum Maximum
Offering Aggregate
Aggregate
Title of Securities Amount Being
Price
per
Offering Registration
Being Registered Registered(1)
Unit(2)
Price(3) Fee
Shares of Common
Stock par value
$.001 per share 1,293,163
$12.79
$16,539,554 $100
of Smith Barney
New Jersey Municipals
Fund Inc.
(1) The shares being registered as set forth in
this table are in addition to the indefinite number of
shares of common stock which the Registrant has
registered under the Securities Act of 1933, as
amended (the "1933 Act"), pursuant to Rule 24f-2
under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Registrant's Rule 24f-
2 Notice for the fiscal year ended March 31, 1995,
was filed on May 25, 1995.
(2) Based on the Registrant's closing price of
$12.79 on May 15, 1995 pursuant to Rule 457 (d) under
the 1933 Act and Rule 24e-2(a) under the 1940 Act.
(3) In response to Rule 24e-2 (b) under the 1940
Act: (1) the calculation of the maximum aggregate
offering price is made pursuant to Rule 24e-2;
(2) 2,840,390 shares of common stock were
redeemed by the Registrant during the fiscal year
ended March 31, 1995; (3) 1,837,227 of such shares
are being used for reductions pursuant to Rule 24f-2
during the current fiscal year; and (4) 1,003,163
shares are being used for reduction in this amendment
pursuant to Rule 24e-2(a).
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.
FORM N-1A
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
Part A.
Item No. Prospectus Caption
1. Cover Page Cover Page
2. Synopsis Prospectus Summary
3. Condensed Financial Information
Financial Highlights;
The Fund's Performance
4. General Description of Registrant Cover
Page; Prospectus Summary;
Purchase of Shares;
Investment Objective and
Management Policies;
Additional Information
5. Management of the Fund Management
of
the
Fund; Distributor;
Additional Information
6. Capital Stock and Other Securities
Purchase of Shares; Dividends, Distributions
and Taxes;
Additional Information
7. Purchase of Securities Purchase of
Shares;
Valuation of Shares;
Redemption of Shares;
Exchange Privilege;
Distributor;
Additional Information
8. Redemption or Repurchase Purchase of
Shares;
Redemption of Shares
9. Legal Proceedings Not Applicable
Part B Statement of
Item No. Additional Information
Caption
10. Cover Cover Page
11. Table of Contents Table
of
Contents
12. General Information
Additional
Information ; Distributor
13. Investment Objectives and Policies
Investment
Objective and Management
Policies
14. Management of the Fund Management
of
the
Fund; Distributor
15. Control Persons and Principal Management
of the Fund
Holders of Securities
16. Investment Advisory and Other Services
Management of the Fund; Distributor
17. Brokerage Allocation Investment
Objective
and Management Policies
18. Capital Stock and Other Securities
Purchase
of Shares; Redemption of Share;
Taxes
19. Purchase, Redemption and Pricing of
Purchase
of Shares; Redemption of Shares;
Securities Being Offered
Distributor; Valuation of Shares; Exchange
Privilege 20. Tax Status Taxes
21. Underwriters Distributor
22. Calculation of Performance Data
Performance Data 23. Financial Statements
Financial Statements
<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 ----------------
- - ---------------------------------
NEW JERSEY MUNICIPAL SECURITIES 24
- - ------------------------------------------------
VALUATION OF SHARES 26
- - -----------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 26
- - ------------------------------------------------
PURCHASE OF SHARES 30
- - ------------------------------------------------
EXCHANGE PRIVILEGE 37
- - -----------------------------------------------
REDEMPTION OF SHARES 42
- - ------------------------------------------------MINIMUM
ACCOUNT SIZE 43
- - -----------------------------------------------
PERFORMANCE 44
- - -----------------------------------------------
MANAGEMENT OF THE FUND 45
- - -----------------------------------------------
DISTRIBUTOR 47
- - -----------------------------------------------
ADDITIONAL INFORMATION 48
- - ------------------------------------------------
</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 between three and
thirty years. See "In-
vestment 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
<PAGE>
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
shortterm 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
whenissued 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
intermediateand long-term
obligations, that is, obligations with remaining
maturities at the time of pur-
chase of between three and thirty 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 lowerrated
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
40
<PAGE>
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 Shareholders 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
41
<PAGE>
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.
42
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
PERFORMANCE
YIELD
From time to time, the Fund may advertises 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. For
more information on equivalent taxable yields, please
refer to the table under
"Dividends, Distributions and Taxes."
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
43
<PAGE>
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
44
<PAGE>
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.
45
<PAGE>
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. For
the fiscal year ended March
31, 1994, the Fund paid administration fees to
Boston Advisors in an amount
equal to 0.18% of the value of the average daily
net assets of the Fund and
Boston Advisors waived administration fees
payable to it in an amount equal to
0.02% of the value of the average daily net
assets of the Fund.
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
46
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
DISTRIDUTOR (CONTINUED)
and expenses of Smith Barney Financial
Consultants and other persons who pro-
vide support services in connection with the
distribution of shares; interest
and/or carrying charges; and indirect and
overhead costs of Smith Barney asso-
ciated with the sale of Fund shares, including
lease, utility, communications
and sales promotion expenses.
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.
47
<PAGE>
SMITH BARNEY
New Jersey Municipals Fund Inc.
ADDITIONAL INFORMATION (CONTINUED)
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
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.
48
<PAGE>
[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
Smith Barney
New Jersey Municipals Fund Inc.
388 Greenwich Street
New York, New York 10013
(212) 723-9218
Statement of Additional Information
May 29, 1995
This Statement of Additional Information
expands upon
and supplements the information contained in the
current
Prospectus of Smith Barney New Jersey Municipals
Fund Inc.
(the "Fund''), dated May 29, 1995, as amended or
supplemented from time to time, and should be
read in
conjunction with the Fund's Prospectus. The
Fund's
Prospectus may be obtained from a Smith Barney
Financial
Consultant or by writing or calling the Fund at
the address
or telephone number set forth above. This
Statement of
Additional Information, although not in itself a
prospectus,
is incorporated by reference into the Prospectus
in its
entirety.
TABLE OF CONTENTS
For ease of reference the same section headings
are used in
both the Prospectus and the Statement of
Additional
Information, except where shown below:
<TABLE>
<S>
<C>
Management of the
Fund.............................................
...........
........................ 1
Investment Objective and Management
Policies.........................................
....
5
Municipal Bonds (See in the Prospectus "New
Jersey Municipal
Securities'') 9
Purchase of
Shares...........................................
...........
.................................. 15
Redemption of
Shares...........................................
...........
.............................. 16
Distributor......................................
...........
.................................................
..
17
Valuation of
Shares...........................................
...........
................................. 18
Exchange
Privilege........................................
...........
..................................... 18
Performance Data (See in the Prospectus
"Performance'')..............................
19
Taxes (See in the Prospectus "Dividends,
Distributions and
Taxes'').............. 22
Additional
Information......................................
...........
................................. 25
Financial
Statements.......................................
...........
................................... 25
Appendix.........................................
...........
.................................................
.
A1
</TABLE>
MANAGEMENT OF THE FUND
The executive officers of the Fund are employees
of certain
of the organizations that provide services to the
Fund.
These organizations are as follows:
<TABLE>
<CAPTION>
Name Service
<S> <C>
Smith Barney Inc.
("Smith
Barney'')........................................
...........
.... Distributor
Smith Barney Mutual Funds Management Inc.
("SBMFM'').......................................
...........
............. Investment Adviser and
Administrator
The Boston Company Advisors, Inc.
("Boston
Advisors'')......................................
...........
.. Sub-Administrator
Boston Safe Deposit and Trust Company
("Boston
Safe'')..........................................
...........
..... Custodian
The Shareholder Services Group, Inc. ("TSSG''),
a subsidiary of First Data
Corporation........................ Transfer
Agent
</TABLE>
These organizations and the functions they
perform for the
Fund are discussed in the Prospectus and in this
Statement
of Additional Information.
Directors and Executive Officers of the Fund
The names of the Directors and executive officers
of the
Fund, together with information as to their
principal
business occupations during the past five years,
are shown
below. Each Director who is an "interested
person'' of the
Fund, as defined in the Investment Company Act of
1940, as
amended (the "1940 Act''), is indicated by an
asterisk.
Herbert Barg, Director (Age 73). Private
Investor. His
address is 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania
19004.
*Alfred J. Bianchetti, Director (Age 72).
Retired; formerly
Senior Consultant to Dean Witter Reynolds Inc.
His address
is 19 Circle End Drive, Ramsey, New Jersey 17466.
Martin Brody, Director (Age 73). Vice Chairman of
the Board
of Restaurant Associates Industries Corp.; a
Director of
Jaclyn, Inc. His address is HMK Associates, Three
ADP
Boulevard, Roseland, New Jersey 07068.
Dwight B. Crane, Director (Age 57). Professor,
Graduate
School of Business Administration, Harvard
University; a
Director of Peer Review Analysis, Inc. His
address is
Graduate School of Business Administration,
Harvard
University, Boston, Massachusetts 02163.
Burt N. Dorsett, Director (Age 69). Managing
Partner of
Dorsett McCabe Management, Inc., an investment
counseling
firm; Director of Research Corporation
Technologies, Inc., a
non-profit patent-clearing and licensing firm.
His address
is 201 East 62nd Street, New York, New York
10021.
Elliot S. Jaffe, Director (Age 68). Chairman of
the Board
and President of The Dress Barn, Inc. His address
is 30
Dunnigan Drive, Suffern, New York 10901.
Stephen E. Kaufman, Director (Age 63). Attorney.
His address
is 277 Park Avenue, New York, New York 10172.
Joseph J. McCann, Director (Age 64). Financial
Consultant;
formerly Vice President of Ryan Homes, Inc.,
Pittsburgh,
Pennsylvania. His address is 200 Oak Park Place,
Pittsburgh,
Pennsylvania 15243.
*Heath B. McLendon, Chairman of the Board and
Investment
Officer (Age 62). Managing Director of Smith
Barney,
Chairman of the Board of Smith Barney Strategy
Advisers Inc.
and President of SBMFM; prior to July 1993,
Senior Executive
Vice President of Shearson Lehman Brothers Inc.
("Shearson
Lehman Brothers''), Vice Chairman of Asset
Management
Division of Shearson Lehman Brothers; a Director
of PanAgora
Asset Management, Inc. and PanAgora Asset
Management
Limited. His address is 388 Greenwich Street, New
York, New
York 10013.
Cornelius C. Rose, Jr., Director (Age 61).
President,
Cornelius C. Rose Associates, Inc., financial
consultants,
and Chairman and Director of Performance Learning
Systems,
an educational consultant. His address is P.O.
Box 355, Fair
Oaks, Enfield, New Hampshire 03748.
James J. Crisona, Director emeritus (Age 87).
Attorney;
formerly Justice of the Supreme Court of the
State of New
York. His address is 118 East 60th Street, New
York, New
York 10022.
Jessica M. Bibliowicz, President (Age 35).
Executive Vice
President of Smith Barney; prior to 1994,
Director of Sales
and Marketing for Prudential Mutual Funds; prior
to 1990,
First Vice President, Asset Management Division
of Shearson
Lehman Brothers. Ms. Bibliowicz also serves as
President of
25 other mutual funds of the Smith Barney Mutual
Funds. Her
address is 388 Greenwich Street, New York, New
York 10013.
Lawrence T. McDermott, Vice President and
Investment Officer
(Age 46). Investment Officer of SBMFM; prior to
July 1993,
Managing Director of Shearson Lehman Advisors,
the
predecessor to SBMFM. Mr. McDermott also serves
as
Investment Officer of 10 other mutual funds of
the Smith
Barney Mutual Funds. His address is 388
Greenwich Street,
New York, New York 10013.
Karen L. Mahoney-Malcomson, Investment Officer
(Age 38).
Investment Officer of SBMFM; prior to July 1993,
Vice
President of Shearson Lehman Advisors. Ms.
Mahoney-Malcomson
also serves as Investment Officer of 7 other
mutual funds of
the Smith Barney Mutual Funds. Her address is
388 Greenwich
Street, New York, New York 10013.
Lewis E. Daidone, Senior Vice President and
Treasurer (Age
37). Managing Director of Smith Barney; Director
and Senior
Vice President of SBMFM. Mr. Daidone also serves
as Senior
Vice President and Treasurer of other mutual
funds of the
Smith Barney Mutual Funds. His address is 388
Greenwich
Street, New York, New York 10013.
Christina T. Sydor, Secretary (Age 44). Managing
Director of
Smith Barney; General Counsel and Secretary of
SBMFM. Ms.
Sydor also serves as Secretary of other mutual
funds of the
Smith Barney Mutual Funds. Her address is 388
Greenwich
Street, New York, New York 10013.
No Director, officer or employee of Smith Barney
or of any
parent or subsidiary receives any compensation
from the Fund
for serving as an officer or Director of the
Fund. The Fund
pays each Director who is not an officer,
director or
employee of Smith Barney or any of its affiliates
a fee of
$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
a fee of
$500 per annum plus $50 per meeting attended.
The Fund
reimburses all Directors for travel and out-of-
pocket
expenses. For the fiscal year ended March 31,
1995, such
fees and expenses totaled $16,692.
For the fiscal year ended March 31, 1995, the
Directors of
the Fund were paid the following compensation:
<TABLE>
<CAPTION>
Aggregate
Compensation
Aggregate
Compensation from
the Smith Barney
Director* from the
Fund#
Mutual Funds ***
<S> <C>
<C>
Herbert Barg
(13).................................
$1,600 $ 77,850
Alfred J. Bianchetti
(8).........................
1,600 38,850
Martin Brody
(15)................................
1,250 111,675
Dwight B. Crane
(18)...........................
1,600 125,975
Burt N. Dorsett
(12).............................
700 34,300
Robert Frankel
(7)##.............................
1,250 75,850
Paul Hardin
(12)##...............................
1,250 68,600
Elliot S. Jaffe
(12)................................
700 33,300
Stephen E. Kaufman (10).....................
1,600 83,600
Joseph J. McCann
(18)........................
1,600 51,100
Heath B. McLendon (29).....................
- - -- --
Cornelius C. Rose
(12)........................
700 33,300
James J. Crisona**
(10)......................
1,425 67,350
<FN>
_____________________
* Number of directorships/trusteeships held with
other
mutual funds in the Smith Barney Mutual Funds.
** Director Emeritus. A Director emeritus may
attend
meetings of the Fund's Board of Directors but has
no voting
rights at such meetings.
*** Aggregate Compensation from the Smith Barney
Mutual
Funds is for calendar year ended December 31,
1994.
#As of January 1, 1995, Messrs. Frankel and
Hardin resigned
from the Fund's Board of Directors.
## The information presented in this table for
Aggregate
Compensation reflects the compensation paid to
Messrs.
Frankel and Hardin and the number of funds within
the Smith
Barney Mutual Funds for which they served as
directors as of
the date of this Statement of Additional
Information for the
fiscal year ended March 31, 1995.
</TABLE>
Investment Adviser and Administrator-SBMFM
SBMFM serves as investment adviser to the Fund
pursuant to a
transfer of the investment advisory agreement
effective
November 7, 1994, from its affiliate, Mutual
Management
Corp. Mutual Management Corp. and SBMFM are both
wholly
owned subsidiaries of Smith Barney Holdings Inc.
("Holdings''). Holdings is a wholly owned
subsidiary of
Travelers Group Inc. ("Travelers''). The advisory
agreement
is dated July 30, 1993 (the "Advisory
Agreement'') and was
first approved by the Board of Directors,
including a
majority of those Directors who are not
"interested
persons'' of the Fund or Smith Barney, on April
7, 1993. The
services provided by SBMFM under the Advisory
Agreement are
described in the Prospectus under "Management of
the Fund.''
SBMFM pays the salary of any officer or employee
who is
employed by both it and the Fund.
As compensation for investment advisory services,
the Fund
pays SBMFM a fee computed daily and paid monthly
at the
following annual rates of the Fund's average
daily net
assets: 0.35% up to $500 million; and 0.32% in
excess of
$500 million. For the 1993, 1994 and 1995 fiscal
years, the
investment advisory fees paid to SBMFM and its
predecessors
amounted to, $378,146, $559,176, and $579,652,
respectively.
Shearson Lehman Advisors, Mutual Management Corp.
and/or
SBMFM voluntarily waived investment advisory fees
for the
fiscal years ended March 31, 1993 and 1994 in the
amounts of
$110,602 and $49,482, respectively.
SBMFM also serves as administrator to the Fund
pursuant to a
written agreement dated April 20, 1994 (the
"Administration
Agreement''), which was most recently approved by
the Fund's
Board of Directors, including a majority of
Directors who
are not "interested persons'' of the Fund or
SBMFM, on July
20, 1994. The services provided by SBMFM under
the
Administration Agreement are described in the
Prospectus
under "Management of the Fund.'' SBMFM pays the
salary of
any officer and employee who is employed by both
it and the
Fund and bears all expenses in connection with
the
performance of its services.
As compensation for administrative services
rendered to the
Fund, SBMFM receives a fee paid at the following
annual
rates: 0.20% of average daily net assets up to
$500 million;
and 0.18% of average daily net assets in excess
of $500
million. For the fiscal year ended March 31,
1995,
administrative fees paid to SBMFM equaled
$331,230.
Sub-Administrator - Boston Advisors
Boston Advisors currently serves as sub-
administrator to the
Fund under a written agreement (the "Sub-
Administration
Agreement'') dated April 20, 1994, which was most
recently
approved by the Fund's Board of Directors,
including a
majority of Directors who are not "interested
persons'' of
the Fund or Boston Advisors on April 20, 1994.
Under the Sub-
Administration Agreement, Boston Advisors is paid
a portion
of the administration fee paid by the Fund to
SBMFM at a
rate agreed upon from time to time between Boston
Advisors
and SBMFM. Boston Advisors is a wholly owned
subsidiary of
The Boston Company, Inc. ("TBC''), a financial
services
holding company, which is in turn a wholly owned
subsidiary
of Mellon Bank Corporation ("Mellon'').
Prior to April 20, 1994, Boston Advisors served
as the
Fund's sub-investment advisor and/or
administrator. For the
fiscal years ended March 31, 1992, 1993 and 1994,
such fees
amounted to $162,580, $216,083 and $319,529,
respectively.
Boston Advisors voluntarily waived sub-investment
advisory
and/or administration fees for the fiscal years
ended March
31, 1993 and 1994 in the amounts of $63,201 and
$28,275,
respectively.
Certain of the services provided to the Fund by
Boston
Advisors pursuant to the Sub-Administration
Agreement are
described in the Prospectus under "Management of
the Fund.''
In addition to those services, Boston Advisors
pays the
salaries of all officers and employees who are
employed by
both it and the Fund, maintains office facilities
for the
Fund, furnishes the Fund with statistical and
research data,
clerical help and accounting, data processing,
bookkeeping,
internal auditing and legal services and certain
other
services required by the Fund, prepares reports
to the
Fund's shareholders, and prepares tax returns,
reports to
and filings with the Securities and Exchange
Commission (the
"SEC'') and state Blue Sky authorities. Boston
Advisors
bears all expenses in connection with the
performance of its
services.
The Fund bears expenses incurred in its
operations,
including: taxes, interest, brokerage fees and
commissions,
if any; fees of Directors who are not officers,
directors,
shareholders or employees of Smith Barney, SBMFM
or Boston
Advisors; SEC fees and state Blue Sky
qualification fees;
charges of custodian; transfer and dividend
disbursing
agent's fees; certain insurance premiums; outside
auditing
and legal expenses; costs of any independent
pricing
service; costs of maintaining corporate
existence; costs
attributable to investors services (including
allocated
telephone and personnel expenses); costs of
preparation and
printing of prospectuses for regulatory purposes
and for
distribution to existing shareholders; costs of
shareholders' reports and shareholder meetings
and meetings
of the officers or Board of Directors of the
Fund.
SBMFM and Boston Advisors have agreed that if in
any fiscal
year the aggregate expenses of the Fund
(including fees
payable pursuant to the Advisory Agreement, Sub-
Administration and Administration Agreement but
excluding
interest, taxes and brokerage fees paid pursuant
to the
Fund's services and distribution plan, and, with
the prior
written consent of the necessary state securities
commissions, extraordinary expenses) exceed the
expense
limitation of any state having jurisdiction over
the Fund,
SBMFM and Boston Advisors will, to the extent
required by
state law, reduce their management fees by the
amount of
such excess expenses, such amount to be allocated
between
them in the proportion that their respective fees
bear to
the aggregate of such fees paid by the Fund. Such
fee
reductions, if any, will be reconciled on a
monthly basis.
For the fiscal year ended March 31, 1995 no such
fee
reduction was required.
Counsel and Auditors
Willkie Farr & Gallagher serves as legal counsel
to the
Fund. The Directors who are not "interested
persons'' of
the Fund ("Independent Directors") have selected
Stroock &
Stroock & Lavan as their legal counsel.
KPMG Peat Marwick LLP ("Peat Marwick"),
independent
accountants, 345 Park Avenue, New York, New York
10154,
serve as auditors of the Fund and will render an
opinion on
the Fund's financial statements annually
beginning with the
fiscal year ending March 31, 1996. Prior to Peat
Marwick's
appointment, Coopers and Lybrand L.L.P., served
as auditors
of the Fund and rendered an opinion on the Fund's
financial
statements for the fiscal year ended March 31,
1995.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Prospectus discusses the Fund's investment
objective and
the policies it employs to achieve that
objective. The
following discussion supplements the description
of the
Fund's investment policies in the Prospectus. For
purposes
of this Statement of Additional Information,
obligations of
non-New Jersey municipal issuers, the interest on
which is
at least exempt from Federal income taxation
("Other
Municipal Securities''), and obligations of the
State of New
Jersey and its political subdivisions, agencies
and public
authorities (together with certain municipal
issuers such as
the Commonwealth of Puerto Rico, the Virgin
Islands and
Guam) that pay interest which is excluded from
gross income
for Federal income tax purposes and exempt from
New Jersey
personal income taxes ("New Jersey Municipal
Securities'')
are collectively referred to as "Municipal
Bonds.''
As noted in the Prospectus, 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 may be invested in
the
obligations of a single issuer. The
identification of the
issuer of Municipal Bonds generally depends upon
the terms
and conditions of the security. When the assets
and revenues
of an agency, authority, instrumentality or other
political
subdivision are separate from those of the
government
creating the issuing entity and the security is
backed only
by the assets and revenues of such entity, such
entity would
be deemed to be the sole issuer. Similarly, in
the case of a
private activity bond, if that bond is backed
only by the
assets and revenues of the non-governmental user,
then such
non-governmental user is deemed to be the sole
issuer. If in
either case, however, the creating government or
some other
entity guarantees a security, such a guarantee
would be
considered a separate security and would be
treated as an
issue of such government or other entity.
Ratings as Investment Criteria
In general, the ratings of Moody's Investors
Service, Inc.
("Moody's'') and Standard & Poor's Corporation
("S&P'')
represent the opinions of those agencies as to
the quality
of the Municipal Bonds and short-term investments
which they
rate. It should be emphasized, however, that such
ratings
are relative and subjective, are not absolute
standards of
quality and do not evaluate the market risk of
securities.
These ratings will be used by the Fund as initial
criteria
for the selection of portfolio securities, but
the Fund also
will rely upon the independent advice of SBMFM to
evaluate
potential investments. Among the factors that
will be
considered are the long-term ability of the
issuer to pay
principal and interest and general economic
trends. To the
extent the Fund invests in lower-rated and
comparable
unrated securities, the Fund's achievement of its
investment
objective may be more dependent on SBMFM's credit
analysis
of such securities than would be the case for a
portfolio
consisting entirely of higher-rated securities.
Subsequent to its purchase by the Fund, an issue
of
Municipal Bonds may cease to be rated or its
rating may be
reduced below the rating given at the time the
securities
were acquired by the Fund. Neither event will
require the
sale of such Municipal Bonds by the Fund, but
SBMFM will
consider such event in its determination of
whether the Fund
should continue to hold the Municipal Bonds. In
addition, to
the extent the ratings change as a result of
changes in such
organizations or their rating systems or due to a
corporate
restructuring of Moody's or S&P, the Fund will
attempt to
use comparable ratings as standards for its
investments in
accordance with its investment objective and
policies. The
Appendix contains information concerning the
ratings of
Moody's and S&P and their significance.
Temporary Investments
The Fund may invest in short-term investments
("Temporary
Investments'') consisting of (a) the following
tax-exempt
securities: notes of municipal issuers having, at
the time
of purchase, a rating within the three highest
grades of
Moody's or S&P or, if not rated, having an issue
of
outstanding Municipal Bonds rated within the
three highest
grades by Moody's or S&P; and (b) the following
taxable
securities: obligations of the United States
government, its
agencies or instrumentalities ("U.S. government
securities''), repurchase agreements, other debt
securities
rated within the three highest grades by Moody's
and S&P,
commercial paper rated in the highest grade by
either of
such rating services, and certificates of deposit
of
domestic banks with assets of $1 billion or more.
The Fund
intends to purchase tax-exempt Temporary
Investments pending
the investment of the proceeds of the sale of
portfolio
securities or shares of the Fund's common stock,
or in order
to have highly liquid securities available to
meet
anticipated redemptions. At no time will more
than 20% of
the Fund's total assets be invested in Temporary
Investments
unless the Fund has adopted a defensive
investment policy;
provided, however, that the Fund will seek, to
the extent
that it makes Temporary Investments for defensive
purposes,
to make such investments in conformity with the
requirements
of a qualified investment fund under New Jersey
law.
Repurchase Agreements. As a defensive position
only, the
Fund may enter into repurchase agreements with
banks which
are the issuers of instruments acceptable for
purchase by
the Fund and with certain dealers on the Federal
Reserve
Bank of New York's list of reporting dealers. A
repurchase
agreement is a contract under which the buyer of
a security
simultaneously commits to resell the security to
the seller
at an agreed-upon price on an agreed-upon date.
Under the
terms of a typical repurchase agreement, the Fund
would
acquire an underlying debt obligation for a
relatively short
period (usually not more than seven days) subject
to an
obligation of the seller to repurchase, and the
Fund to
resell, the obligation at an agreed-upon price
and time,
thereby determining the yield during the Fund's
holding
period. This arrangement results in a fixed rate
of return
that is not subject to market fluctuations during
the Fund's
holding period. Under each repurchase agreement,
the selling
institution will be required to maintain the
value of the
securities subject to the repurchase agreement at
not less
than their repurchase price. Repurchase
agreements could
involve certain risks in the event of default or
insolvency
of the other party, including possible delays or
restrictions upon the Fund's ability to dispose
of the
underlying securities, the risk of a possible
decline in the
value of the underlying securities during the
period in
which the Fund seeks to assert its rights to
them, the risk
of incurring expenses associated with asserting
those rights
and the risk of losing all or part of the income
from the
agreement. To evaluate potential risks, SBMFM or
Boston
Advisors, acting under the supervision of the
Fund's Board
of Directors, reviews on an ongoing basis the
value of the
collateral and the creditworthiness of those
banks and
dealers with which the Fund enters into
repurchase
agreements.
Investment Restrictions
The Fund has adopted the following investment
restrictions
for the protection of shareholders. Restrictions
1 through 7
below cannot be changed without the approval of
the holders
of a majority of the outstanding shares of the
Fund, defined
as the lesser of (a) 67% of the Fund's shares
present at a
meeting, if the holders of more than 50% of the
outstanding
shares are present in person or by proxy, or (b)
more than
50% of the Fund's outstanding shares. The
remaining
restrictions may be changed by the Board of
Directors at any
time. The Fund may not:
1. Issue senior securities as defined in the 1940
Act and
any rules and orders thereunder, except insofar
as the Fund
may be deemed to have issued senior securities by
reason of:
(a) borrowing money or purchasing securities on a
when-
issued or delayed-delivery basis; (b) purchasing
or selling
futures contracts and options on futures
contracts and other
similar instruments; and (c) issuing separate
classes of
shares.
2. Invest more than 25% of its total assets in
securities,
the issuers of which are in the same industry.
For purposes
of this limitation, U.S. government securities
and
securities of state or municipal governments and
their
political subdivisions are not considered to be
issued by
members of any industry.
3. Borrow money, except that the Fund may borrow
from banks
for temporary or emergency (not leveraging)
purposes,
including the meeting of redemption requests
which might
otherwise require the untimely disposition of
securities, in
an amount not exceeding 10% of the value of the
Fund's total
assets (including the amount borrowed) valued at
market less
liabilities (not including the amount borrowed)
at the time
the borrowing is made. Whenever borrowings exceed
5% of the
value of the Fund's total assets, the Fund will
not make
additional investments.
4. Make loans. This restriction does not apply
to: (a) the
purchase of debt obligations in which the Fund
may invest
consistent with its investment objective and
policies; (b)
repurchase agreements; and (c) loans of its
portfolio
securities.
5. Engage in the business of underwriting
securities issued
by other persons, except to the extent that the
Fund may
technically be deemed to be an underwriter under
the
Securities Act of 1933, as amended, in disposing
of
portfolio securities.
6. Purchase or sell real estate, real estate
mortgages, real
estate investment trust securities, commodities
or commodity
contracts, but this shall not prevent the Fund
from: (a)
investing in securities of issuers engaged in the
real
estate business and securities which are secured
by real
estate or interests therein; (b) holding or
selling real
estate received in connection with securities it
holds; or
(c) trading in futures contracts and options on
futures
contracts.
7. Purchase any securities on margin (except for
such short-
term credits as are necessary for the clearance
of purchases
and sales of portfolio securities) or sell any
securities
short (except against the box). For purposes of
this
restriction, the deposit or payment by the Fund
of initial
or maintenance margin in connection with futures
contracts
and related options and options on securities is
not
considered to be the purchase of a security on
margin.
8. Purchase or otherwise acquire any security if,
as a
result, more than 15% of its net assets would be
invested in
securities that are illiquid.
9. Purchase or sell oil and gas interests.
10. Invest more than 5% of the value of its total
assets in
the securities of issuers having a record,
including
predecessors, of less than three years of
continuous
operation, except U.S. government securities.
(For purposes
of this restriction issuers include predecessors,
sponsors,
controlling persons, general partners, guarantors
and
originators of underlying assets.)
11. Invest in companies for the purpose of
exercising
control.
12. Invest in securities of other investment
companies,
except as they may be acquired as part of a
merger,
consolidation or acquisition of assets and except
to the
extent permitted by Section 12 of the 1940 Act
(currently,
up to 5% of the total assets of the Fund and no
more than 3%
of the total outstanding voting stock of any one
investment
company).
13. Engage in the purchase or sale of put, call,
straddle or
spread options or in the writing of such options,
except
that the Fund may engage in transactions
involving municipal
bond index and interest rate futures contracts
and options
thereon after approval of these investment
strategies by the
Board of Directors and notice thereof to the
Fund's
shareholders.
Certain restrictions listed above permit the Fund
to engage
in investment practices that the Fund does not
currently
pursue. The Fund has no present intention of
altering its
current investment practices as otherwise
described in the
Prospectus and this Statement of Additional
Information and
any future change in those practices would
require Board of
Directors approval and appropriate disclosure to
investors.
If a percentage restriction is complied with at
the time of
an investment, a later increase or decrease in
the
percentage of assets resulting from a change in
the values
of portfolio securities or in the amount of the
Fund's
assets will not constitute a violation of such
restriction.
In order to permit the sale of the Fund's shares
in certain
states, the Fund may make commitments more
restrictive than
the restrictions described above. Should the Fund
determine
that any such commitment is no longer in the best
interests
of the Fund and its shareholders, it will revoke
the
commitment by terminating sales of its shares in
the state
involved.
Portfolio Transactions
Newly issued securities normally are purchased
directly from
the issuer or from an underwriter acting as
principal. Other
purchases and sales usually are placed with those
dealers
from which it appears that the best price or
execution will
be obtained; those dealers may be acting as
either agents or
principals. The purchase price paid by the Fund
to
underwriters of newly issued securities usually
includes a
concession paid by the issuer to the underwriter,
and
purchases of after-market securities from dealers
normally
are executed at a price between the bid and asked
prices.
The Fund has paid no brokerage commissions since
its
commencement of operations.
Allocation of transactions, including their
frequency, to
various dealers is determined by SBMFM in its
best judgment
and in the manner deemed fair and reasonable to
shareholders. The primary considerations are the
availability of the desired security and prompt
execution of
orders in an effective manner at the most
favorable prices.
Subject to these considerations, dealers which
provide
supplemental investment research and statistical
or other
services to SBMFM may receive orders for
portfolio
transactions by the Fund. Information so received
enables
SBMFM to supplement its own research and analysis
with the
views and information of other securities firms.
Such
information may be useful to SBMFM in serving
both the Fund
and its other clients, and, conversely,
supplemental
information obtained by the placement of business
of other
clients may be useful to SBMFM in carrying out
its
obligations to the Fund.
The Fund will not purchase Municipal Bonds during
the
existence of any underwriting or selling group
relating
thereto of which SBMFM is a member, except to the
extent
permitted by the SEC. Under certain
circumstances, the Fund
may be at a disadvantage because of this
limitation in
comparison with other investment companies which
have a
similar investment objective but which are not
subject to
such limitation. The Fund also may execute
portfolio
transactions through Smith Barney and its
affiliates in
accordance with rules promulgated by the SEC.
While investment decisions for the Fund are made
independently from those of the other accounts
managed by
SBMFM, investments of the type that the Fund may
make also
may be made by such other accounts. When the Fund
and one or
more other accounts managed by SBMFM are prepared
to invest
in, or desire to dispose of, the same security,
available
investments or opportunities for sales will be
allocated in
a manner believed by SBMFM to be equitable to
each. In some
cases, this procedure may adversely affect the
price paid or
received by the Fund or the size of the position
obtained or
disposed of by the Fund.
Portfolio Turnover
The Fund's portfolio turnover rate (the lesser of
purchases
or sales of portfolio securities during the year
excluding
purchases or sales of short-term securities
divided by the
monthly average value of portfolio securities)
generally is
not expected to exceed 100%, but the portfolio
turnover rate
will not be a limiting factor whenever the Fund
deems it
desirable to sell or purchase securities.
Securities may be
sold in anticipation of a rise in interest rates
(market
decline) or purchased in anticipation of a
decline in
interest rates (market rise) and later sold. In
addition, a
security may be sold and another security of
comparable
quality may be purchased at approximately the
same time in
order to take advantage of what the Fund believes
to be a
temporary disparity in the normal yield
relationship between
the two securities. These yield disparities may
occur for
reasons not directly related to the investment
quality of
particular issues or the general movement of
interest rates,
such as changes in the overall demand for supply
of various
types of tax-exempt securities. For each of the
fiscal years
ended March 31, 1994 and 1995, the Fund's
portfolio turnover
rate was 32% .
MUNICIPAL BONDS
General Information
Municipal Bonds generally are understood to
include debt
obligations issued to obtain funds for various
public
purposes, including the construction of a wide
range of
public facilities, refunding of outstanding
obligations,
payment of general operating expenses and
extensions of
loans to public institutions and facilities.
Private
activity bonds that are issued by or on behalf of
public
authorities to finance privately operated
facilities are
included within the term Municipal Bonds if the
interest
paid thereon qualifies as excludable from gross
income (but
not necessarily from alternative minimum taxable
income) for
Federal income tax purposes in the opinion of
bond counsel
to the issuer.
The yields on Municipal Bonds are dependent upon
a variety
of factors, including general economic and
monetary
conditions, general money market factors, the
financial
condition of the issuer, the general conditions
of the
Municipal Bond market, the size of a particular
offering,
the maturity of the obligation offered and the
rating of the
issue. Municipal Bonds are subject to the
provisions of
bankruptcy, insolvency and other laws affecting
the rights
and remedies of creditors, such as the Federal
Bankruptcy
Code, and laws, if any that may be enacted by
Congress or
state legislatures extending the time for payment
of
principal or interest, or both, or imposing other
constraints upon enforcement of the obligations
or upon the
ability of municipalities to levy taxes. The
possibility
also exists that as a result of litigation or
other
conditions, the power or ability of any one or
more issuers
to pay, when due, principal of and interest on
its, or
their, Municipal Bonds may be materially and
adversely
affected.
When-Issued Securities
The Fund may purchase Municipal Bonds on a "when-
issued''
basis (i.e., for delivery beyond the normal
settlement date
at a stated price and yield). The payment
obligation and the
interest rate that will be received on the
Municipal Bonds
purchased on a when-issued basis are each fixed
at the time
the buyer enters into the commitment. Although
the Fund will
purchase Municipal Bonds on a when-issued basis
only with
the intention of actually acquiring the
securities, the Fund
may sell these securities before the settlement
date if it
is deemed advisable as a matter of investment
strategy.
Municipal Bonds are subject to changes in value
based upon
the public's perception of the creditworthiness
of the
issuers and changes, real or anticipated, in the
level of
interest rates. In general, Municipal Bonds tend
to
appreciate when interest rates decline and
depreciate when
interest rates rise. Purchasing Municipal Bonds
on a when-
issued basis, therefore, can involve the risk
that the
yields available in the market when the delivery
takes place
may actually be higher than those obtained in the
transaction itself. To account for this risk, a
segregated
account of the Fund consisting of cash or liquid
debt
securities equal to the amount of the when-issued
commitments will be established at the Fund's
custodian
bank. For the purpose of determining the adequacy
of the
securities in the account, the deposited
securities will be
valued at market or fair value. If the market or
fair value
of such securities declines, additional cash or
securities
will be placed in the account daily so that the
value of the
account will equal the amount of such commitments
by the
Fund. Placing securities rather than cash in the
segregated
account may have a leveraging effect on the
Fund's net
assets. That is, to the extent the Fund remains
substantially fully invested in securities at the
same time
it has committed to purchase securities on a when-
issued
basis, there will be greater fluctuations in its
net assets
than if it had set aside cash to satisfy its
purchase
commitments. Upon the settlement date of the when-
issued
securities, the Fund will meet its obligations
from then-
available cash flow, sale of securities held in
the
segregated account, sale of other securities or,
although it
normally would not expect to do so, from the sale
of the
when-issued securities themselves (which may have
a value
greater or less than the Fund's payment
obligations). Sales
of securities to meet such obligations may
involve the
realization of capital gains, which may not be
exempt from
New Jersey personal income taxes, and from
Federal income
taxes.
When the Fund engages in when-issued
transactions, it relies
on the seller to consummate the trade. Failure of
the seller
to do so may result in the Fund's incurring a
loss or
missing an opportunity to obtain a price
considered to be
advantageous.
Special Considerations Relating to New Jersey
Municipal
Securities
Some of the significant financial considerations
relating to
the investments of the Fund are summarized below.
The
following information constitutes only a brief
summary, does
not purport to be a complete description and is
largely
based on information drawn from official
statements relating
to securities offerings of New Jersey municipal
obligations
available as of the date of this Statement of
Additional
Information. The accuracy and completeness of the
information contained in such offering statements
has not
been independently verified.
The 1995 Fiscal Year budget for the State of New
Jersey (the
"State") became law on June 30, 1994.
Reflecting the downturn, the rate of unemployment
in the
State rose from a low of 3.6% during the first
quarter of
1989 to a recessionary peak of 9.3% during 1992.
Since
then, the unemployment rate fell to 6.7% during
the fourth
quarter of 1993. The jobless rate averaged 7.1%
during the
first nine months of 1994, but this estimate is
not
comparable to those prior to January because of
major
changes in the federal survey from which these
statistics
are obtained.
In the first nine months of 1994, relative to the
same
period a year ago, job growth took place in
services (3.5%)
and construction (5.7%), more moderate growth
took place in
trade (1.9%), transportation and utilities (1.2%)
and
finance/insurance/real estate (1.4%), while
manufacturing
and government declined by 1.5% and 0.1%,
respectively. The
net result was a 1.6% increase in average
employment during
the first nine months of 1994 compared to the
first nine
months of 1993.
Economic recovery is likely to be slow and uneven
in New
Jersey. Some sectors, like commercial and
industrial
construction, will undoubtedly lag because of
continued
excess capacity. Also, employers in rebounding
sectors can
be expected to remain cautious about hiring until
they
become convinced that improved business will be
sustained.
Other firms will continue to merge or downsize to
increase
profitability. As a result, job gains will
probably come
grudgingly and unemployment will recede at a
correspondingly
slow pace.
Pursuant to the State Constitution, no money may
be drawn
from the State Treasury except for appropriations
made by
law. In addition, all monies for the support of
State
purposes must be provided for in one general
appropriation
law covering one and the same fiscal year.
In addition to the Constitutional provisions, the
New Jersey
statutes contain provisions concerning the budget
and
appropriation system. Under these provisions,
each unit of
the State requests an appropriation from the
Director of the
Division of Budget and Accounting, who reviews
the budget
requests and forwards them with his or her
recommendations
to the Governor. The Governor then transmits his
or her
recommended expenditures and sources of
anticipated revenue
to the legislature, which reviews the Governor's
Budget
Message and submits an appropriations bill to the
Governor
for his or her signature by July 1 of each year.
At the
time of signing the bill, the Governor may revise
appropriations or anticipated revenues. That
action can be
reversed by a two-thirds vote of each House. No
supplemental appropriation may be enacted after
adoption of
the act, except where there are sufficient
revenues on hand
or anticipated, as certified by the Governor, to
meet the
appropriation. Finally, the Governor may, during
the course
of the year, prevent the expenditure of various
appropriations when revenues are below those
anticipated or
when he or she determines that such expenditure
is not in
the best interest of the State.
One of the major reasons for cautious optimism is
found in
the construction industry. Total construction
contracts
awarded in New Jersey have turned around, rising
by 8.6% in
1993 compared with 1992. By far, the largest
boost came
from residential construction awards which
increased by
37.7% in 1993 compared with 1992. In addition,
non-
residential building construction awards have
turned around,
posting a 6.9% gain.
Nonbuilding construction awards increased
approximately 4%
in the first eight months of 1994 compared with
the same
period in 1993.
Finally, even in the labor market there are signs
of
recovery. Thanks to a reduced layoff rate and
the
reappearance of job opportunities in some parts
of the
economy, unemployment in the State has been
receding since
July 1992, when it peaked at 9.6% according to
U.S. Bureau
of Labor Statistics estimates based on the
federal
government's monthly household survey. The same
survey
showed joblessness dropped to an average of 6.7%
in the
fourth quarter of 1993. The unemployment rate
registered an
average of 7.8% in the first quarter of 1994, but
this rate
cannot be compared with prior data due to the
changes in the
U.S. Department of Labor procedures for
determining the
unemployment rate that went into effect in
January 1994.
State Aid to Local Governments was the largest
portion of
Fiscal Year 1995 appropriations. In fiscal year
1995,
$5,782.2 million of the State's appropriations
consisted of
funds which are distributed to municipalities,
counties and
school districts. The largest State Aid
appropriation, in
the amount of $3,900.1 million, is provided for
local
elementary and secondary education programs. Of
this amount
$2,431.6 million is provided as foundation aid to
school
districts by formula based upon the number of
students and
the ability of a school district to raise taxes
from its own
base. In addition, the State provided $582.5
million for
special education programs for children with
disabilities.
A $293.0 million program is also funded for
pupils at risk
of educational failure, including basic skills
improvement.
The State appropriated $474.8 million on behalf
of school
districts as the employer share of the teachers'
pension and
benefits programs, $263.8 million to pay for the
cost of
pupil transportation and $57.4 million for
transition aid,
which guaranteed school districts a 6.5% increase
over the
aid received in Fiscal Year 1991 and is being
phased out
over six years.
Appropriations to the State Department of
Community Affairs
total $635.1 million in State Aid monies for
Fiscal Year
1995. The principal programs funded were the
Supplemental
Municipal Property Tax Act ($314.1 million); the
Municipal
Revitalization Program ($165.0 million);
municipal aid to
urban communities to maintain and upgrade
municipal services
($40.7 million); and the Safe and Clean
Neighborhoods
Program ($58.9 million). Appropriations to the
State
Department of the Treasury total $321.3 million
in State Aid
monies for Fiscal Year 1995. The principal
programs funded
by these appropriations were payments under the
Business
Personal Property Tax Replacement Programs
($158.7 million);
the cost of senior citizens, disabled and
veterans property
tax deductions and exemptions ($41.7 million);
aid to
densely populated municipalities ($25.0 million);
Municipal
Purposes Tax Assistance ($30.0 million) and
payments to
municipalities for services to state owned
property ($34.9
million).
Other appropriations of State Aid in Fiscal 1995
include:
welfare programs ($499.1 million); aid to county
colleges
($123.6 million); and aid to county mental
hospitals ($79.4
million).
The second largest portion of appropriations in
fiscal 1995
is applied to Direct State Services: the
operation of State
government's 17 departments, the Executive
Office, several
commissions, the State Legislature and the
Judiciary. In
Fiscal Year 1995, appropriations for Direct State
Services
aggregate $5,203.1 million. Some of the major
appropriations for Direct State Services during
Fiscal Year
1995 are detailed below.
$595.3 million is appropriated for programs
administered by
the State Department of Human Services. The
State
Department of Labor is appropriated $49.3 million
for the
administration of programs for workers'
compensation,
unemployment and disability insurance, manpower
development,
and health safety inspection.
$27.7 million is appropriated for administration
of the
Medicaid and pharmaceutical assistance to the
aged and
disabled programs; $14.9 million for
administration of the
various income maintenance programs, including
Aid to
Families with Dependent Children (AFDC); $69.3
million for
the Division of Youth and Family Services, which
protects
the children of the State from abuse and neglect
and $15.0
million for juvenile community programs which
serves
juveniles who have violated the laws of the State
and have
been committed to the Juvenile Services Division.
The State Department of Health is appropriated
$32.3 million
for the prevention and treatment of diseases,
alcohol and
drug abuse programs, regulation of health care
facilities,
and the uncompensated care program.
$689.3 million is appropriated to the State
Department of
Higher Education for the support of nine State
colleges,
Rutgers University, the New Jersey Institute of
Technology,
and the University of Medicine and Dentistry of
New Jersey.
$932.5 million is appropriated to the State
Department of
Law and Public Safety and the Department of
Corrections.
$92.3 million is appropriated to the State
Department of
Transportation for the various programs it
administers, such
as the maintenance and improvement of the State
highway
system and subsidies for railroads and bus
companies.
$176.6 million is appropriated to the State
Department of
Environmental Protection for the protection of
air, land,
water, forest, wildlife, and shellfish resources
and for the
provision of outdoor recreational facilities.
The primary method for State financing of capital
projects
is through the sale of the general obligation
bonds of the
State. These bonds are backed by the full faith
and credit
of the State. State tax revenues and certain
other fees
pledged to meet the principal and interest
payments and if
provided, redemption premium payments required to
pay the
debt fully. No general obligation debt can be
issued by the
State without prior voter approval, except that
no voter
approval is required for any law authorizing the
creation of
a debt for the purpose of refinancing all or a
portion of
outstanding debt of the State, so long as such
law requires
that the refinancing provide a debt service
savings.
Litigation. At any given time, there are various
numbers of
claims and cases pending against New Jersey, New
Jersey
agencies and employees, seeking recovery of
monetary damages
that are primarily paid out of the fund created
pursuant to
the Tort Claims Act, N.J.S.A. 59:1-1 et seq. (the
"Tort
Claims Act''). At any given time there are
various contract
and other claims against New Jersey and New
Jersey agencies,
including environmental claims arising from the
alleged
disposal of hazardous waste, seeking recovery of
monetary
damages or other relief which would require the
expenditure
of funds. In addition, at any given time there
are various
number of claims and cases pending against the
University of
Medicine and Dentistry of New Jersey and its
employees,
seeking recovery of monetary damages that are
primarily paid
out of the Self-Insurance Reserve Fund created
pursuant to
the Tort Claims Act, and various numbers of
contract and
other claims against the University of Medicine
and
Dentistry, seeking recovery of monetary damages
or other
relief which would require the expenditure of
funds. New
Jersey is unable to estimate its exposure for
these claims.
As of August, 1994, the following cases were
presently
pending or threatened in which New Jersey has the
potential
for either a significant loss of revenue or
significant
unanticipated expenditures: Abbot v. Burke,
challenging the
constitutionality of the Quality Education Act of
1990,
which was found to be unconstitutional by the
Trial Court
and was recently affirmed by the New Jersey
Supreme Court
and requires that a funding formula be adopted by
September,
1996 which will achieve by the 1997-98 school
year the
mandated parity in spending and will address the
special
educational needs of children in poor and urban
school
districts; County of Essex v. Waldman, et al and
similar
cases involving eleven other counties,
challenging the
methods by which the New Jersey Department of
Human Services
shares with county governments and maintenance
recoveries
and costs for residents in New Jersey psychiatric
hospitals
and residential facilities for the
developmentally disabled,
all of which are on appeal in New Jersey Courts.
County of
Essex v. Commissioner of Human Services, et al.
and similar
cases involving ten other counties, in which the
Appellate
Division ruled that all counties were entitled to
100% of
Social Security benefits and other maintenance
recoveries
received by New Jersey and were entitled to
credits for
payments made to New Jersey for the maintenance
of Medicare
and Medicaid-eligible county residents of certain
New Jersey
facilities, which is on petition for review by
the New
Jersey Supreme Court; New Jersey Association of
Health Care
Facilities, Inc., et al. v. Gibbs, et al., a
class action on
behalf of all New Jersey long-term care
facilities providing
services to Medicaid patients, seeking a
declaration that
the New Jersey Department of Human Services has
violated
Federal law in the setting and paying of 1990
long-term care
facility Medicaid payment rates, where the Third
Circuit
affirmed the District Court's denial of
plaintiff's motion
for preliminary injunction, and the parties are
currently
negotiating the form of an order to dismiss the
action with
prejudice; Exxon v. Hunt and related cases, where
taxpayers
sought refund of taxes paid to the Spill
Compensation Fund
and the New Jersey Supreme Court, on remand from
the U.S.
Supreme Court, ruled that plaintiffs would
receive refunds
only in the event the New Jersey Legislature
refused to
reimburse the Spill Compensation Fund for
expenditures for
preempted purposes and, after exhaustion of
appeals and
other legal avenues, a motion by the State for
dismissal of
all such claims is pending before the Tax Court;
Fair
Automobile Insurance Reform Act ("FAIR Act'')
litigation
challenging various portions of FAIR Act,
including surtax
and assessment provisions, is still pending;
County of
Passaic v. State of New Jersey alleging tort and
contractual
claims against New Jersey and the New Jersey
Department of
Environmental Protection in connection with a
resource
recovery facility plaintiffs had planned to build
in Passaic
County, seeking approximately $30 million in
damages;
Pelletier, et al., v. Waldman, et al., a
challenge by State
Medicaid-eligible children to the adequacy of
Medicaid
reimbursement for services rendered by doctors
and dentists,
is currently in mediation; Barnett Memorial
Hospital v.
Commission of Health, an appeal by several
hospitals of the
Commissioner's calculation of the hospital
assessment
required by the Health Care Cost Reduction Act of
1991, was
decided against the Commission and successful
claimants were
refunded the amount of their overpayment in
April, 1994,
which amount totaled $4,636,576; New Jersey
Hospital
Association, et al. v. Leonard Fishman, seeking
the same
relief as in Barnett; Robert E. Brennan v.
Richard Barry, et
al., a suit filed against two members of the New
Jersey
Bureau of Securities alleging causes of action
for
defamation, injury to reputation, abuse of
process and
improper disclosure, based on the Bureau's
investigation of
certain publicly-traded securities to which the
state has
filed a motion to dismiss and/or for summary
judgment;
Camden Co. v. Waldman, et al., now consolidated
with similar
suits filed by Middlesex, Monmouth and Atlantic
Counties,
seeking reimbursement of federal funds received
by New
Jersey for disproportionate share hospital
payments made to
county psychiatric facilities from July 1, 1998
through July
1, 1991 has been transferred to the Appellate
Division;
Interfaith Community Organization v. Fox, et al.,
a suit
filed by a coalition of churches and church
leaders in
Hudson County against the Governor, the
Commissioners of the
Department of Environmental Protection and Energy
and the
Department of Health, concerning chromium
contamination in
Liberty State Park in Jersey City; American
Trucking
Associations, Inc. and Tri-State Motor Transit v.
State of
New Jersey, challenging the constitutionality of
annual
hazardous and solid waste licensure fees
collected by the
Department of Environmental Protection, seeking a
permanent
injunction enjoining future collection of fees
and refund of
all renewal fees, fines and penalties collected;
and Waste
Management of Pennsylvania, et al. v. Shinn, et
al., an
action filed in federal district court seeking
declaratory
and injunctive relief and compensatory damages
from
Department of Environmental Protection
Commissioner Shinn
and Acting Commissioner Fox, alleging violations
of the
Commerce Clause and the Contracts Clause of the
United
States Constitution based on emergency
redirection orders
and a draft permit.
In addition to litigation against New Jersey, at
any given
time there are various numbers of claims and
cases pending
or threatened against the political subdivisions
of New
Jersey, including but not limited to New Jersey
authorities,
counties, municipalities and school districts,
which have
potential for either a significant loss of
revenue or
significant unanticipated expenditures
PURCHASE OF SHARES
Volume Discounts
The schedule of sales charges on Class A shares
described in
the Prospectus applies to purchases made by any
"purchaser,'' which is defined to include the
following: (a)
an individual; (b) an individual's spouse and his
or her
children purchasing shares for his or her own
account; (c) a
trustee or other fiduciary purchasing shares for
a single
trust estate or single fiduciary account; (d) a
pension,
profit-sharing or other employee benefit plan
qualified
under Section 401(a) of the Internal Revenue Code
of 1986,
as amended (the "Code''), and qualified employee
benefit
plans of employers who are "affiliated persons''
of each
other within the meaning of the 1940 Act; (e) tax-
exempt
organizations enumerated in Section 501(c)(3) or
(13) of the
Code; and (f) a trustee or other professional
fiduciary
(including a bank, or an investment adviser
registered with
the SEC under the Investment Advisers Act of
1940, as
amended) purchasing shares of the Fund for one or
more trust
estates or fiduciary accounts. Purchasers who
wish to
combine purchase orders to take advantage of
volume
discounts should contact a Smith Barney Financial
Consultant.
Combined Right of Accumulation
Reduced sales charges, in accordance with the
schedule in
the Prospectus, apply to any purchase of Class A
shares if
the aggregate investment in Class A shares of the
Fund and
in Class A shares of other funds of the Smith
Barney Mutual
Funds that are offered with a sales charge,
including the
purchase being made, of any purchaser is $25,000
or more.
The reduced sales charge is subject to
confirmation of the
shareholder's holdings through a check of
appropriate
records. The Fund reserves the right to terminate
or amend
the combined right of accumulation at any time
after written
notice to shareholders. For further information
regarding
the right of accumulation, shareholders should
contact a
Smith Barney Financial Consultant.
Determination of Public Offering Price
The Fund offers its shares to the public on a
continuous
basis. The public offering price for a Class A
and Class Y
share of the Fund is equal to the net asset value
per share
at the time of purchase, plus for Class A shares
an initial
sales charge based on the aggregate amount of the
investment. The public offering price for a Class
B and
Class C share (and Class A share purchases,
including
applicable rights of accumulation, equaling or
exceeding
$500,000), is equal to the net asset value per
share at the
time of purchase and no sales charge is imposed
at the time
of purchase. A contingent deferred sales charge
("CDSC''),
however, is imposed on certain redemptions of
Class B and
Class C shares, and Class A shares when purchased
in amounts
exceeding $500,000. The method of computation of
the public
offering price is shown in the Fund's financial
statements,
incorporated by reference in their entirety into
this
Statement of Additional Information.
REDEMPTION OF SHARES
The right of redemption may be suspended or the
date of
payment postponed (a) for any period during which
the New
York Stock Exchange, Inc. ("NYSE'') is closed
(other than
for customary weekend and holiday closings), (b)
when
trading in markets the Fund normally utilizes is
restricted,
or an emergency exists, as determined by the SEC,
so that
disposal of the Fund's investments or
determination of net
asset value is not reasonably practicable or (c)
for such
other periods as the SEC by order may permit for
protection
of the Fund's shareholders.
Distribution in Kind
If the Board of Directors of the Fund determines
that it
would be detrimental to the best interests of the
remaining
shareholders of the Fund to make a redemption
payment wholly
in cash, the Fund may pay, in accordance with SEC
rules, any
portion of a redemption in excess of the lesser
of $250,000
or 1% of the Fund's net assets by a distribution
in kind of
portfolio securities in lieu of cash. Securities
issued as a
distribution in kind may incur brokerage
commissions when
shareholders subsequently sell those securities.
Automatic Cash Withdrawal Plan
An automatic cash withdrawal plan (the
"Withdrawal Plan'')
is available to shareholders who own shares with
a value of
at least $10,000 and who wish to receive specific
amounts of
cash monthly or quarterly. Withdrawals of at
least $50 may
be made under the Withdrawal Plan by redeeming as
many
shares of the Fund as may be necessary to cover
the
stipulated withdrawal payment. Any applicable
CDSC will not
be waived on amounts withdrawn by shareholders
that exceed
1.00% per month of the value of a shareholder's
shares 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 value of a
shareholder's
shares at the time the Withdrawal Plan
commences.) To the
extent withdrawals exceed dividends,
distributions and
appreciation of a shareholder's investment in the
Fund,
there will be a reduction in the value of the
shareholder's
investment, and continued withdrawal payments
will reduce
the shareholder's investment and may ultimately
exhaust it.
Withdrawal payments should not be considered as
income from
investment in the Fund. Furthermore, as it
generally would
not be advantageous to a shareholder to make
additional
investments in the Fund at the same time he or
she is
participating in the Withdrawal Plan, purchases
by such
shareholders in amounts of less than $5,000
ordinarily will
not be permitted.
Shareholders who wish to participate in the
Withdrawal Plan
and who hold their shares in certificate form
must deposit
their share certificates with TSSG as agent for
Withdrawal
Plan members. All dividends and distributions on
shares in
the Withdrawal Plan are reinvested automatically
at net
asset value in additional shares of the Fund.
Effective
November 7, 1994, Withdrawal Plans should be set
up with a
Smith Barney Financial Consultant. A shareholder
who
purchases shares directly through TSSG may
continue to do so
and applications for participation in the
Withdrawal Plan
must be received by TSSG no later than the eighth
day of the
month to be eligible for participation beginning
with that
month's withdrawal. For additional information,
shareholders
should contact a Smith Barney Financial
Consultant.
DISTRIBUTOR
Smith Barney serves as the Fund's distributor on
a best
efforts basis pursuant to a written agreement
dated July 30,
1993 (the "Distribution Agreement") which was
most recently
approved by the Fund's Board of Directors on July
20, 1994.
For the fiscal years ended March 31, 1993, 1994
and 1995,
Shearson Lehman Brothers, the Fund's distributor
prior to
Smith Barney and/or Smith Barney received,
$749,550,
$586,302 and $199,930, respectively, in sales
charges from
the sale of the Fund's Class A shares, and did
not reallow
any portion thereof to dealers. For the period
from November
6, 1993 through March 31, 1994, and the fiscal
year ended
March 31, 1995, Shearson Lehman Brothers and its
successor,
Smith Barney, received $49,338, and $178,656,
respectively,
representing CDSC on redemptions of the Fund's
Class B
shares.
For the fiscal year ended March 31, 1995, Smith
Barney
incurred distribution expenses totaling
approximately
$610,000, consisting of approximately $11,000 for
advertising, $9,000 for printing and mailing of
prospectuses, $262,000 for support services,
$279,000 to
Smith Barney Financial Consultants, and $49,000,
respectively in accruals for interest on the
excess of Smith
Barney expenses incurred in distributing the
Fund's shares
over the sum of the distribution fees and CDSC
received by
Smith Barney from the Fund.
When payment is made by the investor before
settlement date,
unless otherwise noted by the investor, the funds
will be
held as a free credit balance in the investor's
brokerage
account and Smith Barney may benefit from the
temporary use
of the funds. The investor may designate another
use for the
funds prior to settlement date, such as an
investment in a
money market fund (other than Smith Barney
Exchange Reserve
Fund) of the Smith Barney Mutual Funds. If the
investor
instructs Smith Barney to invest the funds in a
Smith Barney
money market fund, the amount of the investment
will be
included as part of the average daily net assets
of both the
Fund and the money market fund, and affiliates of
Smith
Barney that serve the funds in an investment
advisory or
administrative capacity will benefit from the
fact that by
receiving fees from both such investment
companies for
managing these assets, computed on the basis of
their
average daily net assets. The Fund's Board of
Directors has
been advised of the benefits to Smith Barney
resulting from
these settlement procedures and will take such
benefits into
consideration when reviewing the Advisory,
Administration
and Distribution Agreements for continuance.
Distribution Arrangements
To compensate Smith Barney for the services it
provides and
for the expense it bears under the Distribution
Agreement,
the Fund has adopted a services and distribution
plan (the
"Plan") pursuant to Rule 12b-1 under the 1940
Act. Under
the Plan, the Fund pays Smith Barney a service
fee, accrued
daily and paid monthly, calculated at the annual
rate of
0.15% of the value of the Fund's average daily
net assets
attributable to the Class A, Class B and Class C
shares. In
addition, the Fund pays Smith Barney a
distribution fee
primarily intended to compensate Smith Barney for
its
initial expense of paying Financial Consultants a
commission
upon sales of the respective shares. The Class B
distribution fee is calculated at the annual rate
of 0.50%
of the value of the Fund's average net assets
attributable
to the shares of the Class. The Class C
distribution fee is
calculated at the annual rate of 0.55% of the
value of the
Fund's average net assets attributable to the
shares of the
Class.
For the fiscal years ended March 31, 1995, the
Fund's Class
A, Class B and Class C shares paid $170,371,
$77,993 and $58
respectively, in service fees. For the same
period the
Fund's Class B and Class C shares paid and
$259,976 and $214
in distribution fees.
Under its terms, the Plan continues from year to
year,
provided such continuance is approved annually by
vote of
the Fund's Board of Directors, including a
majority of the
Directors who are not interested persons of the
Fund and who
have no direct or indirect financial interest in
the
operation of the Plan or in the Distribution
Agreement (the
"Independent Directors"). The Plan may not be
amended to
increase the amount of the service and
distribution fees
without shareholder approval, and all material
amendments of
the Plan also must be approved by the Directors
and the
Independent Directors in the manner described
above. The
Plan may be terminated with respect to a Class at
any time,
without penalty, by vote of a majority of the
Independent
Directors or by a vote of a majority of the
outstanding
voting securities of the Class (as defined in the
1940 Act).
Pursuant to the Plan, Smith Barney will provide
the Board of
Directors with periodic reports of amounts
expended under
the Plan and the purpose for which such
expenditures were
made.
VALUATION OF SHARES
Each Class' net asset value per share is
calculated on each
day, Monday through Friday, except days on which
the NYSE is
closed. The NYSE currently is scheduled to be
closed on New
Year's Day, Presidents' Day, Good Friday,
Memorial Day,
Independence Day, Labor Day, Thanksgiving and
Christmas, and
on the preceding Friday or subsequent Monday when
one of
these holidays falls on a Saturday or Sunday,
respectively.
Because of the differences in distribution fees
and Class-
specific expenses, the per share net asset value
of each
Class may differ. The following is a description
of the
procedures used by the Fund in valuing its
assets.
The valuation of the Fund's assets is made by
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 and asked prices.
Investments for which, in the judgment of the
Service, there
is no readily obtainable market quotation (which
may
constitute a majority of the portfolio
securities) are
carried at fair value as determined by the
Service. For the
most part, such investments are liquid and may be
readily
sold. The Service may employ electronic data
processing
techniques and/or a matrix system to determine
valuations.
The procedures of the Service are reviewed
periodically by
the officers of the Fund under the general
supervision and
responsibility of the Board of Directors, which
may replace
any such Service at any time if it determines it
to be in
the best interests of the Fund to do so.
EXCHANGE PRIVILEGE
Except as noted below, shareholders of any fund
in the Smith
Barney Mutual Funds may exchange all or part of
their shares
for shares of the same Class of other funds in
the Smith
Barney Mutual Funds, to the extent such shares
are offered
for sale in the shareholder's state of residence,
as listed
in the Prospectus, on the basis of relative net
asset value
per share at the time of exchange as follows:
A. Class A shares of any fund purchased with a
sales charge
may be exchanged for Class A shares of any of the
other
funds, and the sales charge differential, if any,
will be
applied. Class A shares of any fund may be
exchanged without
a sales charge for shares of the funds that are
offered
without a sales charge. Class A shares of any
fund purchased
without a sales charge may be exchanged for
shares sold with
a sales charge, and the appropriate sales charge
differential will be applied.
B. Class A shares of any fund acquired by a
previous
exchange of shares purchased with a sales charge
may be
exchanged for Class A shares of any of the other
funds, and
the sales charge differential, if any, will be
applied.
C. Class B shares of any fund may be exchanged
without a
sales charge. Class B shares of the Fund
exchanged for Class
B shares of another fund will be subject to the
higher
applicable CDSC of the two funds and, for
purposes of
calculating CDSC rates and conversion periods,
will be
deemed to have been held since the date the
shares being
exchanged were deemed to be purchased.
Dealers other than Smith Barney must notify TSSG
of the
investor's prior ownership of Class A shares of
Smith Barney
High Income Fund and the account number in order
to
accomplish an exchange of shares of Smith Barney
High Income
Fund under paragraph B above.
The exchange privilege enables shareholders to
acquire
shares of the same Class in a fund with different
investment
objectives when they believe that a shift between
funds is
an appropriate investment decision. This
privilege is
available to shareholders residing in any state
in which the
fund shares being acquired may legally be sold.
Prior to any
exchange, the shareholder should obtain and
review a copy of
the current prospectus of each fund into which an
exchange
is being considered. Prospectuses may be obtained
from a
Smith Barney Financial Consultant.
Upon receipt of proper instructions and all
necessary
supporting documents, shares submitted for
exchange are
redeemed at the then-current net asset value and
subject to
any applicable CDSC, the proceeds are immediately
invested,
at a price as described above, in shares of the
fund being
acquired. Smith Barney reserves the right to
reject any
exchange request. The exchange privilege may be
modified or
terminated at any time after written notice to
shareholders.
PERFORMANCE DATA
From time to time, the Fund may quote yield or
total return
of a Class in advertisements or in reports and
other
communications to shareholders. The Fund may
include
comparative performance information in
advertising or
marketing the Fund's shares. Such performance
information
may include the following industry and financial
publications: Barron's, Business Week, CDA
Investment
Technologies, Inc., Changing Times, Forbes,
Fortune,
Institutional Investor, Investors Daily, Money
Morningstar
Mutual Fund Values, The New York Times, USA Today
and The
Wall Street Journal. To the extent any
advertisement or
sales literature of the Fund describes the
expenses or
performance of any Class, it will also disclose
such
information for the other Classes.
Yield
A Class' 30-day yield figure described below is
calculated
according to a formula prescribed by the SEC. The
formula
can be expressed as follows:
YIELD =2 [(a-b +1)6-1]
cd
Where: a = dividends and interest earned
during the
period.
b = expenses accrued for the period
(net of
reimbursement).
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on
the last
day of the period.
For the purpose of determining the interest
earned (variable
"a'' in the formula) on debt obligations that
were purchased
by the Fund at a discount or premium, the formula
generally
calls for amortization of the discount or
premium. The
amortization schedule will be adjusted monthly to
reflect
changes in the market values of the debt
obligations.
The Fund's equivalent taxable 30-day yield for a
Class of
shares is computed by dividing that portion of
the Class' 30-
day yield which is tax-exempt by one minus a
stated income
tax rate and adding the product to that portion,
if any, of
the Class' yield that is not tax-exempt.
The yields on municipal securities are dependent
upon a
variety of factors, including general economic
and monetary
conditions, conditions of the municipal
securities market,
size of a particular offering, maturity of the
obligation
offered and rating of the issue. Investors should
recognize
that in periods of declining interest rates the
Fund's yield
for each Class of shares will tend to be somewhat
higher
than prevailing market rates, and in periods of
rising
interest rates the Fund's yield for each Class of
shares
will tend to be somewhat lower. Also, when
interest rates
are falling, the inflow of net new money to the
Fund from
the continuous sale of its shares will likely be
invested in
portfolio instruments producing lower yields than
the
balance of the Fund's portfolio, thereby reducing
the
current yield of the Fund. In periods of rising
interest
rates, the opposite can be expected to occur.
The Fund's yield for Class A and Class B shares
for the 30-
day period ended March 31, 1995 was 4.89% and
5.19%,
respectively. The equivalent taxable yield for
Class A and
Class B shares for that same period, was 7.59%
and 8.06%,
respectively, assuming the payment of Federal
income taxes
at a rate of 31% and New Jersey taxes at a rate
of 6.65%.
Average Annual Total Return
"Average annual total return" figures described
below are
computed according to a formula prescribed by the
SEC. The
formula can be expressed as follows:
P (1+T) n = ERV
Where: P = a hypothetical initial payment
of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a
hypothetical
$1,000 investment made at the
beginning of a
1-, 5- or 10-year period at the end of the 1-, 5-
or 10-year
period (or fractional portion thereof), assuming
reinvestment of all dividends
and
distributions.
The following total return figures assume that
the maximum
4.00% sales charge has been deducted from the
investment at
the time of purchase and have been restated to
show the
change in the maximum sales charge. The average
annual total
return for Class A shares was as follows for the
period
indicated:
2.11% for the one-year period beginning April 1,
1994
through March 31, 1995.
7.37% per annum during the five-year period
beginning on
April 1, 1990 through March 31, 1995.
8.11% per annum during the period from the Fund's
commencement of operations on April 22, 1988
through March
31, 1995.
These total return figures assume that the
maximum 4.00%
sales charge assessed by the Fund has been
deducted from the
investment at the time of purchase. Had the
investment
advisory, sub-investment advisory and/or
administration fees
not been partially waived (and assuming that the
maximum
4.00% sales charge had not been deducted), the
Class A's
average annual total return would have been
6.37%, 8.09% and
8.46%, respectively, for those same periods.
The average annual total return for Class B
shares was as
follows for the periods indicated:
1.26% for the one-year period from April 1, 1994
through
March 31, 1995.
4.47% per annum for the period from November 6,
1992 through
March 31, 1995.
These average annual total return figures assume
that the
applicable maximum CDSC has been deducted from
the
investment. Had the investment advisory and sub-
investment
advisory and/or administration fees not been
partially
waived and the CDSC had not been deducted, the
average
annual total return on the Fund's Class B shares
would have
been 5.76% and 5.55%, respectively, for those
same periods.
Aggregate Total Return
Aggregate total return figures described below
represent the
cumulative change in the value of an investment
in the Class
for the specified period and are computed by the
following
formula:
ERV-P
P
Where: P = a hypothetical initial
payment of
$10,000.
ERV = Ending Redeemable Value of a
hypothetical $10,000 investment made at
the beginning of the 1-, 5- or 10-year period at
the end of
the 1-, 5- or 10- year period
(or
fractional portion thereof), assuming
reinvestment of all
dividends and distributions.
The aggregate total return for Class A shares was
as follows
for the periods indicated (reflecting the partial
waiver of
the investment advisory and sub-investment
advisory and/or
administration fees):
2.11% for the one-year period beginning April 1,
1994
through March 31, 1995.
41.71% for the five-year period from April 1,
1990 through
March 31, 1995; and
68.73% for the period from the Fund's
commencement of
operations on April 22, 1988 through March 31,
1995.
These aggregate total return figures assume that
the maximum
4.00% sales charge assessed by the Fund has been
deducted
from the investment at the time of purchase. If
the maximum
sales charge had not been deducted at the time of
purchase,
the Fund's aggregate total return reflecting the
partial
waiver of the investment advisory and sub-
investment
advisory and/or administration fees for those
same periods
would have been 6.37%, 47.62% and 75.75%,
respectively.
The Fund's aggregate total return for Class B
shares was as
follows for the periods indicated:
1.26% for the one-year period from April 1, 1994
through
March 31, 1995.
10.92% for the period beginning on November 6,
1992 through
March 31, 1995.
These figures assume that the applicable maximum
4.50% CDSC
has been deducted from the investment at the time
of
purchase. If the investment advisory and sub-
investment
advisory and/or administration fees had not been
partially
waived and the maximum CDSC had not been deducted
at the
time of purchase the Fund's aggregate total
returns for the
same period would have been 5.76% and 13.89%.
It is important to note that the total return
figures set
forth above are based on historical earnings and
are not
intended to indicate future performance. Each
Class' net
investment income changes in response to
fluctuation in
interest rates and the expenses of the Fund.
Performance
will vary from time to time depending upon market
conditions, the composition of the Fund's
portfolio and its
operating expenses and the expenses exclusively
attributable
to the Class. Consequently, any given performance
quotation
should not be considered representative of the
Class'
performance for any specified period in the
future. In
addition, because the performance will vary, it
may not
provide a basis for comparing an investment in
the Class
with certain bank deposits or other investments
that pay a
fixed yield for a stated period of time.
Investors comparing
a Class' performance with that of other mutual
funds should
give consideration to the quality and maturity of
the
respective investment companies' portfolio
securities.
TAXES
The following is a summary of selected Federal
income tax
considerations that may affect the Fund and its
shareholders. The summary is not intended as a
substitute
for individual tax advice and investors are urged
to consult
their own tax advisors as to the tax consequences
of an
investment in the Fund.
As described above and in the Prospectus, the
Fund is
designed to provide investors with current income
which is
excluded from gross income for Federal income tax
purposes
and exempt from New Jersey personal income taxes.
The Fund
is not intended to constitute a balanced
investment program
and is not designed for investors seeking capital
gains or
maximum tax-exempt income irrespective of
fluctuations in
principal. Investment in the Fund would not be
suitable for
tax-exempt institutions, qualified retirement
plans, H.R. 10
plans and individual retirement accounts since
such
investors would not gain any additional tax
benefit from the
receipt of tax-exempt income.
The Fund has qualified and intends to continue to
qualify
each succeeding year as a "regulated investment
company"
under the Code. Provided the Fund (a) qualifies
as a
regulated investment company and (b) distributes
at least
90% of the sum of its taxable net investment
income and net
realized short-term capital gains, and 90% of its
tax-exempt
interest income (reduced by certain expenses),
the Fund will
not be liable for Federal income taxes to the
extent its
taxable net investment income and net realized
long-term and
short-term capital gains, if any, are distributed
to its
shareholders. Although the Fund expects to be
relieved of
substantially all Federal and state income or
franchise
taxes, depending upon the extent of its
activities in states
and localities in which its offices are
maintained, in which
its agents or independent contractors are located
or in
which it is otherwise deemed to be conducting
business, that
portion of the Fund's income which is treated as
earned in
any such state or locality could be subject to
state and
local tax. Any such taxes paid by the Fund would
reduce the
amount of income and gains available for
distribution to
shareholders. All net investment income and net
capital
gains earned by the Fund will be reinvested
automatically in
additional shares of the same Class of the Fund
at net asset
value, unless the shareholder elects to receive
dividends
and distributions in cash.
Because the Fund will distribute exempt-interest
dividends,
interest on indebtedness incurred by a
shareholder to
purchase or carry Fund shares is not deductible
for Federal
income and New Jersey personal income tax
purposes. If a
shareholder receives an exempt-interest dividend
with
respect to any share and if the share is held by
the
shareholder for six months or less, then, for
Federal income
tax purposes, any loss on the sale or exchange of
such share
may, to the extent of the exempt-interest
dividend, be
disallowed. In addition, the Code may require a
shareholder,
if he or she receives exempt-interest dividends,
to treat as
Federal taxable income, a portion of certain
otherwise non-
taxable social security and railroad retirement
benefit
payments. Furthermore, that portion of any
dividend paid by
the Fund which represents income derived from
private
activity bonds held by the Fund may not retain
its Federal
tax-exempt status in the hands of a shareholder
who is a
"substantial user" of a facility financed by
such bonds, or
a "related person" thereof. Moreover, as noted
in the
Fund's Prospectus, (a) some or all of the Fund's
dividends
and distributions may be a specific tax
preference item, or
a component of an adjustment item, for purposes
of the
Federal individual and corporate alternative
minimum taxes,
and (b) the receipt of Fund dividends and
distributions may
affect a corporate shareholder's Federal
"environmental"
tax liability. In addition, the receipt of Fund
dividends
and distributions may affect a foreign corporate
shareholder's Federal "branch profits" tax
liability and a
Subchapter S corporation shareholder's Federal
"excess net
passive income" tax liability. Shareholders
should consult
their own tax advisors to determine whether they
are (a)
"substantial users" with respect to a facility
or related
to such users within the meaning of the Code and
(b) subject
to a Federal alternative minimum tax, the Federal
environmental tax, the Federal "branch profits"
tax and the
Federal "excess net passive income" tax.
As described above and in the Prospectus, the
Fund may
invest in municipal bond index and interest rate
futures
contracts and options on these futures contracts.
The Fund
anticipates that these investment activities
would not
prevent the Fund from qualifying as a regulated
investment
company. As a general rule, these investment
activities
would increase or decrease the amount of long-
term and short-
term capital gains or losses realized by the Fund
and,
accordingly, would affect the amount of capital
gains
distributed to the Fund's shareholders.
For Federal income tax purposes, gain or loss on
municipal
bond index and interest rate futures contracts
and options
on these futures contracts (collectively referred
to as
"section 1256 contracts") is taxed pursuant to a
special
"mark-to-market" system, these instruments are
treated as
if sold at the Fund's fiscal year end for their
fair market
value. As a result, the Fund will be recognizing
gains or
losses before they are actually realized. Gain or
loss on
section 1256 contracts generally is treated as
60% long-term
capital gain or loss and 40% short-term capital
gain or
loss, and, accordingly, the mark-to-market system
will
generally affect the amount of capital gains or
losses
taxable to the Fund and the amount of
distributions to a
shareholder. Moreover, if the Fund invests in
both section
1256 contracts and offsetting positions in those
contracts,
which together constitute a straddle, then the
Fund may be
required to defer receiving the benefit of
certain
recognized losses. The Fund expects that its
activities with
respect to section 1256 contracts and offsetting
positions
in those contracts will not cause it to be
treated as
recognizing a materially greater amount of
capital gains
than actually realized and will permit it to use
substantially all of the losses of the Fund for
the fiscal
years in which the losses actually occur.
While the Fund does not expect to realize a
significant amount of net long-term capital
gains, any such
gains will be distributed annually as described
in the
Prospectus. Such distributions ("capital gain
dividends"),
if any, may be taxable to shareholders as long-
term capital
gains, regardless of how long they have held Fund
shares,
and will be designated as capital gain dividends
in a
written notice mailed by the Fund to shareholders
after the
close of the Fund's prior taxable year. If a
shareholder
receives a capital gain dividend with respect to
any share
and if such share has been held by the
shareholder for six
months or less, then any loss (to the extent not
disallowed
pursuant to the other six month rule described
above) on the
sale or exchange of such share will be treated as
a long-
term capital loss to the extent of the capital
gain
dividend.
When a shareholder incurs a sales charge when
acquiring
shares of the Fund, disposes of those shares
within 90 days
and acquires shares in a mutual fund for which
the otherwise
applicable sales charge is reduced by reason of a
reinvestment right (that is, exchange privilege),
the
original sales charge increases the shareholder's
tax basis
in the original shares only to the extent the
otherwise
applicable sales charge for the second
acquisition is not
reduced. The portion of the original sales charge
that does
not increase the shareholder's tax basis in the
original
shares would be treated as incurred with respect
to the
second acquisition and, as a general rule, would
increase
the shareholder's tax basis in the newly acquired
shares.
Furthermore, the same rule also applies to a
disposition of
the newly acquired or redeemed shares made within
90 days of
the second acquisition. This provision prevents a
shareholder from immediately deducting the sales
charge or
CDSC by shifting his or her investment in a
family of mutual
funds.
Each shareholder will receive after the
close of the
calendar year an annual statement as to the
Federal income
tax and New Jersey personal income tax status of
his or her
dividends and distributions from the Fund for the
prior
calendar year. These statements also will
designate the
amount of exempt-interest dividends that is a
preference
item for purposes of the Federal individual and
corporate
alternative minimum taxes. Each shareholder also
will
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. Shareholders should consult their
tax advisors
as to any other state and local taxes that may
apply to
these dividends and distributions. The dollar
amounts of
dividends excluded or exempt from Federal income
taxation or
New Jersey personal income taxation and the
dollar amount of
dividends subject to Federal income taxation or
New Jersey
personal income taxation, if any, will vary for
each
shareholder depending upon the size and duration
of each
shareholder's investment in the Fund. To the
extent that the
Fund earns taxable net investment income, it
intends to
designate as taxable dividends the same
percentage of each
day's dividend as its actual taxable net
investment income
bears to its total net investment income earned
on that day.
Therefore, the percentage of each day's dividend
designated
as taxable, if any, may vary from day-to-day.
Investors considering buying shares of the Fund
just prior
to a record date for a capital gain distribution
should be
aware that, regardless of whether the price of
the Fund
shares to be purchased reflects the amount of the
forthcoming distribution payment, any such
payment will be a
taxable distribution payment.
If a shareholder fails to furnish the Fund with a
correct
taxpayer identification number, fails to report
fully
dividend or interest income, or fails to certify
that he or
she has provided a correct taxpayer
identification number
and that he or she is not subject to "backup
withholding,"
then the shareholder may be subject to a 31%
"backup
withholding" tax with respect to (a) taxable
dividends and
distributions, if any, and (b) proceeds of any
redemption of
Fund shares. An individual's taxpayer
identification number
is his or her social security number. The "backup
withholding" tax is not an additional tax and
may be
credited against a shareholder's Federal income
tax
liability.
In the opinion of the Fund's New Jersey counsel,
income
distributions, including interest income and
gains realized
by the Fund upon disposition of investments paid
from a
"qualified investment fund" are exempt from the
New Jersey
personal income tax to the extent attributable to
New Jersey
Municipal Securities or to obligations that are
free from
state or local taxation under New Jersey or
Federal laws
("Tax-Exempt Obligations"). A "qualified
investment fund"
is any investment or trust company, or series of
such
investment company or trust registered with the
SEC, which
for the calendar year in which a distribution is
paid, has
no investments other than interest-bearing
obligations,
obligations issued at a discount, financial
options,
futures, forward contracts or other similar
financial
instruments related to interest-bearing
obligations,
obligations issued at a discount or related bond
indexes and
cash and cash items, including receivables, and
which has,
at the close of each quarter of the taxable year,
at least
80% of the aggregate principal amount of all of
its
investments, excluding financial options,
futures, forward
contracts, or other similar financial instruments
related to
interest-bearing obligations, obligations issued
at a
discount or bond indexes related there to as
authorized
under the Code, cash and cash items, such as
receivables,
invested in New Jersey Municipal Securities or in
Tax-Exempt
Obligations. Furthermore, gains resulting from
the
redemption or sale of shares of the Fund to the
extent
attributable to interest or gain from obligations
issued by
New Jersey or its local government entities or
obligations
which are free from state or local taxes under
New Jersey or
Federal law, are exempt from the New Jersey
personal income
tax.
The New Jersey personal income tax is not
applicable to
corporations. For all corporations subject to the
New Jersey
Corporation Business Tax, dividends and
distributions from a
"qualified investment fund" are included in the
net income
tax base for purposes of computing the
Corporation Business
Tax. Furthermore, any gain upon the redemption or
sale of
Fund shares by a corporate shareholder is also
included in
the net income tax base for purposes of computing
the
Corporation Business Tax.
The foregoing is only a summary of certain
Federal and New
Jersey tax considerations generally affecting the
Fund and
its shareholders, and is not intended as a
substitute for
careful tax planning. Shareholders are urged to
consult
their tax advisors with specific reference to
their own tax
situations.
ADDITIONAL INFORMATION
The Fund was incorporated under the laws of the
State of
Maryland on November 12, 1987. The Fund commenced
operations
on April 22, 1988 under the name Shearson Lehman
New Jersey
Municipals Inc. On December 15, 1988, March 31,
1992, July
30, 1993 and October 14, 1994, the Fund changed
its name to
SLH New Jersey Municipals Fund Inc., Shearson
Lehman
Brothers New Jersey Municipals Fund Inc., Smith
Barney
Shearson New Jersey Municipals Fund Inc. and
Smith Barney
New Jersey Municipals Fund Inc., respectively.
Boston Safe, a wholly owned subsidiary of TBC, is
located at
One Boston Place, Boston, Massachusetts 02108,
and serves as
the Fund's custodian pursuant to a custody
agreement. Under
the custody agreement, Boston Safe holds the
Fund's
portfolio securities and keeps all necessary
accounts and
records. For its services, Boston Safe receives a
monthly
fee based upon the month-end market value of
securities held
in custody and also receives securities
transaction charges.
The assets of the Fund are held under bank
custodianship in
compliance with the 1940 Act.
TSSG is located at Exchange Place, Boston,
Massachusetts
02109 and serves as the Fund's transfer agent.
Under the
transfer agency agreement, TSSG maintains the
shareholder
account records for the Fund, handles certain
communications
between shareholders and the Fund and distributes
dividends
and distributions payable by the Fund. For these
services,
TSSG receives a monthly fee computed on the basis
of the
number of shareholder accounts it maintains for
the Fund
during the month and is reimbursed for out-of-
pocket
expenses.
FINANCIAL STATEMENTS
The Fund's Annual Report for the fiscal year
ended March 31,
1995, accompanies this Statement of Additional
Information
and is incorporated herein by reference in its
entirety.
APPENDIX
Description of S&P and Moody's ratings:
S&P Ratings for Municipal Bonds
S&P's Municipal Bond ratings cover obligations of
states and
political subdivisions. Ratings are assigned to
general
obligation and revenue bonds. General obligation
bonds are
usually secured by all resources available to the
municipality and the factors outlined in the
rating
definitions below are weighed in determining the
rating.
Because revenue bonds in general are payable from
specifically pledged revenues, the essential
element in the
security for a revenue bond is the quantity and
quality of
the pledged revenues available to pay debt
service.
Although an appraisal of most of the same factors
that bear
on the quality of general obligation bond credit
is usually
appropriate in the rating analysis of a revenue
bond, other
factors are important, including particularly the
competitive position of the municipal enterprise
under
review and the basic security covenants. Although
a rating
reflects S&P's judgment as to the issuer's
capacity for the
timely payment of debt service, in certain
instances it may
also reflect a mechanism or procedure for an
assured and
prompt cure of a default, should one occur, i.e.,
an
insurance program, Federal or state guarantee or
the
automatic withholding and use of state aid to pay
the
defaulted debt service.
AAA
Prime -- These are obligations of the highest
quality. They
have the strongest capacity for timely payment of
debt
service.
General Obligation Bonds -- In a period of
economic stress,
the issuers will suffer the smallest declines in
income and
will be least susceptible to autonomous decline.
Debt burden
is moderate. A strong revenue structure appears
more than
adequate to meet future expenditure requirements.
Quality of
management appears superior.
Revenue Bonds -- Debt service coverage has been,
and is
expected to remain, substantial. Stability of the
pledged
revenues is also exceptionally strong, due to the
competitive position of the municipal enterprise
or to the
nature of the revenues. Basic security provisions
(including
rate covenant, earnings test for issuance of
additional
bonds, and debt service reserve requirements) are
rigorous.
There is evidence of superior management.
AA
High Grade -- The investment characteristics of
general
obligation and revenue bonds in this group are
only slightly
less marked than those of the prime quality
issues. Bonds
rated ``AA'' have the second strongest capacity
for payment
of debt service.
A
Good Grade -- Principal and interest payments on
bonds in
this category are regarded as safe. This rating
describes
the third strongest capacity for payment of debt
service. It
differs from the two higher ratings because:
General Obligation Bonds -- There is some
weakness, either
in the local economic base, in debt burden, in
the balance
between revenues and expenditures, or in quality
of
management. Under certain adverse circumstances,
any one
such weakness might impair the ability of the
issuer to meet
debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good,
but not
exceptional. Stability of the pledged revenues
could show
some variations because of increased competition
or economic
influences on revenues. Basic security
provisions, while
satisfactory, are less stringent. Management
performance
appears adequate.
BBB
Medium Grade -- Of the investment grade ratings,
this is the
lowest.
General Obligation Bonds -- Under certain adverse
conditions, several of the above factors could
contribute to
a lesser capacity for payment of debt service.
The
difference between ``A'' and ``BBB'' ratings is
that the
latter shows more than one fundamental weakness,
or one very
substantial fundamental weakness, whereas the
former shows
only one deficiency among the factors considered.
Revenue Bonds -- Debt coverage is only fair.
Stability of
the pledged revenues could show substantial
variations, with
the revenue flow possibly being subject to
erosion over
time. Basic security provisions are no more than
adequate.
Management performance could be stronger.
BB, B, CCC and CC
Bonds rated BB, B, CCC and CC are regarded, on
balance, as
predominately speculative with respect to
capacity to pay
interest and repay principal in accordance with
the terms of
the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of
speculation. While
such bonds will likely have some quality and
protective
characteristics, these are outweighed by large
uncertainties
or major risk exposures to adverse conditions.
C
The rating C is reserved for income bonds on
which no
interest is being paid.
D
Bonds rated D are in default, and payment of
interest and/or
repayment of principal is in arrears.
S&P's letter ratings may be modified by the
addition of a
plus or a minus sign, which is used to show
relative
standing within the major rating categories,
except in the
AAA-Prime Grade category.
S&P Ratings for Municipal Notes
Municipal notes with maturities of three years or
less are
usually given note ratings (designated SP-1, -2
or -3) by
S&P to distinguish more clearly the credit
quality of notes
as compared to bonds. Notes rated SP-1 have a
very strong or
strong capacity to pay principal and interest.
Those issues
determined to possess overwhelming safety
characteristics
are given the designation of SP-1+. Notes rated
SP-2 have a
satisfactory capacity to pay principal and
interest.
Moody's Ratings for Municipal Bonds
Aaa
Bonds that are Aaa are judged to be of the best
quality.
They carry the smallest degree of investment risk
and are
generally referred to as ``gilt edge.'' Interest
payments
are protected by a large or by an exceptionally
stable
margin and principal is secure. While the various
protective
elements are likely to change, such changes as
can be
visualized are most unlikely to impair the
fundamentally
strong position of such issues.
Aa
Bonds that are rated Aa are judged to be of high
quality by
all standards. Together with the Aaa group they
comprise
what are generally known as high-grade bonds.
They are rated
lower than the best bonds because margins of
protection may
not be as large as in Aaa securities or
fluctuation of
protective elements may be of greater amplitude
or there may
be other elements present which make the long-
term risks
appear somewhat larger than in Aaa securities.
A
Bonds that are rated A possess many favorable
investment
attributes and are to be considered as upper
medium-grade
obligations. Factors giving security to principal
and
interest are considered adequate, but elements
may be
present which suggest a susceptibility to
impairment
sometime in the future.
Baa
Bonds that are rated Baa are considered as medium-
grade
obligations, i.e., they are neither highly
protected nor
poorly secured. Interest payments and principal
security
appear adequate for the present but certain
protective
elements may be lacking or may be
characteristically
unreliable over any great length of time. Such
bonds lack
outstanding investment characteristics and in
fact have
speculative characteristics as well.
Ba
Bonds that are rated Ba are judged to have
speculative
elements; their future cannot be considered as
well assured.
Often the protection of interest and principal
payments may
be very moderate and thereby not well safeguarded
during
both good and bad times over the future.
Uncertainty of
position characterizes bonds in this class.
B
Bonds that are rated B generally lack
characteristics of the
desirable investment. Assurance of interest and
principal
payments or of maintenance of other terms of the
contract
over any long period of time may be small.
Moody's applies the numerical modifiers 1, 2 and
3 in each
generic rating classification from Aa through B.
The
modifier 1 indicates that the security ranks in
the higher
end of its generic rating category; the modifier
2 indicates
a mid-range ranking; and the modifier 3 indicates
that the
issue ranks in the lower end of its generic
rating category.
Caa
Bonds that are rated Caa are of poor standing.
These issues
may be in default or present elements of danger
may exist
with respect to principal or interest.
Ca
Bonds that are rated Ca represent obligations
that are
speculative in a high degree. These issues are
often in
default or have other marked short comings.
C
Bonds that are rated C are the lowest rated class
of bonds,
and issues so rated can be regarded as having
extremely poor
prospects of ever attaining any real investment
standing.
Moody's Ratings for Municipal Notes
Moody's ratings for state and municipal notes and
other
short-term loans are designated Moody's
Investment Grade
("MIG'') and for variable rate demand obligations
are
designated Variable Moody's Investment Grade
("VMIG''). This
distinction is in recognition of the differences
between
short-term credit risk and long-term credit risk.
Loans
bearing the designation MIG 1 or VMIG 1 are of
the best
quality, enjoying strong protection by
established cash
flows of funds for their servicing or from
established and
broad-based access to the market for refinancing,
or both.
Loans bearing the designation MIG 2 or VMIG 2 are
of high
quality, with ample margins of protection
although not as
large as the preceding group. Loans bearing the
designation
MIG 3 or VMIG 3 are of favorable quality, with
all security
elements accounted for, but lacking the
undeniable strength
of the preceding grades. Liquidity and cash flow
may be
tight and market access for refinancing, in
particular, is
likely to be less well established.
Description of S&P A-1+ and A-1 Commercial Paper
Rating
The rating A-1+ is the highest, and A-1 the
second highest,
commercial paper rating assigned by S&P. Paper
rated A-1+
must have either the direct credit support of an
issuer or
guarantor that possesses excellent long-term
operating and
financial strengths combined with strong
liquidity
characteristics (typically, such issuers or
guarantors would
display credit quality characteristics which
would warrant a
senior bond rating of "AA\-'' or higher), or the
direct
credit support of an issuer or guarantor that
possesses
above average long-term fundamental operating and
financing
capabilities combined with ongoing excellent
liquidity
characteristics. Paper rated A-1 by S&P has the
following
characteristics: liquidity ratios are adequate to
meet cash
requirements; long-term senior debt is rated
``A'' or
better; the issuer has access to at least two
additional
channels of borrowing; basic earnings and cash
flow have an
upward trend with allowance made for unusual
circumstances;
typically, the issuer's industry is well
established and the
issuer has a strong position within the industry;
and the
reliability and quality of management are
unquestioned.
Description of Moody's Prime-1 Commercial Paper
Rating
The rating Prime-1 is the highest commercial
paper rating
assigned by Moody's. Among the factors considered
by Moody's
in assigning ratings are the following: (a)
evaluation of
the management of the issuer; (b) economic
evaluation of the
issuer's industry or industries and an appraisal
of
speculative-type risks which may be inherent in
certain
areas; (c) evaluation of the issuer's products in
relation
to competition and customer acceptance; (d)
liquidity; (e)
amount and quality of long-term debt; (f) trend
of earnings
over a period of ten years; (g) financial
strength of a
parent company and the relationships which exist
with the
issuer; and (h) recognition by the management of
obligations
which may be present or may arise as a result of
public
interest questions and preparations to meet such
obligations.
Smith Barney
New Jersey
Municipals Fund
Inc.
Statement of
Additional Information
May 29, 1995
Smith Barney
New Jersey Municipals Fund Inc.
388 Greenwich Street
New York, NY 10013
...................................Fund 66, 206
SMITH BARNEY
A Member
of
Travelers Group
u:\osunkwo\njmu485b.cvr
SMITH BARNEY NEW JERSEY MUNICIPALS FUND
INC. PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
The Registrant's Annual Report for the year ended March
31, 1995 and the report of Independent Accountants dated
May 10, 1995, are incorporated by reference to the
Definitive 30b-1 filed
on May 30, 1995 as Accession # 0000091155-95-
000114 Included in Part C:
Consents of Independent Accountants
(b) Exhibits
Exhibit No. Description of Exhibits
All references are to the Registrant's
Registration Statement on Form N-1A as filed with
the Securities and Exchange Commission on December
1, 1987 File No. 3318779 and 811-5486 (the
"Registration Statement").
(1)(a) Registrant's Articles of Incorporation
dated
November 12, 1987, Articles of Amendment dated
December 15, 1988 to Articles of Incorporation,
Articles of Revival dated March 31, 1992
to
Articles
of
Incorporation, Articles Supplementary dated November
5, 1992 to Articles of Incorporation, and
Articles of Amendment dated July 30, 1993,
to Articles
of
Incorporation are incorporated by reference to
PostEffective Amendment No. 12 to the
Registration Statement ("Post-Effective Amendment
No.12").
(b) Form of Articles of Amendment dated October
14,
1994 to the Articles of Incorporation are
incorporated by reference to Post-Effective Amendment No. 13
to the Registration Statement filed on November 7, 1994
("PostEffective Amendment No. 13").
(c) Form of Articles Supplementary and Form of
Articles
of Amendment dated November 7, 1994 to the Articles
of Incorporation are incorporated by reference to
PostEffective Amendment No. 13
(2) Registrant's By-Laws dated November 23, 1987
are
incorporated by reference to the
Registration Statement.
(3) Not Applicable.
(4) Registrant's form of stock certificate
is
incorporated by reference to Post-Effective
Amendment
No. 9 to the Registration Statement ("Post-
Effective Amendment No. 9").
(5) (a) Investment Advisory Agreement dated July 30,
1993 between the Registrant and Greenwich Street
Advisors is incorporated by reference to Post
Effective Amendment No. 12.
(b) Form of Transfer of Investment Advisory
Agreement
dated as of November 7, 1994, among Registrant,
Mutual Management Corp. and SBMFM is filed
herein.
(6) Form of Distribution Agreement dated July 30,
1993
between the Registrant and Smith Barney Shearson
Inc. is incorporated by reference to Post
Effective
Amendment No. 12.
(7) Not Applicable.
(8) Custody Agreement between the Registrant and
Boston
Safe Deposit and Trust Company dated April 1, 1988
is incorporated by reference to Pre-Effective
Amendment No. 1 to the Registration Statement
("Pre-Effective Amendment No. 1").
(9)(a) Transfer Agency Agreement dated August 2,
1993
between the Registrant and The Shareholder
Services Group, Inc. is incorporated by
reference to PostEffective Amendment No. 12.
(b) Form of Administration Agreement dated April
20,
1994 between the Registrant and Smith, Barney
Advisers, Inc. ("SBA") is incorporated by
reference to PostEffective Amendment No. 13 to the
Registration Statement ("Post-Effective Amendment No. 13").
(c) Form of Sub-Administration Agreement dated
April
20, 1994 between the Registrant, SBA and The
Boston Company Advisors, Inc. is incorporated by
reference to Post-Effective Amendment No. 13.
(10) Opinion of Counsel as to Legality of
Securities
being Offered is filed herein.
(11)(a) Consent of Coopers & Lybrand L.L.P. is
filed
herein.
(b) Consent of KPMG Peat Marwick LLP is
filed
herein
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15) Amended and Restated Services and
Distribution
Plan
pursuant to Rule 12b-1 dated as of November
7th, 1994 is incorporated by reference to
PostEffective Amendment No. 13.
(16) Performance Data is incorporated by
reference
to
Post-Effective Amendment No. 3 to the
Registration Statement filed on May 27,
1989
("Post-Effective Amendment No. 3").
Item 25. Persons Controlled by or under Common Control
with Registrant
None
Item 26. Number of Holders of Securities
(1) (2)
Number of Record Holders
Title of Class by Class as of
May
26,
1995
Common stock, par Class A 8,438,173
.946
value $.001 per share
Class
B
4,421,498.128
Class C 19,854.860
Class Y
0.000
Item 27. Indemnification
Response to this item is incorporated by reference
to Post-Effective Amendment No. 9.
Item 28(a). Business and Other Connections of
Investment Adviser
Investment Adviser - - Smith Barney Mutual Funds Management
Inc., formerly
known as Smith, Barney Advisers, Inc. ("SBMFM")
SBMFM, through its predecessors, has been in the investment
counseling business since 1934 and was incorporated in
December 1968 under the laws of the State of
Delaware. SBMFM is a wholly owned subsidiary of Smith Barney
Holdings Inc.
(formerly known as Smith Barney Shearson Holdings Inc.),
which in turn is a
wholly owned subsidiary of Travelers Group Inc. (formerly
known as Primerica
Corporation) ("Travelers"). SBMFM is registered as an
investment adviser
under the Investment Advisers Act of 1940 (the "Advisers
Act").
The list required by this Item 28 of the officer and
directors of SBMFM together with information as to any
other business, profession, vocation or employment of a
substantial nature engaged in by such officer and
directors during the past two fiscal years, is
incorporated by reference to Schedules A and D of FORM ADV
filed by SBMFM pursuant to the Advisers Act (SEC File No. 801-
8314).
Item 29. Principal Underwriter
Smith Barney Inc. ("Smith Barney") currently acts as
distributor for Smith
Barney New Jersey Municipals Fund Inc., Smith Barney Managed
Municipals Fund Inc., Smith Barney New York Municipals Fund
Inc., Smith Barney California Municipals Fund Inc., Smith
Barney Massachusetts Municipals Fund, Smith Barney Global
Opportunities Fund,
Smith Barney Aggressive Growth Fund Inc., Smith Barney
Appreciation Fund
Inc., Smith Barney Principal Return Fund, Smith Barney
Income Funds, Smith
Barney Equity Funds, Smith Barney Investment Funds Inc.,
Smith Barney
Precious Metals and Minerals Fund Inc., Smith Barney
Telecommunications
Trust, Smith Barney Arizona Municipals Fund Inc., The USA
High Yield Fund N.V., Garzarelli Sector
Analysis Portfolio N.V., Smith Barney Fundamental
Value Fund Inc., Smith Barney Series Fund, Consulting Group
Capital Markets
Funds, Smith Barney Income Trust, Smith Barney Adjustable
Rate Government
Income Fund, Smith Barney Florida Municipals Fund, Smith
Barney Oregon
Municipals Fund, Smith Barney Funds, Inc., Smith Barney Muni
Funds, Smith
Barney World Funds, Inc., Smith Barney Money Funds, Inc.,
Smith Barney Municipal
Money Market Fund., Inc., Smith Barney Variable Account
Funds, Smith Barney
U.S. Dollar Reserve Fund (Cayman), Worldwide Special Fund,
N.V., Worldwide
Securities Limited, (Bermuda), Smith Barney International
Fund (Luxembourg)
and various series of unit investment trusts.
Smith Barney is a wholly owned subsidiary of Smith Barney
Holdings
Inc. (formerly known as Smith Barney Shearson Holdings Inc.),
which in turn
is a wholly owned subsidiary of Travelers Group Inc.
(formerly known as
Primerica Corporation) ("Travelers"). On June 1, 1994,
Smith Barney
changed its name from Smith Barney-Shearson Inc. to its
current name. The
information required by this Item 29 with respect to each
director, officer
and partner of Smith Barney is incorporated by reference to
Schedule A of
FORM BD filed by Smith Barney pursuant to the Securities
Exchange Act of
1934 (SEC File No. 812-8510).
Item 30. Location of Accounts and Records
(1) Smith Barney New Jersey Municipals Fund Inc.
388 Greenwich Street
New York, New York, 10013
(2) Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
(3) The Boston Company Advisors Inc.
One Boston Place
Boston, Massachusetts 02109
(4) Boston Safe Deposit and Trust Company Inc.
One Boston Place
Boston, Massachusetts 02109
(5) The Shareholder Services Group, Inc.
One Boston Place
Boston, Massachusetts 02109
Item 31. Management Services
None
Item 32. Undertakings
None
Rule 485(b) Certification
The Registrant hereby certifies that it meets all
of the requirements for effectiveness pursuant to Rule
485(b) under the Securities Act of 1933, as amended.
The Registrant further represents pursuant to
Rule 485(b)(2)(iv) that the resignations of Dr. Hardin and
Mr.
Frankel as Directors of the Registrant was not due to any
disagreement with the Registrant on any matter relating to
its operation, policies or practices. Messrs. Hardin
and Frankel resigned because of increased board
responsibilities for other investment companies and a desire
to reduce travel and minimize scheduling conflicts with
other professional obligations.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant, SMITH BARNEY NEW JERSEY MUNICIPALS
FUND INC., has duly caused this Amendment to the
Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City
of New York, State of New York on the 30th day of May, 1995.
SMITH BARNEY NEW JERSEY
MUNICIPALS FUND INC.
By: /s/ Heath B. McLendon
Heath B. McLendon,
Chairman of the
Board.
We, the undersigned, hereby severally constitute and
appoint Heath B. McLendon, Christina T. Sydor and Caren A.
Cunningham and each of them singly, our true and lawful
attorney, with full power to them and each of them to sign
for us, and in our hands and in the capacities indicated
below, any and all Amendments to this Registration
Statement and to file the same, with all exhibits
thereto, and other documents therewith, with the
Securities and
Exchange Commission, granting unto said attorneys, and each
of them, acting alone, full authority and power to do and
perform each and every act and thing requisite or necessary
to be done in the premises, as fully to all intents and
purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys or any of
them may lawfully do or cause to be done by virtue thereof.
WITNESS our hands the date set forth below.
Pursuant to the requirements of the Securities Act of
1933,
as amended, this Amendment to the Registration Statement and
the above Power of Attorney has been signed below by the
following persons in the capacities and on the dates
indicated.
Signature
Title Date
/s/ Heath B. McLendon Director and Chairman of the
Board
05/30/95
Heath B. McLendon
/s/ Lewis E. Daidone Treasurer (Chief
Financial 05/30/95
Lewis E. Daidone and Accounting Officer)
/s/ Alfred J. Bianchetti
Director
05/30/95
Alfred J. Bianchetti
/s/ Herbert Barg
Director
05/30/95
Herbert Barg
/s/ Martin Brody
Director
05/30/95
Martin Brody
/s/ Dwight B. Crane
Director
05/30/95
Dwight B. Crane
Signature
Title
Date
/s/ Stephen E. Kaufman Director
05/30/95
Stephen E. Kaufman
/s/ Joseph J. McCann Director
05/30/95
Joseph J. McCann
FORM OF TRANSFER AND ASSUMPTION OF
INVESTMENT ADVISORY AGREEMENT
for
SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.
TRANSFER AND ASSUMPTION OF INVESTMENT ADVISORY
AGREEMENT,
made as of
the 7th day of November, 1994, by and among Smith Barney
New Jersey Municipals Fund Inc., a Maryland corporation
(the "Fund"), Mutual Management Corp., a New
York corporation ("MMC"), and Smith Barney Mutual Funds
Management Inc.
("SBMFM") a Delaware corporation.
WHEREAS, the Fund is registered with the Securities
and Exchange
Commission as an open-end management investment company
under the
Investment Company Act of 1940, as amended (the "Act");
and
WHEREAS, the Fund and MMC entered into an
Investment Advisory Agreement on July 30, 1993,
under which Greenwich Street Advisors, a division
of MMC serves as the investment adviser (the
"Investment Adviser") for
the Fund; and
WHEREAS, MMC desires that its interest,
rights, responsibilities and
obligations in and under the Investment Advisory
Agreement be transferred
to SBMFM and SBMFM desires to assume MMC's
interest, rights, responsibilities and obligations
in and under the Investment Advisory
Agreement; and
WHEREAS, this Agreement does not result in a
change of actual control
or management of the Investment Adviser to the
Fund and, therefore, is not
an "assignment" as defined in Section 2(a)(4) of
the Act nor an
"assignment" for the purposes of Section 15(a)(4)
of the Act.
NOW, THEREFORE, in consideration of the mutual
covenants set forth in
this Agreement and other good and valuable
consideration, the receipt and
sufficiency of which is hereby acknowledged, the
parties hereby agree as
follows:
1. Assignment. Effective as of November 7,
1994 (the "Effective
Date"), MMC hereby transfers to SBMFM all of MMC's
interest, rights,
responsibilities and obligations in and under the
Investment Advisory
Agreement dated July 30, 1993, to which MMC is a
party with the Fund.
2. Assumption and Performance of Duties. As of
the
Effective
Date, SBMFM hereby accepts all of MMC's interest
and rights, and assumes
and agrees to perform all of MMC's
responsibilities and obligations in, and
under the Investment Advisory Agreement; SBMFM
agrees to subject to all of
the terms and conditions of said Agreement; and
SBMFM shall indemnify and
hold harmless MMC from any claim or demand made
thereunder arising or
incurred after the Effective Date.
3. Representation of SBMFM. SBMFM
represents and
warrants that:
(1) it is registered as an investment adviser
under the Investment Advisers
Act of 1940, as amended; and (2) Smith Barney
Holdings Inc. is its sole
shareholder.
4. Consent. The Fund hereby consents to this
transfer by MMC to
SBMFM of MMC's interest, rights,
responsibilities and obligations in and
under the Investment Advisory Agreement and to
the
acceptance and
assumption by SBMFM of the same. The Fund
agrees, subject to the terms
and conditions of said Agreement, to look solely
to SBMFM for the
performance of the Investment Adviser's
responsibilities and obligations
under said Agreement from and after the
Effective Date, and to recognize as
inuring solely to SBMFM the interest and rights
heretofore held by MMC
thereunder.
5. Limitation of Liability of Directors,
Officers and Shareholders.
It is expressly agreed that the obligations of
the Fund hereunder shall
not be binding upon any of the Directors,
shareholders, nominees, officers,
agents, or employees of the Fund, personally,
but shall bind only the
corporate property of the Fund, as provided in
the Articles of Incorporation of the
Fund. The execution and delivery of this
Agreement have been authorized
by the Directors of the Fund and signed by the
President of the Fund,
acting as such, and neither such authorization
by such Directors nor such
execution and delivery by such officer shall be
deemed to have been made by
any of them individually of to impose any
liability on any of them,
personally, but shall bond only the corporate
property of the Fund as provided
in its Articles of Incorporation.
6. Counterparts. This Agreement may be
signed in any number of
counterparts, each of which shall be an
original, with the same effect as
if the signatures thereto and hereto were upon
the same instrument.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to
be executed by their duly authorized officers
hereunto duly attested.
Attest:
By:
Secretary Smith Barney New Jersey
Municipals
Fund Inc.
Attest:
By:
Secretary Mutual Management
Corp.
Attest:
By:
Secretary Smith Barney
Mutual
Funds
Management Inc.
u:\osunkwo\njmutrsf.agr
u:joachim\njmuni.doc
May
31, 1995
Smith Barney New Jersey Municipals Fund Inc.
388 Greenwich Street
New York, NY 10013
Re: Post-Effective Amendment No. 14 to
the Registration
Statement on Form N-1A
for shares registered for Smith
Barney New Jersey Municipals Fund Inc.
File Nos. 33-18779 and 811-5486
Gentlemen:
In connection with the registration of
1,293,163 shares of beneficial interest,
$.001 par value (the "Shares"), by Smith
Barney New Jersey Municipals Fund Inc., a
Maryland Corporation (the "Fund"),
pursuant to Post-Effective Amendment
No. 14 to the Registration Statement under
the
Securities Act of 1933, as amended (the
"1933 Act"), and in reliance upon Rule 24e-
2 under the Investment Company Act of 1940,
as amended (the "1940 Act"), you have
requested that the undersigned provide the
required legal opinion.
The undersigned is Associate General
Counsel and Vice President of Smith Barney
Mutual Funds Management Inc., the Fund's
distributor, and in such capacity, from
time to time and for certain purposes,
acts as counsel to the Fund. I have
examined copies of the Fund's
Articles of
Incorporation, its By-Laws, resolutions
adopted by its Board of Directors, and such
other records and documents as I have
deemed necessary for purposes of this
opinion.
On the basis of the foregoing, I am of
the opinion that the Shares when sold in
accordance with the terms of the Fund's
current Prospectus and Statement of
Additional Information will, at the time
of sale, be validly issued, fully paid
and non-assessable. This opinion is for
the limited purposes expressed above and
should not be deemed do be an expression
of opinion as to compliance with the 1933
Act, the 1940 Act or applicable State
"blue sky" laws in connection with the
sales of the Shares.
Very truly yours,
/s/
Ca
ren
Cun
ni
ngh
am
Car
en
Cun
ni
ngh
am
A
s
s
o
c
i
a
t
e
G
e
n
e
r
a
l
Counsel and
Vice President
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Smith Barney New Jersey Municipals Fund
Inc.:
We hereby consent to the following
with respect to Post Effective Amendment
No. 14 to the Registration Statement on
Form N-1A (File No. 33-18779) under the
Securities Act of 1933, as amended, of
Smith Barney New Jersey Municipals Fund
Inc. (formerly Smith Barney Shearson New
Jersey Municipals Fund Inc.):
1. The incorporation by reference of
our report dated May 10,1995 accompanying
the Annual Report for the fiscal year
ended March 31, 1995 of Smith Barney
New Jersey Municipals Fund Inc.,
in
the Statement of Additional
Information.
2. The reference to our firm
under the heading "Financial Highlights"
in the Prospectus.
3. The reference to our firm
under the heading "Counsel and
Auditors" in the Statement of
Additional Information.
/S/Coopers &
Lybrand L.L.P.
COOPERS &
LYBRAND L.L.P. Boston, Massachusetts
May 31, 1995
Independent Auditors'
Consent
To the Shareholders and Directors of the
Smith Barney New Jersey Municipals Fund
Inc.:
We consent to the reference to our Firm under the
heading "Counsel and Auditors" in the Statement of
Additional Information.
KPMG Peat
Marwick LLP
New York, New York
May 30, 1995
[ARTICLE] 6
[SERIES]
[NUMBER]
[NAME] SB NEW JERSEY MUNICIPAL FUND - CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] MAR-31-1995
[PERIOD-END] MAR-31-1995
[INVESTMENTS-AT-COST] 156,426,777
[INVESTMENTS-AT-VALUE] 160,020,943
[RECEIVABLES] 3,132,840
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 163,153,783
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 651,908
[TOTAL-LIABILITIES] 651,908
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 162,216,138
[SHARES-COMMON-STOCK] 8,474,514
[SHARES-COMMON-PRIOR] 9,553,890
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 111,297
[ACCUMULATED-NET-GAINS] (3,197,132)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3,594,166
[NET-ASSETS] 162,501,875
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 10,758,237
[OTHER-INCOME] 0
[EXPENSES-NET] 1,736,306
[NET-INVESTMENT-INCOME] 9,021,931
[REALIZED-GAINS-CURRENT] (3,197,132)
[APPREC-INCREASE-CURRENT] 3,571,504
[NET-CHANGE-FROM-OPS] 9,396,303
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 6,381,567
[DISTRIBUTIONS-OF-GAINS] 20,959
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 806,228
[NUMBER-OF-SHARES-REDEEMED] 2,211,779
[SHARES-REINVESTED] 326,175
[NET-CHANGE-IN-ASSETS] (5,785,919)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 29,220
[OVERDISTRIB-NII-PRIOR] 131,292
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 579,652
[INTEREST-EXPENSE] 10,129
[GROSS-EXPENSE] 1,736,306
[AVERAGE-NET-ASSETS] 165,614,860
[PER-SHARE-NAV-BEGIN] 12.55
[PER-SHARE-NII] 0.70
[PER-SHARE-GAIN-APPREC] 0.07
[PER-SHARE-DIVIDEND] 0.70
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 12.62
[EXPENSE-RATIO] 0.00
[AVG-DEBT-OUTSTANDING] 163,836
[AVG-DEBT-PER-SHARE] 0.01
[ARTICLE] 6
[SERIES]
[NUMBER]
[NAME] SB NEW JERSEY MUNICIPAL FUND - CLASS B
</TABLE>
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] MAR-31-1995
[PERIOD-END] MAR-31-1995
[INVESTMENTS-AT-COST] 156,426,777
[INVESTMENTS-AT-VALUE] 160,020,943
[RECEIVABLES] 3,132,840
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 163,153,783
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 651,908
[TOTAL-LIABILITIES] 651,908
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 162,216,138
[SHARES-COMMON-STOCK] 4,384,740
[SHARES-COMMON-PRIOR] 3,855,197
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 111,297
[ACCUMULATED-NET-GAINS] (3,197,132)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3,594,166
[NET-ASSETS] 162,501,875
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 10,758,237
[OTHER-INCOME] 0
[EXPENSES-NET] 1,736,306
[NET-INVESTMENT-INCOME] 9,021,931
[REALIZED-GAINS-CURRENT] (3,197,132)
[APPREC-INCREASE-CURRENT] 3,571,504
[NET-CHANGE-FROM-OPS] 9,396,303
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2,618,738
[DISTRIBUTIONS-OF-GAINS] 8,600
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,011,453
[NUMBER-OF-SHARES-REDEEMED] 628,611
[SHARES-REINVESTED] 146,701
[NET-CHANGE-IN-ASSETS] (5,785,919)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 29,220
[OVERDISTRIB-NII-PRIOR] 131,292
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 579,652
[INTEREST-EXPENSE] 10,129
[GROSS-EXPENSE] 1,736,306
[AVERAGE-NET-ASSETS] 165,614,860
[PER-SHARE-NAV-BEGIN] 12.55
[PER-SHARE-NII] 0.63
[PER-SHARE-GAIN-APPREC] 0.06
[PER-SHARE-DIVIDEND] 0.62
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 12.62
[EXPENSE-RATIO] 0.00
[AVG-DEBT-OUTSTANDING] 163,836
[AVG-DEBT-PER-SHARE] 0.01
[ARTICLE] 6
[SERIES]
[NUMBER]
[NAME] SB NEW JERSEY MUNICIPAL FUND - CLASS C
</TABLE>
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] MAR-31-1995
[PERIOD-END] MAR-31-1995
[INVESTMENTS-AT-COST] 156,426,777
[INVESTMENTS-AT-VALUE] 160,020,943
[RECEIVABLES] 3,132,840
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 163,153,783
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 651,908
[TOTAL-LIABILITIES] 651,908
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 162,216,138
[SHARES-COMMON-STOCK] 19,666
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 111,297
[ACCUMULATED-NET-GAINS] (3,197,132)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3,594,166
[NET-ASSETS] 162,501,875
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 10,758,237
[OTHER-INCOME] 0
[EXPENSES-NET] 1,736,306
[NET-INVESTMENT-INCOME] 9,021,931
[REALIZED-GAINS-CURRENT] (3,197,132)
[APPREC-INCREASE-CURRENT] 3,571,504
[NET-CHANGE-FROM-OPS] 9,396,303
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1,631
[DISTRIBUTIONS-OF-GAINS] 5
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 19,546
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 120
[NET-CHANGE-IN-ASSETS] (5,785,919)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 29,220
[OVERDISTRIB-NII-PRIOR] 131,292
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 579,652
[INTEREST-EXPENSE] 10,129
[GROSS-EXPENSE] 1,736,306
[AVERAGE-NET-ASSETS] 165,614,860
[PER-SHARE-NAV-BEGIN] 11.86
[PER-SHARE-NII] 0.20
[PER-SHARE-GAIN-APPREC] 0.74
[PER-SHARE-DIVIDEND] 0.18
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 12.62
[EXPENSE-RATIO] 0.00
[AVG-DEBT-OUTSTANDING] 163,836
[AVG-DEBT-PER-SHARE] 0.01
</TABLE>
